consti full text cases

7/27/2019 Consti Full Text cases

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CEBU OXYGEN AND ACETYLENE VS. SEC. DRILONThe principal issue raised in this petition is whether or not an Implementing Order of the Secretary of Labor

and Employment (DOLE) can provide for a prohibition not contemplated by the law it seeks to implement.The undisputed facts are as follows:Petitioner and the union of its rank and file employees, Cebu Oxygen, Acetylene and Central Visayas

Employees Association (COAVEA) entered into a collective bargaining agreement (CBA) covering the years 1986 to1988. Pursuant thereto, the management gave salary increases as follows:

ARTICLE IVSALARIES/RICE RATIONSection 1. The COMPANY agrees that for and during the three (3) year effectivity of this AGREEMENT, it will grantto all regular covered employees the following salary increases:Salaries:1) For the first year which will be paid on January 14, 1986P200 to each covered employee.It is hereby expressly agreed and understood that this pay increase shall be credited as payment to any mandatedgovernment wage adjustment or allowance increases which may be issued by way of legislation, decree or president2) For the second year which will be paid on January 16, 1987-P 200 to each covered employee.It is hereby expressly agreed and understood that this pay increase shall be credited as payment to any datedgovernment wage adjustment or allowance increases which may be issued by way of legislation, decree or presidentialedict counted from the above date to the next increase.3) For the third year which will be paid on January 16, 1988P300 to each covered employee.

It is hereby expressly agreed and understood that this pay increase shall be credited as payment to any mandatedgovernment wage adjustment or allowance increases which may be issued by way of legislation, decree or presidentialedict counted from the above date to the next increase.If the wage adjustment of allowance increases decreed by law, legislation or presidential qqqedict in any particular yearshall be higher than the foregoing increases in that particular year, then the company shall pay the difference.

On December 14, 1987, Republic Act No. 6640 was passed increasing the minimum wage, as follows:Sec. 2. The statutory minimum wage rates of workers and employees in the private sector, whether agricultural or non-agricultural, shall be increased by ten pesos (P10.00) per day, except non-agricultural workers and employees outsideMetro Manila who shall receive an increase of eleven pesos (P11.00) per day: Provided, that those already receivingabove the minimum wage up to one hundred pesos (Pl 00.00 shall receive an increase of ten pesos (Pl 0.00) per day.Excepted from the provisions of this Act are domestic helpers and persons employed in the personal service ofanother.

The Secretary of Labor issued the pertinent rules implementing the provisions of Republic Act No. 6640.Section 8 thereof provides:Section 8. Wage Increase Under Individual/Collective Agreements. No wage increase shall be credited ascompliance with the increase prescribed herein unless expressly provided under valid individual written/collectiveagreements; and, provided further, that such wage increase was granted in anticipation of the legislated wage increaseunder the act. Such increases shall not include anniversary wage increases provided on collective agreements.

In sum, Section 8 of the implementing rules prohibits the employer from crediting anniversary wage increasesnegotiated under a collective bargaining agreement against such wage increases mandated by Republic Act No. 6640.

Accordingly, petitioner credited the first year increase of P200.00 under the CBA and added the difference ofP61.66 (rounded to P62.00) and P31.00 to the monthly salary and the 13th month pay, respectively, of its employeesfrom the effectivity of Republic Act No. 6640 on December 14,1987 to February 15, 1988.

On February 22, 1988, a Labor and Employment Development Officer, pursuant to Inspection Authority No.058-88, commenced a routine inspection of petitioner's establishment. Upon completion of the inspection on March

10, 1988, and based on payrolls and other records, he found that petitioner committed violations of the law as follows:1. Under payment of Basic Wage per R.A. No. 6640 covering the period of two (2) months representing 208 employeeswho are not receiving wages above P100/day prior to the effectivity of R.A. No. 6640 in the aggregate amount ofEIGHTY THREE THOUSAND AND TWO HUNDRED PESOS (P83,200.00); and2. Under payment of 13th month pay for the year 1987, representing 208 employees who are not receiving wages aboveP 100/day prior to the effectivity of R.A. No. 6640 in the aggregate amount of FORTY EIGHT THOUSAND ANDFORTY EIGHT PESOS (P48,048.00).On April 7, 1988, respondent Assistant Regional Director, issued an Order instructing petitioner to pay its 208employees the aggregate amount of P 131,248.00, computed as follows:Computation sheet of differentials due to COACO-Cebu Workers.Salary Differentials:

a) From December 14/87 to February 15/88

= P200.00/mo x 2 months= P400.00= P400 x 208 employees (who are not receiving above P100/day as wages before the effectivity ofR.A. No. 6640)=P 83,200.00b) 13th month pay differentials of the year 1987:= P231.00 x 208 employees (who are not receiving above P100/day as wages before the effectivity ofRA. No. 6640)=P48,048.00

Total = P131,248.00


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In sum, the Assistant Regional Director ordered petitioner to pay the deficiency of P200.00 in the monthlysalary and P 231.00 in the 13th month pay of its employees for the period stated. Petitioner protested the Order of theRegional Director on the ground that the anniversary wage increases under the CBA can be credited against the wageincrease mandated by Republic Act No. 6640. Hence, petitioner contended that inasmuch as it had credited the firstyear increase negotiated under the CBA, it was liable only for a salary differential of P 62.00 and a 13th month paydifferential of P31.00. Petitioner argued that the payment of the differentials constitutes full compliance with RepublicAct No. 6640. Apparently, the protest was not entertained. Petitioner brought the case immediately to this Court

without appealing the matter to the Secretary of Labor and Employment. On May 9,1988, this Court issued a temporaryrestraining order enjoining the Assistant Regional Director from enforcing his Order dated April 7, 1988.1The thrust ofthe argument of petitioner is that Section 8 of the rules implementing the provisions of Republic Act No. 6640particularly the provision excluding anniversary wage increases from being credited to the wage increase provided bysaid law is null and void on the ground that the same unduly expands the provisions of the said law.

This petition is impressed with merit.Public respondents aver that petitioner should have first appealed to the Secretary of Labor before going to

court. It is fundamental that in a case where only pure questions of law are raised, the doctrine of exhaustion ofadministrative remedies cannot apply because issues of law cannot be resolved with finality by the administrativeofficer. Appeal to the administrative officer of orders involving questions of law would be an exercise in futility sinceadministrative officers cannot decide such issues with finality. 2 The questions raised in this petition are questions oflaw. Hence, the failure to exhaust administrative remedies cannot be considered fatal to this petition.

As to the issue of the validity of Section 8 of the rules implementing Republic Act No. 6640, which prohibitsthe employer from crediting the anniversary wage increases provided in collective bargaining agreements, it is afundamental rule that implementing rules cannot add or detract from the provisions of law it is designed to implement.The provisions of Republic Act No. 6640, do not prohibit the crediting of CBA anniversary wage increases forpurposes of compliance with Republic Act No. 6640. The implementing rules cannot provide for such a prohibition notcontemplated by the law. Administrative regulations adopted under legislative authority by a particular department mustbe in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its generalprovisions. The law itself cannot be expanded by such regulations. An administrative agency cannot amend an act ofCongress. 3 Thus petitioner's contention that the salary increases granted by it pursuant to the existing CBA includinganniversary wage increases should be considered in determining compliance with the wage increase mandated byRepublic Act No. 6640, is correct. However, the amount that should only be credited to petitioner is the wage increasefor 1987 under the CBA when the law took effect. The wage increase for 1986 had already accrued in favor of the

employees even before the said law was enacted.Petitioner therefor correctly credited its employees P62.00 for the differential of two (2) months increase andP31.00 each for the differential in 13th month pay, after deducting the P200.00 anniversary wage increase for 1987under the CBA. Indeed, it is stipulated in the CBA that in case any wage adjustment or allowance increase decreed bylaw, legislation or presidential edict in any particular year shall be higher than the foregoing increase in that particularyear, then the company (petitioner) shall pay the difference.

WHEREFORE, the petition is hereby GRANTED. The Order of the respondent Assistant Regional Directordated April 7, 1988 is modified in that petitioner is directed to pay its 208 employees so entitled the amount of P62.00each as salary differential for two (2) months and P31.00 as 13th month pay differential in full compliance with theprovisions of Republic Act No. 6640. Section 8 of the rules implementing Republic 6640, is hereby declared null andvoid in so far as it excludes the anniversary wage increases negotiated under collective bargaining agreements frombeing credited to the wage increase provided for under Republic Act No. 6440. This decision is immediately executory.

TABLARIN VS. GUTIERREZThe petitioners sought admission into colleges or schools of medicine for the school year 1987-1988. However,

the petitioners either did not take or did not successfully take the National Medical Admission Test (NMAT) requiredby the Board of Medical Education, one of the public respondents, and administered by the private respondent, theCenter for Educational Measurement (CEM).

On 5 March 1987, the petitioners filed with the Regional Trial Court, National Capital Judicial Region, aPetition for Declaratory Judgment and Prohibition with a prayer for Temporary Restraining Order and PreliminaryInjunction. The petitioners sought to enjoin the Secretary of Education, Culture and Sports, the Board of MedicalEducation and the Center for Educational Measurement from enforcing Section 5 (a) and (f) of Republic Act No. 2382,as amended, and MECS Order No. 52, series of 1985, dated 23 August 1985 and from requiring the taking and passingof the NMAT as a condition for securing certificates of eligibility for admission, from proceeding with acceptingapplications for taking the NMAT and from administering the NMAT as scheduled on 26 April 1987 and in the future.

After hearing on the petition for issuance of preliminary injunction, the trial court denied said petition on 20 April 1987.The NMAT was conducted and administered as previously scheduled.Petitioners accordingly filed this Special Civil Action for certiorari with this Court to set aside the Order of the

respondent judge denying the petition for issuance of a writ of preliminary injunction.Republic Act 2382, as amended by Republic Acts Nos. 4224 and 5946, known as the "Medical Act of 1959" defines itsbasic objectives in the following manner:Section 1. Objectives.This Act provides for and shall govern (a) thestandardization and regulation of medical education(b)the examination for registration of physicians; and (c) the supervision, control and regulation of the practice ofmedicine in the Philippines. (Underscoring supplied)


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The statute, among other things, created a Board of Medical Education which is composed of (a) the Secretaryof Education, Culture and Sports or his duly authorized representative, as Chairman; (b) the Secretary of Health or hisduly authorized representative; (c) the Director of Higher Education or his duly authorized representative; (d) theChairman of the Medical Board or his duly authorized representative; (e) a representative of the Philippine MedicalAssociation; (f) the Dean of the College of Medicine, University of the Philippines; (g) a representative of the Councilof Deans of Philippine Medical Schools; and (h) a representative of the Association of Philippine Medical Colleges, asmembers. The functions of the Board of Medical Education specified in Section 5 of the statute include thefollowing:

(a) To determine and prescribe equirements for admission into a recognized college of medicine;b) To determine and prescribe requirements for minimum physical facilities of colleges of medicine, to wit:

buildings, including hospitals, equipment and supplies, apparatus, instruments, appliances, laboratories, bed capacity forinstruction purposes, operating and delivery rooms, facilities for outpatient services, and others, used for didactic andpractical instruction in accordance with modern trends;

(c) To determine and prescribe the minimum number and minimum qualifications of teaching personnel,including student-teachers ratio;

(d) To determine and prescribe the minimum required curriculum leading to the degree of Doctor of Medicine;(e) To authorize the implementation of experimental medical curriculum in a medical school that has

exceptional faculty and instrumental facilities. Such an experimental curriculum may prescribe admission and graduationrequirements other than those prescribed in this Act; Provided, That only exceptional students shall be enrolled in theexperimental curriculum;

(f) To accept applications for certification for admission to a medical school and keep a register of those issued said certificate; and tocollect from said applicants the amount of twenty-five pesos each which shall accrue to the operating fund of the Board of Medical Education;

(g) To select, determine and approve hospitals or some departments of the hospitals for training which complywith the minimum specific physical facilities as provided in subparagraph (b) hereof; and

(h) To promulgate and prescribe and enforce the necessary rules and regulations for the proper implementation of the foregoingfunctions. (Emphasis supplied)Section 7 prescribes certain minimum requirements for applicants to medical schools:

Admission requirements.The medical college may admit any studentwho has not been convicted by any courtof competent jurisdiction of any offense involving moral turpitude and who presents(a) a record of completion of abachelor's degree in science or arts; (b) a certificate of eligibility for entrance to a medical school from the Board of MedicalEducation;(c) a certificate of good moral character issued by two former professors in the college of liberal arts; and (d)birth certificate. Nothing in this act shall be construed to inhibit any college of medicine from establishing, in addition

to the preceding, other entrance requirements that may be deemed admissible.MECS Order No. 52, s. 1985, issued by the then Minister of Education, Culture and Sports and dated 23August 1985, established a uniform admission test called the National Medical Admission Test (NMAT) as anadditional requirement for issuance of a certificate of eligibility for admission into medical schools of the Philippines,beginning with the school year 1986-1987. This Order goes on to state that:

2. The NMAT, an aptitude test, is considered as an instrument toward upgrading the selection of applicants for admission into themedical schools and its calculated to improve the quality of medical education in the country. The cutoff score for the successfulapplicants, based on the scores on the NMAT, shall be determined every year by the Board of Medical Education afterconsultation with the Association of Philippine Medical Colleges. The NMAT rating of each applicant, together with the otheradmission requirements as presently called for under existing rules, shall serve as a basis for the issuance of the prescribed certificate ofelegibility for admission into the medical colleges.

3. Subject to the prior approval of the Board of Medical Education, each medical college may give other tests forapplicants who have been issued a corresponding certificate of eligibility for admissionthat will yield information on other aspects of

the applicant's personality to complement the information derived from the NMAT.8. No applicant shall be issued the requisite Certificate of Eligibility for Admission (CEA), or admitted for enrollment as first

year student in any medical college, beginning the school year, 1986-87, without the required NMAT qualification as called for under thisOrder. (Underscoring supplied)

Pursuant to MECS Order No. 52, s. 1985, the private respondent Center conducted NMATs for entrance tomedical colleges during the school year 1986-1987. In December 1986 and in April 1987, respondent Center conductedthe NMATs for admission to medical colleges during the school year 1987.1988.1avvphi1Petitioners raise the question of whether or not a writ of preliminary injunction may be issued to enjoin theenforcement of Section 5 (a) and (f) of Republic Act No. 2382, as amended, and MECS Order No. 52, s. 1985, pendingresolution of the issue of constitutionality of the assailed statute and administrative order. We regard this issue asentirely peripheral in nature. It scarcely needs documentation that a court would issue a writ of preliminary injunctiononly when the petitioner assailing a statute or administrative order has made out a case of unconstitutionality strong

enough to overcome, in the mind of the judge, the presumption of constitutionality, aside from showing a clear legalright to the remedy sought. The fundamental issue is of course the constitutionality of the statute or order assailed.1. The petitioners invoke a number of provisions of the 1987 Constitution which are, in their assertion,

violated by the continued implementation of Section 5 (a) and (f) of Republic Act 2381, as amended, and MECS OrderNo. 52, s. 1985. The provisions invoked read as follows:

(a) Article 11, Section 11: "The state values the dignity of every human person and guarantees full respect ofhuman rights. "

(b) ArticleII, Section l3: "The State recognizes the vital role of the youth in nation building and shall promoteand protect their physical, moral, spiritual, intellectual and social well being. It shall inculcate in the youth patriotism andnationalism, and encourage their involvement in public and civic affairs."


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(c) Article II, Section 17: "The State shall give priority to education, science and technology, arts, culture andsports to foster patriotism and nationalism, accelerate social progress and to promote total human liberation anddevelopment. "

(d) Article XIV, Section l: "The State shall protect and promote the right of all citizens to quality education atall levels and take appropriate steps to make such education accessible to all. "

(e) Article XIV, Section 5 (3): "Every citizen has a right to select a profession or course of study, subject to fair,reasonable and equitable admission and academic requirements."

Article II of the 1987 Constitution sets forth in its second half certain "State policies" which the government isenjoined to pursue and promote. The petitioners here have not seriously undertaken to demonstrate to what extent orin what manner the statute and the administrative order they assail collide with the State policies embodied in Sections11, 13 and 17. They have not, in other words, discharged the burden of proof which lies upon them. This burden isheavy enough where the constitutional provision invoked is relatively specific, rather than abstract, in character and castin behavioral or operational terms. That burden of proof becomes of necessity heavier where the constitutionalprovision invoked is cast, as the second portion of Article II is cast, in language descriptive of basic policies, or moreprecisely, of basic objectives of State policy and therefore highly generalized in tenor. The petitioners have not madetheir case, even aprima faciecase, and we are not compelled to speculate and to imagine how the legislation andregulation impugned as unconstitutional could possibly offend the constitutional provisions pointed to by thepetitioners.

Turning to Article XIV, Section 1, of the 1987 Constitution, we note that once more petitioners have failed to

demonstrate that the statute and regulation they assail in fact clash with that provision. On the contrary we may note-inanticipation of discussion infrathat the statute and the regulation which petitioners attack are in fact designed topromote "quality education" at the level of professional schools. When one reads Section 1 in relation to Section 5 (3)of Article XIV as one must one cannot but note that the latter phrase of Section 1 is not to be read with absoluteliteralness. The State is not really enjoined to take appropriate steps to make quality education " accessible to allwhomight for any number of reasons wish to enroll in a professional school but rather merely to make such educationaccessible to all who qualify under "fair, reasonable and equitable admission and academic requirements. "

2. In the trial court, petitioners had made the argument that Section 5 (a) and (f) of Republic Act No. 2382, asamended, offend against the constitutional principle which forbids the undue delegation of legislative power, by failingto establish the necessary standard to be followed by the delegate, the Board of Medical Education. The generalprinciple of non-delegation of legislative power, which both flows from the reinforces the more fundamental rule of theseparation and allocation of powers among the three great departments of government,1must be applied with

circumspection in respect of statutes which like the Medical Act of 1959, deal with subjects as obviously complex andtechnical as medical education and the practice of medicine in our present day world. Mr. Justice Laurel stressed thispoint 47 years ago in Pangasinan Transportation Co., Inc. vs. The Public Service Commission:2

One thing, however, is apparent in the development of the principle of separation of powers and that is thatthe maxim ofdelegatus non potest delegare or delegate potestas non potest delegare, adopted this practice (Delegibus etConsuetudiniis Anglia edited by G.E. Woodbine, Yale University Press, 1922, Vol. 2, p. 167) but which is alsorecognized in principle in the Roman Law (d. 17.18.3) has beenmade to adapt itself to the complexities of modern government,giving rise to the adoption, within certain limits of the principle of "subordinate legislation," not only in the UnitedStates and England but in practically all modern governments. (People vs. Rosenthal and Osmena [68 Phil. 318, 1939].Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulation and theincreaseddifficulty of administering the laws, there is a constantly growing tendencytoward the delegation of greater power by the legislature, and towardthe approval of thepractice by the courts."3

The standards set for subordinate legislation in the exercise of rule making authority by an administrative

agency like the Board of Medical Education are necessarily broad and highly abstract. As explained by then Mr. JusticeFernando inEdu v. Ericta4

The standard may be either expressed or implied. If the former, the non-delegation objection is easily met.Thestandard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. Inthe Reflector Law, clearly the legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe transitupon the roads.5

We believe and so hold that the necessary standards are set forth in Section 1 of the 1959 Medical Act: "thestandardization and regulation of medical education" and in Section 5 (a) and 7 of the same Act, the body of the statuteitself, and that these considered together are sufficient compliance with the requirements of the non-delegationprinciple.

3. The petitioners also urge that the NMAT prescribed in MECS Order No. 52, s. 1985, is an "unfair,unreasonable and inequitable requirement," which results in a denial of due process. Again, petitioners have failed to

specify just what factors or features of the NMAT render it "unfair" and "unreasonable" or "inequitable." They appearto suggest that passing the NMAT is an unnecessary requirement when added on top of the admission requirements setout in Section 7 of the Medical Act of 1959, and other admission requirements established by internal regulations of thevarious medical schools, public or private. Petitioners arguments thus appear to relate to utility and wisdom ordesirability of the NMAT requirement. But constitutionality is essentially a question of power or authority: this Courthas neither commission or competence to pass upon questions of the desirability or wisdom or utility of legislation oradministrative regulation. Those questions must be address to the political departments of the government not to thecourts.

There is another reason why the petitioners' arguments must fail: the legislative and administrative provisionsimpugned by them constitute, to the mind of the Court, a valid exercise of the police power of the state. The police
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power, it is commonplace learning, is the pervasive and non-waivable power and authority of the sovereign to secureand promote an the important interests and needs in a word, the public orderof the general community.6Animportant component of that public order is the health and physical safety and well being of the population, thesecuring of which no one can deny is a legitimate objective of governmental effort and regulation.7

Perhaps the only issue that needs some consideration is whether there is some reasonable relation between theprescribing of passing the NMAT as a condition for admission to medical school on the one hand, and the securing ofthe health and safety of the general community, on the other hand. This question is perhaps most usefully approached

by recalling that the regulation of the practice of medicinein all its branches has long been recognized as a reasonable methodof protecting the health and safety of the public.8That the power to regulate and control the practice of medicineincludes the power to regulate admission to the ranks of those authorized to practice medicine, is also well recognized.thus, legislation and administrative regulations requiring those who wish to practice medicine first to take and pass medicalboard examinationshave long ago been recognized as valid exercises of governmental power.9Similarly, the establishmentof minimum medical educational requirements i.e., the completion of prescribed courses in a recognized medical schoolforadmission to the medical profession, has also been sustained as a legitimate exercise of the regulatory authority of thestate.10What we have before us in the instant case is closely related: the regulation of access to medical schools. MECS OrderNo. 52, s. 1985, as noted earlier, articulates the rationale of regulation of this type: the improvement of the professionaland technical quality of the graduates of medical schools, by upgrading the quality of those admitted to the studentbody of the medical schools. That upgrading is sought by selectivity in the process of admission, selectivity consisting,among other things, of limiting admission to those who exhibit in the required degree the aptitude for medical studies

and eventually for medical practice. The need to maintain, and the difficulties of maintaining, high standards in ourprofessional schools in general, and medical schools in particular, in the current stage of our social and economicdevelopment, are widely known.

We believe that the government is entitled to prescribe an admission test like the NMAT as a means forachieving its stated objective of "upgrading the selection of applicants into [our] medical schools" and of "improv[ing]the quality of medical education in the country." Given the widespread use today of such admission tests in, forinstance, medical schools in the United States of America (the Medical College Admission Test [MCAT]11and quiteprobably in other countries with far more developed educational resources than our own, and taking into account thefailure or inability of the petitioners to even attempt to prove otherwise, we are entitled to hold that the NMAT isreasonably related to the securing of the ultimate end of legislation and regulation in this area. That end, it is useful torecall, is the protection of the public from the potentially deadly effects of incompetence and ignorance in those whowould undertake to treat our bodies and minds for disease or trauma.

4. Petitioners have contended, finally, that MECS Order No. 52, s. 1985, is in conflict with the equal protectionclause of the Constitution. More specifically, petitioners assert that that portion of the MECS Order which providesthat

the cutoff score for the successful applicants, based on the scores on the NMAT, shall be determined every-yearby theBoard of Medical 11 Education after consultation with the Association of Philippine Medical Colleges. (Emphasissupplied)

infringes the requirements of equal protection. They assert, in other words, that students seeking admissionduring a given school year, e.g., 1987-1988, when subjected to a different cutoff score than that established for an, e.g.,earlier school year, are discriminated against and that this renders the MECS Order "arbitrary and capricious." Theforce of this argument is more apparent than real. Different cutoff scores for different school years may be dictated bydiffering conditions obtaining during those years. Thus, the appropriate cutoff score for a given year may be a functionof such factors as the number of students who have reached the cutoff score established the preceding year; the numberof places available in medical schools during the current year; the average score attained during the current year; the

level of difficulty of the test given during the current year, and so forth. To establish a permanent and immutable cutoffscore regardless of changes in circumstances from year to year, may wen result in an unreasonable rigidity. The abovelanguage in MECS Order No. 52, far from being arbitrary or capricious, leaves the Board of Medical Education withthe measure of flexibility needed to meet circumstances as they change.

We conclude that prescribing the NMAT and requiring certain minimum scores therein as a condition foradmission to medical schools in the Philippines, do not constitute an unconstitutional imposition.

WHEREFORE, the Petition for certiorari is DISMISSED and the Order of the respondent trial court denyingthe petition for a writ of preliminary injunction is AFFIRMED. Costs against petitioners.

EASTERN SHIPPING LINES VS. POEAThe private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas

Employment Administration (POEA) for the death of her husband. The decision is challenged by the petitioner on the

principal ground that the POEA had no jurisdiction over the case as the husband was not an overseas worker.Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo,Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2of the POEA. The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA butby the Social Security System and should have been filed against the State Insurance Fund. The POEA neverthelessassumed jurisdiction and after considering the position papers of the parties ruled in favor of the complainant. Theaward consisted of 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 dismissal on theground of non-exhaustion of administrative remedies.
http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt6http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt6http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt6http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt7http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt7http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt7http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt8http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt8http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt8http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt9http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt9http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt9http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt10http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt10http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt10http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt11http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt11http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt11http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt11http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt10http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt9http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt8http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt7http://www.lawphil.net/judjuris/juri1987/jul1987/gr_78164_1987.html#fnt6


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Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations Commission,on the theoryinter aliathat the agency should be given an opportunity to correct the errors, if any, of its subordinates.This case comes under one of the exceptions, however, as the questions the petitioner is raising are essentially questionsof law. 1 Moreover, the private respondent himself has not objected to the petitioner's direct resort to this Court,observing that the usual procedure 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 to protect 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 "original and exclusive jurisdiction over all cases, including moneyclaims, involving employee-employer relations arising out of or by virtue of any law or contract involving Filipinocontract workers, including seamen." These cases, according to the 1985 Rules and Regulations on OverseasEmployment issued 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 and consequently hiswidow's claim should have been filed with Social Security System, subject to appeal to the Employees CompensationCommission.

We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas employee ofthe 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 defined as"employment of a worker outside the Philippines, including employment on board vessels plying international waters,covered by a valid contract. 3 A contract worker is described as "any person working or who has worked overseas undera valid employment contract and shall include seamen" 4 or "any person working overseas or who has been employedby another which may be a local employer, foreign employer, principal or partner under a valid employment contractand shall include seamen." 5 These definitions clearly apply to Vitaliano Saco for it is not disputed that he died whileunder a contract of employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern 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 its submission of itsshipping articles to the POEA for processing, formalization and approval in the exercise of its regulatory power overoverseas employment under Executive Order NO. 797. 7The second is its payment 8 of the contributions mandated by

law and regulations to the Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purposeof providing social and welfare services to Filipino overseas workers."Significantly, the office administering this fund, in the receipt it prepared for the private respondent's signature,

described the subject of the burial benefits as "overseas contract worker Vitaliano Saco." 9While this receipt is certainlynot controlling, it does indicate, in the light of the petitioner's own previous acts, that the petitioner and the Fund towhich it had made contributions considered Saco to be an overseas employee.

The petitioner argues that the deceased employee should be likened to the employees of the Philippine AirLines who, although working abroad in its international flights, are not considered overseas workers. If this be so, thepetitioner should not have found it necessary to submit its shipping articles to the POEA for processing, formalizationand approval or to contribute to the Welfare Fund which is available only to overseas workers. Moreover, the analogy ishardly appropriate as the employees of the PAL cannot under the definitions given be considered seamen nor are theirappointments coursed through the POEA.

The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA

pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular prescribed astandard contract to be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen foroverseas employment. A similar contract had earlier been required by the National Seamen Board and had beensustained in a number of cases by this Court. 10 The petitioner claims that it had never entered into such a contract withthe 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 on board any ocean-going vessel are advised to adopt and use this employment contract effective 01 February 1984 and to desist from usingany other format of employment contract effective that date." In the second place, even if it had not done so, theprovisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate of the policepower of the State. 11

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle ofnon-delegation of legislative power. It contends that no authority had been given the POEA to promulgate the said

regulation; and even with such authorization, the regulation represents an exercise of legislative discretion which, underthe 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 asfollows:

... The governing Board of the Administration (POEA), as hereunder provided shall promulgate the necessaryrules 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, had itself prescribed astandard shipping contract substantially the same as the format adopted by the POEA.

The second challenge is more serious as it is true that legislative discretion as to the substantive contents of thelaw cannot be delegated. What can be delegated is the discretion to determinehowthe law may be enforced, notwhatthe


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law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot beabdicated or surrendered by the legislature to the delegate. Thus, in Ynot v. Intermediate Apellate Court 12 whichannulled 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 be distributed tocharitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission maysee fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an extremely generous and dangerous

condition, if condition it is. It is laden with perilous opportunities for partiality and abuse, and even corruption. Onesearches in vain for the usual standard and the reasonable guidelines, or better still, the limitations that the officers mustobserve when they make their distribution. There is none. Their options are apparently boundless. Who shall be thefortunate beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named can supplythe answer, they and they alone may choose the grantee as they see fit, and in their own exclusive discretion. Definitely,there is here a 'roving commission a wide and sweeping authority that is not canalized within banks that keep it fromoverflowing,' in short a clearly profligate and therefore invalid delegation of legislative powers.

There are two accepted tests to determine whether or not there is a valid delegation of legislative power,viz, thecompleteness test and the sufficient standard test. Under the first test, the law must be complete in all its terms andconditions when it leaves the legislature such that when it reaches the delegate the only thing he will have to do isenforce it. 13 Under the sufficient standard test, there must be adequate guidelines or stations in the law to map out theboundaries of the delegate's authority and prevent the delegation from running riot. 14

Both tests are intended to prevent a total transference of legislative authority to the delegate, who is notallowed 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 the Government but isespecially important in the case of the legislative power because of the many instances when its delegation is permitted.The occasions are rare when executive or judicial powers have to be delegated by the authorities to which they legallycertain. In the case of the legislative power, however, such occasions have become more and more frequent, if notnecessary. This had led 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 the legislature tocope directly with the myriad problems demanding its attention. The growth of society has ramified its activities andcreated peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend.Specialization even in legislation has become necessary. To many of the problems attendant upon present-day

undertakings, the legislature may not have the competence to provide the required direct and efficacious, not to say,specific solutions. These solutions 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 applicable toadministrative bodies. With the proliferation of specialized activities and their attendant peculiar problems, the nationallegislature has found it more and more necessary to entrust to administrative agencies the authority to issue rules tocarry out the general provisions of the statute. This is called the "power of subordinate legislation."With this power, administrative bodies may implement the broad policies laid down in a statute by "filling in' the detailswhich the Congress may not have the opportunity or competence to provide. This is effected by their promulgation ofwhat are known as supplementary regulations, such as the implementing rules issued by the Department of Labor onthe new Labor Code. These regulations have the force and effect of law.Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed thereby has beenapplied in a significant number of the cases without challenge by the employer. The power of the POEA (and before it

the National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient standard guiding thedelegate in the exercise of the said authority. That standard is discoverable in the executive order itself which, increating the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas Filipinoworkers to "fair and equitable employment practices."

Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" in People v.Rosenthal15"justice and equity" inAntamok Gold Fields v. CIR16 "public convenience and welfare" in Calalang v.Williams17 and "simplicity, economy and efficiency" in Cervantes v. Auditor General, 18 to mention only a few cases. In theUnited States, the "sense and experience of men" was accepted inMutual Film Corp. v. Industrial Commission, 19and"national security" in Hirabayashi v. United States. 20It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42 since March1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In addition, as alreadyobserved, she also received a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers. These payments

will not preclude allowance of the private respondent's claim against the petitioner because it is specifically reserved inthe standard contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984, thatSection C. Compensation and Benefits.

1. In case of death of the seamen during the term of his Contract, the employer shall pay hisbeneficiaries the amount of:

a. P220,000.00 for master and chief engineersb. P180,000.00 for other officers, including radio operators and master electricianc. P 130,000.00 for ratings.

2. It is understood and agreed that the benefits mentioned above shall be separate and distinct from, and will be inaddition to whatever benefits which the seaman is entitled to under Philippine laws. ...


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3. ...c. If the remains of the seaman is buried in the Philippines, the owners shall pay the beneficiaries of the seaman anamount not exceeding P18,000.00 for burial expenses.

The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the NationalSeamen Board on July 12,1976, providing an follows:Income Benefits under this Rule Shall be Considered Additional Benefits.

All compensation benefits under Title II, Book Four of the Labor Code of the Philippines (Employees

Compensation and State Insurance Fund) shall be granted, in addition to whatever benefits, gratuities or allowances thatthe seaman or his beneficiaries may be entitled to under the employment contract approved by the NSB. If applicable,all benefits under the Social Security Law and the Philippine Medicare Law shall be enjoyed by the seaman or hisbeneficiaries in accordance with such laws.

The above provisions are manifestations of the concern of the State for the working class, consistently with thesocial justice policy and the specific provisions in the Constitution for the protection of the working class and thepromotion of its interest.

One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied dueprocess because the same POEA that issued Memorandum Circular No. 2 has also sustained and applied it is anuninformed criticism of administrative law itself. Administrative agencies are vested with two basic powers, the quasi-legislative and the quasi-judicial. The first enables them to promulgate implementing rules and regulations, and thesecond enables them to interpret and apply such regulations. Examples abound: the Bureau of Internal Revenue

adjudicates on its own revenue regulations, the Central Bank on its own circulars, the Securities and ExchangeCommission on its own rules, as so too do the Philippine Patent Office and the Videogram Regulatory Board and theCivil Aeronautics Administration and the Department of Natural Resources and so on ad infinitumon their respectiveadministrative regulations. Such an arrangement has been accepted as a fact of life of modern governments and cannotbe considered violative of due process as long as the cardinal rights laid down by Justice Laurel in the landmark caseofAng Tibay v. Court of Industrial Relations21 are observed.

Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of theprivate respondent, in line with the express mandate of the Labor Code and the principle that those with less in lifeshould have more in law.

When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavierinfluence of the latter must be counter-balanced by the sympathy and compassion the law must accord theunderprivileged worker. This is only fair if he is to be given the opportunity and the right to assert and defend his cause

not as a subordinate but as a peer of management, with which he can negotiate on even plane. Labor is not a mereemployee of capital but its active and equal partner.WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining order datedDecember 10, 1986 is hereby LIFTED. It is so ordered.

EMPLOYERS CONFEDERATION VS. NATIONAL WAGES AND PRODUCTIVITY COMMISSIONThe petition is given due course and the various pleadings submitted being sufficient to aid the Court in the

proper resolution of the basic issues raised in this case, we decide it without further ado.The Employers Confederation of the Philippines (ECOP) is questioning the validity of Wage Order No. NCR-

01-A dated October 23, 1990 of the Regional Tripartite Wages and Productivity Board, National Capital Region,promulgated pursuant to the authority of Republic Act No. 6727, "AN ACT TO RATIONALIZE WAGE POLICYDETERMINATION BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFORE,AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING ARTICLES 120, 121, 122, 123,

124, 126, AND 127 INTO, PRESIDENTIAL DECREE NO. 442 AS AMENDED, OTHERWISE KNOWN ASTHE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGEINCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHER PURPOSES,"was approved by the President on June 9, 1989. Aside from providing new wage rates,1 the "Wage Rationalization Act"also provides, among other things, for various Regional Tripartite Wages and Productivity Boards in charge ofprescribing minimum wage rates for all workers in the various regions 2 and for a National Wages and ProductivityCommission to review, among other functions, wage levels determined by the boards. 3

On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order No. NCR-01,increasing the minimum wage by P17.00 daily in the National Capital Region. 4The Trade Union Congress of thePhilippines (TUCP) moved for reconsideration; so did the Personnel Management Association of the Philippines(PMAP). 5 ECOP opposed.On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending Wage Order No. NCR-01, as follows:

Section 1. Upon the effectivity of this Wage Order, all workers and employees in the private sector in theNational Capital Region already receiving wages above the statutory minimum wage rates up to one hundred andtwenty-five pesos (P125.00) per day shall also receive an increase of seventeen pesos (P17.00) per day.ECOP appealed to the National Wages and Productivity Commission. On November 6, 1990, the Commissionpromulgated an Order, dismissing the appeal for lack of merit. On November 14, 1990, the Commission deniedreconsideration.

The Orders of the Commission (as well as Wage Order No. NCR-01-A) are the subject of this petition, inwhich. ECOP assails the board's grant of an "across-the-board" wage increase to workers already being paid more thanexisting minimum wage rates (up to P125. 00 a day) as an alleged excess of authority, and alleges that under theRepublic Act No. 6727, the boards may only prescribe "minimum wages," not determine "salary ceilings." ECOP


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likewise claims that Republic Act No. 6727 is meant to promote collective bargaining as the primary mode of settlingwages, and in its opinion, the boards can not preempt collective bargaining agreements by establishing ceilings. ECOPprays for the nullification of Wage Order No. NCR 01-A and for the "reinstatement" of Wage Order No. NCR-01.

The Court directed the Solicitor General to comment on behalf of the Government, and in the SolicitorGeneral's opinion, the Board, in prescribing an across-the-board hike did not, in reality, "grant additional or otherbenefits to workers and employees, such as the extension of wage increases to employees and workers already receivingmore than minimum wages ..." 6 but rather, fixed minimum wages according to the "salary-ceiling method."

ECOP insists, in its reply, that wage is a legislative function, and Republic Act No. 6727 delegated to theregional boards no more "than the power to grant minimum wage adjustments" 7 and "in the absence of clear statutoryauthority," 8 the boards may no more than adjust "floor wages." 9The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is intended to correct "wage distortions" andthe salary-ceiling method (of determining wages) is meant, precisely, to rectify wage distortions. 10

The Court is inclined to agree with the Government. In the National Wages and Productivity Commission'sOrder of November 6, 1990, the Commission noted that the determination of wages has generally involved twomethods, the "floor-wage" method and the "salary-ceiling" method. We quote:

Historically, legislation involving the adjustment of the minimum wage made use of two methods. The firstmethod involves the fixing of determinate amount that would be added to the prevailing statutory minimum wage. Theother involves "the salary-ceiling method" whereby the wage adjustment is applied to employees receiving a certaindenominated salary ceiling. The first method was adopted in the earlier wage orders, while the latter method was used in

R.A. Nos. 6640 and 6727. Prior to this, the salary-ceiling method was also used in no less than eleven issuancesmandating the grant of cost-of-living allowances (P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713 and Wage Order Nos. 1,2, 3, 5 and 6). The shift from the first method to the second method was brought about by labor disputes arising fromwage distortions, a consequence of the implementation of the said wage orders. Apparently, the wage order provisionsthat wage distortions shall be resolved through the grievance procedure was perceived by legislators as ineffective inchecking industrial unrest resulting from wage order implementations. With the establishment of the second method asa practice in minimum wage fixing, wage distortion disputes were minimized. 11

As the Commission noted, the increasing trend is toward the second mode, the salary-cap method, which hasreduced disputes arising from wage distortions (brought about, apparently, by the floor-wage method). Of course,disputes are appropriate subjects of collective bargaining and grievance procedures, but as the Commission observedand as we are ourselves agreed, bargaining has helped very little in correcting wage distortions. Precisely, Republic ActNo. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages round-the-clock,

and second, by giving the boards enough powers to achieve this objective. The Court is of the opinion that Congressmeant the boards to be creative in resolving the annual question of wages without labor and management knocking onthe legislature's door at every turn. The Court's opinion is that if Republic No. 6727 intended the boards alone to setfloor wages, the Act would have no need for a board but an accountant to keep track of the latest consumer priceindex, or better, would have Congress done it as the need arises, as the legislature, prior to the Act, has done so foryears. The fact of the matter is that the Act sought a "thinking" group of men and women bound by statutorystandards. We quote:

ART. 124. Standards / Criteria for Minimum Wage Fixing.The regional minimum wages to be established bythe Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of livingnecessary for the health, efficiency and general well-being of the employees within the framework of the nationaleconomic and social development program. In the determination of such regional minimum wages, the Regional Boardshall, among other relevant factors, consider the following:

(a) The demand for living wages;

(b) Wage adjustment vis-a-vis the consumer price index;(c) The cost of living and changes or increases therein;(d) The needs of workers and their families;(e) The need to induce industries to invest in the countryside;(f) Improvements in standards of living;(g) The prevailing wage levels;(h) Fair return of the capital invested and capacity to pay of emphasis employers;(i) Effects of employment generation and family income; and(j) The equitable distribution of income and wealth along the imperatives of economic and socialdevelopment.12

The Court is not convinced that the Regional Board of the National Capital Region, in decreeing an across-the-board hike, performed an unlawful act of legislation. It is true that wage-fixing, like rate constitutes an act Congress;13 it

is also true, however, that Congress may delegate the power to fix rates 14 provided that, as in all delegations cases,Congress leaves sufficient standards. As this Court has indicated, it is impressed that the above-quoted standards aresufficient, and in the light of the floor-wage method's failure, the Court believes that the Commission correctly upheldthe Regional Board of the National Capital Region.

Apparently, ECOP is of the mistaken impression that Republic Act No. 6727 is meant to "get the Governmentout of the industry" and leave labor and management alone in deciding wages. The Court does not think that the lawintended to deregulate the relation between labor and capital for several reasons: (1) The Constitution calls upon theState to protect the rights of workers and promote their welfare; 15 (2) the Constitution also makes it a duty of the State"to intervene when the common goal so demands" in regulating property and property relations; 16 (3) the Charter urgesCongress to give priority to the enactment of measures, among other things, to diffuse the wealth of the nation and to


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regulate the use of property; 17 (4) the Charter recognizes the "just share of labor in the fruits of production;" 18 (5)under the Labor Code, the State shall regulate the relations between labor and management; 19 (6) under Republic ActNo. 6727 itself, the State is interested in seeing that workers receive fair and equitable wages;20and (7) the Constitutionis primarily a document of social justice, and although it has recognized the importance of the private sector, 21 it hasnot embraced fully the concept of laissez faire 22 or otherwise, relied on pure market forces to govern the economy; Wecan not give to the Act a meaning or intent that will conflict with these basic principles.

It is the Court's thinking, reached after the Court's own study of the Act, that the Act is meant to rationalize

wages, that is, by having permanent boards to decide wages rather than leaving wage determination to Congress yearafter year and law after law. The Court is not of course saying that the Act is an effort of Congress to pass the buck, orworse, to abdicate its duty, but simply, to leave the question of wages to the expertise of experts. As Justice Cruzobserved, "[w]ith the proliferation of specialized activities and their attendant peculiar problems, the national legislaturehas found it more necessary to entrust to administrative agencies the power of subordinate legislation' as it is caned."23The Labor Code defines "wage" as follows:

"Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of beingexpressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other methodof calculating the same, which is payable by an employer to an employee under a written or unwritten contract ofemployment for work done or to be done, or for services rendered or to be rendered and includes the fair andreasonably value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished bythe employer to the employee. "Fair and reasonable value" shall not include any profit to the employer or to any person

affiliated with the employer. 24The concept of "minimum wage" is, however, a different thing, and certainly, it means more than setting afloor wage to upgrade existing wages, as ECOP takes it to mean. "Minimum wages" underlies the effort of the State, asRepublic Act No. 6727 expresses it, "to promote productivity-improvement and gain-sharing measures to ensure adecent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruitsof production; to enhance employment generation in the countryside through industry dispersal; and to allow businessand industry reasonable returns on investment, expansion and growth," 25 and as the Constitution expresses it, to affirm"labor as a primary social economic force." 26 As the Court indicated, the statute would have no need for a board if thequestion were simply "how much". The State is concerned, in addition, that wages are not distributed unevenly, andmore important, that social justice is subserved.

It is another question, to be sure, had Congress created "roving" boards, and were that the case, a problem ofundue delegation would have ensued; but as we said, we do not see a Board (National Capital Region) "running riot"

here, and Wage Order No. NCR-01-A as an excess of authority.It is also another question whether the salary-cap method utilized by the Board may serve the purposes ofRepublic Act No. 6727 in future cases and whether that method is after all, a lasting policy of the Board; however, it is aquestion on which we may only speculate at the moment. At the moment, we find it to be reasonable policy (apparently,it has since been Government policy); and if in the future it would be perceptibly unfair to management, we will take itup then. PETITION DENIED.

TATAD VS. SEC. OF DEPT OF ENERGYFor resolution are: (1) the motion for reconsideration filed by the public respondents; and (2) the partial

motions for reconsideration filed by petitioner Enrique T. Garcia and the intervenors.1In their Motion for Reconsideration, the public respondents contend:I Executive Order No. 392 is not a misapplication of Republic Act No. 8180;II Sections 5(b), 6 and 9(b) of Republic Act No. 8180 do not contravene section 19, Article XII of the Constitution; and

III Sections 5(b), 6 and 9(b) of R.A. No. 8180 do not permeate the essence of the said law; hence their nullity will notvitiate the other parts thereof.In their Motion for Reconsideration, the intervenors argue:

2.1.1 The total nullification of Republic Act No. 8180 restores the disproportionate advantage of the three bigoil firmsCaltex, Shell and Petronover the small oil firms;

2.1.2 The total nullification of Republic Act No. 8180 "disarms" the new entrants and seriously cripples theircapacity to compete and grow; and

2.1.3 Ultimately the total nullification of Republic Act. No. 8180 removes substantial, albeit imperfect, barriersto monopolistic practices and unfair competition and trade practices harmful not only to movant-intervernors but alsoto the public in general.

In his Partial Motion for Reconsideration, 2 petitioner Garcia prays that only the provisions of R.A. No. 8180on the 4% tariff differential, predatory pricing and minimum inventory be declared unconstitutional. He cites the

"pernicious effects" of a total declaration of unconstitutionality of R.A. No. 8180. He avers that "it is very problematic .. . if Congress can fastrack an entirely new law."We find no merit in the motions for reconsideration and partial motion for reconsideration.We shall first resolve public respondents' motion for reconsideration. They insist that there was no

misapplication of Republic Act No. 8180 when the Executive considered the depletion of the OPSF in advancing thedate of full deregulation of the downstream oil industry. They urge that the consideration of this factor did not violatethe rule that the exercise of delegated power must be done strictly in accord with the standard provided in the law. Theycontend that the rule prohibits the Executive from subtracting but not from adding to the standard set by Congress.This hair splitting is a sterile attempt to make a distinction when there is no difference. The choice and crafting of thestandard to guide the exercise of delegated power is part of the lawmaking process and lies within the exclusive


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jurisdiction of Congress. The standard cannot be altered in any way by the Executive for the Executive cannot modifythe will of the Legislature. To be sure, public respondents do not cite any authority to support its strange thesis forthere is none in our jurisprudence.

The public respondents next recycle their arguments that sections 5(b), 6 and 9(b) of R.A. No. 8180 do notcontravene section 19, Article XII of the Constitution.3 They reiterate that the 4% tariff differential would encouragethe construction of new refineries which will benefit the country for they Filipino labor and goods. We have rejectedthis submission for a reality check will reveal that this 4% tariff differential gives a decisive edge to the existing oil

companies even as it constitutes a substantial barrier to the entry of prospective players. We do not agree with thepublic respondents that there is no empirical evidence to support this ruling. In the recent hearing of the SenateCommittee on Energy chaired by Senator Freddie Webb, it was established that the 4% tariff differential on crude oiland refined petroleum importation gives a 20-centavo per liter advantage to the three big oil companies over the newplayers. It was also found that said tariff differential serves as a protective shield for the big oil companies. 4 Nor do weapprove public respondents' submission that the entry of new players after deregulation is proof that the 4% tariffdifferential is not a heavy disincentive. Acting as the mouthpiece of the new players, public respondents even lamentthat "unfortunately, the opportunity to get the answer right from the 'horses' mouth' eluded this Honorable Court sincenone of the new players supposedly adversely affected by the assailed provisions came forward to voice theirposition." 5 They need not continue their lamentation. The new players represented by Eastern Petroleum, SeasoilPetroleum Corporation, Subic Bay Distribution, Inc., TWA Inc., and DubPhil Gas have intervened in the cases at barand have spoken for themselves. In their motion for intervention, they made it crystal clear that it is not their intention

". . . to seek the reversal of the Court's nullification of the 4% differential in section 5(b) nor of the inventoryrequirement of section 6, nor of the prohibition of predatory pricing in section 9(b)."6 They stressed that they onlyprotest the restoration of the 10% oil tariff differential under the Tariff Code. 7 The horse's mouth thereforeauthoritatively tells us that the new players themselves consider the 4% tariff differential in R.A. No. 8180 as oppressiveand should be nullified.

To give their argument a new spin, public respondents try to justify the 4% tariff differential on the ground thatthere is a substantial difference between a refiner and an importer just as there is a difference between raw material andfinished product. Obviously, the effort is made to demonstrate that the unequal tariff does not violate the unequalprotection clause of the Constitution. The effort only proves that the public respondents are still looking at the issue oftariff differential from the wrong end of the telescope. Our Decision did not hold that the 4% tariff differentialinfringed the equal protection clause of the Constitution even as this was contended by petitioner Tatad.8 Rather, weheld that said tariff differential substantially occluded the entry point of prospective players in the downstream oil

industry. We further held that its inevitable result is to exclude fair and effective competition and to enhance themonopolists' ability to tamper with the mechanism of a free market. This consideration is basic in anti-trust suits andcannot be eroded by belaboring the inapplicable principle in taxation that different things can be taxed differently.

The public respondents tenaciously defend the validity of the minimum inventory requirement. They aver thatthe requirement will not prejudice new players ". . . during their first year of operation because they do not have yetannual sales from which the required minimum inventory may be determined. Compliance with such requirement ontheir second and succeeding years of operation will not be difficult because the putting up of storage facilities inproportion to the volume of their business becomes an ordinary and necessary business undertaking just as the case ofimporters of finished products in other industries." 9 The contention is an old one although it is purveyed with a newlipstick. The contention cannot convince for as well articulated by petitioner Garcia, "the prohibitive cost of therequired minimum inventory will not be any less burdensome on the second, third, fourth, etc. years of operations.Unlike most products which can be imported and stored with facility, oil imports require ocean receiving, storagefacilities. Ocean receiving terminals are already very expensive, and to require new players to put up more than they

need is to compound and aggravate their costs, and consequently their great dis-advantage vis-a-visthe Big 3." 10 Again,the argument on whether the minimum inventory requirement seriously hurts the new players is best settled by hearingthe new players themselves. In their motion for intervention, they implicitly confirmed that the high cost of meeting theinventory requirement has an inhibiting effect in their operation and hence, they support the ruling of this Courtstriking it down as unconstitutional.

Public respondents still maintain that the provision on predatory pricing does not offend the Constitution.Again, their argument is not fresh though embellished with citations of cases in the United States sustaining the validityof sales-below-costs statutes. 11 A quick look at these American cases will show that they are inapplicable. R.A. No. 8180has a different cast. As discussed, its provisions on tariff differential and minimum inventory erected high barriers tothe entry of prospective players even as they raised their new rivals' costs, thus creating the clear danger that thederegulated market in the downstream oil industry will not operate under an atmosphere of free and fair competition. Itis certain that lack of real competition will allow the present oil oligopolists to dictate prices,12 and can entice them to

engage in predatory pricing to eliminate rivals. The fact that R.A. No. 8180 prohibits predatory pricing will not dissolvethis clear danger. In truth, its definition of predatory pricing is too loose to be real deterrent. Thus, one of the law'sprincipal authors, Congressman Dante O. Tinga filed H.B. No. 10057 where he acknowledged in its explanatory notethat "the definition of predatory pricing . . . needs to be tightened up particularly with respect to the definitivebenchmark price and the specific anti-competitive intent. The definition in the bill at hand which was taken from theAreeda-Turner test in the United States on predatory pricing resolves the questions." Following the more effectiveAreeda-Turner test, Congressman Tinga has proposed to redefine predatory pricing, viz.: "Predatory pricing meansselling or offering to sell any oil product at a price below the average variable cost for the purpose of destroyingcompetition, eliminating a competitor or discouraging a competitor from entering the market." 13 In light of its loosecharacterization in R.A. 8180 and the law's anti-competitive provisions, we held that the provision on predatory pricing


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is constitutionally infirmed for it can be wielded more successfully by the oil oligopolist. Its cumulative effect is to addto the arsenal of power of the dominant oil companies. For as structured, it has no more than the strength of a spiderwebit can catch the weak but cannot catch the strong; it can stop the small oil players but cannot stop the big oilplayers from engaging in predatory pricing.

Public respondents insist on their thesis that the cases at bar actually assail the wisdom of R.A. No. 8180 andthat this Court should refrain from examining the wisdom of legislations. They contend that R.A. No. 8180 involves aneconomic policy which this Court cannot review for lack of power and competence. To start with, no school of

scholars can claim any infallibility. Historians with undefiled learning have chronicled 14 over the years the disgrace ofmany economists and the fall of one economic dogma after another. Be that as it may, the Court is aware that theprinciple of separation of powers prohibits the judiciary from interferring with the policy setting function of thelegislature. 15 For this reason we italicized in our Decision that the Court did not review the wisdom of R.A. No. 8180but its compatibility with the Constitution; the Court did not annul the economic policy of deregulation but vitiated itsaspects which offended the constitutional mandate on fair competition. It is beyond debate that the power of Congressto enact laws does not include the right to pass unconstitutional laws. In fine, the Court did not usurp the power of theCongress to enact laws but merely discharged its bounden duty to check the constitutionality of laws when challengedin appropriate cases. Our Decision annulling R.A No. 8180 is justified by the principle of check and balance.

We hold that the power and obligation of this Court to pass upon the constitutionality of laws cannot bedefeated by the fact that the challenged law carries serious economic implications. This Court has struck down lawsabridging the political and civil rights of our people even if it has to offend the other more powerful branches of

government. There is no reason why the Court cannot strike down R.A. No. 8180 that violates the economic rights ofour people even if it has to bridle the liberty of big business within reasonable bounds. InAlalayan vs. National PowerCorporation16 the Court, speaking thru Mr. Chief Justice Enrique M. Fernando, held:

2. Nor is petitioner anymore successful in his plea for the nullification of the challenged provision on theground of his being deprived of the liberty to contract without due process of law.

It is to be admitted of course that property rights find shelter in specific constitutional provisions, one of whichis the due process clause. It is equally certain that our fundamental law framed at a time of "surging unrest anddissatisfaction," when there was the fear expressed in many quarters that a constitutional democracy, in view of itscommitment to the claims of property, would not be able to cope effectively with the problems of poverty and miserythat unfortunately afflict so many of our people, is not susceptible to the indictment that the government thereinestablished is impotent to take the necessary remedial measures. The framers saw to that. The welfare state concept isnot alien to the philosophy of our Constitution. It is implicit in quite a few of its provisions. It suffices to mention two.

There is the clause on the promotion of social justice to ensure the well-being and economic security of all thepeople, as well as the pledge of protection to labor with the specific authority to regulate the relations betweenlandowners and tenants and between labor and capital. This particularized reference to the rights of working menwhether in industry and agriculture certainly cannot preclude attention to and concern for the rights of consumers, whoare the objects of solicitude in the legislation now complained of. The police power as an attribute to promote thecommon weal would be diluted considerably of its reach and effectiveness if on the mere plea that the liberty tocontract would be restricted, the statute complained of may be characterized as a denial of due process. The right toproperty cannot be pressed to such an unreasonable extreme.

It is understandable though why business enterprises, not unnaturally evincing lack of enthusiasm for policepower legislation that affect them adversely and restrict their profits could predicate alleged violation of their rights onthe due process clause, which as interpreted by them is a bar to regulatory measures. Invariably, the response from thisCourt, from the time the Constitution was enacted, has been far from sympathetic. Thus, during the Commonwealth,we sustained legislations providing for collective bargaining, security of tenure, minimum wages, compulsory

arbitration, and tenancy regulation. Neither did the objections as to the validity of measures regulating the issuance ofsecurities and public services prevail.

The Constitution gave this Court the authority to strike down alllaws that violate the Constitution.17 It did notexempt from the reach of this authority laws with economic dimension. A 20-20 vision will show that the grant by theConstitution to this Court of this all important power of review is written without any fine print.The next issueis whether the Court should only declare as unconstitutional the provisions of R.A. No. 8180 on 4% tariffdifferential, minimum inventory and predatory pricing.Positing the affirmative view, petitioner Garciaproffered the following arguments:

5. Begging the kind indulgence and benign patience of the Court, we humbly submit that theunconstitutionality of the aforementioned provisions of R.A. No. 8180 implies that the other provisions are constitutional. Thus,said constitutional provisions of R.A. No. 8180 may and can very well be spared.

5.1 With the striking down of "ultimately full deregulation," we will simply go back to the transition period under

R.A. 8180 which will continue until Congress enacts an amendatory law for the start of full oil deregulation in due time, when freemarket forces are already in place. In turn, the monthly automatic price control mechanism based on Singapore Posted Prices(SPP)will be revived. The energy Regulatory Board (ERB), which still exist, would re-acquire jurisdiction and would easily compute themonthly price ceiling, based on SPP, of each and every petroleum fuel product, effective upon finality of this Court's favorableresolution on this motion for partial reconsideration.

5.2 Best of all, the oil deregulation can continue uninterrupted without the three other assailed provisions, namely, the 4% tariffdifferential, predatory pricing and minimum inventory.

6. We further humbly submit that a favorable resolution on this motion for partial reconsideration would beconsistent with public interest.


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6.1 In consequence, new players that have already come in can uninterruptedly continue their operations morecompetitively and bullishly with an even playing field.

6.2 Further, an even playing field will attract many more new players to come in in a much shorter time.6.3 Correspondingly, Congress does not anymore have to pass a new deregulation law, thus it can immediately concentrate on

just amending R.A. No. 8180 to abolish the OPSF, on the government's assumption that it is necessary to do so.Parenthetically, it is neither correct nor fair for high government officials to criticize and blame the Honorable Court onthe OPSF, considering that said OPSF is not inherent in nor necessary to the transition period and may be removed at any time.

6.4 In as much as R.A. No. 8180 would continue to be in place (sansits unconstitutional provisions), only theComprehensive Tax Reform Package (CTRP) would be needed for the country to exit from IMF by December 1997.

7. The Court, in declaring the entire R.A. No. 8180 unconstitutional, was evidently expecting that Congress"can fasttrack the writing of a new law on oil deregulation in accord with the Constitution" (Decision p. 38) However,itis very problematic, to say the least, if Congress can fasttrack an entirely new law.

7.1 There is alreadylimited timefor Congress to pass such a new lawbefore it adjourns for the 1998 elections.7.2 At the very least, whether or not Congress will be able to fasttrack the enactment of a new oil deregulation

law consistent with the Honorable Court's ruling, would depend on many unforseeable and uncontrollable factors. Already, severalstatements from legislators, senators and congressmen alike, say that the new law can wait because of other pendinglegislative matters, etc. Given the "realities" of politics, especially with the 1998 presidential polls six months away, it isnot far-fetched that the general welfare could be sacrificed to gain political mileage, thus further unduly delaying theenactment of a new oil deregulation law.

8. Furthermore, if the entire R.A. No. 8180 remains nullified as unconstitutional, the followingperniciouseffectswill happen:

8.1 Until the new oil deregulation law is enacted, we would have to go back to the old law. This means fullregulation, i.e., higher tariff differential of 10%, higher petroleum product price ceilings based on transfer prices of imported crude oil, andrestrictions on the importation of refined petroleum products that would be allowed only if there are shortages, etc.

8.2 In consequence of the above, the existing new players,would have to totally stop their operations.8.3 The existing new players would find themselves in a bind on how to fulfill their contractual obligations, especially on their

delivery commitments of petroleum fuel products. They will be in some sort of "limbo" upon the nullification of the entire R.A. No. 8180.8.4 The investments that existing new players have already made would become idle and unproductive. All their planned

additional investments would be put on hold.8.5 Needless to say, all this would translate into tremendous losses for them.8.6 And obviously, prospective new players cannot and will not come in.

8.7 On top of everything, public interest will suffer. Firstly, the oil deregulation program will bedelayed. Secondly, theprices of petroleum products will be higher because of price ceilings based on transfer prices of imported crude.9. When it passed R.A. No. 8180, Congress provided a safeguardagainst the possibility that any of its provisions

could be declared unconstitutional, thus the separability clausethereof, which the Court noted (Decision, p. 29). Wehumbly submit that this is another reason to grant this motion for partial reconsideration.In his Supplement to Urgent Motion for Partial Reconsideration, petitioner Garcia amplified his contentions.In a similar refrain, the public respondentscontend that the "unmistakable intention of Congress" is to make each andevery provision of R.A. No. 8180 "independent and separable from one another." To bolster this proposition, they citethe separability clause of the law and the pending bills in Congress proposing to repeal said offensive provisions but notthe entire law itself. They also recite the "inevitable consequences of the declaration of unconstitutionality of R.A. No.8180" as follows:

1. There will be bigger price adjustments in petroleum products due to (a) the reimposition of the higher tariffrates for imported crude oil and imported refined petroleum products [10%-20%], (b) the uncertainty regarding R.A.

8184, or the "Oil Tariff Law," which simplified tax administration by lowering the tax rates for socially-sensitiveproducts such as LPG, diesel, fuel oil and kerosene, and increasing tax rates of gasoline products which are used mostlyby consumers who belong to the upper income group, and (c) the issue of wiping out the deficit of P2.6 billion andcreating a subsidy fund in the Oil Price Stabilization Fund;

2. Importers, traders, and industrial end-users like the National Power Corporation will be constrained tosource their oil requirement only from existing oil

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