Administrative Law: Chapter III — Powers and Functions of Administrative Agencies

Administrative Law

Chapter III — Powers and Functions of Administrative Agencies

Investigatory Powers
Rule-Making Powers
Adjudicatory Powers

A. In General

In General Meaning of powers and functions.

While the words "powers" and "functions" are used conjunctively above, they are interchangeable, and if there is any distinction, the latter term denotes a broader field of activities than the former.

"Function" is that which one is bound or which it is one's business to do.
So far as "power" differs from this meaning, it would appear to refer to the means by which a function is fulfilled.

Source of powers.

The powers of an administrative agency do not always come from a single source.
Aside from the instances in which an administrative agency is created and empowered by a provision of the Constitution, the source of the powers of administrative agencies lies in statutes under which they claim to act

Failure to exercise powers granted to administrative agencies does not forfeit or extinguish them.

Scope of powers.

Not all administrative agencies perform the same functions or exercise the same types of powers.
While some act merely as investigative or advisory bodies, most administrative agencies have:

investigative
rule making, and
determinative functions, or
at least two of such functions.

Express and implied powers.

The jurisdiction and powers of administrative agencies are measured and limited by the Constitution or law creating them or granting their powers, to those conferred expressly or by necessary or fair implication.
Taule v. Santos, 200 SCRA 512 (1991)

Thus, since there is neither a statutory nor constitutional provision expressly or even by implication conferring upon the Secretary of Interior and Local Government the power to assume jurisdiction over an election protest involving officers of the "Katipunan ng mga Barangay" (composed of popularly elected "punong barangays" as prescribed by law whose officers are voted upon by their respective members), the Secretary has no authority to pass upon the validity or regularity of the election of the officers of said "katipunan. "

Radio Communications of the Phils., Inc. v. National Telecommunications Commission, 215 SCRA 455 (1992)

The successor of an administrative agency which did not possess the power to impose administrative fines on public services rendering deficient services to customers cannot arrogate unto itself such power, in the absence of legislation.

It is well-settled, however, that statutes conferring powers on administrative agencies must be liberally construed to enable them to discharge their assigned duties in accordance with the legislative purpose.

While it is the fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise the rule that it has also such powers as are necessarily implied in the exercise of its express powers.
Accordingly, where a general power is conferred or duty is enjoined by law, every particular power necessary for the exercise of one or the performance of the other is also conferred.

Laguna Lake Development Authority v. Court of Appeals, 231 SCRA 292 (1994).

In the exercise of its express powers under its charter with respect to pollution cases, a regulatory and quasi-judicial body has the power to issue an ex parte cease and desist order when there is prima facie evidence of an establishment exceeding the allowable standards set by the anti-pollution laws.

A statute granting powers to an agency created by the Constitution should be liberally construed for the advancement of the purposes and objectives for which it was created.

Inherent powers.

An administrative agency has no inherent powers, although implied powers may sometimes be spoken of as "inherent."
Thus, in the absence of any provision of law, administrative agencies do not possess the inherent power to punish for contempt which has always been regarded as a necessary incident and attribute of the courts.

Quasi-judicial powers.

Official powers cannot be merely assumed by administrative officers, nor can they be created by the courts in the proper exercise of their judicial functions.
Unless expressly empowered, administrative agencies are bereft of quasi-judicial powers.

The jurisdiction of administrative authorities is dependent entirely upon the provisions of the statute reposing power in them; they cannot confer it upon themselves.

That the exercise of power will most effectively prevent or stop specific violations of law is no excuse for a deviation from this rule.

Otherwise, adherence to the rule of law would be rendered meaningless.

Administrative agencies are tribunals of limited jurisdiction and as such can exercise only those powers which are specifically granted to them by their enabling statutes.

In other words, the extent to which an administrative entity may exercise given judicial powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency.
They have, however, in their favor the presumption that they have regularly performed their official functions or duties, including those which are quasi-judicial in nature.

Cases:

Makati Stock Exchange, Inc. v. Securities and Exchange Commission, 14 SCRA 620
(1965)

Test for determining existence of authority.

The Commission cites no provision of law expressly supporting its rule against double listing. It suggests that the power is 'necessary for the execution of the functions vested in it. It argues that said rule was approved by the Department Head before the War and it is not in conflict with the provisions of the Securities Act. The approval of the Department, by itself, adds no weight in a judicial litigation.
The test is not whether the Act forbids the Commission from imposing a prohibition but whether it empowers the Commission to prohibit.
The Commission possesses no power to impose the condition of the rule which results in discrimination and violation of constitutional rights. It is fundamental that an administrative officer has such powers as are expressly granted to him by statute, and those necessarily implied in the exercise thereof. Accordingly, the license of the Makati Stock Exchange is approved without such condition against double listing

Radio Communications of the Phil., Inc. v. Board of Communications, 80 SCRA 471 [1977]

Administrative agencies only exercise such powers as are expressly or by necessary implication conferred on them by law.

They can only adjudicate matters coming within their jurisdiction. The complaint of the respondents in the two cases was that they were allegedly inconvenienced or injured by the failure of the petitioners to transmit to them telegrams informing them of the death of close relatives which, according to them, constitute breach of contractual obligations through negligence under the Civil Code.
The charges, however, do not necessarily involve petitioner's failure to comply with its certificate of public convenience or any order, decision or regulation of the respondent Board. The charge does not relate to the management of the facilities and system of transmission of message by petitioner in accordance with its certificate of public convenience.
If in the two cases, complainants allegedly suffered injury due to petitioner's breach of contractual obligations arising from negligence, the proper forum for them to ventilate their grievances for possible recovery of damages against petitioner should be in the courts and not in the respondent Board of Communications.

Matienzo v. Abellera, 162 SCRA 11 [1988].

A reading of Section 1 shows a grant of power to the respondent Board to issue provisional permits as a step towards the legalization of colorum taxicab operators without the alleged time limitation. There is nothing in Section 4 to suggest the expiration of such powers six (6) months after promulgation of the Decree. Rather, it merely provides for the withdrawal of the State's waiver of its right to punish said colorum operators for their illegal acts. In other words, the cited section declares when the period of moratorium suspending the relentless drive to eliminate illegal operators shall end. Clearly, there is no impediment to the Board's exercise of jurisdiction under its broad powers under the Public Service Act to issue certificates of public convenience to achieve the avowed purpose of P.D. No. 101.
Liberal construction to be followed in determining existence of certain power.

It is a settled principle of law that in determining whether a board or commission has a certain power, the authority given should be liberally construed in the light of the purposes for which it was created and that which is incidentally necessary to a full implementation of the legislative intent should be upheld as being germane to the law. Necessarily, too, where the end is required, the appropriate means are deemed given.

Nature of powers.

Jurisdiction limited.

In general, the jurisdiction of administrative officers and agencies is special and limited.
They possess a:

limited jurisdiction, or purely constitutional or statutory powers, and
only such powers and authority as have been specifically conferred upon them by the Constitution or specifically granted to them by their enabling statutes and those as may be necessarily implied in the exercise thereof or incidental to the attainment of their purposes or objectives.

Powers within their jurisdiction broad.

However, the powers conferred on them must be commensurate with the duties to be performed and the purposes to be lawfully effected.
In various instances, the powers of particular administrative bodies have been held broad and plenary within their fields, and in such case, it is only where such power and authority have been manifestly abused that a court may interfere.
Persons dealing with administrative officers or agencies must take notice of their authority to act, and are charged with knowledge of any and all limitations on their power.

Powers subject to the Constitution, applicable law, or administrative regulation.

A government agency must respect the presumption of constitutionality and legality to which statutes and administrative regulations are entitled until such statute or regulation is repealed or amended, or until set aside in an appropriate case by a competent court, and ultimately by the Supreme Court.
It is not authorized to substitute its own judgment for any applicable law or administrative regulation with the wisdom or propriety of which it does not agree, at least not before such law or regulation is set aside by the authorized agency of the government.

What constitutes administrative power or administrative function.

The term administrative power or administrative function is a convenient rather than a technical term.
It is of indefinite connotation embracing in a loose sense some legislative, executive, and judicial prerogatives.
While it has been said that in a constitutional sense there is no such thing as an "administrative power," as all governmental powers are included in the legislative, executive, and judicial categories, the classification of "administrative powers" is well-established.

Powers not explicitly legislative, executive, and judicial.

An administrative power has been said to be any power not explicitly allocated in the Constitution, although in its nature, legislative, executive, or judicial.
It has been applied in describing those:

powers which may be invested in agencies other than the legislature without delegating legislative powers,
powers which may be vested in agencies other than courts without infringing upon the judicial power, and
functions which may not be imposed upon a member of the judiciary.

Powers involve exercise of judgment and discretion.

Perhaps the most important administrative function is the exercise of the judgment and discretion which statutes have vested in the administrative agency.
Regulatory and control powers of an administrative agency are frequently described as "administrative" though judicial in nature.
The power of an administrative agency to make rules for the future is administrative, although legislative in nature, and the application of the law or such rules in particular cases is executive or administrative in nature.
In the exercise of their functions and in making decisions, quasi-judicial bodies must not be too dogmatic as to restrict themselves to literal interpretations of words, phrases and sentences. A complete and wholistic view must be taken in order to render a just and equitable judgment.

Powers of administrative agencies classified.

As to nature.

The powers of administrative agencies may be classified into:

investigatory powers;
quasi-legislative or rule-making powers; and
quasi-judicial or adjudicatory powers.

The regulatory power of an administrative agency may be either legislative or judicial in nature although in certain instances a regulatory action evidenced by a rule may still constitute adjudication.
The power to conduct investigations and the power to carry out the provisions of law are essentially executive or administrative in nature but the latter is classified as adjudicatory where it involves the exercise of judgment and discretion.

As to degree of subjective choice.

According to the degree of subjective choice involved in their exercise, the powers of administrative agencies are, in general, classified either as:

discretionary or
ministerial.

Discretionary and ministerial powers.

Sometimes it is necessary or desirable to determine whether the power or function being performed by an administrative agency is discretionary or ministerial.
Discretionary Power

The very essence of a discretionary power is that the person or persons exercising it may choose which of several courses will be followed.
Discretion may be defined, when applied to public functionaries, as the power or right conferred upon them by law of acting officially under certain circumstances, according to the dictates of their own judgment and conscience, and not controlled by the judgment or conscience of others.

Ministerial Power

A ministerial duty is one in respect to which nothing is left to discretion.
It is a simple, definite duty arising under conditions admitted or proved to exist, and imposed by law.
A ministerial act has been defined as one performed in response to a duty which has been positively imposed by law and its performance required at a time and in a manner or upon conditions specifically designated, the duty to perform under the conditions specified not being dependent upon the officer's judgment or discretion.
That a necessity may exist for the ascertainment of the facts or conditions, upon the existence of which the performance of an act becomes a clear and specific duty, does not operate to convert a ministerial act into one discretionary or judicial in nature. 3
Although an agency has the power to determine whether an application complies with statutory requisites, if it appears beyond doubt that the application does so comply, there is no discretion to reject the application.

B. Investigatory Powers

Generally.

Scope.

Investigatory or inquisitorial powers include the power of an administrative body to:

inspect the records and premises, and
investigate the activities of persons or entities coming under its jurisdiction, or
to secure, or to require the disclosure of information by means of accounts, records, reports, statements, testimony of witnesses, production of documents, or otherwise.

They are conferred on practically all administrative agencies.
In fact, the investigatory powers of administrative agencies, or their power and facilities to investigate, initiate action, and control the range of investigation, is one of the distinctive functions which sets them apart from the court.

As sole powers granted.

Some administrative agencies act merely as investigatory or advisory bodies, that is, they exist solely to secure and provide information, and in some cases to make recommendations.

As aid to other powers.

Other agencies possess their investigative or inquisitorial powers as an aid to other powers which they possess, and agencies use such investigative powers to inform themselves of particular situations to determine whether they should take further action, in the execution of particular powers or duties, such as the determination or adjudication of a particular matter.
The power of investigation consists in gathering, organizing, and analyzing evidence, which is a useful aid or tool in an administrative agency's performance of its rule-making or quasi judicial functions. Notably, investigation is indispensable to prosecution.

As distinguished from judicial functions.

Ruperto v. Torres

The Supreme Court had occasion to rule on the functions of an investigatory body with the sole power of investigation.
It does not exercise judicial functions and its power is limited to investigating the facts and making findings in respect thereto.
The Court laid down the test of determining whether an administrative body is exercising judicial functions or merely investigatory functions:
Adjudication signifies the exercise of power and authority to adjudicate upon the rights and obligations of the parties before it.
Hence, if the only purpose for investigation is to evaluate evidence submitted before it based on the facts and circumstances presented to it, and if the agency is not authorized to make a final pronouncement affecting the parties, then there is an absence of judicial discretion and judgment.

Montemayor v. Bunda- lin, 405 SCRA 264 (2003)

There are three (3) basic principles in administrative investigations initiated by a complaint.

the burden is on the complainant to prove his allegations by substantial evidence.
the findings of facts made therein are to be respected as long as they are supported by substantial evidence
the administrative decision or finding can only be set aside on proof of gross abuse of discretion, fraud, or error of law.

Scope and extent of powers.

The investigative powers of an administrative agency or official must be exercised within the limits prescribed and bear a reasonable and legitimate relationship to the general powers granted. This includes authority to obtain information necessary to discharge its proper functions.

Initiation of investigation.

An administrative agency or official may initiate an investigation on a complaint or on its own motion.
The proceeding may be inaugurated by an order of investigation, and it is proper for a commission to recite in its order for investigation its duties and powers specifically and to refer to the several legislative acts and sections establishing them.
An administrative body may be required to make certain investigations as a mandatory duty.

Conduct of investigation.

Investigations are usually, and may properly be held in private.
Investigations must be so conducted that harmful publicity will not be used in lieu of sanctions provided by law.

Inspection and examination.

Among the investigatory powers conferred upon administrative agencies is the power, for specific purposes, to enter premises and inspect or examine such premises or things or operations therein, particularly books and records.

Some statutes authorize administrative agencies to enter and inspect such places and such records as they may deem necessary or appropriate to determine whether any person has violated any provision of the act being administered or which may aid in the enforcement of the act.

A fact-finding quasi-judicial body (e.g., Land Transportation Franchising and Regulatory Board) whose decisions (on questions regarding certificates of public convenience) are influenced not only by the facts as disclosed by the evidence in the case before it but also by the reports of its field agents and inspectors that are periodically submitted to it, has the power to take into consideration the result of its own observation and investigation of the matter submitted to it for decision, in connection with other evidence presented at the hearing of the case.

Requirements as to accounts, records, reports, or statements.

Regulatory bodies have been given power to prescribe forms and methods of accounts, records, and memoranda for the business under their control, power to inspect the books, papers, and records, and power to require the filing of reports or statements, or answers to specific questions.
Thus, in regard to some agencies, it is provided that they shall, at all reasonable times, have access to, for the purpose of examination, and the right to copy, any documentary evidence of any person being investigated or proceeded against.

Requiring attendance of witnesses, giving of testimony, and production of evidence.

Although administrative officers do not have inherent power to require the attendance of witnesses before them, put witnesses under oath and require them to testify, this power, and the power to require the production of books, papers, and documents or other evidence, are basic to the power of investigation.
It is common for statutes to confer such powers upon administrative agencies. Such powers may validly be vested in administrative agencies even for purposes not quasi-judicial.
An administrative agency may not itself be empowered to compel the attendance and testimony of witnesses, but that the compulsion must be exerted through judicial process.

Accordingly, it is common for the statutes to provide for application to a court to enforce obedience to a subpoena of an administrative agency or the giving of testimony before it.

The power to compel a witness to testify will not be inferred from a grant of authority to summon and examine witnesses. It must be clearly given by statute.

And the power to investigate anomalies cannot include the power to take testimony or evidence of witnesses whose appearance may be required by the compulsory process of subpoena.

Hearing.

While hearings may be held, as a general rule, a hearing is not a necessary part of an investigation by an administrative agency or official.
A requirement that there be an investigation carries with it no command that a quasi-judicial hearing be conducted.

Contempt proceedings.

Persons failing to attend, give testimony, and produce records at an investigative proceeding may be punished for contempt.
Thus, a person failing to appear in answer to a subpoena issued by an investigative body or refusing to produce records pursuant to a subpoena duces tecum and to explain his inability to produce such records may be subject to contempt proceedings.
An administrative body, however, cannot exercise its power to punish a person for contempt in the absence of any statutory grant, for such power is inherently judicial in nature.

Application of technical rules of procedure and evidence.

It is not totally uncommon that a government agency is given a wide latitude in the scope and exercise of its investigative powers.
After all, in administrative proceeding, technical rules of procedure and evidence are not strictly applied.

Example:

The Supreme Court, through the Court Administrator, investigates and takes cognizance of, not only unverified, but also even anonymous complaints against court employees or officials for violations of R.A. No. 6713, the Code of Conduct and Ethical Standards.
Under the Constitution, the Office of the Ombudsman may investigate on its own, or on complaint by any person, any act or omission of any public official or employee when such act or omission appears to be illegal, unjust, improper, or inefficient.

Right to counsel in administrative investigations.

Hearing not part of criminal prosecution.

While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under existing laws, a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and of the respondent's capacity to represent himself, and no duty rests on such body to furnish the person being investigated with counsel.
In an administrative proceeding, a respondent has the option of engaging the services of counsel or not.
This is clear from the provisions of Section 32, Article VII of R.A. No. 2260 (Civil Service Act) and Section 39(2), Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of Executive Order No. 292 (Administrative Code of 1987).
Thus, the right to counsel is not always imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit disciplinary measure against erring public officers and employees, with the purpose of maintaining the dignity of government service.
As such, the hearing conducted by the investigating authority is not part of a criminal prosecution.

Exclusionary rule in custodial investigation not applicable.

The right to counsel under Section 12(1) of the Bill of Rights of the Constitution is meant to protect a suspect in a criminal case under custodial investigation.
Custodial investigation is the stage where the police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a particular suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit incriminating statements.
It is when questions are initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. The right to counsel attaches only upon the start of such investigation.
Therefore, the exclusionary rule under Section 12(3) of the Bill of Rights applies only to admissions made in a criminal investigation but not to those made in an administrative investigation.

Importance of administrative investigations.

The life blood of the administrative process is the flow of fact, the gathering, the organization and the analysis of evidence.
Investigations are useful for all administrative functions, not only for rule-making, adjudication, and licensing, but also for prosecuting, for supervising and directing, for determining general policy, for recommending legislation, and for purposes no more specific than illuminating obscure areas to find out what if anything should be done.
An administrative agency may be authorized to make investigations, not only in proceedings of a legislative or judicial nature, but also in proceedings, the sole purpose of which is to obtain information upon which future action of a legislative or judicial nature may be taken and may require the attendance of witnesses in proceedings of a purely investigatory nature.
It may conduct general inquiries into evils calling for correction, and to report findings to appropriate bodies and make recommendations for actions.

C. Rule-Making Powers

Generally.

Nature.

Administrative agencies are endowed with powers legislative in nature or quasi-legislative (i.e., to make rules and regulations), and, in practical effect, with the power to make law.
However, the essential legislative functions may not be delegated to administrative agencies and in this sense, it is said that administrative agencies have no legislative power and are precluded from legislating in the strict sense.
hat may be granted to an administrative agency is rule-making power to implement the law it is entrusted to enforce.
It necessarily includes the power to amend, revise, alter, or repeal its rules and regulations, (infra.)
It is a standard provision in administrative rules that prior issuances that are inconsistent therewith are declared repeated or modified.

Necessity.

The most pervasive legislative power conferred upon administrative agencies is the power to make rules and regulations.
The necessity for vesting administrative agencies with this power because of the impracticability of the lawmakers providing general regulations for various and varying details of management has been recognized and the power of the legislature to vest such authority in administrative agencies has been upheld as against various particular objections.
Such power of subordinate legislation conferred upon administrative agencies is permitted in order to adapt to the increasing complexity of modern life and variety of public functions.
As subjects for government regulation multiply, so does the difficulty of administering laws. Hence, specialization even in legislation has become necessary.
With this authority, an administrative body may implement broad policies laid down in a statute by "filling in" the details which the Legislature may neither have time nor competence to provide.

Conditions.

The statutory grant of rule-making power to administrative agencies is a valid exception to the rule on nondelegation of legislative power (Chap. IV.) provided two conditions concur, namely:

The statute is complete in itself, setting forth the policy to be executed by the agency; and
Said statute fixes a standard, mapping out the boundaries of the agency's authority to which it must conform.

Binding force and effect.

A valid rule or regulation duly promulgated by an administrative agency has the force and effect of law and is binding on the agency and on all those dealing with the agency.
It is law.
Conversely, a regulation not adopted pursuant to law is no law and has neither the force nor the effect of law.

Prospective/retroactive application.

The well-entrenched principle is that a statute operates prospectively only and not retroactively, unless the legislative intent to the contrary is made manifest either by express terms of the statute or by necessary implication.
The same principle is applicable to rules and regulations issued by administrative agencies in their duty to implement laws.

Legislation on the administrative level.

Legislative power is the power to make, alter, or repeal laws, or rules for the future.
It is distinguished from judicial power or "legislation," in that basically it operates in the future, rather than on past transactions or circumstances.
The rule-making power of an administrative agency, that is, the power to make implementing or interpretative rules or regulations, is legislative in character and results in "delegated legislation."

"Rule making" is legislation on the administrative level, that is, legislation within the confines of the granting statute, as required by the Constitution and its doctrine of non-delegability and separability of certain powers flowing from the separation of the three branches of the government.
It is also called:

administrative legislation
delegated legislation
ordinance-making
quasi-legislation

The power conferred upon an administrative agency to issue or promulgate rules and regulations necessary to carry out its functions has been held to be an adequate source of authority to delegate a particular function, unless by express provision of the statute or by implication, it has been withheld.

Limitations on the rule-making power.

The quasi-legislative or rule-making power of a public administrative body is a delegated legislative power, which it may not use either to abridge the authority given it by the Congress or the Constitution or to enlarge its power beyond the scope intended.

Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by such a body, as well as with respect to what fields are subject to regulation by it.
A public administrative body may make only such rules and regulations as are within the limits of the powers granted to it or what is found in the legislative enactment itself; otherwise, they become void.

It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.
It may not, by its rules and regulations, amend, alter, modify, supplant, enlarge or expand, restrict or limit the provisions or coverage of the statute as this power belongs to the legislature.

It cannot engraft additional requirements or embrace matters not covered by the statute or contemplated by the legislature.
The power of administrative officials to promulgate rules in the implementation of the statute is necessarily defined by and limited to what is provided in the legislative enactment conferring the power.

It is confined to putting the law into effect or carrying out the legislative purpose.

There is no dispute that in case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law.
The rules of administrative officers and boards which have the effect of extending, or which conflict with the authority-granting statute do not represent a valid exercise of the rule making power but constitute an attempt by an administrative body to legislate.

Furthermore, a rule or regulation should be:

uniform in operation
reasonable, and
not unfair or discriminatory

Rules, regulations, and orders or rulings distinguished.

The terms "rules" and "regulations" are generally used interchangeably although it would appear that the former is a term of broader connotation than the latter.
The rules and regulations of an administrative body or officer usually comprise those actions of such body or officer in which the legislative element predominates in that they establish a pattern of conduct thereafter to be followed.

They are the duly made general rules relative to the subject on which the administrative agency acts, subordinate to the terms of the statute under which they are promulgated, and in aid of the enforcement of its provisions.

On the other hand, some administrative regulations constitute nothing more than an administrative opinion as to what a statute under construction means, as where an administrative tribunal in adopting a regulation, only purports to interpret what the legislature meant by its statutory language.

So too, a recommendation by an administrative officer relative to the interpretation of an administrative regulation may not have the force of a regulation. In other words, the term "regulations" may be used in the sense of "rules" or only in the sense of "interpretative regulations."

The rules and regulations of a public administrative agency have been distinguished from the orders or determinations of such an agency.

The latter are actions in which there is more of the judicial function and which deal with a particular present situation, while the former are actions in which the legislative element predominates.
The term "ruling" is frequently used to signify an interpretation or an application of a rule or statute to a particular situation.

"Rulings" are said to "partake somewhat of the characteristics of individual case decisions, of interpretations, of advisory or advance opinions, and of implementation of the statutes and the regulations themselves."
In a single determination, an administrative agency may act in both a legislative and a judicial capacity.
It may decide matters of policy or determine a rule for future action as well as dispose of a particular controversy.

Kinds of rule-making powers/rules and regulations.

Rule-making powers.

Rules and regulations of administrative agencies are of different classes.
Otherwise stated, administrative agencies have various kinds of rule-making powers which have been classified as follows, to wit: SIC

Supplementary or detailed legislation

rule-making by reason of particular delegation of authority;

Interpretative legislation

rule-making by the construction and interpretation of a statute being administered; and

Contingent legislation or determination

under delegated power, whether a statute shall go into effect.

Administrative rules.

Based on the above classifications, the administrative rules and regulations may be:

discretionary or legislative
interpretative
contingent

Contingent rules are legislative, so are procedural rules.
The agency rules may also be:

internal

those issued by an administrative superior to his subordinates;

penal

those which prescribe criminal sanctions.

Legislative rules and regulations.

A form of subordinate legislation.

"Legislative" or discretionary rules or regulations are indeed a form of subordinate legislation which can be issued only in virtue of statutory delegation.
When valid, they are accorded the force and effect of law immediately upon going into effect.
In such instances, the administrative agency is acting in a legislative capacity, supplementing the statute, filling in the details, or "making the law," and usually acting pursuant to a specific delegation of legislative power to implement the broad policies laid down in a statute.
Administrative rules may describe the general discretionary policies to be followed by the agency.
Example:

An agency given broad discretionary powers in respect to the granting of licenses may formulate a statement of the conditions which must be met in order to obtain a license.
In many cases, agencies have thus worked out standards and policies which, in effect, control the administrative decision in a wide variety of cases.

Characteristics.

It is said that "if the rule represents something more than the agency's opinion as to what the statute requires — if the legislature has delegated a measure of legislative power to the agency and has provided a statutory sanction for violation of such rules as the agency may adopt — then the rule may properly be described as legislative.
There are, thus, two identifying characteristics of legislative rules:

The statute has delegated power to the agency to adopt the rule; and
It provides that the rule shall, if within the delegated power, have authoritative force.

Interpretative rules and regulations.

Resemble judicial adjudication.

They are those which purport to do no more than interpret the statute being administered, to say what it means.

They constitute the administrator's construction of a statute.

In such instances, the administrative agency is merely anticipating what ultimately must be done by the courts.

It is performing a judicial function rather than a legislative function.
Interpretative regulations (in the absence of ratification by the legislature) have validity in judicial proceedings only to the extent that they correctly construe the statute.
Strictly speaking, it is the statute and not the regulation to which the individual must conform.

Entitled to great weight and respect.

It is an elementary rule in administrative law that administrative rules and regulations or policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great weight and respect.
The best authority to interpret a rule is the source of the rule itself.

Nevertheless, interpretations by an administrative body of the law or its rules, while they ordinarily control the construction of the courts, are not conclusive. They are at best advisory for it is the courts that finally determine what the law means, and they will be set aside or ignored if judicially found erroneous.

Commissioner of Customs v. Philippine Acetylene Co., 39 SCRA 70 (1970):

In a case which involves Section 6 of R.A. No. 1394 exempting from the payment of the special import tax "importation into the Philippines of machinery and/or raw materials to be used by new and necessary industries . . . machinery equipments, accessories and spare parts for the use of industries," the Court of Tax Appeals relied on the interpretation of "industries," by the Secretary of Finance, to wit: "Any productive enterprise which employs relatively large amount of capital and/ or labor falls under the term 'industries' as used in Section 6 of Republic Act No. 1394."
The Supreme Court said that this was erroneous.
"Industries" could only refer to "new and necessary industries" for purposes of tax exemption. Since the respondent company was held not a "new and necessary" industry, its importation in question was not exempt from the payment of the special import tax.

Sunga v. Commission on Elections, 288 SCRA 76 (1998):

Under Section 6 of R.A. No. 6646 (Electoral Reform Law) the fact that a candidate was already proclaimed and had assumed office does not divest the Commission on Elections of authority and jurisdiction to continue the hearing and eventually decide the disqualification case against him. The word "shall" in the provision clearly signifies that the requirement of the law is mandatory. Pursuant to its Resolution, the Commission dismissed a disqualification case filed before the election but which remained unresolved after the election.
The Supreme Court ruled: "this amounts to a quasi-judicial legislation by the COMELEC which cannot be countenanced and is invalid for having been issued beyond the scope of its authority. Interpretative rulings of quasi-judicial bodies or administrative agencies must always be in perfect harmony with statutes and should be for the sole purpose of carrying their general provisions into effect. By such interpretative or administrative rulings, of course, the scope of the law itself cannot be limited. Indeed, a quasi-judicial body or an administrative agency for that matter cannot amend an act of Congress. Hence, in case of a discrepancy between the basic law and an interpretative or administrative ruling, the basic law prevails."

Legislative and interpretative rules distinguished.

It is the substance, not the form, which determines the nature of regulations, whether it is an administrative interpretation of law or an administrative rule.
Power to create new law.

Legislative rules are in the nature of subordinate legislation. They are the product of the power to create new and additional legal provisions that have the effect of law.
Interpretative rules are the product of interpretation of previously existing laws.

Thus, while the former may embody new law, the latter merely clarify or provide guidelines to the law they interpret.

Need for express delegation.

Legislative regulations may be issued only under express delegation of law,
Interpretative regulations may be issued as a necessary incident of the administration of a regulatory statute.

Indeed, one charged with such administration must necessarily interpret its provisions before he can apply them to the particular situations, whether he embodies such interpretations in the generalized form of regulations or confines them to the case-by-case approach.
At the same time, the statutes often expressly authorize the issuance of such interpretative regulations.

Presence of statutory sanction.

Whether a given statutory delegation authorizes legislative or interpretative regulations depends upon whether the statute places specific "sanctions" behind the regulations authorized, as for example, by making it a criminal offense to disobey them, or by making conformity with their provisions a condition of the exercise of legal privileges.

Legislative regulations are said to have the force and effect of law unless they are ultra vires or were issued under an unconstitutional delegation.
Interpretative regulations are but statutory interpretations, which have behind them no statutory sanction.

Such regulations, whether so expressly authorized or issued only as an incident of statutory administration, merely embody, so far as their legal effects go, administrative interpretations of an existing law.

Binding force and effect.

Valid legislative rules have the same force and effect as valid statutes.
Since interpretative rules are, in theory, but administrative findings of law (i.e., they do not embody new law but merely interpret previous law), they are always subject to judicial determination that they are erroneous, even when their issuance is authorized by statute.

However, interpretative regulations and the less formalized interpretations which result from long-standing practice on the part of those charged with the administration of statute, while at best merely advisory, are both to be given great weight.
In the absence of error of law, or abuse of power, or lack of juris diction, or grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislative enactment creating or charging a governmental agency with the administration or enforcement thereof, the action of the agency should not be disturbed by the courts.
In case of doubt, they are not to be overthrown unless they are clearly erroneous.” The courts have evolved a number of doctrines to guide judicial self-restraint.

Consequence of wrong construction.

No vested right can be acquired on a wrong construction of the law by administrative officials and such wrong interpretation does not place the government in estoppel to correct or overrule the same.
When an administrative agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means.
Thus, as stated above, an action by an administrative agency may be set aside by the judicial department if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.

Contingent rules and regulations.

Congress may provide that a law (given the apt name "contingent legislation") shall take effect upon the happening of future specified contingencies leaving to some other person or body the power to determine when the specified contingency has arisen.
It may delegate a power not legislative which it may itself rightfully exercise.

The power to ascertain facts is such power which may be delegated.
There is nothing essentially legislative in ascertaining the existence of acts or conditions as the basis of the taking into effect of a law.
The finding by an administrative authority of the existence of conditions defined in the statute under which its provisions shall become operative comes under the head of rule making since it usually involves judgment, if not discretion.

Cruz v. Youngberg, 56 Phil. 234 (1931):

In a case, a law prohibiting the importation into the Philippines of foreign cattle was held valid though it contained a proviso that the Governor-General, with the concurrence of the presiding officers of both Houses of the Legislature, may raise or lift such prohibition, "entirely or in part if the conditions of this country make this advisable or the disease among foreign cattle has ceased to be a menace to the agriculture and livestock of the land."
The Supreme Court, in holding that there was no unlawful delegation of the legislative power said: "The true distinction, therefore, is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be and conferring an authority of or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done, to the latter, no valid objection can be made."

What the President is required in this kind of act is simply in the execution of the act, not in the making of the law. He becomes a mere agent of the legislature in ascertaining and declaring the event upon which its expressed will is to take effect.

Procedural rules.

As here used, the term refers to those describing the methods by which the agency will carry out its appointed functions — rules which make provisions for:

the filing of applications
the resolution of complaints
the serving of papers
the conduct of hearings

An agency cannot very well function without rules of procedure, and it may be supposed that every agency has such rules, at least at the level of intra-office memoranda.
Procedural rules, interpretative rules, and legislative rules serve three basic purposes.
Some rules, however, may serve two or more of these three purposes simultaneously.

Example:
A rule prescribing the burden of proof in administrative hearings may serve as a statement of procedure, and, at the same time evince the agency's interpretation of the governing statute.
Indeed, it is conceivable that such a rule might, under some circumstances, serve the purpose of a legislative regulation.

Ordinance power of the President.

Under his ordinance power, the issuances of the President are classified as follows: EAP-MMG

Executive Orders

Acts of the President providing for rules of a general or permanent character in implementation or execution of constitutional or statutory powers shall be promulgated in executive orders;

Administrative Orders

Acts of the President which relate to particular aspects of governmental operations in pursuance of his duties as administrative head shall be promulgated in administrative orders;

Proclamations

Acts of the President fixing a date or declaring a status or condition of public moment or interest, upon the existence of which the operation of a specific law or regulation is made to depend, shall be promulgated in proclamations which shall have the force of an executive order;

Memorandum Orders

Acts of the President on matters of administrative detail or of subordinate or temporary interest which only concern a particular officer or office of the Government shall be embodied in memorandum orders;

Memorandum Circulars

Acts of the President on matters relating to internal administration, which the President desires to bring to the attention of all or some of the departments, agencies, bureaus or offices of the Government, for information or compliance, shall be embodied in memorandum circulars; and

General or Special Orders

Acts and commands of the President in his capacity as Commander-in-Chief of the Armed Forces of the Philippines shall be issued as general or special orders.

Administrative issuances of Secretaries and heads of bureaus, offices or agencies.

General classification of issuances.

The administrative issuances of Secretaries and heads of bureaus, offices or agencies shall be in the form of circulars or orders.
Circulars shall refer to issuances prescribing policies, rules and regulations, and procedures promulgated pursuant to law, applicable to individuals and organizations outside the Government and designed to supplement provisions of the law or to provide means for carrying them out, including information relating thereto; and
Orders shall refer to issuances directed to particular offices, officials, or employees, concerning specific matters including assignments, detail and transfer of personnel, for observance or compliance by all concerned.

Numbering system of issuances.

Every such circular or order shall properly be identified as such and chronologically numbered.
Each class of issuance shall begin with number 1 for each calendar year.

Official logbook.

Each department, bureau, office or agency shall keep and preserve a logbook in which shall be recorded in chronological order, all final official acts, decisions, transactions or contracts, pertaining to the department, bureau, office or agency.
Whenever the performance of an official act is in issue, the date and the time record in the logbook shall be controlling.
The logbook shall be in the custody of the chief Administrative Officer concerned and shall be open to the public for inspection.

Government-wide application of the classification of issuances.

The Records Management and Archives Office in the General Services Administration shall provide such assistance as may be necessary to effect general adherence to the foregoing classification of issuances, including the conduct of studies for developing sub-classifications and guidelines to meet peculiar needs.
All administrative issuances of a general or permanent character shall be compiled, indexed and published pursuant to the provisions of the Administrative Code.

Practical necessity of the rule- making power.

It is now generally admitted that delegated rule-making is a practical necessity not only in time of emergency but also in the normal operation of a twentieth century government.

Regulation of highly complex and changing conditions.

In the simple days of the agricultural era, statutes could be relatively concrete, specific, and detailed.
With the coming of the industrial age, however, not only are the conditions to be regulated highly complex and rapidly changing, but unprecedented problems have emerged.
The public has demanded new controls, even while there has been neither experience to teach the best methods nor at times even a clear conception of the objectives of control.

Gradual change in regulatory role of congress.

The net result has been a gradual change in the regulatory role of Congress which has been compelled, in many cases, to provide only the general principles of regulation, and to devolve upon administrative authorities the task of applying those general principles. Frequently, it has authorized such authorities to concretize such principles, before applying them to particular cases, by the issuance of rules and regulations of more specific content.
The conclusion that, under modern conditions, this is a necessary and normal technique of regulations is increasingly verified by experience in several states.45 Such an arrangement is now accepted as a fact of life of modern governments and cannot be considered violative of due process as long as the cardinal rights of the parties affected (see Chap. V.) are observed.

Inability of legislative bodies to anticipate future situations.

Statutes are generally couched in general terms.
The details and manner of carrying out the law are left to the administrative agency charged with its implementation.
It seems clear that if the governing or enabling statute is quite detailed or specific, there would be very little need (or occasion) for implementing administrative regulations.
It is, however, precisely the inability of legislative bodies to anticipate all (or many) possible detailed situations in respect of any relatively complex subject matter, that makes subordinate delegated rule-making by administrative agency so important and unavoidable.

Special advantages of the rule-making power.

Under proper safeguards, the delegated rule-making has a number of potential advantages over having the legislature freeze regulatory details into the statutes, as well as over leaving administrators excessive discretion in applying statutory generalities to particular cases.

Freed from concern with details, the legislature can concentrate its attention upon the enactment of the fundamentals of policy, and is thus strengthened as the representative organ of government.
The legislature also has additional time to investigate the manner in which administrative authorities have concretized and enforced its policies.
Since rules are more easily amended than statutes, it becomes easier to correct mistakes and to meet changing conditions, if the difficulty concerns details rather than basic policy.
The administrator is saved from a dilemma that he often faces when his hands are tied by the red tape of legislative details: he does not have to choose between defeating the central purpose of the statute by trying to work the unworkable, and evading the letter of the law.
The administrator is the one who, by constantly rubbing elbows with his particular problems, can, by trial and error, work out the specific regulations best calculated to attain the statutory objective.
In working out the specifics of policy, a bureaucracy is, ideally, subject to political responsibility with respect to discretionary matters, and to professional responsibility with respect to technical matters.
If discretion in particular cases is untrammeled, it is more liable to abuse than if statutory generalities are made more specific and concrete before they are applied to individual situations.
Interpretative regulations are a means of increasing the certainty of the law, especially if the statute provides that no civil or criminal liability shall apply to any act done or omitted in good faith in conformity with such interpretations, notwithstanding that, after such act or omission, such interpretations are held invalid by the courts.
Contingent legislation furnishes a means by which a policy can be blocked out by the legislature, and its coming into operation be made dependent upon unpredictable future contingencies, such as the action of a foreign government.

Requisites for validity of administrative rules and regulations.

They are as follows: ICP

The rules and regulations must have been issued on the authority of law;
They must not be contrary to law and the Constitution;
They must be promulgated in accordance with the prescribed procedure.

In certain cases, previous notice and hearing or publication may be necessary to satisfy the requirement of due process.
They must be published in full if their purpose is to enforce or implement existing law pursuant to a valid delegation.

Grant of rule-making powers.

By some legislative act.

The authority of an administrative body or officer to make rules and regulations must be based upon some legislative act, that is, there must be a law authorizing it to promulgate rules and regulations.
Because of the ever present danger that an agency may adopt legislative rules which go beyond, and possibly conflict with, the legislative intent, it is desirable that an asserted power to adopt such rules be predicated upon a specific and explicit legislative authority.
Without such authority, an administrative rule and regulation is null and void.

By implication from the powers expressly granted.

The power, however, of administrative agencies to make rules and regulations does not depend for its existence solely upon express grant.
The authority of an administrative agency to adopt reasonable rules and regulations which are deemed necessary to the due and efficient exercise of the powers expressly granted, cannot be questioned. This authority may be implied from the power granted. Thus:

The power to fix minimum wage does not confine an agency to that single act. It may adopt rules to make it effective.
The question as to the power of an agency to adopt procedural rules is one which rarely arises. It would seem that the very delegation to an agency of power to administer a statute would carry with it the power to adopt such reasonable procedures as are necessary or useful in carrying out its administrative tasks.
It is equally clear that an agency may, without a specific statutory authority, make known its interpretation of the provisions of the statute it administers. Conversely, it is clear on principle, that an agency may not issue legislative rules in the absence of legislative authority to do so.

Consistency with law and the Constitution.

Administrative rules and regulations to be valid must not be in conflict with the law and the Constitution.
Their promulgation may be legitimately exercised only for the purpose of implementing the law or putting it into effect. Thus:

They must be within the scope and purview of the statutory authority granted by the legislature to the administrative agency.

Administrative authorities must strictly adhere to the standard policies and limitations provided in the basic law vesting power to them.
Rules and regulations must be germane to the object and purpose of the law and conform to the standards that the law prescribes, and must relate solely to carrying into effect the general provisions of the law they seek to apply and implement.
So long as the regulations are in harmony with the provisions of the law and for the sole purpose of carrying into effect its general provisions, they are valid.

They must be confined to details for regulating the mode of proceeding to carry into effect the law as it has been enacted.

The rule making power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute or beyond its terms and provisions.
In case there is a discrepancy between the basic law and the implementing rule or regulation, it is the former that prevails.

Determination of validity of rules.

The questions to be examined in determining the validity of agency rule depend on the type of rule involved.
Legislative rule.

In the case of a legislative rule, the queries would be: SSC

first, whether the rule relates to the subject matter on which power to legislate has been delegated;
second, whether the rule conforms to the standards prescribed in the delegatory statute; and
third, whether the rule is invalid on constitutional grounds, such as due process.

Interpretative rule.

When an interpretative rule is involved, the inquiry relates fundamentally to the question of whether the rule correctly interprets the statute, and involved with this issue, there might be a question of whether the rule amounts to an attempt to exercise legislative powers which have not been delegated.

If this were the case, the rule would be invalid as going beyond the sphere of interpretation and into that of legislation.

Tests applied in determining validity of rules.

Some general tests have been given in passing upon the validity of challenged administrative rules.
A rule is invalid if it exceeds the authority conferred to it.

This test is applied in the following cases:

Where a power has been delegated to make legislative rules within a plainly limited sphere and subject to defined standards, and where the rule adopted exceeds this sphere or is contrary to the standards; and
Where there has been no delegation of legislative power, and where a rule issued as an administrative interpretation of the statute is found to go beyond the sphere of interpretation and into the forbidden realm of legislation.

A rule is invalid if it conflicts with the governing statute.

The conclusion that a rule is invalid as exceeding the authority conferred on the agency by statute is sometimes premised on the finding that there is a conflict between the challenged rule and the provisions of the governing statute.

Where, for example, a procedural rule attempts to limit a right of appeal granted by statute, it is void because it, in effect, conflicts with the statute.
Where an interpretative rule is in conflict with the court's interpretation of the statute, the conclusion of invalidity is premised on the agency's interpretation as being in conflict with the statute.

A rule is void if it extends or modifies the statute.

An administrative agency may not make a rule or regulation that alters, restricts or enlarges the terms of a legislative enactment, or engrafts additional requirements on the statute which were not contemplated by the legislature.
The governing principle was long ago expressed by the United States Supreme Court in these words: "[i]f experience shows that Congress acted under a mistake, that does not authorize the Treasury Department... to make new laws which they imagine Congress would have made had it been properly informed."
Examples of rules which have been held invalid on the ground that they attempted improperly to extend the operative effect or enlarge the policy of the governing statute are:

A rule limiting the size of type that could be used in mortuary advertisements, where the applicable statute prohibited only misleading advertisement;
A rule that sought to transfer to wholesalers of petroleum gas, the responsibility which under the law was placed on the agency itself to see to it that the retailers observed safety regulations;
A rule that imposed a higher standard of care or stricter requirements than that imposed by statute;
A civil service rule prohibiting 57-year old persons from employment, reinstatement, or re-employment in the government service because it has no basis in the law itself, which it is meant to implement and it is not related to or connected with any specific provision of law which it is meant to carry into effect;
A civil service memorandum circular limiting to only (1) year the extension of service of an employee who has reached the compulsory retirement age of 65 without having completed 15 years of service because it has no relation or connection with any provision of the law (P.D. No. 1146.) supposed to be carried into effect for there is nothing in the law which would serve as the basis for providing the allowable extension period to only one (1) year instead of such period to complete the 15-year service requirement to be entitled to the age-old pension benefits under the law. The rule is an addition to or extension of the law, not merely a mode of carrying it into effect.

A rule is void if it has no reasonable relationship to the statutory purpose.

In some cases, the general policy of the rule seems unrelated to the policy of the statute, but neither direct conflict with the statute nor any clear extension of the statutory command can be shown.
In such cases, if the challenged rule produces burdensome and inequitable results, it may be set aside as bearing no reasonable relationship to the purpose of the governing statute, and as producing a result which is out of harmony with the statute and hence, unreasonable.

Courts will set aside rules deemed to be unconstitutional or arbitrary or unreasonable.

Where excess of authority cannot be predicated on the preceding grounds, a conclusion of invalidity may be premised on the ground that the regulation is unreasonable and arbitrary.
In some cases, such a conclusion is planted squarely on constitutional grounds.
As it is sometimes put, the rule is invalid if it goes beyond what the legislature could authorize. Thus, a rule may be held invalid on the ground that it amounts to a taking of private property without compensation, or denies due process or equal protection of the laws.
Every party subject to administrative regulation deserves an opportunity to know, through reasonable regulations promulgated by the agency, of the objective standards that have to be met. Such rule is integral to due process, as it protects substantive rights.

Requirement of reasonableness.

Administrative authorities must not act arbitrarily and capriciously in the enactment of rules and regulations in the exercise of their delegated power to create new or additional legal rules that have the effect of law.
Such rules and regulations should be within the scope of the legislative authority granted by the legislature and, whether required by statute or judicial decisions, their rules and regulations, to be valid must be reasonable.
Bear reasonable relation to the purpose sought to be accomplished.

Rules and regulations must be reasonably adapted to secure the end in view, and are invalid if shown to bear no reasonable relation to the purposes for which they are authorized to be made, i.e., there is lack of reasonable relationship between the purpose sought to be accomplished by the rule.
Examples of rules which have been struck down on this ground:

A rule adopted by a liquor control board prohibiting the use of illuminated signs that showed the trade name of alcoholic beverages, as this was unrelated to the board's statutory purpose of policing the sale of liquor;
A rule by an athletic commission whose function was to establish qualifications for promoters of athletic exhibitions, but which adopted a rule instead which related not to the promoters but to the participants in such exhibitions and undertook to prohibit women from participating in some exhibitions; and
A rule which required a showman to obtain a license if he wished to exhibit animals when the authority of the agency adopting the rule was limited by statute to regulating the "taking, transporting, and storing of animals."

Supported by good reasons.

The requirement of reasonableness of an administrative regulation means no more and no less than that the regulation must be based upon reasonable ground, that is, must be supported by good reasons.

Whether a regulation is reasonable depends on the character or nature of the conditions to be met or overcome, and the nature of the subject matter of a rule may affect its reasonableness.

Thus, the regulation of certain activities involving mere privilege, such as the sale of intoxicating liquors or the conduct of horse racing, is accorded liberal judicial support, and the court is slow to find such regulations unreasonable.

An administrator has a large range of choice in determining what regulations or standards should be adopted. It is enough that the administrator has acted within the statutory bounds of his authority and that his choice, among possible alternatives adapted to the statutory ends, is one which a reasonable person could have made.

Free from constitutional infirmities or charge of arbitrariness.

A court may set aside rules on the basis of their unreasonableness, relying on constitutional grounds (e.g., due process) or without specific reliance on constitutional doctrines but on the bare grounds that they are unreasonable and arbitrary.

Example:

A rule, for example, providing that absence from work for three days or longer on the part of the employee, without consent of the employer, would create a conclusive presumption that the employee had resigned would be unreasonable and hence, contrary to law.

Failure of an agency to give due consideration to all the factors that should have been considered may form a basis for striking down a rule as unreasonable.
Even procedural defects may render a rule unreasonable; e.g., an agency cannot alter the effect of its duly published rules by a mere letter expressing a new policy at variance with the practice permitted under the rules.
A rule although valid when made, may become unreasonable with the passage of time and change of conditions as to become invalid.
In case of delegation of rate-fixing power, the usual standard which the legislature is required to prescribe for the guidance of administrative authority is that the rate be reasonable and just.

However, even in the absence of an express requirement as to reasonableness, this may be implied.

A liberal implementation of the rules and regulations of an administrative agency is justified in cases where their rigid enforcement will result in a deprivation of legal rights.

Thus, a strict implementation of the 60-day rule for the filing of claim with PhilHealth, without regard to the causes of the delay beyond the accredited health provider's (hospital's) control, was held unreasonable considering that the law itself does not provide for any specific period, showing that the period for filing was not per se the principal concern of the legislature. The overly stringent application of technical rules should not be allowed to defeat the hospitals' right to be reimbursed for services it had already rendered, otherwise, no accredited provider will gamble on honoring claims with delayed supporting papers — no matter how meritorious — knowing that reimbursement will not be forthcoming.

Internal rules and regulations.

They refer to administrative rules and regulations issued by a superior administrative or executive officer to his subordinates for the proper and efficient administration of the law.

Object.

Such rules and regulations create no relation except between the official who issues them and the official who receives them.
Such orders, whether executive or departmental, have for their object simply the efficient and economical administration of the affairs of the department or agency in which they issued in accordance with the law governing the subject matter.

Nature.

They are administrative in their nature and do not pass beyond the limits of the department or agency to which they are directed or in which they are published, and, therefore, create no rights in third persons.
They are based on, and are the product of, a relationship in which power is their source, and obedience, their object.

Penal rules and regulations.

They refer to rules and regulations carrying penal or criminal sanctions for violation of the same.
Administrative bodies have the authority to issue administrative regulations which are penal in nature where the delegating statute itself makes the violation of the administrative regulations punishable and provides for its penalty.
Requisites for validity.

The requisites for the validity of administrative rules and regulations with penal sanctions are the following: PFPP

The law which authorizes the promulgation of rules and regulations must itself provide for the imposition of a penalty for their violation;
It must fix or define such penalty;
The violation for which the rules and regulations impose a penalty must be punishable or made a crime under the law itself; and
The rules and regulations must be published in the Official Gazette.

The Administrative Code of 1987 requires that "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." In the absence of a law granting an administrative agency the authority to fix or impose administrative fines, such administrative agency cannot provide for such fines in its implementing rules and regulations.

Nature of power to prescribe penalties.

The rule is that, the lawmaking body cannot delegate to an administrative agency or official, the power to declare what acts shall constitute a criminal offense and how it shall be punished.
Prescribing of penalties is a legislative function.
However, Congress may validly provide in the law itself for the imposition of the penalty for violation of rules and regulations which it has empowered administrative authorities to enact.

Legal force and effect of administrative rules and regulations.

Administrative rule-making includes the formulation of:

legally binding legislative regulations and
non-binding interpretative regulations.

As a matter of policy, courts accord great respect to actions of administrative authorities not only because of the doctrine of separation of powers but also for their presumed knowledgeability and expertise in the enforcement of laws and regulations entrusted to their jurisdiction.
Legislative rules and regulations of an administrative body or officer which are valid have the force and effect of law, and are just as binding upon all the parties, as if they had been written in the original law itself.

They are valid if they have been duly promulgated or adopted in pursuance of properly delegated statutory or constitutional authority of the agency.
They receive statutory force upon going into effect.

On the other hand, interpretative rules and regulations including administrative constructions do not have the force of law.

Their validity is subject to challenges in court.
In this case, the statute itself which is being interpreted remain the sole criterion of what it means and not the interpretative rules and regulations.

So long as the rules represent a correct interpretation of the statute which is acceptable to the court, it is only in that limited sense that they may be said to possess the force of law.

However, it is a principle widely accepted that the contemporaneous construction placed upon the statute by the executive officers whose duty is to enforce, it is entitled to great weight and consideration by the courts.

This is especially true if the administrative interpretation has been observed for a long time without objection.
For instance, it has been said that a regulation of an administrative agency construing a legislative enactment may be deemed to have received legislative approval and to have the effect of law where it is long-continued without substantial change and it applies to unamended or substantially re-enacted statutes.

Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be clearly erroneous or in conflict with either the letter or spirit of the governing statute or the Constitution and other laws.

Administrative interpretation is at best advisory for it is the courts that finally determine what the law means.
In general, interpretative rules are considered important only where the statute itself is ambiguous.

Rules prescribing the methods of procedure within an agency have the effect of law, and are binding on both the agency and on respondent parties.

For example, the time limits prescribed for the filing of applications are normally held to be mandatory.

Thus, an agency has no jurisdiction to act, unless proper application is made within the time prescribed by agency rules.

However, agency rules do not prevent courts from doing what justice requires.

Thus, where the discharge of a civil service employee was found to be unlawful, reinstatement should be ordered despite the fact that the aggrieved employee had not applied for reinstatement within the time required by agency rules.

Courts are competent to deter an agency's own interpretation of its procedural rules, where it is felt that the ends of justice so require.
Like legislative or interpretative rules, procedural rules will be held void if they are found to be in conflict with statutory requirements.

Principles of administrative construction.

By and large, the best authority to interpret a rule is the source itself of the rule.

Generally, the rules and regulations of an administrative agency are subject to the same principles of construction 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 by the agency which adopted it.

It is the intention with which the rule or regulation was adopted which is controlling, and in ascertaining such intention, the rule of construction, expressio unius est exclusio alterius, may be resorted to.
Also, in ascertaining the true meaning of an administrative rule or regulation, the purpose thereof may be considered.

An administrative rule should ordinarily be given that construction which will, if possible, sustain its validity, and, where alternative interpretations of an administrative rule or regulation are possible, the more reasonable of the two is to be chosen.

An administrative regulation providing punishment for the violation thereof should be strictly construed, but it should not be construed so strictly as to defeat the obvious intention with which it was adopted.

Furthermore, the principle of strict construction does not require that a criminal regulation be given its narrowest possible meaning.

In a suit involving a public administrative agency, it has been held that the rules and regulations of such agency should be strictly construed against it, and that any ambiguities contained therein should be resolved in favor of the adversary; but that where a rule is clear and unambiguous, it does not admit of judicial interpretation
In construing an administrative rule or regulation, the court must necessarily look to the administrative construction thereof, where the meaning of the words used is in doubt, but this is not true where the meaning of the words used is not in doubt, or where the language used is not technical."

Administrative rules of procedure are construed liberally in order to promote their object and assist the parties in claiming just, speedy and inexpensive determination of their respective claims and defenses.
But before they can be relaxed to give way to substantive justice, it is implicit that such liberality be applied in a proper case, i.e., a party has to show prima facie that he has meritorious claim or defense.

Effect of reliance on rules.

A person who relies in good faith on an agency rule should be held harmless from loss if that rule is later held invalid or is amended.

Invalid or unconstitutional rule.

One who has relied on an invalid rule is in substantially the same position as one who has relied on an unconstitutional statute.
Thus, as it was put by an Alabama court: "A rule which erroneously interprets a statute is a nullity and no rights are vested as a result of a taxpayer's reliance thereon, since the agency's only power is to rules that would carry into effect the statutory intent."

Rule subsequently amended.

Similarly, protection is accorded to parties who had relied on an administrative rule that was subsequently amended or repealed, (infra.)
The new rule, of course, may be enforced prospectively but it may not be applied retrospectively to periods during which the old rule was in effect, if such retrospective application would be detrimental to the interests of persons who had relied on the superseded rule.

Retroactive operation of rules, regulations, and rulings.

Whether the rules, regulations, or rulings of an administrative agency operate or can be made to operate retroactively depends on the provisions of the authorizing statutes.

The power of an administrative agency to adopt rules and regulations or make rulings ordinarily includes the power to give them a retroactive effect, within the limits specified or contemplated by the statute, provided doing so does not conflict with restrictions on the legislative power to make retroactive laws.

Under some statutes, while an agency may prescribe that a ruling by it shall operate prospectively only, if it fails so to provide, its ruling must operate retroactively as well as prospectively.
However, an administrative rule or regulation usually will not be construed to operate retrospectively where the intention to that effect does not unequivocally appear, although it will be so construed where such intention does appear.
In any case, the new rule or ruling is not to be applied retroactively if to do so would be unreasonable and inequitable.

The principle prohibiting retroactive application of amendments to administrative rules has frequent application to tax cases.
It applies where the retroactive application would prejudice the taxpayer.

Amendment or repeal of administrative rules and regulations.

An administrative agency ordinarily has the authority to change, alter, amend, or correct the rules and regulations duly promulgated by it, and the fact that an administrative rule has been amended does not necessarily mean that the earlier rule was unreasonable.

Since it is discretionary with such an agency whether it will take such action, the exercise of such discretion in the public interest is not subject to judicial control.

In order to be valid, a change in a regulation must be made in accordance with statutory procedural requirements, such as requirements with respect to notice and hearing as well as with respect to the vote necessary to make a change.
As a general practice, an administrative rule should not be amended so as to effect a retroactive change, and the rights of a person acquired before the amendment of a rule have been held determinable under the provisions of such rule prior to such amendment.

However, where an administrative regulation which purports to interpret a statute but is out of harmony therewith is amended so as to correctly apply such statute, such amendment has been held not subject to the objection of being retroactive, since it is, in fact, the first correct application of the law.

Where administrative bodies exercise regulatory or quasi legislative power, laying down rules and regulations, even specific orders to be observed by persons subject thereto, the doctrine of res judicata is not applicable.

Such rules and regulations, or orders may be amended, modified, or revoked to conform to the requirements of the law or the demands of public interest.
But even though an administrative agency is not bound by the rule of res judicata, it is bound to recognize the validity of a rule of conduct prescribed by it, and not to repeal its own enactment with retroactive effect.

In the case of procedural rules, it is often expeditious for an agency to ignore a certain rule in a particular case and adopt therein a different procedure than that contemplated by the agency's rule.

Of course, the parties may voluntarily waive compliance with procedural rules, and such waiver may be founded on acts as well as upon verbal declarations.
Similarly, disregard of minutiae of procedural niceties will be tolerated, where it clearly appears no prejudice resulted.
So too, if it can be shown that a particular rule was established solely for the agency's sole convenience, it may be waived by the agency.
At the opposite extreme, it is clear that an agency will not be permitted to adopt a special rule of procedure for the purpose of affecting the outcome of a particular case, or (with a conscious desire towards the end) wilfully to ignore a rule in a particular case.

But in cases where the record clearly establishes that disregard of an agency's procedural rules could not have prejudiced any party to the proceeding, the departure from prescribed procedures is not fatal.

Formal requirements on the promulgation, etc. of rules and regulations.

The Administrative Code of 1987 contains the following provisions:
Chapter 2. — Rules and Regulations xxx
SEC. 3. Filing. —

Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three months from that date shall not thereafter be subject to any sanction against any party or persons.
The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain of disciplinary action.
A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection.

SEC. 4. Effectivity. — In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them.
SEC. 5. Publication and Reading. — The University of the Philippines Law Center shall:

Publish a monthly bulletin setting forth the text of rules filed with it during the preceding quarter; and
Keep an up-to-date codification of rules thus published and remaining in effect, together with a complete index and appropriate tables.

SEC. 6. Omission of Some Rules. —

The University of the Philippines Law Center may omit from the bulletin or the codification of any rule if its publications would be unduly cumbersome, expensive or otherwise inexpedient, but copies of that rule shall be made available on application to the agency which adopted it, and the bulletin shall contain a notice stating the general subject matter of the omitted rule and new copies thereof may be obtained.
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. —

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.
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.
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

Requirements of notice and hearing or publication.

Quasi-legislative power is exercised by administrative agencies through the promulgation of rules within the confines of the granting statute and the doctrine of non-delegation of certain powers flowing from the separation of the three branches of the government.

Prior notice to and hearing of every affected party is not required since there is no determination of past events or facts that have to be established or ascertained.
As a general rule, prior notice and hearing are not essential to the validity of rules and regulations promulgated to govern future conduct.

Where rules do not apply to named or specified parties.

Where a function, legislative in nature, rather than a judicial function, is delegated to an administrative agency, the legislature need not require a notice or hearing as a prerequisite to the act of the administrative agency, since the legislature could itself have performed that act without notice or hearing particularly where the rules are of a general application, or procedural in nature, or are no more than administrative interpretations.
Thus, it has been held that when the rules, even when they involve the fixing of rates, are meant to apply to all enterprises of a given kind throughout the Philippines (e.g., DECS Order prescribing the maximum school fees that may be charged by all private schools in the country for a particular school year), no previous notice or hearing is required.

Where rules apply to named or specified parties.

Where such rules and/or rates apply exclusively to a particular party and are predicated upon a finding of fact (e.g., based upon a report submitted by the Commission on Audit), which fact is denied by said party, the agency in making such finding of fact, performs a function partaking of a quasi-judicial character the valid exercise of which demands a previous notice and hearing to satisfy the requirement of due process.

Where requirements prescribed by law.

Under the Administrative Code of 1987, notices of proposed rules must be given when required by law; otherwise, such notices shall be circulated as far as practicable to afford interested parties the opportunity to submit their views prior to the adoption of any rule.
But any rule which fixes rates shall not be valid unless the proposed rates shall have been published and hearings conducted with the rules on contested cases to be observed in case of opposition. (supra.)
Kilusang Mayo Uno Labor Center v. Garcia, Jr., 239 SCRA 386 (1994):

In a case, the authority given by the Land Transportation Franchising and Regulatory Board (LTFRB) to the provincial bus operators to set a fare range over and above the authorized existing fare was held illegal and invalid as it is tantamount to an undue delegation of legislative authority.
Moreover, rate making or rate fixing is a delicate and sensitive government function requiring dexterity of judgment and sound discretion to arrive at a just and reasonable rate acceptable to both the public utility and the public.
The government must not relinquish this important function; neither should the requisite notice and hearing be done away with.

Where rules have the force and effect of law.

Issuances by an administrative agency to enforce or implement an existing law have the force and effect of law.
Corollarily, when the issuances are of "general applicability," publication in the Official Gazette or in a newspaper of general circulation in the Philippines is necessary as a requirement of due process.
C.A. No. 638 mandates that besides legislations and resolutions of public nature of the Congress of the Philippines, executive orders and proclamations which have general applicability must also be published.
Publication is required as a condition precedent to the effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and interests are affected by the same; hence, subsequent publication thereof would not cure the defect. P

Prior publication cannot be dispensed with for the reason that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern it.
Executive Orders of the President and Administrative Rules and Regulations must be published if their purpose is to enforce or implement existing laws pursuant to a valid delegation.
The publication must be in full or it is no publication at all since its purpose is to inform the public of the contents thereof.

Where regulations merely interpretative and those internal in nature.

Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published.
Neither is publication required of so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

D. Adjudicatory Powers

Generally.

Administrative agencies or tribunals have and exercise "determinative" or "adjudicatory" powers and functions.

Involve specific parties.

These terms aim to describe powers and functions which involve the decision or determination by administrative agencies of the rights, duties, and obligations of specific individuals and persons, as contrasted with powers (i.e., rule making) of administrative agencies which, while they may involve decisions or determinations in the broadest sense, involve persons generally rather than specially, and usually operate only prospectively.

Involve judicial function exercised by a person other than a judge.

In speaking of the functions of an administrative agency, the terms "quasi judicial" and "adjudicatory" are synonymous or correlative, but not all determinations by an administrative agency are judicial in nature or quasi judicial.
One or the other is used to designate a power or function that partakes of the judicial but is exercised by a person other than a judge.

Where a power rests in judgment or discretion, so that it is of judicial nature or character, but does not involve the exercise of functions of a judge, or is conferred upon an officer other than a judicial officer, it is deemed quasi-judicial.
“Quasi-judicial function is a term which applies to the actions, discretion, etc. of public administrative officers or bodies [that] are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature."
It is the nature of the act to be performed, rather than of the office, board or body which performs it, that determines whether or not it is exercising a judicial or quasi-judicial function.
Ministerial function, on the other hand, is one which an officer or tribunal performs in the context of a given set of facts in a prescribed manner and without regard to the exercise of his own judgment upon the propriety or impropriety of the act done.
It is the power of an administrative agency to hear and determine, or to ascertain facts and decide by the application of rules to the ascertained facts.
By this power, administrative authorities are enabled to interpret and apply not only implementing rules and regulations promulgated by them but also the laws entrusted to their administration.

Involve exercise of judicial power conveniently styled "quasi-judicial."

The fact remains that the function of any particular act must be either administrative or judicial and there can in reality be no middle or halfway ground between them.
The use of such terms is simply a convenient way of approving the exercise of a judicial power by an administrative agency (e.g., legality of contract) or approving review by the courts of the exercise of power by administrative agencies.
Aside from such approval, the terms "quasi-judicial" or "judicial in nature" are used to designate the character of particular proceedings or powers, the exercise of which must be accompanied with certain formalities and safeguards characteristic of the judicial process.
Where an administrative tribunal's function partakes of the judicial, its exercise is styled "quasi-judicial," but it is the exercise of judicial power nonetheless. Still, administrative, agencies are not considered courts; they are neither part of the judicial system nor are they deemed judicial tribunals.

Distinguished from judicial power.

Judicial power in the strict sense, is the power to hear, try and determine all sorts of cases at law and equity which are brought before the courts.
It is the power and authority to make a final, rather than an initial determination, of what the law is and adjudicate the respective legal rights or liabilities of the contending parties with respect to the matter in controversy.

Where function primarily administrative.

For the purpose of deciding questions as to the powers with which an administrative agency may be vested, the true rule is that where the function of the agency is primarily administrative and the power to hear and determine controversies is granted as an incident to the administrative duty, the power is administrative, or at least it is properly exercisable by administrative agencies.
Such a power is variously held to be judicial but validly conferred, or to be quasijudicial or administrative adjudicatory power.

Where function primarily to decide question of legal rights.

Where the duty is primarily to decide questions of legal rights between private parties with respect to the matter in controversy, such decision being the primary object and not merely incidental to regulation or some other administrative function, the question raised is judicial involving the exercise of judicial function.
An element of judicial action which is sometimes stressed by the courts is freedom of action or independence and the absence of control or coercive influence.

Extent of judicial or quasi-judicial powers of administrative agencies.

Jurisdiction limited.

Limited delegation of judicial or quasi-judicial authority to administrative agencies is well- recognized in our jurisdiction, basically because the need for special competence and experience has been recognized as essential in the resolution of questions of complex or specialized character and because of the companion recognition that the dockets of our regular courts have remained crowded and clogged.

Extent of powers depends largely on enabling act.

In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the enabling act of such agency.

In other words, the extent to which an administrative agency may exercise such powers depend largely, if not wholly, on the provisions of the statute creating or empowering such agency.

The grant of original jurisdiction on a quasi-judicial agency is not implied.

In the exercise of such powers, the agency concerned must commonly interpret and apply contracts, determine the rights of private parties under such contracts, and award damages whenever appropriate.

One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights under it is no longer a uniquely judicial function, exercisable only by our regular courts but may be conferred upon an administrative agency.

Split jurisdiction not favored.

The rule is that when an administrative body or agency is conferred quasi-judicial functions, all controversies relating to the subject matter pertaining to its specialization are deemed to be included within its jurisdiction.
Split jurisdiction is not favored.

Thus, an agency with exclusive jurisdiction over controversies involving sale of subdivision lots has also jurisdiction to hear and decide claims for refund by a subdivision buyer.
Similarly, a complaint for specific performance and annulment of mortgage and damages filed by a buyer of subdivision lots against the mortgagee, though involving title to, possession of, or interest in, real estate was held well within the jurisdiction of the Housing and Land Use Regulatory Board (HLURB) for it involved a claim against the subdivision developer as well as the mortgagee to which the former mortgaged the lots without the written approval of the (HLURB) as required by law.

Grant of particular power must be found in the law itself.

Where there is nothing in the law that would suggest that a particular power has been granted, such as the power to decide contractual disputes, the same cannot be exercised.

Except for constitutional officials who can trace their competence to act to the fundamental law itself, a public official must locate in the statute relied upon, a grant of power before he can exercise it.

General policy to uphold exercise.

It is the general policy of the courts to sustain the decision of administrative authorities not only on the basis of the doctrine of separation of powers but also for their presumed knowledgeability and even expertise in the laws they are entrusted to enforce.

A court cannot compel an agency to do a particular act or to enjoin such act which is within the latter's prerogative, except when in the exercise of its authority, it gravely abuses or exceeds its jurisdiction.

Distinguished from investigative power.

The distinction between investigative and adjudicative functions has been set out, thus:

"Investigate" commonly understood, means to examine, explore, inquire or delve or probe into, research on, study.

The dictionary definition of "investigate" is "to observe or study closely; inquire into systematically: "to search or inquire into" xxx to subject to an official probe x x x: to conduct an official inquiry."
The purpose of an investigation, of course, is to discover, to find out, to learn, obtain information.
Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry.

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle.

The dictionary defines the term as "to settle finally (the rights and duties of parties to a court case) on the merits of issues raised: x x x to pass judgment on: settle judicially: x x x act as judge."
And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers."
In a legal sense, "adjudicate" means "To settle in the exercise of judicial authority; To determine finally.
Synonymous with adjudge in its strictest sense;" and "adjudge" means "To pass on judicially, to decide, settle, or decree, or to sentence or condemn, xxx implies a judicial determination of a fact, and the entry of a judgment."1

Distinguished from legislative power or rule-making.

A rule is the product of rule-making and rule-making is a part of the administrative process that resembles a legislature's enactment of statutes.
Adjudication’4 is the part of the administrative process that resembles a court's decision of a case.

Elements of futurity and restrospection.

1Judicial, quasijudicial or adjudicatory action investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed to exist, while legislation or quasi-legislation, or rule- making looks to the future and changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject thereto.

Elements of generality and particularity.

The adjudicatory function applies to named persons or to specific situations, while the second lays down general regulations that apply to or affect classes of persons or situations.

In other words, while adjudications are typically designed to apply to named parties, usually only a few, rule-making involves the issuance of rules or the making of determinations which are addressed to indicated but unnamed and unspecified persons or situations.

However, even though action is evidenced by a rule, it may still constitute adjudication.

Regulatory or rule-making powers may, in certain instances, merge into determinative or adjudicative powers.
Thus, apart from the question of establishing procedural rules, an agency such as a licensing board, may lay down general substantive regulations setting forth factors, the existence of which will lead it to refuse to grant permit or license.

Due process requirement of notice and hearing.

In exercising its quasi-judicial function, an administrative agency adjudicates the rights of persons before it.
The determination of facts and the applicable law as the basis for the exercise of judicial discretion are essential for the performance of this function.
On these considerations, it is elementary that the due process requirements which include prior notice and hearing must be observed.
As a general rule, prior notice and hearing are not essential to the validity of rules and regulations promulgated o govern future conduct since there is no determination of past events or facts that have to be established or ascertained.

Nature of particular acts.

Licensing, enabling, or approving.

The action of an administrative agency in granting or denying, or in suspending or revoking, a license, permit, franchise, or certificate of public convenience and necessity, is not judicial but is administrative or quasi-judicial.
Discretionary refusal of a license, not made on conflicting evidence or after a hearing, is not a quasi-judicial act for procedural purposes, although a hearing which is a method for obtaining knowledge of the facts upon which the determination to grant or deny a license must be based is a quasi-judicial function.
For procedural purposes, an administrative action is not a purely administrative act if it is dependent upon the ascertainment of facts by the administrative agency.

Where a statute empowers an agency to revoke a license for non- compliance with or violation of agency regulations, the administrative act is of a judicial nature, since it depends upon the ascertainment of the existence of certain past or present facts upon which a decision is to be made and rights and liabilities determined.

Fixing rates and charges.

As previously pointed out, the function of prescribing rates by an administrative agency may be either a legislative or an adjudicative function.
Where the rules and/or rates laid down are meant to apply to all enterprises of a given kind throughout the country (e.g., maximum school fees prescribed by the Department of Education, Culture and Sports, that may be charged by all private schools throughout the country for a particular school year), they may partake of a legislative character. If the fixing of rates were a legislative function, the giving of prior notice and hearing to the affected parties is not a requirement of due process, except where the legislature itself requires it.
Where the rules and the rates imposed apply exclusively to a particular party, based upon a finding of fact (e.g., rates the PLDT or the Meralco are authorized to charge its customers), then its function is quasi-judicial in character.

As regards rates prescribed by an administrative agency in the exercise of its quasi-judicial function, prior notice and hearing are essential to the validity of such rates.
But an administrative agency may be empowered by law to approve provisionally, when demanded by urgent public need, rates of public utilities without a hearing.
The reason is easily discerned from the fact that provisional rates are by their nature temporary and subject to adjustment in conformity with the definitive rates approved after final hearing.
Furthermore, rate fixing calls for a technical examination and a specialized review of specific details which the courts are ill-equipped to enter; hence, such matters are primarily entrusted to the administrative or regulatory authority

In any case, the rates must both be non-confiscatory and must have been established in the manner prescribed by the legislature.

Even in the absence of an express requirement as to reasonableness, this standard may be implied.
A rate- fixing order, temporary or provisional though it may be, is not exempt from the procedural requirements of notice and hearing when prescribed by statute, as well as the requirement of reasonableness.
The basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive.
It assumes that the rates are fair to both the public utility and the consumer.

An order prescribing rates even for a temporary period, could be unjust, unreasonable or even confiscatory, as where the rates are unreasonably low, since the public utility permanently loses its just revenue during the prescribed period.

In fact, such order is, in effect, final insofar as the revenue during the period covered by the order is concerned.
Upon a showing, therefore, that the order requiring a reduced rate is confiscatory and will unduly deprive a public utility of a reasonable return upon its property, a declaration of its nullity becomes indubitable, on ground of being violative of substantive due process.

Miscellaneous acts.

Adjudicatory powers have also been classified as administrative on the one hand, or as judicial in nature or quasi-judicial, on the other hand.
Among the acts held, for various purposes, to be administrative or not judicial are:

auditing accounts of a receiver of public moneys;
determinations of the Civil Service Commission in respect of classification and grading of positions in the civil service;
passing upon a petition to call an election;
the function of draft boards;
investigation for the purpose of ascertaining the correctness of a tax return;
the parole of prisoners, at least so long as the duration of the sentence is not affected, and the revocation of parole;
the transfer of prisoners from one place of imprisonment to another;
making a preliminary finding of probable cause for the arrest of an accused;
the initial determination of whether certain things constitute public nuisances; (j) closing and taking charge of banks found to be insolvent or unsafe and assessment of their stockholders;
determination whether or not there had been a violation of the terms of collective bargaining agreement;
the issuance of a warrant of distraint or levy in tax cases and certain other administrative enforcement devices; and
deportation of alien.

Classification of adjudicatory powers.

The adjudicatory powers of administrative agencies have been classified as follows: EDDSE

Enabling powers.

They are usually characterized by the grant or denial of permit or authorization.
The chief application of this power is, of course, in the granting or denial of licenses to engage in a particular business or occupation, but it is also exemplified by the powers of administrative agencies to permit the issuance of securities, to grant certificates of public convenience or necessity, to grant broadcasting licenses, and any other of similar nature.
Of course, rule-making authority is also exercised by licensing bodies;

Directing powers.

They are illustrated by the corrective powers of public utility commissions, powers of assessment under the revenue laws, reparations under public utility laws, and awards under workmen's compensation laws, and powers of abstract determination such as definition-valuation, classification, and fact finding;

Dispensing powers.

They are exemplified by the authority to exempt from or relax a general prohibition, or authority to relieve from an affirmative duty.
In form and as a matter of legislative terminology, dispensing power may be indistinguishable from a licensing power, but it differs from it in purpose.
The licensing power sets or assumes a standard, while the dispensing power sanctions a deviation from a standard.
In the absence of express grant of authority, a commission may not relieve a common carrier subject to its supervision from an affirmative duty imposed by law;

Summary powers.

The term is used to designate administrative power to apply compulsion or force against person or property to effectuate a legal purpose without a judicial warrant to authorize such action.
Often, such powers are summary in both senses of the term, that is, they involve direct administrative action (e.g., abatement of nuisance, summary restraint or levy of property of delinquent taxpayers) taken without notice and hearing.
In the absence of a statutory grant of power, administrative agencies generally may not themselves enforce their determinations, at least not by direct and positive action and such powers are not lightly to be implied; and

Equitable powers.

An administrative tribunal having power to determine the law upon a particular state of facts has he right to, and must, consider and make proper application of the rules of equity.
Sometimes, statutes expressly confer upon administrative agencies certain powers equitable in their nature, such as power to appoint a receiver or power to issue "injunctions" — that is, orders to cease and desist from conduct which is in violation of the law which they administer, or power to take such affirmative action as will effectuate the policies of a statute.
In certain situations, particular administrative agencies are expressly given power to determine what is "fair and equitable" and equitable principles are necessarily applied in their decisions.

Search This Blog

sic itur ad astra

Administrative Law: Chapter III — Powers and Functions of Administrative Agencies

Comments

Post a Comment

Popular posts from this blog

Equality and Human Rights: The United Nations and Human Rights System (September 16, 2023)

Commercial Laws 1: R.A. No. 11057 — Personal Property Security Act

Land Title and Deeds: Chapter 1 — What Lands are Capable of Being Registered