Title
Carbonilla vs. Board of Airlines Representatives
Case
G.R. No. 193247
Decision Date
Sep 14, 2011
BOC's overtime pay amendment (CAO 1-2005) challenged by airlines; Supreme Court upheld its validity, dismissing procedural objections and affirming due process in its issuance.
carbonilla
board of airlines representatives
overtime pay

Case Summary (G.R. No. 156951)

Factual Background

The Bureau of Customs promulgated CAO 1-2005, an amendment to CAO 7-92, revising overtime pay, travel and meal allowances for customs personnel at Ninoy Aquino International Airport (NAIA). The amendment was published in the Manila Standard on February 18, 2005 and took effect on March 16, 2005. BAR learned of the proposed increase and communicated objections by letters in 2004 and early 2005, sought meetings, and later refused to pay new rates when demanded by the BOC. Administrative consultations and meetings were conducted by the BOC-NAIA Collection District and a committee created in April 2002 to review overtime pay. The Secretary of Finance’s approval of CAO 1-2005 was communicated to BAR by the Acting District Collector on March 3, 2005. A letter from Undersecretary Gaudencio A. Mendoza, Jr., dated August 31, 2006, found no valid ground to suspend CAO 1-2005.

Administrative Proceedings

BAR sought administrative relief by writing the Department of Finance and the Office of the President. On December 13, 2006, Deputy Executive Secretary Manuel B. Gaite required BAR to pay an appeal fee and submit an appeal memorandum, which BAR did on January 19, 2007. The Office of the President, by authority of the Executive Secretary, denied BAR’s appeal in a Decision dated March 12, 2007, ruling that the BOC acted in the exercise of quasi-legislative or rule-making power and that challenges to such exercise should be brought before regular courts; the Office of the President also found BAR’s appeal untimely under Administrative Order No. 18. BAR’s motion for reconsideration was denied on March 14, 2008.

Court of Appeals Proceedings

BAR filed a petition for review under Rule 45 to the Court of Appeals. Carbonilla, et al. moved to intervene; the Court of Appeals denied intervention on February 26, 2009, on the ground that the intervenors sought collection of unpaid overtime and their interests should be pursued in separate proceedings. On July 9, 2009 the Court of Appeals set aside the Office of the President’s Decision and declared Section 3506 of the TCCP, CAO 7-92, and CAO 1-2005 unenforceable against BAR. The Court of Appeals reasoned that BAR’s appeal to the Office of the President was treated as timely, that Section 3506 failed the completeness and sufficiency standard tests for delegation, and that the travel and meal allowances amounted to unconstitutional additional or double compensation under Section 8, Article IX(B), 1987 Constitution. The Court of Appeals initially directed BAR to comply with the Office of the President’s Decision in May 2010 but, in a subsequent October 26, 2010 Resolution, granted BAR’s motion for reconsideration and denied the motion for reconsideration of the Office of the President, effectively allowing BAR not to comply.

Issues Presented

The consolidated cases posed the following principal issues: whether the Court of Appeals erred in denying intervention by Carbonilla, et al.; whether the Court of Appeals had jurisdiction to entertain BAR’s petition; whether BAR’s appeal before the Office of the President was timely; whether some BAR member airlines’ officers who executed verification and certification of non-forum shopping had authority to do so; whether BAR was barred by estoppel or laches from challenging CAO 1-2005; and whether the Court of Appeals erred in declaring Section 3506, CAO 7-92, and CAO 1-2005 unenforceable against BAR.

Parties’ Contentions

The Office of the President, Department of Finance, and Bureau of Customs argued that the issues raised by BAR involved the validity and collection of money charges under the Customs Law and thus fell within the exclusive appellate jurisdiction of the Court of Tax Appeals under Republic Act No. 9282; they also urged that BAR’s appeal to the Office of the President was untimely under Administrative Order No. 18, that some verifications and certifications lacked proper authorization, and that BAR was guilty of laches and estoppel for failing earlier to challenge CAO 7-92. BAR contended that the Office of the President treated its communication as an appeal and that procedural obstacles prevented recourse to the Court of Tax Appeals; BAR also challenged CAO 1-2005 on grounds of defective publication and public hearings, incorrect basis for the increase (foreign exchange adjustments), and economic hardship. Carbonilla, et al. sought intervention to pursue collection of unpaid overtime pursuant to CAO 1-2005.

Ruling of the Supreme Court

The Supreme Court denied the petition in G.R. No. 193247 filed by Carbonilla, et al., and granted the petition in G.R. No. 194276 filed by the Office of the President, et al. The Court set aside the Court of Appeals’ July 9, 2009 Decision and its October 26, 2010 Resolution. The Court directed the Bureau of Customs to implement CAO 1-2005 immediately. The Court upheld the Court of Appeals’ denial of intervention by Carbonilla, et al. as a valid exercise of discretion because the movants sought collection of unpaid dues and their rights could be fully protected in separate proceedings.

Jurisdictional and Procedural Reasoning

The Supreme Court held that the Court of Appeals properly took cognizance of BAR’s petition under Section 1 in relation to Section 3, Rule 43 of the 1997 Rules of Civil Procedure because the Office of the President acted in a quasi-judicial capacity in adjudicating BAR’s administrative request and its decisions were appealable to the Court of Appeals. The Court rejected the Office of the President’s contention that BAR should have appealed to the Court of Tax Appeals under RA 9282, observing that the CTA’s exclusive appellate jurisdiction under RA 9282 covers matters involving liability for customs duties, fees and other money charges, seizure, detention or release of property, fines or forfeitures, and other similar matters arising under the Customs Law, but that BAR’s challenge was a review of an administrative regulation issued pursuant to Section 608, TCCP and was not a protest or seizure case within the CTA’s exclusive scope as defined in RA 1937. The Court further held that BAR’s correspondence seeking review did not constitute an appeal under Administrative Order No. 18 and that the Office of the President’s characterization of BAR’s pleadings as untimely did not preclude BAR from seeking relief before the regular courts.

Merits: Delegation, Coverage, and Double Compensation

On the merits, the Supreme Court reversed the Court of Appeals’ constitutional ruling. The Court held that Section 3506, TCCP, authorizes assignment of customs employees to overtime work at rates fixed by the Commissioner to be paid by “importers, shippers or other persons served,” and that the phrase “other persons served” includes airline companies, aircraft owners, and operators because they are persons served by BOC personnel in the processing of passengers, baggage, and cargo. The Court applied the completeness and sufficiency standard tests for permissible delegation and found Section 3506 to satisfy both tests: the statute defines the authority to assign overtime, vests rate-setting in the Commissioner subject to approval, and prescribes the minimum standard that rates “shall not be less than that prescribed by law to be paid to employees of private enterprise.” The Court ruled that the overtime pay plus travel and meal allowances provided in CAO 7-92 and CAO 1-2005 do not amount to unconstitutional additional, double or indirect compensation under Section 8, Article IX(B), 1987 Constitution, because these are payments for additional work rendered and are authorized by law through Section 3506.

Due Process and Publication

The Supreme Court rejected BAR’s procedural due process and publication challenge. The Court found that the BOC conducted repeated consultations through the NAIA collection district and that BAR and the Airline Operators Council participated in such meetings, which constituted substantial compliance with Section 9(2), Chapt

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