Carbonilla vs Board of Airlines

Sufficient Standard and Completeness Test

Before the Court are two petitions for review assailing the Decision promulgated on 9 July 2009 by
the Court of Appeals in CA-G.R. SP No. 103250.
The Bureau of Customs issued Customs Administrative Order No. 1-2005 (CAO 1-2005) amending
CAO 7-92.

The Department of Finance approved CAO 1-2005 on 9 February 2006. CAO 7-92 and CAO 1-2005
were promulgated pursuant to Section 3506 in relation to Section 608 of the Tariff and Customs
Code of the Philippines (TCCP).

Petitioners Office of the President, et al. alleged that prior to the amendment of CAO 7-92, the BOC
created on 23 April 2002 a committee to review the overtime pay of Customs personnel in Ninoy
Aquino International Airport (NAIA) and to propose its adjustment from the exchange rate of ₱25 to
US$1 to the then exchange rate of ₱55 to US$1. The Office of the President, et al. alleged that for a
period of more than two years from the creation of the committee, several meetings were conducted
with the agencies concerned, including respondent Board of Airlines Representatives (BAR), to
discuss the proposed rate adjustment that would be embodied in an Amendatory Customs
Administrative Order.

On the other hand, BAR alleged that it learned of the proposed increase in the overtime rates only
sometime in 2004 and only through unofficial reports.

On 23 August 2004, BAR wrote a letter addressed to Edgardo L. De Leon, Chief, Bonded
Warehouse Division, BOC-NAIA, informing the latter of its objection to the proposed increase in the
overtime rates. BAR further requested for a meeting to discuss the matter.

BAR wrote the Secretary of Finance on 31 January 2005 and 21 February 2005 reiterating its
concerns against the issuance of CAO 1-2005. In a letter dated 3 March 2005, the Acting District
Collector of BOC informed BAR that the Secretary of Finance already approved CAO 1-2005 on 9
February 2005. As such, the increase in the overtime rates became effective on 16 March 2005.
BAR still requested for an audience with the Secretary of Finance which was granted on 12 October
2005.

The BOC then sent a letter to BAR’s member airlines demanding payment of overtime services to
BOC personnel in compliance with CAO 1-2005. The BAR’s member airlines refused and
manifested their intention to file a petition with the Commissioner of Customs and/or the Secretary of
Finance to suspend the implementation of CAO 1-2005.

In a letter dated 31 August 2006,10 Undersecretary Gaudencio A. Mendoza, Jr. (Usec. Mendoza),
Legal and Revenue Operations Group, Department of Finance informed BAR, through its Chairman
Felix J. Cruz (Cruz), that they "find no valid ground to disturb the validity of CAO 1-2005, much less
to suspend its implementation or effectivity" and that its implementation effective 16 March 2005 is
legally proper.

In separate letters both dated 4 December 2006,11 Cruz requested the Office of the President and
the Office of the Executive Secretary to review the decision of Usec. Mendoza. Cruz manifested the
objection of the International Airlines operating in the Philippines to CAO 1-2005. On 13 December
2006, Deputy Executive Secretary Manuel B. Gaite (Deputy Exec. Sec. Gaite) issued an
Order12 requiring BAR to pay its appeal fee and submit an appeal memorandum within 15 days from
notice. BAR paid the appeal fee and submitted its appeal memorandum on 19 January 2007.
Carbonilla vs Board of Airlines
Sufficient Standard and Completeness Test
In a Decision13 dated 12 March 2007, the Office of the President denied the appeal of BAR and
affirmed the Decision of the Department of Finance. BAR filed a motion for reconsideration. In its
Resolution14 dated 14 March 2008, the Office of the President denied BAR’s motion for
reconsideration.

BAR filed a petition for review under Rule 45 before the Court of Appeals.

Petitioners Carbonilla, et al. filed an Omnibus Motion to Intervene before the Court of Appeals on the
ground that as customs personnel, they would be directly affected by the outcome of the case.

Without resolving Carbonilla, et al.’s motion for reconsideration, the Court of Appeals promulgated
the assailed 9 July 2009 Decision which set aside the 12 March 2007 Decision and 14 March 2008
Resolution of the Office of the President and declared Section 3506 of the TCCP, CAO 7-92 and
CAO 1-2005 unenforceable against BAR.

Petitioners Carbonilla, et al. filed their motion for reconsideration of the 9 July 2009 Decision. In its 5
August 2010 Resolution, the Court of Appeals, among others, denied Carbonilla, et al.’s motion for
reconsideration.

Carbonilla, et al. came to this Court via a petition for review, docketed as G.R. No. 193247, on the
following grounds:

The Office of the President, et al. also filed a motion for reconsideration dated 28 July 2009 assailing
the 9 July 2009 Decision of the Court of Appeals.
Carbonilla vs Board of Airlines
Sufficient Standard and Completeness Test
Issues:

1. Whether the Court of Appeals committed a reversible error in denying the intervention of Carbonilla, et
al.;

2. Whether the Court of Appeals has jurisdiction over BAR’s petition

3. Whether BAR’s appeal before the Office of the President was filed on time;

4. Whether the officers of some of BAR’s member airlines who executed the verification and certification
of non-forum shopping have the necessary authorization to execute them;

5. Whether BAR was guilty of laches and/or estoppel; and

6. Whether the Court of Appeals committed a reversible error in declaring Section 3506 of the TCCP,
CAO 7-92, and CAO 1-2005 unenforceable against BAR on the ground of unconstitutionality in
violation of non-delegability of legislative power

Rule:

1. Whether the Court of Appeals committed a reversible error in denying the intervention of
Carbonilla, et al.;

CA was correct in denying the intervention of Carbonilla et al (GR 193247).

Intervention is not a matter of right but it may be permitted by the courts when the applicant
shows facts which satisfy the requirements authorizing intervention. In G.R. No. 193247, the
Court of Appeals denied Carbonilla, et al.’s motion for intervention in its 26 February 2009
Resolution on the ground that the case was for collection of unpaid overtime services and
thus should be pursued in a separate proceeding against the proper respondents.

In addition, Carbonilla, et al. admitted in their petition that their motion for reconsideration of the
26 February 2009 Resolution of the Court of Appeals had been denied in open court during the
oral arguments held by the Court of Appeals on 16 December 2009. Carbonilla, et al. did not act
on the denial of this motion but only pursued their motion for reconsideration of the 9 July 2009
Decision of the Court of Appeals. Hence, the denial of Carbonilla, et al.’s motion for
intervention had already attained finality.

2. Whether the Court of Appeals has jurisdiction over BAR’s petition.

The Office of the President, et al. argue that the Court of Appeals should have denied BAR’s
petition because it had no jurisdiction over the issues raised, involving the validity and collection
of money charges authorized by Customs Law, which are under the jurisdiction of the CTA

The argument lacks merit.

The Office of the President The jurisdiction of the Court of Appeals over BAR’s petition stems
from Section 1 in relation to Section 3, Rule 43 of the 1997 Rules of Civil Procedure which
states that appeals from "awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi judicial functions[,]" which includes the Office of
the President, may be taken to the Court of Appeals. BAR’s petition for review to the Court of
Appeals from the 12 March 2007 Decision and 14 March 2008 Resolution of the Office of the
President falls within the jurisdiction of the Court of Appeals.
Carbonilla vs Board of Airlines
Sufficient Standard and Completeness Test

3. Whether BAR’s appeal before the Office of the President was filed on time;

The Office of the President argues that the BAR, instead of filing an appeal before its office,
should have filed an appeal before the CTA within 30 days from receipt of the assailed
decision or ruling in accordance with Sections 7 and 11 of RA 9282.

The argument lacks merit.

The jurisdiction over the validity and constitutionality of rules and regulations issued by the
Commissioner under Section 608 of the TCCP lies before the regular courts. It is not within the
jurisdiction of the Office of the President or the CTA. Hence, the Office of the President erred
in holding that BAR’s appeal was filed late because BAR can still raise the issue before the
regular courts.

BAR assails the administrative rules and regulations (CAO 1-2005), not a ruling by the
Commissioner in cases involving protests and seizure which are under the jurisdiction of CTA:

Cruz’s (BAR) 4 December 2006 letters to then President Gloria Macapagal Arroyo and then Exec.
Sec. Eduardo Ermita are not in the nature of an appeal provided for under Administrative
Order No. 18, series of 1987 (AO 18). The appeal provided under AO 18 refers to adversarial
cases. It does not refer to a review of administrative rules and regulations, as what BAR
asked the Office of the President to do in this case. BAR, in writing the Office of the
President, was exhausting its administrative remedies. BAR could still go to the regular courts
after the Office of the President acted on its request for a review of Usec. Mendoza’s 31 August
2006 letter. The decision of the Office of the President did not foreclose BAR’s remedy to
bring the matter to the regular courts.

Jurisdiction of Court of Tax Appeals:

Section 2402 of RA 1937 (TCCP or Tariff and Customs Code of the Philippines) provides:

Section 2402. Review by Court of Appeals. - The party aggrieved by a ruling of the
Commissioner in any matter brought before him upon protest or by his action or ruling in
any case of seizure may appeal to the Court of Tax Appeals, in the manner and within
the period prescribed by law and regulations.

Clearly, what is appealable to the CTA are cases involving protest or seizure, which is not the
subject of BAR’s appeal in these cases. BAR’s actions, including seeking an audience with the
Secretary of Finance, as well as writing to the Executive Secretary and the Office of the
President, are part of the administrative process to question the validity of the issuance of an
administrative regulation, that is, of CAO 1-2005, entitled Amendments to Customs
Administrative Order No. 7-92 (Rules and Regulations Governing the Overtime Pay and Other
Compensations Related Thereto Due to Customs Personnel at the NAIA).

CAO 1-2005 was issued pursuant to Section 608 of the TCCP which provides:

Section 608. Commissioner to Make Rules and Regulations. - The Commissioner shall,
subject to the approval of the Secretary of Finance, promulgate all rules and regulations
necessary to enforce the provisions of this Code. x x x
Carbonilla vs Board of Airlines
Sufficient Standard and Completeness Test
4. Whether the officers of some of BAR’s member airlines who executed the verification and
certification of non-forum shopping have the necessary authorization to execute them;

The Office of the President, et al. allege that the Court of Appeals should have dismissed the
petition because of BAR’s failure to comply fully with the requirements of verification and
certification of non-forum shopping.

The Court ruled in favor of the respondents.

Technicality and procedural imperfections should not serve as basis of decisions and should
not be used to defeat the substantive rights of the other party.

5. Whether BAR was guilty of laches and/or estoppel

The Office of the President, et al. allege that BAR is guilty of estoppel and laches because it
did not question CAO 7-92 which had been in effect since 1992. The Office of the President,
et al. argue that a direct attack of CAO 1-2005 is a collateral attack of CAO 7-92 since CAO
7-92 is the main administrative regulation enacted to implement Section 3506 of the TCCP.

The argument has no merit.

BAR is not questioning the validity of CAO 7-92 or Section 3506 of the TCCP. BAR is
questioning the validity of CAO 1-2005.

BAR’s objection to CAO 1-2005 could not be considered a direct attack on CAO 7-92
because BAR was merely objecting to the amendments to CAO 7-92. BAR did not question
the validity of CAO 7-92 itself. Even during the pendency of these cases before the Court of
Appeals, BAR members continued to pay the rates prescribed under CAO 7-92. It was only
upon the promulgation of the Court of Appeals’ Decision declaring CAO 7-92 and CAO 1-
2005 unconstitutional that BAR recommended to its members to stop paying the charges
imposed by the BOC.

Hence, BAR is not estopped from questioning CAO 1-2005 on the ground alone that it did
not question the validity of CAO 7-92.

6. Whether the Court of Appeals committed a reversible error in declaring Section 3506 of the
TCCP, CAO 7-92, and CAO 1-2005 unenforceable against BAR.

We do not agree with the Court of Appeals that Section 3506 of the TCCP failed the
completeness and sufficient standard tests. Under the first test, the law must be complete in
all its terms and conditions when it leaves the legislature such that when it reaches the
delegate, the only thing he will have to do is to enforce it.39 The second test requires
adequate guidelines or limitations in the law to determine the boundaries of the delegate’s
authority and prevent the delegation from running riot.40 Contrary to the ruling of the Court of
Appeals, Section 3506 of the TCCP complied with these requirements. The law is complete
in itself that it leaves nothing more for the BOC to do: it gives authority to the Collector to
assign customs employees to do overtime work; the Commissioner of Customs fixes the
rates; and it provides that the payments shall be made by the importers, shippers or other
persons served. Section 3506 also fixed the standard to be followed by the
Carbonilla vs Board of Airlines
Sufficient Standard and Completeness Test
Commissioner of Customs when it provides that the rates shall not be less than that
prescribed by law to be paid to employees of private enterprise.

Contrary to the ruling of the Court of Appeals, BOC employees rendering overtime services
are not receiving double compensation for the overtime pay, travel and meal
allowances provided for under CAO 7-92 and CAO 1-2005. Section 3506 provides that the
rates shall not be less than that prescribed by law to be paid to employees of private
enterprise. The overtime pay, travel and meal allowances are payment for additional work
rendered after regular office hours and do not constitute double compensation prohibited
under Section 8, Article IX(B) of the 1987 Constitution as they are in fact authorized by
law or Section 3506 of the TCCP. 1âwphi1

Section 8. No elective or appointive public officer or employee shall receive

Pensions or gratuities shall not be considered as additional, double, or indirect