Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R No. 187167               August 16, 2011

PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF.

HARRY C. ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW
STUDENTS, ALITHEA BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY ALTEZ,
FRANCIS ALVIN ASILO, SHERYL BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA,
ROMINA BERNARDO, VALERIE PAGASA BUENAVENTURA, EDAN MARRI CAÑETE, VANN
ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY DUMAN, SHARON ESCOTO, RODRIGO
FAJARDO III, GIRLIE FERRER, RAOULLE OSEN FERRER, CARLA REGINA GREPO, ANNA
MARIE CECILIA GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA LUISA MANALAYSAY,
MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA, WILLIAM
RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES MARK TERRY RIDON,
JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE ROA, NICHOLAS
SANTIZO, MELISSA CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA ANNE TORNO,
MARIA ESTER VANGUARDIA, and MARCELINO VELOSO III, Petitioners,
vs.
HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO
ROMULO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS,
HON. ROLANDO ANDAYA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF
BUDGET AND MANAGEMENT, HON. DIONY VENTURA, IN HIS CAPACITY AS
ADMINISTRATOR OF THE NATIONAL MAPPING & RESOURCE INFORMATION AUTHORITY,
and HON. HILARIO DAVIDE, JR., IN HIS CAPACITY AS REPRESENTATIVE OF THE
PERMANENT MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE UNITED
NATIONS, Respondents.

DECISION

CARPIO, J.:

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of Republic
Act No. 95221 (RA 9522) adjusting the country’s archipelagic baselines and classifying the baseline
regime of nearby territories.

The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046) 2 demarcating the maritime baselines of
the Philippines as an archipelagic State. 3 This law followed the framing of the Convention on the
Territorial Sea and the Contiguous Zone in 1958 (UNCLOS I), 4 codifying, among others, the
sovereign right of States parties over their "territorial sea," the breadth of which, however, was left
undetermined. Attempts to fill this void during the second round of negotiations in Geneva in 1960
(UNCLOS II) proved futile. Thus, domestically, RA 3046 remained unchanged for nearly five
decades, save for legislation passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting
typographical errors and reserving the drawing of baselines around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny.
The change was prompted by the need to make RA 3046 compliant with the terms of the United
Nations Convention on the Law of the Sea (UNCLOS III),5 which the Philippines ratified on 27
February 1984.6 Among others, UNCLOS III prescribes the water-land ratio, length, and contour of
baselines of archipelagic States like the Philippines 7 and sets the deadline for the filing of application
for the extended continental shelf.8 Complying with these requirements, RA 9522 shortened one
baseline, optimized the location of some basepoints around the Philippine archipelago and classified
adjacent territories, namely, the Kalayaan Island Group (KIG) and the Scarborough Shoal, as
"regimes of islands" whose islands generate their own applicable maritime zones.

Petitioners, professors of law, law students and a legislator, in their respective capacities as
"citizens, taxpayers or x x x legislators,"9 as the case may be, assail the constitutionality of RA 9522
on two principal grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically,
the reach of the Philippine state’s sovereign power, in violation of Article 1 of the 1987
Constitution,10 embodying the terms of the Treaty of Paris11 and ancillary treaties,12 and (2) RA 9522
opens the country’s waters landward of the baselines to maritime passage by all vessels and
aircrafts, undermining Philippine sovereignty and national security, contravening the country’s
nuclear-free policy, and damaging marine resources, in violation of relevant constitutional
provisions.13

In addition, petitioners contend that RA 9522’s treatment of the KIG as "regime of islands" not only
results in the loss of a large maritime area but also prejudices the livelihood of subsistence
fishermen.14 To buttress their argument of territorial diminution, petitioners facially attack RA 9522 for
what it excluded and included – its failure to reference either the Treaty of Paris or Sabah and its use
of UNCLOS III’s framework of regime of islands to determine the maritime zones of the KIG and the
Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the
petition’s compliance with the case or controversy requirement for judicial review grounded on
petitioners’ alleged lack of locus standi and (2) the propriety of the writs of certiorari and prohibition
to assail the constitutionality of RA 9522. On the merits, respondents defended RA 9522 as the
country’s compliance with the terms of UNCLOS III, preserving Philippine territory over the KIG or
Scarborough Shoal. Respondents add that RA 9522 does not undermine the country’s security,
environment and economic interests or relinquish the Philippines’ claim over Sabah.

Respondents also question the normative force, under international law, of petitioners’ assertion that
what Spain ceded to the United States under the Treaty of Paris were the islands and all the
waters found within the boundaries of the rectangular area drawn under the Treaty of Paris.

We left unacted petitioners’ prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1. Preliminarily –

1. Whether petitioners possess locus standi to bring this suit; and

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.
 2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as
citizens and (2) the writs of certiorari and prohibition are proper remedies to test the constitutionality
of RA 9522. On the merits, we find no basis to declare RA 9522 unconstitutional.

On the Threshold Issues

Petitioners Possess Locus
Standi as Citizens

Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers
because the petition alleges neither infringement of legislative prerogative 15 nor misuse of public
funds,16 occasioned by the passage and implementation of RA 9522. Nonetheless, we recognize
petitioners’ locus standi as citizens with constitutionally sufficient interest in the resolution of the
merits of the case which undoubtedly raises issues of national significance necessitating urgent
resolution. Indeed, owing to the peculiar nature of RA 9522, it is understandably difficult to find other
litigants possessing "a more direct and specific interest" to bring the suit, thus satisfying one of the
requirements for granting citizenship standing. 17

The Writs of Certiorari and Prohibition

Are Proper Remedies to Test
the Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict
observance of the offices of the writs of certiorari and prohibition, noting that the writs cannot issue
absent any showing of grave abuse of discretion in the exercise of judicial, quasi-judicial or
ministerial powers on the part of respondents and resulting prejudice on the part of petitioners. 18

Respondents’ submission holds true in ordinary civil proceedings. When this Court exercises its
constitutional power of judicial review, however, we have, by tradition, viewed the writs of certiorari
and prohibition as proper remedial vehicles to test the constitutionality of statutes, 19 and indeed, of
acts of other branches of government.20 Issues of constitutional import are sometimes crafted out of
statutes which, while having no bearing on the personal interests of the petitioners, carry such
relevance in the life of this nation that the Court inevitably finds itself constrained to take cognizance
of the case and pass upon the issues raised, non-compliance with the letter of procedural rules
notwithstanding. The statute sought to be reviewed here is one such law.

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool
to Demarcate the Country’s
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory

Petitioners submit that RA 9522 "dismembers a large portion of the national territory" 21 because it
discards the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related
treaties, successively encoded in the definition of national territory under the 1935, 1973 and 1987
Constitutions. Petitioners theorize that this constitutional definition trumps any treaty or statutory
provision denying the Philippines sovereign control over waters, beyond the territorial sea
recognized at the time of the Treaty of Paris, that Spain supposedly ceded to the United States.
Petitioners argue that from the Treaty of Paris’ technical description, Philippine sovereignty over
territorial waters extends hundreds of nautical miles around the Philippine archipelago, embracing
the rectangular area delineated in the Treaty of Paris. 22

Petitioners’ theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty
regulating, among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical
miles from the baselines], contiguous zone [24 nautical miles from the baselines], exclusive
economic zone [200 nautical miles from the baselines]), and continental shelves that UNCLOS III
delimits.23 UNCLOS III was the culmination of decades-long negotiations among United Nations
members to codify norms regulating the conduct of States in the world’s oceans and submarine
areas, recognizing coastal and archipelagic States’ graduated authority over a limited span of waters
and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to
mark-out specific basepoints along their coasts from which baselines are drawn, either straight or
contoured, to serve as geographic starting points to measure the breadth of the maritime zones and
continental shelf. Article 48 of UNCLOS III on archipelagic States like ours could not be any clearer:

Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf. – The breadth of the territorial sea, the contiguous zone,
the exclusive economic zone and the continental shelf shall be measured from archipelagic
baselines drawn in accordance with article 47. (Emphasis supplied)

Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit
with precision the extent of their maritime zones and continental shelves. In turn, this gives notice to
the rest of the international community of the scope of the maritime space and submarine areas
within which States parties exercise treaty-based rights, namely, the exercise of sovereignty over
territorial waters (Article 2), the jurisdiction to enforce customs, fiscal, immigration, and sanitation
laws in the contiguous zone (Article 33), and the right to exploit the living and non-living resources in
the exclusive economic zone (Article 56) and continental shelf (Article 77).

Even under petitioners’ theory that the Philippine territory embraces the islands and all the
waters within the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines
would still have to be drawn in accordance with RA 9522 because this is the only way to draw the
baselines in conformity with UNCLOS III. The baselines cannot be drawn from the boundaries or
other portions of the rectangular area delineated in the Treaty of Paris, but from the "outermost
islands and drying reefs of the archipelago."24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as
petitioners claim, diminution of territory. Under traditional international law typology, States acquire
(or conversely, lose) territory through occupation, accretion, cession and prescription, 25 not by
executing multilateral treaties on the regulations of sea-use rights or enacting statutes to comply with
the treaty’s terms to delimit maritime zones and continental shelves. Territorial claims to land
features are outside UNCLOS III, and are instead governed by the rules on general international
law.26

RA 9522’s Use of the Framework

of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines’ Claim of Sovereignty
Over these Areas

Petitioners next submit that RA 9522’s use of UNCLOS III’s regime of islands framework to draw the
baselines, and to measure the breadth of the applicable maritime zones of the KIG, "weakens our
territorial claim" over that area. 27 Petitioners add that the KIG’s (and Scarborough Shoal’s) exclusion
from the Philippine archipelagic baselines results in the loss of "about 15,000 square nautical miles
of territorial waters," prejudicing the livelihood of subsistence fishermen. 28 A comparison of the
configuration of the baselines drawn under RA 3046 and RA 9522 and the extent of maritime space
encompassed by each law, coupled with a reading of the text of RA 9522 and its congressional
deliberations, vis-à-vis the Philippines’ obligations under UNCLOS III, belie this view.1avvphi1

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely
followed the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522
skipped to optimize the location of basepoints and adjust the length of one baseline (and thus
comply with UNCLOS III’s limitation on the maximum length of baselines). Under RA 3046, as under
RA 9522, the KIG and the Scarborough Shoal lie outside of the baselines drawn around the
Philippine archipelago. This undeniable cartographic fact takes the wind out of petitioners’ argument
branding RA 9522 as a statutory renunciation of the Philippines’ claim over the KIG, assuming that
baselines are relevant for this purpose.

Petitioners’ assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA
9522 is similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the
location of basepoints, increased the Philippines’ total maritime space (covering its internal waters,
territorial sea and exclusive economic zone) by 145,216 square nautical miles, as shown in the table
below:29

Extent of maritime
area using RA 3046, Extent of maritime
as amended, taking area using RA 9522,
into account the taking into account
 
Treaty of Paris’ UNCLOS III (in
delimitation (in square nautical
square nautical miles)
miles)
Internal or
archipelagic
waters 166,858 171,435
Territorial Sea 274,136 32,106
Exclusive
Economic Zone   382,669
TOTAL 440,994 586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522
even extends way beyond the waters covered by the rectangular demarcation under the Treaty of
Paris. Of course, where there are overlapping exclusive economic zones of opposite or adjacent
States, there will have to be a delineation of maritime boundaries in accordance with UNCLOS III. 30
Further, petitioners’ argument that the KIG now lies outside Philippine territory because the
baselines that RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the
law commits to text the Philippines’ continued claim of sovereignty and jurisdiction over the KIG and
the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises
sovereignty and jurisdiction shall be determined as "Regime of Islands" under the Republic of the
Philippines consistent with Article 121 of the United Nations Convention on the Law of the Sea
(UNCLOS):

a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and

b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine
archipelago, adverse legal effects would have ensued. The Philippines would have committed a
breach of two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he
drawing of such baselines shall not depart to any appreciable extent from the general configuration
of the archipelago." Second, Article 47 (2) of UNCLOS III requires that "the length of the baselines
shall not exceed 100 nautical miles," save for three per cent (3%) of the total number of baselines
which can reach up to 125 nautical miles.31

Although the Philippines has consistently claimed sovereignty over the KIG 32 and the Scarborough
Shoal for several decades, these outlying areas are located at an appreciable distance from the
nearest shoreline of the Philippine archipelago, 33 such that any straight baseline loped around them
from the nearest basepoint will inevitably "depart to an appreciable extent from the general
configuration of the archipelago."

The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to
emphasize the foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the
Scarborough Shoal are outside our archipelagic baseline because if we put them inside our
baselines we might be accused of violating the provision of international law which states: "The
drawing of such baseline shall not depart to any appreciable extent from the general configuration of
the archipelago." So sa loob ng ating baseline, dapat magkalapit ang mga islands. Dahil malayo ang
Scarborough Shoal, hindi natin masasabing malapit sila sa atin although we are still allowed by
international law to claim them as our own.

This is called contested islands outside our configuration. We see that our archipelago is defined by
the orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle
doon sa itaas, that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or
the Spratlys. Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic
baselines para lamang masama itong dalawang circles, hindi na sila magkalapit at baka hindi na
tatanggapin ng United Nations because of the rule that it should follow the natural configuration of
the archipelago.34 (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III’s limits.  The need to
1avvphi1

shorten this baseline, and in addition, to optimize the location of basepoints using current maps,
became imperative as discussed by respondents:

[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer
limits of its maritime zones including the extended continental shelf in the manner provided by Article
47 of [UNCLOS III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from
some technical deficiencies, to wit:

1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil
Point) is 140.06 nautical miles x x x. This exceeds the maximum length allowed under Article
47(2) of the [UNCLOS III], which states that "The length of such baselines shall not exceed
100 nautical miles, except that up to 3 per cent of the total number of baselines enclosing
any archipelago may exceed that length, up to a maximum length of 125 nautical miles."

2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted
from the baselines system. This will enclose an additional 2,195 nautical miles of water.

3. Finally, the basepoints were drawn from maps existing in 1968, and not established by
geodetic survey methods. Accordingly, some of the points, particularly along the west coasts
of Luzon down to Palawan were later found to be located either inland or on water, not on
low-water line and drying reefs as prescribed by Article 47. 35

Hence, far from surrendering the Philippines’ claim over the KIG and the Scarborough Shoal,
Congress’ decision to classify the KIG and the Scarborough Shoal as "‘Regime[s] of Islands’ under
the Republic of the Philippines consistent with Article 121" 36 of UNCLOS III manifests the Philippine
State’s responsible observance of its pacta sunt servanda obligation under UNCLOS III. Under
Article 121 of UNCLOS III, any "naturally formed area of land, surrounded by water, which is above
water at high tide," such as portions of the KIG, qualifies under the category of "regime of islands,"
whose islands generate their own applicable maritime zones. 37

Statutory Claim Over Sabah under

RA 5446 Retained

Petitioners’ argument for the invalidity of RA 9522 for its failure to textualize the Philippines’ claim
over Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal,
keeps open the door for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as
provided in this Act is without prejudice to the delineation of the baselines of the territorial sea
around the territory of Sabah, situated in North Borneo, over which the Republic of the
Philippines has acquired dominion and sovereignty. (Emphasis supplied)

UNCLOS III and RA 9522 not

Incompatible with the Constitution’s
Delineation of Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law
unconstitutionally "converts" internal waters into archipelagic waters, hence subjecting these waters
to the right of innocent and sea lanes passage under UNCLOS III, including overflight. Petitioners
extrapolate that these passage rights indubitably expose Philippine internal waters to nuclear and
maritime pollution hazards, in violation of the Constitution. 38

Whether referred to as Philippine "internal waters" under Article I of the Constitution 39 or as
"archipelagic waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over
the body of water lying landward of the baselines, including the air space over it and the submarine
areas underneath. UNCLOS III affirms this:

Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their
bed and subsoil. –

1. The sovereignty of an archipelagic State extends to the waters enclosed by the

archipelagic baselines drawn in accordance with article 47, described as archipelagic
waters, regardless of their depth or distance from the coast.

2. This sovereignty extends to the air space over the archipelagic waters, as well as to
their bed and subsoil, and the resources contained therein.

xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other
respects affect the status of the archipelagic waters, including the sea lanes, or the
exercise by the archipelagic State of its sovereignty over such waters and their air
space, bed and subsoil, and the resources contained therein. (Emphasis supplied)

The fact of sovereignty, however, does not preclude the operation of municipal and international law
norms subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in
the interest of maintaining unimpeded, expeditious international navigation, consistent with the
international law principle of freedom of navigation. Thus, domestically, the political branches of the
Philippine government, in the competent discharge of their constitutional powers, may pass
legislation designating routes within the archipelagic waters to regulate innocent and sea lanes
passage.40 Indeed, bills drawing nautical highways for sea lanes passage are now pending in
Congress.41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate
to grant innocent passage rights over the territorial sea or archipelagic waters, subject to the treaty’s
limitations and conditions for their exercise.42 Significantly, the right of innocent passage is a
customary international law,43 thus automatically incorporated in the corpus of Philippine law. 44 No
modern State can validly invoke its sovereignty to absolutely forbid innocent passage that is
exercised in accordance with customary international law without risking retaliatory measures from
the international community.

The fact that for archipelagic States, their archipelagic waters are subject to both the right of
innocent passage and sea lanes passage 45 does not place them in lesser footing vis-à-
vis continental coastal States which are subject, in their territorial sea, to the right of innocent
passage and the right of transit passage through international straits. The imposition of these
passage rights through archipelagic waters under UNCLOS III was a concession by archipelagic
States, in exchange for their right to claim all the waters landward of their baselines, regardless of
their depth or distance from the coast, as archipelagic waters subject to their territorial sovereignty.
More importantly, the recognition of archipelagic States’ archipelago and the waters enclosed by
their baselines as one cohesive entity prevents the treatment of their islands as separate islands
under UNCLOS III.46 Separate islands generate their own maritime zones, placing the waters
between islands separated by more than 24 nautical miles beyond the States’ territorial sovereignty,
subjecting these waters to the rights of other States under UNCLOS III. 47

Petitioners’ invocation of non-executory constitutional provisions in Article II (Declaration of

Principles and State Policies)48 must also fail. Our present state of jurisprudence considers the
provisions in Article II as mere legislative guides, which, absent enabling legislation, "do not embody
judicially enforceable constitutional rights x x x."49 Article II provisions serve as guides in formulating
and interpreting implementing legislation, as well as in interpreting executory provisions of the
Constitution. Although Oposa v. Factoran50 treated the right to a healthful and balanced ecology
under Section 16 of Article II as an exception, the present petition lacks factual basis to substantiate
the claimed constitutional violation. The other provisions petitioners cite, relating to the protection of
marine wealth (Article XII, Section 2, paragraph 251 ) and subsistence fishermen (Article XIII, Section
752 ), are not violated by RA 9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic
zone, reserving solely to the Philippines the exploitation of all living and non-living resources within
such zone. Such a maritime delineation binds the international community since the delineation is in
strict observance of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the
international community will of course reject it and will refuse to be bound by it.

UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui
generis maritime space – the exclusive economic zone – in waters previously part of the high seas.
UNCLOS III grants new rights to coastal States to exclusively exploit the resources found within this
zone up to 200 nautical miles.53 UNCLOS III, however, preserves the traditional freedom of
navigation of other States that attached to this zone beyond the territorial sea before UNCLOS III.

RA 9522 and the Philippines’ Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound
to pass RA 9522.54 We have looked at the relevant provision of UNCLOS III55 and we find petitioners’
reading plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to
this Court. Moreover, the luxury of choosing this option comes at a very steep price. Absent an
UNCLOS III compliant baselines law, an archipelagic State like the Philippines will find itself devoid
of internationally acceptable baselines from where the breadth of its maritime zones and continental
shelf is measured. This is recipe for a two-fronted disaster: first, it sends an open invitation to the
seafaring powers to freely enter and exploit the resources in the waters and submarine areas around
our archipelago; and second, it weakens the country’s case in any international dispute over
Philippine maritime space. These are consequences Congress wisely avoided.

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent
areas, as embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of
the Philippines’ maritime zones and continental shelf. RA 9522 is therefore a most vital step on the
part of the Philippines in safeguarding its maritime zones, consistent with the Constitution and our
national interest.

WHEREFORE, we DISMISS the petition.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 178160               February 26, 2009

BASES CONVERSION AND DEVELOPMENT AUTHORITY, Petitioner,

vs.
COMMISSION ON AUDIT, Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for certiorari1 with prayer for the issuance of a temporary restraining order and a writ
of preliminary injunction. The petition seeks to nullify Decision No. 2007-020 2 dated 12 April 2007 of
the Commission on Audit (COA).

The Facts

On 13 March 1992, Congress approved Republic Act (RA) No. 7227 3 creating the Bases Conversion
and Development Authority (BCDA). Section 9 of RA No. 7227 states that the BCDA Board of
Directors (Board) shall exercise the powers and functions of the BCDA. Under Section 10, the
functions of the Board include the determination of the organizational structure and the adoption of a
compensation and benefit scheme at least equivalent to that of the Bangko Sentral ng Pilipinas
(BSP). Accordingly, the Board determined the organizational structure of the BCDA and adopted a
compensation and benefit scheme for its officials and employees.

On 20 December 1996, the Board adopted a new compensation and benefit scheme which included
a ₱10,000 year-end benefit granted to each contractual employee, regular permanent employee,
and Board member. In a memorandum 4 dated 25 August 1997, Board Chairman Victoriano A. Basco
(Chairman Basco) recommended to President Fidel V. Ramos (President Ramos) the approval of
the new compensation and benefit scheme. In a memorandum 5 dated 9 October 1997, President
Ramos approved the new compensation and benefit scheme.

In 1999, the BSP gave a ₱30,000 year-end benefit to its officials and employees. In 2000, the BSP
increased the year-end benefit from ₱30,000 to ₱35,000. Pursuant to Section 10 of RA No. 7227
which states that the compensation and benefit scheme of the BCDA shall be at least equivalent to
that of the BSP, the Board increased the year-end benefit of BCDA officials and employees from
₱10,000 to ₱30,000. Thus in 2000 and 2001, BCDA officials and employees received a ₱30,000
year-end benefit, and, on 1 October 2002, the Board passed Resolution No. 2002-10-193 6 approving
the release of a ₱30,000 year-end benefit for 2002.
Aside from the contractual employees, regular permanent employees, and Board members, the full-
time consultants of the BCDA also received the year-end benefit.

On 20 February 2003, State Auditor IV Corazon V. Españo of the COA issued Audit Observation
Memorandum (AOM) No. 2003-0047 stating that the grant of year-end benefit to Board members
was contrary to Department of Budget and Management (DBM) Circular Letter No. 2002-2 dated 2
January 2002. In Notice of Disallowance (ND) No. 03-001-BCDA-(02) 8 dated 8 January 2004,
Director IV Rogelio D. Tablang (Director Tablang), COA, Legal and Adjudication Office-Corporate,
disallowed the grant of year-end benefit to the Board members and full-time consultants. In Decision
No. 2004-0139 dated 13 January 2004, Director Tablang "concurred" with AOM No. 2003-004 and
ND No. 03-001-BCDA-(02).

In a letter10 dated 20 February 2004, BCDA President and Chief Executive Officer Rufo Colayco
requested the reconsideration of Decision No. 2004-013. In a Resolution 11 dated 22 June 2004,
Director Tablang denied the request. The BCDA filed a notice of appeal 12 dated 8 September 2004
and an appeal memorandum13 dated 23 December 2004 with the COA.

The COA’s Ruling

In Decision No. 2007-020,14 the COA affirmed the disallowance of the year-end benefit granted to the
Board members and full-time consultants and held that the presumption of good faith did not apply to
them. The COA stated that:

The granting of YEB x x x is not without x x x limitation. DBM Circular Letter No. 2002-02 dated
January 2, 2002 stating, viz:

"2.0 To clarify and address issues/requests concerning the same, the following
compensation policies are hereby reiterated:

2.1 PERA, ADCOM, YEB and retirement benefits, are personnel benefits granted in addition
to salaries. As fringe benefits, these shall be paid only when the basic salary is also paid.

2.2 Members of the Board of Directors of agencies are not salaried officials of the
government. As non-salaried officials they are not entitled to PERA, ADCOM, YEB and
retirement benefits unless expressly provided by law.

2.3 Department Secretaries, Undersecretaries and Assistant Secretaries who serve as Ex-

officio Members of the Board of Directors are not entitled to any remuneration in line with the
Supreme Court ruling that their services in the Board are already paid for and covered by the
remuneration attached to their office." (underscoring ours)

Clearly, as stated above, the members and ex-officio members of the Board of Directors are
not entitled to YEB, they being not salaried officials of the government. The same goes
with full time consultants wherein no employer-employee relationships exist between them and the
BCDA. Thus, the whole amount paid to them totaling ₱342,000 is properly disallowed in audit.

Moreover, the presumption of good faith may not apply to the members and ex-officio members of
the Board of Directors because despite the earlier clarification on the matter by the DBM thru the
issuance on January 2, 2002 of DBM Circular Letter No. 2002-02, still, the BCDA Board of Directors
enacted Resolution No. 2002-10-93 on October 1, 2002 granting YEB to the BCDA personnel
including themselves. Full time consultants, being non-salaried personnel, are also not entitled to
such presumption since they knew from the very beginning that they are only entitled to the amount
stipulated in their contracts as compensation for their services. Hence, they should be made to
refund the disallowed YEB.15 (Boldfacing in the original)

Hence, this petition.

The Court’s Ruling

The Board members and full-time consultants of the BCDA are not entitled to the year-end benefit.

First, the BCDA claims that the Board can grant the year-end benefit to its members and full-time
consultants because, under Section 10 of RA No. 7227, the functions of the Board include the
adoption of a compensation and benefit scheme.

The Court is not impressed. The Board’s power to adopt a compensation and benefit scheme is not
unlimited. Section 9 of RA No. 7227 states that Board members are entitled to a per diem:

Members of the Board shall receive a per diem of not more than Five thousand pesos
(₱5,000) for every board meeting: Provided, however, That the per diem collected per month
does not exceed the equivalent of four (4) meetings: Provided, further, That the amount of per
diem for every board meeting may be increased by the President but such amount shall not be
increased within two (2) years after its last increase. (Emphasis supplied) 1awphi1

Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the
amount of per diem to not more than ₱5,000; and limits the total amount of per diem for one month
to not more than four meetings. In Magno v. Commission on Audit,16 Cabili v. Civil Service
Commission,17 De Jesus v. Civil Service Commission,18 Molen, Jr. v. Commission on
Audit,19 and Baybay Water District v. Commission on Audit,20 the Court held that the specification of
compensation and limitation of the amount of compensation in a statute indicate that Board
members are entitled only to the per diem authorized by law and no other. In Baybay Water
District, the Court held that:

By specifying the compensation which a director is entitled to receive and by limiting the amount
he/she is allowed to receive in a month, x x x the law quite clearly indicates that directors x x x are
authorized to receive only the per diem authorized by law and no other compensation or allowance
in whatever form.21

Also, DBM Circular Letter No. 2002-2 states that, "Members of the Board of Directors of agencies
are not salaried officials of the government. As non-salaried officials they are not entitled
to PERA, ADCOM, YEB and retirement benefits unless expressly provided by law." RA No. 7227
does not state that the Board members are entitled to a year-end benefit.

With regard to the full-time consultants, DBM Circular Letter No. 2002-2 states that, "YEB and
retirement benefits, are personnel benefits granted in addition to salaries. As fringe benefits,
these shall be paid only when the basic salary is also paid." The full-time consultants are not
part of the BCDA personnel and are not paid the basic salary. The full-time consultants’ consultancy
contracts expressly state that there is no employer-employee relationship between the BCDA and
the consultants, and that the BCDA shall pay the consultants a contract price. For example, the
consultancy contract22 of a certain Dr. Faith M. Reyes states:
SECTION 2. Contract Price. For and in consideration of the services to be performed by the
CONSULTANT (16 hours/week), BCDA shall pay her the amount of TWENTY THOUSAND PESOS
and 00/100 (₱20,000.00), Philippine currency, per month.

xxxx

SECTION 4. Employee-Employer Relationship. It is understood that no employee-employer

relationship shall exist between BCDA and the CONSULTANT.

SECTION 5. Period of Effectivity. This CONTRACT shall have an effectivity period of one (1) year,
from January 01, 2002 to December 31, 2002, unless sooner terminated by BCDA in accordance
with Section 6 below.

SECTION 6. Termination of Services. BCDA, in its sole discretion may opt to terminate this
CONTRACT when it sees that there is no more need for the services contracted for. (Boldfacing in
the original)

Since full-time consultants are not salaried employees of BCDA, they are not entitled to the year-end
benefit which is a "personnel benefit granted in addition to salaries" and which is "paid only when
the basic salary is also paid."

Second, the BCDA claims that the Board members and full-time consultants should be granted the
year-end benefit because the granting of year-end benefit is consistent with Sections 5 and 18,
Article II of the Constitution. Sections 5 and 18 state:

Section 5. The maintenance of peace and order, the protection of life, liberty, and property, and the
promotion of the general welfare are essential for the enjoyment by all people of the blessings of
democracy.

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.

The Court is not impressed. Article II of the Constitution is entitled Declaration of Principles and
State Policies. By its very title, Article II is a statement of general ideological principles and policies.
It is not a source of enforceable rights.23 In Tondo Medical Center Employees Association v. Court of
Appeals,24 the Court held that Sections 5 and 18, Article II of the Constitution are not self-
executing provisions. In that case, the Court held that "Some of the constitutional provisions
invoked in the present case were taken from Article II of the Constitution — specifically, Sections 5 x
x x and 18 — the provisions of which the Court categorically ruled to be non self-executing."

Third, the BCDA claims that the denial of year-end benefit to the Board members and full-time
consultants violates Section 1, Article III of the Constitution. 25 More specifically, the BCDA claims that
there is no substantial distinction between regular officials and employees on one hand, and Board
members and full-time consultants on the other. The BCDA states that "there is here only a
distinction, but no difference" because both "have undeniably one common goal as humans, that is x
x x ‘to keep body and soul together’" or, "[d]ifferently put, both have mouths to feed and stomachs to
fill."

The Court is not impressed. Every presumption should be indulged in favor of the

constitutionality of RA No. 7227 and the burden of proof is on the BCDA to show that there is
a clear and unequivocal breach of the Constitution.26 In Abakada Guro Party List v.
Purisima,27 the Court held that:

A law enacted by Congress enjoys the strong presumption of constitutionality. To justify its
nullification, there must be a clear and unequivocal breach of the Constitution, not a doubtful and
unequivocal one. To invalidate [a law] based on x x x baseless supposition is an affront to the
wisdom not only of the legislature that passed it but also of the executive which approved it.

The BCDA failed to show that RA No. 7227 unreasonably singled out Board members and full-time
consultants in the grant of the year-end benefit. It did not show any clear and unequivocal breach of
the Constitution. The claim that there is no difference between regular officials and employees, and
Board members and full-time consultants because both groups "have mouths to feed and stomachs
to fill" is fatuous. Surely, persons are not automatically similarly situated — thus, automatically
deserving of equal protection of the laws — just because they both "have mouths to feed and
stomachs to fill." Otherwise, the existence of a substantial distinction would become forever highly
improbable.

Fourth, the BCDA claims that the Board can grant the year-end benefit to its members and the full-
time consultants because RA No. 7227 does not expressly prohibit it from doing so.

The Court is not impressed. A careful reading of Section 9 of RA No. 7227 reveals that the Board is
prohibited from granting its members other benefits. Section 9 states:

Members of the Board shall receive a per diem of not more than Five thousand pesos
(₱5,000) for every board meeting: Provided, however, That the per diem collected per month
does not exceed the equivalent of four (4) meetings: Provided, further, That the amount of per
diem for every board meeting may be increased by the President but such amount shall not be
increased within two (2) years after its last increase. (Emphasis supplied)

Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the
amount of per diem to not more than ₱5,000; limits the total amount of per diem for one month to not
more than four meetings; and does not state that Board members may receive other benefits.
In Magno,28 Cabili,29 De Jesus,30 Molen, Jr.,31 and Baybay Water District,32 the Court held that the
specification of compensation and limitation of the amount of compensation in a statute
indicate that Board members are entitled only to the per diem authorized by law and no other.

The specification that Board members shall receive a per diem of not more than ₱5,000 for every
meeting and the omission of a provision allowing Board members to receive other benefits lead the
Court to the inference that Congress intended to limit the compensation of Board members to
the per diem authorized by law and no other. Expressio unius est exclusio alterius. Had Congress
intended to allow the Board members to receive other benefits, it would have expressly stated
so.33 For example, Congress’ intention to allow Board members to receive other benefits besides
the per diem authorized by law is expressly stated in Section 1 of RA No. 9286: 34

SECTION 1. Section 13 of Presidential Decree No. 198, as amended, is hereby amended to read as
follows:

"SEC. 13. Compensation. — Each director shall receive per diem to be determined by the Board, for
each meeting of the Board actually attended by him, but no director shall receive per diems in any
given month in excess of the equivalent of the total per diem of four meetings in any given month.
Any per diem in excess of One hundred fifty pesos (₱150.00) shall be subject to the approval of the
Administration. In addition thereto, each director shall receive allowances and benefits as the
Board may prescribe subject to the approval of the Administration." (Emphasis supplied)

The Court cannot, in the guise of interpretation, enlarge the scope of a statute or insert into a statute
what Congress omitted, whether intentionally or unintentionally. 35

When a statute is susceptible of two interpretations, the Court must "adopt the one in consonance
with the presumed intention of the legislature to give its enactments the most reasonable and
beneficial construction, the one that will render them operative and effective." 36 The Court always
presumes that Congress intended to enact sensible statutes. 37 If the Court were to rule that the
Board could grant the year-end benefit to its members, Section 9 of RA No. 7227 would become
inoperative and ineffective — the specification that Board members shall receive a per diem of not
more than ₱5,000 for every meeting; the specification that the per diem received per month shall not
exceed the equivalent of four meetings; the vesting of the power to increase the amount of per
diem in the President; and the limitation that the amount of per diem shall not be increased within
two years from its last increase would all become useless because the Board could always grant its
members other benefits.

With regard to the full-time consultants, DBM Circular Letter No. 2002-2 states that, "YEB and
retirement benefits, are personnel benefits granted in addition to salaries. As fringe benefits,
these shall be paid only when the basic salary is also paid." The full-time consultants are not
part of the BCDA personnel and are not paid the basic salary. The full-time consultants’ consultancy
contracts expressly state that there is no employer-employee relationship between BCDA and the
consultants and that BCDA shall pay the consultants a contract price. Since full-time consultants are
not salaried employees of the BCDA, they are not entitled to the year-end benefit which is a
"personnel benefit granted in addition to salaries" and which is "paid only when the basic salary
is also paid."

Fifth, the BCDA claims that the Board members and full-time consultants are entitled to the year-end
benefit because (1) President Ramos approved the granting of the benefit to the Board members,
and (2) they have been receiving it since 1997.

The Court is not impressed. The State is not estopped from correcting a public officer’s erroneous
application of a statute, and an unlawful practice, no matter how long, cannot give rise to any vested
right.38

The Court, however, notes that the Board members and full-time consultants received the year-end
benefit in good faith. The Board members relied on (1) Section 10 of RA No. 7227 which authorized
the Board to adopt a compensation and benefit scheme; (2) the fact that RA No. 7227 does not
expressly prohibit Board members from receiving benefits other than the per diem authorized by law;
and (3) President Ramos’ approval of the new compensation and benefit scheme which included the
granting of a year-end benefit to each contractual employee, regular permanent employee, and
Board member. The full-time consultants relied on Section 10 of RA No. 7227 which authorized the
Board to adopt a compensation and benefit scheme. There is no proof that the Board members and
full-time consultants knew that their receipt of the year-end benefit was unlawful. In keeping
with Magno,39 De Jesus,40 Molen, Jr.,41 and Kapisanan ng mga Manggagawa sa Government Service
Insurance System (KMG) v. Commission on Audit,42 the Board members and full-time consultants
are not required to refund the year-end benefits they have already received.

WHEREFORE, the petition is PARTIALLY GRANTED. Commission on Audit Decision No. 2007-020
dated 12 April 2007 is AFFIRMED with the MODIFICATION that the Board members and full-time
consultants of the Bases Conversion and Development Authority are not required to refund the year-
end benefits they have already received.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 118295 May 2, 1997

WIGBERTO E. TAÑADA and ANNA DOMINIQUE COSETENG, as members of the Philippine

Senate and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the
House of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R.
MORALES, both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES,
LIKAS-KAYANG KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION
MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and
PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers and as non-
governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON
ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO
HERRERA, JOSE LINA, GLORIA. MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS
OPLE, JOHN OSMEÑA, SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO
TATAD and FREDDIE WEBB, in their respective capacities as members of the Philippine
Senate who concurred in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his capacity as
Secretary of Budget and Management; CARIDAD VALDEHUESA, in her capacity as National
Treasurer; RIZALINO NAVARRO, in his capacity as Secretary of Trade and Industry;
ROBERTO SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO,
in his capacity as Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of
Foreign Affairs; and TEOFISTO T. GUINGONA, in his capacity as Executive
Secretary, respondents.

PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership
thereto of the vast majority of countries has revolutionized international business and economic
relations amongst states. It has irreversibly propelled the world towards trade liberalization and
economic globalization. Liberalization, globalization, deregulation and privatization, the third-
millennium buzz words, are ushering in a new borderless world of business by sweeping away as
mere historical relics the heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and
currency controls. Finding market niches and becoming the best in specific industries in a market-
driven and export-oriented global scenario are replacing age-old "beggar-thy-neighbor" policies that
unilaterally protect weak and inefficient domestic producers of goods and services. In the words of
Peter Drucker, the well-known management guru, "Increased participation in the world economy has
become the key to domestic economic growth and prosperity."

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the
establishment of three multilateral institutions — inspired by that grand political body, the United
Nations — were discussed at Dumbarton Oaks and Bretton Woods. The first was the World Bank
(WB) which was to address the rehabilitation and reconstruction of war-ravaged and later developing
countries; the second, the International Monetary Fund (IMF) which was to deal with currency
problems; and the third, the International Trade Organization (ITO), which was to foster order and
predictability in world trade and to minimize unilateral protectionist policies that invite challenge,
even retaliation, from other states. However, for a variety of reasons, including its non-ratification by
the United States, the ITO, unlike the IMF and WB, never took off. What remained was only GATT
— the General Agreement on Tariffs and Trade. GATT was a collection of treaties governing access
to the economies of treaty adherents with no institutionalized body administering the agreements or
dependable system of dispute settlement.

After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the
Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body — the
World Trade Organization — with the signing of the "Final Act" in Marrakesh, Morocco and the
ratification of the WTO Agreement by its members. 1

Like many other developing countries, the Philippines joined WTO as a founding member with the
goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra), of improving
"Philippine access to foreign markets, especially its major trading partners, through the reduction of
tariffs on its exports, particularly agricultural and industrial products." The President also saw in the
WTO the opening of "new opportunities for the services sector . . . , (the reduction of) costs and
uncertainty associated with exporting . . . , and (the attraction of) more investments into the country."
Although the Chief Executive did not expressly mention it in his letter, the Philippines — and this is
of special interest to the legal profession — will benefit from the WTO system of dispute settlement
by judicial adjudication through the independent WTO settlement bodies called (1) Dispute
Settlement Panels and (2) Appellate Tribunal. Heretofore, trade disputes were settled mainly through
negotiations where solutions were arrived at frequently on the basis of relative bargaining strengths,
and where naturally, weak and underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and products of
member-countries on the same footing as Filipinos and local products" and (2) that the WTO
"intrudes, limits and/or impairs" the constitutional powers of both Congress and the Supreme Court,
the instant petition before this Court assails the WTO Agreement for violating the mandate of the
1987 Constitution to "develop a self-reliant and independent national economy effectively controlled
by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of
Filipino labor, domestic materials and locally produced goods."
Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade
liberalization and economic globalization? Does it proscribe Philippine integration into a global
economy that is liberalized, deregulated and privatized? These are the main questions raised in this
petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for
the nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the
ratification by the President of the Philippines of the Agreement Establishing the World Trade
Organization (WTO Agreement, for brevity) and (2) for the prohibition of its implementation and
enforcement through the release and utilization of public funds, the assignment of public officials and
employees, as well as the use of government properties and resources by respondent-heads of
various executive offices concerned therewith. This concurrence is embodied in Senate Resolution
No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The Department of Trade and
Industry (Secretary Navarro, for brevity), representing the Government of the Republic of the
Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay
Round of Multilateral Negotiations (Final Act, for brevity).

By signing the Final Act,  Secretary Navarro on behalf of the Republic of the Philippines, agreed:
2

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities, with a view to seeking approval of the Agreement
in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994
from the President of the Philippines,  stating among others that "the Uruguay Round Final Act is
3

hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the
Constitution."

On August 13, 1994, the members of the Philippine Senate received another letter from the
President of the Philippines  likewise dated August 11, 1994, which stated among others that "the
4

Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial Services are
hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the
Constitution."

On December 9, 1994, the President of the Philippines certified the necessity of the immediate
adoption of P.S. 1083, a resolution entitled "Concurring in the Ratification of the Agreement
Establishing the World Trade Organization." 5

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which "Resolved, as it is
hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade Organization."  The text of the WTO
6

Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of

Multilateral Trade Negotiations and includes various agreements and associated legal instruments
(identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as
Multilateral Trade Agreements, for brevity) as follows:
 ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of he
General Agreement on Tariffs and Trade
1994
Agreement on Implementation of Article VII of the
General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating
Measures
Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual

Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing

the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed  the Instrument of Ratification,
7

declaring:

NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic

of the Philippines, after having seen and considered the aforementioned Agreement
Establishing the World Trade Organization and the agreements and associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do
hereby ratify and confirm the same and every Article and Clause thereof.

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the
Agreement Proper and "the associated legal instruments included in Annexes one (1), two (2) and
three (3) of that Agreement which are integral parts thereof."
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO
Agreement (and its integral annexes aforementioned) but also (1) the Ministerial Declarations and
Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum
dated May 13, 1996,  the Solicitor General describes these two latter documents as follows:
8

The Ministerial Decisions and Declarations are twenty-five declarations and

decisions on a wide range of matters, such as measures in favor of least developed
countries, notification procedures, relationship of WTO with the International
Monetary Fund (IMF), and agreements on technical barriers to trade and on dispute
settlement.

The Understanding on Commitments in Financial Services dwell on, among other

things, standstill or limitations and qualifications of commitments to existing non-
conforming measures, market access, national treatment, and definitions of non-
resident supplier of financial services, commercial presence and new financial
service.

On December 29, 1994, the present petition was filed. After careful deliberation on respondents'
comment and petitioners' reply thereto, the Court resolved on December 12, 1995, to give due
course to the petition, and the parties thereafter filed their respective memoranda. The court also
requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations
stationed in Geneva, Switzerland, to submit a paper, hereafter referred to as "Bautista Paper,"  for
9

brevity, (1) providing a historical background of and (2) summarizing the said agreements.

During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in
controversy and (2) the transcript of proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine
treaties signed prior to the Philippine adherence to the WTO Agreement, which
derogate from Philippine sovereignty and (2) copies of the multi-volume WTO
Agreement and other documents mentioned in the Final Act, as soon as possible.

After receipt of the foregoing documents, the Court said it would consider the case submitted for
resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed
copy of the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another
Compliance dated October 24, 1996, he listed the various "bilateral or multilateral treaties or
international instruments involving derogation of Philippine sovereignty." Petitioners, on the other
hand, submitted their Compliance dated January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the

deliberations and voting leading to the concurrence are estopped from impugning the
validity of the Agreement Establishing the World Trade Organization or of the validity
of the concurrence.
 C. Whether the provisions of the Agreement Establishing the World Trade
Organization contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12,
Article XII, all of the 1987 Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization

unduly limit, restrict and impair Philippine sovereignty specifically the legislative
power which, under Sec. 2, Article VI, 1987 Philippine Constitution is "vested in the
Congress of the Philippines";

E. Whether provisions of the Agreement Establishing the World Trade Organization

interfere with the exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of

discretion amounting to lack or excess of jurisdiction when they voted for
concurrence in the ratification of the constitutionally-infirm Agreement Establishing
the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of

discretion amounting to lack or excess of jurisdiction when they concurred only in the
ratification of the Agreement Establishing the World Trade Organization, and not with
the Presidential submission which included the Final Act, Ministerial Declaration and
Decisions, and the Understanding on Commitments in Financial Services.

On the other hand, the Solicitor General as counsel for respondents "synthesized the several issues
raised by petitioners into the following": 
10

1. Whether or not the provisions of the "Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments included in
Annexes one (1), two (2) and three (3) of that agreement" cited by petitioners directly
contravene or undermine the letter, spirit and intent of Section 19, Article II and
Sections 10 and 12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair
the exercise of legislative power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial
power by this Honorable Court in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate "in the ratification by the President
of the Philippines of the Agreement establishing the World Trade Organization"
implied rejection of the treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor
General has effectively ignored three, namely: (1) whether the petition presents a political question
or is otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Tañada
and Anna Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-
members of the Senate acted in grave abuse of discretion when they voted for concurrence in the
ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus:
(1) The "political question" issue — being very fundamental and vital, and being a matter that probes
into the very jurisdiction of this Court to hear and decide this case — was deliberated upon by the
Court and will thus be ruled upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively waived it by not pursuing it in any of their pleadings; in any event, this
issue, even if ruled in respondents' favor, will not cause the petition's dismissal as there are
petitioners other than the two senators, who are not vulnerable to the defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be
taken up as an integral part of the disposition of the four issues raised by the Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question the locus
standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They
probably realized that grave constitutional issues, expenditures of public funds and serious
international commitments of the nation are involved here, and that transcendental public interest
requires that the substantive issues be met head on and decided on the merits, rather than skirted or
deflected by procedural matters.  11

To recapitulate, the issues that will be ruled upon shortly are:

(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY?

OTHERWISE STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION
OVER WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE

ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE
XII, OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT,

RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY
CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE

EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES
ON EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND
ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT
INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS,
AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?

The First Issue: Does the Court

Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than political.
The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld."   Once
12

a "controversy as to the application or interpretation of a constitutional provision is raised before this

Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional
mandate to decide."  13

The jurisdiction of this Court to adjudicate the matters   raised in the petition is clearly set out in the
14

1987 Constitution,   as follows:

15

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.

The foregoing text emphasizes the judicial department's duty and power to strike down grave abuse
of discretion on the part of any branch or instrumentality of government including Congress. It is an
innovation in our political law.   As explained by former Chief Justice Roberto Concepcion,   "the
16 17

judiciary is the final arbiter on the question of 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. This is not only a judicial power but a duty to
pass judgment on matters of this nature."

As this Court has repeatedly and firmly emphasized in many cases,   it will not shirk, digress from or
18

abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse
of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality
or department of the government.

As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate
remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should
be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of
Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional
issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials.
On this, we have no equivocation.

We should stress that, in deciding to take jurisdiction over this petition, this Court will not review
the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or
pass upon the merits of trade liberalization as a policy espoused by said international body. Neither
will it rule on the propriety of the government's economic policy of reducing/removing tariffs, taxes,
subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its
constitutional duty "to determine whether or not there had been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the Senate in ratifying the WTO Agreement
and its three annexes.

Second Issue: The WTO Agreement

and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.

Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution mandating
"economic nationalism" are violated by the so-called "parity provisions" and "national treatment"
clauses scattered in various parts not only of the WTO Agreement and its annexes but also in the
Ministerial Decisions and Declarations and in the Understanding on Commitments in Financial
Services.
Specifically, the "flagship" constitutional provisions referred to are Sec 19, Article II, and Secs. 10
and 12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES
AND STATE POLICIES

x x x           x x x          x x x

Sec. 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.

x x x           x x x          x x x

Article XII

NATIONAL ECONOMY AND PATRIMONY

x x x           x x x          x x x

Sec. 10. . . . The Congress shall enact measures that will encourage the formation
and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.

x x x           x x x          x x x

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make them
competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following WTO
provisions quoted in their memorandum:  19

a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994,

no Member shall apply any TRIM that is inconsistent with the
provisions of Article II or Article XI of GATT 1994.

2. An illustrative list of TRIMS that are inconsistent with the

obligations of general elimination of quantitative restrictions provided
for in paragraph I of Article XI of GATT 1994 is contained in the
Annex to this Agreement." (Agreement on Trade-Related Investment
 Measures, Vol. 27, Uruguay Round, Legal Instruments, p. 22121,
emphasis supplied).

The Annex referred to reads as follows:

ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for
in paragraph 4 of Article III of GATT 1994 include those which are mandatory or
enforceable under domestic law or under administrative rulings, or compliance with
which is necessary to obtain an advantage, and which require:

(a) the purchase or use by an enterprise of products of domestic

origin or from any domestic source, whether specified in terms of
particular products, in terms of volume or value of products, or in
terms of proportion of volume or value of its local production; or

(b) that an enterprise's purchases or use of imported products be

limited to an amount related to the volume or value of local products
that it exports.

2. TRIMS that are inconsistent with the obligations of general elimination of

quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994
include those which are mandatory or enforceable under domestic laws or under
administrative rulings, or compliance with which is necessary to obtain an advantage,
and which restrict:

(a) the importation by an enterprise of products used in or related to

the local production that it exports;

(b) the importation by an enterprise of products used in or related to

its local production by restricting its access to foreign exchange
inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular

products, in terms of volume or value of products, or in terms of a
preparation of volume or value of its local production. (Annex to the
Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay
Round Legal Documents, p. 22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the
territory of any other contracting party shall be accorded treatment no
less favorable than that accorded to like products of national origin in
respect of laws, regulations and requirements affecting their internal
sale, offering for sale, purchase, transportation, distribution or use,
the provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based
 exclusively on the economic operation of the means of transport and
not on the nationality of the product." (Article III, GATT 1947, as
amended by the Protocol Modifying Part II, and Article XXVI of GATT,
14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of
the General Agreement on Tariffs and Trade 1994, Vol. 1, Uruguay
Round, Legal Instruments p. 177, emphasis supplied).

(b) In the area of trade related aspects of intellectual property rights (TRIPS, for
brevity):

Each Member shall accord to the nationals of other Members

treatment no less favourable than that it accords to its own
nationals with regard to the protection of intellectual property. . . (par.
1 Article 3, Agreement on Trade-Related Aspect of Intellectual
Property rights, Vol. 31, Uruguay Round, Legal Instruments, p. 25432
(emphasis supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any

conditions and qualifications set out therein, each Member shall
accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment no
less favourable than it accords to its own like services and service
suppliers.

2. A Member may meet the requirement of paragraph I by according

to services and service suppliers of any other Member, either formally
suppliers of any other Member, either formally identical treatment or
formally different treatment to that it accords to its own like services
and service suppliers.

3. Formally identical or formally different treatment shall be

considered to be less favourable if it modifies the conditions of
completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member.
(Article XVII, General Agreement on Trade in Services, Vol. 28,
Uruguay Round Legal Instruments, p. 22610 emphasis supplied).

It is petitioners' position that the foregoing "national treatment" and "parity provisions" of the WTO
Agreement "place nationals and products of member countries on the same footing as Filipinos and
local products," in contravention of the "Filipino First" policy of the Constitution. They allegedly
render meaningless the phrase "effectively controlled by Filipinos." The constitutional conflict
becomes more manifest when viewed in the context of the clear duty imposed on the Philippines as
a WTO member to ensure the conformity of its laws, regulations and administrative procedures with
its obligations as provided in the annexed agreements.   Petitioners further argue that these
20

provisions contravene constitutional limitations on the role exports play in national development and
negate the preferential treatment accorded to Filipino labor, domestic materials and locally produced
goods.
On the other hand, respondents through the Solicitor General counter (1) that such Charter
provisions are not self-executing and merely set out general policies; (2) that these nationalistic
portions of the Constitution invoked by petitioners should not be read in isolation but should be
related to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read
properly, the cited WTO clauses do not conflict with Constitution; and (4) that the WTO Agreement
contains sufficient provisions to protect developing countries like the Philippines from the harshness
of sudden trade liberalization.

We shall now discuss and rule on these arguments.

Declaration of Principles
Not Self-Executing

By its very title, Article II of the Constitution is a "declaration of principles and state policies." The
counterpart of this article in the 1935 Constitution   is called the "basic political creed of the nation"
21

by Dean Vicente Sinco.   These principles in Article II are not intended to be self-executing principles
22

ready for enforcement through the courts.   They are used by the judiciary as aids or as guides in
23

the exercise of its power of judicial review, and by the legislature in its enactment of laws. As held in
the leading case of Kilosbayan, Incorporated vs. Morato,   the principles and state policies
24

enumerated in Article II and some sections of Article XII are not "self-executing provisions, the
disregard of which can give rise to a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation."

In the same light, we held in Basco vs. Pagcor   that broad constitutional principles need legislative
25

enactments to implement the, thus:

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12

(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it
to state also that these are merely statements of principles and policies. As such,
they are basically not self-executing, meaning a law should be passed by Congress
to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be

self-executing principles ready for enforcement through the courts.
They were rather directives addressed to the executive and to the
legislature. If the executive and the legislature failed to heed the
directives of the article, the available remedy was not judicial but
political. The electorate could express their displeasure with the
failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2).

The reasons for denying a cause of action to an alleged infringement of board constitutional
principles are sourced from basic considerations of due process and the lack of judicial authority to
wade "into the uncharted ocean of social and economic policy making." Mr. Justice Florentino P.
Feliciano in his concurring opinion in Oposa vs. Factoran, Jr.,   explained these reasons as follows:
26

My suggestion is simply that petitioners must, before the trial court, show a more
specific legal right — a right cast in language of a significantly lower order of
generality than Article II (15) of the Constitution — that is or may be violated by the
actions, or failures to act, imputed to the public respondent by petitioners so that the
trial court can validly render judgment grating all or part of the relief prayed for. To
 my mind, the court should be understood as simply saying that such a more specific
legal right or rights may well exist in our corpus of law, considering the general policy
principles found in the Constitution and the existence of the Philippine Environment
Code, and that the trial court should have given petitioners an effective opportunity
so to demonstrate, instead of aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a

cause of action be a specific, operable legal right, rather than a constitutional or
statutory policy, for at least two (2) reasons. One is that unless the legal right claimed
to have been violated or disregarded is given specification in operational terms,
defendants may well be unable to defend themselves intelligently and effectively; in
other words, there are due process dimensions to this matter.

The second is a broader-gauge consideration — where a specific violation of law or

applicable regulation is not alleged or proved, petitioners can be expected to fall back
on the expanded conception of judicial power in the second paragraph of Section 1
of Article VIII of the Constitution which reads:

Sec. 1. . . .

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. (Emphasis
supplied)

When substantive standards as general as "the right to a balanced and healthy

ecology" and "the right to health" are combined with remedial standards as broad
ranging as "a grave abuse of discretion amounting to lack or excess of jurisdiction,"
the result will be, it is respectfully submitted, to propel courts into the uncharted
ocean of social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making
departments — the legislative and executive departments — must be given a real
and effective opportunity to fashion and promulgate those norms and standards, and
to implement them before the courts should intervene.

Economic Nationalism Should Be Read with

Other Constitutional Mandates to Attain
Balanced Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles
relating to the national economy and patrimony, should be read and understood in relation to the
other sections in said article, especially Secs. 1 and 13 thereof which read:

Sec. 1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all especially the
underprivileged.
 The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop. . . .

xxx xxx xxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and
reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic
development, as follows:

1. A more equitable distribution of opportunities, income and wealth;

2. A sustained increase in the amount of goods and services provided by the nation for the benefit of
the people; and

3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.

With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by
expressing preference in favor of qualified Filipinos "in the grant of rights, privileges and concessions
covering the national economy and patrimony"   and in the use of "Filipino labor, domestic materials
27

and locally-produced goods"; (2) by mandating the State to "adopt measures that help make them
competitive;   and (3) by requiring the State to "develop a self-reliant and independent national
28

economy effectively controlled by Filipinos."   In similar language, the Constitution takes into account
29

the realities of the outside world as it requires the pursuit of "a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the basis of equality ad
reciprocity";   and speaks of industries "which are competitive in both domestic and foreign markets"
30

as well as of the protection of "Filipino enterprises against unfair foreign competition and trade

practices."

It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et
al.,   this Court held that "Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory,
31

positive command which is complete in itself and which needs no further guidelines or implementing
laws or rule for its enforcement. From its very words the provision does not require any legislation to
put it in operation. It is per se judicially enforceable." However, as the constitutional provision itself
states, it is enforceable only in regard to "the grants of rights, privileges and concessions covering
national economy and patrimony" and not to every aspect of trade and commerce. It refers to
exceptions rather than the rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is
self-executing or not. Rather, the issue is whether, as a rule, there are enough balancing provisions
in the Constitution to allow the Senate to ratify the Philippine concurrence in the WTO Agreement.
And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair.   In other words, the Constitution did
32

not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services
in the development of the Philippine economy. While the Constitution does not encourage the
unlimited entry of foreign goods, services and investments into the country, it does not prohibit them
either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign
competition that is unfair.

WTO Recognizes Need to

Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to
protect weak and developing economies, which comprise the vast majority of its members. Unlike in
the UN where major states have permanent seats and veto powers in the Security Council, in the
WTO, decisions are made on the basis of sovereign equality, with each member's vote equal in
weight to that of any other. There is no WTO equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the

Ministerial Conference and the General Council shall be taken by the majority of the
votes cast, except in cases of interpretation of the Agreement or waiver of the
obligation of a member which would require three fourths vote. Amendments would
require two thirds vote in general. Amendments to MFN provisions and the
Amendments provision will require assent of all members. Any member may
withdraw from the Agreement upon the expiration of six months from the date of
notice of withdrawals. 33

Hence, poor countries can protect their common interests more effectively through the WTO than
through one-on-one negotiations with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more decisively than outside the
Organization. This is not merely a matter of practical alliances but a negotiating strategy rooted in
law. Thus, the basic principles underlying the WTO Agreement recognize the need of developing
countries like the Philippines to "share in the growth in international trade commensurate with the
needs of their economic development." These basic principles are found in the preamble   of the
34

WTO Agreement as follows:

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should
be conducted with a view to raising standards of living, ensuring full employment and
a large and steadily growing volume of real income and effective demand, and
expanding the production of and trade in goods and services, while allowing for the
optimal use of the world's resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the environment and to enhance
the means for doing so in a manner consistent with their respective needs and
concerns at different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure
a share in the growth in international trade commensurate with the needs of their
economic development,
 Being desirous of contributing to these objectives by entering into reciprocal and
mutually advantageous arrangements directed to the substantial reduction of tariffs
and other barriers to trade and to the elimination of discriminatory treatment in
international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral

trading system encompassing the General Agreement on Tariffs and Trade, the
results of past trade liberalization efforts, and all of the results of the Uruguay Round
of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying
this multilateral trading system, . . . (emphasis supplied.)

Specific WTO Provisos

Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic
principles, the WTO Agreement grants developing countries a more lenient treatment, giving their
domestic industries some protection from the rush of foreign competition. Thus, with respect to tariffs
in general, preferential treatment is given to developing countries in terms of the amount of tariff
reduction and the period within which the reduction is to be spread out. Specifically, GATT requires
an average tariff reduction rate of 36% for developed countries to be effected within a period of six
(6) years while developing countries — including the Philippines — are required to effect an average
tariff reduction of only 24% within ten (10) years.

In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to

agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to
be effected within ten (10) years.

In regard to export subsidy for agricultural products, GATT requires developed countries to reduce
their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy
by 21% within a period of six (6) years. For developing countries, however, the reduction rate is
only two-thirds of that prescribed for developed countries and a longer period of ten (10) years within
which to effect such reduction.

Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can
avail of these measures. There is hardly therefore any basis for the statement that under the WTO,
local industries and enterprises will all be wiped out and that Filipinos will be deprived of control of
the economy. Quite the contrary, the weaker situations of developing nations like the Philippines
have been taken into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a bold decision to steer the
ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set
aside on the ground of grave abuse of discretion, simply because we disagree with it or simply
because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction
of this case will not pass upon the advantages and disadvantages of trade liberalization as an
economic policy. It will only perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion.

Constitution Does Not

Rule Out Foreign Competition
Furthermore, the constitutional policy of a "self-reliant and independent national economy"   does
35

not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
"economic seclusion" nor "mendicancy in the international community." As explained by
Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly

aware of overdependence on external assistance for even its most basic needs. It
does not mean autarky or economic seclusion; rather, it means avoiding mendicancy
in the international community. Independence refers to the freedom from undue
foreign control of the national economy, especially in such strategic industries as in
the development of natural resources and public utilities. 
36

The WTO reliance on "most favored nation," "national treatment," and "trade without discrimination"
cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that
apply to all WTO members. Aside from envisioning a trade policy based on "equality and
reciprocity,"   the fundamental law encourages industries that are "competitive in both domestic and
37

foreign markets," thereby demonstrating a clear policy against a sheltered domestic trade
environment, but one in favor of the gradual development of robust industries that can compete with
the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown
capability and tenacity to compete internationally. And given a free trade environment, Filipino
entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to
prosper against the best offered under a policy of laissez faire.

Constitution Favors Consumers,

Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise,
nor does it contain any specific pronouncement that Filipino companies should be pampered with a
total proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims
to make available to the Filipino consumer the best goods and services obtainable anywhere in the
world at the most reasonable prices. Consequently, the question boils down to whether WTO/GATT
will favor the general welfare of the public at large.

Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?

Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will — as promised
by its promoters — expand the country's exports and generate more employment?

Will it bring more prosperity, employment, purchasing power and quality products at the most
reasonable rates to the Filipino public?

The responses to these questions involve "judgment calls" by our policy makers, for which they are
answerable to our people during appropriate electoral exercises. Such questions and the answers
thereto are not subject to judicial pronouncements based on grave abuse of discretion.

Constitution Designed to Meet

Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and
ratified in 1987. That does not mean however that the Charter is necessarily flawed in the sense that
its framers might not have anticipated the advent of a borderless world of business. By the same
token, the United Nations was not yet in existence when the 1935 Constitution became effective. Did
that necessarily mean that the then Constitution might not have contemplated a diminution of the
absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the decisions of various UN organs like the
Security Council?

It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of
contemporary events. They should be interpreted to cover even future and unknown circumstances.
It is to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but
at the same time bend with the refreshing winds of change necessitated by unfolding events. As one
eminent political law writer and respected jurist   explains:
38

The Constitution must be quintessential rather than superficial, the root and not the
blossom, the base and frame-work only of the edifice that is yet to rise. It is but the
core of the dream that must take shape, not in a twinkling by mandate of our
delegates, but slowly "in the crucible of Filipino minds and hearts," where it will in
time develop its sinews and gradually gather its strength and finally achieve its
substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention, nor can it conjure by mere fiat an
instant Utopia. It must grow with the society it seeks to re-structure and march apace
with the progress of the race, drawing from the vicissitudes of history the dynamism
and vitality that will keep it, far from becoming a petrified rule, a pulsing, living law
attuned to the heartbeat of the nation.

Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed
Agreements."   Petitioners maintain that this undertaking "unduly limits, restricts and impairs
39

Philippine sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987
Philippine Constitution is vested in the Congress of the Philippines. It is an assault on the sovereign
powers of the Philippines because this means that Congress could not pass legislation that will be
good for our national interest and general welfare if such legislation will not conform with the WTO
Agreement, which not only relates to the trade in goods . . . but also to the flow of investments and
money . . . as well as to a whole slew of agreements on socio-cultural matters . . .  40

More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is
lodged in the Congress.   And while the Constitution allows Congress to authorize the President to
41

fix tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts,
such authority is subject to "specified limits and . . . such limitations and restrictions" as Congress
may provide,   as in fact it did under Sec. 401 of the Tariff and Customs Code.
42

Sovereignty Limited by
International Law and Treaties

This Court notes and appreciates the ferocity and passion by which petitioners stressed their
arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily
agreed to by the Philippines, expressly or impliedly, as a member of the family of nations.
Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest
of the world. In its Declaration of Principles and State Policies, the Constitution "adopts the generally
accepted principles of international law as part of the law of the land, and adheres to the policy of
peace, equality, justice, freedom, cooperation and amity, with all nations."   By the doctrine of
43

incorporation, the country is bound by generally accepted principles of international law, which are
considered to be automatically part of our own laws.   One of the oldest and most fundamental rules
44

in international law is pacta sunt servanda — international agreements must be performed in good
faith. "A treaty engagement is not a mere moral obligation but creates a legally binding obligation on
the parties . . . A state which has contracted valid international obligations is bound to make in its
legislations such modifications as may be necessary to ensure the fulfillment of the obligations
undertaken."  45

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange for greater
benefits granted by or derived from a convention or pact. After all, states, like individuals, live with
coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree
to limit the exercise of their otherwise absolute rights. Thus, treaties have been used to record
agreements between States concerning such widely diverse matters as, for example, the lease of
naval bases, the sale or cession of territory, the termination of war, the regulation of conduct of
hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims, the
laying down of rules governing conduct in peace and the establishment of international
organizations.   The sovereignty of a state therefore cannot in fact and in reality be considered
46

absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of
membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by
John F. Kennedy, "Today, no nation can build its destiny alone. The age of self-sufficient nationalism
is over. The age of interdependence is here."  47

UN Charter and Other Treaties

Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented
to restrict its sovereign rights under the "concept of sovereignty as auto-limitation." -A Under Article
47

2 of the UN Charter, "(a)ll members shall give the United Nations every assistance in any action it
takes in accordance with the present Charter, and shall refrain from giving assistance to any state
against which the United Nations is taking preventive or enforcement action." Such assistance
includes payment of its corresponding share not merely in administrative expenses but also in
expenditures for the peace-keeping operations of the organization. In its advisory opinion of July 20,
1961, the International Court of Justice held that money used by the United Nations Emergency
Force in the Middle East and in the Congo were "expenses of the United Nations" under Article 17,
paragraph 2, of the UN Charter. Hence, all its members must bear their corresponding share in such
expenses. In this sense, the Philippine Congress is restricted in its power to appropriate. It is
compelled to appropriate funds whether it agrees with such peace-keeping expenses or not. So too,
under Article 105 of the said Charter, the UN and its representatives enjoy diplomatic privileges and
immunities, thereby limiting again the exercise of sovereignty of members within their own territory.
Another example: although "sovereign equality" and "domestic jurisdiction" of all members are set
forth as underlying principles in the UN Charter, such provisos are however subject to enforcement
measures decided by the Security Council for the maintenance of international peace and security
under Chapter VII of the Charter. A final example: under Article 103, "(i)n the event of a conflict
between the obligations of the Members of the United Nations under the present Charter and their
obligations under any other international agreement, their obligation under the present charter shall
prevail," thus unquestionably denying the Philippines — as a member — the sovereign power to
make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international pacts — both
bilateral and multilateral — that involve limitations on Philippine sovereignty. These are enumerated
by the Solicitor General in his Compliance dated October 24, 1996, as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the
Philippines by, among others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private Investment
Corporation of the United States. Likewise, in said convention, wages, salaries and
similar remunerations paid by the United States to its citizens for labor and personal
services performed by them as employees or officials of the United States are
exempt from income tax by the Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double
taxation.

(d) Bilateral convention with the French Republic for the avoidance of double
taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to
exempt from all customs duties, inspection fees and other duties or taxes aircrafts of
South Korea and the regular equipment, spare parts and supplies arriving with said
aircrafts.

(f) Bilateral air service agreement with Japan, where the Philippines agreed to
exempt from customs duties, excise taxes, inspection fees and other similar duties,
taxes or charges fuel, lubricating oils, spare parts, regular equipment, stores on
board Japanese aircrafts while on Philippine soil.

(g) Bilateral air service agreement with Belgium where the Philippines granted
Belgian air carriers the same privileges as those granted to Japanese and Korean air
carriers under separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the
Philippines exempted Israeli nationals from the requirement of obtaining transit or
visitor visas for a sojourn in the Philippines not exceeding 59 days.

(i) Bilateral agreement with France exempting French nationals from the requirement
of obtaining transit and visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that
premises of Special Missions in the Philippines are inviolable and its agents can not
enter said premises without consent of the Head of Mission concerned. Special
Missions are also exempted from customs duties, taxes and related charges.

(k) Multilateral convention on the Law of Treaties. In this convention, the Philippines
agreed to be governed by the Vienna Convention on the Law of Treaties.
 (l) Declaration of the President of the Philippines accepting compulsory jurisdiction of
the International Court of Justice. The International Court of Justice has jurisdiction in
all legal disputes concerning the interpretation of a treaty, any question of
international law, the existence of any fact which, if established, would constitute a
breach "of international obligation."

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign
powers of taxation, eminent domain and police power. The underlying consideration in this partial
surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the
same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity
characterizes the Philippine commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the

environment, the law of the sea, or trade, constrain domestic political sovereignty
through the assumption of external obligations. But unless anarchy in international
relations is preferred as an alternative, in most cases we accept that the benefits of
the reciprocal obligations involved outweigh the costs associated with any loss of
political sovereignty. (T)rade treaties that structure relations by reference to durable,
well-defined substantive norms and objective dispute resolution procedures reduce
the risks of larger countries exploiting raw economic power to bully smaller countries,
by subjecting power relations to some form of legal ordering. In addition, smaller
countries typically stand to gain disproportionately from trade liberalization. This is
due to the simple fact that liberalization will provide access to a larger set of potential
new trading relationship than in case of the larger country gaining enhanced success
to the smaller country's market.  48

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without
violating the Constitution, based on the rationale that the Philippines "adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy of . . .
cooperation and amity with all nations."

Fourth Issue: The WTO Agreement and Judicial Power

Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)   intrudes on the
49

power of the Supreme Court to promulgate rules concerning pleading, practice and procedures.  50

To understand the scope and meaning of Article 34, TRIPS,   it will be fruitful to restate its full text as
51

follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of
the owner referred to in paragraph 1 (b) of Article 28, if the subject matter of a patent
is a process for obtaining a product, the judicial authorities shall have the authority to
order the defendant to prove that the process to obtain an identical product is
different from the patented process. Therefore, Members shall provide, in at least
one of the following circumstances, that any identical product when produced without
the consent of the patent owner shall, in the absence of proof to the contrary, be
deemed to have been obtained by the patented process:
 (a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was

made by the process and the owner of the patent has been unable
through reasonable efforts to determine the process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in
paragraph 1 shall be on the alleged infringer only if the condition referred to in
subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is
fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in

protecting their manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (not the words "in the
absence of proof to the contrary") presumption that a product shown to be identical to one produced
with the use of a patented process shall be deemed to have been obtained by the (illegal) use of the
said patented process, (1) where such product obtained by the patented product is new, or (2) where
there is "substantial likelihood" that the identical product was made with the use of the said patented
process but the owner of the patent could not determine the exact process used in obtaining such
identical product. Hence, the "burden of proof" contemplated by Article 34 should actually be
understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden,
properly understood, actually refers to the "burden of evidence" (burden of going forward) placed on
the producer of the identical (or fake) product to show that his product was produced without the use
of the patented process.

The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless of
the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence
of the existence of the alleged identical product, the fact that it is "identical" to the genuine one
produced by the patented process and the fact of "newness" of the genuine product or the fact of
"substantial likelihood" that the identical product was made by the patented process.

The foregoing should really present no problem in changing the rules of evidence as the present law
on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a
similar presumption in cases of infringement of patented design or utility model, thus:

Sec. 60. Infringement. — Infringement of a design patent or of a patent for utility

model shall consist in unauthorized copying of the patented design or utility model for
the purpose of trade or industry in the article or product and in the making, using or
selling of the article or product copying the patented design or utility model. Identity
or substantial identity with the patented design or utility model shall constitute
evidence of copying. (emphasis supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption
applies only if (1) the product obtained by the patented process in NEW or (2) there is a substantial
likelihood that the identical product was made by the process and the process owner has not been
able through reasonable effort to determine the process used. Where either of these two provisos
does not obtain, members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.

By and large, the arguments adduced in connection with our disposition of the third issue —
derogation of legislative power — will apply to this fourth issue also. Suffice it to say that the
reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does
not contain an unreasonable burden, consistent as it is with due process and the concept of
adversarial dispute settlement inherent in our judicial system.

So too, since the Philippine is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial.  52

Fifth Issue: Concurrence Only in the WTO Agreement and

Not in Other Documents Contained in the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes — but not in
the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions
and the Understanding on Commitments in Financial Services — is defective and insufficient and
thus constitutes abuse of discretion. They submit that such concurrence in the WTO
Agreement alone is flawed because it is in effect a rejection of the Final Act, which in turn was the
document signed by Secretary Navarro, in representation of the Republic upon authority of the
President. They contend that the second letter of the President to the Senate   which enumerated
53

what constitutes the Final Act should have been the subject of concurrence of the Senate.

"A final act, sometimes called protocol de cloture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of
treaties, conventions, recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference."   It is not the treaty itself. It is rather a summary of the
54

proceedings of a protracted conference which may have taken place over several years. The text of
the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" is
contained in just one page   in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
55

Negotiations. By signing said Final Act, Secretary Navarro as representative of the Republic of the
Philippines undertook:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act
required from its signatories, namely, concurrence of the Senate in the WTO Agreement.

The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They
were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that
representatives of the members can meet "to give effect to those provisions of this Agreement which
invoke joint action, and generally with a view to facilitating the operation and furthering the objectives
of this Agreement." 56

The Understanding on Commitments in Financial Services also approved in Marrakesh does not
apply to the Philippines. It applies only to those 27 Members which "have indicated in their
respective schedules of commitments on standstill, elimination of monopoly, expansion of operation
of existing financial service suppliers, temporary entry of personnel, free transfer and processing of
information, and national treatment with respect to access to payment, clearing systems and
refinancing available in the normal course of business." 57
On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed
included as its integral parts,   as follows:
58

Article II

Scope of the WTO

1. The WTO shall provide the common institutional frame-work for the conduct of
trade relations among its Members in matters to the agreements and associated
legal instruments included in the Annexes to this Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and

3, (hereinafter referred to as "Multilateral Agreements") are integral parts of this
Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4

(hereinafter referred to as "Plurilateral Trade Agreements") are also part of this
Agreement for those Members that have accepted them, and are binding on those
Members. The Plurilateral Trade Agreements do not create either obligation or rights
for Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A

(hereinafter referred to as "GATT 1994") is legally distinct from the General
Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act
adopted at the conclusion of the Second Session of the Preparatory Committee of
the United Nations Conference on Trade and Employment, as subsequently rectified,
amended or modified (hereinafter referred to as "GATT 1947").

It should be added that the Senate was well-aware of what it was concurring in as shown by the
members' deliberation on August 25, 1994. After reading the letter of President Ramos dated August
11, 1994,   the senators
59

of the Republic minutely dissected what the Senate was concurring in, as follows:  60

THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up
in the first day hearing of this Committee yesterday. Was the observation made by
Senator Tañada that what was submitted to the Senate was not the agreement on
establishing the World Trade Organization by the final act of the Uruguay Round
which is not the same as the agreement establishing the World Trade Organization?
And on that basis, Senator Tolentino raised a point of order which, however, he
agreed to withdraw upon understanding that his suggestion for an alternative solution
at that time was acceptable. That suggestion was to treat the proceedings of the
Committee as being in the nature of briefings for Senators until the question of the
submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new . . . is he

making a new submission which improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be
no misunderstanding, it was his intention to clarify all matters by giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Tañada and later on Senator Tolentino since
they were the ones that raised this question yesterday?

Senator Tañada, please.

SEN. TAÑADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is
being submitted to the Senate for ratification is not the Final Act of the Uruguay
Round, but rather the Agreement on the World Trade Organization as well as the
Ministerial Declarations and Decisions, and the Understanding and Commitments in
Financial Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAÑADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tañada. Can we hear from Senator
Tolentino? And after him Senator Neptali Gonzales and Senator Lina.

SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually

transmitted to us but I saw the draft of his earlier, and I think it now complies with the
provisions of the Constitution, and with the Final Act itself . The Constitution does
not require us to ratify the Final Act. It requires us to ratify the Agreement which is
now being submitted. The Final Act itself specifies what is going to be submitted to
with the governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as

appropriate the WTO Agreement for the consideration of the respective competent
authorities with a view to seeking approval of the Agreement in accordance with their
procedures.

In other words, it is not the Final Act that was agreed to be submitted to the
governments for ratification or acceptance as whatever their constitutional
procedures may provide but it is the World Trade Organization Agreement. And if
that is the one that is being submitted now, I think it satisfies both the Constitution
and the Final Act itself .

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of

record. And they had been adequately reflected in the journal of yesterday's session
and I don't see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

 THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make
any comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator

Gonzales out of the abundance of question. Then the new submission is, I believe,
stating the obvious and therefore I have no further comment to make.

Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are
invoking this Court's constitutionally imposed duty "to determine whether or not there has been
grave abuse of discretion amounting to lack or excess of jurisdiction" on the part of the Senate in
giving its concurrence therein via Senate Resolution No. 97. Procedurally, a writ
of certiorari grounded on grave abuse of discretion may be issued by the Court under Rule 65 of the
Rules of Court when it is amply shown that petitioners have no other plain, speedy and adequate
remedy in the ordinary course of law.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction.   Mere abuse of discretion is not enough. It must be grave abuse of
61

discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty
or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.   Failure on
62

the part of the petitioner to show grave abuse of discretion will result in the dismissal of the petition. 
63

In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is
one of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself
a constitutional body independent and coordinate, and thus its actions are presumed regular and
done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow
such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted
definition of grave abuse of discretion and the presumption of regularity in the Senate's processes,
this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's
exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the
Constitution. 64

It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an
independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced goods. But it is equally true that such
principles — while serving as judicial and legislative guides — are not in themselves sources of
causes of action. Moreover, there are other equally fundamental constitutional principles relied upon
by the Senate which mandate the pursuit of a "trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign markets," thereby
justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise
of legislative and judicial powers is balanced by the adoption of the generally accepted principles of
international law as part of the law of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the
WTO Agreement thereby making it "a part of the law of the land" is a legitimate exercise of its
sovereign duty and power. We find no "patent and gross" arbitrariness or despotism "by reason of
passion or personal hostility" in such exercise. It is not impossible to surmise that this Court, or at
least some of its members, may even agree with petitioners that it is more advantageous to the
national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute
grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute grave
abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a
valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside
the realm of judicial inquiry and review. That is a matter between the elected policy makers and the
people. As to whether the nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing their policy makers.
After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of
a member.

The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance   where "the East will become the dominant region of the world economically, politically
65

and culturally in the next century." He refers to the "free market" espoused by WTO as the "catalyst"
in this coming Asian ascendancy. There are at present about 31 countries including China, Russia
and Saudi Arabia negotiating for membership in the WTO. Notwithstanding objections against
possible limitations on national sovereignty, the WTO remains as the only viable structure for
multilateral trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched with
original membership, keenly aware of the advantages and disadvantages of globalization with its on-
line experience, and endowed with a vision of the future, the Philippines now straddles the
crossroads of an international strategy for economic prosperity and stability in the new millennium.
Let the people, through their duly authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-49112 February 2, 1979

LEOVILLO C. AGUSTIN, petitioner,
vs.
HON. ROMEO F. EDU, in his capacity as Land Transportation Commissioner; HON. JUAN
PONCE ENRILE, in his capacity as Minister of National Defense; HON. ALFREDO L. JUINIO, in
his capacity as Minister Of Public Works, Transportation and Communications; and HON:
BALTAZAR AQUINO, in his capacity as Minister of Public Highways, respondents.

Leovillo C. Agustin Law Office for petitioner.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Ruben E. Agpalo and Solicitor
Amado D. Aquino for respondents.

FERNANDO, J.:

The validity of a letter of Instruction   providing for an early seaming device for motor vehicles is
1

assailed in this prohibition proceeding as being violative of the constitutional guarantee of due
process and, insofar as the rules and regulations for its implementation are concerned, for
transgressing the fundamental principle of non- delegation of legislative power. The Letter of
Instruction is stigmatized by petitioner who is possessed of the requisite standing, as being arbitrary
and oppressive. A temporary restraining order as issued and respondents Romeo F. Edu, Land
Transportation Commissioner Juan Ponce Enrile, Minister of National Defense; Alfredo L. Juinio,
Minister of Public Works, Transportation and Communications; and Baltazar Aquino, Minister of
Public Highways; were to answer. That they did in a pleading submitted by Solicitor General Estelito
P. Mendoza.   Impressed with a highly persuasive quality, it makes devoid clear that the imputation
2

of a constitutional infirmity is devoid of justification The Letter of Instruction on is a valid police power
measure. Nor could the implementing rules and regulations issued by respondent Edu be
considered as amounting to an exercise of legislative power. Accordingly, the petition must be
dismissed.

The facts are undisputed. The assailed Letter of Instruction No. 229 of President Marcos, issued on
December 2, 1974, reads in full: "[Whereas], statistics show that one of the major causes of fatal or
serious accidents in land transportation is the presence of disabled, stalled or parked motor vehicles
along streets or highways without any appropriate early warning device to signal approaching
motorists of their presence; [Whereas], the hazards posed by such obstructions to traffic have been
recognized by international bodies concerned with traffic safety, the 1968 Vienna Convention on
Road Signs and Signals and the United Nations Organization (U.N.); [Whereas], the said Vienna
Convention which was ratified by the Philippine Government under P.D. No. 207, recommended the
enactment of local legislation for the installation of road safety signs and devices; [Now, therefore, I,
Ferdinand E. Marcos], President of the Philippines, in the interest of safety on all streets and
highways, including expressways or limited access roads, do hereby direct: 1. That all owners, users
or drivers of motor vehicles shall have at all times in their motor vehicles at least one (1) pair of early
warning device consisting of triangular, collapsible reflectorized plates in red and yellow colors at
least 15 cms. at the base and 40 cms. at the sides. 2. Whenever any motor vehicle is stalled or
disabled or is parked for thirty (30) minutes or more on any street or highway, including expressways
or limited access roads, the owner, user or driver thereof shall cause the warning device mentioned
herein to be installed at least four meters away to the front and rear of the motor vehicle staged,
disabled or parked. 3. The Land Transportation Commissioner shall cause Reflectorized Triangular
Early Warning Devices, as herein described, to be prepared and issued to registered owners of
motor vehicles, except motorcycles and trailers, charging for each piece not more than 15 % of the
acquisition cost. He shall also promulgate such rules and regulations as are appropriate to
effectively implement this order. 4. All hereby concerned shall closely coordinate and take such
measures as are necessary or appropriate to carry into effect then instruction.   Thereafter, on
3

November 15, 1976, it was amended by Letter of Instruction No. 479 in this wise. "Paragraph 3 of
Letter of Instruction No. 229 is hereby amended to read as follows: 3. The Land transportation
Commissioner shall require every motor vehicle owner to procure from any and present at the
registration of his vehicle, one pair of a reflectorized early warning device, as d bed of any brand or
make chosen by mid motor vehicle . The Land Transportation Commissioner shall also promulgate
such rule and regulations as are appropriate to effectively implement this order.'"   There was issued
4

accordingly, by respondent Edu, the implementing rules and regulations on December 10,
1976.   They were not enforced as President Marcos on January 25, 1977, ordered a six-month
5

period of suspension insofar as the installation of early warning device as a pre-registration

requirement for motor vehicle was concerned.   Then on June 30, 1978, another Letter of
6

Instruction   the lifting of such suspension and directed the immediate implementation of Letter of
7

Instruction No. 229 as amended.   It was not until August 29, 1978 that respondent Edu issued
8

Memorandum Circular No. 32, worded thus: "In pursuance of Letter of Instruction No. 716, dated
June 30, 1978, the implementation of Letter of Instruction No. 229, as amended by Letter of
Instructions No. 479, requiring the use of Early Warning Devices (EWD) on motor vehicle, the
following rules and regulations are hereby issued: 1. LTC Administrative Order No. 1, dated
December 10, 1976; shall now be implemented provided that the device may come from whatever
source and that it shall have substantially complied with the EWD specifications contained in Section
2 of said administrative order; 2. In order to insure that every motor vehicle , except motorcycles, is
equipped with the device, a pair of serially numbered stickers, to be issued free of charge by this
Commission, shall be attached to each EWD. The EWD. serial number shall be indicated on the
registration certificate and official receipt of payment of current registration fees of the motor vehicle
concerned. All Orders, Circulars, and Memoranda in conflict herewith are hereby superseded, This
Order shall take effect immediately.   It was for immediate implementation by respondent Alfredo L.
9

Juinio, as Minister of Public Works, transportation, and Communications.  10

Petitioner, after setting forth that he "is the owner of a Volkswagen Beetle Car, Model 13035, already
properly equipped when it came out from the assembly lines with blinking lights fore and aft, which
could very well serve as an early warning device in case of the emergencies mentioned in Letter of
Instructions No. 229, as amended, as well as the implementing rules and regulations in
Administrative Order No. 1 issued by the land transportation Commission,"   alleged that said Letter
11

of Instruction No. 229, as amended, "clearly violates the provisions and delegation of police power,
[sic] * * *: " For him they are "oppressive, unreasonable, arbitrary, confiscatory, nay unconstitutional
and contrary to the precepts of our compassionate New Society."   He contended that they are
12

"infected with arbitrariness because it is harsh, cruel and unconscionable to the motoring
public;"   are "one-sided, onerous and patently illegal and immoral because [they] will make
13

manufacturers and dealers instant millionaires at the expense of car owners who are compelled to
buy a set of the so-called early warning device at the rate of P 56.00 to P72.00 per set."   are
14

unlawful and unconstitutional and contrary to the precepts of a compassionate New Society [as
being] compulsory and confiscatory on the part of the motorists who could very well provide a
practical alternative road safety device, or a better substitute to the specified set of EWD's."   He
15

therefore prayed for a judgment both the assailed Letters of Instructions and Memorandum Circular
void and unconstitutional and for a restraining order in the meanwhile.

A resolution to this effect was handed down by this Court on October 19, 1978: "L-49112 (Leovillo C.
Agustin v. Hon. Romeo F. Edu, etc., et al.) — Considering the allegations contained, the issues
raised and the arguments adduced in the petition for prohibition with writ of p prohibitory and/or
mandatory injunction, the Court Resolved to (require) the respondents to file an answer thereto
within ton (10) days from notice and not to move to dismiss the petition. The Court further Resolved
to [issue] a [temporary restraining order] effective as of this date and continuing until otherwise
ordered by this Court. 16

Two motions for extension were filed by the Office of the Solicitor General and granted. Then on
November 15, 1978, he Answer for respondents was submitted. After admitting the factual
allegations and stating that they lacked knowledge or information sufficient to form a belief as to
petitioner owning a Volkswagen Beetle car," they "specifically deny the allegations and stating they
lacked knowledge or information sufficient to form a belief as to petitioner owning a Volkswagen
Beetle Car,   they specifically deny the allegations in paragraphs X and XI (including its
17

subparagraphs 1, 2, 3, 4) of Petition to the effect that Letter of Instruction No. 229 as amended by
Letters of Instructions Nos. 479 and 716 as well as Land transportation Commission Administrative
Order No. 1 and its Memorandum Circular No. 32 violates the constitutional provisions on due
process of law, equal protection of law and undue delegation of police power, and that the same are
likewise oppressive, arbitrary, confiscatory, one-sided, onerous, immoral unreasonable and illegal
the truth being that said allegations are without legal and factual basis and for the reasons alleged in
the Special and Affirmative Defenses of this Answer."  Unlike petitioner who contented himself with
18

a rhetorical recital of his litany of grievances and merely invoked the sacramental phrases of
constitutional litigation, the Answer, in demonstrating that the assailed Letter of Instruction was a
valid exercise of the police power and implementing rules and regulations of respondent Edu not
susceptible to the charge that there was unlawful delegation of legislative power, there was in the
portion captioned Special and Affirmative Defenses, a citation of what respondents believed to be
the authoritative decisions of this Tribunal calling for application. They are Calalang v.
Williams,   Morfe v. Mutuc,   and Edu v. Ericta.   Reference was likewise made to the 1968 Vienna
19 20 21

Conventions of the United Nations on road traffic, road signs, and signals, of which the Philippines
was a signatory and which was duly ratified.   Solicitor General Mendoza took pains to refute in
22

detail, in language calm and dispassionate, the vigorous, at times intemperate, accusation of
petitioner that the assailed Letter of Instruction and the implementing rules and regulations cannot
survive the test of rigorous scrutiny. To repeat, its highly-persuasive quality cannot be denied.

This Court thus considered the petition submitted for decision, the issues being clearly joined. As
noted at the outset, it is far from meritorious and must be dismissed.

1. The Letter of Instruction in question was issued in the exercise of the police power. That is
conceded by petitioner and is the main reliance of respondents. It is the submission of the former,
however, that while embraced in such a category, it has offended against the due process and equal
protection safeguards of the Constitution, although the latter point was mentioned only in passing.
The broad and expansive scope of the police power which was originally Identified by Chief Justice
Taney of the American Supreme Court in an 1847 decision as "nothing more or less than the powers
of government inherent in every sovereignty"   was stressed in the aforementioned case of Edu v.
23

Ericta thus: "Justice Laurel, in the first leading decision after the Constitution came into
force, Calalang v. Williams, Identified police power with state authority to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare. Persons and
property could thus 'be subjected to all kinds of restraints and burdens in order to we the general
comfort, health and prosperity of the state.' Shortly after independence in 1948, Primicias v.
Fugoso reiterated the doctrine, such a competence being referred to as 'the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety, and general
welfare of the people. The concept was set forth in negative terms by Justice Malcolm in a pre-
Commonwealth decision as 'that inherent and plenary power in the State which enables it to prohibit
all things hurtful to the comfort, safety and welfare of society. In that sense it could be hardly
distinguishable as noted by this Court in Morfe v. Mutuc with the totality of legislative power. It is in
the above sense the greatest and most powerful at. tribute of government. It is, to quote Justice
Malcolm anew, 'the most essential, insistent, and at least table powers, I extending as Justice
Holmes aptly pointed out 'to all the great public needs.' 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. In the language of Justice Cardozo: 'Needs that were narrow or parochial in the past may
be interwoven in the present with the well-being of the nation. What is critical or urgent changes with
the time.' The police power is thus a dynamic agency, suitably vague and far from precisely defined,
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
communal peace, safety, good order, and welfare."  24

2. It was thus a heavy burden to be shouldered by petitioner, compounded by the fact that the
particular police power measure challenged was clearly intended to promote public safety. It would
be a rare occurrence indeed for this Court to invalidate a legislative or executive act of that
character. None has been called to our attention, an indication of its being non-existent. The latest
decision in point, Edu v. Ericta, sustained the validity of the Reflector Law,   an enactment conceived
25

with the same end in view. Calalang v. Williams found nothing objectionable in a statute, the
purpose of which was: "To promote safe transit upon, and. avoid obstruction on roads and streets
designated as national roads * * *.   As a matter of fact, the first law sought to be nullified after the
26

effectivity of the 1935 Constitution, the National Defense Act,   with petitioner failing in his quest,
27

was likewise prompted by the imperative demands of public safety.

3. The futility of petitioner's effort to nullify both the Letter of Instruction and the implementing rules
and regulations becomes even more apparent considering his failure to lay the necessary factual
foundation to rebut the presumption of validity. So it was held in Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila.   The rationale was clearly set forth in an
28

excerpt from a decision of Justice Branders of the American Supreme Court, quoted in the opinion:
"The statute here questioned deals with a subject clearly within the scope of the police power. We
are asked to declare it void on the ground that the specific method of regulation prescribed is
unreasonable and hence deprives the plaintiff of due process of law. As underlying questions of fact
may condition the constitutionality of legislation of this character, the presumption of constitutionality
must prevail in the absence of some factual foundation of record in overthrowing the statute.  29

4. Nor did the Solicitor General as he very well could, rely solely on such rebutted presumption of
validity. As was pointed out in his Answer "The President certainly had in his possession the
necessary statistical information and data at the time he issued said letter of instructions, and such
factual foundation cannot be defeated by petitioner's naked assertion that early warning devices 'are
not too vital to the prevention of nighttime vehicular accidents' because allegedly only 390 or 1.5 per
cent of the supposed 26,000 motor vehicle accidents that in 1976 involved rear-end collisions (p. 12
of petition). Petitioner's statistics is not backed up by demonstrable data on record. As aptly stated
by this Honorable Court: Further: "It admits of no doubt therefore that there being a presumption of
validity, the necessity for evidence to rebut it is unavoidable, unless the statute or ordinance is void
on its face, which is not the case here"' * * *. But even as g the verity of petitioner's statistics, is that
not reason enough to require the installation of early warning devices to prevent another 390 rear-
end collisions that could mean the death of 390 or more Filipinos and the deaths that could likewise
result from head-on or frontal collisions with stalled vehicles?"   It is quite manifest then that the
30

issuance of such Letter of Instruction is encased in the armor of prior, careful study by the Executive
Department. To set it aside for alleged repugnancy to the due process clause is to give sanction to
conjectural claims that exceeded even the broadest permissible limits of a pleader's well known
penchant for exaggeration.

5. The rather wild and fantastic nature of the charge of oppressiveness of this Letter of Instruction
was exposed in the Answer of the Solicitor General thus: "Such early warning device requirement is
not an expensive redundancy, nor oppressive, for car owners whose cars are already equipped with
1) blinking lights in the fore and aft of said motor vehicles,' 2) "battery-powered blinking lights inside
motor vehicles," 3) "built-in reflectorized tapes on front and rear bumpers of motor vehicles," or 4)
"well-lighted two (2) petroleum lamps (the Kinke) * * * because: Being universal among the signatory
countries to the said 1968 Vienna Conventions, and visible even under adverse conditions at a
distance of at least 400 meters, any motorist from this country or from any part of the world, who
sees a reflectorized rectangular early seaming device installed on the roads, highways or
expressways, will conclude, without thinking, that somewhere along the travelled portion of that road,
highway, or expressway, there is a motor vehicle which is stationary, stalled or disabled which
obstructs or endangers passing traffic. On the other hand, a motorist who sees any of the
aforementioned other built in warning devices or the petroleum lamps will not immediately get
adequate advance warning because he will still think what that blinking light is all about. Is it an
emergency vehicle? Is it a law enforcement car? Is it an ambulance? Such confusion or uncertainty
in the mind of the motorist will thus increase, rather than decrease, the danger of collision.  31

6. Nor did the other extravagant assertions of constitutional deficiency go unrefuted in the Answer of
the Solicitor General "There is nothing in the questioned Letter of Instruction No. 229, as amended,
or in Administrative Order No. 1, which requires or compels motor vehicle owners to purchase the
early warning device prescribed thereby. All that is required is for motor vehicle owners concerned
like petitioner, to equip their motor vehicles with a pair of this early warning device in question,
procuring or obtaining the same from whatever source. In fact, with a little of industry and practical
ingenuity, motor vehicle owners can even personally make or produce this early warning device so
long as the same substantially conforms with the specifications laid down in said letter of instruction
and administrative order. Accordingly the early warning device requirement can neither be
oppressive, onerous, immoral, nor confiscatory, much less does it make manufacturers and dealers
of said devices 'instant millionaires at the expense of car owners' as petitioner so sweepingly
concludes * * *. Petitioner's fear that with the early warning device requirement 'a more subtle racket
may be committed by those called upon to enforce it * * * is an unfounded speculation. Besides, that
unscrupulous officials may try to enforce said requirement in an unreasonable manner or to an
unreasonable degree, does not render the same illegal or immoral where, as in the instant case, the
challenged Letter of Instruction No. 229 and implementing order disclose none of the constitutional
defects alleged against it.32

7 It does appear clearly that petitioner's objection to this Letter of Instruction is not premised on lack
of power, the justification for a finding of unconstitutionality, but on the pessimistic, not to say
negative, view he entertains as to its wisdom. That approach, it put it at its mildest, is distinguished,
if that is the appropriate word, by its unorthodoxy. It bears repeating "that this Court, in the language
of Justice Laurel, 'does not pass upon questions of wisdom justice or expediency of legislation.' As
expressed by Justice Tuason: 'It is not the province of the courts to supervise legislation and keep it
within the bounds of propriety and common sense. That is primarily and exclusively a legislative
concern.' There can be no possible objection then to the observation of Justice Montemayor. 'As
long as laws do not violate any Constitutional provision, the Courts merely interpret and apply them
regardless of whether or not they are wise or salutary. For they, according to Justice Labrador, 'are
not supposed to override legitimate policy and * * * never inquire into the wisdom of the law.' It is
thus settled, to paraphrase Chief Justice Concepcion in Gonzales v. Commission on Elections, that
only congressional power or competence, not the wisdom of the action taken, may be the basis for
declaring a statute invalid. This is as it ought to be. The principle of separation of powers has in the
main wisely allocated the respective authority of each department and confined its jurisdiction to
such a sphere. There would then be intrusion not allowable under the Constitution if on a matter left
to the discretion of a coordinate branch, the judiciary would substitute its own. If there be adherence
to the rule of law, as there ought to be, the last offender should be courts of justice, to which rightly
litigants submit their controversy precisely to maintain unimpaired the supremacy of legal norms and
prescriptions. The attack on the validity of the challenged provision likewise insofar as there may be
objections, even if valid and cogent on is wisdom cannot be sustained.  33

8. The alleged infringement of the fundamental principle of non-delegation of legislative power is

equally without any support well-settled legal doctrines. Had petitioner taken the trouble to acquaint
himself with authoritative pronouncements from this Tribunal, he would not have the temerity to
make such an assertion. An exempt from the aforecited decision of Edu v. Ericta sheds light on the
matter: "To avoid the taint of unlawful delegation, there must be a standard, which implies at the very
least that the legislature itself determines matters of principle and lays down fundamental policy.
Otherwise, the charge of complete abdication may be hard to repel A standard thus defines
legislative policy, marks its maps out its boundaries and specifies the public agency to apply it. It
indicates the circumstances under which the legislative command is to be effected. It is the criterion
by which legislative purpose may be carried out. Thereafter, the executive or administrative office
designated may in pursuance of the above guidelines promulgate supplemental rules and
regulations. The standard may be either express or implied. If the former, the non-delegation
objection is easily met. The standard though does not have to be spelled out specifically. It could be
implied from the policy and purpose of the act considered as a whole. In the Reflector Law clearly,
the legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is
"safe transit upon the roads.' This is to adhere to the recognition given expression by Justice Laurel
in a decision announced not too long after the Constitution came into force and effect that the
principle of non-delegation "has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits, of the principle of "subordinate
legislation" not only in the United States and England but in practically all modern governments.' He
continued: 'Accordingly, with the growing complexity of modern life, the multiplication of the subjects
of governmental regulation, and the increased difficulty of administering the laws, there is a
constantly growing tendency toward the delegation of greater powers by the legislature and toward
the approval of the practice by the courts.' Consistency with the conceptual approach requires the
reminder that what is delegated is authority non-legislative in character, the completeness of the
statute when it leaves the hands of Congress being assumed."  34

9. The conclusion reached by this Court that this petition must be dismissed is reinforced by this
consideration. The petition itself quoted these two whereas clauses of the assailed Letter of
Instruction: "[Whereas], the hazards posed by such obstructions to traffic have been recognized by
international bodies concerned with traffic safety, the 1968 Vienna Convention on Road Signs and
Signals and the United Nations Organization (U.N.); [Whereas], the said Vionna Convention, which
was ratified by the Philippine Government under P.D. No. 207, recommended the enactment of local
legislation for the installation of road safety signs and devices; * * * "   It cannot be disputed then that
35

this Declaration of Principle found in the Constitution possesses relevance: "The Philippines * * *
adopts the generally accepted principles of international law as part of the law of the land * *
*."   The 1968 Vienna Convention on Road Signs and Signals is impressed with such a character. It
36

is not for this country to repudiate a commitment to which it had pledged its word. The concept
of Pacta sunt servanda stands in the way of such an attitude, which is, moreover, at war with the
principle of international morality.

10. That is about all that needs be said. The rather court reference to equal protection did not even
elicit any attempt on the Part of Petitioner to substantiate in a manner clear, positive, and categorical
why such a casual observation should be taken seriously. In no case is there a more appropriate
occasion for insistence on what was referred to as "the general rule" in Santiago v. Far Eastern
Broadcasting Co.,   namely, "that the constitutionality of a law wig not be considered unless the point
37

is specially pleaded, insisted upon, and adequately argued."   "Equal protection" is not a talismanic
38

formula at the mere invocation of which a party to a lawsuit can rightfully expect that success will
crown his efforts. The law is anything but that.

WHEREFORE, this petition is dismissed. The restraining order is lifted. This decision is immediately
executory. No costs.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 173034             October 9, 2007

PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF THE PHILIPPINES, petitioner,

vs.
HEALTH SECRETARY FRANCISCO T. DUQUE III; HEALTH UNDER SECRETARIES DR.
ETHELYN P. NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A. PADILLA, & DR.
JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR. MARIO C. VILLAVERDE, DR.
DAVID J. LOZADA, AND DR. NEMESIO T. GAKO, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

The Court and all parties involved are in agreement that the best nourishment for an infant is
mother's milk. There is nothing greater than for a mother to nurture her beloved child straight from
her bosom. The ideal is, of course, for each and every Filipino child to enjoy the unequaled benefits
of breastmilk. But how should this end be attained?

Before the Court is a petition for certiorari under Rule 65 of the Rules of Court, seeking to nullify
Administrative Order (A.O.) No. 2006-0012 entitled, Revised Implementing Rules and
Regulations of Executive Order No. 51, Otherwise Known as The "Milk Code," Relevant
International Agreements, Penalizing Violations Thereof, and for Other Purposes (RIRR).
Petitioner posits that the RIRR is not valid as it contains provisions that are not constitutional and go
beyond the law it is supposed to implement.

Named as respondents are the Health Secretary, Undersecretaries, and Assistant Secretaries of the
Department of Health (DOH). For purposes of herein petition, the DOH is deemed impleaded as a
co-respondent since respondents issued the questioned RIRR in their capacity as officials of said
executive agency.1

Executive Order No. 51 (Milk Code) was issued by President Corazon Aquino on October 28, 1986
by virtue of the legislative powers granted to the president under the Freedom Constitution. One of
the preambular clauses of the Milk Code states that the law seeks to give effect to Article 11 2 of the
International Code of Marketing of Breastmilk Substitutes (ICMBS), a code adopted by the World
Health Assembly (WHA) in 1981. From 1982 to 2006, the WHA adopted several Resolutions to the
effect that breastfeeding should be supported, promoted and protected, hence, it should be ensured
that nutrition and health claims are not permitted for breastmilk substitutes.

In 1990, the Philippines ratified the International Convention on the Rights of the Child. Article 24 of
said instrument provides that State Parties should take appropriate measures to diminish infant and
child mortality, and ensure that all segments of society, specially parents and children, are informed
of the advantages of breastfeeding.

On May 15, 2006, the DOH issued herein assailed RIRR which was to take effect on July 7, 2006.

However, on June 28, 2006, petitioner, representing its members that are manufacturers of
breastmilk substitutes, filed the present Petition for Certiorari and Prohibition with Prayer for the
Issuance of a Temporary Restraining Order (TRO) or Writ of Preliminary Injunction.

The main issue raised in the petition is whether respondents officers of the DOH acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction,
and in violation of the provisions of the Constitution in promulgating the RIRR. 3

On August 15, 2006, the Court issued a Resolution granting a TRO enjoining respondents from
implementing the questioned RIRR.

After the Comment and Reply had been filed, the Court set the case for oral arguments on June 19,
2007. The Court issued an Advisory (Guidance for Oral Arguments) dated June 5, 2007, to wit:

The Court hereby sets the following issues:

1. Whether or not petitioner is a real party-in-interest;

2. Whether Administrative Order No. 2006-0012 or the Revised Implementing Rules and
Regulations (RIRR) issued by the Department of Health (DOH) is not constitutional;

2.1 Whether the RIRR is in accord with the provisions of Executive Order No. 51 (Milk Code);

2.2 Whether pertinent international agreements 1 entered into by the Philippines are part of
the law of the land and may be implemented by the DOH through the RIRR; If in the
affirmative, whether the RIRR is in accord with the international agreements;

2.3 Whether Sections 4, 5(w), 22, 32, 47, and 52 of the RIRR violate the due process clause
and are in restraint of trade; and

2.4 Whether Section 13 of the RIRR on Total Effect provides sufficient standards.

_____________

1 (1) United Nations Convention on the Rights of the Child; (2) the WHO and Unicef "2002
Global Strategy on Infant and Young Child Feeding;" and (3) various World Health Assembly
(WHA) Resolutions.

The parties filed their respective memoranda.

The petition is partly imbued with merit.

On the issue of petitioner's standing

With regard to the issue of whether petitioner may prosecute this case as the real party-in-interest,
the Court adopts the view enunciated in Executive Secretary v. Court of Appeals, 4 to wit:

The modern view is that an association has standing to complain of injuries to its members.
This view fuses the legal identity of an association with that of its members. An association
has standing to file suit for its workers despite its lack of direct interest if its members
are affected by the action. An organization has standing to assert the concerns of its
constituents.

xxxx

x x x We note that, under its Articles of Incorporation, the respondent was organized x x x to
act as the representative of any individual, company, entity or association on matters related
to the manpower recruitment industry, and to perform other acts and activities necessary to
accomplish the purposes embodied therein. The respondent is, thus, the appropriate
party to assert the rights of its members, because it and its members are in every
practical sense identical. x x x The respondent [association] is but the medium
through which its individual members seek to make more effective the expression of
their voices and the redress of their grievances. 5 (Emphasis supplied)

which was reasserted in Purok Bagong Silang Association, Inc. v. Yuipco,6 where the Court ruled
that an association has the legal personality to represent its members because the results of the
case will affect their vital interests.7

Herein petitioner's Amended Articles of Incorporation contains a similar provision just like in
Executive Secretary, that the association is formed "to represent directly or through approved
representatives the pharmaceutical and health care industry before the Philippine Government and
any of its agencies, the medical professions and the general public." 8 Thus, as an organization,
petitioner definitely has an interest in fulfilling its avowed purpose of representing members who are
part of the pharmaceutical and health care industry. Petitioner is duly authorized 9 to take the
appropriate course of action to bring to the attention of government agencies and the courts any
grievance suffered by its members which are directly affected by the RIRR. Petitioner, which is
mandated by its Amended Articles of Incorporation to represent the entire industry, would be remiss
in its duties if it fails to act on governmental action that would affect any of its industry members, no
matter how few or numerous they are. Hence, petitioner, whose legal identity is deemed fused with
its members, should be considered as a real party-in-interest which stands to be benefited or injured
by any judgment in the present action.

On the constitutionality of the provisions of the RIRR

First, the Court will determine if pertinent international instruments adverted to by respondents are
part of the law of the land.

Petitioner assails the RIRR for allegedly going beyond the provisions of the Milk Code, thereby
amending and expanding the coverage of said law. The defense of the DOH is that the RIRR
implements not only the Milk Code but also various international instruments 10 regarding infant and
young child nutrition. It is respondents' position that said international instruments are deemed part
of the law of the land and therefore the DOH may implement them through the RIRR.

The Court notes that the following international instruments invoked by respondents, namely: (1) The
United Nations Convention on the Rights of the Child; (2) The International Covenant on Economic,
Social and Cultural Rights; and (3) the Convention on the Elimination of All Forms of Discrimination
Against Women, only provide in general terms that steps must be taken by State Parties to diminish
infant and child mortality and inform society of the advantages of breastfeeding, ensure the health
and well-being of families, and ensure that women are provided with services and nutrition in
connection with pregnancy and lactation. Said instruments do not contain specific provisions
regarding the use or marketing of breastmilk substitutes.

The international instruments that do have specific provisions regarding breastmilk substitutes are
the ICMBS and various WHA Resolutions.

Under the 1987 Constitution, international law can become part of the sphere of domestic law either
by transformation or incorporation.11 The transformation method requires that an international law
be transformed into a domestic law through a constitutional mechanism such as local legislation.
The incorporation method applies when, by mere constitutional declaration, international law is
deemed to have the force of domestic law.12

Treaties become part of the law of the land through transformation pursuant to Article VII, Section
21 of the Constitution which provides that "[n]o treaty or international agreement shall be valid and
effective unless concurred in by at least two-thirds of all the members of the Senate." Thus, treaties
or conventional international law must go through a process prescribed by the Constitution for it to
be transformed into municipal law that can be applied to domestic conflicts. 13

The ICMBS and WHA Resolutions are not treaties as they have not been concurred in by at least
two-thirds of all members of the Senate as required under Section 21, Article VII of the 1987
Constitution.

However, the ICMBS which was adopted by the WHA in 1981 had been transformed into domestic
law through local legislation, the Milk Code. Consequently, it is the Milk Code that has the force and
effect of law in this jurisdiction and not the ICMBS per se.

The Milk Code is almost a verbatim reproduction of the ICMBS, but it is well to emphasize at this
point that the Code did not adopt the provision in the ICMBS absolutely prohibiting advertising or
other forms of promotion to the general public of products within the scope of the ICMBS.
Instead, the Milk Code expressly provides that advertising, promotion, or other marketing
materials may be allowed if such materials are duly authorized and approved by the Inter-
Agency Committee (IAC).

On the other hand, Section 2, Article II of the 1987 Constitution, to wit:

SECTION 2. The Philippines renounces war as an instrument of national policy, adopts the

generally accepted principles of international law as part of the law of the land and
adheres to the policy of peace, equality, justice, freedom, cooperation and amity with all
nations. (Emphasis supplied)

embodies the incorporation method.14
In Mijares v. Ranada,15 the Court held thus:

[G]enerally accepted principles of international law, by virtue of the incorporation clause of

the Constitution, form part of the laws of the land even if they do not derive from treaty
obligations. The classical formulation in international law sees those customary rules
accepted as binding result from the combination [of] two elements: the established,
widespread, and consistent practice on the part of States; and a psychological element
known as the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the
latter element is a belief that the practice in question is rendered obligatory by the existence
of a rule of law requiring it.16 (Emphasis supplied)

"Generally accepted principles of international law" refers to norms of general or customary

international law which are binding on all states, 17 i.e., renunciation of war as an instrument of
national policy, the principle of sovereign immunity,18 a person's right to life, liberty and due
process,19 and pacta sunt servanda,20 among others. The concept of "generally accepted principles
of law" has also been depicted in this wise:

Some legal scholars and judges look upon certain "general principles of law" as a primary source of
international law because they have the "character of jus rationale" and are "valid through all
kinds of human societies." (Judge Tanaka in his dissenting opinion in the 1966 South West Africa
Case, 1966 I.C.J. 296). O'Connell holds that certain priniciples are part of international law
because they are "basic to legal systems generally" and hence part of the jus gentium. These
principles, he believes, are established by a process of reasoning based on the common identity of
all legal systems. If there should be doubt or disagreement, one must look to state practice and
determine whether the municipal law principle provides a just and acceptable solution. x x
x 21 (Emphasis supplied)

Fr. Joaquin G. Bernas defines customary international law as follows:

Custom or customary international law means "a general and consistent practice of states
followed by them from a sense of legal obligation [opinio juris]." (Restatement) This
statement contains the two basic elements of custom: the material factor, that is, how
states behave, and the psychological or subjective factor, that is, why they behave the
way they do.

xxxx

The initial factor for determining the existence of custom is the actual behavior of states. This
includes several elements: duration, consistency, and generality of the practice of states.

The required duration can be either short or long. x x x

xxxx

Duration therefore is not the most important element. More important is the consistency and
the generality of the practice. x x x

xxxx

Once the existence of state practice has been established, it becomes necessary to
determine why states behave the way they do. Do states behave the way they do
 because they consider it obligatory to behave thus or do they do it only as a matter of
courtesy? Opinio juris, or the belief that a certain form of behavior is obligatory, is
what makes practice an international rule. Without it, practice is not law.22 (Underscoring
and Emphasis supplied)

Clearly, customary international law is deemed incorporated into our domestic system. 23

WHA Resolutions have not been embodied in any local legislation. Have they attained the status of
customary law and should they then be deemed incorporated as part of the law of the land?

The World Health Organization (WHO) is one of the international specialized agencies allied with the
United Nations (UN) by virtue of Article 57,24 in relation to Article 6325 of the UN Charter. Under the
1946 WHO Constitution, it is the WHA which determines the policies of the WHO, 26 and has the
power to adopt regulations concerning "advertising and labeling of biological, pharmaceutical and
similar products moving in international commerce," 27 and to "make recommendations to members
with respect to any matter within the competence of the Organization." 28 The legal effect of its
regulations, as opposed to recommendations, is quite different.

Regulations, along with conventions and agreements, duly adopted by the WHA bind member
states thus:

Article 19. The Health Assembly shall have authority to adopt conventions or agreements
with respect to any matter within the competence of the Organization. A two-thirds vote of
the Health Assembly shall be required for the adoption of such conventions or
agreements, which shall come into force for each Member when accepted by it in
accordance with its constitutional processes.

Article 20. Each Member undertakes that it will, within eighteen months after the adoption
by the Health Assembly of a convention or agreement, take action relative to the
acceptance of such convention or agreement. Each Member shall notify the Director-
General of the action taken, and if it does not accept such convention or agreement within
the time limit, it will furnish a statement of the reasons for non-acceptance. In case of
acceptance, each Member agrees to make an annual report to the Director-General in
accordance with Chapter XIV.

Article 21. The Health Assembly shall have authority to adopt regulations concerning: (a)
sanitary and quarantine requirements and other procedures designed to prevent the
international spread of disease; (b) nomenclatures with respect to diseases, causes of death
and public health practices; (c) standards with respect to diagnostic procedures for
international use; (d) standards with respect to the safety, purity and potency of biological,
pharmaceutical and similar products moving in international commerce; (e) advertising and
labeling of biological, pharmaceutical and similar products moving in international commerce.

Article 22. Regulations adopted pursuant to Article 21 shall come into force for all
Members after due notice has been given of their adoption by the Health Assembly except
for such Members as may notify the Director-General of rejection or reservations within the
period stated in the notice. (Emphasis supplied)

On the other hand, under Article 23, recommendations of the WHA do not come into force for
members, in the same way that conventions or agreements under Article 19 and regulations under
Article 21 come into force. Article 23 of the WHO Constitution reads:
 Article 23. The Health Assembly shall have authority to make recommendations to
Members with respect to any matter within the competence of the Organization. (Emphasis
supplied)

The absence of a provision in Article 23 of any mechanism by which the recommendation would
come into force for member states is conspicuous.

The former Senior Legal Officer of WHO, Sami Shubber, stated that WHA recommendations are
generally not binding, but they "carry moral and political weight, as they constitute the judgment on a
health issue of the collective membership of the highest international body in the field of
health."29 Even the ICMBS itself was adopted as a mere recommendation, as WHA Resolution No.
34.22 states:

"The Thirty-Fourth World Health Assembly x x x adopts, in the sense of Article 23 of the
Constitution, the International Code of Marketing of Breastmilk Substitutes annexed to the
present resolution." (Emphasis supplied)

The Introduction to the ICMBS also reads as follows:

In January 1981, the Executive Board of the World Health Organization at its sixty-seventh
session, considered the fourth draft of the code, endorsed it, and unanimously
recommended to the Thirty-fourth World Health Assembly the text of a resolution by which it
would adopt the code in the form of a recommendation rather than a regulation. x x x
(Emphasis supplied)

The legal value of WHA Resolutions as recommendations is summarized in Article 62 of the WHO
Constitution, to wit:

Art. 62. Each member shall report annually on the action taken with respect to
recommendations made to it by the Organization, and with respect to conventions,
agreements and regulations.

Apparently, the WHA Resolution adopting the ICMBS and subsequent WHA Resolutions urging
member states to implement the ICMBS are merely recommendatory and legally non-binding. Thus,
unlike what has been done with the ICMBS whereby the legislature enacted most of the
provisions into law which is the Milk Code, the subsequent WHA Resolutions, 30 specifically
providing for exclusive breastfeeding from 0-6 months, continued breastfeeding up to 24
months, and absolutely prohibiting advertisements and promotions of breastmilk substitutes,
have not been adopted as a domestic law.

It is propounded that WHA Resolutions may constitute "soft law" or non-binding norms, principles
and practices that influence state behavior. 31

"Soft law" does not fall into any of the categories of international law set forth in Article 38, Chapter
III of the 1946 Statute of the International Court of Justice. 32 It is, however, an expression of non-
binding norms, principles, and practices that influence state behavior. 33 Certain declarations and
resolutions of the UN General Assembly fall under this category. 34 The most notable is the UN
Declaration of Human Rights, which this Court has enforced in various cases,
specifically, Government of Hongkong Special Administrative Region v. Olalia,35 Mejoff v. Director of
Prisons,36 Mijares v. Rañada37 and Shangri-la International Hotel Management, Ltd. v. Developers
Group of Companies, Inc..38
The World Intellectual Property Organization (WIPO), a specialized agency attached to the UN with
the mandate to promote and protect intellectual property worldwide, has resorted to soft law as a
rapid means of norm creation, in order "to reflect and respond to the changing needs and demands
of its constituents."39 Other international organizations which have resorted to soft law include the
International Labor Organization and the Food and Agriculture Organization (in the form of
the Codex Alimentarius).40

WHO has resorted to soft law. This was most evident at the time of the Severe Acute Respiratory
Syndrome (SARS) and Avian flu outbreaks.

Although the IHR Resolution does not create new international law binding on WHO
member states, it provides an excellent example of the power of "soft law" in
international relations. International lawyers typically distinguish binding rules of
international law-"hard law"-from non-binding norms, principles, and practices that
influence state behavior-"soft law." WHO has during its existence generated many
soft law norms, creating a "soft law regime" in international governance for public
health.

The "soft law" SARS and IHR Resolutions represent significant steps in laying the political
groundwork for improved international cooperation on infectious diseases. These resolutions
clearly define WHO member states' normative duty to cooperate fully with other countries
and with WHO in connection with infectious disease surveillance and response to outbreaks.

This duty is neither binding nor enforceable, but, in the wake of the SARS epidemic,
the duty is powerful politically for two reasons. First, the SARS outbreak has taught the
lesson that participating in, and enhancing, international cooperation on infectious disease
controls is in a country's self-interest x x x if this warning is heeded, the "soft law" in the
SARS and IHR Resolution could inform the development of general and consistent state
practice on infectious disease surveillance and outbreak response, perhaps crystallizing
eventually into customary international law on infectious disease prevention and control. 41

In the Philippines, the executive department implemented certain measures recommended by WHO
to address the outbreaks of SARS and Avian flu by issuing Executive Order (E.O.) No. 201 on April
26, 2003 and E.O. No. 280 on February 2, 2004, delegating to various departments broad powers to
close down schools/establishments, conduct health surveillance and monitoring, and ban importation
of poultry and agricultural products.

It must be emphasized that even under such an international emergency, the duty of a state to
implement the IHR Resolution was still considered not binding or enforceable, although said
resolutions had great political influence.

As previously discussed, for an international rule to be considered as customary law, it must be

established that such rule is being followed by states because they consider it obligatory to comply
with such rules (opinio juris). Respondents have not presented any evidence to prove that the WHA
Resolutions, although signed by most of the member states, were in fact enforced or practiced by at
least a majority of the member states; neither have respondents proven that any compliance by
member states with said WHA Resolutions was obligatory in nature.

Respondents failed to establish that the provisions of pertinent WHA Resolutions are customary
international law that may be deemed part of the law of the land.
Consequently, legislation is necessary to transform the provisions of the WHA Resolutions into
domestic law. The provisions of the WHA Resolutions cannot be considered as part of the law
of the land that can be implemented by executive agencies without the need of a law enacted
by the legislature.

Second, the Court will determine whether the DOH may implement the provisions of the WHA
Resolutions by virtue of its powers and functions under the Revised Administrative Code even in the
absence of a domestic law.

Section 3, Chapter 1, Title IX of the Revised Administrative Code of 1987 provides that the DOH
shall define the national health policy and implement a national health plan within the framework
of the government's general policies and plans, and issue orders and regulations concerning the
implementation of established health policies.

It is crucial to ascertain whether the absolute prohibition on advertising and other forms of promotion
of breastmilk substitutes provided in some WHA Resolutions has been adopted as part of the
national health policy.

Respondents submit that the national policy on infant and young child feeding is embodied in A.O.
No. 2005-0014, dated May 23, 2005. Basically, the Administrative Order declared the following
policy guidelines: (1) ideal breastfeeding practices, such as early initiation of breastfeeding,
exclusive breastfeeding for the first six months, extended breastfeeding up to two years and beyond;
(2) appropriate complementary feeding, which is to start at age six months; (3) micronutrient
supplementation; (4) universal salt iodization; (5) the exercise of other feeding options; and (6)
feeding in exceptionally difficult circumstances. Indeed, the primacy of breastfeeding for children is
emphasized as a national health policy. However, nowhere in A.O. No. 2005-0014 is it declared
that as part of such health policy, the advertisement or promotion of breastmilk substitutes
should be absolutely prohibited.

The national policy of protection, promotion and support of breastfeeding cannot automatically be
equated with a total ban on advertising for breastmilk substitutes.

In view of the enactment of the Milk Code which does not contain a total ban on the advertising and
promotion of breastmilk substitutes, but instead, specifically creates an IAC which will regulate said
advertising and promotion, it follows that a total ban policy could be implemented only pursuant to a
law amending the Milk Code passed by the constitutionally authorized branch of government, the
legislature.

Thus, only the provisions of the Milk Code, but not those of subsequent WHA Resolutions, can
be validly implemented by the DOH through the subject RIRR.

Third, the Court will now determine whether the provisions of the RIRR are in accordance with those
of the Milk Code.

In support of its claim that the RIRR is inconsistent with the Milk Code, petitioner alleges the
following:

1. The Milk Code limits its coverage to children 0-12 months old, but the RIRR extended its
coverage to "young children" or those from ages two years old and beyond:

MILK CODE RIRR

 WHEREAS, in order to ensure that safe and Section 2. Purpose – These Revised Rules
adequate nutrition for infants is provided, there and Regulations are hereby promulgated to
is a need to protect and promote breastfeeding ensure the provision of safe and adequate
and to inform the public about the proper use of nutrition for infants and young children by the
breastmilk substitutes and supplements and promotion, protection and support of
related products through adequate, consistent breastfeeding and by ensuring the proper use
and objective information and appropriate of breastmilk substitutes, breastmilk
regulation of the marketing and distribution of supplements and related products when these
the said substitutes, supplements and related are medically indicated and only when
products; necessary, on the basis of adequate
information and through appropriate marketing
SECTION 4(e). "Infant" means a person falling and distribution.
within the age bracket of 0-12 months.
Section 5(ff). "Young Child" means a person
from the age of more than twelve (12) months
up to the age of three (3) years (36 months).

2. The Milk Code recognizes that infant formula may be a proper and possible substitute for
breastmilk in certain instances; but the RIRR provides "exclusive breastfeeding for infants
from 0-6 months" and declares that "there is no substitute nor replacement for breastmilk":

MILK CODE RIRR

WHEREAS, in order to ensure that safe and Section 4. Declaration of Principles – The
adequate nutrition for infants is provided, there following are the underlying principles from
is a need to protect and promote breastfeeding which the revised rules and regulations are
and to inform the public about the proper use of premised upon:
breastmilk substitutes and supplements and
related products through adequate, consistent a. Exclusive breastfeeding is for infants from 0
and objective information and appropriate to six (6) months.
regulation of the marketing and distribution of
the said substitutes, supplements and related b. There is no substitute or replacement for
products; breastmilk.

3. The Milk Code only regulates and does not impose unreasonable requirements for
advertising and promotion; RIRR imposes an absolute ban on such activities for breastmilk
substitutes intended for infants from 0-24 months old or beyond, and forbids the use of
health and nutritional claims. Section 13 of the RIRR, which provides for a "total effect" in the
promotion of products within the scope of the Code, is vague:

MILK CODE RIRR

SECTION 6. The General Public and
Mothers. –
(a) No advertising, promotion or other
marketing materials, whether written, audio or
visual, for products within the scope of this
Code shall be printed, published, distributed,
exhibited and broadcast unless such materials
are duly authorized and approved by an inter-
agency committee created herein pursuant to
the applicable standards provided for in this
Section 4. Declaration of Principles – The
following are the underlying principles from
which the revised rules and regulations are
premised upon:
xxxx
f. Advertising, promotions, or sponsor-ships of
infant formula, breastmilk substitutes and other
related products are prohibited.
Code. Section 11. Prohibition – No advertising,
promotions, sponsorships, or marketing
materials and activities for breastmilk
substitutes intended for infants and young
children up to twenty-four (24) months, shall be
allowed, because they tend to convey or give
subliminal messages or impressions that
undermine breastmilk and breastfeeding or
otherwise exaggerate breastmilk substitutes
and/or replacements, as well as related
products covered within the scope of this Code.

Section 13. "Total Effect" - Promotion of

products within the scope of this Code must be
objective and should not equate or make the
product appear to be as good or equal to
breastmilk or breastfeeding in the advertising
concept. It must not in any case undermine
breastmilk or breastfeeding. The "total effect"
should not directly or indirectly suggest that
buying their product would produce better
individuals, or resulting in greater love,
intelligence, ability, harmony or in any manner
bring better health to the baby or other such
exaggerated and unsubstantiated claim.

Section 15. Content of Materials. - The

following shall not be included in advertising,
promotional and marketing materials:

a. Texts, pictures, illustrations or information

which discourage or tend to undermine the
benefits or superiority of breastfeeding or which
idealize the use of breastmilk substitutes and
milk supplements. In this connection, no
pictures of babies and children together with
their mothers, fathers, siblings, grandparents,
other relatives or caregivers (or yayas) shall be
used in any advertisements for infant formula
and breastmilk supplements;

b. The term "humanized," "maternalized,"

"close to mother's milk" or similar words in
describing breastmilk substitutes or milk
supplements;

c. Pictures or texts that idealize the use of

infant and milk formula.

Section 16. All health and nutrition claims for

products within the scope of the Code are
 absolutely prohibited. For this purpose, any
phrase or words that connotes to increase
emotional, intellectual abilities of the infant and
young child and other like phrases shall not be
allowed.

4. The RIRR imposes additional labeling requirements not found in the Milk Code:

MILK CODE RIRR

SECTION 10. Containers/Label. – Section 26. Content – Each container/label
shall contain such message, in both Filipino
(a) Containers and/or labels shall be designed and English languages, and which message
to provide the necessary information about the cannot be readily separated therefrom, relative
appropriate use of the products, and in such a the following points:
way as not to discourage breastfeeding.
(a) The words or phrase "Important Notice" or
(b) Each container shall have a clear, "Government Warning" or their equivalent;
conspicuous and easily readable and
understandable message in Pilipino or English (b) A statement of the superiority of
printed on it, or on a label, which message can breastfeeding;
not readily become separated from it, and
which shall include the following points: (c) A statement that there is no substitute for
breastmilk;
(i) the words "Important Notice" or their
equivalent; (d) A statement that the product shall be used
only on the advice of a health worker as to the
(ii) a statement of the superiority of need for its use and the proper methods of use;
breastfeeding;
(e) Instructions for appropriate prepara-tion,
(iii) a statement that the product shall be used and a warning against the health hazards of
only on the advice of a health worker as to the inappropriate preparation; and
need for its use and the proper methods of use;
and (f) The health hazards of unnecessary or
improper use of infant formula and other
(iv) instructions for appropriate preparation, related products including information that
and a warning against the health hazards of powdered infant formula may contain
inappropriate preparation. pathogenic microorganisms and must be
prepared and used appropriately.

5. The Milk Code allows dissemination of information on infant formula to health

professionals; the RIRR totally prohibits such activity:

MILK CODE RIRR

SECTION 7. Health Care System. –
(b) No facility of the health care system shall
be used for the purpose of promoting infant
formula or other products within the scope of
this Code. This Code does not, however,
preclude the dissemination of information to
Section 22. No manufacturer, distributor, or
representatives of products covered by the
Code shall be allowed to conduct or be
involved in any activity on breastfeeding
promotion, education and production of
Information, Education and Communication
(IEC) materials on breastfeeding, holding of or
 participating as speakers in classes or
health professionals as provided in Section seminars for women and children activities and
8(b). to avoid the use of these venues to market
their brands or company names.
SECTION 8. Health Workers. -
SECTION 16. All health and nutrition claims for
(b) Information provided by manufacturers and products within the scope of the Code are
distributors to health professionals regarding absolutely prohibited. For this purpose, any
products within the scope of this Code shall be phrase or words that connotes to increase
restricted to scientific and factual matters and emotional, intellectual abilities of the infant and
such information shall not imply or create a young child and other like phrases shall not be
belief that bottle-feeding is equivalent or allowed.
superior to breastfeeding. It shall also include
the information specified in Section 5(b).

6. The Milk Code permits milk manufacturers and distributors to extend assistance in
research and continuing education of health professionals; RIRR absolutely forbids the
same.

MILK CODE RIRR

SECTION 8. Health Workers – Section 4. Declaration of Principles –

(e) Manufacturers and distributors of products
within the scope of this Code may assist in the
research, scholarships and continuing
education, of health professionals, in
accordance with the rules and regulations
promulgated by the Ministry of Health.
The following are the underlying principles from
which the revised rules and regulations are
premised upon:
i. Milk companies, and their
representatives, should not form part of any
policymaking body or entity in relation to the
advancement of breasfeeding.

SECTION 22. No manufacturer, distributor, or

representatives of products covered by the
Code shall be allowed to conduct or be
involved in any activity on breastfeeding
promotion, education and production of
Information, Education and Communication
(IEC) materials on breastfeeding, holding of or
participating as speakers in classes or
seminars for women and children activities and
to avoid the use of these venues to market
their brands or company names.

SECTION 32. Primary Responsibility of

Health Workers - It is the primary
responsibility of the health workers to promote,
protect and support breastfeeding and
appropriate infant and young child feeding.
Part of this responsibility is to continuously
update their knowledge and skills on
breastfeeding. No assistance, support, logistics
 or training from milk companies shall be
permitted.

7. The Milk Code regulates the giving of donations; RIRR absolutely prohibits it.

MILK CODE RIRR

SECTION 6. The General Public and Section 51. Donations Within the Scope of
Mothers. – This Code - Donations of products, materials,
defined and covered under the Milk Code and
(f) Nothing herein contained shall prevent these implementing rules and regulations, shall
donations from manufacturers and distributors be strictly prohibited.
of products within the scope of this Code upon
request by or with the approval of the Ministry Section 52. Other Donations By Milk
of Health. Companies Not Covered by this Code. -
Donations of products, equipments, and the
like, not otherwise falling within the scope of
this Code or these Rules, given by milk
companies and their agents, representatives,
whether in kind or in cash, may only be
coursed through the Inter Agency Committee
(IAC), which shall determine whether such
donation be accepted or otherwise.

8. The RIRR provides for administrative sanctions not imposed by the Milk Code.

MILK CODE RIRR

  Section 46. Administrative Sanctions. – The
following administrative sanctions shall be
imposed upon any person, juridical or natural,
found to have violated the provisions of the
Code and its implementing Rules and
Regulations:

a) 1st violation – Warning;

b) 2nd violation – Administrative fine of a

minimum of Ten Thousand (P10,000.00) to
Fifty Thousand (P50,000.00) Pesos, depending
on the gravity and extent of the violation,
including the recall of the offending product;

c) 3rd violation – Administrative Fine of a

minimum of Sixty Thousand (P60,000.00) to
One Hundred Fifty Thousand (P150,000.00)
Pesos, depending on the gravity and extent of
the violation, and in addition thereto, the recall
of the offending product, and suspension of the
Certificate of Product Registration (CPR);

d) 4th violation –Administrative Fine of a

 minimum of Two Hundred Thousand
(P200,000.00) to Five Hundred (P500,000.00)
Thousand Pesos, depending on the gravity and
extent of the violation; and in addition thereto,
the recall of the product, revocation of the
CPR, suspension of the License to Operate
(LTO) for one year;

e) 5th and succeeding repeated violations –

Administrative Fine of One Million
(P1,000,000.00) Pesos, the recall of the
offending product, cancellation of the CPR,
revocation of the License to Operate (LTO) of
the company concerned, including the
blacklisting of the company to be furnished the
Department of Budget and Management
(DBM) and the Department of Trade and
Industry (DTI);

f) An additional penalty of Two Thou-sand Five

Hundred (P2,500.00) Pesos per day shall be
made for every day the violation continues
after having received the order from the IAC or
other such appropriate body, notifying and
penalizing the company for the infraction.

For purposes of determining whether or not

there is "repeated" violation, each product
violation belonging or owned by a company,
including those of their subsidiaries, are
deemed to be violations of the concerned milk
company and shall not be based on the
specific violating product alone.

9. The RIRR provides for repeal of existing laws to the contrary.

The Court shall resolve the merits of the allegations of petitioner seriatim.

1. Petitioner is mistaken in its claim that the Milk Code's coverage is limited only to children 0-12
months old. Section 3 of the Milk Code states:

SECTION 3. Scope of the Code – The Code applies to the marketing, and practices related
thereto, of the following products: breastmilk substitutes, including infant formula; other milk
products, foods and beverages, including bottle-fed complementary foods, when marketed or
otherwise represented to be suitable, with or without modification, for use as a partial or total
replacement of breastmilk; feeding bottles and teats. It also applies to their quality and
availability, and to information concerning their use.

Clearly, the coverage of the Milk Code is not dependent on the age of the child but on the kind of
product being marketed to the public. The law treats infant formula, bottle-fed complementary food,
and breastmilk substitute as separate and distinct product categories.
Section 4(h) of the Milk Code defines infant formula as "a breastmilk substitute x x x to satisfy the
normal nutritional requirements of infants up to between four to six months of age, and adapted to
their physiological characteristics"; while under Section 4(b), bottle-fed complementary food refers to
"any food, whether manufactured or locally prepared, suitable as a complement to breastmilk or
infant formula, when either becomes insufficient to satisfy the nutritional requirements of the infant."
An infant under Section 4(e) is a person falling within the age bracket 0-12 months. It is the
nourishment of this group of infants or children aged 0-12 months that is sought to be promoted and
protected by the Milk Code.

But there is another target group. Breastmilk substitute is defined under Section 4(a) as "any food
being marketed or otherwise presented as a partial or total replacement for breastmilk, whether or
not suitable for that purpose." This section conspicuously lacks reference to any particular age-
group of children. Hence, the provision of the Milk Code cannot be considered exclusive for
children aged 0-12 months. In other words, breastmilk substitutes may also be intended for young
children more than 12 months of age. Therefore, by regulating breastmilk substitutes, the Milk Code
also intends to protect and promote the nourishment of children more than 12 months old.

Evidently, as long as what is being marketed falls within the scope of the Milk Code as provided in
Section 3, then it can be subject to regulation pursuant to said law, even if the product is to be used
by children aged over 12 months.

There is, therefore, nothing objectionable with Sections 242 and 5(ff)43 of the RIRR.

2. It is also incorrect for petitioner to say that the RIRR, unlike the Milk Code, does not recognize that
breastmilk substitutes may be a proper and possible substitute for breastmilk.

The entirety of the RIRR, not merely truncated portions thereof, must be considered and construed
together. As held in De Luna v. Pascual,44 "[t]he particular words, clauses and phrases in the Rule
should not be studied as detached and isolated expressions, but the whole and every part thereof
must be considered in fixing the meaning of any of its parts and in order to produce a harmonious
whole."

Section 7 of the RIRR provides that "when medically indicated and only when necessary, the use of
breastmilk substitutes is proper if based on complete and updated information." Section 8 of the
RIRR also states that information and educational materials should include information on the proper
use of infant formula when the use thereof is needed.

Hence, the RIRR, just like the Milk Code, also recognizes that in certain cases, the use of
breastmilk substitutes may be proper.

3. The Court shall ascertain the merits of allegations 345 and 446 together as they are interlinked with
each other.

To resolve the question of whether the labeling requirements and advertising regulations under the
RIRR are valid, it is important to deal first with the nature, purpose, and depth of the regulatory
powers of the DOH, as defined in general under the 1987 Administrative Code, 47 and as delegated in
particular under the Milk Code.

Health is a legitimate subject matter for regulation by the DOH (and certain other administrative
agencies) in exercise of police powers delegated to it. The sheer span of jurisprudence on that
matter precludes the need to further discuss it..48 However, health information, particularly advertising
materials on apparently non-toxic products like breastmilk substitutes and supplements, is a
relatively new area for regulation by the DOH.49

As early as the 1917 Revised Administrative Code of the Philippine Islands, 50 health information was
already within the ambit of the regulatory powers of the predecessor of DOH. 51 Section 938 thereof
charged it with the duty to protect the health of the people, and vested it with such powers as "(g) the
dissemination of hygienic information among the people and especially the inculcation of
knowledge as to the proper care of infants and the methods of preventing and combating
dangerous communicable diseases."

Seventy years later, the 1987 Administrative Code tasked respondent DOH to carry out the state
policy pronounced under Section 15, Article II of the 1987 Constitution, which is "to protect and
promote the right to health of the people and instill health consciousness among them."52 To that
end, it was granted under Section 3 of the Administrative Code the power to "(6) propagate health
information and educate the population on important health, medical and environmental matters
which have health implications."53

When it comes to information regarding nutrition of infants and young children, however, the Milk
Code specifically delegated to the Ministry of Health (hereinafter referred to as DOH) the power to
ensure that there is adequate, consistent and objective information on breastfeeding and use of
breastmilk substitutes, supplements and related products; and the power to control such
information. These are expressly provided for in Sections 12 and 5(a), to wit:

SECTION 12. Implementation and Monitoring –

xxxx

(b) The Ministry of Health shall be principally responsible for the implementation and
enforcement of the provisions of this Code. For this purpose, the Ministry of Health shall
have the following powers and functions:

(1) To promulgate such rules and regulations as are necessary or proper for the
implementation of this Code and the accomplishment of its purposes and objectives.

xxxx

(4) To exercise such other powers and functions as may be necessary for or
incidental to the attainment of the purposes and objectives of this Code.

SECTION 5. Information and Education –

(a) The government shall ensure that objective and consistent information is provided on

infant feeding, for use by families and those involved in the field of infant nutrition. This
responsibility shall cover the planning, provision, design and dissemination of information,
and the control thereof, on infant nutrition. (Emphasis supplied)

Further, DOH is authorized by the Milk Code to control the content of any information on
breastmilk vis-à-vis breastmilk substitutes, supplement and related products, in the following
manner:

SECTION 5. x x x
 (b) Informational and educational materials, whether written, audio, or visual, dealing with the
feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: (1) the benefits and superiority of
breastfeeding; (2) maternal nutrition, and the preparation for and maintenance of
breastfeeding; (3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4)
the difficulty of reversing the decision not to breastfeed; and (5) where needed, the proper
use of infant formula, whether manufactured industrially or home-prepared. When such
materials contain information about the use of infant formula, they shall include the
social and financial implications of its use; the health hazards of inappropriate foods
or feeding methods; and, in particular, the health hazards of unnecessary or improper
use of infant formula and other breastmilk substitutes. Such materials shall not use
any picture or text which may idealize the use of breastmilk substitutes.

SECTION 8. Health Workers –

xxxx

(b) Information provided by manufacturers and distributors to health professionals regarding

products within the scope of this Code shall be restricted to scientific and factual
matters, and such information shall not imply or create a belief that bottlefeeding is
equivalent or superior to breastfeeding. It shall also include the information specified
in Section 5(b).

SECTION 10. Containers/Label –

(a) Containers and/or labels shall be designed to provide the necessary information about
the appropriate use of the products, and in such a way as not to discourage
breastfeeding.

xxxx

(d) The term "humanized," "maternalized" or similar terms shall not be used. (Emphasis
supplied)

The DOH is also authorized to control the purpose of the information and to whom such information
may be disseminated under Sections 6 through 9 of the Milk Code 54 to ensure that the information
that would reach pregnant women, mothers of infants, and health professionals and workers in the
health care system is restricted to scientific and factual matters and shall not imply or create a belief
that bottlefeeding is equivalent or superior to breastfeeding.

It bears emphasis, however, that the DOH's power under the Milk Code to control information
regarding breastmilk vis-a-vis breastmilk substitutes is not absolute as the power to control does
not encompass the power to absolutely prohibit the advertising, marketing, and promotion of
breastmilk substitutes.

The following are the provisions of the Milk Code that unequivocally indicate that the control over
information given to the DOH is not absolute and that absolute prohibition is not contemplated by the
Code:

a) Section 2 which requires adequate information and appropriate marketing and distribution
of breastmilk substitutes, to wit:
 SECTION 2. Aim of the Code – The aim of the Code is to contribute to the provision
of safe and adequate nutrition for infants by the protection and promotion of
breastfeeding and by ensuring the proper use of breastmilk substitutes and
breastmilk supplements when these are necessary, on the basis of adequate
information and through appropriate marketing and distribution.

b) Section 3 which specifically states that the Code applies to the marketing of and practices
related to breastmilk substitutes, including infant formula, and to information concerning their
use;

c) Section 5(a) which provides that the government shall ensure that objective and consistent
information is provided on infant feeding;

d) Section 5(b) which provides that written, audio or visual informational and educational
materials shall not use any picture or text which may idealize the use of breastmilk
substitutes and should include information on the health hazards of unnecessary or improper
use of said product;

e) Section 6(a) in relation to Section 12(a) which creates and empowers the IAC to review
and examine advertising, promotion, and other marketing materials;

f) Section 8(b) which states that milk companies may provide information to health
professionals but such information should be restricted to factual and scientific matters and
shall not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding;
and

g) Section 10 which provides that containers or labels should not contain information that
would discourage breastfeeding and idealize the use of infant formula.

It is in this context that the Court now examines the assailed provisions of the RIRR regarding
labeling and advertising.

Sections 1355 on "total effect" and 2656 of Rule VII of the RIRR contain some labeling requirements,
specifically: a) that there be a statement that there is no substitute to breastmilk; and b) that there be
a statement that powdered infant formula may contain pathogenic microorganisms and must be
prepared and used appropriately. Section 1657 of the RIRR prohibits all health and nutrition claims for
products within the scope of the Milk Code, such as claims of increased emotional and intellectual
abilities of the infant and young child.

These requirements and limitations are consistent with the provisions of Section 8 of the Milk Code,
to wit:

SECTION 8. Health workers -

xxxx

(b) Information provided by manufacturers and distributors to health professionals regarding

products within the scope of this Code shall be restricted to scientific and factual matters,
and such information shall not imply or create a belief that bottlefeeding
is equivalent or superior to breastfeeding. It shall also include the information specified in
Section 5.58 (Emphasis supplied)
and Section 10(d)59 which bars the use on containers and labels of the terms "humanized,"
"maternalized," or similar terms.

These provisions of the Milk Code expressly forbid information that would imply or create a belief
that there is any milk product equivalent to breastmilk or which is humanized or maternalized, as
such information would be inconsistent with the superiority of breastfeeding.

It may be argued that Section 8 of the Milk Code refers only to information given to health workers
regarding breastmilk substitutes, not to containers and labels thereof. However, such restrictive
application of Section 8(b) will result in the absurd situation in which milk companies and distributors
are forbidden to claim to health workers that their products are substitutes or equivalents of
breastmilk, and yet be allowed to display on the containers and labels of their products the exact
opposite message. That askewed interpretation of the Milk Code is precisely what Section 5(a)
thereof seeks to avoid by mandating that all information regarding breastmilk vis-a-vis breastmilk
substitutes be consistent, at the same time giving the government control over planning, provision,
design, and dissemination of information on infant feeding.

Thus, Section 26(c) of the RIRR which requires containers and labels to state that the product
offered is not a substitute for breastmilk, is a reasonable means of enforcing Section 8(b) of the Milk
Code and deterring circumvention of the protection and promotion of breastfeeding as embodied in
Section 260 of the Milk Code.

Section 26(f)61 of the RIRR is an equally reasonable labeling requirement. It implements Section 5(b)
of the Milk Code which reads:

SECTION 5. x x x

xxxx

(b) Informational and educational materials, whether written, audio, or visual, dealing with the
feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: x x x (5) where needed, the proper use
of infant formula, whether manufactured industrially or home-prepared. When such materials
contain information about the use of infant formula, they shall include the social and financial
implications of its use; the health hazards of inappropriate foods or feeding methods;
and, in particular, the health hazards of unnecessary or improper use of infant
formula and other breastmilk substitutes. Such materials shall not use any picture or text
which may idealize the use of breastmilk substitutes. (Emphasis supplied)

The label of a product contains information about said product intended for the buyers thereof. The
buyers of breastmilk substitutes are mothers of infants, and Section 26 of the RIRR merely adds a
fair warning about the likelihood of pathogenic microorganisms being present in infant formula and
other related products when these are prepared and used inappropriately.

Petitioner’s counsel has admitted during the hearing on June 19, 2007 that formula milk is prone to
contaminations and there is as yet no technology that allows production of powdered infant formula
that eliminates all forms of contamination.62

Ineluctably, the requirement under Section 26(f) of the RIRR for the label to contain the message
regarding health hazards including the possibility of contamination with pathogenic microorganisms
is in accordance with Section 5(b) of the Milk Code.
The authority of DOH to control information regarding breastmilk vis-a-vis breastmilk substitutes and
supplements and related products cannot be questioned. It is its intervention into the area of
advertising, promotion, and marketing that is being assailed by petitioner.

In furtherance of Section 6(a) of the Milk Code, to wit:

SECTION 6. The General Public and Mothers. –

(a) No advertising, promotion or other marketing materials, whether written, audio or visual,
for products within the scope of this Code shall be printed, published, distributed, exhibited
and broadcast unless such materials are duly authorized and approved by an inter-agency
committee created herein pursuant to the applicable standards provided for in this Code.

the Milk Code invested regulatory authority over advertising, promotional and marketing materials to
an IAC, thus:

SECTION 12. Implementation and Monitoring -

(a) For purposes of Section 6(a) of this Code, an inter-agency committee composed of the
following members is hereby created:

Minister of Health ------------------- Chairman

Minister of Trade and Industry ------------------- Member

Minister of Justice ------------------- Member

Minister of Social Services and Development ------------------- Member

The members may designate their duly authorized representative to every meeting of the
Committee.

The Committee shall have the following powers and functions:

(1) To review and examine all advertising. promotion or other marketing materials,
whether written, audio or visual, on products within the scope of this Code;

(2) To approve or disapprove, delete objectionable portions from and prohibit the
printing, publication, distribution, exhibition and broadcast of, all advertising
promotion or other marketing materials, whether written, audio or visual, on products
within the scope of this Code;

(3) To prescribe the internal and operational procedure for the exercise of its powers
and functions as well as the performance of its duties and responsibilities; and

(4) To promulgate such rules and regulations as are necessary or proper for
the implementation of Section 6(a) of this Code. x x x (Emphasis supplied)

However, Section 11 of the RIRR, to wit:

 SECTION 11. Prohibition – No advertising, promotions, sponsorships, or marketing materials
and activities for breastmilk substitutes intended for infants and young children up to twenty-
four (24) months, shall be allowed, because they tend to convey or give subliminal messages
or impressions that undermine breastmilk and breastfeeding or otherwise exaggerate
breastmilk substitutes and/or replacements, as well as related products covered within the
scope of this Code.

prohibits advertising, promotions, sponsorships or marketing materials and activities for breastmilk
substitutes in line with the RIRR’s declaration of principle under Section 4(f), to wit:

SECTION 4. Declaration of Principles –

xxxx

(f) Advertising, promotions, or sponsorships of infant formula, breastmilk substitutes and

other related products are prohibited.

The DOH, through its co-respondents, evidently arrogated to itself not only the regulatory authority
given to the IAC but also imposed absolute prohibition on advertising, promotion, and marketing.

Yet, oddly enough, Section 12 of the RIRR reiterated the requirement of the Milk Code in Section 6
thereof for prior approval by IAC of all advertising, marketing and promotional materials prior to
dissemination.

Even respondents, through the OSG, acknowledged the authority of IAC, and repeatedly insisted,
during the oral arguments on June 19, 2007, that the prohibition under Section 11 is not actually
operational, viz:

SOLICITOR GENERAL DEVANADERA:

xxxx

x x x Now, the crux of the matter that is being questioned by Petitioner is whether or not
there is an absolute prohibition on advertising making AO 2006-12 unconstitutional. We
maintained that what AO 2006-12 provides is not an absolute prohibition because Section 11
while it states and it is entitled prohibition it states that no advertising, promotion,
sponsorship or marketing materials and activities for breast milk substitutes intended for
infants and young children up to 24 months shall be allowed because this is the standard
they tend to convey or give subliminal messages or impression undermine that breastmilk or
breastfeeding x x x.

We have to read Section 11 together with the other Sections because the other Section,
Section 12, provides for the inter agency committee that is empowered to process and
evaluate all the advertising and promotion materials.

xxxx

What AO 2006-12, what it does, it does not prohibit the sale and manufacture, it simply
regulates the advertisement and the promotions of breastfeeding milk substitutes.

xxxx
Now, the prohibition on advertising, Your Honor, must be taken together with the provision
on the Inter-Agency Committee that processes and evaluates because there may be some
information dissemination that are straight forward information dissemination. What the AO
2006 is trying to prevent is any material that will undermine the practice of breastfeeding,
Your Honor.

xxxx

ASSOCIATE JUSTICE SANTIAGO:

Madam Solicitor General, under the Milk Code, which body has authority or power to
promulgate Rules and Regulations regarding the Advertising, Promotion and Marketing of
Breastmilk Substitutes?

SOLICITOR GENERAL DEVANADERA:

Your Honor, please, it is provided that the Inter-Agency Committee, Your Honor.

xxxx

ASSOCIATE JUSTICE SANTIAGO:

x x x Don't you think that the Department of Health overstepped its rule making authority
when it totally banned advertising and promotion under Section 11 prescribed the total effect
rule as well as the content of materials under Section 13 and 15 of the rules and regulations?

SOLICITOR GENERAL DEVANADERA:

Your Honor, please, first we would like to stress that there is no total absolute ban. Second,
the Inter-Agency Committee is under the Department of Health, Your Honor.

xxxx

ASSOCIATE JUSTICE NAZARIO:

x x x Did I hear you correctly, Madam Solicitor, that there is no absolute ban on advertising of
breastmilk substitutes in the Revised Rules?

SOLICITOR GENERAL DEVANADERA:

Yes, your Honor.

ASSOCIATE JUSTICE NAZARIO:

But, would you nevertheless agree that there is an absolute ban on advertising of breastmilk
substitutes intended for children two (2) years old and younger?

SOLICITOR GENERAL DEVANADERA:

 It's not an absolute ban, Your Honor, because we have the Inter-Agency Committee that can
evaluate some advertising and promotional materials, subject to the standards that we have
stated earlier, which are- they should not undermine breastfeeding, Your Honor.

xxxx

x x x Section 11, while it is titled Prohibition, it must be taken in relation with the other
Sections, particularly 12 and 13 and 15, Your Honor, because it is recognized that the Inter-
Agency Committee has that power to evaluate promotional materials, Your Honor.

ASSOCIATE JUSTICE NAZARIO:

So in short, will you please clarify there's no absolute ban on advertisement regarding milk
substitute regarding infants two (2) years below?

SOLICITOR GENERAL DEVANADERA:

We can proudly say that the general rule is that there is a prohibition, however, we take
exceptions and standards have been set. One of which is that, the Inter-Agency Committee
can allow if the advertising and promotions will not undermine breastmilk and breastfeeding,
Your Honor.63

Sections 11 and 4(f) of the RIRR are clearly violative of the Milk Code.

However, although it is the IAC which is authorized to promulgate rules and regulations for the
approval or rejection of advertising, promotional, or other marketing materials under Section 12(a) of
the Milk Code, said provision must be related to Section 6 thereof which in turn provides that the
rules and regulations must be "pursuant to the applicable standards provided for in this Code." Said
standards are set forth in Sections 5(b), 8(b), and 10 of the Code, which, at the risk of being
repetitious, and for easy reference, are quoted hereunder:

SECTION 5. Information and Education –

xxxx

(b) Informational and educational materials, whether written, audio, or visual, dealing with the
feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: (1) the benefits and superiority of
breastfeeding; (2) maternal nutrition, and the preparation for and maintenance of
breastfeeding; (3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4)
the difficulty of reversing the decision not to breastfeed; and (5) where needed, the proper
use of infant formula, whether manufactured industrially or home-prepared. When such
materials contain information about the use of infant formula, they shall include the social
and financial implications of its use; the health hazards of inappropriate foods of feeding
methods; and, in particular, the health hazards of unnecessary or improper use of infant
formula and other breastmilk substitutes. Such materials shall not use any picture or text
which may idealize the use of breastmilk substitutes.

xxxx

SECTION 8. Health Workers. –

 xxxx

(b) Information provided by manufacturers and distributors to health professionals regarding

products within the scope of this Code shall be restricted to scientific and factual matters and
such information shall not imply or create a belief that bottle feeding is equivalent or superior
to breastfeeding. It shall also include the information specified in Section 5(b).

xxxx

SECTION 10. Containers/Label –

(a) Containers and/or labels shall be designed to provide the necessary information about
the appropriate use of the products, and in such a way as not to discourage breastfeeding.

(b) Each container shall have a clear, conspicuous and easily readable and understandable
message in Pilipino or English printed on it, or on a label, which message can not readily
become separated from it, and which shall include the following points:

(i) the words "Important Notice" or their equivalent;

(ii) a statement of the superiority of breastfeeding;

(iii) a statement that the product shall be used only on the advice of a health worker
as to the need for its use and the proper methods of use; and

(iv) instructions for appropriate preparation, and a warning against the health hazards
of inappropriate preparation.

Section 12(b) of the Milk Code designates the DOH as the principal implementing agency for the
enforcement of the provisions of the Code. In relation to such responsibility of the DOH, Section 5(a)
of the Milk Code states that:

SECTION 5. Information and Education –

(a) The government shall ensure that objective and consistent information is provided on

infant feeding, for use by families and those involved in the field of infant nutrition. This
responsibility shall cover the planning, provision, design and dissemination of information,
and the control thereof, on infant nutrition. (Emphasis supplied)

Thus, the DOH has the significant responsibility to translate into operational terms the
standards set forth in Sections 5, 8, and 10 of the Milk Code, by which the IAC shall screen
advertising, promotional, or other marketing materials.

It is pursuant to such responsibility that the DOH correctly provided for Section 13 in the RIRR which
reads as follows:

SECTION 13. "Total Effect" - Promotion of products within the scope of this Code must be
objective and should not equate or make the product appear to be as good or equal to
breastmilk or breastfeeding in the advertising concept. It must not in any case undermine
breastmilk or breastfeeding. The "total effect" should not directly or indirectly suggest that
buying their product would produce better individuals, or resulting in greater love,
 intelligence, ability, harmony or in any manner bring better health to the baby or other such
exaggerated and unsubstantiated claim.

Such standards bind the IAC in formulating its rules and regulations on advertising, promotion, and
marketing. Through that single provision, the DOH exercises control over the information content of
advertising, promotional and marketing materials on breastmilk vis-a-vis breastmilk substitutes,
supplements and other related products. It also sets a viable standard against which the IAC may
screen such materials before they are made public.

In Equi-Asia Placement, Inc. vs. Department of Foreign Affairs,64 the Court held:

x x x [T]his Court had, in the past, accepted as sufficient standards the following: "public
interest," "justice and equity," "public convenience and welfare," and "simplicity, economy
and welfare."65

In this case, correct information as to infant feeding and nutrition is infused with public interest and
welfare.

4. With regard to activities for dissemination of information to health professionals, the Court also
finds that there is no inconsistency between the provisions of the Milk Code and the RIRR. Section
7(b)66 of the Milk Code, in relation to Section 8(b)67 of the same Code, allows dissemination of
information to health professionals but such information is restricted to scientific and factual
matters.

Contrary to petitioner's claim, Section 22 of the RIRR does not prohibit the giving of information to
health professionals on scientific and factual matters. What it prohibits is the involvement of the
manufacturer and distributor of the products covered by the Code in activities for the promotion,
education and production of Information, Education and Communication (IEC) materials regarding
breastfeeding that are intended for women and children. Said provision cannot be construed to
encompass even the dissemination of information to health professionals, as restricted by the
Milk Code.

5. Next, petitioner alleges that Section 8(e)68 of the Milk Code permits milk manufacturers and
distributors to extend assistance in research and in the continuing education of health professionals,
while Sections 22 and 32 of the RIRR absolutely forbid the same. Petitioner also assails Section
4(i)69 of the RIRR prohibiting milk manufacturers' and distributors' participation in any policymaking
body in relation to the advancement of breastfeeding.

Section 4(i) of the RIRR provides that milk companies and their representatives should not form part
of any policymaking body or entity in relation to the advancement of breastfeeding. The Court finds
nothing in said provisions which contravenes the Milk Code. Note that under Section 12(b) of the
Milk Code, it is the DOH which shall be principally responsible for the implementation and
enforcement of the provisions of said Code. It is entirely up to the DOH to decide which entities to
call upon or allow to be part of policymaking bodies on breastfeeding. Therefore, the RIRR's
prohibition on milk companies’ participation in any policymaking body in relation to the advancement
of breastfeeding is in accord with the Milk Code.

Petitioner is also mistaken in arguing that Section 22 of the RIRR prohibits milk companies from
giving reasearch assistance and continuing education to health professionals. Section 2270 of the
RIRR does not pertain to research assistance to or the continuing education of health
professionals; rather, it deals with breastfeeding promotion and education for women and
children. Nothing in Section 22 of the RIRR prohibits milk companies from giving assistance for
research or continuing education to health professionals; hence, petitioner's argument against this
particular provision must be struck down.

It is Sections 971 and 1072 of the RIRR which govern research assistance. Said sections of the RIRR
provide that research assistance for health workers and researchers may be allowed upon
approval of an ethics committee, and with certain disclosure requirements imposed on the
milk company and on the recipient of the research award.

The Milk Code endows the DOH with the power to determine how such research or educational
assistance may be given by milk companies or under what conditions health workers may accept the
assistance. Thus, Sections 9 and 10 of the RIRR imposing limitations on the kind of research done
or extent of assistance given by milk companies are completely in accord with the Milk Code.

Petitioner complains that Section 3273 of the RIRR prohibits milk companies from giving assistance,
support, logistics or training to health workers. This provision is within the prerogative given to the
DOH under Section 8(e)74 of the Milk Code, which provides that manufacturers and distributors of
breastmilk substitutes may assist in researches, scholarships and the continuing education, of health
professionals in accordance with the rules and regulations promulgated by the Ministry of Health,
now DOH.

6. As to the RIRR's prohibition on donations, said provisions are also consistent with the Milk Code.
Section 6(f) of the Milk Code provides that donations may be made by manufacturers and
distributors of breastmilk substitutes upon the request or with the approval of the DOH. The law
does not proscribe the refusal of donations. The Milk Code leaves it purely to the discretion of the
DOH whether to request or accept such donations. The DOH then appropriately exercised its
discretion through Section 5175 of the RIRR which sets forth its policy not to request or approve
donations from manufacturers and distributors of breastmilk substitutes.

It was within the discretion of the DOH when it provided in Section 52 of the RIRR that any donation
from milk companies not covered by the Code should be coursed through the IAC which shall
determine whether such donation should be accepted or refused. As reasoned out by respondents,
the DOH is not mandated by the Milk Code to accept donations. For that matter, no person or entity
can be forced to accept a donation. There is, therefore, no real inconsistency between the RIRR and
the law because the Milk Code does not prohibit the DOH from refusing donations.

7. With regard to Section 46 of the RIRR providing for administrative sanctions that are not found in
the Milk Code, the Court upholds petitioner's objection thereto.

Respondent's reliance on Civil Aeronautics Board v. Philippine Air Lines, Inc. 76 is misplaced. The
glaring difference in said case and the present case before the Court is that, in the Civil Aeronautics
Board, the Civil Aeronautics Administration (CAA) was expressly granted by the law (R.A. No.
776) the power to impose fines and civil penalties, while the Civil Aeronautics Board (CAB) was
granted by the same law the power to review on appeal the order or decision of the CAA and to
determine whether to impose, remit, mitigate, increase or compromise such fine and civil penalties.
Thus, the Court upheld the CAB's Resolution imposing administrative fines.

In a more recent case, Perez v. LPG Refillers Association of the Philippines, Inc.,77 the Court upheld
the Department of Energy (DOE) Circular No. 2000-06-10
implementing Batas Pambansa (B.P.) Blg. 33. The circular provided for fines for the commission of
prohibited acts. The Court found that nothing in the circular contravened the law because the DOE
was expressly authorized by B.P. Blg. 33 and R.A. No. 7638 to impose fines or penalties.
In the present case, neither the Milk Code nor the Revised Administrative Code grants the DOH the
authority to fix or impose administrative fines. Thus, without any express grant of power to fix or
impose such fines, the DOH cannot provide for those fines in the RIRR. In this regard, the DOH
again exceeded its authority by providing for such fines or sanctions in Section 46 of the RIRR. Said
provision is, therefore, null and void.

The DOH is not left without any means to enforce its rules and regulations. Section 12(b) (3) of the
Milk Code authorizes the DOH to "cause the prosecution of the violators of this Code and other
pertinent laws on products covered by this Code." Section 13 of the Milk Code provides for the
penalties to be imposed on violators of the provision of the Milk Code or the rules and regulations
issued pursuant to it, to wit:

SECTION 13. Sanctions –

(a) Any person who violates the provisions of this Code or the rules and regulations
issued pursuant to this Code shall, upon conviction, be punished by a penalty of two (2)
months to one (1) year imprisonment or a fine of not less than One Thousand Pesos
(P1,000.00) nor more than Thirty Thousand Pesos (P30,000.00) or both. Should the offense
be committed by a juridical person, the chairman of the Board of Directors, the president,
general manager, or the partners and/or the persons directly responsible therefor, shall be
penalized.

(b) Any license, permit or authority issued by any government agency to any health worker,
distributor, manufacturer, or marketing firm or personnel for the practice of their profession or
occupation, or for the pursuit of their business, may, upon recommendation of the Ministry of
Health, be suspended or revoked in the event of repeated violations of this Code, or of the
rules and regulations issued pursuant to this Code. (Emphasis supplied)

8. Petitioner’s claim that Section 57 of the RIRR repeals existing laws that are contrary to the RIRR
is frivolous.

Section 57 reads:

SECTION 57. Repealing Clause - All orders, issuances, and rules and regulations or parts
thereof inconsistent with these revised rules and implementing regulations are hereby
repealed or modified accordingly.

Section 57 of the RIRR does not provide for the repeal of laws but only orders, issuances and rules
and regulations. Thus, said provision is valid as it is within the DOH's rule-making power.

An administrative agency like respondent possesses quasi-legislative or rule-making power or the

power to make rules and regulations which results in delegated legislation that is within the confines
of the granting statute and the Constitution, and subject to the doctrine of non-delegability and
separability of powers.78 Such express grant of rule-making power necessarily includes the power to
amend, revise, alter, or repeal the same.79 This is to allow administrative agencies flexibility in
formulating and adjusting the details and manner by which they are to implement the provisions of a
law,80 in order to make it more responsive to the times. Hence, it is a standard provision in
administrative rules that prior issuances of administrative agencies that are inconsistent therewith
are declared repealed or modified.
In fine, only Sections 4(f), 11 and 46 are ultra vires, beyond the authority of the DOH to promulgate
and in contravention of the Milk Code and, therefore, null and void. The rest of the provisions of the
RIRR are in consonance with the Milk Code.

Lastly, petitioner makes a "catch-all" allegation that:

x x x [T]he questioned RIRR sought to be implemented by the Respondents is unnecessary

and oppressive, and is offensive to the due process clause of the Constitution, insofar
as the same is in restraint of trade and because a provision therein is inadequate to
provide the public with a comprehensible basis to determine whether or not they have
committed a violation.81 (Emphasis supplied)

Petitioner refers to Sections 4(f),82 4(i),83 5(w),84 11,85 22,86 32,87 46,88 and 5289 as the provisions that

suppress the trade of milk and, thus, violate the due process clause of the Constitution.

The framers of the constitution were well aware that trade must be subjected to some form of
regulation for the public good. Public interest must be upheld over business interests. 90 In Pest
Management Association of the Philippines v. Fertilizer and Pesticide Authority,91 it was held thus:

x x x Furthermore, as held in Association of Philippine Coconut Desiccators v. Philippine

Coconut Authority, despite the fact that "our present Constitution enshrines free
enterprise as a policy, it nonetheless reserves to the government the power to
intervene whenever necessary to promote the general welfare." There can be no
question that the unregulated use or proliferation of pesticides would be hazardous to our
environment. Thus, in the aforecited case, the Court declared that "free enterprise does not
call for removal of ‘protective regulations’." x x x It must be clearly explained and
proven by competent evidence just exactly how such protective regulation would
result in the restraint of trade. [Emphasis and underscoring supplied]

In this case, petitioner failed to show that the proscription of milk manufacturers’ participation in any
policymaking body (Section 4(i)), classes and seminars for women and children (Section 22); the
giving of assistance, support and logistics or training (Section 32); and the giving of donations
(Section 52) would unreasonably hamper the trade of breastmilk substitutes. Petitioner has not
established that the proscribed activities are indispensable to the trade of breastmilk substitutes.
Petitioner failed to demonstrate that the aforementioned provisions of the RIRR are unreasonable
and oppressive for being in restraint of trade.

Petitioner also failed to convince the Court that Section 5(w) of the RIRR is unreasonable and
oppressive. Said section provides for the definition of the term "milk company," to wit:

SECTION 5 x x x. (w) "Milk Company" shall refer to the owner, manufacturer, distributor of
infant formula, follow-up milk, milk formula, milk supplement, breastmilk substitute or
replacement, or by any other description of such nature, including their representatives who
promote or otherwise advance their commercial interests in marketing those products;

On the other hand, Section 4 of the Milk Code provides:

(d) "Distributor" means a person, corporation or any other entity in the public or private sector
engaged in the business (whether directly or indirectly) of marketing at the wholesale or retail
level a product within the scope of this Code. A "primary distributor" is a manufacturer's sales
agent, representative, national distributor or broker.
 xxxx

(j) "Manufacturer" means a corporation or other entity in the public or private sector engaged
in the business or function (whether directly or indirectly or through an agent or and entity
controlled by or under contract with it) of manufacturing a products within the scope of this
Code.

Notably, the definition in the RIRR merely merged together under the term "milk company" the
entities defined separately under the Milk Code as "distributor" and "manufacturer." The RIRR also
enumerated in Section 5(w) the products manufactured or distributed by an entity that would qualify
it as a "milk company," whereas in the Milk Code, what is used is the phrase "products within the
scope of this Code." Those are the only differences between the definitions given in the Milk Code
and the definition as re-stated in the RIRR.

Since all the regulatory provisions under the Milk Code apply equally to both manufacturers and
distributors, the Court sees no harm in the RIRR providing for just one term to encompass both
entities. The definition of "milk company" in the RIRR and the definitions of "distributor" and
"manufacturer" provided for under the Milk Code are practically the same.

The Court is not convinced that the definition of "milk company" provided in the RIRR would bring
about any change in the treatment or regulation of "distributors" and "manufacturers" of breastmilk
substitutes, as defined under the Milk Code.

Except Sections 4(f), 11 and 46, the rest of the provisions of the RIRR are in consonance with the
objective, purpose and intent of the Milk Code, constituting reasonable regulation of an industry
which affects public health and welfare and, as such, the rest of the RIRR do not constitute illegal
restraint of trade nor are they violative of the due process clause of the Constitution.

WHEREFORE, the petition is PARTIALLY GRANTED. Sections 4(f), 11 and 46 of Administrative

Order No. 2006-0012 dated May 12, 2006 are declared NULL and VOID for being ultra vires. The
Department of Health and respondents are PROHIBITED from implementing said provisions.

The Temporary Restraining Order issued on August 15, 2006 is LIFTED insofar as the rest of the
provisions of Administrative Order No. 2006-0012 is concerned.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 208566               November 19, 2013

GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ

REUBEN M. ABANTE and QUINTIN PAREDES SAN DIEGO, Petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET
AND MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON
SENATE OF THE PHILIPPINES represented by FRANKLIN M. DRILON m his capacity as
SENATE PRESIDENT and HOUSE OF REPRESENTATIVES represented by FELICIANO S.
BELMONTE, JR. in his capacity as SPEAKER OF THE HOUSE, Respondents.

x-----------------------x

G.R. No. 208493

SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner,

vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and
HONORABLE FELICIANO S. BELMONTE, JR., in his capacity as SPEAKER OF THE HOUSE
OF REPRESENTATIVES, Respondents.

x-----------------------x

G.R. No. 209251

PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board

Member -Province of Marinduque, Petitioner,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD,
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

DECISION

PERLAS-BERNABE, J.:

"Experience is the oracle of truth." 1

-James Madison

Before the Court are consolidated petitions  taken under Rule 65 of the Rules of Court, all of which
2

assail the constitutionality of the Pork Barrel System. Due to the complexity of the subject matter, the
Court shall heretofore discuss the system‘s conceptual underpinnings before detailing the particulars
of the constitutional challenge.
 The Facts

I. Pork Barrel: General Concept.

"Pork Barrel" is political parlance of American -English origin.  Historically, its usage may be
3

traced to the degrading ritual of rolling out a barrel stuffed with pork to a multitude of black
slaves who would cast their famished bodies into the porcine feast to assuage their hunger
with morsels coming from the generosity of their well-fed master.  This practice was later
4

compared to the actions of American legislators in trying to direct federal budgets in favor of
their districts.  While the advent of refrigeration has made the actual pork barrel obsolete, it
5

persists in reference to political bills that "bring home the bacon" to a legislator‘s district and
constituents.  In a more technical sense, "Pork Barrel" refers to an appropriation of
6

government spending meant for localized projects and secured solely or primarily to bring
money to a representative's district.  Some scholars on the subject further use it to refer to
7

legislative control of local appropriations. 8

In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary
funds of Members of the Legislature,  although, as will be later discussed, its usage would
9

evolve in reference to certain funds of the Executive.

II. History of Congressional Pork Barrel in the Philippines.

A. Pre-Martial Law Era (1922-1972).

Act 3044,  or the Public Works Act of 1922, is considered  as the earliest form of
10 11

"Congressional Pork Barrel" in the Philippines since the utilization of the funds
appropriated therein were subjected to post-enactment legislator approval.
Particularly, in the area of fund release, Section 3  provides that the sums
12

appropriated for certain public works projects  "shall be distributed x x x subject to

13

the approval of a joint committee elected by the Senate and the House of
Representatives. "The committee from each House may also authorize one of its
members to approve the distribution made by the Secretary of Commerce and
Communications."  Also, in the area of fund realignment, the same section provides
14

that the said secretary, "with the approval of said joint committee, or of the
authorized members thereof, may, for the purposes of said distribution, transfer
unexpended portions of any item of appropriation under this Act to any other item
hereunder."

In 1950, it has been documented  that post-enactment legislator participation

15

broadened from the areas of fund release and realignment to the area of project
identification. During that year, the mechanics of the public works act was modified to
the extent that the discretion of choosing projects was transferred from the Secretary
of Commerce and Communications to legislators. "For the first time, the law carried a
list of projects selected by Members of Congress, they ‘being the representatives of
the people, either on their own account or by consultation with local officials or civil
leaders.‘"  During this period, the pork barrel process commenced with local
16

government councils, civil groups, and individuals appealing to Congressmen or

Senators for projects. Petitions that were accommodated formed part of a legislator‘s
allocation, and the amount each legislator would eventually get is determined in a
caucus convened by the majority. The amount was then integrated into the
administration bill prepared by the Department of Public Works and Communications.
Thereafter, the Senate and the House of Representatives added their own provisions
 to the bill until it was signed into law by the President – the Public Works Act.  In the
17

1960‘s, however, pork barrel legislation reportedly ceased in view of the stalemate
between the House of Representatives and the Senate. 18

B. Martial Law Era (1972-1986).

While the previous" Congressional Pork Barrel" was apparently discontinued in 1972
after Martial Law was declared, an era when "one man controlled the
legislature,"  the reprieve was only temporary. By 1982, the Batasang Pambansa
19

had already introduced a new item in the General Appropriations Act (GAA) called
the" Support for Local Development Projects" (SLDP) under the article on "National
Aid to Local Government Units". Based on reports,  it was under the SLDP that the
20

practice of giving lump-sum allocations to individual legislators began, with each

assemblyman receiving ₱500,000.00. Thereafter, assemblymen would communicate
their project preferences to the Ministry of Budget and Management for approval.
Then, the said ministry would release the allocation papers to the Ministry of Local
Governments, which would, in turn, issue the checks to the city or municipal
treasurers in the assemblyman‘s locality. It has been further reported that
"Congressional Pork Barrel" projects under the SLDP also began to cover not only
public works projects, or so- called "hard projects", but also "soft projects",  or non-
21

public works projects such as those which would fall under the categories of, among
others, education, health and livelihood. 22

C. Post-Martial Law Era:

Corazon Cojuangco Aquino Administration (1986-1992).

After the EDSA People Power Revolution in 1986 and the restoration of Philippine
democracy, "Congressional Pork Barrel" was revived in the form of the "Mindanao
Development Fund" and the "Visayas Development Fund" which were created with
lump-sum appropriations of ₱480 Million and ₱240 Million, respectively, for the
funding of development projects in the Mindanao and Visayas areas in 1989. It has
been documented  that the clamor raised by the Senators and the Luzon legislators
23

for a similar funding, prompted the creation of the "Countrywide Development Fund"
(CDF) which was integrated into the 1990 GAA  with an initial funding of ₱2.3 Billion
24

to cover "small local infrastructure and other priority community projects."

Under the GAAs for the years 1991 and 1992,  CDF funds were, with the approval of
25

the President, to be released directly to the implementing agencies but "subject to

the submission of the required list of projects and activities."Although the GAAs from
1990 to 1992 were silent as to the amounts of allocations of the individual legislators,
as well as their participation in the identification of projects, it has been reported  that
26

by 1992, Representatives were receiving ₱12.5 Million each in CDF funds, while
Senators were receiving ₱18 Million each, without any limitation or qualification, and
that they could identify any kind of project, from hard or infrastructure projects such
as roads, bridges, and buildings to "soft projects" such as textbooks, medicines, and
scholarships. 27

D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).

The following year, or in 1993,  the GAA explicitly stated that the release of CDF
28

funds was to be made upon the submission of the list of projects and activities
 identified by, among others, individual legislators. For the first time, the 1993 CDF
Article included an allocation for the Vice-President.  As such, Representatives were
29

allocated ₱12.5 Million each in CDF funds, Senators, ₱18 Million each, and the Vice-
President, ₱20 Million.

In 1994,  1995,  and 1996,  the GAAs contained the same provisions on project
30 31 32

identification and fund release as found in the 1993 CDF Article. In addition,
however, the Department of Budget and Management (DBM) was directed to submit
reports to the Senate Committee on Finance and the House Committee on
Appropriations on the releases made from the funds. 33

Under the 1997  CDF Article, Members of Congress and the Vice-President, in
34

consultation with the implementing agency concerned, were directed to submit to the
DBM the list of 50% of projects to be funded from their respective CDF allocations
which shall be duly endorsed by (a) the Senate President and the Chairman of the
Committee on Finance, in the case of the Senate, and (b) the Speaker of the House
of Representatives and the Chairman of the Committee on Appropriations, in the
case of the House of Representatives; while the list for the remaining 50% was to be
submitted within six (6) months thereafter. The same article also stated that the
project list, which would be published by the DBM,  "shall be the basis for the release
35

of funds" and that "no funds appropriated herein shall be disbursed for projects not
included in the list herein required."

The following year, or in 1998,  the foregoing provisions regarding the required lists
36

and endorsements were reproduced, except that the publication of the project list
was no longer required as the list itself sufficed for the release of CDF Funds.

The CDF was not, however, the lone form of "Congressional Pork Barrel" at that
time. Other forms of "Congressional Pork Barrel" were reportedly fashioned and
inserted into the GAA (called "Congressional Insertions" or "CIs") in order to
perpetuate the ad ministration‘s political agenda.  It has been articulated that since
37

CIs "formed part and parcel of the budgets of executive departments, they were not
easily identifiable and were thus harder to monitor." Nonetheless, the lawmakers
themselves as well as the finance and budget officials of the implementing agencies,
as well as the DBM, purportedly knew about the insertions.  Examples of these CIs
38

are the Department of Education (DepEd) School Building Fund, the Congressional
Initiative Allocations, the Public Works Fund, the El Niño Fund, and the Poverty
Alleviation Fund.  The allocations for the School Building Fund, particularly, ―shall
39

be made upon prior consultation with the representative of the legislative district
concerned.”  Similarly, the legislators had the power to direct how, where and when
40

these appropriations were to be spent. 41

E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001).

In 1999,  the CDF was removed in the GAA and replaced by three (3) separate
42

forms of CIs, namely, the "Food Security Program Fund,"  the "Lingap Para Sa
43

Mahihirap Program Fund,"  and the "Rural/Urban Development Infrastructure

44

Program Fund,"  all of which contained a special provision requiring "prior

45

consultation" with the Member s of Congress for the release of the funds.

It was in the year 2000  that the "Priority Development Assistance Fund" (PDAF)
46

appeared in the GAA. The requirement of "prior consultation with the respective
 Representative of the District" before PDAF funds were directly released to the
implementing agency concerned was explicitly stated in the 2000 PDAF Article.
Moreover, realignment of funds to any expense category was expressly allowed, with
the sole condition that no amount shall be used to fund personal services and other
personnel benefits.  The succeeding PDAF provisions remained the same in view of
47

the re-enactment  of the 2000 GAA for the year 2001.
48

F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).

The 2002  PDAF Article was brief and straightforward as it merely contained a single
49

special provision ordering the release of the funds directly to the implementing
agency or local government unit concerned, without further qualifications. The
following year, 2003,  the same single provision was present, with simply an
50

expansion of purpose and express authority to realign. Nevertheless, the provisions

in the 2003 budgets of the Department of Public Works and Highways  (DPWH) and 51

the DepEd  required prior consultation with Members of Congress on the aspects of
52

implementation delegation and project list submission, respectively. In 2004, the

2003 GAA was re-enacted. 53

In 2005,  the PDAF Article provided that the PDAF shall be used "to fund priority
54

programs and projects under the ten point agenda of the national government and
shall be released directly to the implementing agencies." It also introduced the
program menu concept,  which is essentially a list of general programs and
55

implementing agencies from which a particular PDAF project may be subsequently

chosen by the identifying authority. The 2005 GAA was re-enacted  in 2006 and 56

hence, operated on the same bases. In similar regard, the program menu concept
was consistently integrated into the 2007,  2008,  2009,  and 2010  GAAs.
57 58 59 60

Textually, the PDAF Articles from 2002 to 2010 were silent with respect to the
specific amounts allocated for the individual legislators, as well as their participation
in the proposal and identification of PDAF projects to be funded. In contrast to the
PDAF Articles, however, the provisions under the DepEd School Building Program
and the DPWH budget, similar to its predecessors, explicitly required prior
consultation with the concerned Member of Congress  anent certain aspects of
61

project implementation.

Significantly, it was during this era that provisions which allowed formal participation
of non-governmental organizations (NGO) in the implementation of government
projects were introduced. In the Supplemental Budget for 2006, with respect to the
appropriation for school buildings, NGOs were, by law, encouraged to participate.
For such purpose, the law stated that "the amount of at least ₱250 Million of the
₱500 Million allotted for the construction and completion of school buildings shall be
made available to NGOs including the Federation of Filipino-Chinese Chambers of
Commerce and Industry, Inc. for its "Operation Barrio School" program, with
capability and proven track records in the construction of public school buildings x x
x."  The same allocation was made available to NGOs in the 2007 and 2009 GAAs
62

under the DepEd Budget.  Also, it was in 2007 that the Government Procurement
63

Policy Board  (GPPB) issued Resolution No. 12-2007 dated June 29, 2007 (GPPB
64

Resolution 12-2007), amending the implementing rules and regulations  of RA 65

9184,  the Government Procurement Reform Act, to include, as a form of negotiated

66

procurement,  the procedure whereby the Procuring Entity  (the implementing

67 68

agency) may enter into a memorandum of agreement with an NGO, provided that
 "an appropriation law or ordinance earmarks an amount to be specifically contracted
out to NGOs." 69

G. Present Administration (2010-Present).

Differing from previous PDAF Articles but similar to the CDF Articles, the
2011  PDAF Article included an express statement on lump-sum amounts allocated
70

for individual legislators and the Vice-President: Representatives were given ₱70
Million each, broken down into ₱40 Million for "hard projects" and ₱30 Million for "soft
projects"; while ₱200 Million was given to each Senator as well as the Vice-
President, with a ₱100 Million allocation each for "hard" and "soft projects." Likewise,
a provision on realignment of funds was included, but with the qualification that it
may be allowed only once. The same provision also allowed the Secretaries of
Education, Health, Social Welfare and Development, Interior and Local Government,
Environment and Natural Resources, Energy, and Public Works and Highways to
realign PDAF Funds, with the further conditions that: (a) realignment is within the
same implementing unit and same project category as the original project, for
infrastructure projects; (b) allotment released has not yet been obligated for the
original scope of work, and (c) the request for realignment is with the concurrence of
the legislator concerned. 71

In the 2012  and 2013  PDAF Articles, it is stated that the "identification of projects
72 73

and/or designation of beneficiaries shall conform to the priority list, standard or

design prepared by each implementing agency (priority list requirement) x x x."
However, as practiced, it would still be the individual legislator who would choose
and identify the project from the said priority list.
74

Provisions on legislator allocations  as well as fund realignment  were included in

75 76

the 2012 and 2013 PDAF Articles; but the allocation for the Vice-President, which
was pegged at ₱200 Million in the 2011 GAA, had been deleted. In addition, the
2013 PDAF Article now allowed LGUs to be identified as implementing agencies if
they have the technical capability to implement the projects.  Legislators were also
77

allowed to identify programs/projects, except for assistance to indigent patients and

scholarships, outside of his legislative district provided that he secures the written
concurrence of the legislator of the intended outside-district, endorsed by the
Speaker of the House.  Finally, any realignment of PDAF funds, modification and
78

revision of project identification, as well as requests for release of funds, were all
required to be favorably endorsed by the House Committee on Appropriations and
the Senate Committee on Finance, as the case may be. 79

III. History of Presidential Pork Barrel in the Philippines.

While the term "Pork Barrel" has been typically associated with lump-sum, discretionary
funds of Members of Congress, the present cases and the recent controversies on the
matter have, however, shown that the term‘s usage has expanded to include certain funds of
the President such as the Malampaya Funds and the Presidential Social Fund.

On the one hand, the Malampaya Funds was created as a special fund under Section 8  of 80

Presidential Decree No. (PD) 910,  issued by then President Ferdinand E. Marcos (Marcos)
81

on March 22, 1976. In enacting the said law, Marcos recognized the need to set up a special
fund to help intensify, strengthen, and consolidate government efforts relating to the
exploration, exploitation, and development of indigenous energy resources vital to economic
 growth.  Due to the energy-related activities of the government in the Malampaya natural
82

gas field in Palawan, or the "Malampaya Deep Water Gas-to-Power Project",  the special
83

fund created under PD 910 has been currently labeled as Malampaya Funds.

On the other hand the Presidential Social Fund was created under Section 12, Title IV  of 84

PD 1869,  or the Charter of the Philippine Amusement and Gaming Corporation (PAGCOR).
85

PD 1869 was similarly issued by Marcos on July 11, 1983. More than two (2) years after, he
amended PD 1869 and accordingly issued PD 1993 on October 31, 1985,  amending86

Section 12  of the former law. As it stands, the Presidential Social Fund has been described
87

as a special funding facility managed and administered by the Presidential Management

Staff through which the President provides direct assistance to priority programs and projects
not funded under the regular budget. It is sourced from the share of the government in the
aggregate gross earnings of PAGCOR. 88

IV. Controversies in the Philippines.

Over the decades, "pork" funds in the Philippines have increased tremendously,  owing in no 89

small part to previous Presidents who reportedly used the "Pork Barrel" in order to gain
congressional support.  It was in 1996 when the first controversy surrounding the "Pork
90

Barrel" erupted. Former Marikina City Representative Romeo Candazo (Candazo), then an
anonymous source, "blew the lid on the huge sums of government money that regularly went
into the pockets of legislators in the form of kickbacks."  He said that "the kickbacks were
91

‘SOP‘ (standard operating procedure) among legislators and ranged from a low 19 percent to
a high 52 percent of the cost of each project, which could be anything from dredging, rip
rapping, sphalting, concreting, and construction of school buildings."  "Other sources of
92

kickbacks that Candazo identified were public funds intended for medicines and textbooks. A
few days later, the tale of the money trail became the banner story of the Philippine Daily
Inquirer issue of August 13, 1996, accompanied by an illustration of a roasted pig."  "The 93

publication of the stories, including those about congressional initiative allocations of certain
lawmakers, including ₱3.6 Billion for a Congressman, sparked public outrage." 94

Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as
enacted in the 2004 GAA for being unconstitutional. Unfortunately, for lack of "any pertinent
evidentiary support that illegal misuse of PDAF in the form of kickbacks has become a
common exercise of unscrupulous Members of Congress," the petition was dismissed. 95

Recently, or in July of the present year, the National Bureau of Investigation (NBI) began its
probe into allegations that "the government has been defrauded of some ₱10 Billion over the
past 10 years by a syndicate using funds from the pork barrel of lawmakers and various
government agencies for scores of ghost projects."  The investigation was spawned by
96

sworn affidavits of six (6) whistle-blowers who declared that JLN Corporation – "JLN"
standing for Janet Lim Napoles (Napoles) – had swindled billions of pesos from the public
coffers for "ghost projects" using no fewer than 20 dummy NGOs for an entire decade. While
the NGOs were supposedly the ultimate recipients of PDAF funds, the whistle-blowers
declared that the money was diverted into Napoles‘ private accounts.  Thus, after its
97

investigation on the Napoles controversy, criminal complaints were filed before the Office of
the Ombudsman, charging five (5) lawmakers for Plunder, and three (3) other lawmakers for
Malversation, Direct Bribery, and Violation of the Anti-Graft and Corrupt Practices Act. Also
recommended to be charged in the complaints are some of the lawmakers‘ chiefs -of-staff or
representatives, the heads and other officials of three (3) implementing agencies, and the
several presidents of the NGOs set up by Napoles. 98
On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year
audit investigation  covering the use of legislators' PDAF from 2007 to 2009, or during the
99

last three (3) years of the Arroyo administration. The purpose of the audit was to determine
the propriety of releases of funds under PDAF and the Various Infrastructures including
Local Projects (VILP)  by the DBM, the application of these funds and the implementation of
100

projects by the appropriate implementing agencies and several government-owned-and-

controlled corporations (GOCCs).  The total releases covered by the audit amounted to
101

₱8.374 Billion in PDAF and ₱32.664 Billion in VILP, representing 58% and 32%,
respectively, of the total PDAF and VILP releases that were found to have been made
nationwide during the audit period.  Accordingly, the Co A‘s findings contained in its Report
102

No. 2012-03 (CoA Report), entitled "Priority Development Assistance Fund (PDAF) and
Various Infrastructures including Local Projects (VILP)," were made public, the highlights of
which are as follows: 103

● Amounts released for projects identified by a considerable number of legislators

significantly exceeded their respective allocations.

● Amounts were released for projects outside of legislative districts of sponsoring

members of the Lower House.

● Total VILP releases for the period exceeded the total amount appropriated under
the 2007 to 2009 GAAs.

● Infrastructure projects were constructed on private lots without these having been
turned over to the government.

● Significant amounts were released to implementing agencies without the latter‘s

endorsement and without considering their mandated functions, administrative and
technical capabilities to implement projects.

● Implementation of most livelihood projects was not undertaken by the

implementing agencies themselves but by NGOs endorsed by the proponent
legislators to which the Funds were transferred.

● The funds were transferred to the NGOs in spite of the absence of any
appropriation law or ordinance.

● Selection of the NGOs were not compliant with law and regulations.

● Eighty-Two (82) NGOs entrusted with implementation of seven hundred seventy

two (772) projects amount to ₱6.156 Billion were either found questionable, or
submitted questionable/spurious documents, or failed to liquidate in whole or in part
their utilization of the Funds.

● Procurement by the NGOs, as well as some implementing agencies, of goods and

services reportedly used in the projects were not compliant with law.

As for the "Presidential Pork Barrel", whistle-blowers alleged that" at least ₱900 Million from
royalties in the operation of the Malampaya gas project off Palawan province intended for
agrarian reform beneficiaries has gone into a dummy NGO."  According to incumbent CoA
104
 Chairperson Maria Gracia Pulido Tan (CoA Chairperson), the CoA is, as of this writing, in the
process of preparing "one consolidated report" on the Malampaya Funds. 105

V. The Procedural Antecedents.

Spurred in large part by the findings contained in the CoA Report and the Napoles
controversy, several petitions were lodged before the Court similarly seeking that the "Pork
Barrel System" be declared unconstitutional. To recount, the relevant procedural
antecedents in these cases are as follows:

On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice
Society, filed a Petition for Prohibition of even date under Rule 65 of the Rules of Court (Alcantara
Petition), seeking that the "Pork Barrel System" be declared unconstitutional, and a writ of prohibition
be issued permanently restraining respondents Franklin M. Drilon and Feliciano S. Belmonte, Jr., in
their respective capacities as the incumbent Senate President and Speaker of the House of
Representatives, from further taking any steps to enact legislation appropriating funds for the "Pork
Barrel System," in whatever form and by whatever name it may be called, and from approving further
releases pursuant thereto.  The Alcantara Petition was docketed as G.R. No. 208493.
106

On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez, Reuben M.
Abante, Quintin Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an
Urgent Petition For Certiorari and Prohibition With Prayer For The Immediate Issuance of Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction dated August 27, 2013 under Rule 65
of the Rules of Court (Belgica Petition), seeking that the annual "Pork Barrel System," presently
embodied in the provisions of the GAA of 2013 which provided for the 2013 PDAF, and the
Executive‘s lump-sum, discretionary funds, such as the Malampaya Funds and the Presidential
Social Fund,  be declared unconstitutional and null and void for being acts constituting grave abuse
107

of discretion. Also, they pray that the Court issue a TRO against respondents Paquito N. Ochoa, Jr.,
Florencio B. Abad (Secretary Abad) and Rosalia V. De Leon, in their respective capacities as the
incumbent Executive Secretary, Secretary of the Department of Budget and Management (DBM),
and National Treasurer, or their agents, for them to immediately cease any expenditure under the
aforesaid funds. Further, they pray that the Court order the foregoing respondents to release to the
CoA and to the public: (a) "the complete schedule/list of legislators who have availed of their PDAF
and VILP from the years 2003 to 2013, specifying the use of the funds, the project or activity and the
recipient entities or individuals, and all pertinent data thereto"; and (b) "the use of the Executive‘s
lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds and
remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and
the recipient entities or individuals, and all pertinent data thereto."  Also, they pray for the "inclusion
108

in budgetary deliberations with the Congress of all presently off-budget, lump-sum, discretionary
funds including, but not limited to, proceeds from the Malampaya Funds and remittances from the
PAGCOR."  The Belgica Petition was docketed as G.R. No. 208566.
109 110

Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition

dated August 23, 2012 (Nepomuceno Petition), seeking that the PDAF be declared unconstitutional,
and a cease and desist order be issued restraining President Benigno Simeon S. Aquino III
(President Aquino) and Secretary Abad from releasing such funds to Members of Congress and,
instead, allow their release to fund priority projects identified and approved by the Local
Development Councils in consultation with the executive departments, such as the DPWH, the
Department of Tourism, the Department of Health, the Department of Transportation, and
Communication and the National Economic Development Authority.  The Nepomuceno Petition was
111

docketed as UDK-14951. 112

On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases; (b)
requiring public respondents to comment on the consolidated petitions; (c) issuing a TRO
(September 10, 2013 TRO) enjoining the DBM, National Treasurer, the Executive Secretary, or any
of the persons acting under their authority from releasing (1) the remaining PDAF allocated to
Members of Congress under the GAA of 2013, and (2) Malampaya Funds under the phrase "for
such other purposes as may be hereafter directed by the President" pursuant to Section 8 of PD 910
but not for the purpose of "financing energy resource development and exploitation programs and
projects of the government‖ under the same provision; and (d) setting the consolidated cases for
Oral Arguments on October 8, 2013.

On September 23, 2013, the Office of the Solicitor General (OSG) filed a Consolidated Comment
(Comment) of even date before the Court, seeking the lifting, or in the alternative, the partial lifting
with respect to educational and medical assistance purposes, of the Court‘s September 10, 2013
TRO, and that the consolidated petitions be dismissed for lack of merit. 113

On September 24, 2013, the Court issued a Resolution of even date directing petitioners to reply to
the Comment.

Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a) on
September 30, 2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas Reply); (b)
on October 1, 2013, Belgica, et al. filed a Reply dated September 30, 2013 (Belgica Reply); and (c)
on October 2, 2013, Alcantara filed a Reply dated October 1, 2013.

On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by the
parties for the Oral Arguments scheduled on October 8, 2013. In view of the technicality of the
issues material to the present cases, incumbent Solicitor General Francis H. Jardeleza (Solicitor
General) was directed to bring with him during the Oral Arguments representative/s from the DBM
and Congress who would be able to competently and completely answer questions related to,
among others, the budgeting process and its implementation. Further, the CoA Chairperson was
appointed as amicus curiae and thereby requested to appear before the Court during the Oral
Arguments.

On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed the
parties to submit their respective memoranda within a period of seven (7) days, or until October 17,
2013, which the parties subsequently did.

The Issues Before the Court

Based on the pleadings, and as refined during the Oral Arguments, the following are the main issues
for the Court‘s resolution:

I. Procedural Issues.

Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable
controversy; (b) the issues raised in the consolidated petitions are matters of policy not subject to
judicial review; (c) petitioners have legal standing to sue; and (d) the Court‘s Decision dated August
19, 1994 in G.R. Nos. 113105, 113174, 113766, and 113888, entitled "Philippine Constitution
Association v. Enriquez"  (Philconsa) and Decision dated April 24, 2012 in G.R. No. 164987,
114

entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and Management"  (LAMP) 115

bar the re-litigatio n of the issue of constitutionality of the "Pork Barrel System" under the principles
of res judicata and stare decisis.
II. Substantive Issues on the "Congressional Pork Barrel."

Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto
are unconstitutional considering that they violate the principles of/constitutional provisions on (a)
separation of powers; (b) non-delegability of legislative power; (c) checks and balances; (d)
accountability; (e) political dynasties; and (f) local autonomy.

III. Substantive Issues on the "Presidential Pork Barrel."

Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the
President" under Section 8 of PD 910,  relating to the Malampaya Funds, and (b) "to finance the
116

priority infrastructure development projects and to finance the restoration of damaged or destroyed
facilities due to calamities, as may be directed and authorized by the Office of the President of the
Philippines" under Section 12 of PD 1869, as amended by PD 1993, relating to the Presidential
Social Fund, are unconstitutional insofar as they constitute undue delegations of legislative power.

These main issues shall be resolved in the order that they have been stated. In addition, the Court
shall also tackle certain ancillary issues as prompted by the present cases.

The Court’s Ruling

The petitions are partly granted.

I. Procedural Issues.

The prevailing rule in constitutional litigation is that no question involving the constitutionality or
validity of a law or governmental act may be heard and decided by the Court unless there is
compliance with the legal requisites for judicial inquiry,  namely: (a) there must be an actual case or
117

controversy calling for the exercise of judicial power; (b) the person challenging the act must have
the standing to question the validity of the subject act or issuance; (c) the question of constitutionality
must be raised at the earliest opportunity ; and (d) the issue of constitutionality must be the very lis
mota of the case.  Of these requisites, case law states that the first two are the most
118

important  and, therefore, shall be discussed forthwith.

119

A. Existence of an Actual Case or Controversy.

By constitutional fiat, judicial power operates only when there is an actual case or controversy.  This
120

is embodied in Section 1, Article VIII of the 1987 Constitution which pertinently states that "judicial
power includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable x x x." Jurisprudence provides that an actual case or
controversy is one which "involves a conflict of legal rights, an assertion of opposite legal claims,
susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or
dispute.  In other words, "there must be a contrariety of legal rights that can be interpreted and
121

enforced on the basis of existing law and jurisprudence."  Related to the requirement of an actual
122

case or controversy is the requirement of "ripeness," meaning that the questions raised for
constitutional scrutiny are already ripe for adjudication. "A question is ripe for adjudication when the
act being challenged has had a direct adverse effect on the individual challenging it. It is a
prerequisite that something had then been accomplished or performed by either branch 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."  "Withal, courts will decline to pass
123
upon constitutional issues through advisory opinions, bereft as they are of authority to resolve
hypothetical or moot questions." 124

Based on these principles, the Court finds that there exists an actual and justiciable controversy in
these cases.

The requirement of contrariety of legal rights is clearly satisfied by the antagonistic positions of the
parties on the constitutionality of the "Pork Barrel System." Also, the questions in these consolidated
cases are ripe for adjudication since the challenged funds and the provisions allowing for their
utilization – such as the 2013 GAA for the PDAF, PD 910 for the Malampaya Funds and PD 1869,
as amended by PD 1993, for the Presidential Social Fund – are currently existing and operational;
hence, there exists an immediate or threatened injury to petitioners as a result of the unconstitutional
use of these public funds.

As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered
moot and academic by the reforms undertaken by respondents. A case becomes moot when there is
no more actual controversy between the parties or no useful purpose can be served in passing upon
the merits.  Differing from this description, the Court observes that respondents‘ proposed line-item
125

budgeting scheme would not terminate the controversy nor diminish the useful purpose for its
resolution since said reform is geared towards the 2014 budget, and not the 2013 PDAF Article
which, being a distinct subject matter, remains legally effective and existing. Neither will the
President‘s declaration that he had already "abolished the PDAF" render the issues on PDAF moot
precisely because the Executive branch of government has no constitutional authority to nullify or
annul its legal existence. By constitutional design, the annulment or nullification of a law may be
done either by Congress, through the passage of a repealing law, or by the Court, through a
declaration of unconstitutionality. Instructive on this point is the following exchange between
Associate Justice Antonio T. Carpio (Justice Carpio) and the Solicitor General during the Oral
Arguments: 126

Justice Carpio: The President has taken an oath to faithfully execute the law,  correct? Solicitor
127

General Jardeleza: Yes, Your Honor.

Justice Carpio: And so the President cannot refuse to implement the General Appropriations Act,
correct?

Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the
PDAF, the President has a duty to execute the laws but in the face of the outrage over PDAF, the
President was saying, "I am not sure that I will continue the release of the soft projects," and that
started, Your Honor. Now, whether or not that … (interrupted)

Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the
power to stop the releases in the meantime, to investigate, and that is Section 38 of Chapter 5 of
Book 6 of the Revised Administrative Code  x x x. So at most the President can suspend, now if the
128

President believes that the PDAF is unconstitutional, can he just refuse to implement it?

Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the specific case of the
PDAF because of the CoA Report, because of the reported irregularities and this Court can take
judicial notice, even outside, outside of the COA Report, you have the report of the whistle-blowers,
the President was just exercising precisely the duty ….

xxxx
Justice Carpio: Yes, and that is correct. You‘ve seen the CoA Report, there are anomalies, you stop
and investigate, and prosecute, he has done that. But, does that mean that PDAF has been
repealed?

Solicitor General Jardeleza: No, Your Honor x x x.

xxxx

Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a law
to repeal it, or this Court declares it unconstitutional, correct?

Solictor General Jardeleza: Yes, Your Honor.

Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied)

Even on the assumption of mootness, jurisprudence, nevertheless, dictates that "the moot and
academic‘ principle is not a magical formula that can automatically dissuade the Court in resolving a
case." The Court will decide cases, otherwise moot, if: first, there is a grave violation of the
Constitution; second, the exceptional character of the situation and the paramount public interest is
involved; third, when the constitutional issue raised requires formulation of controlling principles to
guide the bench, the bar, and the public; and fourth, the case is capable of repetition yet evading
review.129

The applicability of the first exception is clear from the fundamental posture of petitioners – they
essentially allege grave violations of the Constitution with respect to, inter alia, the principles of
separation of powers, non-delegability of legislative power, checks and balances, accountability and
local autonomy.

The applicability of the second exception is also apparent from the nature of the interests involved

– the constitutionality of the very system within which significant amounts of public funds have been
and continue to be utilized and expended undoubtedly presents a situation of exceptional character
as well as a matter of paramount public interest. The present petitions, in fact, have been lodged at a
time when the system‘s flaws have never before been magnified. To the Court‘s mind, the
coalescence of the CoA Report, the accounts of numerous whistle-blowers, and the government‘s
own recognition that reforms are needed "to address the reported abuses of the
PDAF"  demonstrates a prima facie pattern of abuse which only underscores the importance of the
130

matter. It is also by this finding that the Court finds petitioners‘ claims as not merely theorized,
speculative or hypothetical. Of note is the weight accorded by the Court to the findings made by the
CoA which is the constitutionally-mandated audit arm of the government. In Delos Santos v. CoA,  a 131

recent case wherein the Court upheld the CoA‘s disallowance of irregularly disbursed PDAF funds, it
was emphasized that:

The COA is endowed with enough latitude to determine, prevent, and disallow irregular,
unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It is
tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and
ultimately the people's, property. The exercise of its general audit power is among the constitutional
mechanisms that gives life to the check and balance system inherent in our form of government.

It is the general policy of the Court to sustain the decisions of administrative authorities, especially
one which is constitutionally-created, such as the CoA, not only on the basis of the doctrine of
separation of powers but also for their presumed expertise in the laws they are entrusted to enforce.
Findings of administrative agencies are accorded not only respect but also finality when the decision
and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of
discretion. It is only when the CoA has acted without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition
questioning its rulings. x x x. (Emphases supplied)

Thus, if only for the purpose of validating the existence of an actual and justiciable controversy in
these cases, the Court deems the findings under the CoA Report to be sufficient.

The Court also finds the third exception to be applicable largely due to the practical need for a
definitive ruling on the system‘s constitutionality. As disclosed during the Oral Arguments, the CoA
Chairperson estimates that thousands of notices of disallowances will be issued by her office in
connection with the findings made in the CoA Report. In this relation, Associate Justice Marvic Mario
Victor F. Leonen (Justice Leonen) pointed out that all of these would eventually find their way to the
courts.  Accordingly, there is a compelling need to formulate controlling principles relative to the
132

issues raised herein in order to guide the bench, the bar, and the public, not just for the expeditious
resolution of the anticipated disallowance cases, but more importantly, so that the government may
be guided on how public funds should be utilized in accordance with constitutional principles.

Finally, the application of the fourth exception is called for by the recognition that the preparation and
passage of the national budget is, by constitutional imprimatur, an affair of annual occurrence.  The
133

relevance of the issues before the Court does not cease with the passage of a "PDAF -free budget
for 2014."  The evolution of the "Pork Barrel System," by its multifarious iterations throughout the
134

course of history, lends a semblance of truth to petitioners‘ claim that "the same dog will just
resurface wearing a different collar."  In Sanlakas v. Executive Secretary,  the government had
135 136

already backtracked on a previous course of action yet the Court used the "capable of repetition but
evading review" exception in order "to prevent similar questions from re- emerging."  The situation
137

similarly holds true to these cases. Indeed, the myriad of issues underlying the manner in which
certain public funds are spent, if not resolved at this most opportune time, are capable of repetition
and hence, must not evade judicial review.

B. Matters of Policy: the Political Question Doctrine.

The "limitation on the power of judicial review to actual cases and controversies‖ carries the
assurance that "the courts will not intrude into areas committed to the other branches of
government."  Essentially, the foregoing limitation is a restatement of the political question doctrine
138

which, under the classic formulation of Baker v. Carr,  applies when there is found, among others,
139

"a textually demonstrable constitutional commitment of the issue to a coordinate political

department," "a lack of judicially discoverable and manageable standards for resolving it" or "the
impossibility of deciding without an initial policy determination of a kind clearly for non- judicial
discretion." Cast against this light, respondents submit that the "the political branches are in the best
position not only to perform budget-related reforms but also to do them in response to the specific
demands of their constituents" and, as such, "urge the Court not to impose a solution at this stage." 140

The Court must deny respondents‘ submission.

Suffice it to state that the issues raised before the Court do not present political but legal questions
which are within its province to resolve. A political question refers to "those questions which, under
the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full
discretionary authority has been delegated to the Legislature or executive branch of the
Government. It is concerned with issues dependent upon the wisdom, not legality, of a particular
measure."  The intrinsic constitutionality of the "Pork Barrel System" is not an issue dependent upon
141

the wisdom of the political branches of government but rather a legal one which the Constitution
itself has commanded the Court to act upon. Scrutinizing the contours of the system along
constitutional lines is a task that the political branches of government are incapable of rendering
precisely because it is an exercise of judicial power. More importantly, the present Constitution has
not only vested the Judiciary the right to exercise judicial power but essentially makes it a duty to
proceed therewith. Section 1, Article VIII of the 1987 Constitution cannot be any clearer: "The judicial
power shall be vested in one Supreme Court and in such lower courts as may be established by law.
It 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." In Estrada v. Desierto,  the expanded concept of judicial power under the 1987
142

Constitution and its effect on the political question doctrine was explained as follows: 143

To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine
when it expanded the power of judicial review of this court not only to settle actual controversies
involving rights which are legally demandable and enforceable but also 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 government. Heretofore, the judiciary has focused on the "thou shalt
not's" of the Constitution directed against the exercise of its jurisdiction. With the new provision,
however, courts are given a greater prerogative to determine what it can do to prevent grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of government. Clearly, the new provision did not just grant the Court power of doing nothing. x x x
(Emphases supplied)

It must also be borne in mind that ― when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; does not in reality nullify
or invalidate an act of the legislature or the executive, but only asserts the solemn and sacred
obligation assigned to it by the Constitution."  To a great extent, the Court is laudably cognizant of
144

the reforms undertaken by its co-equal branches of government. But it is by constitutional force that
the Court must faithfully perform its duty. Ultimately, it is the Court‘s avowed intention that a
resolution of these cases would not arrest or in any manner impede the endeavors of the two other
branches but, in fact, help ensure that the pillars of change are erected on firm constitutional
grounds. After all, it is in the best interest of the people that each great branch of government, within
its own sphere, contributes its share towards achieving a holistic and genuine solution to the
problems of society. For all these reasons, the Court cannot heed respondents‘ plea for judicial
restraint.

C. Locus Standi.

"The gist of the question of standing is whether a party alleges such personal stake in the outcome
of the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court depends for illumination of difficult constitutional questions. Unless a
person is injuriously affected in any of his constitutional rights by the operation of statute or
ordinance, he has no standing." 145

Petitioners have come before the Court in their respective capacities as citizen-taxpayers and
accordingly, assert that they "dutifully contribute to the coffers of the National Treasury."  Clearly, as
146

taxpayers, they possess the requisite standing to question the validity of the existing "Pork Barrel
System" under which the taxes they pay have been and continue to be utilized. It is undeniable that
petitioners, as taxpayers, are bound to suffer from the unconstitutional usage of public funds, if the
Court so rules. Invariably, taxpayers have been allowed to sue where there is a claim that public
funds are illegally disbursed or that public money is being deflected to any improper purpose, or that
public funds are wasted through the enforcement of an invalid or unconstitutional law,  as in these
147

cases.

Moreover, as citizens, petitioners have equally fulfilled the standing requirement given that the
issues they have raised may be classified as matters "of transcendental importance, of overreaching
significance to society, or of paramount public interest."  The CoA Chairperson‘s statement during
148

the Oral Arguments that the present controversy involves "not merely a systems failure" but a
"complete breakdown of controls"  amplifies, in addition to the matters above-discussed, the
149

seriousness of the issues involved herein. Indeed, of greater import than the damage caused by the
illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the
enforcement of an invalid statute.  All told, petitioners have sufficient locus standi to file the instant
150

cases.

D. Res Judicata and Stare Decisis.

Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or simply,
stare decisis which means "follow past precedents and do not disturb what has been settled") are
general procedural law principles which both deal with the effects of previous but factually similar
dispositions to subsequent cases. For the cases at bar, the Court examines the applicability of these
principles in relation to its prior rulings in Philconsa and LAMP.

The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a
previous case rendered by a court of competent jurisdiction would bind a subsequent case if,
between the first and second actions, there exists an identity of parties, of subject matter, and of
causes of action.  This required identity is not, however, attendant hereto since Philconsa and
151

LAMP, respectively involved constitutional challenges against the 1994 CDF Article and 2004 PDAF
Article, whereas the cases at bar call for a broader constitutional scrutiny of the entire "Pork Barrel
System." Also, the ruling in LAMP is essentially a dismissal based on a procedural technicality –
and, thus, hardly a judgment on the merits – in that petitioners therein failed to present any
"convincing proof x x x showing that, indeed, there were direct releases of funds to the Members of
Congress, who actually spend them according to their sole discretion" or "pertinent evidentiary
support to demonstrate the illegal misuse of PDAF in the form of kickbacks and has become a
common exercise of unscrupulous Members of Congress." As such, the Court up held, in view of the
presumption of constitutionality accorded to every law, the 2004 PDAF Article, and saw "no need to
review or reverse the standing pronouncements in the said case." Hence, for the foregoing reasons,
the res judicata principle, insofar as the Philconsa and LAMP cases are concerned, cannot apply.

On the other hand, the focal point of stare decisis is the doctrine created. The principle, entrenched
under Article 8  of the Civil Code, evokes the general rule that, for the sake of certainty, a
152

conclusion reached in one case should be doctrinally applied to those that follow if the facts are
substantially the same, even though the parties may be different. It proceeds from the first principle
of justice that, absent any powerful countervailing considerations, like cases ought to be decided
alike. Thus, where the same questions relating to the same event have been put forward by the
parties similarly situated as in a previous case litigated and decided by a competent court, the rule of
stare decisis is a bar to any attempt to re-litigate the same issue.153

Philconsa was the first case where a constitutional challenge against a Pork Barrel provision, i.e.,
the 1994 CDF Article, was resolved by the Court. To properly understand its context, petitioners‘
posturing was that "the power given to the Members of Congress to propose and identify projects
and activities to be funded by the CDF is an encroachment by the legislature on executive power,
since said power in an appropriation act is in implementation of the law" and that "the proposal and
identification of the projects do not involve the making of laws or the repeal and amendment thereof,
the only function given to the Congress by the Constitution."  In deference to the foregoing
154

submissions, the Court reached the following main conclusions: one, under the Constitution, the
power of appropriation, or the "power of the purse," belongs to Congress; two, the power of
appropriation carries with it the power to specify the project or activity to be funded under the
appropriation law and it can be detailed and as broad as Congress wants it to be; and, three, the
proposals and identifications made by Members of Congress are merely recommendatory. At once,
it is apparent that the Philconsa resolution was a limited response to a separation of powers
problem, specifically on the propriety of conferring post-enactment identification authority to
Members of Congress. On the contrary, the present cases call for a more holistic examination of (a)
the inter-relation between the CDF and PDAF Articles with each other, formative as they are of the
entire "Pork Barrel System" as well as (b) the intra-relation of post-enactment measures contained
within a particular CDF or PDAF Article, including not only those related to the area of project
identification but also to the areas of fund release and realignment. The complexity of the issues and
the broader legal analyses herein warranted may be, therefore, considered as a powerful
countervailing reason against a wholesale application of the stare decisis principle.

In addition, the Court observes that the Philconsa ruling was actually riddled with inherent
constitutional inconsistencies which similarly countervail against a full resort to stare decisis. As may
be deduced from the main conclusions of the case, Philconsa‘s fundamental premise in allowing
Members of Congress to propose and identify of projects would be that the said identification
authority is but an aspect of the power of appropriation which has been constitutionally lodged in
Congress. From this premise, the contradictions may be easily seen. If the authority to identify
projects is an aspect of appropriation and the power of appropriation is a form of legislative power
thereby lodged in Congress, then it follows that: (a) it is Congress which should exercise such
authority, and not its individual Members; (b) such authority must be exercised within the prescribed
procedure of law passage and, hence, should not be exercised after the GAA has already been
passed; and (c) such authority, as embodied in the GAA, has the force of law and, hence, cannot be
merely recommendatory. Justice Vitug‘s Concurring Opinion in the same case sums up the
Philconsa quandary in this wise: "Neither would it be objectionable for Congress, by law, to
appropriate funds for such specific projects as it may be minded; to give that authority, however, to
the individual members of Congress in whatever guise, I am afraid, would be constitutionally
impermissible." As the Court now largely benefits from hindsight and current findings on the matter,
among others, the CoA Report, the Court must partially abandon its previous ruling in Philconsa
insofar as it validated the post-enactment identification authority of Members of Congress on the
guise that the same was merely recommendatory. This postulate raises serious constitutional
inconsistencies which cannot be simply excused on the ground that such mechanism is "imaginative
as it is innovative." Moreover, it must be pointed out that the recent case of Abakada Guro Party List
v. Purisima  (Abakada) has effectively overturned Philconsa‘s allowance of post-enactment
155

legislator participation in view of the separation of powers principle. These constitutional

inconsistencies and the Abakada rule will be discussed in greater detail in the ensuing section of this
Decision.

As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality and,
hence, has not set any controlling doctrine susceptible of current application to the substantive
issues in these cases. In fine, stare decisis would not apply.

II. Substantive Issues.

A. Definition of Terms.
Before the Court proceeds to resolve the substantive issues of these cases, it must first define the
terms "Pork Barrel System," "Congressional Pork Barrel," and "Presidential Pork Barrel" as they are
essential to the ensuing discourse.

Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and
Executive branches of government to accumulate lump-sum public funds in their offices with
unchecked discretionary powers to determine its distribution as political largesse."  They assert that
156

the following elements make up the Pork Barrel System: (a) lump-sum funds are allocated through
the appropriations process to an individual officer; (b) the officer is given sole and broad discretion in
determining how the funds will be used or expended; (c) the guidelines on how to spend or use the
funds in the appropriation are either vague, overbroad or inexistent; and (d) projects funded are
intended to benefit a definite constituency in a particular part of the country and to help the political
careers of the disbursing official by yielding rich patronage benefits.  They further state that the Pork
157

Barrel System is comprised of two (2) kinds of discretionary public funds: first, the Congressional (or
Legislative) Pork Barrel, currently known as the PDAF;  and, second, the Presidential (or Executive)
158

Pork Barrel, specifically, the Malampaya Funds under PD 910 and the Presidential Social Fund
under PD 1869, as amended by PD 1993. 159

Considering petitioners‘ submission and in reference to its local concept and legal history, the Court
defines the Pork Barrel System as the collective body of rules and practices that govern the manner
by which lump-sum, discretionary funds, primarily intended for local projects, are utilized through the
respective participations of the Legislative and Executive branches of government, including its
members. The Pork Barrel System involves two (2) kinds of lump-sum discretionary funds:

First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund wherein legislators, either individually or collectively organized into committees,
are able to effectively control certain aspects of the fund’s utilization through various post-enactment
measures and/or practices. In particular, petitioners consider the PDAF, as it appears under the
2013 GAA, as Congressional Pork Barrel since it is, inter alia, a post-enactment measure that allows
individual legislators to wield a collective power;  and
160

Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund which allows the President to determine the manner of its utilization. For reasons
earlier stated,  the Court shall delimit the use of such term to refer only to the Malampaya Funds
161

and the Presidential Social Fund.

With these definitions in mind, the Court shall now proceed to discuss the substantive issues of
these cases.

B. Substantive Issues on the Congressional Pork Barrel.

1. Separation of Powers.

a. Statement of Principle.

The principle of separation of powers refers to the constitutional demarcation of the three
fundamental powers of government. In the celebrated words of Justice Laurel in Angara v. Electoral
Commission,  it means that the "Constitution has blocked out with deft strokes and in bold lines,
162

allotment of power to the executive, the legislative and the judicial departments of the
government."  To the legislative branch of government, through Congress,  belongs the power to
163 164

make laws; to the executive branch of government, through the President,  belongs the power to
165

enforce laws; and to the judicial branch of government, through the Court,  belongs the power to
166
interpret laws. Because the three great powers have been, by constitutional design, ordained in this
respect, "each department of the government has exclusive cognizance of matters within its
jurisdiction, and is supreme within its own sphere."  Thus, "the legislature has no authority to
167

execute or construe the law, the executive has no authority to make or construe the law, and the
judiciary has no power to make or execute the law."  The principle of separation of powers and its
168

concepts of autonomy and independence stem from the notion that the powers of government must
be divided to avoid concentration of these powers in any one branch; the division, it is hoped, would
avoid any single branch from lording its power over the other branches or the citizenry.  To achieve
169

this purpose, the divided power must be wielded by co-equal branches of government that are
equally capable of independent action in exercising their respective mandates. Lack of
independence would result in the inability of one branch of government to check the arbitrary or self-
interest assertions of another or others. 170

Broadly speaking, there is a violation of the separation of powers principle when one branch of
government unduly encroaches on the domain of another. US Supreme Court decisions instruct that
the principle of separation of powers may be violated in two (2) ways: firstly, "one branch may
interfere impermissibly with the other’s performance of its constitutionally assigned function";  and
171

"alternatively, the doctrine may be violated when one branch assumes a function that more properly
is entrusted to another."  In other words, there is a violation of the principle when there is
172

impermissible (a) interference with and/or (b) assumption of another department‘s functions.

The enforcement of the national budget, as primarily contained in the GAA, is indisputably a function
both constitutionally assigned and properly entrusted to the Executive branch of government. In
Guingona, Jr. v. Hon. Carague  (Guingona, Jr.), the Court explained that the phase of budget
173

execution "covers the various operational aspects of budgeting" and accordingly includes "the
evaluation of work and financial plans for individual activities," the "regulation and release of funds"
as well as all "other related activities" that comprise the budget execution cycle.  This is rooted in
174

the principle that the allocation of power in the three principal branches of government is a grant of
all powers inherent in them.  Thus, unless the Constitution provides otherwise, the Executive
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department should exclusively exercise all roles and prerogatives which go into the implementation
of the national budget as provided under the GAA as well as any other appropriation law.

In view of the foregoing, the Legislative branch of government, much more any of its members,
should not cross over the field of implementing the national budget since, as earlier stated, the same
is properly the domain of the Executive. Again, in Guingona, Jr., the Court stated that "Congress
enters the picture when it deliberates or acts on the budget proposals of the President. Thereafter,
Congress, "in the exercise of its own judgment and wisdom, formulates an appropriation act
precisely following the process established by the Constitution, which specifies that no money may
be paid from the Treasury except in accordance with an appropriation made by law." Upon approval
and passage of the GAA, Congress‘ law -making role necessarily comes to an end and from there
the Executive‘s role of implementing the national budget begins. So as not to blur the constitutional
boundaries between them, Congress must "not concern it self with details for implementation by the
Executive."176

The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that
"from the moment the law becomes effective, any provision of law that empowers Congress or any
of its members to play any role in the implementation or enforcement of the law violates the principle
of separation of powers and is thus unconstitutional."  It must be clarified, however, that since the
177

restriction only pertains to "any role in the implementation or enforcement of the law," Congress may
still exercise its oversight function which is a mechanism of checks and balances that the
Constitution itself allows. But it must be made clear that Congress‘ role must be confined to mere
oversight. Any post-enactment-measure allowing legislator participation beyond oversight is bereft of
any constitutional basis and hence, tantamount to impermissible interference and/or assumption of
executive functions. As the Court ruled in Abakada: 178

Any post-enactment congressional measure x x x should be limited to scrutiny and investigation.  In 1âwphi1

particular, congressional oversight must be confined to the following:

(1) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings
conducted in connection with it, its power to ask heads of departments to appear before and
be heard by either of its Houses on any matter pertaining to their departments and its power
of confirmation; and

(2) investigation and monitoring of the implementation of laws pursuant to the power of
Congress to conduct inquiries in aid of legislation.

Any action or step beyond that will undermine the separation of powers guaranteed by the
Constitution. (Emphases supplied)

b. Application.

In these cases, petitioners submit that the Congressional Pork Barrel – among others, the 2013
PDAF Article – "wrecks the assignment of responsibilities between the political branches" as it is
designed to allow individual legislators to interfere "way past the time it should have ceased" or,
particularly, "after the GAA is passed."  They state that the findings and recommendations in the
179

CoA Report provide "an illustration of how absolute and definitive the power of legislators wield over
project implementation in complete violation of the constitutional principle of separation of
powers."  Further, they point out that the Court in the Philconsa case only allowed the CDF to exist
180

on the condition that individual legislators limited their role to recommending projects and not if they
actually dictate their implementation.181

For their part, respondents counter that the separations of powers principle has not been violated
since the President maintains "ultimate authority to control the execution of the GAA‖ and that he
"retains the final discretion to reject" the legislators‘ proposals.  They maintain that the Court, in
182

Philconsa, "upheld the constitutionality of the power of members of Congress to propose and identify
projects so long as such proposal and identification are recommendatory."  As such, they claim that
183

"everything in the Special Provisions [of the 2013 PDAF Article follows the Philconsa framework, and
hence, remains constitutional." 184

The Court rules in favor of petitioners.

As may be observed from its legal history, the defining feature of all forms of Congressional Pork
Barrel would be the authority of legislators to participate in the post-enactment phases of project
implementation.

At its core, legislators – may it be through project lists,  prior consultations  or program menus  –
185 186 187

have been consistently accorded post-enactment authority to identify the projects they desire to be
funded through various Congressional Pork Barrel allocations. Under the 2013 PDAF Article, the
statutory authority of legislators to identify projects post-GAA may be construed from the import of
Special Provisions 1 to 3 as well as the second paragraph of Special Provision 4. To elucidate,
Special Provision 1 embodies the program menu feature which, as evinced from past PDAF Articles,
allows individual legislators to identify PDAF projects for as long as the identified project falls under a
general program listed in the said menu. Relatedly, Special Provision 2 provides that the
implementing agencies shall, within 90 days from the GAA is passed, submit to Congress a more
detailed priority list, standard or design prepared and submitted by implementing agencies from
which the legislator may make his choice. The same provision further authorizes legislators to
identify PDAF projects outside his district for as long as the representative of the district concerned
concurs in writing. Meanwhile, Special Provision 3 clarifies that PDAF projects refer to "projects to be
identified by legislators"  and thereunder provides the allocation limit for the total amount of projects
188

identified by each legislator. Finally, paragraph 2 of Special Provision 4 requires that any
modification and revision of the project identification "shall be submitted to the House Committee on
Appropriations and the Senate Committee on Finance for favorable endorsement to the DBM or the
implementing agency, as the case may be." From the foregoing special provisions, it cannot be
seriously doubted that legislators have been accorded post-enactment authority to identify PDAF
projects.

Aside from the area of project identification, legislators have also been accorded post-enactment
authority in the areas of fund release and realignment. Under the 2013 PDAF Article, the statutory
authority of legislators to participate in the area of fund release through congressional committees is
contained in Special Provision 5 which explicitly states that "all request for release of funds shall be
supported by the documents prescribed under Special Provision No. 1 and favorably endorsed by
House Committee on Appropriations and the Senate Committee on Finance, as the case may be";
while their statutory authority to participate in the area of fund realignment is contained in: first ,
paragraph 2, Special Provision 4  which explicitly state s, among others, that "any realignment of
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funds shall be submitted to the House Committee on Appropriations and the Senate Committee on
Finance for favorable endorsement to the DBM or the implementing agency, as the case may be‖ ;
and, second , paragraph 1, also of Special Provision 4 which authorizes the "Secretaries of
Agriculture, Education, Energy, Interior and Local Government, Labor and Employment, Public
Works and Highways, Social Welfare and Development and Trade and Industry  x x x to approve
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realignment from one project/scope to another within the allotment received from this Fund, subject
to among others (iii) the request is with the concurrence of the legislator concerned."

Clearly, these post-enactment measures which govern the areas of project identification, fund
release and fund realignment are not related to functions of congressional oversight and, hence,
allow legislators to intervene and/or assume duties that properly belong to the sphere of budget
execution. Indeed, by virtue of the foregoing, legislators have been, in one form or another,
authorized to participate in – as Guingona, Jr. puts it – "the various operational aspects of
budgeting," including "the evaluation of work and financial plans for individual activities" and the
"regulation and release of funds" in violation of the separation of powers principle. The fundamental
rule, as categorically articulated in Abakada, cannot be overstated – from the moment the law
becomes effective, any provision of law that empowers Congress or any of its members to play any
role in the implementation or enforcement of the law violates the principle of separation of powers
and is thus unconstitutional.  That the said authority is treated as merely recommendatory in nature
191

does not alter its unconstitutional tenor since the prohibition, to repeat, covers any role in the
implementation or enforcement of the law. Towards this end, the Court must therefore abandon its
ruling in Philconsa which sanctioned the conduct of legislator identification on the guise that the
same is merely recommendatory and, as such, respondents‘ reliance on the same falters altogether.

Besides, it must be pointed out that respondents have nonetheless failed to substantiate their
position that the identification authority of legislators is only of recommendatory import. Quite the
contrary, respondents – through the statements of the Solicitor General during the Oral Arguments –
have admitted that the identification of the legislator constitutes a mandatory requirement before his
PDAF can be tapped as a funding source, thereby highlighting the indispensability of the said act to
the entire budget execution process: 192
Justice Bernabe: Now, without the individual legislator’s identification of the project, can the PDAF of
the legislator be utilized?

Solicitor General Jardeleza: No, Your Honor.

Justice Bernabe: It cannot?

Solicitor General Jardeleza: It cannot… (interrupted)

Justice Bernabe: So meaning you should have the identification of the project by the individual
legislator?

Solicitor General Jardeleza: Yes, Your Honor.

xxxx

Justice Bernabe: In short, the act of identification is mandatory?

Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is no
identification.

xxxx

Justice Bernabe: Now, would you know of specific instances when a project was implemented
without the identification by the individual legislator?

Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific
examples. I would doubt very much, Your Honor, because to implement, there is a need for a SARO
and the NCA. And the SARO and the NCA are triggered by an identification from the legislator.

xxxx

Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a
question, "How can a legislator make sure that he is able to get PDAF Funds?" It is mandatory in the
sense that he must identify, in that sense, Your Honor. Otherwise, if he does not identify, he cannot
avail of the PDAF Funds and his district would not be able to have PDAF Funds, only in that sense,
Your Honor. (Emphases supplied)

Thus, for all the foregoing reasons, the Court hereby declares the 2013 PDAF Article as well as all
other provisions of law which similarly allow legislators to wield any form of post-enactment authority
in the implementation or enforcement of the budget, unrelated to congressional oversight, as
violative of the separation of powers principle and thus unconstitutional. Corollary thereto, informal
practices, through which legislators have effectively intruded into the proper phases of budget
execution, must be deemed as acts of grave abuse of discretion amounting to lack or excess of
jurisdiction and, hence, accorded the same unconstitutional treatment. That such informal practices
do exist and have, in fact, been constantly observed throughout the years has not been substantially
disputed here. As pointed out by Chief Justice Maria Lourdes P.A. Sereno (Chief Justice Sereno)
during the Oral Arguments of these cases: 193

Chief Justice Sereno:

Now, from the responses of the representative of both, the DBM and two (2) Houses of Congress, if
we enforces the initial thought that I have, after I had seen the extent of this research made by my
staff, that neither the Executive nor Congress frontally faced the question of constitutional
compatibility of how they were engineering the budget process. In fact, the words you have been
using, as the three lawyers of the DBM, and both Houses of Congress has also been using is
surprise; surprised that all of these things are now surfacing. In fact, I thought that what the 2013
PDAF provisions did was to codify in one section all the past practice that had been done since
1991. In a certain sense, we should be thankful that they are all now in the PDAF Special Provisions.
x x x (Emphasis and underscoring supplied)

Ultimately, legislators cannot exercise powers which they do not have, whether through formal
measures written into the law or informal practices institutionalized in government agencies, else the
Executive department be deprived of what the Constitution has vested as its own.

2. Non-delegability of Legislative Power.

a. Statement of Principle.

As an adjunct to the separation of powers principle,  legislative power shall be exclusively exercised
194

by the body to which the Constitution has conferred the same. In particular, Section 1, Article VI of
the 1987 Constitution states that such power shall be vested in the Congress of the Philippines
which shall consist of a Senate and a House of Representatives, except to the extent reserved to the
people by the provision on initiative and referendum.  Based on this provision, it is clear that only
195

Congress, acting as a bicameral body, and the people, through the process of initiative and
referendum, may constitutionally wield legislative power and no other. This premise embodies the
principle of non-delegability of legislative power, and the only recognized exceptions thereto would
be: (a) delegated legislative power to local governments which, by immemorial practice, are allowed
to legislate on purely local matters;  and (b) constitutionally-grafted exceptions such as the authority
196

of the President to, by law, exercise powers necessary and proper to carry out a declared national
policy in times of war or other national emergency,  or fix within specified limits, and subject to such
197

limitations and restrictions as Congress may impose, tariff rates, import and export quotas, tonnage
and wharfage dues, and other duties or imposts within the framework of the national development
program of the Government. 198

Notably, the principle of non-delegability should not be confused as a restriction to delegate rule-
making authority to implementing agencies for the limited purpose of either filling up the details of
the law for its enforcement (supplementary rule-making) or ascertaining facts to bring the law into
actual operation (contingent rule-making).  The conceptual treatment and limitations of delegated
199

rule-making were explained in the case of People v. Maceren  as follows:

200

The grant of the rule-making power to administrative agencies is a relaxation of the principle of
separation of powers and is an exception to the nondelegation of legislative powers. Administrative
regulations or "subordinate legislation" calculated to promote the public interest are necessary
because of "the growing complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the law."

xxxx

Nevertheless, it must be emphasized that the rule-making power must be confined to details for
regulating the mode or proceeding to carry into effect the law as it has been enacted. The power
cannot be extended to amending or expanding the statutory requirements or to embrace matters not
covered by the statute. Rules that subvert the statute cannot be sanctioned. (Emphases supplied)
b. Application.

In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers post-
enactment identification authority to individual legislators, violates the principle of non-delegability
since said legislators are effectively allowed to individually exercise the power of appropriation,
which – as settled in Philconsa – is lodged in Congress.  That the power to appropriate must be
201

exercised only through legislation is clear from Section 29(1), Article VI of the 1987 Constitution
which states that: "No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law." To understand what constitutes an act of appropriation, the Court, in
Bengzon v. Secretary of Justice and Insular Auditor  (Bengzon), held that the power of appropriation
202

involves (a) the setting apart by law of a certain sum from the public revenue for (b) a specified
purpose. Essentially, under the 2013 PDAF Article, individual legislators are given a personal lump-
sum fund from which they are able to dictate (a) how much from such fund would go to (b) a specific
project or beneficiary that they themselves also determine. As these two (2) acts comprise the
exercise of the power of appropriation as described in Bengzon, and given that the 2013 PDAF
Article authorizes individual legislators to perform the same, undoubtedly, said legislators have been
conferred the power to legislate which the Constitution does not, however, allow. Thus, keeping with
the principle of non-delegability of legislative power, the Court hereby declares the 2013 PDAF
Article, as well as all other forms of Congressional Pork Barrel which contain the similar legislative
identification feature as herein discussed, as unconstitutional.

3. Checks and Balances.

a. Statement of Principle; Item-Veto Power.

The fact that the three great powers of government are intended to be kept separate and distinct
does not mean that they are absolutely unrestrained and independent of each other. The
Constitution has also provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government. 203

A prime example of a constitutional check and balance would be the President’s power to veto an
item written into an appropriation, revenue or tariff bill submitted to him by Congress for approval
through a process known as "bill presentment." The President‘s item-veto power is found in Section
27(2), Article VI of the 1987 Constitution which reads as follows:

Sec. 27. x x x.

xxxx

(2) The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object.

The presentment of appropriation, revenue or tariff bills to the President, wherein he may exercise
his power of item-veto, forms part of the "single, finely wrought and exhaustively considered,
procedures" for law-passage as specified under the Constitution.  As stated in Abakada, the final
204

step in the law-making process is the "submission of the bill to the President for approval. Once
approved, it takes effect as law after the required publication." 205

Elaborating on the President‘s item-veto power and its relevance as a check on the legislature, the
Court, in Bengzon, explained that: 206
The former Organic Act and the present Constitution of the Philippines make the Chief Executive an
integral part of the law-making power. His disapproval of a bill, commonly known as a veto, is
essentially a legislative act. The questions presented to the mind of the Chief Executive are precisely
the same as those the legislature must determine in passing a bill, except that his will be a broader
point of view.

The Constitution is a limitation upon the power of the legislative department of the government, but
in this respect it is a grant of power to the executive department. The Legislature has the affirmative
power to enact laws; the Chief Executive has the negative power by the constitutional exercise of
which he may defeat the will of the Legislature. It follows that the Chief Executive must find his
authority in the Constitution. But in exercising that authority he may not be confined to rules of strict
construction or hampered by the unwise interference of the judiciary. The courts will indulge every
intendment in favor of the constitutionality of a veto in the same manner as they will presume the
constitutionality of an act as originally passed by the Legislature. (Emphases supplied)

The justification for the President‘s item-veto power rests on a variety of policy goals such as to
prevent log-rolling legislation,  impose fiscal restrictions on the legislature, as well as to fortify the
207

executive branch‘s role in the budgetary process.  In Immigration and Naturalization Service v.
208

Chadha, the US Supreme Court characterized the President‘s item-power as "a salutary check upon
the legislative body, calculated to guard the community against the effects of factions, precipitancy,
or of any impulse unfriendly to the public good, which may happen to influence a majority of that
body"; phrased differently, it is meant to "increase the chances in favor of the community against the
passing of bad laws, through haste, inadvertence, or design." 209

For the President to exercise his item-veto power, it necessarily follows that there exists a proper
"item" which may be the object of the veto. An item, as defined in the field of appropriations, pertains
to "the particulars, the details, the distinct and severable parts of the appropriation or of the bill." In
the case of Bengzon v. Secretary of Justice of the Philippine Islands,  the US Supreme Court
210

characterized an item of appropriation as follows:

An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of
money, not some general provision of law which happens to be put into an appropriation bill.
(Emphases supplied)

On this premise, it may be concluded that an appropriation bill, to ensure that the President may be
able to exercise his power of item veto, must contain "specific appropriations of money" and not only
"general provisions" which provide for parameters of appropriation.

Further, it is significant to point out that an item of appropriation must be an item characterized by
singular correspondence – meaning an allocation of a specified singular amount for a specified
singular purpose, otherwise known as a "line-item."  This treatment not only allows the item to be
211

consistent with its definition as a "specific appropriation of money" but also ensures that the
President may discernibly veto the same. Based on the foregoing formulation, the existing Calamity
Fund, Contingent Fund and the Intelligence Fund, being appropriations which state a specified
amount for a specific purpose, would then be considered as "line- item" appropriations which are
rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly
apportioned into component percentages or values; however, it is crucial that each percentage or
value must be allocated for its own corresponding purpose for such component to be considered as
a proper line-item. Moreover, as Justice Carpio correctly pointed out, a valid appropriation may even
have several related purposes that are by accounting and budgeting practice considered as one
purpose, e.g., MOOE (maintenance and other operating expenses), in which case the related
purposes shall be deemed sufficiently specific for the exercise of the President‘s item veto power.
Finally, special purpose funds and discretionary funds would equally square with the constitutional
mechanism of item-veto for as long as they follow the rule on singular correspondence as herein
discussed. Anent special purpose funds, it must be added that Section 25(4), Article VI of the 1987
Constitution requires that the "special appropriations bill shall specify the purpose for which it is
intended, and shall be supported by funds actually available as certified by the National Treasurer,
or t o be raised by a corresponding revenue proposal therein." Meanwhile, with respect to
discretionary funds, Section 2 5(6), Article VI of the 1987 Constitution requires that said funds "shall
be disbursed only for public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law."

In contrast, what beckons constitutional infirmity are appropriations which merely provide for a
singular lump-sum amount to be tapped as a source of funding for multiple purposes. Since such
appropriation type necessitates the further determination of both the actual amount to be expended
and the actual purpose of the appropriation which must still be chosen from the multiple purposes
stated in the law, it cannot be said that the appropriation law already indicates a "specific
appropriation of money‖ and hence, without a proper line-item which the President may veto. As a
practical result, the President would then be faced with the predicament of either vetoing the entire
appropriation if he finds some of its purposes wasteful or undesirable, or approving the entire
appropriation so as not to hinder some of its legitimate purposes. Finally, it may not be amiss to
state that such arrangement also raises non-delegability issues considering that the implementing
authority would still have to determine, again, both the actual amount to be expended and the actual
purpose of the appropriation. Since the foregoing determinations constitute the integral aspects of
the power to appropriate, the implementing authority would, in effect, be exercising legislative
prerogatives in violation of the principle of non-delegability.

b. Application.

In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum
appropriation, the legislator‘s identification of the projects after the passage of the GAA denies the
President the chance to veto that item later on."  Accordingly, they submit that the "item veto power
212

of the President mandates that appropriations bills adopt line-item budgeting" and that "Congress
cannot choose a mode of budgeting which effectively renders the constitutionally-given power of the
President useless." 213

On the other hand, respondents maintain that the text of the Constitution envisions a process which
is intended to meet the demands of a modernizing economy and, as such, lump-sum appropriations
are essential to financially address situations which are barely foreseen when a GAA is enacted.
They argue that the decision of the Congress to create some lump-sum appropriations is
constitutionally allowed and textually-grounded. 214

The Court agrees with petitioners.

Under the 2013 PDAF Article, the amount of ₱24.79 Billion only appears as a collective allocation
limit since the said amount would be further divided among individual legislators who would then
receive personal lump-sum allocations and could, after the GAA is passed, effectively appropriate
PDAF funds based on their own discretion. As these intermediate appropriations are made by
legislators only after the GAA is passed and hence, outside of the law, it necessarily means that the
actual items of PDAF appropriation would not have been written into the General Appropriations Bill
and thus effectuated without veto consideration. This kind of lump-sum/post-enactment legislative
identification budgeting system fosters the creation of a budget within a budget" which subverts the
prescribed procedure of presentment and consequently impairs the President‘s power of item veto.
As petitioners aptly point out, the above-described system forces the President to decide between
(a) accepting the entire ₱24.79 Billion PDAF allocation without knowing the specific projects of the
legislators, which may or may not be consistent with his national agenda and (b) rejecting the whole
PDAF to the detriment of all other legislators with legitimate projects. 215

Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF Article
would remain constitutionally flawed since it would then operate as a prohibited form of lump-sum
appropriation above-characterized. In particular, the lump-sum amount of ₱24.79 Billion would be
treated as a mere funding source allotted for multiple purposes of spending, i.e., scholarships,
medical missions, assistance to indigents, preservation of historical materials, construction of roads,
flood control, etc. This setup connotes that the appropriation law leaves the actual amounts and
purposes of the appropriation for further determination and, therefore, does not readily indicate a
discernible item which may be subject to the President‘s power of item veto.

In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA
Chairperson relays, "limited state auditors from obtaining relevant data and information that would
aid in more stringently auditing the utilization of said Funds."  Accordingly, she recommends the
216

adoption of a "line by line budget or amount per proposed program, activity or project, and per
implementing agency." 217

Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as all
Congressional Pork Barrel Laws of similar operation, to be unconstitutional. That such budgeting
system provides for a greater degree of flexibility to account for future contingencies cannot be an
excuse to defeat what the Constitution requires. Clearly, the first and essential truth of the matter is
that unconstitutional means do not justify even commendable ends. 218

c. Accountability.

Petitioners further relate that the system under which various forms of Congressional Pork Barrel
operate defies public accountability as it renders Congress incapable of checking itself or its
Members. In particular, they point out that the Congressional Pork Barrel "gives each legislator a
direct, financial interest in the smooth, speedy passing of the yearly budget" which turns them "from
fiscalizers" into "financially-interested partners."  They also claim that the system has an effect on
219

re- election as "the PDAF excels in self-perpetuation of elective officials." Finally, they add that the
"PDAF impairs the power of impeachment" as such "funds are indeed quite useful, ‘to well,
accelerate the decisions of senators.‘" 220

The Court agrees in part.

The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that "public
office is a public trust," is an overarching reminder that every instrumentality of government should
exercise their official functions only in accordance with the principles of the Constitution which
embodies the parameters of the people‘s trust. The notion of a public trust connotes
accountability,  hence, the various mechanisms in the Constitution which are designed to exact
221

accountability from public officers.

Among others, an accountability mechanism with which the proper expenditure of public funds may
be checked is the power of congressional oversight. As mentioned in Abakada,  congressional
222

oversight may be performed either through: (a) scrutiny based primarily on Congress‘ power of
appropriation and the budget hearings conducted in connection with it, its power to ask heads of
departments to appear before and be heard by either of its Houses on any matter pertaining to their
departments and its power of confirmation;  or (b) investigation and monitoring of the
223

implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation. 224
The Court agrees with petitioners that certain features embedded in some forms of Congressional
Pork Barrel, among others the 2013 PDAF Article, has an effect on congressional oversight. The fact
that individual legislators are given post-enactment roles in the implementation of the budget makes
it difficult for them to become disinterested "observers" when scrutinizing, investigating or monitoring
the implementation of the appropriation law. To a certain extent, the conduct of oversight would be
tainted as said legislators, who are vested with post-enactment authority, would, in effect, be
checking on activities in which they themselves participate. Also, it must be pointed out that this very
same concept of post-enactment authorization runs afoul of Section 14, Article VI of the 1987
Constitution which provides that:

Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel
before any court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative
bodies. Neither shall he, directly or indirectly, be interested financially in any contract with, or in any
franchise or special privilege granted by the Government, or any subdivision, agency, or
instrumentality thereof, including any government-owned or controlled corporation, or its subsidiary,
during his term of office. He shall not intervene in any matter before any office of the Government for
his pecuniary benefit or where he may be called upon to act on account of his office. (Emphasis
supplied)

Clearly, allowing legislators to intervene in the various phases of project implementation – a matter
before another office of government – renders them susceptible to taking undue advantage of their
own office.

The Court, however, cannot completely agree that the same post-enactment authority and/or the
individual legislator‘s control of his PDAF per se would allow him to perpetuate himself in office.
Indeed, while the Congressional Pork Barrel and a legislator‘s use thereof may be linked to this area
of interest, the use of his PDAF for re-election purposes is a matter which must be analyzed based
on particular facts and on a case-to-case basis.

Finally, while the Court accounts for the possibility that the close operational proximity between
legislators and the Executive department, through the former‘s post-enactment participation, may
affect the process of impeachment, this matter largely borders on the domain of politics and does not
strictly concern the Pork Barrel System‘s intrinsic constitutionality. As such, it is an improper subject
of judicial assessment.

In sum, insofar as its post-enactment features dilute congressional oversight and violate Section 14,
Article VI of the 1987 Constitution, thus impairing public accountability, the 2013 PDAF Article and
other forms of Congressional Pork Barrel of similar nature are deemed as unconstitutional.

4. Political Dynasties.

One of the petitioners submits that the Pork Barrel System enables politicians who are members of
political dynasties to accumulate funds to perpetuate themselves in power, in contravention of
Section 26, Article II of the 1987 Constitution  which states that:
225

Sec. 26. The State shall guarantee equal access to opportunities for public service, and prohibit
political dynasties as may be defined by law. (Emphasis and underscoring supplied)

At the outset, suffice it to state that the foregoing provision is considered as not self-executing due to
the qualifying phrase "as may be defined by law." In this respect, said provision does not, by and of
itself, provide a judicially enforceable constitutional right but merely specifies guideline for legislative
or executive action.  Therefore, since there appears to be no standing law which crystallizes the
226

policy on political dynasties for enforcement, the Court must defer from ruling on this issue.

In any event, the Court finds the above-stated argument on this score to be largely speculative since
it has not been properly demonstrated how the Pork Barrel System would be able to propagate
political dynasties.

5. Local Autonomy.

The State‘s policy on local autonomy is principally stated in Section 25, Article II and Sections 2 and
3, Article X of the 1987 Constitution which read as follows:

ARTICLE II

Sec. 25. The State shall ensure the autonomy of local governments.

ARTICLE X

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

Sec. 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and functions and duties of
local officials, and all other matters relating to the organization and operation of the local units.

Pursuant thereto, Congress enacted RA 7160,  otherwise known as the "Local Government Code of
227

1991" (LGC), wherein the policy on local autonomy had been more specifically explicated as follows:

Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them
to attain their fullest development as self-reliant communities and make them more effective partners
in the attainment of national goals. Toward this end, the State shall provide for a more responsive
and accountable local government structure instituted through a system of decentralization whereby
local government units shall be given more powers, authority, responsibilities, and resources. The
process of decentralization shall proceed from the National Government to the local government
units.

xxxx

(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic
consultations with appropriate local government units, nongovernmental and people‘s organizations,
and other concerned sectors of the community before any project or program is implemented in their
respective jurisdictions. (Emphases and underscoring supplied)

The above-quoted provisions of the Constitution and the LGC reveal the policy of the State to
empower local government units (LGUs) to develop and ultimately, become self-sustaining and
effective contributors to the national economy. As explained by the Court in Philippine Gamefowl
Commission v. Intermediate Appellate Court: 228
This is as good an occasion as any to stress the commitment of the Constitution to the policy of local
autonomy which is intended to provide the needed impetus and encouragement to the development
of our local political subdivisions as "self - reliant communities." In the words of Jefferson, "Municipal
corporations are the small republics from which the great one derives its strength." The vitalization of
local governments will enable their inhabitants to fully exploit their resources and more important,
imbue them with a deepened sense of involvement in public affairs as members of the body politic.
This objective could be blunted by undue interference by the national government in purely local
affairs which are best resolved by the officials and inhabitants of such political units. The decision we
reach today conforms not only to the letter of the pertinent laws but also to the spirit of the
Constitution.  (Emphases and underscoring supplied)
229

In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the
constitutional principles on local autonomy since it allows district representatives, who are national
officers, to substitute their judgments in utilizing public funds for local development.  The Court
230

agrees with petitioners.

Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is also a
recognition that individual members of Congress, far more than the President and their
congressional colleagues, are likely to be knowledgeable about the needs of their respective
constituents and the priority to be given each project."  Drawing strength from this pronouncement,
231

previous legislators justified its existence by stating that "the relatively small projects implemented
under the Congressional Pork Barrel complement and link the national development goals to the
countryside and grassroots as well as to depressed areas which are overlooked by central agencies
which are preoccupied with mega-projects.  Similarly, in his August 23, 2013 speech on the
232

"abolition" of PDAF and budgetary reforms, President Aquino mentioned that the Congressional
Pork Barrel was originally established for a worthy goal, which is to enable the representatives to
identify projects for communities that the LGU concerned cannot afford. 233

Notwithstanding these declarations, the Court, however, finds an inherent defect in the system which
actually belies the avowed intention of "making equal the unequal." In particular, the Court observes
that the gauge of PDAF and CDF allocation/division is based solely on the fact of office, without
taking into account the specific interests and peculiarities of the district the legislator represents. In
this regard, the allocation/division limits are clearly not based on genuine parameters of equality,
wherein economic or geographic indicators have been taken into consideration. As a result, a district
representative of a highly-urbanized metropolis gets the same amount of funding as a district
representative of a far-flung rural province which would be relatively "underdeveloped" compared to
the former. To add, what rouses graver scrutiny is that even Senators and Party-List
Representatives – and in some years, even the Vice-President – who do not represent any locality,
receive funding from the Congressional Pork Barrel as well. These certainly are anathema to the
Congressional Pork Barrel‘s original intent which is "to make equal the unequal." Ultimately, the
PDAF and CDF had become personal funds under the effective control of each legislator and given
unto them on the sole account of their office.

The Court also observes that this concept of legislator control underlying the CDF and PDAF
conflicts with the functions of the various Local Development Councils (LDCs) which are already
legally mandated to "assist the corresponding sanggunian in setting the direction of economic and
social development, and coordinating development efforts within its territorial
jurisdiction."  Considering that LDCs are instrumentalities whose functions are essentially geared
234

towards managing local affairs,  their programs, policies and resolutions should not be overridden
235

nor duplicated by individual legislators, who are national officers that have no law-making authority
except only when acting as a body. The undermining effect on local autonomy caused by the post-
enactment authority conferred to the latter was succinctly put by petitioners in the following wise: 236
With PDAF, a Congressman can simply bypass the local development council and initiate projects
on his own, and even take sole credit for its execution. Indeed, this type of personality-driven project
identification has not only contributed little to the overall development of the district, but has even
contributed to "further weakening infrastructure planning and coordination efforts of the government."

Thus, insofar as individual legislators are authorized to intervene in purely local matters and thereby
subvert genuine local autonomy, the 2013 PDAF Article as well as all other similar forms of
Congressional Pork Barrel is deemed unconstitutional.

With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the
substantive issues involving the Presidential Pork Barrel.

C. Substantive Issues on the Presidential Pork Barrel.

1. Validity of Appropriation.

Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended by PD
1993), which respectively provide for the Malampaya Funds and the Presidential Social Fund, as
invalid appropriations laws since they do not have the "primary and specific" purpose of authorizing
the release of public funds from the National Treasury. Petitioners submit that Section 8 of PD 910 is
not an appropriation law since the "primary and specific‖ purpose of PD 910 is the creation of an
Energy Development Board and Section 8 thereof only created a Special Fund incidental
thereto.  In similar regard, petitioners argue that Section 12 of PD 1869 is neither a valid
237

appropriations law since the allocation of the Presidential Social Fund is merely incidental to the
"primary and specific" purpose of PD 1869 which is the amendment of the Franchise and Powers of
PAGCOR.  In view of the foregoing, petitioners suppose that such funds are being used without any
238

valid law allowing for their proper appropriation in violation of Section 29(1), Article VI of the 1987
Constitution which states that: "No money shall be paid out of the Treasury except in pursuance of
an appropriation made by law." 239

The Court disagrees.

"An appropriation made by law‖ under the contemplation of Section 29(1), Article VI of the 1987
Constitution exists when a provision of law (a) sets apart a determinate or determinable  amount of
240

money and (b) allocates the same for a particular public purpose. These two minimum designations
of amount and purpose stem from the very definition of the word "appropriation," which means "to
allot, assign, set apart or apply to a particular use or purpose," and hence, if written into the law,
demonstrate that the legislative intent to appropriate exists. As the Constitution "does not provide or
prescribe any particular form of words or religious recitals in which an authorization or appropriation
by Congress shall be made, except that it be ‘made by law,‘" an appropriation law may – according
to Philconsa – be "detailed and as broad as Congress wants it to be" for as long as the intent to
appropriate may be gleaned from the same. As held in the case of Guingona, Jr.: 241

There is no provision in our Constitution that provides or prescribes any particular form of words or
religious recitals in which an authorization or appropriation by Congress shall be made, except that it
be "made by law," such as precisely the authorization or appropriation under the questioned
presidential decrees. In other words, in terms of time horizons, an appropriation may be made
impliedly (as by past but subsisting legislations) as well as expressly for the current fiscal year (as by
enactment of laws by the present Congress), just as said appropriation may be made in general as
well as in specific terms. The Congressional authorization may be embodied in annual laws, such as
a general appropriations act or in special provisions of laws of general or special application which
appropriate public funds for specific public purposes, such as the questioned decrees. An
appropriation measure is sufficient if the legislative intention clearly and certainly appears from the
language employed (In re Continuing Appropriations, 32 P. 272), whether in the past or in the
present. (Emphases and underscoring supplied)

Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave: 242

To constitute an appropriation there must be money placed in a fund applicable to the designated
purpose. The word appropriate means to allot, assign, set apart or apply to a particular use or
purpose. An appropriation in the sense of the constitution means the setting apart a portion of the
public funds for a public purpose. No particular form of words is necessary for the purpose, if the
intention to appropriate is plainly manifested. (Emphases supplied)

Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must be
the "primary and specific" purpose of the law in order for a valid appropriation law to exist. To
reiterate, if a legal provision designates a determinate or determinable amount of money and
allocates the same for a particular public purpose, then the legislative intent to appropriate becomes
apparent and, hence, already sufficient to satisfy the requirement of an "appropriation made by law"
under contemplation of the Constitution.

Section 8 of PD 910 pertinently provides:

Section 8. Appropriations. x x x

All fees, revenues and receipts of the Board from any and all sources including receipts from service
contracts and agreements such as application and processing fees, signature bonus, discovery
bonus, production bonus; all money collected from concessionaires, representing unspent work
obligations, fines and penalties under the Petroleum Act of 1949; as well as the government share
representing royalties, rentals, production share on service contracts and similar payments on the
exploration, development and exploitation of energy resources, shall form part of a Special Fund to
be used to finance energy resource development and exploitation programs and projects of the
government and for such other purposes as may be hereafter directed by the President. (Emphases
supplied)

Whereas Section 12 of PD 1869, as amended by PD 1993, reads:

Sec. 12. Special Condition of Franchise. — After deducting five (5%) percent as Franchise Tax, the
Fifty (50%) percent share of the Government in the aggregate gross earnings of the Corporation
from this Franchise, or 60% if the aggregate gross earnings be less than ₱150,000,000.00 shall be
set aside and shall accrue to the General Fund to finance the priority infrastructure development
projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may
be directed and authorized by the Office of the President of the Philippines. (Emphases supplied)

Analyzing the legal text vis-à-vis the above-mentioned principles, it may then be concluded that (a)
Section 8 of PD 910, which creates a Special Fund comprised of "all fees, revenues, and receipts of
the Energy Development Board from any and all sources" (a determinable amount) "to be used to
finance energy resource development and exploitation programs and projects of the government and
for such other purposes as may be hereafter directed by the President" (a specified public purpose),
and (b) Section 12 of PD 1869, as amended by PD 1993, which similarly sets aside, "after deducting
five (5%) percent as Franchise Tax, the Fifty (50%) percent share of the Government in the
aggregate gross earnings of PAGCOR, or 60%, if the aggregate gross earnings be less than
₱150,000,000.00" (also a determinable amount) "to finance the priority infrastructure development
projects and x x x the restoration of damaged or destroyed facilities due to calamities, as may be
directed and authorized by the Office of the President of the Philippines" (also a specified public
purpose), are legal appropriations under Section 29(1), Article VI of the 1987 Constitution.

In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a
legal appropriation under the said constitutional provision precisely because, as earlier stated, it
contains post-enactment measures which effectively create a system of intermediate appropriations.
These intermediate appropriations are the actual appropriations meant for enforcement and since
they are made by individual legislators after the GAA is passed, they occur outside the law. As such,
the Court observes that the real appropriation made under the 2013 PDAF Article is not the ₱24.79
Billion allocated for the entire PDAF, but rather the post-enactment determinations made by the
individual legislators which are, to repeat, occurrences outside of the law. Irrefragably, the 2013
PDAF Article does not constitute an "appropriation made by law" since it, in its truest sense, only
authorizes individual legislators to appropriate in violation of the non-delegability principle as afore-
discussed.

2. Undue Delegation.

On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue delegation of
legislative power since the phrase "and for such other purposes as may be hereafter directed by the
President" gives the President "unbridled discretion to determine for what purpose the funds will be
used."  Respondents, on the other hand, urged the Court to apply the principle of ejusdem generis
243

to the same section and thus, construe the phrase "and for such other purposes as may be hereafter
directed by the President" to refer only to other purposes related "to energy resource development
and exploitation programs and projects of the government." 244

The Court agrees with petitioners‘ submissions.

While the designation of a determinate or determinable amount for a particular public purpose is
sufficient for a legal appropriation to exist, the appropriation law must contain adequate legislative
guidelines if the same law delegates rule-making authority to the Executive  either for the purpose
245

of (a) filling up the details of the law for its enforcement, known as supplementary rule-making, or (b)
ascertaining facts to bring the law into actual operation, referred to as contingent rule-
making.  There are two (2) fundamental tests to ensure that the legislative guidelines for delegated
246

rule-making are indeed adequate. The first test is called the "completeness test." Case law states
that a law is complete when it sets forth therein the policy to be executed, carried out, or
implemented by the delegate. On the other hand, the second test is called the "sufficient standard
test." Jurisprudence holds that a law lays down a sufficient standard when it provides adequate
guidelines or limitations in the law to map out the boundaries of the delegate‘s authority and prevent
the delegation from running riot.  To be sufficient, the standard must specify the limits of the
247

delegate‘s authority, announce the legislative policy, and identify the conditions under which it is to
be implemented. 248

In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other
purposes as may be hereafter directed by the President" under Section 8 of PD 910 constitutes an
undue delegation of legislative power insofar as it does not lay down a sufficient standard to
adequately determine the limits of the President‘s authority with respect to the purpose for which the
Malampaya Funds may be used. As it reads, the said phrase gives the President wide latitude to use
the Malampaya Funds for any other purpose he may direct and, in effect, allows him to unilaterally
appropriate public funds beyond the purview of the law. That the subject phrase may be confined
only to "energy resource development and exploitation programs and projects of the government"
under the principle of ejusdem generis, meaning that the general word or phrase is to be construed
to include – or be restricted to – things akin to, resembling, or of the same kind or class as those
specifically mentioned,  is belied by three (3) reasons: first, the phrase "energy resource
249

development and exploitation programs and projects of the government" states a singular and
general class and hence, cannot be treated as a statutory reference of specific things from which the
general phrase "for such other purposes" may be limited; second, the said phrase also exhausts the
class it represents, namely energy development programs of the government;  and, third, the
250

Executive department has, in fact, used the Malampaya Funds for non-energy related purposes
under the subject phrase, thereby contradicting respondents‘ own position that it is limited only to
"energy resource development and exploitation programs and projects of the government."  Thus,251

while Section 8 of PD 910 may have passed the completeness test since the policy of energy
development is clearly deducible from its text, the phrase "and for such other purposes as may be
hereafter directed by the President" under the same provision of law should nonetheless be stricken
down as unconstitutional as it lies independently unfettered by any sufficient standard of the
delegating law. This notwithstanding, it must be underscored that the rest of Section 8, insofar as it
allows for the use of the Malampaya Funds "to finance energy resource development and
exploitation programs and projects of the government," remains legally effective and subsisting.
Truth be told, the declared unconstitutionality of the aforementioned phrase is but an assurance that
the Malampaya Funds would be used – as it should be used – only in accordance with the avowed
purpose and intention of PD 910.

As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of PD
1869 has already been amended by PD 1993 which thus moots the parties‘ submissions on the
same.  Nevertheless, since the amendatory provision may be readily examined under the current
252

parameters of discussion, the Court proceeds to resolve its constitutionality.

Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that the Presidential Social
Fund may be used "to first, finance the priority infrastructure development projects and second, to
finance the restoration of damaged or destroyed facilities due to calamities, as may be directed and
authorized by the Office of the President of the Philippines." The Court finds that while the second
indicated purpose adequately curtails the authority of the President to spend the Presidential Social
Fund only for restoration purposes which arise from calamities, the first indicated purpose, however,
gives him carte blanche authority to use the same fund for any infrastructure project he may so
determine as a "priority". Verily, the law does not supply a definition of "priority in frastructure
development projects" and hence, leaves the President without any guideline to construe the same.
To note, the delimitation of a project as one of "infrastructure" is too broad of a classification since
the said term could pertain to any kind of facility. This may be deduced from its lexicographic
definition as follows: "the underlying framework of a system, especially public services and facilities
(such as highways, schools, bridges, sewers, and water-systems) needed to support commerce as
well as economic and residential development."  In fine, the phrase "to finance the priority
253

infrastructure development projects" must be stricken down as unconstitutional since – similar to the
above-assailed provision under Section 8 of PD 910 – it lies independently unfettered by any
sufficient standard of the delegating law. As they are severable, all other provisions of Section 12 of
PD 1869, as amended by PD 1993, remains legally effective and subsisting.

D. Ancillary Prayers. 1.

Petitioners’ Prayer to be Furnished Lists and Detailed Reports.

Aside from seeking the Court to declare the Pork Barrel System unconstitutional – as the Court did
so in the context of its pronouncements made in this Decision – petitioners equally pray that the
Executive Secretary and/or the DBM be ordered to release to the CoA and to the public: (a) "the
complete schedule/list of legislators who have availed of their PDAF and VILP from the years 2003
to 2013, specifying the use of the funds, the project or activity and the recipient entities or
individuals, and all pertinent data thereto" (PDAF Use Schedule/List);  and (b) "the use of the
254

Executive‘s lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds
and remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity
and the recipient entities or individuals, and all pertinent data thereto"  (Presidential Pork Use
255

Report). Petitioners‘ prayer is grounded on Section 28, Article II and Section 7, Article III of the 1987
Constitution which read as follows:

ARTICLE II

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions involving public interest.

ARTICLE III Sec. 7.

The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents and papers pertaining to official acts, transactions, or decisions,
as well as to government research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.

The Court denies petitioners‘ submission.

Case law instructs that the proper remedy to invoke the right to information is to file a petition for
mandamus. As explained in the case of Legaspi v. Civil Service Commission: 256

While the manner of examining public records may be subject to reasonable regulation by the
government agency in custody thereof, the duty to disclose the information of public concern, and to
afford access to public records cannot be discretionary on the part of said agencies. Certainly, its
performance cannot be made contingent upon the discretion of such agencies. Otherwise, the
enjoyment of the constitutional right may be rendered nugatory by any whimsical exercise of agency
discretion. The constitutional duty, not being discretionary, its performance may be compelled by a
writ of mandamus in a proper case.

But what is a proper case for Mandamus to issue? In the case before Us, the public right to be
enforced and the concomitant duty of the State are unequivocably set forth in the Constitution.

The decisive question on the propriety of the issuance of the writ of mandamus in this case is,
whether the information sought by the petitioner is within the ambit of the constitutional guarantee.
(Emphases supplied)

Corollarily, in the case of Valmonte v. Belmonte Jr.  (Valmonte), it has been clarified that the right to
257

information does not include the right to compel the preparation of "lists, abstracts, summaries and
the like." In the same case, it was stressed that it is essential that the "applicant has a well -defined,
clear and certain legal right to the thing demanded and that it is the imperative duty of defendant to
perform the act required." Hence, without the foregoing substantiations, the Court cannot grant a
particular request for information. The pertinent portions of Valmonte are hereunder quoted: 258

Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access
to official records," the Constitution does not accord them a right to compel custodians of official
records to prepare lists, abstracts, summaries and the like in their desire to acquire information on
matters of public concern.
It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a well-
defined, clear and certain legal right to the thing demanded and that it is the imperative duty of
defendant to perform the act required. The corresponding duty of the respondent to perform the
required act must be clear and specific Lemi v. Valencia, G.R. No. L-20768, November 29,1968,126
SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August 27, 1976, 72 SCRA 443.

The request of the petitioners fails to meet this standard, there being no duty on the part of
respondent to prepare the list requested. (Emphases supplied)

In these cases, aside from the fact that none of the petitions are in the nature of mandamus actions,
the Court finds that petitioners have failed to establish a "a well-defined, clear and certain legal right"
to be furnished by the Executive Secretary and/or the DBM of their requested PDAF Use
Schedule/List and Presidential Pork Use Report. Neither did petitioners assert any law or
administrative issuance which would form the bases of the latter‘s duty to furnish them with the
documents requested. While petitioners pray that said information be equally released to the CoA, it
must be pointed out that the CoA has not been impleaded as a party to these cases nor has it filed
any petition before the Court to be allowed access to or to compel the release of any official
document relevant to the conduct of its audit investigations. While the Court recognizes that the
information requested is a matter of significant public concern, however, if only to ensure that the
parameters of disclosure are properly foisted and so as not to unduly hamper the equally important
interests of the government, it is constrained to deny petitioners‘ prayer on this score, without
prejudice to a proper mandamus case which they, or even the CoA, may choose to pursue through a
separate petition.

It bears clarification that the Court‘s denial herein should only cover petitioners‘ plea to be furnished
with such schedule/list and report and not in any way deny them, or the general public, access to
official documents which are already existing and of public record. Subject to reasonable regulation
and absent any valid statutory prohibition, access to these documents should not be proscribed.
Thus, in Valmonte, while the Court denied the application for mandamus towards the preparation of
the list requested by petitioners therein, it nonetheless allowed access to the documents sought for
by the latter, subject, however, to the custodian‘s reasonable regulations,viz.: 259

In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS,
subject to reasonable regulations that the latter may promulgate relating to the manner and hours of
examination, to the end that damage to or loss of the records may be avoided, that undue
interference with the duties of the custodian of the records may be prevented and that the right of
other persons entitled to inspect the records may be insured Legaspi v. Civil Service Commission,
supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. The petition, as to the second and third
alternative acts sought to be done by petitioners, is meritorious.

However, the same cannot be said with regard to the first act sought by petitioners, i.e.,

"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the
UNIDO and PDP-Laban who were able to secure clean loans immediately before the February 7
election thru the intercession/marginal note of the then First Lady Imelda Marcos."

The Court, therefore, applies the same treatment here.

2. Petitioners’ Prayer to Include Matters in Congressional Deliberations.

Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the
Congress of all presently, off-budget, lump sum, discretionary funds including but not limited to,
proceeds from the x x x Malampaya Fund, remittances from the PAGCOR and the PCSO or the
Executive‘s Social Funds." 260

Suffice it to state that the above-stated relief sought by petitioners covers a matter which is generally
left to the prerogative of the political branches of government. Hence, lest the Court itself overreach,
it must equally deny their prayer on this score.

3. Respondents’ Prayer to Lift TRO; Consequential Effects of Decision.

The final issue to be resolved stems from the interpretation accorded by the DBM to the concept of
released funds. In response to the Court‘s September 10, 2013 TRO that enjoined the release of the
remaining PDAF allocated for the year 2013, the DBM issued Circular Letter No. 2013-8 dated
September 27, 2013 (DBM Circular 2013-8) which pertinently reads as follows:

3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a Special Allotment
Release Order (SARO) has been issued by the DBM and such SARO has been obligated by the
implementing agencies prior to the issuance of the TRO, may continually be implemented and
disbursements thereto effected by the agencies concerned.

Based on the text of the foregoing, the DBM authorized the continued implementation and
disbursement of PDAF funds as long as they are: first, covered by a SARO; and, second, that said
SARO had been obligated by the implementing agency concerned prior to the issuance of the
Court‘s September 10, 2013 TRO.

Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does not
yet involve the release of funds under the PDAF, as release is only triggered by the issuance of a
Notice of Cash Allocation [(NCA)]."  As such, PDAF disbursements, even if covered by an obligated
261

SARO, should remain enjoined.

For their part, respondents espouse that the subject TRO only covers "unreleased and unobligated
allotments." They explain that once a SARO has been issued and obligated by the implementing
agency concerned, the PDAF funds covered by the same are already "beyond the reach of the TRO
because they cannot be considered as ‘remaining PDAF.‘" They conclude that this is a reasonable
interpretation of the TRO by the DBM. 262

The Court agrees with petitioners in part.

At the outset, it must be observed that the issue of whether or not the Court‘s September 10, 2013
TRO should be lifted is a matter rendered moot by the present Decision. The unconstitutionality of
the 2013 PDAF Article as declared herein has the consequential effect of converting the temporary
injunction into a permanent one. Hence, from the promulgation of this Decision, the release of the
remaining PDAF funds for 2013, among others, is now permanently enjoined.

The propriety of the DBM‘s interpretation of the concept of "release" must, nevertheless, be resolved
as it has a practical impact on the execution of the current Decision. In particular, the Court must
resolve the issue of whether or not PDAF funds covered by obligated SAROs, at the time this
Decision is promulgated, may still be disbursed following the DBM‘s interpretation in DBM Circular
2013-8.

On this score, the Court agrees with petitioners‘ posturing for the fundamental reason that funds
covered by an obligated SARO are yet to be "released" under legal contemplation. A SARO, as
defined by the DBM itself in its website, is "aspecific authority issued to identified agencies to incur
obligations not exceeding a given amount during a specified period for the purpose indicated. It shall
cover expenditures the release of which is subject to compliance with specific laws or regulations, or
is subject to separate approval or clearance by competent authority." 263

Based on this definition, it may be gleaned that a SARO only evinces the existence of an obligation
and not the directive to pay. Practically speaking, the SARO does not have the direct and immediate
effect of placing public funds beyond the control of the disbursing authority. In fact, a SARO may
even be withdrawn under certain circumstances which will prevent the actual release of funds. On
the other hand, the actual release of funds is brought about by the issuance of the NCA,  which is
264

subsequent to the issuance of a SARO. As may be determined from the statements of the DBM
representative during the Oral Arguments: 265

Justice Bernabe: Is the notice of allocation issued simultaneously with the SARO?

xxxx

Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for the agencies to obligate
or to enter into commitments. The NCA, Your Honor, is already the go signal to the treasury for us to
be able to pay or to liquidate the amounts obligated in the SARO; so it comes after. x x x The NCA,
Your Honor, is the go signal for the MDS for the authorized government-disbursing banks to,
therefore, pay the payees depending on the projects or projects covered by the SARO and the NCA.

Justice Bernabe: Are there instances that SAROs are cancelled or revoked?

Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs issued
are withdrawn by the DBM.

Justice Bernabe: They are withdrawn?

Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)

Thus, unless an NCA has been issued, public funds should not be treated as funds which have been
"released." In this respect, therefore, the disbursement of 2013 PDAF funds which are only covered
by obligated SAROs, and without any corresponding NCAs issued, must, at the time of this
Decision’s promulgation, be enjoined and consequently reverted to the unappropriated surplus of the
general fund. Verily, in view of the declared unconstitutionality of the 2013 PDAF Article, the funds
appropriated pursuant thereto cannot be disbursed even though already obligated, else the Court
sanctions the dealing of funds coming from an unconstitutional source.

This same pronouncement must be equally applied to (a) the Malampaya Funds which have been
obligated but not released – meaning, those merely covered by a SARO – under the phrase "and for
such other purposes as may be hereafter directed by the President" pursuant to Section 8 of PD
910; and (b) funds sourced from the Presidential Social Fund under the phrase "to finance the
priority infrastructure development projects" pursuant to Section 12 of PD 1869, as amended by PD
1993, which were altogether declared by the Court as unconstitutional. However, these funds should
not be reverted to the general fund as afore-stated but instead, respectively remain under the
Malampaya Funds and the Presidential Social Fund to be utilized for their corresponding special
purposes not otherwise declared as unconstitutional.

E. Consequential Effects of Decision.

As a final point, it must be stressed that the Court‘s pronouncement anent the unconstitutionality of
(a) the 2013 PDAF Article and its Special Provisions, (b) all other Congressional Pork Barrel
provisions similar thereto, and (c) the phrases (1) "and for such other purposes as may be hereafter
directed by the President" under Section 8 of PD 910, and (2) "to finance the priority infrastructure
development projects" under Section 12 of PD 1869, as amended by PD 1993, must only be treated
as prospective in effect in view of the operative fact doctrine.

To explain, the operative fact doctrine exhorts the recognition that until the judiciary, in an
appropriate case, declares the invalidity of a certain legislative or executive act, such act is
presumed constitutional and thus, entitled to obedience and respect and should be properly
enforced and complied with. As explained in the recent case of Commissioner of Internal Revenue v.
San Roque Power Corporation,  the doctrine merely "reflects awareness that precisely because the
266

judiciary is the governmental organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication."  "In the language of an American Supreme Court decision: ‘The actual existence of a
267

statute, prior to such a determination of unconstitutionality, is an operative fact and may have
consequences which cannot justly be ignored.‘" 268

For these reasons, this Decision should be heretofore applied prospectively.

Conclusion

The Court renders this Decision to rectify an error which has persisted in the chronicles of our
history. In the final analysis, the Court must strike down the Pork Barrel System as unconstitutional
in view of the inherent defects in the rules within which it operates. To recount, insofar as it has
allowed legislators to wield, in varying gradations, non-oversight, post-enactment authority in vital
areas of budget execution, the system has violated the principle of separation of powers; insofar as it
has conferred unto legislators the power of appropriation by giving them personal, discretionary
funds from which they are able to fund specific projects which they themselves determine, it has
similarly violated the principle of non-delegability of legislative power ; insofar as it has created a
system of budgeting wherein items are not textualized into the appropriations bill, it has flouted the
prescribed procedure of presentment and, in the process, denied the President the power to veto
items ; insofar as it has diluted the effectiveness of congressional oversight by giving legislators a
stake in the affairs of budget execution, an aspect of governance which they may be called to
monitor and scrutinize, the system has equally impaired public accountability ; insofar as it has
authorized legislators, who are national officers, to intervene in affairs of purely local nature, despite
the existence of capable local institutions, it has likewise subverted genuine local autonomy ; and
again, insofar as it has conferred to the President the power to appropriate funds intended by law for
energy-related purposes only to other purposes he may deem fit as well as other public funds under
the broad classification of "priority infrastructure development projects," it has once more
transgressed the principle of non-delegability.

For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods
and mechanisms the Court has herein pointed out should never again be adopted in any system of
governance, by any name or form, by any semblance or similarity, by any influence or effect.
Disconcerting as it is to think that a system so constitutionally unsound has monumentally endured,
the Court urges the people and its co-stewards in government to look forward with the optimism of
change and the awareness of the past. At a time of great civic unrest and vociferous public debate,
the Court fervently hopes that its Decision today, while it may not purge all the wrongs of society nor
bring back what has been lost, guides this nation to the path forged by the Constitution so that no
one may heretofore detract from its cause nor stray from its course. After all, this is the Court‘s
bounden duty and no other‘s.

WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations
discussed in this Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013
PDAF Article; (b) all legal provisions of past and present Congressional Pork Barrel Laws, such as
the previous PDAF and CDF Articles and the various Congressional Insertions, which authorize/d
legislators – whether individually or collectively organized into committees – to intervene, assume or
participate in any of the various post-enactment stages of the budget execution, such as but not
limited to the areas of project identification, modification and revision of project identification, fund
release and/or fund realignment, unrelated to the power of congressional oversight; (c) all legal
provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and
CDF Articles and the various Congressional Insertions, which confer/red personal, lump-sum
allocations to legislators from which they are able to fund specific projects which they themselves
determine; (d) all informal practices of similar import and effect, which the Court similarly deems to
be acts of grave abuse of discretion amounting to lack or excess of jurisdiction; and (e) the phrases
(1) "and for such other purposes as may be hereafter directed by the President" under Section 8 of
Presidential Decree No. 910 and (2) "to finance the priority infrastructure development projects"
under Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993, for
both failing the sufficient standard test in violation of the principle of non-delegability of legislative
power.

Accordingly, the Court‘s temporary injunction dated September 10, 2013 is hereby declared to be
PERMANENT. Thus, the disbursement/release of the remaining PDAF funds allocated for the year
2013, as well as for all previous years, and the funds sourced from (1) the Malampaya Funds under
the phrase "and for such other purposes as may be hereafter directed by the President" pursuant to
Section 8 of Presidential Decree No. 910, and (2) the Presidential Social Fund under the phrase "to
finance the priority infrastructure development projects" pursuant to Section 12 of Presidential
Decree No. 1869, as amended by Presidential Decree No. 1993, which are, at the time this Decision
is promulgated, not covered by Notice of Cash Allocations (NCAs) but only by Special Allotment
Release Orders (SAROs), whether obligated or not, are hereby ENJOINED. The remaining PDAF
funds covered by this permanent injunction shall not be disbursed/released but instead reverted to
the unappropriated surplus of the general fund, while the funds under the Malampaya Funds and the
Presidential Social Fund shall remain therein to be utilized for their respective special purposes not
otherwise declared as unconstitutional.

On the other hand, due to improper recourse and lack of proper substantiation, the Court hereby
DENIES petitioners‘ prayer seeking that the Executive Secretary and/or the Department of Budget
and Management be ordered to provide the public and the Commission on Audit complete
lists/schedules or detailed reports related to the availments and utilization of the funds subject of
these cases. Petitioners‘ access to official documents already available and of public record which
are related to these funds must, however, not be prohibited but merely subjected to the custodian‘s
reasonable regulations or any valid statutory prohibition on the same. This denial is without prejudice
to a proper mandamus case which they or the Commission on Audit may choose to pursue through
a separate petition.

The Court also DENIES petitioners prayer to order the inclusion of the funds subject of these cases
in the budgetary deliberations of Congress as the same is a matter left to the prerogative of the
political branches of government.

Finally, the Court hereby DIRECTS all prosecutorial organs of the government to, within the bounds
of reasonable dispatch, investigate and accordingly prosecute all government officials and/or private
individuals for possible criminal offenses related to the irregular, improper and/or unlawful
disbursement/utilization of all funds under the Pork Barrel System.

This Decision is immediately executory but prospective in effect.

SO ORDERED.