TOPIC: RULE-MAKING POWERS

Dagan vs. Philippine Racing Commission

J. Tinga, ponente
 On August 11, 2004, PHILRACOM issued a directive against the Manila Jockey Club, Inc. (MJCI) and
the Philippine Racing Club, Inc. (PRCI) to immediately come up with their respective club’s house
rules to address the Equine Infectious Anemia (EIA) problem, and to rid their facilities of horses
infected with EIA. The said directive was issued pursuant to Administrative Order No. 5 dated
March 28, 1994 by the Department of Agriculture declaring it unlawful for any person, firm or
corporation to ship, drive, or transport horses from any locality or place except when
accompanied by a certificate issued by the authority of the Director of the Bureau of Animal
Industry.
 In compliance with the directive, MJCI and PRCI ordered the owners of racehorses stable in their
establishments to submit the horses to blood sampling and administration of the Coggins Test to
determine whether they are afflicted with the EIA virus. Subsequently, on September 17, 2004,
PHILRACOM issued copies of the guidelines for the monitoring and eradication of EIA.
 Petitioners refused to comply with the directives. Despite resistance from petitioners, the blood
testing proceeded. The horses, whose owners refused to comply were banned from the races,
were removed from the actual day of race, prohibited from renewing their licenses or evicted
from their stables. The racehorse owners complained before the Office of the President which in
turn issued a directive instructing PHILRACOM to investigate the matter.
 The petitioners maintain that the assailed guidelines do not comply with the due process
requirements; that no investigation or at least a summary proceeding was conducted affording
petitioners an opportunity to be heard; and that the assailed guidelines are ultra vires in that the
sanctions imposed for refusing to submit to medical examiniation are summary eviction from the
stables or arbitrary banning of participation in the races, notwithstanding the penalties prescribed
in the contract of lease.
 PHILRACOM also justified its right under the law to regulate horse racing. MJCI adds that
PHILRACOM need not delegate its rule-making power to the former since MJCI’s right to
formulate its internal rules is subsumed under the franchise granted to it by Congress.
 That is why petitioners also raise for the first time the issue that PHILRACOM had
unconstitutionally delegated its rule-making power to PRCI and MJCI in issuing the directive for
them to come up with club rules. They said that power granted to PRCI and MJCI under their
respective franchises is limited to: (1) the construction, operation, and maintenance of racetracks;
(2) the establishment of branches for booking purposes; and (3) the conduct of horse races.

Issue(s)/Ruling(s)
1. Whether or not there is a valid delegation of legislative power to PHILRACOM.

Yes. The validity of an administrative issuance, such as the assailed guidelines, hinges on compliance with
the following requisites:
A. Its promulgation must be authorized by the legislature;
B. It must be promulgated in accordance with the prescribed procedure;
C. It must be within the scope of the authority given by the legislature;
D. It must be reasonable.
All the prescribed requisites are met as regards the questioned issuances. Philracom’s authority is drawn
from P.D. No. 420. The delegation made in the presidential decree is valid. Philracom did not exceed its
authority. And the issuances are fair and reasonable. Xxx

P.D. No. 420 hurdles the tests of completeness and standards sufficiency.

Philracom was created for the purpose of carrying out the declared policy in Section 1 which is “to
promote and direct the accelerated development and continued growth of horse racing not only in
pursuance of the sports development program but also in order to insure the full exploitation of the sport
as a source of revenue and employment.” Furthermore, Philracom was granted exclusive jurisdiction and
control over every aspect of the conduct of horse racing, including the framing and scheduling of races,
the construction and safety of race tracks, and the security of racing. P.D. No. 420 is already complete in
itself.

Clearly, there is a proper legislative delegation of rule-making power to Philracom. Clearly too, for its part
Philracom has exercised its rule-making power in a proper and reasonable manner. More specifically, its
discretion to rid the facilities of MJCI and PRCI of horses afflicted with EIA is aimed at preserving the
security and integrity of horse races.

Petitioners also question the supposed delegation by Philracom of its rule-making powers to MJCI and
PRCI.

There is no delegation of power to speak of between Philracom, as the delegator and MJCI and PRCI as
delegates. The Philracom directive is merely instructive in character. Philracom had instructed PRCI and
MJCI to “immediately come up with Club’s House Rule to address the problem and rid their facilities of
horses infected with EIA.” PRCI and MJCI followed-up when they ordered the racehorse owners to submit
blood samples and subject their race horses to blood testing. Compliance with the Philracom’s directive
is part of the mandate of PRCI and MJCI under Sections 11 of R.A. No. 7953 and Sections 1 and 2 of 8407.

As correctly proferred by MJCI, its duty is not derived from the delegated authority of Philracom but arises
from the franchise granted to them by Congress allowing MJCI “to do and carry out all such acts, deeds
and things as may be necessary to give effect to the foregoing.” As justified by PRCI, “obeying the terms
of the franchise and abiding by whatever rules enacted by Philracom is its duty.”

As to the second requisite, petitioners raise some infirmities relating to Philracom’s guidelines. They
question the supposed belated issuance of the guidelines, that is, only after the collection of blood
samples for the Coggins Test was ordered. While it is conceded that the guidelines were issued a month
after Philracom’s directive, this circumstance does not render the directive nor the guidelines void. The
directive’s validity and effectivity are not dependent on any supplemental guidelines. Philracom has every
right to issue directives to MJCI and PRCI with respect to the conduct of horse racing, with or without
implementing guidelines.

On publication: Petitioners also argue that Philracom’s guidelines have no force and effect for lack of
publication and failure to file copies with the University of the Philippines (UP) Law Center as required by
law.

As a rule, the issuance of rules and regulations in the exercise of an administrative agency of its quasi-
legislative power does not require notice and hearing, In Abella, Jr. v. Civil Service Commission, this Court
had the occasion to rule that prior notice and hearing are not essential to the validity of rules or
regulations issued in the exercise of quasi-legislative powers since there is no determination of past events
or facts that have to be established or ascertained.

The third requisite for the validity of an administrative issuance is that it must be within the limits of the
powers granted to it. The administrative body 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.

The assailed guidelines prescribe the procedure for monitoring and eradicating EIA. These guidelines are
in accord with Philracom’s mandate under the law to regulate the conduct of horse racing in the country.

Anent the fourth requisite, the assailed guidelines do not appear to be unreasonable or discriminatory. In
fact, all horses stabled at the MJCI and PRCI’s premises underwent the same procedure. The guidelines
implemented were undoubtedly reasonable as they bear a reasonable relation to the purpose sought to
be accomplished, i.e., the complete riddance of horses infected with EIA.

It also appears from the records that MJCI properly notified the racehorse owners before the test was
conducted. Those who failed to comply were repeatedly warned of certain consequences and sanctions.

Furthermore, extant from the records are circumstances which allow respondents to determine from time
to time the eligibility of horses as race entries. The lease contract executed between petitioner and MJC
contains a proviso reserving the right of the lessor, MJCI in this case, the right to determine whether a
particular horse is a qualified horse. In addition, Philracom’s rules and regulations on horse racing provide
that horses must be free from any contagious disease or illness in order to be eligible as race entries.

All told, we find no grave abuse of discretion on the part of Philracom in issuing the contested guidelines
and on the part MJCI and PRCI in complying with Philracom’s directive.

TOPIC: ADJUDICATORY POWERS

Eastern Shipping Lines, Inc. vs. POEA, Minister of Labor and Employment, Abdul Basar (Hearing Officer),
Kathleen D. Saco
G.R. No. 76633, October 18, 1988

J. Cruz, ponente
 Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in
Tokyo, Japan on March 15, 1985. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular o. 2 of the POEA.
 The petitioner, as the owner of the vessel, argued that the complaint was cognizable not by the
POEA but by the Social Security System and should have been filed against the State Fund
Insurance.
 The POEA nevertheless assumed jurisdiction and after considering the position papers of the
parties ruled in favour of the complainant.

Issue(s)/Ruling(s)
1. Whether or not the POEA had jurisdiction over the case as the husband was not an overseas
worker.
Yes. The Philippine Overseas Employment Administration was created under Executive Order No. 797,
promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to
protect their rights. It replaced the National Seamen Board created earlier under Article 20 of the Labor
Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with “original and
exclusive jurisdiction over all cases, including money claims, involving employee-employer relations
arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen.”
These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA,
include, “claims for death, disability and other benefits” arising out of such employment.

The award of P180,000 for death benefits and P12,000 for burial expenses was made by the POEA
pursuant to its Memorandum Circular No. 2 which became effective on February 1, 1984. This circular
prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the
hiring of Filipino seamen for overseas employment.