Republic of the Philippines should act similarly with respect to male workers.
act similarly with respect to male workers. The Court, of course, is not impressing some
SUPREME COURT
Manila
EN BANC
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D.
ACHACOSO, as Administrator of the Philippine Overseas Employment
Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm
"engaged principally in the recruitment of Filipino workers, male and female, for overseas
placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988,
of the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING
THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the
measure is assailed for "discrimination against males or females;" 2 that it "does not apply to all
Filipino workers but only to domestic helpers and females with similar skills;" 3 and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution,
providing for worker participation "in policy and decision-making processes affecting their rights
4
and benefits as may be provided by law." Department Order No. 1, it is contended, was
passed in the absence of prior consultations. It is claimed, finally, to be in violation of the
Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment
informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the
deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy,
Norway, Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the
Solicitor General invokes the police power of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only
question is whether or not it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined as the
"state authority to enact legislation that may interfere with personal liberty or property in order
to promote the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon
liberty or property, (2) in order to foster the common good. It is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible response to
conditions and circumstances thus assuring the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of
statehood and sovereignty. It is a fundamental attribute of government that has enabled it to
perform the most vital functions of governance. Marshall, to whom the expression has been
credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8
"The police power of the State ... is a power coextensive with self- protection, and it is not
inaptly termed the "law of overwhelming necessity." It may be said to be that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety,
and welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in
the conception that men in organizing the state and imposing upon its government limitations
to safeguard constitutional rights did not intend thereby to enable an individual citizen or a
group of citizens to obstruct unreasonably the enactment of such salutary measures calculated
to ensure communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights
itself does not purport to be an absolute guaranty of individual rights and liberties "Even liberty
itself, the greatest of all rights, is not unrestricted license to act according to one's will." 11 It is
subject to the far more overriding demands and requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its
awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and
in that event, it defeats the purpose for which it is exercised, that is, to advance the public
good. Thus, when the power is used to further private interests at the expense of the citizenry,
there is a clear misuse of the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and
convincing evidence to the contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be
nullified. There is no question that Department Order No. 1 applies only to "female contract
workers," 14 but it does not thereby make an undue discrimination between the sexes. It is well-
settled that "equality before the law" under the Constitution 15 does not import a perfect Identity
of rights among all men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the purposes of the law;
(3) they are not confined to existing conditions; and (4) they apply equally to all members of
the same class. 16
The Court is satisfied that the classification made-the preference for female workers — rests
on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen
our female labor force abroad, especially domestic servants, amid exploitative working
conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of
maltreatment suffered by migrant Filipina workers, even rape and various forms of torture,
confirmed by testimonies of returning workers, are compelling motives for urgent Government
action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect
victims of exploitation. In fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no
evidence that, except perhaps for isolated instances, our men abroad have been afflicted with
an Identical predicament. The petitioner has proffered no argument that the Government
male chauvinistic notion that men are superior to women. What the Court is saying is that it
was largely a matter of evidence (that women domestic workers are being ill-treated abroad in
massive instances) and not upon some fanciful or arbitrary yardstick that the Government
acted in this case. It is evidence capable indeed of unquestionable demonstration and
evidence this Court accepts. The Court cannot, however, say the same thing as far as men are
concerned. There is simply no evidence to justify such an inference. Suffice it to state, then,
that insofar as classifications are concerned, this Court is content that distinctions are borne by
the evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally final on the Court.
Under a republican regime, it is the executive branch that enforces policy. For their part, the
courts decide, in the proper cases, whether that policy, or the manner by which it is
implemented, agrees with the Constitution or the laws, but it is not for them to question its
wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief
Executive or his subalterns, especially when the legislature itself has specifically given them
enough room on how the law should be effectively enforced. In the case at bar, there is no
gainsaying the fact, and the Court will deal with this at greater length shortly, that Department
Order No. 1 implements the rule-making powers granted by the Labor Code. But what should
be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded
that prevailing conditions indeed call for a deployment ban.
There is likewise no doubt that such a classification is germane to the purpose behind the
measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance
the protection for Filipino female overseas workers" 17 this Court has no quarrel that in the
midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment
will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply
indefinitely so long as those conditions exist. This is clear from the Order itself ("Pending
review of the administrative and legal measures, in the Philippines and in the host countries . .
."18), meaning to say that should the authorities arrive at a means impressed with a greater
degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a
necessary malleability, depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic
overseas workers. That it does not apply to "all Filipina workers" 20 is not an argument for
unconstitutionality. Had the ban been given universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or group of persons within
an existing class, to the prejudice of such a person or group or resulting in an unfair advantage
to another person or group of persons. To apply the ban, say exclusively to workers deployed
by A, but not to those recruited by B, would obviously clash with the equal protection clause of
the Charter. It would be a classic case of what Chase refers to as a law that "takes property
from A and gives it to B." 21 It would be an unlawful invasion of property rights and freedom of
contract and needless to state, an invalid act. 22 (Fernando says: "Where the classification is
based on such distinctions that make a real difference as infancy, sex, and stage of civilization
of minority groups, the better rule, it would seem, is to recognize its validity only if the young,
the women, and the cultural minorities are singled out for favorable treatment. There would be
an element of unreasonableness if on the contrary their status that calls for the law ministering
to their needs is made the basis of discriminatory legislation against them. If such be the case,
it would be difficult to refute the assertion of denial of equal protection." 23 In the case at bar,
the assailed Order clearly accords protection to certain women workers, and not the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas
deployment. From scattered provisions of the Order, it is evident that such a total ban has hot
been contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar
skills defined herein to the following [sic] are authorized under these guidelines and are
exempted from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited international
organizations.
5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor
agreements or understanding.
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--Vacationing
domestic helpers and/or workers of similar skills shall be allowed to process with the POEA
and leave for worksite only if they are returning to the same employer to finish an existing or
partially served employment contract. Those workers returning to worksite to serve a new
employer shall be covered by the suspension and the provision of these guidelines.
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 24
The consequence the deployment ban has on the right to travel does not impair the right. The
right to travel is subject, among other things, to the requirements of "public safety," "as may be
provided by law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in
particular, its basic policy to "afford protection to labor," 26 pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor Code. 27 The petitioner
assumes that it is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it
does not mean that such an authority may not be lawfully delegated. As we have mentioned,
the Labor Code itself vests the Department of Labor and Employment with rulemaking powers
in the enforcement whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and
decision-making processes affecting their rights and benefits" 29 is not well-taken. The right
1
granted by this provision, again, must submit to the demands and necessities of the State's
power of regulation.

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all. 30

"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands
because it cannot satisfy their employment needs at home. Under these circumstances, the
Government is duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the Government has
evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of
such protection, and as part of its duty, it has precisely ordered an indefinite ban on
deployment.

The Court finds furthermore that the Government has not indiscriminately made use of its
authority. It is not contested that it has in fact removed the prohibition with respect to certain
countries as manifested by the Solicitor General.

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the
loftier purposes targetted by the Government. 31 Freedom of contract and enterprise, like all
other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has
never been fully accepted as a controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens.
The Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary
relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.

2
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6025 May 30, 1964
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
AMADO V. HERNANDEZ, ET AL., accused,
AMADO V. HERNANDEZ, ET AL., defendants-appellants.
-----------------------------
G.R. No. L-6026 May 30, 1964
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
BAYANI ESPIRITU, ET AL., accused,
BAYANI ESPIRITU and TEOPISTA VALERIO, defendants-appellants.
LABRADOR, J.:
This is the appeal prosecuted by the defendants from the judgment rendered by the Court of
First Instance of Manila, Hon. Agustin P. Montesa, presiding, in its Criminal Case No.
15841, People vs. Amado V. Hernandez, et al., and Criminal Case No. 15479, People vs.
Bayani Espiritu, et al. In Criminal Case No. 15841 (G.R. No. L-6026) the charge is for
Rebellion with Multiple Murder, Arsons and Robberies; the appellants are Amado V.
Hernandez, Juan J. Cruz, Genaro de la Cruz, Amado Racanday, Fermin Rodillas and Julian
Lumanog; Aquilino Bunsol, Adriano Samson and Andres Baisa, Jr. were among those
sentenced in the judgment appealed from, but they have withdrawn their appeal. In Criminal
Case No. 15479 (G.R. No. L-6026) the charge is for rebellion with murders, arsons and
kidnappings; the accused are Bayani Espiritu Teopista Valerio and Andres Balsa, Jr.; they all
appealed but Andres Balsa, Jr. withdrew his appeal.
The information filed against defendants Hernandez and others in Criminal Case No. 15481
alleged:
I. That on or about March 15, 1945, and for some time before the said date and continuously
thereafter, until the present time, in the City of Manila, Philippines, and the place which they
had chosen as the nerve center of all their rebellious activities in the different parts of the
Philippines, the said accused, conspiring, confederating and cooperating with each other, as
well as with the thirty-one (31) defendants charged in Criminal Cases Nos. 19071, 14082,
14270, 14315 and 14344 of the Court of First Instance of Manila (decided May 11, 1951) and
also with others whose whereabouts and identities are still unknown, the said accused and
their other co-conspirators, being then high ranking officers and/or members of, or otherwise
affiliated with the Communist Party of the Philippines (P.K.P.), which is now actively engaged
in an armed rebellion against the Government of the Philippines thru act theretofore committed
and planned to be further committed in Manila and other places in the Philippines, and of
which party the "Hukbong Mapagpalaya Ng Bayan"(H.M.B.) otherwise or formerly known as
the "Hukbalahaps" (Huks), unlawfully and did then and there willfully, unlawfully and
feloniously help, support, promote, maintain, cause, direct and/or command the "Hukbong
Mapagpalaya Ng Bayan" (H.M.B.) or the "Hukbalahaps" (Huks) to rise publicly and take arms
against the Republic of the Philippines, or otherwise participate in such armed public uprising,
for the purpose of removing the territory of the Philippines from the allegiance to the
government and laws thereof as in fact the said "Hukbong Mapagpalaya Ng Bayan" or
"Hukbalahaps" have risen publicly and taken arms to attain the said purpose by then and there
making armed raids, sorties and ambushes, attacks against police, constabulary and army
detachments as well as innocent civilians, and as a necessary means to commit the crime of
rebellion, in connection therewith and in furtherance thereof, have then and there committed
acts of murder, pillage, looting, plunder, arson, and planned destruction of private and public
property to create and spread chaos, disorder, terror, and fear so as to facilitate the
accomplishment of the aforesaid purpose, as. follows, to wit: (Enumeration of thirteen attacks
on government forces or civilians by Huks on May 6, 1946, August 6, 1946, April 10, 1947,
May 9, 1947, August 19, 1947, June, 1946, April 28, 1949, August 25, 1950, August 26, 1950,
August 25, 1950, September 12, 1950, March 28, 1950 and March 29, 1950.)
II. That during the period of time and under the same circumstances herein-above indicated
the said accused in the above-entitled case, conspiring among themselves and with several
others as aforesaid, willfully, unlawfully and feloniously organized, established, led and/or
maintained the Congress of Labor Organizations (CLO), formerly known as the Committee on
Labor Organizations (CLO), with central offices in Manila and chapters and affiliated or
associated labor unions and other "mass organizations" in different places in the Philippines,
as an active agency, organ, and instrumentality of the Communist Party of the Philippines
(P.K.P.) and as such agency, organ, and instrumentality, to fully cooperate in, and synchronize
its activities — as the CLO thus organized, established, led and/or maintained by the herein
accused and their co-conspirators, has in fact fully cooperated in and synchronized its
activities with the activities of the "Hukbong Mapagpalaya Ng Bayan" (H.M.B.) and other
organs, agencies, and instrumentalities of the Communist Party of the Philippines (P.K.P.), to
thereby assure, facilitate, and effect the complete and permanent success of the above-
mentioned armed rebellion against the Government of the Philippines.
The information filed against the defendants in Criminal Case No. 15479, Bayani Espiritu
Andres Baisa, Jr. and Teopista Valerio, alleges:
That on or about the 6th day of May, 1946, and for sometime prior and subsequent thereto and
continuously up to the present time, in the City of Manila, the seat of the government of the
Republic of the Philippines, which the herein accused have intended to overthrow, and the
place chosen for that purpose as the nerve center of all their rebellious atrocities in the
different parts of the country, the said accused being then high ranking officials and/or
members of the Communist Party of the Philippines (P.K.P.) and/or of the "Hukbong
Mapagpalaya Ng Bayan" (H.M.B.) otherwise or formerly known as the "Hukbalahaps" (HUKS),
the latter being the armed forces of said Communist Party of the Philippines; having come to
an agreement with the 29 of the 31 accused in Criminal Cases Nos. 14071, 14082, 14270,
14315, 14344 of the Court of First Instance of Manila and decided to commit the crime of
rebellion, and therefore, conspiring and confederating with all of the 29 accused in said
criminal cases, acting in accordance with their conspiracy and in furtherance thereof, together
with many others whose whereabouts and identities are still unknown up to the filing of this
information, and helping one another, did then and there willfully, unlawfully and feloniously
promote maintain, cause, direct and/or command the "Hukbong Mapagpalaya Ng Bayan",
(HMB) or the Hukbalahaps (HUKS) to rise publicly and take Arms against the Government or
otherwise participate therein for the purpose of overthrowing the same, as in fact, the said
"Hukbong Mapagpalaya Ng Bayan" or Hukbalahap (HUKS) have risen publicly and taken arms
against the Government, by then and there making armed raids, sorties and ambushes,
attacks against police, constabulary and army detachment, and as a necessary means to
commit the crime of rebellion, in connection therewith and in furtherance thereof, by then and
there committing wanton acts of murder, spoilage, looting, arson, kidnappings, planned
destruction of private and public buildings, to create and spread terrorism in order to facilitate
the accomplishment of the aforesaid purpose, as follows to wit: (Enumeration of thirteen
attacks on Government forces or civilians by Huks on May 6, 1946. August 6, 1946, April 10,
1947, May 9, 1947, August 19, 1947, June 1946, April 28, 1949, August 25, 1950, August 26,
1950, August 25, 1950, September 12, 1950, March 28, 1950 and March 29, 1950).
A joint trial of both cases was held, after which the court rendered the decision subject of the
present appeals.
APPEAL OF AMADO V. HERNANDEZ
After trial the Court of First Instance found, as against appellant Amado V. Hernandez, the
following: (1) that he is a member of the Communist Party of the Philippines and as such had
aliases, namely, Victor or Soliman; (2) that he was furnished copies of "Titis", a Communist
publication, as well as other publications of the Party; (3) that he held the position of President
of the Congress of Labor Organizations; (4) that he had close connections with the Secretariat
of the Communist Party and held continuous communications with its leaders and its
members; (5) that he furnished a mimeographing machine used by the Communist Party, as
well as clothes and supplies for the military operations of the Huks; (6) that he had contacted
well-known Communists coming to the Philippines and had gone abroad to the WFTU
conference Brussels, Belgium as a delegate of the CLO, etc. Evidence was also received by
the court that Hernandez made various speeches encouraging the people to join in the Huk
movement in the provinces.
The court also found that there was a close tie-up between the Communist Party and the
Congress of Labor Organizations, of which Hernandez was the President, and that this
Congress was organized by Hernandez in conjunction with other Huks, namely: Alfredo Saulo,
Mariano Balgos, Guillermo Capadocia, etc.
We will now consider the nature and character of both the testimonial as well as the
documentary evidence, independently of each other, to find out if the said evidence supports
the findings of the court.
Testimonial Evidence
Amado V. Hernandez took the oath as member of the Communist Party in the month of
October, 1947, at the offices of the Congress of Labor Organizations at 2070 Azcarraga in the
presence of Guillermo Capadocia, Ramon Espiritu, Pedro Castro, Andres Balsa, etc. As a
Communist he was given the pseudonyms of Victor and Soliman, and received copies of the
Communist paper "Titis". He made various speeches on the following dates and occasions:
(1) On August 29, 1948 before the Democratic Peace Rally of the CLO at Plaza Miranda, in
which he announced that the people will soon meet their dear comrade in the person of
Comrade Luis Taruc.
(2) On September 4, 1948 he conferred with Hindu Khomal Goufar at the Escolta, at which
occasion Balgos told Goufar that the PKM, CLO and the Huks are in one effort that the PKM
are the peasants in the field and the Huks are the armed forces of the Communist Party; and
the CLO falls under the TUD of the Communist Party. 1äwphï1.ñët
(3) On October 2, 1948 he went abroad to attend the Second Annual Convention of the World
Federation of Trade Unions and after arrival from abroad a dinner was given to him by the
people of Gagalangin, at which Hernandez delivered a speech and he said that he preferred to
go with the Huks because he felt safer with them than with the authorities of the Government.
(4) In April, 1949, he made a speech before a group of tenants in Malabon attacking the frauds
in the 1947 elections, graft and corruption in the elections and that if improvement cannot be
made by the ballots, they could be made by bullets; and enjoined the people to go to the hills
and join Luis Taruc the head of the dissidents in the Philippines.
(5) On October 2, 1949 he delivered a speech on the occasion of the commemoration of the
World Peace at the CLO headquarters at 330 P. Campa. He attacked the city mayor and
incited the people to go to Balintawak and see Bonifacio there and thereafter join four
comrades under the leadership of Luis Taruc.
(6) On October 16, 1949 he delivered a speech before a convention of the unemployed at 330
P. Campa. He asked the unemployed to approve a resolution urging the Government to give
them jobs. In conclusion he said that if the Government fails to give them jobs the only way out
was to join the revolutionary forces fighting in the hills. He further said that Mao Tse Tung,
leader of the People's Army in China, drove Chiang Kai Shek from his country, and that Luis
Taruc was also being chased by Government forces run by puppets like Quirino, etc.
(7) On January 13, 1950 there was another meeting at 330 P. Campa. In his talk Hernandez
expressed regret that two foremost leaders of the CLO, Balgos and Capadocia, had gone to
the field to join the liberation army of the HMB, justifying their going out and becoming heroes
by fighting in the fields against Government forces until the ultimate goal is achieved.
The above evidence was testified to by Florentino Diolata who was the official photographer of
the CLO since August, 1948.
On the tie-up between the Communist Party and the CLO Guillermo Calayag, a Communist
and a Huk from 1942 to 1950, explained:
(1) The ultimate goal of the Communist Party is to overthrow the president government by
force of aims and violence; thru armed revolution and replace it with the so-called dictatorship
of the proletariat the Communist Party carries its program of armed overthrow of the present
government by organizing the HMB and other forms of organization's such as the CLO, PKM,
union organizations, and the professional and intellectual group; the CLO was organized by
the Trade Union Division TUD of the Communist Party.
(2) A good majority of the members of the Executive Committee and the Central Committee of
the CLO were also top ranking officials of the Communist Party; activities undertaken by the
TUD - the vital undertaking of the TUD is to see that the directives coming from the
organizational bureau of the Communist Party can be discussed within the CLO especially the
Executive Committee. And it is a fact that since a good majority of the members of the
Executive Committee are party members, there is no time, there is no single time that those
directives and decisions of the organizational department, thru the TUD are being objected to
by the Executive Committee of the CLO. These directives refer to how the CLO will conduct its
functions. The executive committee is under the chairmanship of accused Amado V.
Hernandez.
(3) The CLO played its role in the overall Communist program of armed overthrow of the
present government and its replacement by the dictatorship of the proletariat by means of
propaganda - by propagating the principles of Communism, by giving monetary aid, clothing,
medicine and other forms of material help to the HMB. This role is manifested in the very
constitution of the CLO itself which expounded the theory of classless society and the
eradication of social classes (par. 5, Sec. 1, Art. 2, page 18 of the CLO Constitution contained
in the Fourth Annual Convention Souvenir Program of the CLO Exh. "V-1579"). Thru
propaganda, the CLO promoted the aims of Communist Party and disseminated Communist
ideas by:
(a) The conspicuous display of the portrait or, pictures of Crisanto Evangelista (Exh. V-1662),
founder of Communism in the Philippines, in the session hall of the CLO headquarters at 2070
Azcarraga and then at 330 P. Campa;
(b) The distribution of foreign communist reading materials such as the World Federation of
Trade Union Magazine, International Union of Students magazine, Voice magazine of the
marine cooks of the CLO, World Committee of the Defenders of the Peace magazine, Free
Bulgaria magazine, Soviet Russia Today magazine and World Federation of Democratic Youth
magazine (Exhs. V-911, V-907, V-910, V-899, V-912, V-853, W-996 and V-967);
3
(c) The publication and distribution of some local subversive publications such as the "Titis",
"Bisig", Kidlat", which are Communist Party organs; "The Philippine Labor Demands Justice"
and "Hands Off Korea" authored by accused Amado V. Hernandez;
(d) Principles of Communism were also propagated thru lectures, meetings, and by means of
organization of committees in the educational department as well as researches in the
Worker's Institute of the CLO.
(4) The CLO also helped carry out the program of the Communist Party thru infiltration of party
members and selected leaders of the HMB within the trade unions under the control of the
CLO. The Communist Party thru the CLO assigned Communist Party leaders and organizers
to different factories in order to organize unions. After the organization of the union, it will
affiliate itself with the CLO thru the Communist leaders and the CLO in turn, will register said
union with the Department of Labor; and the orientation and indoctrination of the workers is
continued in the line of class struggle. After this orientation and infiltration of the Communist
Party members and selected leaders of the HMB with the trade unions under the control of the
CLO is already achieved and the group made strong enough to carry out its aims, they will
begin the sporadic strikes and the liquidation of anti-labor elements and anti-Communist
elements and will create a so-called revolutionary crisis. That revolutionary crisis will be done
for the party to give directives to the HMB who are fighting in the countrysides and made them
come to the city gates. The entry of the HMB is being paved by the simultaneous and sporadic
strikes, by ultimate general strikes thru the management of the CLO.
Important Documents Submitted at Trial
1. Documents which proved that Amado V. Hernandez used the aliases "Victor", or was
referred to as "Victor" or "Soliman".
(a) Letter dated April 23, 1950 (signed) by Victor addressed to Julie telling the latter of his
sympathies for other communists, describing his experiences with Communists abroad, telling
Julie to dispose of materials that may be sent by Victor. (Exh. D-2001-2004)
(b) "Paano Maisasagawa, etc." — mentions different groups of labor unions of which Victor
heads one group, consisting of the MRRCO, PTLD, PGWU, EMWU and IRWU (Exh. C-2001-
2008) Cadres assigned to different industries. (Exh. V-40-41)
(c) Handwritten certificate of Honofre Mangila states that he knew Amado Hernandez as Victor
from co-party members Hugo and Ely. (Exh. LL)
(d) Letter of Elias to Ka Eto requesting the latter to deliver attached letter to Victor. (Exh. 1103)
(e) Saulo's letter about his escape, asks Victor why his press statement was not published in
the newspapers. (Exh. C-362) Letter was however published by Hernandez in the Daily Mirror.
(f) Letter of Taruc to Maclang directing the latter to give copy of Huk Story to Victor. (Exh. D-
463-64)
(g) Notes of Salome Cruz, Huk courier, stating that she went to Soliman at Pampanga St. to
bring to the latter communications from the Communist Party. (Exh. D-1203) That Soliman was
given copies of "Titis". (Exh. D-1209)
(h) SEC directions to Politburo members, Soliman not to be involved with Nacionalista Rebels.
(Exh. F-92-93. SEC)
(i) Letter of SEC to Politburo reporting that Saulo be sent out and Soliman has "tendencies of
careerism and tendency to want to deal with leaders of the party"; that he should be asked to
choose to go underground or fight legally. (Exh. F-562)
(j) Explanation given by Hernandez why he did not join Saulo in going underground. (Exh. V-
87) (1) His election as councilor until December, 1951. (Exhs. V-42, W-9) (2) His election as
President of CLO until August of following year. (Exhs. V-42, W-9)
2. Letters and Messages of Hernandez.
(a) To Lyden Henry and Harry Reich, tells Huks still fighting. (Exh. V-80)
(b) To SOBSI Jakarta — that Filipinos are joining other communist countries of the East. (Exh.
V-82)
(c) Press release on Saulo's disappearance published by Amado Hernandez. (Exh. W-116-
120)
(d) To Hugh and Eddie, July 8, 1949 — Extends greetings to National Union of Marine Cooks
and Stewards, states that labor has one common struggle — "the liberation of all the peoples
from the chains of tyranny, fascism and imperialism". (Exh. V-259)
(e) To Kas. Pablo and Estrada - talks of the fight - fight of labor. (Exh. V-85-89)
(f) Appeal to the Women and Asia. (Exh. V-5-10)
(g) Letter to Julie (Exh. V-2001-2004)
(h) Letter to Chan Lieu - states that leaders during the war are being persecuted, like Taruc.
Tells of reward of P100,000.00 on Taruc's head. (Exh. X-85-88)
(i) Letter to John Gates of the Daily Worker — condemns Wall Street maneuvers; corruption
and graft in Quirino administration, etc. (Exh. V-83)
(j) Cablegram: CLO join ILWU commends Harry Bridges, US Communist. (Exh. V-79)
(k) Communication of Hernandez to CLO at MRRCO — Praises Balgos and Capadocia for
joining the Huks. (Exhs. V-12-22, V-289)
(l) "Philippine labor Demands Justice" — Attacks czars of Wall Street and U.S. Army and
Government. (Exh. V-94) .
(m) Letter to Taruc — June 28, 1948.-States solidarity among the CLO Huks and PKM. Attacks
North Atlantic Pact. Praises Mao Tse Tung (contained in Exh. V-94)
(n) "Philippines Is Not A Paradise" — States of a delegation to Roxas attacking unemployment.
(Exh. V-90-93)
(o) Article "Progressive Philippines" — (Exh. V-287)
(p) Article "Hands Off Korea" — (Exhs. V-488-494, 495-501, 509-515, W-25-26)
(q) "Limang Buwang Balak Sa Pagpapalakas Ng Organisasyon". (Exh. X-35-38)
(r) Press statement of Hernandez — opposes acceptance of decorations from Greece by
Romulo. (Exh. V-72)
3. Other Activities of Hernandez.
(a) Hernandez received clothes from Pres. Lines thru P. Campa, which clothes he sent to the
field. Letters show of sending of supplies to Huks. (Exh. S-383)
(b) Hernandez was asked to furnish portable typewriter, which he did furnish to Huks. (Exh. C-
364)
(c) Hernandez brought Taruc's letter about facts and incidents about Huks to Bulosan for
inclusion in Bulosan's book. (Exh. FF-1)
(d) Had conference with Kumar Goshal a Hindu, about the Huks and their armed forces.
(Photographs, Exhs. X-6 RR-54-55A)
(e) Supervised taking of pictures of sons of Capadocia and Joven. (Photographs, Exhs. T-1,
RR-136-138A)
(f) Had knowledge of the going underground of Capadocia and Balgos and issued press
release about their going underground. (Exh. F-91)
(g) Victor mentioned to continue as contact for Chino. (Exh. C-362)
(h) Taruc's letter to Maclang shows that Soliman had sent 7 lessons to Taruc. (Exh. D-451-
451-A)
(i) Associated with fellow ranking Communist leaders.
The Court upon consideration of the evidence submitted, found (1) that the Communist Party
was fully organized as a party and in order to carry out its aims and policies a established a
National Congress, a Central Committee (CC), Politburo PB, Secretariat (SEC), Organization
Bureau (OB), and National Courier or Communication Division (NCD), each body performing
functions indicated in their respective names; (2) that in a meeting held on August 11, 1950 the
SEC discussed the creation of a Military Committee of the Party and a new GHQ, under which
on September 29, 1950 the SEC organized a special warfare division, with a technological
division; (3) that on May 5, 1950 a body known as the National Intelligence Division was
created, to gather essential military intelligence and, in general, all information useful for the
conduct of the armed struggle (4) that a National Finance Committee was also organized as a
part of the Politburo and answerable to it; (5) that the country was divided into 10 Recos, the
10th Reco comprising the Manila and suburbs command; (6) that since November, 1949 the
CPP had declared the existence of a revolutionary situation and since then the Party had gone
underground and the CPP is leading the armed struggle for national liberation, and called on
the people to organize guerrillas and coordinate with the HMB on the decisive struggle and
final overthrow of the imperialist government; (7) that in accordance with such plan the CPP
prepared plans for expansion and development not only of the Party but also of the HMB; the
expansion of the cadres from 3,600 in July 1950 to 56,000 in September 1951, the HMB from
10,800 in July 1950 to 172,000 in September 1951, et seq.
Around the month of January, 1950 it was decided by the CPP to intensify HMB military
operations for political purposes. The Politburo sanctioned the attacks made by the Huks on
the anniversary of the HMB on March 25, 1950. The HMB attacks that were reported to the PB
were those made in May, 1946; June, 1946; April 10, 1947; May 9, 1947; August 19, 1947;
August 25, 1950; August 26, 1950; October 15 and 17, 1950; May 6, 1946; August 6, 1946;
April 10, 1947; May 9, 1947; August 19, 1947; April 29, 1949; August 25, 1950; August 26,
1950; September 12, 1950; March 26, 1950; March 29, 1950.
The theory of the prosecution, as stated in the lower court's decision, is as follows:
The evidence does not show that the defendants in these cases now before this Court had
taken a direct part in those raids and in the commission of the crimes that had been
committed. It is not, however, the theory of the prosecution that they in fact had direct
participation in the commission of the same but rather that the defendants in these cases have
cooperated, conspired and confederated with the Communist Party in the prosecution and
successful accomplishment of the aims and purposes of the said Party thru the organization
called the CLO (Congress of Labor Organizations).
The Court found that the CLO is independent and separate from the CPP, organized under the
same pattern as the CPP, having its own National Congress, a Central Committee (which acts
in the absence of and in representation of the National Congress), an Executive Committee
(which acts when the National Congress and the Executive Committee are not in session), and
seven permanent Committees, namely, of Organization, Unemployment and Public Relations,
Different Strikes and Pickets, Finance, Auditing, Legislation and Political Action. Members of
the Communist Party dominate the committees of the CLO. The supposed tie-up between CPP
and the CLO of which Hernandez was the President, is described by the court below in finding,
thus:
Just how the CLO coordinates its functions with the Communist Party organ under which it
operates was explained by witness Guillermo S. Calayag, one-time ranking member of the
Communist Party and the CLO who typewrites the "Patnubay sa Education" from a
handwritten draft of Capadocia, which is one of the texts used in the Worker's institute of the
CLO. According to him, the CLO plays its role by means of propaganda, giving monetary aid,
clothing, medicine and other material forms of help to the HMB, which constitutes the armed
forces of the Communist Party. Propaganda is done by lectures, meetings, and the
organization of committees of the educational department as well as researches at the CLO
Worker's Institute.
Another way of helping the Communist Party of the Philippines is by allowing the Communist
Party leaders to act as organizers in the different factories in forming a union. These Party
Members help workers in the factories to agitate for the eradication of social classes and
ultimately effect the total emancipation of the working classes thru the establishment of the so-
called dictatorship of the proletariat. It is the duty of these Communist Party members to
indoctrinate uninitiated workers in the union to become proselytes of the Communist Party
ideology. After the right number is secured and a union is formed under a communist leader,
this union is affiliated with the CLO and this in turn registers the same with the Department of
Labor. The orientation and indoctrination of the masses is continued with the help of the CLO.
The primary objective of the CLO is to create what is called a revolutionary crisis. It seeks to
attain this objective by first making demands from the employers for concessions which
become more and more unreasonable until the employers would find it difficult to grant the
same. Then a strike is declared. But the strikes are only preparation for the ultimate attainment
of the Communist goal of armed overthrow of the government. After the workers in the
factories have already struck in general at the behest of the Communist Party thru the CLO a
critical point is reached when a signal is given for the armed forces of the Communist Party,
the HMB, to intervene and carry the revolution now being conducted outside to within the city.
4
On the basis of the above findings, the court below found Hernandez guilty as principal of the
crime charged against him and sentenced him to suffer the penalty of reclusion perpetua with
the accessories provided by law, and to pay the proportionate amount of the costs.
Our study of the testimonial and documentary evidence, especially those cited by the Court in
its decision and by the Solicitor General in his brief, discloses that defendant-appellant Amado
V. Hernandez, as a Communist, was an active advocate of the principles of Communism,
frequently exhorting his hearers to follow the footsteps of Taruc and join the uprising of the
laboring classes against capitalism and more specifically against America and the Quirino
administration, which he dubbed as a regime of puppets of American imperialism. But beyond
the open advocacy of Communistic Theory there appears no evidence that he actually
participated in the actual conspiracy to overthrow by force the constituted authority.
Hernandez is the founder and head of the CLO. As such, what was his relation to the
rebellion? If, as testified to by Guillermo S. Calayag, the CLO plays merely the role of
propagation by lectures, meetings and organization of committees of education by
Communists; if, as stated, the CLO merely allowed Communist Party leaders to act as
organizers in the different factories, to indoctrinate the CLO members into the Communist
Party and proselytize them to the Communist ideology; if, as also indicated by Calayag, the
CLO purports to attain the ultimate overthrow of the Government first by making demands from
employers for concessions until the employers find it difficult to grant the same, at which time a
strike is declared; if it is only after the various strikes have been carried out and a crisis is
thereby developed among the laboring class, that the Communist forces would intervene and
carry the revolution — it is apparent that the CLO was merely a stepping stone in the
preparation of the laborers for the Communist' ultimate revolution. In other words, the CLO had
no function but that of indoctrination and preparation of the members for the uprising that
would come. It was only a preparatory organization prior to revolution, not the revolution itself.
The leader of the CLO therefore, namely Hernandez, cannot be considered as a leader in
actual rebellion or of the actual uprising subject of the accusation. Hernandez, as President of
the CLO therefore, by his presidency and leadership of the CLO cannot be considered as
having actually risen up in arms in rebellion against the Government of the Philippines, or
taken part in the conspiracy to commit the rebellion as charged against him in the present
case; he was merely a propagandist and indoctrinator of Communism, he was not a
Communist conspiring to commit the actual rebellion by the mere fact of his presidency of the
CLO.
The court below declares that since November 1949 the Communist Party of the Philippines
had declared the existence of the revolutionary situation and since then the Party had gone
underground, with the CPP leading the struggle for national integration and that in the month of
January 1950, it was decided by the said Party to intensify the HMB military operations for
political purposes. The court implicates the appellant Hernandez as a co-conspirator in this
resolution or acts of the Communist Party by his mere membership thereto. We find this
conclusion unwarranted. The seditious speeches of Hernandez took place before November,
1949 when the CPP went underground. The court below has not been able to point out, nor
have We been able to find among all acts attributed to Hernandez, any single fact or act of his
from which it may be inferred that he took part in the deliberations declaring the existence of a
revolutionary situation, or that he had gone underground. As a matter of fact the prosecution's
evidence is to the effect that Hernandez refused to go underground preferring to engage in
what they consider the legal battle for the cause.
We have also looked into the different documents which have been presented at the time of
the trial and which were confiscated from the office of the Politburo of the Communist Party.
The speeches of Hernandez were delivered before the declaration by the Communist Party of
a state of revolutionary situation in 1949. Neither was it shown that Hernandez was a member
of the Executive Committee, or of the SEC, or of the Politburo of the Communist Party; so NO
presumption can arise that he had taken part in the accord or conspiracy declaring a
revolution. In short, there has been no evidence, direct or indirect, to relate or connect the
appellant Hernandez with the uprising or the resolution to continue or maintain said uprising,
his participation in the deliberations leading to the uprising being inferred only from the fact that
he was a communist.
The practice among the top Communists, as declared by the trial court appears to have been
for important members, if they intend actually to join the rebellion, to go underground, which
meant leaving the city, disappearing from sight and/or secretly joining the forces in the field.
The document, Exhibit F-562, which is quoted in the decision, contains the directive of the
SEC of September 1, 1950, to Saulo and Hernandez, which reads:
11. In view of the new developments in the city, send out Elias who prefers to work outside.
Present problem of fighting legally to Com. Soliman. If Soliman is prepared for martyrdom,
retain him to fight legally. If not, send him out with Elias. Same goes with Com. Mino and other
relatively exposed mass leaders.
And the lower court itself found that whereas Saulo went underground and joined the
underground forces outside the City, Hernandez remained in the City, engaged in the work of
propaganda, making speeches and causing the publication of such matters as the Communist
Party leaders directed him to publish.
That Hernandez refused to go underground is a fact which is further corroborated by the
following reasons (excuses) given by him for not going underground, namely (1) that his term
of councilor of the City of Manila was to extend to December, 1951; and (2) that he was
elected President of the CLO for a term which was to end the year 1951.
As a matter of fact the SEC gave instructions to Hernandez not to be involved with
Nacionalista Rebels, and reported to the Politburo that Hernandez "has tendencies of
careerism, and tending to want to deal with leaders of the Nacionalista Party instead of
following CPP organizational procedures."
The court below further found that Hernandez had been furnishing supplies for the Huks in the
field. But the very document dated December 3, 1949, Exhibit D-420422, cited in the decision
(printed, p. 49), is to the effect that clothes and shoes that Hernandez was supposed to have
sent have not been received. It is true that some clothes had been sent thru him to the field,
but these clothes had come from a crew member of a ship of the American President Lines.
He also, upon request, sent a portable typewriter to the SEC or Politburo. Furthermore, a
certain Niagara Duplicating machine received by Hernandez from one Rolland Scott Bullard a
crew member of the SS President Cleveland, appease later to have been forwarded by him to
the officers of the SEC or the Politburo.
Lastly, it further appears that Taruc and other CPP leaders used to send notes to appellant
Hernandez, who in turn issued press releases for which he found space in the local papers.
His acts in this respect belong to the category of propaganda, to which he appears to have
limited his actions as a Communist.
The acts of the appellant as thus explained and analyzed fall under the category of acts of
propaganda, but do not prove that he actually and in fact conspired with the leaders of the
Communist Party in the uprising or in the actual rebellion, for which acts he is charged in the
information. And his refusal to go underground because of his political commitments
occasioned by his term of election as president of the CLO and the impressions caused by his
acts on the Communist leaders, to the effect that he was in direct communication or
understanding with the Nacionalista Party to which he was affiliated, creates in Us the
reasonable doubt that it was not his Communistic leanings but his political ambitions, that
motivated his speeches sympathizing with the Huks. For which reason We hold that the
evidence submitted fails to prove beyond reasonable doubt that he has conspired in the
instigation of the rebellion for which he is held to account in this criminal case.
The question that next comes up for resolution is: Does his or anyone's membership in the
Communist Party per se render Hernandez or any Communist guilty of conspiracy to commit
rebellion under the provisions of Article 136 of the Revised Penal Code? The pertinent
provision reads:
ART. 136. Conspiracy and proposal to commit rebellion or insurrection. — The conspiracy and
proposal to commit rebellion or insurrection shall be punished, respectively, by prision
correccional in its maximum period and a fine which shall not exceed 5,000 pesos, and
by prision correccional in its medium period and a fine not exceeding 2,000 pesos.
The advocacy of Communism or Communistic theory and principle is not to be considered as a
criminal act of conspiracy unless transformed or converted into an advocacy of action. In the
very nature of things, mere advocacy of a theory or principle is insufficient unless the
communist advocates action, immediate and positive, the actual agreement to start an uprising
or rebellion or an agreement forged to use force and violence in an uprising of the working
class to overthrow constituted authority and seize the reins of Government itself. Unless action
is actually advocated or intended or contemplated, the Communist is a mere theorist, merely
holding belief in the supremacy of the proletariat a Communist does not yet advocate the
seizing of the reins of Government by it. As a theorist the Communist is not yet actually
considered as engaging in the criminal field subject to punishment. Only when the Communist
advocates action and actual uprising, war or otherwise, does he become guilty of conspiracy to
commit rebellion. Borrowing the language of the Supreme Court of the United States:
In our jurisprudence guilt is personal, and when the imposition of punishment on a status or on
conduct can only be justified by reference to the relationship of that status or conduct to other
concededly criminal activity (here advocacy of violent overthrow), that relationship must be
sufficiently substantial to satisfy the concept of personal guilt in order to withstand attack under
the Due Process Clause of the Fifth Amendment. Membership, without more, in an
organization engaged in illegal advocacy, it is now said, has not heretofore been recognized by
this Court to be such a relationship. ... .
What must be met, then, is the argument that membership, even when accompanied by the
elements of knowledge and specific intent, affords an insufficient quantum of participation in
the organization's alleged criminal activity, that is, an insufficiently significant form of aid and
encouragement to permit the imposition of criminal sanctions on that basis. It must indeed be
recognized that a person who merely becomes a member of an illegal organization, by that
"act" alone need be doing nothing more than signifying his assent to its purposes and activities
on one hand, and providing, on the other, only the sort of moral encouragement which comes
from the knowledge that others believe in what the organization is doing. It may indeed be
argued that such assent and encouragement do fall short of the concrete, practical impetus
given to a criminal enterprise which is lent for instance by a commitment on the part of the
conspirator to act in furtherance of that enterprise. A member, as distinguished from a
conspirator, may indicate his approval of a criminal enterprise by the very fact of his
membership without thereby necessarily committing himself to further it by any act or course of
conduct whatever. (Scales v. United States, 367 U.S. 203, 6 L. ed. 782)
The most important activity of appellant Hernandez appears to be the propagation of
improvement of conditions of labor through his organization, the CLO. While the CLO of which
he is the founder and active president, has communistic tendencies, its activity refers to the
strengthening of the unity and cooperation between labor elements and preparing them for
struggle; they are not yet indoctrinated in the need of an actual war with or against Capitalism.
The appellant was a politician and a labor leader and it is not unreasonable to suspect that his
labor activities especially in connection with the CLO and other trade unions, were impelled
and fostered by the desire to secure the labor vote to support his political ambitions. It is
doubtful whether his desire to foster the labor union of which he was the head was impelled by
an actual desire to advance the cause of Communism, not merely to advance his political
aspirations.
Insofar as the appellant's alleged activities as a Communist are concerned, We have not
found, nor has any particular act on his part been pointed to Us, which would indicate that he
had advocated action or the use of force in securing the ends of Communism. True it is, he
had friends among the leaders of the Communist Party, and especially the heads of the
rebellion, but this notwithstanding, evidence is wanting to show that he ever attended their
meetings, or collaborated and conspired with said leaders in planning and encouraging the
acts of rebellion, or advancing the cause thereof. Insofar as the furnishing of the mimeograph
machine and clothes is concerned, it appears that he acted merely as an intermediary, who
passed said machine and clothes on to others. It does not appear that he himself furnished
funds or material help of his own to the members of the rebellion or to the forces of the
rebellion in the field.
But the very act or conduct of his in refusing to go underground, in spite of the apparent desire
of the chief of the rebellion, is clear proof of his non-participation in the conspiracy to engage in
or to foster the rebellion or the uprising.
We next consider the question as to whether the fact that Hernandez delivered speeches of
propaganda in favor of Communism and in favor of rebellion can be considered as a criminal
act of conspiracy to commit rebellion as defined in the law. In this respect, the mere fact of his
giving and rendering speeches favoring Communism would not make him guilty of conspiracy,
because there was no evidence that the hearers of his speeches of propaganda then and
there agreed to rise up in arms for the purpose of obtaining the overthrow of the democratic
government as envisaged by the principles of Communism. To this effect is the following
comment of Viada:
CUESTION 10. El que hace propaganda entre sus convecinos, induciendoles a que el dia que
se anunciara la subasta de consumes se echaran a la calle para conseguir aunque fuera
preciso acudir a la fuerza el reparto entre los vecinos ricos solamente, sera responsable de un
delito de conspiracion para la sedicion? — El Tribunal Supreme ha resuelto la negative al
casar cierta sentencia de la Audiencia de Valencia, que entendio lo contrario: "Considerando
que, con areglo a lo que dispone el art. 4. del Codigo Penal, hay conspiracion cuando dos o
mas personas se conciertan para la execution de un delito y resuelven cmeterlo; y no
constando que existiera ese concierto en cuanto a los hechos que se refieren en la tercera
pregunta del veredicto, pues en ella solo se habla de los actos de induccion que el procesado
realizo, sin expresar el efecto que la mismo produjo en el animo de las personas a quienes se
dirigian, ni si estas aceptaron o no lo que se las propuso, resulta evidence que faltan los
clementos integrantes de la conspiracion, etc." (Se. de 5 de Julio de 1907, Gaceta de 7 de
Enero de 1909.) (Viada, Tomo I, Codigo Penal, p. 152)
In view of all the above circumstances We find that there is no concrete evidence proving
beyond reasonable doubt that the appellant (Hernandez) actually participated in the rebellion
or in any act of conspiracy to commit or foster the cause of the rebellion. We are constrained,
in view of these circumstances, to absolve, as We hereby absolve, the appellant Amado V.
Hernandez from the crime charged, with a proportionate share of the costs de oficio.
APPEAL OF OTHER DEFENDANTS-APPELLANTS
All the other defendants were found guilty as accomplices in the crime of rebellion as charged
in the information and were each sentenced to suffer the penalty of 10 years and 1 day
of prision mayor, with the accessories provided by law, and to pay their proportionate share of
the costs.
Legal Considerations. — Before proceeding to consider the appeals of the other defendants, it
is believed useful if not necessary to lay dawn the circumstances or facts that may be
determinative of their criminal responsibility or the existence or nature thereof. To begin with,
as We have exhaustively discussed in relation to the appeal of Hernandez, we do not believe
that mere membership in the Communist Party or in the CLO renders the member liable, either
of rebellion or of conspiracy to commit rebellion, because mere membership and nothing more
merely implies advocacy of abstract theory or principle without any action being induced
thereby; and that such advocacy becomes criminal only if it is coupled with action or advocacy
of action, namely, actual rebellion or conspiracy to commit rebellion, or acts conducive thereto
or evincing the same.
5
On the other hand, membership in the HMB (Hukbalahap) implies participation in an actual
uprising or rebellion to secure, as the Huks pretend, the liberation of the peasants and laboring
class from thraldom. By membership in the HMB, one already advocates uprising and the use
of force, and by such membership he agrees or conspires that force be used to secure the
ends of the party. Such membership, therefore, even if there is nothing more, renders the
member guilty of conspiracy to commit rebellion punishable by law.
And when a Huk member, not content with his membership, does anything to promote the
ends of the rebellion like soliciting contributions, or acting as courier, he thereby becomes
guilty of conspiracy, unless he takes to the field and joins in the rebellion or uprising, in which
latter case he commits rebellion.
In U.S. v. Vergara, infra, the defendants organized a secret society commonly known as the
"Katipunan", the purpose of which was to overthrow the government by force. Each of the
defendants on various times solicited funds from the people of Mexico, Pampanga. The Court
held that the defendants were guilty of conspiracy and proposal to commit rebellion or
insurrection and not of rebellion or insurrection itself. Thus, the Court ruled that:
From the evidence adduced in this case we are of the opinion that the said defendants are
guilty, not of inciting, setting or foot, or assisting or engaging in rebellion, but rather of the
crime of conspiring to overthrow, put down, and destroy by force the Government of the United
States in the Philippine Islands, and therefore we find that said defendants, and each of them,
did, together with others, in the months of February and March, 1903, in the Province of
Pampanga, Philippine Islands, conspire to overthrow, put down, and to destroy by force the
Government of the United States in the Philippine Islands. (U.S. v. Vergara, et al., 3 Phil. 432,
434.)
JUAN J. CRUZ
The court found him to be a Communist with various aliases, a member of the Central
Committee of the CLO member of the Central Committee of the CPP and as such committed
to the establishment of the dictatorship of the proletariat To the same effect is the testimony of
Guillermo Calayag.
There is no evidence to connect him with the rebellion or to the conspiracy to commit rebellion.
He should therefore be absolved of the charges contained in the information.
AMADO RACANDAY
The trial court found him guilty as a Communist, a Secretary and Executive Committee
member of the CLO a communications center of the Communist Party, having been found in
possession of letters from Federico Maclang to Salome Cruz, and solicitor of contributions for
the Huks.
Racanday admits being a member of the Executive Committee of the CLO Editor of the Kidlat
of the Government Workers Union, receiving copies of the Titis. Calayag testified that he was a
member of the Central Committee of the Communist Party entrusted with the duty of receiving
directives of the Regional Committee of the Communist Party.
The letters found in his possession are dated February 14, 1950, before the Communist Party
went underground. We have been unable to find the evidence upon which the court bases its
conclusion that he received contributions for the Huks. With these circumstances in mind, We
are not convinced beyond reasonable doubt that as a Communist he took part in the
conspiracy among the officials of the Communist Party to take part and support the rebellion of
the Huks.
We are, therefore, constrained to absolve him of the charges filed against him.
GENARO DE LA CRUZ
The court found him to be a Communist since 1945, an officer of an organized Communist
branch in Pasay City, a member of the Central Committee and Treasurer of the CLO. He
admitted his membership and his position as member of the executive committee and
treasurer of the CLO these facts being corroborated by the witness Guillermo Calayag.
His membership in the Communist Party dates as far back as the year 1945. As a communist,
Genaro de la Cruz received quotas and monetary contributions coming from the areas under
his jurisdiction, and one time he made a receipt from a member from Caloocan at the CLO
headquarters at Azcarraga signing the receipt as "Gonzalo" which is one of his aliases. He
also distributed copies of the "Titis" magazine. `
While his membership in the Communist Party plus his having received contributions for the
party indicate that he is an active member, it was not shown that the contributions that he
received from Communist Party members were received around the year 1950 when the
Central Committee of the Communist Party had already agreed to conspire and go
underground and support the Huk rebellion. Under these circumstances We cannot find him
guilty of conspiracy to commit rebellion because of the lack of evidence to prove his guilt
beyond reasonable doubt.
JULIAN LUMANOG
The court found him to be an organizer of HMB among the mill workers, solicited contributions
for the HMB and Central Committee member of the CLO as per Testimony of Guillermo
Calayag.
He admitted that he joined the Communist Party because he was made to believe that the
Party is for the welfare of the laborers. He also admitted being a member of the Central
Committee of the CLO Calayag testified that Lumanog organized the HMB units of the
Communist Party in the Lumber Unions and attended a Communist meeting held by Maclang.
Domingo Clarin testified that he (Julian Lumanog) used to give the money collected by him to
one Nicasio Pamintuan, one of the members of the HMB Special Unit Trigger Squad) in Manila
for the use of the said unit.
Considering that the HMB was engaged in a rebellion to overthrow the government, it is
evident that by giving his contributions he actually participated in the conspiracy to overthrow
the government and should, therefore, be held liable for such conspiracy, and should be
sentenced accordingly.
FERMIN RODILLAS
The trial court found that Fermin Rodillas was a member of the CPP and the CLO that his
activities consisted in soliciting contributions, in cash and in kind, from city residents for the use
of the HMB, turning over said collections to the Party; that he has given asylum to a wanted
Hukbalahap at his house at Juan Luna St., Gagalangin, which house was used as Military
post. The above findings of the court are fully supported by the testimony of Domingo Clarin.
Considering that while he has not actually taken part in the rebellion, he has shown sympathy
with the cause by soliciting contributions for it and had given shelter to the Huks. We feel that
the court was fully justified in finding him guilty, but We hold that he should be declared liable
merely as a co-conspirator in the crime of conspiracy to commit rebellion, and should be
sentenced accordingly.
BAYANI ESPIRITU
This appellant was found by the court to be a Communist, he having admitted membership in
the Communist Party since 1945; that his duties as a Communist was to help in the office of
the National Finance Committee, assorting papers and written documents; that sometimes he
accompanied the purchaser of medicines, shoes, papers, foodstuffs and clothing to be given to
the Huks; that he is a member of the Communication Division of the CPP in Manila, in charge
of distribution of letters or communications; that he admits having written to Salome Cruz,
courier of the Communist Party, when he asked for his necessities, such as money and shoes,
etc.
The facts found by the court are sufficiently supported by the communications and evidence
submitted by the prosecution. The exhibits show that he was in constant communication with
the communists; serving them as courier. His oath as a member of the Communist Party was
submitted in court and in it he admits obedience to all orders of the Party and to propagate the
stability of the PKP.
Considering that the PKP was engaged in an actual uprising against the constituted
Government and that Bayani Espiritu was in constant communication with the Communist
Party and served it as courier, We believe that the court was fully justified in finding him guilty.
However, We believe that not having actually taken up arms in the uprising he may only be
declared guilty of conspiracy to commit rebellion.
TEOPISTA VALERIO
The court below found that this appellant joined the Communists in 1938 in San Luis,
Pampanga, under Casto Alejandrino, who later became her common-law husband; that her
aliases are "Estrella" and "Star"; that she was found in possession of various documents
written to top Communists like Alejandrino, Lava and Romy, as well as a letter from Taruc
congratulating her for the delivers, of a son.
Jose Taguiang testified that she was a member of the Provincial Committee of the CPP in
Nueva Ecija, later Chairman of the Finance Department, and then promoted to Finance Officer
of the Central Luzon Committee. Alicia Vergara, a Huk courier, testified that she delivered
letter from the mountains to Teopista Valerie, who was in turn also a courier.
Without considering the close relationship that she had with top Communist Casto Alejandrino,
We are satisfied that she herself was, aside from being a Huk courier, also a Huk, a member of
the HMB from 1942 to 1951. As she was a Communist and at the same time a member of the
HMB, and considering that the HMB was engaged in an uprising to uproot the legitimate
government, there cannot be any question that she was in conspiracy with the other members
of her Party against the constituted government. We hold, therefore, that the evidence proves
beyond reasonable doubt that she is guilty of conspiracy to commit rebellion.
DEFENDANTS NOT INCLUDED IN DECISION
In Crim. Case No. 15841 (G.R. No. L-6025) the charge against Guillermo Capadocia, Mariano
P. Balgos, Alfredo B. Saulo and Jacobo Espino was dismissed because they have not been
apprehended at the time of the trial.
PEOPLE VS. EVANGELISTA, 57 PHIL. 354 AND REPUBLIC ACT NO. 1700,
DISTINGUISHED
In the case at bar the prosecution is for actual rebellion which consists in rising publicly and
taking aims against the Government for the purpose of removing from the allegiance to said
Government or its laws, the territory of the Philippines, or any part thereof, etc., a crime
defined in Article 134 of the Revised Penal Code; whereas Evangelista was charged and
convicted for inciting to rebellion under Art. 138, Revised Penal Code (formerly Sec. 2, Act No.
292). As the specific charge against appellants is that of rising up in arms in actual rebellion
against the Government, they cannot be held guilty of inciting the people to arms under Article
138, which is a different offense.
On the other hand, Rep. Act 1700, known as the Anti-subversion Act, which penalizes
membership in any organization or association committed to subvert the Government, cannot
be applied to the appellants because said Act was approved on June 20, 1957 and was not in
force at the time of the commission of the acts charged against appellants (committed 1945-
1950) ; the Anti-Subversion Act punishes participation or membership in an organization
committed to overthrow the duly constituted Government, a crime district from that of actual
rebellion with which appellants are charged.
CONCLUSION
WHEREFORE, in Criminal Case No. 15841 (G.R. No. L-6025) defendants-appellants Amado
V. Hernandez, Juan J. Cruz, Amado Racanday and Genaro de la Cruz are absolved from the
charges contained in the information, with their proportionate share of the costs de oficio. The
defendants-appellants Julian Lumanog and Fermin Rodillas in Criminal Case No. 15841 (G.R.
No. L-6025) and the defendants-appellants Bayani Espiritu and Teopista Valerio in Criminal
Case No. 15479 (G.R. No. L-6026) are hereby found guilty of the crime of conspiracy to
commit rebellion, as defined and punished in Article 136 of the Revised Penal Code, and each
and everyone of them is hereby sentenced to suffer imprisonment for five years, four months
and twenty-one days of prision correccional, and to pay a fine of P5,000.00, with subsidiary
imprisonment in case of insolvency and to pay their proportional share of the costs. So
ordered.
6
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-50581-50617 January 30, 1982
RUFINO V. NUÑEZ petitioner,
vs.
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
FERNANDO, C.J.:
In categorical and explicit language, the Constitution provided for but did not create a special
Court, the Sandiganbayan with "jurisdiction over criminal and civil cases involving graft and
corrupt practices and such other offenses committed by public officers and employees,
including those in government-owned or controlled corporations, in relation to their office as
may be determined by law." 1 It came into existence with the issuance in 1978 of a Presidential
Decree. 2 Even under the 1935 Constitution, to be precise, in 1955, an anti-graft statute was
passed, 3 to be supplemented five years later by another act, 4 the validity of which was upheld
in Morfe v. Mutuc, 5 a 1968 decision. As set forth in the opinion of the Court: "Nothing can be
clearer therefore than that the AntiGraft Act of 1960 like the earlier statute was precisely aimed
at curtailing and minimizing the opportunities for official corruption and maintaining a standard
of honesty in the public service. It is intended to further promote morality in public
administration. A public office must indeed be a public trust. Nobody can cavil at its objective;
the goal to be pursued commands the assent of all. The conditions then prevailing called for
norms of such character. The times demanded such a remedial device." 6 It should occasion
no surprise, therefore, why the 1971 Constitutional Convention, with full awareness of the
continuity need to combat the evils of graft and corruption, included the above-cited provision.
Petitioner in this certiorari and prohibition proceeding assails the validity of the Presidential
Decree creating the Sandiganbayan, He was accused before such respondent Court of estafa
through falsification of public and commercial documents committed in connivance with his
other co-accused, all public officials, in several cases. 7 The informations were filed
respectively on February 21 and March 26, 1979. Thereafter, on May 15 of that year, upon
being arraigned, he filed a motion to quash on constitutional and jurisdictional grounds. 8 A
week later. respondent Court denied such motion. 9 There was a motion for reconsideration
filed the next day; it met the same fate. 10 Hence this petition for certiorari and prohibition It is
the claim of petitioner that Presidential Decree No. 1486, as amended, creating the respondent
Court is violative of the due process, 11 equal protection, 12 and ex post facto 13 clauses of the
Constitution. 14
The overriding concern, made manifest in the Constitution itself, to cope more effectively with
dishonesty and abuse of trust in the public service whether committed by government officials
or not, with the essential cooperation of the private citizens with whom they deal, cannot of
itself justify any departure from or disregard of constitutional rights. That is beyond question.
With due recognition, however, of the vigor and persistence of counsel of petitioner 15 in his
pleadings butressed by scholarly and diligent research, the Court, equally aided in the study of
the issues raised by the exhaustive memorandum of the Solicitor General, 16 is of the view that
the invalidity of Presidential Decree No, 1486 as amended, creating respondent Court has not
been demonstrated.
The petition then cannot be granted. The unconstitutionality of such Decree cannot be
adjudged.
1. It is to be made clear that the power of the then President and Prime Minister Ferdinand E.
Marcos to create the Sandiganbayan in 1978 is not challenged in this proceeding. While such
competence under the 1973 Constitution contemplated that such an act should come from the
National Assembly, the 1976 Amendments made clear that he as incumbent President "shall
continue to exercise legislative powers until martial law shall have been lifted. " 17 Thus, there
is an affirmation of the ruling of this Court in Aquino Jr. v. Commission on Elections 18 decided
in 1975. In the language of the ponente, Justice Makasiar, it dissipated "all doubts as to the
legality of such law-making authority by the President during the period of Martial Law, ...
. 19 As the opinion went on to state: "It is not a grant of authority to legislate, but a recognition
of such power as already existing in favor of the incumbent President during the period of
Martial Law. " 20
2. Petitioner in his memorandum invokes the guarantee of equal protection in seeking to nullify
Presidential Decree No. 1486. What does it signify? To quote from J. M. Tuason & Co. v. Land
Tenure Administration: 21 "The Ideal situation is for the law's benefits to be available to all, that
none be placed outside the sphere of its coverage. Only thus could chance and favor be
excluded and the affairs of men governed by that serene and impartial uniformity which is of
the very essence of the Idea of law." 22 There is recognition, however, in the opinion that what
in fact exists "cannot approximate the Ideal. Nor is the law susceptible to the reproach that it
does not take into account the realities of the situation. The constitutional guarantee then is not
to be given a meaning that disregards what is, what does in fact exist .To assure that the
general welfare be promoted, which is the end of law, a regulatory measure may cut into the
rights to liberty and property. Those adversely affected may under such circumstances invoke
the equal protection clause only if they can show that the governmental act assailed, far from
being inspired by the attainment of the common weal was prompted by the spirit of hostility, or
at the very least, discrimination that finds no support in reason. " 23 Classification is thus not
ruled out, it being sufficient to quote from the Tuason decision anew "that the laws operate
equally and uniformly on all persons under similar circumstances or that all persons must be
treated in the same manner, the conditions not being different, both in the privileges conferred
and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the
principle is that equal protection and security shall be given to every person under
circumstances which, if not Identical, are analogous. If law be looked upon in terms of burden
or charges, those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest." 24
3. The premise underlying petitioner's contention on this point is set forth in his memorandum
thus: " 1. The Sandiganbayan proceedings violates petitioner's right to equal protection,
because - appeal as a matter of right became minimized into a mere matter of discretion; -
appeal likewise was shrunk and limited only to questions of law, excluding a review of the facts
and trial evidence; and - there is only one chance to appeal conviction, by certiorari to the
Supreme Court, instead of the traditional two chances; while all other estafa indictees are
entitled to appeal as a matter of right covering both law and facts and to two appellate courts,
i.e., first to the Court of Appeals and thereafter to the Supreme Court." 25 ,that is hardly
convincing, considering that the classification satisfies the test announced by this Court
through Justice Laurel in People v. Vera 26 requiring that it "must be based on substantial
distinctions which make real differences; it must be germane to the purposes of the law; it must
not be limited to existing conditions only, and must apply equally to each member of the
class. 27 To repeat, the Constitution specifically makes mention of the creation of a special
court, the Sandiganbayan 4 precisely in response to a problem, the urgency of which cannot
be denied, namely, dishonesty in the public service. It follows that those who may thereafter be
tried by such court ought to have been aware as far back as January 17, 1973, when the
present Constitution came into force, that a different procedure for the accused therein,
whether a private citizen as petitioner is or a public official, is not necessarily offensive to the
equal protection clause of the Constitution. Petitioner, moreover, cannot be unaware of the
ruling of this Court in Co Chiong v. Cuaderno 28 a 1949 decision, that the general guarantees
of the Bill of Rights, included among which are the due process of law and equal protection
clauses must "give way to [a] specific provision, " in that decision, one reserving to "Filipino
citizens of the operation of public services or utilities." 29 The scope of such a principle is not to
be constricted. It is certainly broad enough to cover the instant situation.
4. The contention that the challenged Presidential Decree is contrary to the ex post
facto provision of the Constitution is similarly premised on the allegation that "petitioner's right
of appeal is being diluted or eroded efficacy wise ... ." 30 A more searching scrutiny of its
rationale would demonstrate the lack of permisiveness of such an argument. The Kay Villegas
Kami 31 decision promulgated in 1970, cited by petitioner, supplies the most recent and binding
pronouncement on the matter. To quote from the ponencia of Justice Makasiar: "An ex post
facto law is one which: (1) makes criminal an act done before the passage of the law and
which was innocent when done, and punishes such an act; (2) aggravates a crime, or makes it
greater than it was, when committed; (3) changes the punishment and inflicts a greater
punishment than the law annexed to the crime when committed; (4) alters the legal rules of
evidences, and authorizes conviction upon less or different testimony . than the law required at
the time of the commission to regulate civil rights and remedies only, in effect imposes penalty
or deprivation of a right for something which when done was lawful, and (6) deprives a person
accused of a crime of some lawful protection to which he has become entitled, such as the
protection of a former conviction or acquittal, or a proclamation of amnesty." 32 Even the most
careful scrutiny of the above definition fails to sustain the claim of petitioner. The "lawful
protection" to which an accused "has become entitled" is qualified, not given a broad scope. It
hardly can be argued that the mode of procedure provided for in the statutory right to appeal is
therein embraced. This is hardly a controversial matter. This Court has spoken in no uncertain
terms. In People v. Vilo 33 a 1949 decision, speaking through the then Justice, later Chief
Justice Paras, it made clear that seven of the nine Justices then composing this Court,
excepting only the ponente himself and the late Justice Perfecto, were of the opinion that
Section 9 of the Judiciary Act of 1948, doing away with the requirement of unanimity under
Article 47 of the Revised Penal Code with eight votes sufficing for the imposition of the death
sentence, does not suffer from any constitutional infirmity. For them its applicability to crimes
committed before its enactment would not make the law ex post facto.
5. It may not be amiss to pursue the subject further. The first authoritative exposition of what is
prohibited by the ex post facto clause is found in Mekin v. Wolfe, 34 decided in 1903. Thus:
"An ex post facto law has been defined as one - (a) Which makes an action done before the
passing of the law and which was innocent when done criminal, and punishes such action; or
(b) Which aggravates a crime or makes it greater than it was when committed; or (c) Which
changes the punishment and inflicts a greater punishment than the law annexed to the crime
when it was committed; or (d) Which alters the legal rules of evidence and receives less or
different testimony than the law required at the time of the commission of the offense in order
to convict the defendant. " 35 There is relevance to the next paragraph of the opinion of Justice
Cooper: "The case clearly does not come within this definition, nor can it be seen in what way
the act in question alters the situation of petitioner to his disadvantage. It gives him, as well as
the Government, the benefit of the appeal, and is intended
First Instance may commit error in his favor and wrongfully discharge him appears to be the
only foundation for the claim. A person can have no vested right in such a possibility. 36
6. Mekin v. Wolfe is traceable to Calder v. Bull, 37 a 1798 decision of the United States
Supreme Court. Even the very language as to what falls with the category of this provision is
well-nigh Identical. Thus: "I will state what laws I consider ex post facto laws, within the words
and the intent of the prohibition. Ist. Every law that makes an action done before the passing of
the law, and which was innocent when done, criminal; and punishes such action. 2nd. Every
law that aggravates a crime, or makes it greater than it was, when committed. 3rd. Every law
that changes the punishment, and inflicts a greater punishment, than the law annexed to the
crime, when committed. 4th Every law that alters the legal rules of evidence, and receives less,
or different, testimony, than the law required at the time of the commission of the offense, in
order to convict the offender. All these, and similar laws, are manifestly unjust and
oppressive." 38 The opinion of Justice Chase who spoke for the United States Supreme Court
went on to state: "The expressions 'ex post facto laws,' are technical, they had been in use
long before the Revolution, and had acquired an appropriate meaning, by legislators, lawyers,
and authors. The celebrated and judicious Sir William Blackstone in his commentaries,
considers an ex post facto law precisely in the same light I have done. His opinion is confirmed
by his successor, Mr. Wooddeson and by the author of the Federalist, who I esteem superior
to both, for his extensive and accurate knowledge of the true principle of government. " 39
7. Petitioner relies on Thompson v. Utaha. 40 As it was decided by the American Supreme
Court in April of 1898 - the very same year when the Treaty of Paris, by virtue of which,
American sovereignty over the Philippines was acquired - it is understandable why he did so.
Certainly, the exhaustive opinion of the first Justice Harlan, as was mentioned by an author,
has a cutting edge, but it cuts both ways. It also renders clear why the obstacles to declaring
unconstitutional the challenged Presidential Decree are well-nigh insuperable. After a review of
the previous pronouncements of the American Supreme Court on this subject, Justice Harlan
made this realistic appraisal: "The difficulty is not so much as to the soundness of the general
rule that an accused has no vested right in particular modes of procedure as in determining
whether particular statutes by their operation take from an accused any right that was
regarded, at the time of the adoption of the constitution, as vital for the protection of life and
liberty, and which he enjoyed at the time of the commission of the offense charged against
him." 41 An 1894 decision of the American Supreme Court, Duncan v. Missouri 42 was also
cited by petitioner, The opinion of the then Chief Justice Fuller, speaking for the Court, is to the
same effect. It was categorically stated that "the prescribing of different modes of procedure
and the abolition of courts and the creation of new ones, leaving untouched all the substantial
protections with which the existing laws surrounds the person accused of crime, are not
considered within the constitutional inhibition." 43
8. Even from the standpoint then of the American decisions relied upon, it cannot be
successfully argued that there is a dilution of the right to appeal. Admittedly under Presidential
Decree No. 1486, there is no recourse to the Court of Appeals, the review coming from this
Court. The test as to whether the ex post facto clause is disregarded, in the language of
Justice Harlan in the just-cited Thompson v. Utah decision taking "from an accused any right
that was regarded, at the time of the adoption of the constitution as vital for the protection of
life and liberty, and which he enjoyed at the time of the commission of the offense charged
against him." The crucial words are "vital for the protection of life and liberty" of a defendant in
a criminal case. Would the omission of the Court of Appeals as an intermediate tribunal
deprive petitioner of a right vital to the protection of his liberty? The answer must be in the
negative. In the first place, his innocence or guilt is passed upon by the three-judge court of a
division of respondent Court. Moreover, a unanimous vote is required, failing which "the
Presiding Justice shall designate two other justices from among the members of the Court to
sit temporarily with them, forming a division of five justices, and the concurrence of a majority
of such division shall be necessary for rendering judgment. " 44 Then if convicted, this Court
has the duty if he seeks a review to see whether any error of law was committed to justify a
reversal of the judgment. Petitioner makes much, perhaps excessively so as is the wont of
advocates, of the fact that there is no review of the facts. What Cannot be too sufficiently
stressed is that this Court in determining whether or not to give due course to the petition for
review must be convinced that the constitutional presumption of innocence 45 has been
overcome. In that sense, it cannot be said that on the appellate level there is no way of
scrutinizing whether the quantum of evidence required for a finding of guilt has been satisfied.
The standard as to when there is proof of such weight to justify a conviction is set forth in
People v. Dramayo. 46 Thus: "Accusation is not, according to the fundamental law, as
synonymous with guilt. It is incumbent on the prosecution to demonstrate that culpability lies.
Appellants were not even called upon then to offer evidence on their behalf. Their freedom is
forfeit only if the requisite quantum of proof necessary for conviction be in existence. Their guilt
must be shown beyond reasonable doubt. To such a standard, this Court has always been
committed. There is need, therefore, for the most careful scrutiny of the testimony of the state,
both oral and documentary, independently of whatever defense, is offered by the accused.
Only if the judge below and thereafter the appellate tribunal could arrive at a conclusion that
the crime had been committed precisely by the person on trial under such an exacting test
should the sentence be one of conviction. It is thus required that every circumstance favoring
his innocence be duly taken into account. The proof against him must survive the test of
reason; the strongest suspicion must not be permitted to sway judgment. The conscience must
be satisfied that on the defendant could be laid the responsibility for the offense charged: that
not only did he perpetrate the act but that it amounted to a crime. What is required then is
moral certainty." 47 This Court has repeatedly reversed convictions on a showing that this
fundamental and basic right to De presumed innocent has been disregarded. 48 It does seem
farfetched and highly unrealistic to conclude that the omission of the Court of Appeals as a
reviewing authority results in the loss "vital protection" of liberty.
9. The argument based on denial of due process has much less to recommend it. In the
exhaustive forty-two page memorandum of petitioner, only four and a half pages were devoted
to its discussion. There is the allegation of lack of fairness. Much is made of what is
characterized as "the tenor and thrust" of the leading American Supreme Court decision,
Snyder v. Massachusetts. 49 Again this citation cuts both ways. With his usual felicitous choice
of words, Justice Cardozo, who penned the opinion, emphasized: "The law, as we have seen,
is sedulous in maintaining for a defendant charged with crime whatever forms of procedure are
of the essence of an opportunity to defend. Privileges so fundamental as to be inherent in
7
every concept of a fair trial that could be acceptable to the thought of reasonable men will be
kept inviolate and inviolable, however crushing may be the pressure of incriminating proof. But
justice, though due to the accused, is due to the accuser also, The concept of fairness must
not be strained till it is narrowed to a filament. We are to keep the balance true." 50 What is
required for compliance with the due process mandate in criminal proceedings? In Arnault v.
Pecson, 51 this Court with Justice Tuason as ponente, succinctly Identified it with "a fair and
impartial trial and reasonable opportunity for the preparation of defense." 52 In criminal
proceedings then, due process is satisfied if the accused is "informed as to why he is
proceeded against and what charge he has to meet, with his conviction being made to rest on
evidence that is not tainted with falsity after full opportunity for him to rebut it and the sentence
being imposed in accordance with a valid law. It is assumed, of course, that the court that
rendered the decision is one of competent jurisdiction." 53 The above formulation is a
reiteration of what was decided by the American Supreme Court in a case of Philippine
origin, Ong Chang Wing v. United States 54 decided during the period of American rule, 1910
to be precise. Thus: "This court has had frequent occasion to consider the requirements of due
process of law as applied to criminal procedure, and, generally speaking, it may be said that if
an accused has been heard in a court of competent jurisdiction, and proceeded against under
the orderly processes of law, and only punished after inquiry and investigation, upon notice to
him, with an opportunity to be heard, and a judgment awarded within the authority of a
constitutional law, then he has had due process of law." 55

10. This Court holds that petitioner has been unable to make a case calling for a declaration of
unconstitutionality of Presidential Decree No. 1486 as amended by Presidential Decree No.
1606. The decision does not go as far as passing on any question not affecting the right of
petitioner to a trial with all the safeguards of the Constitution. It is true that other Sections of
the Decree could have been worded to avoid any constitutional objection. As of now, however,
no ruling is called for. The view is given expression in the concurring and dissenting opinion of
Justice Makasiar that in such a case to save the Decree from the dire fate of invalidity, they
must be construed in such a way as preclude any possible erosion on the powers vested in
this Court by the Constitution. That is a proposition too plain to be contested. It commends
itself for approval. Nor should there be any doubt either that a review by certiorari of a decision
of conviction by the Sandiganbayan calls for strict observance of the constitutional
presumption of innocence.

WHEREFORE, the petition is dismissed. No costs.

8
G.R. No. 202408, June 27, 2018
FAROUK B. ABUBAKAR, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.
G.R. No. 202409
ULAMA S. BARAGUIR Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.
G.R. No. 202412
DATUKAN M. GUIANI Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
LEONEN, J.:
The rules on competitive public bidding and those concerning the disbursement of public funds
are imbued with public interest. Government officials whose work relates to these matters are
expected to exercise greater responsibility in ensuring compliance with the pertinent rules and
regulations. The doctrine allowing heads of offices to rely in good faith on the acts of their
subordinates is inapplicable in a situation where there are circumstances that should have
prompted the government officials to make further inquiries.
For this Court's resolution are three (3) consolidated Petitions for Review on Certiorari1
concerning alleged anomalies in the implementation of infrastructure projects within the
Autonomous Region of Muslim Mindanao (ARMM). The Petitions, separately docketed as G.R.
Nos. 202408,2 202409,3 and 202412,4 question the Sandiganbayan's December 8, 2011
Decision5 and June 19, 2012 Resolution6 in Criminal Case Nos. 24963-24983. The assailed
judgments declared Farouk B. Abubakar (Abubakar) guilty beyond reasonable doubt of 10
counts of violation of Section 3(e) of Republic Act No. 3019, and Ulama S. Baraguir (Baraguir)
and Datukan M. Guiani (Guiani) guilty beyond reasonable doubt of 17 counts of violation of
Section 3(e) of Republic Act No. 3019.
Abubakar, Baraguir, and Guiani were public officials of the Department of Public Works and
Highways in ARMM (DPWH-ARMM) when the offenses were allegedly committed. Abubakar
held the position of Director III, Administrative, Finance Management Service. Baraguir was
the Director of the Bureau of Construction, Materials and Equipment, and a member of the
Pre-Qualification Bids and Awards Committee, while Guiani was the DPWH-ARMM Regional
Secretary.
Guiani v. Sandiganbayan9 is the procedural antecedent of this case.
After the creation of ARMM, the national government earmarked P615,000,000.00 for the
implementation of regional and provincial infrastructure projects. In 1991, the funds were
transferred to the Office of the ARMM Regional Governor. Later, a portion of the funds was
then transferred to DPWH-ARMM.
During the incumbency of then President Fidel V. Ramos (President Ramos), the Office of the
President received reports of irregularities attending the implementation of the DPWH-ARMM
infrastructure projects. The Commission on Audit was directed to conduct an investigation.
Acting upon then President Ramos' instruction, the Commission on Audit created a special
audit team headed by Heidi L. Mendoza (Mendoza) to look into the implementation of four (4)
road concreting projects, namely: (1) the Cotabato-Lanao Road, Sections 1-13; (2) the Awang-
Nuro Road; (3) the Highway Linek-Kusiong Road; and (4) the Highway Simuay Seashore
Road.12 Physical inspections were conducted on October 15, 1992 to validate the existence of
the projects and the extent of their development.
The audit team made the following findings:
First, an overpayment amounting to P17,684,000.00 was incurred on nine (9) road sections.
The audit team discovered the existence of bloated accomplishment reports that allowed
contractors to prematurely claim on their progress billings.
Second, advance payments totaling P14,400,000.00 were given to nine (9) contractors for the
procurement of aggregate sub-base course in violation of Section 88(l) of Presidential Decree
No. 1445.
Third, public bidding for the Cotabato-Lanao Road Project was done without a detailed
engineering survey.17 The bidding was reportedly conducted on January 14, 1992. However,
the engineering survey was only completed sometime in August 1992. The audit team also
observed bidding irregularities in the Awang-Nuro Road Project and in six (6) road sections of
the Cotabato-Lanao Road Project. Public bidding for the two (2) projects was reportedly
conducted on January 14, 1992 but records disclose that the contractors already mobilized
their equipment as early as January 4 to 7, 1992.
Lastly, the engineering survey for the centerline relocation and profiling of the Cotabato-Lanao
Road, which cost P200,000.00, appeared to be unnecessary due to the existence of a
previous engineering survey. Furthermore, advance payment was given to the contractor in
excess of the limit provided under the implementing rules and regulations of Presidential
Decree No. 1594.
Based on the report submitted by the Commission on Audit, the Office of the Ombudsman
conducted a preliminary investigation and found probable cause to indict the regional officials
of DPWH-ARMM for violation of Section 3(e) of Republic Act No. 3019 or the Anti-Graft and
Corrupt Practices Act. On July 31, 1998, 21 separate Informations were filed against
Abubakar, Baraguir, Guiani, and other officials of DPWH-ARMM. The consolidated cases were
docketed as Criminal Case Nos. 24963-24983.
Charged in Criminal Case Nos. 24963 to 24969 were Guiani, Baraguir, and several other
DPWH-ARMM officials for allegedly awarding projects to contractors without the required
public bidding.
Abubakar, Guiani, Baraguir, and two (2) employees of DPWH-ARMM were charged in Criminal
Case No. 24970 for allegedly awarding excessive mobilization fees to Arce Engineering
Services.
Guiani was charged in Criminal Case No. 24971 for entering into an unnecessary contract with
Arce Engineering Services for the conduct of another detailed engineering survey.
Abubakar, Baraguir, Guiani, and two (2) other officials of DPWH¬-ARMM were charged in
Criminal Case Nos. 24972, 24975 to 24980, and 24982 to 24983 for allegedly advancing
P14,400,000.00 to several contractors for sub-base aggregates.
Lastly, Abubakar, Baraguir, Guiani, and several other DPWH-ARMM officials were charged in
Criminal Case Nos. 24973, 24974, and 24981 for allegedly causing overpayment on several
projects due to bloated accomplishment reports.
All the Informations charged the accused with conspiracy except for Criminal Case No. 24971.
Upon arraignment, Abubakar, Baraguir, Guiani, and some of their co¬-accused entered a plea
of not guilty. Seven (7) of their co-accused remained at large while one (1) died prior to the
scheduled arraignment.27
During trial, the prosecution presented Leodivina A. De Leon (De Leon) and Mendoza to testify
on the findings of the Commission on Audit.28
De Leon testified on the alleged irregularities attending the bidding procedure. She explained
that some contractors were allowed to mobilize their equipment even before the conduct of the
bidding and the perfection of the contracts for six (6) road sections of the Cotabato-Lanao
Road and the Awang-Nuro Road Projects.29
Mendoza testified on the alleged irregular payment scheme for the procurement of sub-base
aggregates. She stated that the concerned DPWH¬-ARMM officials made it appear that they
were requesting for the pre-payment of cement. However, the disbursement vouchers indicate
that the payment was made for the procurement of sub-base aggregates. The words "sub-
base aggregates" were superimposed on the disbursement vouchers.
After the prosecution rested its case, several of the accused filed their respective Motions for
Leave to file Demurrer to Evidence. These Motions were denied by the Sandiganbayan in its
March 18, 2008 Resolution. The defense then proceeded to the presentation of its evidence.31
Presented as witnesses for the defense were some of the accused: (1) Nelfa M. Suasin
(Suasin), an accountant of DPWH-ARMM; (2) Guialoson A. Mamogkat (Mamogkat), the
DPWH-ARMM Director for Operations; (3) Taungan S. Masadag (Masandag), the DPWH-
ARMM Regional Assistant Secretary and the designated Chair of the Pre-Qualification Bids
and Awards Committee; (4) Abubakar; and (5) Baraguir. Commission on Audit's Records
Custodian Nenita V. Rama was also presented as a defense witness.
Suasin testified that she consulted her superiors, particularly Abubakar, Baraguir, and Guiani,
regarding the 30% mobilization fees awarded to Arce Engineering Services. They explained to
her that the mobilization fee was increased as no other surveyor was willing to undertake the
work due to the peace and order situation in the area. Suasin raised the same defense on the
P14,400,000.00 advance payment. She claimed that she signed the disbursement vouchers
after seeking approval from her superiors. She also testified that the item typewritten on the
disbursement vouchers was "cement" and not "sub-base aggregates."
Mamogkat testified that DPWH-ARMM had to re-survey some areas of the Cotabato-Lanao
Road Project because they could no longer locate the reference points marked in the original
survey. He denied the charge that some contractors were overpaid, and attributed the
discrepancy between the audit team's report and DPWH-ARMM's report on several factors. He
pointed out, among others, that the physical inspection conducted by the DPWH-ARMM team
was more extensive compared to the audit team's one (1)-day inspection.34
Masandag insisted that the Pre-Qualification Bids and Awards Committee followed the bidding
procedure laid down in Presidential Decree No. 1594. He denied knowledge and participation
on the alleged early mobilization of contractors, and claimed that it was the Regional Secretary
who authorized the issuance of the certificates of mobilization.
Abubakar claimed that he was only implicated due to the presence of his signature in the
disbursement vouchers. He asserted that he examined the supporting documents and the
certifications made by the technical experts before affixing his signature.
Last to testify for the defense was Baraguir. He claimed that some contractors took the risk of
mobilizing their equipment before the conduct of public bidding on the expectation that the
winning bidders would sub-lease their equipment. He also testified that construction
immediately began on some projects after the engineering survey to fast track the
implementation of the projects.
On December 8, 2011, the Sandiganbayan rendered judgment38 finding Guiani, Baraguir, and
Masandag guilty beyond reasonable doubt of seven (7) counts of violation of Section 3(e) of
Republic Act No. 3019 in Criminal Case Nos. 24963 to 24969.39
The Sandiganbayan held that Guiani, Baraguir, and Masandag conspired with each other and
gave unwarranted benefits, preference, and advantage to seven (7) contractors by allowing
them to deploy their equipment before the scheduled public bidding. Records show that the
public bidding for the Cotabato-Lanao Road and Awang-Nuro Road Projects was conducted
after the issuance of the certificates of mobilization:
Project Contractor Date of Certification Date of Bidding Date of Contract Awang-Nuro Road
HMB Construction and Supply Jan. 7, 1992 Jan. 14, 1992 Jan. 16, 1992 Cotabato-Lanao Road
Section 8 Kutawato Construction Jan. 5, 1992 [Jan. 14, 1992] [Jan. 16, 1992] [Cotabato-Lanao
Road] Section 7 Al Mohandiz Construction Jan. 5, 1992 [Jan. 14, 1992] [Jan. 16, 1992]
[Cotabato-Lanao Road] Section 2 JM Construction Jan. 7, 1992 [Jan. 14, 1992] [Jan. 16, 1992]
[Cotabato-Lanao Road] Section 5 PMA Construction Jan. 6, 1992 [Jan. 14, 1992] Jan. 20,
1992 [Cotabato-Lanao Road] Section 3 Al-Aziz-Engineering Jan. 4, 1992 [Jan. 14, 1992] Jan.
8, 1992 [Cotabato-Lanao Road] Section 1 MGL Construction Jan. 5, 1992 [Jan. 14, 1992] Jan.
15, 199241
According to the Sandiganbayan, HMB Construction and Supply, Kutawato Construction, Al
Mohandiz Construction, JM Construction, PMA Construction, Al-Aziz-Engineering, and MGL
Construction were already identified as contractors for the abovementioned projects even
before the scheduled public bidding. For instance, the certification issued to HMB Construction
and Supply stated:
CERTIFICATION
THIS IS TO CERTIFY that HMB CONSTRUCTION AND SUPPLY, Contractor for the
construction of AWANG-NURO, UPI ROAD, had already mobilized a minimum number of
equipments (sic) necessary for the implementation of the said project.
This certification is being issued to HMB CONSTRUCTION AND SUPPLY in connection with
his legal claim under P.D. 1594 as stated for the payment of fifteen (15) percent mobilization
fee.
Issued this 7th day of January, 1992.42 (Emphasis in the original)
Similar certifications were issued to Kutawato Construction, Al Mohandiz Construction, JM
Construction, PMA Construction, Al-Aziz¬ Engineering, and MGL Construction.43
The Sandiganbayan rejected the defense's justification regarding the early mobilization of
these contractors, and underscored that no contractor would risk mobilizing its equipment
without any assurance that the projects would be awarded to it. Although a public bidding was
actually conducted, the Sandiganbayan believed that it was done as a mere formality.44
Accused Guiani, Mamogkat, Abubakar, Baraguir, and Suasin were found guilty beyond
reasonable doubt of violation of Section 3(e) of Republic Act No. 3019 for causing the
disbursement of30% of the mobilization fees or advance payment to Arce Engineering
Services.
Accused Guiani was acquitted in Criminal Case No. 24971 for his alleged act of entering into a
second detailed engineering survey. The Sandiganbayan held that the second survey was
indispensable because the reference points in the original survey could no longer be found.
The prosecution failed to prove that accused Guiani exhibited manifest partiality, evident bad
faith, or gross inexcusable negligence in hiring Arce Engineering Services.46
9
The Sandiganbayan convicted accused Guiani, Mamogkat, Abubakar, Baraguir, and Suasin of
nine (9) counts of violation of Section 3(e) of Republic Act No. 3019 for facilitating the advance
payment for the procurement of sub-base aggregates.47 It characterized the P14,400,000.00
disbursement as an advance payment and not as pre-payment for construction materials. First,
the disbursement was given directly to the contractor and not to the suppliers. Second, there
were no written requests from the contractors who wished to avail of the pre-payment facility.
Third, under Department Order No. 42 of the Department of Public Works and Highways, only
cement, reinforcing steel bars, and asphalt may be procured under a pre-payment scheme.48
Thus, the P14,400,000.00 disbursement could not be considered as pre-payment for
construction materials.
The Sandiganbayan concluded that the disbursement was an advance payment and declared
it illegal because there were no documents to prove that the items were actually delivered. It
cited Section 88(1) of Presidential Decree No. 1445 as legal basis.49
Guiani, Baraguir, Abubakar, and Mamogkat were acquitted in Criminal Case Nos. 24973,
24974, and 24981 for allegedly causing the overpayment on several projects due to bloated
accomplishment reports. The Sandiganbayan gave more credence to DPWH-ARMM's
accomplishment report over the audit team's report. First, the standards used by each team
varied. Second, DPWH-ARMM's inspection was more extensive.50
The dispositive portion of the Sandiganbayan's December 8, 2011 Decision stated:
WHEREFORE, IN LIGHT OF ALL THE FOREGOING, the Court hereby renders judgment as
follows:
1. In Criminal Cases No. 24963, No. 24964, No. 24965, No. 24966, No. 24967, No. 24968 and
No. 24969, the Court finds accused DATUKAN M. GUIANI, TAUNGAN S. MASANDAG and
ULAMA S. BARAGUIR GUILTY beyond reasonable doubt of seven (7) counts of violation of
Sec. 3(e) of R.A. 3019, and pursuant to Section 9 thereof, are hereby sentenced to suffer for
each count the indeterminate penalty of imprisonment of six (6) years and one (1) month as
minimum, up to ten (10) years as maximum, with perpetual disqualification from public office.
2. In Criminal Case No. 24970, the Court finds accused DATUKAN M. GUIANI, GUIALOSON
A. MAMOGKAT, FAROUK B. ABUBAKAR, ULAMA S. BARAGUIR AND NELFA M. SUASIN
GUILTY beyond reasonable doubt of violating Sec. 3 (e) of RA 3019, and hereby sentenced to
suffer the indeterminate penalty of imprisonment of six (6) years and one (1) month as
minimum, up to ten (10) years as maximum, with perpetual disqualification from public office.
3. In Criminal Case No. 24971, for failure of the prosecution to prove his guilt beyond
reasonable doubt, accused DATUKAN M. GUIANI is hereby ACQUITTED of the offense of
violation of Sec. 3 (e) of RA 3019.
Considering that the act or omission from which the civil liability might arise did not exist, no
civil liability may be assessed against the accused.
The hold departure order issued against him by reason of this case is hereby LIFTED and SET
ASIDE, and his bond ordered RELEASED.
4. In Criminal Cases No. 24972, No. 24975, No. 24976, No. 24977, No. 24978, No. 24979, No.
24980, No. 24982 and No. 24983, the Court finds accused DATUKAN M. GUIANI,
GUIALOSON A. MAMOGKAT, FAROUK B. ABUBAKAR, ULAMA S. BARAGUIR and NELFA
M. SUASIN GUILTY beyond reasonable doubt of nine (9) counts of violation of Sec. 3 (e) of
RA 3019 and, pursuant to Section 9 thereof, are hereby sentenced to suffer for each count the
indeterminate penalty of imprisonment of six (6) years and one (1) month as minimum, up to
ten (10) years as maximum, with perpetual disqualification from public office.
5. In Criminal Case No. 24973, for failure of the prosecution to prove their guilt beyond
reasonable doubt, accused DATUKAN M. GUIANI, ULAMA S. BARAGUIR, FAROUK B.
ABUBAKAR, GUIALOSON A. MAMOGKAT, NASSER G. SINARIMBO, MANGONDA YA A.
MADID and SALIK ALI are hereby ACQUITTED of the offense of violation of Sec. 3 (e) of RA
3019.
Considering that the act or omission from which the civil liability might arise did not exist, no
civil liability may be assessed against the accused.
The hold departure order issued against them by reason of this case is hereby LIFTED and
SET ASIDE, and their bonds ordered RELEASED.
6. In Criminal Case No. 24974, for failure of the prosecution to prove their guilt beyond
reasonable doubt, accused DATUKAN M. GUIANI, TAUNGAN S. MASANDAG, ULAMA S.
BARAGUIR, FAROUK B. ABUBAKAR, GUIALOSON A. MAMOGKAT, MANGONDA YA A.
MADID, SALIK ALI, NASSER G. SINARIMBO, EMRAN B. BUISAN, BEVERLY GRACE D.
VILLAR and ROMMEL A. GALINDO are hereby ACQUITTED of the offense of violation of Sec.
3 (e) of RA 3019.
Considering that the act or omission from which the civil liability might arise did not exist, no
civil liability may be assessed against the accused.
The hold departure order issued against them by reason of this case is hereby LIFTED and
SET ASIDE, and their bonds ordered RELEASED.
7. In Criminal Case No. 24981, for failure of the prosecution to prove their guilt beyond
reasonable doubt, accused DATUKAN M. GUIANI, FAROUK B. ABUBAKAR, ULAMA S.
BARAGUIR, GUIALOSON A. MAMOGKAT, BAHAMA A. ANDAR, PENDATUN JAUHALI,
EMRAN B. BUISAN, NAZER P. EBUS and RONEL C. QUESADA are hereby ACQUITTED of
the offense of violation of Sec. 3 (e) RA 3019.
Considering that the act or omission from which the civil liability might arise did not exist, no
civil liability may be assessed against the accused.
The hold departure order issued against them by reason of this case is hereby LIFTED and
SET ASIDE, and their bonds ordered RELEASED.
SO ORDERED.51 (Emphasis in the original)
Abubakar and Baraguir filed their respective motions for new trial and reconsideration on
separate dates. They anchored their prayer for new trial on the alleged incompetence of their
former counsel. Guiani, Suasin, and Mamogkat also moved for reconsideration.52 In their
motions, accused Guiani and Baraguir invoked the application of the Arias53 doctrine.54
On June 19, 2012, the Sandiganbayan rendered a Resolution55 denying the motions for new
trial and reconsideration for lack of merit.56
Abubakar, Baraguir, and Guiani filed their respective Petitions for Review before this Court
questioning the December 8, 2011 Decision and June 19, 2012 Resolution of the
Sandiganbayan. The petitions were consolidated on January 21, 2013.57
Respondents the Honorable Sandiganbayan, the People of the Philippines, and the Office of
the Special Prosecutor filed, through the Office of the Special Prosecutor, their consolidated
Comment,58 to which petitioners Abubakar and Baraguir filed their respective Replies.59 Due
to petitioner Guiani's repeated failure to submit the required reply, this Court dispensed with its
filing.
Petitioners Abubakar and Baraguir maintain that they are entitled to a new trial due to their
former counsel's incompetence and negligence. They claim that aside from simply adopting
the evidence submitted by their co-¬accused, their former counsel also failed to present and to
formally offer relevant evidence that would exonerate them from liability. Petitioners Abubakar
and Baraguir believe that they were deprived of the opportunity to fully present their case60
and to claim that the following documents should have been presented before the
Sandiganbayan:
(1) Original copies of the assailed disbursement vouchers proving that the entries were for
cement and not for sub-base aggregates;61
(2) The testimony of handwriting experts who would confirm their defense;62
(3) Written requests of contractors who wished to avail of the pre¬payment scheme for the
procurement of cement to prove compliance with DPWH Department Order No. 42;
(4) Original copy of the February 17, 1992 DPWH Memorandum issued by the former DPWH
Regional Secretary requiring petitioners Abubakar and Baraguir to sign Box 3 of the
disbursement vouchers;64
(5) The Personnel Data Files of petitioners Abubakar and Baraguir, the Contract of Services of
petitioner Abubakar, and the Appointment of petitioner Baraguir to prove that their employment
was temporary or contractual in nature, and to prove that their duties did not require "the
exercise of judgment or discretion";65 and
(6) The Department of Trade and Industry Certification on the scarcity of cement to prove that
pre-payment was necessary.66
Petitioner Abubakar adds that copies of several disbursement vouchers should have been
presented to prove that his signatures were unnecessary.67 These disbursement vouchers,68
which do not bear his name or signature, should have been formally offered in Criminal Case
Nos. 24972, 24979, 24980, 24982, and 24983.69
Petitioner Baraguir believes that other documents should have been formally offered,
including:
[a] The invitation to bid to prove that the projects were published for public bidding;
[b] The actual bids to prove that an actual bidding took place;
[c] The Notices of Award issued by the Regional Secretary to prove that the projects were
awarded to the lowest bidders;
[d] The Notices to Commence issued by the Regional Secretary to prove that the winning
contractor cannot start the project yet until the latter has received the same.70
On the other hand, respondents, through the Office of the Special Prosecutor, assert that
petitioners Abubakar and Baraguir are not entitled to a new trial. As a rule, clients are bound
by the acts of their counsel. Mistakes committed due to a counsel's incompetence or
inexperience cannot justify the grant of a new trial. Otherwise, there would be no end to
litigation.71
Aside from this, petitioners Abubakar and Baraguir assert that their right to equal protection
was violated due to "selective prosecution." Only a handful of DPWH-ARMM officials were
charged of violation of Republic Act No. 3019. Several employees who allegedly participated in
the preparation of project documents were not indicted.72
Respondents counter that petitioners' claim of selective prosecution will not prosper as there is
no proof of "clear showing of intentional discrimination" against them.73
With regard to the alleged early mobilization of contractors prior to the scheduled public
bidding, petitioner Baraguir asserts that he has neither favored nor given arty unwarranted
benefit to any contractor. He asserts that the risk-taking strategy of some contractors in
choosing to mobilize their equipment ahead of public bidding is beyond the control of the Pre-
Qualification Bids and Awards Committee. Furthermore, he did not prepare the certificates of
mobilization.74 Petitioner Guiani also denies giving unwarranted benefits to certain parties.75
He claims that the certificates of mobilization, on which the prosecution heavily relies, prove
nothing.76
Further, petitioner Abubakar argues that the Contract for Survey Work executed by petitioner
Guiani and a certain Engineer Ricardo Arce served as the basis for the advance payment
given to Arce Engineering Services. The Contract for Survey Work explicitly stated that Arce
Engineering Services would immediately be entitled to 30% of the contract price upon the
contract's execution. Thus, he had no other choice but to approve the disbursement.
Furthermore, he claims that petitioner Guiani's acquittal in Criminal Case No. 24971 should be
considered in his favor.77 Petitioner Baraguir raises a similar defense. He argues that he relied
in good faith on the contract entered into by petitioner Guiani with Arce Engineering Services.
Petitioners Abubakar and Baraguir add that they are entitled to the justifying circumstance
under Article 11(6) of the Revised Penal Code for relying on the Contract for Survey Work.
As to the P14,400,000.00 disbursement for sub-base aggregates, petitioner Abubakar argues
that his signatures on the disbursement vouchers have no bearing and were affixed on them
as a formality pursuant to DPWH¬ARMM Memorandum80 dated February 17, 1992.81
Petitioner Baraguir, on the other hand, insists that "cement" was indicated on the disbursement
vouchers and that there were no traces of alterations or superimpositions at the time he affixed
his signature.82
Throughout their pleadings, petitioners invoke good faith as a defense. They claim that they
relied on the representations and assurances of their subordinates who were more versed on
technical matters.83 Petitioner Guiani, in particular, asserts that the Sandiganbayan should
have applied the Arias doctrine in this case. He should not have been penalized for relying on
the acts of his subordinates, which he presumed were done in accordance with law.
Respondents disagree and claim that the Arias doctrine is inapplicable. They assert that
petitioners cannot claim good faith as they were fully aware of the bidding irregularities. The
evidence presented by the prosecution show that certificates of mobilization were issued prior
to the conduct of actual public bidding. Further, petitioners cannot claim good faith in allowing
Arce Engineering Services to claim 30% as advance payment considering that they knew of
the 15% limitation.
Meanwhile, petitioners Abubakar and Baraguir assert that the government did not suffer undue
injury considering that the projects in dispute have already been completed. They argue that
undue injury, in the context of Republic Act No. 3019, has been equated by this Court with the
civil law concept of actual damages. They believe that the prosecution failed to substantiate
the actual injury sustained by the government.
Respondents, on the other hand, argue that a violation of Section 3(e) of Republic Act No.
3019 may be committed in two (2) ways, namely: by causing any undue injury to a party, or by
giving unwarranted benefits, advantage, or preference to any party.87
This case presents the following issues for this Court's resolution:
10
First, whether or not petitioners Farouk B. Abubakar and Ulama S. Baraguir are entitled to a
new trial for the alleged incompetence of their former counsel;
Second, whether or not the right of petitioners Farouk B. Abubakar and Ulama S. Baraguir to
the equal protection of the laws was violated due to "selective prosecution";
Third, whether or not the prosecution was able to establish petitioners Farouk B. Abubakar,
Ulama S. Baraguir, and Datukan M. Guiani 's guilt beyond reasonable doubt for violation of
Section 3(e) of Republic Act No. 3019; and
Finally, whether or not petitioners Farouk B. Abubakar, Ulama S. Baraguir, and Datukan M.
Guiani should be exonerated from criminal liability based on the Arias doctrine.
I Lawyers act on behalf of their clients with binding effect.88 This is the necessary
consequence of the fiduciary relationship created between a lawyer and a client. Once
engaged, a counsel holds "the implied authority to do all acts which are necessary or, at least,
incidental to the prosecution and management of the suit."89 The acts of counsel are deemed
acts of the client.
Thus, as a rule, parties are bound by the acts, omissions, and mistakes of their counsel.90 To
adopt a contrary principle may lead to unnecessary delays, indefinite court proceedings, and
possibly no end to litigation for all that a defeated party would do is to claim .that his or her
counsel acted negligently.91 An exception to this is when the gross and inexcusable
negligence of counsel deprives the latter's client of his or her day in court. The allegation of
gross and inexcusable negligence, however, must be substantiated.92 In determining whether
the case falls under the exception, courts should always be guided by the principle that parties
must be "given the fullest opportunity to establish the merits of [their] action or defense."93
The general rule on the binding effect of counsel's acts and omissions has been applied with
respect to applications for a new trial. In U.S. v. Umali:94
In criminal as well as in civil cases, it has frequently been held that the fact that blunders and
mistakes may have been made in the conduct of the proceedings in the trial court, as a result
of the ignorance, inexperience, or incompetence of counsel, does not furnish a ground for a
new trial.
So it has been held that mistakes of attorneys as to the competency of a witness, the
sufficiency, relevancy, materiality, or immateriality of certain evidence, the proper defense, or
the burden of proof are not proper grounds for a new trial; and in general the client is bound by
the action of his counsel in the conduct of his case, and can not be heard to complain that the
result of the litigation might have been different had counsel proceeded differently.95
(Emphasis supplied, citations omitted)
Liberality has been applied in criminal cases but under exceptional circumstances. Given that
a person's liberty is at stake in a criminal case, Umali concedes that the strict application of the
general rule may lead to a manifest miscarriage of justice.96 Thus, appropriate relief may be
accorded to a defendant who has shown a meritorious defense and who has satisfied the court
that acquittal would follow after the introduction of omitted evidence:
It must be admitted, however, that courts of last resort have occasionally relaxed the strict
application of this rule in criminal cases, where the defendants, having otherwise a good case,
were able to satisfy the court that acquittal would in all probability have followed the
introduction of certain testimony, which was not submitted at the trial under improper or
injudicious advice of incompetent counsel.97
In De Guzman v. Sandiganbayan,98 the accused was convicted based solely on the testimony
of the prosecution's witness. The accused was unable to present any evidence due to his
counsel's insistence in filing a demurrer to evidence despite the Sandiganbayan's denial of the
motion for leave to file it.99 This was considered by this Court as gross negligence:
Petitioner's present dilemma is certainly not something reducible to pesos and centavos. No
less than his liberty is at stake here. And he is just about to lose it simply because his former
lawyers pursued a carelessly contrived procedural strategy of insisting on what has already
become an imprudent remedy, as aforediscussed, which thus forbade petitioner from offering
his evidence all the while available for presentation before the Sandiganbayan. Under the
circumstances, higher interests of justice and equity demand that petitioner be not penalized
for the costly importunings of his previous lawyers based on the same principles why this Court
had, on many occasions where it granted new trial, excused parties from the negligence or
mistakes of counsel. To cling to the general rule in this case is only to condone rather than
rectify a serious injustice to petitioners whose only fault was to repose his faith and entrust his
innocence to his previous lawyers. Consequently, the receipts and other documents
constituting his evidence which he failed to present in the Sandiganbayan are entitled to be
appreciated, however, by that forum and not this Court, for the general rule is that we are not
triers of facts. Without prejudging the result of such appreciation, petitioner's documentary
evidences prima facie appear strong when reckoned with the lone prosecution witness
Angeles' testimony, indicating that official training programs were indeed actually conducted
and that the P200,000.00 cash advance he received were spent entirely for those
programs.100 (Citation omitted)
Similarly, in Callangan v. People of the Philippines,101 the accused was unable to present any
evidence. This Court, in granting new trial, characterized the "chronic inaction of [the
accused's] counsel on important incidents and stages of the criminal proceedings" as a denial
of due process:102
The omissions of petitioner's counsel amounted to an abandonment or total disregard of her
case. They show conscious indifference to or utter disregard of the possible repercussions to
his client. Thus, the chronic inaction of petitioner's counsel on important incidents and stages
of the criminal proceedings constituted gross negligence.
The RTC itself found that petitioner never had the chance to present her defense because of
the nonfeasance (malfeasance, even) of her counsel. It also concluded that, effectively, she
was without counsel. Considering these findings, to deprive petitioner of her liberty without
affording her the right to be assisted by counsel is to deny her due process.103
In one occasion, this Court allowed the presentation of additional evidence even if the accused
initially adduced evidence during trial. This level ofliberality, however, is conditioned upon a
finding that the introduction of omitted evidence would probably alter the result of the case.
In Abrajano v. Court of Appeals,104 this Court remanded the case to the trial court for the
conduct of new trial to allow the accused to present additional evidence. The same standard in
Umali was applied:
Nevertheless, courts of last resort have occasionally relaxed the strict application of the rule
that the acts of counsel bind the client in criminal cases, where the defendants, having
otherwise a good case were able to satisfy the Court that acquittal would in all probability have
followed the introduction of certain testimonies, which were not submitted at the trial under
improper or injudicious advi[c]e of incompetent counsel. While conceding that these cases are
extremely rare, the Court, in United States v. Umali, allowed for the relaxation of the rule.
Where there are very exceptional circumstances, and where a review of the whole record
taken together with the evidence improvidently omitted would clearly justify the conclusion that
the omission had resulted in the conviction of one innocent of the crime charged, a new trial
may be granted.
In the case at bar, the circumstance that petitioner allegedly used the name "Carmen" in her
first marriage instead ofCarmelita, together with the affidavits she submitted, particularly those
of Mrs. Priscila Alimagno, supposedly a witness to Carmen's marriage to Mauro Espinosa, and
petitioner's sister Jocelyn Gilbuena, who attested that Carmen is indeed their half-sister, would
in our mind probably alter the result of this case. A new trial is therefore necessary if justice is
to be served.105 (Citations omitted)
Given this standard, this Court holds that petitioners Abubakar and Baraguir are not entitled to
a new trial.
First, they failed to convince this Court that they have a meritorious defense and that the
evidence they seek to introduce would probably lead to their acquittal.
The present case does not involve the same factual circumstances in De Guzman or in
Callangan where the accused were absolutely denied the opportunity to present evidence due
to the actuations of their counsels. In those cases, it was just and reasonable for this Court to
take a much more liberal stance considering that there was a denial of due process. The same
kind of liberality, however, cannot be applied here. Petitioners Abubakar and Baraguir, through
counsel, presented their evidence and made out their case before the Sandiganbayan. Based
on Umali and Abrajano, it is incumbent upon them to present a meritorious defense and to
convince this Court that the evidence omitted by their former counsel would probably alter the
results of the case. They cannot simply allege that they were deprived of due process or that
their defense was not fully threshed out during trial.
Petitioners Abubakar and Baraguir failed to discharge this burden.
Petitioners seek to introduce as evidence their personnel data files, contracts of service, and
appointment papers to prove that they were engaged in a temporary capacity. These
documents would certainly not alter the results of the case. Regardless of the nature of their
employment, petitioners are required to abide by the rules and regulations on public bidding
and disbursement of public funds.
Testimony of handwriting experts, original copies of disbursement vouchers, and written
requests of contractors who wished to avail of the pre¬payment scheme under DPWH
Department Order No. 42 would probably not change the finding on the irregularities pertaining
to the P14,400,000.00 disbursement for sub-base aggregates.
The disbursement vouchers106 that petitioner Abubakar seeks to introduce would not
exonerate him from liability in Criminal Case Nos. 24972, 24979, 24980, 24982, and 24983,
where the disbursement vouchers are not relevant. The disbursement vouchers relate to the
payment of the balance of mobilization fees to contractors. The criminal cases cited by
Abubakar, on the other hand, pertain to the alleged advance payment for sub-base
aggregates.
Likewise, the evidence cited by petitioner Baraguir would not affect the result of the case
against him. There is no reason to introduce pieces of evidence to prove the publication of the
invitation to bid and the conduct of actual bidding. The occurrence of these events was not
disputed by the parties. Meanwhile, the Notices of Award and Notices to Commence, even if
admitted, would not change the finding that certain contractors deployed their equipment
ahead of public bidding. The pieces of evidence that petitioner Baraguir ought to have
presented are those tending to prove that the contractors only mobilized after they won the
bidding. This would have destroyed the prosecution's theory and the basis for the criminal
charge.107
Second, petitioners Abubakar and Baraguir's former counsel was not grossly negligent. Their
former counsel may have failed to present other pieces of evidence in addition to what their co-
accused had presented. He may have also failed to incorporate other arguments in the record
of the case. However, these cannot be considered as grossly negligent acts.
Assessments regarding the materiality or relevancy of evidence, competency of witnesses,
and procedural technique generally fall within the expertise and control of counsel.108 This
Court has held that for a claim of gross negligence to prosper, "nothing short of clear
abandonment of the client's cause must be shown."109
Litigants cannot always be assured that their expectations regarding their counsel's
competence would be met. In Ong Lay Hin v. Court of Appeals:110
The state does not guarantee to the client that they will receive the kind of service that they
expect. Through this court, we set the standard on competence and integrity through the
application requirements and our disciplinary powers. Whether counsel discharges his or her
role to the satisfaction of the client is a matter that will ideally be necessarily monitored but, at
present, is too impractical.
Besides, finding good counsel is also the responsibility of the client especially when he or she
can afford to do so. Upholding client autonomy in these choices is infinitely a better policy
choice than assuming that the state is omniscient. Some degree of error must, therefore, be
borne by the client who does have the capacity to make choices.
This is one of the bases of the doctrine that the error of counsel visits the client. This court will
cease to perform its social functions if it provides succor to all who are not satisfied with the
services of their counsel.111
Furthermore, in Aguila v. Court of First Instance of Batangas:112
Persons are allowed to practice law only after they shall have passed the bar examinations,
which merely determine if they have the minimum requirements to engage in the exercise of
the legal profession. This is no guaranty, of course, that they will discharge their duties with full
fidelity to their clients or with unfailing mastery or at least appreciation of the law. The law, to
be fair, is not really all that simple; there are parts that are rather complicated and may
challenge the skills of many lawyers. By and large, however, the practice of the law should not
present much difficulty unless by some unfortunate quirk of fate, the lawyer has been allowed
to enter the bar despite his lack of preparation, or, while familiar with the intricacies of his
calling, is nevertheless neglectful of his duties and does not pay proper attention to his
work.113
II
The prosecution of offenses is generally addressed to the sound discretion of the fiscal. A
claim of "selective prosecution"114 may only prosper if there is extrinsic evidence of "clear
showing of intentional discrimination."115 The prosecution of one person to the exclusion of
others who may be just as guilty does not automatically entail a violation of the equal
protection clause.
Selective prosecution is a concept that is foreign to this jurisdiction. It originated from United
States v. Armstrong,116 a 1996 case decided by the United States Supreme Court.117 A case
for selective prosecution arises when a prosecutor charges defendants based on
"constitutionally prohibited standards such as race, religion or other arbitrary classification."118
Essentially, a selective prosecution claim rests upon an alleged violation of the equal
protection clause.119
Although "selective prosecution" has not been formally adopted in this jurisdiction, there are
cases that have been decided by this Court recognizing the possibility of defendants being
unduly discriminated against through the prosecutorial process. The burden lies on the
defendant to show discriminatory intent through extrinsic evidence.
In People v. Dela Piedra,120 the accused was charged and convicted of large-scale illegal
recruitment.121 Among the arguments she raised in her appeal was the violation of the equal
protection clause as she was the only person who was charged. She pointed out that a certain
Jasmine Alejandro (Alejandro), the person who handed out application forms, was not indicted.
She concluded that the prosecution discriminated against her based on "regional origins." She
was a Cebuana while Alejandro was a Zamboangueña.122
In rejecting the accused's argument, this Court held that the prosecution of one person to the
exclusion of others who may be just as guilty does not automatically entail a violation of the
equal protection clause.123 There must be a showing of discriminatory intent or "clear and
intentional discrimination," which can only be established through extrinsic evidence. In Dela
Piedra:
Where the official action purports to be in conformity to the statutory classification, an
erroneous or mistaken performance of the statutory duty. although a violation of the statute, is
not without more a denial of the equal protection of the laws. The unlawful administration by
officers of a statute fair on its face, resulting in its unequal application to those who are entitled
to be treated alike, is not a denial of equal protection unless there is shown to be present in it
an element of intentional or purposeful discrimination. This may appear on the face of the
action taken with respect to a particular class or person, or it may only be shown by extrinsic
evidence showing a discriminatory design over another not to be inferred from the action itself.
But a discriminatory purpose is not presumed, there must be a showing of "clear and
intentional discrimination." Appellant has failed to show that, in charging appellant in court, that
there was a "clear and intentional discrimination" on the part of the prosecuting officials.
The discretion of who to prosecute depends on the prosecution's sound assessment whether
the evidence before it can justify a reasonable belief that a person has committed an offense.
The presumption is that the prosecuting officers regularly performed their duties, and this
presumption can be overcome only by proof to the contrary, not by mere speculation. Indeed,
appellant has not presented any evidence to overcome this presumption. The mere allegation
that appellant, a Cebuana, was charged with the commission of a crime, while a
Zamboangueña, the guilty party in appellant's eyes, was not, is insufficient to support a
conclusion that the prosecution officers denied appellant equal protection of the laws.
There is also common sense practicality in sustaining appellant's prosecution.
While all persons accused of crime are to be treated on a basis of equality before the law, it
does not follow that they are to be protected in the commission of crime. It would be
unconscionable, for instance, to excuse a defendant guilty of murder because others have
murdered with impunity. The remedy for unequal enforcement of the law in such instances
does not lie in the exoneration of the guilty at the expense of society . . . Protection of the law
will be extended to all persons equally in the pursuit of their lawful occupations, but no person
has the right to demand protection of the law in the commission of a crime.
Likewise,
[i]f the failure of prosecutors to enforce the criminal laws as to some persons should be
converted into a defense for others charged with crime, the result would be that the trial of the
district attorney for nonfeasance would become an issue in the trial of many persons charged
11
with heinous crimes and the enforcement of law would suffer a complete breakdown.124
(Emphasis in the original, citations omitted)
The principle established in Dela Piedra was reiterated and applied in People v. Dumlao:125
A discriminatory purpose is never presumed. It must be remembered that it was not solely
respondent who was charged, but also five of the seven board members. If, indeed, there were
discrimination, respondent Dumlao alone could have been charged. But this was not the case.
Fmther, the fact that the dismissal of the case against his co-accused Canlas and Clave was
not appealed is not sufficient to cry discrimination. This is likewise true for the non-inclusion of
the two government officials who signed the Lease¬Purchase Agreement and the other two
board members. Mere speculation, unsupported by convincing evidence, cannot establish
discrimination on the part of the prosecution and the denial to respondent of the equal
protection of the laws.126
The reason for the requirement of "clear and intentional discrimination" lies in the discretion
given to fiscals in the prosecution of offenses. In People v. Pineda,127 this Court held that the
choice of who to prosecute is addressed to the sound discretion of the investigating
prosecutor. He or she may not be compelled to charge persons when the evidence is
insufficient to establish probable cause:
A prosecuting attorney, by the nature of his office, is under no compulsion to file a particular
criminal information where he is not convinced that he has evidence to prop up the averments
thereof, or that the evidence at hand points to a different conclusion. This is not to discount the
possibility of the commission of abuses on the part of the prosecutor. But we must have to
recognize that a prosecuting attorney should not be unduly compelled to work against his
conviction. In case of doubt, we should give him the benefit thereof. A contrary rule may result
in our court being unnecessarily swamped with unmeritorious cases. Worse still, a criminal
suspect's right to due process - the sporting idea of fair play - may be transgressed.128
In Alberto v. De la Cruz,129 this Court said:
Although this power and prerogative of the Fiscal, to determine whether or not the evidence at
hand is sufficient to form a reasonable belief that a person committed an offense, is not
absolute and subject to judicial review, it would be embarrassing for the prosecuting attorney
to be compelled to prosecute a case when he is in no position to do so, because in his opinion,
he does not have the necessary evidence to secure a conviction, or he is not convinced of the
merits of the case. The better procedure would be to appeal the Fiscal's decision to the
Ministry of Justice and/or ask for a special prosecutor.130 (Citation omitted)
Petitioners failed to establish discriminatory intent on the part of the Ombudsman in choosing
not to indict other alleged participants to the anomalous transactions. Their contention that
several other public officials were not criminally charged, by itself, does not amount to a
violation of petitioners Abubakar and Baraguir's right to equal protection of laws. The evidence
against the others may have been insufficient to establish probable cause. There may have
been no evidence at all. At this point, all this Court could do is speculate. In the absence of
extrinsic evidence establishing discriminatory intent, a claim of selective prosecution cannot
prosper.
III
Section 3(e) of Republic Act No. 3019 punishes a public officer who causes "any undue injury
to any party, including the Government" or gives "any private party any unwarranted benefits,
advantage or preference in the discharge of his official administrative or judicial functions
through manifest partiality, evident bad faith or gross inexcusable negligence."
A conviction under this provision reqmres the concurrence of the following elements:
The accused must be a public officer discharging administrative, judicial or official functions;
He [or she] must have acted with manifest partiality, evident bad faith or [gross] inexcusable
negligence;
That his [or her] action caused any undue injury to any party, including the government, or
giving any private party unwarranted benefits, advantage or preference in the discharge of his
functions.131
The second element provides the modalities by which a violation of Section 3(e) of Republic
Act No. 3019 may be committed. "Manifest partiality," "evident bad faith," or "gross inexcusable
negligence" are not separate offenses,132 and proof of the existence of any of these three (3)
"in connection with the prohibited acts . . . is enough to convict."133
These terms were defined in Uriarte v. People:134
There is "manifest partiality" when there is a clear, notorious or plain inclination or predilection
to favor one side or person rather than another. "Evident bad faith" connotes not only bad
judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity
or conscious wrongdoing for some perverse motive or ill will. It contemplates a state of mind
affirmatively operating with furtive design or with some motive or self-interest or ill will or for
ulterior purposes. "Gross inexcusable negligence" refers to negligence characterized by the
want of even the slightest care, acting or omitting to act in a situation where there is a duty to
act, not inadvertently but willfully and intentionally, with conscious indifference to
consequences insofar as other persons may be affected.135 (Emphasis in the original,
citations omitted)
The third element refers to two (2) separate acts that qualify as a violation of Section 3(e) of
Republic Act No. 3019. An accused may be charged with the commission of either or both.
An accused is said to have caused undue injury to the government or any party when the latter
sustains actual loss or damage, which must exist as a fact and cannot be based on
speculations or conjectures. Thus, in a situation where the government could have been
defrauded, the law would be inapplicable, there being no actual loss or damage sustained.136
In Pecho v. Sandiganbayan,137 this Court was faced with the issue of whether the attempted
or frustrated stages of the offense defined in Section 3(e) of Republic Act No. 3019 are
punishable. The accused and his co¬conspirators' plan to defraud the government was
prevented through the timely intervention of customs officials.138 In holding that Section 3(e)
of Republic Act No. 3019 only covers consummated acts, this Court reasoned among others
that:
[T]he third requisite of Section 3(e), viz., "causing undue injury to any party, including the
government," could only mean actual injury or damage which must be established by
evidence. [T]he word causing is the present participle of the word cause. As a verb, the latter
means "to be the cause or occasion of; to effect as an agent; to bring about; to bring into
existence; to make to induce; to compel." The word undue means "more than necessary; not
proper; illegal." And the word injury means "any wrong or damage done to another, either in
his person, rights, reputation or property. The invasion of any legally protected interest of
another." Taken together, proof of actual injury or damage is required.
No actual injury or damage having been caused to the Government due to the timely 100%
examination of the shipment and the subsequent issuance of a hold order and a warrant of
seizure and detention, the petitioner must, perforce, be acquitted of the violation of Section 3
(e) of R.A. No. 3019.139 (Citations omitted)
The loss or damage need not be proven with actual certainty. However, there must be "some
reasonable basis by which the court can measure it."140 Aside from this, the loss or damage
must be substantial.141 It must be "more than necessary, excessive, improper or illegal."142
The second punishable act under Section 3(e) ofRepublic Act No. 3019 is the giving of
unwarranted benefits, advantage, or preference to a private party. This does not require actual
damage as it is sufficient that the accused has given "unjustified favor or benefit to
another."143
The terms "unwarranted benefits, advantage or preference" were defined in Uriarte:144
[U]nwarranted means lacking adequate or official support; unjustified; unauthorized; or without
justification or adequate reasons. Advantage means a more favorable or improved position or
condition; benefit or gain of any kind; benefit from course of action. Preference signifies priority
or higher evaluation or desirability; choice or estimation above another.145 (Emphasis in the
original, citation omitted)
III.A
This Court finds that petitioners Baraguir and Guiani gave unwarranted benefits and advantage
to several contractors by allowing them to deploy their equipment ahead of the scheduled
public bidding.
As a matter of policy, public contracts are awarded through competitive public bidding. The
purpose of this process is two (2)-fold.
First, it protects public interest by giving the public the "best possible advantages thru open
competition."146 Open and fair competition among bidders is seen as a mechanism by which
the public may obtain the best terms on a given contract. Participating bidders offer competing
proposals, which are evaluated by the appropriate authority "to determine the bid most
favorable to the government."147
Second, competitive public bidding avoids "suspicion of favoritism and anomalies in the
execution of public contracts."148
These important public policy considerations demand the strict observance of procedural rules
relating to the bidding process.149
Under Presidential Decree No. 1594, a public contract shall be awarded to the lowest
prequalified bidder. The bid must comply with the terms and conditions stated in the call to bid
and must be the most advantageous to the government.150 After the evaluation of the bids,
the winning bidder shall be given a Notice of Award. The concerned government office or
agency and the successful bidder will then execute the contract, which shall be forwarded to
the head of the concerned government office or agency for approval. The contract's approval
signifies its perfection and it is at this time when the successful bidder may be allowed to
commence work upon receipt of a Notice to Proceed.151
Petitioners Baraguir and Guiani insist that the prosecution failed to establish their intent to
favor some contractors in the bidding process. Petitioner Guiani claims that the certificates of
mobilization, on which the prosecution heavily relies, prove nothing.
Their arguments are unmeritorious.
The certificates of mobilization, which were issued at least one (1) week before the date of
public bidding, categorically identified HMB Construction and Supply, Kutawato Construction,
Al Mohandiz Construction, JM Construction, PMA Construction, Al-Aziz-Engineering, and MGL
Construction as contractors for some portions of the Awang-Nuro Road and Cotabato-Lanao
Road Projects.
The acts of identifying certain contractors ahead of the scheduled public bidding and of
allowing the advanced deployment of their equipment through the issuance of certificates of
mobilization are glaring irregularities in the bidding procedure that engender suspicion of
favoritism and partiality towards the seven (7) contractors. These irregularities create a
reasonable, if not conclusive, presumption that the concerned public officials had no intention
of complying with the rules on public bidding and that the results were already predetermined.
Although petitiOner Baraguir concedes that contractors can only commence work after they
receive a notice to proceed, he justifies the irregularity on an alleged "risk-taking strategy'
employed by some contractors.152
This appears to be a flimsy excuse. There is no justifiable reason why contractors should be
allowed to deploy their equipment in advance considering that it would defeat the very purpose
of competitive public bidding. Benefits derived from this practice, if any, would certainly not
redound to the government.
Aside from this, the alleged purpose of the contractors in mobilizing their equipment ahead of
public bidding is speculative. Prospective contractors are required to possess the technical
capability to execute the implementation of a given project. Section 3(b) of Presidential Decree
No. 1594 lists as a condition for all bidders the "[a]vailability and commitment of the
contractor's equipment to be used for the subject project."153 The Pre¬Qualification Bids and
Awards Committee is mandated under the implementing rules and regulations to look into the
"suitability of [the contractor's] available construction equipment" in assessing technical
capability.154
The screening process ensures that bidders have the necessary equipment and personnel to
carry out the implementation of a particular government project. In this regard, it may not even
be possible for a winning bidder to lease equipment from another contractor after it has won
because technical capability is evaluated before the submission of the bids. Assuming that
prospective bidders would be permitted to sublease their equipment from other entities, the
sublease agreement should already be finalized prior to the conduct of public bidding.
Clearly, petitioners Baraguir and Guiani gave seven (7) contractors unwarranted benefits and
advantage through manifest partiality. Petitioner Baraguir also gave unwarranted benefits and
advantage to the contractors through gross inexcusable negligence. Admittedly, he failed to
check the dates on the certificates of mobilization when they were presented to him for his
signature.155
III.B
Petitioners Abubakar and Baraguir assert that they should benefit from the judgment of
acquittal in Criminal Case No. 24971. The judgment in Criminal Case No. 24971 should
likewise apply in Criminal Case No. 24970.156
Concededly, Criminal Case Nos. 24970 and 24971 are similar in that they are founded upon
the same contract, particularly the Contract for Survey Work.157 However, the charges are
different. Petitioner Guiani was charged in Criminal Case No. 24971 for allegedly entering into
an unnecessary engineering survey contract with Arce Engineering Services. He was acquitted
upon a finding that the engineering survey was indispensable for the project's implementation.
On the other hand, in Criminal Case No. 24970, petitioners Abubakar, Baraguir, and Guiani
were charged for causing the payment of excessive mobilization fees to Arce Engineering
Services. Therefore, the acquittal of petitioner Guiani in Criminal Case No. 24971 would have
no effect on Criminal Case No. 24970.
The implementing rules and regulations of Presidential Decree No. 1594 allow contractors to
obtain advance payment from the government during the contract's implementation stage.
Before a disbursement can be made, the contractor must submit a written request and furnish
an irrevocable standby letter of credit or a guarantee payment bond. The rules limit the amount
of advance payment to 15% of the total contract price.158
A provision in a contract stipulating for a higher percentage of advance payment is invalid. In
J.C. Lopez & Associates, Inc. v. Commission on Audit,159 this Court struck down a contractual
provision authorizing the payment of P18,000,000.00 to a contractor as mobilization cost. The
amount, which was 26% of the total contract price, exceeded the prescribed limitation for
advance payment under the implementing rules and regulations of Presidential Decree No.
1594. This Court held that although parties may stipulate on such tenns and conditions that
they deem convenient, these stipulations should not be contrary to law. The justification given
by the petitioner in that case for the stipulated mobilization cost was brushed aside.160
In this case, the Contract for Survey Work entered into by petitioner Guiani with Arce
Engineering Services stated, in part:
4. As compensation for the services to be rendered by the SURVEYOR to the CLIENT, the
CLIENT hereby agrees to pay the SURVEYOR the sum of TWO HUNDRED THOUSAND
PESOS (P200,000.00), with the following as Mode of Payment;
4.1. Thirty percent of the Contract Cost or P60,000.00 upon signing of this CONTRACT, with
the SURVEYOR posting a Surety Bond of equal amount[.]161
Section 4 of the Contract for Survey Work gave Arce Engineering Services the right to secure
30% of the contract cost as advance payment or mobilization fee upon the contract's
execution. This is clearly contrary to the implementing rules and regulations of Presidential
Decree No. 1594 on advance payment.
Petitioner Guiani cannot shift the blame to his subordinates because he entered into the
contract with Arce Engineering Services as Regional Secretary. In consenting to the 30%
advance payment, petitioner Guiani, through evident bad faith, gave unwarranted benefits to
Arce Engineering Services. Bad faith, as contemplated under Section 3(e) of Republic Act No.
3019, connotes "not only bad judgment but also palpably and patently fraudulent and
dishonest purpose to do moral obliquity or conscious wrongdoing."162
Petitioners impute the increased mobilization fee to the risks that Arce Engineering Services
might encounter in the area to be surveyed.
As pointed out by the Commission on Audit, risks during the actual survey, if any, could have
been covered by the total contract cost.163 If Arce Engineering Services foresaw security and
safety issues in the area, these could have been factored into the contract price. There is no
justifiable reason for the government to award additional mobilization fees to Arce Engineering
Services.
Petitioners Abubakar and Baraguir, in allowing the disbursement, gave unwarranted benefits to
Arce Engineering Services through evident bad faith. They cannot seek refuge in the argument
that they relied in good faith on what was stated in the Contract for Survey Vork because the
illegality was patent on the face of the contract. The disbursement should not have been
allowed for being contrary to the provisions of Presidential Decree No. 1594. Furthermore, they
are not entitled to the justifying circumstance of "any person who acts in obedience to an order
issued by a superior" under Article 11(6) of the Revised Penal Code as the order issued by the
superior must be for a lawful purpose.164 In this case, the contractual provision allowing Arce
Engineering Services to claim 30% of the contract price as mobilization fees is clearly unlawful.
III.C
12
Section 88(1) of Presidential Decree No. 1445165 prohibits advance payments on undelivered
supplies and on services that have not yet been rendered. It states:
CHAPTER 4
Application of Appropriated Funds
Section 88. Prohibition Against Advance Payment on Government Contracts. - (1) Except with
the prior approval of the President (Prime Minister) the government shall not be obliged to
make an advance payment for services not yet rendered or for supplies and materials not yet
delivered under any contract therefor. No payment, partial or final, shall be made on any such
contract except upon a certification by the head of the agency concerned to the effect that the
services or supplies and materials have been rendered or delivered in accordance with the
terms of the contract and have been duly inspected and accepted.
An exception to the prohibition on advance payment under Presidential Decree No. 1445 is
Memorandum Order No. 341, which allows government agencies that implement government
infrastructure projects to procure cement, reinforcing steel bars, and asphalt on a pre-payment
basis.
The February 18, 1991 Guidelines166 issued by the Department of Public Works and
Highways require contractors who wish to avail of the pre¬payment facility to submit a written
request addressed to the head of the implementing government agency with the following
requirements:
(a) the quantities of materials for which pre-payment is desired which should not exceed the
project requirements per balance of work as of the filing date of the request;
(b) the unit cost of the materials and the corresponding total cost of quantities applied for;
The same can be said for Criminal Case No. 24970. The Contract of Survey Work, which was
used as the primary supporting document for the disbursement of the 30% mobilization fee to
Arce Engineering Services, contained a patently illegal stipulation. Petitioner Guiani cannot
blame his subordinates and claim that he acted in good faith considering that he entered into
the contract with Arce Engineering Services.
Petitioners should have also made further inqmnes regarding the P14,400,000.00 advance
payment for sub-aggregates. There were no appropriate documents such as purchase orders
and delivery receipts to support this disbursement.
The rules on public bidding and on public funds disbursement are imbued with public interest.
The positions and functions of petitioners Abubakar, Baraguir, and Guiani impose upon them a
greater responsibility in ensuring that rules on these matters are complied with. They are
expected to exercise a greater degree of diligence.
WHEREFORE, the Consolidated Petitions are DENIED. The assailed December 8, 2011
Decision and June 19, 2012 Resolution of the Sandiganbayan in Criminal Case Nos. 24963 to
24969, Criminal Case No. 24970, and Criminal Case Nos. 24972 to 24983 are AFFIRMED.
Petitioner Farouk B. Abubakar is found GUILTY beyond reasonable doubt often (10) counts of
violation of Section 3(e) of Republic Act No. 3019. Petitioners Ulama S. Baraguir and Datukan
M. Guiani are found GUILTY beyond reasonable doubt of seventeen (17) counts of violation of
Section 3(e) of Republic Act No. 3019.
SO ORDERED.

(c) the name of the Supplier to which payment shall be made;

(d) [the] Contract Agreement between Contractor and Supplier indicating the quantities of
materials covered by the purchase agreement, their unit cost and corresponding cost,
mode/timing of deliveries to the project site and terms of payment; [and]

(e) the manner of recouping the amount prepaid, the recovery period of which shall not exceed
the date when the project shall have been 80% complete[.]167
The contractor must also furnish a surety bond as guarantee.168

The head of the implementing agency, on the other hand, is required to process the request
and may make the necessary modifications based on the following:
(a) [the] quantities requested for pre-payment are the actual requirements of the project per
balance of work therein;

(b) the total amounts pre-paid shall be fully recovered not later than the time when 80% of the
project shall have been completed;

(c) recouping the pre-paid amount during the scheduled recovery period will not strain the cash
flow of the contractor which is detrimental to his operations and successful completion of the
project. The cash flow shall consider remaining deductions due to retainage and recoupement
of the 15% advance payment.169
In the present case, petitioners insist that the P14,400,000.00 advance payment was lawful
because it was actually pre-payment for cement under Memorandum Order No. 341.
Petitioners posit that the disbursement vouchers might have been altered to reflect "sub-base
aggregates."

The issue on the alleged forgery was never addressed by the Sandiganbayan in its December
8, 2011 Decision. There was also no express finding during the Commission on Audit's
investigation as to who allegedly altered the disbursement vouchers. Nevertheless, the
Sandiganbayan observed that the official receipts issued by the contractors indicated that the
payment pertained to the purchase of sub-base aggregates.170 DPWH-ARMM issued
numerous checks171 for which receipts were issued.172 If petitioners' claims were true, then
they should have at least questioned what was stated in the official receipts and requested for
the rectification of the discrepancy.

Thus, there is reason to believe that the P14,400,000.00 was paid in advance for the
procurement of sub-base aggregates.

Considering that sub-base aggregates are excluded from the list of construction materials
allowed to be procured under a pre-payment scheme, the rules on advance payment under
Presidential Decree No. 1445 should apply. For an advance payment to be lawful, the
materials or supplies should have been delivered in accordance with the contract and should
have been duly inspected and accepted. If there is no delivery, prior approval of the President
is required.173

The Sandiganbayan found that the procurement of sub-base aggregates was not supported by
any purchase orders. There were also no receipts to evidence delivery of the materials on-
site.174 Thus, the disbursement should not have been approved by petitioners due to the
absence of appropriate supporting documents. Undue benefit was given to contractors when
they were allowed to claim advance payments totaling P14,400,000.00 for undelivered
materials. These contractors had no right to receive them under Section 88(1) of Presidential
Decree No. 1445.
IV

This Court's ruling in Arias v. Sandiganbayan175 cannot exonerate petitioners from criminal
liability.

Arias laid down the doctrine that heads of offices may, in good faith, rely to a certain extent on
the acts of their subordinates "who prepare bids, purchase supplies, or enter into
negotiations."176 This is based upon the recognition that heads of offices cannot be expected
to examine every single document relative to government transactions:
We would be setting a bad precedent if a head of office plagued by all too common problems -
dishonest or negligent subordinates, overwork, multiple assignments or positions, or plain
incompetence - is suddenly swept into a conspiracy conviction simply because he did not
personally examine every single detail, painstakingly trace every step from inception, and
investigate the motives of every person involved in a transaction before affixing his signature
as the final approving authority.

There appears to be no question from the records that [the] documents used in the negotiated
sale were falsified. A key tax declaration had a typewritten number instead of being machine
numbered. The registration stampmark was antedated and the land [was] reclassified as
residential instead of ricefield. But were the petitioners guilty of conspiracy in the falsification
and the subsequent charge of causing undue injury and damage to the Government?

We can, in retrospect, argue that Arias should have probed records, inspected documents,
received procedures, and questioned persons. It is doubtful if any auditor for a fairly sized
office could personally do all these things in all vouchers presented for his signature. The
Court would be asking for the impossible. All heads of offices have to rely to a reasonable
extent on their subordinates and on the good faith of those who prepare bids, purchase
supplies, or enter into negotiations. If a department secretary entertains important visitors, the
auditor is not ordinarily expected to call the restaurant about the amount of the bill, question
each guest whether he was present at the luncheon, inquire whether the correct amount of
food was served, and otherwise personally look into the reimbursement voucher's accuracy,
propriety, and sufficiency. There has to be some added reason why he should examine each
voucher in such detail. Any executive head of even small government agencies or
commissions can attest to the volume of papers that must be signed. There are hundreds of
documents, letters, memoranda, vouchers, and supporting papers that routinely pass through
his hands. The number in bigger offices or departments is even more appalling.177 (Emphasis
supplied)
The application of the doctrine is subject to the qualification that the public official has no
foreknowledge of any facts or circumstances that would prompt him or her to investigate or
exercise a greater degree of care.178 In a number of cases, this Court refused to apply the
Arias doctrine considering that there were circumstances that should have prompted the
government official to inquire further.179

In the present case, the Arias doctrine cannot exonerate petitioners Abubakar, Baraguir, or
Guiani from criminal liability. There were circumstances that should have prompted them to
make further inquiries on the transactions subject of this case.

In Criminal Case Nos. 24963-24969 on the early mobilization of contractors, the irregularity
was already apparent on the face of the certificates of mobilization, which bore dates earlier
than the scheduled public bidding. This should have already roused suspicion from petitioners
Baraguir and Guiani, who were the last signatories and final approving authorities.

13
 Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 142030. April 21, 2005
ARTURO GALLARDO, PETER MELCHOR J. ARCHES, ALLAN B. AMPOLOQUIO, CIRILO
N. BACQUIANO, JOSUE M. RODAJE, BENJAMIN R. MACASAET, JR., VICTORINA
DELOS CIENTOS-MIRAL, RODOLFO M. CARTIN, QUIRINA T. SARTE, NORBERTO E.
GOMEZ, GENEFREDO P. ESPINA, NOEL GUINITA, AND OFELIA NACIONAL, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES, SANDIGANBAYAN, HONORABLE ANIANO DESIERTO in
his official capacity as OMBUDSMAN, AND OFFICE OF THE SPECIAL
PROSECUTOR, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court assailing the Resolution of
the Sandiganbayan1 (Second Division) in Criminal Case No. 25092 denying petitioners’ Motion
To Quash.
The records show that the above-numbered case originated from a sworn letter-complaint filed
with the Office of the Ombudsman-Mindanao by Atty. Victor dela Serna, for and in behalf of the
Public Health Workers (PHWs) of Bansalan, Davao del Sur, charging herein petitioners Mayor
Arturo A. Gallardo, Vice-Mayor Peter Melchor J. Arches, Sangguniang Bayan members Allan
B. Ampoloquio, Cirilo N. Bacquiano, Josue M. Rodaje, Benjamin R. Macasaet, Jr., Victorina
delos Cientos-Miral, Rodolfo M. Cartin, Quirina T. Sarte, Norberto E. Gomez, Genefredo P.
Espina, Noel Guinita and Budget Officer Ofelia Nacional, all public officers of the Municipality
of Bansalan, Davao del Sur, with violation of Section 3(e) of Republic Act No. 3019 for their
alleged refusal to appropriate in the municipal budget the amount representing payment of the
mandatory statutory obligations of the Municipality of Bansalan accruing to the complaining
PHWs in the nature of unpaid salary differential and magna carta benefits.2
On 08 January 1999, herein public respondent Ombudsman Aniano A. Desierto approved the
Resolution dated 26 November 1998 of Graft Investigation Officer II Jovito A. Coresis, Jr., of
the Office of the Ombudsman-Mindanao, finding probable cause to indict petitioners of the
crime alleged.3
On 13 January 1999, the Information was filed with the Sandiganbayan which reads:
That sometime in or about January, 1998, or shortly prior or subsequent thereto, in Davao del
Sur, Philippines and within the jurisdiction of this Honorable Court, the accused Mayor Arturo
A. Gallardo with salary grade 27, Vice-mayor Peter Melchor J. Arches with salary grade 25,
Sangguniang Bayan Members with salary grade 24 Allan B. Ampoloquio, Cirilo N. Bacquiano,
Josue M. Rodaje, Benjamin R. Macasaet, Jr., Victorina delos Cientos-Miral, Rodolfo M. Cartin,
Quirina T. Sarte, Norberto E. Gomez, Genefredo P. Espina, Noel Guinita and Budget Officer
Ofelia Nacional all public officers of the Local Government Unit of Bansalan, Davao del Sur,
committing the offense while in the performance of their official duties and taking advantage of
their public position, conspiring, confederating and mutually aiding each other, did there and
then, willfully, unlawfully, and criminally, cause undue injury to the Public Health Workers
(PHWs) of the Municipality of Bansalan, to wit: by illegally and unjustifiably refusing to perform
their duties to include an appropriation in the municipal budget for the payment of the
mandatory statutory obligations of the Municipality of Bansalan due to the complaining PHWs
in the nature of unpaid salary differential and magna carta benefits in the aggregate amount of
P3,833,798.10 Philippine currency, thus causing undue damage and injury to the complaining
PHWs thru evident bad faith in the performance of their official duties. 4
On 24 February 1999, petitioners filed a Motion for Reinvestigation. 5 The Sandiganbayan
granted the motion in a resolution dated 27 April 1999 and ordered the prosecution to conduct
a reinvestigation.6 In a resolution dated 26 July 1999, Special Prosecutor II Jose O. Montero,
Jr., recommended the dismissal of the case, which recommendation was approved by
Prosecution Bureau Director Victorio U. Tabanguil, Deputy Special Prosecutor Robert E.
Kallos and concurred in by Special Prosecutor Leonardo P. Tamayo. 7 This recommendation,
however, was disapproved by Ombudsman Aniano A. Desierto who stated in his own
handwriting "[l]et the court determine if indeed the evidence cannot stand the judicial scrutiny."8
On 15 November 1999, petitioners filed a motion to quash the information anchored on the
following grounds: 1) the facts charged do not constitute an offense; 2) the accused are denied
due process; and 3) the accused are not accorded the equal protection of laws. 9
On 06 January 2000, the Sandiganbayan denied petitioners’ motion. It ruled that the
averments in the Information sufficiently charged the offense, and that the mere fact that cases
similar to this case were dismissed by the Ombudsman does not mean due process or equal
protection of the law clause was denied the petitioners.
Hence, this petition.
Petitioners contend that the reinvestigation conducted by Ombudsman Special Prosecutor II
Jose O. Montero, Jr., showed that insufficient funds were the reason for petitioners’ failure to
appropriate the money to meet the magna carta benefits of PHWs and that petitioners acted in
good faith when they failed to enact the required appropriation ordinance. The Sandiganbayan
should have duly considered such findings and the evidence adduced supporting the same,
irrespective of the opinion of Ombudsman Aniano A. Desierto. They conclude that the
Sandiganbayan erred when it totally failed to consider the findings and recommendations of
the Office of the Special Prosecutor.
Petitioners likewise argue that the one-sentence disapproval by Ombudsman Aniano A.
Desierto of the recommendations of the Office of the Special Prosecutor was arbitrary,
whimsical and capricious for he failed to explain how such action was arrived at, thereby
depriving petitioners of their rights to be informed of the facts and the law on which the denial
was based.
At the outset, it must be emphasized that petitioners’ choice of remedy is clearly erroneous.
It is basic that Rule 45 of the Rules of Court governs appeals from judgment or final orders.10 A
final order is one which disposes of the whole subject matter or terminates a particular
proceeding or action, leaving nothing to be done but to enforce by execution what has been
determined.11 The resolution of the Sandiganbayan sought to be reviewed or set aside is not in
any sense judgment or a final order, but an interlocutory order. 12 An order is interlocutory if it
does not dispose of a case completely, but leaves something more to be done on its
merits.13 The order of the Sandiganbayan denying the motion to quash filed by petitioners is
interlocutory in nature because it leaves something more to be done by the Sandiganbayan, by
way of resolving the case on the merits. The denial of petitioners’ motion to quash allows the
same petitioners to enter a plea, go to trial without prejudice on their part to present the special
defenses they invoked in their motion and if, after trial on the merits, an adverse decision is
rendered, to appeal therefrom via appeal by certiorari.14
Even if we consider the petition as one for certiorari under Rule 65 of the Rules of Court, we
find that the Sandiganbayan did not commit grave abuse of discretion in denying the
petitioners’ motion to quash.
Petitioners fault the Sandiganbayan for not taking into account the findings and
recommendations of the Office of the Special Prosecutor which found no probable cause to
charge them. Allied to this assignment of error is petitioners’ allegation that the Ombudsman
failed to accord them due process of law and equal protection of the law. They claimed they
were denied due process because Ombudsman Aniano A. Desierto disapproved the
recommendation of Special Prosecutor II Jose O. Montero, Jr., by simply writing a one-line
note. The disapproval allegedly deprived them of their right to be informed of the facts and law
on which the said disapproval was based. It is further asseverated that they were deprived the
equal protection of law since the Ombudsman, in sixteen (16) previous cases which were
similar to the case at bar, dismissed the same.
These arguments are specious. Petitioners’ submission that they were deprived of due
process hinges on the erroneous assumption that respondent Ombudsman failed to assess
and consider the evidence presented by petitioners when he disapproved the recommendation
by the investigating prosecutor to dismiss the case, and that his ruling was not supported by
evidence on record.
The truth of the matter is that petitioners were not denied due process of law. The order of the
Ombudsman for the filing of the necessary information is not a case of a total absence of
factual and legal bases nor a failure to appreciate the evidence presented. It may appear that
the Ombudsman’s one-line note lacks any factual or evidentiary grounds as it did not set forth
the same. The state of affairs, however, is that the Ombudsman’s note stems from his review
of the findings of fact reached by the investigating prosecutor. 15 The Ombudsman, contrary to
the investigating prosecutor’s conclusion, was of the conviction that petitioners are probably
guilty of the offense charged, and for this, he is not required to conduct an investigation
anew.16 He is merely determining the propriety and correctness of the recommendation by the
investigating prosecutor, i.e., whether probable cause actually exists or not, on the basis of the
findings of fact of the latter. He may agree, fully or partly, or disagree completely with the
investigating prosecutor. Whatever course of action that the Ombudsman may take, whether to
approve or to disapprove the recommendation of the investigating prosecutor, is but an
exercise of his discretionary powers based upon constitutional mandate. 17 Generally, courts
should not interfere in such exercise. It is beyond the ambit of this Court to review the exercise
of discretion of the Ombudsman in prosecuting or dismissing a complaint filed before it, save in
cases where there is clear showing of grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Ombudsman which is absent in the case at hand. 18 Such initiative
and independence are inherent in the Ombudsman who, beholden to no one, acts as the
19
champion of the people and preserver of the integrity of the public service.
The fact that the Ombudsman merely wrote his recommendation for the filing of the information
against petitioners in a one-line note is not a sufficient basis for this Court to attribute
arbitrariness or caprice on the part of respondent. As held in Olivarez v. Sandiganbayan:20
The mere fact that the order to file the information against petitioner was contained in a
marginal note is not sufficient to impute arbitrariness or caprice on the part of the respondent
special prosecutors, absent a clear showing that they gravely abused their discretion in
disapproving the recommendation of the investigating prosecutors to dismiss or withdraw the
case against petitioner. Neither are these notes tainted with or indicative of vindictiveness or
arbitrariness as imputed by petitioner. Public respondents disapproved the recommendation of
the investigating prosecutors because they sincerely believed that there is sufficient evidence
to indict the accused.
The contention that petitioners’ right to equal protection of the law has been transgressed is
equally untenable. The equal protection clause requires that the law operates uniformly on all
persons under similar circumstances or that all persons are treated in the same manner, the
conditions not being different, both in privileges conferred and the liabilities imposed. 21 It allows
reasonable classification. If the classification is characterized by real and substantial
differences, one class may be treated differently from another. 22 Simply because the
respondent Ombudsman dismissed some cases allegedly similar to the case at bar is not
sufficient to impute arbitrariness or caprice on his part, absent a clear showing that he gravely
abused his discretion in pursuing the instant case. The Ombudsman dismissed those cases
because he believed there were no sufficient grounds for the accused therein to undergo trial.
On the other hand, he recommended the filing of appropriate information against petitioners
because there are ample grounds to hold them for trial. He was only exercising his power and
discharging his duty based upon the constitutional mandate of his office. Stated otherwise, the
circumstances obtaining in the numerous cases previously dismissed by the Ombudsman are
entirely divergent from those here existing.
In the same vein, respondent Sandiganbayan could not be blamed for not considering the
findings of the special prosecutor because the rule is that in case of conflict in the conclusions
of the Ombudsman and the special prosecutor, it is the former’s decision that shall prevail
since the Office of the Special Prosecutor is under the supervision and control of the
Ombudsman.23 Moreover, once a case has been filed with the court, it is that court, no longer
the prosecution, which has full control of the case, so much so that the information may grant
or deny it, in the faithful exercise of judicial discretion. 24 The court is the best and sole judge on
what to do with the case before it. 25 In the instant case, respondent court is convinced that
there is adequate evidence against the petitioners. Absence of proof that it gravely abused its
discretion, the conclusion arrived at by the Sandiganbayan in its assailed resolution, will not be
disturbed.
Besides, petitioners’ argument that they could not be indicted for violation of Section 3(e) of
Rep. Act No. 3019 as they acted in good faith when they failed to appropriate funds for the
unpaid salary differential and magna carta benefits due the private complainants, is evidentiary
in nature and is a matter of defense, which could be raised in a full-blown trial on the
merits.26 As aptly held in Deloso v. Desierto:27
Public prosecutors do not decide whether there is evidence beyond reasonable doubt of the
guilt of the person charged. They merely determine whether there is sufficient ground to
engender a well-founded belief that a crime has been committed and that the accused is
probably guilty thereof, and should be held for trial. A finding of probable cause does not
require an inquiry as to whether there is sufficient evidence to secure a conviction. It is enough
that prosecutors believe that the act or omission complained of constitutes the offense
charged. Precisely, there is a trial for the reception of evidence of the prosecution in support of
the charges.
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
SO ORDERED.
14
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 127410 January 20, 1999
CONRADO L. TIU, JUAN T. MONTELIBANO JR. and ISAGANI M. JUNGCO, petitioners,
vs.
COURT OF APPEALS, HON. TEOFISTO T. GUINGONA JR., BASES CONVERSION AND
DEVELOPMENT AUTHORITY, SUBIC BAY METROPOLITAN AUTHORITY, BUREAU OF
INTERNAL REVENUE, CITY TREASURER OF OLONGAPO and MUNICIPAL TREASURER
OF SUBIC, ZAMBALES, respondents.
PANGANIBAN, J.:
The constituttional rights to equal protection of the law is not violated by an executive order,
issued pursuant to law, granting tax and duty incentives only to the bussiness and residents
within the "secured area" of the Subic Special Econimic Zone and denying them to those who
live within the Zone but outside such "fenced-in" territory. The Constitution does not require
absolute equality among residents. It is enough that all persons under like circumstances or
conditions are given the same privileges and required to follow the same obligations. In short,
a classification based on valid and reasonable standards does not violate the equal protection
clause.
The Case
Before us is a petition for review under Rule 45 of the Rules of Court, seeking the reversal of
the Court of Appeals' Decision1 promulgated on August 29, 1996, and Resolution 2 dated
November 13, 1996, in CA-GR SP No. 37788. 3 The challenged Decision upheld the
constitutionality and validity of Executive Order No. 97-A (EO 97-A), according to which the
grant and enjoyment of the tax and duty incentives authorized under Republic Act No. 7227
(RA 7227) were limited to the business enterprises and residents within the fenced-in area of
the Subic Special Economic Zone (SSEZ).
The assailed Resolution denied the petitioners' motion for reconsideration.
On March 13, 1992, Congress, with the approval of the President, passed into law RA 7227
entitled "An Act Accelerating the Conversion of Military Reservations Into Other Productive
Uses, Creating the Bases Conversion and Development Authority for this Purpose, Providing
Funds Therefor and for Other Purposes." Section 12 thereof created the Subic Special
Economic Zone and granted there to special privileges, as follows:
Sec. 12. Subic Special Economic Zone. — Subject to the concurrence by resolution of
the sangguniang panlungsod of the City of Olongapo and the sangguniang bayan of the
Municipalities of Subic, Morong and Hermosa, there is hereby created a Special Economic and
Free-port Zone consisting of the City of Olongapo and the Municipality of Subic, Province of
Zambales, the lands occupied by the Subic Naval Base and its contiguous extensions as
embraced, covered, and defined by the 1947 Military Bases Agreement between the
Philippines and the United States of America as amended, and within the territorial jurisdiction
of the Municipalities of Morong and Hermosa, Province of Bataan, hereinafter referred to as
the Subic Special Economic Zone whose metes and bounds shall be delineated in a
proclamation to be issued by the President of the Philippines. Within thirty (30) days after the
approval of this Act, each local government unit shall submit its resolution of concurrence to
join the Subic Special Economic Zone to the Office of the President. Thereafter, the President
of the Philippines shall issue a proclamation defining the metes and bounds of the zone as
provided herein.
The abovementioned zone shall be subject to the following policies:
(a) Within the framework and subject to the mandate and limitations of the Constitution and the
pertinent provisions of the Local Government Code, the Subic Special Economic Zone shall be
developed into a self-sustaining, industrial, commercial, financial and investment center to
generate employment opportunities in and around the zone and to attract and promote
productive foreign investments;
(b) The Subic Special Economic Zone shall be operated and managed as a separate customs
territory ensuring free flow or movement of goods and capital within, into and exported out of
the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free
importations of raw materials, capital and equipment. However, exportation or removal of
goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine
territory shall be subject to customs duties and taxes under the Customs and Tariff Code and
other relevant tax laws of the Philippines;
(c) The provision of existing laws, rules and regulations to the contrary notwithstanding, no
taxes, local and national, shall be imposed within the Subic Special Economic Zone. In lieu of
paying taxes, three percent (3%) of the gross income earned by all businesses and enterprises
within the Subic Special Economic Zone shall be remitted to the National Government, one
percent (1%) each to the local government units affected by the declaration of the zone in
proportion to their population area, and other factors. In addition, there is hereby established a
development fund of one percent (1%) of the gross income earned by all businesses and
enterprises within the Subic Special Economic Zone to be utilized for the development of
municipalities outside the City of Olongapo and the Municipality of Subic, and other
municipalities contiguous to the base areas.
In case of conflict between national and local laws with respect to tax exemption privileges in
the Subic Special Economic Zone, the same shall be resolved in favor of the latter;
(d) No exchange control policy shall be applied and free markets for foreign exchange, gold,
securities and future shall be allowed and maintained in the Subic Special Economic Zone;
(e) The Central Bank, through the Monetary Board, shall supervise and regulate the operations
of banks and other financial institutions within the Subic Special Economic Zone;
(f) Banking and finance shall be liberalized with the establishment of foreign currency
depository units of local commercial banks and offshore banking units of foreign banks with
minimum Central Bank regulation;
(g) Any investor within the Subic Special Economic Zone whose continuing investment shall
not be less than two hundred fifty thousand dollars ($250,000), his/her spouse and dependent
children under twenty-one (21) years of age, shall be granted permanent resident status within
the Subic Special Economic Zone. They shall have the freedom of ingress and egress to and
from the Subic Special Economic Zone without any need of special authorization form the
Bureau of Immigration and Deportation. The Subic Bay Metropolitan Authority referred to in
Section 13 of this Act may also issue working visas renewable every two (2) years to foreign
executives and other aliens possessing highly technical skills which no Filipino within the Subic
Special Economic Zone possesses, as certified by the Department of Labor and Employment.
The names of aliens granted permanent residence status and working visas by the Subic Bay
Metropolitan Authority shall be reported to the Bureau of Immigration and Deportation within
thirty (30) days after issuance thereof;
(h) The defense of the zone and the security of its perimeters shall be the responsibility of the
National Government in coordination with the Subic Bay Metropolitan Authority. The Subic Bay
Metropolitan Authority shall provide and establish its own security and fire-fighting forces; and
(i) Except as herein provided, the local government units comprising the Subic Special
Economic Zone shall retain their basic autonomy and identity. The cities shall be governed by
their respective charters and the municipalities shall operate and function in accordance with
Republic Act No. 7160, otherwise known as the Local Government Code of 1991.
On June 10, 1993, then President Fidel V. Ramos issued Executive Order No. 97 (EO 97),
clarifying the application of the tax and duty incentives thus:
Sec. 1. On Import Taxes and Duties. — Tax and duty-free importations shall apply only to raw
materials, capital goods and equipment brought in by business enterprises into the SSEZ.
Except for these items, importations of other goods into the SSEZ, whether by business
enterprises or resident individuals, are subject to taxes and duties under relevant Philippine
laws.
The exportation or removal of tax and duty-free goods from the territory of the SSEZ to other
parts of the Philippine territory shall be subject to duties and taxes under relevant Philippine
laws.
Sec. 2. On All Other Taxes. — In lieu of all local and national taxes (except import taxes and
duties), all business enterprises in the SSEZ shall be required to pay the tax specified in
Section 12(c) of R.A. No. 7227.
Nine days after, on June 19, 1993, the President issued Executive Order No. 97-A (EO 97-A),
specifying the area within which the tax-and-duty-free privilege was operative, viz.:
Sec. 1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base
shall be the only completely tax and duty-free area in the SSEFPZ [Subic Special Economic
and Free Port Zone]. Business enterprises and individuals (Filipinos and foreigners) residing
within the Secured Area are free to import raw materials, capital goods, equipment, and
consumer items tax and duty-free. Consumption items, however, must be consumed within the
Secured Area. Removal of raw materials, capital goods, equipment and consumer items out of
the Secured Area for sale to non-SSEFPZ registered enterprises shall be subject to the usual
taxes and duties, except as may be provided herein.
On October 26, 1994, the petitioners challenged before this Court the constitutionality of EO
97-A for allegedly being violative of their right to equal protection of the laws. In a Resolution
dated June 27, 1995, this Court referred the matter to the Court of Appeals, pursuant to
Revised Administrative Circular No. 1-95.
Incidentally, on February 1, 1995, Proclamation No. 532 was issued by President Ramos. It
delineated the exact metes and bounds of the Subic Special Economic and Free Port Zone,
pursuant to Section 12 of RA 7227.
Ruling of the Court of Appeals
Respondent Court held that "there is no substantial difference between the provisions of EO
97-A and Section 12 of RA 7227. In both, the 'Secured Area' is precise and well-defined as '. . .
the lands occupied by the Subic Naval Base and its contiguous extensions as embraced,
covered and defined by the 1947 Military Bases Agreement between the Philippines and the
United States of America, as amended . . .'" The appellate court concluded that such being the
case, petitioners could not claim that EO 97-A is unconstitutional, while at the same time
maintaining the validity of RA 7227.
The court a quo also explained that the intention of Congress was to confine the coverage of
the SSEZ to the "secured area" and not to include the "entire Olongapo City and other areas
mentioned in Section 12 of the law." It relied on the following deliberarions in the Senate:
Senator Paterno. Thank you, Mr. President. My first question is the extent of the economic
zone. Since this will be a free port, in effect, I believe that it is important to delineate or make
sure that the delineation will be quite precise[. M]y question is: Is it the intention that the entire
of Olongapo City, the Municipality of Subic and the Municipality of Dinalupihan will be covered
by the special economic zone or only portions thereof?
Senator Shahani. Only portions, Mr. President. In other words, where the actual operations of
the free port will take place.
Senator Paterno. I see. So, we should say, "COVERING THE DESIGNATED PORTIONS OR
CERTAIN PORTIONS OF OLONGAPO CITY, SUBIC AND DINALUPIHAN" to make it clear
that it is not supposed to cover the entire area of all of these territories.
Senator Shahani. So, the Gentleman is proposing that the words "CERTAIN AREAS". . .
The President. The Chair would want to invite the attention of the Sponsor and Senator
Paterno to letter "C," which says: "THE PRESIDENT OF THE PHILIPPINES IS HEREBY
AUTHORIZED TO PROCLAIM, DELINEATE AND SPECIFY THE METES AND BOUNDS OF
OTHER SPECIAL ECONOMIC ZONES WHICH MAY BE CREATED IN THE CLARK
MILITARY RESERVATIONS AND ITS EXTENSIONS."
Probably, this provision can be expanded since, apparently, the intention is that what is
referred to in Olongapo as Metro Olongapo is not by itself ipso jure already a special economic
zone.
Senator Paterno. That is correct.
The President. Someone, some authority must declare which portions of the same shall be the
economic zone. Is it the intention of the author that it is the President of the Philippines who
will make such delineation?
Senator Shahani. Yes Mr. President.
The Court of Appeals further justified the limited application of the tax incentives as being
within the prerogative of the legislature, pursuant to its "avowed purpose [of serving] some
public benefit or interest." It ruled that "EO 97-A merely implements the legislative purpose of
[RA 7227]."
Disagreeing, petitioners now seek before us a review of the aforecited Court of Appeals
Decision and Resolution.
15
The Issue
Petitioners submit the following issue for the resolution of the Court:
[W]hether or not Executive Order No. 97-A violates the equal protection clause of the
Constitution. Specifically the issue is whether the provisions of Executive Order No. 97-A
confining the application of R.A. 7227 within the secured area and excluding the residents of
4
the zone outside of the secured area is discriminatory or not.
The Court's Ruling
The petition 5 is bereft of merit.
thousands of new, jobs. On the other hand, definitely none of such magnitude. In the first, the
economic impact will be national; in the second, only local. Even more important, at this time
the business activities outside the "secured area" are not likely to have any impact in achieving
the purpose of the law, which is to turn the former military base to productive use for the
benefit of the Philippine economy. There is, then, hardly any reasonable basis to extend to
them the benefits and incentives accorded in RA 7227. Additionally, as the Court of Appeals
pointed out, it will be easier to manage and monitor the activities within the "secured area,"
which is already fenced off, to prevent "fraudulent importation of merchandise" or smuggling.
It is well-settled that the equal-protection guarantee does not require territorial uniformity of
laws.13 As long as there are actual and material differences between territories, there is no
violation of the constitutional clause. And of course, anyone, including the petitioners,
possessing the requisite investment capital can always avail of the same benefits by
channeling his or her resources or business operations into the fenced-off free port zone.

We believe that the classification set forth by the executive issuance does not apply merely to
Main Issue: existing conditions. As laid down in RA 7227, the objective is to establish a "self-sustaining,
industrial, commercial, financial and investment center" in the area. There will, therefore, be a
long-term difference between such investment center and the areas outside it.
The Constitionality of EO 37-A

Citing Section 12 of RA 7227, petitioners contend that the SSEZ encompasses (1) the City of
Olongapo, (2) the Municipality of Subic in Zambales, and (3) the area formerly occupied by the
Subic Naval Base. However, EO 97-A, according to them, narrowed down the area within
which the special privileges granted to the entire zone would apply to the present "fenced-in
former Subic Naval Base" only. It has thereby excluded the residents of the first two
components of the zone from enjoying the benefits granted by the law. It has effectively
discriminated against them without reasonable or valid standards, in contravention of the equal
protection guarantee.
Lastly, the classification applies equally to all the resident individuals and businesses within the
"secured area." The residents, being in like circumstances or contributing directly to the
achievement of the end purpose of the law, are not categorized further. Instead, they are all
similarly treated, both in privileges granted and in obligations required.
All told, the Court holds that no undue favor or privilege was extended. The classification
occasioned by EO 97-A was not unreasonable, capricious or unfounded. To repeat, it was
based, rather, on fair and substantive considerations that were germane to the legislative
purpose.

On the other hand, the solicitor general defends, on behalf of respondents, the validity of EO
97-A, arguing that Section 12 of RA 7227 clearly vests in the President the authority to WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and Resolution
delineate the metes and bounds of the SSEZ. He adds that the issuance fully complies with are hereby AFFIRMED. Costs against petitioners.1âwphi1.nêt
the requiretnents of a valid classification.

SO ORDERED.
We rule in favor of the constitutionality and validity of the assailed EO. Said Order is not
violative of the equal protection clause; neither is it discriminatory. Rather, than we find real
and substantive distinctions between the circumstances obtain;ng inside and those outside the
Subic Naval Base, thereby justifying a valid and reasonable classification.

The fundamental right of equal protection of the laws is not absolute, but is subject to
reasonable classification. If the groupings are characterized by substantial distinctions that
make real differences, one class may be treated and regulated differently from another. 6 The
classification must also be germane to the purpose of the law and must apply to all those
belonging to the same class. Explaining the nature of the equal protection guarantee, the Court
in Ichong v. Hernandez 8 said:

The equal protection of the law clause is against undue favor and individual or class privilege,
as well as hostile discrimination or the oppression of inequality. It is not intended to prohibit
legislation which is limited either [by] the object to which it is directed or by [the] territory within
which it is to operate. It does not demand absolute equality among residents; it merely requires
that all persons shall be treated alike, under like circumstances and conditions both as to
privileges conferred and liabilities enforced. The equal protection clause is not infringed by
legislation which applies only to those persons falling within a specified class, if it applies alike
to all persons within such class, and reasonable. grounds exist for making a distinction
between those who fall within such class and those who do not.

Classification, to be valid, must (1) rest on substantial distinctions, (2) be germane to the
purpose of the law, (3) not be limited to existing conditions only, and (4) apply equally to all
9
members of the same class.

We first determine the purpose of the law. From the very title itself, it is clear that RA 7227
aims primarily to accelerate the conversion of military reservations into productive uses.
Obviously, the "lands covered under the 1947 Military Bases Agreement" are its object. Thus,
the law avows this policy:

Sec. 2. Declaration of Policies. — It is hereby declared the policy of the Government to

accelerate the sound and balanced conversion into alternative productive uses of the Clark
and Subic military reservations and their extensions (John Hay Station, Wallace Air Station,
O'Donnell Transmitter Station, San Miguel Naval Communications Station and Capas Relay
Station), to raise funds by the sale of portions of Metro Manila military camps, and to apply
said funds as provided herein for the development and conversion to productive civilian use of
the lands covered under the 1947 Military Bases Agreement between the Philippines and the
United States of America, as amended.

To undertake the above objectives, the same law created the Bases Conversion and
Development Authority, some of whose relevant defined purposes are:

(b) To adopt, prepare and implement a comprehensive and detailed development plan
embodying a list of projects including but not limited to those provided in the Legislative-
Executive Bases Council (LEBC) framework plan for the sound and balanced conversion of the
Clark and Subic military reservations and their extensions consistent with ecological and
environmental standards, into other productive uses to promote the economic and social
development of Central Luzon in particular and the country in general;

(c). To encourage the active participation of the private sector in transforming the Clark and
Subic military reservations and their extensions into other productive uses;

Further, in creating the SSEZ, the law declared it a policy to develop the zone into a "self-
sustaining, industrial, commercial, financial and investment center." 10

From the above provisions of the law, it can easily be deduced that the real concern of RA
7227 is to convert the lands formerly occupied by the US military bases into economic or
industrial areas. In furtherance of such objective, Congress deemed it necessary to extend
economic incentives to attract and encourage investors, both local and foreign. Among such
enticements are:11 (1) a separate customs territory within the zone, (2) tax-and-duty-free
importation's, (3) restructured income tax rates on business enterprises within the zone, (4) no
foreign exchange control, (5) liberalized regulations on banking and finance, and (6) the grant
of resident status to certain investors and of working visas to certain foreign executives and
workers .

We believe it was reasonable for the President to have delimited the application of some
incentives to the confines of the former Subic military base. It is this specific area which the
government intends to transform and develop from its status quo ante as an abandoned naval
facility into a self-sustaining industrial and commercial zone, particularly for big foreign and
local investors to use as operational bases for their businesses and industries. Why the
seeming bias for the big investors? Undeniably, they are the ones who can pour huge
investments to spur economic growth in the country and to generate employment opportunities
for the Filipinos, the ultimate goals of the government for such conversion. The classification is,
therefore, germane to the purposes of the law. And as the legal maxim goes, "The intent of a
statute is the law."12

Certainly, there are substantial differences between the big investors who are being lured to
establish and operate their industries in the so-called "secured area" and the present business
operators outside the area. On the one hand, we are talking of billion-peso investments and
16
G.R. No. 128845 June 1, 2000
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,
vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary
of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid
more than their colleagues in other schools is, of course, beside the point. The point is that
employees should be given equal pay for work of equal value. That is a principle long honored
in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the
principle we uphold today.1âwphi1.nêt
Private respondent International School, Inc. (the School, for short), pursuant to Presidential
Decree 732, is a domestic educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents. 1 To enable the School to continue
carrying out its educational program and improve its standard of instruction, Section 2(c) of the
same decree authorizes the School to employ its own teaching and management personnel
selected by it either locally or abroad, from Philippine or other nationalities, such personnel
being exempt from otherwise applicable laws and regulations attending their employment,
except laws that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be classified as a foreign-hire or a local
hire:
a. What is one's domicile?
b. Where is one's home economy?
c. To which country does one owe economic allegiance?
d. Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines? 2
Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These
include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic disadvantages" foreign-hires have
to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave his family
and friends, and take the risk of deviating from a promising career path — all for the purpose of
pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is
faced with economic realities: decent abode for oneself and/or for one's family, effective means
of transportation, allowance for the education of one's children, adequate insurance against
illness and death, and of course the primary benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same economic
reality after his term: that he will eventually and inevitably return to his home country where he
will have to confront the uncertainty of obtaining suitable employment after along period in a
foreign land.
The compensation scheme is simply the School's adaptive measure to remain competitive on
an international level in terms of attracting competent professionals in the field of international
education.3
When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members" 4 of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the question of
whether foreign-hires should be included in the appropriate bargaining unit, eventually caused
a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation
and Mediation Board to bring the parties to a compromise prompted the Department of Labor
and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE
Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing
subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997.
Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is discriminatory
to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering
38 in all, with nationalities other than Filipino, who have been hired locally and classified as
local hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received
the same benefits as the Filipino local-hires.
The compensation package given to local-hires has been shown to apply to all, regardless of
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally
as Filipino local hires.6
The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:
The Principle "equal pay for equal work" does not find applications in the present case. The
international character of the School requires the hiring of foreign personnel to deal with
different nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries and benefits accorded to
foreign hired personnel which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to entice them to render their services
in the Philippines and in the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and
other benefits would also require parity in other terms and conditions of employment which
include the employment which include the employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary
and professional compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School has the discretion to recruit and hire
expatriate teachers from abroad, under terms and conditions that are consistent with accepted
international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differential is reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured status of Locally Recruited
Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the difference in the
status of two types of employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws is
not violated by legislation or private covenants based on reasonable classification. A
classification is reasonable if it is based on substantial distinctions and apply to all members of
the same class. Verily, there is a substantial distinction between foreign hires and local hires,
the former enjoying only a limited tenure, having no amenities of their own in the Philippines
and have to be given a good compensation package in order to attract them to join the
teaching faculty of the School.7
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution
and laws reflect the policy against these evils. The Constitution 8 in the Article on Social Justice
and Human Rights exhorts Congress to "give highest priority to the enactment of measures
that protect and enhance the right of all people to human dignity, reduce social, economic, and
political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the
exercise of his rights and in the performance of his duties, [to] act with justice, give everyone
his due, and observe honesty and good faith.
International law, which springs from general principles of law, 9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the general
principles of fairness and justice, based on the test of what is reasonable. 11 The Universal
Declaration of Human Rights, 12 the International Covenant on Economic, Social, and Cultural
Rights, 13 the International Convention on the Elimination of All Forms of Racial
Discrimination, 14 the Convention against Discrimination in Education, 15 the Convention (No.
111) Concerning Discrimination in Respect of Employment and Occupation 16 — all embody
the general principle against discrimination, the very antithesis of fairness and justice. The
Philippines, through its Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution 17 specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace — the factory, the office or the
field — but include as well the manner by which employers treat their employees.
The Constitution 18 also directs the State to promote "equality of employment opportunities for
all." Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities
regardless of sex, race or creed." It would be an affront to both the spirit and letter of these
provisions if the State, in spite of its primordial obligation to promote and ensure equal
employment opportunities, closes its eyes to unequal and discriminatory terms and conditions
of employment. 20
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135,
for example, prohibits and penalizes 21 the payment of lesser compensation to a female
employee as against a male employee for work of equal value. Article 248 declares it an unfair
labor practice for an employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article
7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favourable conditions of work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in
particular women being guaranteed conditions of work not inferior to those enjoyed by men,
with equal pay for equal work;
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. 22 This
rule applies to the School, its "international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the employer
pays one employee less than the rest, it is not for that employee to explain why he receives
less or why the others receive more. That would be adding insult to injury. The employer has
discriminated against that employee; it is for the employer to explain why the employee is
treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National
Labor Relations Commission, 24 we said that:
17
"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation for
services rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires, salaries should not be used
as an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason,
the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for
the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires
are adequately compensated by certain benefits accorded them which are not enjoyed by
local-hires, such as housing, transportation, shipping costs, taxes and home leave travel
allowances.

The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty to
regulate the relations between labor and capital. 27 These relations are not merely contractual
but are so impressed with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good. 28 Should such contracts contain stipulations that are
contrary to public policy, courts will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local hires to be an invalid classification.
There is no reasonable distinction between the services rendered by foreign-hires and local-
hires. The practice of the School of according higher salaries to foreign-hires contravenes
public policy and, certainly, does not deserve the sympathy of this Court.1avvphi1

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-
hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer, indicate to be the
best suited to serve the reciprocal rights and duties of the parties under the collective
29
bargaining provisions of the law." The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status. 30 The basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the combination which will
best assure to all employees the exercise of their collective bargaining rights. 31

It does not appear that foreign-hires have indicated their intention to be grouped together with
local-hires for purposes of collective bargaining. The collective bargaining history in the School
also shows that these groups were always treated separately. Foreign-hires have limited
tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar functions
under the same working conditions as the local-hires, foreign-hires are accorded certain
benefits not granted to local-hires. These benefits, such as housing, transportation, shipping
costs, taxes, and home leave travel allowance, are reasonably related to their status as
foreign-hires, and justify the exclusion of the former from the latter. To include foreign-hires in
a bargaining unit with local-hires would not assure either group the exercise of their respective
collective bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN
PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March
19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of
respondent School of according foreign-hires higher salaries than local-hires.

SO ORDERED.

18

Republic of the Philippines
SUPREME COURT
Baguio City
EN BANC
G.R. No. 132922 April 21, 1998
TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES, INC.
and GMA NETWORK, INC., petitioners,
vs.
THE COMMISSION ON ELECTIONS, respondent.
MENDOZA, J.:
In Osmeña v. COMELEC, G.R. No. 132231, decided March 31, 1998, 1 we upheld the validity
of § 11(b) of R.A. No. 6646 which prohibits the sale or donation of print space or air time for
political ads, except to the Commission on Elections under §90, of B.P. No. 881, the Omnibus
Election Code, with respect to print media, and §92, with respect to broadcast media. In the
present case, we consider the validity of §92 of B.P. Blg. No. 881 against claims that the
requirement that radio and television time be given free takes property without due process of
law; that it violates the eminent domain clause of the Constitution which provides for the
payment of just compensation; that it denies broadcast media the equal protection of the laws;
and that, in any event, it violates the terms of the franchise of petitioner GMA Network, Inc.
Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an
organization of lawyers of radio and television broadcasting companies. They are suing as
citizens, taxpayers, and registered voters. The other petitioner, GMA Network, Inc., operates
radio and television broadcasting stations throughout the Philippines under a franchise granted
by Congress.
Petitioners challenge the validity of §92 on the ground (1) that it takes property without due
process of law and without just compensation; (2) that it denies radio and television broadcast
companies the equal protection of the laws; and (3) that it is in excess of the power given to
the COMELEC to supervise or regulate the operation of media of communication or
information during the period of election.
The Question of Standing
At the threshold of this suit is the question of standing of petitioner Telecommunications and
Broadcast Attorneys of the Philippines, Inc. (TELEBAP). As already noted, its members assert
an interest as lawyers of radio and television broadcasting companies and as citizens,
taxpayers, and registered voters.
In those cases2 in which citizens were authorized to sue, this Court upheld their standing in
view of the "transcendental importance" of the constitutional question raised which justified the
granting of relief. In contrast, in the case at bar, as will presently be shown, petitioner's
substantive claim is without merit. To the extent, therefore, that a party's standing is
determined by the substantive merit of his case or preliminary estimate thereof, petitioner
TELEBAP must be held to be without standing. Indeed, a citizen will be allowed to raise a
constitutional question only when he can show that he has personally suffered some actual or
threatened injury as a result of the allegedly illegal conduct of the government; the injury fairly
is fairly traceable to the challenged action; and the injury is likely to be redressed by a
favorable action.3 Members of petitioner have not shown that they have suffered harm as a
result of the operation of §92 of B.P. Blg. 881.
Nor do members of petitioner TELEBAP have an interest as registered voters since this case
does not concern their right of suffrage. Their interest in §92 of B.P. Blg. 881 should be
precisely in upholding its validity.
Much less do they have an interest as taxpayers since this case does not involve the exercise
by Congress of its taxing or spending power. 4 A party suing as a taxpayer must specifically
show that he has a sufficient interest in preventing the illegal expenditure of money raised by
taxation and that he will sustain a direct injury as a result of the enforcement of the questioned
statute.
Nor indeed as a corporate entity does TELEBAP have standing to assert the rights of radio
and television broadcasting companies. Standing jus tertii will be recognized only if it can be
shown that the party suing has some substantial relation to the third party, or that the third
party cannot assert his constitutional right, or that the eight of the third party will be diluted
unless the party in court is allowed to espouse the third party's constitutional claim. None of
these circumstances is here present. The mere fact that TELEBAP is composed of lawyers in
the broadcast industry does not entitle them to bring this suit in their name as representatives
of the affected companies.
Nevertheless, we have decided to take this case since the other petitioner, GMA Network, Inc.,
appears to have the requisite standing to bring this constitutional challenge. Petitioner
operates radio and television broadcast stations in the Philippines affected by the enforcement
of §92 of B.P. Blg. 881 requiring radio and television broadcast companies to provide free air
time to the COMELEC for the use of candidates for campaign and other political purposes.
Petitioner claims that it suffered losses running to several million pesos in providing COMELEC
Time in connection with the 1992 presidential election and the 1995 senatorial election and
that it stands to suffer even more should it be required to do so again this year. Petitioner's
allegation that it will suffer losses again because it is required to provide free air time is
sufficient to give it standing to question the validity of §92. 5
Airing of COMELEC Time, a Reasonable Condition for Grant of Petitioner's Franchise
As pointed out in our decision in Osmeña v. COMELEC, §11(b) of R.A. No. 6646 and §90 and
§92 of the B.P. Blg. 881 are part and parcel of a regulatory scheme designed to equalize the
opportunity of candidates in an election in regard to the use of mass media for political
campaigns. These statutory provisions state in relevant parts:
R.A. No. 6646
Sec. 11. Prohibited Forms of Election Propaganda. — In addition to the forms of election
propaganda prohibited under Section 85 of Batas Pambansa Blg. 881, it shall be unlawful:
(b) for any newspapers, radio broadcasting or television station, or other mass media, or any
person making use of the mass media to sell or to give free of charge print space or air time for
campaign or other political purposes except to the Commission as provided under Section 90
and 92 of Batas Pambansa Blg. 881. Any mass media columnist, commentator, announcer or
personality who is a candidate for any elective public office shall take a leave of absence from
his work as such during the campaign period.
B.P. Blg. 881, (Omnibus Election Code)
Sec. 90. Comelec space. — The Commission shall procure space in at least one newspaper of
general circulation in every province or city; Provided, however, That in the absence of said
newspaper, publication shall be done in any other magazine or periodical in said province or
city, which shall be known as "Comelec Space" wherein candidates can announce their
candidacy. Said space shall be allocated, free of charge, equally and impartially by the
Commission among all candidates within the area in which the newspaper is circulated. (Sec.
45, 1978 EC).
Sec. 92. Comelec time. — The commission shall procure radio and television time to be known
as "Comelec Time" which shall be allocated equally and impartially among the candidates
within the area of coverage of all radio and television stations. For this purpose, the franchise
of all radio broadcasting and television stations are hereby amended so as to provide radio or
television time, free of charge, during the period of the campaign. (Sec. 46, 1978 EC)
Thus, the law prohibits mass media from selling or donating print space and air time to the
candidates and requires the COMELEC instead to procure print space and air time for
allocation to the candidates. It will be noted that while §90 of B.P. Blg. 881 requires the
COMELEC to procure print space which, as we have held, should be paid for, §92 states that
air time shall be procured by the COMELEC free of charge.
Petitioners contend that §92 of BP Blg. 881 violates the due process clause 6 and the eminent
domain provision7 of the Constitution by taking air time from radio and television broadcasting
stations without payment of just compensation. Petitioners claim that the primary source of
revenue of the radio and television stations is the sale of air time to advertisers and that to
require these stations to provide free air time is to authorize a taking which is not "a de
minimis temporary limitation or restraint upon the use of private property." According to
petitioners, in 1992, the GMA Network, Inc. lost P22,498,560.00 in providing free air time of
one (1) hour every morning from Mondays to Fridays and one (1) hour on Tuesdays and
Thursday from 7:00 to 8:00 p.m. (prime time) and, in this year's elections, it stands to lose
P58,980,850.00 in view of COMELEC'S requirement that radio and television stations provide
at least 30 minutes of prime time daily for the COMELEC Time. 8
Petitioners' argument is without merit, All broadcasting, whether by radio or by television
stations, is licensed by the government. Airwave frequencies have to be allocated as there are
9
more individuals who want to broadcast than there are frequencies to assign. A franchise is
thus a privilege subject, among other things, to amended by Congress in accordance with the
constitutional provision that "any such franchise or right granted . . . shall be subject to
amendment, alteration or repeal by the Congress when the common good so requires." 10
The idea that broadcast stations may be required to provide COMELEC Time free of charge is
not new. It goes back to the Election Code of 1971 (R.A. No. 6388), which provided:
Sec. 49. Regulation of election propaganda through mass media. — (a) The franchise of all
radio broadcasting and television stations are hereby amended so as to require each such
station to furnish free of charge, upon request of the Commission [on Elections], during the
period of sixty days before the election not more than fifteen minutes of prime time once a
week which shall be known as "Comelec Time" and which shall be used exclusively by the
Commission to disseminate vital election information. Said "Comelec Time" shall be
considered as part of the public service time said stations are required to furnish the
Government for the dissemination of public information and education under their respective
franchises or permits.
The provision was carried over with slight modification by the 1978 Election Code (P.D. No.
1296), which provided:
Sec. 46. COMELEC Time. — The Commission [on Elections] shall procure radio and television
time to be known as "COMELEC Time" which shall be allocated equally and impartially among
the candidates within the area of coverage of said radio and television stations. For this
purpose, the franchises of all radio broadcasting and television stations are hereby amended
so as to require such stations to furnish the Commission radio or television time, free of
charge, during the period of the campaign, at least once but not oftener than every other day.
Substantially the same provision is now embodied in §92 of B.P. Blg. 881.
Indeed, provisions for COMELEC Tima have been made by amendment of the franchises of
radio and television broadcast stations and, until the present case was brought, such
provisions had not been thought of as taking property without just compensation. Art. XII, §11
of the Constitution authorizes the amendment of franchises for "the common good." What
better measure can be conceived for the common good than one for free air time for the
benefit not only of candidates but even more of the public, particularly the voters, so that they
will be fully informed of the issues in an election? "[I]t is the right of the viewers and listeners,
not the right of the broadcasters, which is paramount." 11
Nor indeed can there be any constitutional objection to the requirement that broadcast stations
give free air time. Even in the United States, there are responsible scholars who believe that
government controls on broadcast media can constitutionally be instituted to ensure diversity
of views and attention to public affairs to further the system of free expression. For this
purpose, broadcast stations may be required to give free air time to candidates in an
election. 12 Thus, Professor Cass R. Sunstein of the University of Chicago Law School, in
urging reforms in regulations affecting the broadcast industry, writes:
Elections. We could do a lot to improve coverage of electoral campaigns. Most important,
government should ensure free media time for candidates. Almost all European nations make
such provisions; the United States does not. Perhaps government should pay for such time on
its own. Perhaps broadcasters should have to offer it as a condition for receiving a
license. Perhaps a commitment to provide free time would count in favor of the grant of a
license in the first instance. Steps of this sort would simultaneously promote attention to public
affairs and greater diversity of view. They would also help overcome the distorting effects of
"soundbites" and the corrosive financial pressures faced by candidates in seeking time on the
media. 13
In truth, radio and television broadcasting companies, which are given franchises, do not own
the airwaves and frequencies through which they transmit broadcast signals and images. They
are merely given the temporary privilege of using them. Since a franchise is a mere privilege,
the exercise of the privilege may reasonably be burdened with the performance by the grantee
of some form of public service. Thus, in De Villata v. Stanley,14 a regulation requiring
interisland vessels licensed to engage in the interisland trade to carry mail and, for this
purpose, to give advance notice to postal authorities of date and hour of sailings of vessels
and of changes of sailing hours to enable them to tender mail for transportation at the last
practicable hour prior to the vessel's departure, was held to be a reasonable condition for the
state grant of license. Although the question of compensation for the carriage of mail was not
in issue, the Court strongly implied that such service could be without compensation, as in fact
under Spanish sovereignty the mail was carried free.15
In Philippine Long Distance Telephone Company v. NTC,16 the Court ordered the PLDT to
allow the interconnection of its domestic telephone system with the international gateway
facility of Eastern Telecom. The Court cited (1) the provisions of the legislative franchise
allowing such interconnection; (2) the absence of any physical, technical, or economic basis
for restricting the linking up of two separate telephone systems; and (3) the possibility of
increase in the volume of international traffic and more efficient service, at more moderate
cost, as a result of interconnection.
Similarly, in the earlier case of PLDT v. NTC,17 it was held:
19
Such regulation of the use and ownership of telecommunications systems is in the exercise of
the plenary police power of the State for the promotion of the general welfare. The 1987
Constitution recognizes the existence of that power when it provides:
Sec. 6. The use of property bears a social function, and all economic agents shall contribute to
the common good. Individuals and private groups, including corporations, cooperatives, and
similar collective organizations, shall have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote distributive justice and to intervene
when the common good so demands (Article XII).
The interconnection which has been required of PLDT is a form of "intervention" with property
rights dictated by "the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines, . . . to maximize the use of
telecommunications facilities available, . . . in recognition of the vital role of communications in
nation building . . . and to ensure that all users of the public telecommunications service have
access to all other users of the service wherever they may be within the Philippines at an
acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248).
Undoubtedly, the encompassing objective is the common good. The NTC, as the regulatory
agency of the State, merely exercised its delegated authority to regulate the use of
telecommunications networks when it decreed interconnection.
In the granting of the privilege to operate broadcast stations and thereafter supervising radio
and television stations, the state spends considerable public funds in licensing and supervising
such stations. 18 It would be strange if it cannot even require the licensees to render public
service by giving free air time.
Considerable effort is made in the dissent of Mr. Justice Panganiban to show that the
production of television programs involves large expenditure and requires the use of
equipment for which huge investments have to be made. The dissent cites the claim of GMA
Network that the grant of free air time to the COMELEC for the duration of the 1998 campaign
period would cost the company P52,380,000, representing revenue it would otherwise earn if
the air time were sold to advertisers, and the amount of P6,600,850, representing the cost of
producing a program for the COMELEC Time, or the total amount of P58,980,850.
The claim that petitioner would be losing P52,380,000 in unrealized revenue from advertising
is based on the assumption that air time is "finished product" which, it is said, become the
property of the company, like oil produced from refining or similar natural resources after
undergoing a process for their production. But air time is not owned by broadcast companies.
As held in Red Lion Broadcasting Co. v. F.C.C.,19 which upheld the right of a party personally
attacked to reply, "licenses to broadcast do not confer ownership of designated frequencies,
but only the temporary privilege of using them." Consequently, "a license permits broadcasting,
but the license has no constitutional right to be the one who holds the license or to monopolize
a radio frequency to the exclusion of his fellow citizens. There is nothing in the First
Amendment which prevents the Government from requiring a licensee to share his frequency
with others and to conduct himself as a proxy or fiduciary with obligations to present those
views and voices which are representative of his community and which would otherwise, by
necessity, be barred from the airwaves." 20 As radio and television broadcast stations do not
own the airwaves, no private property is taken by the requirement that they provide air time to
the COMELEC.
Justice Panganiban's dissent quotes from Tolentino on the Civil Code which says that "the air
lanes themselves 'are not property because they cannot be appropriated for the benefit of any
individual.'" (p. 5) That means neither the State nor the stations own the air lanes. Yet the
dissent also says that "The franchise holders can recover their huge investments only by
selling air time to advertisers." (p. 13) If air lanes cannot be appropriated, how can they be
used to produce air time which the franchise holders can sell to recover their investment?
There is a contradiction here.
As to the additional amount of P6,600,850, it is claimed that this is the cost of producing a
program and it is for such items as "sets and props," "video tapes," "miscellaneous (other
rental, supplies, transportation, etc.)," and "technical facilities (technical crew such as director
and cameraman as well as 'on air plugs')." There is no basis for this claim. Expenses for these
items will be for the account of the candidates. COMELEC Resolution No. 2983, §6(d)
specifically provides in this connection:
(d) Additional services such as tape-recording or video-taping of programs, the preparation of
visual aids, terms and condition thereof, and consideration to be paid therefor may be
arranged by the candidates with the radio/television station concerned. However, no
radio/television station shall make any discrimination among candidates relative to charges,
terms, practices or facilities for in connection with the services rendered.
It is unfortunate that in the effort to show that there is taking of private property worth millions
of pesos, the unsubstantiated charge is made that by its decision the Court permits the "grand
larceny of precious time," and allows itself to become "the people's unwitting oppressor." The
charge is really unfortunate. In Jackson v. Rosenbaun,21 Justice Holmes was so incensed by
the resistance of property owners to the erection of party walls that he was led to say in his
original draft, "a statute, which embodies the community's understanding of the reciprocal
rights and duties of neighboring landowners, does not need to invoke the penalty larceny of the
police power in its justification." Holmes's brethren corrected his taste, and Holmes had to
amend the passage so that in the end it spoke only of invoking "the police power." 22 Justice
Holmes spoke of the "petty larceny" of the police power. Now we are being told of the "grand
larceny [by means of the police power] of precious air time."
Giving Free Air Time a Duty Assumed by Petitioner
Petitioners claim that §92 is an invalid amendment of R.A. No. 7252 which granted GMA
Network, Inc. a franchise for the operation of radio and television broadcasting stations. They
argue that although §5 of R.A. No. 7252 gives the government the power to temporarily use
and operate the stations of petitioner GMA Network or to authorize such use and operation,
the exercise of this right must be compensated.
The cited provision of. R.A. No. 7252 states:
Sec. 5. Right of Government. — A special right is hereby reserved to the President of the
Philippines, in times of rebellion, public peril, calamity, emergency, disaster or disturbance of
peace and order, to temporarily take over and operate the stations of the grantee, to
temporarily suspend the operation of any station in the interest of public safety, security and
public welfare, or to authorize the temporary use and operation thereof by any agency of the
Government, upon due compensation to the grantee, for the use of said stations during the
period when they shall be so operated.
The basic flaw in petitioner's argument is that it assumes that the provision for COMELEC
Time constitutes the use and operation of the stations of the GMA Network, Inc., This is not so.
Under §92 of B.P. Blg. 881, the COMELEC does not take over the operation of radio and
television stations but only the allocation of air time to the candidates for the purpose of
ensuring, among other things, equal opportunity, time, and the right to reply as mandated by
the Constitution.23
Indeed, it is wrong to claim an amendment of petitioner's franchise for the reason that B.P. Blg.
881, which is said to have amended R.A. No. 7252, actually antedated it. 24 The provision of
§92 of B.P. Blg. 881 must be deemed instead to be incorporated in R.A. No. 7252. And,
indeed, §4 of the latter statute does.
For the fact is that the duty imposed on the GMA Network, Inc. by its franchise to render
"adequate public service time" implements §92 of B.P. Blg. 881. Undoubtedly, its purpose is to
enable the government to communicate with the people on matters of public interest. Thus,
R.A. No. 7252 provides:
Sec. 4. Responsibility to the Public. — The grantee shall provide adequate public service time
to enable the Government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public information
and education; conform to the ethics of honest enterprise; and not use its station for the
broadcasting of obscene and indecent language, speech, act or scene, or for the
dissemination of deliberately false information or willful misrepresentation, or to the detriment
of the public interest, or to incite, encourage, or assist in subversive or treasonable acts.
(Emphasis added).
It is noteworthy that §40 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken,
expressly provided that the COMELEC Time should "be considered as part of the public
service time said stations are required to furnish the Government for the dissemination of
public information and education under their respective franchises or permits." There is no
reason to suppose that §92 of B.P. Blg. 881 considers the COMELEC Time therein provided to
be otherwise than as a public service which petitioner is required to render under §4 of its
charter (R.A. No. 7252). In sum, B.P. Blg. 881, §92 is not an invalid amendment of petitioner's
franchise but the enforcement of a duty voluntarily assumed by petitioner in accepting a public
grant of privilege.
Thus far, we have confined the discussion to the provision of §92 of B.P. Blg. 881 for free air
time without taking into account COMELEC Resolution No. 2983-A, §2 of which states:
Sec. 2. Grant of "Comelec Time." — Every radio broadcasting and television station operating
under franchise shall grant the Commission, upon payment of just compensation, at least thirty
(30) minutes of prime time daily, to be known as "Comelec Time", effective February 10, 1998
for candidates for President, Vice-President and Senators, and effective March 27, 1998, for
candidates for local elective offices, until May 9, 1998. (Emphasis added).
This is because the amendment providing for the payment of "just compensation" is invalid,
being in contravention of §92 of B.P. Blg. 881 that radio and television time given during the
period of the campaign shall be "free of charge." Indeed, Resolution No. 2983 originally
provided that the time allocated shall be "free of charge," just as §92 requires such time to be
given "free of charge." The amendment appears to be a reaction to petitioner's claim in this
case that the original provision was unconstitutional because it allegedly authorized the taking
of property without just compensation.
The Solicitor General, relying on the amendment, claims that there should be no more dispute
because the payment of compensation is now provided for. It is basic, however, that an
administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress.
Since §2 of Resolution No. 2983-A is invalid, it cannot be invoked by the parties.
Law Allows Flextime for Programming by Stations, Not Confiscation of Air Time by COMELEC
It is claimed that there is no standard in the law to guide the COMELEC in procuring free air
time and that "theoretically the COMELEC can demand all of the air time of such
stations."25 Petitioners do not claim that COMELEC Resolution No. 2983-A arbitrarily
sequesters radio and television time. What they claim is that because of the breadth of the
statutory language, the provision in question is susceptible of "unbridled, arbitrary and
oppressive exercise."26
The contention has no basis. For one, the COMELEC is required to procure free air time for
candidates "within the area of coverage" of a particular radio or television broadcaster so that it
cannot, for example, procure such time for candidates outside that area. At what time of the
day and how much time the COMELEC may procure will have to be determined by it in relation
to the overall objective of informing the public about the candidates, their qualifications and
their programs of government. As stated in Osmeña v. COMELEC, the COMELEC Time
provided for in §92, as well as the COMELEC Space provided for in §90, is in lieu of paid ads
which candidates are prohibited to have under §11(b) of R.A. No. 6646. Accordingly, this
objective must be kept in mind in determining the details of the COMELEC Time as well as
those of the COMELEC Space.
There would indeed be objection to the grant of power to the COMELEC if §92 were so
detailed as to leave no room for accommodation of the demands of radio and television
programming. For were that the case, there could be an intrusion into the editorial prerogatives
of radio and television stations.
Differential Treatment of Broadcast Media Justified
Petitioners complain that B.P. Blg. 881, §92 singles out radio and television stations to provide
free air time. They contend that newspapers and magazines are not similarly required as, in
fact, in Philippine Press Institute v. COMELEC,27 we upheld their right to the payment of just
compensation for the print space they may provide under §90.
The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to
the same treatment under the free speech guarantee of the Constitution as the print media.
There are important differences in the characteristics of the two media, however, which justify
their differential treatment for free speech purposes. Because of the physical limitations of the
broadcast spectrum, the government must, of necessity, allocate broadcast frequencies to
those wishing to use them. There is no similar justification for government allocation and
regulation of the print media.28
In the allocation of limited resources, relevant conditions may validly be imposed on the
grantees or licensees. The reason for this is that, as already noted, the government spends
public funds for the allocation and regulation of the broadcast industry, which it does not do in
the case of the print media. To require the radio and television broadcast industry to provide
free air time for the COMELEC Time is a fair exchange for what the industry gets.
From another point of view, this Court has also held that because of the unique and pervasive
influence of the broadcast media, "[n]ecessarily . . . the freedom of television and radio
broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print
media."29
The broadcast media have also established a uniquely pervasive presence in the lives of all
Filipinos. Newspapers and current books are found only in metropolitan areas and in the
poblaciones of municipalities accessible to fast and regular transportation. Even here, there
are low income masses who find the cost of books, newspapers, and magazines beyond their
humble means. Basic needs like food and shelter perforce enjoy high priorities.
On the other hand, the transistor radio is found everywhere. The television set is also
becoming universal. Their message may be simultaneously received by a national or regional
audience of listeners including the indifferent or unwilling who happen to be within reach of a
blaring radio or television set. The materials broadcast over the airwaves reach every person
of every age, persons of varying susceptibilities to persuasion, persons of different I.Q.s and
mental capabilities, persons whose reactions to inflammatory or offensive speech would he
difficult to monitor or predict. The impact of the vibrant speech is forceful and immediate.
Unlike readers of the printed work, the radio audience has lesser opportunity to cogitate,
analyze, and reject the utterance. 30
Petitioners' assertion therefore that §92 of B.P. Blg. 881 denies them the equal protection of
the law has no basis. In addition, their plea that §92 (free air time) and §11(b) of R.A. No. 6646
20
(ban on paid political ads) should be invalidated would pave the way for a return to the old
regime where moneyed candidates could monopolize media advertising to the disadvantage of
candidates with less resources. That is what Congress tried to reform in 1987 with the
enactment of R.A. No. 6646. We are not free to set aside the judgment of Congress, especially
in light of the recent failure of interested parties to have the law repealed or at least modified.

Requirement of COMELEC Time, a Reasonable Exercise of the State's Power to Regulate

Use of Franchises

Finally, it is argued that the power to supervise or regulate given to the COMELEC under Art.
IX-C, §4 of the Constitution does not include the power to prohibit. In the first place, what the
COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution,31 among
other things, is the use by media of information of their franchises or permits, while what
Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for
political ads. In other words, the object of supervision or regulation is different from the object
of the prohibition. It is another fallacy for petitioners to contend that the power to regulate does
not include the power to prohibit. This may have force if the object of the power were the
same.

In the second place, the prohibition in §11(b) of R.A. No. 6646 is only half of the regulatory
provision in the statute. The other half is the mandate to the COMELEC to procure print space
and air time for allocation to candidates. As we said in Osmeña v. COMELEC:

The term political "ad ban" when used to describe §11(b) of R.A. No. 6646, is misleading, for
even as §11(b) prohibits the sale or donation of print space and air time to political candidates,
it mandates the COMELEC to procure and itself allocate to the candidates space and time in
the media. There is no suppression of political ads but only a regulation of the time and
manner of advertising.

. . . What is involved here is simply regulation of this nature. Instead of leaving candidates to
advertise freely in the mass media, the law provides for allocation, by the COMELEC of print
space and air time to give all candidates equal time and space for the purpose of ensuring
"free, orderly, honest, peaceful, and credible elections."

With the prohibition on media advertising by candidates themselves, the COMELEC Time and
COMELEC Space are about the only means through which candidates can advertise their
qualifications and programs of government. More than merely depriving their qualifications and
programs of government. More than merely depriving candidates of time for their ads, the
failure of broadcast stations to provide air time unless paid by the government would clearly
deprive the people of their right to know. Art III, §7 of the Constitution provides that "the right of
the people to information on matters of public concern shall be recognized," while Art. XII, §6
states that "the use of property bears a social function [and] the right to own, establish, and
operate economic enterprises [is] subject to the duty of the State to promote distributive justice
and to intervene when the common good so demands."

To affirm the validity of §92 of B.P. Blg. 881 is to hold public broadcasters to their obligation to
see to it that the variety and vigor of public debate on issues in an election is maintained. For
while broadcast media are not mere common carriers but entities with free speech rights, they
are also public trustees charged with the duty of ensuring that the people have access to the
diversity of views on political issues. This right of the people is paramount to the autonomy of
broadcast media. To affirm the validity of §92, therefore, is likewise to uphold the people's right
to information on matters of public concern. The use of property bears a social function and is
subject to the state's duty to intervene for the common good. Broadcast media can find their
just and highest reward in the fact that whatever altruistic service they may render in
connection with the holding of elections is for that common good.

For the foregoing reasons, the petition is dismissed.

SO ORDERED.

21
 Republic of the Philippines
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
SUPREME COURT
Manila
25,382.23

EN BANC Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010

G.R. No. 167614 March 24, 2009 11
TOTAL CLAIM US$ 26,442.73

ANTONIO M. SERRANO, Petitioner,

vs. as well as moral and exemplary damages and attorney's fees.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal
DECISION and awarding him monetary benefits, to wit:

AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities out of
poverty. Their earnings have built houses, provided health care, equipped schools and planted
the seeds of businesses. They have woven together the world by transmitting ideas and
knowledge from country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to understand not only
how much international migration impacts development, but how smart public policies can
magnify this effect.
United Nations Secretary-General Ban Ki-Moon Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of
Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their entitlement
in case of illegal dismissal to their lump-sum salary either for the unexpired portion of their
employment contract "or for three months for every year of the unexpired term, whichever is
less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional
rights in that it impairs the terms of their contract, deprives them of equal protection and denies
them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which
applied the subject clause, entreating this Court to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved
Contract of Employment with the following terms and conditions:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal
of the complainant (petitioner) by the respondents in the above-entitled case was illegal and
the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally, in
Philippine Currency, based on the rate of exchange prevailing at the time of payment, the
amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US
$8,770.00), representing the complainant’s salary for three (3) months of the unexpired
portion of the aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally,
in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the
amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim
for a salary differential. In addition, the respondents are hereby ordered to pay the
complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the
time of payment, the complainant’s (petitioner's) claim for attorney’s fees equivalent to ten
percent (10%) of the total amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for
lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on
the salary period of three months only -- rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract - applying the subject clause.
However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month,
vacation leave pay = US$2,590.00/compensation per month." 14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the
finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations
Commission 17 that in case of illegal dismissal, OFWs are entitled to their salaries for the
unexpired portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

Duration of contract 12 months WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby
ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate
of exchange at the time of payment the following:
Position Chief Officer

Basic monthly salary US$1,400.00 1. Three (3) months salary

$1,400 x 3 US$4,200.00
Hours of work 48.0 hours per week
2. Salary differential 45.00
Overtime US$700.00 per month
US$4,245.00
5
Vacation leave with pay 7.00 days per month 3. 10% Attorney’s fees 424.50

TOTAL US$4,669.50

On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly salary of
US$1,000.00, upon the assurance and representation of respondents that he would be made The other findings are affirmed.
Chief Officer by the end of April 1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence,
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May
26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to
March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2)
months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and
twenty-three (23) days.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay." 20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22

Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73, broken Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge
down as follows: against the subject clause.24 After initially dismissing the petition on a technicality, the CA
eventually gave due course to it, as directed by this Court in its Resolution dated August 7,
2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of
June 01/30, 1998 2,590.00 the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner.25
July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00 His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause
to this Court on the following grounds:
Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00 I

Nov. 01/30, 1998 2,590.00

The Court of Appeals and the labor tribunals have decided the case in a way not in accord with
Dec. 01/31, 1998 2,590.00 applicable decision of the Supreme Court involving similar issue of granting unto the migrant
worker back wages equal to the unexpired portion of his contract of employment instead of
Jan. 01/31, 1999 2,590.00 limiting it to three (3) months

Feb. 01/28, 1999 2,590.00

II

22
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their
interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals
gravely erred in law when it failed to discharge its judicial duty to decide questions of
substance not theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas
workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042,
the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime pay
and vacation pay provided in his contract since under the contract they form part of his
salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old
and sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to
allow partial execution of the undisputed monetary award and, at the same time, praying that
the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up the
full merit of the petition mindful of the extreme importance of the constitutional question raised
therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is
not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner
in all three fora. What remains disputed is only the computation of the lump-sum salary to be
awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner
at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired
portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the
US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total
of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his
employment contract, computed at the monthly rate of US$2,590.00. 31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package.32 It also impinges on the equal
protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers when their
dismissal is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups; 33 and that it defeats Section 18,34 Article II of
the Constitution which guarantees the protection of the rights and welfare of all Filipino
workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line
with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though
there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance
36
of affected OFWs.
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves
no other purpose but to benefit local placement agencies. He marks the statement made by
the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims
in the event that jurisdiction over the foreign employer is not acquired by the court or if the
foreign employer reneges on its obligation. Hence, placement agencies that are in good faith
and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No.
8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject
clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers
better off than local employers because in cases involving the illegal dismissal of employees,
foreign employers are liable for salaries covering a maximum of only three months of the
unexpired employment contract while local employers are liable for the full lump-sum salaries
of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following well-
entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the maximum of
three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can
be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives
him of the salaries and other emoluments he is entitled to under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should
not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,
and not at the earliest opportunity, which was when he filed an appeal before the NLRC. 40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its
provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No.
8042 having preceded petitioner's contract, the provisions thereof are deemed part of the
minimum terms of petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or
against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v.
National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG posits
that there are rights and privileges exclusive to local workers, but not available to OFWs; that
these peculiarities make for a reasonable and valid basis for the differentiated treatment under
the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the
provision does not violate the equal protection clause nor Section 18, Article II of the
Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit
of the migrant workers whose welfare the government seeks to promote. The survival of
legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-
equals, such as the Congress, it does so only when these conditions obtain: (1) that there is an
actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party 48 and at the
earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50 otherwise the Court will dismiss the case or decide the same on some other ground. 51
Without a doubt, there exists in this case an actual controversy directly involving petitioner who
is personally aggrieved that the labor tribunals and the CA computed his monetary award
based on the salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that
a constitutional issue be raised at the earliest opportunity entails the interposition of the issue
in the pleadings before a competent court, such that, if the issue is not raised in the pleadings
before that competent court, it cannot be considered at the trial and, if not considered in the
52
trial, it cannot be considered on appeal. Records disclose that the issue on the
constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC,
but in his Motion for Partial Reconsideration with said labor tribunal, 53 and reiterated in his
Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the constitutional
issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function – its function
in the present case is limited to determining questions of fact to which the legislative policy of
R.A. No. 8042 is to be applied and to resolving such questions in accordance with the
standards laid down by the law itself; 55 thus, its foremost function is to administer and enforce
R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand,
is vested with the power of judicial review or the power to declare unconstitutional a law or a
provision thereof, such as the subject clause.56 Petitioner's interposition of the constitutional
issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to
take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire
unexpired portion of his 12-month employment contract, and not just for a period of three
months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10, Article III of the Constitution on non-impairment of
contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract
on the term of his employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58 and cannot affect acts or contracts already perfected; 59 however, as to
laws already in existence, their provisions are read into contracts and deemed a part
thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application
to laws about to be enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998. Hence, it
cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment
contract of the parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was
enacted in the exercise of the police power of the State to regulate a business, profession or
calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may be
employed.61 Police power legislations adopted by the State to promote the health, morals,
peace, education, good order, safety, and general welfare of the people are generally
applicable not only to future contracts but even to those already in existence, for all private
contracts must yield to the superior and legitimate measures taken by the State to promote
public welfare.62
Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article
II and Section 3, Article XIII on labor as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any
person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed by
workers of similar category, while all monetary obligations should be borne by them in equal
degree; none should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances. 65
23
Such rights are not absolute but subject to the inherent power of Congress to incorporate,
when it sees fit, a system of classification into its legislation; however, to be valid, the
classification must comply with these requirements: 1) it is based on substantial distinctions; 2)
it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it
applies equally to all members of the class.66
Third, OFWs vis-à-vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more

There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a legitimate
state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show
that the challenged classification serves an important state interest and that the classification is
at least substantially related to serving that interest; 68 and c) strict judicial scrutiny69 in which a
legislative classification which impermissibly interferes with the exercise of a fundamental
right70 or operates to the peculiar disadvantage of a suspect class 71 is presumed
unconstitutional, and the burden is upon the government to prove that the classification is
necessary to achieve a compelling state interest and that it is the least restrictive means to
protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn along
income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the constitutionality of a provision
in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution
(GFI), was challenged for maintaining its rank-and-file employees under the Salary
Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately employed the
standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its judicial
philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies
should be accorded recognition and respect by the courts of justice except when they run afoul
of the Constitution. The deference stops where the classification violates a fundamental right,
or prejudices persons accorded special protection by the Constitution. When these
violations arise, this Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to constitutional limitations.
Rational basis should not suffice.
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79 (Second Division, 1999) that the Court laid down the following rules
on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an
illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired
portion of his employment contract or three (3) months’ salary for every year of the
unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more. This is evident from the words
"for every year of the unexpired term" which follows the words "salaries x x x for three
months." To follow petitioners’ thinking that private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is to completely disregard and overlook
some words used in the statute while giving effect to some. This is contrary to the well-
established rule in legal hermeneutics that in interpreting a statute, care should be taken that
every part or word thereof be given effect since the law-making body is presumed to know the
meaning of the words employed in the statue and to have used them advisedly. Ut res magis
valeat quam pereat.80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings
on Section 10(5). One was Asian Center for Career and Employment System and Services v.
National Labor Relations Commission (Second Division, October 1998),81 which involved an
OFW who was awarded a two-year employment contract, but was dismissed after working for
one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00
as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal,
the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being
the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without
just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this
jurisdiction. At best, they are persuasive and have been used to support many of our
decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through
the employment of our own endowments. We live in a different ambience and must decide our
own problems in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must
be construed in accordance with the intention of our own lawmakers and such intent may be
deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is the
be-all and the end-all of all our laws. And it need not be stressed that our public interest is
distinct and different from others.
In the case at bar, the unexpired portion of private respondent’s employment contract is eight
(8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600.82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission (Third Division, December 1998),83 which involved an OFW (therein respondent
Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed
for another 12 months. After serving for one year and seven-and-a-half months, respondent
Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired
portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Further, the quest for a better and more "equal" world calls for the use of equal protection as a
tool of effective judicial intervention.
Case Title Contract Period of Unexpired Period Period Applied in
Period Service the Computation
Equality is one ideal which cries out for bold attention and action in the Constitution. The of the Monetary
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in Award
Philippine society. The command to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated in Article XIII, are clear commands to the Skippers v. 6 months 2 months 4 months 4 months
State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Maguad84
Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards
achieving a reasonable measure of equality.
Bahia Shipping 9 months 8 months 4 months 4 months
v. Reynaldo
Chua 85
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane Centennial 9 months 4 months 5 months 5 months
justification that those with less privilege in life should have more in law. And the obligation to Transmarine v.
afford protection to labor is incumbent not only on the legislative and executive branches but dela Cruz l86
also on the judiciary to translate this pledge into a living reality. Social justice calls for the
humanization of laws and the equalization of social and economic forces by the State so that Talidano v. 12 3 months 9 months 3 months
justice in its rational and objectively secular conception may at least be approximated. Falcon87 months

Univan v. 12 3 months 9 months 3 months

Under most circumstances, the Court will exercise judicial restraint in deciding questions of CA 88 months
constitutionality, recognizing the broad discretion given to Congress in exercising its legislative
power. Judicial scrutiny would be based on the "rational basis" test, and the legislative
discretion would be given deferential treatment. Oriental v. 12 more than 10 months 3 months
CA 89 months 2 months

But if the challenge to the statute is premised on the denial of a fundamental right, or the PCL v. NLRC90 12 more than more or less 9 3 months
perpetuation of prejudice against persons favored by the Constitution with special months 2 months months
protection, judicial scrutiny ought to be more strict. A weak and watered down view would
call for the abdication of this Court’s solemn duty to strike down any law repugnant to the Olarte v. 12 21 days 11 months and 9 3 months
Constitution and the rights it enshrines. This is true whether the actor committing the Nayona91 months days
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
JSS v.Ferrer92 12 16 days 11 months and 24 3 months
months days
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-
employee status. It is akin to a distinction based on economic class and status, with the higher Pentagon v. 12 9 months 2 months and 23 2 months and 23
grades as recipients of a benefit specifically withheld from the lower grades. Officers of the Adelantar93 months and 7 days days days
BSP now receive higher compensation packages that are competitive with the industry, while
the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The Phil. Employ v. 12 10 months 2 months Unexpired portion
implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented Paramio, et months
rates of the SSL while employees higher in rank - possessing higher and better education and al.94
opportunities for career advancement - are given higher compensation packages to entice
them to stay. Considering that majority, if not all, the rank-and-file employees consist of people Flourish 2 years 26 days 23 months and 4 6 months or 3
whose status and rank in life are less and limited, especially in terms of job marketability, it is
Maritime v. days months for each
they - and not the officers - who have the real economic and financial need for the adjustment . Almanzor 95 year of contract
This is in accord with the policy of the Constitution "to free the people from poverty, provide
adequate social services, extend to them a decent standard of living, and improve the quality
of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves Athenna 1 year, 10 1 month 1 year, 9 months and 6 months or 3
strict scrutiny by this Court before it can pass muster. (Emphasis supplied) Manpower v. months 28 days months for each
Villanos 96 and 28 year of contract
days
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the subject
clause a suspect classification prejudicial to OFWs.
As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories.
The first category includes OFWs with fixed-period employment contracts of less than one
year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
portion of their contract. The second category consists of OFWs with fixed-period employment
However, a closer examination reveals that the subject clause has a discriminatory intent
contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award
against, and an invidious impact on, OFWs at two levels:
equivalent to only 3 months of the unexpired portion of their contracts.

First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the
contracts of one year or more;
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his
salaries for the remaining 4 months. In contrast, the respondent OFWs
in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts
Second, among OFWs with employment contracts of more than one year; and
24
 were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even
the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months
out of their 12-month contracts before being illegally dismissed were awarded their salaries for
only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical
OFW-B with an employment contract of 15 months with the same monthly salary rate of
US$1,000.00. Both commenced work on the same day and under the same employer, and
were illegally dismissed after one month of work. Under the subject clause, OFW-A will be
entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract,
whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of
the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14
months of his contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account jurisprudence
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs,
no matter how long the period of their employment contracts, were entitled to their salaries for
the entire unexpired portions of their contracts. The matrix below speaks for itself:
Case Title Contract Period of Service Unexpired Period Period Applied in
Period the Computation
of the Monetary
Award
ATCI v. CA, et al.98 2 years 2 months 22 months 22 months
Phil. Integrated v. 2 years 7 days 23 months and 23 23 months and 23
NLRC99 days days
JGB v. NLC100 2 years 9 months 15 months 15 months
101
Agoy v. NLRC 2 years 2 months 22 months 22 months
EDI v. NLRC, et 2 years 5 months 19 months 19 months
al.102
Barros v. NLRC, et 12 months 4 months 8 months 8 months
al.103
Philippine 12 months 6 months and 22 5 months and 18 5 months and 18
Transmarine v. days days days
Carilla104
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in
case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their
basic salaries multiplied by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired portion
of one year or more and subjecting them to the peculiar disadvantage of having their monetary
awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is
less, but all the while sparing the other category from such prejudice, simply because the
latter's unexpired contracts fall short of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has
misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the unexpired
term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By
its ordinary meaning, the word "term" means a limited or definite extent of time. 105 Corollarily,
that "every year" is but part of an "unexpired term" is significant in many ways: first, the
unexpired term must be at least one year, for if it were any shorter, there would be no occasion
for such unexpired term to be measured by every year; and second, the original term must be
more than one year, for otherwise, whatever would be the unexpired term thereof will not reach
even a year. Consequently, the more decisive factor in the determination of when the subject
clause "for three (3) months for every year of the unexpired term, whichever is less" shall apply
is not the length of the original contract period as held in Marsaman,106 but the length of the
unexpired portion of the contract period -- the subject clause applies in cases when the
unexpired portion of the contract period is at least one year, which arithmetically requires that
the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally dismissed with less
than one year left in their contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one year or more remaining in
their contracts shall be covered by the subject clause, and their monetary benefits limited to
their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the
Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a
salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and
OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser amount of
US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the
contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there
are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired
portion.
OFWs vis-à-vis Local Workers With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the
Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees
should have been made of a fixed period, none of the contracting parties, without the consent
of the other, may withdraw from the fulfillment of said contract until the termination of the
period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with
the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine
the liability of a shipping company for the illegal discharge of its managers prior to the
expiration of their fixed-term employment. The Court therein held the shipping company liable
for the salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be
for a definite period or voyage, they cannot be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness,
and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence allowance of
its illegally dismissed employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and
for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment
of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a
conjunctive "and" so as to apply the provision to local workers who are employed for a time
certain although for no particular skill. This interpretation of Article 1586 was reiterated in
Garcia Palomar v. Hotel de France Company. 113 And in both Lemoine and Palomar, the Court
adopted the general principle that in actions for wrongful discharge founded on Article 1586,
local workers are entitled to recover damages to the extent of the amount stipulated to be paid
to them by the terms of their contract. On the computation of the amount of such damages, the
Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to
our attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully
discharged it is his duty to seek other employment of the same kind in the same community,
for the purpose of reducing the damages resulting from such wrongful discharge. However,
while this is the general rule, the burden of showing that he failed to make an effort to secure
other employment of a like nature, and that other employment of a like nature was obtainable,
is upon the defendant. When an employee is wrongfully discharged under a contract of
employment his prima facie damage is the amount which he would be entitled to had he
continued in such employment until the termination of the period. (Howard vs. Daly, 61 N. Y.,
362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract
of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV. 116 Much like
Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly
provide for the remedies available to a fixed-term worker who is illegally discharged. However,
it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court carried over the
principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and
applied the same to a case involving the illegal discharge of a local worker whose fixed-period
employment contract was entered into in 1952, when the new Civil Code was already in
effect.118
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in First
Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor
Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed
term of two years, but who was illegally dismissed after only nine months on the job -- the
Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract.
In Asia World Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino working
as a security officer in 1989 in Angola was awarded his salaries for the remaining period of his
12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v.
National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut
short in the second month was declared entitled to his salaries for the remaining 10 months of
his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
illegally discharged were treated alike in terms of the computation of their money claims: they
were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But
with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally
dismissed OFWs with an unexpired portion of one year or more in their employment contract
have since been differently treated in that their money claims are subject to a 3-month cap,
whereas no such limitation is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that, in
the computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion
of one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification
of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history. 124 It is akin to the paramount interest of
the state125 for which some individual liberties must give way, such as the public interest in
safeguarding health or maintaining medical standards, 126 or in maintaining access to
information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state interest
that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic],
Filipino seafarers have better chance of getting hired by foreign employers." The limitation also
protects the interest of local placement agencies, which otherwise may be made to shoulder
millions of pesos in "termination pay." 128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims
in the event that jurisdiction over the foreign employer is not acquired by the court or if the
foreign employer reneges on its obligation. Hence, placement agencies that are in good faith
and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
25
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under decent and
humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the
speech makes no reference to the underlying reason for the adoption of the subject clause.
That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to
wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of the
complaint, the claim arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas employment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under
this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive
of damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such compromise
or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this Section
shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office for five
(5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability
which any such official may have incurred under other existing laws or rules and regulations as
a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of
money claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined
the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state
interest, let alone a compelling one, that is sought to be protected or advanced by the adoption
of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against OFWs
under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous
and cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private businesses such as
placement agencies, while the disadvantaged sector is composed of OFWs whose protection
no less than the Constitution commands. The idea that private business interest can be
elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in place
that can be employed to achieve that purpose without infringing on the constitutional rights of
OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers and/or
their Philippine agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary
measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding
local placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the
right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly
violates state policy on labor under Section 3,131 Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there are
some which this Court has declared not judicially enforceable, Article XIII being
one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National
Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed
as self-executing in the sense that these are automatically acknowledged and observed
without need for any enabling legislation. However, to declare that the constitutional provisions
are enough to guarantee the full exercise of the rights embodied therein, and the realization of
ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view
presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full
protection to labor" and "security of tenure", when examined in isolation, are facially
unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor
against any form of removal regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly
within the contemplation of the framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection and promotion, not only the
rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at
least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause owing to
the failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights,
for the violation of which the questioned clause may be declared unconstitutional. It may
unwittingly risk opening the floodgates of litigation to every worker or union over every
conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class
any actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial recognition.
Its utility is best limited to being an impetus not just for the executive and legislative
departments, but for the judiciary as well, to protect the welfare of the working class. And it
was in fact consistent with that constitutional agenda that the Court in Central Bank (now
Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated
the judicial precept that when the challenge to a statute is premised on the perpetuation of
prejudice against persons favored by the Constitution with special protection -- such as the
working class or a section thereof -- the Court may recognize the existence of a suspect
classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated
in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a
groundless apprehension. Central Bank applied Article XIII in conjunction with the equal
protection clause. Article XIII, by itself, without the application of the equal protection clause,
has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting
the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them
a better chance of getting hired by foreign employers. This is plain speculation. As earlier
discussed, there is nothing in the text of the law or the records of the deliberations leading to
its enactment or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for
that precise reason that the clause violates not just petitioner's right to equal protection, but
also her right to substantive due process under Section 1, 137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his employment contract, pursuant to law and
jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the
computation of his monetary award, because these are fixed benefits that have been stipulated
into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work "performed"
in excess of the regular eight hours, and holiday pay is compensation for any work "performed"
on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that he
performed work during those periods. As the Court held in Centennial Transmarine, Inc. v.
Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our ruling
in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to such benefit must
first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is
unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for
every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of
Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that
petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per
month.
No costs.
SO ORDERED.
26
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 179267 June 25, 2013
JESUS C. GARCIA, Petitioner,
vs.
THE HONORABLE RAY ALAN T. DRILON, Presiding Judge, Regional Trial Court-Branch
41, Bacolod City, and ROSALIE JAYPE-GARCIA, for herself and in behalf of minor
children, namely: JO-ANN, JOSEPH EDUARD, JESSE ANTHONE, all surnamed
GARCIA, Respondents.
DECISION
PERLAS-BERNABE, J.:
Hailed as the bastion of Christianity in Asia, the Philippines boasts of 86.8 million Filipinos- or
93 percent of a total population of 93.3 million – adhering to the teachings of Jesus
Christ.1 Yet, the admonition for husbands to love their wives as their own bodies just as Christ
loved the church and gave himself up for her 2 failed to prevent, or even to curb, the
pervasiveness of violence against Filipino women. The National Commission on the Role of
Filipino Women (NCRFW) reported that, for the years 2000-2003, "female violence comprised
more than 90o/o of all forms of abuse and violence and more than 90% of these reported
cases were committed by the women's intimate partners such as their husbands and live-in
partners."3
Thus, on March 8, 2004, after nine (9) years of spirited advocacy by women's groups,
Congress enacted Republic Act (R.A.) No. 9262, entitled "An Act Defining Violence Against
Women and Their Children, Providing for Protective Measures for Victims, Prescribing
Penalties Therefor, and for Other Purposes." It took effect on March 27, 2004. 4
R.A. 9262 is a landmark legislation that defines and criminalizes acts of violence against
women and their children (VAWC) perpetrated by women's intimate partners, i.e, husband;
former husband; or any person who has or had a sexual or dating relationship, or with whom
the woman has a common child.5 The law provides for protection orders from the barangay
and the courts to prevent the commission of further acts of VAWC; and outlines the duties and
responsibilities of barangay officials, law enforcers, prosecutors and court personnel, social
workers, health care providers, and other local government officials in responding to
complaints of VAWC or requests for assistance.
A husband is now before the Court assailing the constitutionality of R.A. 9262 as being
violative of the equal protection and due process clauses, and an undue delegation of judicial
power to barangay officials.
The Factual Antecedents
On March 23, 2006, Rosalie Jaype-Garcia (private respondent) filed, for herself and in behalf
of her minor children, a verified petition 6 (Civil Case No. 06-797) before the Regional Trial
Court (RTC) of Bacolod City for the issuance of a Temporary Protection Order (TPO) against
her husband, Jesus C. Garcia (petitioner), pursuant to R.A. 9262. She claimed to be a victim of
physical abuse; emotional, psychological, and economic violence as a result of marital infidelity
on the part of petitioner, with threats of deprivation of custody of her children and of financial
support.7
Private respondent's claims
Private respondent married petitioner in 2002 when she was 34 years old and the former was
eleven years her senior. They have three (3) children, namely: Jo-Ann J. Garcia, 17 years old,
who is the natural child of petitioner but whom private respondent adopted; Jessie Anthone J.
Garcia, 6 years old; and Joseph Eduard J. Garcia, 3 years old. 8
Private respondent described herself as a dutiful and faithful wife, whose life revolved around
her husband. On the other hand, petitioner, who is of Filipino-Chinese descent, is dominant,
controlling, and demands absolute obedience from his wife and children. He forbade private
respondent to pray, and deliberately isolated her from her friends. When she took up law, and
even when she was already working part time at a law office, petitioner trivialized her
ambitions and prevailed upon her to just stay at home. He was often jealous of the fact that his
attractive wife still catches the eye of some men, at one point threatening that he would have
any man eyeing her killed.9
Things turned for the worse when petitioner took up an affair with a bank manager of
Robinson's Bank, Bacolod City, who is the godmother of one of their sons. Petitioner admitted
to the affair when private respondent confronted him about it in 2004. He even boasted to the
household help about his sexual relations with said bank manager. Petitioner told private
respondent, though, that he was just using the woman because of their accounts with the
bank.10
Petitioner's infidelity spawned a series of fights that left private respondent physically and
emotionally wounded. In one of their quarrels, petitioner grabbed private respondent on both
arms and shook her with such force that caused bruises and hematoma. At another time,
petitioner hit private respondent forcefully on the lips that caused some bleeding. Petitioner
sometimes turned his ire on their daughter, Jo-Ann, who had seen the text messages he sent
to his paramour and whom he blamed for squealing on him. He beat Jo-Ann on the chest and
slapped her many times. When private respondent decided to leave petitioner, Jo-Ann begged
her mother to stay for fear that if the latter leaves, petitioner would beat her up. Even the small
boys are aware of private respondent's sufferings. Their 6-year-old son said that when he
grows up, he would beat up his father because of his cruelty to private respondent. 11
All the emotional and psychological turmoil drove private respondent to the brink of despair.
On December 17, 2005, while at home, she attempted suicide by cutting her wrist. She was
found by her son bleeding on the floor. Petitioner simply fled the house instead of taking her to
the hospital. Private respondent was hospitalized for about seven (7) days in which time
petitioner never bothered to visit, nor apologized or showed pity on her. Since then, private
respondent has been undergoing therapy almost every week and is taking anti-depressant
medications.12
When private respondent informed the management of Robinson's Bank that she intends to file
charges against the bank manager, petitioner got angry with her for jeopardizing the manager's
job. He then packed his things and told private respondent that he was leaving her for good.
He even told private respondent's mother, who lives with them in the family home, that private
respondent should just accept his extramarital affair since he is not cohabiting with his
paramour and has not sired a child with her. 13
Private respondent is determined to separate from petitioner but she is afraid that he would
take her children from her and deprive her of financial support. Petitioner had previously
warned her that if she goes on a legal battle with him, she would not get a single centavo.14
Petitioner controls the family businesses involving mostly the construction of deep wells. He is
the President of three corporations – 326 Realty Holdings, Inc., Negros Rotadrill Corporation,
and J-Bros Trading Corporation – of which he and private respondent are both stockholders. In
contrast to the absolute control of petitioner over said corporations, private respondent merely
draws a monthly salary of ₱20,000.00 from one corporation only, the Negros Rotadrill
Corporation. Household expenses amounting to not less than ₱200,000.00 a month are paid
for by private respondent through the use of credit cards, which, in turn, are paid by the same
corporation together with the bills for utilities.15
On the other hand, petitioner receives a monthly salary of ₱60,000.00 from Negros Rotadrill
Corporation, and enjoys unlimited cash advances and other benefits in hundreds of thousands
of pesos from the corporations.16 After private respondent confronted him about the affair,
petitioner forbade her to hold office at JBTC Building, Mandalagan, where all the businesses of
the corporations are conducted, thereby depriving her of access to full information about said
businesses. Until the filing of the petition a quo, petitioner has not given private respondent an
accounting of the businesses the value of which she had helped raise to millions of pesos. 17
Action of the RTC of Bacolod City
Finding reasonable ground to believe that an imminent danger of violence against the private
respondent and her children exists or is about to recur, the RTC issued a TPO 18 on March 24,
2006 effective for thirty (30) days, which is quoted hereunder:
Respondent (petitioner herein), Jesus Chua Garcia, is hereby:
a) Ordered to remove all his personal belongings from the conjugal dwelling or family home
within 24 hours from receipt of the Temporary Restraining Order and if he refuses, ordering
that he be removed by police officers from the conjugal dwelling; this order is enforceable
notwithstanding that the house is under the name of 236 Realty Holdings Inc. (Republic Act
No. 9262 states "regardless of ownership"), this is to allow the Petitioner (private respondent
herein) to enter the conjugal dwelling without any danger from the Respondent.
After the Respondent leaves or is removed from the conjugal dwelling, or anytime the
Petitioner decides to return to the conjugal dwelling to remove things, the Petitioner shall be
assisted by police officers when re-entering the family home.
The Chief of Police shall also give the Petitioner police assistance on Sunday, 26 March 2006
because of the danger that the Respondent will attempt to take her children from her when he
arrives from Manila and finds out about this suit.
b) To stay away from the petitioner and her children, mother and all her household help and
driver from a distance of 1,000 meters, and shall not enter the gate of the subdivision where
the Petitioner may be temporarily residing.
c) Not to harass, annoy, telephone, contact or otherwise communicate with the Petitioner,
directly or indirectly, or through other persons, or contact directly or indirectly her children,
mother and household help, nor send gifts, cards, flowers, letters and the like. Visitation rights
to the children may be subject of a modified TPO in the future.
d) To surrender all his firearms including a .9MM caliber firearm and a Walther PPK and
ordering the Philippine National Police Firearms and Explosives Unit and the Provincial
Director of the PNP to cancel all the Respondent's firearm licenses. He should also be ordered
to surrender any unlicensed firearms in his possession or control.
e) To pay full financial support for the Petitioner and the children, including rental of a house
for them, and educational and medical expenses.
f) Not to dissipate the conjugal business.
g) To render an accounting of all advances, benefits, bonuses and other cash he received from
all the corporations from 1 January 2006 up to 31 March 2006, which himself and as President
of the corporations and his Comptroller, must submit to the Court not later than 2 April 2006.
Thereafter, an accounting of all these funds shall be reported to the court by the Comptroller,
copy furnished to the Petitioner, every 15 days of the month, under pain of Indirect Contempt
of Court.
h) To ensure compliance especially with the order granting support pendente lite, and
considering the financial resources of the Respondent and his threat that if the Petitioner sues
she will not get a single centavo, the Respondent is ordered to put up a BOND TO KEEP THE
PEACE in the amount of FIVE MILLION PESOS, in two sufficient sureties.
On April 24, 2006, upon motion19 of private respondent, the trial court issued an amended
TPO,20 effective for thirty (30) days, which included the following additional provisions:
i) The petitioners (private respondents herein) are given the continued use of the Nissan Patrol
and the Starex Van which they are using in Negros Occidental.
j) The petitioners are given the continued use and occupation of the house in Parañaque, the
continued use of the Starex van in Metro Manila, whenever they go to Manila.
k) Respondent is ordered to immediately post a bond to keep the peace, in two sufficient
sureties.
l) To give monthly support to the petitioner provisionally fixed in the sum of One Hundred Fifty
Thousand Pesos (Php 150,000.00) per month plus rental expenses of Fifty Thousand Pesos
(Php 50,000.00) per month until the matter of support could be finally resolved.
Two days later, or on April 26, 2006, petitioner filed an Opposition to the Urgent Ex-Parte
Motion for Renewal of the TPO21 seeking the denial of the renewal of the TPO on the grounds
that it did not (1) comply with the three-day notice rule, and (2) contain a notice of hearing. He
further asked that the TPO be modified by (1) removing one vehicle used by private
respondent and returning the same to its rightful owner, the J-Bros Trading Corporation, and
(2) cancelling or reducing the amount of the bond from ₱5,000,000.00 to a more manageable
level at ₱100,000.00.
Subsequently, on May 23, 2006, petitioner moved 22 for the modification of the TPO to allow
him visitation rights to his children.
On May 24, 2006, the TPO was renewed and extended yet again, but subject only to the
following modifications prayed for by private respondent:
a) That respondent (petitioner herein) return the clothes and other personal belongings of
Rosalie and her children to Judge Jesus Ramos, co-counsel for Petitioner, within 24 hours
from receipt of the Temporary Protection Order by his counsel, otherwise be declared in
Indirect Contempt of Court;
b) Respondent shall make an accounting or list of furniture and equipment in the conjugal
house in Pitimini St., Capitolville Subdivision, Bacolod City within 24 hours from receipt of the
Temporary Protection Order by his counsel;
27
c) Ordering the Chief of the Women's Desk of the Bacolod City Police Headquarters to remove
Respondent from the conjugal dwelling within eight (8) hours from receipt of the Temporary
Protection Order by his counsel, and that he cannot return until 48 hours after the petitioners
have left, so that the petitioner Rosalie and her representatives can remove things from the
conjugal home and make an inventory of the household furniture, equipment and other things
in the conjugal home, which shall be submitted to the Court.
d) Deliver full financial support of Php200,000.00 and Php50,000.00 for rental and
Php25,000.00 for clothes of the three petitioners (sic) children within 24 hours from receipt of
the Temporary Protection Order by his counsel, otherwise be declared in indirect contempt of
Court;
e) That respondent surrender his two firearms and all unlicensed firearms to the Clerk of Court
within 24 hours from receipt of the Temporary Protection Order by his counsel;
f) That respondent shall pay petitioner educational expenses of the children upon presentation
of proof of payment of such expenses.23
Claiming that petitioner continued to deprive them of financial support; failed to faithfully
comply with the TPO; and committed new acts of harassment against her and their children,
private respondent filed another application24 for the issuance of a TPO ex parte. She alleged
inter
alia that petitioner contrived a replevin suit against himself by J-Bros Trading, Inc., of which the
latter was purportedly no longer president, with the end in view of recovering the Nissan Patrol
and Starex Van used by private respondent and the children. A writ of replevin was served
upon private respondent by a group of six or seven policemen with long firearms that scared
the two small boys, Jessie Anthone and Joseph Eduard. 25
While Joseph Eduard, then three years old, was driven to school, two men allegedly attempted
to kidnap him, which incident traumatized the boy resulting in his refusal to go back to school.
On another occasion, petitioner allegedly grabbed their daughter, Jo-Ann, by the arm and
26
threatened her. The incident was reported to the police, and Jo-Ann subsequently filed a
criminal complaint against her father for violation of R.A. 7610, also known as the "Special
Protection of Children Against Child Abuse, Exploitation and Discrimination Act."
Aside from the replevin suit, petitioner's lawyers initiated the filing by the housemaids working
at the conjugal home of a complaint for kidnapping and illegal detention against private
respondent. This came about after private respondent, armed with a TPO, went to said home
to get her and her children's belongings. Finding some of her things inside a housemaid's
(Sheryl Jamola) bag in the maids' room, private respondent filed a case for qualified theft
against Jamola.27
On August 23, 2006, the RTC issued a TPO, 28 effective for thirty (30) days, which reads as
follows:
Respondent (petitioner herein), Jesus Chua Garcia, is hereby:
1) Prohibited from threatening to commit or committing, personally or through another, acts of
violence against the offended party;
2) Prohibited from harassing, annoying, telephoning, contacting or otherwise communicating in
any form with the offended party, either directly or indirectly;
3) Required to stay away, personally or through his friends, relatives, employees or agents,
from all the Petitioners Rosalie J. Garcia and her children, Rosalie J. Garcia's three brothers,
her mother Primitiva Jaype, cook Novelita Caranzo, driver Romeo Hontiveros, laundrywoman
Mercedita Bornales, security guard Darwin Gayona and the petitioner's other household
helpers from a distance of 1,000 meters, and shall not enter the gate of the subdivision where
the Petitioners are temporarily residing, as well as from the schools of the three children;
Furthermore, that respondent shall not contact the schools of the children directly or indirectly
in any manner including, ostensibly to pay for their tuition or other fees directly, otherwise he
will have access to the children through the schools and the TPO will be rendered nugatory;
4) Directed to surrender all his firearms including .9MM caliber firearm and a Walther PPK to
the Court;
5) Directed to deliver in full financial support of Php200,000.00 a month and Php50,000.00 for
rental for the period from August 6 to September 6, 2006; and support in arrears from March
2006 to August 2006 the total amount of Php1,312,000.00;
6) Directed to deliver educational expenses for 2006-2007 the amount of Php75,000.00 and
Php25,000.00;
7) Directed to allow the continued use of a Nissan Patrol with Plate No. FEW 508 and a Starex
van with Plate No. FFD 991 and should the respondent fail to deliver said vehicles, respondent
is ordered to provide the petitioner another vehicle which is the one taken by J Bros Tading;
8) Ordered not to dissipate, encumber, alienate, sell, lease or otherwise dispose of the
conjugal assets, or those real properties in the name of Jesus Chua Garcia only and those in
which the conjugal partnership of gains of the Petitioner Rosalie J. Garcia and respondent
have an interest in, especially the conjugal home located in No. 14, Pitimini St., Capitolville
Subdivision, Bacolod City, and other properties which are conjugal assets or those in which the
conjugal partnership of gains of Petitioner Rosalie J. Garcia and the respondent have an
interest in and listed in Annexes "I," "I-1," and "I-2," including properties covered by TCT Nos.
T-186325 and T-168814;
9) Ordered that the Register of Deeds of Bacolod City and E.B. Magalona shall be served a
copy of this TEMPORARY PROTECTION ORDER and are ordered not to allow the transfer,
sale, encumbrance or disposition of these above-cited properties to any person, entity or
corporation without the personal presence of petitioner Rosalie J. Garcia, who shall affix her
signature in the presence of the Register of Deeds, due to the fear of petitioner Rosalie that
her signature will be forged in order to effect the encumbrance or sale of these properties to
defraud her or the conjugal partnership of gains.
In its Order29 dated September 26, 2006, the trial court extended the aforequoted TPO for
another ten (10) days, and gave petitioner a period of five (5) days within which to show cause
why the TPO should not be renewed, extended, or modified. Upon petitioner's
manifestation,30 however, that he has not received a copy of private respondent's motion to
modify/renew the TPO, the trial court directed in its Order31 dated October 6, 2006 that
petitioner be furnished a copy of said motion. Nonetheless, an Order 32 dated a day earlier,
October 5, had already been issued renewing the TPO dated August 23, 2006. The pertinent
portion is quoted hereunder:
x x x it appearing further that the hearing could not yet be finally terminated, the Temporary
Protection Order issued on August 23, 2006 is hereby renewed and extended for thirty (30)
days and continuously extended and renewed for thirty (30) days, after each expiration, until
further orders, and subject to such modifications as may be ordered by the court.
After having received a copy of the foregoing Order, petitioner no longer submitted the
required comment to private respondent's motion for renewal of the TPO arguing that it would
only be an "exercise in futility."33
Proceedings before the CA
During the pendency of Civil Case No. 06-797, petitioner filed before the Court of Appeals (CA)
34
a petition for prohibition (CA-G.R. CEB-SP. No. 01698), with prayer for injunction and
temporary restraining order, challenging (1) the constitutionality of R.A. 9262 for being violative
of the due process and the equal protection clauses, and (2) the validity of the modified TPO
issued in the civil case for being "an unwanted product of an invalid law."
On May 26, 2006, the appellate court issued a 60-day Temporary Restraining Order36 (TRO)
against the enforcement of the TPO, the amended TPOs and other orders pursuant thereto.
Subsequently, however, on January 24, 2007, the appellate court dismissed36 the petition for
failure of petitioner to raise the constitutional issue in his pleadings before the trial court in the
civil case, which is clothed with jurisdiction to resolve the same. Secondly, the challenge to the
validity
of R.A. 9262 through a petition for prohibition seeking to annul the protection orders issued by
the trial court constituted a collateral attack on said law.
His motion for reconsideration of the foregoing Decision having been denied in the
Resolution37 dated August 14, 2007, petitioner is now before us alleging that –
The Issues
I.
THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION ON THE THEORY
THAT THE ISSUE OF CONSTITUTIONALITY WAS NOT RAISED AT THE EARLIEST
OPPORTUNITY AND THAT, THE PETITION CONSTITUTES A COLLATERAL ATTACK ON
THE VALIDITY OF THE LAW.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN FAILING TO CONCLUDE
THAT R.A. 9262 IS DISCRIMINATORY, UNJUST, AND VIOLATIVE OF THE EQUAL
PROTECTION CLAUSE.
III.
THE COURT OF APPEALS COMMITTED GRAVE MISTAKE IN NOT FINDING THAT R.A.
9262 RUNS COUNTER TO THE DUE PROCESS CLAUSE OF THE CONSTITUTION.
IV.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LAW DOES VIOLENCE TO
THE POLICY OF THE STATE TO PROTECT THE FAMILY AS A BASIC SOCIAL
INSTITUTION.
V.
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT DECLARING R.A. No. 9262 AS
INVALID AND UNCONSTITUTIONAL BECAUSE IT ALLOWS AN UNDUE DELEGATION OF
JUDICIAL POWER TO THE BARANGAY OFFICIALS.38
The Ruling of the Court
Before delving into the arguments propounded by petitioner against the constitutionality of R.A.
9262, we shall first tackle the propriety of the dismissal by the appellate court of the petition for
prohibition (CA-G.R. CEB-SP. No. 01698) filed by petitioner.
As a general rule, the question of constitutionality must be raised at the earliest opportunity so
that if not raised in the pleadings, ordinarily it may not be raised in the trial, and if not raised in
the trial court, it will not be considered on appeal. 39 Courts will not anticipate a question of
constitutional law in advance of the necessity of deciding it. 40
In defending his failure to attack the constitutionality of R.A. 9262 before the RTC of Bacolod
City, petitioner argues that the Family Court has limited authority and jurisdiction that is
"inadequate to tackle the complex issue of constitutionality."41
We disagree.
Family Courts have authority and jurisdiction to consider the constitutionality of a statute.
At the outset, it must be stressed that Family Courts are special courts, of the same level as
Regional Trial Courts. Under R.A. 8369, otherwise known as the "Family Courts Act of 1997,"
family courts have exclusive original jurisdiction to hear and decide cases of domestic violence
against women and children.42 In accordance with said law, the Supreme Court designated
from among the branches of the Regional Trial Courts at least one Family Court in each of
several key cities identified.43 To achieve harmony with the first mentioned law, Section 7 of
R.A. 9262 now provides that Regional Trial Courts designated as Family Courts shall have
original and exclusive jurisdiction over cases of VAWC defined under the latter law, viz:
SEC. 7. Venue. – The Regional Trial Court designated as a Family Court shall have original
and exclusive jurisdiction over cases of violence against women and their children under this
law. In the absence of such court in the place where the offense was committed, the case shall
be filed in the Regional Trial Court where the crime or any of its elements was committed at
the option of the complainant. (Emphasis supplied)
Inspite of its designation as a family court, the RTC of Bacolod City remains possessed of
authority as a court of general original jurisdiction to pass upon all kinds of cases whether civil,
criminal, special proceedings, land registration, guardianship, naturalization, admiralty or
insolvency.44 It is settled that RTCs have jurisdiction to resolve the constitutionality of a
statute,45 "this authority being embraced in the general definition of the judicial power to
determine what are the valid and binding laws by the criterion of their conformity to the
fundamental law."46 The Constitution vests the power of judicial review or the power to declare
the constitutionality or validity of a law, treaty, international or executive agreement,
presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all
RTCs.47 We said in J.M. Tuason and Co., Inc. v. CA48 that, "plainly the Constitution
contemplates that the inferior courts should have jurisdiction in cases involving constitutionality
of any treaty or law, for it speaks of appellate review of final judgments of inferior courts in
28
cases where such constitutionality happens to be in issue." Section 5, Article VIII of the 1987
Constitution reads in part as follows:
SEC. 5. The Supreme Court shall have the following powers:
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of
Court may provide, final judgments and orders of lower courts in:
a. All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation
is in question.
Thus, contrary to the posturing of petitioner, the issue of constitutionality of R.A. 9262 could
have been raised at the earliest opportunity in his Opposition to the petition for protection order
before the RTC of Bacolod City, which had jurisdiction to determine the same, subject to the
review of this Court.
Section 20 of A.M. No. 04-10-11-SC, the Rule on Violence Against Women and Their Children,
lays down a new kind of procedure requiring the respondent to file an opposition to the petition
and not an answer.49 Thus:
SEC. 20. Opposition to petition. – (a) The respondent may file an opposition to the petition
which he himself shall verify. It must be accompanied by the affidavits of witnesses and shall
show cause why a temporary or permanent protection order should not be issued.
(b) Respondent shall not include in the opposition any counterclaim, cross-claim or third-party
complaint, but any cause of action which could be the subject thereof may be litigated in a
separate civil action. (Emphasis supplied)
We cannot subscribe to the theory espoused by petitioner that, since a counterclaim, cross-
claim and third-party complaint are to be excluded from the opposition, the issue of
constitutionality cannot likewise be raised therein. A counterclaim is defined as any claim for
money or other relief which a defending party may have against an opposing party. 50 A cross-
claim, on the other hand, is any claim by one party against a co-party arising out of the
transaction or occurrence that is the subject matter either of the original action or of a
counterclaim therein.51 Finally, a third-party complaint is a claim that a defending party may,
with leave of court, file against a person not a party to the action for contribution, indemnity,
subrogation or any other relief, in respect of his opponent's claim.52 As pointed out by Justice
Teresita J. Leonardo-De Castro, the unconstitutionality of a statute is not a cause of action that
could be the subject of a counterclaim, cross-claim or a third-party complaint. Therefore, it is
not prohibited from being raised in the opposition in view of the familiar maxim expressio unius
est exclusio alterius.
Moreover, it cannot be denied that this issue affects the resolution of the case a quo because
the right of private respondent to a protection order is founded solely on the very statute the
validity of which is being attacked53 by petitioner who has sustained, or will sustain, direct
injury as a result of its enforcement. The alleged unconstitutionality of R.A. 9262 is, for all
intents and purposes, a valid cause for the non-issuance of a protection order.
That the proceedings in Civil Case No. 06-797 are summary in nature should not have
deterred petitioner from raising the same in his Opposition. The question relative to the
constitutionality of a statute is one of law which does not need to be supported by
evidence.54 Be that as it may, Section 25 of A.M. No. 04-10-11-SC nonetheless allows the
conduct of a hearing to determine legal issues, among others, viz:
SEC. 25. Order for further hearing. - In case the court determines the need for further hearing,
it may issue an order containing the following:
(a) Facts undisputed and admitted;
(b) Factual and legal issues to be resolved;
(c) Evidence, including objects and documents that have been marked and will be presented;
(d) Names of witnesses who will be ordered to present their direct testimonies in the form of
affidavits; and
(e) Schedule of the presentation of evidence by both parties which shall be done in one day, to
the extent possible, within the 30-day period of the effectivity of the temporary protection order
issued. (Emphasis supplied)
To obviate potential dangers that may arise concomitant to the conduct of a hearing when
necessary, Section 26 (b) of A.M. No. 04-10-11-SC provides that if a temporary protection
order issued is due to expire, the trial court may extend or renew the said order for a period of
thirty (30) days each time until final judgment is rendered. It may likewise modify the extended
or renewed temporary protection order as may be necessary to meet the needs of the parties.
With the private respondent given ample protection, petitioner could proceed to litigate the
constitutional issues, without necessarily running afoul of the very purpose for the adoption of
the rules on summary procedure.
In view of all the foregoing, the appellate court correctly dismissed the petition for prohibition
with prayer for injunction and temporary restraining order (CA-G.R. CEB - SP. No. 01698).
Petitioner may have proceeded upon an honest belief that if he finds succor in a superior court,
he could be granted an injunctive relief. However, Section 22(j) of A.M. No. 04-10-11-SC
expressly disallows the filing of a petition for certiorari, mandamus or prohibition against any
interlocutory order issued by the trial court. Hence, the 60-day TRO issued by the appellate
court in this case against the enforcement of the TPO, the amended TPOs and other orders
pursuant thereto was improper, and it effectively hindered the case from taking its normal
course in an expeditious and summary manner.
As the rules stand, a review of the case by appeal or certiorari before judgment is prohibited.
Moreover, if the appeal of a judgment granting permanent protection shall not stay its
enforcement,55 with more reason that a TPO, which is valid only for thirty (30) days at a
time,56 should not be enjoined.
The mere fact that a statute is alleged to be unconstitutional or invalid, does not of itself entitle
a litigant to have the same enjoined.57 In Younger v. Harris, Jr.,58 the Supreme Court of the
United States declared, thus:
Federal injunctions against state criminal statutes, either in their entirety or with respect to their
separate and distinct prohibitions, are not to be granted as a matter of course, even if such
statutes are unconstitutional. No citizen or member of the community is immune from
prosecution, in good faith, for his alleged criminal acts. The imminence of such a prosecution
even though alleged to be unauthorized and, hence, unlawful is not alone ground for relief in
equity which exerts its extraordinary powers only to prevent irreparable injury to the plaintiff
who seeks its aid. (Citations omitted)
The sole objective of injunctions is to preserve the status quo until the trial court hears fully the
merits of the case. It bears stressing, however, that protection orders are granted ex parte so
as to protect women and their children from acts of violence. To issue an injunction against
such orders will defeat the very purpose of the law against VAWC.
Notwithstanding all these procedural flaws, we shall not shirk from our obligation to determine
novel issues, or issues of first impression, with far-reaching implications. We have, time and
again, discharged our solemn duty as final arbiter of constitutional issues, and with more
reason now, in view of private respondent's plea in her Comment 59 to the instant Petition that
we should put the challenge to the constitutionality of R.A. 9262 to rest. And so we shall.
Intent of Congress in enacting R.A. 9262.
Petitioner claims that since R.A. 9262 is intended to prevent and criminalize spousal and child
abuse, which could very well be committed by either the husband or the wife, gender alone is
not enough basis to deprive the husband/father of the remedies under the law.60
A perusal of the deliberations of Congress on Senate Bill No. 2723, 61 which became R.A.
9262, reveals that while the sponsor, Senator Luisa Pimentel-Ejercito (better known as
Senator Loi Estrada), had originally proposed what she called a "synthesized measure" 62 – an
amalgamation of two measures, namely, the "Anti-Domestic Violence Act" and the "Anti-Abuse
of Women in Intimate Relationships Act" 63 – providing protection to "all family members,
leaving no one in isolation" but at the same time giving special attention to women as the
"usual victims" of violence and abuse,64 nonetheless, it was eventually agreed that men be
denied protection under the same measure. We quote pertinent portions of the deliberations:
Wednesday, December 10, 2003
Senator Pangilinan. I just wanted to place this on record, Mr. President. Some women's groups
have expressed concerns and relayed these concerns to me that if we are to include domestic
violence apart from against women as well as other members of the household, including
children or the husband, they fear that this would weaken the efforts to address domestic
violence of which the main victims or the bulk of the victims really are the wives, the spouses
or the female partners in a relationship. We would like to place that on record. How does the
good Senator respond to this kind of observation?
Senator Estrada. Yes, Mr. President, there is this group of women who call themselves "WIIR"
Women in Intimate Relationship. They do not want to include men in this domestic violence.
But plenty of men are also being abused by women. I am playing safe so I placed here
members of the family, prescribing penalties therefor and providing protective measures for
victims. This includes the men, children, live-in, common-law wives, and those related with the
family.65
Wednesday, January 14, 2004
The President Pro Tempore. x x x
Also, may the Chair remind the group that there was the discussion whether to limit this to
women and not to families which was the issue of the AWIR group. The understanding that I
have is that we would be having a broader scope rather than just women, if I remember
correctly, Madam sponsor.
Senator Estrada. Yes, Mr. President.
As a matter of fact, that was brought up by Senator Pangilinan during the interpellation period.
I think Senator Sotto has something to say to that.
Senator Legarda. Mr. President, the reason I am in support of the measure. Do not get me
wrong. However, I believe that there is a need to protect women's rights especially in the
domestic environment.
As I said earlier, there are nameless, countless, voiceless women who have not had the
opportunity to file a case against their spouses, their live-in partners after years, if not decade,
of battery and abuse. If we broaden the scope to include even the men, assuming they can at
all be abused by the women or their spouses, then it would not equalize the already difficult
situation for women, Mr. President.
I think that the sponsor, based on our earlier conversations, concurs with this position. I am
sure that the men in this Chamber who love their women in their lives so dearly will agree with
this representation. Whether we like it or not, it is an unequal world. Whether we like it or not,
no matter how empowered the women are, we are not given equal opportunities especially in
the domestic environment where the macho Filipino man would always feel that he is stronger,
more superior to the Filipino woman.
The President Pro Tempore. What does the sponsor say?
Senator Estrada. Mr. President, before accepting this, the committee came up with this bill
because the family members have been included in this proposed measure since the other
members of the family other than women are also possible victims of violence. While women
are most likely the intended victims, one reason incidentally why the measure focuses on
women, the fact remains that in some relatively few cases, men also stand to be victimized
and that children are almost always the helpless victims of violence. I am worried that there
may not be enough protection extended to other family members particularly children who are
excluded. Although Republic Act No. 7610, for instance, more or less, addresses the special
needs of abused children. The same law is inadequate. Protection orders for one are not
available in said law.
I am aware that some groups are apprehensive about granting the same protection to men,
fearing that they may use this law to justify their abusive behavior against women. However,
we should also recognize that there are established procedures and standards in our courts
which give credence to evidentiary support and cannot just arbitrarily and whimsically entertain
baseless complaints.
Mr. President, this measure is intended to harmonize family relations and to protect the family
as the basic social institution. Though I recognize the unequal power relations between men
and women in our society, I believe we have an obligation to uphold inherent rights and dignity
of both husband and wife and their immediate family members, particularly children.
While I prefer to focus mainly on women, I was compelled to include other family members as
a critical input arrived at after a series of consultations/meetings with various NGOs, experts,
sports groups and other affected sectors, Mr. President.
Senator Sotto. Mr. President.
The President Pro Tempore. Yes, with the permission of the other senators.
Senator Sotto. Yes, with the permission of the two ladies on the Floor.
29
The President Pro Tempore. Yes, Sen. Vicente C. Sotto III is recognized.
Senator Sotto. I presume that the effect of the proposed amendment of Senator Legarda would
be removing the "men and children" in this particular bill and focus specifically on women
alone. That will be the net effect of that proposed amendment. Hearing the rationale mentioned
by the distinguished sponsor, Sen. Luisa "Loi" Ejercito Estrada, I am not sure now whether she
is inclined to accept the proposed amendment of Senator Legarda.
I am willing to wait whether she is accepting this or not because if she is going to accept this, I
will propose an amendment to the amendment rather than object to the amendment, Mr.
President.
Senator Estrada. The amendment is accepted, Mr. President.
The President Pro Tempore. Is there any objection?
Senator Sotto. x x x May I propose an amendment to the amendment.
The President Pro Tempore. Before we act on the amendment?
Senator Sotto. Yes, Mr. President.
The President Pro Tempore. Yes, please proceed.
Senator Sotto. Mr. President, I am inclined to believe the rationale used by the distinguished
proponent of the amendment. As a matter of fact, I tend to agree. Kung may maaabuso, mas
malamang iyong babae kaysa sa lalake. At saka iyong mga lalake, puwede na talagang
magulpi iyan. Okey lang iyan. But I cannot agree that we remove the children from this
particular measure.
So, if I may propose an amendment –
The President Pro Tempore. To the amendment.
Senator Sotto. – more than the women, the children are very much abused. As a matter of
fact, it is not limited to minors. The abuse is not limited to seven, six, 5-year-old children. I have
seen 14, 15-year-old children being abused by their fathers, even by their mothers. And it
breaks my heart to find out about these things.
Because of the inadequate existing law on abuse of children, this particular measure will
update that. It will enhance and hopefully prevent the abuse of children and not only women.
SOTTO-LEGARDA AMENDMENTS
Therefore, may I propose an amendment that, yes, we remove the aspect of the men in the bill
but not the children.
Senator Legarda. I agree, Mr. President, with the Minority Leader.
The President Pro Tempore. Effectively then, it will be women AND CHILDREN.
Senator Sotto. Yes, Mr. President.
Senator Estrada. It is accepted, Mr. President.
The President Pro Tempore. Is there any objection? [Silence] There being none, the
amendment, as amended, is approved.66
It is settled that courts are not concerned with the wisdom, justice, policy, or expediency of a
statute.67 Hence, we dare not venture into the real motivations and wisdom of the members of
Congress in limiting the protection against violence and abuse under R.A. 9262 to women and
children only. No proper challenge on said grounds may be entertained in this proceeding.
Congress has made its choice and it is not our prerogative to supplant this judgment. The
choice may be perceived as erroneous but even then, the remedy against it is to seek its
amendment or repeal by the legislative. By the principle of separation of powers, it is the
legislative that determines the necessity, adequacy, wisdom and expediency of any law. 68 We
only step in when there is a violation of the Constitution. However, none was sufficiently shown
in this case.
R.A. 9262 does not violate the guaranty of equal protection of the laws.
Equal protection simply requires that all persons or things similarly situated should be treated
alike, both as to rights conferred and responsibilities imposed. The oft-repeated disquisition in
69
the early case of Victoriano v. Elizalde Rope Workers' Union is instructive:
The guaranty of equal protection of the laws is not a guaranty of equality in the application of
the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the same.
The equal protection clause does not forbid discrimination as to things that are different. It
does not prohibit legislation which is limited either in the object to which it is directed or by the
territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification
in law, as in the other departments of knowledge or practice, is the grouping of things in
speculation or practice because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. The very idea of classification is that of inequality, so that
it goes without saying that the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it be reasonable, which
means that the classification should be based on substantial distinctions which make for real
differences; that it must be germane to the purpose of the law; that it must not be limited to
existing conditions only; and that it must apply equally to each member of the class. This Court
has held that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary. (Emphasis supplied)
Measured against the foregoing jurisprudential yardstick, we find that R.A. 9262 is based on a
valid classification as shall hereinafter be discussed and, as such, did not violate the equal
protection clause by favoring women over men as victims of violence and abuse to whom the
State extends its protection.
I. R.A. 9262 rests on substantial distinctions.
The unequal power relationship between women and men; the fact that women are more likely
than men to be victims of violence; and the widespread gender bias and prejudice against
women all make for real differences justifying the classification under the law. As Justice
McIntyre succinctly states, "the accommodation of differences ... is the essence of true
equality."70
A. Unequal power relationship between men and women
According to the Philippine Commission on Women (the National Machinery for Gender
Equality and Women's Empowerment), violence against women (VAW) is deemed to be
closely linked with the unequal power relationship between women and men otherwise known
as "gender-based violence". Societal norms and traditions dictate people to think men are the
leaders, pursuers, providers, and take on dominant roles in society while women are nurturers,
men's companions and supporters, and take on subordinate roles in society. This perception
leads to men gaining more power over women. With power comes the need to control to retain
that power. And VAW is a form of men's expression of controlling women to retain power. 71
The United Nations, which has long recognized VAW as a human rights issue, passed its
Resolution 48/104 on the Declaration on Elimination of Violence Against Women on December
20, 1993 stating that "violence against women is a manifestation of historically unequal power
relations between men and women, which have led to domination over and discrimination
against women by men and to the prevention of the full advancement of women, and that
violence against women is one of the crucial social mechanisms by which women are forced
into subordinate positions, compared with men." 72
Then Chief Justice Reynato S. Puno traced the historical and social context of gender-based
violence and developments in advocacies to eradicate VAW, in his remarks delivered during
the Joint Launching of R.A. 9262 and its Implementing Rules last October 27, 2004, the
pertinent portions of which are quoted hereunder:
History reveals that most societies sanctioned the use of violence against women. The
patriarch of a family was accorded the right to use force on members of the family under his
control. I quote the early studies:
Traditions subordinating women have a long history rooted in patriarchy – the institutional rule
of men. Women were seen in virtually all societies to be naturally inferior both physically and
intellectually. In ancient Western societies, women whether slave, concubine or wife, were
under the authority of men. In law, they were treated as property.
The Roman concept of patria potestas allowed the husband to beat, or even kill, his wife if she
endangered his property right over her. Judaism, Christianity and other religions oriented
towards the patriarchal family strengthened the male dominated structure of society.
English feudal law reinforced the tradition of male control over women. Even the eminent
Blackstone has been quoted in his commentaries as saying husband and wife were one and
that one was the husband. However, in the late 1500s and through the entire 1600s, English
common law began to limit the right of husbands to chastise their wives. Thus, common law
developed the rule of thumb, which allowed husbands to beat their wives with a rod or stick no
thicker than their thumb.
In the later part of the 19th century, legal recognition of these rights to chastise wives or inflict
corporeal punishment ceased. Even then, the preservation of the family was given more
importance than preventing violence to women.
The metamorphosis of the law on violence in the United States followed that of the English
common law. In 1871, the Supreme Court of Alabama became the first appellate court to strike
down the common law right of a husband to beat his wife:
The privilege, ancient though it may be, to beat one's wife with a stick, to pull her hair, choke
her, spit in her face or kick her about the floor, or to inflict upon her like indignities, is not now
acknowledged by our law... In person, the wife is entitled to the same protection of the law that
the husband can invoke for himself.
As time marched on, the women's advocacy movement became more organized. The
temperance leagues initiated it. These leagues had a simple focus. They considered the evils
of alcoholism as the root cause of wife abuse. Hence, they demonstrated and picketed
saloons, bars and their husbands' other watering holes. Soon, however, their crusade was
joined by suffragette movements, expanding the liberation movement's agenda. They fought
for women's right to vote, to own property, and more. Since then, the feminist movement was
on the roll.
The feminist movement exposed the private invisibility of the domestic violence to the public
gaze. They succeeded in transforming the issue into an important public concern. No less than
the United States Supreme Court, in 1992 case Planned Parenthood v. Casey, noted:
In an average 12-month period in this country, approximately two million women are the
victims of severe assaults by their male partners. In a 1985 survey, women reported that
nearly one of every eight husbands had assaulted their wives during the past year. The
[American Medical Association] views these figures as "marked underestimates," because the
nature of these incidents discourages women from reporting them, and because surveys
typically exclude the very poor, those who do not speak English well, and women who are
homeless or in institutions or hospitals when the survey is conducted. According to the AMA,
"researchers on family violence agree that the true incidence of partner violence is probably
double the above estimates; or four million severely assaulted women per year."
Studies on prevalence suggest that from one-fifth to one-third of all women will be physically
assaulted by a partner or ex-partner during their lifetime... Thus on an average day in the
United States, nearly 11,000 women are severely assaulted by their male partners. Many of
these incidents involve sexual assault... In families where wife beating takes place, moreover,
child abuse is often present as well.
Other studies fill in the rest of this troubling picture. Physical violence is only the most visible
form of abuse. Psychological abuse, particularly forced social and economic isolation of
women, is also common.
Many victims of domestic violence remain with their abusers, perhaps because they perceive
no superior alternative...Many abused women who find temporary refuge in shelters return to
their husbands, in large part because they have no other source of income... Returning to
one's abuser can be dangerous. Recent Federal Bureau of Investigation statistics disclose that
8.8 percent of all homicide victims in the United States are killed by their spouses...Thirty
percent of female homicide victims are killed by their male partners.
Finally in 1994, the United States Congress enacted the Violence Against Women Act.
In the International front, the women's struggle for equality was no less successful. The United
States Charter and the Universal Declaration of Human Rights affirmed the equality of all
human beings. In 1979, the UN General Assembly adopted the landmark Convention on the
Elimination of all Forms of Discrimination Against Women (CEDAW). In 1993, the UN General
Assembly also adopted the Declaration on the Elimination of Violence Against Women. World
conferences on the role and rights of women have been regularly held in Mexico City,
Copenhagen, Nairobi and Beijing. The UN itself established a Commission on the Status of
Women.
30
 The Philippines has been in cadence with the half – and full – steps of all these women's
movements. No less than Section 14, Article II of our 1987 Constitution mandates the State to
recognize the role of women in nation building and to ensure the fundamental equality before Vexation 0 0 9 9 3 0 8 5
the law of women and men. Our Senate has ratified the CEDAW as well as the Convention on 3 3 5
the Rights of the Child and its two protocols. To cap it all, Congress, on March 8, 2004,
enacted Rep. Act No. 9262, entitled "An Act Defining Violence Against Women and Their
Children, Providing for Protective Measures for Victims, Prescribing Penalties therefor and for
other Purposes." (Citations omitted) 6 1 1
5, 4, 5, 6, 9,
, 5, 2,
3 8 7 9 4
Total 2 1 9
B. Women are the "usual" and "most likely" 7 8 2 0 8
7 0 4
4 1 9 5 5
1 4 8

victims of violence.

At the time of the presentation of Senate Bill No. 2723, official statistics on violence against *2011 report covers only from January to August
women and children show that –

x x x physical injuries had the highest number of cases at 5,058 in 2002 representing 55.63%
of total cases reported (9,903). And for the first semester of 2003, there were 2,381 reported
cases out of 4,354 cases which represent 54.31%. xxx (T)he total number of women in
especially difficult circumstances served by the Department of Social Welfare and
Development (DSWD) for the year 2002, there are 1,417 physically abused/maltreated cases
out of the total of 5,608 cases. xxx (T)here are 1,091 DSWD cases out of a total number of
3,471 cases for the first semester of 2003. Female violence comprised more than 90% of all
forms of abuse and violence and more than 90% of these reported cases were committed by
the women's intimate partners such as their husbands and live-in partners.73
Recently, the Philippine Commission on Women presented comparative statistics on violence
against women across an eight-year period from 2004 to August of 2011 with violations under
R.A. 9262 ranking first among the different VAW categories since its implementation in
2004,74 thus:
Source: Philippine National Police – Women and Children Protection Center (WCPC)
On the other hand, no reliable estimates may be obtained on domestic abuse and violence
against men in the Philippines because incidents thereof are relatively low and, perhaps,
because many men will not even attempt to report the situation. In the United Kingdom, 32% of
women who had ever experienced domestic violence did so four or five (or more) times,
compared with 11% of the smaller number of men who had ever experienced domestic
violence; and women constituted 89% of all those who had experienced 4 or more incidents of
domestic violence.75 Statistics in Canada show that spousal violence by a woman against a
man is less likely to cause injury than the other way around (18 percent versus 44 percent).
Men, who experience violence from their spouses are much less likely to live in fear of violence
at the hands of their spouses, and much less likely to experience sexual assault. In fact, many
cases of physical violence by a woman against a spouse are in self-defense or the result of
many years of physical or emotional abuse.76

While there are, indeed, relatively few cases of violence and abuse perpetrated against men in
Table 1. Annual Comparative Statistics on Violence Against Women, 2004 - 2011* the Philippines, the same cannot render R.A. 9262 invalid.

In a 1960 case involving the violation of a city ordinance requiring drivers of animal-drawn
vehicles to pick up, gather and deposit in receptacles the manure emitted or discharged by
2 2 2 2 2 2 2 2 their vehicle-drawing animals in any public highways, streets, plazas, parks or alleys, said
Reported 0 0 0 0 0 0 0 0 ordinance was challenged as violative of the guaranty of equal protection of laws as its
Cases 0 0 0 0 0 0 1 1 application is limited to owners and drivers of vehicle-drawing animals and not to those
4 5 6 7 8 9 0 1 animals, although not utilized, but similarly pass through the same streets.

The ordinance was upheld as a valid classification for the reason that, while there may be non-
1, vehicle-drawing animals that also traverse the city roads, "but their number must be negligible
9 9 6 8 8 7 8 and their appearance therein merely occasional, compared to the rig-drawing ones, as not to
0
Rape 9 2 5 3 1 7
4
3 constitute a menace to the health of the community." 77 The mere fact that the legislative
7 7 9 7 1 0 2 classification may result in actual inequality is not violative of the right to equal protection, for
2
every classification of persons or things for regulation by law produces inequality in some
degree, but the law is not thereby rendered invalid.78

Incestuous 3 4 2 2 2 2 1 2 C. Gender bias and prejudices

Rape 8 6 6 2 8 7 9 3

From the initial report to the police through prosecution, trial, and sentencing, crimes against
women are often treated differently and less seriously than other crimes. This was argued by
1 1 1 1 2 1 2 2 then United States Senator Joseph R. Biden, Jr., now Vice President, chief sponsor of the
Attempted Violence Against Women Act (VAWA), in defending the civil rights remedy as a valid exercise
9 4 8 4 0 6 6 0
Rape of the U.S. Congress' authority under the Commerce and Equal Protection Clauses. He
4 8 5 7 4 7 8 1
stressed that the widespread gender bias in the U.S. has institutionalized historic prejudices
against victims of rape or domestic violence, subjecting them to "double victimization" – first at
the hands of the offender and then of the legal system. 79
Acts of 5 5 3 3 4 4 7 6
Lascivious 8 3 8 5 4 8 4 2 Our own Senator Loi Estrada lamented in her Sponsorship Speech for Senate Bill No. 2723
ness 0 6 2 8 5 5 5 5 that "(w)henever violence occurs in the family, the police treat it as a private matter and advise
the parties to settle the conflict themselves. Once the complainant brings the case to the
prosecutor, the latter is hesitant to file the complaint for fear that it might later be withdrawn.
This lack of response or reluctance to be involved by the police and prosecution reinforces the
3 escalating, recurring and often serious nature of domestic violence." 80
2, 1, 1, 1, 1, 2, 1,
,
Physical 3 8 5 3 4 0 5
5
Injuries 3 9 0 0 9 1 8 Sadly, our own courts, as well, have exhibited prejudices and biases against our women.
5
5 2 5 7 8 8 8
3

In a recent case resolved on March 9, 2011, we fined RTC Judge Venancio J. Amila for
Conduct Unbecoming of a Judge. He used derogatory and irreverent language in reference to
the complainant in a petition for TPO and PPO under R.A. 9262, calling her as "only a live-in
Sexual
5 3 3 4 1 5 8 6 partner" and presenting her as an "opportunist" and a "mistress" in an "illegitimate
Harassme
3 7 8 6 8 4 3 3 relationship." Judge Amila even called her a "prostitute," and accused her of being motivated
nt
by "insatiable greed" and of absconding with the contested property. 81 Such remarks betrayed
Judge Amila's prejudices and lack of gender sensitivity.

1, 2, 3, 5, 9, 9, The enactment of R.A. 9262 aims to address the discrimination brought about by biases and
2 9
2 3 5 2 9 0 prejudices against women. As emphasized by the CEDAW Committee on the Elimination of
RA 9262 1 2
6 8 9 8 7 2 Discrimination against Women, addressing or correcting discrimination through specific
8 4
9 7 9 5 4 1 measures focused on women does not discriminate against men. 82 Petitioner's
contention,83 therefore, that R.A. 9262 is discriminatory and that it is an "anti-male," "husband-
bashing," and "hate-men" law deserves scant consideration. As a State Party to the CEDAW,
the Philippines bound itself to take all appropriate measures "to modify the social and cultural
patterns of conduct of men and women, with a view to achieving the elimination of prejudices
3 2 1 1 2 2 3 2
and customary and all other practices which are based on the idea of the inferiority or the
Threats 1 2 9 8 2 0 7 1
superiority of either of the sexes or on stereotyped roles for men and women." 84 Justice Puno
9 3 9 2 0 8 4 3
correctly pointed out that "(t)he paradigm shift changing the character of domestic violence
from a private affair to a public offense will require the development of a distinct mindset on the
part of the police, the prosecution and the judges." 85

6 1 2 3 1 1 2 1
Seduction
2 9 9 0 9 9 5 5 II. The classification is germane to the purpose of the law.

The distinction between men and women is germane to the purpose of R.A. 9262, which is to
1 1 1 1 1 1 address violence committed against women and children, spelled out in its Declaration of
Concubina 9 9 Policy, as follows:
2 0 0 0 5 2
ge 3 9
1 2 9 9 8 8
SEC. 2. Declaration of Policy. – It is hereby declared that the State values the dignity of
women and children and guarantees full respect for human rights. The State also recognizes
the need to protect the family and its members particularly women and children, from violence
1 1 and threats to their personal safety and security.
1 1 1 2 3 6
RA 9208 5 9
7 1 6 4 4 2
2 0
Towards this end, the State shall exert efforts to address violence committed against women
and children in keeping with the fundamental freedoms guaranteed under the Constitution and
the provisions of the Universal Declaration of Human Rights, the Convention on the Elimination
Abduction of All Forms of Discrimination Against Women, Convention on the Rights of the Child and other
1 3 2 2 1 2 2 international human rights instruments of which the Philippines is a party.
/Kidnappin
6 4 3 8 8 5 2
g 29

In 1979, the U.N. General Assembly adopted the CEDAW, which the Philippines ratified on
August 5, 1981. Subsequently, the Optional Protocol to the CEDAW was also ratified by the
Philippines on October 6, 2003.86 This Convention mandates that State parties shall accord to
Unjust 9 5 5 5 8 7 1 1 women equality with men before the law87 and shall take all appropriate measures to eliminate
discrimination against women in all matters relating to marriage and family relations on the
basis of equality of men and women.88 The Philippines likewise ratified the Convention on the
31
Rights of the Child and its two protocols.89 It is, thus, bound by said Conventions and their
respective protocols.
III. The classification is not limited to existing
conditions only, and apply equally to all members
Moreover, the application of R.A. 9262 is not limited to the existing conditions when it was
promulgated, but to future conditions as well, for as long as the safety and security of women
and their children are threatened by violence and abuse.
R.A. 9262 applies equally to all women and children who suffer violence and abuse. Section 3
thereof defines VAWC as:
x x x any act or a series of acts committed by any person against a woman who is his wife,
former wife, or against a woman with whom the person has or had a sexual or dating
relationship, or with whom he has a common child, or against her child whether legitimate or
illegitimate, within or without the family abode, which result in or is likely to result in physical,
sexual, psychological harm or suffering, or economic abuse including threats of such acts,
battery, assault, coercion, harassment or arbitrary deprivation of liberty. It includes, but is not
limited to, the following acts:
A. "Physical Violence" refers to acts that include bodily or physical harm;
B. "Sexual violence" refers to an act which is sexual in nature, committed against a woman or
her child. It includes, but is not limited to:
a) rape, sexual harassment, acts of lasciviousness, treating a woman or her child as a sex
object, making demeaning and sexually suggestive remarks, physically attacking the sexual
parts of the victim's body, forcing her/him to watch obscene publications and indecent shows
or forcing the woman or her child to do indecent acts and/or make films thereof, forcing the
wife and mistress/lover to live in the conjugal home or sleep together in the same room with
the abuser;
b) acts causing or attempting to cause the victim to engage in any sexual activity by force,
threat of force, physical or other harm or threat of physical or other harm or coercion;
c) Prostituting the woman or child.
C. "Psychological violence" refers to acts or omissions causing or likely to cause mental or
emotional suffering of the victim such as but not limited to intimidation, harassment, stalking,
damage to property, public ridicule or humiliation, repeated verbal abuse and marital infidelity.
It includes causing or allowing the victim to witness the physical, sexual or psychological abuse
of a member of the family to which the victim belongs, or to witness pornography in any form or
to witness abusive injury to pets or to unlawful or unwanted deprivation of the right to custody
and/or visitation of common children.
D. "Economic abuse" refers to acts that make or attempt to make a woman financially
dependent which includes, but is not limited to the following:
1. withdrawal of financial support or preventing the victim from engaging in any legitimate
profession, occupation, business or activity, except in cases wherein the other spouse/partner
objects on valid, serious and moral grounds as defined in Article 73 of the Family Code;
2. deprivation or threat of deprivation of financial resources and the right to the use and
enjoyment of the conjugal, community or property owned in common;
3. destroying household property;
4. controlling the victims' own money or properties or solely controlling the conjugal money or
properties.
It should be stressed that the acts enumerated in the aforequoted provision are attributable to
research that has exposed the dimensions and dynamics of battery. The acts described here
are also found in the U.N. Declaration on the Elimination of Violence Against Women. 90 Hence,
the argument advanced by petitioner that the definition of what constitutes abuse removes the
difference between violent action and simple marital tiffs is tenuous.
There is nothing in the definition of VAWC that is vague and ambiguous that will confuse
petitioner in his defense. The acts enumerated above are easily understood and provide
adequate contrast between the innocent and the prohibited acts. They are worded with
sufficient definiteness that persons of ordinary intelligence can understand what conduct is
prohibited, and need not guess at its meaning nor differ in its application. 91 Yet, petitioner
insists92 that phrases like "depriving or threatening to deprive the woman or her child of a legal
right," "solely controlling the conjugal or common money or properties," "marital infidelity," and
"causing mental or emotional anguish" are so vague that they make every quarrel a case of
spousal abuse. However, we have stressed that the "vagueness" doctrine merely requires a
reasonable degree of certainty for the statute to be upheld – not absolute precision or
mathematical exactitude, as petitioner seems to suggest. Flexibility, rather than meticulous
specificity, is permissible as long as the metes and bounds of the statute are clearly
delineated. An act will not be held invalid merely because it might have been more explicit in
its wordings or detailed in its provisions.93
There is likewise no merit to the contention that R.A. 9262 singles out the husband or father as
the culprit. As defined above, VAWC may likewise be committed "against a woman with whom
the person has or had a sexual or dating relationship." Clearly, the use of the gender-neutral
word "person" who has or had a sexual or dating relationship with the woman encompasses
even lesbian relationships. Moreover, while the law provides that the offender be related or
connected to the victim by marriage, former marriage, or a sexual or dating relationship, it does
not preclude the application of the principle of conspiracy under the Revised Penal Code
(RPC). Thus, in the case of Go-Tan v. Spouses Tan,94 the parents-in-law of Sharica Mari L.
Go-Tan, the victim, were held to be proper respondents in the case filed by the latter upon the
allegation that they and their son (Go-Tan's husband) had community of design and purpose in
tormenting her by giving her insufficient financial support; harassing and pressuring her to be
ejected from the family home; and in repeatedly abusing her verbally, emotionally, mentally
and physically.
R.A. 9262 is not violative of the due process clause of the Constitution.
Petitioner bewails the disregard of R.A. 9262, specifically in the issuance of POs, of all
protections afforded by the due process clause of the Constitution. Says he: "On the basis of
unsubstantiated allegations, and practically no opportunity to respond, the husband is stripped
of family, property, guns, money, children, job, future employment and reputation, all in a
matter of seconds, without an inkling of what happened." 95
A protection order is an order issued to prevent further acts of violence against women and
their children, their family or household members, and to grant other necessary reliefs. Its
purpose is to safeguard the offended parties from further harm, minimize any disruption in their
daily life and facilitate the opportunity and ability to regain control of their life.96
"The scope of reliefs in protection orders is broadened to ensure that the victim or offended
party is afforded all the remedies necessary to curtail access by a perpetrator to the victim.
This serves to safeguard the victim from greater risk of violence; to accord the victim and any
designated family or household member safety in the family residence, and to prevent the
perpetrator from committing acts that jeopardize the employment and support of the victim. It
also enables the court to award temporary custody of minor children to protect the children
from violence, to prevent their abduction by the perpetrator and to ensure their financial
support."97
The rules require that petitions for protection order be in writing, signed and verified by the
petitioner98 thereby undertaking full responsibility, criminal or civil, for every allegation therein.
Since "time is of the essence in cases of VAWC if further violence is to be prevented," 99 the
court is authorized to issue ex parte a TPO after raffle but before notice and hearing when the
life, limb or property of the victim is in jeopardy and there is reasonable ground to believe that
the order is necessary to protect the victim from the immediate and imminent danger of VAWC
or to prevent such violence, which is about to recur. 100
There need not be any fear that the judge may have no rational basis to issue an ex parte
order. The victim is required not only to verify the allegations in the petition, but also to attach
her witnesses' affidavits to the petition.101
The grant of a TPO ex parte cannot, therefore, be challenged as violative of the right to due
process. Just like a writ of preliminary attachment which is issued without notice and hearing
because the time in which the hearing will take could be enough to enable the defendant to
abscond or dispose of his property, 102 in the same way, the victim of VAWC may already have
suffered harrowing experiences in the hands of her tormentor, and possibly even death, if
notice and hearing were required before such acts could be prevented. It is a constitutional
commonplace that the ordinary requirements of procedural due process must yield to the
necessities of protecting vital public interests, 103 among which is protection of women and
children from violence and threats to their personal safety and security.
It should be pointed out that when the TPO is issued ex parte, the court shall likewise order
that notice be immediately given to the respondent directing him to file an opposition within five
(5) days from service. Moreover, the court shall order that notice, copies of the petition and
TPO be served immediately on the respondent by the court sheriffs. The TPOs are initially
effective for thirty (30) days from service on the respondent. 104
Where no TPO is issued ex parte, the court will nonetheless order the immediate issuance and
service of the notice upon the respondent requiring him to file an opposition to the petition
within five (5) days from service. The date of the preliminary conference and hearing on the
merits shall likewise be indicated on the notice. 105
The opposition to the petition which the respondent himself shall verify, must be accompanied
by the affidavits of witnesses and shall show cause why a temporary or permanent protection
order should not be issued.106
It is clear from the foregoing rules that the respondent of a petition for protection order should
be apprised of the charges imputed to him and afforded an opportunity to present his side.
Thus, the fear of petitioner of being "stripped of family, property, guns, money, children, job,
future employment and reputation, all in a matter of seconds, without an inkling of what
happened" is a mere product of an overactive imagination. The essence of due process is to
be found in the reasonable opportunity to be heard and submit any evidence one may have in
support of one's defense. "To be heard" does not only mean verbal arguments in court; one
may be heard also through pleadings. Where opportunity to be heard, either through oral
arguments or pleadings, is accorded, there is no denial of procedural due process. 107
It should be recalled that petitioner filed on April 26, 2006 an Opposition to the Urgent Ex-Parte
Motion for Renewal of the TPO that was granted only two days earlier on April 24, 2006.
Likewise, on May 23, 2006, petitioner filed a motion for the modification of the TPO to allow
him visitation rights to his children. Still, the trial court in its Order dated September 26, 2006,
gave him five days (5) within which to show cause why the TPO should not be renewed or
extended. Yet, he chose not to file the required comment arguing that it would just be an
"exercise in futility," conveniently forgetting that the renewal of the questioned TPO was only
for a limited period (30 days) each time, and that he could prevent the continued renewal of
said order if he can show sufficient cause therefor. Having failed to do so, petitioner may not
now be heard to complain that he was denied due process of law.
Petitioner next laments that the removal and exclusion of the respondent in the VAWC case
from the residence of the victim, regardless of ownership of the residence, is virtually a "blank
check" issued to the wife to claim any property as her conjugal home. 108
The wording of the pertinent rule, however, does not by any stretch of the imagination suggest
that this is so. It states:
SEC. 11. Reliefs available to the offended party. -- The protection order shall include any,
some or all of the following reliefs:
(c) Removing and excluding the respondent from the residence of the offended party,
regardless of ownership of the residence, either temporarily for the purpose of protecting the
offended party, or permanently where no property rights are violated. If the respondent must
remove personal effects from the residence, the court shall direct a law enforcement agent to
accompany the respondent to the residence, remain there until the respondent has gathered
his things and escort him from the residence;
Indubitably, petitioner may be removed and excluded from private respondent's residence,
regardless of ownership, only temporarily for the purpose of protecting the latter. Such removal
and exclusion may be permanent only where no property rights are violated. How then can the
private respondent just claim any property and appropriate it for herself, as petitioner seems to
suggest?
The non-referral of a VAWC case to a mediator is justified.
Petitioner argues that "by criminalizing run-of-the-mill arguments, instead of encouraging
mediation and counseling, the law has done violence to the avowed policy of the State to
"protect and strengthen the family as a basic autonomous social institution." 109
Under Section 23(c) of A.M. No. 04-10-11-SC, the court shall not refer the case or any issue
thereof to a mediator. The reason behind this provision is well-explained by the Commentary
on Section 311 of the Model Code on Domestic and Family Violence as follows: 110
This section prohibits a court from ordering or referring parties to mediation in a proceeding for
an order for protection. Mediation is a process by which parties in equivalent bargaining
positions voluntarily reach consensual agreement about the issue at hand. Violence, however,
is not a subject for compromise. A process which involves parties mediating the issue of
violence implies that the victim is somehow at fault. In addition, mediation of issues in a
proceeding for an order of protection is problematic because the petitioner is frequently unable
to participate equally with the person against whom the protection order has been sought.
(Emphasis supplied)
There is no undue delegation of judicial power to barangay officials.
Petitioner contends that protection orders involve the exercise of judicial power which, under
the Constitution, is placed upon the "Supreme Court and such other lower courts as may be
32
established by law" and, thus, protests the delegation of power to barangay officials to issue
protection orders.111 The pertinent provision reads, as follows:

SEC. 14. Barangay Protection Orders (BPOs); Who May Issue and How. – Barangay
Protection Orders (BPOs) refer to the protection order issued by the Punong Barangay
ordering the perpetrator to desist from committing acts under Section 5 (a) and (b) of this
Act.1âwphi1 A Punong Barangay who receives applications for a BPO shall issue the
protection order to the applicant on the date of filing after ex parte determination of the basis of
the application. If the Punong Barangay is unavailable to act on the application for a BPO, the
application shall be acted upon by any available Barangay Kagawad. If the BPO is issued by a
Barangay Kagawad, the order must be accompanied by an attestation by the Barangay
Kagawad that the Punong Barangay was unavailable at the time of the issuance of the BPO.
BPOs shall be effective for fifteen (15) days. Immediately after the issuance of an ex parte
BPO, the Punong Barangay or Barangay Kagawad shall personally serve a copy of the same
on the respondent, or direct any barangay official to effect its personal service.

The parties may be accompanied by a non-lawyer advocate in any proceeding before the
Punong Barangay.

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government. 112 On the other hand, executive power "is
generally defined as the power to enforce and administer the laws. It is the power of carrying
the laws into practical operation and enforcing their due observance." 113

As clearly delimited by the aforequoted provision, the BPO issued by the Punong Barangay or,
in his unavailability, by any available Barangay Kagawad, merely orders the perpetrator to
desist from (a) causing physical harm to the woman or her child; and (2) threatening to cause
the woman or her child physical harm. Such function of the Punong Barangay is, thus, purely
executive in nature, in pursuance of his duty under the Local Government Code to "enforce all
laws and ordinances," and to "maintain public order in the barangay." 114

We have held that "(t)he mere fact that an officer is required by law to inquire into the
existence of certain facts and to apply the law thereto in order to determine what his official
conduct shall be and the fact that these acts may affect private rights do not constitute an
exercise of judicial powers."115

In the same manner as the public prosecutor ascertains through a preliminary inquiry or
proceeding "whether there is reasonable ground to believe that an offense has been
committed and the accused is probably guilty thereof," the Punong Barangay must determine
reasonable ground to believe that an imminent danger of violence against the woman and her
children exists or is about to recur that would necessitate the issuance of a BPO. The
preliminary investigation conducted by the prosecutor is, concededly, an executive, not a
judicial, function. The same holds true with the issuance of a BPO.

We need not even belabor the issue raised by petitioner that since barangay officials and other
law enforcement agencies are required to extend assistance to victims of violence and abuse,
it would be very unlikely that they would remain objective and impartial, and that the chances
of acquittal are nil. As already stated, assistance by barangay officials and other law
enforcement agencies is consistent with their duty to enforce the law and to maintain peace
and order.

Conclusion

Before a statute or its provisions duly challenged are voided, an unequivocal breach of, or a
clear conflict with the Constitution, not merely a doubtful or argumentative one, must be
demonstrated in such a manner as to leave no doubt in the mind of the Court. In other words,
the grounds for nullity must be beyond reasonable doubt.116 In the instant case, however, no
concrete evidence and convincing arguments were presented by petitioner to warrant a
declaration of the unconstitutionality of R.A. 9262, which is an act of Congress and signed into
law by the highest officer of the co-equal executive department. As we said in Estrada v.
Sandiganbayan, 117 courts must assume that the legislature is ever conscious of the borders
and edges of its plenary powers, and passed laws with full knowledge of the facts and for the
purpose of promoting what is right and advancing the welfare of the majority.

We reiterate here Justice Puno's observation that "the history of the women's movement
against domestic violence shows that one of its most difficult struggles was the fight against
the violence of law itself. If we keep that in mind, law will not again be a hindrance to the
struggle of women for equality but will be its fulfillment." 118 Accordingly, the constitutionality of
R.A. 9262 is, as it should be, sustained.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED for lack of merit.

SO ORDERED.

33
G.R. No. 199669
SOUTHERN LUZON DRUG CORPORATION, Petitioner,
vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL
COUNCIL FOR THE WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF
FINANCE, and THE BUREAU OF INTERNAL REVENUE, Respondents
DECISION
REYES, J.:
Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court,
assailing the Decision2 dated June 17, 2011, and Resolution3 dated November 25, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the petition for prohibition
filed by Southern Luzon Drug Corporation (petitioner) against the Department of1 Social
Welfare and Development (DSWD), the National Council for the Welfare of Disabled Persons
(NCWDP) (now National Council on Disability Affairs or NCDA), the Department of Finance
(DOF) and the Bureau of: Internal Revenue (collectively, the respondents), which sought to
prohibit the implementation of Section 4(a) of Republic Act (R.A.) No. 9257, otherwise known
as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No. 9442, which
amends the "Magna Carta for Disabled Persons," particularly the granting of 20% discount on
the purchase of medicines by senior citizens and persons with disability (PWD),: respectively,
and treating them as tax deduction.
The petitioner is a domestic corporation engaged in the business of: drugstore operation in the
Philippines while the respondents are government' agencies, office and bureau tasked to
monitor compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules and
regulations for their effective implementation, as well as prosecute and revoke licenses of
erring1 establishments.
Factual Antecedents
On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior
Citizens to Nation-Building, Grant Benefits and Special Privileges and For Other
Purposes," was enacted. Under the said law, a senior citizen, who must be at least 60 years
old and has an annual income of not more than P60,000.00, 4 may avail of the privileges
provided in Section 4 thereof, one of which is 20% discount on the purchase of medicines. The
said provision states:
Sec. 4. Privileges for the Senior Citizen. - x x x:
a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment, restaurants and recreation
centers and purchase of medicine anywhere in the country: Provided, That private
establishments may claim the cost as tax credit[.]
x x x x (Emphasis ours)
To recoup the amount given as discount to qualified senior citizens, covered establishments
can claim an equal amount as tax credit which can be applied against the income tax due from
them.
On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257,
amending some provisions of R.A. No. 7432. The new law retained the 20% discount on the
purchase of medicines but removed the annual income ceiling thereby qualifying all senior
citizens to the privileges under the law. Further, R.A. No. 9257 modified the tax treatment of
the discount granted to senior citizens, from tax credit to tax deduction from gross income,
computed based on the net cost of goods sold or services rendered. The pertinent provision,
as amended by R.A. No. 9257, reads as follows:
SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be entitled to the
following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization
of services in hotels and similar lodging establishments, restaurants and recreation centers,
and purchase of medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior citizens;
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided, That
the cost of the discount shall be allowed as deduction from gross income for the same
taxable year that the discount is granted. Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, shall be included in their gross
sales receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended. (Emphasis ours)
On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of R.A.
No. 9257. Article 8 of Rule VI of the said IRR provides:
Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts
granted under Rule V, Section 4 - Discounts for Establishments; Section 9, Medical and Dental
Services in Private Facilities and Sections 10 and 11 -Air, Sea and Land Transportation as tax
deduction based on the net cost of the goods sold or services rendered. Provided, That the
cost of the discount shall be allowed as deduction from gross income for the same
taxable year that the discount is granted; Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, shall be included in their gross
sales receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be issued
by the Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF).
(Emphasis ours)
The change in the tax treatment of the discount given to senior citizens did not sit well with
some drug store owners and corporations, claiming it affected the profitability of their business.
Thus, on January 13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug), together with
other. corporation and proprietors operating drugstores in the Philippines, filed a Petition for
Prohibition with Prayer for Temporary Restraining Order (TRO) I and/or Preliminary Injunction
before this Court, entitled Carlos Superdrug I Corporation v. DSWD,5docketed as G.R. No.
166494, assailing the constitutionality of Section 4(a) of R.A. No. 9257 primarily on the ground
that it amounts to taking of private property without payment of just compensation. In a
Decision dated June 29, 2007, the Court upheld the constitutionality of the assailed provision,
holding that the same is a legitimate exercise of police power. The relevant portions of the
decision read, thus:
The law is a legitimate exercise of police power which, similar to the power of eminent domain,
has general welfare for its object. Police power is not capable of an exact definition, but has
been purposely veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been described as "the
most essential, insistent and the least limitable of powers, extending as it does to all the great
public needs." It is "[t]he power vested in the legislature by the constitution to make, ordain,
and establish all manner of wholesome and reasonable laws, statutes, and ordinances, either
with penalties or without, not repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of the same."
For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered by
due process, must yield to general welfare.
Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the precept for the protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public utilities, continuously serve as a
reminder that the right to property can be relinquished upon the command of the State for the
promotion of public good. Undeniably, the success of the senior citizens program rests largely
on the support imparted by petitioners and the other private establishments concerned. This
being the case, the means employed in invoking the active participation of the private sector, in
order to achieve the purpose or objective of the law, is reasonably and directly related. Without
sufficient proof that Section 4(a) of RA. No. 9257 is arbitrary, and that the continued
implementation of the same would be unconscionably detrimental to petitioners, the Court will
refrain from quashing a legislative act.
WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations omitted)
On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing
decision. Subsequently, the Court issued Resolution dated August 21, 2007, denying the said
motion with finality. 7
Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for Disabled
Persons" was enacted, codifying the rights and privileges of PWDs. Thereafter, on April 30,
2007, R.A. No. 9442 was enacted, amending R.A. No. 7277. One of the salient amendments in
the law is the insertion of Chapter 8 in Title 2 thereof, which enumerates the other privileges
and incentives of PWDs, including the grant of 20% discount on the purchase of medicines.
Similar to R.A. No. 9257, covered establishments shall claim the discounts given to PWDs as
tax deductions from the gross income, based on the net cost of goods sold or services
rendered. Section 32 ofR.A. No. 9442 reads:
CHAPTER 8. Other Privileges and Incentives
SEC. 32. Persons with disability shall be entitled to the following:
(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for
the exclusive use or enjoyment of persons with disability;
The establishments may claim the discounts granted in subsections (a), (b), (c), (e), (t)
and (g) as taxdeductions based on the net cost of the goods sold or services
rendered: Provided, however, That the cost of the discount shall be allowed as deduction from
gross income for the same taxable year that the discount is granted: Provided, further, That the
total amount of the claimed tax deduction net of value-added tax if applicable, shall be included
in their gross sales receipts for tax purposes and shall be subject to proper documentation and
to the provisions of the National Internal Revenue Code (NIRC), as amended. (Emphasis ours)
Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD,
Department of Education, DOF, Department of Tourism and the Department of Transportation
and Communications.8Sections 5 .1 and 6.1.d thereof provide:
Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are
defined as follows:
5.1. Persons with Disability are those individuals defined under Section 4 of RA 7277, "An
Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with
Disability as amended and their integration into the Mainstream of Society and for Other
Purposes." This is defined as a person suffering from restriction or different abilities, as a result
of a mental, physical or sensory impairment, to perform an activity in a manner or within the
range considered normal for human being. Disability shall mean: (1) a physical or mental
impairment that substantially limits one or more psychological, physiological or anatomical
function of an individual or activities of such individual; (2) a record of such an impairment; or
(3) being regarded as having such an impairment.
6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the purchase of
medicine for the exclusive use and enjoyment of persons with disability. All drug stores,
hospital, pharmacies, clinics and other similar establishments selling medicines are required to
provide at least twenty percent (20%) discount subject to the guidelines issued by DOH and
PHILHEALTH.
On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for TRO
and/or Writ of Preliminary Injunction9 with the CA, seeking to declare as unconstitutional (a)
Section 4(a) of R.A. No. 9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR,
insofar as these provisions only allow tax deduction on the gross income based on the net cost
of goods sold or services rendered as compensation to private establishments for the 20%
discount that they are required to grant to senior citizens and PWDs. Further, the petitioner
prayed that the respondents be permanently enjoined from implementing the assailed
provisions.
Ruling of the CA
On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
Superdrug10particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police
power. Moreover, the CA held that considering that the same question had been raised by
parties similarly situated and was resolved in Carlos Superdrug, the rule of stare decisis stood
as a hindrance to any further attempt to relitigate the same issue. It further noted that
jurisdictional considerations also compel the dismissal of the action. It particularly emphasized
that it has no original or appellate jurisdiction to pass upon the constitutionality of the assailed
laws, 11 the same pertaining to the Regional Trial Court (RTC). Even assuming that it had
concurrent jurisdiction with the RTC, the principle of hierarchy of courts mandates that the
case be commenced and heard by the lower court. 12 The CA further ruled that the petitioner
resorted to the wrong remedy as a petition for prohibition will not lie to restrain the actions of
the respondents for the simple reason that they do not exercise judicial, quasi-judicial or
ministerial duties relative to the issuance or implementation of the questioned provisions. Also,
the petition was wanting of the allegations of the specific acts committed by the respondents
that demonstrate the exercise of these powers which may be properly challenged in a petition
for prohibition.13
The petitioner filed its Motion for Reconsideration 14 of the Decision dated June 17, 2011 of the
CA, but the same was denied in a Resolution 15 dated November 25, 2011.
Unyielding, the petitioner filed the instant petition, raising the following assignment of errors, to
wit:
I
THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR PROHIBITION
FILED WITH THE CA IS AN IMPROPER REMEDY TO ASSAIL THE CONSTITUTIONALITY
OF THE 20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs;
34
II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME COURT'S RULING
IN CARLOS SUPERDRUG CONSTITUTES STARE DECISIS;
III
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT
THE 20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs IS A VALID EXERCISE
OF POLICE POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER
OF EMINENT DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO THE
PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;
IV
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT
THE 20°/o SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs DOES NOT VIOLATE
THE PETITIONER'S RIGHT TO EQUAL PROTECTION OF THE LAW; and
V of the senior citizen discount per se, but the manner by which they were allowed to recoup the
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT
THE DEFINITIONS OF DISABILITIES AND PWDs ARE NOT VAGUE AND DO NOT
VIOLATE THE PETITIONER'S RIGHT TO DUE PROCESS OF LAW.16
Ruling of the Court
Prohibition may be filed to question the constitutionality of a law
In the assailed decision, the CA noted that the action, although denominated as one for
prohibition, seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No. 9257
and Section 32 of R.A. No.9442. It held that in such a case, the proper remedy is not a special
civil 1 action but a petition for declaratory relief, which falls under the exclusive original
jurisdiction of the RTC, in the first instance, and of the Supreme Court, on appeal. 17
The Court clarifies.
Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of
authority and is directed against proceedings that are done without or in excess of jurisdiction,
or with grave abuse of discretion, there being no appeal or other plain, speedy, and adequate
remedy in the ordinary course of law. It is the remedy to prevent inferior courts, corporations,
boards, or persons from usurping or exercising a jurisdiction or power with which they have not
been vested by law. 18 This is, however, not the lone office of an action for prohibition. In Diaz,
et al. v. The Secretary of Finance, et al., 19 prohibition was also recognized as a proper remedy
to prohibit or nullify acts of executive officials that amount to usurpation of legislative
authority. 20 And, in a number of jurisprudence, prohibition was allowed as a proper action to
assail the constitutionality of a law or prohibit its implementation.
In Social Weather Stations, Inc. v. Commission on Elections, 21therein petitioner filed a petition
for prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or the "Fair
Elections Act," which prohibited the publication of surveys within 15 days before an election for
national candidates, and seven days for local candidates. Included in the petition is a prayer to
prohibit the Commission on Elections from enforcing the said provision. The Court granted the
Petition and struck down the assailed provision for being unconstitutional. 22
In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,23 therein petitioner assailed
the constitutionality of paragraphs (c ), (d), (f) and (g) of Section 36 of R.A. No. 9165,
otherwise known as the "Comprehensive Dangerous Drugs Act of 2002," on the ground that
they constitute undue delegation of legislative power for granting unbridled discretion to
schools and private employers in determining the manner of drug 'testing of their employees,
and that the law constitutes a violation of the right against unreasonable searches and
seizures. It also sought to enjoin the Dangerous Drugs Board and the Philippine Drug
Enforcement Agency from enforcing the challenged provision. 24 The Court partially granted the
petition by declaring Section 36(f) and (g) of R.A. No. 9165 unconstitutional, and permanently
enjoined the concerned agencies from implementing them. 25
In another instance, consolidated petitions for prohibitions 26 questioning the constitutionality of
the Priority Development Assistance Fund were deliberated upon by this Court which
ultimately granted the same.
Clearly, prohibition has been found an appropriate remedy to challenge the constitutionality of
various laws, rules, and regulations.
There is also no question regarding the jurisdiction of the CA to hear and decide a petition for
prohibition. By express provision of the law, particularly Section 9(1) of Batas Pambansa
Bilang 129,27 the CA was granted "original jurisdiction to issue writs
of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or I
processes, whether or not in aid of its appellate jurisdiction." This authority· the CA enjoys
concurrently with RTCs and this Court.
In the same manner, the supposed violation of the principle of the ·. hierarchy of courts does
not pose any hindrance to the full deliberation of the issues at hand. It is well to remember that
"the judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases involving
warring factual allegations. For this reason, litigants are required to [refer] to the trial courts at
the first instance to determine the truth or falsity of these contending allegations on the basis of
the evidence of the parties. Cases which depend on disputed facts for decision cannot be
brought immediately before appellate courts as they are not triers of facts. Therefore, a strict
application of the rule of hierarchy of courts is not necessary when the cases brought before
the appellate courts do not involve factual but legal questions." 28
Moreover, the principle of hierarchy of courts may be set aside for special and important
reasons, such as when dictated by public welfare and ' the advancement of public policy, or
demanded by the broader interest of justice. 29 Thus, when based on the good judgment of the
court, the urgency and significance of the issues presented calls for its intervention, it should
not hesitate to exercise its duty to resolve.
The instant petition presents an exception to the principle as it basically raises a legal question
on the constitutionality of the mandatory discount and the breadth of its rightful beneficiaries.
More importantly, the resolution of the issues will redound to the benefit of the public as it will
put to rest the questions on the propriety of the granting of discounts to senior citizens and
PWDs amid the fervent insistence of affected establishments that the measure transgresses
their property rights. The Court, therefore, finds it to the best interest of justice that the instant
petition be resolved.
The instant case is not barred by stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos
Superdrug constitutes as stare decisis or law of the case which bars the relitigation of the
issues that had been resolved therein and had been raised anew in the instant petition. It
argues that there are substantial differences between Carlos Superdrug and the circumstances
in the instant case which take it out from the operation of the doctrine of stare decisis. It cites
that in Carlos Superdrug, the Court denied the petition because the petitioner therein failed to
prove the confiscatory effect of the tax deduction scheme as no proof of actual loss was
submitted. It believes that its submission of financial statements for the years 2006 and 2007
to prove the confiscatory effect of the law is a material fact that distinguishes the instant case
from that of Carlos Superdrug. 30
The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the
instant case, not because of the petitioner's submission of financial statements which were
wanting in the first case, but because it had the good sense of including questions that had not
been raised or deliberated in the former case of Carlos Superdrug, i.e., validity of the 20%
discount granted to PWDs, the supposed vagueness of the provisions of R.A. No. 9442 and
violation of the equal protection clause.
Nonetheless, the Court finds nothing in the instant case that merits a reversal of the earlier
ruling of the Court in Carlos Superdrug. Contrary to the petitioner's claim, there is a very slim
difference between the issues in Carlos Superdrug and the instant case with respect to the
nature of the senior citizen discount. A perfunctory reading of the circumstances of the two
cases easily discloses marked similarities in the issues and the arguments raised by the
petitioners in both cases that semantics nor careful play of words can hardly obscure.
In both cases, it is apparent that what the petitioners are ultimately questioning is not the grant
said discount. In particular, they are protesting the change in the tax treatment of the senior
citizen discount from tax credit to being merely a deduction from gross income which they
claimed to have significantly reduced their profits.
This question had been settled in Carlos Superdrug, where the Court ruled that the change in
the tax treatment of the discount was a valid exercise of police power, thus:
Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers and
formed part of the gross sales of the private establishments, were it not for R.A. No. 9257.
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it
would not meet the definition of just compensation.
Having said that, this raises the question of whether the State, in promoting the health and
welfare of a special group of citizens, can impose upon private establishments the burden of
partly subsidizing a government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-
being as the State considers them an integral part of our society.
The priority given to senior citizens finds its basis in the Constitution as set forth in the law
itself. Thus, the Act provides:
SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: "The State shall provide social justice in all phases of
national development." Further, Article XIII, Section 11, provides: "The State shall adopt an
integrated and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost.
There shall be priority for the needs of the underprivileged sick, elderly, disabled, women and
children." Consonant with these constitutional principles the following are the declared policies
of this Act:
(f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.
To implement the above policy, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and
similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of reimbursement,
the law provides that business establishments extending the twenty percent discount to senior
citizens may claim the discount as a tax deduction.
The law is a legitimate exercise of police power which, similar to the power of eminent domain,
has general welfare for its object. Police power is not capable of an exact definition, but has
been purposely veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been described as "the
most essential, insistent and the least limitable of powers, extending as it does to all the great
public needs." It is "[t]he power vested in the legislature by the constitution to make, ordain,
and establish all manner of wholesome and reasonable laws, statutes, and ordinances, either
with penalties or without, not repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of the same."
For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because proper rights, though sheltered by due
process, must yield to general welfare. 31 (Citations omitted and emphasis in the original)
Verily, it is the bounden duty of the State to care for the elderly as they reach the point in their
lives when the vigor of their youth has diminished and resources have become scarce. Not
much because of choice, they become needing of support from the society for whom they
presumably spent their productive days and for whose betterment they' exhausted their
energy, know-how and experience to make our days better to live.
In the same way, providing aid for the disabled persons is an equally important State
responsibility. Thus, the State is obliged to give full support to the improvement of the total
well-being of disabled persons and their integration into the mainstream of society. 32This
entails the creation of opportunities for them and according them privileges if only to balance
the playing field which had been unduly tilted against them because of their limitations.
The duty to care for the elderly and the disabled lies not only upon the State, but also on the
community and even private entities. As to the State, the duty emanates from its role
as parens patriae which holds it under obligation to provide protection and look after the
welfare of its people especially those who cannot tend to themselves. Parens patriae means
parent of his or her country, and refers to the State in its role as "sovereign", or the State in its
capacity as a provider of protection to those unable to care for themselves. 33 In fulfilling this
duty, the State may resort to the exercise of its inherent powers: police power, eminent domain
and power of taxation.
35
In Gerochi v. Department of Energy,34the Court passed upon one of the inherent powers of the
state, the police power, where it emphasized, thus:
[P]olice power is the power of the state to promote public welfare by restraining and regulating
the use of liberty and property. It is the most pervasive, the least limitable, and the most
demanding of the three fundamental powers of the State. The justification is found in the Latin
maxim salus populi est suprema lex (the welfare of the people is the supreme law) and sic
utere tuo ut alienum non laedas (so use your property as not to injure the property of others).
As an inherent attribute of sovereignty which virtually extends to all public needs, police power
grants a wide panoply of instruments through which the State, as parens patriae, gives effect
to a host of its regulatory powers. We have held that the power to "regulate" means the power
to protect, foster, promote, preserve, and control, with due regard for the interests, first and
foremost, of the public, then of the utility and of its patrons. 35 (Citations omitted)
It is in the exercise of its police power that the Congress enacted R.A. Nos. 9257 and 9442,
the laws mandating a 20% discount on purchases of medicines made by senior citizens and
PWDs. It is also in further exercise of this power that the legislature opted that the said
discount be claimed as tax deduction, rather than tax credit, by covered establishments.
The petitioner, however, claims that the change in the tax treatment of the discount is illegal as
it constitutes taking without just compensation. It even submitted financial statements for the
years 2006 and 2007 to support its claim of declining profits when the change in the policy was
implemented.
The Court is not swayed.
To begin with, the issue of just compensation finds no relevance in the instant case as it had
already been made clear in Carlos Superdrug that the power being exercised by the State in
the imposition of senior citizen discount was its police power. Unlike in the exercise of the
power of eminent domain, just compensation is not required in wielding police power. This is
precisely because there is no taking involved, but only an imposition of burden.
36
In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., the Court ruled that by
examining the nature and the effects of R.A. No. 9257, it becomes apparent that the
challenged governmental act was an exercise of police power. It was held, thus:
[W]e now look at the nature and effects of the 20% discount to determine if it constitutes an
exercise of police power or eminent domain.
The 20% discount is intended to improve the welfare of senior citizens who, at their age, are
less likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in
need of subsidy in purchasing basic commodities. It may not be amiss to mention also that the
discount serves to honor senior citizens who presumably spent the productive years of their
lives on contributing to the development and progress of the nation. This distinct cultural
Filipino practice of honoring the elderly is an integral part of this law.
As to its nature and effects, the 20% discount is a regulation affecting the ability of private
establishments to price their products and services relative to a special class of individuals,
senior citizens, for which the Constitution affords preferential concern. In turn, this affects the
amount of profits or income/gross sales that a private establishment can derive from senior
citizens. In other words, the subject regulation affects the pricing, and, hence, the profitability
of a private establishment. However, it does not purport to appropriate or burden specific
properties, used in the operation or conduct of the business of private establishments, for the
use or benefit of the public, or senior citizens for that matter, but merely regulates the pricing of
goods and services relative to, and the amount of profits or income/gross sales that such
private establishments may derive from, senior citizens.
The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of 'return on investment control laws which are traditionally regarded as police
power measures. x x x. 37 (Citations omitted)
In the exercise of police power, "property rights of private individuals are subjected to restraints
and burdens in order to secure the general comfort, health, and prosperity of the
State."38 Even then, the State's claim of police power cannot be arbitrary or unreasonable.
After all, the overriding purpose of the exercise of the power is to promote general welfare,
public health and safety, among others. It is a measure, which by sheer necessity, the State
exercises, even to the point of interfering with personal liberties or property rights in order to
advance common good. To warrant such interference, two requisites must concur: (a) the
interests of the public generally, as distinguished from those of a particular class, require the
interference of the! State; and (b) the means employed are reasonably necessary to the:
attainment of the object sought to be accomplished and not unduly oppressive upon
individuals. In other words, the proper exercise of the police power requires the concurrence of
a lawful subject and a lawful method.39
The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are individuals
whose well-being is a recognized public duty. As a public duty, the responsibility for their care
devolves upon the concerted efforts of the State, the family and the community. In Article XIII,
Section 1 of the Constitution, the State is mandated to give highest priority to the enactment of
measures that protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities by equitably diffusing
wealth and political power1 for the common good. The more apparent manifestation of these
social inequities is the unequal distribution or access to healthcare services. To: abet in
alleviating this concern, the State is committed to adopt an integrated! and comprehensive
approach to health development which shall endeavor to make essential goods, health and
other social services available to all the people at affordable cost, with priority for the needs of
the underprivileged sick, elderly, disabled, women, and children. 40
In the same manner, the family and the community have equally significant duties to perform in
reducing social inequality. The family as the basic social institution has the foremost duty to
care for its elderly members.41 On the other hand, the community, which include the private
sector, is recognized as an active partner of the State in pursuing greater causes. The private
sector, being recipients of the privilege to engage business in our land, utilize our goods as
well as the services of our people for proprietary purposes, it is only fitting to expect their
support in measures that contribute to common good. Moreover, their right to own, establish
and operate economic enterprises is always subject to the duty of the State to promote
distributive justice and to intervene when the common good so demands.42
The Court also entertains no doubt on the legality of the method taken by the legislature to
implement the declared policies of the subject laws, that is, to impose discounts on the medical
services and purchases of senior citizens and PWDs and to treat the said discounts as tax
deduction rather than tax credit. The measure is fair and reasonable and no credible proof was
presented to prove the claim that it was confiscatory. To be considered confiscatory, there
must be taking of property without just compensation.
Illuminating on this point is the discussion of the Court on the concept of taking in City of
Manila v. Hon. Laguio, Jr.,43 viz.:
There are two different types of taking that can be identified. A "possessory" taking occurs
when the government confiscates or physically occupies property. A "regulatory" taking occurs
when the government's regulation leaves no reasonable economically viable use of the
property.
No formula or rule can be devised to answer the questions of what is too far and when
regulation becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of
degree and therefore cannot be disposed of by general propositions." On many other
occasions as well, the U.S. Supreme Court has said that the issue of when regulation
constitutes a taking is a matter of considering the facts in each case. x x x.
What is crucial in judicial consideration of regulatory takings is that government regulation is a
taking if it leaves no reasonable economically viable use of property in a manner that interferes
with reasonable expectations for use. A regulation that permanently denies all economically
beneficial or productive use of land is, from the owner's point of view, equivalent to a "taking"
unless principles of nuisance or property law that existed when the owner acquired the land
make the use prohibitable. When the owner of real property has been called upon to sacrifice
all economically beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking.
A restriction on use of property may also constitute a "taking" if not reasonably necessary to
the effectuation of a substantial public purpose or if it has an unduly harsh impact on the
distinct investment-backed expectations of the owner.44 (Citations omitted)
The petitioner herein attempts to prove its claim that the pertinent provisions of R.A. Nos. 9257
and 9442 amount to taking by presenting financial statements purportedly showing financial
losses incurred by them due to the adoption of the tax deduction scheme.
For the petitioner's clarification, the presentation of the financial statement is not of compelling
significance in justifying its claim for just compensation. What is imperative is for it to establish
that there was taking in the constitutional sense or that, in the imposition of the mandatory
discount, the power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi,45five circumstances must be
present in order to qualify "taking" as an exercise of eminent domain. First, the expropriator
must enter a private property. Second, the entrance into private property must be for more
than a momentary period. Third, the entry into the property should be under warrant or color of
legal authority. Fourth, the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected. Fifth, the utilization of the property for public use must be
in such a way as to oust the owner and deprive him of all beneficial enjoyment of the
property. 46
The first requirement speaks of entry into a private property which clearly does not obtain in
this case. There is no private property that is; invaded or appropriated by the State. As it is, the
petitioner precipitately deemed future profits as private property and then proceeded to argue
that the State took it away without full compensation. This seemed preposterous considering
that the subject of what the petitioner supposed as taking was not even earned profits but
merely an expectation of profits, which may not even occur. For obvious reasons, there cannot
be taking of a contingency or of a mere possibility because it lacks physical existence that is
necessary before there could be any taking. Further, it is impossible to quantify the
compensation for the loss of supposed profits before it is earned.
The supposed taking also lacked the characteristics of permanence 47 and
consistency.1âwphi1 The presence of these characteristics is significant because they can
establish that the effect of the questioned provisions is the same on all establishments and
those losses are indeed its unavoidable consequence. But apparently these indications are
wanting in this case. The reason is that the impact on the establishments varies depending on
their response to the changes brought about by the subject provisions. To be clear,
establishments, are not prevented from adjusting their prices to accommodate the effects of
the granting of the discount and retain their profitability while being fully compliant to the laws.
It follows that losses are not inevitable because establishments are free to take business
measures to accommodate the contingency. Lacking in permanence and consistency, there
can be no taking in the constitutional sense. There cannot be taking in one establishment and
none in another, such that the former can claim compensation but the other may not. Simply
told, there is no taking to justify compensation; there is only poor business decision to blame.
There is also no ousting of the owner or deprivation of ownership. Establishments are neither
divested of ownership of any of their properties nor is anything forcibly taken from them. They
remain the owner of their goods and their profit or loss still depends on the performance of
their sales.
Apart from the foregoing, covered establishments are also provided with a mechanism to
recoup the amount of discounts they grant the senior citizens and PWDs. It is provided in
Section 4(a) of R.A. No. 9257 and Section 32 of R.A. No. 9442 that establishments may claim
the discounts as "tax deduction based on the net cost of the goods sold or services rendered."
Basically, whatever amount was given as discount, covered establishments may claim an
equal amount as an expense or tax deduction. The trouble is that the petitioner, in protesting
the change in the tax treatment of the discounts, apparently seeks tax incentive and not merely
a return of the amount given as discounts. It premised its interpretation of financial losses in
terms of the effect of the change in the tax treatment of the discount on its tax liability; hence,
the claim that the measure was confiscatory. However, as mentioned earlier in the discussion,
loss of profits is not the inevitable result of the change in tax treatment of the discounts; it is
more appropriately a consequence of poor business decision.
It bears emphasizing that the law does not place a cap on the amount of mark up that covered
establishments may impose on their items. This rests on the discretion of the establishment
which, of course, is expected to put in the price of the overhead costs, expectation of profits
and other considerations into the selling price of an item. In a simple illustration, here is Drug
A, with acquisition cost of ₱8.00, and selling price of ₱10.00. Then comes a law that imposes
20% on senior citizens and PWDs, which affected Establishments 1, 2 and 3. Let us suppose
that the approximate number of patrons who purchases Drug A is 100, half of which are senior
citizens and PWDs. Before the passage of the law, all of the establishments are earning the
same amount from profit from the sale of Drug A, viz.:
Before the passage of the law:
Drug A
Acquisition cost Selling ₱8.00
price ₱10.00
Number of patrons 100
Sales:
100 x ₱10.00 = ₱1,000.00
Profit: ₱200
After the passage of the law, the three establishments reacted differently. Establishment 1 was
passive and maintained the price of Drug A at ₱8.00 which understandably resulted in
diminution of profits.
Establishment 1
Drug A
Acquisition cost ₱8.00
Selling price ;₱10.00
36

Number of patrons 100
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱100.00
Profit: ₱100.00
On the other hand, Establishment 2, mindful that the new law will affect the profitability of the
business, made a calculated decision by increasing the mark up of Drug A to ₱3.20, instead of
only ₱2.00. This brought a positive result to the earnings of the company.
Establishment 2
Drug A
Acquisition cost ;₱8.00
Selling price ₱11.20
Number of patron 100
Senior Citizens/PWDs 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱112.00
Profit: ₱208.00
For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just to even out the
effect of the law. This measure left a negligible effect on its profit, but Establishment 3 took it
as a social duty: to share in the cause being promoted by the government while still
maintaining profitability.
Establishment 3
Drug A
Acquisition cost Selling price ₱8.00 ₱11.20
Number of patrons SeniorCitizens/PWD 100 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱110.00
Profit: ₱190.00
The foregoing demonstrates that it is not the law per se which occasioned the losses in the
covered establishments but bad business I judgment. One of the main considerations in
making business decisions is the law because its effect is widespread and inevitable. Literally,
anything can be a subject of legislation. It is therefore incumbent upon business managers to
cover this contingency and consider it in making business strategies. As shown in the
illustration, the better responses were exemplified by Establishments 2 and 3 which promptly
put in the additional costs brought about by the law into the price of Drug A. In doing so, they
were able to maintain the profitability of the business, even earning some more, while at the
same time being fully compliant with the law. This is not to mention that the illustration is even
too simplistic and not' the most ideal since it dealt only with a single drug being purchased by
both regular patrons and senior citizens and PWDs. It did not consider the accumulated profits
from the other medical and non-medical products being sold by the establishments which are
expected to further curb the effect of the granting of the discounts in the business.
It is therefore unthinkable how the petitioner could have suffered losses due to the mandated
discounts in R.A. Nos. 9257 and 9442, when a fractional increase in the prices of items could
bring the business standing at a balance even with the introduction of the subject laws. A level
adjustment in the pricing of items is a reasonable business measure to take in order to adapt
to the contingency. This could even make establishments earn more, as shown in the
illustration, since every fractional increase in the price of covered items translates to a wider
cushion to taper off the effect of the granting of discounts and ultimately results to additional
profits gained from the purchases of the same items by regular patrons who are not entitled to
the discount. Clearly, the effect of the subject laws in the financial standing of covered
companies depends largely on how they respond and forge a balance between profitability and
their sense of social responsibility. The adaptation is entirely up to them and they are not
powerless to make adjustments to accommodate the subject legislations.
Still, the petitioner argues that the law is confiscatory in the sense that the State takes away a
portion of its supposed profits which could have gone into its coffers and utilizes it for public
purpose. The petitioner claims that the action of the State amounts to taking for which it should
be compensated.
To reiterate, the subject provisions only affect the petitioner's right to profit, and not earned
profits. Unfortunately for the petitioner, the right to profit is not a vested right or an entitlement
that has accrued on the person or entity such that its invasion or deprivation warrants
compensation. Vested rights are "fixed, unalterable, or irrevocable."48 More extensively, they
are depicted as follows:
Rights which have so completely and definitely accrued to or settled in a person that they are
not subject to be defeated or cancelled by the act of any other private person, and which it is
right and equitable that the government should recognize and protect, as being lawful in
themselves, and settled according to the then current rules of law, and of which the individual
could not be deprived arbitrarily without injustice, or of which he could not justly be deprived
otherwise than by the established methods of procedure and for the public welfare. x x x A
right is not 'vested' unless it is more than a mere expectation based on the anticipated
continuance of present laws; it must be an established interest in property, not open to doubt. x
x x To be vested in its accurate legal sense, a right must be complete and consummated, and
one of which the person to whom it belongs cannot be divested without his consent.x x
x.49 (Emphasis ours)
Right to profits does not give the petitioner the cause of action to ask for just compensation, it
being only an inchoate right or one that has not fully developed50 and therefore cannot be
claimed as one's own. An inchoate right is a mere expectation, which may or may not come
into existence. It is contingent as it only comes "into existence on an event or condition which
may not happen or be performed until some other event may prevent their
vesting."51 Certainly, the petitioner cannot claim confiscation or taking of something that has
yet to exist. It cannot claim deprivation of profit before the consummation of a sale and the
purchase by a senior citizen or PWD.
Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not come
into being until the occurrence or realization of a condition precedent. It is a mere "contingency
that might never eventuate into a right. It stands for a mere possibility of profit but nothing
might ever be payable under it."52
The inchoate nature of the right to profit precludes the possibility of compensation because it
lacks the quality or characteristic which is necessary before any act of taking or expropriation
can be effected. Moreover, there is no yardstick fitting to quantify a contingency or to
determine compensation for a mere possibility. Certainly, "taking" presupposes the existence
of a subject that has a quantifiable or determinable value, characteristics which a mere
contingency does not possess.
Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say that it
is within the province of Congress to do so in the exercise of its legislative power. It has the
authority to choose the subject of legislation, outline the effective measures to achieve its
declared policies and even impose penalties in case of non-compliance. It has the sole
discretion to decide which policies to pursue and devise means to achieve them, and courts
often do not interfere in this exercise for as long as it does not transcend constitutional
limitations. "In performing this duty, the legislature has no guide but its judgment and discretion
and the wisdom of experience."53 In Carter v. Carter Coal Co.,54legislative discretion has been
described as follows:
Legislative congressional discretion begins with the choice of means, and ends with the
adoption of methods and details to carry the delegated powers into effect. x x x [W]hile the
powers are rigidly limited to the enumerations of the Constitution, the means which may be
employed to carry the powers into effect are not restricted, save that they must be appropriate,
plainly adapted to the end, and not prohibited by, but consistent with, the letter and spirit of the
Constitution. x x x. 55 (Emphasis ours)
Corollary, whether to treat the discount as a tax deduction or tax credit is a matter addressed
to the wisdom of the legislature. After all, it is within its prerogative to enact laws which it
deems sufficient to address a specific public concern. And, in the process of legislation, a bill
goes through rigorous tests of validity, necessity and sufficiency in both houses of Congress
before enrolment. It undergoes close scrutiny of the members of Congress and necessarily
had to surpass the arguments hurled against its passage. Thus, the presumption of validity
that goes with every law as a form of deference to the process it had gone through and also to
the legislature's exercise of discretion. Thus, in lchong, etc., et al. v. Hernandez) etc., and
Sarmiento,56the Court emphasized, thus:
It must not be overlooked, in the first place, that the legislature, which is the constitutional
repository of police power and exercises the prerogative of determining the policy of the State,
is by force of circumstances primarily the judge of necessity, adequacy or reasonableness
and wisdom, of any law promulgated in the exercise of the police power, or of the
measures adopted to implement the public policy or to achieve public interest.x x
x.57 (Emphasis ours)
The legislature may also grant rights and impose additional burdens: It may also regulate
industries, in the exercise of police power, for the protection of the public. R.A. Nos. 9257 and
9442 are akin to regulatory laws, the issuance of which is within the ambit of police power. The
minimum wage law, zoning ordinances, price control laws, laws regulating the operation of
motels and hotels, laws limiting the working hours to eight, and the like fall under this
category. 58
Indeed, regulatory laws are within the category of police power measures from which affected
persons or entities cannot claim exclusion or compensation. For instance, private
establishments cannot protest that the imposition of the minimum wage is confiscatory since it
eats up a considerable chunk of its profits or that the mandated remuneration is not
commensurate for the work done. The compulsory nature of the provision for minimum wages
underlies the effort of the State; as R.A. No. 6727 59 expresses it, to promote productivity-
improvement and gain-sharing measures to ensure a decent standard of living for the workers
and their families; to guarantee the rights of labor to its just share in the fruits of production; to
enhance employment generation in the countryside through industry dispersal; and to allow
business and industry reasonable returns on investment, expansion and growth, and as the
Constitution expresses it, to affirm labor as a primary social economic force. 60
Similarly, the imposition of price control on staple goods in R.A. No. 7581 61 is likewise a valid
exercise of police power and affected establishments cannot argue that the law was depriving
them of supposed gains. The law seeks to ensure the availability of basic necessities and
prime commodities at reasonable prices at all times without denying legitimate business a fair
return on investment. It likewise aims to provide effective and sufficient protection to
consumers against hoarding, profiteering and cartels with respect to the supply, distribution,
marketing and pricing of said goods, especially during periods of calamity, emergency,
widespread illegal price manipulation and other similar situations.62
More relevantly, in Manila Memorial Park, Inc.,63it was ruled that it is within the bounds of the
police power of the state to impose burden on private entities, even if it may affect their profits,
such as in the imposition of price control measures. There is no compensable taking but only a
recognition of the fact that they are subject to the regulation of the State and that all personal
or private interests must bow down to the more paramount interest of the State.
This notwithstanding, the regulatory power of the State does not authorize the destruction of
the business. While a business may be regulated, such regulation must be within the bounds
of reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be
oppressive amounting to an arbitrary interference with the business or calling subject of
regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power. 64 After all, regulation only signifies control
or restraint, it does not mean suppression or absolute prohibition. Thus, in Philippine
Communications Satellite Corporation v. Alcuaz, 65 the Court emphasized:
The power to regulate is not the power to destroy useful and harmless enterprises, but is the
power to protect, foster, promote, preserve, and control with due regard for the interest, first
and foremost, of the public, then of the utility and of its patrons. Any regulation, therefore,
which operates as an effective confiscation of private property or constitutes an arbitrary or
unreasonable infringement of property rights is void, because it is repugnant to the
constitutional guaranties of due process and equal protection of the laws. 66 (Citation omitted)
Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of regulation,
allow undue interference in an otherwise legitimate business.1avvphi1 On the contrary, it was
shown that the questioned laws do not meddle in the business or take anything from it but only
regulate its realization of profits.
The subject laws do not violate the equal protection clause
The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause
in that it failed to distinguish between those who have the capacity to pay and those who do
not, in granting the 20% discount. R.A. No. 9257, in particular, removed the income
qualification in R.A. No. 7432 of'₱60,000.00 per annum before a senior citizen may be entitled
to the 20o/o discount.
The contention lacks merit.
37
The petitioner's argument is dismissive of the reasonable qualification on which the subject
laws were based. In City of Manila v. Hon. Laguio, Jr., 67 the Court emphasized:
Equal protection requires that all persons or things similarly situated should be treated alike,
both as to rights conferred and responsibilities imposed. Similar subjects, in other words,
should not be treated differently, so as to give undue favor to some and unjustly discriminate
against others. The guarantee means that no person or class of persons shall be denied the
same protection of laws which is enjoyed by other persons or other classes in like
68
circumstances. (Citations omitted)
"The equal protection clause is not infringed by legislation which applies only to those persons
falling within a specified class. If the groupings are characterized by substantial distinctions
that make real differences, one class may be treated and regulated differently from
another."69 For a classification to be valid, (1) it must be based upon substantial distinctions,
(2) it must be germane to the purposes of the law, (3) it must not be limited to existing
conditions only, and (4) it must apply equally to all members of the same class. 70
To recognize all senior citizens as a group, without distinction as to income, is a valid
classification. The Constitution itself considered the elderly as a class of their own and deemed
it a priority to address their needs. When the Constitution declared its intention to prioritize the
predicament of the underprivileged sick, elderly, disabled, women, and children, 71 it did not
make any reservation as to income, race, religion or any other personal circumstances. It was
a blanket privilege afforded the group of citizens in the enumeration in view of the vulnerability
of their class.
R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures
that protect and enhance the right of all the people to human dignity, reduce social, economic,
and political inequalities. 72 Specifically, it caters to the welfare of all senior citizens. The
classification is based on age and therefore qualifies all who have attained the age of 60.
Senior citizens are a class of their own, who are in need and should be entitled to government
support, and the fact that they may still be earning for their own sustenance should not
disqualify them from the privilege.
It is well to consider that our senior citizens have already reached the age when work
opportunities have dwindled concurrently as their physical health.1âwphi1 They are no longer
expected to work, but there are still those who continue to work and contribute what they can
to the country. Thus, to single them out and take them out of the privileges of the law for
continuing to strive and earn income to fend for themselves is inimical to a welfare state that
the Constitution envisions. It is tantamount to penalizing them for their persistence. It is
commending indolence rather than rewarding diligence. It encourages them to become wards
of the State rather than productive partners.
Our senior citizens were the laborers, professionals and overseas contract workers of the past.
While some may be well to do or may have the capacity to support their sustenance, the
discretion to avail of the privileges of the law is up to them. But to instantly tag them. as
undeserving of the privilege would be the height of ingratitude; it is an outright discrimination.
The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442
and in granting them discounts.1âwphi1 It needs no further explanation that PWDs have
special needs which, for most,' last their entire lifetime. They constitute a class of their own,
equally deserving of government support as our elderlies. While some of them maybe willing to
work and earn income for themselves, their disability deters them from living their full potential.
Thus, the need for assistance from the government to augment the reduced income or
productivity brought about by their physical or intellectual limitations.
There is also no question that the grant of mandatory discount is germane to the purpose of
R.A. Nos. 9257 and 9442, that is, to adopt an integrated and comprehensive approach to
health development and make essential goods and other social services available to all the
people at affordable cost, with special priority given to the elderlies and the disabled, among
others. The privileges granted by the laws ease their concerns and allow them to live more
comfortably.
The subject laws also address a continuing concern of the government for the welfare of the
senior citizens and PWDs. It is not some random predicament but an actual, continuing and
pressing concern that requires preferential attention. Also, the laws apply to all senior citizens
and PWDs, respectively, without further distinction or reservation. Without a doubt, all the
elements for a valid classification were met.
The definitions of "disabilities" and "PWDs" are clear and unequivocal
Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in defining the
terms "disability" and "PWDs," such that it lack comprehensible standards that men of common
intelligence must guess at its meaning. It likewise bewails the futility of the given safeguards to
prevent abuse since government officials who are neither experts nor practitioners of medicine
are given the authority to issue identification cards that authorizes the granting of the privileges
under the law.
The Court disagrees.
Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as
follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the
range considered normal for a human being[.]
On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as
follows:
5.1. PersonswithDisability are those individuals defined under Section 4 of [R.A. No.] 7277
[or] An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons
with Disability as amended and their integration into the Mainstream of Society and for Other
Purposes. This is defined as a person suffering from restriction or different abilities, as a result
of a mental, physical or sensory impairment, to perform an activity in a manner or within the
range considered normal for human being. Disability shall mean (1) a physical 1or mental
impairment that substantially limits one or more psychological, physiological or anatomical
function of an individual or activities of such individual; (2) a record of such an impairment; or
(3) being regarded as having such an impairment.
The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of
the United Nations Convention on the Rights of Persons with Disabilities which reads:
Persons with disabilities include those who have long-term physical, mental, intellectual or
sensory impairments which in interaction with various barriers may hinder their full and
effective participation in society on an equal basis with others. (Emphasis and italics ours)
The seemingly broad definition of the terms was not without good reasons. It recognizes that
"disability is an evolving concept" 73 and appreciates the "diversity of PWDs." 74 The terms were
given comprehensive definitions so as to accommodate the various forms of disabilities, and
not confine it to a particular case as this would effectively exclude other forms of physical,
intellectual or psychological impairments.
Moreover, in Estrada v. Sandiganbayan, 75 it was declared, thus:
A statute is not rendered uncertain and void merely because general terms are used therein,
or because of the employment of terms without defining them; much less do we have to define
every word we use. Besides, there is no positive constitutional or statutory command requiring
the legislature to define each and every word in an enactment. Congress is not restricted in the
form of expression of its will, and its inability to so define the words employed in a statute will
not necessarily result in the vagueness or ambiguity of the law so long as the legislative will is
76
clear, or at least, can be gathered from the whole act x x x. (Citation omitted)
At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As regards the
petitioner's claim that the law lacked reasonable standards in determining the persons entitled
to the discount, Section 32 thereof is on point as it identifies who may avail of the privilege and
the manner of its availment. It states:
Sec. 32. x x x
The abovementioned privileges are available only to persons with disability who are Filipino
citizens upon submission of any of the following as proof of his/her entitlement thereto:
(I) An identification card issued by the city or municipal mayor or the barangay captain of the
place where the persons with disability resides;
(II) The passport of the persons with disability concerned; or
(III) Transportation discount fare Identification Card (ID) issued by the National Council for the
Welfare of Disabled Persons (NCWDP).
It is, however, the petitioner's contention that the foregoing authorizes government officials
who had no medical background to exercise discretion in issuing identification cards to those
claiming to be PWDs. It argues that the provision lends to the indiscriminate availment of the
privileges even by those who are not qualified.
The petitioner's apprehension demonstrates a superficial understanding of the law and its
implementing rules. To be clear, the issuance of identification cards to PWDs does not depend
on the authority of the city or municipal mayor, the DSWD or officials of the NCDA (formerly
NCWDP). It is well to remember that what entitles a person to the privileges of the law is
his disability, the fact of which he must prove to qualify. Thus, in NCDA Administrative Order
(A.O.) No. 001, series of 2008, 77 it is required that the person claiming disability must submit
the following requirements before he shall be issued a PWD Identification Card:
1. Two "1 x l" recent ID pictures with the names, and signatures or thumb marks at the back of
the picture.
2. One (1) Valid ID
78
3. Document to confirm the medical or disability condition
To confirm his disability, the person must obtain a medical certificate or assessment, as the
case maybe, issued by a licensed private or government physician, licensed teacher or head
of a business establishment attesting to his impairment. The issuing entity depends on whether
the disability is apparent or non-apparent. NCDAA.O. No. 001 further provides: 79
DISABILITY DOCUMENT ISSUING ENTITY
Apparent Medical Licensed Private or
Disability Certificate Government Physician
School Licensed Teacher duly
Assessment signed by the School
Principal
Certificate of
Disability  Head of the Business
Establishment
 Head of Non-Government Organization
Non-Apparent Medical Licensed Private or
Disability Certificate Government Physician
To provide further safeguard, the Department of Health issued A.O. No. 2009-0011, providing
guidelines for the availment of the 20% discount on the purchase of medicines by PWDs. In
making a purchase, the individual must present the documents enumerated in Section VI(4)(b
), to wit:
i. PWD identification card x x x
ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic name of
the medicine, dosage form, dosage strength, quantity, signature over printed name of
physician, physician's address, contact number of physician or dentist, professional license
number, professional tax receipt number and narcotic license number, if applicable. To
safeguard the health of PWDs and to prevent abuse of [R.A. No.] 9257, a doctor's prescription
is required in the purchase of over-the-counter medicines. x x x.
iii. Purchase booklet issued by the local social/health office to PWDs for free containing the
following basic information:
a) PWD ID number b) Booklet control number c) Name of PWD d) Sex e) Address f) Date of
Birth g) Picture h) Signature of PWD i) Information of medicine purchased: i.1 Name of
medicine i.2 Quantity i.3 Attending Physician i.4 License Number i.5 Servicing drug store name
i.6 Name of dispensing pharmacist
j) Authorization letter of the PWD x x x in case the medicine is bought by the representative or
caregiver of the PWD.
The PWD identification card also has a validity period of only three years which facilitate in the
monitoring of those who may need continued support and who have been relieved of their
disability, and therefore may be taken out of the coverage of the law.
At any rate, the law has penal provisions which give concerned establishments the option to
file a case against those abusing the privilege Section 46(b) of R.A. No. 9442 provides that
"[a]ny person who abuses the privileges granted herein shall be punished with imprisonment of
not less than six months or a fine of not less than Five Thousand pesos (₱5,000.00), but not
more than Fifty Thousand pesos (₱50,000.00), or both, at the discretion of the court." Thus,
38
concerned establishments, together with the proper government agencies, must actively
participate in monitoring compliance with the law so that only the intended beneficiaries of the
law can avail of the privileges.

Indubitably, the law is clear and unequivocal, and the petitioner claim of vagueness to cast
uncertainty in the validity of the law does not stand.

WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and
Section 32 of Republic Act No. 9442 are hereby declared CONSTITUTIONAL.

SO ORDERED.

39
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 156052 March 7, 2007
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO
S. TUMBOKON, Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.
DECISION
CORONA, J.:
In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir
Alarique T. Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L.
Atienza, Jr., mayor of the City of Manila, to enforce Ordinance No. 8027.
The antecedents are as follows.
On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.
8027.2 Respondent mayor approved the ordinance on November 28, 2001.3 It became
effective on December 28, 2001, after its publication. 4
Ordinance No. 8027 was enacted pursuant to the police power delegated to local government
units, a principle described as the power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health, morals and general welfare of the
society.5 This is evident from Sections 1 and 3 thereof which state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public
safety, and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining
areas, the land use of [those] portions of land bounded by the Pasig River in the north, PNR
Railroad Track in the east, Beata St. in the south, Palumpong St. in the southwest, and Estero
de Pancacan in the west[,] PNR Railroad in the northwest area, Estero de Pandacan in the
[n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in the southwest. The area of
Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F.
Manalo Street, are hereby reclassified from Industrial II to Commercial I.
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the
date of effectivity of this Ordinance within which to cease and desist from the operation of
businesses which are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and
directed the owners and operators of businesses disallowed under Section 1 to cease and
desist from operating their businesses within six months from the date of effectivity of the
ordinance. Among the businesses situated in the area are the so-called "Pandacan Terminals"
of the oil companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell
Petroleum Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered
6
into a memorandum of understanding (MOU) with the oil companies in which they agreed that
"the scaling down of the Pandacan Terminals [was] the most viable and practicable option."
Under the MOU, the oil companies agreed to perform the following:
Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon
signing of this MOU, undertake a program to scale down the Pandacan Terminals which shall
include, among others, the immediate removal/decommissioning process of TWENTY EIGHT
(28) tanks starting with the LPG spheres and the commencing of works for the creation of
safety buffer and green zones surrounding the Pandacan Terminals. xxx
Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES
shall establish joint operations and management, including the operation of common,
integrated and/or shared facilities, consistent with international and domestic technical, safety,
environmental and economic considerations and standards. Consequently, the joint operations
of the OIL COMPANIES in the Pandacan Terminals shall be limited to the common and
integrated areas/facilities. A separate agreement covering the commercial and operational
terms and conditions of the joint operations, shall be entered into by the OIL COMPANIES.
Section 3. - The development and maintenance of the safety and green buffer zones
mentioned therein, which shall be taken from the properties of the OIL COMPANIES and not
from the surrounding communities, shall be the sole responsibility of the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed to do the following:
Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate
action with the view of implementing the spirit and intent thereof.
Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this
MOU, enable the OIL COMPANIES to continuously operate in compliance with legal
requirements, within the limited area resulting from the joint operations and the scale down
program.
Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with
the provisions of this MOU.
Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer
and green zones and shall exert all efforts at preventing future occupation or encroachment
into these areas by illegal settlers and other unauthorized parties.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution,
the Sanggunian declared that the MOU was effective only for a period of six months starting
July 25, 2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No.
139 extending the validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza
to issue special business permits to the oil companies. Resolution No. 13, s. 2003 also called
for a reassessment of the ordinance.10
Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying
that Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate
removal of the terminals of the oil companies.11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order
the removal of the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.12
Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of
13
the Local Government Code (RA 7160), to enforce Ordinance No. 8027 and order the
removal of the Pandacan Terminals of the oil companies. Instead, he has allowed them to
stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the
resolutions.14 However, he also confusingly argues that the ordinance and MOU are not
inconsistent with each other and that the latter has not amended the former. He insists that the
ordinance remains valid and in full force and effect and that the MOU did not in any way
prevent him from enforcing and implementing it. He maintains that the MOU should be
considered as a mere guideline for its full implementation. 15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when
any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust or
station. Mandamus is an extraordinary writ that is employed to compel the performance, when
refused, of a ministerial duty that is already imposed on the respondent and there is no other
plain, speedy and adequate remedy in the ordinary course of law. The petitioner should have a
well-defined, clear and certain legal right to the performance of the act and it must be the clear
and imperative duty of respondent to do the act required to be done. 17
Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal function of the writ
of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is
neither the office nor the aim of the writ to secure a legal right but to implement that which is
already established. Unless the right to the relief sought is unclouded, mandamus will not
issue.18
To support the assertion that petitioners have a clear legal right to the enforcement of the
ordinance, petitioner SJS states that it is a political party registered with the Commission on
Elections and has its offices in Manila. It claims to have many members who are residents of
Manila. The other petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when
a mandamus proceeding concerns a public right and its object is to compel a public duty, the
people who are interested in the execution of the laws are regarded as the real parties in
interest and they need not show any specific interest. 19 Besides, as residents of Manila,
petitioners have a direct interest in the enforcement of the city’s ordinances. Respondent never
questioned the right of petitioners to institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the duty, as city
mayor, to "enforce all laws and ordinances relative to the governance of the city.">20 One of
these is Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce
Ordinance No. 8027 as long as it has not been repealed by the Sanggunian or annulled by the
courts.21 He has no other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra,
Jr.,22 we stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the
statute imposing the duty. The reason for this is obvious. It might seriously hinder the
transaction of public business if these officers were to be permitted in all cases to question the
constitutionality of statutes and ordinances imposing duties upon them and which have not
judicially been declared unconstitutional. Officers of the government from the highest to the
lowest are creatures of the law and are bound to obey it.23
The question now is whether the MOU entered into by respondent with the oil companies and
the subsequent resolutions passed by the Sanggunian have made the respondent’s duty to
enforce Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the
second issue raised by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002
and 13, s. 2003 of the Sanggunian can amend or repeal Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with
Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of Manila
expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is
nothing that legally hinders respondent from enforcing Ordinance No. 8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world,
witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade
Center in New York City. The objective of the ordinance is to protect the residents of Manila
from the catastrophic devastation that will surely occur in case of a terrorist attack25 on the
Pandacan Terminals. No reason exists why such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as
mayor of the City of Manila, is directed to immediately enforce Ordinance No. 8027.
SO ORDERED.
40
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 166494 June 29, 2007
CARLOS SUPERDRUG CORP., doing business under the name and style "Carlos
Superdrug," ELSIE M. CANO, doing business under the name and style "Advance
Drug," Dr. SIMPLICIO L. YAP, JR., doing business under the name and style "City
Pharmacy," MELVIN S. DELA SERNA, doing business under the name and style "Botica
dela Serna," and LEYTE SERV-WELL CORP., doing business under the name and style
"Leyte Serv-Well Drugstore," petitioners,
vs.
DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD), DEPARTMENT OF
HEALTH (DOH), DEPARTMENT OF FINANCE (DOF), DEPARTMENT OF JUSTICE (DOJ),
and DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT (DILG), respondents.
DECISION
AZCUNA, J.:
This is a petition1 for Prohibition with Prayer for Preliminary Injunction assailing the
constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257, 2 otherwise known as the
"Expanded Senior Citizens Act of 2003."
Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.
Public respondents, on the other hand, include the Department of Social Welfare and
Development (DSWD), the Department of Health (DOH), the Department of Finance (DOF),
the Department of Justice (DOJ), and the Department of Interior and Local Government (DILG)
which have been specifically tasked to monitor the drugstores’ compliance with the law;
promulgate the implementing rules and regulations for the effective implementation of the law;
and prosecute and revoke the licenses of erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432, 3 was signed into law by
President Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a) of
the Act states:
SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization
of services in hotels and similar lodging establishments, restaurants and recreation centers,
and purchase of medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior citizens;
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided, That the
cost of the discount shall be allowed as deduction from gross income for the same taxable
year that the discount is granted. Provided, further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be included in their gross sales receipts for
tax purposes and shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code, as amended.4
On May 28, 2004, the DSWD approved and adopted the Implementing Rules and Regulations
of R.A. No. 9257, Rule VI, Article 8 of which states:
Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts
granted under Rule V, Section 4 – Discounts for Establishments;5 Section 9, Medical and
Dental Services in Private Facilities[,]6 and Sections 107 and 118 – Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods sold or services
rendered. Provided, That the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted; Provided, further, That the total
amount of the claimed tax deduction net of value added tax if applicable, shall be included in
their gross sales receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be issued
by the Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF). 9
On July 10, 2004, in reference to the query of the Drug Stores Association of the Philippines
(DSAP) concerning the meaning of a tax deduction under the Expanded Senior Citizens Act,
the DOF, through Director IV Ma. Lourdes B. Recente, clarified as follows:
1) The difference between the Tax Credit (under the Old Senior Citizens Act) and Tax
Deduction (under the Expanded Senior Citizens Act).
1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act) grants twenty
percent (20%) discount from all establishments relative to the utilization of transportation
services, hotels and similar lodging establishment, restaurants and recreation centers and
purchase of medicines anywhere in the country, the costs of which may be claimed by the
private establishments concerned as tax credit.
Effectively, a tax credit is a peso-for-peso deduction from a taxpayer’s tax liability due to the
government of the amount of discounts such establishment has granted to a senior citizen.
The establishment recovers the full amount of discount given to a senior citizen and hence, the
government shoulders 100% of the discounts granted.
It must be noted, however, that conceptually, a tax credit scheme under the Philippine tax
system, necessitates that prior payments of taxes have been made and the taxpayer is
attempting to recover this tax payment from his/her income tax due. The tax credit scheme
under R.A. No. 7432 is, therefore, inapplicable since no tax payments have previously
occurred.
1.2. The provision under R.A. No. 9257, on the other hand, provides that the establishment
concerned may claim the discounts under Section 4(a), (f), (g) and (h) as tax deduction from
gross income, based on the net cost of goods sold or services rendered.
Under this scheme, the establishment concerned is allowed to deduct from gross income, in
computing for its tax liability, the amount of discounts granted to senior citizens. Effectively, the
government loses in terms of foregone revenues an amount equivalent to the marginal tax rate
the said establishment is liable to pay the government. This will be an amount equivalent to
32% of the twenty percent (20%) discounts so granted. The establishment shoulders the
remaining portion of the granted discounts.
It may be necessary to note that while the burden on [the] government is slightly diminished in
terms of its percentage share on the discounts granted to senior citizens, the number of
potential establishments that may claim tax deductions, have however, been broadened. Aside
from the establishments that may claim tax credits under the old law, more establishments
were added under the new law such as: establishments providing medical and dental services,
diagnostic and laboratory services, including professional fees of attending doctors in all
private hospitals and medical facilities, operators of domestic air and sea transport services,
public railways and skyways and bus transport services.
A simple illustration might help amplify the points discussed above, as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme, the tax deduction on discounts was
subtracted from Net Sales together with other deductions which are considered as operating
expenses before the Tax Due was computed based on the Net Taxable Income. On the other
hand, under a tax credit scheme, the amount of discounts which is the tax credit item, was
deducted directly from the tax due amount. 10
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or the Policies and
Guidelines to Implement the Relevant Provisions of Republic Act 9257, otherwise known as
the "Expanded Senior Citizens Act of 2003" 11 was issued by the DOH, providing the grant of
twenty percent (20%) discount in the purchase of unbranded generic medicines from all
establishments dispensing medicines for the exclusive use of the senior citizens.
On November 12, 2004, the DOH issued Administrative Order No 17712 amending A.O. No.
171. Under A.O. No. 177, the twenty percent discount shall not be limited to the purchase of
unbranded generic medicines only, but shall extend to both prescription and non-prescription
medicines whether branded or generic. Thus, it stated that "[t]he grant of twenty percent (20%)
discount shall be provided in the purchase of medicines from all establishments dispensing
medicines for the exclusive use of the senior citizens."
Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior Citizens Act
based on the following grounds:13
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution which provides
that private property shall not be taken for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our Constitution which
states that "no person shall be deprived of life, liberty or property without due process of law,
nor shall any person be denied of the equal protection of the laws;" and
3) The 20% discount on medicines violates the constitutional guarantee in Article XIII, Section
11 that makes "essential goods, health and other social services available to all people at
affordable cost."14
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes
deprivation of private property. Compelling drugstore owners and establishments to grant the
discount will result in a loss of profit
and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded
medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly
compensated for the discount.
Examining petitioners’ arguments, it is apparent that what petitioners are ultimately questioning
is the validity of the tax deduction scheme as a reimbursement mechanism for the twenty
percent (20%) discount that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse
petitioners for the discount privilege accorded to senior citizens. This is because the discount
is treated as a deduction, a tax-deductible expense that is subtracted from the gross income
and results in a lower taxable income. Stated otherwise, it is an amount that is allowed by
law15 to reduce the income prior to the application of the tax rate to compute the amount of tax
which is due.16 Being a tax deduction, the discount does not reduce taxes owed on a peso for
peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers and
formed part of the gross sales of the private establishments, were it not for R.A. No. 9257.
The permanent reduction in their total revenues is a forced subsidy corresponding to the taking
of private property for public use or benefit. 17 This constitutes compensable taking for which
petitioners would ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is
used to intensify the meaning of the word compensation, and to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full and
ample.18
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it
would not meet the definition of just compensation. 19
41
Having said that, this raises the question of whether the State, in promoting the health and would be unconscionably detrimental to petitioners, the Court will refrain from quashing a
welfare of a special group of citizens, can impose upon private establishments the burden of legislative act.31
partly subsidizing a government program.

WHEREFORE, the petition is DISMISSED for lack of merit.

The Court believes so.

No costs. SO ORDERED.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-
being as the State considers them an integral part of our society. 20

The priority given to senior citizens finds its basis in the Constitution as set forth in the law
itself. Thus, the Act provides:

SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. – Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: "The State shall provide social justice in all phases of
national development." Further, Article XIII, Section 11, provides: "The State shall adopt an
integrated and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost.
There shall be priority for the needs of the underprivileged sick, elderly, disabled, women and
children." Consonant with these constitutional principles the following are the declared policies
of this Act:

(f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.21

To implement the above policy, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and
similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of reimbursement,
the law provides that business establishments extending the twenty percent discount to senior
citizens may claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent domain,
has general welfare for its object. Police power is not capable of an exact definition, but has
been purposely veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. 22 Accordingly, it has been described as
"the most essential, insistent and the least limitable of powers, extending as it does to all the
great public needs."23 It is "[t]he power vested in the legislature by the constitution to make,
ordain, and establish all manner of wholesome and reasonable laws, statutes, and ordinances,
either with penalties or without, not repugnant to the constitution, as they shall judge to be for
the good and welfare of the commonwealth, and of the subjects of the same." 24

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered by
due process, must yield to general welfare.25

Police power as an attribute to promote the common good would be diluted considerably if on
the mere plea of petitioners that they will suffer loss of earnings and capital, the questioned
provision is invalidated. Moreover, in the absence of evidence demonstrating the alleged
confiscatory effect of the provision in question, there is no basis for its nullification in view of
the presumption of validity which every law has in its favor. 26

Given these, it is incorrect for petitioners to insist that the grant of the senior citizen discount is
unduly oppressive to their business, because petitioners have not taken time to calculate
correctly and come up with a financial report, so that they have not been able to show properly
whether or not the tax deduction scheme really works greatly to their disadvantage. 27

In treating the discount as a tax deduction, petitioners insist that they will incur losses because,
referring to the DOF Opinion, for every ₱1.00 senior citizen discount that petitioners would
give, ₱0.68 will be shouldered by them as only ₱0.32 will be refunded by the government by
way of a tax deduction.

To illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive maintenance
drug Norvasc as an example. According to the latter, it acquires Norvasc from the distributors
at ₱37.57 per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount
to senior citizens or an amount equivalent to ₱7.92, then it would have to sell Norvasc at
₱31.68 which translates to a loss from capital of ₱5.89 per tablet. Even if the government will
allow a tax deduction, only ₱2.53 per tablet will be refunded and not the full amount of the
discount which is ₱7.92. In short, only 32% of the 20% discount will be reimbursed to the
drugstores.28

Petitioners’ computation is flawed. For purposes of reimbursement, the law states that the cost
of the discount shall be deducted from gross income, 29 the amount of income derived from all
sources before deducting allowable expenses, which will result in net income. Here, petitioners
tried to show a loss on a per transaction basis, which should not be the case. An income
statement, showing an accounting of petitioners’ sales, expenses, and net profit (or loss) for a
given period could have accurately reflected the effect of the discount on their income. Absent
any financial statement, petitioners cannot substantiate their claim that they will be operating at
a loss should they give the discount. In addition, the computation was erroneously based on
the assumption that their customers consisted wholly of senior citizens. Lastly, the 32% tax
rate is to be imposed on income, not on the amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices
of their medicines given the cutthroat nature of the players in the industry. It is a business
decision on the part of petitioners to peg the mark-up at 5%. Selling the medicines below
acquisition cost, as alleged by petitioners, is merely a result of this decision. Inasmuch as
pricing is a property right, petitioners cannot reproach the law for being oppressive, simply
because they cannot afford to raise their prices for fear of losing their customers to
competition.

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive
pricing component of the business. While the Constitution protects property rights, petitioners
must accept the realities of business and the State, in the exercise of police power, can
intervene in the operations of a business which may result in an impairment of property rights
in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the precept for the protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public utilities, continuously serve as a
reminder that the right to property can be relinquished upon the command of the State for the
promotion of public good.30

Undeniably, the success of the senior citizens program rests largely on the support imparted
by petitioners and the other private establishments concerned. This being the case, the means
employed in invoking the active participation of the private sector, in order to achieve the
purpose or objective of the law, is reasonably and directly related. Without sufficient proof that
Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued implementation of the same
42
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 175356 December 3, 2013
MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC., Petitioners,
vs.
SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT and
THE SECRETARY OF THE DEPARTMENT OF FINANCE, Respondents.
DECISION
DEL CASTILLO, J.:
When a party challeges the constitutionality of a law, the burden of proof rests upon him.
Before us is a Petition for Prohibition 2 under Rule 65 of the Rules of Court filed by petitioners
Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged
in the business of providing funeral and burial services, against public respondents Secretaries
of the Department of Social Welfare and Development (DSWD) and the Department of
Finance (DOF).
3
Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432, as
amended by RA 9257,4 and the implementing rules and regulations issued by the DSWD and
DOF insofar as these allow business establishments to claim the 20% discount given to senior
citizens as a tax deduction.
Factual Antecedents
On April 23, 1992, RA 7432 was passed into law, granting senior citizens the following
privileges:
SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:
a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment[s], restaurants and recreation
centers and purchase of medicine anywhere in the country: Provided, That private
establishments may claim the cost as tax credit;
b) a minimum of twenty percent (20%) discount on admission fees charged by theaters,
cinema houses and concert halls, circuses, carnivals and other similar places of culture,
leisure, and amusement;
c) exemption from the payment of individual income taxes: Provided, That their annual taxable
income does not exceed the property level as determined by the National Economic and
Development Authority (NEDA) for that year;
d) exemption from training fees for socioeconomic programs undertaken by the OSCA as part
of its work;
e) free medical and dental services in government establishment[s] anywhere in the country,
subject to guidelines to be issued by the Department of Health, the Government Service
Insurance System and the Social Security System;
f) to the extent practicable and feasible, the continuance of the same benefits and privileges
given by the Government Service Insurance System (GSIS), Social Security System (SSS)
and PAG-IBIG, as the case may be, as are enjoyed by those in actual service.
On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432.
Sections 2(i) and 4 of RR No. 02-94 provide:
Sec. 2. DEFINITIONS. – For purposes of these regulations: i. Tax Credit – refers to the
amount representing the 20% discount granted to a qualified senior citizen by all
establishments relative to their utilization of transportation services, hotels and similar lodging
establishments, restaurants, drugstores, recreation centers, theaters, cinema houses, concert
halls, circuses, carnivals and other similar places of culture, leisure and amusement, which
discount shall be deducted by the said establishments from their gross income for income tax
purposes and from their gross sales for value-added tax or other percentage tax purposes. x x
x x Sec. 4. RECORDING/BOOKKEEPING REQUIREMENTS FOR PRIVATE
ESTABLISHMENTS. – Private establishments, i.e., transport services, hotels and similar
lodging establishments, restaurants, recreation centers, drugstores, theaters, cinema houses,
concert halls, circuses, carnivals and other similar places of culture[,] leisure and amusement,
giving 20% discounts to qualified senior citizens are required to keep separate and accurate
record[s] of sales made to senior citizens, which shall include the name, identification number,
gross sales/receipts, discounts, dates of transactions and invoice number for every
transaction. The amount of 20% discount shall be deducted from the gross income for income
tax purposes and from gross sales of the business enterprise concerned for purposes of the
VAT and other percentage taxes.
In Commissioner of Internal Revenue v. Central Luzon Drug Corporation, 5 the Court declared
Sections 2(i) and 4 of RR No. 02-94 as erroneous because these contravene RA 7432, 6 thus:
RA 7432 specifically allows private establishments to claim as tax credit the amount of
discounts they grant. In turn, the Implementing Rules and Regulations, issued pursuant
thereto, provide the procedures for its availment. To deny such credit, despite the plain
mandate of the law and the regulations carrying out that mandate, is indefensible. First, the
definition given by petitioner is erroneous. It refers to tax credit as the amount representing the
20 percent discount that "shall be deducted by the said establishments from their gross income
for income tax purposes and from their gross sales for value-added tax or other percentage tax
purposes." In ordinary business language, the tax credit represents the amount of such
discount. However, the manner by which the discount shall be credited against taxes has not
been clarified by the revenue regulations. By ordinary acceptation, a discount is an "abatement
or reduction made from the gross amount or value of anything." To be more precise, it is in
business parlance "a deduction or lowering of an amount of money;" or "a reduction from the
full amount or value of something, especially a price." In business there are many kinds of
discount, the most common of which is that affecting the income statement or financial report
upon which the income tax is based.
Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent
discount deductible from gross income for income tax purposes, or from gross sales for VAT or
other percentage tax purposes. In effect, the tax credit benefit under RA 7432 is related to a
sales discount. This contrived definition is improper, considering that the latter has to be
deducted from gross sales in order to compute the gross income in the income statement and
cannot be deducted again, even for purposes of computing the income tax. When the law says
that the cost of the discount may be claimed as a tax credit, it means that the amount — when
claimed — shall be treated as a reduction from any tax liability, plain and simple. The option to
avail of the tax credit benefit depends upon the existence of a tax liability, but to limit the
benefit to a sales discount — which is not even identical to the discount privilege that is
granted by law — does not define it at all and serves no useful purpose. The definition must,
therefore, be stricken down.
Laws Not Amended by Regulations
Second, the law cannot be amended by a mere regulation. In fact, a regulation that "operates
to create a rule out of harmony with the statute is a mere nullity;" it cannot prevail. It is a
cardinal rule that courts "will and should respect the contemporaneous construction placed
upon a statute by the executive officers whose duty it is to enforce it x x x." In the scheme of
judicial tax administration, the need for certainty and predictability in the implementation of tax
laws is crucial. Our tax authorities fill in the details that "Congress may not have the
opportunity or competence to provide." The regulations these authorities issue are relied upon
by taxpayers, who are certain that these will be followed by the courts. Courts, however, will
not uphold these authorities’ interpretations when clearly absurd, erroneous or improper. In the
present case, the tax authorities have given the term tax credit in Sections 2.i and 4 of RR 2-94
a meaning utterly in contrast to what RA 7432 provides. Their interpretation has muddled x x x
the intent of Congress in granting a mere discount privilege, not a sales discount. The
administrative agency issuing these regulations may not enlarge, alter or restrict the provisions
of the law it administers; it cannot engraft additional requirements not contemplated by the
legislature.
In case of conflict, the law must prevail. A "regulation adopted pursuant to law is law."
Conversely, a regulation or any portion thereof not adopted pursuant to law is no law and has
neither the force nor the effect of law.7
On February 26, 2004, RA 92578 amended certain provisions of RA 7432, to wit:
SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization
of services in hotels and similar lodging establishments, restaurants and recreation centers,
and purchase of medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior citizens;
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction
based on the net cost of the goods sold or services rendered: Provided, That the cost of the
discount shall be allowed as deduction from gross income for the same taxable year that the
discount is granted. Provided, further, That the total amount of the claimed tax deduction net of
value added tax if applicable, shall be included in their gross sales receipts for tax purposes
and shall be subject to proper documentation and to the provisions of the National Internal
Revenue Code, as amended.
To implement the tax provisions of RA 9257, the Secretary of Finance issued RR No. 4-2006,
the pertinent provision of which provides:
SEC. 8. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION
FROM GROSS INCOME. – Establishments enumerated in subparagraph (6) hereunder
granting sales discounts to senior citizens on the sale of goods and/or services specified
thereunder are entitled to deduct the said discount from gross income subject to the following
conditions:
(1) Only that portion of the gross sales EXCLUSIVELY USED, CONSUMED OR ENJOYED BY
THE SENIOR CITIZEN shall be eligible for the deductible sales discount.
(2) The gross selling price and the sales discount MUST BE SEPARATELY INDICATED IN
THE OFFICIAL RECEIPT OR SALES INVOICE issued by the establishment for the sale of
goods or services to the senior citizen.
(3) Only the actual amount of the discount granted or a sales discount not exceeding 20% of
the gross selling price can be deducted from the gross income, net of value added tax, if
applicable, for income tax purposes, and from gross sales or gross receipts of the business
enterprise concerned, for VAT or other percentage tax purposes.
(4) The discount can only be allowed as deduction from gross income for the same taxable
year that the discount is granted.
(5) The business establishment giving sales discounts to qualified senior citizens is required to
keep separate and accurate record[s] of sales, which shall include the name of the senior
citizen, TIN, OSCA ID, gross sales/receipts, sales discount granted, [date] of [transaction] and
invoice number for every sale transaction to senior citizen.
(6) Only the following business establishments which granted sales discount to senior citizens
on their sale of goods and/or services may claim the said discount granted as deduction from
gross income, namely:
(i) Funeral parlors and similar establishments – The beneficiary or any person who shall
shoulder the funeral and burial expenses of the deceased senior citizen shall claim the
discount, such as casket, embalmment, cremation cost and other related services for the
senior citizen upon payment and presentation of [his] death certificate.
The DSWD likewise issued its own Rules and Regulations Implementing RA 9257, to wit:
RULE VI DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS
Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts
granted under Rule V, Section 4 – Discounts for Establishments, Section 9, Medical and
Dental Services in Private Facilities and Sections 10 and 11 – Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods sold or services rendered.
Provided, That the cost of the discount shall be allowed as deduction from gross income for
the same taxable year that the discount is granted; Provided, further, That the total amount of
the claimed tax deduction net of value added tax if applicable, shall be included in their gross
sales receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be issued
by the Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF).
Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying
that Section 4 of RA 7432, as amended by RA 9257, and the implementing rules and
regulations issued by the DSWD and the DOF be declared unconstitutional insofar as these
allow business establishments to claim the 20% discount given to senior citizens as a tax
deduction; that the DSWD and the DOF be prohibited from enforcing the same; and that the
tax credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be
reinstated.
Issues
43
Petitioners raise the following issues:
A.
WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY.
B.
WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING
RULES AND REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY
PERCENT (20%) DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX
DEDUCTION BY THE PRIVATE ESTABLISHMENTS, ARE INVALID AND
UNCONSTITUTIONAL.9
Petitioners’ Arguments
Petitioners emphasize that they are not questioning the 20% discount granted to senior
citizens but are only assailing the constitutionality of the tax deduction scheme prescribed
under RA 9257 and the implementing rules and regulations issued by the DSWD and the
DOF.10
Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the
Constitution, which provides that: "[p]rivate property shall not be taken for public use without
just compensation."11
In support of their position, petitioners cite Central Luzon Drug Corporation, 12 where it was
ruled that the 20% discount privilege constitutes taking of private property for public use which
requires the payment of just compensation, 13 and Carlos Superdrug Corporation v. Department
of Social Welfare and Development,14 where it was acknowledged that the tax deduction
scheme does not meet the definition of just compensation.15
Petitioners likewise seek a reversal of the ruling in Carlos Superdrug Corporation 16 that the tax
deduction scheme adopted by the government is justified by police power. 17
They assert that "[a]lthough both police power and the power of eminent domain have the
general welfare for their object, there are still traditional distinctions between the two" 18 and
that "eminent domain cannot be made less supreme than police power." 19
Petitioners further claim that the legislature, in amending RA 7432, relied on an erroneous
contemporaneous construction that prior payment of taxes is required for tax credit. 20
Petitioners also contend that the tax deduction scheme violates Article XV, Section 421 and
Article XIII, Section 1122 of the Constitution because it shifts the State’s constitutional mandate
or duty of improving the welfare of the elderly to the private sector. 23
Under the tax deduction scheme, the private sector shoulders 65% of the discount because
only 35%24 of it is actually returned by the government. 25
Consequently, the implementation of the tax deduction scheme prescribed under Section 4 of
RA 9257 affects the businesses of petitioners.26
Thus, there exists an actual case or controversy of transcendental importance which deserves
judicious disposition on the merits by the highest court of the land.
27
Respondents’ Arguments
Respondents, on the other hand, question the filing of the instant Petition directly with the
Supreme Court as this disregards the hierarchy of courts. 28
They likewise assert that there is no justiciable controversy as petitioners failed to prove that
the tax deduction treatment is not a "fair and full equivalent of the loss sustained" by them. 29
As to the constitutionality of RA 9257 and its implementing rules and regulations, respondents
contend that petitioners failed to overturn its presumption of constitutionality. 30
More important, respondents maintain that the tax deduction scheme is a legitimate exercise of
the State’s police power.31
Our Ruling
The Petition lacks merit.
There exists an actual case or controversy.
We shall first resolve the procedural issue. When the constitutionality of a law is put in issue,
judicial review may be availed of only if the following requisites concur: "(1) the existence of an
actual and appropriate case; (2) the existence of personal and substantial interest on the part
of the party raising the [question of constitutionality]; (3) recourse to judicial review is made at
the earliest opportunity; and (4) the [question of constitutionality] is the lis mota of the case." 32
In this case, petitioners are challenging the constitutionality of the tax deduction scheme
provided in RA 9257 and the implementing rules and regulations issued by the DSWD and the
DOF. Respondents, however, oppose the Petition on the ground that there is no actual case or
controversy. We do not agree with respondents. An actual case or controversy exists when
there is "a conflict of legal rights" or "an assertion of opposite legal claims susceptible of
judicial resolution."33
The Petition must therefore show that "the governmental act being challenged has a direct
adverse effect on the individual challenging it." 34
In this case, the tax deduction scheme challenged by petitioners has a direct adverse effect on
them. Thus, it cannot be denied that there exists an actual case or controversy.
The validity of the 20% senior citizen discount and tax deduction scheme under RA
9257, as an exercise of police power of the State, has already been settled in Carlos
Superdrug Corporation.
Petitioners posit that the resolution of this case lies in the determination of whether the legally
mandated 20% senior citizen discount is an exercise of police power or eminent domain. If it is
police power, no just compensation is warranted. But if it is eminent domain, the tax deduction
scheme is unconstitutional because it is not a peso for peso reimbursement of the 20%
discount given to senior citizens. Thus, it constitutes taking of private property without payment
of just compensation. At the outset, we note that this question has been settled in Carlos
Superdrug Corporation.35
In that case, we ruled:
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes
deprivation of private property. Compelling drugstore owners and establishments to grant the
discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of
only 5% to 10% on branded medicines; and 2) the law failed to provide a scheme whereby
drugstores will be justly compensated for the discount. Examining petitioners’ arguments, it is
apparent that what petitioners are ultimately questioning is the validity of the tax deduction
scheme as a reimbursement mechanism for the twenty percent (20%) discount that they
extend to senior citizens. Based on the afore-stated DOF Opinion, the tax deduction scheme
does not fully reimburse petitioners for the discount privilege accorded to senior citizens. This
is because the discount is treated as a deduction, a tax-deductible expense that is subtracted
from the gross income and results in a lower taxable income. Stated otherwise, it is an amount
that is allowed by law to reduce the income prior to the application of the tax rate to compute
the amount of tax which is due. Being a tax deduction, the discount does not reduce taxes
owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers and
formed part of the gross sales of the private establishments, were it not for R.A. No. 9257. The
permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit. This constitutes compensable taking for which
petitioners would ordinarily become entitled to a just compensation. Just compensation is
defined as the full and fair equivalent of the property taken from its owner by the expropriator.
The measure is not the taker’s gain but the owner’s loss. The word just is used to intensify the
meaning of the word compensation, and to convey the idea that the equivalent to be rendered
for the property to be taken shall be real, substantial, full and ample. A tax deduction does not
offer full reimbursement of the senior citizen discount. As such, it would not meet the definition
of just compensation. Having said that, this raises the question of whether the State, in
promoting the health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program. The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-
being as the State considers them an integral part of our society. The priority given to senior
citizens finds its basis in the Constitution as set forth in the law itself.1âwphi1 Thus, the Act
provides: SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:
SECTION 1. Declaration of Policies and Objectives. — Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: "The State shall provide social justice in all phases of
national development." Further, Article XIII, Section 11, provides: "The State shall adopt an
integrated and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost.
There shall be priority for the needs of the underprivileged sick, elderly, disabled, women and
children." Consonant with these constitutional principles the following are the declared policies
of this Act:
(f) To recognize the important role of the private sector in the improvement of the welfare of
senior citizens and to actively seek their partnership.
To implement the above policy, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and
similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of reimbursement,
the law provides that business establishments extending the twenty percent discount to senior
citizens may claim the discount as a tax deduction. The law is a legitimate exercise of police
power which, similar to the power of eminent domain, has general welfare for its object. Police
power is not capable of an exact definition, but has been purposely veiled in general terms to
underscore its comprehensiveness to meet all exigencies and provide enough room for an
efficient and flexible response to conditions and circumstances, thus assuring the greatest
benefits. Accordingly, it has been described as "the most essential, insistent and the least
limitable of powers, extending as it does to all the great public needs." It is "[t]he power vested
in the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant
to the constitution, as they shall judge to be for the good and welfare of the commonwealth,
and of the subjects of the same." For this reason, when the conditions so demand as
determined by the legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general welfare. Police power
as an attribute to promote the common good would be diluted considerably if on the mere plea
of petitioners that they will suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory
effect of the provision in question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor. Given these, it is incorrect for
petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their
business, because petitioners have not taken time to calculate correctly and come up with a
financial report, so that they have not been able to show properly whether or not the tax
deduction scheme really works greatly to their disadvantage. In treating the discount as a tax
deduction, petitioners insist that they will incur losses because, referring to the DOF Opinion,
for every ₱1.00 senior citizen discount that petitioners would give, P0.68 will be shouldered by
them as only P0.32 will be refunded by the government by way of a tax deduction. To illustrate
this point, petitioner Carlos Super Drug cited the anti-hypertensive maintenance drug Norvasc
as an example. According to the latter, it acquires Norvasc from the distributors at ₱37.57 per
tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount to senior
citizens or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which
translates to a loss from capital of ₱5.89 per tablet. Even if the government will allow a tax
deduction, only ₱2.53 per tablet will be refunded and not the full amount of the discount which
is ₱7.92. In short, only 32% of the 20% discount will be reimbursed to the drugstores.
Petitioners’ computation is flawed. For purposes of reimbursement, the law states that the cost
of the discount shall be deducted from gross income, the amount of income derived from all
sources before deducting allowable expenses, which will result in net income. Here, petitioners
tried to show a loss on a per transaction basis, which should not be the case. An income
statement, showing an accounting of petitioners' sales, expenses, and net profit (or loss) for a
given period could have accurately reflected the effect of the discount on their income. Absent
any financial statement, petitioners cannot substantiate their claim that they will be operating at
a loss should they give the discount. In addition, the computation was erroneously based on
the assumption that their customers consisted wholly of senior citizens. Lastly, the 32% tax
rate is to be imposed on income, not on the amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices
of their medicines given the cutthroat nature of the players in the industry. It is a business
decision on the part of petitioners to peg the mark-up at 5%. Selling the medicines below
acquisition cost, as alleged by petitioners, is merely a result of this decision. Inasmuch as
pricing is a property right, petitioners cannot reproach the law for being oppressive, simply
because they cannot afford to raise their prices for fear of losing their customers to
competition. The Court is not oblivious of the retail side of the pharmaceutical industry and the
competitive pricing component of the business. While the Constitution protects property rights,
petitioners must accept the realities of business and the State, in the exercise of police power,
can intervene in the operations of a business which may result in an impairment of property
rights in the process.
Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the precept for the protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public utilities, continuously serve as x x
x reminder[s] that the right to property can be relinquished upon the command of the State for
the promotion of public good. Undeniably, the success of the senior citizens program rests
largely on the support imparted by petitioners and the other private establishments concerned.
This being the case, the means employed in invoking the active participation of the private
sector, in order to achieve the purpose or objective of the law, is reasonably and directly
related. Without sufficient proof that Section 4 (a) of R.A. No. 9257 is arbitrary, and that the
44
continued implementation of the same would be unconscionably detrimental to petitioners, the
Court will refrain from quashing a legislative act.36 (Bold in the original; underline supplied)
We, thus, found that the 20% discount as well as the tax deduction scheme is a valid exercise
of the police power of the State.
No compelling reason has been proffered to overturn, modify or abandon the ruling in
Carlos Superdrug Corporation.
37
Petitioners argue that we have previously ruled in Central Luzon Drug Corporation that the
20% discount is an exercise of the power of eminent domain, thus, requiring the payment of
just compensation. They urge us to re-examine our ruling in Carlos Superdrug
Corporation38 which allegedly reversed the ruling in Central Luzon Drug Corporation. 39
They also point out that Carlos Superdrug Corporation 40 recognized that the tax deduction
scheme under the assailed law does not provide for sufficient just compensation. We agree
with petitioners’ observation that there are statements in Central Luzon Drug
Corporation41 describing the 20% discount as an exercise of the power of eminent domain,
viz.:
[T]he privilege enjoyed by senior citizens does not come directly from the State, but rather from
the private establishments concerned. Accordingly, the tax credit benefit granted to these
establishments can be deemed as their just compensation for private property taken by the
State for public use. The concept of public use is no longer confined to the traditional notion of
use by the public, but held synonymous with public interest, public benefit, public welfare, and
public convenience. The discount privilege to which our senior citizens are entitled is actually a
benefit enjoyed by the general public to which these citizens belong. The discounts given
would have entered the coffers and formed part of the gross sales of the private
establishments concerned, were it not for RA 7432. The permanent reduction in their total
revenues is a forced subsidy corresponding to the taking of private property for public use or
benefit. As a result of the 20 percent discount imposed by RA 7432, respondent becomes
entitled to a just compensation. This term refers not only to the issuance of a tax credit
certificate indicating the correct amount of the discounts given, but also to the promptness in
its release. Equivalent to the payment of property taken by the State, such issuance — when
not done within a reasonable time from the grant of the discounts — cannot be considered as
just compensation. In effect, respondent is made to suffer the consequences of being
immediately deprived of its revenues while awaiting actual receipt, through the certificate, of
the equivalent amount it needs to cope with the reduction in its revenues. Besides, the taxation
power can also be used as an implement for the exercise of the power of eminent domain. Tax
measures are but "enforced contributions exacted on pain of penal sanctions" and "clearly
imposed for a public purpose." In recent years, the power to tax has indeed become a most
effective tool to realize social justice, public welfare, and the equitable distribution of wealth.
While it is a declared commitment under Section 1 of RA 7432, social justice "cannot be
invoked to trample on the rights of property owners who under our Constitution and laws are
also entitled to protection. The social justice consecrated in our [C]onstitution [is] not intended
to take away rights from a person and give them to another who is not entitled thereto." For
this reason, a just compensation for income that is taken away from respondent becomes
necessary. It is in the tax credit that our legislators find support to realize social justice, and no
administrative body can alter that fact. To put it differently, a private establishment that merely
breaks even — without the discounts yet — will surely start to incur losses because of such
discounts. The same effect is expected if its mark-up is less than 20 percent, and if all its sales
come from retail purchases by senior citizens. Aside from the observation we have already
raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated
merely as deductions from either its gross income or its gross sales.1âwphi1 Operating at a
loss through no fault of its own, it will realize that the tax credit limitation under RR 2-94 is
inutile, if not improper. Worse, profit-generating businesses will be put in a better position if
they avail themselves of tax credits denied those that are losing, because no taxes are due
from the latter.42 (Italics in the original; emphasis supplied)
The above was partly incorporated in our ruling in Carlos Superdrug Corporation43 when we
stated preliminarily that—
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes
deprivation of private property. Compelling drugstore owners and establishments to grant the
discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of
only 5% to 10% on branded medicines; and 2) the law failed to provide a scheme whereby
drugstores will be justly compensated for the discount. Examining petitioners’ arguments, it is
apparent that what petitioners are ultimately questioning is the validity of the tax deduction
scheme as a reimbursement mechanism for the twenty percent (20%) discount that they
extend to senior citizens. Based on the afore-stated DOF Opinion, the tax deduction scheme
does not fully reimburse petitioners for the discount privilege accorded to senior citizens. This
is because the discount is treated as a deduction, a tax-deductible expense that is subtracted
from the gross income and results in a lower taxable income. Stated otherwise, it is an amount
that is allowed by law to reduce the income prior to the application of the tax rate to compute
the amount of tax which is due. Being a tax deduction, the discount does not reduce taxes
owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers and
formed part of the gross sales of the private establishments, were it not for R.A. No. 9257. The
permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit. This constitutes compensable taking for which
petitioners would ordinarily become entitled to a just compensation. Just compensation is
defined as the full and fair equivalent of the property taken from its owner by the expropriator.
The measure is not the taker’s gain but the owner’s loss. The word just is used to intensify the
meaning of the word compensation, and to convey the idea that the equivalent to be rendered
for the property to be taken shall be real, substantial, full and ample. A tax deduction does not
offer full reimbursement of the senior citizen discount. As such, it would not meet the definition
of just compensation. Having said that, this raises the question of whether the State, in
promoting the health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program. The Court believes
so.44
This, notwithstanding, we went on to rule in Carlos Superdrug Corporation 45 that the 20%
discount and tax deduction scheme is a valid exercise of the police power of the State. The
present case, thus, affords an opportunity for us to clarify the above-quoted statements in
Central Luzon Drug Corporation46 and Carlos Superdrug Corporation.47
First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug
Corporation48 is obiter dicta and, thus, not binding precedent. As stated earlier, in Central
Luzon Drug Corporation,49 we ruled that the BIR acted ultra vires when it effectively treated the
20% discount as a tax deduction, under Sections 2.i and 4 of RR No. 2-94, despite the clear
wording of the previous law that the same should be treated as a tax credit. We were,
therefore, not confronted in that case with the issue as to whether the 20% discount is an
exercise of police power or eminent domain. Second, although we adverted to Central Luzon
Drug Corporation50 in our ruling in Carlos Superdrug Corporation, 51 this referred only to
preliminary matters. A fair reading of Carlos Superdrug Corporation 52 would show that we
categorically ruled therein that the 20% discount is a valid exercise of police power. Thus, even
if the current law, through its tax deduction scheme (which abandoned the tax credit scheme
under the previous law), does not provide for a peso for peso reimbursement of the 20%
discount given by private establishments, no constitutional infirmity obtains because, being a
valid exercise of police power, payment of just compensation is not warranted. We have
carefully reviewed the basis of our ruling in Carlos Superdrug Corporation 53 and we find no
cogent reason to overturn, modify or abandon it. We also note that petitioners’ arguments are
a mere reiteration of those raised and resolved in Carlos Superdrug Corporation. 54 Thus, we
sustain Carlos Superdrug Corporation.55
Nonetheless, we deem it proper, in what follows, to amplify our explanation in Carlos
Superdrug Corporation56 as to why the 20% discount is a valid exercise of police power and
why it may not, under the specific circumstances of this case, be considered as an exercise of
the power of eminent domain contrary to the obiter in Central Luzon Drug Corporation. 57
Police power versus eminent domain.
Police power is the inherent power of the State to regulate or to restrain the use of liberty and
property for public welfare.58
The only limitation is that the restriction imposed should be reasonable, not oppressive. 59
In other words, to be a valid exercise of police power, it must have a lawful subject or objective
and a lawful method of accomplishing the goal.60
Under the police power of the State, "property rights of individuals may be subjected to
restraints and burdens in order to fulfill the objectives of the government." 61
The State "may interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare [as long as] the interference [is] reasonable and not arbitrary." 62
Eminent domain, on the other hand, is the inherent power of the State to take or appropriate
private property for public use.63
The Constitution, however, requires that private property shall not be taken without due
process of law and the payment of just compensation.64
Traditional distinctions exist between police power and eminent domain. In the exercise of
police power, a property right is impaired by regulation,65 or the use of property is merely
prohibited, regulated or restricted66 to promote public welfare. In such cases, there is no
compensable taking, hence, payment of just compensation is not required. Examples of these
regulations are property condemned for being noxious or intended for noxious purposes (e.g.,
a building on the verge of collapse to be demolished for public safety, or obscene materials to
be destroyed in the interest of public morals) 67 as well as zoning ordinances prohibiting the use
of property for purposes injurious to the health, morals or safety of the community (e.g.,
dividing a city’s territory into residential and industrial areas).
68
It has, thus, been observed that, in the exercise of police power (as distinguished from eminent
domain), although the regulation affects the right of ownership, none of the bundle of rights
which constitute ownership is appropriated for use by or for the benefit of the public.69
On the other hand, in the exercise of the power of eminent domain, property interests are
appropriated and applied to some public purpose which necessitates the payment of just
compensation therefor. Normally, the title to and possession of the property are transferred to
the expropriating authority. Examples include the acquisition of lands for the construction of
public highways as well as agricultural lands acquired by the government under the agrarian
reform law for redistribution to qualified farmer beneficiaries. However, it is a settled rule that
the acquisition of title or total destruction of the property is not essential for "taking" under the
power of eminent domain to be present. 70
Examples of these include establishment of easements such as where the land owner is
perpetually deprived of his proprietary rights because of the hazards posed by electric
transmission lines constructed above his property 71 or the compelled interconnection of the
telephone system between the government and a private company. 72
In these cases, although the private property owner is not divested of ownership or
possession, payment of just compensation is warranted because of the burden placed on the
property for the use or benefit of the public.
The 20% senior citizen discount is an exercise of police power.
It may not always be easy to determine whether a challenged governmental act is an exercise
of police power or eminent domain. The very nature of police power as elastic and responsive
to various social conditions73 as well as the evolving meaning and scope of public use 74 and
just compensation75 in eminent domain evinces that these are not static concepts. Because of
the exigencies of rapidly changing times, Congress may be compelled to adopt or experiment
with different measures to promote the general welfare which may not fall squarely within the
traditionally recognized categories of police power and eminent domain. The judicious
approach, therefore, is to look at the nature and effects of the challenged governmental act
and decide, on the basis thereof, whether the act is the exercise of police power or eminent
domain. Thus, we now look at the nature and effects of the 20% discount to determine if it
constitutes an exercise of police power or eminent domain. The 20% discount is intended to
improve the welfare of senior citizens who, at their age, are less likely to be gainfully
employed, more prone to illnesses and other disabilities, and, thus, in need of subsidy in
purchasing basic commodities. It may not be amiss to mention also that the discount serves to
honor senior citizens who presumably spent the productive years of their lives on contributing
to the development and progress of the nation. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law. As to its nature and effects, the 20%
discount is a regulation affecting the ability of private establishments to price their products and
services relative to a special class of individuals, senior citizens, for which the Constitution
affords preferential concern.76
In turn, this affects the amount of profits or income/gross sales that a private establishment can
derive from senior citizens. In other words, the subject regulation affects the pricing, and,
hence, the profitability of a private establishment. However, it does not purport to appropriate
or burden specific properties, used in the operation or conduct of the business of private
establishments, for the use or benefit of the public, or senior citizens for that matter, but merely
regulates the pricing of goods and services relative to, and the amount of profits or
income/gross sales that such private establishments may derive from, senior citizens. The
subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of return on investment control laws which are traditionally regarded as police
power measures.77
These laws generally regulate public utilities or industries/enterprises imbued with public
interest in order to protect consumers from exorbitant or unreasonable pricing as well as
temper corporate greed by controlling the rate of return on investment of these corporations
considering that they have a monopoly over the goods or services that they provide to the
general public. The subject regulation differs therefrom in that (1) the discount does not
prevent the establishments from adjusting the level of prices of their goods and services, and
(2) the discount does not apply to all customers of a given establishment but only to the class
of senior citizens. Nonetheless, to the degree material to the resolution of this case, the 20%
discount may be properly viewed as belonging to the category of price regulatory measures
which affect the profitability of establishments subjected thereto. On its face, therefore, the
subject regulation is a police power measure. The obiter in Central Luzon Drug
Corporation,78 however, describes the 20% discount as an exercise of the power of eminent
domain and the tax credit, under the previous law, equivalent to the amount of discount given
as the just compensation therefor. The reason is that (1) the discount would have formed part
of the gross sales of the establishment were it not for the law prescribing the 20% discount,
and (2) the permanent reduction in total revenues is a forced subsidy corresponding to the
taking of private property for public use or benefit. The flaw in this reasoning is in its premise. It
presupposes that the subject regulation, which impacts the pricing and, hence, the profitability
of a private establishment, automatically amounts to a deprivation of property without due
process of law. If this were so, then all price and rate of return on investment control laws
would have to be invalidated because they impact, at some level, the regulated
establishment’s profits or income/gross sales, yet there is no provision for payment of just
compensation. It would also mean that overnment cannot set price or rate of return on
investment limits, which reduce the profits or income/gross sales of private establishments, if
no just compensation is paid even if the measure is not confiscatory. The obiter is, thus, at
odds with the settled octrine that the State can employ police power measures to regulate the
pricing of goods and services, and, hence, the profitability of business establishments in order
45
to pursue legitimate State objectives for the common good, provided that the regulation does
not go too far as to amount to "taking." 79
In City of Manila v. Laguio, Jr.,80 we recognized that— x x x a taking also could be found if
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and
compensation to support the act. While property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking. No formula or rule can be devised to
answer the questions of what is too far and when regulation becomes a taking. In Mahon,
Justice Holmes recognized that it was "a question of degree and therefore cannot be disposed
of by general propositions." On many other occasions as well, the U.S. Supreme Court has
said that the issue of when regulation constitutes a taking is a matter of considering the facts in
each case. The Court asks whether justice and fairness require that the economic loss caused
by public action must be compensated by the government and thus borne by the public as a
whole, or whether the loss should remain concentrated on those few persons subject to the
public action.81
The impact or effect of a regulation, such as the one under consideration, must, thus, be
determined on a case-to-case basis. Whether that line between permissible regulation under
police power and "taking" under eminent domain has been crossed must, under the specific
circumstances of this case, be subject to proof and the one assailing the constitutionality of the
regulation carries the heavy burden of proving that the measure is unreasonable, oppressive
or confiscatory. The time-honored rule is that the burden of proving the unconstitutionality of a
law rests upon the one assailing it and "the burden becomes heavier when police power is at
issue."82
The 20% senior citizen discount has not been shown to be unreasonable, oppressive or
confiscatory.
In Alalayan v. National Power Corporation,83 petitioners, who were franchise holders of electric
plants, challenged the validity of a law limiting their allowable net profits to no more than 12%
per annum of their investments plus two-month operating expenses. In rejecting their plea, we
ruled that, in an earlier case, it was found that 12% is a reasonable rate of return and that
petitioners failed to prove that the aforesaid rate is confiscatory in view of the presumption of
84
constitutionality.
We adopted a similar line of reasoning in Carlos Superdrug Corporation 85 when we ruled that
petitioners therein failed to prove that the 20% discount is arbitrary, oppressive or confiscatory.
We noted that no evidence, such as a financial report, to establish the impact of the 20%
discount on the overall profitability of petitioners was presented in order to show that they
would be operating at a loss due to the subject regulation or that the continued implementation
of the law would be unconscionably detrimental to the business operations of petitioners. In the
case at bar, petitioners proceeded with a hypothetical computation of the alleged loss that they
will suffer similar to what the petitioners in Carlos Superdrug Corporation 86 did. Petitioners
went directly to this Court without first establishing the factual bases of their claims. Hence, the
present recourse must, likewise, fail. Because all laws enjoy the presumption of
constitutionality, courts will uphold a law’s validity if any set of facts may be conceived to
sustain it.87
On its face, we find that there are at least two conceivable bases to sustain the subject
regulation’s validity absent clear and convincing proof that it is unreasonable, oppressive or
confiscatory. Congress may have legitimately concluded that business establishments have
the capacity to absorb a decrease in profits or income/gross sales due to the 20% discount
without substantially affecting the reasonable rate of return on their investments considering
(1) not all customers of a business establishment are senior citizens and (2) the level of its
profit margins on goods and services offered to the general public. Concurrently, Congress
may have, likewise, legitimately concluded that the establishments, which will be required to
extend the 20% discount, have the capacity to revise their pricing strategy so that whatever
reduction in profits or income/gross sales that they may sustain because of sales to senior
citizens, can be recouped through higher mark-ups or from other products not subject of
discounts. As a result, the discounts resulting from sales to senior citizens will not be
confiscatory or unduly oppressive. In sum, we sustain our ruling in Carlos Superdrug
Corporation88 that the 20% senior citizen discount and tax deduction scheme are valid
exercises of police power of the State absent a clear showing that it is arbitrary, oppressive or
confiscatory.
Conclusion
In closing, we note that petitioners hypothesize, consistent with our previous ratiocinations,
that the discount will force establishments to raise their prices in order to compensate for its
impact on overall profits or income/gross sales. The general public, or those not belonging to
the senior citizen class, are, thus, made to effectively shoulder the subsidy for senior citizens.
This, in petitioners’ view, is unfair.
As already mentioned, Congress may be reasonably assumed to have foreseen this
eventuality. But, more importantly, this goes into the wisdom, efficacy and expediency of the
subject law which is not proper for judicial review. In a way, this law pursues its social equity
objective in a non-traditional manner unlike past and existing direct subsidy programs of the
government for the poor and marginalized sectors of our society. Verily, Congress must be
given sufficient leeway in formulating welfare legislations given the enormous challenges that
the government faces relative to, among others, resource adequacy and administrative
capability in implementing social reform measures which aim to protect and uphold the
interests of those most vulnerable in our society. In the process, the individual, who enjoys the
rights, benefits and privileges of living in a democratic polity, must bear his share in supporting
measures intended for the common good. This is only fair. In fine, without the requisite
showing of a clear and unequivocal breach of the Constitution, the validity of the assailed law
must be sustained.
Refutation of the Dissent
The main points of Justice Carpio’s Dissent may be summarized as follows: (1) the discussion
on eminent domain in Central Luzon Drug Corporation 89 is not obiter dicta ; (2) allowable
taking, in police power, is limited to property that is destroyed or placed outside the commerce
of man for public welfare; (3) the amount of mandatory discount is private property within the
ambit of Article III, Section 990 of the Constitution; and (4) the permanent reduction in a private
establishment’s total revenue, arising from the mandatory discount, is a taking of private
property for public use or benefit, hence, an exercise of the power of eminent domain requiring
the payment of just compensation. I We maintain that the discussion on eminent domain in
Central Luzon Drug Corporation91 is obiter dicta. As previously discussed, in Central Luzon
Drug Corporation,92 the BIR, pursuant to Sections 2.i and 4 of RR No. 2-94, treated the senior
citizen discount in the previous law, RA 7432, as a tax deduction instead of a tax credit despite
the clear provision in that law which stated –
SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:
a) The grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment, restaurants and recreation
centers and purchase of medicines anywhere in the country: Provided, That private
establishments may claim the cost as tax credit; (Emphasis supplied)
Thus, the Court ruled that the subject revenue regulation violated the law, viz:
The 20 percent discount required by the law to be given to senior citizens is a tax credit, not
merely a tax deduction from the gross income or gross sale of the establishment concerned. A
tax credit is used by a private establishment only after the tax has been computed; a tax
deduction, before the tax is computed. RA 7432 unconditionally grants a tax credit to all
covered entities. Thus, the provisions of the revenue regulation that withdraw or modify such
grant are void. Basic is the rule that administrative regulations cannot amend or revoke the
law.93
As can be readily seen, the discussion on eminent domain was not necessary in order to arrive
at this conclusion. All that was needed was to point out that the revenue regulation
contravened the law which it sought to implement. And, precisely, this was done in Central
Luzon Drug Corporation94 by comparing the wording of the previous law vis-à-vis the revenue
regulation; employing the rules of statutory construction; and applying the settled principle that
a regulation cannot amend the law it seeks to implement. A close reading of Central Luzon
Drug Corporation95 would show that the Court went on to state that the tax credit "can be
deemed" as just compensation only to explain why the previous law provides for a tax credit
instead of a tax deduction. The Court surmised that the tax credit was a form of just
compensation given to the establishments covered by the 20% discount. However, the reason
why the previous law provided for a tax credit and not a tax deduction was not necessary to
resolve the issue as to whether the revenue regulation contravenes the law. Hence, the
discussion on eminent domain is obiter dicta.
A court, in resolving cases before it, may look into the possible purposes or reasons that
impelled the enactment of a particular statute or legal provision. However, statements made
relative thereto are not always necessary in resolving the actual controversies presented
before it. This was the case in Central Luzon Drug Corporation96 resulting in that unfortunate
statement that the tax credit "can be deemed" as just compensation. This, in turn, led to the
erroneous conclusion, by deductive reasoning, that the 20% discount is an exercise of the
power of eminent domain. The Dissent essentially adopts this theory and reasoning which, as
will be shown below, is contrary to settled principles in police power and eminent domain
analysis. II The Dissent discusses at length the doctrine on "taking" in police power which
occurs when private property is destroyed or placed outside the commerce of man. Indeed,
there is a whole class of police power measures which justify the destruction of private
property in order to preserve public health, morals, safety or welfare. As earlier mentioned,
these would include a building on the verge of collapse or confiscated obscene materials as
well as those mentioned by the Dissent with regard to property used in violating a criminal
statute or one which constitutes a nuisance. In such cases, no compensation is required.
However, it is equally true that there is another class of police power measures which do not
involve the destruction of private property but merely regulate its use. The minimum wage law,
zoning ordinances, price control laws, laws regulating the operation of motels and hotels, laws
limiting the working hours to eight, and the like would fall under this category. The examples
cited by the Dissent, likewise, fall under this category: Article 157 of the Labor Code, Sections
19 and 18 of the Social Security Law, and Section 7 of the Pag-IBIG Fund Law. These laws
merely regulate or, to use the term of the Dissent, burden the conduct of the affairs of business
establishments. In such cases, payment of just compensation is not required because they fall
within the sphere of permissible police power measures. The senior citizen discount law falls
under this latter category. III The Dissent proceeds from the theory that the permanent
reduction of profits or income/gross sales, due to the 20% discount, is a "taking" of private
property for public purpose without payment of just compensation. At the outset, it must be
emphasized that petitioners never presented any evidence to establish that they were forced to
suffer enormous losses or operate at a loss due to the effects of the assailed law. They came
directly to this Court and provided a hypothetical computation of the loss they would allegedly
suffer due to the operation of the assailed law. The central premise of the Dissent’s argument
that the 20% discount results in a permanent reduction in profits or income/gross sales, or
forces a business establishment to operate at a loss is, thus, wholly unsupported by competent
evidence. To be sure, the Court can invalidate a law which, on its face, is arbitrary, oppressive
or confiscatory.97
But this is not the case here.
In the case at bar, evidence is indispensable before a determination of a constitutional violation
can be made because of the following reasons. First, the assailed law, by imposing the senior
citizen discount, does not take any of the properties used by a business establishment like,
say, the land on which a manufacturing plant is constructed or the equipment being used to
produce goods or services. Second, rather than taking specific properties of a business
establishment, the senior citizen discount law merely regulates the prices of the goods or
services being sold to senior citizens by mandating a 20% discount. Thus, if a product is sold
at ₱10.00 to the general public, then it shall be sold at ₱8.00 ( i.e., ₱10.00 less 20%) to senior
citizens. Note that the law does not impose at what specific price the product shall be sold,
only that a 20% discount shall be given to senior citizens based on the price set by the
business establishment. A business establishment is, thus, free to adjust the prices of the
goods or services it provides to the general public. Accordingly, it can increase the price of the
above product to ₱20.00 but is required to sell it at ₱16.00 (i.e. , ₱20.00 less 20%) to senior
citizens. Third, because the law impacts the prices of the goods or services of a particular
establishment relative to its sales to senior citizens, its profits or income/gross sales are
affected. The extent of the impact would, however, depend on the profit margin of the business
establishment on a particular good or service. If a product costs ₱5.00 to produce and is sold
at ₱10.00, then the profit98 is ₱5.0099 or a profit margin100 of 50%.101
Under the assailed law, the aforesaid product would have to be sold at ₱8.00 to senior citizens
yet the business would still earn ₱3.00 102 or a 30%103 profit margin. On the other hand, if the
product costs ₱9.00 to produce and is required to be sold at ₱8.00 to senior citizens, then the
business would experience a loss of ₱1.00.104
But note that since not all customers of a business establishment are senior citizens, the
business establishment may continue to earn ₱1.00 from non-senior citizens which, in turn,
can offset any loss arising from sales to senior citizens.
Fourth, when the law imposes the 20% discount in favor of senior citizens, it does not prevent
the business establishment from revising its pricing strategy.
By revising its pricing strategy, a business establishment can recoup any reduction of profits or
income/gross sales which would otherwise arise from the giving of the 20% discount. To
illustrate, suppose A has two customers: X, a senior citizen, and Y, a non-senior citizen. Prior
to the law, A sells his products at ₱10.00 a piece to X and Y resulting in income/gross sales of
₱20.00 (₱10.00 + ₱10.00). With the passage of the law, A must now sell his product to X at
₱8.00 (i.e., ₱10.00 less 20%) so that his income/gross sales would be ₱18.00 (₱8.00 +
₱10.00) or lower by ₱2.00. To prevent this from happening, A decides to increase the price of
his products to ₱11.11 per piece. Thus, he sells his product to X at ₱8.89 (i.e. , ₱11.11 less
20%) and to Y at ₱11.11. As a result, his income/gross sales would still be ₱20.00 105 (₱8.89 +
₱11.11). The capacity, then, of business establishments to revise their pricing strategy makes
it possible for them not to suffer any reduction in profits or income/gross sales, or, in the
alternative, mitigate the reduction of their profits or income/gross sales even after the passage
of the law. In other words, business establishments have the capacity to adjust their prices so
that they may remain profitable even under the operation of the assailed law.
The Dissent, however, states that – The explanation by the majority that private
establishments can always increase their prices to recover the mandatory discount will only
encourage private establishments to adjust their prices upwards to the prejudice of customers
who do not enjoy the 20% discount. It was likewise suggested that if a company increases its
prices, despite the application of the 20% discount, the establishment becomes more profitable
than it was before the implementation of R.A. 7432. Such an economic justification is self-
defeating, for more consumers will suffer from the price increase than will benefit from the 20%
discount. Even then, such ability to increase prices cannot legally validate a violation of the
eminent domain clause.106
But, if it is possible that the business establishment, by adjusting its prices, will suffer no
reduction in its profits or income/gross sales (or suffer some reduction but continue to operate
profitably) despite giving the discount, what would be the basis to strike down the law? If it is
possible that the business establishment, by adjusting its prices, will not be unduly burdened,
how can there be a finding that the assailed law is an unconstitutional exercise of police power
or eminent domain? That there may be a burden placed on business establishments or the
consuming public as a result of the operation of the assailed law is not, by itself, a ground to
declare it unconstitutional for this goes into the wisdom and expediency of the law.
46
The cost of most, if not all, regulatory measures of the government on business establishments
is ultimately passed on to the consumers but that, by itself, does not justify the wholesale
nullification of these measures. It is a basic postulate of our democratic system of government
that the Constitution is a social contract whereby the people have surrendered their sovereign
powers to the State for the common good.107
All persons may be burdened by regulatory measures intended for the common good or to
serve some important governmental interest, such as protecting or improving the welfare of a
special class of people for which the Constitution affords preferential concern. Indubitably, the
one assailing the law has the heavy burden of proving that the regulation is unreasonable,
oppressive or confiscatory, or has gone "too far" as to amount to a "taking." Yet, here, the
Dissent would have this Court nullify the law without any proof of such nature.
Further, this Court is not the proper forum to debate the economic theories or realities that
impelled Congress to shift from the tax credit to the tax deduction scheme. It is not within our
power or competence to judge which scheme is more or less burdensome to business
establishments or the consuming public and, thereafter, to choose which scheme the State
should use or pursue. The shift from the tax credit to tax deduction scheme is a policy
determination by Congress and the Court will respect it for as long as there is no showing, as
here, that the subject regulation has transgressed constitutional limitations. Unavoidably, the
lack of evidence constrains the Dissent to rely on speculative and hypothetical argumentation
when it states that the 20% discount is a significant amount and not a minimal loss (which
erroneously assumes that the discount automatically results in a loss when it is possible that
the profit margin is greater than 20% and/or the pricing strategy can be revised to prevent or
mitigate any reduction in profits or income/gross sales as illustrated above),108 and not all
private establishments make a 20% profit margin (which conversely implies that there are
those who make more and, thus, would not be greatly affected by this regulation). 109
In fine, because of the possible scenarios discussed above, we cannot assume that the 20%
discount results in a permanent reduction in profits or income/gross sales, much less that
business establishments are forced to operate at a loss under the assailed law. And, even if
we gratuitously assume that the 20% discount results in some degree of reduction in profits or
income/gross sales, we cannot assume that such reduction is arbitrary, oppressive or
confiscatory. To repeat, there is no actual proof to back up this claim, and it could be that the
loss suffered by a business establishment was occasioned through its fault or negligence in
not adapting to the effects of the assailed law. The law uniformly applies to all business
establishments covered thereunder. There is, therefore, no unjust discrimination as the
aforesaid business establishments are faced with the same constraints. The necessity of proof
is all the more pertinent in this case because, as similarly observed by Justice Velasco in his
Concurring Opinion, the law has been in operation for over nine years now. However, the grim
picture painted by petitioners on the unconscionable losses to be indiscriminately suffered by
business establishments, which should have led to the closure of numerous business
establishments, has not come to pass. Verily, we cannot invalidate the assailed law based on
assumptions and conjectures. Without adequate proof, the presumption of constitutionality
must prevail. IV At this juncture, we note that the Dissent modified its original arguments by
including a new paragraph, to wit:
Section 9, Article III of the 1987 Constitution speaks of private property without any distinction.
It does not state that there should be profit before the taking of property is subject to just
compensation. The private property referred to for purposes of taking could be inherited,
donated, purchased, mortgaged, or as in this case, part of the gross sales of private
establishments. They are all private property and any taking should be attended by
corresponding payment of just compensation. The 20% discount granted to senior citizens
belong to private establishments, whether these establishments make a profit or suffer a loss.
In fact, the 20% discount applies to non-profit establishments like country, social, or golf clubs
which are open to the public and not only for exclusive membership. The issue of profit or loss
to the establishments is immaterial.110
Two things may be said of this argument. First, it contradicts the rest of the arguments of the
Dissent. After it states that the issue of profit or loss is immaterial, the Dissent proceeds to
argue that the 20% discount is not a minimal loss 111 and that the 20% discount forces business
112
establishments to operate at a loss.
Even the obiter in Central Luzon Drug Corporation, 113 which the Dissent essentially adopts and
relies on, is premised on the permanent reduction of total revenues and the loss that business
establishments will be forced to suffer in arguing that the 20% discount constitutes a "taking"
under the power of eminent domain. Thus, when the Dissent now argues that the issue of
profit or loss is immaterial, it contradicts itself because it later argues, in order to justify that
there is a "taking" under the power of eminent domain in this case, that the 20% discount
forces business establishments to suffer a significant loss or to operate at a loss. Second, this
argument suffers from the same flaw as the Dissent's original arguments. It is an erroneous
characterization of the 20% discount. According to the Dissent, the 20% discount is part of the
gross sales and, hence, private property belonging to business establishments. However, as
previously discussed, the 20% discount is not private property actually owned and/or used by
the business establishment. It should be distinguished from properties like lands or buildings
actually used in the operation of a business establishment which, if appropriated for public use,
would amount to a "taking" under the power of eminent domain. Instead, the 20% discount is a
regulatory measure which impacts the pricing and, hence, the profitability of business
establishments. At the time the discount is imposed, no particular property of the business
establishment can be said to be "taken." That is, the State does not acquire or take anything
from the business establishment in the way that it takes a piece of private land to build a public
road. While the 20% discount may form part of the potential profits or income/gross sales 114 of
the business establishment, as similarly characterized by Justice Bersamin in his Concurring
Opinion, potential profits or income/gross sales are not private property, specifically cash or
money, already belonging to the business establishment. They are a mere expectancy
because they are potential fruits of the successful conduct of the business. Prior to the sale of
goods or services, a business establishment may be subject to State regulations, such as the
20% senior citizen discount, which may impact the level or amount of profits or income/gross
sales that can be generated by such establishment. For this reason, the validity of the discount
is to be determined based on its overall effects on the operations of the business
establishment.
Again, as previously discussed, the 20% discount does not automatically result in a 20%
reduction in profits, or, to align it with the term used by the Dissent, the 20% discount does not
mean that a 20% reduction in gross sales necessarily results. Because (1) the profit margin of
a product is not necessarily less than 20%, (2) not all customers of a business establishment
are senior citizens, and (3) the establishment may revise its pricing strategy, such reduction in
profits or income/gross sales may be prevented or, in the alternative, mitigated so that the
business establishment continues to operate profitably. Thus, even if we gratuitously assume
that some degree of reduction in profits or income/gross sales occurs because of the 20%
discount, it does not follow that the regulation is unreasonable, oppressive or confiscatory
because the business establishment may make the necessary adjustments to continue to
operate profitably. No evidence was presented by petitioners to show otherwise. In fact, no
evidence was presented by petitioners at all. Justice Leonen, in his Concurring and Dissenting
Opinion, characterizes "profits" (or income/gross sales) as an inchoate right. Another way to
view it, as stated by Justice Velasco in his Concurring Opinion, is that the business
establishment merely has a right to profits. The Constitution adverts to it as the right of an
enterprise to a reasonable return on investment. 115
Undeniably, this right, like any other right, may be regulated under the police power of the
State to achieve important governmental objectives like protecting the interests and improving
the welfare of senior citizens. It should be noted though that potential profits or income/gross
sales are relevant in police power and eminent domain analyses because they may, in
appropriate cases, serve as an indicia when a regulation has gone "too far" as to amount to a
"taking" under the power of eminent domain. When the deprivation or reduction of profits or
income/gross sales is shown to be unreasonable, oppressive or confiscatory, then the
challenged governmental regulation may be nullified for being a "taking" under the power of
eminent domain. In such a case, it is not profits or income/gross sales which are actually taken
and appropriated for public use. Rather, when the regulation causes an establishment to incur
losses in an unreasonable, oppressive or confiscatory manner, what is actually taken is capital
and the right of the business establishment to a reasonable return on investment. If the
business losses are not halted because of the continued operation of the regulation, this
eventually leads to the destruction of the business and the total loss of the capital invested
therein. But, again, petitioners in this case failed to prove that the subject regulation is
unreasonable, oppressive or confiscatory.
V.
The Dissent further argues that we erroneously used price and rate of return on investment
control laws to justify the senior citizen discount law. According to the Dissent, only profits from
industries imbued with public interest may be regulated because this is a condition of their
franchises. Profits of establishments without franchises cannot be regulated permanently
because there is no law regulating their profits. The Dissent concludes that the permanent
reduction of total revenues or gross sales of business establishments without franchises is a
taking of private property under the power of eminent domain. In making this argument, it is
unfortunate that the Dissent quotes only a portion of the ponencia – The subject regulation
may be said to be similar to, but with substantial distinctions from, price control or rate of return
on investment control laws which are traditionally regarded as police power measures. These
laws generally regulate public utilities or industries/enterprises imbued with public interest in
order to protect consumers from exorbitant or unreasonable pricing as well as temper
corporate greed by controlling the rate of return on investment of these corporations
considering that they have a monopoly over the goods or services that they provide to the
general public. The subject regulation differs therefrom in that (1) the discount does not
prevent the establishments from adjusting the level of prices of their goods and services, and
(2) the discount does not apply to all customers of a given establishment but only to the class
of senior citizens. x x x116
The above paragraph, in full, states –
The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of return on investment control laws which are traditionally regarded as police
power measures. These laws generally regulate public utilities or industries/enterprises imbued
with public interest in order to protect consumers from exorbitant or unreasonable pricing as
well as temper corporate greed by controlling the rate of return on investment of these
corporations considering that they have a monopoly over the goods or services that they
provide to the general public. The subject regulation differs therefrom in that (1) the discount
does not prevent the establishments from adjusting the level of prices of their goods and
services, and (2) the discount does not apply to all customers of a given establishment but only
to the class of senior citizens.
Nonetheless, to the degree material to the resolution of this case, the 20% discount may be
properly viewed as belonging to the category of price regulatory measures which affects the
profitability of establishments subjected thereto. (Emphasis supplied)
The point of this paragraph is to simply show that the State has, in the past, regulated prices
and profits of business establishments. In other words, this type of regulatory measures is
traditionally recognized as police power measures so that the senior citizen discount may be
considered as a police power measure as well. What is more, the substantial distinctions
between price and rate of return on investment control laws vis-à-vis the senior citizen discount
law provide greater reason to uphold the validity of the senior citizen discount law. As
previously discussed, the ability to adjust prices allows the establishment subject to the senior
citizen discount to prevent or mitigate any reduction of profits or income/gross sales arising
from the giving of the discount. In contrast, establishments subject to price and rate of return
on investment control laws cannot adjust prices accordingly. Certainly, there is no intention to
say that price and rate of return on investment control laws are the justification for the senior
citizen discount law. Not at all. The justification for the senior citizen discount law is the plenary
powers of Congress. The legislative power to regulate business establishments is broad and
covers a wide array of areas and subjects. It is well within Congress’ legislative powers to
regulate the profits or income/gross sales of industries and enterprises, even those without
franchises. For what are franchises but mere legislative enactments? There is nothing in the
Constitution that prohibits Congress from regulating the profits or income/gross sales of
industries and enterprises without franchises. On the contrary, the social justice provisions of
the Constitution enjoin the State to regulate the "acquisition, ownership, use, and disposition"
of property and its increments.117
This may cover the regulation of profits or income/gross sales of all businesses, without
qualification, to attain the objective of diffusing wealth in order to protect and enhance the right
of all the people to human dignity.118
Thus, under the social justice policy of the Constitution, business establishments may be
compelled to contribute to uplifting the plight of vulnerable or marginalized groups in our
society provided that the regulation is not arbitrary, oppressive or confiscatory, or is not in
breach of some specific constitutional limitation. When the Dissent, therefore, states that the
"profits of private establishments which are non-franchisees cannot be regulated permanently,
and there is no such law regulating their profits permanently," 119 it is assuming what it ought to
prove. First, there are laws which, in effect, permanently regulate profits or income/gross sales
of establishments without franchises, and RA 9257 is one such law. And, second, Congress
can regulate such profits or income/gross sales because, as previously noted, there is nothing
in the Constitution to prevent it from doing so. Here, again, it must be emphasized that
petitioners failed to present any proof to show that the effects of the assailed law on their
operations has been unreasonable, oppressive or confiscatory. The permanent regulation of
profits or income/gross sales of business establishments, even those without franchises, is not
as uncommon as the Dissent depicts it to be. For instance, the minimum wage law allows the
State to set the minimum wage of employees in a given region or geographical area. Because
of the added labor costs arising from the minimum wage, a permanent reduction of profits or
income/gross sales would result, assuming that the employer does not increase the prices of
his goods or services. To illustrate, suppose it costs a company ₱5.00 to produce a product
and it sells the same at ₱10.00 with a 50% profit margin. Later, the State increases the
minimum wage. As a result, the company incurs greater labor costs so that it now costs ₱7.00
to produce the same product. The profit per product of the company would be reduced to
₱3.00 with a profit margin of 30%. The net effect would be the same as in the earlier example
of granting a 20% senior citizen discount. As can be seen, the minimum wage law could,
likewise, lead to a permanent reduction of profits. Does this mean that the minimum wage law
should, likewise, be declared unconstitutional on the mere plea that it results in a permanent
reduction of profits? Taking it a step further, suppose the company decides to increase the
price of its product in order to offset the effects of the increase in labor cost; does this mean
that the minimum wage law, following the reasoning of the Dissent, is unconstitutional because
the consuming public is effectively made to subsidize the wage of a group of laborers, i.e.,
minimum wage earners? The same reasoning can be adopted relative to the examples cited
by the Dissent which, according to it, are valid police power regulations. Article 157 of the
Labor Code, Sections 19 and 18 of the Social Security Law, and Section 7 of the Pag-IBIG
Fund Law would effectively increase the labor cost of a business establishment.1âwphi1 This
would, in turn, be integrated as part of the cost of its goods or services. Again, if the
establishment does not increase its prices, the net effect would be a permanent reduction in its
profits or income/gross sales. Following the reasoning of the Dissent that "any form of
permanent taking of private property (including profits or income/gross sales) 120 is an exercise
of eminent domain that requires the State to pay just compensation," 121 then these statutory
provisions would, likewise, have to be declared unconstitutional. It does not matter that these
benefits are deemed part of the employees’ legislated wages because the net effect is the
same, that is, it leads to higher labor costs and a permanent reduction in the profits or
income/gross sales of the business establishments.122
The point then is this – most, if not all, regulatory measures imposed by the State on business
establishments impact, at some level, the latter’s prices and/or profits or income/gross sales.123
If the Court were to sustain the Dissent’s theory, then a wholesale nullification of such
measures would inevitably result. The police power of the State and the social justice
provisions of the Constitution would, thus, be rendered nugatory. There is nothing sacrosanct
about profits or income/gross sales. This, we made clear in Carlos Superdrug Corporation: 124
Police power as an attribute to promote the common good would be diluted considerably if on
the mere plea of petitioners that they will suffer loss of earnings and capital, the questioned
provision is invalidated. Moreover, in the absence of evidence demonstrating the alleged
47
confiscatory effect of the provision in question, there is no basis for its nullification in view of
the presumption of validity which every law has in its favor.

xxxx

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive
pricing component of the business. While the Constitution protects property rights petitioners
must the realities of business and the State, in the exercise of police power, can intervene in
the operations of a business which may result in an impairment of property rights in the
process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the percept for the protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public utilities, continously serve as a
reminder for the promotion of public good.

Undeniably, the success of the senior citizens program rests largely on the support imparted
by petitioners and the other private establishments concerned. This being the case, the means
employed in invoking the active participation of the private sector, in order to achieve the
purpose or objective of the law, is reasonably and directly related. Without sufficient proof that
Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued implementation of the same
would be unconscionably detrimental to petitioners, the Court will refrain form quashing a
legislative act.125

In conclusion, we maintain that the correct rule in determining whether the subject regulatory
measure has amounted to a "taking" under the power of eminent domain is the one laid down
in Alalayan v. National Power Corporation126 and followed in Carlos Superdurg
Corporation127 consistent with long standing principles in police power and eminent domain
analysis. Thus, the deprivation or reduction of profits or income. Gross sales must be clearly
shown to be unreasonable, oppressive or confiscatory. Under the specific circumstances of
this case, such determination can only be made upon the presentation of competent proof
which petitioners failed to do. A law, which has been in operation for many years and promotes
the welfare of a group accorded special concern by the Constitution, cannot and should not be
summarily invalidated on a mere allegation that it reduces the profits or income/gross sales of
business establishments.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit.

SO ORDERED.

48
G.R. No. 194561, September 14, 2016
DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND NORTHERN LUZON
DRUG CORPORATION, Petitioners, v. NATIONAL COUNCIL ON DISABILITY AFFAIRS;
DEPARTMENT OF HEALTH; DEPARTMENT OF FINANCE; BUREAU OF INTERNAL
REVENUE; DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT; AND
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, Respondent.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari1 with a Prayer for a Temporary Restraining
Order and/or Writ of Preliminary Injunction which seeks to annul and set aside the Decision2
dated July 26, 2010, and the Resolution3 dated November 19, 2010 of the Court of Appeals
(CA) in CA-G.R. SP No. 109903. The CA dismissed petitioners' Petition for Prohibition4 and
upheld the constitutionality of the mandatory twenty percent (20%) discount on the purchase of
medicine by persons with disability (PWD).
The antecedents are as follows:
On March 24, 1992, Republic Act (R.A.) No. 7277, entitled "An Act Providing for the
Rehabilitation, Self-Development and Self-Reliance of Disabled Persons and their Integration
into the Mainstream of Society and for Other Purposes," otherwise known as the "Magna Carta
for Disabled Persons," was passed into law.5 The law defines "disabled persons",
"impairment" and "disability" as follows:
SECTION 4. Definition of Terms. - For purposes of this Act, these terms are defined as
follows:
(a) Disabled Persons are those suffering from restriction of different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the
range considered normal for a human being;
(b) Impairment is any loss, diminution or aberration of psychological, physiological, or
anatomical structure of function;
(c) Disability shall mean (1) a physical or mental impairment that substantially limits one or
more psychological, physiological or anatomical function of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an
impairment.6
On April 30, 2007, Republic Act No. 94427 was enacted amending R.A. No. 7277. The Title of
R.A. No. 7277 was amended to read as "Magna Carta for Persons with Disability" and all
references on the law to "disabled persons" were amended to read as "persons with disability"
(PWD).8 Specifically, R.A. No. 9442 granted the PWDs a twenty (20) percent discount on the
purchase of medicine, and a tax deduction scheme was adopted wherein covered
establishments may deduct the discount granted from gross income based on the net cost of
goods sold or services rendered:
CHAPTER 8. Other Privileges and Incentives. SEC. 32. Persons with disability shall be entitled
to the following:
(d)At least twenty percent (20%) discount for the purchase of medicines in all drugstores for
the exclusive use or enjoyment of persons with disability;
The abovementioned privileges are available only to persons with disability who are Filipino
citizens upon submission of any of the following as proof of his/her entitlement thereto:
(i) An identification card issued by the city or municipal mayor or the barangay
captain of the place where the person with disability resides;
(ii) The passport of the person with disability concerned; or
(ii) Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP).
The establishments may claim the discounts granted in sub¬sections (a), (b), (c), (f) and (g) as
tax deductions based on the net cost of the goods sold or services rendered: Provided,
however, That the cost of the discount shall be allowed as deduction from gross income for the
same taxable year that the discount is granted: Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, shall be included in their gross
sales receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code (NIRC), as amended.9
The Implementing Rules and Regulations (IRR) of R.A. No. 944210 was jointly promulgated by
the Department of Social Welfare and Development (DSWD), Department of Education,
Department of Finance (DOF), Department of Tourism, Department of Transportation and
Communication, Department of the Interior and Local Government (DILG) and Department of
Agriculture. Insofar as pertinent to this petition, the salient portions of the IRR are hereunder
quoted:11
RULE III. DEFINITION OF TERMS
Section 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are
defined as follows:
5.1. Persons with Disability - are those individuals defined under Section 4 of RA 7277 "An Act
Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability
as amended and their integration into the Mainstream of Society and for Other Purposes". This
is defined as a person suffering from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in a manner or within the range
considered normal for human being. Disability shall mean (1) a physical or mental impairment
that substantially limits one or more psychological, physiological or anatomical function of an
individual or activities of such individual; (2) a record of such an impairment; or (3) being
regarded as having such an impairment.
RULE IV. PRIVILEGES AND INCENTIVES FOR THE PERSONS WITH DISABILITY
Section 6. Other Privileges and Incentives. Persons with disability shall be entitled to the
following:
6.1.d. Purchase of Medicine - at least twenty percent (20%) discount on the purchase of
medicine for the exclusive use and enjoyment of persons with disability. All drugstores,
hospital, pharmacies, clinics and other similar establishments selling medicines are required to
provide at least twenty percent (20%) discount subject to the guidelines issued by DOH and
PHILHEALTH.
6.11 The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement thereto
subject to the guidelines issued by the NCWDP in coordination with DSWD, DOH and DILG.
6.11.1 An identification card issued by the city or municipal mayor or the barangay captain of
the place where the person with disability resides;
6.11.2 The passport of the persons with disability concerned; or
6.11.3 Transportation discount fare Identification Card (ID) issued by the National Council for
the Welfare of Disabled Persons (NCWDP). However, upon effectivity of this Implementing
Rules and Regulations, NCWDP will already adopt the Identification Card issued by the Local
Government Unit for purposes of uniformity in the implementation. NCWDP will provide the
design and specification of the identification card that will be issued by the Local Government
Units.13
6.14. Availmenl of Tax Deductions by Establishment Granting Twenty Percent. 20% Discount -
The establishments may claim the discounts granted in sub-sections (6.1), (6.2), (6.4), (6.5)
and (6.6) as tax deductions based on the net cost of the goods sold or services rendered:
Provided, however, that the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted: Provided, further, That the total
amount of the claimed tax deduction net of value-added tax if applicable, shall be included in
their gross sales receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code, as amended.
On April 23, 2008, the National Council on Disability Affairs (NCDA)14 issued Administrative
Order (A.O.) No. 1, Series of 2008,15 prescribing guidelines which should serve as a
mechanism for the issuance of a PWD Identification Card (IDC) which shall be the basis for
providing privileges and discounts to bona fide PWDs in accordance with R.A. 9442:
IV. INSTITUTIONAL ARRANGEMENTS
The Local Government Unit of the City or Municipal Office shall implement these guidelines in
the issuance of the PWD-IDC
D. Issuance of the appropriate document to confirm the medical condition of the applicant is as
follows:
Disability Document Issuing Entity
Apparent Disability Medical Certificate Licensed Private or Government
Physician
School Assessment Licensed Teacher duly signed by the School Principal
Certificate of Disability Head of the Business Establishment or Head of Non-Government
Organization
Non-Apparent Disability Medical Certificate Licensed Private or Government
Physician
E. PWD Registration Forms and ID Cards shall be issued and signed by the City or Municipal
Mayor, or Barangay Captain.
V. IMPLEMENTING GUIDELINES AND PROCEDURES
Any bonafide person with permanent disability can apply for the issuance of the PWD-IDC.
His/her caregiver can assist in the application process. Procedures for the issuance of the ID
Cards are as follows:
A. Completion of the Requirements. Complete and/or make available the following
requirements:
Two "1x1" recent ID pictures with the names, and signatures or thumbmarks at the back of the
picture
One (1) Valid ID
Document to confirm the medical or disability condition (See Section IV, D for the required
document).
On December 9, 2008, the DOF issued Revenue Regulations No. 1-200916 prescribing rules
and regulations to implement R.A. 9442 relative to the tax privileges of PWDs and tax
incentives for establishments granting the discount. Section 4 of Revenue Regulations No.
001-09 states that drugstores can only deduct the 20% discount from their gross income
subject to some conditions.17chanrobleslaw
On May 20, 2009, the DOH issued A.O. No. 2009-001118 specifically stating that the grant of
20% discount shall be provided in the purchase of branded medicines and unbranded generic
medicines from all establishments dispensing medicines for the exclusive use of the PWDs.19
It also detailed the guidelines for the provision of medical and related discounts and special
privileges to PWDs pursuant to R.A. 9442.20chanrobleslaw
On July 28, 2009, petitioners filed a Petition for Prohibition with application for a Temporary
Restraining Order and/or a Writ of Preliminary Injunction21 before the Court of Appeals to
annul and enjoin the implementation of the following laws:
1) Section 32 of R.A. No. 7277 as amended by R.A. No. 9442;
2) Section 6, Rule IV of the Implementing Rules and Regulations of R.A. No. 9442;
3) NCDA A.O. No. 1;
4) DOF Revenue Regulation No. 1-2009;
5) DOH A.O. No. 2009-0011.
49
On July 26, 2010, the CA rendered a Decision upholding the constitutionality of R.A. 7277 as
amended, as well as the assailed administrative issuances. However, the CA suspended the
effectivity of NCDA A.O. No. 1 pending proof of respondent NCDA's compliance with filing of
said administrative order with the Office of the National Administrative Register (ONAR) and its
publication in a newspaper of general circulation. The dispositive portion of the Decision
states:
WHEREFORE, the petition is PARTLY GRANTED. The effectivity of NCDA Administrative
Order No. 1 is hereby SUSPENDED pending Respondent's compliance with the proof of filing
of NCDA Administrative Order No. 1 with the Office of the National Administrative Register and
its publication in a newspaper of general circulation.
Respondent NCDA filed a motion for reconsideration before the CA to lift the suspension of the
implementation of NCDA A.O. No. 1 attaching thereto proof of its publication in the Philippine
Star and Daily Tribune on August 12, 2010, as well as a certification from the ONAR showing
that the same was filed with the said office on October 22, 2009.22 Likewise, petitioners filed a
motion for reconsideration of the CA Decision.
In a Resolution dated November 19, 2010, the CA dismissed petitioners' motion for
reconsideration and lifted the suspension of the effectivity of NCDA A.O. No. 1 considering the
filing of the same with ONAR and its publication in a newspaper of general circulation.
Hence, the instant petition raising the following issues:
I. THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT
THE MANDATED PWD DISCOUNT IS A VALID EXERCISE OF POLICE POWER. ON THE
CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT DOMAIN
BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO PETITIONERS AND OTHER
SIMILARLY SITUATED DRUGSTORES;
II. THE CA SERIOUSLY ERRED WHEN IT RULED THAT SECTION 32 OF RA 7277 AS
AMENDED BY RA 9442, NCDA AO 1 AND THE OTHER IMPLEMENTING REGULATIONS
DID NOT VIOLATE THE DUE PROCESS CLAUSE;
III. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE DEFINITIONS OF
DISABILITIES UNDER SECTION 4(A), SECTION 4(B) AND SECTION 4(C) OF RA 7277 AS
AMENDED BY RA 9442, RULE 1 OF THE IMPLEMENTING RULES AND REGULATIONS23
OF RA 7277, SECTION 5.1 OF THE IMPLEMENTING RULES AND REGULATIONS OF RA
9442, NCDA AO 1 AND DOH AO 2009-11 ARE NOT VAGUE, AMBIGUOUS AND
UNCONSTITUTIONAL;
IV. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE MANDATED PWD
DISCOUNT DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE.
We deny the petition.
The CA is correct when it applied by analogy the case of Carlos Superdrug Corporation et al.
v. DSWD, et al.24 wherein We pronouced that Section 4 of R.A. No. 9257 which grants 20%
discount on the purchase of medicine of senior citizens is a legitimate exercise of police power:
The law is a legitimate exercise of police power which, similar to the power of eminent domain,
has general welfare for its object. Police power is not capable of an exact definition, but has
been purposely veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits.25cralawred Accordingly, it has been
described as the most essential, insistent and the least limitable of powers, extending as it
does to all the great public needs.26 It is [t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes, and ordinances, either with penalties or without, not repugnant to the constitution, as
they shall judge to be for the good and welfare of the commonwealth, and of the subjects of
the same.
For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered by
due process, must yield to general welfare.
Police power as an attribute to promote the common good would be diluted considerably if on
the mere plea of petitioners that they will suffer loss of earnings and capital, the questioned
provision is invalidated. Moreover, in the absence of evidence demonstrating the alleged
confiscatory effect of the provision in question, there is no basis for its nullification in view of
the presumption of validity which every law has in its favor.
Police power is the power of the state to promote public welfare by restraining and regulating
the use of liberty and property. On the other hand, the power of eminent domain is the inherent
right of the state (and of those entities to which the power has been lawfully delegated) to
condemn private property to public use upon payment of just compensation. In the exercise of
police power, property rights of private individuals are subjected to restraints and burdens in
order to secure the general comfort, health, and prosperity of the state.30 A legislative act
based on the police power requires the concurrence of a lawful subject and a lawful method. In
more familiar words, (a) the interests of the public generally, as distinguished from those of a
particular class, should justify the interference of the state; and (b) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.
R.A. No. 7277 was enacted primarily to provide full support to the improvement of the total
well-being of PWDs and their integration into the mainstream of society. The priority given to
PWDs finds its basis in the Constitution:
ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY
Section 6. The use of property bears a social function, and all economic agents shall contribute
to the common good. Individuals and private groups, including corporations, cooperatives, and
similar collective organizations, shall have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote distributive justice and to intervene
when the common good so demands.32chanrobleslaw
ARTICLE XIII
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services
available to all the people at affordable cost. There shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children. The State shall endeavor to
provide free medical care to paupers.33
Thus, R.A. No. 7277 provides:
SECTION 2. Declaration of Policy. The grant of the rights and privileges for disabled persons
shall be guided by the following principles:
(a). Disabled persons are part of the Philippine society, thus the Senate shall give full support
to the improvement of the total well-being of disabled persons and their integration into the
mainstream of society.
Toward this end, the State shall adopt policies ensuring the rehabilitation, self-development
and self-reliance of disabled persons.
It shall develop their skills and potentials to enable them to compete favorably for available
opportunities.
(b). Disabled persons have the same rights as other people to take their proper place in
society. They should be able to live freely and as independently as possible. This must be the
concern of everyone - the family, community and all government and non-government
organizations.
Disabled person's rights must never be perceived as welfare services by the Government.
(d). The State also recognizes the role of the private sector in promoting the welfare of
disabled persons and shall encourage partnership in programs that address their needs and
concerns.34
To implement the above policies, R.A. No. 9442 which amended R.A. No. 7277 grants
incentives and benefits including a twenty percent (20%) discount to PWDs in the purchase of
medicines; fares for domestic air, sea and land travels including public railways and skyways;
recreation and amusement centers including theaters, food chains and restaurants.35 This is
specifically stated in Section 4 of the IRR of R.A. No. 9442:
Section 4. Policies and Objectives - It is the objective of Republic Act No. 9442 to provide
persons with disability, the opportunity to participate fully into the mainstream of society by
granting them at least twenty percent (20%) discount in all basic services. It is a declared
policy of RA 7277 that persons with disability are part of Philippine society, and thus the State
shall give full support to the improvement of their total wellbeing and their integration into the
mainstream of society. They have the same rights as other people to take their proper place in
society. They should be able to live freely and as independently as possible. This must be the
concern of everyone the family, community and all government and non-government
organizations. Rights of persons with disability must never be perceived as welfare services.
Prohibitions on verbal, non-verbal ridicule and vilification against persons with disability shall
always be observed at all times.
Hence, the PWD mandatory discount on the purchase of medicine is supported by a valid
objective or purpose as aforementioned. It has a valid subject considering that the concept of
public use is no longer confined to the traditional notion of use by the public, but held
synonymous with public interest, public benefit, public welfare, and public convenience. As in
the case of senior citizens,37 the discount privilege to which the PWDs are entitled is actually
a benefit enjoyed by the general public to which these citizens belong. The means employed in
invoking the active participation of the private sector, in order to achieve the purpose or
objective of the law, is reasonably and directly related.38 Also, the means employed to provide
a fair, just and quality health care to PWDs are reasonably related to its accomplishment, and
are not oppressive, considering that as a form of reimbursement, the discount extended to
PWDs in the purchase of medicine can be claimed by the establishments as allowable tax
deductions pursuant to Section 32 of R.A. No. 9442 as implemented in Section 4 of DOF
Revenue Regulations No. 1-2009. Otherwise stated, the discount reduces taxable income
upon which the tax liability of the establishments is computed.
Further, petitioners aver that Section 32 of R.A. No. 7277 as amended by R.A. No. 9442 is
unconstitutional and void for violating the due process clause of the Constitution since
entitlement to the 20% discount is allegedly merely based on any of the three documents
mentioned in the provision, namely: (i) an identification card issued by the city or municipal
mayor or the barangay captain of the place where the PWD resides; (ii) the passport of the
PWD; or (iii) transportation discount fare identification card issued by NCDA. Petitioners, thus,
maintain that none of the said documents has any relation to a medical finding of disability, and
the grant of the discount is allegedly without any process for the determination of a PWD in
accordance with law.
Section 32 of R.A. No. 7277, as amended by R.A. No. 9442, must be read with its IRR which
stated that upon its effectivity, NCWDP (which is the government agency tasked to ensure the
implementation of RA 7277), would adopt the IDC issued by the local government units for
purposes of uniformity in the implementation.39 Thus, NCDA A.O. No. 1 provides the
reasonable guidelines in the issuance of IDCs to PWDs as proof of their entitlement to the
privileges and incentives under the law40 and fills the details in the implementation of the law.
As stated in NCDA A.O. No. 1, before an IDC is issued by the city or municipal mayor or the
barangay captain,41 or the Chairman of the NCDA,42 the applicant must first secure a medical
certificate issued by a licensed private or government physician that will confirm his medical or
disability condition. If an applicant is an employee with apparent disability, a "certificate of
disability" issued by the head of the business establishment or the head of the non-
governmental organization is needed for him to be issued a PWD-IDC. For a student with
apparent disability, the "school assessment" issued by the teacher and signed by the school
principal should be presented to avail of a PWD-ID.
Petitioners' insistence that Part IV (D) of NCDA Administrative Order No. 1 is void because it
allows allegedly non-competent persons like teachers, head of establishments and heads of
Non-Governmental Organizations (NGOs) to confirm the medical condition of the applicant is
misplaced. It must be stressed that only for apparent disabilities can the teacher or head of a
business establishment validly issue the mentioned required document because, obviously,
the disability is easily seen or clearly visible. It is, therefore, not an unqualified grant of
authority for the said non-medical persons as it is simply limited to apparent disabilities. For a
non-apparent disability or a disability condition that is not easily seen or clearly visible, the
disability can only be validated by a licensed private or government physician, and a medical
certificate has to be presented in the procurement of an IDC. Relative to this issue, the CA
validly ruled, thus:
We agree with the Office of the Solicitor General's (OSG) ratiocination that teachers, heads of
business establishments and heads of NGOs can validly confirm the medical condition of their
students/employees with apparent disability for obvious reasons as compared to non-apparent
disability which can only be determined by licensed physicians. Under the Labor Code,
disabled persons are eligible as apprentices or learners provided that their handicap are not as
much as to effectively impede the performance of their job. We find that heads of business
establishments can validly issue certificates of disability of their employees because aside from
the fact that they can obviously validate the disability, they also have medical records of the
employees as a pre-requisite in the hiring of employees. Hence, Part IV (D) of NCDA AO No. 1
is logical and valid.43
Furthermore, DOH A.O. No. 2009-11 prescribes additional guidelines for the 20% discount in
the purchase of all medicines for the exclusive use of PWD.44 To avail of the discount, the
PWD must not only present his I.D. but also the doctor's prescription stating, among others,
the generic name of the medicine, the physician's address, contact number and professional
license number, professional tax receipt number and narcotic license number, if applicable. A
purchase booklet issued by the local social/health office is also required in the purchase of
over-the-counter medicines. Likewise, any single dispensing of medicine must be in
accordance with the prescription issued by the physician and should not exceed a one (1)
month supply. Therefore, as correctly argued by the respondents, Section 32 of R.A. No. 7277
as amended by R.A. No. 9442 complies with the standards of substantive due process.
50
We are likewise not persuaded by the argument of petitioners that the definition of "disabilities"
under the subject laws is vague and ambiguous because it is allegedly so general and broad
that the person tasked with implementing the law will undoubtedly arrive at different
interpretations and applications of the law. Aside from the definitions of a "person with
disability" or "disabled persons" under Section 4 of R.A. No. 7277 as amended by R.A. No.
9442 and in the IRR of RA 9442, NCDA A.O. No. 1 also provides:
vested in the legislature to determine, not only what interests of the public require, but what
measures are necessary for the protection of such interests.55 Thus, We are mindful of the
fundamental criteria in cases of this nature that all reasonable doubts should be resolved in
favor of the constitutionality of a statute.56 The burden of proof is on him who claims that a
statute is unconstitutional. Petitioners failed to discharge such burden of proof.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated July 26,
Identification Cards shall be issued to any bonafide PWD with permanent disabilities due to 2010, and the Resolution dated November 19, 2010, in CA-G.R. SP No. 109903 are
any one or more of the following conditions: psychosocial, chronic illness, learning, mental, AFFIRMED.
visual, orthopedic, speech and hearing conditions. This includes persons suffering from
disabling diseases resulting to the person's limitations to do day to day activities as normally as
possible such as but not limited to those undergoing dialysis, heart disorders, severe cancer SO ORDERED.
cases and such other similar cases resulting to temporary or permanent disability.45

Similarly, DOH A.O. No. 2009-0011 defines the different categories of disability as follows:

Rule IV, Section 4, Paragraph B of the Implementing Rules and Regulations (IRR) of this Act
required the Department of Health to address the health concerns of seven (7) different
categories of disability, which include the following: (1) Psychological and behavioral
disabilities (2) Chronic illness with disabilities (3)Learning(cognitive or intellectual) disabilities
(4) Mental disabilities (5) Visual/seeing disabilities (6) Orthopedic/moving, and (7)
communication deficits.46

Elementary is the rule that when laws or rules are clear, when the law is unambiguous and
unequivocal, application not interpretation thereof is imperative. However, where the language
of a statute is vague and ambiguous, an interpretation thereof is resorted to. A law is deemed
ambiguous when it is capable of being understood by reasonably well-informed persons in
either of two or more senses. The fact that a law admits of different interpretations is the best
evidence that it is vague and ambiguous.47chanrobleslaw

In the instant case, We do not find the aforestated definition of terms as vague and ambiguous.
Settled is the rule that courts will not interfere in matters which are addressed to the sound
discretion of the government agency entrusted with the regulation of activities coming under
the special and technical training and knowledge of such agency.48 As a matter of policy, We
accord great respect to the decisions and/or actions of administrative authorities not only
because of the doctrine of separation of powers but also for their presumed knowledge, ability,
and expertise in the enforcement of laws and regulations entrusted to their jurisdiction. The
rationale for this rule relates not only to the emergence of the multifarious needs of a modern
or modernizing society and the establishment of diverse administrative agencies for
addressing and satisfying those needs; it also relates to the accumulation of experience and
growth of specialized capabilities by the administrative agency charged with implementing a
particular statute.49chanrobleslaw

Lastly, petitioners contend that R.A. No. 7227, as amended by R.A. No. 9442, violates the
equal protection clause of the Constitution because it fairly singles out drugstores to bear the
burden of the discount, and that it can hardly be said to "rationally" meet a legitimate
government objective which is the purpose of the law. The law allegedly targets only retailers
such as petitioners, and that the other enterprises in the drug industry are not imposed with
similar burden. This same argument had been raised in the case of Carlos Superdrug Corp., et
al. v. DSWD, et al.,50 and We reaffirm and apply the ruling therein in the case at bar:

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive
pricing component of the business. While the Constitution protects property rights, petitioners
must accept the realities of business and the State, in the exercise of police power, can
intervene in the operations of a business which may result in an impairment of property rights
in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the precept for the protection of property, various laws and jurisprudence, particularly
on agrarian reform and the regulation of contracts and public utilities, continuously serve as a
reminder that the right to property can be relinquished upon the command of the State for the
promotion of public good.51

Under the equal protection clause, all persons or things similarly situated must be treated alike,
both in the privileges conferred and the obligations imposed. Conversely, all persons or things
differently situated should be treated differently.52 In the case of ABAKADA Guro Party List, et
al. v. Hon. Purisima, et al.,53 We held:

Equality guaranteed under the equal protection clause is equality under the same conditions
and among persons similarly situated; it is equality among equals, not similarity of treatment of
persons who are classified based on substantial differences in relation to the object to be
accomplished. When things or persons are different in fact or circumstance, they may be
treated in law differently. In Victoriano v. Elizalde Rope Workers' Union, this Court declared:

The guaranty of equal protection of the laws is not a guaranty of equality in the application of
the laws upon all citizens of the State. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the same.
The equal protection clause does not forbid discrimination as to things that are different. It
does not prohibit legislation which is limited either in the object to which it is directed or by the
territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification
in law, as in the other departments of knowledge or practice, is the grouping of things in
speculation or practice because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. The very idea of classification is that of inequality, so that
it goes without saying that the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it be reasonable, which
means that the classification should be based on substantial distinctions which make for real
differences, that it must be germane to the purpose of the law; that it must not be limited to
existing conditions only; and that it must apply equally to each member of the class. This Court
has held that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws over
matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It
is not necessary that the classification be based on scientific or marked differences of things or
in their relation. Neither is it necessary that the classification be made with mathematical
nicety. Hence, legislative classification may in many cases properly rest on narrow distinctions,
for the equal protection guaranty does not preclude the legislature from recognizing degrees of
evil or harm, and legislation is addressed to evils as they may appear.

The equal protection clause recognizes a valid classification, that is, a classification that has a
reasonable foundation or rational basis and not arbitrary.54 With respect to R.A. No. 9442, its
expressed public policy is the rehabilitation, self-development and self-reliance of PWDs.
Persons with disability form a class separate and distinct from the other citizens of the country.
Indubitably, such substantial distinction is germane and intimately related to the purpose of the
law. Hence, the classification and treatment accorded to the PWDs fully satisfy the demands of
equal protection. Thus, Congress may pass a law providing for a different treatment to persons
with disability apart from the other citizens of the country.

Subject to the determination of the courts as to what is a proper exercise of police power using
the due process clause and the equal protection clause as yardsticks, the State may interfere
wherever the public interests demand it, and in this particular, a large discretion is necessarily
51
G.R. No. 195145
MANILA ELECTRIC COMPANY, Petitioner,
vs.
SPOUSES SULPICIO and PATRICIARAMOS, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1assailing the July 30, 2010 decision 2 of the
Court of Appeals (CA) in CA-G.R. CV No. 87843 entitled "Spouses Sulpicio and Patricia
Ramos v. Manila Electric Company," that affirmed the Regional Trial Couri' s (RTC) August 22,
2006 decision3 in Civil Case No. 99-95975.
The August 22, 2006 RTC decision ordered the Manila Electric Company (MERALCO) to
restore the electric power connection of Spouses Sulpicio and Patricia
Ramos (respondents) and awarded them P2,000,000.00, with legal interest, in total damages.
The Factual Antecedents
MERALCO is a private corporation engaged in the business of selling and distributing
electricity to its customers in Metro Manila and other franchise areas. The respondents are
registered customers of MERALCO under Service Identification Number (SIN) 409076401.
MERALCO entered into a contract of service with the respondents agreeing to supply the latter
with electric power in their residence at 2760-B Molave St., Manuguit, Tondo, Manila. To
measure the respondents’ electric consumption, it installed the electric meter with serial
number 330ZN43953 outside the front wall of the property occupied by Patricia’s brother,
Isidoro Sales, and his wife, Nieves Sales (Nieves), located beside the respondents’ house.
On November 5, 1999, MERALCO’s service inspector inspected the respondents’ electrical
facilities and found an outside connection attached to their electric meter. The service
inspector traced the connection, an illegal one, to the residence and appliances of Nieves.
Nieves was the only one present during the inspection and she was the one who signed the
Metering Facilities Inspection Report.
Due to the discovery of the illegal connection, the service inspector disconnected the
respondents’ electric services on the same day. The inspection and disconnection were
done without the knowledge of the respondents as they were not at home and their house was
closed at the time.
The respondents denied that they had been using an illegal electrical connection and they
requested MERALCO to immediately reconnect their electric services. Despite the
respondents’ request, MERALCO instead demanded from them the payment of P179,231.70
as differential billing.
On December 20, 1999, the respondents filed a complaint for breach of contract with
preliminary mandatory injunction and damages against MERALCO before the RTC,
Branch 40, City of Manila. They prayed for the immediate reconnection of their electric service
and the award of actual, moral, and exemplary damages, attorney’s fees, and litigation
expenses.
In a decision dated August 22, 2006, the RTC ordered MERALCO to reconnect the
respondents’ electric service and awarded damages as follows:
WHEREFORE, Judgment is rendered directing defendant MERALCO to permanently
reconnect immediately the plaintiff’s electric services, and for said defendant to pay the
following:
1. P100,000.00 as actual or compensatory damages;
2. P1,500,000.00 as moral damages;
3. P300,000.00 as exemplary damages;
4. P100,000.00 as attorney’s fees; and,
5. Costs of suit;
with legal interest on the total damages of P2,000,000.00 from the date of this Judgment until
fully paid.
SO ORDERED.4
MERALCO appealed the RTC’s decision to the CA.
In its assailed July 30, 2010 decision,5 the CA denied the appeal for lack of merit and affirmed
the RTC’s order of reconnection and award for payment of damages. The appellate court held
that MERALCO failed to comply not only with its own contract of service, but also with the
requirements under Sections 4 and 6 of Republic Act No. 7832, or the Anti- Electricity and
Electric Transmission Lines/Materials Pilferage Act of 1994 (R.A. 7832), when it resorted to the
immediate disconnection of the respondents’ electric service without due notice. It also ruled
that the respondents were not liable for the differential billing as it had not been established
that they knew or consented to the illegal connection or even benefited from it.
MERALCO moved for the reconsideration of the decision, but the CA denied its motion in a
resolution6 dated January 3, 2011. The present petition for review on certiorari7 was filed with
this Court on March 4, 2011, as a consequence.
The Petition
MERALCO argues that under R.A. 7832, it had the right and authority to immediately
disconnect the electric service of the respondents after they were caught in flagrante
delicto using a tampered electrical installation.
MERALCO also claims that by virtue of their contract of service, the respondents are liable to
pay the differential billing regardless of whether the latter benefited from the illegal electric
service or not. It adds that this is true even if the respondents did not personally tamper with
the electrical facilities.
Finally, MERALCO contends that there is no basis for the award of damages as the
disconnection of the respondents’ electric service was done in good faith and in the lawful
exercise of its rights as a public utility company.
The Respondents’ Comment
In their comment 8 of June 29, 2011, the respondents pray for the denial of the present petition
for lack of merit. They argue that the discovery of an outside connection attached to their
electric meter does not give MERALCO the right to automatically disconnect their electric
service as the law provides certain mandatory requirements that should be observed before a
disconnection could be effected. They claim that MERALCO failed to comply with these
statutory requirements.
Also, the respondents contend that MERALCO breached its contractual obligations when its
service inspector immediately disconnected their electric service without notice. They claim
that this breach of contract, coupled with MERALCO’s failure to observe the requirements
under R.A. 7832, entitled them to damages which were sufficiently established with evidence
and were rightfully awarded by the RTC and affirmed by the CA.
Lastly, the respondents argue that they are not liable to MERALCO for the differential billing as
they were not the ones who illegally consumed the unbilled electricity through the illegal
connection.
The Court’s Ruling
We DENY the petition for review on certiorari as we find no reversible error committed
by the CA in issuing its assailed decision.
The core issue in this case is whether MERALCO had the right to immediately disconnect the
electric service of the respondents upon discovery of an outside connection attached to their
electric meter.
The distribution of electricity is a basic necessity that is imbued with public interest. Its provider
is considered as a public utility subject to the strict regulation by the State in the exercise of its
police power. Failure to comply with these regulations gives rise to the presumption of
bad faithor abuse of right.9
Nevertheless, the State also recognizes that electricity is the property of the service provider.
R.A. 7832 was enacted by Congress to afford electric service providers multiple remedies to
protect themselves from electricity pilferage. These remedies include the immediate
disconnection of the electric service of an erring customer, criminal prosecution, and the
imposition of surcharges.10 However, the service provider must avail of any or all of these
remedies within legal bounds, in strict compliance with the requirements and/or conditions set
forth by law.
Section 4(a) of R.A. 7832 provides that the discovery of an outside connection attached on the
electric meter shall constitute as prima facie evidence of illegal use of electricity by the person
who benefits from the illegal use if the discovery is personally witnessed and attested to by
an officer of the law or a duly authorized representative of the Energy Regulatory
Board (ERB). With the presence of such prima facie evidence, the electric service provider is
within its rights to immediately disconnect the electric service of the consumer after due notice.
This Court has repeatedly stressed the significance of the presence of an authorized
government representative during an inspection of electric facilities, viz.:
The presence of government agents who may authorize immediate disconnections go
into the essence of due process. Indeed, we cannot allow respondent to act virtually as
prosecutor and judge in imposing the penalty of disconnection due to alleged meter
tampering. That would not sit well in a democratic country. After all, Meralco is a monopoly
that derives its power from the government. Clothing it with unilateral authority to disconnect
would be equivalent to giving it a license to tyrannize its hapless customers. 11 (emphasis
supplied)
Additionally, Section 6 of R.A. 7832 affords a private electric utility the right and authority to
immediately disconnect the electric service of a consumer who has been caught in flagrante
delicto doing any of the acts covered by Section 4(a). However, the law clearly states that the
disconnection may only be done after serving a written notice or warning to the consumer.
To reiterate, R.A. 7832 has two requisites for an electric service provider to be authorized to
disconnect its customer’s electric service on the basis of alleged electricity pilferage: first, an
officer of the law or an authorized ERB representative must be present during the inspection of
the electric facilities; and second, even if there is prima facie evidence of illegal use of
electricity and the customer is caught in flagrante delicto committing the acts under Section
4(a), the customer must still be given due notice prior to the disconnection. 12
In its defense, MERALCO insists that it observed due process when its service inspector
disconnected the respondents’ electric service, viz.:
Under the present situation, there is no doubt that due process, as required by R.A. 7832, was
observed [when] the petitioner discontinued the electric supply of respondent: there was an
inspection conducted in the premises of respondent with the consent of their authorized
representative; it was discovered during the said inspection that private respondents were
using outside connection; the nature of the violation was explained to private respondents’
representative; the inspection and discovery was personally witnessed and attested to by
private respondents’ representative; private respondents failed and refused to pay the
differential billing amounting to P179,231.70 before their electric service was
disconnected.13(emphasis supplied)
After a thorough examination of the records of the case, we find no proof that MERALCO
complied with these two requirements under R.A. 7832. MERALCO never even alleged in its
submissions that an ERB representative or an officer of the law was present during the
inspection of the respondents’ electric meter. Also, it did not claim that the respondents were
ever notified beforehand of the impending disconnection of their electric service.
In view of MERALCO’s failure to comply with the strict requirements under Sections 4 and 6 of
R. A. No. 7832, we hold that MERALCO had no authority to immediately disconnect the
respondents’ electric service. As a result, the immediate disconnection of the respondents’
electric service is presumed to be in bad faith.
We point out, too, that MERALCO’s allegation that the respondents refused to pay the
differential billing before the disconnection of their electric service is an obvious falsity.
MERALCO never disputed the fact that the respondents’ electric service was disconnected on
November 5, 1999 – the same day as when the electric meter was inspected. Also,
MERALCO’s demand letter for payment of the differential billing is dated December 4, 1999.
Thus, there is no truth to the statement that the respondents first failed to pay the differential
billing and only then was their electric service disconnected.
The disconnection of respondents’ electric service is not supported by MERALCO’s
own Terms and Conditions of Service.
52
In addition, we observe that MERALCO also failed to follow its own procedure for the
discontinuance of service under its contract of service with the respondents. We quote in this
regard the relevant terms of service:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is in arrears in the
payment of bills in those cases where the meter stopped or failed to register the correct
amount of energy consumed, or failure to comply with any of these terms and conditions or in
case of or to prevent fraud upon the Company. Before disconnection is made in case of or
to prevent fraud, the Company may adjust the bill of said customer accordingly and if
the adjusted bill is not paid, the Company may disconnect the same. In case of
disconnection, the provisions of Revised Order No. 1 of the former Public Service
Commission (now ERC) shall be observed. Any such suspension of service shall not terminate
the contract between the Company and the customer. 14 (emphasis supplied)
Applied to this case, after due consideration of the manner of disconnection of the
respondents’ electric service and the length of time that the respondents had to endure without
electricity, we find the award of moral damages proper. Aside from having to spend eight (8)
months in the dark at their own residence, Patricia testified that they suffered extreme social
humiliation, embarrassment, and serious anxiety as they were subjected to gossip in their
neighborhood of stealing electricity through the use of an illegal connection. The damage to
the respondents’ reputation and social standing was aggravated by their decision to move to a
new residence following the absolute refusal of MERALCO to restore their electric services.
However, we find the award of P1,500,000.00 in moral damages to be excessive. Moral
damages are not intended to enrich the complainant as a penalty for the defendant.1âwphi1 It
is awarded as a means to ease the moral suffering the complainant suffered due to the
defendant’s culpable action.24 While prevailing jurisprudence deems it appropriate to award
P100,000.00 in moral damages in cases where MERALCO wrongfully disconnected electric
service,25 we hold that such amount is not commensurate with the injury suffered by the
respondents. Thus, in view of the specific circumstances present in this case, we reduce the
award of moral damages from P1,500,000.00 to P300,000.00.

There is nothing in its contract of service that gives MERALCO the authority to immediately
disconnect a customer’s electric connection. MERALCO’s contractual right to disconnect
electric service arises only after the customer has been notified of his adjusted bill and has
been afforded the opportunity to pay the differential billing.
Third, exemplary or corrective damages are imposed by way of example or correction for the
public good, in addition to moral, temperate, liquidated, or compensatory damages. The award
of exemplary damages is allowed by law as a warning to the public and as a deterrent against
the repetition of socially deleterious actions.26

In this case, the disconnection of the respondents’ electric service happened on November 5,
1999, while the demand for the payment of differential billing was made through a letter dated
December 4, 1999. Thus, we hold that MERALCO breached its contract of service with
the respondents as it disconnected the latter’s electric service before they were ever
notified of the differential billing.
Differential billing
Section 6 of R.A. 7832 defines differential billing as "the amount to be charged to the person
concerned for the unbilled electricity illegally consumed by him." Clearly, the law provides that
the person who actually consumed the electricity illegally shall be liable for the differential
billing. It does not ipso facto make liable for payment of the differential billing the registered
customer whose electrical facilities had been tampered with and utilized for the illegal use of
electricity.
In this case, as the prima facie presumption afforded by Section 4 of R.A. 7832 does not apply,
it falls upon MERALCO to first prove that the respondents had actually installed the outside
connection attached on their electric meter and that they had benefited from the electricity
consumed through the outside connection before it could hold them liable for the differential
billing.
In numerous cases,27 this Court found that MERALCO failed to comply with the requirements
under R.A. 7832 before a disconnection of a customer’s electric service could be effected. In
these cases, we aptly awarded exemplary damages against MERALCO to serve as a warning
against repeating the same actions.
In this case, MERALCO totally failed to comply with the two requirements under R.A. 7832
before disconnecting the respondents’ electric service. While MERALCO insists that R.A. 7832
gives it the right to disconnect the respondents’ electric service, nothing in the records
indicates that it attempted to comply with the statutory requirements before effecting the
disconnection.
Under these circumstances, we find that the previous awards against MERALCO have not
served their purpose as a means to prevent the repetition of the same damaging actions that it
has committed in the past. Therefore, we increase the award of exemplary damages from
P300,000.00 to P500,000.00 in the hope that this will persuade MERALCO to be more prudent
and responsible in its observance of the requirements under the law in disconnecting a
customer’s electrical supply.
Lastly, in view of the award of exemplary damages, we find the award of attorney's fees
proper, in accordance with Article 2208(1) of the Civil Code. We find the CA’s award of
attorney’s fees in the amount of P100,000.00 just and reasonable under the
circumstances.

The records show that MERALCO presented no proof that it ever caught the respondents, or
anyone acting in the respondents’ behalf, in the act of tampering with their electric meter. As
the CA correctly held, the respondents could not have been caught in flagrante
delicto committing the tampering since they were not present during the inspection of the
electric meter, nor were any of their representatives at hand.15 Moreover, the presence of an
outside connection attached to the electric meter operates only as a prima facie evidence of
electricity pilferage under R.A. 7832; it is not enough to declare the respondents in flagrante
delicto tampering with the electric meter.16 In fact, MERALCO itself admitted in its submissions
that Nieves was the illegal user of the outside connection attached to the respondents’ electric
meter.17
WHEREFORE, the petition is DENIED. The decision dated July 30, 2010 and resolution dated
January 3, 2011 of the Court of Appeals in CA-G.R. CV No. 87843 are AFFIRMED with the
following modifications: MERALCO is ordered to pay respondents Spouses Sulpicio and
Patricia Ramos P210,000.00 as actual damages, P300,000.00 as moral damages,
PS00,000.00 as exemplary damages, and Pl00,000.00 as attorneys fees. Costs against Manila
Electric Company.
SO ORDERED.

On this point, MERALCO argues that Nieves was an authorized representative of the
respondents. However, the records are bereft of any sufficient proof to support this claim. The
fact that she is an occupant of the premises where the electric meter was installed does not
make her the respondents’ representative considering that the unit occupied by the
respondents is separate and distinct from the one occupied by Nieves and her family.
Similarly, the fact that Nieves was able to show the respondents’ latest electric bill does not
make her the latter’s authorized representative.

While this Court recognizes the right of MERALCO as a public utility to collect system losses,
the courts cannot and will not blindly grant a public utility’s claim for differential billing if there is
no sufficient evidence to prove entitlement. 18 As MERALCO failed to sufficiently prove its
claim for payment of the differential billing, we rule that the respondents cannot be held
liable for the billed amount.

On the issue of damages

With MERALCO in bad faith for its failure to follow the strict requirements under R.A. 7832 in
the disconnection of the respondents’ electric service, we agree with the CA that the award of
damages is in order. However, we deem it proper to modify the award in accordance with
prevailing jurisprudence.

First, actual damages pertain to such injuries or losses that are actually sustained and are
susceptible of measurement. They are intended not to enrich the injured party but to put him in
the position in which he was in before he was injured. 19

In Viron Transportation Co., Inc. v. Delos Santos,20 we explained that in order to recover actual
damages, there must be pleading and proof of the damages suffered, viz.:

Actual damages, to be recoverable, must not only be capable of proof, but must actually be
proved with a reasonable degree of certainty.1âwphi1 Courts cannot simply rely on
speculation, conjecture or guesswork in determining the fact and amount of damages. To
justify an award of actual damages, there must be competent proof of the actual amount
of loss, credence can be given only to claims which are duly supported by
receipts. (emphasis supplied)

In this case, Patricia stated that her family’s food expenses doubled after MERALCO
disconnected their electric services as they could no longer cook at home. We note, however,
that there is no sufficient proof presented to show the actual food expenses that the
respondents incurred. Nevertheless, Patricia also testified that they were forced to move to a
new residence after living without electricity for eight (8) months at their home in Tondo,
Manila. They proved this allegation through the presentation of a contract of lease and receipts
for payment of monthly rentals for 42 months amounting to P210,000.00. Thus, we find it
proper to increase the award of actual damages from P100,000.00 to P210,000.00.

Second, moral damages are designed to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar harm unjustly caused to a person. 21 They may be properly
awarded to persons who have been unjustly deprived of property without due process of law. 22

In Regala v. Carin,23 we discussed the requisites for the award of moral damages, viz:

In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched
reputation or physical, mental or psychological suffering sustained by the claimant; 2) a
culpable act or omission factually established; 3) proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the claimant; and 4) the proof
that the act is predicated on any of the instances expressed or envisioned by Article 2219 and
Article 2220 of the Civil Code.

53
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 170656 August 15, 2007
THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY and BAYANI FERNANDO as
Chairman of the Metropolitan Manila Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC., respondent.
x --------------------------------------------- x
G.R. No. 170657 August 15, 2007
HON. ALBERTO G. ROMULO, Executive Secretary, the METROPOLITAN MANILA
DEVELOPMENT AUTHORITY and BAYANI FERNANDO as Chairman of the Metropolitan
Manila Development Authority, petitioners,
vs.
MENCORP TRANSPORTATION SYSTEM, INC., respondent.
DECISION
CARPIO MORALES, J.:
The following conditions in 1969, as observed by this Court:
Vehicles have increased in number. Traffic congestion has moved from bad to worse, from
tolerable to critical. The number of people who use the thoroughfares has multiplied x x x, 1
have remained unchecked and have reverberated to this day. Traffic jams continue to clog the
streets of Metro Manila, bringing vehicles to a standstill at main road arteries during rush hour
traffic and sapping people’s energies and patience in the process.
The present petition for review on certiorari, rooted in the traffic congestion problem, questions
the authority of the Metropolitan Manila Development Authority (MMDA) to order the closure of
provincial bus terminals along Epifanio de los Santos Avenue (EDSA) and major thoroughfares
of Metro Manila.
Specifically challenged are two Orders issued by Judge Silvino T. Pampilo, Jr. of the Regional
Trial Court (RTC) of Manila, Branch 26 in Civil Case Nos. 03-105850 and 03-106224.
The first assailed Order of September 8, 2005, 2 which resolved a motion for reconsideration
filed by herein respondents, declared Executive Order (E.O.) No. 179, hereafter referred to as
the E.O., "unconstitutional as it constitutes an unreasonable exercise of police power." The
second assailed Order of November 23, 20053 denied petitioners’ motion for reconsideration.
The following facts are not disputed:
President Gloria Macapagal Arroyo issued the E.O. on February 10, 2003, "Providing for the
Establishment of Greater Manila Mass Transport System," the pertinent portions of which read:
WHEREAS, Metro Manila continues to be the center of employment opportunities, trade and
commerce of the Greater Metro Manila area;
WHEREAS, the traffic situation in Metro Manila has affected the adjacent provinces of
Bulacan, Cavite, Laguna, and Rizal, owing to the continued movement of residents and
industries to more affordable and economically viable locations in these provinces;
WHEREAS, the Metropolitan Manila Development Authority (MMDA) is tasked to undertake
measures to ease traffic congestion in Metro Manila and ensure the convenient and efficient
travel of commuters within its jurisdiction;
WHEREAS, a primary cause of traffic congestion in Metro Manila has been the numerous
buses plying the streets that impedes [sic] the flow of vehicles and commuters due to the
inefficient connectivity of the different transport modes;
WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating the bus
terminals now located along major Metro Manila thoroughfares and providing more convenient
access to the mass transport system to the commuting public through the provision of mass
transport terminal facilities that would integrate the existing transport modes, namely the
buses, the rail-based systems of the LRT, MRT and PNR and to facilitate and ensure efficient
travel through the improved connectivity of the different transport modes;
WHEREAS, the national government must provide the necessary funding requirements to
immediately implement and render operational these projects; and extent to MMDA such other
assistance as may be warranted to ensure their expeditious prosecution.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by
virtue of the powers vested in me by law, do hereby order:
Section 1. THE PROJECT. – The project shall be identified as GREATER MANILA
TRANSPORT SYSTEM Project.
Section 2. PROJECT OBJECTIVES. – In accordance with the plan proposed by MMDA, the
project aims to develop four (4) interim intermodal mass transport terminals to integrate the
different transport modes, as well as those that shall hereafter be developed, to serve the
commuting public in the northwest, north, east, south, and southwest of Metro Manila. Initially,
the project shall concentrate on immediately establishing the mass transport terminals for the
north and south Metro Manila commuters as hereinafter described.
Section 3. PROJECT IMPLEMENTING AGENCY. – The Metropolitan Manila Development
Authority (MMDA), is hereby designated as the implementing Agency for the project. For this
purpose, MMDA is directed to undertake such infrastructure development work as may be
necessary and, thereafter, manage the project until it may be turned-over to more appropriate
agencies, if found suitable and convenient. Specifically, MMDA shall have the following
functions and responsibilities:
a) Cause the preparation of the Master Plan for the projects, including the designs and costing;
b) Coordinate the use of the land and/or properties needed for the project with the respective
agencies and/or entities owning them;
c) Supervise and manage the construction of the necessary structures and facilities;
d) Execute such contracts or agreements as may be necessary, with the appropriate
government agencies, entities, and/or private persons, in accordance with existing laws and
pertinent regulations, to facilitate the implementation of the project;
e) Accept, manage and disburse such funds as may be necessary for the construction and/or
implementation of the projects, in accordance with prevailing accounting and audit polices and
practice in government.
f) Enlist the assistance of any national government agency, office or department, including
local government units, government-owned or controlled corporations, as may be necessary;
g) Assign or hire the necessary personnel for the above purposes; and
h) Perform such other related functions as may be necessary to enable it to accomplish the
objectives and purposes of this Executive Order. 4 (Emphasis in the original; underscoring
supplied)
As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in
Metro Manila has been the numerous buses plying the streets and the inefficient connectivity
of the different transport modes;5 and the MMDA had "recommended a plan to decongest
traffic by eliminating the bus terminals now located along major Metro Manila thoroughfares
and providing more and convenient access to the mass transport system to the commuting
public through the provision of mass transport terminal facilities" 6 which plan is referred to
under the E.O. as the Greater Manila Mass Transport System Project (the Project).
The E.O. thus designated the MMDA as the implementing agency for the Project.
Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking
body of the MMDA, issued Resolution No. 03-07 series of 20037 expressing full support of the
Project. Recognizing the imperative to integrate the different transport modes via the
establishment of common bus parking terminal areas, the MMC cited the need to remove the
bus terminals located along major thoroughfares of Metro Manila. 8
On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in
the business of public transportation with a provincial bus operation, 9 filed a petition for
declaratory relief10 before the RTC11 of Manila.
In its petition which was docketed as Civil Case No. 03-105850, Viron alleged that the MMDA,
through Chairman Fernando, was "poised to issue a Circular, Memorandum or Order closing,
or tantamount to closing, all provincial bus terminals along EDSA and in the whole of the
Metropolis under the pretext of traffic regulation." 12 This impending move, it stressed, would
mean the closure of its bus terminal in Sampaloc, Manila and two others in Quezon City.
Alleging that the MMDA’s authority does not include the power to direct provincial bus
operators to abandon their existing bus terminals to thus deprive them of the use of their
property, Viron asked the court to construe the scope, extent and limitation of the power of the
MMDA to regulate traffic under R.A. No. 7924, "An Act Creating the Metropolitan Manila
Development Authority, Defining its Powers and Functions, Providing Funds Therefor and For
Other Purposes."
Viron also asked for a ruling on whether the planned closure of provincial bus terminals would
contravene the Public Service Act and related laws which mandate public utilities to provide
and maintain their own terminals as a requisite for the privilege of operating as common
carriers.13
Mencorp Transportation System, Inc. (Mencorp), another provincial bus operator, later filed a
similar petition for declaratory relief14 against Executive Secretary Alberto G. Romulo and
MMDA Chairman Fernando.
Mencorp asked the court to declare the E.O. unconstitutional and illegal for transgressing the
possessory rights of owners and operators of public land transportation units over their
respective terminals.
Averring that MMDA Chairman Fernando had begun to implement a plan to close and
eliminate all provincial bus terminals along EDSA and in the whole of the metropolis and to
transfer their operations to common bus terminals, 15 Mencorp prayed for the issuance of a
temporary restraining order (TRO) and/or writ of preliminary injunction to restrain the
impending closure of its bus terminals which it was leasing at the corner of EDSA and New
York Street in Cubao and at the intersection of Blumentritt, Laon Laan and Halcon Streets in
Quezon City. The petition was docketed as Civil Case No. 03-106224 and was raffled to
Branch 47 of the RTC of Manila.
Mencorp’s petition was consolidated on June 19, 2003 with Viron’s petition which was raffled
to Branch 26 of the RTC, Manila.
Mencorp’s prayer for a TRO and/or writ of injunction was denied as was its application for the
issuance of a preliminary injunction.16
In the Pre-Trial Order17 issued by the trial court, the issues were narrowed down to whether 1)
the MMDA’s power to regulate traffic in Metro Manila included the power to direct provincial
bus operators to abandon and close their duly established and existing bus terminals in order
to conduct business in a common terminal; (2) the E.O. is consistent with the Public Service
Act and the Constitution; and (3) provincial bus operators would be deprived of their real
properties without due process of law should they be required to use the common bus
terminals.
Upon the agreement of the parties, they filed their respective position papers in lieu of
hearings.
By Decision18 of January 24, 2005, the trial court sustained the constitutionality and legality of
the E.O. pursuant to R.A. No. 7924, which empowered the MMDA to administer Metro Manila’s
basic services including those of transport and traffic management.
The trial court held that the E.O. was a valid exercise of the police power of the State as it
satisfied the two tests of lawful subject matter and lawful means, hence, Viron’s and Mencorp’s
property rights must yield to police power.
On the separate motions for reconsideration of Viron and Mencorp, the trial court, by Order of
September 8, 2005, reversed its Decision, this time holding that the E.O. was "an
unreasonable exercise of police power"; that the authority of the MMDA under Section (5)(e) of
R.A. No. 7924 does not include the power to order the closure of Viron’s and Mencorp’s
existing bus terminals; and that the E.O. is inconsistent with the provisions of the Public
Service Act.
54
Petitioners’ motion for reconsideration was denied by Resolution of November 23, 2005.
Hence, this petition, which faults the trial court for failing to rule that: (1) the requisites of
declaratory relief are not present, there being no justiciable controversy in Civil Case Nos. 03-
105850 and 03-106224; and (2) the President has the authority to undertake or cause the
implementation of the Project.19
Petitioners contend that there is no justiciable controversy in the cases for declaratory relief as
nothing in the body of the E.O. mentions or orders the closure and elimination of bus terminals
along the major thoroughfares of Metro Manila. Viron and Mencorp, they argue, failed to
produce any letter or communication from the Executive Department apprising them of an
immediate plan to close down their bus terminals.
And petitioners maintain that the E.O. is only an administrative directive to government
agencies to coordinate with the MMDA and to make available for use government property
along EDSA and South Expressway corridors. They add that the only relation created by the
E.O. is that between the Chief Executive and the implementing officials, but not between third
persons.
The petition fails.
It is true, as respondents have pointed out, that the alleged deficiency of the consolidated
petitions to meet the requirement of justiciability was not among the issues defined for
resolution in the Pre-Trial Order of January 12, 2004. It is equally true, however, that the
question was repeatedly raised by petitioners in their Answer to Viron’s petition, 20 their
Comment of April 29, 2003 opposing Mencorp’s prayer for the issuance of a TRO, 21 and their
Position Paper of August 23, 2004.22
In bringing their petitions before the trial court, both respondents pleaded the existence of the
essential requisites for their respective petitions for declaratory relief, 23 and refuted petitioners’
contention that a justiciable controversy was lacking. 24 There can be no denying, therefore,
that the issue was raised and discussed by the parties before the trial court.
The following are the essential requisites for a declaratory relief petition: (a) there must be a
justiciable controversy; (b) the controversy must be between persons whose interests are
adverse; (c) the party seeking declaratory relief must have a legal interest in the controversy;
and (d) the issue invoked must be ripe for judicial determination. 25
The requirement of the presence of a justiciable controversy is satisfied when an actual
controversy or the ripening seeds thereof exist between the parties, all of whom are sui
juris and before the court, and the declaration sought will help in ending the controversy.26 A
question becomes justiciable when it is translated into a claim of right which is actually
contested.27
In the present cases, respondents’ resort to court was prompted by the issuance of the E.O.
The 4th Whereas clause of the E.O. sets out in clear strokes the MMDA’s plan to "decongest
traffic by eliminating the bus terminals now located along major Metro Manila thoroughfares
and providing more convenient access to the mass transport system to the commuting public
through the provision of mass transport terminal facilities x x x." (Emphasis supplied)
Section 2 of the E.O. thereafter lays down the immediate establishment of common bus
terminals for north- and south-bound commuters. For this purpose, Section 8 directs the
Department of Budget and Management to allocate funds of not more than one hundred million
pesos (P100,000,000) to cover the cost of the construction of the north and south terminals.
And the E.O. was made effective immediately.
The MMDA’s resolve to immediately implement the Project, its denials to the contrary
notwithstanding, is also evident from telltale circumstances, foremost of which was the
passage by the MMC of Resolution No. 03-07, Series of 2003 expressing its full support of the
immediate implementation of the Project.
Notable from the 5th Whereas clause of the MMC Resolution is the plan to "remove the bus
terminals located along major thoroughfares of Metro Manila and an urgent need to integrate
the different transport modes." The 7th Whereas clause proceeds to mention the establishment
of the North and South terminals.
As alleged in Viron’s petition, a diagram of the GMA-MTS North Bus/Rail Terminal had been
drawn up, and construction of the terminal is already in progress. The MMDA, in its
Answer28 and Position Paper,29 in fact affirmed that the government had begun to implement
the Project.
It thus appears that the issue has already transcended the boundaries of what is merely
conjectural or anticipatory.lawphil
Under the circumstances, for respondents to wait for the actual issuance by the MMDA of an
order for the closure of respondents’ bus terminals would be foolhardy for, by then, the proper
action to bring would no longer be for declaratory relief which, under Section 1, Rule 63 30 of
the Rules of Court, must be brought before there is a breach or violation of rights.
As for petitioners’ contention that the E.O. is a mere administrative issuance which creates no
relation with third persons, it does not persuade. Suffice it to stress that to ensure the success
of the Project for which the concerned government agencies are directed to coordinate their
activities and resources, the existing bus terminals owned, operated or leased by third persons
like respondents would have to be eliminated; and respondents would be forced to operate
from the common bus terminals.
It cannot be gainsaid that the E.O. would have an adverse effect on respondents. The closure
of their bus terminals would mean, among other things, the loss of income from the operation
and/or rentals of stalls thereat. Precisely, respondents claim a deprivation of their constitutional
right to property without due process of law.
Respondents have thus amply demonstrated a "personal and substantial interest in the case
such that [they have] sustained, or will sustain, direct injury as a result of [the E.O.’s]
enforcement."31 Consequently, the established rule that the constitutionality of a law or
administrative issuance can be challenged by one who will sustain a direct injury as a result of
its enforcement has been satisfied by respondents.
On to the merits of the case.
Respondents posit that the MMDA is devoid of authority to order the elimination of their bus
terminals under the E.O. which, they argue, is unconstitutional because it violates both the
Constitution and the Public Service Act; and that neither is the MMDA clothed with such
authority under R.A. No. 7924.
Petitioners submit, however, that the real issue concerns the President’s authority to undertake
or to cause the implementation of the Project. They assert that the authority of the President is
derived from E.O. No. 125, "Reorganizing the Ministry of Transportation and Communications
Defining its Powers and Functions and for Other Purposes," her residual power and/or E.O.
No. 292, otherwise known as the Administrative Code of 1987. They add that the E.O. is also a
valid exercise of the police power.
E.O. No. 125,32 which former President Corazon Aquino issued in the exercise of legislative
powers, reorganized the then Ministry (now Department) of Transportation and
Communications. Sections 4, 5, 6 and 22 of E.O. 125, as amended by E.O. 125-A,33 read:
SECTION 4. Mandate. — The Ministry shall be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity of the Executive
Branch of the government in the promotion, development and regulation of dependable
and coordinated networks of transportation and communication systems as well as in the
fast, safe, efficient and reliable postal, transportation and communications services.
To accomplish such mandate, the Ministry shall have the following objectives:
(a) Promote the development of dependable and coordinated networks of transportation and
communications systems;
(b) Guide government and private investment in the development of the country’s
intermodal transportation and communications systems in a most practical, expeditious,
and orderly fashion for maximum safety, service, and cost effectiveness; (Emphasis and
underscoring supplied)
xxxx
SECTION 5. Powers and Functions. — To accomplish its mandate, the Ministry shall have the
following powers and functions:
(a) Formulate and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and communications systems
at the national, regional and local levels;
(b) Establish and administer comprehensive and integrated programs for transportation
and communications, and for this purpose, may call on any agency, corporation, or
organization, whether public or private, whose development programs include transportation
and communications as an integral part thereof, to participate and assist in the preparation and
implementation of such program;
(c) Assess, review and provide direction to transportation and communications research and
development programs of the government in coordination with other institutions concerned;
(d) Administer all laws, rules and regulations in the field of transportation and
communications; (Emphasis and underscoring supplied)
xxxx
SECTION 6. Authority and Responsibility. — The authority and responsibility for the
exercise of the mandate of the Ministry and for the discharge of its powers and
functions shall be vested in the Minister of Transportation and Communications,
hereinafter referred to as the Minister, who shall have supervision and control over the Ministry
and shall be appointed by the President. (Emphasis and underscoring supplied)
SECTION 22. Implementing Authority of Minister. — The Minister shall issue such orders,
rules, regulations and other issuances as may be necessary to ensure the effective
implementation of the provisions of this Executive Order. (Emphasis and underscoring
supplied)
It is readily apparent from the abovequoted provisions of E.O. No. 125, as amended, that the
President, then possessed of and exercising legislative powers, mandated the DOTC to be the
primary policy, planning, programming, coordinating, implementing, regulating and
administrative entity to promote, develop and regulate networks of transportation and
communications. The grant of authority to the DOTC includes the power
to establish and administer comprehensive and integrated programs for transportation and
communications.
As may be seen further, the Minister (now Secretary) of the DOTC is vested with the authority
and responsibility to exercise the mandate given to the department. Accordingly, the DOTC
Secretary is authorized to issue such orders, rules, regulations and other issuances as may be
necessary to ensure the effective implementation of the law.
Since, under the law, the DOTC is authorized to establish and administer programs and
projects for transportation, it follows that the President may exercise the same power and
authority to order the implementation of the Project, which admittedly is one for transportation.
Such authority springs from the President’s power of control over all executive departments as
well as the obligation for the faithful execution of the laws under Article VII, Section 17 of the
Constitution which provides:
SECTION 17. The President shall have control of all the executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed.
This constitutional provision is echoed in Section 1, Book III of the Administrative Code of
1987. Notably, Section 38, Chapter 37, Book IV of the same Code defines the President’s
power of supervision and control over the executive departments, viz:
SECTION 38. Definition of Administrative Relationships. — Unless otherwise expressly stated
in the Code or in other laws defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as follows:
(1) Supervision and Control. — Supervision and control shall include authority to
act directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts; review, approve,
reverse or modify acts and decisions of subordinate officials or units; determine priorities in the
execution of plans and programs. Unless a different meaning is explicitly provided in the
specific law governing the relationship of particular agencies the word "control" shall
encompass supervision and control as defined in this paragraph. x x x (Emphasis and
underscoring supplied)
Thus, whenever a specific function is entrusted by law or regulation to a subordinate, the
President may act directly or merely direct the performance of a duty. 34
Respecting the President’s authority to order the implementation of the Project in the exercise
of the police power of the State, suffice it to stress that the powers vested in the DOTC
Secretary to establish and administer comprehensive and integrated programs for
transportation and communications and to issue orders, rules and regulations to implement
such mandate (which, as previously discussed, may also be exercised by the President) have
been so delegated for the good and welfare of the people. Hence, these powers partake of the
nature of police power.
Police power is the plenary power vested in the legislature to make, ordain, and establish
wholesome and reasonable laws, statutes and ordinances, not repugnant to the Constitution,
55
for the good and welfare of the people. 35 This power to prescribe regulations to promote the
health, morals, education, good order or safety, and general welfare of the people flows from
the recognition that salus populi est suprema lex ─ the welfare of the people is the supreme
law.
While police power rests primarily with the legislature, such power may be delegated, as it is in
fact increasingly being delegated.36 By virtue of a valid delegation, the power may be exercised
by the President and administrative boards37 as well as by the lawmaking bodies of municipal
corporations or local governments under an express delegation by the Local Government
Code of 1991.38
The authority of the President to order the implementation of the Project notwithstanding, the
designation of the MMDA as the implementing agency for the Project may not be sustained. It
is ultra vires, there being no legal basis therefor.
It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and
not the MMDA, which is authorized to establish and implement a project such as the one
subject of the cases at bar. Thus, the President, although authorized to establish or cause the
implementation of the Project, must exercise the authority through the instrumentality of
the DOTC which, by law, is the primary implementing and administrative entity in the
promotion, development and regulation of networks of transportation, and the one so
authorized to establish and implement a project such as the Project in question.
By designating the MMDA as the implementing agency of the Project, the President clearly
overstepped the limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of MMDA flies in the absence of a specific grant
of authority to it under R.A. No. 7924.
To recall, R.A. No. 7924 declared the Metropolitan Manila area 39 as a "special development
and administrative region" and placed the administration of "metro-wide" basic services
affecting the region under the MMDA.
Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform "planning, monitoring
and coordinative functions, and in the process exercise regulatory and supervisory authority
over the delivery of metro-wide services," including transport and traffic
management.40 Section 5 of the same law enumerates the powers and functions of the MMDA
as follows:
(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and
programs for the delivery of metro-wide services, land use and physical development within
Metropolitan Manila, consistent with national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term investment programs
for metro-wide services which shall indicate sources and uses of funds for priority programs
and projects, and which shall include the packaging of projects and presentation to funding
institutions;
(c) Undertake and manage on its own metro-wide programs and projects for the delivery of
specific services under its jurisdiction, subject to the approval of the Council. For this purpose,
MMDA can create appropriate project management offices;
(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro
Manila; identify bottlenecks and adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall
coordinate and regulate the implementation of all programs and projects concerning
traffic management, specifically pertaining to enforcement, engineering and
education. Upon request, it shall be extended assistance and cooperation, including but not
limited to, assignment of personnel, by all other government agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and collect fines and
penalties for all kinds of violations of traffic rules and regulations, whether moving or
non-moving in nature, and confiscate and suspend or revoke drivers’ licenses in the
enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD 1605 to
the contrary notwithstanding. For this purpose, the Authority shall impose all traffic laws and
regulations in Metro Manila, through its traffic operation center, and may deputize members of
the PNP, traffic enforcers of local government units, duly licensed security guards, or members
of non-governmental organizations to whom may be delegated certain authority, subject to
such conditions and requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the objectives of the MMDA, including
the undertaking of delivery of basic services to the local government units, when deemed
necessary subject to prior coordination with and consent of the local government unit
concerned." (Emphasis and underscoring supplied)
The scope of the function of MMDA as an administrative, coordinating and policy-setting body
has been settled in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village
Association, Inc.41 In that case, the Court stressed:
Clearly, the scope of the MMDA’s function is limited to the delivery of the seven (7) basic
services. One of these is transport and traffic management which includes the formulation
and monitoring of policies, standards and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares and promotion of the safe
movement of persons and goods. It also covers the mass transport system and the
institution of a system of road regulation, the administration of all traffic enforcement
operations, traffic engineering services and traffic education programs, including the institution
of a single ticketing system in Metro Manila for traffic violations. Under this service, the MMDA
is expressly authorized to "to set the policies concerning traffic" and "coordinate and regulate
the implementation of all traffic management programs." In addition, the MMDA may install and
administer a single ticketing system," fix, impose and collect fines and penalties for all traffic
violations.
It will be noted that the powers of the MMDA are limited to the following acts: formulation,
coordination, regulation, implementation, preparation, management, monitoring, setting of
policies, installation of a system and administration. There is no syllable in R.A. No. 7924 that
grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has
not been delegated any legislative power. Unlike the legislative bodies of the local
government units, there is no provision in R.A. No. 7924 that empowers the MMDA or its
Council to ‘enact ordinances, approve resolutions and appropriate funds for the general
welfare’ of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself,
a ‘development authority.’ It is an agency created for the purpose of laying down
policies and coordinating with the various national government agencies, people’s
organizations, non-governmental organizations and the private sector for the efficient
and expeditious delivery of basic services in the vast metropolitan area. All its functions
are administrative in nature and these are actually summed up in the charter itself, viz:
‘SECTION 2. Creation of the Metropolitan Manila Development Authority. — . . .
The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of the local government
units concerning purely local matters.’42 (Emphasis and underscoring supplied)
In light of the administrative nature of its powers and functions, the MMDA is devoid of
authority to implement the Project as envisioned by the E.O; hence, it could not have been
validly designated by the President to undertake the Project. It follows that the MMDA cannot
validly order the elimination of respondents’ terminals.
Even the MMDA’s claimed authority under the police power must necessarily fail in
consonance with the above-quoted ruling in MMDA v. Bel-Air Village Association, Inc. and this
Court’s subsequent ruling in Metropolitan Manila Development Authority v. Garin 43 that the
MMDA is not vested with police power.
Even assuming arguendo that police power was delegated to the MMDA, its exercise of such
power does not satisfy the two tests of a valid police power measure, viz: (1) the interest of the
public generally, as distinguished from that of a particular class, requires its exercise; and (2)
the means employed are reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals.44 Stated differently, the police power legislation must be
firmly grounded on public interest and welfare and a reasonable relation must exist between
the purposes and the means.
As early as Calalang v. Williams,45 this Court recognized that traffic congestion is a public, not
merely a private, concern. The Court therein held that public welfare underlies the contested
statute authorizing the Director of Public Works to promulgate rules and regulations to regulate
and control traffic on national roads.
Likewise, in Luque v. Villegas,46 this Court emphasized that public welfare lies at the bottom of
any regulatory measure designed "to relieve congestion of traffic, which is, to say the least, a
menace to public safety."47 As such, measures calculated to promote the safety and
convenience of the people using the thoroughfares by the regulation of vehicular traffic present
a proper subject for the exercise of police power.
Notably, the parties herein concede that traffic congestion is a public concern that needs to be
addressed immediately. Indeed, the E.O. was issued due to the felt need to address the
worsening traffic congestion in Metro Manila which, the MMDA so determined, is caused by
the increasing volume of buses plying the major thoroughfares and the inefficient connectivity
of existing transport systems. It is thus beyond cavil that the motivating force behind the
issuance of the E.O. is the interest of the public in general.
Are the means employed appropriate and reasonably necessary for the accomplishment of the
purpose. Are they not duly oppressive?
With the avowed objective of decongesting traffic in Metro Manila, the E.O. seeks to
"eliminate[e] the bus terminals now located along major Metro Manila thoroughfares and
provid[e] more convenient access to the mass transport system to the commuting public
through the provision of mass transport terminal facilities x x x."48 Common carriers with
terminals along the major thoroughfares of Metro Manila would thus be compelled to close
down their existing bus terminals and use the MMDA-designated common parking areas.
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,49 two city ordinances were passed
by the Sangguniang Panlungsod of Lucena, directing public utility vehicles to unload and load
passengers at the Lucena Grand Central Terminal, which was given the exclusive franchise to
operate a single common terminal. Declaring that no other terminals shall be situated,
constructed, maintained or established inside or within the city of Lucena,
the sanggunian declared as inoperable all temporary terminals therein.
The ordinances were challenged before this Court for being unconstitutional on the ground
that, inter alia, the measures constituted an invalid exercise of police power, an undue taking
of private property, and a violation of the constitutional prohibition against monopolies.
Citing De la Cruz v. Paras50 and Lupangco v. Court of Appeals,51 this Court held that the
assailed ordinances were characterized by overbreadth, as they went beyond what was
reasonably necessary to solve the traffic problem in the city. And it found that the compulsory
use of the Lucena Grand Terminal was unduly oppressive because it would subject its users to
fees, rentals and charges.
The true role of Constitutional Law is to effect an equilibrium between authority and liberty so
that rights are exercised within the framework of the law and the laws are enacted with due
deference to rights.
A due deference to the rights of the individual thus requires a more careful formulation of
solutions to societal problems.
From the memorandum filed before this Court by petitioner, it is gathered that the
Sangguniang Panlungsod had identified the cause of traffic congestion to be the indiscriminate
loading and unloading of passengers by buses on the streets of the city proper, hence, the
conclusion that the terminals contributed to the proliferation of buses obstructing traffic on the
city streets.
Bus terminals per se do not, however, impede or help impede the flow of
traffic. How the outright proscription against the existence of all terminals, apart from
that franchised to petitioner, can be considered as reasonably necessary to solve the
traffic problem, this Court has not been enlightened. If terminals lack adequate space such
that bus drivers are compelled to load and unload passengers on the streets instead of inside
the terminals, then reasonable specifications for the size of terminals could be instituted, with
permits to operate the same denied those which are unable to meet the specifications.
In the subject ordinances, however, the scope of the proscription against the
maintenance of terminals is so broad that even entities which might be able to provide
facilities better than the franchised terminal are barred from operating at all. (Emphasis
and underscoring supplied)
As in Lucena, this Court fails to see how the prohibition against the existence of respondents’
terminals can be considered a reasonable necessity to ease traffic congestion in the
metropolis. On the contrary, the elimination of respondents’ bus terminals brings forth the
distinct possibility and the equally harrowing reality of traffic congestion in the common parking
areas, a case of transference from one site to another.
Less intrusive measures such as curbing the proliferation of "colorum" buses, vans and taxis
entering Metro Manila and using the streets for parking and passenger pick-up points, as
respondents suggest, might even be more effective in easing the traffic situation. So would the
strict enforcement of traffic rules and the removal of obstructions from major thoroughfares.
As to the alleged confiscatory character of the E.O., it need only to be stated that respondents’
certificates of public convenience confer no property right, and are mere licenses or
privileges.52 As such, these must yield to legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the MMDA cannot order the closure of
respondents’ terminals not only because no authority to implement the Project has been
granted nor legislative or police power been delegated to it, but also because the elimination of
the terminals does not satisfy the standards of a valid police power measure.
Finally, an order for the closure of respondents’ terminals is not in line with the provisions of
the Public Service Act.
56
Paragraph (a), Section 13 of Chapter II of the Public Service Act (now Section 5 of Executive
Order No. 202, creating the Land Transportation Franchising and Regulatory Board or LFTRB)
vested the Public Service Commission (PSC, now the LTFRB) with "x x x jurisdiction,
supervision and control over all public services and their franchises, equipment and other
properties x x x."

Consonant with such grant of authority, the PSC was empowered to "impose such
conditions as to construction, equipment, maintenance, service, or operation as the
53
public interests and convenience may reasonably require" in approving any franchise or
privilege.

Further, Section 16 (g) and (h) of the Public Service Act 54 provided that the Commission shall
have the power, upon proper notice and hearing in accordance with the rules and provisions of
this Act, subject to the limitations and exceptions mentioned and saving provisions to the
contrary:

(g) To compel any public service to furnish safe, adequate, and proper service as regards
the manner of furnishing the same as well as the maintenance of the necessary material and
equipment.

(h) To require any public service to establish, construct, maintain, and operate any
reasonable extension of its existing facilities, where in the judgment of said Commission,
such extension is reasonable and practicable and will furnish sufficient business to justify the
construction and maintenance of the same and when the financial condition of the said public
service reasonably warrants the original expenditure required in making and operating such
extension.(Emphasis and underscoring supplied)

The establishment, as well as the maintenance of vehicle parking areas or passenger

terminals, is generally considered a necessary service to be provided by provincial bus
operators like respondents, hence, the investments they have poured into the acquisition or
lease of suitable terminal sites. Eliminating the terminals would thus run counter to the
provisions of the Public Service Act.

This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at
solving the pestering problem of traffic congestion in Metro Manila. These efforts are
commendable, to say the least, in the face of the abominable traffic situation of our roads day
in and day out. This Court can only interpret, not change, the law, however. It needs only to be
reiterated that it is the DOTC ─ as the primary policy, planning, programming, coordinating,
implementing, regulating and administrative entity to promote, develop and regulate networks
of transportation and communications ─ which has the power to establish and administer a
transportation project like the Project subject of the case at bar.

No matter how noble the intentions of the MMDA may be then, any plan, strategy or project
which it is not authorized to implement cannot pass muster.

WHEREFORE, the Petition is, in light of the foregoing disquisition, DENIED. E.O. No. 179 is
declared NULL and VOID for being ultra vires.

SO ORDERED.

57
G.R. No. 207132, December 06, 2016
ASSOCIATION OF MEDICAL CLINICS FOR OVERSEAS WORKERS, INC., (AMCOW),
REPRESENTED HEREIN BY ITS PRESIDENT, DR. ROLANDO VILLOTE, Petitioner, v. GCC
APPROVED MEDICAL CENTERS ASSOCIATION, INC. AND CHRISTIAN
CANGCO, Respondents.
G.R. No. 207205
HON. ENRIQUE T. ONA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF
HEALTH, Petitioner, v. GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC. AND
CHRISTIAN E. CANGCO, Respondents.
DECISION
BRION, J.:
In these consolidated petitions for review on certiorari1 filed under Rule 45 of the Rules of
Court, by the Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) in GR No.
207132, and by Secretary Enrique T. Ona (Secretary Ona) of the Department of Health (DOH)
in GR No. 207205, we resolve the challenge to the August 10, 2012 decision2 and the April 12,
2013 order3 of the Regional Trial Court (RTC) of Pasay City, Branch 108, in Sp. Civil Action
No. R-PSY-10-04391-CV.4
The August 10, 2012 decision and April 12, 2013 order declared null and void ab initio the
August 23, 2010 and November 2, 2010 orders issued by the DOH directing respondent GCC
Approved Medical Centers Association, Inc. (GAMCA) to cease and desist from implementing
the referral decking system (these orders shall be alternately referred to as DOH CDO letters).
I. The Antecedents
On March 8, 2001, the DOH issued Administrative Order No. 5, Series of 20015(AO 5-01)
which directed the decking or equal distribution of migrant workers among the several clinics
who are members of GAMCA.
AO 5-01 was issued to comply with the Gulf Cooperative Countries (GCC) States' requirement
that only GCC-accredited medical clinics/hospitals' examination results will be honored by the
GCC States' respective embassies. It required an OFW applicant to first go to a GAMCA
Center which, in turn, will refer the applicant to a GAMCA clinic or hospital.
Subsequently, the DOH issued AO No. 106, Series of 20026holding in abeyance the
implementation of the referral decking system. The DOH reiterated its directive suspending the
referral decking system in AO No. 159, Series of 2004.7
In 2004, the DOH issued AO No. 167, Series of 20048repealing AO 5-01, reasoning that the
referral decking system did not guarantee the migrant workers' right to safe and quality health
service. AO 167-04 pertinently reads:
WHEREAS, after a meticulous and deliberate study, examination, and consultation about the
GAMCA referral decking system, the DOH believes that its mandate is to protect and promote
the health of the Filipino people by ensuring the rights to safe and quality health service and
reliable medical examination results through the stricter regulation of medical clinics and other
health facilities, which the referral decking system neither assures nor guarantees.
NOW, THEREFORE, for and in consideration of the foregoing, the DOH hereby withdraws,
repeals and/or revokes Administrative Order No. 5, series of 2001, concerning the referral
decking system. Hence, all other administrative issuances, bureau circulars and memoranda
related to A.O. No. 5, series of 2001, are hereby withdrawn, repealed and/revoked accordingly.
In Department Memorandum No. 2008-0210,9 dated September 26, 2008, then DOH
Secretary Francisco T. Duque III expressed his concern about the continued implementation of
the referral decking system despite the DOH's prior suspension directives. The DOH directed
the "OFW clinics, duly accredited/licensed by the DOH and/or by the Philippine Health
Insurance Corporation (PHILHEALTH) belonging to and identified with GAMCA x x x to
forthwith stop, terminate, withdraw or otherwise end the x x x 'referral decking system.'"10
GAMCA questioned the DOH's Memorandum No. 2008-0210 before the Office of the President
(OP). In a decision11 dated January 14, 2010, the OP nullified Memorandum No. 2008-0210.
On March 8, 2010, Republic Act (RA) No. 1002212lapsed into law without the President's
signature. Section 16 of RA No. 10022 amended Section 23 of RA No. 8042, adding two new
paragraphs - paragraphs (c) and (d). The pertinent portions of the amendatory provisions read:
Section 16. Under Section 23 of Republic Act No. 8042, as amended, add new paragraphs (c)
and (d) with their corresponding subparagraphs to read as follows:
(c) Department of Health. - The Department of Health (DOH) shall regulate the activities and
operations of all clinics which conduct medical, physical, optical, dental, psychological and
other similar examinations, hereinafter referred to as health examinations, on Filipino migrant
workers as requirement for their overseas employment. Pursuant to this, the DOH shall ensure
that:
(c.1) The fees for the health examinations are regulated, regularly monitored and duly
published to ensure that the said fees are reasonable and not exorbitant;
(c.2) The Filipino migrant worker shall only be required to undergo health examinations when
there is reasonable certainty that he or she will be hired and deployed to the jobsite and only
those health examinations which are absolutely necessary for the type of job applied for or
those specifically required by the foreign employer shall be conducted;
(c.3) No group or groups of medical clinics shall have a monopoly of exclusively conducting
health examinations on migrant workers for certain receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-
accredited or DOH-operated clinics that will conduct his/her health examinations and that his
or her rights as a patient are respected. The decking practice, which requires an overseas
Filipino worker to go first to an office for registration and then farmed out to a medical clinic
located elsewhere, shall not be allowed;
(c.5) Within a period of three (3) years from the effectivity of this Act, all DOH regional and/or
provincial hospitals shall establish and operate clinics that can serve the health examination
requirements of Filipino migrant workers to provide them easy access to such clinics all over
the country and lessen their transportation and lodging expenses; and
(c.6) All DOH-accredited medical clinics, including the DOH¬ operated clinics, conducting
health examinations for Filipino migrant workers shall observe the same standard operating
procedures and shall comply with internationally accepted standards in their operations to
conform with the requirements of receiving countries or of foreign employers/principals.
Any Foreign employer who does not honor the results of valid health examinations conducted
by a DOH-accredited or DOH-operated clinic shall be temporarily disqualified from participating
in the overseas employment program, pursuant to POEA rules and regulations.
In case an overseas Filipino worker is found to be not medically fit upon his/her immediate
arrival in the country of destination, the medical clinic that conducted the health examinations
of such overseas Filipino worker shall pay for his or her repatriation back to the Philippines and
the cost of deployment of such worker.
Any government official or employee who violates any provision of this subsection shall be
removed or dismissed from service with disqualification to hold any appointive public office for
five (5) years. Such penalty is without prejudice to any other liability which he or she may have
incurred under existing laws, rules or regulations. [emphases and underscoring supplied]
On August 13, 2010, the Implementing Rules and Regulations13 (IRR) of RA No. 8042, as
amended by RA No. 10022, took effect.
Pursuant to Section 16 of RA No. 10022, the DOH, through its August 23, 2010 letter-order,14
directed GAMCA to cease and desist from implementing the referral decking system and to
wrap up their operations within three (3) days from receipt thereof. GAMCA received its copy
of the August 23, 2010 letter-order on August 25, 2010.
On August 26, 2010, GAMCA filed with the RTC of Pasig City a petition for certiorari and
prohibition with prayer for a writ of preliminary injunction and/or temporary restraining order
(GAMCA's petition).15 It assailed: (1) the DOH's August 23, 2010 letter-order on the ground of
grave abuse of discretion; and (2) paragraphs c.3 and c.4, Section 16 of RA No. 10022, as well
as Section 1 (c) and (d), Rule XI of the IRR, as unconstitutional.
Meanwhile, the DOH reiterated - through its November 2, 2010 order - its directive that
GAMCA cease and desist from implementing the referral decking system.16
On November 23, 2010, AMCOW filed an urgent motion for leave to intervene and to file an
opposition-in-intervention, attaching its opposition-¬in-intervention to its motion.17 In the
hearing conducted the following day, November 24, 2010, the RTC granted AMCOW's
intervention; DOH and GAMCA did not oppose AMCOW's motion.18 AMCOW subsequently
paid the docket fees and submitted its memorandum.19
In an order20 dated August 1, 2011, the RTC issued a writ of preliminary injunction21 directing
the DOH to cease and desist from implementing its August 23, 2010 and November 2, 2010
orders. The RTC likewise issued an order denying the motion for inhibition/disqualification filed
by AMCOW.
On August 18, 2011, the DOH sought reconsideration of the RTC's August 1, 2011 order.
The assailed RTC rulings
In its August 10, 2012 decision,22 the RTC granted GAMCA's certiorari petition and declared
null and void ab initio the DOH CDO letters. It also issued a writ of prohibition directing "the
DOH Secretary and all persons acting on his behalf to cease and desist from implementing the
assailed Orders against the [GAMCA]."
The RTC upheld the constitutionality of Section 16 of RA No. 10022, amending Section 23 of
RA No. 8042, but ruled that Section 16 of RA No. 10022 does not apply to GAMCA.
The RTC reasoned out that the prohibition against the referral decking system under Section
16 of RA No. 10022 must be interpreted as applying only to clinics that conduct health
examination on migrant workers bound for countries that do not require the referral decking
system for the issuance of visas to job applicants.
It noted that the referral decking system is part of the application procedure in obtaining visas
to enter the GCC States, a procedure made in the exercise of the sovereign power of the GCC
States to protect their nationals from health hazards, and of their diplomatic power to regulate
and screen entrants to their territories. Under the principle of sovereign equality and
independence of States, the Philippines cannot interfere with this system and, in fact, must
respect the visa-granting procedures of foreign states in the same way that they respect our
immigration procedures.
Moreover, to restrain GAMCA which is a mere adjunct of HMC, the agent of GCC States, is to
restrain the GCC States themselves. To the RTC, the Congress was aware of this limitation,
pursuant to the generally accepted principles of international law under Article II, Section 2 of
the 1987 Constitution, when it enacted Section 16 of RA No. 10022.
The DOH and AMCOW separately sought reconsideration of the RTC's August 10, 2012
decision, which motions the RTC denied.23 The DOH and AMCOW separately filed the
present Rule 45 petitions.
On August 24, 2013, AMCOW filed a motion for consolidation24 of the two petitions; the Court
granted this motion and ordered the consolidation of the two petitions in a resolution dated
September 17, 2013.25cralawred
In the resolution26 of April 14, 2015, the Court denied: (1) GAMCA's most urgent motion for
issuance of temporary restraining order/writ of preliminary injunction/status quo ante order
(with request for immediate inclusion in the Honorable Court's agenda of March 3, 2015, its
motion dated March 2, 2015);27 and (2) the most urgent reiterating motion for issuance of
temporary restraining order/writ of preliminary injunction/status quo ante order dated March 11,
2015.28
The Court also suspended the implementation of the permanent injunction issued by the RTC
of Pasay City, Branch 108 in its August 10, 2012 decision.
II. The Issues
The consolidated cases before us present the following issues:
First, whether the Regional Trial Court legally erred in giving due course to the petition for
certiorari and prohibition against the DOH CDO letters;
Second, whether the DOH CDO letters prohibiting GAMCA from implementing the referral
decking system embodied under Section 16 of Republic Act No. 10022 violates Section 3,
Article II of the 1987 Constitution for being an undue taking of property;
Third, whether the application of Section 16 of Republic Act No.10022 to the GAMCA violates
the international customary principles of sovereign independence and equality.
III. Our Ruling
58
A. The RTC legally erred when it gave due course to GAMCA's petition for certiorari and
prohibition.
The present case reached us through an appeal by certiorari (pursuant to Rule 45) of an RTC
ruling, assailing the decision based solely on questions of law. The RTC decision, on the other
hand, involves the grant of the petitions for certiorari and prohibition (pursuant to Rule 65)
assailing the DOH CDO letters for grave abuse of discretion.
The question before us asks whether the RTC made a reversible error of law when it issued
writs of certiorari and prohibition against the DOH CDO letters.
AMCOW questions the means by which GAMCA raised the issue of the legality of RA No.
10022 before the RTC. AMCOW posits that GAMCA availed of an improper remedy, as
certiorari and prohibition lie only against quasi-judicial acts, and quasi-judicial and ministerial
acts, respectively. Since the disputed cease and desist order is neither, the RTC should have
dismissed the petition outright for being an improper remedy.
We agree with the petitioners' assertion that the RTC erred when it gave due course to
GAMCA's petition for certiorari and prohibition, but we do so for different reasons.
1. Certiorari under Rules of Court and under the courts' expanded jurisdiction under Art VIII,
Section 1 of the Constitution, as recognized by jurisprudence.
A.1.a. The Current Certiorari Situation
The use of petitions for certiorari and prohibition under Rule 65 is a remedy that judiciaries
have used long before our Rules of Court existed.29 As footnoted below, these writs - now
recognized and regulated as remedies under Rule 65 of our Rules of Court - have been
characterized a "supervisory writs" used by superior courts to keep lower courts within the
confines of their granted jurisdictions, thereby ensuring orderliness in lower courts' rulings.
We confirmed this characterization in Madrigal Transport v. Lapanday Holdings Corporation,30
when we held that a writ is founded on the supervisory jurisdiction of appellate courts over
inferior courts, and is issued to keep the latter within the bounds of their jurisdiction. Thus, the
writ corrects only errors of jurisdiction of judicial and quasi-judicial bodies, and cannot be used
to correct errors of law or fact. For these mistakes of judgment, the appropriate remedy is an
appeal.31
This situation changed after 1987 when the new Constitution "expanded" the scope of judicial
power by providing that -
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government. (italics supplied)32
In Francisco v. The House of Representatives,33 we recognized that this expanded jurisdiction
was meant "to ensure the potency of the power of judicial review to curb grave abuse of
discretion by 'any branch or instrumentalities of government.'" Thus, the second paragraph of
Article VIII, Section 1 engraves, for the first time in its history, into black letter law the
"expanded certiorari jurisdiction" of this Court, whose nature and purpose had been provided in
the sponsorship speech of its proponent, former Chief Justice Constitutional Commissioner
Roberto Concepcion:
The first section starts with a sentence copied from former
Constitutions. It says:
The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.
I suppose nobody can question it.
The next provision is new in our constitutional law. I will read it first and explain.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government.
Fellow Members of this Commission, this is actually a product of our experience during martial
law. As a matter of fact, it has some antecedents in the past, but the role of the judiciary during
the deposed regime was marred considerably by the circumstance that in a number of cases
against the government, which then had no legal defense at all, the solicitor general set up the
defense of political question and got away with it. As a consequence, certain principles
concerning particularly the writ of habeas corpus, that is, the authority of courts to order the
release of political detainees, and other matters related to the operation and effect of martial
law failed because the government set up the defense of political question. And the Supreme
Court said: "Well, since it is political, we have no authority to pass upon it." The Committee on
the Judiciary feels that this was not a proper solution of the questions involved. It did not
merely request an encroachment upon the rights of the people, but it, in effect, encouraged
further violations thereof during the martial law regime. x x x
Briefly stated, courts of justice determine the limits of power of the agencies and offices of the
government as well as those of its officers. In other words, the judiciary is the final arbiter on
the question whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion
amounting to excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a
duty to pass judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters
constitute a political question.34 (italics in the original; emphasis and underscoring supplied)
Meanwhile that no specific procedural rule has been promulgated to enforce this "expanded"
constitutional definition of judicial power and because of the commonality of "grave abuse of
discretion" as a ground for review under Rule 65 and the courts expanded jurisdiction, the
Supreme Court based on its power to relax its rules35 allowed Rule 65 to be used as the
medium for petitions invoking the courts' expanded jurisdiction based on its power to relax its
Rules.36 This is however an ad hoc approach that does not fully consider the accompanying
implications, among them, that Rule 65 is an essentially distinct remedy that cannot simply be
bodily lifted for application under the judicial power's expanded mode. The terms of Rule 65,
too, are not fully aligned with what the Court's expanded jurisdiction signifies and requires.37
On the basis of almost thirty years' experience with the courts' expanded jurisdiction, the Court
should now fully recognize the attendant distinctions and should be aware that the continued
use of Rule 65 on an ad hoc basis as the operational remedy in implementing its expanded
jurisdiction may, in the longer term, result in problems of uneven, misguided, or even incorrect
application of the courts' expanded mandate.
The present case is a prime example of the misguided reading that may take place in
constitutional litigation: the procedural issues raised apparently spring from the lack of proper
understanding of what a petition for certiorari assails under the traditional and expanded
modes, and the impact of these distinctions in complying with the procedural requirements for
a valid petition.
2. The Basic Distinctions
A.2.a. Actual Case or Controversy
Basic in the exercise of judicial power whether under the traditional or in the expanded setting -
is the presence of an actual case or controversy. For a dispute to be justiciable, a legally
demandable and enforceable right must exist as basis, and must be shown to have been
violated.38
Whether a case actually exists depends on the pleaded allegations, as affected by the
elements of standing (translated in civil actions as the status of being a "real-party-in-interest,"
in criminal actions as "offended party" and in special proceedings as "interested
party"),39ripeness,40prematurity, and the moot and academic principle that likewise interact
with one another. These elements and their interactions are discussed m greater detail below.
The Court's expanded jurisdiction - itself an exercise of judicial power - does not do away with
the actual case or controversy requirement in presenting a constitutional issue, but effectively
simplifies this requirement by merely requiring a prima facie showing of grave abuse of
discretion in the assailed governmental act.
A.2.b. Actions Correctable by Certiorari
A basic feature of the expanded jurisdiction under the constitutional definition of judicial power,
is the authority and command for the courts to act on petitions involving the commission by any
branch or instrumentality of government of grave abuse of discretion amounting to lack or
excess of jurisdiction.
This command distinctly contrasts with the terms of Rule 65 which confines court certiorari
action solely to the review of judicial and quasi¬-judicial acts.41 These differing features create
very basic distinctions that must necessarily result in differences in the application of remedies.
While actions by lower courts do not pose a significant problem because they are necessarily
acting judicially when they adjudicate, a critical question comes up for the court acting on
certiorari petitions when governmental agencies are involved - under what capacity does the
agency act?
This is a critical question as the circumstances of the present case show. When the
government entity acts quasi-judicially, the petition for certiorari challenging the action falls
under Rule 65; in other instances, the petition must be filed based on the courts' expanded
jurisdiction.
A.2.c. Grave Abuse of Discretion
Another distinction, a seeming one as explained below, relates to the cited ground of a
certiorari petition under Rule 65 which speaks of lack or excess of jurisdiction or grave abuse
of discretion amounting to lack or excess of jurisdiction, as against the remedy under the
courts' expanded jurisdiction which expressly only mentions grave abuse of discretion
amounting to lack or excess of jurisdiction.
This distinction is apparently not legally significant when it is considered that action outside of
or in excess of the granted authority necessarily involves action with grave abuse of discretion:
no discretion is allowed in areas outside of an agency's granted authority so that any such
action would be a gravely abusive exercise of power. The constitutional grant of power, too,
pointedly addresses grave abuse of discretion when it amounts to lack or excess of
jurisdiction,42 thus establishing that the presence of jurisdiction is the critical element; failure to
comply with this requirement necessarily leads to the certiorari petition's immediate
dismissal.43
As an added observation on a point that our jurisprudence has not fully explored, the result of
the action by a governmental entity (e.g., a law or an executive order) can be distinguished
from the perspective of its legality as tested against the terms of the Constitution or of another
law (where subordinate action like an executive order is involved), vis-a-vis the legality of the
resulting action where grave abuse of discretion attended the governmental action or the
exercise of the governmental function.
In the former, the conclusion may be plain illegality or legal error that characterized the law or
exec order (as tested, for example, under the established rules of interpretation); no
consideration is made of how the governmental entity exercised its function. In the latter case,
on the other hand, it is the governmental entity's exercise of its function that is examined and
adjudged independently of the result, with impact on the legality of the result of the gravely
abusive action.
Where the dispute in a case relates to plain legal error, ordinary court action and traditional
mode are called for and this must be filed in the lower courts based on rules of jurisdiction
while observing the hierarchy of courts.
Where grave abuse of discretion is alleged to be involved, the expanded jurisdiction is brought
into play based on the express wording of the Constitution and constitutional implications may
be involved (such as grave abuse of discretion because of plain oppression or discrimination),
but this must likewise be filed with the lowest court of concurrent jurisdiction, unless the court
highest in the hierarchy grants exemption. Note that in the absence of express rules, it is only
the highest court, the Supreme Court, that can only grant exemptions.
From these perspectives, the use of grave abuse of discretion can spell the difference in
deciding whether a case filed directly with the Supreme Court has been properly filed.
A.2.d. Exhaustion of Available Remedies
A basic requirement under Rule 65 is that there be "no other plain, speedy and adequate
remedy found in law,"44 which requirement the expanded jurisdiction provision does not
expressly carry. Nevertheless, this requirement is not a significant distinction in using the
remedy of certiorari under the traditional and the expanded modes. The doctrine of exhaustion
of administrative remedies applies to a petition for certiorari, regardless of the act of the
administrative agency concerned, i.e., whether the act concerns a quasi-judicial, or quasi-
legislative function, or is purely regulatory.45
Consider in this regard that once an administrative agency has been empowered by Congress
to undertake a sovereign function, the agency should be allowed to perform its function to the
full extent that the law grants. This full extent covers the authority of superior officers in the
administrative agencies to correct the actions of subordinates, or for collegial bodies to
reconsider their own decisions on a motion for reconsideration. Premature judicial intervention
would interfere with this administrative mandate, leaving administrative action incomplete; if
59
allowed, such premature judicial action through a writ of certiorari, would be a usurpation that
violates the separation of powers principle that underlies our Constitution.46
In every case, remedies within the agency's administrative process must be exhausted before
external remedies can be applied. Thus, even if a governmental entity may have committed a
grave abuse of discretion, litigants should, as a rule, first ask reconsideration from the body
itself, or a review thereof before the agency concerned. This step ensures that by the time the
grave abuse of discretion issue reaches the court, the administrative agency concerned would
have fully exercised its jurisdiction and the court can focus its attention on the questions of law
presented before it.
Additionally, the failure to exhaust administrative remedies affects the ripeness to adjudicate
the constitutionality of a governmental act, which in turn affects the existence of the need for
an actual case or controversy for the courts to exercise their power of judicial review.47 The
need for ripeness - an aspect of the timing of a case or controversy does not change
regardless of whether the issue of constitutionality reaches the Court through the traditional
means, or through the Court's expanded jurisdiction. In fact, separately from ripeness, one
other concept pertaining to judicial review is intrinsically connected to it; the concept of a case
being moot and academic.48
Both these concepts relate to the timing of the presentation of a controversy before the Court
ripeness relates to its prematurity, while mootness relates to a belated or unnecessary
judgment on the issues. The Court cannot preempt the actions of the parties, and neither
should it (as a rule) render judgment after the issue has already been resolved by or through
external developments.
The importance of timing in the exercise of judicial review highlights and reinforces the need
for an actual case or controversy an act that may violate a party's right. Without any completed
action or a concrete threat of injury to the petitioning party, the act is not yet ripe for
adjudication. It is merely a hypothetical problem. The challenged act must have been
accomplished or performed by either branch or instrumentality of government before a court
may come into the picture, and the petitioner must allege the existence of an immediate or
threatened injury to itself as a result of the challenged action.
In these lights, a constitutional challenge, whether presented through the traditional route or
through the Court's expanded jurisdiction, requires compliance with the ripeness requirement.
In the case of administrative acts, ripeness manifests itself through compliance with the
doctrine of exhaustion of administrative remedies.
In like manner, an issue that was once ripe for resolution but whose resolution, since then, has
been rendered unnecessary, needs no resolution from the Court, as it presents no actual case
or controversy and likewise merely presents a hypothetical problem. In simpler terms, a case is
moot and academic when an event supervenes to render a judgment over the issues
unnecessary and superfluous.
Without the element of ripeness or a showing that the presented issue is moot and academic,
petitions challenging the constitutionality of a law or governmental act are vulnerable to
dismissal.
Not to be forgotten is that jurisprudence also prohibits litigants from immediately seeking
judicial relief without first exhausting the available administrative remedies for practical
reasons.49
From the perspective of practicality, immediate resort to the courts on issues that are within the
competence of administrative agencies to resolve, would unnecessarily clog the courts'
dockets. These issues, too, usually involve technical considerations that are within the
agency's specific competence and which, for the courts, would require additional time and
resources to study and consider.50 Of course, the Supreme Court cannot really avoid the
issues that a petition for certiorari, filed with the lower courts may present; the case may be
bound ultimately to reach the Court, albeit as an appeal from the rulings of the lower courts.
3. Situations Where a Petition for Certiorari May Be Used
There are two distinct situations where a writ of certiorari or prohibition may be sought. Each
situation carries requirements, peculiar to the nature of each situation, that lead to distinctions
that should be recognized in the use of certiorari under Rule 65 and under the courts'
expanded jurisdiction.
The two situations differ in the type of questions raised. The first is the constitutional situation
where the constitutionality of acts are questioned. The second is the non-constitutional
situation where acts amounting to grave abuse of discretion are challenged without raising
constitutional questions or violations.
The process of questioning the constitutionality of a governmental action provides a notable
area of comparison between the use of certiorari in the traditional and the expanded modes.
Under the traditional mode, plaintiffs question the constitutionality of a governmental action
through the cases they file before the lower courts; the defendants may likewise do so when
they interpose the defense of unconstitutionality of the law under which they are being sued. A
petition for declaratory relief may also be used to question the constitutionality or application of
a legislative (or quasi-legislative) act before the court.51
For quasi-judicial actions, on the other hand, certiorari is an available remedy, as acts or
exercise of functions that violate the Constitution are necessarily committed with grave abuse
of discretion for being acts undertaken outside the contemplation of the Constitution. Under
both remedies, the petitioners should comply with the traditional requirements of judicial
review, discussed below.52 In both cases, the decisions of these courts reach the Court
through an appeal by certiorari under Rule 45.
In contrast, existing Court rulings in the exercise of its expanded jurisdiction have allowed the
direct filing of petitions for certiorari and prohibition with the Court to question, for grave abuse
of discretion, actions or the exercise of a function that violate the Constitution.53 The
governmental action may be questioned regardless of whether it is quasi¬-judicial, quasi-
legislative, or administrative in nature. The Court's expanded jurisdiction does not do away with
the actual case or controversy requirement for presenting a constitutional issue, but effectively
simplifies this requirement by merely requiring a prima facie showing of grave abuse of
discretion in the exercise of the governmental act.54
To return to judicial review heretofore mentioned, in constitutional cases where the question of
constitutionality of a governmental action is raised, the judicial power the courts exercise is
likewise identified as the power of judicial review - the power to review the constitutionality of
the actions of other branches of government.55 As a rule, as required by the hierarchy of
courts principle, these cases are filed with the lowest court with jurisdiction over the matter.
The judicial review that the courts undertake requires:
1) there be an actual case or controversy calling for the exercise of judicial power;
(2) the person challenging the act must have "Standing" to challenge; he must have
a personal and substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement;
(3) the question of constitutionality must be raised at the earliest possible
opportunity; and
(4) the issue of constitutionality must be the very lis mota of the case.56
The lower court's decision under the constitutional situation reaches the Supreme Court
through the appeal process, interestingly, through a petition for review on certiorari under Rule
45 of the Rules of Court.
In the non-constitutional situation, the same requirements essentially apply, less the
requirements specific to the constitutional issues. In particular, there must be an actual case or
controversy and the compliance with requirements of standing, as affected by the hierarchy of
courts, exhaustion of remedies, ripeness, prematurity, and the moot and academic principles.
A.3.a. The "Standing" Requirement
Under both situations, the party bringing suit must have the necessary "standing." This means
that this party has, in its favor, the demandable and enforceable right or interest giving rise to a
justiciable controversy after the right is violated by the offending party.
The necessity of a person's standing to sue derives from the very definition of judicial power.
Judicial power includes the duty of the courts to settle actual controversies involving rights
which are legally demandable and enforceable. Necessarily, the person availing of a judicial
remedy must show that he possesses a legal interest or right to it, otherwise, the issue
presented would be purely hypothetical and academic. This concept has been translated into
the requirement to have "standing" in judicial review,57 or to be considered as a "real-party-in-
interest" in civil actions,58 as the "offended party" in criminal actions59 and the "interested
party" in special proceedings.60
While the Court follows these terms closely in both non-constitutional cases and constitutional
cases under the traditional mode, it has relaxed the rule in constitutional cases harrdled under
the expanded jurisdiction mode. in the latter case, a prima facie showing that the questioned
governmental act violated the Constitution, effectively disputably shows an injury to the
sovereign Filipino nation who approved the Constitution and endowed it with authority, such
that the challenged act may be questioned by any Philippine citizen before the Supreme
Court.61 In this manner, the "standing" requirement is relaxed compared with the standard of
personal stake or injury that the traditional petition requires.
The relaxation of the standing requirement has likewise been achieved through the application
of the "transcendental importance doctrine" under the traditional mode for constitutional
cases.62 (Under the traditional mode, "transcendental importance" not only relaxes the
standing requirement, but also allows immediate access to this Court, thus exempting the
petitioner from complying with the hierarchy of courts requirement.)63
More importantly perhaps, the prima facie showing of grave abuse of discretion in
constitutional cases also implies that the injury alleged is actual or imminent, and not merely
hypothetical.
Through this approach, the Court's attention is directed towards the existence of an actual
case or controversy - that is, whether the government indeed violated the Constitution to the
detriment of the Filipino people without the distractions of determining the existence of
transcendental importance indicators unrelated to the dispute and which do not at all
determine whether the Court properly exercises its power of judicial review.
Parenthetically, in the traditional mode, the determination of the transcendental importance of
the issue presented,64 aside from simply relaxing the standing requirement, may result in the
dilution of the actual case or controversy element because of the inextricable link between
standing and the existence of an actual case or controversy.
Consider, in this regard, that an actual case or controversy that calls for the exercise of judicial
power necessarily requires that the party presenting it possesses the standing to mount a
challenge to a governmental act. A case or controversy exists when there is an actual dispute
between parties over their legal rights, which remains in conflict at the time the dispute is
presented before the court.65 Standing, on the other hand, involves a personal and substantial
interest in the case because the petitioner has sustained, or will sustain, direct injury as a
result of the violation of its right.66
With the element of "standing" (or the petitioner's personal or substantial stake or interest in
the case) relaxed, the practical effect is to dilute the need to show that an immediate actual
dispute over legal rights did indeed take place and is now the subject of the action before the
court.67
In both the traditional and the expanded modes, this relaxation carries a ripple effect under
established jurisprudential rulings,68 affecting not only the actual case or controversy
requirement, but compliance with the doctrine of hierarchy of courts, discussed in greater detail
below.
A.3.b. The Hierarchy of Courts Principle
Another requirement that a certiorari petition carries, springs from the principle of "hierarchy of
courts" which recognizes the various levels of courts in the country as they are established
under the Constitution and by law, their ranking and effect of their rulings in relation with one
another, and how these different levels of court interact with one another.69 Since courts are
established and given their defined jurisdictions by law, the hierarchy of the different levels of
courts should leave very little opening for flexibility (and potential legal questions), but for the
fact that the law creates courts at different and defined levels but with concurrent jurisdictions.
The Constitution itself has partially determined the judicial hierarchy in the Philippine legal
system by designating the Supreme Court as the highest court with irreducible powers; its
rulings serve as precedents that other courts must follow70 because they form part of the law
of the land.71 As a rule, the Supreme Court is not a trial court and rules only on questions of
law, in contrast with the Court of Appeals and other intermediate courts72 which rule on both
questions of law and of fact. At the lowest level of courts are the municipal and the regional
trial courts which handle questions of fact and law at the first instance according to the
jurisdiction granted to them by law.
Petitions for certiorari and prohibition fall under the concurrent jurisdiction of the regional trial
courts and the higher courts, all the way up to the Supreme Court. As a general rule, under the
hierarchy of courts principle, the petition must be brought to the lowest court with
jurisdiction;73 the petition brought to the higher courts may be dismissed based on the
hierarchy principle. Cases, of course, may ultimately reach the Supreme Court through the
medium of an appeal.
The recognition of exceptions to the general rule is provided by the Supreme Court through
jurisprudence, i.e., through the cases that recognized the propriety of filing cases directly with
the Supreme Court. This is possible as the Supreme Court has the authority to relax the
application of its own rules.74
60
As observed above, this relaxation waters down other principles affecting the remedy of
certiorari. While the relaxation may result in greater and closer supervision by the Court over
the lower courts and quasi-judicial bodies under Rule 65, the effect may not always be salutary
in the long term when it is considered that this may affect the constitutional standards for the
exercise of judicial power, particularly the existence of an actual case or controversy.
The "transcendental importance" standard, in particular, is vague, open-ended and value-
laden, and should be limited in its use to exemptions from the application of the hierarchy of
courts principle. It should not carry any ripple effect on the constitutional requirement for the
presence of an actual case or controversy.
4. The petition for certiorari and prohibition against the DOH Letter was filed before the wrong
court.
In the present case, the act alleged to be unconstitutional refers to the cease and desist order
that the DOH issued against GAMCA's referral decking system. Its constitutionality was
questioned through a petition for certiorari and prohibition before the RTC. The case reached
this Court through a Rule 45 appeal by certiorari under the traditional route.
In using a petition for certiorari and prohibition to assail the DOH¬CDO letters, GAMCA
committed several procedural lapses that rendered its petition readily dismissible by the RTC.
Not only did the petitioner present a premature challenge against an administrative act; it also
committed the grave jurisdictional error of filing the petition before the wrong court.
A.4.a. The DOH CDO letters were issued in the exercise of the DOH's quasi¬-judicial
functions, and could be assailed through Rule 65 on certiorari and prohibition.
A cease and desist order is quasi-judicial in nature, as it applies a legislative policy to an
individual or group within the coverage of the law containing the policy.
The Court, in Municipal Council of Lemery, Batangas v. Provincial Board of Batangas,75
recognized the difficulty of d fining the precise demarcation line between what are judicial and
what are administrative or ministerial functions, as the exercise of judicial functions may
involve the performance of legislative or administrative duties, and the performance of
administrative or ministerial duties may, to some extent, involve the exercise of functions
judicial in character. Thus, the Court held that the nature of the act to be performed, rather
than of the office, board, or body which performs it, should determine whether or not an action
is in the discharge of a judicial or a quasi-judicial function.76
Generally, the exercise of judicial functions involves the determination of what the law is, and
what the legal rights of parties are under this law with respect to a matter in controversy.
Whenever an officer is clothed with this authority and undertakes to determine those
questions, he acts judicially.77
In the administrative realm, a government officer or body exercises a quasi-judicial function
when it hears and determines questions of fact to which the legislative policy is to apply, and
decide, based on the law's standards, matters relating to the enforcement and administration
of the law.78
The DOH CDO letter directed GAMCA to cease and desist from engaging in the referral
decking system practice within three days from receipt of the letter. By issuing this CDO letter
implementing Section 16 of RA No. 10022, the DOH (1) made the finding of fact that GAMCA
implements the referral decking system, and (2) applied Section 16 of RA No. 10022, to
conclude that GAMCA's practice is prohibited by law and should be stopped
From this perspective, the DOH acted in a quasi-judicial capacity: its CDO letter determined a
question of fact, and applied the legislative policy prohibiting the referral decking system
practice.
Notably, cease and desist orders have been described and treated as quasi-judicial acts in
past cases, and had even been described as similar to the remedy of injunction granted by the
courts.79
A.4.b. The petitions for certiorari and prohibition against the DOH CDO letters fall within the
jurisdiction of the Court of Appeals.
Since the CDO Letter was a quasi-judicial act, the manner by which GAMCA assailed it before
the courts of law had been erroneous; the RTC should not have entertained GAMCA's petition.
First, acts or omissions by quasi-judicial agencies, regardless of whether the remedy involves
a Rule 43 appeal or a Rule 65 petition for certiorari, is cognizable by the Court of Appeals. In
particular, Section 4, Rule 65 of the Rules of Court provides:
Section 4. When and where petition filed. The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall
be counted from notice of the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a
lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising
jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the
Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, unless otherwise provided by law or these Rules, the petition shall be
filed in and cognizable only by the Court of Appeals. (emphasis, italics, and underscoring
supplied)
Since the DOH is part of the Executive Department and has acted in its quasi-judicial capacity,
the petition challenging its CDO letter should have been filed before the Court of Appeals. The
RTC thus did not have jurisdiction over the subject matter of the petitions and erred in giving
due course to the petition for certiorari and prohibition against the DOH CDO letters. In
procedural terms, petitions for certiorari and prohibition against a government agency are
remedies avaiJable to assail its quasi-judicial acts, and should thus have been filed before the
CA.
The provision in Section 4, Rule 65 requiring that certiorari petitions challenging quasi-judicial
acts to be filed with the CA is in full accord with Section 9 of Batas Pambansa Blg. 12980 on
the same point. Section 9 provides:
Section 9. Jurisdiction.- The Court of Appeals shall exercise:
1. Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and
quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;
3. Exclusive appellate jurisdiction over all final judgments, resolutions, orders or awards of
Regional Trial Courts and quasi-¬judicial agencies, instrumentalities, boards or commission,
including the Securities and Exchange Commission, the Social Security Commission, the
Employees Compensation Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph 4 of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
(emphases, italics, and underscoring supplied)
Thus, by law and by Supreme Court Rules, the CA is the court with the exclusive original
jurisdiction to entertain petitions for certiorari and prohibition against quasi-judicial agencies. In
short, GAMCA filed its remedy with the wrong court.
A.4.c The petitions for certiorari and prohibition against the DOH CDO letters were premature
challenges - they failed to comply with the requirement that there be "no other plain, speedy
and adequate remedy" and with the doctrine of exhaustion of administrative remedies.
Second, the Regional Trial Court of Pasay City unduly disregarded the requirements that there
be "no other plain, speedy and adequate remedy at law" and the doctrine of exhaustion of
administrative remedies, when it gave due course to the certiorari and prohibition petition
against the DOH's CDO.
Under Chapter 8, Book IV of Executive Order (EO) No. 292,81 series of 1987, the DOH
Secretary "shall have supervision and control over the bureaus, offices, and agencies under
him"82 and "shall have authority over and responsibility for x x x operation" of the Department.
Section 1, Chapter 1, Title I, Book III of EO No. 292 in relation with Article VII, Sections 1 and
17 of the Constitution,83 on the other hand, provides that the "President shall have control of
all the executive departments, bureaus, and offices."
These provisions both signify that remedies internal to the Executive Branch exist before
resorting to judicial remedies: GAMCA could ask the DOH Secretary to reconsider or clarify its
letter-order, after which it could appeal, should the ruling be unfavorable, to the Office of the
President.
Significantly, this was what GAMCA did in the past when the DOH issued Memorandum Order
No. 2008-0210 that prohibited the referral decking system. GAMCA then asked for the DOH
Secretary's reconsideration, and subsequently appealed the DOH's unfavorable decision with
the Office of the President. The OP then reversed Memorandum Order No. 2008-0210 and
allowed the referral decking system to continue.
That GAMCA had earlier taken this course indicates that it was not unaware of the
administrative remedies available to it; it simply opted to disregard the doctrine of exhaustion
of administrative remedies and the requirement that there be no other plain, speedy, and
adequate remedy in law when it immediately filed its petition for certiorari with the RTC.
This blatant disregard of the Rule 65 requirements clearly places GAMCA's petition outside the
exceptions that we recognized in the past in relaxing strict compliance with the exhaustion of
administrative remedies requirement.
Jurisprudence84 shows that this Court never hesitated in the past in relaxing the application of
the rules of procedure to accommodate exceptional circumstances when their strict application
would result in injustice. These instances, founded as they are on equitable considerations, do
not include the undue disreiard of administrative remedies, particularly when they are readily
available.85
A.4.d. The petitions for certiorari and prohibition against the DOH CDO letters should have
been dismissed outright, as Rule 65 Petitions for Certiorari and Prohibition are extraordinary
remedies given due course only upon compliance with the formal and substantive
requirements.
Note, at this point, that Rule 65 petitions for certiorari and prohibition are discretionary writs,
and that the handling court possesses the authority to dismiss them outright for failure to
comply with the form and substance requirements. Section 6, Rule 65 of the Rules of Court in
this regard provides:
Section 6. Order to comment. - If the petition is sufficient in form and substance to justify suclr
process, the court shall issue an order requiring the respondent or respondents to comment on
the petition within ten (10) days from receipt of a copy thereof. Such order shall be served on
the respondents in such manner as the court may direct together with a copy of the petition
and any annexes thereto. (emphasis, italics, and underscoring supplied)
Thus, even before requiring the DOH to comment, the RTC could have assessed the petition
for certiorari and prohibition for its compliance with the Rule 65 requirements. At that point, the
petition for certiorari and prohibition should have been dismissed outright, for failing to comply
with Section 1 and Section 4 of Rule 65. When the court instead took cognizance of the
petition, it acted on a matter outside its jurisdiction.
Consequently, the RTC's resulting judgment is void and carries no legal effect. The decision
exempting GAMCA from the application of the referral decking system should equally have no
legal effect.
Noncompliance with the Section 1, Rule 65 requirement that there be no other plain, speedy,
and adequate remedy in law, on the other hand, is more than just a pro-forma requirement in
the present case. Since the petitions for certiorari and prohibition challenge a governmental act
- i.e. action under the DOH CDO letters, as well as the validity of the instruments under which
these letters were issued - compliance with Section 1, Rule 65 and the doctrine of exhaustion
of administrative remedies that judicial review requires is also mandatory. To recall a previous
discussion, the exhaustion of administrative remedies is also an aspect of ripeness in deciding
a constitutional issue.
Thus, GAMCA's disregard of the Rules of Court not only renders the petition dismissible for
failure to first exhaust administrative remedies; the constitutional issues GAMCA posed before
the RTC were not also ripe for adjudication.
5. The Regional Trial Court erred in finding grave abuse of discretion on the part of the DOH's
issuance of the DOH CDO letters.
On the merits, we find that the RTC of Pasay reversibly erred in law when it held that the DOH
acted with grave abuse of discretion m prohibiting GAMCA from implementing the referral
decking system.
In exempting GAMCA from the referral decking system that RA No. 10022 prohibits, the RTC
of Pasay City noted that the regulation per se was not unconstitutional, but its application to
GAMCA would violate the principle of sovereign equality and independence.
While we agree with the RTC's ultimate conclusion upholding the constitutionality of the
prohibition against the referral decking system under RA No. 10022, our agreement proceeds
from another reason; we disagree that the prohibition does not apply to GAMCA and with the
consequent ruling nullifying the DOH's CDO Letter.
A.5.a. The prohibition against the referral decking system under Section 16, RA No. 10022, is
a valid exercise of police power.
61
In its comment, GAMCA asserts that implementing the prohibition against the referral decking
system would amount to an undue taking of property that violates Article II, Section 2 of the
1987 Constitution.
It submits that the Securities and Exchange Commission had in fact approved its Articles of
Incorporation and Bylaws that embody the referral decking system; thus, the DOH cannot
validly prohibit the implementation of this system.
GAMCA further claims that its members made substantial investments to upgrade their
facilities and equipment. From this perspective, the August 23, 2010 order constitutes taking of
property without due process of law as its implementation would deprive GAMCA members of
their property.
AMCOW responded to these claims with the argument that the DOH CDO letters implementing
RA No. 10022 are consistent with the State's exercise of the police power to prescribe
regulations to promote the health, safety, and general welfare of the people. Public interest
justifies the State's interference in health matters, since the welfare of migrant workers is a
legitimate public concern. The DOH thus merely performed its duty of upholding the migrant
workers' freedom to consult their chosen clinics for the conduct of health examinations.
We agree with AMCOW.
The State's police power86 is vast and plenary87 and the operation of a business,88
especially one that is imbued with public interest (such as healthcare services),89 falls within
the scope of governmental exercise of police power through regulation.
As defined, police power includes (1) the imposition of restraint on liberty or property, (2) in
order to foster the common good.90 The exercise of police power involves the "state authority
to enact legislation that may interfere with personal liberty or property in order to promote the
general welfare."91
By its very nature, the exercise of the State's police power limits individual rights and liberties,
and subjects them to the "far more overriding demands and requirements of the greater
number."92 Though vast and plenary, this State power also carries limitations, specifically, it
may not be exercised arbitrarily or unreasonably. Otherwise, it defeats the purpose for which it
is exercised, that is, the advancement of the public good.93
To be considered reasonable, the government's exercise of police power must satisfy the
"valid object and valid means" method of analysis: first, the interest of the public generally, as
distinguished from those of a particular class, requires interference; and second, the means
employed are reasonably necessary to attain the objective sought and not unduly oppressive
upon individuals.94
These two elements of reasonableness are undeniably present in Section 16 of RA No. 10022.
The prohibition against the referral decking system is consistent with the State's exercise of the
police power to prescribe regulations to promote the health, safety, and general welfare of the
people. Public interest demands State interference on health matters, since the welfare of
migrant workers is a legitimate public concern.
We note that RA No. 10022 expressly reflects the declared State policies to "uphold the dignity
of its citizens whether in the country or overseas, in general, and Filipino migrant workers," and
to "afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all. Towards this end, the State
shall provide adequate and timely social, economic and legal services to Filipino migrant
workers." The prohibition against the referral decking system in Section 16 of RA No. 10022 is
an expression and implementation of these state policies.
The guarantee under Section 16 for OFWs to be given the option to choose a quality
healthcare service provider as expressed in Section 16 (c)95 of RA No. 10022 is guaranteed
by the prohibition against the decking practice and against monopoly practices in OFW health
examinations.96
Section 16 likewise requires employers to accept health examinations from any DOH-
accredited health facility; a refusal could lead to their temporary disqualification under pertinent
rules to be formulated by the Philippine Overseas Employment Authority (POEA).97
These rules are part of the larger legal framework to ensure the Overseas Filipino Workers'
(OFW) access to quality healthcare services, and to curb existing practices that limit their
choices to specific clinics and facilities.
Separately from the Section 16 prohibition against the referral decking system, RA No. 10022
also prohibits and penalizes the imposition of a compulsory exclusive arrangement requiring
OFWs to undergo health examinations only from specifically designated medical clinics,
institutions, entities or persons. Section 5, in relation to Section 6 of RA No. 10022, penalizes
compulsory, exclusive arrangements98 by imprisonment and fine and by the automatic
revocation of the participating medical clinic's license.
The DOH's role under this framework is to regulate the activities and operations of all clinics
conducting health examinations on Filipino migrant workers as a requirement for their
overseas employment. The DOH is tasked to ensure that:
(c.3) No group or groups of medical clinics shall have a monopoly of exclusively conducting
health examinations on migrant workers for certain receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-
accredited or DOH-operated clinics that will conduct his/her health examinations and that his
or her rights as a patient are respected. The decking practice, which requires an overseas
Filipino worker to go first to an office for registration and then farmed out to a medical clinic
located elsewhere, shall not be allowed;99
While Section 16 of RA No. 10022 does not specifically define the consequences of violating
the prohibition against the referral decking system, Republic Act No. 4226 (Hospital Licensure
Act), which governs the licensure and regulation of hospitals and health facilities, authorizes
the DOH to suspend, revoke, or refuse to renew the license of hospitals and clinics violating
the law.100
These consequences cannot but apply to the violation of the prohibition against the referral
decking system under RA No. 10022. If, under the law, the DOH can suspend, revoke, or
refuse to renew the license of these hospitals upon the finding that they violated any provision
of law (whether those found in RA No. 4226 or in RA No. 10022), it follows- as a necessarily
included lesser power - that the DOH can likewise order these clinics and their association to
cease and desist from practices that the law deems to be undesirable.
A.5.b. The DOH did not gravely abuse its discretion in issuing the assailed DOH CDO letters.
As discussed above, the letter-order implementing the prohibition against the referral decking
system is quasi-judicial in nature. This characteristic requires that procedural due process be
observed - that is, that the clinics concerned be given the opportunity to be heard before the
standard found in the law can be applied to them.
Thus, prior to the issuance of the disputed CDO letter, the DOH should have given GAMCA
the opportunity to be heard on whether the prohibition applies to it. Lest this opportunity to be
heard be misunderstood, this DOH obligation raises an issue different from the question of
whether Congress can, under the exercise of police power, prohibit the referral decking
system; this latter issue lies outside the scope of the DOH to pass upon. The required hearing
before the DOH relates solely to whether it properly implemented, based on the given
standards under the law, the prohibition that Congress decreed under RA No. 10022.
Under normal circumstances, the issuance of a CDO without a prior hearing would violate
GAMCA's procedural due process rights, and would amount to more than a legal error, i.e., an
error equivalent to action without jurisdiction. Rendering a decision quasi-judicial in nature
without providing the opportunity to be heard amounts to a grave abuse of discretion that
divests a quasi-judicial agency of its jurisdiction.
Factual circumstances unique to the present case, however, lead us to conclude that while it
was an error of law for the DOH to issue a CDO without complying with the requirements of
procedural due process, its action did not amount to a grave abuse of discretion.
Grave abuse of discretion amounts to more than an error of law; it refers to an act that is so
capricious, arbitrary, and whimsical that it amounts to a clear evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, as where the power is exercised in an
arbitrary and despotic manner because of passion or hostility.101
Prior to the issuance of its CDO Letter, the DOH had more than sufficient basis to determine
that GAMCA practices the prohibited referral decking system under RA No. 10022. Notably,
the DOH had earlier allowed and recognized the referral decking system that GAMCA
practiced through AO 5-01. This recognition was made with GAMCA's practice in mind. The
subsequent administrative orders and department memorandum suspending and terminating
the referral decking system, respectively, all pertain to the practice that the DOH had
authorized under AO 5-01. Even the subject matter of these issuances do not just pertain to
any other referral decking system, but to the "GAMCA referral decking system."
GAMCA likewise had more than several opportunities to contest the suspension and eventual
revocation of the referral decking system initially pe1mitted under AO 5-01. Its appeal even
reached the Office of the President, which overturned the DOH Memorandum Order
terminating the referral decking system.
That the referral decking system had been subsequently prohibited by law shows the intent of
Congress to prevent and prohibit the practice that GAMCA initiated and which the President
had allowed. The President's duty under our political system is to implement the law; hence,
when Congress subsequently prohibited the practice that GAMCA initiated, the Executive -
including the President -has no choice but to implement it.
Based on these circumstances, while the DOH erred when it issued its CDO letters without first
giving GAMCA the opportunity to prove whether the practice conducted by GAMCA is the
same practice prohibited under RA No. 10022, the DOH conclusion to so act, in our view, did
not constitute grave abuse of discretion that would have divested it of jurisdiction.
We note that the DOH had sufficient basis when it determined that the referral decking system
prohibited under RA No. 10022 was the same decking system practiced by GAMCA. To
reiterate, the referral decking system was not something new; it was an old system that
GAMCA practiced and was known to all in its scope and operating details. That GAMCA had
previously questioned the DOH prohibition and had been given ample opportunity to be heard
when it filed an appeal before the OP, negate the conclusion that GAMCA had been aggrieved
by precipitate and unfair DOH action.
To be sure, these factual circumstances do not make the CDO letter compliant with procedural
due process. They mitigate, however, the error committed and render it less than the
capricious, arbitrary, and patent refusal to comply with a positive legal duty that characterizes
an act committed with grave abuse of discretion.
The Court furthermore, in several instances,102 has recognized that an administrative agency
may issue an ex parte cease and desist order, where vital public interests outweigh the need
for procedural due process." In these instances, the Court noted that the affected
establishment may contest the ex parte order, upon which the administrative agency
concerned must conduct a hearing and allow the establishment to be heard. While
jurisprudence has so far used the "vital public interests" standard to pollution cases, it had not
been a grave abuse of discretion on the part of the DOH to consider that GAMCA's referral
decking practice falls within this category. The DOH has long made the factual finding that the
referral decking system hinders our Filipino seafarers' access to quality and affordable
healthcare in its A.O. No. 106, series of 2002.
These circumstances further mitigate whatever legal error the DOH has committed and render
the conclusion that grave abuse of discretion had taken place misplaced.
Since the writs of certiorari and prohibition do not issue against legal errors, but to acts of
grave abuse of discretion, the RTC erred in issuing these writs against the DOH CDO letters.
6. The prohibition against the referral decking system against GAMCA does not violate the
principle of sovereign equality and independence.
The RTC based its decision to grant the writs of certiorari and prohibition against the DOH
letter-order on the principle of sovereign equality and independence; applying the referral
decking system prohibition against GAMCA violates this principle.
The RTC reasoned out that the prohibition against the referral decking system under Section
16 of RA No. 10022 must be interpreted to apply only to clinics conducting health examinations
on migrant workers bound for countries that do not require the referral decking system for the
issuance of visas to job applicants.
The RTC observed, too, that the refer al decking system is part of the application procedure in
obtaining visas to enter the GCC States, a procedure made in the exercise of the sovereign
power of the GCC States to protect their nationals from health hazards, and of their diplomatic
power to regulate and screen entrants to their territories.
It also reasoned out that under the principle of sovereign equality and independence of States,
the Philippines cannot interfere with this system and in fact must respect the visa-granting
procedures of foreign states in the same way that they respect our immigration procedures.
Moreover, to restrain GAMCA which is a mere adjunct of HMC (an agent of GCC States) is to
restrain the GCC States themselves.
AMCOW contests the RTC's conclusion, arguing that the principles of sovereign equality and
independence of States do not apply to the present case. According to AMCOW, the subject
matter of this case pertains to a domestic concern as the law and the regulations that GAMCA
assails relate to the operation of medical clinics in the Philippines.
It points out that the Philippines gave GAMCA and its members the privilege of conducting
their businesses domestically; hence, their operations are governed by Philippine laws,
specifically by RA No. 10022 which serves as one of the limitations on the privilege granted to
62
them. GAMCA's right to engage in business should yield to the State's exercise of police WHEREFORE, in the light of these considerations, we hereby GRANT the petitions.
power. In legal contemplation, therefore, the DOH CDO letters did not prejudice GAMCA's right Accordingly, we REVERSE and SET ASIDE the orders dated August 10, 2012 and April 12,
to engage in business; nor did they hamper the GAMCA members' business operations. 2013 of the Regional Trial Court of Pasay City, Branch 108, in Sp. Civil Action No. R-PSY-10-
04391-CV.

AMCOW further insists that the August 23, 2010 and November 2, 2010 orders are consistent
with the State's exercise of the police power to prescribe regulations to promote the health, Costs against respondent GAMCA.
safety, and general welfare of the people. Public interest demands State interference on health
matters, since the welfare of migrant workers is a legitimate public concern. The DOH thus
merely performed its duty of upholding the migrant workers' freedom to choose any of its SO ORDERED.
accredited or operated clinics that will conduct health examinations.

The DOH, for its part, adds that the implementation of RA No. 10022 cannot be defeated by
agreements entered into by GAMCA with the GCC States. The GCC States, the DOH points
out, are not empowered to determine the Philippines' courses of action with respect to the
operation, within Philippine territory, of medical clinics; the conduct of health examinations; and
the freedom of choice of Filipino migrant workers.

GAMCA responds to these arguments by asserting that the referral decking system is a part of
the application procedure for obtaining visas to enter the GCC States. Hence, it is an exercise
of the sovereign power of the GCC States to protect their nationals from health hazards, and
their diplomatic power to regulate and screen entrants to their territories. To restrain an agent
of the GCC States under the control and acting in accordance with the direction of these GCC
States, restrains the GCC States.

GAMCA also points out that the OFWs would suffer grave and irreparable damage and injury if
the DOH CDO letters would be implemented as the GCC States would not issue working visas
without the GAMCA seal attesting that the OFWs had been medically examined by GAMCA
member clinics.

After considering all these arguments, we find that the RTC's decision misapplied the principle
of sovereign independence and equality to the present case. While the principles of sovereign
independence and equality have been recognized in Philippine jurisprudence, our recogmtmn
of this principle does not extend to the exemption of States and their affiliates from compliance
with Philippine regulatory laws.

A.6. The principle of sovereign equality and independence of states does not exempt
GAMCAfrom the referral decking system prohibition under RA No. 10022.

In Republic of Indonesia v. Vinzon,103 we recognized the principle of sovereign independence

and equality as part of the law of the land. We used this principle to justify the recognition of
the principle of sovereign immunity which exempts the State - both our Government and
foreign governments - from suit. We held:

International law is founded largely upon the principles of reciprocity, comity, independence,
and equality of States which were adopted as part of the law of our land under Article II,
Section 2 of the 1987 Constitution. The rule that a State may not be sued without its consent is
a necessary consequence of the principles of independence and equality of States. As
enunciated in Sanders v. Veridiano II, the practical justification for the doctrine of sovereign
immunity is that there can be no legal right against the authority that makes the law on which
the right depends. In the case of foreign States, the rule is derived from the principle of the
sovereign equality of States, as expressed in the maxim par in parem non habet imperium. All
states are sovereign equals and cannot assert jurisdiction over one another. A contrary attitude
would "unduly vex the peace of nations."

Our recognition of sovereign immunity, however, has never been unqualified. While we
recognized the principles of independence and equality of States to justify a State's sovereign
immunity from suit, we also restricted state immunity to acts jus imperii, or public acts. We said
that once a State enters into commercial transactions (jus gestionis), then it descends to the
level of a private individual, and is thus not immune from the resulting liability and
consequences of its actions.104

By this recognition, we acknowledge that a foreign government acting in its jus imperii function
cannot be held liable in a Philippine court. Philippine courts, as part of the Philippine
government, cannot and should not take jurisdiction over cases involving the public acts of a
foreign government. Taking jurisdiction would amount to authority over a foreign government,
and would thus violate the principle of sovereign independence and equality.105

This recognition is altogether different from exempting governments whose agents are in the
Philippines from complying with our domestic laws.106 We have yet to declare in a case that
the principle of sovereign independence and equality exempts agents of foreign governments
from compliance with the application of Philippine domestic law.

In the present case, GAMCA has not adduced any evidence in the court below, nor has it
presented any argument before us showing that the principle of sovereign equality and
independence has developed into an international custom shielding state agents from
compliance with another state's domestic laws. Under this situation, the Court is in no position
to determine whether the practice that GAMCA alleges has indeed crystallized into an
international custom.

GAMCA has never proven in this case, too, that the GCC has extended its sovereign immunity
to GAMCA. Sovereign immunity belongs to the State, and it must first be extended to its
agents before the latter may be considered to possess sovereign immunity.

Significantly, the Court has even adopted a restrictive approach in recognizing state immunity,
by distinguishing between a State's jus imperii and jus gestionis. It is only when a State acts in
its jus imperii function that we recognize state immunity.107

We point out furthermore that the prohibition against the referral decking system applies to
hospitals and clinics, as well as to OFW employers, and does not seek to interfere with the
GCC's visa requirement processes. RA 10022 prohibits hospitals and clinics in the Philippines
from practicing the referral decking system, and employers from requiring OFWs to procure
their medical examinations from hospitals and clinics practicing the referral decking system.

The regulation applies to Philippine hospitals and clinics, as well as to employers of OFWs. It
does not apply to the GCCs and their visa processes. That the regulation could affect the
OFWs' compliance with the visa requirements imposed by GCCs does not place it outside the
regulatory powers of the Philippine government.

In the same manner, GCC states continue to possess the prerogative to apply their visa
requirements to any foreign national, including our OFWs, who seeks to enter their territory;
they may refuse to grant them entry for failure to comply with the referral decking system, or
they may adjust to the prohibition against the referral decking system that we have imposed.
These prerogatives lie with the GCC member-states and do not affect at all the legality of the
prohibition against the referral decking system.

Lastly, the effect of the prohibition against the referral decking system is beyond the authority
of this Court to consider. The wisdom of this prohibition has been decided by Congress,
through the enactment of RA No. 10022. Our role in this case is merely to determine whether
our government has the authority to enact the law's prohibition against the referral decking
system, and whether this prohibition is being implemented legally. Beyond these lies the realm
of policy that, under our Constitution's separation of powers, this Court cannot cross.

63
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162053 March 7, 2007
ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND
MARIBEL S. SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL
CENTER, INC., Respondents.
DECISION
AZCUNA, J.:
Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA)
dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision 2 dated August 23,
2002 rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-
00.
The antecedent facts are as follows:
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of
private respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a
graduate of Associate in Radiologic Technology from The Family Clinic Incorporated School of
Radiologic Technology.
On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the
"Radiologic Technology Act of 1992." Said law requires that no person shall practice or offer to
practice as a radiology and/or x-ray technologist in the Philippines without having obtained the
proper certificate of registration from the Board of Radiologic Technology.
On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director
of private respondent SLMC issued a final notice to all practitioners of Radiologic Technology
to comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise,
the unlicensed employee will be transferred to an area which does not require a license to
practice if a slot is available.
On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner
Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and
passing the forthcoming examination scheduled in June 1997; otherwise, private respondent
SLMC may be compelled to retire her from employment should there be no other position
available where she may be absorbed.
On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services
issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC
Registration form/Examination Permit per Memorandum dated March 4, 1997.
On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC and that the latter is
giving her the last chance to take and pass the forthcoming board examination scheduled in
June 1998; otherwise, private respondent SLMC shall be constrained to take action which may
include her separation from employment.
On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner
Maribel S. Santos informing the latter that the management of private respondent SLMC has
approved her retirement in lieu of separation pay.
On November 26, 1998, the Personnel Manager of private respondent SLMC issued a "Notice
of Separation from the Company" to petitioner Maribel S. Santos effective December 30, 1998
in view of the latter's refusal to accept private respondent SLMC's offer for early retirement.
The notice also states that while said private respondent exerted its efforts to transfer
petitioner Maribel S. Santos to other position/s, her qualifications do not fit with any of the
present vacant positions in the hospital.
In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of
private respondent SLMC, requesting the latter to give "due consideration" to the
organization's three (3) regular members of his organization (petitioner Maribel S. Santos
included) "for not passing yet the Board of Examination for X-ray Technology," "by giving them
an assignment in any department of your hospital awaiting their chance to pass the future
Board Exam."
On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a
"Notice of Separation from the Company" to petitioner Maribel S. Santos effective February 5,
1999 after the latter failed to present/ submit her appeal for rechecking to the Professional
Regulation Commission (PRC) of the recent board examination which she took and failed.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent
SLMC for illegal dismissal and non-payment of salaries, allowances and other monetary
benefits. She likewise prayed for the award of moral and exemplary damages plus attorney's
fees.
In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal
Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human
Resources Director of private respondent SLMC, requested the latter to accommodate
petitioner Maribel S. Santos and assign her to the vacant position of CSS Aide in the hospital
arising from the death of an employee more than two (2) months earlier.
In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:
Gentlemen:
Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant
regular position of a CSS Aide in Ms. Maribel Santos' behalf.
The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially
on minimum requirements of the job and the need to meet said requirements, as well as other
pre-employment requirements, in order to be considered for the vacant position. As a matter of
fact, Ms. Santos is welcome to apply for any vacant position on the condition that she
possesses the necessary qualifications.
As to the consensus referred to in your letter, may I correct you that the agreement is,
regardless of the vacant position Ms. Santos decides to apply, she must go through the usual
application procedures. The formal letter, I am afraid, will not suffice for purposes of
recruitment processing. As you know, the managers requesting to fill any vacancy has a say
on the matter and correctly so. The manager's inputs are necessarily factored into the standard
recruitment procedures. Hence, the need to undergo the prescribed steps.
Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer while she
was employed with SLMC given the prescribed period. She was given 30 days from issuance
of the notice of termination to look for appropriate openings which incidentally she wittingly
declined to utilize. She did this knowing fully well that the consequences would be that her
application beyond the 30-day period or after the effective date of her termination from SLMC
would be considered a re-application with loss of seniority and shall be subjected to the
pertinent application procedures.
Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos
at the time successfully managed to get herself transferred to E.R. because she opted to apply
for the appropriate vacant position and qualified for it within the prescribed 30-day period. The
other X-ray Technologist, on the other hand, as you may recall, was eventually terminated not
just for his failure to comply with the licensure requirement of the law but for cause (refusal to
serve a customer).
Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the
opportunity given her, or assuming she was not qualified for any vacant position even if she
tried to look for one within the prescribed period, I simply cannot understand why she also
refused the separation pay offered by Management in an amount beyond the minimum
required by law only to re-apply at SLMC, which option would be available to her anyway even
(if she) chose to accept the separation pay!
Well, here's hoping that our Union can timely influence our employees to choose their options
well as it has in the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of
private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:
Dear Mr. Calderon:
This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms.
Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms regarding
the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the position of
Secretary at the Dietary Department. In that meeting, Ms. Santos replied that she would think
about the offer. To date, we still have no definite reply from her. Again, during the conference
held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos, and inform us of her reply
by Dec. 21, 1999. Again we failed to hear her reply through him.
Please be informed that said position is in need of immediate staffing. The Dietary Department
has already been experiencing serious backlog of work due to the said vacancy. Please note
that more than 2 months has passed since Ms. Marasigan offered this compromise.
Management cannot afford to wait for her decision while the operation of the said department
suffers from vacancy.
Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If
we fail to hear from her or from you as her representatives by that time, we will consider it as a
waiver and we will be forced to offer the position to other applicants so as not to jeopardize the
Dietary Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out with a Decision ordering private
respondent SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen
Thousand Five Hundred Pesos (₱115,500.00) representing her separation pay. All other
claims of petitioner were dismissed for lack of merit.
Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent
NLRC.
On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision
of the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its
Resolution promulgated on December 27, 2002.
Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned,
affirmed the decision of the NLRC.
Hence, this petition raising the following issues:
I. Whether the CA overlooked certain material facts and circumstances on petitioners' legal
claim in relation to the complaint for illegal dismissal.
II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity
the issues on the merit of petitioner's constitutional right of security of tenure. 3
For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its
comment4 that: 1) the petition should be dismissed for failure of petitioners to file a motion for
reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the NLRC
and the Labor Arbiter's ruling that petitioner was legally dismissed; 3) petitioner was legally and
validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private
respondent's decision to terminate petitioner Santos was made in good faith and was not the
result of unfair discrimination; and 5) petitioner Santos' non-transfer to another position in the
SLMC was a valid exercise of management prerogative.
The petition lacks merit.
Generally, the Court has always accorded respect and finality to the findings of fact of the CA
particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by
substantial evidence.5 True this rule admits of certain exceptions as, for example, when the
judgment is based on a misapprehension of facts, or the findings of fact are not supported by
the evidence on record6 or are so glaringly erroneous as to constitute grave abuse of
discretion.7 None of these exceptions, however, has been convincingly shown by petitioners to
apply in the present case. Hence, the Court sees no reason to disturb such findings of fact of
the CA.
Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally
dismissed by private respondent SLMC on the basis of her inability to secure a certificate of
registration from the Board of Radiologic Technology.
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The requirement for a certificate of registration is set forth under R.A. No. 7431 8 thus:

Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. -
Unless exempt from the examinations under Sections 16 and 17 hereof, no person shall
practice or offer to practice as a radiologic and/or x-ray technologist in the Philippines without
having obtained the proper certificate of registration from the Board.

It is significant to note that petitioners expressly concede that the sole cause for petitioner
Santos' separation from work is her failure to pass the board licensure exam for X-ray
technicians, a precondition for obtaining the certificate of registration from the Board. It is
argued, though, that petitioner Santos' failure to comply with the certification requirement did
not constitute just cause for termination as it violated her constitutional right to security of
tenure. This contention is untenable.

While the right of workers to security of tenure is guaranteed by the Constitution, its exercise
may be reasonably regulated pursuant to the police power of the State to safeguard health,
morals, peace, education, order, safety, and the general welfare of the people. Consequently,
persons who desire to engage in the learned professions requiring scientific or technical
knowledge may be required to take an examination as a prerequisite to engaging in their
chosen careers.9 The most concrete example of this would be in the field of medicine, the
practice of which in all its branches has been closely regulated by the State. It has long been
recognized that the regulation of this field is a reasonable method of protecting the health and
safety of the public to protect the public from the potentially deadly effects of incompetence
and ignorance among those who would practice medicine. 10 The same rationale applies in the
regulation of the practice of radiologic and x-ray technology. The clear and unmistakable
intention of the legislature in prescribing guidelines for persons seeking to practice in this field
is embodied in Section 2 of the law:

Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed
by radiation as well as to ensure safe and proper diagnosis, treatment and research through
the application of machines and/or equipment using radiation. 11

In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its
decision dated August 23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's
inherent police power. It should be noted that the police power embraces the power to
prescribe regulations to promote the health, morals, educations, good order, safety or general
welfare of the people. The state is justified in prescribing the specific requirements for x-ray
technicians and/or any other professions connected with the health and safety of its citizens.
Respondent-appellee being engaged in the hospital and health care business, is a proper
subject of the cited law; thus, having in mind the legal requirements of these laws, the latter
cannot close its eyes and [let] complainant-appellant's private interest override public interest.

Indeed, complainant-appellant cannot insist on her "sterling work performance without any
derogatory record" to make her qualify as an x-ray technician in the absence of a proper
certificate of Registration from the Board of Radiologic Technology which can only be obtained
by passing the required examination. The law is clear that the Certificate of Registration cannot
be substituted by any other requirement to allow a person to practice as a Radiologic
Technologist and/or X-ray Technologist (Technician).12

No malice or ill-will can be imputed upon private respondent as the separation of petitioner
Santos was undertaken by it conformably to an existing statute. It is undeniable that her
continued employment without the required Board certification exposed the hospital to possible
sanctions and even to a revocation of its license to operate. Certainly, private respondent
could not be expected to retain petitioner Santos despite the inimical threat posed by the latter
to its business. This notwithstanding, the records bear out the fact that petitioner Santos was
given ample opportunity to qualify for the position and was sufficiently warned that her failure
to do so would result in her separation from work in the event there were no other vacant
positions to which she could be transferred. Despite these warnings, petitioner Santos was still
unable to comply and pass the required exam. To reiterate, the requirement for Board
certification was set by statute. Justice, fairness and due process demand that an employer
should not be penalized for situations where it had no participation or control. 13

It would be unreasonable to compel private respondent to wait until its license is cancelled and
it is materially injured before removing the cause of the impending evil. Neither can the courts
step in to force private respondent to reassign or transfer petitioner Santos under these
circumstances. Petitioner Santos is not in the position to demand that she be given a different
work assignment when what necessitated her transfer in the first place was her own fault or
failing. The prerogative to determine the place or station where an employee is best qualified
to serve the interests of the company on the basis of the his or her qualifications, training and
performance belongs solely to the employer. 14 The Labor Code and its implementing Rules do
not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts)
managerial authority.15

While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play. 16 Labor laws, to be sure, do not authorize
interference with the employer's judgment in the conduct of the latter's business. Private
respondent is free to determine, using its own discretion and business judgment, all elements
of employment, "from hiring to firing" except in cases of unlawful discrimination or those which
may be provided by law. None of these exceptions is present in the instant case.

The fact that another employee, who likewise failed to pass the required exam, was allowed by
private respondent to apply for and transfer to another position with the hospital does not
constitute unlawful discrimination. This was a valid exercise of management prerogative,
petitioners not having alleged nor proven that the reassigned employee did not qualify for the
position where she was transferred. In the past, the Court has ruled that an objection founded
on the ground that one has better credentials over the appointee is frowned upon so long as
the latter possesses the minimum qualifications for the position. 17 Furthermore, the records
show that Ms. Santos did not even seriously apply for another position in the company.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

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