Mary January Chan

Administrative law

Principles of Administrative Construction.

thereof, where the meaning of the
By and large, the best authority to interpret
words used is in doubt, but this is not
a rule is the source itself of the rule. Generally, the
true where the meaning of the words
rules and regulations of an administrative agency
used is not in doubt, or where the
are subject to the same principles of construction
language used is not technical."
as applied to the construction of statutes, and in
the guise of construing such a rule or regulation,
the court should not give it an effect not intended Administrative rules of procedure are
by the agency which adopted it. construed liberally in order to promote their object
and assist the parties in claiming just, speedy and
It is the intention with which the rule or regulation
inexpensive determination of their respective
was adopted which is controlling, and in
claims and defenses. But before they can be
ascertaining such intention, the rule of
relaxed to give way to substantive justice, it is
construction, expressiounius est exclusio alterius,
implicit that such liberality be applied in a proper
may be resorted to. Also, in ascertaining the true
case, i.e., a party has to show prima facie that he
meaning of an administrative rule or regulation,
has meritorious claim or defense.
the purpose thereof may be considered.
Effect of Reliance on Rules.
1. An administrative rule should
ordinarily be given that construction A person who relies in good faith on an
which will, if possible, sustain its agency rule should be held harmless from loss if
validity, and, where alternative that rule is later held invalid or is amended.
interpretations of an administrative rule
1. Invalid or unconstitutional rule. —
or regulation are possible, the more
One who has relied on an invalid rule
reasonable of the two is to be chosen.
is in substantially the same position as
one who has relied on an
2. An administrative regulation providing
unconstitutional statute. Thus, as it was
punishment for the violation thereof
put by an Alabama court: "A rule
should be strictly construed, but it
which erroneously interprets a statute
should not be construed so strictly as to
is a nullity and no rights are vested as a
defeat the obvious intention with
result of a taxpayer's reliance thereon,
which it was adopted. Furthermore, the
since the agency's only power is to
principle of strict construction does not
rules that would carry into effect the
require that a criminal regulation be
statutory intent."
given its narrowest possible meaning.
2. Rule subsequently amended. —
Similarly, protection is accorded to
3. In a suit involving a public
parties who had relied on an
administrative agency, it has been held
administrative rule that was
that the rules and regulations of such
subsequently amended or repealed,
agency should be strictly construed
(infra.) The new rule, of course, may
against it, and that any ambiguities
be enforced prospectively but it may
contained therein should be resolved in
not be applied retrospectively to
favor of the adversary; but that where a
periods during which the old rule was
rule is clear and unambiguous, it does
in effect, if such retrospective
not admit of judicial interpretation.
application would be detrimental to the
interests of persons who had relied on
4. In construing an administrative rule or
the superseded rule.
regulation, the court must necessarily
look to the administrative construction
 Mary January Chan
Administrative law

Retroactive Operation of Rules, take such action, the exercise of such discretion in
Regulations, and Rulings. the public interest is not subject to judicial control.
Whether the rules, regulations, or 1. In order to be valid, a change in a
rulings of an administrative agency operate regulation must be made in accordance
or can be made to operate retroactively with statutory procedural requirements,
depends on the provisions of the such as requirements with respect to notice
authorizing statutes. and hearing as well as with respect to the
vote necessary to make a change.
The power of an administrative
agency to adopt rules and regulations or
2. As a general practice, an administrative
make rulings ordinarily includes the power
rule should not be amended so as to effect
to give them a retroactive effect, within the
a retroactive change, and the rights of a
limits specified or contemplated by the
person acquired before the amendment of a
statute, provided doing so does not conflict
rule have been held determinable under the
with restrictions on the legislative power to
provisions of such rule prior to such
make retroactive laws.
amendment. However, where an
1. Under some statutes, while an administrative regulation which purports to
agency may prescribe that a ruling by it interpret a statute but is out of harmony
shall operate prospectively only, if it fails therewith is amended so as to correctly
so to provide, its ruling must operate apply such statute, such amendment has
retroactively as well as prospectively. been held not subject to the objection of
being retroactive, since it is, in fact, the
2. However, an administrative rule first correct application of the law.
or regulation usually will not be construed
to operate retrospectively where the 3. Where administrative bodies exercise
intention to that effect does not regulatory or quasi-legislative power,
unequivocally appear, although it will be laying down rules and regulations, even
so construed where such intention does specific orders to be observed by persons
appear. subject thereto, the doctrine of res judicata
3. In any case, the new rule or is not applicable. Such rules and
ruling is not to be applied retroactively if regulations, or orders may be amended,
to do so would be unreasonable and modified, or revoked to conform to the
inequitable. The principle prohibiting requirements of the law or the demands of
retroactive application of amendments to public interest. But even though an
administrative rules has frequent administrative agency is not bound by the
application to tax cases. It applies where rule of res judicata, it is bound to
the retroactive application would prejudice recognize the validity of a rule of conduct
the taxpayer. prescribed by it, and not to repeal its own
enactment with retroactive effect.
Amendment or Repeal of Administrative Rules
and Regulations. 4. In the case of procedural rules, it is often
An administrative agency ordinarily has expeditious for an agency to ignore a
the authority to change, alter, amend, or correct certain rule in a particular case and adopt
the rules and regulations duly promulgated by it, therein a different procedure than that
and the fact that an administrative rule has been contemplated by the agency's rule.
amended does not necessarily mean that the a. Of course, the parties may
earlier rule was unreasonable. Since it is voluntarily waive compliance with
discretionary with such an agency whether it will procedural rules, and such waiver
 Mary January Chan
Administrative law

may be founded on acts as well as P12,837.65 was disallowed as a deduction from

upon verbal declarations. the gross income of petitioner for 1951 and the
b. Similarly, disregard of minutiae of Collector of Internal Revenue demanded from him
procedural niceties will be the payment of the sum of P3,546.00 as deficiency
tolerated, where it clearly appears income tax for the year.
no prejudice resulted.
Issue: Has the Secretary of Finance acted with
c. So too, if it can be shown that a
valid authority in revoking General Circular No.
particular rule was established
V-123 and approving in lieu thereof, Circular No.
solely for the agency's sole
V-139?
convenience, it may be waived by
the agency. Held: Yes. (1) Construction of a statute by
d. At the opposite extreme, it is clear Secretary of Finance not binding on his
that an agency will not be successors. — "The Secretary of Finance is vested
permitted to adopt a special rule of with authority to revoke, repeal or abrogate the
procedure for the purpose of acts or previous rulings of his predecessors in
affecting the outcome of a office because the construction of a statute by
particular case, or (with a those administering it is not binding on their
conscious desire towards the end) successors if thereafter the latter becomes satisfied
wilfully to ignore a rule in a that a different construction should be given.
particular case. But in cases where General Circular No. V-123, having been issued
the record clearly establishes that on a wrong construction of the law, cannot give
disregard of an agency's procedural rise to a vested right that can be invoked by a
rules could not have prejudiced any taxpayer. The reason is obvious: a vested right
party to the proceeding, the cannot spring from a wrong interpretation. This is
departure from prescribed too clear to require elaboration."
procedures is not fatal.
(2) No vested right acquired from erroneous
ILLUSTRARTIVE CASES: construction of a law. — "It seems too clear for
serious argument that an administrative officer
CASE 01: Secretary of Finance revoked a
cannot change a law enacted by Congress. A
general circular pursuant to which a taxpayer
regulation that is merely an interpretation of the
claimed deductions from his gross income.
statute when once determined to have been
Facts: H filed his income tax return wherein he erroneous becomes a nullity. An erroneous
claimed, among other things, the amount of construction of the law by the Collector of Internal
P12,387.65 as a deductible item from his gross Revenue does not preclude or stop the
income pursuant to General Circular No. V-123 Government from collecting a tax which is legally
issued by the Collector of Internal Revenue. This due. Under Art. 2254 of the Civil Code, no vested
circular was issued pursuant to certain rules laid or acquired right can arise from acts or omissions
down by the Secretary of Finance. Subsequently, which are against the law or which infringe upon
the new Secretary of Finance, through the the rights of others." (Hilado v. Collector of
Collector of Internal Revenue, issued General Internal Revenue, 100 Phil. 288 [1956].)
Circular No. V-139 which not only revoked and
CASE 02: The Secretary of Finance expressly
declared General Circular No. V-123 but laid
authorized the nonretroactivity of regulation
down the rule that losses of property which
which amended a previous one.
occurred during the period of World War II from
fires, storms, shipwreck or other casualty, or from Facts: Under Section 334 (now Sec. 232.) of the
robbery, theft, or embezzlement are deductible in National Internal Revenue Code, all corporations,
the year of actual loss or destruction of said companies, partnerships, or persons required by
property. As a consequence, the amount of law to pay internal revenue taxes whose gross
 Mary January Chan
Administrative law

quarterly sales, earnings, etc. do not exceed (2) Regulations issued by Secretary of Finance
P5,000.00 are required to keep and use a subject to amendment or revocation by his
simplified set of Bookkeeping Records duly successor. — "Granting, for the sake of argument
authorized by the Secretary of Finance. Pursuant that the subsequent permission to use old
to such authority, the Secretary of Finance bookkeeping forms was incompatible with the
promulgated Revenue Regulations No. V-13, new regulation, such incompatibility would not
authorizing the use by the taxpayers whose render the permission illegal and void, since it is
quarterly sales do not exceed P5,000.00, a not disputed that the Secretary may, at any time,
simplified set of bookkeeping records. amend or revoke any of the regulations issued by
him so long as it is in consonance with the statute.
The Secretary amended Regulations No. V-13 by
The Secretary, under the law, may, therefore,
promulgating Revenue Regulations No. V-43,
change or repeal any of the regulations issued by
which requires that simplified set of bookkeeping
him, as he may see fit."93 (Ollada v. Secretary of
records should be especially designed for each
Finance, 109 Phil. 1072 [1960].)
class or kind of trade and prepared by a Certified
Public Accountant. One of those who prepared CASE 03: The Office of the President modified
simplified sets of bookkeeping records under its decision which had already become final and
Regulations No. V-13, raised the point whether executory
her old set could still be used after the
Facts: In a decision, the Supreme Court struck
promulgation of the new regulation. The Secretary
down as void the act of the Office of the President
answered that the new regulation was not intended
(OP) in reopening the case in O.P. Case No. 96-C-
to have a retroactive effect and, therefore, could
6424 through the issuance of the November 7,
not adversely affect those who had already
1997 "win-win" Resolution which substantially
acquired an accrued right under the old regulation.
modified its March 29, 1996 Decision that had
A Certified Public Accountant prepared and
long become final and executory, being in gross
devised his own simplified sets of bookkeeping
disregard of the rules and basic legal precept that
regulations under the new regulation. Thereafter,
accord finality to administrative determinations.
he instituted these proceedings praying that
The March 29, 1996 OP Decision was declared by
respondent finance officials be enjoined from
the same Office as final and executory in its Order
further accepting, authorizing, and tolerating the
dated June 23, 1997 after the respondent DAR's
use by the public of simplified sets of
motion for reconsideration of the said decision
bookkeeping records that are not prepared in
was denied in the same order for having been filed
accordance with the new regulation.
beyond the 15-day reglementary period. In their
Issue: Did the Secretary of Finance act within his instant motion, the respondents contend that the
authority in not giving retroactive effect to "winwin" Resolution of November 7, 1997 "is not
Regulation No. V-43? a void resolution as it seeks to correct an
erroneous ruling," hence, "(t)he March 29, 1996
Held: Yes. (1) Resolution not unreasonable or
decision of the Office of the President could not as
arbitrary. — "The resolution of the Secretary of
yet become final and executory as to be beyond
Finance that Regulation No. V-43 was not
modification." The respondents explained that the
intended to have retroactive effect was fully
DAR's failure to file on time the motion for
within his powers and authority and becomes part
reconsideration of the March 29, 1996 OP
of the regulation itself. Not being clearly
Decision was "excusable.”
unreasonable or arbitrary, the Secretary's
resolution is entitled to recognition and respect Issue: Was the modification of the decision void
from the Courts. Surely, no one is better qualified or a valid exercise by the President of his powers
to interpret the intent behind these revenue and prerogatives?
regulations than the authority that issued them."
Field: (1) Late filing of the DAR of its motion for
reconsideration not excusable, — "xxx The said
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Administrative law

denial of the DAR's motion for reconsideration inscribed in the Constitution which guarantees that
was in accordance with Section 7 of 'all persons shall have a right to the speedy
Administrative Order No. 18, dated February 12, disposition of their cases before all judicial, quasi-
1987, which mandates that judicial and administrative bodies.' The
'decisions/resolutions/orders of the Office of the adjudicatory bodies and the parties to a case are
President shall, except as otherwise provided for thus enjoined to abide strictly by the rules. While
by special laws, become final after the lapse of it is true that a litigation is not a game of
fifteen (15) days from receipt of a copy thereof x x technicalities, it is equally true that every case
x,' unless a motion for reconsideration thereof is must be prosecuted in accordance with the
filed within such period." prescribed procedure to ensure an orderly and
speedy administration of justice. There have been
Contrary to the respondents' submission, the late
some instances wherein this Court allowed a
filing by the DAR of its motion for
relaxation in the application of the rules, but this
reconsideration of the March 29, 1996 OP
flexibility was 'never intended to forge a bastion
Decision is not excusable. The respondents'
for erring litigants to violate the rules with
explanation that the DAR's office procedure after
impunity.' A liberal interpretation and application
receiving the copy of the March 29, 1996 OP
of the rules of procedure can be resorted to only in
Decision 'made it impossible for DAR to file its
proper cases and under justifiable causes and
motion for reconsideration on time' since the said
circumstances.
decision had to be referred to the different
departments of the DAR, cannot be considered a In the instant case, we cannot grant respondents
valid justification. There is nothing wrong with the relief prayed for since they have not shown a
referring the decision to the departments justifiable reason for a relaxation of the rules. As
concerned for the preparation of the motion for we have discussed earlier, the DAR's late filing of
reconsideration, but in doing so, the DAR must its motion for reconsideration of the March 29,
not disregard the reglementary period fixed by 1996 OP Decision was not justified. Hence, the
law, rule or regulation. final and executory character of the said OP
Decision can no longer be disturbed, much less
In other words, the DAR must develop a system of
substantially modified. Res judicata has set in and
procedure that would enable it to comply with the
the adjudicated thing or affair should forever be
reglementary period for filing the said motion.
put to rest. It is in this sense that we, in our
For, the rules relating to reglementary period
decision under reconsideration, declared as void
should not be made subservient to the internal
and of no binding effect the 'win-win' Resolution
office procedure of an administrative body.
of November 7, 1997 which substantially
Otherwise, the noble purpose of the rules
modified the March 29, 1996 Decision, the said
prescribing a definite period for filing a motion for
resolution having been issued in excess of
reconsideration of a decision can easily be
jurisdiction and in arrant violation of the
circumvented by the mere expediency of claiming
fundamental and time-honored principle of
a long and arduous process of preparing the said
finality to administrative determinations."
motion involving several departments of the
administrative agency." (3) Mere technicality of law or procedure not
involved. — "Itmust be emphasized that a
(2) No justifiable reason shown for a relaxation of
decision/resolution/order of an administrative
the rules. — "Procedural rules, we must stress,
body, court or tribunal which is declared void on
should be treated with utmost respect and due
the ground that the same was rendered without or
regard since they are designed to facilitate the
in excess of jurisdiction, or with grave abuse of
adjudication of cases to remedy the worsening
discretion, is by no means a mere technicality of
problem of delay in the resolution of rival claims
law or procedure. It is elementary that jurisdiction
and in the administration of justice. The
of a body, court or tribunal is an essential and
requirement is in pursuance to the bill of rights
mandatory requirement before it can act on a case
 Mary January Chan
Administrative law

or controversy. And even if said body, court or relating to governmental operations, including
tribunal has jurisdiction over a case, but has acted administrative procedure. These rules take the
in excess of its jurisdiction or with grave abuse of form of administrative orders. This power is
discretion, such act is still invalid. The decision necessary for the President to discharge his
nullifying the questioned act as an adjudication on constitutional duty of faithfully executing our
the merits. laws.
(4) Vested rights acquired by petitioners. — "It Under exceptional circumstances, this Court has
should be stressed that when the March 29, 1996 suspended its rules to prevent miscarriage of
OP Decision was declared final and executory, justice. In the same breath, we should hold that the
vested rights were acquired by the herein President has the power to suspend the effectivity
petitioners, namely, the province of Bukidnon, the of administrative rules of procedure when they
municipality of Sumilao, Bukidnon, and the hamper, defeat or in any way undermine the
NQSR Management and Development effective enforcement of the laws of the land.
Corporation, and all others who should be Indeed, we already recognize that Congress can
benefited by the said decision. Thus, we repeat, suspend its own rules if doing so will enable it to
the issue here is not a question of technicality but facilitate its task of lawmaking. The three great
that of substance and merit. In the words of the branches of our government are co-equal and
learned Justice Artemio V. Ranganiban in the case within their own sphere they have the same
of Videogram Regulatory Board v. Court of responsibility to promote the good of our people.
Appeals, et a!., '(j)ust as a losing party has the There is no reason to withhold the power to
right to file an appeal within the prescribed period, suspend rules from the President and grant it alone
the winning party also has the correlative right to to the two other branches of government."
enjoy the finality of the resolution of his/her
(3) The suspension by the President of
case.'" (Fortich v. Corona, 298 SCRA 685
Administrative Order No. 18 not whimsical. — "A
[1998].)
closer scrutiny of the records in the instant case
Separate Opinion: reveals that the fifteen-day rule for filing a motion
for reconsideration under Section 7 of
(1) Suspension of procedural rules lies in that
Administrative Order No. 18 was suspended by
authority that promulgated them. — "I vote to
the President when he constituted, on October
grant their motions for reconsideration and
15,1997 or some six (6) months after the
remand the case to the Court of Appeals.
promulgation of the Torres decision, the
First. It is true that procedural rules are Presidential Fact-Finding Task Force to conduct a
necessary to secure just, speedy and inexpensive comprehensive review of the proper land use of
disposition of every action and proceeding. the 144-hectare Sumilao property.
Procedure, however, is only a means to an end,
(4) The President clearly exercised his control
and they may be suspended when they subvert the
power over an alter ego. — "I also respectfully
interests of justice. It is self-evident that the
submit that this act of the President finds full
prerogative to suspend procedural rules or to grant
sanction under the corollary principles of
an exception in a particular case lies in the
presidential power of control and qualified
authority that promulgated the rules."
political agency. xxx xxx xxx By suspending the
(2) Power of the President to suspend the fifteen-day period for filing a motion for
effectivity of administrative rules of procedure. — reconsideration and re-opening the Torres
"Rules concerning pleading, practice and decision, the President clearly exercised his
procedure in all courts are promulgated by this control power over an alter-ego within the
Court. On the other hand, it is the President as framework of a constitutional and presidential
administrative head who is vested by the system of governance."
Administrative Code of 1987 to promulgate rules
 Mary January Chan
Administrative law

(5) The suspension not arbitrary. — "The Chapter 2. — Rules and Regulations
President's suspension of the fifteen-day rule for
SEC. 3. Filing. — (1) Every agency shall
filing a motion for reconsideration cannot be
file with the University of the Philippines Law
characterized as arbitrary. The Sumilao problem
Center three (3) certified copies of every rule
raises fundamental issues which conflict between
adopted by it. Rules in force on the date of
land reform and the industrialization of the
effectivity of this Code which are not filed within
countryside, the power of control by the President
three months from that date shall not thereafter be
over his alter egos vis-a-vis the power of local
subject to any sanction against any party or
governments to convert agricultural land to
persons.
industrial land. The resolution of these issues has
far reaching implications on the success of our (2) The records officer of the agency, or his
land reform program. Indeed, their successful equivalent functionary, shall carry out the
resolution can bring peace or rebellion in our requirements of this section under pain of
countryside. The President should not be disciplinary action.
frustrated by an administrative procedural rule that
he himself promulgated, from formulating a (3) A permanent register of all rules shall be kept
creative, legal solution to the Sumilao problem. by the issuing agency and shall be open to public
inspection.
(6) Petitioners in estoppel. — "The petitioners are
estopped from assailing the authority of the Office SEC. 4. Effectivity. — In addition to other
of the President to re-open the Sumilao case and rule-making requirements provided by law not
resolve it based on the report of the Presidential inconsistent with this Book, each rule shall
Fact-Finding Task Force. Undeniably, petitioners become effective fifteen (15) days from the date
participated in the processes conducted by the task of filing as above provided unless a different date
force. Their participation in the administrative is fixed by law, or specified in the rule in cases of
proceedings without raising any objection thereto, imminent danger to public health, safety and
bars them from raising any jurisdictional infirmity welfare, the existence of which must be expressed
after an adverse decision is rendered against them, in a statement accompanying the rule. The agency
xxx shall take appropriate measures to make
emergency rules known to persons who may be
The 'win-win' resolution being adverse to affected by them.
petitioners, they now assail the authority of the
President to modify the Torres decision. Under the SEC. 5. Publication and Reading. — The
above-mentioned circumstances, however, the University of the Philippines Law Center shall:
principle of estoppel applies to effectively bar (1) Publish a monthly bulletin setting forth the
petitioners from raising the issue of jurisdiction. text of rules filed with it during the preceding
While lack of jurisdiction of the court or quasi- quarter; and
judicial body may be assailed at any stage, a
party's active participation in the proceedings (2) Keep an up-to-date codification of rules thus
before it will estop him from assailing its lack of published and remaining in effect, together with a
jurisdiction. This Court has always frowned upon complete index and appropriate tables.
the undesirable practice of a party submitting his SEC. 6. Omission of Some Rules. — (1)
case for decision and then accepting the judgment, The University of the Philippines Law Center may
only if favorable, and attacking it for lack of omit from the bulletin or the codification of any
jurisdiction when adverse." (Puno, J.) rule if its publications would be unduly
Formal Requirements on The Promulgation, cumbersome, expensive or otherwise inexpedient,
Etc. of Rules and Regulations. but copies of that rule shall be made available on
application to the agency which adopted it, and
The Administrative Code of 1987 contains the bulletin shall contain a notice stating the
the following provisions:
 Mary January Chan
Administrative law

general subject matter of the omitted rule and new

copies thereof may be obtained.
(2) Every rule establishing an offense or defining
an act which, pursuant to law, is punishable as a
crime or subject to a penalty shall in all cases be
published in full text.
SEC. 7. Distribution of Bulletin and
Codified Rules. — The University of the
Philippines Law Center shall furnish one free
copy each of every issue of the bulletin and of the
codified rules or supplements to the Office of the
President, Congress, all appellate courts, and the
National Library. The bulletin and the codified
rules shall be made available free of charge to
such public officers or agencies as the Congress
may select, and to other persons at a price
sufficient to cover publication and mailing or
distribution costs.
SEC. 8. Judicial Notice. —The court shall
take judicial notice of the certified copy of each
rule duly filed or as published in the bulletin or the
codified rules.
SEC. 9. Public Participation. — (1) If not
otherwise required by law, an agency shall, as far
as practicable, publish or circulate notices of
proposed rules and afford interested parties the
opportunity to submit their views prior to the
adoption of any rule.
(2) In the fixing of rates, no rule or final order
shall be valid unless the proposed rates shall have
been published in a newspaper of general
circulation at least two (2) weeks before the first
hearing thereon.
(3) In case of opposition, the rules on contested
cases shall be observed.
The above provisions are applicable to all
agencies as defined, except the Congress, the
Judiciary, the Constitutional Commissions,
military establishments in all matters relating
exclusively to Armed Forces personnel, the Board
of Pardons and Parole, and state universities and
colleges.