Santos v.

Estenzo
109 Phil. 119, 125
FACTS:
The wife Gloria Montederamos filed on her behalf and
of their 4 minor children claim for compensation with the
Department of Labor of the death of the driver Felepe Cabalde
an employee of the People Land Transportation Company.
After appropriate proceeding the Workmen Compensation
Commission awarded to claimants P 3 494.40 with burial
expenses not exceeding P 200.00.
No appeal having been taken from the award, on
October 21, 1954, the mother of the deceased Manuela H. De
Cabalde having custody of the children filed a petition for the
enforcement of awards which was contested by the herein
petitioner.
When the petitioner moved for the postponement of the
trial was denied by the court and failed to appear on the day of
the hearing the Judge Estenzo rendered a decision for the
payment of award and burial expense with interest on the legal
rate together with P500 on Attorneys fees on the refusal of the
petitioner to comply with the said award.
Respondent Judge denied the motion for reconsideration of
the petitioner. Hence, petitioner filed notice of Appeal
Certiorari.
ISSUE: Whether the court lost jurisdiction to enforce award in
Workmen Compensation cases.
RULING: Petition is denied.
The petitioner contention is devoid of merit, the commission
cannot amend the act of the congress and also the court
acquired the main case (2) two years and half after the rules
was promulgated.

Section 6, Rule 26 of the Workmens Compensation

Commission regulates the fees that may be awarded either in
the Commission or when the decision thereof has been
appealed to the Supreme Court. It does not govern the fees
allowable by the Court of Justice, in proceeding for the
execution of the award of the Commission which is govern by
Rules of Court, when the employer unduly refuses to comply
with the said award.
DOMINGO B. TEOXON vs. MEMBERS OF THE BOARD OF
ADMINISTRATORS, PHILIPPINE VETERANS
ADMINISTRATION
FACTS:
The petitioner sustained physical injuries in line of duty as a
former member of a recognized guerilla organization which
participated actively in the resistance movement against the
enemy, and as a result of which petitioner suffered a
permanent, physical disability. For having been permanently
incapacitated from work, he filed his claim for disablility
pension with the Philippine Veterans Administration under the
Veterans' Bill of Rights, Republic Act No. 65. However,
respondents in turn would limit the amount of pension received
by him in accordance with the rules and regulations
promulgated by them.
Petitioner filed his suit for mandamus before the CFI of Manila
alleging that he filed his claim for disability pension under the
Veterans' Bill of Rights, Republic Act No. 65, for having been
permanently incapacitated from work and that he was first
awarded only P25.00 monthly, thereafter increased to P50.00
a month contrary to the terms of the basic law as thereafter
amended. 3 His claim, therefore, was for a pension effective
May 10, 1955 at the rate of P50.00 a month up to June 21,
1957 and at the rate of P100.00 a month, plus P10.00 a
month, for each of his unmarried minor children below 18

years of age from June 22, 1957 up to June 30, 1963; and the
difference of P50.00 a month, plus P10.00 a month for each of
his four unmarried minor children below 18 years of age from
July 1, 1963. He would likewise seek for the payment of moral
and exemplary damages as well as attorney's fees.
Respondent, while admitting, with qualification, the facts as
alleged in the petition, would rely primarily in its special and
affirmative defenses, on petitioner not having exhausted its
administrative remedies and his suit being in effect one
against the government, which cannot prosper without its
consent.
The CFI found for respondents. Hence this petition.
ISSUE: W.O.N. rules and regulations promulgated by
administrative agencies can prevail over a statue.
HELD: Petition is affirmed. CFI is reversed.
The Court cited the case of Begosa v. Chairman, Philippine
Veterans Administration, promulgated just a month before the
case at bar, where it categorically held that a veteran suffering
from permanent disability is not to be denied what has been
granted him specifically by legislative enactment, which
certainly is superior to any regulation that may be promulgated
by the Philippine Veterans Administration, presumably in the
implementation thereof.
It added that the decision of the CFI where it held that the
respondent Board has authority under the Pension law to
process applications for pension, using as guide the rules and
regulations that it adopted under the law and their decisions,
unless shown clearly to be in error or against the law or
against the general policy of the Board, should be maintained"
is clearly erroneous.

The Court also cited United States v. Tupasi Molina, which

held that "Of course the regulations adopted under legislative
authority by a particular department must be in harmony with
the provisions of the law, and for the sole purpose of carrying
into effect its general provisions. By such regulations, of
course, the law itself cannot be extended. So long, however,
as the regulations relate solely to carrying into effect the
provisions of the law, they are valid." As well as its ruling in
People v. Santos, wherein it held that an administrative order
betrays inconsistency or repugnancy to the provisions of the
Act, "the mandate of the Act must prevail and must be
followed."
Finally, the Court said there must be strict compliance with the
legislative enactment. Its terms must be followed. The statute
requires adherence to, not departure from, its provisions. No
deviation is allowable. In the terse language of the present
Chief Justice, an administrative agency "cannot amend an act
of Congress." Respondents can be sustained, therefore, only if
it could be shown that the rules and regulations promulgated
by them were in accordance with what the Veterans' Bill of
Rights provides.
Benito Manuel vs. General Auditing Office
G.R. No. L-28952 December 29, 1971
FACTS:
Petitioner Benito C. Manuel applied for retirement, effective
December 31, 1967, according to law, after having to his credit
more than (20) years of service in the government, included in
which were four successive terms as Mayor of Lingayen,
Pangasinan from January 1, 1952 to December 31, 1967.
Such application was approved on December 5, 1967. He had
likewise sought the commutation of his vacation and sick
leave, filing with the Municipal Treasurer of Lingayen,

Pangasinan on December 22, 1967 a communication to that

effect.
In his memorandum filed with respondent General Auditing
Office to which the matter was referred, he stressed that he
was entitled to unused vacation and sick leave earned from
May 31, 1957 (date of effectivity Republic Act No. 1616) to
December 31, 1967, or a period of 10 years and 7 months,
and since his highest salary was P600.00 a month, the total
amount which should accrue to him is P6,000.00, (one month
for every year).
ISSUE: Whether or not an elective official may be entitled in
the event that he voluntarily retires or be separated from the
service without fault on his part to the commutation of his
vacation and sick leave
HELD: The petition is meritorious. The decision is
reversed.
It is expressly provided under Section 286 of the Revised
Administrative Code that vacation and sick leave shall be
cumulative, any part thereof not taken within the calendar year
earned being carried over the succeeding years with the
employee voluntarily retiring or being separated from the
service without fault on his part, being entitled to the
commutation of all such accumulated vacation or sick leave to
his credit provided that it shall in no case exceed ten (10)
months.
"Officials and employees retired under this Act shall be entitled
to the commutation of the unused vacation and sick leave,
based on the highest rate received, which they have to their
credit at the time of retirement."
Why then did respondent decide otherwise? It may have been
due to a misreading of Section 2187 of the Revised
Administrative Code. What must have misled respondent was

a failure to take due note that this section deals solely with a
situation when a municipal mayor is absent from his office
because of illness. It does not cover therefore the specific
case here presented of the right of the elective official to a
commutation of his vacation and sick leave upon his
retirement or separation from the service through no fault of
his own. Moreover it must have felt justified in view of the
endorsement of the Commission of the Civil Service, who
applied Section 9 of Civil Service Rule XVI, included in which
is the express injunction that the leave is not cumulative.
Further reflection ought to have cautioned it that certainly this
rule is far from being applicable as on its face it is based on
the aforesaid Section 2187, which as noted is not in point.
"The recognition of the power of administrative officials to
promulgate rules in the implementation of the statute,
necessarily limited to what is provided for in the legislative
enactment, may be found in the early case of United States v.
Barrias decided in 1908. Then came, in a 1914 decision,
United States v. Tupasi Molina, a delineation of the scope of
such competence. Thus: 'Of course the regulations adopted
under legislative authority by a particular department must be
in harmony with the provisions of the law, and for the sole
purpose of carrying into effect its general provisions.
Nothing can be clearer therefore than that the claim of
petitioner to a commutation of his vacation and sick leave not
exceeding ten (10) months must be upheld, inasmuch as the
facts show that the total amount sought to be paid to him was
precisely in accordance with the controlled legal provisions.
The ruling now on review must be versed and petitioner's plea
granted.

Deluao v. Casteel 29 SCRA 350

Facts:
In 1940 Nicanor Casteel filed a fishpond application for
a big tract of swampy land in the then Sitio of Malalag (now the
Municipality of Malalag), Municipality of Padada, Davao. No
action was taken thereon by the authorities concerned. During
the Japanese occupation, he filed another fishpond application
for the same area, but because of the conditions then
prevailing, it was not acted upon either. On December 12,
1945 he filed a third fishpond application for the same area,
which, after a survey, was found to contain 178.76 hectares.
However, his third application was denied by reason that the
area needs a firewood protection.
Despite the said rejection, Casteel did not lose interest. He
filed a motion for reconsideration. While this motion was
pending resolution, he was advised by the district forester of
Davao City that no further action would be taken on his
motion, unless he filed a new application for the area
concerned. So he filed on May 27, 1947 his fishpond
application 1717.
Meanwhile, several applications were submitted by other
persons for portions of the area covered by Casteel's
application.
Because of the threat poised upon his position by the above
applicants who entered upon and spread themselves within
the area, Casteel realized the urgent necessity of expanding
his occupation thereof by constructing dikes and cultivating
marketable fishes, in order to prevent old and new squatters

from usurping the land. But lacking financial resources at that

time, he sought financial aid from his uncle Felipe Deluao who
then extended loans totalling more or less P27,000 with which
to finance the needed improvements on the fishpond. Hence,
a wide productive fishpond was built.
He filed two administrative cases against the applicants when
the portion of the property was already occupied. However, the
Director of Fisheries rejected the protest of the respondent
Casteel.
Inocencia Deluao (wife of Felipe Deluao) as party of the first
part, and Nicanor Casteel as party of the second part,
executed a contract denominated a "contract of service".
The Secretary of Agriculture and Natural Resources issued a
decision in DANR Case 353, rendered that Casteel be
reinstated and given due course of the area stated. On the
same day the Secretary of Agriculture also revoked the
Fishpond Permit of the rival applicants.
Sometime in January 1951 Nicanor Casteel forbade Inocencia
Deluao from further administering the fishpond, and ejected
the latter's representative,Jesus Donesa, from the premises.
Alleging violation of the contract of service (exhibit A) entered
into between Inocencia Deluao and Nicanor Casteel, Felipe
Deluao and Inocencia Deluao on April 3, 1951 filed an action
in the Court of First Instance of Davao for specific performance
and damages against Nicanor Casteel and Juan Depra.

The plaintiffs filed an ex parte motion for the issuance of a

preliminary injunction. The respondent filed a motion to
dissolve the injunction, alleging that he was the owner of the
fishpond. The court denied such motion.
After the issues were joined, the case was set for trial. Then
came a series of postponements. The lower court (Branch I,
presided by Judge Enrique A. Fernandez) finally issued on
March 21, 1956 an order in open court that the hearing of this
case is hereby transferred to May 2 and 3, 1956 at 8:30
o'clock in the morning. And any circumstance this Court will
not entertain any other transfer of hearing of this case and if
the parties will not be ready on that day set for hearing, the
court will take the necessary steps for the final determination
of this case.
The defendants' counsel received a notice of hearing dated
April 21, 1956, issued by the office of the Clerk of Court of the
Court of First Instance of Davao, setting the hearing of the
case for May 2 and 3, 1956 before Judge Amador Gomez of
Branch II. The defendants, thru counsel, on April 26, 1956 filed
a motion for postponement.

on April 26, 1956, issued an order reiterating its previous order

handed down in open court on March 21, 1956 and directing
the plaintiffs to introduce their evidence ex parte, there being
no appearance on the part of the defendants or their counsel.
The court ruled in favor of the plaintiffs.
The defendant Casteel filed a petition for relief from the
foregoing decision, alleging, inter alia, lack of knowledge of the
order of the court a quo setting the case for trial. The court
denied the petition for relief of defendant stating that Atty. Ruiz
is present on the sala when the court set the hearing of the
trial and call the assistance of the same on his motion to
transfer.
Dissatisfied on the ruling, hence this respondent appeal to the
Court of Appeals
Issue: Whether the lower court erred in ordering the issuance
ex parte of a writ of preliminary injunction against defendantappellant, and in not dismissing appellees' complaint.
Ruling: The contention is meritorious.

The branch II of the court under the examination of the record

of the case considering that various incidents have already
been considered and resolved by Judge Fernandez on various
occasions. The court referred back the case to Branch 1 for
the consideration and termination of the case.

Section 37 of Administrative Order No. 14 of the Secretary of

Agriculture and Natural Resources issued in August 1937,
prohibits a transfer or sublease unless first approved by the
Director of Lands and under such terms and conditions as he
may prescribe.

On the scheduled date of hearing, that is, on May 2, 1956, the

lower court (Branch I, with Judge Fernandez presiding), when
informed about the defendants' motion for postponement filed

In this jurisdiction, the Secretary of Agriculture and Natural

Resources possesses executive and administrative powers
with regard to the survey, classification, lease, sale or any

other form of concession or disposition and management of

the lands of the public domain, and, more specifically, with
regard to the grant or withholding of licenses, permits, leases
and contracts over portions of the public domain to be utilized
as fishponds. Thus, we held in Pajo, et al. vs. Ago, et al. (L15414, June 30, 1960), and reiterated in Ganitano vs.
Secretary of Agriculture and Natural Resources, et al.
(L-21167, March 31, 1966), that
[T]he powers granted to the Secretary of Agriculture and
Commerce (Natural Resources) by law regarding the
disposition of public lands such as granting of licenses,
permits, leases, and contracts, or approving, rejecting,
reinstating, or cancelling applications, or deciding conflicting
applications, are all executive and administrative in nature. It
is a well-recognized principle that purely administrative and
discretionary functions may not be interfered with by the
courts. In general, courts have no supervising power over the
proceedings and action of the administrative departments of
the government. This is generally true with respect to acts
involving the exercise of judgment or discretion, and findings
of fact. Findings of fact by an administrative board or official,
following a hearing, are binding upon the courts and will not be
disturbed except where the board or official has gone beyond
his statutory authority, exercised unconstitutional powers or
clearly acted arbitrarily and without regard to his duty or with
grave abuse of discretion... (emphasis supplied)
In the case at bar, the Secretary of Agriculture and Natural
Resources gave due course to the appellant's fishpond
application 1717 and awarded to him the possession of the
area in question. In view of the finality of the Secretary's

decision in DANR Cases 353 and 353-B, and considering the

absence of any proof that the said official exceeded his
statutory authority, exercised unconstitutional powers, or acted
with arbitrariness and in disregard of his duty, or with grave
abuse of discretion, we can do no less than respect and
maintain unfettered his official acts in the premises. It is a
salutary rule that the judicial department should not dictate to
the executive department what to do with regard to the
administration and disposition of the public domain which the
law has entrusted to its care and administration. Indeed, courts
cannot superimpose their discretion on that of the land
department and compel the latter to do an act which involves
the exercise of judgment and discretion.
UST v. Court of Tax Appeals 93 Phil 376
FACTS:
The Collector of Internal Revenue notified petitioner that its
income as an educational institution was taxable. Later on
UST submitted a memorandum before the Sec. of Finance
disputing the decision of the latter as regard the taxability of
the formers income from tuition fees.
The case was elevated before the Board of Tax Appeals in
accordance with the rules romulgated by said Board under
E.O. No. 401-A, whereby the petitioner questioned the
jurisdiction of respondent to take cognizance of the petition for
review.
ISSUE: Whether or not E.O. No. 401-A is tainted with invalidity
for the reason that it deprives the CFIs of their jurisdiction to
take cognizance of cases involving recovery of taxes.

Held: E.O. No. 401-A does not merely create the BTA, which,
as an instrumentality of the Dept of Finance may properly
come within the purview of R.A. No. 422, but goes as far as
depriving the CFIs of their jurisdiction to act on internal
evenue cases, a matter which is foreign to it and which comes
within the exclusive province of Congress. This the Chief
Executive cannot do, nor can that power be delegated by
Congress alone has the power to define, prescribe, and
apportion the jurisdiction of the various department.
Bautista vs. Juinio
127 SCRA 329
FACTS:
Letter of Instruction No. 869, issued on May 31, 1979
the response to the protracted oil crisis that dates back to
1974 memorandum circular No. 39, provides fort the penalties.
Letter of Instruction No. 869 banning the use of the private
vehicles with H and EH plates on weekends and on holidays
12am Saturday morning to 5am Monday morning, 1am of the
holiday to 5am of the day after the holiday.
Memorandum Circular No. 39 has penalties of fine,
confiscation of vehicles and cancellation of registration. The
exempted vehicles are service trucks, Diplomatic, Consular
Corps, and tourist cars. Petitioners contended that
Memorandum Circular No. 39, issued by the Minister of Public
works, Transportation and Communications (Alfredo L. Juinio),
and then respondent Land Transportation Commissioners
(Romeo Edu), is unconstitutional on the ground that is violative
of the non-delegation of legislative powers. However
respondent contend that said Memorandum Circular No. 39
were adapted pursuant to the land transportation and traffic
code.

ISSUE: Whether or not Memorandum Circular No. 39 is ultra

vires
HELD:
Memorandum Circular No. 39 cannot be held ultra vires as
long as the fine imposed is not less than ten or more than fifty
pesos, as to the suspension of registration to the suspension
of registration, it is valid. However as to the impounding of a
vehicle finds no statutory justification, it must be made clear
that a penalty even if warranted can only be imposed in
accordance with the procedure required by law.
Metropolitan Traffic Command West Traffic District vs.
Gonong
GR No. 91023,
July 13, 1990
FACTS: Atty. Dante David claims that the rear license plate of
his car was removed by petitioner while his vehicle was parked
in Escolta. He filed a complaint in the RTC of Manila. He
questioned the petitioners act on the ground that not only was
the car not illegally parked but that there was no law or
ordinance authorizing such removal. The lower court ruled that
LOI 43, which the defendant (petitioner) invoked, did not
empower it to detach, remove and confiscate vehicle plates or
motor vehicles illegally parked and unattended. It merely
authorizes the removal of said vehicles when they are
obstacles to free passage or continued flow of traffic on streets
and highways. Moreover, that the said LOI had been repeal
PD 1605.
ISSUE: W/N petitioner is authorized to penalize traffic
violations as removing license plate.
HELD: No. What the LOI punishes is not a traffic violation but
a traffic obstruction, which is an altogether different offense.
LOI 43 deals with motor vehicles that stall on streets and

highways and not those that are intentionally parked in a

public place in violation of a traffic law or regulation. In the
case at bar, it is not alleged or shown that private respondents
vehicle stalled on a public thoroughfare and obstructed the
flow of traffic. The charge against him is that he purposely
parked his vehicle in a no-parking area. The act, if true is a
violation that may not be punished under LOI 43. The
applicable law is PD 1605, which does not include removal
and confiscation of the license plate of the vehicle among the
imposable penalties.
LUZON POLYMERS CORPORATION vs. CLAVE
209 SCRA 711, G.R. No. 51009, June 10, 1992
FACTS: This special civil action of certiorari questions the
administrative grant of an emergency allowance of fifty pesos
to the employees of a corporation with a capital stock of one
million pesos. The emergency allowance of employees in the
private sector has its origin in Presidential Decree No. 390,
granting said allowance to government employees.
Subsequent to the promulgation of P.D. No. 390, then
President Marcos issued Letter of Instructions No. 174 to
implement the policy enunciated in said decree in the private
sector. He directed the Secretary of Labor "to take such
measures as may be necessary to ensure orderly and
effective response by employers in the private sector." To
explain the meaning and scope of application of LOI No. 174,
on March 11, 1974, the Department of Labor issued an
Interpretative Bulletin. P.D. No. 525 was issued making
mandatory the payment of emergency allowance under LOI
No. 174. petitioner, a corporation with an authorized capital
stock of P1 million and total assets of P2,656,793.45 as of

December 31, 1974, was named a respondent in a complaint

for underpayment of emergency allowance filed before
Regional Office No. 4 of the Department of Labor in 1976 by
the Luzon Polymers Labor Union (FFW) on behalf of 185 of its
members. Alleging that since February 1974, regular
employees of petitioner corporation who were members of the
union had been receiving P1.15 daily or P30.00 monthly
emergency allowance, complainant-union contended that its
members were entitled to P50.00 monthly emergency
allowance inasmuch as their employer's total assets were over
and above P1 million. Petitioner claimed that since it had fully
complied with LOI No. 174, it had not underpaid its employees.
Noting that petitioner corporation had total assets of more than
one million in 1973 and 1974 or P1,920,529.04 and
P2,676,793.45, respectively, Officer-in-Charge and Assistant
Secretary Vicente Leogardo, Jr. ruled that petitioner had not
fully complied with LOl No. 174. Petitioner appealed to
Secretary Ople but the latter dismissed the appeal for lack of
merit in the order of February 21, 1978 and directed petitioner
"to pay the difference of P20.00 as awarded in the appealed
order." Hence, petitioner elevated the case to the Office of the
President which, through Presidential Executive Assistant
Jacobo C. Clave, likewise dismissed the appeal in an undated
decision.
ISSUE: Whether or not the Department of Labor exercised a
valid quasi-legislative power when it issued their interpretative
bulletin.
HELD: No. The second requisite for a valid administrative
regulation was not complied with, which says that it must be
within the scope of the authority given by the legislature. The

Supreme Court stated that, LOI No. 174 mandates the grant of
P50 a month emergency allowance for employees of
"enterprises capitalized at P1 million to P4 million or more" and
P30 for employees of "enterprises capitalized at P100,000 to
P1 million." While the determinative factor for the amount of
emergency allowance is simply the capitalization of the
employer concerned. The problem lies in the fact that the
same provision of LOI No. 174 categorizes an enterprise
capitalized at P1 million as under both the P50 and the P30
brackets of emergency allowance. This grey area, however,
was clarified by the Interpretative Bulletin on LOI No. 174
issued by the Department of Labor. Sec. 5 states that an
employer has to pay the fifty-peso allowance "where the
authorized capital stock of the corporation, or the total assets
in the case of other undertakings, exceeds P1 million" or thirty
pesos "where the authorized capital stock of the corporation,
or the total assets in the case of other undertakings, is not less
than P100,000 but not more than P1 million." Clearly then, the
petitioner falls under the bracket of employers required to give
a thirty-peso monthly emergency allowance under LOI No. 174
in view of the undisputed fact that it is a "domestic corporation
duly organized and existing under Philippine laws" with an
authorized capital stock of one million pesos. While said
administrative interpretation of LOI No. 174 is at best merely
advisory for it is only the courts which have the power to
determine what LOI No. 174 really means, said Sec. 5 of the
Interpretative Bulletin was adopted in P.D. No. 525 Sec. 7 of
the said Rules has not conformed with the standards that P.D.
No. 525 prescribes. Having been based on an erroneous
decision of the Office of the President, it is further rendered
obnoxious by the principle that an administrative agency like

the Department of Labor cannot amend the law it seeks to

implement.
PHILIPPINE BANK OF COMMUNICATIONS vs.
COMMISSIONER OF INTERNAL REVENUE, COURT OF
TAX APPEALS and COURT OF APPEALS
G.R. No. 112024, January 28, 1999
Facts: Petitioner, Philippine Bank of Communications
(PBCom), a commercial banking corporation duly organized
under Philippine laws, filed its quarterly income tax returns for
the first and second quarters of 1985, reported profits, and
paid the total income tax of P5,016,954.00 by applying
PBCom's tax credit memos for P3,401,701.00 and
P1,615,253.00, respectively. Subsequently, however, PBCom
suffered net loss of P25,317,228.00, thereby showing no
income tax liability in its Annual Income Tax Returns for the
year-ended December 31, 1985. For the succeeding year,
ending December 31, 1986, the petitioner likewise reported a
net loss of P14,129,602.00, and thus declared no tax payable
for the year. But during these two years, PBCom earned
rental income from leased properties. The lessees withheld
and remitted to the BIR withholding creditable taxes of
P282,795.50 in 1985 and P234,077.69 in 1986. On August 7,
1987, petitioner requested the Commissioner of Internal
Revenue, among others, for a tax credit of P5,016,954.00
representing the overpayment of taxes in the first and second
quarters of 1985. Thereafter, on July 25, 1988, petitioner filed
a claim for refund of creditable taxes withheld by their lessees
from property rentals in 1985 for P282,795.50 and in 1986 for
P234,077.69. Pending the investigation of the respondent
Commissioner of Internal Revenue, petitioner instituted a
Petition for Review on November 18, 1988 before the Court of
Tax Appeals (CTA). The petition was docketed as CTA Case
No. 4309 entitled: "Philippine Bank of Communications vs.
Commissioner of Internal Revenue."
The CTA decided in

favor of the BIR on the ground that the Petition was filed out of
time as the same was filed beyond the two-year reglementary
period. This is in reference to the Revenue Memorandum
Circular No. 7-85 issued on April 1, 1985. The circular states
that overpaid income taxes are not covered by the two-year
prescriptive period under the tax Code and that taxpayers may
claim refund or tax credits for the excess quarterly income tax
with the BIR within ten (10) years under Article 1144 of the
Civil Code. Respondent Commissioner of Internal Revenue,
through the Solicitor General, argues that the two-year
prescriptive period for filing tax cases in court concerning
income tax payments of Corporations is reckoned from the
date of filing the Final Adjusted Income Tax Return, which is
generally done on April 15 following the close of the calendar
year. Respondent Commissioner also states that since the
Final Adjusted Income Tax Return of the petitioner for the
taxable year 1985 was supposed to be filed on April 15, 1986,
the latter had only until April 15, 1988 to seek relief from the
court. Further, respondent Commissioner stresses that when
the petitioner filed the case before the CTA on November 18,
1988, the same was filed beyond the time fixed by law, and
such failure is fatal to petitioners cause of action. A motion for
Reconsideration was denied and the appeal to Court of
Appeals was likewise denied. Thus, this appeal to Supreme
Court.
Issue: Whether or not the BIR exercised a valid quasilegislative power when it issued Revenue Memorandum
Circular No. 7-85.
Held: No. Supreme Court stated that the Revenue
Memorandum Circular No. 7-85 is clearly inconsistent with the
provisions of the National Internal Revenue Code. Further, the
Supreme Court said that A memorandum-circular of a bureau
head could not operate to vest a taxpayer with a shield against
judicial action. For there are no vested rights to speak of

respecting a wrong construction of the law by the

administrative officials and such wrong interpretation could not
place the Government in estoppel to correct or overrule the
same. A valid administrative regulation must comply with the
following requisites: (1) its promulgation must be authorized by
the legislature; (2) it must be within the scope of the authority
given by the legislature; (3) it must be promulgated in
accordance with the prescribed procedure, and (4) it must be
reasonable. In the case at bar, the BIR have not complied with
the second requisite as it was ultra vires with the NIRC.
Philippine Association of Service Exporters, Inc. vs.
Torres
212 SCRA 298
FACTS: On 01 June 1991, DOLE Secretary Ruben Torres as
a result of published stories the abuses suffered by Filipina
housemaids particularly in Hong Kong suspended the
placement and recruitment by the private recruitment
agencies. The DOLE itself and POEA took control of the
recruitment and deployment of Filipina helpers bound to Hong
Kong. On 01 July 1991, DOLE Secretary ordered the
administrator of POEA to use the facilities of the agencies for
the purpose. On 10 July DOLE Secretary issued memorandum
Circulars no. 30 series of 1991 seeking accreditation by the
Philippine government from recruitment agencies based in
Hong Kong. On 01 August of the same year, POEA
Administrator issued MC no.37 series of 1991 on the
processing of domestic helpers after the request for
accreditation was responded positively by recruitment
agencies in based in Hong Kong. On 02, September 1991,
petitioner, through its counsel, filed a petition to annul the DO
16 and MC 30 and 37 thus, preventing the Department of
Labor and Employment and the Philippine Overseas and
Employment Administration to implement the issuances.

ISSUES: (1) Whether or not respondents committed a grave

abuse of discretion and/or in excess of their rule-making
authority in issuing the circulars? (2) Whether or not the
issuances violates the constitution and against the regimes of
reasonableness, fairness and equality? (3) Whether or not the
issuances complies the requirement of publication for its
validity?
HELD: Resolving the first issue, the court finds that the
circulars are valid exercise of the rule-making power of DOLE
Secretary as delegated to the executive Branch of the
Government. Applying article 36 the regulatory power of the
Secretary of Labor to restrict and regulate the recruitment and
placement as well as deployment of Filipino abroad. Executive
order 797 issued on May 01, 1982 further provides the DOLEs
regulatory functions to regulate the deployment of foreign

Filipino workers. The issuances of those circulars are therefore

valid exercise of quasi-legislative power of the agency, it
cannot be considered as unconstitutional or oppressive or
unreasonable. Resolving the last issue, the issuances are
legally invalid, defective and it cannot be enforced for lack of
publication requirement as codified under section 2 of the Civil
Code of the Philippines and section 3 and 4 chapter 2 of the
administrative code of 1987. Lack of publication is an essential
requisite for the validity of the law. (Tanada v. Tuvera)
Accordingly, the prohibition was granted. The issuances were
all suspended pending the compliance of publications as
required by law.