Creation and Abolition of Administrative Agencies

1. Buklod ng Kawaning EIIB v. Zamora, G.R. No. 142801-802, July 10, 2001

DOCTRINE: WHO HAS POWER TO ABOLISH ADMINISTRATIVE AGENCIES?

FACTS:

• Cory Aquino issued EO 127 which established the Economic Intelligence

Investigation Bureau (EIIB) as part of the Ministry of Finance
o Through Memorandum Order no. 225 the EIIB was designated as the agency
primarily responsible for anti-smuggling operations in land areas and inland
waters outside the jurisdiction of the Bureau of Customs
• Joseph Estrada issued EO 191 which deactivated the EIIB and transferred its
functions to the Bureau of Customs and NBI
o EO 196 created Presidential Anti-Smuggling Task Force “Aduana”
o Executed EO 223 separating the EIIB personnel from service pursuant to
reorganization
• Petitioners filed a petition for certiorari, prohibition and mandamus seeking to
nullify EO 191 and 223
o Violate security of tenure
o President w/o authority to abolish EIIB
▪ Constitute usurpation of the power of the Congress

ISSUE: Whether the President has the authority to reorganize the executive department,
including the deactivation of the EIIB

HELD: YES

Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative
Code of 1987), "the President, subject to the policy in the Executive Office and in order to
achieve simplicity, economy and efficiency, shall have the continuing authority to
reorganize the administrative structure of the Office of the President."

The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the
President. Hence, it is subject to the President's continuing authority to reorganize.

- GR: The power to abolish a public office is lodged with the legislature.
o Power to create includes the power to destroy
- Public office is created by the ff:
o Constitution (XPN)
o Statute
o Authority of law
 - Reorganization = involves the reduction of personnel, consolidation of offices,
or abolition thereof by reason of economy or redundancy of functions
- Circumstances which may be considered as Evidence of bad faith in the removal of
civil service employees (Republic Act No. 6656)
o where there is a significant increase in the number of positions in the new
staffing pattern of the department or agency concerned;
o wherean office is abolished and another performing substantially the same
functions is created;
o where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit;
o where there is a classification of offices in the department or agency
concerned and the reclassified offices perform substantially the same
functions as the original offices, and
o where the removal violates the order of separation

2. Banda v. Ermita, G.R. No. 166620, April 20, 2010

DOCTRINE: DELEGATED LEGISLATIVE POWER TO THE PRESIDENT UNDER THE

ADMINISTRATIVE CODE
FACTS:

• EO 285 created the National Printing Office (NPO) w/ exclusive printing jurisdiction
over certain government documents
• Gloria Arroyo issued EO 378 which removed the NPO’s exclusive jurisdiction over
printing services for government agencies allowing them to source from the private
sector
o Limited the budget of the NPO to its own income
• Petitioners (employees of NPO) filed a petition challenging the constitutionality of
EO 378 (class suit)
o President lacked authority to amend EO 285
o EO 378 violated their security of tenure

ISSUE: Whether the president had authority to issue the EO 378 amending the previous EO

HELD: YES.

President has the power to reorganize the offices and agencies in the executive
department in line with the President's constitutionally granted power of control over
executive offices and by virtue of previous delegation of the Legislative Power to reorga nize
executive offices under existing statutes.
Executive Order No. 292 or the Administrative Code of 1987 gives the President continuing
authority to reorganize and redefine the functions of the Office of the President.

Sec. 31. Continuing Authority of the President to Reorganize his Office. - The President,
subject to the policy in the Executive Office and in order to achieve simplicity, economy
and efficiency, shall have continuing authority to reorganize the administrative structure of
the Office of the President. For this purpose, he may take any of the following actions:

(1) Restructure the internal organization of the Office of the President Proper, including
the immediate Offices, the President Special Assistants/Advisers System and the Common
Staff Support System, by abolishing, consolidating or merging units thereof or transferring
functions from one unit to another;

(2) Transfer any function under the Office of the President to any other Department or
Agency as well as transfer functions to the Office of the President from other Departments
and Agencies; and

(3) Transfer any agency under the Office of the President to any other department or agency
as well as transfer agencies to the Office of the President from other Departments or
agencies.

It is undisputed that the NPO, as an agency that is part of the Office of the Press Secretary,
is part of the Office of the President.

3. Biraogo v. The Philippine Truth Commission of 2010, G.R. No. 192935, December 7,
2010

DOCTRINE: PRESIDENT’S POWER TO CONDUCT INVESTIGATINS TO AID HIM IN

ENSURING FAITHFUL EXECUTION OF LAWS IS AN INHERENT POWER
FACTS:

• Noynoy Aquino issued EO 1 creating the Philippine Truth Commission of 2010

o Tasked w/ investigating reports of large-scale corruption in the previous
administration
• Biraogo filed a petition challenging the constitutionality of the EO
o Several legislators also filed separate petitions
• Petitioners argue that the EO violated the SEPARATION OF POWERS and EQUAL
PROTECTION CLAUSE
o Usurpation of the congress’ powers to create public office and appropriate
funds
o Illegally amends the constitution and statutes by vesting TC w/ quasi-judicial
powers (duplicate of the Ombudsman and DOJ)
 o Violates equal protection bc it targets only the previous administration
o Violates international practice of truth commissions investigating human
rights violations
• OSG defended the constitutionality of the EO

ISSUE: Whether EO 1 violates separation of powers

HELD: NO.

While the power to create a truth commission cannot pass muster on the basis of P.D. No.
1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under
Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure
that the laws are faithfully executed. Section 17 reads:

Section 17. The President shall have control of all the executive departments, bureaus, and
offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

- Faithful Execution Clause (Article VII, Section 17)

o constituted the PTC to primarily investigate reports of graft and corruption
and to recommend the appropriate action

Completeness Test

4. U.S. v. Ang Tang Ho, 43 Phil. 1 (1922)

DOCTRINE:
FACTS:

• Act 2868 was passed authorizing the governor-general to issue rules and
regulations to prevent monopoly and hoarding of palay, rice, and corn
o Allowed the fixing of maximum sale price of the ff by the governor general
• Governor-general issued a proclamation fixing the price of rice
• Tang Ho allegedly sold the rice at a higher price than that fixed by the proclamation
o Charged w/ violating the proclamation
o Tried and found guilty
• Tang Ho challenges the constitutionality of the Act
o Delegates legislative power to gov-gen
o Does not define the crime within itself but leaves it to the gov-gen's
discretion
o Power to fix prices of private property and make violations of such a crime
exclusively belongs to the legislature
o Violats separation of powers
ISSUE: Whether the Act is an unconstitutional delegation

HELD: YES. The Legislature cannot delegate Legislative Power to enact any law. If Act No.
2868 is a law unto itself and within itself, and it does nothing more than to authorize the
Governor-General to make rules and regulations to carry it into effect, then the Legislature
created the law. There is no delegation of power and it is valid. One the other hand, if the
act within itself does not define a crime and is not complete, and some legislative act
remains to be done to make it law or a crime, the doing of which is vested in the Governor-
General, the is a delegation of Legislative Power, is unconstitutional and avoid.

COMPLETENESS TEST

- There was no act of the Legislature making it a crime to sell rice at any price, and
without the proclamation, the sale of it at any price was not crime.
- Act No. 2868 is nothing more than a floating law, which, in the discretion and by a
proclamation of the Governor-General, makes it a floating crime to sell rice at a
price in excess of the proclamation, without regard to grade or quality.
- The Legislature did not specify or define what was "any cause," or what was "an
extraordinary rise in the price of rice, palay or corn." Neither did it specify or define
the conditions upon which the proclamation should be issued.

Sufficiency of Standard Test

5. A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)

DOCTRINE:
FACTS:

Under the National Industrial Recovery Act, Congress allowed the President to regulate
certain industries by distributing authority to develop codes of conduct among business
groups and boards in those industries. The Act did not provide standards for the President
or the business groups in implementing its objectives. When Schechter Poultry Corp. was
indicted for violating a business code governing the poultry industry in New York City, it
argued that the law was an unconstitutional violation of the non-delegation doctrine.

ISSUE: Did Congress unconstitutionally delegate legislative power to the President by

giving him power to regulate certain industries without also providing guiding standards?

HELD: YES

In an opinion authored by Chief Justice Hughes, the unanimous Court held that the Act was
"without precedent" and was an unconstitutional delegation of legislative authority. The
President cannot be allowed to have unbridled control to make whatever laws he believes
to be necessary to achieve a certain goal. The law did not establish rules or standards to
evaluate industrial activity, meaning Congress failed to provide the necessary guidelines
for the implementation of this functionally legislative process.

6. Vigan Electric Light Co., Inc. v. Public Service Commission, G.R. No. L-19850,
January 30, 1964

DOCTRINE: Such law is not deemed complete unless it lays down a standard or pattern
sufficiently fixed or determinate, or, at least, determinable without requiring another
legislation, to guide the administrative body concerned in the performance of its duty to
implement or enforce said policy
FACTS:

• P was granted franchise to operate an electric light, heat, and power plant in
municipalities in Ilocos Sur
• R approved the company’s rates
• R recieved a letter-petition from Congressman Crisologo alleging that there were
irregularities in the company’s operations
o R ordered an audit of the company’s books by the General Auditing office
• Based on the audit, R issued an order reducing the company’s rates by 18%
o Issued w/o prior notice or hearing
• P filed a petition for certiorari to annul the order
o Not given a copy of the order ort auditor’s report (no notice)

ISSUE: Whether the Public Service Commission (R) order reducing the petitioner’s rates
w/o notice and hearing is valid

HELD: NO. The determination of the issue involved in the order complained of partakes of
the nature of a quasi-judicial function and that, having been issued without previous notice
and hearing, said order is clearly violative of the due process clause, and, hence, null and
void.

- Legislative powers may not be delegated except to local governments, and only as
to matters purely of local concern
o However, Congress may delegate to administrative agencies of the
government the power to supply the details in the Execution or enforcement
of a policy laid down by a law which is complete in itself
- Such law is not deemed complete unless it lays down a standard or pattern
sufficiently fixed or determinate, or, at least, determinable without requiring
another legislation, to guide the administrative body concerned in the
performance of its duty to implement or enforce said policy
 o Sections 16 and 20 (a) of Commonwealth Act No. 146 explicitly require
notice and hearing.

7. Pelaez v. Auditor General, G.R. No. L-23825, December 24, 19965

DOCTRINE:
FACTS:

• The president issued EO 93 to 121 and 126 to 129 creating 33 municipalities

o Pursuant to sec. 68 of the Administrative Code
• Pelaez, as VP of the PH and taxpayer, filed a petition for a writ of prohibition w/
preliminary injunction against R
o To restrain from passing in audit any expenditure of public funds in the
implementation of the executive orders
o EOs were null and void as sec. 68 had been impliedly repealed by Act 2370
THUS an undue delegation of legislative power
o “as public welfare may require” in sec. 68 is too broad and gives the
president unfettered discretion
o Power to create municipalities is LEGISLATIVE IN NATURE

ISSUE: Whether sec. 68 is an undue delegation of legislative power

HELD: YES. It does not enunciate any policy to be carried out or implemented by the
President. Neither does it give a standard sufficiently precise to avoid the evil effects above
referred to. It is apparent, however, from the language of this clause, that the phra se "as
the public welfare may require" qualifies, not the clauses preceding the one just quoted,
but only the place to which the seat of the government may be transferred.

- The question whether or not "public interest" demands the exercise of such power
is not one of fact. It is purely a legislative question"

For a valid delegation of power the law must be:

1) Complete in itself - set forth therein the policy to be executed, carried out or
implemented
2) Fix a standard of limits to whish are sufficiently determinate - to which the delegate
must conform in the performance of his functions.
- In other words, Section 68 of the Revised Administrative Code does not merely fail
to comply with the constitutional mandate above quoted. Instead of giving the
President less power over local governments than that vested in him over the
executive departments, bureaus or offices, it reverses the process and does the
 exact opposite, by conferring upon him more power over municipal corporations
than that which he has over said executive departments, bureaus or offices.

8. Ynot v. IAC, G.R. No. 74457, March 20, 1987

DOCTRINE: EZ NA YAN
FACTS:

• EO 626-A prohibited the interprovincial movement of carabao and carabeef

• Ynot transported 6 carabaos from Masbate to Iloilo
o Carabao's were confiscated for violating the EO
o Ynot sued for recovery
o RTC sustained the confiscation
• Ynot filed a petition for review on certiorari
o Penalty is invalib bc there was no opportunity to be heard
o Unconstitutional
o Improper exercise of legislative power

ISSUE: Whether the EO is an invalid delegation of legislative power

HELD: YES. The Supreme Court found that Executive Order No. 626-A constitutes an
invalid delegation of legislative powers. The Court took issue with the provision allowing
confiscated property to be distributed "as the Chairman of the National Meat
Inspection Commission may see fit" or "as the Director of Animal Industry may see
fit." The Court ruled: "The phrase 'may see fit' is an extremely generous and dangerous
condition, if condition it is. It is laden with perilous opportunities for partiality and abuse,
and even corruption. One searches in vain for the usual standard and the reasonable
guidelines, or better still, the limitations that the said officers must observe when they
make their distribution. There is none. Their options are apparently boundless."

9. Confederation of Coconut Farmers Organization of the Philippines, Inc. v. Aquino,

G.R. No. 217965, August 8, 2017

DOCTRINE:
FACTS:

• EO 179 and 180 were executed regading coconut levy

o EO 179 – inventory and privatization of coco levy assets
o EO 180 – reconveyance and utilization of assets for coconut farmers and
industry development
• CCFOP filed a petition challenging the constitutionality of the EOs
o Previously the SC ruled that the coconut levy funds are public funds
 • PD 1234 treated coconut levy as special accounts in the general fund
• PD 1468 had provisions on the utilization of the Coconut Consumers Stabilization
Fund and Coconut Industry Development Fund
o ALLEGEDLY intended to treat levy funds as private funds owned by farmers

ISSUE: Whether the president usurped legislative power by issuing EO 179 and 180 w/o
prior legislation

HELD: PARTIALLY YES. The provision of P.D. No. 1468 are simply too broad to limit the
amount of spending that may be done by the implementing authority. Considering that no
statute provides for specific parameters on how the SAGF may be spent, Congress must
first provide a law for the disbursements of the funds, in line with its constitutional
authority. The absence of the requisite legislative authority in the disbursement of public
funds cannot be remedied by executive fiat. However, the Court also noted that E.O. Nos.
179 and 180 were issued pursuant to previous laws and jurisprudence which declared
coconut levy funds as public funds for a special purpose.

- A law which provides this kind of open-ended provision cannot be considered a law
which provides clear legislative parameters. Too much unbridled discretion is given
for any surplus or balance that remains unutilized from the CIDF.

10. Lagman v. Executive Secretary, G.R. No. 197422, November 3, 2020

DOCTRINE:
FACTS:

• Sec. 5 of RA 10149 delegates legislative power by empowering the Governance

Commission to abolish GOCCs
• Petitioner is the former chairperson of the Local Water Utilities Administration
(GOCC created under PD 198)
o Contends that the phrase “best interest of the state” is NOT a sufficientr
standard for the Governance Commission to abolish, merge, streamline or
privatize GOCCs
• Petitioner seeks to declare RA 10149 unconstitutional
o Undue delegation of legislative powers – no sufficient guidelines or definitive
standards

ISSUE: Whether RA 10149 amounts to undue delegation of legislative power

HELD: NO. The law complied w/ the completeness and sufficient standard tests.

1) Abolition or reorganization was already determined in the assailed law

2) Governance commission will only determine whether it will take effect in
accordance w/ policy and standards provided in the law
- Was only delegated the power to ascertain the facts to determine the propriety
of abolition, reorganization, merger, streamlining or privatization of GOCCs
3) Standards were set and the policy was fixed thus, the commission only had to carry
out the mandate