ARTICLE III BILL OF RIGHTS Evidence in the record showed that respondent is the owner of a house and lot
in the record showed that respondent is the owner of a house and lot located at
EN BANC
G.R. No. 104768               July 21, 2003
REPUBLIC OF THE PHILIPPINES, Petitioner, 
vs. SANDIGANBAYAN, MAJOR GENERAL JOSEPHUS Q. RAMAS and ELIZABETH
DIMAANO, Respondents.
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari seeking to set aside the Resolutions
of the Sandiganbayan (First Division) dated 18 November 1991 and 25 March 1992 in
1 
Civil Case No. 0037. The first Resolution dismissed petitioner’s Amended Complaint and
ordered the return of the confiscated items to respondent Elizabeth Dimaano, while the
second Resolution denied petitioner’s Motion for Reconsideration. Petitioner prays for the
grant of the reliefs sought in its Amended Complaint, or in the alternative, for the remand
of this case to the Sandiganbayan (First Division) for further proceedings allowing
petitioner to complete the presentation of its evidence.
Antecedent Facts  1986, a person who rode in a car went to the residence of Elizabeth Dimaano with four (4)
Immediately upon her assumption to office following the successful EDSA Revolution, then
President Corazon C. Aquino issued Executive Order No. 1 ("EO No. 1") creating the
Presidential Commission on Good Government ("PCGG"). EO No. 1 primarily tasked the
PCGG to recover all ill-gotten wealth of former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close associates. EO No. 1 vested the
PCGG with the power "(a) to conduct investigation as may be necessary in order to
accomplish and carry out the purposes of this order" and the power "(h) to promulgate
such rules and regulations as may be necessary to carry out the purpose of this order."
Accordingly, the PCGG, through its then Chairman Jovito R. Salonga, created an AFP
Anti-Graft Board ("AFP Board") tasked to investigate reports of unexplained wealth and
corrupt practices by AFP personnel, whether in the active service or retired. 2  This money was never declared in the Statement of Assets and Liabilities of respondent.
Based on its mandate, the AFP Board investigated various reports of alleged unexplained
wealth of respondent Major General Josephus Q. Ramas ("Ramas"). On 27 July 1987, the
AFP Board issued a Resolution on its findings and recommendation on the reported
unexplained wealth of Ramas. The relevant part of the Resolution reads:
III. FINDINGS and EVALUATION:
15-Yakan St., La Vista, Quezon City. He is also the owner of a house and lot located in
Cebu City. The lot has an area of 3,327 square meters.
The value of the property located in Quezon City may be estimated modestly at
₱700,000.00.
The equipment/items and communication facilities which were found in the premises of
Elizabeth Dimaano and were confiscated by elements of the PC Command of Batangas
were all covered by invoice receipt in the name of CAPT. EFREN SALIDO, RSO
Command Coy, MSC, PA. These items could not have been in the possession of
Elizabeth Dimaano if not given for her use by respondent Commanding General of the
Philippine Army.
Aside from the military equipment/items and communications equipment, the raiding team
was also able to confiscate money in the amount of ₱2,870,000.00 and $50,000 US
Dollars in the house of Elizabeth Dimaano on 3 March 1986.
Affidavits of members of the Military Security Unit, Military Security Command, Philippine
Army, stationed at Camp Eldridge, Los Baños, Laguna, disclosed that Elizabeth Dimaano
is the mistress of respondent. That respondent usually goes and stays and sleeps in the
alleged house of Elizabeth Dimaano in Barangay Tengga, Itaas, Batangas City and when
he arrives, Elizabeth Dimaano embraces and kisses respondent. That on February 25,
attache cases filled with money and owned by MGen Ramas.
Sworn statement in the record disclosed also that Elizabeth Dimaano had no visible
means of income and is supported by respondent for she was formerly a mere secretary.
Taking in toto the evidence, Elizabeth Dimaano could not have used the military
equipment/items seized in her house on March 3, 1986 without the consent of respondent,
he being the Commanding General of the Philippine Army. It is also impossible for
Elizabeth Dimaano to claim that she owns the ₱2,870,000.00 and $50,000 US Dollars for
she had no visible source of income.
There was an intention to cover the existence of these money because these are all ill-
gotten and unexplained wealth. Were it not for the affidavits of the members of the Military
Security Unit assigned at Camp Eldridge, Los Baños, Laguna, the existence and
ownership of these money would have never been known.
The Statement of Assets and Liabilities of respondent were also submitted for scrutiny and
analysis by the Board’s consultant. Although the amount of ₱2,870,000.00 and $50,000
US Dollars were not included, still it was disclosed that respondent has an unexplained
wealth of ₱104,134. 60.
IV. CONCLUSION:
In view of the foregoing, the Board finds that a prima facie case exists against respondent
for ill-gotten and unexplained wealth in the amount of ₱2,974,134.00 and $50,000 US
Dollars.
V. RECOMMENDATION:
Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be prosecuted and
tried for violation of RA 3019, as amended, otherwise known as "Anti-Graft and Corrupt
Practices Act" and RA 1379, as amended, otherwise known as "The Act for the Forfeiture
of Unlawfully Acquired Property."3 
Thus, on 1 August 1987, the PCGG filed a petition for forfeiture under Republic Act No.
1379 ("RA No. 1379")  against Ramas.
4  acquired by defendant Dimaano alone x x x."
Before Ramas could answer the petition, then Solicitor General Francisco I. Chavez filed
an Amended Complaint naming the Republic of the Philippines ("petitioner"), represented
by the PCGG, as plaintiff and Ramas as defendant. The Amended Complaint also
impleaded Elizabeth Dimaano ("Dimaano") as co-defendant.
The Amended Complaint alleged that Ramas was the Commanding General of the
Philippine Army until 1986. On the other hand, Dimaano was a confidential agent of the
Military Security Unit, Philippine Army, assigned as a clerk-typist at the office of Ramas
from 1 January 1978 to February 1979. The Amended Complaint further alleged that
Ramas "acquired funds, assets and properties manifestly out of proportion to his salary as
an army officer and his other income from legitimately acquired property by taking undue
advantage of his public office and/or using his power, authority and influence as such
officer of the Armed Forces of the Philippines and as a subordinate and close associate of
the deposed President Ferdinand Marcos." 5 
The Amended Complaint also alleged that the AFP Board, after a previous inquiry, found
reasonable ground to believe that respondents have violated RA No. 1379. The Amended
6 
Complaint prayed for, among others, the forfeiture of respondents’ properties, funds and
equipment in favor of the State.
Ramas filed an Answer with Special and/or Affirmative Defenses and Compulsory
Counterclaim to the Amended Complaint. In his Answer, Ramas contended that his
property consisted only of a residential house at La Vista Subdivision, Quezon City, valued
at ₱700,000, which was not out of proportion to his salary and other legitimate income. He
denied ownership of any mansion in Cebu City and the cash, communications equipment
and other items confiscated from the house of Dimaano.
Dimaano filed her own Answer to the Amended Complaint. Admitting her employment as a
clerk-typist in the office of Ramas from January-November 1978 only, Dimaano claimed
ownership of the monies, communications equipment, jewelry and land titles taken from
her house by the Philippine Constabulary raiding team.
After termination of the pre-trial, the court set the case for trial on the merits on 9-11
7 
November 1988.
On 9 November 1988, petitioner asked for a deferment of the hearing due to its lack of
preparation for trial and the absence of witnesses and vital documents to support its case.
The court reset the hearing to 17 and 18 April 1989.
On 13 April 1989, petitioner filed a motion for leave to amend the complaint in order "to
charge the delinquent properties with being subject to forfeiture as having been unlawfully
8 
Nevertheless, in an order dated 17 April 1989, the Sandiganbayan proceeded with
petitioner’s presentation of evidence on the ground that the motion for leave to amend
complaint did not state when petitioner would file the amended complaint. The
Sandiganbayan further stated that the subject matter of the amended complaint was on its
face vague and not related to the existing complaint. The Sandiganbayan also held that
due to the time that the case had been pending in court, petitioner should proceed to
present its evidence.
After presenting only three witnesses, petitioner asked for a postponement of the trial.
On 28 September 1989, during the continuation of the trial, petitioner manifested its
inability to proceed to trial because of the absence of other witnesses or lack of further
evidence to present. Instead, petitioner reiterated its motion to amend the complaint to
conform to the evidence already presented or to change the averments to show that
Dimaano alone unlawfully acquired the monies or properties subject of the forfeiture.
The Sandiganbayan noted that petitioner had already delayed the case for over a year
mainly because of its many postponements. Moreover, petitioner would want the case to
revert to its preliminary stage when in fact the case had long been ready for trial. The
Sandiganbayan ordered petitioner to prepare for presentation of its additional evidence, if
any.
During the trial on 23 March 1990, petitioner again admitted its inability to present further
evidence. Giving petitioner one more chance to present further evidence or to amend the
complaint to conform to its evidence, the Sandiganbayan reset the trial to 18 May 1990.
The Sandiganbayan, however, hinted that the re-setting was without prejudice to any
action that private respondents might take under the circumstances.
However, on 18 May 1990, petitioner again expressed its inability to proceed to trial
because it had no further evidence to present. Again, in the interest of justice, the
Sandiganbayan granted petitioner 60 days within which to file an appropriate pleading.
The Sandiganbayan, however, warned petitioner that failure to act would constrain the
court to take drastic action.
Private respondents then filed their motions to dismiss based on Republic v. Migrino. The
9 
Court held in Migrino that the PCGG does not have jurisdiction to investigate and
prosecute military officers by reason of mere position held without a showing that they are
"subordinates" of former President Marcos.
On 18 November 1991, the Sandiganbayan rendered a resolution, the dispositive portion
of which states:
WHEREFORE, judgment is hereby rendered dismissing the Amended Complaint, without
pronouncement as to costs. The counterclaims are likewise dismissed for lack of merit, but
the confiscated sum of money, communications equipment, jewelry and land titles are
ordered returned to Elizabeth Dimaano.
The records of this case are hereby remanded and referred to the Hon. Ombudsman, who
has primary jurisdiction over the forfeiture cases under R.A. No. 1379, for such appropriate
action as the evidence warrants. This case is also referred to the Commissioner of the
Bureau of Internal Revenue for a determination of any tax liability of respondent Elizabeth
Dimaano in connection herewith.
SO ORDERED.
On 4 December 1991, petitioner filed its Motion for Reconsideration.
In answer to the Motion for Reconsideration, private respondents filed a Joint
Comment/Opposition to which petitioner filed its Reply on 10 January 1992.
On 25 March 1992, the Sandiganbayan rendered a Resolution denying the Motion for
Reconsideration.
Ruling of the Sandiganbayan
The Sandiganbayan dismissed the Amended Complaint on the following grounds:
(1.) The actions taken by the PCGG are not in accordance with the rulings of the
Supreme Court in Cruz, Jr. v. Sandiganbayan and Republic v. Migrino which
10  11 
involve the same issues.
(2.) No previous inquiry similar to preliminary investigations in criminal cases was
conducted against Ramas and Dimaano.
(3.) The evidence adduced against Ramas does not constitute a prima facie case
against him.
(4.) There was an illegal search and seizure of the items confiscated.
The Issues
Petitioner raises the following issues:
A. RESPONDENT COURT SERIOUSLY ERRED IN CONCLUDING THAT
PETITIONER’S EVIDENCE CANNOT MAKE A CASE FOR FORFEITURE AND
THAT THERE WAS NO SHOWING OF CONSPIRACY, COLLUSION OR
RELATIONSHIP BY CONSANGUINITY OR AFFINITY BY AND BETWEEN
RESPONDENT RAMAS AND RESPONDENT DIMAANO NOTWITHSTANDING
THE FACT THAT SUCH CONCLUSIONS WERE CLEARLY UNFOUNDED AND
PREMATURE, HAVING BEEN RENDERED PRIOR TO THE COMPLETION OF
THE PRESENTATION OF THE EVIDENCE OF THE PETITIONER.
B. RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE
ACTIONS TAKEN BY THE PETITIONER, INCLUDING THE FILING OF THE
ORIGINAL COMPLAINT AND THE AMENDED COMPLAINT, SHOULD BE
STRUCK OUT IN LINE WITH THE RULINGS OF THE SUPREME COURT IN
CRUZ, JR. v. SANDIGANBAYAN, 194 SCRA 474 AND REPUBLIC v. MIGRINO,
189 SCRA 289, NOTWITHSTANDING THE FACT THAT:
1. The cases of Cruz, Jr. v. Sandiganbayan, supra, and Republic v.
Migrino, supra, are clearly not applicable to this case;
2. Any procedural defect in the institution of the complaint in Civil Case No.
0037 was cured and/or waived by respondents with the filing of their
respective answers with counterclaim; and
3. The separate motions to dismiss were evidently improper considering
that they were filed after commencement of the presentation of the
evidence of the petitioner and even before the latter was allowed to
formally offer its evidence and rest its case;
 C. RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE
ARTICLES AND THINGS SUCH AS SUMS OF MONEY, COMMUNICATIONS
EQUIPMENT, JEWELRY AND LAND TITLES CONFISCATED FROM THE
HOUSE OF RESPONDENT DIMAANO WERE ILLEGALLY SEIZED AND
THEREFORE EXCLUDED AS EVIDENCE. 12 
The Court’s Ruling
First Issue: PCGG’s Jurisdiction to Investigate Private Respondents
This case involves a revisiting of an old issue already decided by this Court in Cruz, Jr. v.
Sandiganbayan and Republic v. Migrino.
13  14  was undoubtedly a subordinate of former President Marcos because of his position as the
The primary issue for resolution is whether the PCGG has the jurisdiction to investigate
and cause the filing of a forfeiture petition against Ramas and Dimaano for unexplained
wealth under RA No. 1379.
We hold that PCGG has no such jurisdiction.
The PCGG created the AFP Board to investigate the unexplained wealth and corrupt
practices of AFP personnel, whether in the active service or retired. The PCGG tasked the
15 
AFP Board to make the necessary recommendations to appropriate government agencies
on the action to be taken based on its findings. The PCGG gave this task to the AFP
16 
Board pursuant to the PCGG’s power under Section 3 of EO No. 1 "to conduct
investigation as may be necessary in order to accomplish and to carry out the purposes of
this order." EO No. 1 gave the PCGG specific responsibilities, to wit:
SEC. 2. The Commission shall be charged with the task of assisting the President in
regard to the following matters:
(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E.
Marcos, his immediate family, relatives, subordinates and close associates, whether
located in the Philippines or abroad, including the takeover and sequestration of all
business enterprises and entities owned or controlled by them, during his administration,
directly or through nominees, by taking undue advantage of their public office and/ or
using their powers, authority, influence, connections or relationship.
(b) The investigation of such cases of graft and corruption as the President may assign to
the Commission from time to time.
x x x.
The PCGG, through the AFP Board, can only investigate the unexplained wealth and
corrupt practices of AFP personnel who fall under either of the two categories mentioned
in Section 2 of EO No. 1. These are: (1) AFP personnel who have accumulated ill-gotten
wealth during the administration of former President Marcos by being the latter’s
immediate family, relative, subordinate or close associate, taking undue advantage of their
public office or using their powers, influence x x x; or (2) AFP personnel involved in other
17 
cases of graft and corruption provided the President assigns their cases to the PCGG. 18 
Petitioner, however, does not claim that the President assigned Ramas’ case to the
PCGG. Therefore, Ramas’ case should fall under the first category of AFP personnel
before the PCGG could exercise its jurisdiction over him. Petitioner argues that Ramas
Commanding General of the Philippine Army. Petitioner claims that Ramas’ position
enabled him to receive orders directly from his commander-in-chief, undeniably making
him a subordinate of former President Marcos.
We hold that Ramas was not a "subordinate" of former President Marcos in the sense
contemplated under EO No. 1 and its amendments.
Mere position held by a military officer does not automatically make him a "subordinate" as
this term is used in EO Nos. 1, 2, 14 and 14-A absent a showing that he enjoyed close
association with former President Marcos. Migrino discussed this issue in this wise:
A close reading of EO No. 1 and related executive orders will readily show what is
contemplated within the term ‘subordinate.’ The Whereas Clauses of EO No. 1 express
the urgent need to recover the ill-gotten wealth amassed by former President Ferdinand E.
Marcos, his immediate family, relatives, and close associates both here and abroad.
EO No. 2 freezes ‘all assets and properties in the Philippines in which former President
Marcos and/or his wife, Mrs. Imelda Marcos, their close relatives, subordinates, business
associates, dummies, agents, or nominees have any interest or participation.’
Applying the rule in statutory construction known as ejusdem generis that is-
‘[W]here general words follow an enumeration of persons or things by words of a particular
and specific meaning, such general words are not to be construed in their widest extent,
but are to be held as applying only to persons or things of the same kind or class as those
specifically mentioned [Smith, Bell & Co, Ltd. vs. Register of Deeds of Davao, 96 Phil. 53,
58, citing Black on Interpretation of Laws, 2nd Ed., 203].’
[T]he term "subordinate" as used in EO Nos. 1 & 2 refers to one who enjoys a close
association with former President Marcos and/or his wife, similar to the immediate family
member, relative, and close associate in EO No. 1 and the close relative, business
associate, dummy, agent, or nominee in EO No. 2.
xxx
It does not suffice, as in this case, that the respondent is or was a government official or
employee during the administration of former President Marcos. There must be a prima
facie showing that the respondent unlawfully accumulated wealth by virtue of his close
association or relation with former Pres. Marcos and/or his wife. (Emphasis supplied)
Ramas’ position alone as Commanding General of the Philippine Army with the rank of
Major General does not suffice to make him a "subordinate" of former President Marcos
19 
for purposes of EO No. 1 and its amendments. The PCGG has to provide a prima facie
showing that Ramas was a close associate of former President Marcos, in the same
manner that business associates, dummies, agents or nominees of former President
Marcos were close to him. Such close association is manifested either by Ramas’
complicity with former President Marcos in the accumulation of ill-gotten wealth by the
deposed President or by former President Marcos’ acquiescence in Ramas’ own
accumulation of ill-gotten wealth if any.
This, the PCGG failed to do.
Petitioner’s attempt to differentiate the instant case from Migrino does not convince us.
Petitioner argues that unlike in Migrino, the AFP Board Resolution in the instant case
states that the AFP Board conducted the investigation pursuant to EO Nos. 1, 2, 14 and
14-A in relation to RA No. 1379. Petitioner asserts that there is a presumption that the
PCGG was acting within its jurisdiction of investigating crony-related cases of graft and
corruption and that Ramas was truly a subordinate of the former President. However, the
same AFP Board Resolution belies this contention. Although the Resolution begins with
such statement, it ends with the following recommendation:
V. RECOMMENDATION:
Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be prosecuted and
tried for violation of RA 3019, as amended, otherwise known as "Anti-Graft and Corrupt
Practices Act" and RA 1379, as amended, otherwise known as "The Act for the Forfeiture
of Unlawfully Acquired Property." 20  wealth under Republic Act No. 1379, accumulated by former President Marcos, his
Thus, although the PCGG sought to investigate and prosecute private respondents under
EO Nos. 1, 2, 14 and 14-A, the result yielded a finding of violation of Republic Acts Nos.
3019 and 1379 without any relation to EO Nos. 1, 2, 14 and 14-A. This absence of relation
to EO No. 1 and its amendments proves fatal to petitioner’s case. EO No. 1 created the
PCGG for a specific and limited purpose, and necessarily its powers must be construed to
address such specific and limited purpose.
Moreover, the resolution of the AFP Board and even the Amended Complaint do not show
that the properties Ramas allegedly owned were accumulated by him in his capacity as a
"subordinate" of his commander-in-chief. Petitioner merely enumerated the properties
Ramas allegedly owned and suggested that these properties were disproportionate to his
salary and other legitimate income without showing that Ramas amassed them because of
his close association with former President Marcos. Petitioner, in fact, admits that the AFP
Board resolution does not contain a finding that Ramas accumulated his wealth because
of his close association with former President Marcos, thus:
10. While it is true that the resolution of the Anti-Graft Board of the New Armed
Forces of the Philippines did not categorically find a prima facie evidence showing
that respondent Ramas unlawfully accumulated wealth by virtue of his close
association or relation with former President Marcos and/or his wife, it is submitted
that such omission was not fatal. The resolution of the Anti-Graft Board should be read
in the context of the law creating the same and the objective of the investigation which
was, as stated in the above, pursuant to Republic Act Nos. 3019 and 1379 in relation to
Executive Order Nos. 1, 2, 14 and 14-a; (Emphasis supplied)
21 
Such omission is fatal. Petitioner forgets that it is precisely a prima facie showing that the
ill-gotten wealth was accumulated by a "subordinate" of former President Marcos that
vests jurisdiction on PCGG. EO No. 1 clearly premises the creation of the PCGG on the
22 
urgent need to recover all ill-gotten wealth amassed by former President Marcos, his
immediate family, relatives, subordinates and close associates. Therefore, to say that such
omission was not fatal is clearly contrary to the intent behind the creation of the PCGG.
In Cruz, Jr. v. Sandiganbayan, the Court outlined the cases that fall under the jurisdiction
23 
of the PCGG pursuant to EO Nos. 1, 2, 14, 14-A:
24  25  26 
A careful reading of Sections 2(a) and 3 of Executive Order No. 1 in relation with Sections
1, 2 and 3 of Executive Order No. 14, shows what the authority of the respondent PCGG
to investigate and prosecute covers:
(a) the investigation and prosecution of the civil action for the recovery of ill-gotten
immediate family, relatives, subordinates and close associates, whether located in
the Philippines or abroad, including the take-over or sequestration of all business
enterprises and entities owned or controlled by them, during his administration,
directly or through his nominees, by taking undue advantage of their public office
and/or using their powers, authority and influence, connections or relationships;
and
 (b) the investigation and prosecution of such offenses committed in the acquisition
of said ill-gotten wealth as contemplated under Section 2(a) of Executive Order No.
1.
However, other violations of the Anti-Graft and Corrupt Practices Act not otherwise
falling under the foregoing categories, require a previous authority of the President
for the respondent PCGG to investigate and prosecute in accordance with Section 2
(b) of Executive Order No. 1. Otherwise, jurisdiction over such cases is vested in the
Ombudsman and other duly authorized investigating agencies such as the
provincial and city prosecutors, their assistants, the Chief State Prosecutor and his
assistants and the state prosecutors. (Emphasis supplied)
The proper government agencies, and not the PCGG, should investigate and prosecute
forfeiture petitions not falling under EO No. 1 and its amendments. The preliminary
investigation of unexplained wealth amassed on or before 25 February 1986 falls under
the jurisdiction of the Ombudsman, while the authority to file the corresponding forfeiture
petition rests with the Solicitor General. The Ombudsman Act or Republic Act No. 6770
27 
("RA No. 6770") vests in the Ombudsman the power to conduct preliminary investigation
and to file forfeiture proceedings involving unexplained wealth amassed after 25 February
1986.28 
After the pronouncements of the Court in Cruz, the PCGG still pursued this case despite
the absence of a prima facie finding that Ramas was a "subordinate" of former President
Marcos. The petition for forfeiture filed with the Sandiganbayan should be dismissed for
lack of authority by the PCGG to investigate respondents since there is no prima facie
showing that EO No. 1 and its amendments apply to respondents. The AFP Board
Resolution and even the Amended Complaint state that there are violations of RA Nos.
3019 and 1379. Thus, the PCGG should have recommended Ramas’ case to the
Ombudsman who has jurisdiction to conduct the preliminary investigation of ordinary
unexplained wealth and graft cases. As stated in Migrino:
[But] in view of the patent lack of authority of the PCGG to investigate and cause the
prosecution of private respondent for violation of Rep. Acts Nos. 3019 and 1379, the
PCGG must also be enjoined from proceeding with the case, without prejudice to any
action that may be taken by the proper prosecutory agency. The rule of law mandates that
an agency of government be allowed to exercise only the powers granted to it.
Petitioner’s argument that private respondents have waived any defect in the filing of the
forfeiture petition by submitting their respective Answers with counterclaim deserves no
merit as well.
Petitioner has no jurisdiction over private respondents. Thus, there is no jurisdiction to
waive in the first place. The PCGG cannot exercise investigative or prosecutorial powers
never granted to it. PCGG’s powers are specific and limited. Unless given additional
assignment by the President, PCGG’s sole task is only to recover the ill-gotten wealth of
the Marcoses, their relatives and cronies. Without these elements, the PCGG cannot
29 
claim jurisdiction over a case.
Private respondents questioned the authority and jurisdiction of the PCGG to investigate
and prosecute their cases by filing their Motion to Dismiss as soon as they learned of the
pronouncement of the Court in Migrino. This case was decided on 30 August 1990, which
explains why private respondents only filed their Motion to Dismiss on 8 October 1990.
Nevertheless, we have held that the parties may raise lack of jurisdiction at any stage of
the proceeding. Thus, we hold that there was no waiver of jurisdiction in this case.
30 
Jurisdiction is vested by law and not by the parties to an action.31 
Consequently, the petition should be dismissed for lack of jurisdiction by the PCGG to
conduct the preliminary investigation. The Ombudsman may still conduct the proper
preliminary investigation for violation of RA No. 1379, and if warranted, the Solicitor
General may file the forfeiture petition with the Sandiganbayan. The right of the State to
32 
forfeit unexplained wealth under RA No. 1379 is not subject to prescription, laches or
estoppel.33 
Second Issue: Propriety of Dismissal of Case
Before Completion of Presentation of Evidence
Petitioner also contends that the Sandiganbayan erred in dismissing the case before
completion of the presentation of petitioner’s evidence.
We disagree.
Based on the findings of the Sandiganbayan and the records of this case, we find that
petitioner has only itself to blame for non-completion of the presentation of its evidence.
First, this case has been pending for four years before the Sandiganbayan dismissed it.
Petitioner filed its Amended Complaint on 11 August 1987, and only began to present its
evidence on 17 April 1989. Petitioner had almost two years to prepare its evidence.
However, despite this sufficient time, petitioner still delayed the presentation of the rest of
its evidence by filing numerous motions for postponements and extensions. Even before
the date set for the presentation of its evidence, petitioner filed, on 13 April 1989, a Motion
for Leave to Amend the Complaint. The motion sought "to charge the delinquent
34 
properties (which comprise most of petitioner’s evidence) with being subject to forfeiture
as having been unlawfully acquired by defendant Dimaano alone x x x."
The Sandiganbayan, however, refused to defer the presentation of petitioner’s evidence
since petitioner did not state when it would file the amended complaint. On 18 April 1989,
the Sandiganbayan set the continuation of the presentation of evidence on 28-29
September and 9-11 October 1989, giving petitioner ample time to prepare its evidence.
Still, on 28 September 1989, petitioner manifested its inability to proceed with the
presentation of its evidence. The Sandiganbayan issued an Order expressing its view on
the matter, to wit:
The Court has gone through extended inquiry and a narration of the above events
because this case has been ready for trial for over a year and much of the delay hereon
has been due to the inability of the government to produce on scheduled dates for pre-trial
and for trial documents and witnesses, allegedly upon the failure of the military to supply
them for the preparation of the presentation of evidence thereon. Of equal interest is the
fact that this Court has been held to task in public about its alleged failure to move cases
such as this one beyond the preliminary stage, when, in view of the developments such as
those of today, this Court is now faced with a situation where a case already in progress
will revert back to the preliminary stage, despite a five-month pause where appropriate
action could have been undertaken by the plaintiff Republic. 35 
On 9 October 1989, the PCGG manifested in court that it was conducting a preliminary
investigation on the unexplained wealth of private respondents as mandated by RA No.
1379. The PCGG prayed for an additional four months to conduct the preliminary
36 
investigation. The Sandiganbayan granted this request and scheduled the presentation of
evidence on 26-29 March 1990. However, on the scheduled date, petitioner failed to
inform the court of the result of the preliminary investigation the PCGG supposedly
conducted. Again, the Sandiganbayan gave petitioner until 18 May 1990 to continue with
the presentation of its evidence and to inform the court of "what lies ahead insofar as the
status of the case is concerned x x x." Still on the date set, petitioner failed to present its
37 
evidence. Finally, on 11 July 1990, petitioner filed its Re-Amended Complaint. The38 
Sandiganbayan correctly observed that a case already pending for years would revert to
its preliminary stage if the court were to accept the Re-Amended Complaint.
Based on these circumstances, obviously petitioner has only itself to blame for failure to
complete the presentation of its evidence. The Sandiganbayan gave petitioner more than
sufficient time to finish the presentation of its evidence. The Sandiganbayan overlooked
petitioner’s delays and yet petitioner ended the long-string of delays with the filing of a Re-
Amended Complaint, which would only prolong even more the disposition of the case.
Moreover, the pronouncements of the Court in Migrino and Cruz prompted the
Sandiganbayan to dismiss the case since the PCGG has no jurisdiction to investigate and
prosecute the case against private respondents. This alone would have been sufficient
legal basis for the Sandiganbayan to dismiss the forfeiture case against private
respondents.
Thus, we hold that the Sandiganbayan did not err in dismissing the case before
completion of the presentation of petitioner’s evidence.
Third Issue: Legality of the Search and Seizure
Petitioner claims that the Sandiganbayan erred in declaring the properties confiscated
from Dimaano’s house as illegally seized and therefore inadmissible in evidence. This
issue bears a significant effect on petitioner’s case since these properties comprise most
of petitioner’s evidence against private respondents. Petitioner will not have much
evidence to support its case against private respondents if these properties are
inadmissible in evidence.
On 3 March 1986, the Constabulary raiding team served at Dimaano’s residence a search
warrant captioned "Illegal Possession of Firearms and Ammunition." Dimaano was not
present during the raid but Dimaano’s cousins witnessed the raid. The raiding team seized
the items detailed in the seizure receipt together with other items not included in the
search warrant. The raiding team seized these items: one baby armalite rifle with two
magazines; 40 rounds of 5.56 ammunition; one pistol, caliber .45; communications
equipment, cash consisting of ₱2,870,000 and US$50,000, jewelry, and land titles.
Petitioner wants the Court to take judicial notice that the raiding team conducted the
search and seizure "on March 3, 1986 or five days after the successful EDSA
revolution." Petitioner argues that a revolutionary government was operative at that time
39 
by virtue of Proclamation No. 1 announcing that President Aquino and Vice President
Laurel were "taking power in the name and by the will of the Filipino people." Petitioner
40 
asserts that the revolutionary government effectively withheld the operation of the 1973
Constitution which guaranteed private respondents’ exclusionary right.
Moreover, petitioner argues that the exclusionary right arising from an illegal search
applies only beginning 2 February 1987, the date of ratification of the 1987 Constitution.
Petitioner contends that all rights under the Bill of Rights had already reverted to its
embryonic stage at the time of the search. Therefore, the government may confiscate the
monies and items taken from Dimaano and use the same in evidence against her since at
the time of their seizure, private respondents did not enjoy any constitutional right.
Petitioner is partly right in its arguments.
The EDSA Revolution took place on 23-25 February 1986. As succinctly stated in
President Aquino’s Proclamation No. 3 dated 25 March 1986, the EDSA Revolution
was "done in defiance of the provisions of the 1973 Constitution." The resulting
41 
government was indisputably a revolutionary government bound by no constitution or legal
limitations except treaty obligations that the revolutionary government, as the de jure
government in the Philippines, assumed under international law.
The correct issues are: (1) whether the revolutionary government was bound by the Bill of
Rights of the 1973 Constitution during the interregnum, that is, after the actual and
effective take-over of power by the revolutionary government following the cessation of
resistance by loyalist forces up to 24 March 1986 (immediately before the adoption of the
Provisional Constitution); and (2) whether the protection accorded to individuals under the
International Covenant on Civil and Political Rights ("Covenant") and the Universal
Declaration of Human Rights ("Declaration") remained in effect during the interregnum.
We hold that the Bill of Rights under the 1973 Constitution was not operative during the
interregnum. However, we rule that the protection accorded to individuals under the
Covenant and the Declaration remained in effect during the interregnum.
During the interregnum, the directives and orders of the revolutionary government were
the supreme law because no constitution limited the extent and scope of such directives
and orders. With the abrogation of the 1973 Constitution by the successful revolution,
there was no municipal law higher than the directives and orders of the revolutionary
government. Thus, during the interregnum, a person could not invoke any exclusionary
right under a Bill of Rights because there was neither a constitution nor a Bill of Rights
during the interregnum. As the Court explained in Letter of Associate Justice Reynato S.
Puno: 42 
A revolution has been defined as "the complete overthrow of the established government
in any country or state by those who were previously subject to it" or as "a sudden, radical
and fundamental change in the government or political system, usually effected with
violence or at least some acts of violence." In Kelsen's book, General Theory of Law and
State, it is defined as that which "occurs whenever the legal order of a community is
nullified and replaced by a new order . . . a way not prescribed by the first order itself."
It was through the February 1986 revolution, a relatively peaceful one, and more popularly
known as the "people power revolution" that the Filipino people tore themselves away from
an existing regime. This revolution also saw the unprecedented rise to power of the
Aquino government.
From the natural law point of view, the right of revolution has been defined as "an inherent
right of a people to cast out their rulers, change their policy or effect radical reforms in their
system of government or institutions by force or a general uprising when the legal and
constitutional methods of making such change have proved inadequate or are so
obstructed as to be unavailable." It has been said that "the locus of positive law-making
power lies with the people of the state" and from there is derived "the right of the people to
abolish, to reform and to alter any existing form of government without regard to the
existing constitution."
xxx
It is widely known that Mrs. Aquino’s rise to the presidency was not due to
constitutional processes; in fact, it was achieved in violation of the provisions of
the 1973 Constitution as a Batasang Pambansa resolution had earlier declared Mr.
Marcos as the winner in the 1986 presidential election. Thus it can be said that the
organization of Mrs. Aquino’s Government which was met by little resistance and her
control of the state evidenced by the appointment of the Cabinet and other key officers of
the administration, the departure of the Marcos Cabinet officials, revamp of the Judiciary
and the Military signaled the point where the legal system then in effect, had ceased to
be obeyed by the Filipino. (Emphasis supplied)
To hold that the Bill of Rights under the 1973 Constitution remained operative during the
interregnum would render void all sequestration orders issued by the Philippine
Commission on Good Government ("PCGG") before the adoption of the Freedom
Constitution. The sequestration orders, which direct the freezing and even the take-over of
private property by mere executive issuance without judicial action, would violate the due
process and search and seizure clauses of the Bill of Rights.
During the interregnum, the government in power was concededly a revolutionary
government bound by no constitution. No one could validly question the sequestration
orders as violative of the Bill of Rights because there was no Bill of Rights during the
interregnum. However, upon the adoption of the Freedom Constitution, the sequestered
companies assailed the sequestration orders as contrary to the Bill of Rights of the
Freedom Constitution.
In Bataan Shipyard & Engineering Co. Inc. vs. Presidential Commission on Good
Government, petitioner Baseco, while conceding there was no Bill of Rights during the
43 
interregnum, questioned the continued validity of the sequestration orders upon adoption
of the Freedom Constitution in view of the due process clause in its Bill of Rights. The
Court ruled that the Freedom Constitution, and later the 1987 Constitution, expressly
recognized the validity of sequestration orders, thus:
If any doubt should still persist in the face of the foregoing considerations as to the validity
and propriety of sequestration, freeze and takeover orders, it should be dispelled by the
fact that these particular remedies and the authority of the PCGG to issue them have
received constitutional approbation and sanction. As already mentioned, the Provisional or
"Freedom" Constitution recognizes the power and duty of the President to enact
"measures to achieve the mandate of the people to . . . (r)ecover ill-gotten properties
amassed by the leaders and supporters of the previous regime and protect the interest of
the people through orders of sequestration or freezing of assets or accounts." And as also
already adverted to, Section 26, Article XVIII of the 1987 Constitution treats of, and ratifies
the "authority to issue sequestration or freeze orders under Proclamation No. 3 dated
March 25, 1986."
The framers of both the Freedom Constitution and the 1987 Constitution were fully aware
that the sequestration orders would clash with the Bill of Rights. Thus, the framers of both
constitutions had to include specific language recognizing the validity of the sequestration
orders. The following discourse by Commissioner Joaquin G. Bernas during the
deliberations of the Constitutional Commission is instructive:
FR. BERNAS: Madam President, there is something schizophrenic about the arguments in
defense of the present amendment.
For instance, I have carefully studied Minister Salonga’s lecture in the Gregorio Araneta
University Foundation, of which all of us have been given a copy. On the one hand, he
argues that everything the Commission is doing is traditionally legal. This is repeated by
Commissioner Romulo also. Minister Salonga spends a major portion of his lecture
developing that argument. On the other hand, almost as an afterthought, he says that in
the end what matters are the results and not the legal niceties, thus suggesting that the
PCGG should be allowed to make some legal shortcuts, another word for niceties or
exceptions.
Now, if everything the PCGG is doing is legal, why is it asking the CONCOM for special
protection? The answer is clear. What they are doing will not stand the test of ordinary due
process, hence they are asking for protection, for exceptions. Grandes malos, grandes
remedios, fine, as the saying stands, but let us not say grandes malos, grande y malos
remedios. That is not an allowable extrapolation. Hence, we should not give the
exceptions asked for, and let me elaborate and give three reasons:
First, the whole point of the February Revolution and of the work of the CONCOM is to
hasten constitutional normalization. Very much at the heart of the constitutional
normalization is the full effectivity of the Bill of Rights. We cannot, in one breath, ask for
constitutional normalization and at the same time ask for a temporary halt to the full
functioning of what is at the heart of constitutionalism. That would be hypocritical; that
would be a repetition of Marcosian protestation of due process and rule of law. The New
Society word for that is "backsliding." It is tragic when we begin to backslide even before
we get there.
Second, this is really a corollary of the first. Habits tend to become ingrained. The
committee report asks for extraordinary exceptions from the Bill of Rights for six months
after the convening of Congress, and Congress may even extend this longer.
Good deeds repeated ripen into virtue; bad deeds repeated become vice. What the
committee report is asking for is that we should allow the new government to acquire the
vice of disregarding the Bill of Rights.
Vices, once they become ingrained, become difficult to shed. The practitioners of the vice
begin to think that they have a vested right to its practice, and they will fight tooth and nail
to keep the franchise. That would be an unhealthy way of consolidating the gains of a
democratic revolution.
Third, the argument that what matters are the results and not the legal niceties is an
argument that is very disturbing. When it comes from a staunch Christian like
Commissioner Salonga, a Minister, and repeated verbatim by another staunch Christian
like Commissioner Tingson, it becomes doubly disturbing and even discombobulating. The
argument makes the PCGG an auctioneer, placing the Bill of Rights on the auction block.
If the price is right, the search and seizure clause will be sold. "Open your Swiss bank
account to us and we will award you the search and seizure clause. You can keep it in
your private safe."
Alternatively, the argument looks on the present government as hostage to the hoarders of
hidden wealth. The hoarders will release the hidden health if the ransom price is paid and
the ransom price is the Bill of Rights, specifically the due process in the search and
seizure clauses. So, there is something positively revolving about either argument. The Bill
of Rights is not for sale to the highest bidder nor can it be used to ransom captive dollars.
This nation will survive and grow strong, only if it would become convinced of the values
enshrined in the Constitution of a price that is beyond monetary estimation.
For these reasons, the honorable course for the Constitutional Commission is to delete all
of Section 8 of the committee report and allow the new Constitution to take effect in full
vigor. If Section 8 is deleted, the PCGG has two options. First, it can pursue the Salonga
and the Romulo argument — that what the PCGG has been doing has been completely
within the pale of the law. If sustained, the PCGG can go on and should be able to go on,
even without the support of Section 8. If not sustained, however, the PCGG has only one
honorable option, it must bow to the majesty of the Bill of Rights.
The PCGG extrapolation of the law is defended by staunch Christians. Let me conclude
with what another Christian replied when asked to toy around with the law. From his prison
cell, Thomas More said, "I'll give the devil benefit of law for my nation’s safety sake." I ask
the Commission to give the devil benefit of law for our nation’s sake. And we should delete
Section 8.
Thank you, Madam President. (Emphasis supplied)
Despite the impassioned plea by Commissioner Bernas against the amendment excepting
sequestration orders from the Bill of Rights, the Constitutional Commission still adopted
the amendment as Section 26, Article XVIII of the 1987 Constitution. The framers of the
44 
Constitution were fully aware that absent Section 26, sequestration orders would not stand
the test of due process under the Bill of Rights.
Thus, to rule that the Bill of Rights of the 1973 Constitution remained in force during the
interregnum, absent a constitutional provision excepting sequestration orders from such
Bill of Rights, would clearly render all sequestration orders void during the interregnum.
Nevertheless, even during the interregnum the Filipino people continued to enjoy, under
the Covenant and the Declaration, almost the same rights found in the Bill of Rights of the
1973 Constitution.
The revolutionary government, after installing itself as the de jure government, assumed
responsibility for the State’s good faith compliance with the Covenant to which the
Philippines is a signatory. Article 2(1) of the Covenant requires each signatory State "to
respect and to ensure to all individuals within its territory and subject to its jurisdiction the
rights recognized in the present Covenant." Under Article 17(1) of the Covenant, the
45 
revolutionary government had the duty to insure that "[n]o one shall be subjected to
arbitrary or unlawful interference with his privacy, family, home or correspondence."
The Declaration, to which the Philippines is also a signatory, provides in its Article 17(2)
that "[n]o one shall be arbitrarily deprived of his property." Although the signatories to the
Declaration did not intend it as a legally binding document, being only a declaration, the
Court has interpreted the Declaration as part of the generally accepted principles of
international law and binding on the State. Thus, the revolutionary government was also
46 
obligated under international law to observe the rights of individuals under the
47 
Declaration.
The revolutionary government did not repudiate the Covenant or the Declaration during
the interregnum. Whether the revolutionary government could have repudiated all its
obligations under the Covenant or the Declaration is another matter and is not the issue
here. Suffice it to say that the Court considers the Declaration as part of customary
international law, and that Filipinos as human beings are proper subjects of the rules of
international law laid down in the Covenant. The fact is the revolutionary government did
not repudiate the Covenant or the Declaration in the same way it repudiated the 1973
Constitution. As the de jure government, the revolutionary government could not escape
responsibility for the State’s good faith compliance with its treaty obligations under
international law.
It was only upon the adoption of the Provisional Constitution on 25 March 1986 that the
directives and orders of the revolutionary government became subject to a higher
municipal law that, if contravened, rendered such directives and orders void. The
Provisional Constitution adopted verbatim the Bill of Rights of the 1973 Constitution. The 48 
Provisional Constitution served as a self-limitation by the revolutionary government to
avoid abuses of the absolute powers entrusted to it by the people.
During the interregnum when no constitution or Bill of Rights existed, directives and orders
issued by government officers were valid so long as these officers did not exceed the
authority granted them by the revolutionary government. The directives and orders should
not have also violated the Covenant or the Declaration. In this case, the revolutionary
government presumptively sanctioned the warrant since the revolutionary government did
not repudiate it. The warrant, issued by a judge upon proper application, specified the
items to be searched and seized. The warrant is thus valid with respect to the items
specifically described in the warrant.
However, the Constabulary raiding team seized items not included in the warrant. As
admitted by petitioner’s witnesses, the raiding team confiscated items not included in the
warrant, thus:
Direct Examination of Capt. Rodolfo Sebastian
AJ AMORES
Q. According to the search warrant, you are supposed to seize only for weapons. What
else, aside from the weapons, were seized from the house of Miss Elizabeth Dimaano?
A. The communications equipment, money in Philippine currency and US dollars, some
jewelries, land titles, sir.
Q. Now, the search warrant speaks only of weapons to be seized from the house of
Elizabeth Dimaano. Do you know the reason why your team also seized other properties
not mentioned in said search warrant?
A. During the conversation right after the conduct of said raid, I was informed that the
reason why they also brought the other items not included in the search warrant was
because the money and other jewelries were contained in attaché cases and cartons with
markings "Sony Trinitron", and I think three (3) vaults or steel safes. Believing that the
attaché cases and the steel safes were containing firearms, they forced open these
containers only to find out that they contained money.
xxx
Q. You said you found money instead of weapons, do you know the reason why your team
seized this money instead of weapons?
A. I think the overall team leader and the other two officers assisting him decided to bring
along also the money because at that time it was already dark and they felt most secured
if they will bring that because they might be suspected also of taking money out of those
items, your Honor. 49 
Cross-examination Q. So that when you applied for search warrant, you had reason to believe that only
weapons were in the house of Miss Elizabeth Dimaano?
Atty. Banaag
A. Yes, your Honor. 50 

Q. Were you present when the search warrant in connection with this case was applied
before the Municipal Trial Court of Batangas, Branch 1? xxx

A. Yes, sir. Q. You stated that a .45 caliber pistol was seized along with one armalite rifle M-16 and
how many ammunition?
Q. And the search warrant applied for by you was for the search and seizure of five (5)
baby armalite rifles M-16 and five (5) boxes of ammunition? A. Forty, sir.

A. Yes, sir. Q. And this became the subject of your complaint with the issuing Court, with the fiscal’s
office who charged Elizabeth Dimaano for Illegal Possession of Firearms and
xxx Ammunition?

AJ AMORES A. Yes, sir.

Q. Before you applied for a search warrant, did you conduct surveillance in the house of Q. Do you know what happened to that case?
Miss Elizabeth Dimaano?
A. I think it was dismissed, sir.
A. The Intelligence Operatives conducted surveillance together with the MSU elements,
your Honor. Q. In the fiscal’s office?

Q. And this party believed there were weapons deposited in the house of Miss Elizabeth A. Yes, sir.
Dimaano?
Q. Because the armalite rifle you seized, as well as the .45 caliber pistol had a
A. Yes, your Honor. Memorandum Receipt in the name of Felino Melegrito, is that not correct?

Q. And they so swore before the Municipal Trial Judge? A. I think that was the reason, sir.

A. Yes, your Honor.
Q. But they did not mention to you, the applicant for the search warrant, any other
properties or contraband which could be found in the residence of Miss Elizabeth
Dimaano?
A. They just gave us still unconfirmed report about some hidden items, for instance, the
communications equipment and money. However, I did not include that in the application
for search warrant considering that we have not established concrete evidence about that.
So when…
Q. There were other articles seized which were not included in the search warrant, like for
instance, jewelries. Why did you seize the jewelries?
A. I think it was the decision of the overall team leader and his assistant to bring along also
the jewelries and other items, sir. I do not really know where it was taken but they brought
along also these articles. I do not really know their reason for bringing the same, but I just
learned that these were taken because they might get lost if they will just leave this
behind.
xxx
Q. How about the money seized by your raiding team, they were not also included in the
search warrant?

A. Yes sir, but I believe they were also taken considering that the money was discovered
to be contained in attaché cases.  These attaché cases were suspected to be containing
1âwphi1

pistols or other high powered firearms, but in the course of the search the contents turned
out to be money. So the team leader also decided to take this considering that they
believed that if they will just leave the money behind, it might get lost also.

Q. That holds true also with respect to the other articles that were seized by your raiding
team, like Transfer Certificates of Title of lands?

A. Yes, sir. I think they were contained in one of the vaults that were opened. 51 

It is obvious from the testimony of Captain Sebastian that the warrant did not include the
monies, communications equipment, jewelry and land titles that the raiding team
confiscated. The search warrant did not particularly describe these items and the raiding
team confiscated them on its own authority. The raiding team had no legal basis to seize
these items without showing that these items could be the subject of warrantless search
and seizure. Clearly, the raiding team exceeded its authority when it seized these items.
52 

The seizure of these items was therefore void, and unless these items are contraband per
se, and they are not, they must be returned to the person from whom the raiding seized
53 

them. However, we do not declare that such person is the lawful owner of these items,
merely that the search and seizure warrant could not be used as basis to seize and
withhold these items from the possessor. We thus hold that these items should be
returned immediately to Dimaano.

WHEREFORE, the petition for certiorari is DISMISSED. The questioned Resolutions of the
Sandiganbayan dated 18 November 1991 and 25 March 1992 in Civil Case No. 0037,
remanding the records of this case to the Ombudsman for such appropriate action as the
evidence may warrant, and referring this case to the Commissioner of the Bureau of
Internal Revenue for a determination of any tax liability of respondent Elizabeth Dimaano,
are AFFIRMED.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 139325 : April 12, 2005]
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO,
SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf
and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United
States District Court of Hawaii, Petitioner, v. HON. SANTIAGO JAVIER
RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial
Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its
court appointed legal representatives in Class Action MDL 840, United
States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand
Marcos, Jr.,Respondents.
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish
weeding out its bitter crop. While the restoration of freedom and the fundamental
structures and processes of democracy have been much lauded, according to a
significant number, the changes, however, have not sufficiently healed the colossal
damage wrought under the oppressive conditions of the martial law period. The
cries of justice for the tortured, the murdered, and the desaparecidos arouse
outrage and sympathy in the hearts of the fair-minded, yet the dispensation of the
appropriate relief due them cannot be extended through the same caprice or whim
that characterized the ill-wind of martial rule. The damage done was not merely
personal but institutional, and the proper rebuke to the iniquitous past has to
involve the award of reparations due within the confines of the restored rule of
law.
The petitioners in this case are prominent victims of human rights violations 1 who,
deprived of the opportunity to directly confront the man who once held absolute
rule over this country, have chosen to do battle instead with the earthly
representative, his estate. The clash has been for now interrupted by a trial court
ruling, seemingly comported to legal logic, that required the petitioners to pay a
whopping filing fee of over Four Hundred Seventy-Two Million Pesos
(P472,000,000.00) in order that they be able to enforce a judgment awarded them
by a foreign court.   There is an understandable temptation to cast the struggle
within the simplistic confines of a morality tale, and to employ short-cuts to arrive
at what might seem the desirable solution. But easy, reflexive resort to the equity
principle all too often leads to a result that may be morally correct, but legally
wrong.
Nonetheless, the application of the legal principles involved in this case will
comfort those who maintain that our substantive and procedural laws, for all their
perceived ambiguity and susceptibility to myriad interpretations, are inherently fair
and just. The relief sought by the petitioners is expressly mandated by our laws
and conforms to established legal principles. The granting of this petition
for certiorari is warranted in order to correct the legally infirm and unabashedly
unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed
with the United States District Court (US District Court), District of Hawaii, against
the Estate of former Philippine President Ferdinand E. Marcos (Marcos Estate ). The
action was brought forth by ten Filipino citizens2 who each alleged having suffered
human rights abuses such as arbitrary detention, torture and rape in the hands of
police or military forces during the Marcos regime.3 The Alien Tort Act was invoked
as basis for the US District Court's jurisdiction over the complaint, as it involved a
suit by aliens for tortious violations of international law.4 These plaintiffs brought
the action on their own behalf and on behalf of a class of similarly situated
individuals, particularly consisting of all current civilian citizens of the Philippines,
their heirs and beneficiaries, who between 1972 and 1987 were tortured,
summarily executed or had disappeared while in the custody of military or
paramilitary groups. Plaintiffs alleged that the class consisted of approximately ten
thousand (10,000) members; hence, joinder of all these persons was
impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B)
of the US Federal Rules of Civil Procedure, the provisions of which were invoked by
the plaintiffs. Subsequently, the US District Court certified the case as a class
action and created three (3) sub-classes of torture, summary execution and
disappearance victims.5 Trial ensued, and subsequently a jury rendered a verdict
and an award of compensatory and exemplary damages in favor of the plaintiff
class.   Then, on 3 February 1995, the US District Court, presided by Judge Manuel
L. Real, rendered a Final Judgment (Final Judgment) awarding the plaintiff class a
total of One Billion Nine Hundred Sixty Four Million Five Thousand Eight Hundred
Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was
eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision
rendered on 17 December 1996.6
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial
Court, City of Makati (Makati RTC) for the enforcement of the  Final Judgment.  
They alleged that they are members of the plaintiff class in whose favor the US
District Court awarded damages.7 They argued that since the Marcos Estate failed
to file a petition for certiorari with the US Supreme Court after the Ninth Circuit
Court of Appeals had affirmed the Final Judgment, the decision of the US District
Court had become final and executory, and hence should be recognized and
enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules of Court
then in force.8
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among
others, the non-payment of the correct filing fees .   It alleged that petitioners had
only paid Four Hundred Ten Pesos (P410.00) as docket and filing fees,
notwithstanding the fact that they sought to enforce a monetary amount of
damages in the amount of over Two and a Quarter Billion US Dollars (US$2.25
Billion).   The Marcos Estate cited Supreme Court Circular No. 7, pertaining to the
proper computation and payment of docket fees.   In response, the petitioners
claimed that an action for the enforcement of a foreign judgment is not capable of
pecuniary estimation; hence, a filing fee of only Four Hundred Ten Pesos (P410.00)
was proper, pursuant to Section 7(c) of Rule 141.9
On 9 September 1998, respondent Judge Santiago Javier Ranada10 of the Makati
RTC issued the subject Orderdismissing the complaint without prejudice.
Respondent judge opined that contrary to the petitioners' submission, the subject
matter of the complaint was indeed capable of pecuniary estimation, as it involved
a judgment rendered by a foreign court ordering the payment of definite sums of
money, allowing for easy determination of the value of the foreign judgment. On
that score, Section 7(a) of Rule 141 of the Rules of Civil Procedure would find
application, and the RTC estimated the proper amount of filing fees was
approximately Four Hundred Seventy Two Million Pesos, which obviously had not
been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge
Ranada denied in an Order dated 28 July 1999. From this denial, petitioners filed
a Petition for Certiorari under Rule 65 assailing the twin orders of respondent
judge.11 They prayed for the annulment of the questioned orders, and an order
directing the reinstatement of Civil Case No. 97-1052 and the conduct of
appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the
subject matter of the suit is the enforcement of a foreign judgment, and not an
action for the collection of a sum of money or recovery of damages.   They also
point out that to require the class plaintiffs to pay Four Hundred Seventy Two
Million Pesos (P472,000,000.00) in filing fees would negate and render inutile the
liberal construction ordained by the Rules of Court, as required by Section 6, Rule
1 of the Rules of Civil Procedure, particularly the inexpensive disposition of every
action.
particularly those lodged against an estate. There is no basis for the issuance a
limited pro hac vice ruling based on the special circumstances of the petitioners as
victims of martial law, or on the emotionally-charged allegation of human rights
abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the
respondent judge ignored the clear letter of the law when he concluded that the
filing fee be computed based on the total sum claimed or the stated value of the
property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141
as basis for the computation of the filing fee of over P472 Million.   The provision
states:
SEC. 7. Clerk of Regional Trial Court. - 
(a) For filing an action or a permissive counterclaim or money claim against an
estate not based on judgment, or for filing with leave of court a third-party,
fourth-party, etc., complaint, or a complaint in intervention, and for all clerical
services in the same time, if the total sum claimed, exclusive of interest, or the
started value of the property in litigation, is:

Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, 1. Less than P 100,00.00 ' P 500.00
which provides that "Free access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any person by reason of poverty,"
a mandate which is essentially defeated by the required exorbitant filing fee. The
adjudicated amount of the filing fee, as arrived at by the RTC, was characterized 2. P 100,000.00 or more but less than P 150,000.00 ' P 800.00
as indisputably unfair, inequitable, and unjust.

The Commission on Human Rights (CHR) was permitted to intervene in this

case.12 It urged that the petition be granted and a judgment rendered, ordering 3. P 150,000.00 or more but less than P 200,000.00 ' P 1,000.00
the enforcement and execution of the District Court judgment in accordance with
Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For the CHR, the Makati
RTC erred in interpreting the action for the execution of a foreign judgment as a
4. P 200,000.00 or more but less than P 250,000.00 ' P 1,500.00
new case, in violation of the principle that once a case has been decided between
the same parties in one country on the same issue with finality, it can no longer be
relitigated again in another country.13 The CHR likewise invokes the principle of
comity, and of vested rights. 5. P 250,000.00 or more but less than P 300,00.00 ' P 1,750.00

The Court's disposition on the issue of filing fees will prove a useful jurisprudential
guidepost for courts confronted with actions enforcing foreign judgments,

6. P 300,000.00 or more but not more than P 400,000.00 ' P 2,000.00
7. P 350,000.00 or more but not more than P400,000.00 ' P 2,250.00
8. For each P 1,000.00 in excess of P 400,000.00 ' P 10.00
(Emphasis supplied)ςrαlαωlιbrαrÿ
Obviously, the above-quoted provision covers, on one hand, ordinary actions,
permissive counterclaims, third-party, etc. complaints and complaints-in-
interventions, and on the other, money claims against estates which are not based
on judgment.   Thus, the relevant question for purposes of the present petition is
whether the action filed with the lower court is a "money claim against an estate
not based on judgment."
Petitioners' complaint may have been lodged against an estate, but it is clearly
based on a judgment, the Final Judgment of the US District Court. The provision
does not make any distinction between a local judgment and a foreign judgment,
and where the law does not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing
fee is computed on the basis of the amount of the relief sought, or on the value of
the property in litigation. The filing fee for requests for extrajudicial foreclosure of
mortgage is based on the amount of indebtedness or the mortgagee's claim. 14 In
special proceedings involving properties such as for the allowance of wills, the
filing fee is again based on the value of the property. 15 The aforecited rules
evidently have no application to petitioners' complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value
of the subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court. - 
(b) For filing  The rules of comity, utility and convenience of nations have established a usage
1.           Actions where the value
of the subject matter
cannot be estimated                 - - -             P 600.00
2.           Special civil actions except
judicial foreclosure which 
shall be governed by 
paragraph (a) above           - - -             P 600.00
3.           All other actions not 
involving property           - - -             P 600.00
In a real action, the assessed value of the property, or if there is none, the
estimated value, thereof shall be alleged by the claimant and shall be the basis in
computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed
value or estimated value of the property shall be alleged by the claimant and shall
be the basis in computing the fees. Yet again, this provision does not apply in the
case at bar. A real action is one where the plaintiff seeks the recovery of real
property or an action affecting title to or recovery of possession of real
property.16 Neither the complaint nor the award of damages adjudicated by the US
District Court involves any real property of the Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the
filing fees should be computed on the basis of the schematic table of Section 7(a),
as the action involved pertains to a claim against an estate based on judgment.
What provision, if any, then should apply in determining the filing fees for an
action to enforce a foreign judgment?
To resolve this question, a proper understanding is required on the nature and
effects of a foreign judgment in this jurisdiction.
among civilized states by which final judgments of foreign courts of competent
jurisdiction are reciprocally respected and rendered efficacious under certain
conditions that may vary in different countries.17 This principle was prominently
affirmed in the leading American case of Hilton v. Guyot18 and expressly recognized
in our jurisprudence beginning with Ingenholl v. Walter E. Olsen & Co.19 The
conditions required by the Philippines for recognition and enforcement of a foreign
judgment were originally contained in Section 311 of the Code of Civil Procedure,
which was taken from the California Code of Civil Procedure which, in turn, was
derived from the California Act of March 11, 1872.20 Remarkably, the procedural
rule now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has
remained unchanged down to the last word in nearly a century. Section 48 states:
SEC. 48.           Effect of foreign judgments. 'The effect of a judgment of a tribunal
of a foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon
the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence
of a right as between the parties and their successors in interest by a subsequent
title;
In either case, the judgment or final order may be repelled by evidence of a want
of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law
or fact.
There is an evident distinction between a foreign judgment in an action in rem and
one in personam. For an action in rem, the foreign judgment is deemed conclusive
upon the title to the thing, while in an action inpersonam, the foreign judgment is
presumptive, and not conclusive, of a right as between the parties and their
successors in interest by a subsequent title.21 However, in both cases, the foreign
judgment is susceptible to impeachment in our local courts on the grounds of want
of jurisdiction or notice to the party,22collusion, fraud,23 or clear mistake of law or
fact.24 Thus, the party aggrieved by the foreign judgment is entitled to defend
against the enforcement of such decision in the local forum. It is essential that
there should be an opportunity to challenge the foreign judgment, in order for the
court in this jurisdiction to properly determine its efficacy.25
It is clear then that it is usually necessary for an action to be filed in order to
enforce a foreign judgment26, even if such judgment has conclusive effect as in the
case of in rem actions, if only for the purpose of allowing the losing party an
opportunity to challenge the foreign judgment, and in order for the court to
properly determine its efficacy.27 Consequently, the party attacking a foreign
judgment has the burden of overcoming the presumption of its validity.28
The rules are silent as to what initiatory procedure must be undertaken in order to
enforce a foreign judgment in the Philippines. But there is no question that the
filing of a civil complaint is an appropriate measure for such purpose. A civil action
is one by which a party sues another for the enforcement or protection of a
right,29 and clearly an action to enforce a foreign judgment is in essence a
vindication of a right prescinding either from a "conclusive judgment upon title" or
the "presumptive evidence of a right." 30 Absent perhaps a statutory grant of
jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must
be brought before the regular courts.31
There are distinctions, nuanced but discernible, between the cause of action arising
from the enforcement of a foreign judgment, and that arising from the facts or
allegations that occasioned the foreign judgment.   They may pertain to the same
set of facts, but there is an essential difference in the right-duty correlatives that
are sought to be vindicated. For example, in a complaint for damages against a
tortfeasor, the cause of action emanates from the violation of the right of the
complainant through the act or omission of the respondent. On the other hand, in
a complaint for the enforcement of a foreign judgment awarding damages from the
same tortfeasor, for the violation of the same right through the same manner of
action, the cause of action derives not from the tortious act but from the foreign
judgment itself.
More importantly, the matters for proof are different. Using the above example,
the complainant will have to establish before the court the tortious act or omission
committed by the tortfeasor, who in turn is allowed to rebut these factual
allegations or prove extenuating circumstances.   Extensive litigation is thus
conducted on the facts, and from there the right to and amount of damages are
assessed. On the other hand, in an action to enforce a foreign judgment, the
matter left for proof is the foreign judgment itself, and not the facts from which it
prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a
review of jurisdiction of the foreign court, the service of personal notice, collusion,
fraud, or mistake of fact or law.   The limitations on review is in consonance with a
strong and pervasive policy in all legal systems to limit repetitive litigation on
claims and issues.32 Otherwise known as the policy of preclusion, it seeks to
protect party expectations resulting from previous litigation, to safeguard against
the harassment of defendants, to insure that the task of courts not be increased by
never-ending litigation of the same disputes, and - in a larger sense - to promote
what Lord Coke in the Ferrer's Case of 1599 stated to be the goal of all law: "rest
and quietness."33If every judgment of a foreign court were reviewable on the
merits, the plaintiff would be forced back on his/her original cause of action,
rendering immaterial the previously concluded litigation.34
Petitioners appreciate this distinction, and rely upon it to support the proposition
that the subject matter of the complaintthe enforcement of a foreign
judgmentis incapable of pecuniary estimation. Admittedly the proposition, as it
applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all
practical intents and purposes, the matter at hand is capable of pecuniary
estimation, down to the last cent. In the assailed Order, the respondent judge
pounced upon this point without equivocation:
The Rules use the term "where the value of the subject matter cannot be
estimated." The subject matter of the present case is the judgment rendered by
the foreign court ordering defendant to pay plaintiffs definite sums of money, as
and for compensatory damages. The Court finds that the value of the foreign
judgment can be estimated; indeed, it can even be easily determined. The Court is
not minded to distinguish between the enforcement of a judgment and the amount
of said judgment, and separate the two, for purposes of determining the correct
filing fees. Similarly, a plaintiff suing on promissory note for P1 million cannot be
allowed to pay only P400 filing fees (sic), on the reasoning that the subject matter
of his suit is not the P1 million, but the enforcement of the promissory note, and
that the value of such "enforcement" cannot be estimated.35
The jurisprudential standard in gauging whether the subject matter of an action is
capable of pecuniary estimation is well-entrenched. The Marcos Estate
cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought.   If it is primarily
for the recovery of a sum of money, the claim is considered capable of pecuniary
estimation, and whether jurisdiction is in the municipal courts or in the courts of
first instance would depend on the amount of the claim.   However, where the
basic issue is something other than the right to recover a sum of money, where
the money claim is purely incidental to, or a consequence of, the principal relief
sought, this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable exclusively
by courts of first instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,36 from which the rule in Singsong and Raymundo actually derives, but
which incorporates this additional nuance omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover a
sum of money, where the money claim is purely incidental to, or a consequence of,
the principal relief sought, like in suits to have the defendant perform his
part of the contract (specific performance) and in actions for support, or
for annulment of judgment or to foreclose a mortgage, this Court has
considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first
instance.37
Petitioners go on to add that among the actions the Court has recognized as being
incapable of pecuniary estimation include legality of conveyances and money
deposits,38 validity of a mortgage,39 the right to support,40 validity of
documents,41 rescission of contracts,42 specific performance,43 and validity or
annulment of judgments.44 It is urged that an action for enforcement of a foreign
judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the
subject matter of the action is undoubtedly the enforcement of a foreign judgment,
the effect of a providential award would be the adjudication of a sum of money.
Perhaps in theory, such an action is primarily for "the enforcement of the foreign
judgment," but there is a certain obtuseness to that sort of argument since there
is no denying that the enforcement of the foreign judgment will necessarily result
in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we
must examine its possible ramifications. Petitioners raise the point that a
declaration that an action for enforcement of foreign judgment may be capable of
pecuniary estimation might lead to an instance wherein a first level court such as
the Municipal Trial Court would have jurisdiction to enforce a foreign judgment. But
under the statute defining the jurisdiction of first level courts, B.P. 129, such
courts are not vested with jurisdiction over actions for the enforcement of foreign
judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. - Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings,
testate and intestate, including the grant of provisional remedies in proper cases,
where the value of the personal property, estate, or amount of the demand does
not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where
such personal property, estate, or amount of the demand does not exceed Two
hundred thousand pesos (P200,000.00) exclusive of interest damages of whatever
kind, attorney's fees, litigation expenses, and costs, the amount of which must be
specifically alleged: Provided, That   where there are several claims or causes of
action between the same or different parties, embodied in the same complaint, the
amount of the demand shall be the totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of the same or different
transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and costs: Provided, That value
of such property shall be determined by the assessed value of the adjacent lots.45
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject
matter pertains to an assertion of rights and interests over property or a sum of
money. But as earlier pointed out, the subject matter of an action to enforce a
foreign judgment is the foreign judgment itself, and the cause of action arising
from the adjudication of such judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for
enforcement of a foreign judgment, even if capable of pecuniary estimation, would
fall under the jurisdiction of the Regional Trial Courts, thus negating the fears of
the petitioners. Indeed, an examination of the provision indicates that it can be
relied upon as jurisdictional basis with respect to actions for enforcement of foreign
judgments, provided that no other court or office is vested jurisdiction over such
complaint:
Sec. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person
or body exercising jurisdiction or any court, tribunal, person or body exercising
judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce
the US District Court judgment is one capable of pecuniary estimation. But at the
same time, it is also an action based on judgment against an estate, thus placing it
beyond the ambit of Section 7(a) of Rule 141. What provision then governs the
proper computation of the filing fees over the instant complaint? For this case and
other similarly situated instances, we find that it is covered by Section 7(b)(3),
involving as it does, "other actions not involving property."
Notably, the amount paid as docket fees by the petitioners on the premise that it
was an action incapable of pecuniary estimation corresponds to the same amount
required for "other actions not involving property." The petitioners thus paid the
correct amount of filing fees, and it was a grave abuse of discretion for respondent
judge to have applied instead a clearly inapplicable rule and dismissed the
complaint.
There is another consideration of supreme relevance in this case, one which should
disabuse the notion that the doctrine affirmed in this decision is grounded solely on
the letter of the procedural rule.   We earlier adverted to the the internationally
recognized policy of preclusion,46 as well as the principles of comity, utility and
convenience of nations47 as the basis for the evolution of the rule calling for the
recognition and enforcement of foreign judgments. The US Supreme Court
in Hilton v. Guyot48 relied heavily on the concept of comity, as especially derived
from the landmark treatise of Justice Story in his Commentaries on the Conflict of
Laws of 1834.49 Yet the notion of "comity" has since been criticized as one "of dim
contours"50 or suffering from a number of fallacies.51 Other conceptual bases for
the recognition of foreign judgments have evolved such as the vested rights theory
or the modern doctrine of obligation.52
There have been attempts to codify through treaties or multilateral agreements
the standards for the recognition and enforcement of foreign judgments, but these
have not borne fruition. The members of the European Common Market accede to
the Judgments Convention, signed in 1978, which eliminates as to participating
countries all of such obstacles to recognition such as reciprocity and révision au
fond.53 The most ambitious of these attempts is the Convention on the Recognition
and Enforcement of Foreign Judgments in Civil and Commercial Matters, prepared
in 1966 by the Hague Conference of International Law.54 While it has not received
the ratifications needed to have it take effect,55 it is recognized as representing
current scholarly thought on the topic.56 Neither the Philippines nor the United
States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition
and enforcement of foreign judgments or a universal treaty rendering it obligatory
force, there is consensus that the viability of such recognition and enforcement is
essential. Steiner and Vagts note:
.   .   . The notion of unconnected bodies of national law on private international
law, each following a quite separate path, is not one conducive to the growth of a
transnational community encouraging travel and commerce among its members.
There is a contemporary resurgence of writing stressing the identity or similarity of
the values that systems of public and private international law seek to further - a
community interest in common, or at least reasonable, rules on these matters in
national legal systems. And such generic principles as reciprocity play an important
role in both fields.57
Salonga, whose treatise on private international law is of worldwide renown, points
out:
Whatever be the theory as to the basis for recognizing foreign judgments, there
can be little dispute that the end is to protect the reasonable expectations and
demands of the parties. Where the parties have submitted a matter for
adjudication in the court of one state, and proceedings there are not tainted with
irregularity, they may fairly be expected to submit, within the state or elsewhere,
to the enforcement of the judgment issued by the court.58
There is also consensus as to the requisites for recognition of a foreign judgment
and the defenses against the enforcement thereof. As earlier discussed, the
exceptions enumerated in Section 48, Rule 39 have remain unchanged since the
time they were adapted in this jurisdiction from long standing American rules. The
requisites and exceptions as delineated under Section 48 are but a restatement of
generally accepted principles of international law. Section 98 of The Restatement,
Second, Conflict of Laws, states that "a valid judgment rendered in a foreign
nation after a fair trial in a contested proceeding will be recognized in the United
States," and on its face, the term "valid" brings into play requirements such
notions as valid jurisdiction over the subject matter and parties. 59 Similarly, the
notion that fraud or collusion may preclude the enforcement of a foreign judgment
finds affirmation with foreign jurisprudence and commentators,60 as well as the
doctrine that the foreign judgment must not constitute "a clear mistake of law or
fact."61 And finally, it has been recognized that "public policy" as a defense to the
recognition of judgments serves as an umbrella for a variety of concerns in
international practice which may lead to a denial of recognition.62
The viability of the public policy defense against the enforcement of a foreign
judgment has been recognized in this jurisdiction.63 This defense allows for the
application of local standards in reviewing the foreign judgment, especially when
such judgment creates only a presumptive right, as it does in cases wherein the
judgment is against a person.64 The defense is also recognized within the
international sphere, as many civil law nations adhere to a broad public policy
exception which may result in a denial of recognition when the foreign court, in the
light of the choice-of-law rules of the recognizing court, applied the wrong law to
the case.65 The public policy defense can safeguard against possible abuses to the
easy resort to offshore litigation if it can be demonstrated that the original claim is
noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the
Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof.   However, generally 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. 66 The classical
formulation in international law sees those customary rules accepted as binding
result from the combination 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.67
While the definite conceptual parameters of the recognition and enforcement of
foreign judgments have not been authoritatively established, the Court can assert
with certainty that such an undertaking is among those generally accepted
principles of international law.68 As earlier demonstrated, there is a widespread
practice among states accepting in principle the need for such recognition and
enforcement, albeit subject to limitations of varying degrees. The fact that there is
no binding universal treaty governing the practice is not indicative of a widespread
rejection of the principle, but only a disagreement as to the imposable specific
rules governing the procedure for recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory or
jurisprudential, adopted in various foreign jurisdictions. In the Philippines, this is
evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed
in its current form since the early 1900s. Certainly, the Philippine legal system has
long ago accepted into its jurisprudence and procedural rules the viability of an
action for enforcement of foreign judgment, as well as the requisites for such valid
enforcement, as derived from internationally accepted doctrines.   Again, there
may be distinctions as to the rules adopted by each particular state,69 but they all
prescind from the premise that there is a rule of law obliging states to allow for,
however generally, the recognition and enforcement of a foreign judgment. The
bare principle, to our mind, has attained the status of opinio juris in international
practice.
This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely from the
procedural rule, but by virtue of the incorporation clause of the Constitution.   legal assistance shall not be denied to any person by reason of poverty." Since the
Rules of procedure are promulgated by the Supreme Court,70 and could very well
be abrogated or revised by the high court itself. Yet the Supreme Court is obliged,
as are all State components, to obey the laws of the land, including generally
accepted principles of international law which form part thereof, such as those
ensuring the qualified recognition and enforcement of foreign judgments.71
Thus, relative to the enforcement of foreign judgments in the Philippines, it
emerges that there is a general right recognized within our body of laws, and
affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the grounds
of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country
merely due to an exhorbitant assessment of docket fees is alien to generally
accepted practices and principles in international law. Indeed, there are grave
concerns in conditioning the amount of the filing fee on the pecuniary award or the
value of the property subject of the foreign decision. Such pecuniary award will
almost certainly be in foreign denomination, computed in accordance with the
applicable laws and standards of the forum.72 The vagaries of inflation, as well as
the relative low-income capacity of the Filipino, to date may very well translate
into an award virtually unenforceable in this country, despite its integral validity, if
the docket fees for the enforcement thereof were predicated on the amount of the
award sought to be enforced. The theory adopted by respondent judge and the
Marcos Estate may even lead to absurdities, such as if applied to an award
involving real property situated in places such as the United States or Scandinavia
where real property values are inexorably high. We cannot very well require that
the filing fee be computed based on the value of the foreign property as
determined by the standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it
recognizes that the subject matter of an action for enforcement of a foreign
judgment is the foreign judgment itself, and not the right-duty correlatives that
resulted in the foreign judgment.   In this particular circumstance, given that the
complaint is lodged against an estate and is based on the US District Court's Final
Judgment, this foreign judgment may, for purposes of classification under the
governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule
141, i.e., within the class of "all other actions not involving property." Thus, only
the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which
states that "[F]ree access to the courts and quasi-judicial bodies and adequate
provision is among the guarantees ensured by the Bill of Rights, it certainly gives
rise to a demandable right. However, now is not the occasion to elaborate on the
parameters of this constitutional right. Given our preceding discussion, it is not
necessary to utilize this provision in order to grant the relief sought by the
petitioners. It is axiomatic that the constitutionality of an act will not be resolved
by the courts if the controversy can be settled on other grounds73 or unless the
resolution thereof is indispensable for the determination of the case.74
One more word.   It bears noting that Section 48, Rule 39 acknowledges that
the Final Judgment is not conclusive yet, but presumptive evidence of a right of
the petitioners against the Marcos Estate. Moreover, the Marcos Estate is not
precluded to present evidence, if any, of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. This ruling, decisive as it is
on the question of filing fees and no other, does not render verdict on the
enforceability of the Final Judgment before the courts under the jurisdiction of the
Philippines, or for that matter any other issue which may legitimately be presented
before the trial court.   Such issues are to be litigated before the trial court, but
within the confines of the matters for proof as laid down in Section 48, Rule 39. On
the other hand, the speedy resolution of this claim by the trial court is encouraged,
and contumacious delay of the decision on the merits will not be brooked by this
Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and
SET ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby
issued. No costs.  11:00 A.M. at the Company's canteen, and those present were: for the
SO ORDERED.
 Section 1 No person shall be deprived of life, liberty, or property without due process
of law, nor shall any person be denied the equal protection of the laws.
EN BANC G.R. No. L-31195 June 5, 1973
PHILIPPINE BLOOMING MILLS EMPLOYMENT ORGANIZATION, NICANOR TOLENTINO,
FLORENCIO, PADRIGANO RUFINO, ROXAS MARIANO DE LEON, ASENCION PACIENTE,
BONIFACIO VACUNA, BENJAMIN PAGCU and RODULFO MUNSOD, petitioners,  guaranteed by the Constitution but emphasized, however, that any
vs. PHILIPPINE BLOOMING MILLS CO., INC. and COURT OF INDUSTRIAL
RELATIONS, respondents.
MAKASIAR, J.:
The petitioner Philippine Blooming Mills Employees Organization (hereinafter referred to as
PBMEO) is a legitimate labor union composed of the employees of the respondent Philippine
Blooming Mills Co., Inc., and petitioners Nicanor Tolentino, Florencio Padrigano, Rufino Roxas,
Mariano de Leon, Asencion Paciente, Bonifacio Vacuna, Benjamin Pagcu and Rodulfo Munsod
are officers and members of the petitioner Union.
Petitioners claim that on March 1, 1969, they decided to stage a mass demonstration at
Malacañang on March 4, 1969, in protest against alleged abuses of the Pasig police, to be
participated in by the workers in the first shift (from 6 A.M. to 2 P.M.) as well as those in the
regular second and third shifts (from 7 A.M. to 4 P.M. and from 8 A.M. to 5 P.M., respectively);
and that they informed the respondent Company of their proposed demonstration.
The questioned order dated September 15, 1969, of Associate Judge Joaquin M. Salvador of
the respondent Court reproduced the following stipulation of facts of the parties — parties —
3. That on March 2, 1969 complainant company learned of the projected mass
demonstration at Malacañang in protest against alleged abuses of the Pasig
Police Department to be participated by the first shift (6:00 AM-2:00 PM)
workers as well as those working in the regular shifts (7:00 A.M. to 4:00 PM
and 8:00 AM to 5:00 PM) in the morning of March 4, 1969;
4. That a meeting was called by the Company on March 3, 1969 at about
Company: (1) Mr. Arthur L. Ang (2) Atty. S. de Leon, Jr., (3) and all department
and section heads. For the PBMEO (1) Florencio Padrigano, (2) Rufino Roxas,
(3) Mariano de Leon, (4) Asencion Paciente, (5) Bonifacio Vacuna and (6)
Benjamin Pagcu.
5. That the Company asked the union panel to confirm or deny said projected
mass demonstration at Malacañang on March 4, 1969. PBMEO thru Benjamin
Pagcu who acted as spokesman of the union panel, confirmed the planned
demonstration and stated that the demonstration or rally cannot be cancelled
because it has already been agreed upon in the meeting. Pagcu explained
further that the demonstration has nothing to do with the Company because
the union has no quarrel or dispute with Management;
6. That Management, thru Atty. C.S. de Leon, Company personnel manager,
informed PBMEO that the demonstration is an inalienable right of the union
demonstration for that matter should not unduly prejudice the normal operation
of the Company. For which reason, the Company, thru Atty. C.S. de Leon
warned the PBMEO representatives that workers who belong to the first and
regular shifts, who without previous leave of absence approved by the
Company, particularly , the officers present who are the organizers of the
demonstration, who shall fail to report for work the following morning (March 4,
1969) shall be dismissed, because such failure is a violation of the existing
CBA and, therefore, would be amounting to an illegal strike;
7. That at about 5:00 P.M. on March 3, 1969, another meeting was convoked
Company represented by Atty. C.S. de Leon, Jr. The Union panel was
composed of: Nicanor Tolentino, Rodolfo Munsod, Benjamin Pagcu and
 Florencio Padrigano. In this afternoon meeting of March 3, 1969, Company
reiterated and appealed to the PBMEO representatives that while all workers
may join the Malacañang demonstration, the workers for the first and regular
shift of March 4, 1969 should be excused from joining the demonstration and
should report for work; and thus utilize the workers in the 2nd and 3rd shifts in
order not to violate the provisions of the CBA, particularly Article XXIV: NO
LOCKOUT — NO STRIKE'. All those who will not follow this warning of the
Company shall be dismiss; De Leon reiterated the Company's warning that the
officers shall be primarily liable being the organizers of the mass
demonstration. The union panel countered that it was rather too late to change
their plans inasmuch as the Malacañang demonstration will be held the
following morning; and
8. That a certain Mr. Wilfredo Ariston, adviser of PBMEO sent a cablegram to
the Company which was received 9:50 A.M., March 4, 1969, the contents of
which are as follows: 'REITERATING REQUEST EXCUSE DAY SHIFT
EMPLOYEES JOINING DEMONSTRATION MARCH 4, 1969.' (Pars. 3-8,
Annex "F", pp. 42-43, rec.)
Because the petitioners and their members numbering about 400 proceeded with the
demonstration despite the pleas of the respondent Company that the first shift workers should
not be required to participate in the demonstration and that the workers in the second and third
shifts should be utilized for the demonstration from 6 A.M. to 2 P.M. on March 4, 1969,
respondent Company prior notice of the mass demonstration on March 4, 1969, with the
respondent Court, a charge against petitioners and other employees who composed the first
shift, charging them with a "violation of Section 4(a)-6 in relation to Sections 13 and 14, as well
as Section 15, all of Republic Act No. 875, and of the CBA providing for 'No Strike and No
Lockout.' " (Annex "A", pp. 19-20, rec.). The charge was accompanied by the joint affidavit of
Arthur L. Ang and Cesareo de Leon, Jr. (Annex "B", pp. 21-24, rec.). Thereafter, a
corresponding complaint was filed, dated April 18, 1969, by Acting Chief Prosecutor Antonio T.
Tirona and Acting Prosecutor Linda P. Ilagan (Annex "C", pp. 25-30, rec.)
In their answer, dated May 9, 1969, herein petitioners claim that they did not violate the existing
CBA because they gave the respondent Company prior notice of the mass demonstration on
March 4, 1969; that the said mass demonstration was a valid exercise of their constitutional
freedom of speech against the alleged abuses of some Pasig policemen; and that their mass
demonstration was not a declaration of strike because it was not directed against the
respondent firm (Annex "D", pp. 31-34, rec.)
After considering the aforementioned stipulation of facts submitted by the parties, Judge
Joaquin M. Salvador, in an order dated September 15, 1969, found herein petitioner PBMEO
guilty of bargaining in bad faith and herein petitioners Florencio Padrigano, Rufino Roxas,
Mariano de Leon, Asencion Paciente, Bonifacio Vacuna, Benjamin Pagcu, Nicanor Tolentino
and Rodulfo Munsod as directly responsible for perpetrating the said unfair labor practice and
were, as a consequence, considered to have lost their status as employees of the respondent
Company (Annex "F", pp. 42-56, rec.)
Herein petitioners claim that they received on September 23, 1969, the aforesaid order (p. 11,
rec.); and that they filed on September 29, 1969, because September 28, 1969 fell on Sunday
(p. 59, rec.), a motion for reconsideration of said order dated September 15, 1969, on the
ground that it is contrary to law and the evidence, as well as asked for ten (10) days within
which to file their arguments pursuant to Sections 15, 16 and 17 of the Rules of the CIR, as
amended (Annex "G", pp. 57-60, rec. )
In its opposition dated October 7, 1969, filed on October 11, 1969 (p. 63, rec.), respondent
Company averred that herein petitioners received on September 22, 1969, the order dated
September 17 (should be September 15), 1969; that under Section 15 of the amended Rules of
the Court of Industrial Relations, herein petitioners had five (5) days from September 22, 1969
or until September 27, 1969, within which to file their motion for reconsideration; and that
because their motion for reconsideration was two (2) days late, it should be accordingly
dismissed, invoking Bien vs. Castillo,1 which held among others, that a motion for extension of
the five-day period for the filing of a motion for reconsideration should be filed before the said
five-day period elapses (Annex "M", pp. 61-64, rec.).
Subsequently, herein petitioners filed on October 14, 1969 their written arguments dated
October 11, 1969, in support of their motion for reconsideration (Annex "I", pp. 65-73, rec.).
In a resolution dated October 9, 1969, the respondent en banc  dismissed the motion for
reconsideration of herein petitioners for being pro forma  as it was filed beyond the
reglementary period prescribed by its Rules (Annex "J", pp. 74-75, rec.), which herein
petitioners received on October 28, 196 (pp. 12 & 76, rec.).
At the bottom of the notice of the order dated October 9, 1969, which was released on October
24, 1969 and addressed to the counsels of the parties (pp. 75-76, rec.), appear the
requirements of Sections 15, 16 and 17, as amended, of the Rules of the Court of Industrial
Relations, that a motion for reconsideration shall be filed within five (5) days from receipt of its
decision or order and that an appeal from the decision, resolution or order of the C.I.R.,
sitting en banc, shall be perfected within ten (10) days from receipt thereof (p. 76, rec.).
On October 31, 1969, herein petitioners filed with the respondent court a petition for relief from
the order dated October 9, 1969, on the ground that their failure to file their motion for
reconsideration on time was due to excusable negligence and honest mistake committed by
the president of the petitioner Union and of the office clerk of their counsel, attaching thereto
the affidavits of the said president and clerk (Annexes "K", "K-1" and "K-2", rec.).
Without waiting for any resolution on their petition for relief from the order dated October 9,
1969, herein petitioners filed on November 3, 1969, with the Supreme Court, a notice of appeal
(Annex "L", pp. 88-89, rec.).
I
There is need of briefly restating basic concepts and principles which underlie the issues posed
by the case at bar.
(1) In a democracy, the preservation and enhancement of the dignity and worth of the human
personality is the central core as well as the cardinal article of faith of our civilization. The
inviolable character of man as an individual must be "protected to the largest possible extent in
his thoughts and in his beliefs as the citadel of his person."2
(2) The Bill of Rights is designed to preserve the ideals of liberty, equality and security "against
the assaults of opportunism, the expediency of the passing hour, the erosion of small
encroachments, and the scorn and derision of those who have no patience with general
principles."3
In the pithy language of Mr. Justice Robert Jackson, the purpose of the Bill of Rights is to
withdraw "certain subjects from the vicissitudes of political controversy, to place them beyond
the reach of majorities and officials, and to establish them as legal principles to be applied by
the courts. One's rights to life, liberty and property, to free speech, or free press, freedom of
worship and assembly, and other fundamental rights may not be submitted to a vote; they
depend on the outcome of no elections."4 Laski proclaimed that "the happiness of the
individual, not the well-being of the State, was the criterion by which its behaviour was to be
judged. His interests, not its power, set the limits to the authority it was entitled to exercise."5
(3) The freedoms of expression and of assembly as well as the right to petition are included
among the immunities reserved by the sovereign people, in the rhetorical aphorism of Justice
Holmes, to protect the ideas that we abhor or hate more than the ideas we cherish; or as
Socrates insinuated, not only to protect the minority who want to talk, but also to benefit the
majority who refuse to listen.6 And as Justice Douglas cogently stresses it, the liberties of one
are the liberties of all; and the liberties of one are not safe unless the liberties of all are
protected.7
(4) The rights of free expression, free assembly and petition, are not only civil rights but also
political rights essential to man's enjoyment of his life, to his happiness and to his full and
complete fulfillment. Thru these freedoms the citizens can participate not merely in the periodic
establishment of the government through their suffrage but also in the administration of public
affairs as well as in the discipline of abusive public officers. The citizen is accorded these rights
so that he can appeal to the appropriate governmental officers or agencies for redress and
protection as well as for the imposition of the lawful sanctions on erring public officers and
employees.
(5) While the Bill of Rights also protects property rights, the primacy of human rights over
property rights is recognized.8 Because these freedoms are "delicate and vulnerable, as well as
supremely precious in our society" and the "threat of sanctions may deter their exercise almost
as potently as the actual application of sanctions," they "need breathing space to survive,"
permitting government regulation only "with narrow specificity."9
Property and property rights can be lost thru prescription; but human rights are imprescriptible.
If human rights are extinguished by the passage of time, then the Bill of Rights is a useless
attempt to limit the power of government and ceases to be an efficacious shield against the
tyranny of officials, of majorities, of the influential and powerful, and of oligarchs — political,
economic or otherwise.
In the hierarchy of civil liberties, the rights of free expression and of assembly occupy a
preferred position as they are essential to the preservation and vitality of our civil and political
institutions; 10 and such priority "gives these liberties the sanctity and the sanction not
permitting dubious intrusions." 11
The superiority of these freedoms over property rights is underscored by the fact that a mere
reasonable or rational relation between the means employed by the law and its object or
purpose — that the law is neither arbitrary nor discriminatory nor oppressive — would suffice to
validate a law which restricts or impairs property rights. 12 On the other hand, a constitutional or
valid infringement of human rights requires a more stringent criterion, namely existence of a
grave and immediate danger of a substantive evil which the State has the right to prevent. So it
has been stressed in the main opinion of Mr. Justice Fernando in Gonzales vs. Comelec and
reiterated by the writer of the opinion in Imbong vs. Ferrer. 13 It should be added that Mr.
Justice Barredo in Gonzales vs. Comelec, supra, like Justices Douglas, Black and Goldberg
in N.Y. Times Co. vs. Sullivan, 14 believes that the freedoms of speech and of the press as well
as of peaceful assembly and of petition for redress of grievances are absolute when directed
against public officials or "when exercised in relation to our right to choose the men and women
by whom we shall be governed," 15 even as Mr. Justice Castro relies on the balancing-of-
interests test. 16 Chief Justice Vinson is partial to the improbable danger rule formulated by
Chief Judge Learned Hand, viz. — whether the gravity of the evil, discounted by its
improbability, justifies such invasion of free expression as is necessary to avoid the danger. 17
II
The respondent Court of Industrial Relations, after opining that the mass demonstration was
not a declaration of strike, concluded that by their "concerted act and the occurrence temporary
stoppage of work," herein petitioners are guilty bargaining in bad faith and hence violated the
collective bargaining agreement with private respondent Philippine Blooming Mills Co., inc.. Set
against and tested by foregoing principles governing a democratic society, such conclusion
cannot be sustained. The demonstration held petitioners on March 4, 1969 before Malacañang
was against alleged abuses of some Pasig policemen, not against their employer, herein
private respondent firm, said demonstrate was purely and completely an exercise of their
freedom expression in general and of their right of assembly and petition for redress of
grievances in particular before appropriate governmental agency, the Chief Executive, again
the police officers of the municipality of Pasig. They exercise their civil and political rights for
their mutual aid protection from what they believe were police excesses. As matter of fact, it
was the duty of herein private respondent firm to protect herein petitioner Union and its
members fro the harassment of local police officers. It was to the interest herein private
respondent firm to rally to the defense of, and take up the cudgels for, its employees, so that
they can report to work free from harassment, vexation or peril and as consequence perform
more efficiently their respective tasks enhance its productivity as well as profits. Herein
respondent employer did not even offer to intercede for its employees with the local police.
Was it securing peace for itself at the expenses of its workers? Was it also intimidated by the
local police or did it encourage the local police to terrorize or vex its workers? Its failure to
defend its own employees all the more weakened the position of its laborers the alleged
oppressive police who might have been all the more emboldened thereby subject its lowly
employees to further indignities.
In seeking sanctuary behind their freedom of expression well as their right of assembly and of
petition against alleged persecution of local officialdom, the employees and laborers of herein
private respondent firm were fighting for their very survival, utilizing only the weapons afforded
them by the Constitution — the untrammelled enjoyment of their basic human rights. The
pretension of their employer that it would suffer loss or damage by reason of the absence of its
employees from 6 o'clock in the morning to 2 o'clock in the afternoon, is a plea for the
preservation merely of their property rights. Such apprehended loss or damage would not spell
the difference between the life and death of the firm or its owners or its management. The
employees' pathetic situation was a stark reality — abused, harassment and persecuted as
they believed they were by the peace officers of the municipality. As above intimated, the
condition in which the employees found themselves vis-a-vis the local police of Pasig, was a
matter that vitally affected their right to individual existence as well as that of their families.
Material loss can be repaired or adequately compensated. The debasement of the human
being broken in morale and brutalized in spirit-can never be fully evaluated in monetary terms.
The wounds fester and the scars remain to humiliate him to his dying day, even as he cries in
anguish for retribution, denial of which is like rubbing salt on bruised tissues.
As heretofore stated, the primacy of human rights — freedom of expression, of peaceful
assembly and of petition for redress of grievances — over property rights has been
sustained. 18 Emphatic reiteration of this basic tenet as a coveted boon — at once the shield
and armor of the dignity and worth of the human personality, the all-consuming ideal of our
enlightened civilization — becomes Our duty, if freedom and social justice have any meaning
at all for him who toils so that capital can produce economic goods that can generate
happiness for all. To regard the demonstration against police officers, not against the employer,
as evidence of bad faith in collective bargaining and hence a violation of the collective
bargaining agreement and a cause for the dismissal from employment of the demonstrating
employees, stretches unduly the compass of the collective bargaining agreement, is "a potent
means of inhibiting speech" and therefore inflicts a moral as well as mortal wound on the
constitutional guarantees of free expression, of peaceful assembly and of petition. 19
The collective bargaining agreement which fixes the working shifts of the employees, according
to the respondent Court Industrial Relations, in effect imposes on the workers the "duty ... to
observe regular working hours." The strain construction of the Court of Industrial Relations that
a stipulated working shifts deny the workers the right to stage mass demonstration against
police abuses during working hours, constitutes a virtual tyranny over the mind and life the
workers and deserves severe condemnation. Renunciation of the freedom should not be
predicated on such a slender ground.
The mass demonstration staged by the employees on March 4, 1969 could not have been
legally enjoined by any court, such an injunction would be trenching upon the freedom
expression of the workers, even if it legally appears to be illegal picketing or strike. 20 The
respondent Court of Industrial Relations in the case at bar concedes that the mass
demonstration was not a declaration of a strike "as the same not rooted in any industrial
dispute although there is concerted act and the occurrence of a temporary stoppage work."
(Annex "F", p. 45, rec.).
The respondent firm claims that there was no need for all its employees to participate in the
demonstration and that they suggested to the Union that only the first and regular shift from 6
A.M. to 2 P.M. should report for work in order that loss or damage to the firm will be averted.
This stand failed appreciate the sine qua non  of an effective demonstration especially by a
labor union, namely the complete unity of the Union members as well as their total presence at
the demonstration site in order to generate the maximum sympathy for the validity of their
cause but also immediately action on the part of the corresponding government agencies with
jurisdiction over the issues they raised against the local police. Circulation is one of the aspects
of freedom of expression. 21 If demonstrators are reduced by one-third, then by that much the
circulation of the issues raised by the demonstration is diminished. The more the participants,
the more persons can be apprised of the purpose of the rally. Moreover, the absence of one-
third of their members will be regarded as a substantial indication of disunity in their ranks
which will enervate their position and abet continued alleged police persecution. At any rate,
the Union notified the company two days in advance of their projected demonstration and the
company could have made arrangements to counteract or prevent whatever losses it might
sustain by reason of the absence of its workers for one day, especially in this case when the
Union requested it to excuse only the day-shift employees who will join the demonstration on
March 4, 1969 which request the Union reiterated in their telegram received by the company at
9:50 in the morning of March 4, 1969, the day of the mass demonstration (pp. 42-43, rec.).
There was a lack of human understanding or compassion on the part of the firm in rejecting the
request of the Union for excuse from work for the day shifts in order to carry out its mass
demonstration. And to regard as a ground for dismissal the mass demonstration held against
the Pasig police, not against the company, is gross vindictiveness on the part of the employer,
which is as unchristian as it is unconstitutional.
III
The respondent company is the one guilty of unfair labor practice. Because the refusal on the
part of the respondent firm to permit all its employees and workers to join the mass
demonstration against alleged police abuses and the subsequent separation of the eight (8)
petitioners from the service constituted an unconstitutional restraint on the freedom of
expression, freedom of assembly and freedom petition for redress of grievances, the
respondent firm committed an unfair labor practice defined in Section 4(a-1) in relation to
Section 3 of Republic Act No. 875, otherwise known as the Industrial Peace Act. Section 3 of
Republic Act No. 8 guarantees to the employees the right "to engage in concert activities for ...
mutual aid or protection"; while Section 4(a-1) regards as an unfair labor practice for an
employer interfere with, restrain or coerce employees in the exercise their rights guaranteed in
Section Three."
We repeat that the obvious purpose of the mass demonstration staged by the workers of the
respondent firm on March 4, 1969, was for their mutual aid and protection against alleged
police abuses, denial of which was interference with or restraint on the right of the employees
to engage in such common action to better shield themselves against such alleged police
indignities. The insistence on the part of the respondent firm that the workers for the morning
and regular shift should not participate in the mass demonstration, under pain of dismissal, was
as heretofore stated, "a potent means of inhibiting speech." 22
Such a concerted action for their mutual help and protection deserves at least equal protection
as the concerted action of employees in giving publicity to a letter complaint charging bank
president with immorality, nepotism, favoritism an discrimination in the appointment and
promotion of ban employees. 23 We further ruled in the Republic Savings Bank case, supra,
that for the employees to come within the protective mantle of Section 3 in relation to Section
4(a-1) on Republic Act No. 875, "it is not necessary that union activity be involved or that
collective bargaining be contemplated," as long as the concerted activity is for the furtherance
of their interests. 24
As stated clearly in the stipulation of facts embodied in the questioned order of respondent
Court dated September 15, 1969, the company, "while expressly acknowledging, that the
demonstration is an inalienable right of the Union guaranteed by the Constitution," nonetheless
emphasized that "any demonstration for that matter should not unduly prejudice the normal
operation of the company" and "warned the PBMEO representatives that workers who belong
to the first and regular shifts, who without previous leave of absence approved by the
Company, particularly the officers present who are the organizers of the demonstration, who
shall fail to report for work the following morning (March 4, 1969) shall be dismissed, because
such failure is a violation of the existing CBA and, therefore, would be amounting to an illegal
strike (;)" (p. III, petitioner's brief). Such threat of dismissal tended to coerce the employees
from joining the mass demonstration. However, the issues that the employees raised against
the local police, were more important to them because they had the courage to proceed with
the demonstration, despite such threat of dismissal. The most that could happen to them was
to lose a day's wage by reason of their absence from work on the day of the demonstration.
One day's pay means much to a laborer, more especially if he has a family to support. Yet,
they were willing to forego their one-day salary hoping that their demonstration would bring
about the desired relief from police abuses. But management was adamant in refusing to
recognize the superior legitimacy of their right of free speech, free assembly and the right to
petition for redress.
Because the respondent company ostensibly did not find it necessary to demand from the
workers proof of the truth of the alleged abuses inflicted on them by the local police, it thereby
concedes that the evidence of such abuses should properly be submitted to the corresponding
authorities having jurisdiction over their complaint and to whom such complaint may be referred
by the President of the Philippines for proper investigation and action with a view to disciplining
the local police officers involved.
On the other hand, while the respondent Court of Industrial Relations found that the
demonstration "paralyzed to a large extent the operations of the complainant company," the
respondent Court of Industrial Relations did not make any finding as to the fact of loss actually
sustained by the firm. This significant circumstance can only mean that the firm did not sustain
any loss or damage. It did not present evidence as to whether it lost expected profits for failure
to comply with purchase orders on that day; or that penalties were exacted from it by
customers whose orders could not be filled that day of the demonstration; or that purchase
orders were cancelled by the customers by reason of its failure to deliver the materials ordered;
or that its own equipment or materials or products were damaged due to absence of its workers
on March 4, 1969. On the contrary, the company saved a sizable amount in the form of wages
for its hundreds of workers, cost of fuel, water and electric consumption that day. Such savings
could have amply compensated for unrealized profits or damages it might have sustained by
reason of the absence of its workers for only one day.
IV
Apart from violating the constitutional guarantees of free speech and assembly as well as the
right to petition for redress of grievances of the employees, the dismissal of the eight (8)
leaders of the workers for proceeding with the demonstration and consequently being absent
from work, constitutes a denial of social justice likewise assured by the fundamental law to
these lowly employees. Section 5 of Article II of the Constitution imposes upon the State "the
promotion of social justice to insure the well-being and economic security of all of the people,"
which guarantee is emphasized by the other directive in Section 6 of Article XIV of the
Constitution that "the State shall afford protection to labor ...". Respondent Court of Industrial
Relations as an agency of the State is under obligation at all times to give meaning and
substance to these constitutional guarantees in favor of the working man; for otherwise these
constitutional safeguards would be merely a lot of "meaningless constitutional patter." Under
the Industrial Peace Act, the Court of Industrial Relations is enjoined to effect the policy of the
law "to eliminate the causes of industrial unrest by encouraging and protecting the exercise by
employees of their right to self-organization for the purpose of collective bargaining and for the
promotion of their moral, social and economic well-being." It is most unfortunate in the case at
bar that respondent Court of Industrial Relations, the very governmental agency designed
therefor, failed to implement this policy and failed to keep faith with its avowed mission —
its raison d'etre — as ordained and directed by the Constitution.
V
It has been likewise established that a violation of a constitutional right divests the court of
jurisdiction; and as a consequence its judgment is null and void and confers no rights. Relief
from a criminal conviction secured at the sacrifice of constitutional liberties, may be obtained
through habeas corpus proceedings even long after the finality of the judgment. Thus, habeas
corpus is the remedy to obtain the release of an individual, who is convicted by final judgment
through a forced confession, which violated his constitutional right against self-
incrimination; 25 or who is denied the right to present evidence in his defense as a deprivation
of his liberty without due process of law, 26 even after the accused has already served sentence
for twenty-two years. 27
Both the respondents Court of Industrial Relations and private firm trenched upon these
constitutional immunities of petitioners. Both failed to accord preference to such rights and
aggravated the inhumanity to which the aggrieved workers claimed they had been subjected by
the municipal police. Having violated these basic human rights of the laborers, the Court of
Industrial Relations ousted itself of jurisdiction and the questioned orders it issued in the instant
case are a nullity. Recognition and protection of such freedoms are imperative on all public
offices including the courts 28 as well as private citizens and corporations, the exercise and
enjoyment of which must not be nullified by mere procedural rule promulgated by the Court
Industrial Relations exercising a purely delegate legislative power, when even a law enacted by
Congress must yield to the untrammelled enjoyment of these human rights. There is no time
limit to the exercise of the freedoms. The right to enjoy them is not exhausted by the delivery of
one speech, the printing of one article or the staging of one demonstration. It is a continuing
immunity to be invoked and exercised when exigent and expedient whenever there are errors
to be rectified, abuses to be denounced, inhumanities to be condemned. Otherwise these
guarantees in the Bill of Rights would be vitiated by rule on procedure prescribing the period for
appeal. The battle then would be reduced to a race for time. And in such a contest between an
employer and its laborer, the latter eventually loses because he cannot employ the best an
dedicated counsel who can defend his interest with the required diligence and zeal, bereft as
he is of the financial resources with which to pay for competent legal services. 28-a
VI
The Court of Industrial Relations rule prescribes that motion for reconsideration of its order or
writ should filed within five (5) days from notice thereof and that the arguments in support of
said motion shall be filed within ten (10) days from the date of filing of such motion for
reconsideration (Sec. 16). As above intimated, these rules of procedure were promulgated by
the Court of Industrial Relations pursuant to a legislative delegation. 29
The motion for reconsideration was filed on September 29, 1969, or seven (7) days from notice
on September 22, 1969 of the order dated September 15, 1969 or two (2) days late. Petitioners
claim that they could have filed it on September 28, 1969, but it was a Sunday.
Does the mere fact that the motion for reconsideration was filed two (2) days late defeat the
rights of the petitioning employees? Or more directly and concretely, does the inadvertent
omission to comply with a mere Court of Industrial Relations procedural rule governing the
period for filing a motion for reconsideration or appeal in labor cases, promulgated pursuant to
a legislative delegation, prevail over constitutional rights? The answer should be obvious in the
light of the aforecited cases. To accord supremacy to the foregoing rules of the Court of
Industrial Relations over basic human rights sheltered by the Constitution, is not only
incompatible with the basic tenet of constitutional government that the Constitution is superior
to any statute or subordinate rules and regulations, but also does violence to natural reason
and logic. The dominance and superiority of the constitutional right over the aforesaid Court of
Industrial Relations procedural rule of necessity should be affirmed. Such a Court of Industrial
Relations rule as applied in this case does not implement or reinforce or strengthen the
constitutional rights affected,' but instead constrict the same to the point of nullifying the
enjoyment thereof by the petitioning employees. Said Court of Industrial Relations rule,
promulgated as it was pursuant to a mere legislative delegation, is unreasonable and therefore
is beyond the authority granted by the Constitution and the law. A period of five (5) days within
which to file a motion for reconsideration is too short, especially for the aggrieved workers, who
usually do not have the ready funds to meet the necessary expenses therefor. In case of the
Court of Appeals and the Supreme Court, a period of fifteen (15) days has been fixed for the
filing of the motion for re hearing or reconsideration (See. 10, Rule 51; Sec. 1, Rule 52; Sec. 1,
Rule 56, Revised Rules of Court). The delay in the filing of the motion for reconsideration could
have been only one day if September 28, 1969 was not a Sunday. This fact accentuates the
unreasonableness of the Court of Industrial are concerned.
It should be stressed here that the motion for reconsideration dated September 27, 1969, is
based on the ground that the order sought to be reconsidered "is not in accordance with law,
evidence and facts adduced during the hearing," and likewise prays for an extension of ten (10)
days within which to file arguments pursuant to Sections 15, 16 and 17 of the Rules of the
Court of Industrial Relations (Annex "G", pp. 57-60, rec.); although the arguments were actually
filed by the herein petitioners on October 14, 1969 (Annex "I", pp. 70-73, rec.), long after the
10-day period required for the filing of such supporting arguments counted from the filing of the
motion for reconsideration. Herein petitioners received only on October 28, 1969 the resolution
dated October 9, 1969 dismissing the motion for reconsideration for being pro forma  since it
was filed beyond the reglementary period (Annex "J", pp. 74-75, rec.)
It is true that We ruled in several cases that where a motion to reconsider is filed out of time, or
where the arguments in suppf such motion are filed beyond the 10 day reglementary period
provided for by the Court of Industrial Relations rules, the order or decision subject of29-
a reconsideration becomes final and unappealable. But in all these cases, the constitutional
rights of free expression, free assembly and petition were not involved.
It is a procedural rule that generally all causes of action and defenses presently available must
be specifically raised in the complaint or answer; so that any cause of action or defense not
raised in such pleadings, is deemed waived. However, a constitutional issue can be raised any
time, even for the first time on appeal, if it appears that the determination of the constitutional
issue is necessary to a decision of the case, the very lis mota of the case without the resolution
of which no final and complete determination of the dispute can be made. 30 It is thus seen that
a procedural rule of Congress or of the Supreme Court gives way to a constitutional right. In
the instant case, the procedural rule of the Court of Industrial Relations, a creature of
Congress, must likewise yield to the constitutional rights invoked by herein petitioners even
before the institution of the unfair labor practice charged against them and in their defense to
the said charge.
In the case at bar, enforcement of the basic human freedoms sheltered no less by the organic
law, is a most compelling reason to deny application of a Court of Industrial Relations rule
which impinges on such human rights. 30-a
It is an accepted principle that the Supreme Court has the inherent power to "suspend its own
rules or to except a particular case from its operation, whenever the purposes of justice
require." 30-b Mr. Justice Barredo in his concurring opinion in Estrada vs. Sto. Domingo. 30-
c reiterated this principle and added that
Under this authority, this Court is enabled to cove with all situations without
concerning itself about procedural niceties that do not square with the need to
do justice, in any case, without further loss of time, provided that the right of
the parties to a full day in court is not substantially impaired. Thus, this Court
may treat an appeal as a certiorari and vice-versa. In other words, when all the
material facts are spread in the records before Us, and all the parties have
been duly heard, it matters little that the error of the court a quo is of judgment
or of jurisdiction. We can then and there render the appropriate judgment. Is
within the contemplation of this doctrine that as it is perfectly legal and within
the power of this Court to strike down in an appeal acts without or in excess of
jurisdiction or committed with grave abuse of discretion, it cannot be beyond
the admit of its authority, in appropriate cases, to reverse in a certain proceed
in any error of judgment of a court a quo which cannot be exactly categorized
as a flaw of jurisdiction. If there can be any doubt, which I do not entertain, on
whether or not the errors this Court has found in the decision of the Court of
Appeals are short of being jurisdiction nullities or excesses, this Court would
still be on firm legal grounds should it choose to reverse said decision here
and now even if such errors can be considered as mere mistakes of judgment
or only as faults in the exercise of jurisdiction, so as to avoid the unnecessary
return of this case to the lower court for the sole purpose of pursuing the
ordinary course of an appeal. (Emphasis supplied). 30-d  respondent court to consider whether or not its previous ruling that petitioners
Insistence on the application of the questioned Court industrial Relations rule in this particular
case at bar would an unreasoning adherence to "Procedural niceties" which denies justice to
the herein laborers, whose basic human freedoms, including the right to survive, must be
according supremacy over the property rights of their employer firm which has been given a full
hearing on this case, especially when, as in the case at bar, no actual material damage has be
demonstrated as having been inflicted on its property rights.
If We can disregard our own rules when justice requires it, obedience to the Constitution
renders more imperative the suspension of a Court of Industrial Relations rule that clash with
the human rights sanctioned and shielded with resolution concern by the specific guarantees
outlined in the organic law. It should be stressed that the application in the instant case Section
15 of the Court of Industrial Relations rules relied upon by herein respondent firm is
unreasonable and therefore such application becomes unconstitutional as it subverts the
human rights of petitioning labor union and workers in the light of the peculiar facts and
circumstances revealed by the record.
The suspension of the application of Section 15 of the Court of Industrial Relations rules with
reference to the case at is also authorized by Section 20 of Commonwealth Act No. 103, the
C.I.R. charter, which enjoins the Court of Industrial Relations to "act according to justice and
equity and substantial merits of the case, without regard to technicalities or legal forms ..."
On several occasions, We emphasized this doctrine which was re-stated by Mr. Justice
Barredo, speaking for the Court, in the 1970 case of Kapisanan, etc. vs. Hamilton, etc., et.
al.,  30-e thus:
As to the point that the evidence being offered by the petitioners in the motion
for new trial is not "newly discovered," as such term is understood in the rules
of procedure for the ordinary courts, We hold that such criterion is not binding
upon the Court of Industrial Relations. Under Section 20 of Commonwealth Act
No. 103, 'The Court of Industrial Relations shall adopt its, rules or procedure
and shall have such other powers as generally pertain to a court of justice:
Provided, however, That in the hearing, investigation and determination of any
question or controversy and in exercising any duties and power under this Act,
the Court shall act according to justice and equity and substantial merits of the
case, without regard to technicalities or legal forms and shall not be bound by
any technical rules of legal evidence but may inform its mind in such manner
as it may deem just and equitable.' By this provision the industrial court is
disengaged from the rigidity of the technicalities applicable to ordinary courts.
Said court is not even restricted to the specific relief demanded by the
parties but may issue such orders as may be deemed necessary or expedient
for the purpose of settling the dispute or dispelling any doubts that may give
rise to future disputes. (Ang Tibay v. C.I.R., G.R. No. 46496, Feb. 17, 1940;
Manila Trading & Supply Co. v. Phil. Labor, 71 Phil. 124.) For these reasons,
We believe that this provision is ample enough to have enabled the
constitute a minority was founded on fact, without regard to the technical
meaning of newly discovered evidence. ... (Alonso v. Villamor, 16 Phil. 315;
Chua Kiong v. Whitaker, 46 Phil. 578). (emphasis supplied.)
To apply Section 15 of the Court of Industrial Relations rules with "pedantic rigor" in the instant
case is to rule in effect that the poor workers, who can ill-afford an alert competent lawyer, can
no longer seek the sanctuary of human freedoms secured to them by the fundamental law,
simply because their counsel — erroneously believing that he received a copy of the decision
on September 23, 1969, instead of September 22, 1969 - filed his motion for reconsideration
September 29, 1969, which practically is only one day late considering that September 28,
1969 was a Sunday.
Many a time, this Court deviated from procedure technicalities when they ceased to be
instruments of justice, for the attainment of which such rules have been devised. Summarizing
the jurisprudence on this score, Mr. Justice Fernando, speaking for a unanimous Court
in Palma vs. Oreta, 30-f Stated:
As was so aptly expressed by Justice Moreland in Alonso v. Villamor (16 Phil.
315 [1910]. The Villamor decision was cited with approval in Register of Deeds
v. Phil. Nat. Bank, 84 Phil. 600 [1949]; Potenciano v. Court of Appeals, 104
Phil. 156 [1958] and Uy v. Uy, 14243, June 30, 1961, 2 SCRA 675.), decided
as far back as 1910, "technicality. when it deserts its proper-office as an aid to
 justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts." (Ibid., p, 322.) To that norm, this Court has
remained committed. The late Justice Recto in Blanco v. Bernabe, (63 Phil.
124 [1936]) was of a similar mind. For him the interpretation of procedural rule
should never "sacrifice the ends justice." While "procedural laws are no other
than technicalities" view them in their entirety, 'they were adopted not as ends
themselves for the compliance with which courts have organized and function,
but as means conducive to the realization the administration of the law and of
justice (Ibid., p.,128). We have remained steadfastly opposed, in the highly
rhetorical language Justice Felix, to "a sacrifice of substantial rights of a litigant
in altar of sophisticated technicalities with impairment of the sacred principles
of justice." (Potenciano v. Court of Appeals, 104 Phil. 156, 161 [1958]). As
succinctly put by Justice Makalintal, they "should give way to the realities of
the situation." (Urbayan v. Caltex, L-15379, Aug. 31, 1962, 5 SCRA 1016,
1019). In the latest decision in point promulgated in 1968, (Udan v. Amon,
(1968, 23 SCRA citing McEntee v. Manotok, L-14968, Oct. 27, 1961, 3 SCRA
272.) Justice Zaldivar was partial to an earlier formulation of Justice Labrador
that rules of procedure "are not to be applied in a very rigid, technical sense";
but are intended "to help secure substantial justice." (Ibid., p. 843) ... 30-g  ... But even if we should sense no danger to our own liberties, even if we feel
Even if the questioned Court of Industrial Relations orders and rule were to be given effect, the
dismissal or termination of the employment of the petitioning eight (8) leaders of the Union is
harsh for a one-day absence from work. The respondent Court itself recognized the severity of
such a sanction when it did not include the dismissal of the other 393 employees who are
members of the same Union and who participated in the demonstration against the Pasig
police. As a matter of fact, upon the intercession of the Secretary of Labor, the Union members
who are not officers, were not dismissed and only the Union itself and its thirteen (13) officers
were specifically named as respondents in the unfair labor practice charge filed against them
by the firm (pp. 16-20, respondent's Brief; Annexes "A", "B" and "C", pp. 20-30, rec.). Counsel
for respondent firm insinuates that not all the 400 or so employee participated in the
demonstration, for which reason only the Union and its thirteen (13) officers were specifically
named in the unfair labor practice charge (p. 20, respondent's brief). If that were so, then
many, if not all, of the morning and regular shifts reported for work on March 4, 1969 and that,
as a consequence, the firm continued in operation that day and did not sustain any damage.
The appropriate penalty — if it deserves any penalty at all — should have been simply to
charge said one-day absence against their vacation or sick leave. But to dismiss the eight (8)
leaders of the petitioner Union is a most cruel penalty, since as aforestated the Union leaders
depend on their wages for their daily sustenance as well as that of their respective families
aside from the fact that it is a lethal blow to unionism, while at the same time strengthening the
oppressive hand of the petty tyrants in the localities.
Mr. Justice Douglas articulated this pointed reminder:
The challenge to our liberties comes frequently not from those who
consciously seek to destroy our system of Government, but from men of
goodwill — good men who allow their proper concerns to blind them to the fact
that what they propose to accomplish involves an impairment of liberty.
... The Motives of these men are often commendable. What we must
remember, however, is thatpreservation of liberties does not depend on
motives. A suppression of liberty has the same effect whether the suppress or
be a reformer or an outlaw. The only protection against misguided zeal is a
constant alertness of the infractions of the guarantees of liberty contained in
our Constitution. Each surrender of liberty to the demands of the moment
makes easier another, larger surrender. The battle over the Bill of Rights is a
never ending one.
... The liberties of any person are the liberties of all of us.
... In short, the Liberties of none are safe unless the liberties of all are
protected.
secure because we belong to a group that is important and respected, we
must recognize that our Bill of Rights is a code of fair play for the less fortunate
that we in all honor and good conscience must be observe. 31
The case at bar is worse.
Management has shown not only lack of good-will or good intention, but a complete lack of
sympathetic understanding of the plight of its laborers who claim that they are being subjected
to indignities by the local police, It was more expedient for the firm to conserve its income or
profits than to assist its employees in their fight for their freedoms and security against alleged
petty tyrannies of local police officers. This is sheer opportunism. Such opportunism and
expediency resorted to by the respondent company assaulted the immunities and welfare of its
employees. It was pure and implement selfishness, if not greed.
Of happy relevance is the 1967 case of Republic Savings Bank vs. C.I.R., 32 where the
petitioner Bank dismissed eight (8) employees for having written and published "a patently
libelous letter ... to the Bank president demanding his resignation on the grounds of immorality,
nepotism in the appointment and favoritism as well as discrimination in the promotion of bank
employees." Therein, thru Mr. Justice Castro, We ruled:
It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the
letter-charge they were nonetheless protected for they were engaged in
concerted activity, in the exercise of their right of self organization that includes
concerted activity for mutual aid and protection, (Section 3 of the Industrial
Peace Act ...) This is the view of some members of this Court. For, as has
been aptly stated, the joining in protests or demands, even by a small group of
 employees, if in furtherance of their interests as such, is a concerted activity
protected by the Industrial Peace Act. It is not necessary that union activity be
involved or that collective bargaining be contemplated. (Annot., 6 A.L.R. 2d
416 [1949]).
xxx xxx xxx
(2) directing the re instatement of the herein eight (8) petitioners, with full back pay from the
date of their separation from the service until re instated, minus one day's pay and whatever
earnings they might have realized from other sources during their separation from the service.
With costs against private respondent Philippine Blooming Company, Inc.

Instead of stifling criticism, the Bank should have allowed the respondents to
air their grievances.

xxx xxx xxx

The Bank defends its action by invoking its right to discipline for what it calls
the respondents' libel in giving undue publicity to their letter-charge. To be
sure, the right of self-organization of employees is not unlimited (Republic
Aviation Corp. vs. NLRB 324 U.S. 793 [1945]), as the right of the employer to
discharge for cause (Philippine Education Co. v. Union of Phil. Educ.
Employees, L-13773, April 29, 1960) is undenied. The Industrial Peace Act
does not touch the normal exercise of the right of the employer to select his
employees or to discharge them. It is directed solely against the abuse of that
right by interfering with the countervailing right of self organization (Phelps
Dodge Corp. v. NLRB 313 U.S. 177 [1941])...

xxx xxx xxx

In the final sum and substance, this Court is in unanimity that the Bank's
conduct, identified as an interference with the employees' right of self-
organization or as a retaliatory action,  and/or as a refusal to bargain
collectively, constituted an unfair labor practice within the meaning and
intendment of section 4(a) of the Industrial Peace Act. (Emphasis supplied.) 33

If free expression was accorded recognition and protection to fortify labor unionism in the
Republic Savings case, supra, where the complaint assailed the morality and integrity of the
bank president no less, such recognition and protection for free speech, free assembly and
right to petition are rendered all the more justifiable and more imperative in the case at bar,
where the mass demonstration was not against the company nor any of its officers.

WHEREFORE, judgement is hereby rendered:

(1) setting aside as null and void the orders of the respondent Court of Industrial Relations
dated September 15 and October 9, 1969; and
 2. Not only must the party be given an opportunity to present his case and to adduce evidence
tending to establish the rights which he asserts but the tribunal must consider the evidence
presented.

3. While the duty to deliberate does not impose the obligation to decide right, it does imply a
necessity which cannot be disregarded, namely, that of having something to support its
decision. A decision with absolutely nothing to support it is a nullity, a place when directly
attached.

4. Not only must there be some evidence to support a finding or conclusion but the evidence
must be “substantial.” Substantial evidence is more than a mere scintilla It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.

Teodoro Toribio owns and operates Ang Tibay, a leather company which supplies the
Philippine Army. Due to alleged shortage of leather, Toribio caused the lay off of a number of
his employees. However, the National Labor Union, Inc. (NLU) questioned the validity of said
lay off as it averred that the said employees laid off were members of NLU while no members
of the rival labor union National Workers Brotherhood (NWB) were laid off. NLU claims that
NWB is a company dominated union and Toribio was merely busting NLU.
The case reached the Court of Industrial Relations (CIR) where Toribio and NWB won.
Eventually, NLU went to the Supreme Court invoking its right for a new trial on the ground of
newly discovered evidence. The Supreme Court agreed with NLU. The Solicitor General,
arguing for the CIR, filed a motion for reconsideration.
5. The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.
6. The administrative body or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the
views of a subordinate in arriving at a decision.
7. The administrative body should, in all controversial questions, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the
reasons for the decisions rendered. The performance of this duty is inseparable from the
authority conferred upon it.

ISSUE: Whether or not the National Labor Union, Inc. is entitled to a new trial.

HELD: Yes. The records show that the newly discovered evidence or documents obtained by
NLU, which they attached to their petition with the SC, were evidence so inaccessible to them
at the time of the trial that even with the exercise of due diligence they could not be expected to
have obtained them and offered as evidence in the Court of Industrial Relations. Further, the
attached documents and exhibits are of such far-reaching importance and effect that their
admission would necessarily mean the modification and reversal of the judgment rendered
(said newly obtained records include books of business/inventory accounts by Ang Tibay which
were not previously accessible but already existing).

The SC also outlined that administrative bodies, like the CIR, although not strictly bound by the
Rules of Court must also make sure that they comply to the requirements of due process. For
administrative bodies, due process can be complied with by observing the following: EN BANC G.R. No. L-46496             February 27, 1940

1. The right to a hearing which includes the right of the party interested or affected to present
his own case and submit evidence in support thereof.
ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and  prevent the forfeiture of this bond despite the breach of his CONTRACT with the
NATIONAL WORKERS BROTHERHOOD, petitioners, vs. THE COURT OF INDUSTRIAL
RELATIONS and NATIONAL LABOR UNION, INC., respondents.
LAUREL, J.:
The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-
entitled case has filed a motion for reconsideration and moves that, for the reasons stated in
his motion, we reconsider the following legal conclusions of the majority opinion of this Court:
1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de
duracion o que no sea para una determinada, termina o bien por voluntad de
cualquiera de las partes o cada vez que ilega el plazo fijado para el pago de los
salarios segun costumbre en la localidad o cunado se termine la obra;
2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya
colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus
tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan
de ser empleados u obreros de la misma;
3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con
sus osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que
se niega a readmitir a dichos obreros que cesaron como consecuencia de un paro
forzoso, no es culpable de practica injusta in incurre en la sancion penal del articulo 5
de la Ley No. 213 del Commonwealth, aunque su negativa a readmitir se deba a que
dichos obreros pertenecen a un determinado organismo obrero, puesto que tales ya
han dejado deser empleados suyos por terminacion del contrato en virtud del paro.
The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the
judgement rendered by the majority of this Court and the remanding of the case to the Court of
Industrial Relations for a new trial, and avers:
1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of
leather soles in ANG TIBAY making it necessary for him to temporarily lay off the
members of the National Labor Union Inc., is entirely false and unsupported by the
records of the Bureau of Customs and the Books of Accounts of native dealers in
leather.
2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a
scheme to systematically prevent the forfeiture of this bond despite the breach of his
CONTRACT with the Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re
supposed delay of leather soles from the States) was but a scheme to systematically
Philippine Army.
4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer
union dominated by Toribio Teodoro, the existence and functions of which are illegal.
(281 U.S., 548, petitioner's printed memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to collective bargaining, majority
rule and elective representation are highly essential and indispensable. (Sections 2
and 5, Commonwealth Act No. 213.)
6. That the century provisions of the Civil Code which had been (the) principal source
of dissensions and continuous civil war in Spain cannot and should not be made
applicable in interpreting and applying the salutary provisions of a modern labor
legislation of American origin where the industrial peace has always been the rule.
7. That the employer Toribio Teodoro was guilty of unfair labor practice for
discriminating against the National Labor Union, Inc., and unjustly favoring the National
Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the respondents that even
with the exercise of due diligence they could not be expected to have obtained them
and offered as evidence in the Court of Industrial Relations.
9. That the attached documents and exhibits are of such far-reaching importance and
effect that their admission would necessarily mean the modification and reversal of the
judgment rendered herein.
The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the
respondent National Labor Union, Inc.
In view of the conclusion reached by us and to be herein after stead with reference to the
motion for a new trial of the respondent National Labor Union, Inc., we are of the opinion that it
is not necessary to pass upon the motion for reconsideration of the Solicitor-General. We shall
proceed to dispose of the motion for new trial of the respondent labor union. Before doing this,
however, we deem it necessary, in the interest of orderly procedure in cases of this nature, in
interest of orderly procedure in cases of this nature, to make several observations regarding
the nature of the powers of the Court of Industrial Relations and emphasize certain guiding
principles which should be observed in the trial of cases brought before it. We have re-
examined the entire record of the proceedings had before the Court of Industrial Relations in
this case, and we have found no substantial evidence that the exclusion of the 89 laborers here
was due to their union affiliation or activity. The whole transcript taken contains what transpired
during the hearing and is more of a record of contradictory and conflicting statements of
opposing counsel, with sporadic conclusion drawn to suit their own views. It is evident that
these statements and expressions of views of counsel have no evidentiary value.
The Court of Industrial Relations is a special court whose functions are specifically stated in the
law of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the
integrated judicial system of the nation. It is not intended to be a mere receptive organ of the
Government. Unlike a court of justice which is essentially passive, acting only when its
jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the
function of the Court of Industrial Relations, as will appear from perusal of its organic law, is
more active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in
the determination of disputes between employers and employees but its functions in the
determination of disputes between employers and employees but its functions are far more
comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider,
investigate, decide, and settle any question, matter controversy or dispute arising between,
and/or affecting employers and employees or laborers, and regulate the relations between
them, subject to, and in accordance with, the provisions of Commonwealth Act No. 103
(section 1). It shall take cognizance or purposes of prevention, arbitration, decision and
settlement, of any industrial or agricultural dispute causing or likely to cause a strike or lockout,
arising from differences as regards wages, shares or compensation, hours of labor or
conditions of tenancy or employment, between landlords and tenants or farm-laborers,
provided that the number of employees, laborers or tenants of farm-laborers involved exceeds
thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of
Labor or by any or both of the parties to the controversy and certified by the Secretary of labor
as existing and proper to be by the Secretary of Labor as existing and proper to be dealth with
by the Court for the sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute
and in the course of such hearing, endeavor to reconcile the parties and induce them to settle
the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When directed by the
President of the Philippines, it shall investigate and study all industries established in a
designated locality, with a view to determinating the necessity and fairness of fixing and
adopting for such industry or locality a minimum wage or share of laborers or tenants, or a
maximum "canon" or rental to be paid by the "inquilinos" or tenants or less to landowners.
(Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement of industrial
disputes; may employ mediation or conciliation for that purpose, or recur to the more effective
system of official investigation and compulsory arbitration in order to determine specific
controversies between labor and capital industry and in agriculture. There is in reality here a
mingling of executive and judicial functions, which is a departure from the rigid doctrine of the
separation of governmental powers.
In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated
September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al.,
G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the
Court of Industrial Relations is not narrowly constrained by technical rules of procedure, and
the Act requires it to "act according to justice and equity and substantial merits of the case,
without regard to technicalities or legal forms and shall not be bound by any technicalities or
legal forms and shall not be bound by any technical rules of legal evidence but may inform its
mind in such manner as it may deem just and equitable." (Section 20, Commonwealth Act No.
103.) It shall not be restricted to the specific relief claimed or demands made by the parties to
the industrial or agricultural dispute, but may include in the award, order or decision any matter
or determination which may be deemed necessary or expedient for the purpose of settling the
dispute or of preventing further industrial or agricultural disputes. (section 13, ibid.) And in the
light of this legislative policy, appeals to this Court have been especially regulated by the rules
recently promulgated by the rules recently promulgated by this Court to carry into the effect the
avowed legislative purpose. The fact, however, that the Court of Industrial Relations may be
said to be free from the rigidity of certain procedural requirements does not mean that it can, in
justifiable cases before it, entirely ignore or disregard the fundamental and essential
requirements of due process in trials and investigations of an administrative character. There
are primary rights which must be respected even in proceedings of this character:
(1) The first of these rights is the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit evidence in support thereof.
In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82
Law. ed. 1129, "the liberty and property of the citizen shall be protected by the
rudimentary requirements of fair play.
(2) Not only must the party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the tribunal must
consider  the evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S.
468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court in Edwards vs.
McCoy, 22 Phil., 598, "the right to adduce evidence, without the corresponding duty on
the part of the board to consider it, is vain. Such right is conspicuously futile if the
person or persons to whom the evidence is presented can thrust it aside without notice
or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide right, it does
imply a necessity which cannot be disregarded, namely, that of having something to
support it is a nullity, a place when directly attached." (Edwards vs. McCoy, supra.)
This principle emanates from the more fundamental is contrary to the vesting of
unlimited power anywhere. Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding or conclusion (City of
Manila vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G.
1335), but the evidence must be "substantial." (Washington, Virginia and Maryland
Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81
Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as
adequate to support a conclusion." (Appalachian Electric Power v. National Labor
Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v.
Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National
Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the
rules of evidence prevailing in courts of law and equity shall not be controlling.' The
obvious purpose of this and similar provisions is to free administrative boards from the
compulsion of technical rules so that the mere admission of matter which would be
deemed incompetent inn judicial proceedings would not invalidate the administrative
order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568,
48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co.,
227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and
 Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable
flexibility in administrative procedure does not go far as to justify orders without a basis
in evidence having rational probative force. Mere uncorroborated hearsay or rumor
does not constitute substantial evidence. (Consolidated Edison Co. v. National Labor
Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"
(5) The decision must be rendered on the evidence presented at the hearing, or at
least contained in the record and disclosed to the parties affected. (Interstate
Commence Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed.
431.) Only by confining the administrative tribunal to the evidence disclosed to the
parties, can the latter be protected in their right to know and meet the case against
them. It should not, however, detract from their duty actively to see that the law is
enforced, and for that purpose, to use the authorized legal methods of securing
evidence and informing itself of facts material and relevant to the controversy. Boards
of inquiry may be appointed for the purpose of investigating and determining the facts
in any given case, but their report and decision are only advisory. (Section 9,
Commonwealth Act No. 103.) The Court of Industrial Relations may refer any industrial
or agricultural dispute or any matter under its consideration or advisement to a local
board of inquiry, a provincial fiscal. a justice of the peace or any public official in any
part of the Philippines for investigation, report and recommendation, and may delegate
to such board or public official such powers and functions as the said Court of
Industrial Relations may deem necessary, but such delegation shall not affect the
exercise of the Court itself of any of its powers. (Section 10, ibid.)
(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or
his own independent consideration of the law and facts of the controversy, and not
simply accept the views of a subordinate in arriving at a decision. It may be that the
volume of work is such that it is literally Relations personally to decide all controversies
coming before them. In the United States the difficulty is solved with the enactment of
statutory authority authorizing examiners or other subordinates to render final decision,
with the right to appeal to board or commission, but in our case there is no such
statutory authority.
(7) The Court of Industrial Relations should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can know the various
issues involved, and the reasons for the decision rendered. The performance of this
duty is inseparable from the authority conferred upon it.
In the right of the foregoing fundamental principles, it is sufficient to observe here that, except
as to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood
(appendix A), the record is barren and does not satisfy the thirst for a factual basis upon which
to predicate, in a national way, a conclusion of law.
This result, however, does not now preclude the concession of a new trial prayed for the by
respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed
by Toribio Teodoro was but a scheme adopted to systematically discharged all the members of
the National Labor Union Inc., from work" and this avernment is desired to be proved by the
petitioner with the "records of the Bureau of Customs and the Books of Accounts of native
dealers in leather"; that "the National Workers Brotherhood Union of Ang Tibay is a company or
employer union dominated by Toribio Teodoro, the existence and functions of which are
illegal." Petitioner further alleges under oath that the exhibits attached to the petition to prove
his substantial avernments" are so inaccessible to the respondents that even within the
exercise of due diligence they could not be expected to have obtained them and offered as
evidence in the Court of Industrial Relations", and that the documents attached to the petition
"are of such far reaching importance and effect that their admission would necessarily mean
the modification and reversal of the judgment rendered herein." We have considered the reply
of Ang Tibay and its arguments against the petition. By and large, after considerable
discussions, we have come to the conclusion that the interest of justice would be better served
if the movant is given opportunity to present at the hearing the documents referred to in his
motion and such other evidence as may be relevant to the main issue involved. The legislation
which created the Court of Industrial Relations and under which it acts is new. The failure to
grasp the fundamental issue involved is not entirely attributable to the parties adversely
affected by the result. Accordingly, the motion for a new trial should be and the same is hereby
granted, and the entire record of this case shall be remanded to the Court of Industrial
Relations, with instruction that it reopen the case, receive all such evidence as may be relevant
and otherwise proceed in accordance with the requirements set forth hereinabove. So ordered.
EN BANC G.R. No. 207342 August 16, 2016
GOVERNMENT OF HONGKONG SPECIAL ADMINISTRATIVE REGION,
REPRESENTED BY THE PHILIPPINE DEPARTMENT OF
JUSTICE, Petitioner, v. JUAN ANTONIO MUNOZ, Respondent.
BERSAMIN, J.:
This case is the third in the trilogy of cases that started with the 2000 case
of Cuevas v. Muñoz,1 which dealt with respondent Juan Antonio Munoz's
provisional arrest as an extraditee, and the 2007 case of Government of Hong
Kong Special Administrative Region v. Olalia, Jr., 2 which resolved the question
of Muñoz's right to bail as a potential extraditee. Both rulings dealt with and
resolved incidents arising during the process of having Munoz extradited to
Hong Kong under and pursuant to the Agreement Between the Government of
the Republic of the Philippines and the Government of Hong Kong for the
Surrender of Accused and Convicted Persons (RP-HK Agreement).
Up for our consideration and resolution in the current case is whether or not
the extradition request of the Government of Hong Kong Special Administrative
Region (HKSAR) sufficiently complied with the RP-HK Agreement and
Presidential Decree No. 1069 (Philippine Extradition Law): On November 28,
2006, the Regional Trial Court (RTC), Branch 8, in Manila granted the request
for the extradition of Muñoz.3 Although the CA at first ruled that Munoz could
be tried in Hong Kong for the crimes of conspiracy to defraud and accepting an
advantage as an agent, it granted his motion for reconsideration and
promulgated the now assailed amended decision on March 1, 2013 in CA-G.R.
CV No. 88610,4 in which it pronounced that the crime of accepting an
advantage as an agent should be excluded from the charges for which he
would be tried in Hong Kong due to non-compliance with the double criminality
rule. Also being challenged is the resolution promulgated on May 29, 2013 by
the CA (denying the motion for reconsideration of the petitioner).5chanrobleslaw
Antecedents
As factual antecedents, the CA narrated the following: 
Bared to its essentials, the record shows that in late 1991, respondent-
appellant, as Head of the Treasury Department of the Central Bank of the
Philippines (CBP), was instructed by its Governor to raise Seven Hundred
Million US Dollars (US$700M) in order to fund the buyback of Philippine debts
and the purchase of zero coupon US Treasury Bonds. To this end, respondent-
appellant recommended that the amount be obtained through gold
loans/swaps, for which, seven (7) contracts of about One Hundred Million US
Dollars (US$100M) each were to be awarded to certain accredited parties. Two
(2) of these contracts were granted to Mocatta, London. These in turn were
rolled over as they matured, hence, totaling five (5) gold loan/swap
agreements in Mocatta, London's favor.
In relation to this, petitioner-appellee narrates:  x x x x
2. At all material times, Mr. Juan Antonio E. MUÑOZ ("MUÑOZ") was the Head
of the Treasury Department of the Central Bank of the Philippines ("CBP"). In
July 1993, CBP changed its name to the Bangko Sentral ng Pilipinas.
3. At all material times, Mr. Ho CHI ("CHI") was the Chief Executive of
Standard Chartered Bank – The Mocatta Group (Hong Kong) ("MHK"), MHK
was a branch of the Mocatta Group in London ("Mocatta London") which was a
division of the Standard Chartered Bank.
4. CBP and MHK had been dealing in small gold transactions for several years
prior to 1991. During the latter part of 1991, MUÑOZ and CHI began
negotiating larger deals up to US$100 M. CBP were (sic) reluctant to deal with
MHK for such large amounts and wanted to deal 'directly with Mocatta
(London).
5. CHI approached Philip WILSON ("WILSON"), the then Chief Dealer of
Mocatta (London) about the proposed deals. CHI indicated that to get business
it would be necessary for Mocatta (London) to pay rebates to an unnamed
group of people at CBP. WILSON told CHI that that was wrong in principal
(sic). CHI, however, approached Keith SMITH, the then Managing Director of
Mocatta (London), who approved the payments.
xxxx
6. Between February 1992 to March 1993, there were a series of "gold swaps"
and gold backed loans between CBP (sic) and Mocatta (London) through MHK
in Hong Kong. The transactions were a means for CBP to raise finance.
xxxx
9. As a result of these transactions, Mocatta (London) paid out rebates
of US$1,703,304.87 to an account ("the Sundry Creditors Account") held
with MHK for onward transmission by MHK to destinations as instructed by
CHI.  Funds from this Sundry Creditors Account were subsequently disbursed
to the benefit of CHI and MUÑOZ personally (x x x).
xxxx
10. In addition to the gold swaps and the gold backed loans referred to above,
there were option agreements created between CBP and MHK. Under an option
agreement, CBP granted a right to MHK to exercise (or not to exercise) the
option to buy gold at a fixed price on a fixed date.

11. As a result, between 27 July 1992 and 6 May 1993, MHK
paid US$4,026,000 into the Sundry Creditors Account, ostensibly for CBP, as
premiums for these options, xxx
xxxx
13. CHI operated an account at Mocatta Hong Kong, called the MHK No. 3
Account, purportedly on behalf of CBP, for trading in gold. Profits from the
trading were accrued to the amount of US$1,625,000. The trading and the
profits were unknown to CBP.
14. On 12 October 1993, this US$1,625,000 was transferred to the Sundry
Creditors Account. Funds from this Sundry Creditors Account were
subsequently disbursed to the benefit of CHI and MUÑOZ personally (xxx).
xxxx
15. Apart from the aforesaid, there were other payments made by MHK to the
Sundry Creditors Account, ostensibly for CBP, namely:  30, 1993 were signed by Phil Wilson for Mocatta London (SCB-The Mocatta
commission on gold location swaps  US$227,086.18
commission on silver location swaps  US$ 47,524.69  transactions with Mocatta Hong Kong. CB also allowed Mocatta Hong Kong to
commission on options  US$ 9,750.00  quote on the gold and silver location swaps CB periodically did to decongest its
interest  US$ 32,889.61  vaults at the gold plant in Quezon City. The gold swap/loan agreements,
16. None of the above payments were known to CBP and none of them ever
reached CBP. Funds from this Sundry Creditors Account were subsequently
disbursed to the benefit of CHI and MUÑOZ personally (x x x).
xxxx
On the other hand, respondent-appellant gives his version, thus:
x x x the Central Bank executed all these gold loan/swap agreements with
chanRoblesvirtualLawlibrary
the same counter party, namely, Mocatta London. Munoz signed in behalf of
the Central Bank while Phil Wilson signed for Mocatta London.
xxxx
In late 1992 (around November or December), Munoz received a note from
Mocatta London requesting that their accreditation as official counter party of
the Central Bank be transferred to Standard Chartered Bank (SCB) in view of
an ongoing reorganization which will result in Mocatta London being a mere
division of SCB. Before such reorganization, both Mocatta London and Mocatta
Hong Kong operated as independent subsidiaries of SCB.
xxxx
As mentioned earlier, the Monetary Board approved the transfer of the
accreditation of Mocatta London as authorized counter party of the bank to
SCB sometime in February or March of 1993. Mocatta London became known
as SCB-The Mocatta Group, or SCB-The Mocatta Group (sic), or SCB-The
Mocatta Group London, while Mocatta became known as SCB-the Mocatta
Group Hong Kong. Phil Wilson was the Chief Executive Officer for London,
while Ho Chi was the Chief Executive for Hong Kong. The Group Chief
Executive Officer was Ron Altringham.
As can be seen in Annex 'C', even with the SCB reorganization, the gold
[loan]/swap agreements continued to be contracted with Mocatta London. As
shown, both the gold loan/swap agreements dated March 25, 1993 and June
Group London). With the accreditation of SCB as the official counter party of
the bank, however, CB did allow the dealers to transact minor trading
however, as shown in the Annex, continued to be rolled over with Mocatta
London.
During Muñoz's stay in Treasury at the bank as its Head, he did not involve
himself in the details of work done by the Dealing Group, Treasury Service
Group (TSG) and Accounting which were all headed by either Director or a
Deputy Director who could clarify any issue that may arise, and who consult
with him on matters they were unsure. The department had been operational
over 6 years when Muñoz joined, and the Treasury transactions had already
become routine for majority of the staff. Muñoz meet (sic) weekly with senior
officers to inform of development and discuss problems of the department.
In respect to the five gold loan/swap agreements with Mocatta London (as well
as the agreements contracted with other official counter parties), upon the
signing of each agreement, a copy of the agreement was forwarded to the
Dealing Group for proper implementation. The Treasury dealers usually
coordinated with dealers of the counter party involved in effecting the
necessary transactions.
These agreements are the subject often (10) criminal cases filed against
respondent-appellant in Hong Kong - i.e., three (3) counts of accepting an
advantage as an agent, contrary to Section 9(1) (a) of the Prevention of
Bribery Ordinance, Cap. 201 and seven (7) counts of conspiracy to
defraud, contrary to the common law of HKSAR.6
Invoking the Agreement Between the Government of the Republic of the
Philippines and the Government of Hong Kong for the Surrender of Accused
and Convicted Persons (RP-HK Agreement), which was signed in Hong Kong on
January 30, 1995, the Hong Kong Special Administrative Region (HKSAR) sent
Note No. SBCR 11/1/2716/80 dated July 9, 1997 to the Philippine Consulate
General in Hong Kong to inquire on which agency of the Philippine Government
should handle a request for extradition under the RP-HK Agreement. The
Philippine Consulate General replied through Note No. 78-97 dated October 16,
1997 that the proper agency was the Department of Justice (DOJ).7 On
September 13, 1999, therefore, the DOJ received the request for the
provisional arrest of Muñoz pursuant to Article 11(1) of the RP-HK Agreement.
On September 17, 1999, the National Bureau of Investigation (NBI), acting for
and in behalf of HKSAR, initiated the proceedings for his arrest in the RTC,
whose Branch 19 then issued on September 3, 1999 the order granting the
application for the provisional arrest of Muñoz. Branch 19 consequently issued
the corresponding order of arrest. On October 14, 1999, Muñoz challenged
through certiorari,prohibition and mandamus the validity of the order for his
arrest in the CA, which declared the order of arrest null and void in its
judgment promulgated on November 9, 1999. DOJ Secretary Serafin R.
Cuevas consequently appealed the decision of the CA to this Court, which
reversed the CA on December 18, 2000 in Cuevas v. Muñoz,  8 disposing:  of extradition. However, it does not necessarily mean that in keeping with its
WHEREFORE, the petition is GRANTED, and the assailed Decision of the Court
of Appeals, dated November 9, 1999, in CA-G.R. SP No. 55343 is hereby
REVERSED and SET ASIDE. Respondent's "Urgent Motion For Release Pending
Appeal" is hereby DENIED.
SO ORDERED.  standard for the grant is satisfactorily met.
Meantime, on November 22, 1999,9 the DOJ, representing the HKSAR, filed a
petition in the RTC for the surrender of Munoz to the HKSAR to face the
criminal charges against him in Hong Kong. He filed a petition for bail. Initially,
on October 8, 2001, the RTC, through Presiding Judge Ricardo Bernardo, Jr. of
Branch 10, denied the petition for bail after hearing on the ground that there
was no Philippine law that allowed bail in extradition cases, and that he was a
high "flight risk." But after the case was re-assigned to Branch 8, presided by
Judge Felixberto T. Olalia, Jr., following the inhibition of Judge Bernardo, Jr.,
Muñoz filed his motion for reconsideration against the denial of his petition for
bail. Granting the motion for reconsideration on December 20, 2001,10 Judge
Olalia, Jr. allowed bail to Muñoz under the conditions stated in the order of that
date. Not satisfied, the DOJ assailed the granting of bail to Muñoz as a
potential extraditee by petition for certiorari directly filed in this Court. The
matter of bail for Muñoz was ultimately settled by the Court in Government of
Hong Kong Special Administrative Region v. Olalia, Jr., 11viz.  : 
While our extradition law does not provide for the grant of bail to an
extraditee, however, there is no provision prohibiting him or her from filing a
motion for bail, a right to due process under the Constitution.
The applicable standard of due process, however, should not be the same as
that in criminal proceedings.  In the latter, the standard of due process is
premised on the presumption of innocence of the accused.
As Purganan correctly points out, it is from this major premise that the
ancillary presumption in favor of admitting to bail arises. Bearing in mind the
purpose of extradition proceedings, the premise behind the issuance of the
arrest warrant and the "temporary detention" is the possibility of flight of the
potential extraditee. This is based on the assumption that such extraditee is a
fugitive from justice. Given the foregoing, the prospective extraditee thus
bears the onus probandi of showing that he or she is not a flight risk and
should be granted bail.
The time-honored principle of pacta sunt servanda demands that the
Philippines honor its obligations under the Extradition Treaty it entered into
with the Hong Kong Special Administrative Region. Failure to comply with
these obligations is a setback in our foreign relations and defeats the purpose
treaty obligations, the Philippines should diminish a potential extraditee's
rights to life, liberty, and due process. More so, where these rights are
guaranteed, not only by our Constitution, but also by international
conventions, to which the Philippines is a party. We should not, therefore,
deprive an extraditee of his right to apply for bail, provided that a certain
An extradition proceeding being sui generis, the standard of proof required in
granting or denying bail can neither be the proof beyond reasonable doubt in
criminal cases nor the standard of proof of preponderance of evidence in civil
cases. While administrative in character, the standard of substantial evidence
used in administrative cases cannot likewise apply given the object of
extradition law which is to prevent the prospective extraditee from fleeing our
jurisdiction. In his Separate Opinion in Purganan, then Associate Justice, now
Chief Justice Reynato S. Puno, proposed that a new standard which he
termed "clear and convincing evidence" should be used in granting bail
in extradition cases. According to him, this standard should be lower than
proof beyond reasonable doubt but higher than preponderance of evidence.
The potential extraditee must prove by "clear and convincing evidence" that he
is not a flight risk and will abide with all the orders and processes of the
extradition court.
In this case, there is no showing that private respondent presented evidence to
show that he is not a flight risk. Consequently, this case should be remanded
to the trial court to determine whether private respondent may be granted bail
on the basis of "clear and convincing evidence."
WHEREFORE, we DISMISS the petition. This case is REMANDED to the trial
court to determine whether private respondent is entitled to bail on the basis
of "clear and convincing evidence." If not, the trial court should order the
cancellation of his bail bond and his immediate detention; and thereafter,
conduct the extradition proceedings with dispatch.
SO ORDERED.12 chanroblesvirtuallawlibrary
Eventually, on November 28, 2006, the RTC ruled on the main case of
extradition by holding that the extradition request sufficiently complied with
the RP-HK Agreement and Presidential Decree No. 1069.13 chanrobleslaw
In due course, Muñoz elevated the adverse decision of November 28, 2006 to
the CA upon the following issues, namely: (1) the enforceability of the RP-HK
Agreement, including the HKSAR's personality to institute the petition under its
current status as a special administrative region; (2) the DOJ's authority to
receive the request for extradition and to file the petition despite Presidential
Decree No. 1069 naming the Secretary of Foreign Affairs for that purpose; (3)
the extraditability of the offense, considering the nature of the crimes charged
and the pieces of evidence presented in support of the petition; and (4) the
limits of the jurisdiction of the extradition court, i.e., whether or not it included
passing upon the defenses of the person to be extradited.14 chanrobleslaw
In its decision promulgated on August 30, 2012,15 the CA opined that although
the People's Republic of China resumed the exercise of jurisdiction over the
HKSAR, Article 9616 of the latter's Basic Law still empowered it to enter into
international agreements in its own name, including extradition treaties;17 that
despite the exception made in the Joint Declaration of the Government of the
United Kingdom of Great Britain and Northern Ireland and the Government of
the People's Republic of China on the Question of Hong Kong to the effect that
the HKSAR would enjoy a high degree of autonomy, except in foreign and
defense affairs that were the responsibilities of the Central People's
Government, there was a status quo as regards the laws currently in force in
Hong Kong; that Article 153 of the Basic Law explicitly provided that
international agreements to which the People's Republic of China was not a
party but which were implemented in Hong Kong could continue to be
implemented in the HKSAR; that an Exchange of Notes between the
Governments of China and the Philippines confirmed the continuous
enforceability of the RP-HK Agreement;18 that the DOJ had the authority to
receive the request for extradition by the HKSAR because the RP-Hong Kong
Agreement referred to the "appropriate authority" as would be identified from
time to time by one party to the other;19 and that, as such, the reliance by
Muñoz on the provision of Presidential Decree No. 1069 that only the Secretary
of Foreign Affairs had the authority to receive requests for extradition should
be rejected.
The CA affirmed the RTC's conclusion that the crimes of conspiracy to
defraud and accepting an advantage as an agent were extraditable offenses;
that not only was conspiracy to defraud explicitly included in the offenses
covered by the RP-HK Agreement, but also that both crimes satisfied the
double criminality rule, or the principle to the effect that extradition was
available only when the act was an offense in the jurisdictions of both parties;
and that it was not for the Philippine court to determine the extent of the
criminal jurisdiction of the foreign court because entering into questions that
were the prerogative of that other jurisdiction was the function of the assisting
authorities.20
chanrobleslaw
On September 14, 2012,21 Muñoz sought the reconsideration of the August 30,
2012 decision.
On March 1, 2013,22 the CA promulgated its assailed amended decision by
partially granting Muñoz's motion for reconsideration. Although affirming its
previous ruling, it concluded that the crime of accepting an advantage as an
agent should be excluded from the charges under which Muñoz would be tried
due to non-compliance with the double criminality rule.
After the HKSAR's motion for reconsideration was denied on May 29, 2013,23 it
has appealed by petition for review on certiorari. 
Issue

The sole issue raised by the HKSAR relates to the propriety of the CA's
conclusion that the crime of accepting an advantage as an agent did not
comply with the double criminality rule.24 chanrobleslaw
Ruling of the Court
Upon thorough consideration, we DENY the petition for review.
Extradition is "the surrender by one nation to another of an individual accused
or convicted of an offense outside of its own territory, and within the territorial
jurisdiction of the other, which, being competent to try and to punish him,
demands the surrender."25  It is not- part of customary international law,
cralawred
although the duty to extradite exists only for some international
crimes.26 Thus, a state must extradite only when obliged by treaty to do
so.27 The right of a state to successfully request the extradition of a criminal
offender arises from a treaty with the requested state.28 Absent the treaty, the
duty to surrender a person who has sought asylum within its boundaries does
not inhere in the state, which, if it so wishes, can extend to him a refuge and
protection even from the state that he has fled. Indeed, in granting him
asylum, the state commits no breach of international law. But by concluding
the treaty, the asylum state imposes limitations on itself, because it thereby
agrees to do something it was free not to do.29 The extradition treaty creates
the reciprocal obligation to surrender persons from the requested state's
jurisdiction charged or convicted of certain crimes committed within the
requesting state's territory, and is of the same level as a law passed by the
Legislatures of the respective parties.
Presidential Decree No. 1069 defines the general procedure for the extradition
of persons who have committed crimes in a foreign country, and lays down the
rules to guide the Executive Department and the courts of the Philippines on
the proper implementation of the extradition treaties to which the country is a
signatory. Nevertheless, the particular treaties entered into by the Philippine
Government with other countries primarily govern the relationship between the
parties.
The RP-HK Agreement is still in full force and effect as an extradition treaty.
The procedures therein delineated regulate the rights and obligations of the
Republic of the Philippines and the HKSAR under the treaty in the handling of
extradition requests.
For purposes of the extradition of Munoz, the HKSAR as the requesting state
must establish the following six elements,30 namely: (1) there must be an
extradition treaty in force between the HKSAR and the Philippines; (2) the
criminal charges that are pending in the HKSAR against the person to be
extradited;31 (3) the crimes for which the person to be extradited is charged
are extraditable within the terms of the treaty;32 (4) the individual before the
court is the same person charged in the HKSAR;33(5) the evidence submitted
establishes probable cause to believe that the person to be extradited
committed the offenses charged;34 and (6) the offenses are criminal in both
the HKSAR and the Philippines (double criminality rule).
The first five of the elements inarguably obtain herein, as both the RTC and
the CA found. To start with, the RP-Hong Kong Agreement subsists and has
not been revoked or terminated by either parties. Secondly, there have been
10 criminal cases filed against Muñoz in Hong Kong, specifically: three counts
of accepting an advantage as an agent and seven counts of conspiracy to
defraud 35 Thirdly, the crimes of accepting an advantage as an agent and of
conspiracy to defraud were extraditable under the terms of the RP-Hong Kong
Agreement. Fourthly, Muñoz was the very same person charged with such
offenses based on the documents relied upon by the DOJ, and the examination
and determination of probable cause by the RTC that led to the issuance of the
order for the arrest of Muñoz. And, lastly, there is probable cause to believe
that Muñoz committed the offenses charged.
However, it was as to the sixth element that the CA took exception as not
having been established. Although the crime of conspiracy to defraud was
included among the offenses covered by the RP-Hong Kong Agreement, and
the RTC and the CA have agreed that the crime was analogous to the felony
of  estafa through false pretense as defined and penalized under Article
315(2)36 of the Revised Penal Code, it was disputed whether or not the other
crime of accepting an advantage as an agent was also punished as a crime in
the Philippines. As such, the applicability of the double criminality rule became
the issue.
Under the double criminality rule, the extraditable offense must be criminal
under the laws of both the requesting and the requested states".37 This simply
means that the requested state comes under no obligation to surrender the
person if its laws do not regard the conduct covered by the request for
extradition as criminal.38
chanrobleslaw
The HKS AR defines the crime of accepting an advantage as an agentunder
Section 9(1)(a) of the Prevention of Bribery Ordinance (POBO), Cap. 201,39 to
wit: 
Section 9. Corrupt transactions with agents. jurisdiction.43
chanroblesla w

(1) Any agent who, without lawful authority or reasonable excuse, solicits or We uphold the conclusion and observation by the CA.
accepts any advantage as an inducement to or reward for or otherwise on
account of his – A careful reading shows that the foreign law subject-matter of this controversy
deals with bribery in both public and private sectors. However, it is also quite
(a) doing or forbearing to do, or having done or forborne to do, any act in evident that the particular provision of the POBO allegedly violated by
relation to his principal's affairs or business; or Muñoz, i.e.,  Section 9(1 )(a), deals with private sector bribery -this, despite
the interpretation under Section 2 of the POBO that an "agent includes a public
xxxx  servant and any person employed by or acting for another." The POBO clearly
A perusal of the decision of the RTC and the original decision of the CA show states that the interpretation shall apply unless the context otherwise requires.
that said courts determined that the crime of accepting an advantage as an
agent was analogous to the crime of corrupt practices of public officers as It cannot be argued that Section 9(1)(a) of the POBO encompasses both
defined under Section 340 of Republic Act No. 3019 (Anti-Graft and Corrupt private individuals and public servants. A Section 9(1)(a) offense has a parallel
Practices Act). In its assailed amended decision, however, the CA reversed POBO provision applicable to public servants, to wit:44
itself, and agreed with Muñoz to the effect that Section 9(1)(a) of the POBO
Private Sector Bribery Public Sector Bribery
referred only to private individuals, not to persons belonging to the public
sector. It revised its determination by taking into consideration the expert Section 9. Corrupt transactions with Section 4. BRIBERY, x x x x. 
opinions on the nature and attributes of the crime of accepting an advantage agents.
as an agent tendered by Clive Stephen Grossman, Senior Counsel of the Hong
(2) Any public servant who, whether in
Kong Bar Association, in behalf of Muñoz, and Ian Charles Me Walters, Senior
Assistant Director of Public Prosecutions in the Department of Justice of the
(1) Any agent who, without lawful Hong Kong or elsewhere, without lawful
HKSAR, testifying on behalf of the HKSAR. Said experts shared the opinion authority or reasonable excuse, solicits authority or reasonable excuse, solicits
that the POBO was a two-part statute concerned with corruption by public or accepts any advantage as an or accepts any advantage as an
officials and corruption in the private sector.41 However, Me Walters gave the inducement to or reward for or otherwise inducement to or reward for or otherwise
following explanation regarding the nature of the offenses enumerated in on account of his – on account of his – (Amended 28 of 1980
Section 9 of the POBO, to wit:  s. 3)
8. A person can be guilty of a POBO bribery offense if he offers an advantage (a) doing or forbearing to do or having
to an agent, or being an agent, he solicits or accepts an advantage. However, done or forborne to do, any act in relation   a. performing or abstaining from
there is no mention of the word corruption, or variants of it, in these offences. to his principal's affairs or business; or  performing, or having performed or
Proof of corruption comes from establishing that the advantage was offered, abstained from performing, any act in his
solicited or accepted "as an inducement to, reward for or otherwise on account capacity as a public servant; 
of the agent doing inter alia "an act in his capacity as a public servant" (public
sector bribery) or "an act in relation to his principal's affairs or business"
(private sector bribery). The private sector bribery offence is section 9 of
xxxx 
the POBO and its language is derived from section 1 of the United
Kingdom's Prevention of Corruption Act of 1906. 42 shall be guilty of an offence. 
Based on the foregoing, the CA ultimately concluded that the crime Considering that the transactions were entered into by and in behalf of the
of accepting an advantage as an agent did not have an equivalent in this Central Bank of the Philippines, an instrumentality of the Philippine
jurisdiction considering that when the unauthorized giving and receiving of Government, Munoz should be charged for the offenses not as a regular agent
benefits happened in the private sector, the same was not a crime because or one representing a private entity but as a public servant or employee of the
there was no law that defined and' punished such act as criminal in this Philippine Government. Yet, because the offense of accepting an advantage as
an agent charged against him in the HKSAR is one that deals with private
sector bribery, the conditions for the application of the double criminality rule
are obviously not met. Accordingly, the crime of accepting an advantage as an
agent must be dropped from the request for extradition. Conformably with the
principle of specialty embodied in Article 17 of the RP-HK Agreement, Muñoz
should be proceeded against only for the seven counts of conspiracy to
defraud.  As such, the HKSAR shall hereafter arrange for Muñoz's surrender
within the period provided under Article 15 of the RP-HK Agreement.
WHEREFORE, the Court DENIES the petition for review
on certiorari; and AFFIRMS the amended decision promulgated on March 1,
2013 in CA-G.R. SP No. 88610.
No pronouncement on costs of suit.
SO ORDERED.
FIRST DIVISION
G.R. No. 196171               December 10, 2012
RCBC CAPITAL CORPORATION, Petitioners,  vs. BANCO DE ORO UNIBANK,
INC., Respondent.
X- - - - - - - - - - - - - - - - - - - - - - - - - -X
G.R. No. 199238
BANCO DE ORO UNIBANK, INC., Petitioner, vs. COURT OF APPEALS and RCBC
CAPITAL CORPORATION, Respondents.
VILLARAMA, JR., J.:
Before the Court are two consolidated petitions separately filed by the parties in an arbitration
case administered by the International Chamber of Commerce-International Court of Arbitration
(ICC-ICA) pursuant to the arbitration clause in their contract.
The Case
In G.R. No. 196171, a petition for review under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, RCBC Capital Corporation (RCBC) seeks to reverse the Court of Appeals (CA)
Decision1 dated December 23, 2010 in CA-G.R. SP No. 113525 which reversed and set aside
the June 24, 2009 Order2 of the Regional Trial Court (RTC) of Makati City, Branch 148 in SP
Proc. Case No. M-6046.
In G.R. No. 199238,a petition for certiorari under Rule 65, Banco De Oro Unibank, Inc.
(BDO)assails the Resolution3 dated September 13, 2011 in CA-G.R. SP No. 120888 which
denied BDO’s application for the issuance of a stay order and/or temporary restraining order
(TRO)/preliminary injunction against the implementation of the Writ of Execution4 dated August
22, 2011 issued by the Makati City RTC, Branch 148 in SP Proc. Case No. M-6046.
Factual Antecedents
On May 24, 2000, RCBC entered into a Share Purchase Agreement5 (SPA) with Equitable-PCI
Bank, Inc. (EPCIB), George L. Go and the individual shareholders6 of Bankard, Inc. (Bankard)
for the sale to RCBC of 226,460,000 shares (Subject Shares) of Bankard, constituting 67% of
the latter’s capital stock. After completing payment of the contract price (₱1,786,769,400), the
corresponding deeds of sale over the subject shares were executed in January 2001.
The dispute between the parties arose sometime in May 2003 when RCBC informed EPCIB
and the other selling shareholdersof an overpayment of the subject shares, claiming there was
an overstatement of valuation of accounts amounting to ₱478 million and that the sellers
violated their warrantyunder Section 5(g)of the SPA.7 
As no settlement was reached, RCBC commenced arbitration proceedings with the ICC-ICA in
accordance with Section 10 of the SPA which states:
Section 10.Arbitration
Should there be any dispute arising between the parties relating to this Agreement including
the interpretation or performance hereof which cannot be resolved by agreement of the parties
within fifteen (15) days after written notice by a party to another, such matter shall then be
finally settled by arbitration under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce in force as of the time of arbitration, by three arbitrators appointed in
accordance with such rules. The venue of arbitration shall be in Makati City, Philippines and
the arbitration proceedings shall be conducted in the English language. Substantive aspects of
the dispute shall be settled by applying the laws of the Philippines. The decision of the
arbitrators shall be final and binding upon the parties hereto and the expenses of arbitration
(including without limitation the award of attorney’s fees to the prevailing party) shall be paid as
the arbitrators shall determine.8 
In its Request for Arbitration9 dated May 12, 2004, Claimant RCBC charged Bankard with
deviating from and contravening generally accepted accounting principles and practices, due to
which the financial statements of Bankard prior to the stock purchase were far from fair and
accurate, and resulted in the overpayment of ₱556 million. For this violation of
sellers’representations and warranties under the SPA, RCBC sought its rescission, as well as
payment of actual damages in the amount of ₱573,132,110, legal interest on the purchase
price until actual restitution, moral damages and litigation and attorney’s fees, with alternative
prayer for award of damages in the amount of at least ₱809,796,082 plus legal interest.
In their Answer,10 EPCIB, Go and the other selling individual shareholders (Respondents)
denied RCBC’s allegations contending that RCBC’s claim is one for overpayment or price
reduction under Section 5(h) of the SPA which is already time-barred, the remedy of rescission
is unavailable, and even assuming that rescission is permitted by the SPA, RCBC failed to file
its claim within a reasonable time. They further asserted that RCBC is not entitled to its
alternative prayer for damages, being guilty of laches and failing to set out the details of the
breach as required under Section 7 of the SPA. A counterclaim for litigation expenses and
costs of arbitration in the amount of US$300,000, as well as moral and exemplary damages,
was likewise raised by the Respondents.
RCBC submitted a Reply11 to the aforesaid Answer.
Subsequently, the Arbitration Tribunal was constituted. Mr. Neil Kaplan was nominated by
RCBC; Justice Santiago M. Kapunan (a retired Member of this Court) was nominated by the
Respondents; and Sir Ian Barker was appointed by the ICC-ICA as Chairman.
On August 13, 2004, the ICC-ICA informed the parties that they are required to pay
US$350,000 as advance on costs pursuant to Article 30 (3) of the ICC Rules of Arbitration (ICC
Rules). RCBC paid its share of US$107,000, the balance remaining after deducting payments
of US$2,500 and US$65,000 it made earlier. Respondents’ share of the advance on costs was
thus fixed at US$175,000.
Respondents filed an Application for Separate Advances on Costs12 dated September 17, 2004
under Article 30(2) of the ICC Rules, praying that the ICC fix separate advances on the cost of
the parties’ respective claims and counterclaims, instead of directing them to share equally on
the advance cost of Claimant’s (RCBC) claim. Respondents deemed this advance cost
allocation to be proper, pointing out that the total amount of RCBC’s claim is substantially
higher – more than 40 times –the total amount of their counterclaims, and that it would be
unfair to require them to share in the costs of arbitrating what is essentially a price issue that is
now time-barred under the SPA.
On September 20, 2004, the ICC-ICA informed Respondents that their application for separate
advances on costs was premature pending the execution of the Terms of Reference
(TOR).13 The TOR was settled by the parties and signed by the Chairman and Members of the
Arbitral Tribunal by October 11, 2004. On December 3, 2004,14 the ICC-ICA denied the
application for separate advances on costs and invited anew the Respondents to pay its share
in the advance on costs. However, despite reminders from the ICC-ICA, Respondents refused
to pay their share in the advance cost fixed by the ICC-ICA. On December 16, 2004, the ICC-
ICA informed the parties that if Respondents still failed to pay its share in the advance cost, it
would apply Article 30(4) of the ICC Rules and request the Arbitration Tribunal to suspend its
work and set a new time limit, and if such requested deposit remains unpaid at the expiry
thereof, the counterclaims would be considered withdrawn.15 
In a fax-letter dated January 4, 2005, the ICC-ICA invited RCBC to pay the said amount in
substitution of Respondents.It also granted an extension until January 17, 2005 within which to
pay the balance of the advance cost (US$175,000). RCBC replied that it was not willing to
shoulder the share of Respondents in the advance on costs but nevertheless requested for a
clarification as to the effect of such refusal to substitute for Respondents’share.16 
On March 10, 2005, the ICC-ICA instructed the Arbitration Tribunal to suspend its work and
granted the parties a final time-limit of 15 days to pay the balance of the advanceon costs,
failing which the claims shall be considered withdrawn, without prejudice to their reintroduction
at a later date in another proceeding. The parties were advised that if any of them objects to
the measure, it should make a request in writing within such period.17 For the same reason of
non-receipt of the balance of the advance cost, the ICC-ICA issued Procedural Order No. 3 for
the adjournment of the substantive hearings and granting the Respondents a two-month
extension within which to submit their brief of evidence and witnesses.
RCBC objected to the cancellation of hearings, pointing out that Respondents have been given
ample time and opportunity to submit their brief of evidence and prepare for the hearings and
that their request for postponement serves no other purpose but to delay the proceedings. It
alleged that Respondents’ unjustified refusal to pay their share in the advance on costs
warrants a ruling that they have lost standing to participate in the proceedings. It thus prayed
that Respondents be declared as in default, the substantive hearings be conducted as
originally scheduled, and RCBC be allowed to submit rebuttal evidence and additional witness
statements.18 
On December 15, 2005, the ICC-ICA notified the parties of its decision to increase the
advances on costs from US$350,000 to US$450,000 subject to later readjustments, and again
invited the Respondents to pay the US$100,000 increment within 30 days from notice.
Respondents, however, refused to pay the increment, insisting that RCBC should bear the cost
of prosecuting its own claim and that compelling the Respondents to fund such prosecution is
inequitable. Respondents reiterated that it was willing to pay the advance on costs for their
counterclaim.19 
On December 27, 2005, the ICC-ICA advised that it was not possible to fix separate advances
on costs as explained in its December 3, 2004 letter, and again invited Respondents to pay
their share in the advance on costs. Respondents’ response contained in the letter dated
January 6, 2006 was still the same: it was willing to pay only the separate advance on costs of
their counterclaim.20 In view of Respondents’ continuing refusal to pay its equal share in the
advance on costs and increment, RCBC wrote the ICC-ICA stating that the latter should
compel the Respondents to pay as otherwise RCBC will be prejudiced and the inaction of the
ICC-ICA and the Arbitration Tribunal will detract from the effectiveness of arbitration as a
means of settling disputes. In accordance with Article 30(4) of the ICC Rules, RCBC reiterated
its request to declare the Respondents as in default without any personality to participate in the
proceedings not only with respect to their counterclaims but also to the claim of RCBC.21  Award) in ICC-ICA Case No. 13290/MS/JB/JEM,as follows:
Chairman Ian Barker, in a letter dated January 25, 2006, stated in part:
xxxx
2. The Tribunal has no power under the ICC Rules to order the Respondents to
pay the advance on costs sought by the ICC or to give the Claimant any relief
against the Respondents’ refusal to pay. The ICC Rules differ from, for example,
the Rules of the LCIA (Article 24.3) which enables a party paying the share of costs
which the other party has refused to pay, to recover "that amount as a debt
immediately due from the defaulting party."
3. The only sanction under the ICC Rules is contained within Article 30 (4). Where a
request for an advance on costs has not been complied with, after consultation with the
Tribunal, the Secretary-General may direct the Tribunal to suspend its work. After
expiry of a time limit, all claims and counterclaims are then considered as withdrawn.
This provision cannot assist a Claimant who is anxious to litigate its claim. Such a
Claimant has to pay the sums requested (including the Respondents’ share) if it wishes
the arbitration to proceed.
4. It may be possible for a Claimant in the course of the arbitral hearing (or
whenever costs are being considered by the Tribunal) to make submissions
based on the failure of the Respondents to pay their share of the costs
advance.What relief, if any, would have to be then determined by the Tribunal
after having heard submissions from the Respondents.
5. I should be pleased if the Claimant will advise the Tribunal of its intention in relation
to the costs advance. If the costs are not paid, the arbitration cannot proceed.22 (Italics
in the original; emphasis supplied)
RCBC paid the additional US$100,000 under the second assessment to avert suspension of
the Arbitration Tribunal’s proceedings.
Upon the commencement of the hearings, the Arbitration Tribunal decided that hearings will be
initially confined to issues of liability (liability phase) while the substantial issues will be heard
on a later date (quantum phase).
Meanwhile, EPCIB’s corporate name was officially changed to Banco De Oro (BDO)-EPCIB
after its merger with BDO was duly approved by the Securities and Exchange Commission. As
such, BDO assumed all the obligations and liabilities of EPCIB under the SPA.
On September 27, 2007, the Arbitration Tribunal rendered a Partial Award23 (First Partial
15 AWARD AND DIRECTIONS
15.1 The Tribunal makes the following declarations by way of Partial Award:
(a) The Claimant’s claim is not time-barred under the provisions of this SPA.
(b) The Claimant is not estopped by its conduct or the equitable doctrine of
laches from pursuing its claim.
(c) As detailed in the Partial Award, the Claimant has established the following
breaches by the Respondents of clause 5(g) of the SPA:
i) the assets, revenue and net worth of Bankard were overstated by
reason of its policy on and recognition of Late Payment Fees;
ii) reported receivables were higher than their realisable values by
reason of the ‘bucketing’ method, thus overstating Bankard’s assets;
and
iii) the relevant Bankard statements were inadequate and misleading
in that their disclosures caused readers to be misinformed about
Bankard’s accounting policies on revenue and receivables.
(d) Subject to proof of loss the Claimant is entitled to damages for the
foregoing breaches.
(e) The Claimant is not entitled to rescission of the SPA.
(f) All other issues, including any issue relating to costs, will be dealt
with in a further or final award.
15.2 A further Procedural Order will be necessary subsequent to the delivery of this
Partial Award to deal with the determination of quantum and in particular, whether
there should be an Expert appointed by the Tribunal under Article 20(4) of the ICC
Rules to assist the Tribunal in this regard.
15.3 This Award is delivered by a majority of the Tribunal (Sir Ian Barker and Mr.
Kaplan). Justice Kapunan is unable to agree with the majority’s conclusion on the claim
of estoppel brought by the Respondents.24 (Emphasis supplied)
On October 26, 2007, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No.
M-6046)amotion to confirm the First Partial Award, while Respondents filed a motion to vacate
the same.
ICC-ICA by letter25 dated October 12, 2007 increased the advance on costs from US$450,000
to US$580,000. Under this third assessment, RCBC paid US$130,000 as its share on the
increment. Respondents declined to pay its adjudged total share of US$290,000 on account of
its filing in the RTC of a motion to vacate the First Partial Award.26 The ICC-ICA then invited
RCBC to substitute for Respondents in paying the balance of US$130,000 by December 21,
2007.27 RCBC complied with the request, making its total payments in the amount of
US$580,000.28  and (3) to stress the liability of Respondents to share equally in paying the advance on costs
While RCBC paid Respondents’ share in the increment (US$130,000), it reiterated its plea that
Respondents be declared as in default and the counterclaimsdeemed as withdrawn.29  Respondents, on the other hand, filed their Opposition34 to the said application alleging that the
Chairman Barker’s letter dated December 18, 2007 states in part:
xxxx
8. Contrary to the Complainant’s view, the Tribunal has no jurisdiction to declare that
the Respondents have no right to participate in the proceedings concerning the claim.
Article 30(4) of the ICC Rules applies only to any counterclaim of the Respondents.
9. The Tribunal interprets the Claimant’s latest letter as an application by the
Claimant to the Tribunal for the issue of a partial award against the Respondents
in respect of their failure to pay their share of the ICC’s requests for advance on
costs.
10. I should be grateful if the Claimant would confirm that this is the situation. If so, the
Claimant should propose a timetable for which written submissions should be made by
both parties. This is an application which can be considered by the Tribunal on written
submissions.30 (Emphasis supplied)
RCBC, in a letter dated December 26, 2007, confirmed the Arbitration Tribunal’s interpretation
that it was applying for a partial award against Respondents’ failure to pay their share in the
advance on costs.31  asserted that since the advances on costs have been paid by the Claimant (RCBC), the main
Meanwhile, on January 8, 2008, the Makati City RTC, Branch 148 issued an order in SP Proc.
Case No. M-6046 confirming the First Partial Award and denying Respondents’ separate
motions to vacate and to suspend and inhibit Barker and Kaplan. Respondents’ motion for
reconsideration was likewise denied. Respondents directly filed with this Court a petition for
review on certiorari under Rule 45, docketed as G.R. No. 182248 and entitled Equitable PCI
Banking Corporation v. RCBC Capital Corporation.32 In our Decision dated December 18, 2008,
we denied the petition and affirmed the RTC’s ruling confirming the First Partial Award.
On January 18, 2008, the Arbitration Tribunal set a timetable for the filing of submission by the
parties on whether it should issue a Second Partial Award in respect of the Respondents’
refusal to pay an advance on costs to the ICC-ICA.
In compliance, RCBC filed on February 7, 2008an Application for Reimbursement of Advance
on Costs Paid, praying for the issuance of a partial award directing the Respondents to
reimburse its payment in the amount of US$290,000 representing Respondents’ share in the
Advance on Costs and to consider Respondents’ counterclaim for actual damages in the
amount of US$300,000, and moral and exemplary damages as withdrawn for their failure to
pay their equal share in the advance on costs. RCBC invoked the plain terms of Article 30 (2)
where the Arbitration Tribunal has fixed the same.33 
Arbitration Tribunal has lost its objectivity in an unnecessary litigation over the payment of
Respondents’ share in the advance costs. They pointed out that RCBC’s letter merely asked
that Respondents be declared as in default for their failure to pay advance costs but the
Arbitration Tribunal, while denying the request offered an alternative to RCBC: a Partial Award
for Respondents’ share in the advance costs even if it was clear from the language of RCBC’s
December 11, 2007 letter that it had no intention of litigating for the advance costs. Chairman
Barker, after ruling earlier that it cannot grant RCBC’s request to declare the Respondents as
having no right to participate in the proceedings concerning the claim, interpreted RCBC’s letter
as an application for the Arbitration Tribunal to issue a partial award in respect of such refusal
of Respondents to pay their share in the advance on costs, and subsequently directed the
parties to make submissions on the matter.Aside from violating their right to due process and to
be heard by an impartial tribunal, Respondents also argued that in issuing the award for
advance cost, the ArbitrationTribunal decided an issue beyond the terms of the TOR.
Respondents also emphasized that the parties agreed on a two-part arbitration: the first part of
the Tribunal’s proceedings would determine Respondents’ liability, if any, for alleged violation
of Section 5(g) and (h) of the SPA; and the second part of the proceedings would determine
the amounts owed by one party to another as a consequence of a finding of liability or lack
thereof. An award for "reimbursement of advances for costs" clearly falls outside the scope of
either proceedings. Neither can the Tribunal justify such proceedings under Article 23 of the
ICC Rules (Conservatory and Interim Measures) because that provision does not contemplate
an award for the reimbursement of advance on costs in arbitration cases. Respondents further
claim and counterclaim may both be heard by the Arbitration Tribunal.
In his letter dated March 13, 2008, Chairman Barker advised the parties, as follows:
1. The Tribunal acknowledges the Respondents’ response to the Claimant’s
application for a Partial Award, based on the Respondents’ failure to pay their share of
the costs, as requested by the ICC.
 2. The Tribunal notes that neither party has referred to an article by Mat[t]hew
Secomb on this very subject which appears in the ICC Bulletin Vol. 14 No.1
(Spring 2003). To assist both sides and to ensure that the Tribunal does not consider
material on which the parties have not been given an opportunity to address, I attach a
copy of this article, which also contains reference to other scholarly works on the
subject.
3. The Tribunal will give each party seven days within which to submit further written
comments as a consequence of being alerted to the above authorities.35 (Additional
emphasis supplied)
The parties complied by submitting their respective comments.
RCBC refuted Respondents’ allegation of partiality on the part of Chairman Barker and
reiterated the prayer in its application for reimbursement of advance on costs paid to the ICC-
ICA. RCBC contended that based on Mr. Secomb’s article, whether the "contractual" or
"provisional measures" approach is applied, the Arbitration Tribunal is vested with jurisdiction
and authority to render an award with respect to said reimbursement of advance cost paid by
the non-defaulting party.36  dispositions on costs liability in the Final Award, not before.
Respondents, on the other hand, maintained that RCBC’s application for reimbursement of
advance cost has no basis under the ICC Rules. They contended that no manifest injustice can
be inferred from an act of a party paying for the share of the defaulting party as this scenario is
allowed by the ICC Rules. Neither can a partial award for advance cost be justified under the
"contractual approach" since the matter of costs for arbitration is between the ICC and the
parties, not the Arbitration Tribunal and the parties. An arbitration tribunal can issue decisions
on costs only for those costs not fixed by the ICC.37  December 11, 2007 letter as an application for a partial award for reimbursement of the
Respondents reiterated their position that Article 30(3) envisions a situation whereby a party
would refuse to pay its share on the advance on costs and provides a remedy therefor – the
other party "shall be free to pay the whole of the advance on costs." Such party’s
reimbursement for payments of the defaulting party’s share depends on the final arbitral award
where the party liable for costs would be determined. This is the only remedy provided by the
ICC Rules.38  fees which are simply cost of litigation properly brought at the conclusion of the arbitration. It
On May 28, 2008, the Arbitration Tribunal rendered the Second Partial Award,39 as follows:
7 AWARD
7.1 Having read and considered the submissions of both parties, the Tribunal AWARDS,
DECLARES AND ORDERS as follows:
(a) The Respondents are forthwith to pay to the Claimant the sum of US$290,000.
(b) The Respondents’ counterclaim is to be considered as withdrawn.
(c) All other questions, including interest and costs, will be dealt with in a subsequent
award.40 
The above partial award was received by RCBC and Respondents on June 12, 2008.
On July 11, 2008, EPCIB filed a Motion to Vacate Second Partial Award41 in the Makati City
RTC, Branch 148 (SP Proc. Case No. M-6046). On July 10, 2008, RCBC filed in the same
court a Motion to Confirm Second Partial Award.42 
EPCIB raised the following grounds for vacating the Second Partial Award: (a) the award is
void ab initio having been rendered by the arbitrators who exceeded their power or acted
without it; and (b) the award was procured by undue means or issued with evident partiality or
attended by misbehavior on the part of the Tribunal which resulted in a material prejudice to the
rights of the Respondents. EPCIB argued that there is no express agreement either in the SPA
or the ICC Rules for such right of reimbursement. There is likewise no implied agreement
because from the ICC Rules, the only inference is that the parties agreed to await the
On the ruling of the Arbitration Tribunal that Respondents’ application for costs are not
counterclaims, EPCIB asserted that this is contrary to Philippine law as it is basic in our
jurisdiction that counterclaims for litigation expenses, moral and exemplary damages are
proper counterclaims, which rule should be recognized in view of Section 10 of the SPA which
provides that "substantive aspects of the dispute shall be settled by applying the laws of the
Philippines." Finally, EPCIB takes issue with Chairman Barker’s interpretation of RCBC’s
substituted payments. Such conduct of Chairman Barker is prejudicial and proves his evident
partiality in favor of RCBC.
RCBC filed its Opposition,43 asserting that the Arbitration Tribunal had jurisdiction to consider
Respondents’ counterclaim as withdrawn, the same having been abandoned by not presenting
any computation or substantiation by evidence, their only computation relates only to attorney’s
also pointed out that the Arbitration Tribunal was empowered by the parties’ arbitral clause to
determine the manner of payment of expenses of arbitration, and that the Second Partial
Award was based on authorities and treatiseson the mandatory and contractual nature of the
obligation to pay advances on costs.
In its Reply,44 EPCIB contended that RCBC had the option to agree to its proposal for separate
advances on costs but decided against it; RCBC’s act of paying the balance of the advance
cost in substitution of EPCIB was for the purpose of having EPCIB defaulted and the latter’s
counterclaim withdrawn. Having agreed to finance the arbitration until its completion, RCBC is
not entitled to immediate reimbursement of the amount it paid in substitution of EPCIB under
an interim award, as its right to a partial or total reimbursement will have to be determined
under the final award. EPCIB asserted that the matter of reimbursement of advance cost paid
cannot be said to have properly arisen during arbitration. EPCIB reiterated that Chairman
Barker’s interpretation of RCBC’s December 11, 2007 letter as an application for interim award
for reimbursement is tantamount to a promise that the award will be issued in due course.
After a further exchange of pleadings, and other motions seeking relief from the court in
connection with the arbitration proceedings (quantum phase), the Makati City RTC, Branch 148
issued the Order45 dated June 24, 2009 confirming the Second Partial Award and denying
EPCIB’s motion to vacate the same. Said court held that since the parties agreed to submit any
dispute under the SPA to arbitration and to be bound by the ICC Rules, they are also bound to
pay in equal shares the advance on costs as provided in Article 30 (2) and (3). It noted that
RCBC was forced to pay the share of EPCIB in substitution of the latter to prevent a
suspension of the arbitration proceedings, while EPCIB’s non-payment seems more like a
scheme to delay such proceedings. On the Arbitration Tribunal’s ruling on EPCIB’s
counterclaim, no error was committed in considering it withdrawn for failure of EPCIB to
quantify and substantiate it with supporting evidence. As to EPCIB’s claim for attorney’s fees,
the RTC agreed that these should be brought only at the close of arbitration.
EPCIB moved to reconsider the June 24, 2009 Order and for the voluntary inhibition of the
Presiding Judge (Judge Oscar B. Pimentel) on the ground that EPCIB’s new counsel
represented another client in another case before him in which said counsel assailed his
conduct and had likewise sought his inhibition. Both motions were denied in the Joint
Order46 dated March 23, 2010.
On April 14, 2010, EPCIB filed in the CA a petition for review47 with application for TRO and/or
writ of preliminary injunction (CA-G.R. SP No. 113525) in accordance with Rule 19, Section 4
of the Special Rules of Court on Alternative Dispute Resolution48 (Special ADR Rules). EPCIB
assailed the Makati City RTC, Branch 148 in denying its motion to vacate the Second Partial
Award despite (a) said award having been rendered in excess of jurisdiction or power, and
contrary to public policy; (b) the fact that it was issued with evident partiality and serious
misconduct; (c) the award deals with a dispute not contemplated within the terms of submission
to arbitration or beyond the scope of such submission, which therefore ought to be vacated
pursuant to Article 34 of the UNCITRAL Model Law; and (d) the Presiding Judge having
exhibited bias and prejudice against BDO and its counsel as confirmed by his pronouncements
in the Joint Order dated March 23, 2010 in which, instead of recusing himself, he imputed
malice and unethical conduct in the entry of appearance of Belo Gozon Elma Asuncion and
Lucila Law Offices in SP Proc. Case No. M-6046, which warrants his voluntary inhibition.
Meanwhile, on June 16, 2010, the Arbitration Tribunal issued the Final Award,49 as follows:
15 AWARD
15.1 The Tribunal by a majority (Sir Ian Barker & Mr. Kaplan) awards, declares and adjudges
as follows:
(a) the Respondents are to pay damages to the Claimant for breach of the sale and
purchase agreement for Bankard shares in the sum of ₱348,736,920.29.
(b) The Respondents are to pay to the Claimant the sum of US$880,000 in respect of
the costs of the arbitration as fixed by the ICC Court.
(c) The Respondents are to pay to the Claimant the sum of US$582,936.56 for the fees
and expenses of Mr. Best.
(d) The Respondents are to pay to the Claimant their expenses of the arbitration as
follows:
(i) Experts’ fees ₱7,082,788.55
(ii) Costs of without prejudice meeting ₱22,571.45
(iii) Costs of arbitration hearings ₱553,420.66
(iv) Costs of transcription service ₱483,597.26
Total ₱8,144,377.62
(e) The Respondents are to pay to the Claimant the sum of ₱7,000,000 for party-and-
party legal costs.
(f) The Counterclaims of the Respondents are all dismissed.
(g) All claims of the Claimant are dismissed, other than those referred to above.
15.2 Justice Kapunan does not agree with the majority of the members of the Tribunal and has
issued a dissenting opinion. He has refused to sign this Award.50 
On July 1, 2010 BDO filed in the Makati City RTC a Petition to Vacate Final Award Ad
Cautelam,51 docketed as SP Proc. Case No. M-6995, which was raffled to Branch 65.
On July 28, 2010, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No. M-
6046) a Motion to Confirm Final Award.52 BDO filed its Opposition With Motion to Dismiss53 on
grounds that a Petition to Vacate Final Award Ad Cautelamhad already been filed in SP Proc.
Case No. M-6995. BDO also pointed out that RCBC did not file the required petition but instead
filed a mere motion which did not go through the process of raffling to a proper branch of the
RTC of Makati City and the payment of the required docket/filing fees. Even assuming that
Branch 148 has jurisdiction over RCBC’s motion to confirm final award, BDO asserted that
RCBC had filed before the Arbitration Tribunal an Application for Correction and Interpretation
of Award under Article 29 of the ICC Rules, which is irreconcilable with its Motion to Confirm
Final Award before said court. Hence, the Motion to Confirm Award was filed precipitately.
On August 18, 2010, RCBC filed an Omnibus Motion in SP Proc. Case No. M-6995 (Branch
65) praying for the dismissal of BDO’s Petition to Vacate Final Award or the transfer of the
same to Branch 148 for consolidation with SP Proc. Case No. M-6046. RCBC contended that
BDO’s filing of its petition with another court is a blatant violation of the Special ADR Rules and
is merely a subterfuge to commit forum-shopping. BDO filed its Opposition to the Omnibus
Motion.54  follows:
On October 28, 2010, Branch 65 issued a Resolution55 denying RCBC’s omnibus motion and
directing the service of the petition to RCBC for the latter’s filing of a comment thereon.
RCBC’s motion for reconsideration was likewise denied in the said court’s Order dated
December 15, 2010. RCBC then filed its Opposition to the Petition to Vacate Final Award Ad
Cautelam.
Meanwhile, on November 10, 2010, Branch 148 (SP Proc. Case No. M-6046) issued an
Order56 confirming the Final Award "subject to the correction/interpretation thereof by the
Arbitral Tribunal pursuant to the ICC Rules and the UNCITRAL Model Law," and denying
BDO’s Opposition with Motion to Dismiss.
On December 30, 2010, George L. Go, in his personal capacity and as attorney-in-fact of the
other listed shareholders of Bankard, Inc. in the SPA (Individual Shareholders), filed a petition
in the CA, CA-G.R. SP No. 117451, seeking to set aside the above-cited November 10, 2010
Order and to enjoin Branch 148 from further proceeding in SP Proc. Case No. M-6046. By
Decision57 dated June 15, 2011, the CA dismissed the said petition. Their motion for
reconsideration of the said decision was likewise denied by the CA in its Resolution58 dated
December 14, 2011.
On December 23, 2010, the CA rendered its Decision in CA-G.R. SP No. 113525, the
dispositive portion of which states:
WHEREFORE, premises considered, the following are hereby REVERSED and SET ASIDE:
1. the Order dated June 24, 2009 issued in SP Proc. Case No. M-6046 by the Regional
Trial Court of Makati City, Branch 148, insofar as it denied the Motion to Vacate
Second Partial Award dated July 8, 2008 and granted the Motion to Confirm Second
Partial Award dated July 10, 2008;
2. the Joint Order dated March 23, 2010 issued in SP Proc. Case No. M-6046 by the
Regional Trial Court of Makati City, Branch 148, insofar as it denied the Motion For
Reconsideration dated July 28, 2009 relative to the motions concerning the Second
Partial Award immediately mentioned above; and
3. the Second Partial Award dated May 28, 2008 issued in International Chamber of
Commerce Court of Arbitration Reference No. 13290/MS/JB/JEM.
SO ORDERED.59  Final Award have been confirmed, the same shall be enforced in the same manner as
RCBC filed a motion for reconsideration but the CA denied the same in its Resolution60 dated
March 16, 2011. On April 6, 2011, it filed a petition for review on certiorari in this Court (G.R.
No. 196171).
On February 25, 2011, Branch 65 rendered a Decision61 in SP Proc. Case No. M-6995, as
WHEREFORE, premises considered, the Final Award dated June 16, 2010 in ICC Ref. No.
13290/MS/JB/JEM is hereby VACATED with cost against the respondent.
SO ORDERED.62 
In SP Proc. Case No. M-6046, Branch 148 issued an Order63 dated August 8, 2011 resolving
the following motions: (1) Motion for Reconsideration filed by BDO, Go and Individual
Shareholders of the November 10, 2010 Order confirming the Final Award; (2) RCBC’s
Omnibus Motion to expunge the motion for reconsideration filed by Go and Individual
Shareholders, and for execution of the Final Award; (3) Motion for Execution filed by RCBC
against BDO; (4) BDO’s Motion for Leave to File Supplement to the Motion for
Reconsideration; and (5) Motion for Inhibition filed by Go and Individual Shareholders. Said
Order decreed:
WHEREFORE, premises considered, it is hereby ORDERED, to wit:
1. Banco De Oro’s Motion for Reconsideration, Motion for Leave to File Supplement to
Motion for Reconsideration, and Motion to Inhibit are DENIED  for lack of merit.
2. RCBC Capital’s Motion to Expunge, Motion to Execute against Mr. George L. Go
and the Bankard Shareholders, and the Motion to Execute against Banco De Oro are
hereby GRANTED.
3. The damages awarded to RCBC Capital Corporation in the amount of
Ph₱348,736,920.29 is subject to an interest of 6% per annum reckoned from the date
of RCBC Capital’s extra-judicial demand or from May 5, 2003 until the confirmation of
the Final Award. Likewise, this compounded amount is subject to 12% interest per
annum from the date of the confirmation of the Final Award until its satisfaction. The
costs of the arbitration amounting to US$880,000.00, the fees and expenses of Mr.
Best amounting to US$582,936.56, the Claimant’s expenses of the arbitration
amounting to Ph₱8,144,377.62, and the party-and-party legal costs amounting to
Ph₱7,000,000.00 all ruled in favor of RCBC Capital Corporation in the Final Award of
the Arbitral Tribunal dated June 16, 2010 are subject to 12% legal interest per annum,
also reckoned from the date of the confirmation of the Final Award until its satisfaction.
4. Pursuant to Section 40 of R.A. No. 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004 in relation to Rule 39 of the Rules of Court, since the
 final and executory decisions of the Regional Trial Court, let a writ of execution be
issued commanding the Sheriff to enforce this instant Order confirming this Court’s
Order dated November 10, 2010 that judicially confirmed the June 16, 2010 Final
Award.
SO ORDERED.64  provided under Section 9(b), Rule 39 in relation to Section 7, Rule 57 of the Rules of Court
Immediately thereafter, RCBC filed an Urgent Motion for Issuance of a Writ of Execution.65 On
August 22, 2011, after approving the execution bond, Branch 148 issued a Writ of Execution
for the implementation of the said court’s "Order dated August 8, 2011 confirming the
November 10, 2010 Order that judicially confirmed the June 16, 2010 Final Award x x x."66  In its Opposition to BDO’s application for injunctive relief, RCBC prayed for its outright denial
BDO then filed in the CA, a "Petition for Review (With Application for a Stay Order or
Temporary Restraining Order and/or Writ of Preliminary Injunction," docketed as CA-G.R. SP
No. 120888. BDO sought to reverse and set aside the Orders dated November 10, 2010 and
August 8, 2011, and any writ of execution issued pursuant thereto, as well as the Final Award
dated June 16, 2010 issued by the Arbitration Tribunal.
In its Urgent Omnibus Motion67 to resolve the application for a stay order and/or TRO/writ of
preliminary injunction, and to quash the Writ of Execution dated August 22, 2011 and lift the
Notices of Garnishment dated August 22, 2011, BDO argued that the assailed orders of
execution (Writ of Execution and Notice of Garnishment) were issued with indecent haste and
despite the non-compliance with the procedures in Special ADR Rules of the November 10,
2010 Order confirming the Final Award. BDO was not given sufficient time to respond to the
demand for payment or to elect the method of satisfaction of the judgment debt or the property
to be levied upon. In any case, with the posting of a bond by BDO, Branch 148 has no
jurisdiction to implement the appealed orders as it would pre-empt the CA from exercising its
review under Rule 19 of the Special ADR Rules after BDO had perfected its appeal. BDO
stressed that the bond posted by RCBC was for a measly sum of ₱3,000,000.00 to cause
execution pending appeal of a monetary award that may reach ₱631,429,345.29. RCBC also
failed to adduce evidence of "good cause" or "good reason" to justify discretionary execution
under Section 2(a), Rule 39 of the Rules of Court.
BDO further contended that the writ of execution should be quashed for having been issued
with grave abuse of discretion amounting to lack or excess of jurisdiction as Branch 148
modified the Final Award at the time of execution by imposing the payment of interests though
none was provided therein nor in the Order confirming the same.
During the pendency of CA-G.R. SP No. 120888, Branch 148 continued with execution
proceedings and on motion by RCBC designated/deputized additional sheriffs to replace
Sheriff Flora who was supposedly physically indisposed.68 These court personnel went to the
offices/branches of BDO attempting to serve notices of garnishment and to levy the furniture,
fixtures and equipment.
On September 12, 2011, BDO filed a Very Urgent Motion to Lift Levy and For Leave to Post
Counter-Bond69 before Branch 148 praying for the lifting of the levy of BDO Private Bank, Inc.
(BPBI) shares and the cancellation of the execution sale thereof scheduled on September 15,
2011, which was set for hearing on September 14, 2011. BDO claimed that the levy was invalid
because it was served by the RTC Sheriffs not to the authorized representatives of BPBI, as
stating that a notice of levy on shares of stock must be served to the president or managing
agent of the company which issued the shares. However, BDO was advised by court staff that
Judge Sarabia was on leave and the case could not be set for hearing.
as BDO’s petition raises questions of fact and/or law which call for the CA to substitute its
judgment with that of the Arbitration Tribunal, in patent violation of applicable rules of
procedure governing domestic arbitration and beyond the appellate court’s jurisdiction. RCBC
asserted that BDO’s application has become moot and academic as the writ of execution was
already implemented and/or enforced. It also contended that BDO has no clear and
unmistakable right to warrant injunctive relief because the issue of jurisdiction was already
ruled upon in CA-G.R. SP No. 117451 which dismissed the petition filed by Go and the
Individual Shareholders of Bankard questioning the authority of Branch 148 over RCBC’s
motion to confirm the Final Award despite the earlier filing by BDO in another branch of the
RTC (Branch 65) of a petition to vacate the said award.
On September 13, 2011, BDO, to avert the sale of the BPBI shares scheduled on September
15, 2011 and prevent further disruption in the operations of BDO and BPBI, paid under protest
by tendering a Manager’s Check in the amount of ₱637,941,185.55, which was accepted by
RCBC as full and complete satisfaction of the writ of execution. BDO manifested before Branch
148 that such payment was made without prejudice to its appeal before the CA.70 
On even date, the CA denied BDO’s application for a stay order and/or TRO/preliminary
injunction for non-compliance with Rule 19.25 of the Special ADR Rules. The CA ruled that
BDO failed to show the existence of a clear right to be protected and that the acts sought to be
enjoined violated any right. Neither was BDO able to demonstrate that the injury to be suffered
by it is irreparable or not susceptible to mathematical computation.
BDO did not file a motion for reconsideration and directly filed with this Court a petition for
certiorari with urgent application for writ of preliminary mandatory injunction (G.R. No. 199238).
The Petitions
In G.R. No. 196171, RCBC set forth the following grounds for the reversal of the CA Decision
dated December 23, 2010:
I.
 THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF
THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR IN VACATING
THE SECOND PARTIAL AWARD ON THE BASIS OF CHAIRMAN BARKER’S
ALLEGED PARTIALITY, WHICH IT CLAIMS IS INDICATIVE OF BIAS CONSIDERING
THAT THE ALLEGATIONS CONTAINED IN BDO/EPCIB’S PETITION FALL SHORT
OF THE JURISPRUDENTIAL REQUIREMENT THAT THE SAME BE SUPPORTED
BY CLEAR AND CONVINCING EVIDENCE.
II.
THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF
THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR WHEN IT
REVERSED THE ARBITRAL TRIBUNAL’S FINDINGS OF FACT AND LAW IN THE
SECOND PARTIAL AWARD IN PATENT CONTRAVENTION OF THE SPECIAL ADR
RULES WHICH EXPRESSLY PROHIBITS THE COURTS, IN AN APPLICATION TO
VACATE AN ARBITRAL AWARD, FROM DISTURBING THE FINDINGS OF FACT
AND/OR INTERPRE[TA]TION OF LAW OF THE ARBITRAL TRIBUNAL.71  Philippines.73
BDO raises the following arguments in G.R. No. 199238:
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION IN PERFUNCTORILY DENYING PETITIONER
BDO’S APPLICATION FOR STAY ORDER, AND/OR TEMPORARY RESTRAINING ORDER
AND PRELIMINARY INJUNCTION DESPITE THE EXISTENCE AND CONCURRENCE OF
ALL THE ELEMENTS FOR THE ISSUANCE OF SAID PROVISIONAL RELIEFS
A. PETITIONER BDO HAS CLEAR AND UNMISTAKABLE RIGHTS TO BE
PROTECTED BY THE ISSUANCE OF THE INJUNCTIVE RELIEF PRAYED FOR,
WHICH, HOWEVER, WERE DISREGARDED BY PUBLIC RESPONDENT WHEN IT
DENIED PETITIONER BDO’S PRAYER FOR ISSUANCE OF A STAY ORDER
AND/OR TRO
B. PETITIONER BDO’S RIGHT TO DUE PROCESS AND EQUAL PROTECTION OF
THE LAW WAS GROSSLY VIOLATED BY THE RTC-MAKATI CITY BRANCH 148,
THE DEPUTIZED SHERIFFS AND RESPONDENT RCBC CAPITAL, WHICH
VIOLATION WAS AIDED BY PUBLIC RESPONDENT’S INACTION ON AND
EVENTUAL DENIAL OF THE PRAYER FOR STAY ORDER AND/OR TRO
C. DUE TO THE ACTS AND ORDERS OF RTC BRANCH 148, PETITIONER BDO
SUFFERED IRREPARABLE DAMAGE AND INJURY, AND THERE WAS DIRE AND
URGENT NECESSITY FOR THE ISSUANCE OF THE INJUNCTIVE RELIEF PRAYED
FOR WHICH PUBLIC RESPONDENT DENIED IN GRAVE ABUSE OF
DISCRETION72 
Essentially, the issues to be resolved are: (1) whether there is legal ground to vacate the
Second Partial Award; and (2) whether BDO is entitled to injunctive relief in connection with the
execution proceedings in SP Proc. Case No. M-6046.
In their TOR, the parties agreed on the governing law and rules as follows:
Laws to be Applied
13 The Tribunal shall determine the issues to be resolved in accordance with the laws of the
Republic of the Philippines.
Procedure to be Applied
14 The proceedings before the Tribunal shall be governed by the ICC Rules of Arbitration (1
January 1998) and the law currently applicable to arbitration in the Republic of the
 
As stated in the Partial Award dated September 27, 2007, although the parties provided in
Section 10 of the SPA that the arbitration shall be conducted under the ICC Rules, it was
nevertheless arbitration under Philippine law since the parties are both residents of this
country. The provisions of Republic Act No. 87674 (RA 876),as amended by Republic Act No.
928575 (RA 9285)principally applied in the arbitration between the herein parties.76 
The pertinent provisions of R.A. 9285 provide:
SEC. 40. Confirmation of Award. – The confirmation of a domestic arbitral award shall be
governed by Section 23 of R.A. 876.
A domestic arbitral award when confirmed shall be enforced in the same manner as final and
executory decisions of the Regional Trial Court.
The confirmation of a domestic award shall be made by the regional trial court in accordance
with the Rules of Procedure to be promulgated by the Supreme Court.
xxxx
SEC. 41. Vacation Award. – A party to a domestic arbitration may question the arbitral award
with the appropriate regional trial court in accordance with the rules of procedure to be
promulgated by the Supreme Court only on those grounds enumerated in Section 25 of
Republic Act No. 876. Any other ground raised against a domestic arbitral award shall be
disregarded by the regional trial court.
Rule 11.4 of the Special ADR Rules sets forth the grounds for vacating an arbitral award:
Rule 11.4. Grounds.—(A) To vacate an arbitral award. – The arbitral award may be vacated on
the following grounds:
a. The arbitral award was procured through corruption, fraud or other undue means;
b. There was evident partiality or corruption in the arbitral tribunal or any of its
members;
c. The arbitral tribunal was guilty of misconduct or any form of misbehavior that has
materially prejudiced the rights of any party such as refusing to postpone a hearing
upon sufficient cause shown or to hear evidence pertinent and material to the
controversy;
d. One or more of the arbitrators was disqualified to act as such under the law and
willfully refrained from disclosing such disqualification; or
e. The arbitral tribunal exceeded its powers, or so imperfectly executed them, such
that a complete, final and definite award upon the subject matter submitted to them
was not made.
The award may also be vacated on any or all of the following grounds:
a. The arbitration agreement did not exist, or is invalid for any ground for the revocation
of a contract or is otherwise unenforceable; or
b. A party to arbitration is a minor or a person judicially declared to be incompetent.
xxxx
In deciding the petition to vacate the arbitral award, the court shall disregard any other ground
than those enumerated above. (Emphasis supplied)
Judicial Review
At the outset, it must be stated that a review brought to this Court under the Special ADR Rules
is not a matter of right. Rule 19.36 of said Rules specified the conditions for the exercise of this
Court’s discretionary review of the CA’s decision.
Rule 19.36.Review discretionary.—A review by the Supreme Court is not a matter of right, but
of sound judicial discretion, which will be granted only for serious and compelling reasons
resulting in grave prejudice to the aggrieved party. The following, while neither controlling
nor fully measuring the court’s discretion, indicate the serious and compelling, and necessarily,
restrictive nature of the grounds that will warrant the exercise of the Supreme Court’s
discretionary powers, when the Court of Appeals:
a. Failed to apply the applicable standard or test for judicial review prescribed in
these Special ADR Rules in arriving at its decision resulting in substantial prejudice to
the aggrieved party;
b. Erred in upholding a final order or decision despite the lack of jurisdiction of the court
that rendered such final order or decision;
c. Failed to apply any provision, principle, policy or rule contained in these Special
ADR Rules resulting in substantial prejudice to the aggrieved party; and
d. Committed an error so egregious and harmful to a party as to amount to an
undeniable excess of jurisdiction.
The mere fact that the petitioner disagrees with the Court of Appeals’ determination of
questions of fact, of law or both questions of fact and law, shall not warrant the exercise of the
Supreme Court’s discretionary power. The error imputed to the Court of Appeals must be
grounded upon any of the above prescribed grounds for review or be closely analogous
thereto.
A mere general allegation that the Court of Appeals has committed serious and substantial
error or that it has acted with grave abuse of discretion resulting in substantial prejudice to the
petitioner without indicating with specificity the nature of such error or abuse of discretion and
the serious prejudice suffered by the petitioner on account thereof, shall constitute sufficient
ground for the Supreme Court to dismiss outright the petition. (Emphasis supplied)
The applicable standard for judicial review of arbitral awards in this jurisdiction is set forth in
Rule 19.10 which states:
Rule 19.10. Rule on judicial review on arbitration in the Philippines.--As a general rule, the
court can only vacate or set aside the decision of an arbitral tribunal upon a clear showing that
the award suffers from any of the infirmities or grounds for vacating an arbitral award
under Section 24 of Republic Act No. 876 or under Rule 34 of the Model Law in a
domestic arbitration, or for setting aside an award in an international arbitration under Article 34
of the Model Law, or for such other grounds provided under these Special Rules.
xxxx
The court shall not set aside or vacate the award of the arbitral tribunal merelyon the ground
that the arbitral tribunal committed errors of fact, or of law, or of fact and law, as the court
cannot substitute its judgment for that of the arbitral tribunal. (Emphasis supplied)
The above rule embodied the stricter standard in deciding appeals from arbitral awards
established by jurisprudence. In the case of Asset Privatization Trust v. Court of Appeals,77 this
Court held:
As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either as
to the law or as to the facts.Courts are without power to amend or overrule merely because of
disagreement with matters of law or facts determined by the arbitrators.They will not review the
findings of law and fact contained in an award, and will not undertake to substitute their
judgment for that of the arbitrators, since any other rule would make an award the
commencement, not the end, of litigation.Errors of law and fact, or an erroneous decision of
matters submitted to the judgment of the arbitrators, are insufficient to invalidate an award fairly
and honestly made. Judicial review of an arbitration is, thus, more limited than judicial review of
a trial.78  create an impression of possible bias,"84 and that underlying such standard is "the premise that
Accordingly, we examine the merits of the petition before us solely on the statutory ground
raised for vacating the Second Partial Award: evident partiality, pursuant to Section 24 (b) of
the Arbitration Law (RA 876) and Rule 11.4 (b) of the Special ADR Rules.
Evident Partiality
Evident partiality is not defined in our arbitration laws. As one of the grounds for vacating an
arbitral award under the Federal Arbitration Act (FAA) in the United States (US), the term
"encompasses both an arbitrator’s explicit bias toward one party and an arbitrator’s inferred
bias when an arbitrator fails to disclose relevant information to the parties."79  Subsequent cases decided by the US Court of Appeals Circuit Courts adopted different
From a recent decision80 of the Court of Appeals of Oregon, we quote a brief discussion of the
common meaning of evident partiality:
To determine the meaning of "evident partiality," we begin with the terms themselves. The
common meaning of "partiality" is "the inclination to favor one side."Webster’s Third New
Int'l Dictionary  1646 (unabridged ed 2002); see also id.  (defining "partial" as "inclined to favor
one party in a cause or one side of a question more than the other: biased, predisposed"
(formatting in original)). "Inclination," in turn, means "a particular disposition of mind or
character : propensity, bent" or "a tendency to a particular aspect, state, character, or
action."Id.  at 1143 (formatting in original); see also id.  (defining "inclined" as "having
inclination, disposition, or tendency").
The common meaning of "evident" is "capable of being perceived esp[ecially] by sight :
distinctly visible : being in evidence : discernable[;] * * * clear to the understanding : obvious,
manifest, apparent."Id.  at 789 (formatting in original); see also id. (stating that synonyms of
"evident" include "apparent, patent, manifest, plain, clear, distinct, obvious, [and] palpable" and
that, "[s]ince evident rather naturally suggests evidence, it may imply the existence of
signs and indications that must lead to an identification or inference" (formatting in
original)). (Emphasis supplied)
Evident partiality in its common definition thus implies "the existence of signs and
indications that must lead to an identification or inference" of partiality.81 Despite the increasing
adoption of arbitration in many jurisdictions, there seems to be no established standard for
determining the existence of evident partiality. In the US, evident partiality "continues to be the
subject of somewhat conflicting and inconsistent judicial interpretation when an arbitrator’s
failure to disclose prior dealings is at issue."82 
The first case to delineate the standard of evident partiality in arbitration proceedings
was Commonwealth Coatings Corp. v. Continental Casualty Co., et al.83 decided by the US
Supreme Court in 1968. The Court therein addressed the issue of whether the requirement of
impartiality applies to an arbitration proceeding. The plurality opinion written by Justice Black
laid down the rule that the arbitrators must disclose to the parties "any dealings that might
any tribunal permitted by law to try cases and controversies not only must be unbiased but also
must avoid even the appearance of bias."85 In a separate concurring opinion, Justice White
joined by Justice Marshall, remarked that "[t]he Court does not decide today that arbitrators are
to be held to the standards of judicial decorum of Article III judges, or indeed of any
judges."86 He opined that arbitrators should not automatically be disqualified from an arbitration
proceeding because of a business relationship where both parties are aware of the relationship
in advance, or where the parties are unaware of the circumstances but the relationship is trivial.
However, in the event that the arbitrator has a "substantial interest" in the transaction at hand,
such information must be disclosed.
approaches, given the imprecise standard of evident partiality in Commonwealth Coatings.
In Morelite Construction Corp. v. New York District Council Carpenters Benefit Funds,87 the
Second Circuit reversed the judgment of the district court and remanded with instructions to
vacate the arbitrator’s award, holding that the existence of a father-son relationship between
the arbitrator and the president of appellee union provided strong evidence of partiality and was
unfair to appellant construction contractor. After examining prior decisions in the Circuit, the
court concluded that –
x x x we cannot countenance the promulgation of a standard for partiality as insurmountable as
"proof of actual bias" -- as the literal words of Section 10 might suggest. Bias is always difficult,
and indeed often impossible, to "prove." Unless an arbitrator publicly announces his partiality,
or is overheard in a moment of private admission, it is difficult to imagine how "proof" would be
obtained. Such a standard, we fear, occasionally would require that we enforce awards in
situations that are clearly repugnant to our sense of fairness, yet do not yield "proof" of
anything.
If the standard of "appearance of bias" is too low for the invocation of Section 10, and
"proof of actual bias" too high, with what are we left? Profoundly aware of the competing
forces that have already been discussed, we hold that "evident partiality" within the
meaning of 9 U.S.C. § 10  will be found where a reasonable person would have to
conclude that an arbitrator was partial to one party to the arbitration.x x x88 (Emphasis
supplied)
In Apperson v. Fleet Carrier Corporation,89 the Sixth Circuit agreed with the Morelite  court’s
analysis, and accordingly held that to invalidate an arbitration award on the grounds of bias, the
challenging party must show that "a reasonable person would have to conclude that an
arbitrator was partial" to the other party to the arbitration.
This "myriad of judicial interpretations and approaches to evident partiality" resulted in a lack of
a uniform standard, leaving the courts "to examine evident partiality on a case-by-case
basis."90 The case at bar does not present a non-disclosure issue but conduct allegedly
showing an arbitrator’s partiality to one of the parties.
EPCIB/BDO, in moving to vacate the Second Partial Award claimed that the Arbitration
Tribunal exceeded its powers in deciding the issue of advance cost not contemplated in the
TOR, and that Chairman Barker acted with evident partiality in making such award. The RTC
held that BDO failed to substantiate these allegations. On appeal, the CA likewise found that
the Arbitration Tribunal did not go beyond the submission of the parties because the phrasing
of the scope of the agreed issues in the TOR ("[t]he issues to be determined by the Tribunal
are those issues arising from the said Request for Arbitration, Answer and Reply and such
other issues as may properly arise during the arbitration")is broad enough to accommodate a
finding on the liability and the repercussions of BDO’s failure to share in the advances on costs.
Section 10 of the SPA also gave the Arbitration Tribunal authority to decide how the costs
should be apportioned between them.
However, the CA found factual support in BDO’s charge of partiality, thus:
On the issue on evident partiality, the rationale in the American case of Commonwealth
Coatings Corp. v. Continental Cas. Co. appears to be very prudent. In Commonwealth,  the
United States Supreme Court reasoned that courts "should…be even more scrupulous to
safeguard the impartiality of arbitrators than judges, since the former have completely free rein
to decide the law as well as the facts, and are not subject to appellate review" in general. This
taken into account, the Court applies the standard demanded of the conduct of
magistrates by analogy. After all, the ICC Rules require that an arbitral tribunal should act
fairly and impartially. Hence, an arbitrator’s conduct should be beyond reproach and
suspicion. His acts should be free from the appearances of impropriety.
An examination of the circumstances claimed to be illustrative of Chairman Barker’s partiality is
indicative of bias. Although RCBC had repeatedly asked for reimbursement and the withdrawal
of BDO’s counterclaims prior to Chairman Barker’s December 18, 2007 letter, it is baffling
why it is only in the said letter that RCBC’s prayer was given a complexion of being an
application for a partial award. To the Court, the said letter signaled a preconceived
course of action that the relief prayed for by RCBC will be granted.
That there was an action to be taken beforehand is confirmed by Chairman Barker’s furnishing
the parties with a copy of the Secomb article. This article ultimately favored RCBC by
advancing its cause. Chairman Barker makes it appear that he intended good to be done
in doing so but due process dictates the cold neutrality of impartiality. This means that "it
is not enough…[that] cases [be decided] without bias and favoritism. Nor is it sufficient that…
prepossessions [be rid of]. [A]ctuations should moreover inspire that belief." These put into the
equation, the furnishing of the Secomb article further marred the trust reposed in Chairman
Barker. The suspicion of his partiality on the subject matter deepened. Specifically, his act
established that he had pre-formed opinions.
Chairman Barker’s providing of copies of the said text is easily interpretable that he had
prejudged the matter before him. In any case, the Secomb article tackled bases upon which the
Second Partial Award was founded. The subject article reflected in advance the
disposition of the ICC arbitral tribunal. The award can definitely be viewed as an affirmation
that the bases in the Secomb article were adopted earlier on. To the Court, actuations of
arbitrators, like the language of judges, "must be guarded and measured lest the best of
intentions be misconstrued."
x x x x91 (Emphasis supplied)
We affirm the foregoing findings and conclusion of the appellate court save for its reference to
the obiter in Commonwealth Coatings  that arbitrators are held to the same standard of conduct
imposed on judges. Instead, the Court adopts the reasonable impression of partiality  standard,
which requires a showing that a reasonable person would have to conclude that an arbitrator
was partial to the other party to the arbitration. Such interest or bias, moreover, "must be direct,
definite and capable of demonstration rather than remote, uncertain, or speculative."92 When a
claim of arbitrator’s evident partiality is made, "the court must ascertain from such record as is
available whether the arbitrators’ conduct was so biased and prejudiced as to destroy
fundamental fairness."93 
Applying the foregoing standard, we agree with the CA in finding that Chairman Barker’s act of
furnishing the parties with copies of Matthew Secomb’s article, considering the attendant
circumstances,is indicative of partiality such that a reasonable man would have to conclude
that he was favoring the Claimant, RCBC. Even before the issuance of the Second Partial
Award for the reimbursement of advance costs paid by RCBC, Chairman Barker exhibited
strong inclination to grant such relief to RCBC, notwithstanding his categorical ruling that the
Arbitration Tribunal "has no power under the ICC Rules to order the Respondents to pay the
advance on costs sought by the ICC or to give the Claimantany relief against the Respondents’
refusal to pay."94 That Chairman Barker was predisposed to grant relief to RCBC was shown by
his act of interpreting RCBC’s letter, which merely reiterated its plea to declare the
Respondents in default and consider all counterclaims withdrawn – as what the ICC Rules
provide – as an application to the Arbitration Tribunal to issue a partial award in respect of
BDO’s failure to share in the advance costs. It must be noted that RCBC in said letter did not
contemplate the issuance of a partial order, despite Chairman Barker’s previous letter which
mentioned the possibility of granting relief upon the parties making submissions to the
Arbitration Tribunal. Expectedly, in compliance with Chairman Barker’s December 18, 2007
letter, RCBC formally applied for the issuance of a partial award ordering BDO to pay its share
in the advance costs.
Mr. Secomb’s article, "Awards and Orders Dealing With the Advance on Costs in ICC
Arbitration: Theoretical Questions and Practical Problems" 95 specifically dealt with the situation
when one of the parties to international commercial arbitration refuses to pay its share on the
advance on costs. After a brief discussion of the provisions of ICC Rules dealing with advance
on costs, which did not provide for issuance of a partial award to compel payment by the
defaulting party, the author stated:
4. As we can see, the Rules have certain mechanisms to deal with defaulting parties.
Occasionally, however, parties have sought to use other methods to tackle the problem of a
party refusing to pay its part of the advance on costs. These have included seeking an order or
award from the arbitral tribunal condemning the defaulting party to pay its share of the advance
on costs.1âwphi1 Such applications are the subject of this article.96  Court, based on Article 30-3 ICC Rules which – by reference – forms part of the parties’
By furnishing the parties with a copy of this article, Chairman Barker practically armed RCBC
with supporting legal arguments under the "contractual approach" discussed by Secomb. True
enough, RCBC in its Application for Reimbursement of Advance Costs Paid utilized said
approach as it singularly focused on Article 30(3)97 of the ICC Rules and fiercely argued that
BDO was contractually bound to share in the advance costs fixed by the ICC.98 But whether
under the "contractual approach" or "provisional approach" (an application must be treated as
an interim measure of protection under Article 23 [1] rather than enforcement of a contractual
obligation), both treated in the Secomb article, RCBC succeeded in availing of a remedy which
was not expressly allowed by the Rules but in practice has been resorted to by parties in
international commercial arbitration proceedings. It may also be mentioned that the author,
Matthew Secomb, is a member of the ICC Secretariat and the "Counsel in charge of the file",
as in fact he signed some early communications on behalf of the ICC Secretariat pertaining to
the advance costs fixed by the ICC.99 This bolstered the impression that Chairman Barker was
predisposed to grant relief to RCBC by issuing a partial award.
Indeed, fairness dictates that Chairman Barker refrainfrom suggesting to or directing RCBC
towards a course of action to advance the latter’s cause, by providing it with legal arguments
contained in an article written by a lawyer who serves at the ICC Secretariat and was involved
or had participation -- insofar as the actions or recommendations of the ICC – in the case.
Though done purportedly to assist both parties, Chairman Barker’s act clearly violated Article
15 of the ICC Rules declaring that "[i]n all cases, the Arbitral Tribunal shall act fairly and
impartially and ensure that each party has a reasonable opportunity to present its case."
Having pre-judged the matter in dispute, Chairman Barker had lost his objectivity in the
issuance of the Second Partial Award.
In fine, we hold that the CA did not err in concluding that the article ultimately favored RCBC as
it reflected in advance the disposition of the Arbitral Tribunal, as well as "signalled a
preconceived course of action that the relief prayed for by RCBC will be granted." This
conclusion is further confirmed by the Arbitral Tribunal’s pronouncements in its Second Partial
Award which not only adopted the "contractual approach" but even cited Secomb’s article
along with other references, thus:
6.1 It appears to the Tribunal that the issue posed by this application is essentially a
contractual one. x x x
xxxx
6.5 Matthew Secomb, considered these points in the article in 14 ICC Bulletin No. 1 (2003)
which was sent to the parties. At Para. 19, the learned author quoted from an ICC Tribunal
(Case No. 11330) as follows:
"The Arbitral Tribunal concludes that the partiesin arbitrations conducted under the ICC Rules
have a mutually binding obligation to pay the advance on costs as determined by the ICC
agreement to arbitration under such Rules."100 
The Court, however, must clarify that the merits of the parties’ arguments as to the propriety of
the issuance of the Second Partial Award are not in issue here. Courts are generally without
power to amend or overrule merely because of disagreement with matters of law or facts
determined by the arbitrators. They will not review the findings of law and fact contained in an
award, and will not undertake to substitute their judgment for that of the arbitrators. A contrary
rule would make an arbitration award the commencement, not the end, of litigation.101 It is the
finding of evident partiality which constitutes legal ground for vacating the Second Partial
Award and not the Arbitration Tribunal’s application of the ICC Rules adopting the "contractual
approach" tackled in Secomb’s article.
Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and
conciliation – are encouraged by this Court. By enabling parties to resolve their disputes
amicably, they provide solutions that are less time-consuming, less tedious, less
confrontational, and more productive of goodwill and lasting relationship.102 Institutionalization
of ADR was envisioned as "an important means to achieve speedy and impartial  justice and
declog court dockets."103 The most important feature of arbitration, and indeed, the key to its
success, is the public’s confidence and trust in the integrity of the process.104 For this reason,
the law authorizes vacating an arbitral award when there is evident partiality in the arbitrators.
Injunction Against Execution Of Arbitral Award
Before an injunctive writ can be issued, it is essential that the following requisites are present:
(1) there must be a right inesse or the existence of a right to be protected; and (2) the act
against which injunction to be directed is a violation of such right. The onus probandi is on
movant to show that there exists a right to be protected, which is directly threatened by the act
sought to be enjoined. Further, there must be a showing that the invasion of the right is
material and substantial and that there is an urgent and paramount necessity for the writ to
prevent a serious damage.105 
Rule 19.22 of the Special ADR Rules states:
Rule 19.22. Effect of appeal.—The appeal shall not stay the award, judgment, final order or
resolution sought to be reviewed unless the Court of Appeals directs otherwise upon such
terms as it may deem just.

We find no reversible error or grave abuse of discretion in the CA’s denial of the application for
stay order or TRO upon its finding that BDO failed to establish the existence of a clear legal
right to enjoin execution of the Final Award confirmed by the Makati City RTC, Branch 148,
pending resolution of its appeal.It would be premature to address on the merits the issues
raised by BDO in the present petition considering that the CA still has to decide on the validity
of said court's orders confirming the Final Award. But more important, since BOO had already
paid ₱637,941,185.55 m manager's check, albeit under protest, and which payment was
accepted by RCBC as full and complete satisfaction of the writ of execution, there is no more
act to be enjoined.

Settled is the rule that injunctive reliefs are preservative remedies for the protection of
substantive rights and interests. Injunction is not a cause of action in itself, but merely a
provisional remedy, an adjunct to a main suit. When the act sought to be enjoined has
become fait accompli,  the prayer for provisional remedy should be denied. 106 

Thus, the Court ruled in Gov. Looyuko107 that when the events sought to be prevented by
injunction or prohibition have already happened, nothing more could be enjoined or prohibited.
Indeed, it is a universal principle of law that an injunction will not issue to restrain the
performance of an act already done. This is so for the simple reason that nothing more can be
done in reference thereto. A writ of injunction becomes moot and academic after the act sought
to be enjoined has already been consummated.

WHEREFORE, premises considered, the petition m G.R. No. 199238 is DENIED. The

Resolution dated September 13,2011 ofthe Court of Appeals in CA-G.R. SP No. 120888
is AFFIRMED. EN BANC G.R. No. 99327 May 27, 1993

The petition in G.R. No. 196171 is DENIED. The Decision dated December 23, 2010 of the
Court of Appeals in CA-G.R. SP No. 113525 is hereby AFFIRMED.
SO ORDERED.
ATENEO DE MANILA UNIVERSITY, FATHER JOAQUIN BERNAS, S. J., DEAN CYNTHIA
ROXAS-DEL CASTILLO, JUDGE RUPERTO KAPUNAN, JR., JUSTICE VENICIO ESCOLIN,
FISCAL MIGUEL ALBAR, ATTYS. MARCOS HERRAS, FERDINAND CASIS, JOSE CLARO
TESORO, RAMON CAGUIOA, and RAMON ERENETA. petitioners, 
vs. HON. IGNACIO M. CAPULONG, Presiding Judge of the RTC-Makati, Br. 134, ZOSIMO
MENDOZA, JR. ERNEST MONTECILLO, ADEL ABAS, JOSEPH LLEDO AMADO SABBAN,
DALMACIO LIM JR., MANUEL ESCONA and JUDE FERNANDEZ, respondents.

ROMERO, J.:

In 1975, the Court was confronted with a mandamus proceeding to compel the Faculty
Admission Committee of the Loyola School of Theology, a religious seminary which has a
working arrangement with the Ateneo de Manila University regarding accreditation of common
students, to allow petitioner who had taken some courses therein for credit during summer, to
continue her studies.1 Squarely meeting the issue, we dismissed the petition on the ground that
students in the position of petitioner possess, not a right, but a privilege, to be admitted to the
institution. Not having satisfied the prime and indispensable requisite of
a mandamus proceeding since there is no duty, much less a clear duty, on the part of the
respondent to admit the petitioner, the petition did not prosper.
In support of its decision, the Court invoked academic freedom of institutions of higher learning,
as recognized by the Constitution, the concept encompassing the right of a school to choose its
students.
Eighteen (18) years later, the right of a University to refuse admittance to its students, this time
in Ateneo de Manila University proper, is again challenged.
Whereas, in the Garcia case referred to in the opening paragraph, the individual concerned
was not a regular student, the respondents in the case at bar, having been previously enrolled
in the University, seek re-admission. Moreover, in the earlier case, the petitioner was refused
admittance, not on such considerations as personality traits and character orientation, or even
inability to meet the institution's academic or intellectual standards, but because of her
behavior in the classroom. The school pointedly informed her that ". . . it would seem to be in
your best interest to work with a Faculty that is more compatible with your orientations."
On the other hand, students who are now being refused admission into petitioner University
have been found guilty of violating Rule No. 3 of the Ateneo Law School Rules on Discipline
which prohibits participation in hazing activities. The case attracted much publicity due to the
death of one of the neophytes and serious physical injuries inflicted on another.
Herein lies an opportunity for the Court to add another dimension to the concept of academic
freedom of institutions of higher learning, this time a case fraught with social and emotional
overtones.
The facts which gave rise to this case which is far from novel, are as follows:
As a requisite to membership, the Aquila Legis, a fraternity organized in the Ateneo Law
School, held its initiation rites on February 8, 9 and 10, 1991, for students interested in joining
its ranks. As a result of such initiation rites, Leonardo "Lennie" H. Villa, a first year student of
petitioner university, died of serious physical injuries at Chinese General Hospital on February
10, 1991. He was not the lone victim, though, for another freshman by the name of Bienvenido
Marquez was also hospitalized at the Capitol Medical Center for acute renal failure occasioned
by the serious physical injuries inflicted upon him on the same occasion.
In a notice dated February 11, 1991, petitioner Dean Cynthia del Castillo created a Joint
Administration-Faculty-Student Investigating Committee2 which was tasked to investigate and
submit a report within 72 hours on the circumstances surrounding the death of Lennie Villa.
Said notice also required respondent students to submit their written statements within twenty-
four (24) hours from receipt. Although respondent students received a copy of the written
notice, they failed to file a reply. In the meantime, they were placed on preventive
suspension.3 Through their respective counsels, they requested copies of the charges and
pertinent documents or affidavits.
In a notice dated February 14, 1991, the Joint Administration-Faculty-Student Investigating
Committee, after receiving the written statements and hearing the testimonies of several
witness, found a  prima facie case against respondent students for violation of Rule 3 of the
Law School Catalogue entitled "Discipline."4
Respondent students were then required to file their written answers to the formal charge on or
before February 18, 1991; otherwise, they would be deemed to have waived their right to
present their defenses.
On February 20, 1991, petitioner Dean created a Disciplinary Board composed of petitioners
Judge Ruperto Kapunan, Justice Venicio Escolin, Atty. Marcos Herras, Fiscal Miguel Albar and
Atty. Ferdinand Casis, to hear the charges against respondent students.
In a letter dated February 20, 1991, respondent students were informed that they had violated
Rule No. 3 of the Rules on Discipline contained in the Law School Catalogue. Said letter also
states: "The complaint/charge against you arose from initiations held on February 8-10, 1991.
The evidence against you consist of testimonies of students, showing your participation in acts
prohibited by the School regulations." Finally, it ordered respondent students to file their written
answers to the above charge on or before February 22 1991, otherwise they would be deemed
to have waived their defenses.5
In a motion dated February 21, 1991, respondent students, through counsel, requested that the
investigation against them be held in abeyance, pending action on their request for copies of
the evidence against them.6
Respondent students were then directed by the Board to appear before it at a hearing on
February 28, 1991 to clarify their answer with regard to the charges filed by the investigating
committee for violation of Rule No. 3. However, in a letter to a petitioners dated February 27,
1991, counsel for respondent students moved to postpone the hearing from February 28, 1991
to March 1, 1991.7
Subsequently, respondent students were directed to appear on March 2, 1991 for clarificatory
questions.8 They were also informed that:
a) The proceedings will be summary in nature in accordance with the rules laid
down in the case of Guzman vs. National University;9
b) Petitioners have no right to cross-examine the affiants-neophytes;
c) Hazing which is not defined in the School catalogue shall be defined in
accordance with the proposed bill of Sen. Jose Lina, Senate Bill No. 3815;
 d) The Board will take into consideration the degree of participation of the
petitioners in the alleged hazing incident in imposing the penalty;
e) The Decision of the Board shall be appealable to the President of the
University, i. e., Respondent Joaquin Bernas S. J.
On March 5, 1991, petitioner Bernas wrote Dean Castillo that, "in cases where the Disciplinary
Board is not prepared to impose the penalty of dismissal, I would prefer that the Board leave
the decision on the penalty to the Administration so that this case be decided not just on the
Law School level but also on the University level."10
In a resolution dated March 9, 1991, the Board found respondent students guilty of violating
Rule No. 3 of the Ateneo Law School Rules on Discipline which prohibits participation in hazing
activities. The Board found that respondent students acted as master auxiliaries or "auxies"
during the initiation rites of Aquila Legis, and exercised the "auxies privilege," which allows
them to participate in the physical hazing. Although respondent students claim that they were
there to assist and attend to the needs of the neophytes, actually they were assigned a definite
supportive role to play in the organized activity. Their guilt was heightened by the fact that they
made no effort to prevent the infliction of further physical punishment on the neophytes under
their care. The Board considered respondent students part and parcel of the integral process of
hazing. In conclusion, the Board pronounced respondents guilty of hazing, either by active
participation or through acquiescence. However, in view of the lack of unanimity among the
members of the Board on the penalty of dismissal, the Board left the imposition of the penalty
to the University Administration.11 Petitioner Dean del Castillo waived her prerogative to review
the decision of the Board and left to the President of the University the decision of whether to
expel respondents or not.
Consequently, in a resolution dated March 10, 1991, petitioner Fr. Joaquin G. Bernas, as
President of the Ateneo de Manila University, accepted the factual findings of the Board, thus:
"that as Master Auxiliaries they exercised the 'auxie's privilege;' that even assuming they did
not lay hands on the neophytes," respondents students are still guilty in accordance with the
principle that "where two or more persons act together in the commission of a crime, whether
they act through the physical volition of one or of all, proceeding severally or collectively, each
individual whose will contributes to the wrongdoing is responsible for the whole." Fr. Bernas, in
describing the offense which led to the death of Leonardo Villa, concluded that the "offense of
the respondents can be characterized as grave and serious, subversive of the goals of
Christian education and contrary to civilized behavior." Accordingly, he imposed the penalty of
dismissal on all respondent students.12
In a resolution dated March 18, 1991 and concurred in by petitioner Fr. Bernas,13 the Board
excluded respondent students Abas and Mendoza from the coverage of the resolution of March
10, 1991, inasmuch as at the time the latter resolution was promulgated, neither had as yet
submitted their case to the Board. Said resolution also set the investigation of the two students
on March 21, 1991.
On March 18, 1991, respondent students filed with the Regional Trial Court of Makati, a petition
for certiorari, prohibition and mandamus with prayer for temporary restraining order and
preliminary injunction14 alleging that they were currently enrolled as students for the second
semester of school year 1990-91. Unless a temporary restraining order is issued, they would
be prevented from taking their examinations. The petition principally centered on the alleged
lack of due process in their dismissal.
On the same day, Judge Madayag issued a temporary restraining order the enjoining
petitioners from dismissing respondent students and stopping the former from conducting
hearings relative to the hazing incident.15
Hearings in connection with the issuance of the temporary restraining order were then held. On
April 7, 1991, the temporary restraining order were issued on March 18, 1991 lapsed.
Consequently, a day after the expiration of the temporary restraining order, Dean del Castillo
created a Special Board composed of Atty.(s) Jose Claro Tesoro, Ramon Caguioa, and Ramon
Ereñeta to investigate the charges of hazing against respondent students Abas and Mendoza.
Respondent students reacted immediately by filing a Supplemental Petition of certiorari,
prohibition and mandamuswith prayer for a temporary restraining order and preliminary
injunction, to include the aforesaid members of the Special Board, as additional respondents to
the original petition.16
Petitioners moved to strike out the Supplement Petition arguing that the creation of the Special
Board was totally unrelated to the original petition which alleged lack of due process in the
conduct of investigations by the Disciplinary Board against respondent students; that a
supplemental petition cannot be admitted without the same being set for hearing and that the
supplemental petition for the issuance of a temporary restraining order will, in effect, extend the
previous restraining order beyond its mandatory 20-day lifetime.17 Acting on the urgent motion
to admit the supplemental petition with prayer for a temporary restraining order, Judge Amin,
as pairing judge of respondents Judge Capulong, granted respondent students' prayer on April
10, 1991.18
On May 17, 1991, respondent Judge ordered petitioners to reinstate respondent students.
Simultaneously, the court ordered petitioners to conduct special examinations in lieu of the final
examinations which allegedly the students were not allowed to take, and enjoined them to
maintain the status quo with regard to the cases of Adel Abas and Zosimo Mendoza pending
final determination of the issue of the instant case. Lastly, it directed respondent students to file
a bond in the amount of P50,000.00.19
On the same date, May 17, 1991, the Special Board investigating petitioners Abas and
Mendoza and directed the dropping of their names from its roll of students.20
The following day or on May 21, 1991, respondent judge issued the writ of preliminary
injunction upon posting by respondents of a bond dated May 17, 1991 in the amount of
P50,000.00.
Hence, this special civil action of certiorari under Rule 65 with prayer for the issuance of a
temporary restraining order enjoining the enforcement of the May 17, 1991 order of respondent
judge.21
In the case at bar, we come to grips with two relevant issues on academic freedom, namely: (1)
whether a school is within its rights in expelling students from its academic community pursuant
to its disciplinary rules and moral standards; and (2) whether or not the penalty imposed by the
school administration is proper under the circumstances.
We grant the petition and reverse the order of respondent judge ordering readmission of
respondent students. Respondent judge committed grave abuse of discretion when he ruled
that respondent students had been denied due process in the investigation of the charges
against them.
It is the threshold argument of respondent students that the decision of petitioner Fr. Joaquin
Bernas, S. J., then President of the Ateneo de Manila University, to expel them was arrived at
without affording them their right to procedural due process. We are constrained to disagree as
we find no indication that such right has been violated. On the contrary, respondent students'
rights in a school disciplinary proceeding, as enunciated in the cases of Guzman v. National
University,22 Alcuaz v. PSBA, Q.C. Branch23 and Non v. Dames II24 have been meticulously
respected by petitioners in the various investigative proceedings held before they were
expelled.
Corollary to their contention of denials of due process is their argument that it is Ang
Tibay case25 and not the Guzman case which is applicable in the case at bar. Though both
cases essentially deal with the requirements of due process, the Guzman case is
more apropos to the instant case, since the latter deals specifically with the minimum
standards to be satisfied in the imposition of disciplinary sanctions in academic institutions,
such as petitioner university herein, thus:
(1) the students must be informed in writing of the nature and cause of any
accusation against them; (2) that they shall have the right to answer the
charges against them with the assistance of counsel, if desired: (3) they shall
be informed of the evidence against them (4) they shall have the right to
adduce evidence in their own behalf; and (5) the evidence must be duly
considered by the investigating committee or official designated by the school
authorities to hear and decide the case.26
It cannot seriously be asserted that the above requirements were not met. When, in view of the
death of Leonardo Villa, petitioner Cynthia del Castillo, as Dean of the Ateneo Law School,
notified and required respondent students on February 11, 1991 to submit within twenty-four
hours their written statement on the incident,27 the records show that instead of filing a reply,
respondent students requested through their counsel, copies of the charges.28 While of the
students mentioned in the February 11, 1991 notice duly submitted written statements, the
others failed to do so. Thus, the latter were granted an extension of up to February 18, 1991 to
file their statements.29
Indubitably, the nature and cause of the accusation were adequately spelled out in petitioners'
notices dated February 14 and 20, 1991.30 It is to be noted that the February 20, 1991 letter
which quoted Rule No. 3 of its Rules of Discipline as contained in the Ateneo Law School
Catalogue was addressed individually to respondent students. Petitioners' notices/letters dated
February 11, February 14 and 20 clearly show that respondent students were given ample
opportunity to adduce evidence in their behalf and to answer the charges leveled against them.
The requisite assistance of counsel was met when, from the very start of the investigations
before the Joint Administration Faculty-Student Committee, the law firm of Gonzales Batiler
and Bilog and Associates put in its appearance and filed pleadings in behalf of respondent
students.
Respondent students may not use the argument that since they were not accorded the
opportunity to see and examine the written statements which became the basis of petitioners'
February 14, 1991 order, they were denied procedural due process.31 Granting that they were
denied such opportunity, the same may not be said to detract from the observance of due
process, for disciplinary cases involving students need not necessarily include the right to cross
examination. An administrative proceeding conducted to investigate students' participation in a
hazing activity need not be clothed with the attributes of a judicial proceeding. A closer
examination of the March 2, 1991 hearing which characterized the rules on the investigation as
being summary in nature and that respondent students have no right to examine affiants-
neophytes, reveals that this is but a reiteration of our previous ruling in Alcuaz.32
Respondent students' contention that the investigating committee failed to consider their
evidence is far from the truth because the February 14, 1992 ordered clearly states that it was
reached only after receiving the written statements and hearing the testimonies of several
witnesses.33 Similarly, the Disciplinary Board's resolution dated March 10, 1991 was preceded
by a hearing on March 2, 1991 wherein respondent students were summoned to answer
clarificatory questions.
With regard to the charge of hazing, respondent students fault petitioners for not explicitly
defining the word "hazing" and allege that there is no proof that they were furnished copies of
the 1990-91 Ateneo Law School Catalogue which prohibits hazing. Such flawed sophistry is not
worthy of students who aspire to be future members of the Bar. It cannot be overemphasized
that the charge filed before the Joint Administration-Faculty-Student Investigating Committee
and the Disciplinary Board is not a criminal case requiring proof beyond reasonable doubt but
is merely administrative in character. As such, it is not subject to the rigorous requirements of
criminal due process, particularly with respect to the specification of the charge involved. As we
have had occasion to declare in previous cases a similar nature, due process in disciplinary
cases involving students does not entail proceedings and hearings identical to those prescribed
for actions and proceedings in courts of justice.34 Accordingly, disciplinary charges against a
student need not be drawn with the precision of a criminal information or complaint. Having
given prior notice to the students involved that "hazing" which is not defined in the School
Catalogue shall be defined in accordance with Senate Bill No. 3815, the proposed bill on the
subject of Sen. Jose Lina, petitioners have said what needs to be said. We deem this sufficient
for purposes of the investigation under scrutiny.
Hazing, as a ground for disciplining a students, to the extent of dismissal or expulsion, finds
its raison d' etre in the increasing frequency of injury, even death, inflicted upon the neophytes
by their insensate "masters." Assuredly, it passes the test of reasonableness and absence of
malice on the part of the school authorities. Far from fostering comradeship and esprit d' corps,
it has merely fed upon the cruel and baser instincts of those who aspire to eventual leadership
in our country.
Respondent students argue that petitioners are not in a position to file the instant petition under
Rule 65 considering that they failed to file a motion for reconsideration first before the trial
court, thereby by passing the latter and the Court of Appeals.35
It is accepted legal doctrine that an exception to the doctrine of exhaustion of remedies is when
the case involves a question of law,36 as in this case, where the issue is whether or not
respondent students have been afforded procedural due process prior to their dismissal
from petitioner university.
Lastly, respondent students argue that we erred in issuing a Temporary Restraining Order
since petitioners do not stand to suffer irreparable damage in the event that private
respondents are allowed to re-enroll. No one can be so myopic as to doubt that the immediate
reinstatement of respondent students who have been investigated and found by the
Disciplinary Board to have violated petitioner university's disciplinary rules and standards will
certainly undermine the authority of the administration of the school. This we would be most
loathe to do.
More importantly, it will seriously impair petitioner university's academic freedom which has
been enshrined in the 1935, 1973 and the present 1987 Constitutions.
At this juncture, it would be meet to recall the essential freedoms subsumed by Justice Felix
Frankfurter in the term "academic freedom" cited in the case of Sweezy v. New
Hampshire,37 thus: (1) who may teach: (2) what may be taught; (3) how it shall be taught; and
(4) who may be admitted to study.
Socrates, the "first of the great moralists of Greece," proud to claim the title "gadfly of the
State" has deservedly earned for himself a respected place in the annals of history as a martyr
to the cause of free intellectual inquiry. To Plato, this great teacher of his was the "best, the
most sensible, and the most sensible, and the most just man of his age." In 399 B.C., he
willingly quaffed the goblet of hemlock as punishment for alleged "corruption" of the youth of
Athens. He describes in his own words how this charge of "corruption," the forerunner of the
concept of academic freedom, came about:
Young men of the richer classes, who have not much to do, come about me of
their own accord: they like to heart the pretenders examined, and they often
imitate me, and examine others themselves; there are plenty of person, as
they soon discover, who think that they know something, but really know little
or nothing; and then those who are examined by them instead of being angry
with themselves are angry with me. This confounded Socrates, they say; this
villainous misleader of youth. And then if somebody asks them, Why, what evil
does he practice or teach? they do not know, and cannot tell; but in order that
they may not appear to be at a loss, they repeat the ready-made charges
which are used against all philosophers about teaching things up in the clouds
and under the earth, and having no gods, and making the worse appear the
better cause; for they do not like to confess that their pretense of knowledge
has been detected — which is the truth; and as they are numerous and
ambitious and energetic, and are all in battle array and have persuasive
tongues, they have filled your ears with their loud and inveterate calumnies.38
Since Socrates, numberless individuals of the same heroic mold have similarly defied the
stifling strictures of authority, whether State, Church, or various interest groups, to be able to
give free rein to their ideas. Particularly odious were the insidious and blatant attempts at
thought control during the time of the Inquisition until even the Medieval universities, renowned
as intellectual centers in Europe, gradually lost their autonomy.
In time, such noble strivings, gathering libertarian encrustations along the way, were gradually
crystallized in the cluster of freedoms which awaited the champions and martyrs of the dawning
modern age. This was exemplified by the professors of the new German universities in the 16th
and 17th centuries such as the Universities of Leiden (1554), Helmstatdt (1574) and
Heidelberg (1652). The movement back to freedom of inquiry gained adherents among the
exponents of fundamental human rights of the 19th and 20th centuries. "Academic freedom",
the term as it evolved to describe the emerging rights related to intellectual liberty, has
traditionally been associated with freedom of thought, speech, expression and the press; in
other words, with the right of individuals in university communities, such as professors,
researchers and administrators, to investigate, pursue, discuss and, in the immortal words of
Socrates, "to follow the argument wherever it may lead," free from internal and external
interference or pressure.
But obviously, its optimum impact is best realized where the freedom is exercised judiciously
and does not degenerate into unbridled license. Early cases on this individual aspect of
academic freedom have been stressed the need for assuring to such individuals a measure of
independence through the guarantees of autonomy and security of tenure. The components of
this aspect of academic freedom have been categorized under the areas of: (1) who may teach
and (2) how to teach.
It is to be realized that this individual aspects of academic freedom could have developed
only  pari passu with its institutional counterpart. As corporate entities, educational institutions
of higher learning are inherently endowed with the right to establish their policies, academic
and otherwise, unhampered by external controls or pressure. In theFrankfurter formulation, this
is articulated in the areas of: (1) what shall be taught, e.g., the curriculum and (2) who may be
admitted to study.
In the Philippines, the Acts which are passed with the change of sovereignty from the Spanish
to the American government, namely, the Philippine Bill of 1902 and the Philippine Autonomy
Act of 1916 made no mention of the rights now subsumed under the catch-all term of
"academic freedom." This is most especially true with respect to the institutional aspect of the
term. It had to await the drafting of the Philippine Constitutions to be recognized as deserving
of legal protection.
The breakthrough for the concept itself was found in Section 5 of the 1935 Constitution which
stated: "Universities established by the State shall enjoy academic freedom." The only State
University at that time, being the University of the Philippines, the Charter was perceived by
some as exhibiting rank favoritism for the said institution at the expense of the rest.
In attempt to broaden the coverage of the provision, the 1973 Constitution provided in its
Section 8(2): "All institutions of higher learning shall enjoy academic freedom." In his
interpretation of the provision, former U.P. President Vicente G. Sinco, who was also a
delegate to the 1971 Constitutional Convention, declared that it "definitely grants the right of
academic freedom to the University as an institution as distinguished from the academic
freedom of a university professor."39
Has the right been carried over the to the present Constitution? In an attempt to give an explicit
definition with an expanded coverage, the Commissioners of the Constitutional Commission of
the 1986 came up with this formulation: "Academic freedom shall be enjoyed by students, by
teachers, and by researchers." After protracted debate and ringing speeches, the final version
which was none too different from the way it was couched in the previous two (2) Constitutions,
as found in Article XIV, Section 5(2) states: "Academic freedom shall be enjoyed in all
institutions of higher learning." In anticipation of the question as to whether and what aspects of
academic freedom are included herein, ConCom Commissioner Adolfo S. Azcuna explained:
"Since academic freedom is a dynamic concept, we want to expand the frontiers of freedom,
especially in education, therefore, we shall leave it to the courts to develop further the
parameters of academic freedom."40
More to the point, Commissioner Jose Luis Martin C. Gascon asked: "When we speak of the
sentence 'academic freedom shall be enjoyed in all institutions of higher learning,' do we mean
that academic freedom shall be enjoyed by the institution itself?" Azcuna replied: "Not only that,
it also includes . . . . " Gascon finished off the broken thought,— "the faculty and the students."
Azcuna replied: "Yes."
Since Garcia v. Loyola School of Theology,41 we have consistently upheld the salutary
proposition that admission to an institution of higher learning is discretionary upon a school, the
same being a privilege on the part of the student rather than a right. While under the education
Act of 1982, students have a right "to freely choose their field of study, subject to existing
curricula and to continue their course therein up to graduation," such right is subject, as all
rights are, to the established academic and disciplinary standards laid down by the academic
institution.42
"For private schools have the right to establish reasonable rules and regulations for the
admission, discipline and promotion of students. This . . . extends as well to parents . . . as
parents are under a social and moral (if not legal) obligation, individually and collectively, to
assist and cooperate with the schools."43
Such rules are "incident to the very object of incorporation and indispensable to the successful
management of the college. The rules may include those governing student discipline."44 Going
a step further, the establishment of rules governing university-student relations, particularly
those pertaining to student discipline, may be regarded as vital, not merely to the smooth and
efficient operation of the institution, but to its very survival.
Within memory of the current generation is the eruption of militancy in the academic groves as
collectively, the students demanded and plucked for themselves from the ponoply of academic
freedom their own rights encapsulized under the rubric of "right to education" forgetting that, in
Holfeldian terms, they have a concomitant duty, and that is, their duty to learn under the rules
laid down by the school.
Considering that respondent students are proud to claim as their own a Christian school that
includes Theology as part of its curriculum and assidously strives to turn out individuals of
unimpeachable morals and integrity in the mold of the founder of the order of the Society of
Jesus, St. Ignatius of Loyola, and their God-fearing forbears, their barbaric and ruthless acts
are the more reprehensible. It must be borne in mind that universities are established, not
merely to develop the intellect and skills of the studentry, but to inculcate lofty values, ideals
and attitudes; nay, the development, or flowering if you will, of the total man.
In essence, education must ultimately be religious — not in the sense that the founders or
charter members of the institution are sectarian or profess a religious ideology. Rather, a
religious education, as the renowned philosopher Alfred North Whitehead said, is "an
education which inculcates duty and reverence."45 It appears that the particular brand of
religious education offered by the Ateneo de Manila has been lost on the respondent students.
Certainly, they do not deserve to claim such a venerable institution as the Ateneo de Manila
University as their own a minute longer, for they may foreseeably cast a malevolent influence
on the students currently enrolled, as well as those who come after them.
Quite applicable to this case is our pronouncement in Yap Chin Fah v. Court of Appeals that:
"The maintenance of a morally conducive and orderly educational environment will be seriously
imperiled if, under the circumstances of this case, Grace Christian is forced to admit petitioner's
children and to reintegrate them to the student body."46 Thus, the decision of petitioner
university to expel them is but congruent with the gravity of their misdeeds. That there must be
such a congruence between the offense committed and the sanction imposed was stressed
in Malabanan v. Ramento.47
Having carefully reviewed the records and the procedure followed by petitioner university, we
see no reason to reverse its decision founded on the following undisputed facts: that on
February 8, 9 and 10, 1991, the Aquila Legis Fraternity conducted hazing activities; that
respondent students were present at the hazing as auxiliaries, and that as a result of the
hazing, Leonardo Villa died from serious physical injuries, while Bienvenido Marquez was
hospitalized. In light of the vicious acts of respondent students upon those whom ironically they
would claim as "brothers" after the initiation rites, how can we countenance the imposition of
such nominal penalties as reprimand or even suspension? We, therefore, affirm petitioners'
imposition of the penalty of dismissal upon respondent students. This finds authority and
justification in Section 146 of the Manual of Regulations for Private Schools.48

WHEREFORE, the instant petition is GRANTED; the order of respondent Judge dated May 17,
1991 reinstating respondents students into petitioner university is hereby REVERSED. The
resolution of petitioner Joaquin Bernas S. J., then President of Ateneo de Manila University
dated March 1991, is REINSTATED and the decision of the Special Board DISMISSING
respondent students ADEL ABAS and ZOSIMO MENDOZA dated May 20, 1991 is hereby
AFFIRMED.

FIRST DIVISION G.R. No. 81798 December 29, 1989

LAO GI alias FILOMENO CHIA, SR., his wife, ONG UE, and his children FILOMENO, JR.,
MANUEL, ROSITA VICENTA and DOMINGA, all surnamed CHIA, petitioners 
vs. HONORABLE COURT OF APPEALS AND COMMISSION ON IMMIGRATION AND
DEPORTATION, respondents..

GANCAYCO, J.:

On September 3, 1958 the Secretary of Justice rendered Opinion No. 191, series of 1958
finding Filomeno Chia, Jr., alias Sia Pieng Hui to be a Filipino citizen as it appears that his
father Filomeno Chia, Sr. is a Filipino citizen born on November 28, 1899 being the legitimate
son of Inocencio Chia and Maria Layug of Guagua, Pampanga. However on October 3, 1980
the Minister of Justice rendered Opinion No. 147, series of 1980 cancelling Opinion No. 191,
series of 1958 and setting aside the citizenship of Filomeno Chia, Sr. on the ground that it was
founded on fraud and misrepresentation. A motion for reconsideration of said Opinion was
denied by the Minister of Justice on February 13, 1981.

On March 9, 1981 a charge for deportation was filed with the Commission on Immigration and
Deportation (CID) against Lao Gi alias Filomeno Chia, Sr., his wife and children.
An amended charge was filed with the CID on March 19,1981 alleging that said respondents
refused to register as aliens having been required to do so and continued to refuse to register
as such. On August 31, 1981 another amended charge was filed alleging that Manuel Chia
committed acts of undesirability.  January 7, 1988.
On September 4, 1981 said respondents filed a motion to dismiss the amended charges on the
ground that the CID has no authority to reopen a matter long settled under Opinion No. 191,
series of 1958. The motion to dismiss was opposed by the private prosecutor. The CID special
prosecutor also filed an opposition on the ground that the citizenship may be threshed out as
the occasion may demand and that due process was accorded to respondents. The
respondents filed a reply thereto. The motion to dismiss was denied by the CID and a motion
for reconsideration of said denial was also denied in a resolution dated December 10, 1981.  1. The issues raised in G.R. No. 59619 before the Honorable Supreme Court were different
Said respondents then filed with this Court on February 11, 1982 a petition for certiorari and
prohibition with a prayer for the issuance of a writ of preliminary injunction and restraining order
docketed as G.R. No. 59619. After requiring a comment thereon, on April 28, 1982 this
court en banc resolved to dismiss the petition for lack of merit. 
Earlier, Manuel Chia was charged with falsification of public documents in the Court of First
Instance (CFI) of Manila in Criminal Case No. 60172 for alleging that he was a Filipino citizen
in the execution of a Deed of Absolute Sale of certain real property. He was acquitted by the
trial court in an order dated May 5, 1982 on the ground that Opinion No. 191, series of 1958 of
the Secretary of Justice may be equated as res judicata  and that revocation thereof by Opinion
No. 147, series of 1980 cannot be considered just, fair and reasonable. 
On June 1, 1982 respondents filed a motion for reconsideration of the aforesaid resolution of
this Court dismissing the petition but this was denied by another resolution of this Court dated
August 17, 1982. A second motion for reconsideration thereof was also denied by this Court on
September 16, 1982. 
On September 23, 1982 the CID set the deportation case against respondents for hearing and
Acting Commissioner Victor G. Nituda gave respondents three (3) days to move for
reconsideration of the order directing them to register as aliens and to oppose the motion for
their arrest. On September 27, 1982 respondents filed said motion for reconsideration and
opposition but this was denied by Acting Commissioner Nituda on September 28, 1982. The
latter directed respondents to register as aliens within two (2) days from notice thereof.
`` deportation case was set for hearing on October 5, 1 982 but on the same day
respondents filed the petition for certiorari and prohibition with a prayer for injunctive relief in
the Court of First Instance of Manila docketed as Civil Case No. 82- 12935 whereby a writ of
preliminary injunction was issued. On April 17,1985 a decision was rendered by the trial court
dismissing the petition for lack of legal basis and for want of supervisory jurisdiction on the part
of the trial court on the particular subject involved. The writ of preliminary injunction previously
issued was dissolved.
An appeal therefrom was interposed to the Court of Appeals. In due course a decision was
rendered on August 19, 1987 dismissing the appeal with costs against petitioners. A motion for
reconsideration of the decision filed by petitioners was also denied in a resolution dated
 
Hence, the herein petition for certiorari filed by petitioners wherein they seek to set aside the
decision of the Court of Appeals and ask that a new one be rendered setting aside the order of
the CID dated September 28, 1982 and directing it to proceed with the reception of the
evidence in support of the charges against the petitioners. The issues raised in the petition are
as follows:
from the issues raised in Civil Case No. 82-12935-CV. 
2. The minute resolution of the Honorable Supreme Court in G.R. No. 59619 did not make a
categorical ruling that petitioner entered and remained in the Philippines by false pretenses. 
3. The issue of whether or not petitioners' citizenship was secured by fraud is precisely the
subject matter of the proceedings before the Commission on Immigration and Deportation, in
which no evidence had been presented yet in support of the charge of fraud in the acquisition
of petitioners' citizenship. 
4. Petitioners are not subject to immediate deportation. 
5. The order for the arrest of petitioners in case of failure to register as aliens was premature
since there was no competent determination yet that their citizenship was indeed procured by
fraud. 
6. The Honorable Court of Appeals overstepped its appellate jurisdiction, when it ruled on
matters not covered by the Decision of the lower court.
There can be no question that the CID has the authority and jurisdiction to hear and determine
the deportation case against petitioners and in the process determine also the question of
citizenship raised by the petitioners. Section 37(a) (1) of the Immigration Act provides as
follows:
SEC. 37. (a) The following aliens shall be arrested upon the warrant of the
Commissioner of Immigration or of any other officer designated by him for the
purpose and deported upon the warrant of the Commissioner of Immigration
after a determination by the Board of Commissioners of the existence of the
ground for deportation as charged against the alien: 
(1) Any alien who enters the Philippines after the effective date of this Act by
means of false and misleading statements or without inspection and admission
 by the immigration authorities at a designated port of entry or at any place
other than at a designated port of entry. (As amended by Sec. 13, Rep. Act
No. 503.) ...
From the foregoing provision it is clear that before any alien may be deported upon a warrant of
the Commissioner of Immigration, there should be a prior determination by the Board of
Commissioners of the existence of the ground as charged against the alien.
In this case it appears that petitioners are charged with having entered the Philippines by
means of false and misleading statements or without inspection or admission by the
immigration authorities at a designated port of entry. 
After appropriate charges are filed in the CID the specific grounds of which he should be duly
informed of, a hearing should be conducted, and it is only after such a hearing by the CID that
the alien may be ordered deported. In such a hearing, Opinion No. 191, Series of 1958 of the
Secretary of Justice and Opinion No. 147, Series of 1980 of the Minister of Justice will bear
much weight in the determination by the CID of the citizenship of said petitioners.  party. In such case he may intervene by counsel.
The petitioners question the Order of Acting Commissioner Nituda that they register as aliens
as required by the Immigration Act. While it is not disputed that it is also within the power and
authority of the Commissioner to require an alien to so register, such a requirement must be
predicated on a positive finding that the person who is so required is an alien. In this case
where the very citizenship of the petitioners is in issue there should be a previous
determination by the CID that they are aliens before the petitioners may be directed and
required to register as aliens.  is the sole concern of the State. This is the reason why there are special prosecutors and
The power to deport an alien is an act of the State. It is an act by or under the authority of the
sovereign power. 1 It is a police measure against undesirable aliens whose presence in the
country is found to be injurious to the public good and domestic tranquility of the people. 2
Although a deportation proceeding does not partake of the nature of a criminal action, however,
considering that it is a harsh and extraordinary administrative proceeding affecting the freedom
and liberty of a person, the constitutional right of such person to due process should not be
denied. Thus, the provisions of the Rules of Court of the Philippines particularly on criminal
procedure are applicable to deportation proceedings. 
Under Section 37(c) of the Philippine Immigration Act of 1940 as amended, it is provided:
c No alien shall be deported without being informed of the specific grounds for
deportation nor without being given a hearing under rules of procedure to be
prescribed by the Commissioner of Immigration.
Hence, the charge against an alien must specify the acts or omissions complained of which
must be stated in ordinary and concise language to enable a person of common understanding
to know on what ground he is intended to be deported and enable the CID to pronounce a
proper judgment. 3
Before any charge should be filed in the CID a preliminary investigation must be conducted to
determine if there is a sufficient cause to charge the respondent for deportation. 4 The issuance
of warrants of arrest, arrests without warrant and service of warrants should be in accordance
likewise with Rule 113 of the 1985 Rules of Criminal Procedure; 5 search warrants issued by
the CID shall be governed by Rule 126 of the 1985 Rules of Criminal Procedure; 6 and so the
matter of bail, motion to quash, and trial, 7 among others. Fealty to the prescribed rules of
procedure in deportation cases shall insure a speedy, fair and just dispensation of justice. 
The Court takes note of the fact that a private prosecutor is assisting in the prosecution of the
case by the special prosecutor of the CID. The Court sees no reason why a private prosecutor
should be allowed to participate in a deportation case. Under the 1985 Rules on Criminal
Procedure, particularly Section 16, Rule 110 thereof, an offended party may intervene in a
criminal prosecution when there is civil liability arising from the criminal action claimed by said
 
In deportation cases, the Court cannot conceive of any justification for a private party to have
any right to intervene. Even if such party can establish any damages due him arising from the
deportation charge against the alien, such relief cannot be afforded him in the deportation
proceeding. His recourse if at all is in the ordinary courts. Thus the Court rules that the
intervention of a private prosecutor should not be allowed in deportation cases. The possibility
of oppression, harrassment and persecution cannot be discounted. The deportation of an alien
fiscals tasked to prosecute such cases.
WHEREFORE, the petition is hereby GRANTED and the questioned order of the respondent
Commission on Immigration and Deportation dated September 28, 1982 is hereby set aside.
The respondent Commission on Immigration and Deportation is hereby directed to continue
hearing the deportation case against petitioners and thereafter, based on the evidence before
it, to resolve the issue of citizenship of petitioners, and if found to be aliens, to determine
whether or not the petitioners should be deported and/or otherwise ordered to register as
aliens. No costs.  SO ORDERED.
 Gallegos (Judge Gallegos) of the Regional Trial Court-Manila, Branch 47 in SP. PROC.
No. 14-131282.

The records show that on 23 December 2013, the International Criminal Police
EN BANC Organization (Interpol) of Seoul, Republic of Korea sent a Notice  to Interpol Manila
8

requesting assistance in the location and deportation of respondent Ja Hoon Ku (Ku) for
G.R. No. 210759               June 23, 2015 arbitrarily spending money allotted as reserve fund of Phildip Korea Co., Ltd.
Consequently, the Embassy of the Republic of Korea wrote a Letter-Request  to petitioner, 9

Hon. Siegfred Mison, Chairperson of the Bureau of Immigration (BI), for the immediate
CHAIRPERSON SIEGFRED B. MISON, in his capacity as Chairperson  of Bureau of1

arrest and deportation of Ku to Korea for being an undesirable alien.

Immigration and Deportation,  Petitioner, 
2

vs. HON. PAULINO Q. GALLEGOS, in his capacity as Presiding Judge of the

Regional Trial Court-Manila, Branch 47 and JA HOON KU, Respondents. Meanwhile, on 1 January 2014, Ku’s visa expired. 10

x-----------------------x On 3 January 2014, Special Prosecutor Maria Antonette Bucasas-Mangrobang charged

Ku for being a risk to public interest pursuant to Sec. 69, Act No. 2711. This finding was
11

approved by the BI Board of Commissioners which, on 16 January 2014, issued a

G.R. No. 211403
Summary Deportation Order. 12

CHAIRPERSON SIEGFRED B. MISON, as the Chairperson of Bureau of Immigration

On the same day, 16 January 2014, BI officers, with the assistance of the Manila Police
and Deportation,Petitioner, 
District-Warrant and Subpoena Section, arrested Ku. Upon arrival at the BI detention
vs.
center, Ku was detained. 13

HON. PAULINO Q. GALLEGOS, as Presiding Judge of the Regional Trial Court-

Manila, Branch 47 and JAHOONKU, Respondents.
On 17 January 2014, the Republic of Korea voided Ku’s passport. 14

x-----------------------x
Also on 17 January 2014, Ku filed a Petition for the Issuance of a Writ of Amparo with
G.R. No. 211590 Interim Remedies, docketed as SP PROC. No. 14- 131282.  On 22 January 2014, he also
15

filed a Supplemental Petition for the Issuance of a Writ of Amparo. 16

CHAIRPERSON SIEGFRED B. MISON, in his capacity as the Chairperson of Bureau

of Immigration and Deportation, Petitioner,  vs. JA HOON KU, Respondent. Finding said supplemental petition to be sufficient in form and substance, Judge Gallegos,
in an Order dated 22 January 2014, issued a Writ of Amparo.  On 24 January 2014, Ku
17

PEREZ, J.: filed a Motion for the Issuance of a Temporary Protection Order (TPO).  Judge Gallegos
18

then set the hearing on the TPO on 27 January 2014 at 8:30 a.m., while he set the
19

The privilege of the writ of amparo is .an extraordinary remedy adopted to address the hearing on the petition for the issuance of a writ of amparo on 29 January 2014 at 8:30
special concerns of extra-legal killings and enforced disappearances. Accordingly, the a.m.20

remedy ought to be resorted to and granted judiciously, lest the ideal sought by the
Amparo Rule be diluted and undermined by the indiscriminate filing of Amparo petitions for In the afternoon of 27 January 2014, petitioner filed his Return of the Writ.  He was then
21

purposes less than the desire to secure amparo reliefs and protection and/or on the basis notified that a hearing on the TPO was held earlier in the morning and that the same was
of unsubstantiated allegations.3 already submitted for resolution. 22

For the consideration of the Court are three consolidated petitions assailing the Orders Petitioner then filed an Opposition to the Motion for Issuance of TPO on 28 January 2014. 23

dated 28 January 2014,  29 January 2014,  and 18 February 2014,  as well as the
4 5 6

Resolution dated 14 March 2014,  all issued by respondent Presiding Judge Paulino
7
On 28 January 2014, Judge Gallegos issued the first assailed Order granting the motion however, Judge Gallegos merely noted petitioner’s motion for being moot, considering that
for issuance of TPO, entrusting Ku’s custody to the Philippine National Red Cross and/or he already released Ku’s passport on 20 March 2014, upon the personal request of Ku. 37

its Chairman CEO Richard Gordon, and directing the Philippine National Police-Police
Security and Protection Group (PNP-PSPG) to protect Ku and his immediate family.  On 24
Due to the complexities involved, petitioner filed the Petition for Review on Certiorari in
29 January 2014, Judge Gallegos issued the second assailed Order directing the transfer G.R. No. 211590, essentially assailing the Resolution dated 14 March 2014.
of custody and protection of Ku to the PNP-PSPG.  Petitioner challenged these orders
25

before the Court via a Petition for Certiorari  docketed as G.R. No. 210759.
26
Condensing the various issues raised in these petitions,  we come to the central question
38

of whether or not the privilege of the writ of amparo was properly granted in the case at
On 4 February 2014, the Court issued a Resolution in G.R. No. 210759 issuing a bar.
Temporary Restraining Order (TRO) enjoining the enforcement of the Orders dated 28 and
29 January 2014 and directing the BI to retain custody of Ku, as well as requiring Ku to We rule in the negative.
comment on the petition.  In issuing this resolution, the Court intimated the possibility of
27

misuse by Ku of the writ of amparo given that he was validly arrested and placed under
Section 1 of the Rule on the Writ of Amparo (Amparo Rule)  provides:
39

the jurisdiction and custody of the BI; thus the case cannot be categorized as one of
extralegal killing or enforced disappearance. 28

SECTION 1. Petition. – The petition for a writ of amparo is a remedy available to any
person whose right to life, liberty and security is violated or threatened with violation by an
Owing to the Court’s Resolution dated 4 February 2014, in the hearing set on 11 February
unlawful act or omission of a public official or employee, or of a private individual or entity.
2014 before the trial court, petitioner verbally moved for the dismissal of the amparo
petition. On 18 February 2014, however, Judge Gallegos issued the third assailed order
29

denying the motion to dismiss for lack of merit. Thus, petitioner appealed the matter to the
30 The writ shall cover extralegal killings and enforced disappearances or threats thereof.
Court via the Petition for Certiorari and Prohibition  docketed as G.R. No. 211403.
31

On 25 February 2014, Ku filed an appeal memorandum on his deportation order
addressed to the Office of the President (OP). 32
On 14 March 2014, Judge Gallegos issued the assailed Resolution granting the privilege
of the writ of amparo, to wit:
WHEREFORE, the privilege of the Writ of Amparo is hereby GRANTED. [Ku] is ordered
immediately released from [petitioner’s] custody without prejudice to the institution of the
proper remedy to extradition. Moreover, the [petitioner] and/or agents are ordered to cease
and desist from further violating the right to liberty of [Ku] and the members of his family by
filing cases to legitimize his detention.
33
On 25 September 2007, the Court promulgated the Amparo Rule "in light of the
prevalence of extralegal killings and enforced disappearances." It was an exercise for the
first time of the Court’s expanded power to promulgate rules to protect our people’ s
constitutional rights, which made its maiden appearance in the 1987 Constitution in
response to the Filipino experience of the martial law regime. As the Amparo Rule was
intended to address the intractable problem of "extralegal killings" and "enforced
disappearances," its coverage, in its present form, is confined to these two instances or to
threats thereof. "Extralegal killings" are ‘killings committed without due process of law, i.e.,
without legal safeguards or judicial proceedings." On the other hand, "enforced
disappearances" are "attended by the following characteristics: an arrest, detention or
abduction of a person by a government official or organized groups or private individuals
acting with the direct or indirect acquiescence of the government; the refusal of the State
to disclose the fate or where about s of the person concerned or a refusal to acknowledge
the deprivation of liberty which places such persons outside the protection of law." 40

Meanwhile, in the Resolution dated 18 March 2014 in G.R. No. 211403, the Court issued a
TRO enjoining the RTC from enforcing the Order dated 18 February 2014 and from further
proceeding with the case. 34
This pronouncement on the coverage of the writ was further cemented in the latter case of
Lozada, Jr. v. Macapagal-Arroyo  where this Court explicitly declared that as it stands, the
41

writ of amparo is confined only to cases of extrajudicial killings and enforced

On 19 March 2014, the OP granted Ku provisional liberty only until 31 August 2014 or until
his appeal was resolved, whichever came first. Ku then moved for the release of his
35
disappearances, or to threats thereof. As to what constitutes "enforced disappearance,"
the Court in Navia v. Pardico  enumerated the elements constituting "enforced
42

passport before the RTC, which petitioner opposed and to which he filed a counter-motion disappearances" as the term is statutorily defined in Section 3(g) of Republic Act (R.A.)
for the RTC to release said passport to the BI, given that such was one of the conditions No. 9851,  to wit:
43

for the OP’s grant of provisional liberty to Ku.  In the Order dated 26 March 2014,
36
 (a) that there be an arrest, detention, abduction or any form of deprivation of
liberty;
(b) that it be carried out by, or with the authorization, support or acquiescence of,
the State or a political organization;
(c) that it be followed by the State or political organization’s refusal to acknowledge
or give information on the fate or whereabouts of the person subject of the amparo
petition; and
(d) that the intention for such refusal is to remove the subject person from the
protection of the law for a prolonged period of time.44
As clarified in Navia, with the enactment of R.A. No. 9851, the Amparo Rule is now a
procedural law anchored, not only on the constitutional rights to life, liberty and security,
but on a concrete statutory definition as well of what an ‘enforced or involuntary
disappearance’ is. Therefore, A.M. No. 07-9-12-SC’s reference to enforced
disappearances should be construed to mean the enforced or involuntary disappearance
of persons contemplated in Section 3(g) of R.A. No. 9851. Meaning, in probing enforced
disappearance cases, courts should read A.M. No. 07-9-12-SC in relation to R.A. No.
9851.45
Guided by the parameters of R.A. No. 9851, we can readily discern that Ku’s circumstance
does not come under the statutory definition of an enforced or involuntary disappearance.
Indeed, Ku was arrested by agents of the BI, but there was no refusal on the part of the BI
to acknowledge such arrest nor was there any refusal to give information on the
whereabouts of Ku. Neither can it be said that the BI had any intention to remove Ku from
the protection of the law for a prolonged time.
Although Ku claims that he was arbitrarily arrested and detained by agents of the BI, that
he was not read his rights under the constitution and was not informed of the reason for hi
s arrest, nor provided a copy of any document leading to his arrest and detention,  the46
arresting officers are all consistent in testifying that, upon Ku’s arrest, they introduced
themselves as agents of the BI, presented to Ku the Warrant of Deportation, and informed
him of his constitutional rights as well as the expiration of his visa.47
More importantly, there was no attempt on the part of the BI to conceal Ku or his
whereabouts. Within the Bureau, Ku’s arrest and the fact that he was in their custody was
not obscured as, in fact, these were well-documented as evidenced by the Return of
Warrant of Deportation dated 20 January 2014  and the After-Mission Report dated 17
48
January 2014. 49
More importantly, in the Return of the Writ, petitioner readily disclosed to the trial court that
Ku was in the custody of the BI pursuant to a Warrant of Deportation and a Summary
Deportation Order. 50
These documents and pleading show that there was never any intention on the part of the
BI to re move Ku from the protection of the law for a prolonged time. Besides, when Ku
was arrested at 9:30 p.m. on 16 January 2014, and received at the BI Detention Center at
11:30 p.m. also on 16 January 2014,  the following day or on 17 January 2014, Ku’s
51
counsel was immediately able to file his Entry of Appearance with Motion for
Reconsideration before the BI,  thereby showing that Ku’s legal rights were amply guarded
52
and that he was never removed from the protection of the law.
Section 5 of the Amparo Rule enumerates what an amparo petition should contain, among
which is the right to life, liberty and security of the aggrieved party violated or threatened
with violation by an unlawful act or omission of the respondent, and how such threat or
violation is committed with the attendant circumstances detailed in supporting affidavits, to
wit:
SEC. 5. Contents of Petition. – The petition shall be signed and verified and shall allege
the following:
(a) The personal circumstances of the petitioner;
(b) The name and personal circumstances of the respondent responsible for the
threat, act or omission, or, if the name is unknown or uncertain, the respondent
may be described by an assumed appellation;
(c) The right to life, liberty and security of the aggrieved party violated or
threatened with violation by an unlawful act or omission of the respondent, and
how such threat or violation is committed with the attendant circumstances detailed
in supporting affidavits;
(d) The investigation conducted, if any, specifying the names, personal
circumstances, and addresses of the investigating authority or individuals, as well
as the manner and conduct of the investigation, together with any report;
(e) The actions and recourses taken by the petitioner to determine the fate or
whereabouts of the aggrieved party and the identity of the person responsible for
the threat, act or omission; and
(f) The relief prayed for.
The petition may include a general prayer for other just and equitable reliefs.
Ku claims that he fears for his life and feels the serious danger of being detained for a long
period of time without any cause, and that he fears that the BI will fabricate criminal cases
against him to hold him under detention. 53
According to Ku, what he seeks to obtain in filing an amparo petition is the protection it will
give to his person against the actions of some government officials who will likely take
advantage of their positions and use the power of the government at their command. Ku
adds that the longer he stays in confinement the more he is exposed to life-threatening
situations and the further the violation of his guaranteed rights. 54
The allegations of Ku, though, are specious. It is to be noted that the Amparo Rule
requires the parties to establish their claims by substantial evidence.  Other than making
55
unfounded claims, however, Ku was not able to present evidence that he was exposed
to "life-threatening situations" while confined at the BI Detention Center. On the
contrary, the records show that he is afforded visitorial rights and that he has access
to his counsel.
Moreover, his primary fear, which prompted him to file the amparo petition, was that the BI
would trump up charges against him so as to justify his detention. The fact remains,
however, that even before his arrest, deportation charges against him were already duly
filed and ruled upon by the BI.  with the courts and abusing their processes. It is improper conduct and degrades the
As such, it can readily be discerned that the RTC’s grant of the privilege of the writ of
amparo was improper in this case as Ku and his whereabouts were never concealed, and
as the alleged threats to his life, liberty and security were unfounded and unsubstantiated.
It is to be emphasized that the fundamental function of the writ of amparo is to cause the
disclosure of details concerning the extrajudicial killing or the enforced disappearance of
an aggrieved party. As Ku and his whereabouts were never hidden, there was no need for
the issuance of the privilege of the writ of amparo in the case at bar.
It is to be additionally observed that Ku is guilty of forum shopping. Being the subject of a
Warrant of Deportation and a Summary Deportation Order, Ku’s proper recourse is with
the BI and, thereafter, with the DOJ and the OP. 56
Ku knows this and, in fact, he filed a Motion for Reconsideration before the BI and an
Appeal before the OP. When Ku, however, injudiciously filed a Petition and a
Supplemental Petition for the Issuance of a Writ of Amparo, he committed forum shopping
by seeking a remedy which he had already solicited from another tribunal.
In Kiani v. BID,  where petitioner therein file d before the trial court a petition for a writ of
57
habeas corpus seeking to have the detention of her husband declared as illegal and to
order the latter’s release, and where her husband filed before the Bureau of Immigration
and Deportation (BID) an omnibus motion seeking to question the summary deportation
order issued against him, the Court held that petitioner indulged in forum shopping.
The Court clarified that under Section 8, Chapter 3, Title I, Book III of Executive Order No.
292, the power to deport aliens is vested in the President of the Philippines, subject to the
requirements of due process. The Immigration Commissioner is vested with authority to
deport aliens under Section 37 of the Philippine Immigration Act of 1940, as amended.
Thus, a party aggrieved by a Deportation Order issued by the BOC is proscribed from
assailing said Order in the RTC even via a petition for a writ of habeas corpus .
Conformably with ruling of the Court in Domingo v. Scheer , such party may file a motion
for the reconsideration thereof before the BOC. 58
Citing Balite v. Court of Appeals,  the Court held that there is forum shopping when a party
59
seeks to obtain remedies in an action in one court, which had already been solicited, and
in other courts and other proceedings in other tribunals. While a party may avail of the
remedies prescribed by the Rules of Court, such party is not free to resort to them
simultaneously or at his/her pleasure or caprice. A party should not be allowed to present
simultaneous remedies in two different forums, for it degrades and wreaks havoc to the
rule on orderly procedure. A party must follow the sequence and hierarchical order in
availing of such remedies and not resort to shortcuts in procedure or playing fast and
loose with the said rules. Forum shopping, an act of malpractice, is considered as trifling
administration of justice.
On a final note, the Court observes that Judge Gallegos knowingly disregarded the Court’s
directives as regards this case. The records show that the Court’s Resolution dated 4
February 2014, wherein we issued a TRO enjoining the enforcement of the Orders dated
28 and 29 January 2014 and intimated the impropriety of the amparo petition, was
received by the RTC on 5 February 2014.  This should have alerted Judge Gallegos to
60
proceed with caution and restraint in granting the privilege of the writ of amparo. And yet,
despite having knowledge of the Court’s pronouncements, Judge Gallegos proceeded to
grant the said privilege.
Also, the records show that the Court’s Resolution dated 18 March 2014, wherein we
issued a TRO enjoining the enforcement of the Order dated 18 February 2014 and
enjoining the RTC from further proceeding with the case, was received by the RTC on 20
March 2014 at 9:00 a.m. 61
Although by then, Judge Gallegos already issued the Resolution dated 14 March 2014
which granted the privilege of the writ of amparo, his receipt of the Court’s Resolution
dated 18 Marc h 2014 should have forewarned him against releasing Ku’s passport. That
he did so demonstrates his resistance and unwillingness to follow the Court’s edicts.
It is well to note that a resolution of the Supreme Court should not be construed as a mere
request, and should be complied with promptly and completely.  Such failure to comply
1âwphi1

accordingly betrays not only a recalcitrant streak in character, but al so disrespect for the
Court’s lawful order and directive.
62

Judge Gallegos should know that judges must respect the orders and decisions of higher
tribunals, especially the Supreme Court from which all other courts take their bearings. A
resolution of the Supreme Court is not to be construed as a mere request nor should it be
complied with partially, inadequately or selectively.
63

In the Judiciary, moral integrity is more than a cardinal virtue, it is a necessity. The
exacting standards of conduct demanded from judges are designed to promote public
confidence in the integrity and impartiality of the judiciary. When the judge himself
becomes the transgressor of the law which he is sworn to apply, he places his office in
disrepute, encourages disrespect for the law and impairs public confidence in the integrity
of the judiciary itself.
64

WHEREFORE, premises considered, the Court hereby resolves to:

a) GRANT the present petitions, and REVERSE and SET ASIDE the Resolution
dated 14 March 2014 of the Regional Trial Court which granted the privilege of the
Writ of Amparo;
b) DENY the privilege of the Writ of Amparo sought via the Petition for the
Issuance of a Writ of Amparo and the Supplemental Petition for the Issuance of
Writ of Amparo in SP. PROC.No. 14131282 before the Regional Trial of Manila,
Branch 47; and
c) DIRECT the Office of the Court Administrator to file the appropriate
administrative charge/s against Judge Paulino Q. Gallegos in accordance with the
tenor of this Decision, and to forthwith submit to the Court its report and
recommendation thereon.
SO ORDERED.
EN BANC G.R. No. 96266             July 18, 1991
ERNESTO M. MACEDA, petitioner,  vs. ENERGY REGULATORY BOARD, CALTEX
(Philippines), INC., PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON
CORPORATION, respondents.
G.R. No. 96349             July 18, 1991
EUGENIO O. ORIGINAL, IRENEO N. AARON, JR., RENE LEDESMA, ROLANDO
VALLE, ORLANDO MONTANO, STEVE ABITANG, NERI JINON, WILFREDO
DELEONIO, RENATO BORRO, RODRIGO DE VERA, ALVIN BAYUANG, JESUS
MELENDEZ, NUMERIANO CAJILIG JR., RUFINO DE LA CRUZ AND JOVELINO G.
TIPON, petitioners, vs. ENERGY REGULATORY BOARD, CALTEX (Philippines), INC.,
PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON
CORPORATION, respondents.

G.R. No. 96284             July 18,1991

CEFERINO S. PAREDES, JR., petitioner, vs. ENERGY REGULATORY BOARD,

CALTEX (Philippines), INC., PILIPINAS SHELL, INC. AND PETROPHIL
CORPORATION, respondents.
MEDIALDEA, J.:
In G.R. No. 96266, petitioner Maceda seeks nullification of the Energy Regulatory Board
(ERB) Orders dated December 5 and 6, 1990 on the ground that the hearings conducted
on the second provisional increase in oil prices did not allow him substantial cross-
examination, in effect, allegedly, a denial of due process.
The facts of the case are as follows:
Upon the outbreak of the Persian Gulf conflict on August 2, 1990, private respondents oil
companies filed with the ERB their respective applications on oil price increases (docketed
as ERB Case Nos. 90-106, 90-382 and 90-384, respectively).
On September 21, 1990, the ERB issued an order granting a provisional increase of P1.42
per liter. Petitioner Maceda filed a petition for Prohibition on September 26, 1990 (E.
Maceda v. ERB, et al., G.R. No. 95203), seeking to nullify the provisional increase. We
dismissed the petition on December 18, 1990, reaffirming ERB's authority to grant
provisional increase even without prior hearing, pursuant to Sec. 8 of E.O. No. 172,
clarifying as follows:
What must be stressed is that while under Executive Order No. 172, a hearing is
indispensable, it does not preclude the Board from ordering, ex-parte, a provisional
increase, as it did here, subject to its final disposition of whether or not: (1) to make
it permanent; (2) to reduce or increase it further; or (3) to deny the application.
Section 3, paragraph (e) is akin to a temporary restraining order or a writ of
preliminary attachment issued by the courts, which are given ex-parte and which
are subject to the resolution of the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise,
operate exclusively of the other, in that the Board may resort to one but not to both
at the same time. Section 3(e) outlines the jurisdiction of the Board and the
grounds for which it may decree a price adjustment, subject to the requirements of
notice and hearing. Pending that, however, it may order, under Section 8, an
authority to increase provisionally, without need of a hearing, subject to the final
outcome of the proceeding. The Board, of course, is not prevented from
conducting a hearing on the grant of provisional authority-which is of course, the
better procedure — however, it cannot be stigmatized later if it failed to conduct
one. (pp. 129-130, Rollo) (Emphasis supplied)
In the same order of September 21, 1990, authorizing provisional increase, the ERB set
the applications for hearing with due notice to all interested parties on October 16, 1990.
Petitioner Maceda failed to appear at said hearing as well as on the second hearing on
October 17, 1990.
To afford registered oppositors the opportunity to cross-examine the witnesses, the ERB
set the continuation of the hearing to October 24, 1990. This was postponed to November
5, 1990, on written notice of petitioner Maceda.
On November 5, 1990, the three oil companies filed their respective motions for leave to
file or admit amended/supplemental applications to further increase the prices of
petroleum products.
The ERB admitted the respective supplemental/amended petitions on November 6, 1990
at the same time requiring applicants to publish the corresponding Notices of Public
Hearing in two newspapers of general circulation (p. 4, Rollo and Annexes "F" and "G," pp.
60 and 62, Rollo).
Hearing for the presentation of the evidence-in-chief commenced on November 21, 1990
with ERB ruling that testimonies of witnesses were to be in the form of Affidavits (p.
6, Rollo). ERB subsequently outlined the procedure to be observed in the reception of
evidence, as follows:
CHAIRMAN FERNANDO:
Well, at the last hearing, applicant Caltex presented its evidence-in-chief and there
is an understanding or it is the Board's wish that for purposes of good order in the
presentation of the evidence considering that these are being heard together, we
will defer the cross-examination of applicant Caltex's witness and ask the other
applicants to present their evidence-in-chief so that the oppositors win have a
better Idea of what an of these will lead to because as I mentioned earlier, it has
been traditional and it is the intention of the Board to act on these applications on
an industry-wide basis, whether to accept, reject, modify or whatever, the Board
win do it on an industry wide basis, so, the best way to have (sic) the oppositors
and the Board a clear picture of what the applicants are asking for is to have all the
evidence-in-chief to be placed on record first and then the examination will come
later, the cross-examination will come later. . . . (pp. 5-6, tsn., November 23, 1990,
ERB Cases Nos. 90-106, 90382 and 90-384). (p. 162, Rollo)
Petitioner Maceda maintains that this order of proof deprived him of his right to finish his
cross-examination of Petron's witnesses and denied him his right to cross-examine each
of the witnesses of Caltex and Shell. He points out that this relaxed procedure resulted in
the denial of due process.
We disagree. The Solicitor General has pointed out:
. . . The order of testimony both with respect to the examination of the particular
witness and to the general course of the trial is within the discretion of the court
and the exercise of this discretion in permitting to be introduced out of the order
prescribed by the rules is not improper (88 C.J.S. 206-207).
Such a relaxed procedure is especially true in administrative bodies, such as the
ERB which in matters of rate or price fixing is considered as exercising a quasi-
legislative, not quasi-judicial, function As such administrative agency, it is not
bound by the strict or technical rules of evidence governing court proceedings
(Sec. 29, Public Service Act; Dickenson v. United States, 346, U.S. 389, 98 L. ed.
132, 74 S. St. 152). (Emphasis supplied)
In fact, Section 2, Rule I of the Rules of Practice and Procedure Governing
Hearings Before the ERB provides that —
These Rules shall govern pleadings, practice and procedure before the Energy
Regulatory Board in all matters of inquiry, study, hearing, investigation and/or any
other proceedings within the jurisdiction of the Board. However, in the broader
interest of justice, the Board may, in any particular matter, except itself from these
rules and apply such suitable procedure as shall promote the objectives of the
Order.
(pp. 163-164, Rollo)
Petitioner Maceda also claims that there is no substantial evidence on record to support
the provisional relief.
We have, in G.R. Nos. 95203-05, previously taken judicial notice of matters and events
related to the oil industry, as follows:
. . . (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the
exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments
is expected to reach $1 Billion; (4) our trade deficit is at P2.855 Billion as of the
first nine months of the year.
. . . (p. 150, Rollo)
The Solicitor General likewise commented:
Among the pieces of evidence considered by ERB in the grant of the contested
provisional relief were: (1) certified copies of bins of lading issued by crude oil
suppliers to the private respondents; (2) reports of the Bankers Association of the
Philippines on the peso-dollar exchange rate at the BAP oil pit; and (3) OPSF
status reports of the Office of Energy Affairs. The ERB was likewise guided in the
determination of international crude oil prices by traditional authoritative sources of
information on crude oil and petroleum products, such as Platt's Oilgram and
Petroleum Intelligence Weekly. (p. 158, Rollo)
Thus, We concede ERB's authority to grant the provisional increase in oil price, as We
note that the Order of December 5, 1990 explicitly stated:
in the light, therefore, of the rise in crude oil importation costs, which as earlier
mentioned, reached an average of $30.3318 per barrel at $25.551/US $ in
September-October 1990; the huge OPSF deficit which, as reported by the Office
of Energy Affairs, has amounted to P5.7 Billion (based on filed claims only and net
of the P5 Billion OPSF) as of September 30, 1990, and is estimated to further
increase to over P10 Billion by end December 1990; the decision of the
government to discontinue subsidizing oil prices in view of inflationary pressures;
the apparent inadequacy of the proposed additional P5.1 Billion government
appropriation for the OPSF and the sharp drop in the value of the peso in relation
to the US dollar to P28/US $, this Board is left with no other recourse but to grant
applicants oil companies further relief by increasing the prices of petroleum
products sold by them. (p. 161, Rollo)
Petitioner Maceda together with petitioner Original (G.R. No. 96349) also claim that the
provisional increase involved amounts over and above that sought by the petitioning oil
companies.
The Solicitor General has pointed out that aside from the increase in crude oil prices, all
the applications of the respondent oil companies filed with the ERB covered claims from
the OPSF.
We shall thus respect the ERB's Order of December 5, 1990 granting a provisional price
increase on petroleum products premised on the oil companies' OPSF claims, crude cost
peso differentials, forex risk for a subsidy on sale to NPC (p. 167, Rollo), since the oil
companies are "entitled to as much relief as the fact alleged constituting the course of
action may warrant," (Javellana v. D.O. Plaza Enterprises, Inc., G.R. No. L-28297, March
30, 1970, 32 SCRA 261 citing Rosales v. Reyes, 25 Phil. 495; Aguilar v. Rubiato, 40 Phil.
470) as follows:
Per Liter
Weighted build-up) .6264 .7069 2.1269

Petron Shell Caltex Average Net Price Increase

Crude Cost P3.11 P3.6047 P2.9248 P3.1523 Applied for 2.8685

Peso Cost Nonetheless, it is relevant to point out that on December 10, 1990, the ERB, in response
to the President's appeal, brought back the increases in Premium and Regular gasoline to
Diffn'l 2.1747 1.5203 1.5669 1.8123 the levels mandated by the December 5, 1990 Order (P6.9600 and P6.3900, respectively),
as follows:
Forex Risk
Product In Pesos Per Liter
Fee -0.1089 -0,0719 -0.0790 -0.0896
OPSF
Subsidy on
Premium Gasoline 6.9600
Sales to NPC 0.1955 0.0685 0.0590 0.1203
Regular Gasoline 6.3900
Total Price
Avturbo 4.9950
Increase
Kerosene 1.4100
Applied for P59.3713 P5.1216 P4.4717 P4.9954
Diesel Oil 1.4100
Less: September 21 Price
Fuel Oil/Feedstock 0.2405
Relief
LPG 1.2200
Actual Price Increase P1.42
Asphalt 2.5000
Actual Tax Reduction:
Thinner 2.5000
Ad Valorem Tax
In G.R. No. 96349, petitioner Original additionally claims that if the price increase will be
(per Sept. 1, 1990 used to augment the OPSF this will constitute illegal taxation. In the Maceda case, (G.R.
Nos. 95203-05, supra) this Court has already ruled that "the Board Order authorizing the
proceeds generated by the increase to be deposited to the OPSF is not an act of taxation
price build-up) P1.3333
but is authorized by Presidential Decree No. 1956, as amended by Executive Order No.
137.
Specific Tax (per

Oct. 5, 1990 price

The petitions of E.O. Original et al. (G.R. No. 96349) and C.S. Povedas, Jr. (G.R. No.
96284), insofar as they question the ERB's authority under Sec. 8 of E.O. 172, have
become moot and academic.

We lament Our helplessness over this second provisional increase in oil price. We have
stated that this "is a question best judged by the political leadership" (G.R. Nos. 95203-05,
G.R. Nos. 95119-21, supra). We wish to reiterate Our previous pronouncements therein
that while the government is able to justify a provisional increase, these findings "are not
final, and it is up to petitioners to demonstrate that the present economic picture does not
warrant a permanent increase."

In this regard, We also note the Solicitor General's comments that "the ERB is not averse
to the idea of a presidential review of its decision," except that there is no law at present
authorizing the same. Perhaps, as pointed out by Justice Padilla, our lawmakers may see
the wisdom of allowing presidential review of the decisions of the ERB since, despite its
being a quasi-judicial body, it is still "an administrative body under the Office of the
President whose decisions should be appealed to the President under the established
principle of exhaustion of administrative remedies," especially on a matter as
transcendental as oil price increases which affect the lives of almost an Filipinos.

ACCORDINGLY, the petitions are hereby DISMISSED.

SO ORDERED.

EN BANC G.R. No. 111953 December 12, 1997

HON. RENATO C. CORONA, in his capacity as Assistant Secretary for Legal Affairs,
HON. JESUS B. GARCIA, in his capacity as Acting Secretary, Department of
Transportation and Communications, and ROGELIO A. DAYAN, in his capacity as
General Manager of Philippine Ports Authority, petitioners, 
vs. UNITED HARBOR PILOTS ASSOCIATION OF THE PHILIPPINES and MANILA
PILOTS ASSOCIATION, respondents.

ROMERO, J.:

In issuing Administrative Order No. 04-92 (PPA-AO No. 04-92), limiting the term of
appointment of harbor pilots to one year subject to yearly renewal or cancellation, did the
Philippine Ports Authority (PPA) violate respondents' right to exercise their profession and
their right to due process of law?
The PPA was created on July 11, 1974, by virtue of Presidential Decree No. 505. On
December 23, 1975, Presidential Decree No. 857 was issued revising the PPA's charter.
Pursuant to its power of control, regulation, and supervision of pilots and the pilotage
profession,  the PPA promulgated PPA-AO-03-85  on March 21, 1985, which embodied the
1 2
"Rules and Regulations Governing Pilotage Services, the Conduct of Pilots and Pilotage
Fees in Philippine Ports." These rules mandate, inter alia, that aspiring pilots must be
holders of pilot licenses  and must train as probationary pilots in outports for three months
3
and in the Port of Manila for four months. It is only after they have achieved satisfactory
performance  that they are given permanent and regular appointments by the PPA itself to
4 5
exercise harbor pilotage until they reach the age of 70, unless sooner removed by reason
of mental or physical unfitness by the PPA General Manager.  Harbor pilots in every
6
harbor district are further required to organize themselves into pilot associations which
would make available such equipment as may be required by the PPA for effective
pilotage services. In view of this mandate, pilot associations invested in floating,
communications, and office equipment. In fact, every new pilot appointed by the PPA
automatically becomes a member of a pilot association and is required to pay a
proportionate equivalent equity or capital before being allowed to assume his duties, as
reimbursement to the association concerned of the amount it paid to his predecessor.
Subsequently, then PPA General Manager Rogelio A. Dayan issued PPA-AO No. 04-
92  on July 15, 1992, whose avowed policy was to "instill effective discipline and thereby
7
afford better protection to the port users through the improvement of pilotage services."
This was implemented by providing therein that "all existing regular appointments which
have been previously issued either by the Bureau of Customs or the PPA shall remain
valid up to 31 December 1992 only" and that "all appointments to harbor pilot positions in
all pilotage districts shall, henceforth, be only for a term of one (1) year from date of
effectivity subject to yearly renewal or cancellation by the Authority after conduct of a rigid
evaluation of performance."
On August 12, 1992, respondents United Harbor Pilots Association and the Manila Pilots
Association, through Capt. Alberto C. Compas, questioned PPA-AO No. 04-92 before the
Department of Transportation and Communication, but they were informed by then DOTC
Secretary Jesus B. Garcia that "the matter of reviewing, recalling or annulling PPA's
administrative issuances lies exclusively with its Board of Directors as its governing body."
Meanwhile, on August 31, 1992, the PPA issued Memorandum Order No. 08-92  which 8
laid down the criteria or factors to be considered in the reappointment of harbor pilot, viz.:
(1) Qualifying Factors:  safety record and physical/mental medical exam report and (2)
9
Criteria for Evaluation:  promptness in servicing vessels, compliance with PPA Pilotage
10
Guidelines, number of years as a harbor pilot, average GRT of vessels serviced as pilot,
awards/commendations as harbor pilot, and age.
Respondents reiterated their request for the suspension of the implementation of PPA-AO
No. 04-92, but Secretary Garcia insisted on his position that the matter was within the
jurisdiction of the Board of Directors of the PPA. Compas appealed this ruling to the Office
of the President (OP), reiterating his arguments before the DOTC.
On December 23, 1992, the OP issued an order directing the PPA to hold in abeyance the
implementation of PPA-AO No. 04-92. In its answer, the PPA countered that said
administrative order was issued in the exercise of its administrative control and
supervision over harbor pilots under Section 6-a (viii), Article IV of P.D. No. 857, as
amended, and it, along with its implementing guidelines, was intended to restore order in
the ports and to improve the quality of port services.
On March 17, 1993, the OP, through then Assistant Executive Secretary for Legal Affairs
Renato C. Corona, dismissed the appeal/petition and lifted the restraining order issued
earlier.  He concluded that PPA-AO No. 04-92 applied to all harbor pilots and, for all
11
intents and purposes, was not the act of Dayan, but of the PPA, which was merely
implementing Section 6 of P.D. No. 857, mandating it "to control, regulate and supervise
pilotage and conduct of pilots in any port district."
On the alleged unconstitutionality and illegality of PPA-AO No. 04-92 and its implementing
memoranda and circulars, Secretary Corona opined that:
The exercise of one's profession falls within the constitutional guarantee against
wrongful deprivation of, or interference with, property rights without due
process. In the limited context of this case. PPA-AO 04-92 does not constitute a
wrongful interference with, let alone a wrongful deprivation of, the property rights
of those affected thereby. As may be noted, the issuance aims no more than to
improve pilotage services by limiting the appointment to harbor pilot positions to
one year, subject to renewal or cancellation after a rigid evaluation of the
appointee's performance.
PPA-AO 04-92 does not forbid, but merely regulates, the exercise by harbor pilots
of their profession in PPA's jurisdictional area. (Emphasis supplied)
Finally, as regards the alleged "absence of ample prior consultation" before the issuance
of the administrative order, Secretary Corona cited Section 26 of P.D. No. 857, which
merely requires the PPA to consult with "relevant Government agencies." Since the PPA
Board of Directors is composed of the Secretaries of the DOTC, the Department of Public
Works and Highways, the Department of Finance, and the Department of Environment
and Natural Resources, as well as the Director-General of the National Economic
Development Agency, the Administrator of the Maritime Industry Authority (MARINA), and
the private sector representative who, due to his knowledge and expertise, was appointed
by the President to the Board, he concluded that the law has been sufficiently complied
with by the PPA in issuing the assailed administrative order.
Consequently, respondents filed a petition for certiorari, prohibition and injunction with
prayer for the issuance of a temporary restraining order and damages, before Branch 6 of
the Regional Trial Court of Manila, which was docketed as Civil Case No. 93-65673. On
September 6, 1993, the trial court rendered the following judgment: 12
WHEREFORE, for all the foregoing, this Court hereby rules that:
1. Respondents (herein petitioners) have acted excess jurisdiction and with grave
abuse of discretion and in a capricious, whimsical and arbitrary manner in
promulgating PPA Administrative Order 04-92 including all its implementing
Memoranda, Circulars and Orders;
2. PPA Administrative Order 04-92 and its implementing Circulars and Orders are
declared null and void;
3. The respondents are permanently enjoined from implementing PPA
Administrative Order 04-92 and its implementing Memoranda, Circulars and
Orders.
No costs.
SO ORDERED.
The court a quo pointed out that the Bureau of Customs, the precursor of the PPA,
recognized pilotage as a profession and, therefore, a property right under Callanta
v. Carnation Philippines, Inc.  Thus, abbreviating the term within which that privilege may
13
be exercised would be an interference with the property rights of the harbor pilots.
Consequently, any "withdrawal or alteration" of such property right must be strictly made in
accordance with the constitutional mandate of due process of law. This was apparently not
followed by the PPA when it did not conduct public hearings prior to the issuance of PPA-
AO No. 04-92; respondents allegedly learned about it only after its publication in the
newspapers. From this decision, petitioners elevated their case to this Court on certiorari.
After carefully examining the records and deliberating on the arguments of the parties, the
Court is convinced that PPA-AO No. 04-92 was issued in stark disregard of respondents'
right against deprivation of property without due process of law. Consequently, the instant
petition must be denied.
Section 1 of the Bill of Rights lays down what is known as the "due process clause" of the
Constitution, viz.:
Sec. 1. No person shall be deprived of life, liberty, or property without due process
of law, . . .
In order to fall within the aegis of this provision, two conditions must concur, namely, that
there is a deprivation and that such deprivation is done without proper observance of due
process. When one speaks of due process of law, however, a distinction must be made
between matters of procedure and matters of substance. In essence, procedural due
process "refers to the method or manner by which the law is enforced," while substantive
due process "requires that the law itself, not merely the procedures by which the law would
be enforced, is fair, reasonable, and just."  PPA-AO No. 04-92 must be examined in light
14
of this distinction.
Respondents argue that due process was not observed in the adoption of PPA-AO No. 04-
92 allegedly because no hearing was conducted whereby "relevant government agencies"
and the pilots themselves could ventilate their views. They are obviously referring to the
procedural aspect of the enactment. Fortunately, the Court has maintained a clear position
in this regard, a stance it has stressed in the recent case of Lumiqued
v. Hon. Exevea,  where it declared that "(a)s long as a party was given the opportunity to
15
defend his interests in due course, he cannot be said to have been denied due process of
law, for this opportunity to be heard is the very essence of due process. Moreover, this
constitutional mandate is deemed satisfied if a person is granted an opportunity to seek
reconsideration of the action or ruling complained of."
In the case at bar, respondents questioned PPA-AO No. 04-92 no less than four
times  before the matter was finally elevated to this Tribunal. Their arguments on this
16
score, however, fail to persuade. While respondents emphasize that the Philippine Coast
Guard, "which issues the licenses of pilots after administering the pilots' examinations,"
was not consulted,  the facts show that the MARINA, which took over the licensing
17
function of the Philippine Coast Guard, was duly represented in the Board of Directors of
the PPA. Thus, petitioners correctly argued that, there being no matters of naval defense
involved in the issuance of the administrative order, the Philippine Coast Guard need not
be consulted. 18
Neither does the fact that the pilots themselves were not consulted in any way taint the
validity of the administrative order. As a general rule, notice and hearing, as the
fundamental requirements of procedural due process, are essential only when an
administrative body exercises its quasi-judicial function. In the performance of its executive
or legislative functions, such as issuing rules and regulations, an administrative body need
not comply with the requirements of notice and hearing. 19
Upon the other hand, it is also contended that the sole and exclusive right to the exercise
of harbor pilotage by pilots is a settled issue. Respondents aver that said right has become
vested and can only be "withdrawn or shortened" by observing the constitutional mandate
of due process of law. Their argument has thus shifted from the procedural to one of
substance. It is here where PPA-AO No. 04-92 fails to meet the condition set by the
organic law.
There is no dispute that pilotage as a profession has taken on the nature of a property
right. Even petitioner Corona recognized this when he stated in his March 17, 1993,
decision that "(t)he exercise of one's profession falls within the constitutional guarantee
against wrongful deprivation of, or interference with, property rights without due
process."  He merely expressed the opinion the "(i)n the limited context of this case, PPA-
20
AO 04-92 does not constitute a wrongful interference with, let alone a wrongful deprivation
of, the property rights of those affected thereby, and that "PPA-AO 04-95 does not forbid,
but merely regulates, the exercise by harbor pilots of their profession." As will be presently
demonstrated, such supposition is gravely erroneous and tends to perpetuate an
administrative order which is not only unreasonable but also superfluous.
Pilotage, just like other professions, may be practiced only by duly licensed individuals.
Licensure is "the granting of license especially to practice a profession." It is also "the
system of granting licenses (as for professional practice) in accordance with establishment
standards."  A license is a right or permission granted by some competent authority to
21
carry on a business or do an act which, without such license, would be illegal. 22
Before harbor pilots can earn a license to practice their profession, they literally have to
pass through the proverbial eye of a needle by taking, not one but five examinations, each
followed by actual training and practice. Thus, the court a quo observed:
Petitioners (herein respondents) contend, and the respondents (herein petitioners)
do not deny, the here (sic) in this jurisdiction, before a person can be a harbor
pilot, he must pass five (5) government professional examinations, namely, (1) For
Third Mate and after which he must work, train and practice on board a vessel for
at least a year; (2) For Second Mate and after which he must work, train and
practice for at least a year; (3) For Chief Mate and after which he must work, train
and practice for at least a year; (4) For a Master Mariner and after which he must
work as Captain of vessel for at least two (2) years to qualify for an examination to
be a pilot; and finally, of course, that given for pilots.
Their license is granted in the form of an appointment which allows them to engage in
pilotage until they retire at the age 70 years. This is a vested right. Under the terms of
PPA-AO No. 04-92, "(a)ll existing regular appointments which have been previously issued
by the Bureau of Customs or the PPA shall remain valid up to 31 December 1992 only,"
and "(a)ll appointments to harbor pilot positions in all pilotage districts shall, henceforth, be
only for a term of one (1) year from date of effectivity subject to renewal or cancellation by
the Authority after conduct of a rigid evaluation of performance."
It is readily apparent that PPA-AO No. 04-92 unduly restricts the right of harbor pilots to
enjoy their profession before their compulsory retirement. In the past, they enjoyed a
measure of security knowing that after passing five examinations and undergoing years of
on-the-job training, they would have a license which they could use until their retirement,
unless sooner revoked by the PPA for mental or physical unfitness. Under the new
issuance, they have to contend with an annual cancellation of their license which can be
temporary or permanent depending on the outcome of their performance evaluation.
Veteran pilots and neophytes alike are suddenly confronted with one-year terms
which ipso facto expire at the end of that period. Renewal of their license is now
dependent on a "rigid evaluation of performance" which is conducted only after the license
has already been cancelled. Hence, the use of the term "renewal." It is this pre-evaluation
cancellation which primarily makes PPA-AO No. 04-92 unreasonable and constitutionally
infirm. In a real sense, it is a deprivation of property without due process of law.
The Court notes that PPA-AO No. 04-92 and PPA-MO No. 08-92 are already covered by
PPA-AO No. 03-85, which is still operational. Respondents are correct in pointing out that
PPA-AO No. 04-92 is a "surplusage"  and, therefore, an unnecessary enactment. PPA-AO
23
03-85 is a comprehensive order setting forth the "Rules and Regulations Governing
Pilotage Services, the Conduct of Pilots and Pilotage Fees in Philippine Ports." It
provides, inter alia, for the qualification, appointment, performance evaluation, disciplining
and removal of harbor pilots — matters which are duplicated in PPA-AO No. 04-92 and its
implementing memorandum order. Since it adds nothing new or substantial, PPA-AO No.
04-92 must be struck down.
Finally, respondents' insinuation that then PPA General Manager Dayan was responsible
for the issuance of the questioned administrative order may have some factual basis; after
all, power and authority were vested in his office to propose rules and regulations. The trial
court's finding of animosity between him and private respondents might likewise have a
grain of truth. Yet the number of cases filed in court between private respondents and
Dayan, including cases which have reached this Court, cannot certainly be considered the
primordial reason for the issuance of PPA-AO No. 04-92. In the absence of proof to the
contrary, Dayan should be presumed to have acted in accordance with law and the best of
professional motives. In any event, his actions are certainly always subject to scrutiny by
higher administrative authorities.
WHEREFORE, the instant petition is hereby DISMISSED and the assailed decision of the
court a quo dated September 6, 1993, in Civil Case No. 93-65673 is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
 SECOND DIVISION

G.R. No. 90786 September 27, 1991

ESPERO SANTOS SAIAW, petitioner vs. NATIONAL LABOR RELATIONS

COMMISSION, ASSOCIATED BANK AND/ OR JOSE R. TENGCO, Chairman of the
Board, ROLLIE TUAZON, Manager, respondents.
SARMIENTO, J.:

This is a petition for review on certiorari of the Decision  rendered in NLRC Case No. 4-
1

1272-85 dated July 26, 1989, affirming the dismissal of the petitioner by the respondent
bank, and reversing thereby the Decision  of Labor Arbiter Benigno C. Villarente, Jr. of
2

March 29, 1988 which declared the petitioner's dismissal as illegal and ordered his
reinstatement with backwages and benefits.

The records show that the petitioner, Espero Santos Salaw, was employed by the private
respondents in September 1967 as a credit investigator-appraiser. His duties included
inspecting, investigating, appraising, and identifying the company's foreclosed assets;
giving valuation to its real properties, and verifying the genuineness and encumbrances of
the titles of properties mortgaged to the respondents.

On November 27, 1984, the Criminal Investigation Service (CIS) of the Philippine
Constabulary, National Capital Region, extracted from the petitioner — without the
assistance of counsel — a Sworn Statement  which made it appear that the petitioner, in
3
cahoots with a co-employee, Reynaldo Madrigal, a supervisor in charge of the acquired
assets of respondent Associated Bank, sold twenty sewing machines and electric
generators which had been foreclosed by the respondent bank from Worldwide Garment
and L.P. Money Garment, for P60,000.00, and divided the proceeds thereof in equal
shares of P30,000.00 between the two of them.
On December 5, 1984, the petitioner was requested by private respondent Rollie Tuazon,
the bank manager, to appear before the bank's Personnel Discipline and Investigation
Committee (PDIC) which would be meeting the following day, December 6, 1984, at 9:00
a.m., in connection with the Worldwide case.
When petitioner Salaw signified his readiness to appear before the PDIC, private
respondent Rollie Tuazon sent him a letter  stating —
4
Your request to appear before the Personnel Discipline and Invesgation
Committee (PDIC) with regard to the Worldwide Case has been accepted.
Thus, you are requested to come on Thursday, February 28, 1985 at 11:00 at the
Board Room, 10th Floor of the Madrigal Building, Ayala, without counsel or
representative. (Emphasis supplied)
On April 1, 1985, the petitioner was terminated from his employment effective March 27,
1985, for alleged serious misconduct or willful disobedience and fraud or willful breach of
the trust reposed on him by the private respondents.
Subsequently, the petitioner filed with the NLRC on April 17, 1985, a complaint for illegal
dismissal against respondent Bank, Jose R. Tengco, and Rollie Tuazon. This case was
docketed as Case No. NCR-4-1272-85. He likewise submitted an affidavit recanting his
Sworn Statement before the CIS (Annex "A") mentioned earlier.
After the proper proceedings, on March 29,1988, Labor Arbiter Benigno C. Villarente, Jr.,
rendered a Decision  the decretal portion of which reads as follows:
5 allegations against him was granted and a hearing was set "without counsel or
WHEREFORE, premises considered, judgment is hereby rendered declaring the
dismissal of complainant illegal and ordering respondents to reinstate complainant
to his former or equivalent position without loss of seniority rights and to pay him
his backwages and benefits due an employee of respondent Bank from the time of
illegal dismissal until actual reinstatement.
The private respondents appealed the labor arbiter's decision to the National Labor
Relations Commission (NLRC) which on July 26, 1989, rendered a Decision  reversing
6
that of the labor arbiter and dismissing the case for lack of merit.
The petitioner filed a Motion for Reconsideration of the NLRC decision, but this was
denied in a Resolution  dated October 31, 1989. Hence, this recourse.
7
The only issue for our resolution is whether or not the dismissal of the petitioner by the
private respondents was legally justified.
Under the Labor Code, as amended, the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not only must
the dismissal be for a valid or authorized cause as provided by law (Articles 279, 281, 282-
284, New Labor Code), but the rudimentary requirements of due process — notice and
hearing — must also be observed before an employee may be dismissed. One does not
suffice; without their concurrence, the terminate would, in the eyes of the law, be illegal. 8
The inviolability of notice and hearing for a valid dismissal an employee can not be over-
emphasized. Those twin requirements constitute essential elements of due process in
cases employee dismissal. The requirement of notice is intended inform the employee
concerned of the employer's intent dismiss him and the reason for the proposed dismissal;
on other hand, the requirement of hearing affords the employ the opportunity to answer his
employer's charges against him and accordingly to defend himself therefrom before
dismissal effected. Neither one of these two requirements can be dispensed with without
running afoul of the due process requirement of the Constitution. 9
We agree with the labor arbiter that the petitioner was terminated without the benefit of
due process of law. His dismiss was, therefore, illegal. Thus,
Respondents' initial act in convening their Personnel Discipline and Investigation
Committee (PDIC) to investigate complainant (after the CIS experience) would
have complied with the demands of due process had complainant been given the
opportunity to present his own defense and confront the witnesses, if any, and
examine the evidence against him. But as the records clearly show, complainant
was denied that constitutional right when his subsequent request refute the
representative. (See respondent Tuazon's letter t respondent dated February 25,
1985).10
The investigation of petitioner Salaw by the respondent Bank' investigating committee
violated his constitutional right to due process, in as much as he was not given a chance
to defend himself, as provided in Rule XIV, Book V of the Implementing Rules and
Regulations of the Labor Code governing the dismissal of employees. Section 5 of the
said Rule requires that "the employer shall afford the worker ample opportunity to be heard
and to defend himself with the assistance of his representative, if he so
desires."  (Emphasis supplied.) Here petition was perfunctorily denied the assistance of
11
counsel during investigation to be conducted by the PDIC. No reasons preferred which
vitiated the denial with irregularity and unfairness.
It is true that administrative and quasi-judicial bodies are not bound by the technical rules
of procedure in the adjudication cases. However, the right to counsel, a very basic
requirement of substantive due process, has to be observed. Indeed, rights to counsel and
to due process of law are two of fundamental rights guaranteed by the 1987 Constitution
to person under investigation, be the proceeding administrate civil, or criminal. Thus,
Section 12(1), Article III thereof specifically provides: "Any person under investigation for
the commssion of an offense shall have the right to ... have compete and independent
counsel preferably of his own choice. If the person cannot afford the service of counsel, he
must be provided with one. These rights cannot be waived except in writing in the
presence of counsel."  To underscore the inviolability this provision, the third paragraph of
12
the same section explicitly states that, "any confession or admission obtained in violation
of this or the preceding section shall be inadmissible evidence against him." 13
As aptly observed by the labor arbiter, the respondents premised their action in dismissing
the complainant on his supposed admission of the offense imputed to him by the Criminal
Investigation Service (CIS) in its interrogation in November, 1984. The said admission was
carried in a three-page Sworn Statement signed by the complainant. Aside from this
Statement, other evidence was presented by the respondents to establish the culpability of
the complainant in the fraudulent sale of respondents' foreclosed properties. Even the
minutes of proceeding taken during the investigation conducted by respondents were not
presented. ... This is a glaring denial of due process. We find it worth reiterating the
cardinal primary rights which must be respected even in proceedings of administrative
character as enunciated by this Court in classic landmark decision of Justice Laurel in Ang
Tibay, wit:
14
(1) The first of these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit evidence in
support thereof. In the language of Chief Justice Hughes, in Morgan v. U.S., 304
U.S. 1, 58 S. Ct. 773, 999, Law. ed. 1129, the liberty and property of the citizen
shall be protected by the rudimentary requirements of fair play.
(2) Not only must the party be given an opportunity to present his case and to
adduce evidence tending to establish the rights which he asserts but the tribunal
must consider the evidence prese (ChiefJustice Hughes in Morgan v. U.S. 298
U.S. 468,66 S. Ct. 906, Law. ed. 1288). In the language of this Court in Edwards
vs. McCoy 22 Phil. 598, the right to adduce evidence, without the corresponding
duty on the part of the board to consider it, is vain. Such right conspicuously futile if
the person or persons to whom the evidence presented thrust it aside without
notice or consideration.
(3) While the duty to deliberate does not impose the obligation to decide right, it
does imply a necessity which cannot be disregard namely, that of having
something to support its decision. A decision with absolutely nothing to support it is
a nullity, a place when directly attached. (Edward vs. McCoy, supra.) ...
(4) Not only must there be some evidence to support a finding or conclusion (City
of Manila vs. Agustin, G.R. No. 45844, promulgate November 29, 1937, XXXVI
O.G. 1335), but the evidence must be "substantial."(Washington, Virginia &
Maryland Coach Co. v. National Labor Relations Board, 301 U.S. 142,147, 57 S.
Ct. 648, 650, 8 Law. ed. 965.) "Substantial evidence is more than a mere scintilla.
It means such relevant evidence as a reasonable mind might accept adequate to
support a conclusion." (Appalachian Electric Power v National Labor Relations
Board, 4 Cir., 93 F. 2d 985, 989; Nation Labor Relations Board v. Thompson
Products, 6 Cir., 97 F. 2d 13, 15 Ballston-Stillwater Knitting Co. v. National Labor
Relations Board, 2 Cir., 98 F. 2d 758, 760.)...
(5) The decision must be rendered on the evidence presented the hearing, or at
least contained in the record and disclosed to parties affected. (Interstate
Commence Commission vs. L. & N.R. Co 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 
431) ...
(6) The Court of Industrial Relations (now the National Relations Commission) or
any of its judges, therefore, must act on its or his own independent consideration
of the law and facts of controversy, and not simply accept the views of a
subordinate arriving at a decision ....
(7) The Court of Industrial Relations (now NLRC) should, in controversial
questions, render its decision in such a manner that parties to the proceeding can
know the various issues involved, the reasons for the decisions rendered. The
performance of this duty inseparable from the authority conferred upon it.
x x x           x x x          x x x
Considering further that the admission by the petitioner which was extracted from him by
the Criminal Investigate Service of the Philippine Constabulary (National Capital Region)
without the assistance of counsel and which was made the sole basis for his dismissal,
can not be admitted in evidence against him, then, the finding of guilt of the PDIC, which
was affirmed by the public respondent NLRC; has no more leg stand on. A decision with
absolutely nothing to support it is a nullity.
Significantly, the dismissal of the petitioner from his employment was characterized by
undue haste. The law is clear that even in the disposition of labor cases, due process must
not be subordinated to expediency or dispatch. Otherwise, the dismissal of the employee
will be tainted with illegality. On this point, we have ruled 
consistently.15

We reiterate the rule laid down in Santos v. NLRC  that normal consequences of a finding
16

that an employee has been illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of seniority rights and,
secondly, the payment of backwages corresponding to the period from his illegal dismissal
up to actual reinstatement." The petitioner is entitled to no less.

WHEREFORE, premises considered, judgment is hereby rendered SETTING ASIDE the

appealed decision of the NLRC REINSTATING the decision of the labor arbiter.

SO ORDERED.

EN BANC G.R. No. L-44143 August 31, 1988

THE PEOPLE OF THE PHILIPPINES, plaintiff,  vs. EUSEBIO NAZARIO, accused-

appellant.
SARMIENTO, J.:
The petitioner was charged with violation of certain municipal ordinances of the municipal council of
Pagbilao, in Quezon province. By way of confession and avoidance, the petitioner would admit having
committed the acts charged but would claim that the ordinances are unconstitutional, or, assuming their
constitutionality, that they do not apply to him in any event.
The facts are not disputed:
This defendant is charged of the crime of Violation of Municipal Ordinance
in an information filed by the provincial Fiscal, dated October 9, 1968, as
follows:
That in the years 1964, 1965 and 1966, in the Municipality
of Pagbilao, Province of Quezon, Philippines, and within
the jurisdiction of this Honorable Court, the above-named
accused, being then the owner and operator of a fishpond
situated in the barrio of Pinagbayanan, of said municipality,
did then and there willfully, unlawfully and feloniously
refuse and fail to pay the municipal taxes in the total
amount of THREE HUNDRED SIXTY TWO PESOS AND
SIXTY TWO CENTAVOS (P362.62), required of him as
fishpond operator as provided for under Ordinance No. 4,
series of 1955, as amended, inspite of repeated demands
made upon him by the Municipal Treasurer of Pagbilao,
Quezon, to pay the same.
Contrary to law.
For the prosecution the following witnesses testified in substance as
follows;  letter demanded for payment of P362.00, more or less, by way of taxes
MIGUEL FRANCIA, 39 years of age, married, farmer and resident of
Lopez, Quezon —  June 28, 1967, I sent a letter to the Fishery Commission (Exhibit D),
In 1962 to 1967, I resided at Pinagbayanan, Pagbilao, Quezon. I know the
accused as I worked in his fishpond in 1962 to 1964. The fishpond of
Nazario is at Pinagbayanan, Pagbilao, Quezon. I worked in the clearing of
the fishpond, the construction of the dikes and the catching of fish. 
On cross-examination, this witness declared: 
I worked with the accused up to March 1964. 
NICOLAS MACAROLAY, 65 years of age, married, copra maker and
resident of Pinagbayanan, Pagbilao, Quezon — 
I resided at Pinagbayanan, Pagbilao, Quezon since 1959 up to the
present. I know the accused since 1959 when he opened a fishpond at
Pinagbayanan, Pagbilao, Quezon. He still operates the fishpond up to the
present and I know this fact as I am the barrio captain of Pinagbayanan. 
On cross-examination, this witness declared: 
I came to know the accused when he first operated his fishpond since
1959. 
On re-direct examination, this witness declared: 
I was present during the catching of fish in 1967 and the accused was
there. 
On re-cross examination, this witness declared: 
I do not remember the month in 1962 when the accused caught fish. 
RODOLFO R. ALVAREZ, 45 years old, municipal treasurer of Pagbilao,
Quezon, married — 
As Municipal Treasurer I am in charge of tax collection. I know the accused
even before I was Municipal Treasurer of Pagbilao. I have written the
accused a letter asking him to pay his taxes (Exhibit B). Said letter was
received by the accused as per registry return receipt, Exhibit B-1. The
which he did not pay up to the present. The former Treasurer, Ceferino
Caparros, also wrote a letter of demand to the accused (Exhibit C). On
requesting information if accused paid taxes with that office. The
Commission sent me a certificate (Exhibits D-1, D-2 & D-3). The accused
had a fishpond lease agreement. The taxes unpaid were for the years
1964, 1965 and 1966. 
On cross-examination, this witness declared: 
I have demanded the taxes for 38.10 hectares. 
On question of the court, this witness declared:  demand asked me to pay different amounts for taxes for the fishpond.
What I was collecting from the accused is the fee on fishpond operation,
not rental.  Because under the Tax Code, fishermen are exempted from percentage
The prosecution presented as part of their evidence Exhibits A, A-1, A-2,
B, B-2, C, D, D-1, D-2, D-3, E, F, F-1 and the same were admitted by the
court, except Exhibits D, D-1, D-2 and D-3 which were not admitted for
being immaterial.  B, 4-B, 4-C, 5, 5-A, 6, 6-A, 6-B, 6-C, 7, 7-A, 8 and 8-A and the same were
For the defense the accused EUSEBIO NAZARIO, 48 years of age,
married, owner and general manager of the ZIP Manufacturing Enterprises
and resident of 4801 Old Sta. Mesa, Sampaloc, Manila, declared in
substance as follows:  Pagbilao, refused, and still refuses, to pay the municipal taxes for the years
I have lived in Sta. Mesa, Manila, since 1949. I buy my Residence
Certificates at Manila or at San Juan. In 1964, 1965 and 1966, I was living
in Manila and my business is in Manila and my family lives at Manila. I
never resided at Pagbilao, Quezon. I do not own a house at Pagbilao. I am
a lessee of a fishpond located at Pagbilao, Quezon, and I have a lease
agreement to that effect with the Philippine Fisheries Commission marked
as Exhibit 1. In 1964, 1965 and 1966, the contract of lease, Exhibit 1, was
still existing and enforceable. The Ordinances Nos. 4, 15 and 12, series of
1955, 1965 and 1966, were translated into English by the Institute of
National Language to better understand the ordinances. There were
exchange of letters between me and the Municipal Treasurer of Pagbilao
regarding the payment of the taxes on my leased fishpond situated at
Pagbilao. There was a letter of demand for the payment of the taxes by the
treasurer (Exhibit 3) which I received by mail at my residence at Manila. I
answered the letter of demand, Exhibit 3, with Exhibit 3-A. I requested an
inspection of my fishpond to determine its condition as it was not then in
operation. The Municipal Treasurer Alvarez went there once in 1967 and
he found that it was destroyed by the typhoon and there were pictures
taken marked as Exhibits 4, 4-A, 4-B and 4C. I received another letter of
demand, Exhibit 5, and I answered the same (Exhibit 5-A). I copied my
reference quoted in Exhibit 5-A from Administrative Order No. 6, Exhibit 6.
I received another letter of demand from Tomas Ornedo, Acting Municipal
Treasurer of Pagbilao, dated February 16, 1966, Exhibit 7, and I answered
the same with the letter marked as Exhibit 7-A, dated February 26, 1966. I
received another letter of demand from Treasurer Alvarez of Pagbilao,
Exhibit 8, and I answered the same (Exhibit 8-A). In 1964, I went to
Treasurer Caparros to ask for an application for license tax and he said
none and he told me just to pay my taxes. I did not pay because up to now
I do not know whether I am covered by the Ordinance or not. The letters of
Because under Sec. 2309 of the Revised Administrative Code, municipal
taxes lapse if not paid and they are collecting on a lapsed ordinance.
tax and privilege tax. There is no law empowering the municipality to pass
ordinance taxing fishpond operators.
The defense presented as part of their evidence Exhibits 1, 2, 3, 3-A, 4, 4-
admitted by the court. 
From their evidence the prosecution would want to show to the court that
the accused, as lessee or operator of a fishpond in the municipality of
1964, 1965 and 1966, in violation of Municipal Ordinance No. 4, series of
1955, as amended by Municipal Ordinance No. 15, series of 1965, and
finally amended by Municipal Ordinance No. 12, series of 1966. 
On the other hand, the accused, by his evidence, tends to show to the
court that the taxes sought to be collected have already lapsed and that
there is no law empowering municipalities to pass ordinances taxing
fishpond operators. The defense, by their evidence, tried to show further
that, as lessee of a forest land to be converted into a fishpond, he is not
covered by said municipal ordinances; and finally that the accused should
not be taxed as fishpond operator because there is no fishpond yet being
operated by him, considering that the supposed fishpond was under
construction during the period covered by the taxes sought to be collected. 
Finally, the defendant claims that the ordinance in question is ultra vires as
it is outside of the power of the municipal council of Pagbilao, Quezon, to
enact; and that the defendant claims that the ordinance in question is
ambiguous and uncertain. 
There is no question from the evidences presented that the accused is a
lessee of a parcel of forest land, with an area of 27.1998 hectares, for
fishpond purposes, under Fishpond Lease Agreement No. 1066, entered
into by the accused and the government, through the Secretary of
Agriculture and Natural Resources on August 21, 1959. 
There is no question from the evidences presented that the 27.1998
hectares of land leased by the defendant from the government for fishpond
purposes was actually converted into fishpond and used as such, and
 therefore defendant is an operator of a fishpond within the purview of the
ordinance in question. 1
The trial Court   returned a verdict of guilty and disposed as follows: 
2
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Court finds the accused guilty
beyond reasonable doubt of the crime of violation of Municipal Ordinance No. 4, series of
1955, as amended by Ordinance No. 15, series of 1965 and further amended by
Ordinance No. 12, series of 1966, of the Municipal Council of Pagbilao, Quezon; and
hereby sentences him to pay a fine of P50.00, with subsidiary imprisonment in case of
insolvency at the rate of P8.00 a day, and to pay the costs of this proceeding.  Sec. l (a). For the convenience of those who have or owners or managers
SO ORDERED.  3
In this appeal, certified to this Court by the Court of Appeals, the petitioner alleges that:  Bureau of Fisheries.  6
I.
THE LOWER COURT ERRED IN NOT DECLARING THAT ORDINANCE NO. 4, SERIES
OF 1955, AS AMENDED BY ORDINANCE NO. 15, SERIES OF 1965, AND AS FURTHER
AMENDED BY ORDINANCE NO. 12, SERIES OF 1966, OF THE MUNICIPALITY OF
PAGBILAO, QUEZON, IS NULL AND VOID FOR BEING AMBIGUOUS AND
UNCERTAIN.
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN
QUESTION, AS AMENDED, IS UNCONSTITUTIONAL FOR BEING EX POST FACTO.
III.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN
QUESTION COVERS ONLY OWNERS OR OVERSEER OF FISHPONDS OF PRIVATE
OWNERSHIP AND NOT TO LESSEES OF PUBLIC LANDS.
IV.
THE LOWER COURT ERRED IN NOT FINDING THAT THE QUESTIONED
ORDINANCE, EVEN IF VALID, CANNOT BE ENFORCED BEYOND THE TERRITORIAL
LIMITS OF PAGBILAO AND DOES NOT COVER NON-
RESIDENTS.  4
The ordinances in question are Ordinance No. 4, series of 1955, Ordinance No. 15, series
of 1965, and Ordinance No. 12, series of 1966, of the Municipal Council of Pagbilao.
Insofar as pertinent to this appeal, the salient portions thereof are hereinbelow quoted:
Section 1. Any owner or manager of fishponds in places within the
territorial limits of Pagbilao, Quezon, shall pay a municipal tax in the
amount of P3.00 per hectare of fishpond on part thereof per annum.  5
xxx xxx xxx 
of fishponds within the territorial limits of this municipality, the date of
payment of municipal tax relative thereto, shall begin after the lapse of
three (3) years starting from the date said fishpond is approved by the
xxx xxx xxx 
Section 1. Any owner or manager of fishponds in places within the
territorial limits of Pagbilao shall pay a municipal tax in the amount of P3.00
per hectare or any fraction thereof per annum beginning and taking effect
from the year 1964, if the fishpond started operating before the year 1964.  7
The first objection refers to the ordinances being allegedly "ambiguous and
uncertain."   The petitioner contends that being a mere lessee of the fishpond, he is not
8
covered since the said ordinances speak of "owner or manager." He likewise maintains
that they are vague insofar as they reckon the date of payment: Whereas Ordinance No. 4
provides that parties shall commence payment "after the lapse of three (3) years starting
from the date said fishpond is approved by the Bureau of Fisheries."   Ordinance No. 12
9
states that liability for the tax accrues "beginning and taking effect from the year 1964 if the
fishpond started operating before the year 1964."  10
As a rule, a statute or act may be said to be vague when it lacks comprehensible
standards that men "of common intelligence must necessarily guess at its meaning and
differ as to its application."   It is repugnant to the Constitution in two respects: (1) it
11
violates due process for failure to accord persons, especially the parties targetted by it, fair
notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion in
carrying out its provisions and becomes an arbitrary flexing of the Government muscle. 
But the act must be utterly vague on its face, that is to say, it cannot be clarified by either a
saving clause or by construction. Thus, in Coates v. City of Cincinnati,   the U.S. Supreme
12
Court struck down an ordinance that had made it illegal for "three or more persons to
assemble on any sidewalk and there conduct themselves in a manner annoying to
persons passing by."   Clearly, the ordinance imposed no standard at all "because one
13
may never know in advance what 'annoys some people but does not annoy others.' "  14
Coates highlights what has been referred to as a "perfectly vague"   act whose obscurity is
15
evident on its face. It is to be distinguished, however, from legislation couched in imprecise
language — but which nonetheless specifies a standard though defectively phrased — in
which case, it may be "saved" by proper construction.
It must further be distinguished from statutes that are apparently ambiguous yet fairly
applicable to certain types of activities. In that event, such statutes may not be challenged
whenever directed against such activities. In Parker v. Levy,   a prosecution originally
16
under the U.S. Uniform Code of Military Justice (prohibiting, specifically, "conduct
unbecoming an officer and gentleman"), the defendant, an army officer who had urged his
men not to go to Vietnam and called the Special Forces trained to fight there thieves and
murderers, was not allowed to invoke the void for vagueness doctrine on the premise that
accepted military interpretation and practice had provided enough standards, and
consequently, a fair notice that his conduct was impermissible. 
It is interesting that in Gonzales v. Commission on Elections,   a divided Court sustained
17
an act of Congress (Republic Act No. 4880 penalizing "the too early nomination of
candidates"   limiting the election campaign period, and prohibiting "partisan political
18
activities"), amid challenges of vagueness and overbreadth on the ground that the law had
included an "enumeration of the acts deemed included in the terms 'election campaign' or
'partisan political activity"   that would supply the standards. "As thus limited, the objection
19
that may be raised as to vagueness has been minimized, if not totally set at rest."   In his
20
opinion, however, Justice Sanchez would stress that the conduct sought to be prohibited
"is not clearly defined at all."   "As worded in R.A 4880, prohibited discussion could cover
21
the entire spectrum of expression relating to candidates and political parties."   He was
22
unimpressed with the "restrictions" Fernando's opinion had relied on: " 'Simple
expressions of opinions and thoughts concerning the election' and expression of 'views on
current political problems or issues' leave the reader conjecture, to guesswork, upon the
extent of protection offered, be it as to the nature of the utterance ('simple expressions of
opinion and thoughts') or the subject of the utterance ('current political problems or
issues')." 
23
The Court likewise had occasion to apply the "balancing-of-interests" test,   insofar as the
24
statute's ban on early nomination of candidates was concerned: "The rational connection
between the prohibition of Section 50-A and its object, the indirect and modest scope of its
restriction on the rights of speech and assembly, and the embracing public interest which
Congress has found in the moderation of partisan political activity, lead us to the
conclusion that the statute may stand consistently with and does not offend the
Constitution."   In that case, Castro would have the balance achieved in favor of State
25
authority at the "expense" of individual liberties.  tax payable "after the lapse of three (3) years starting from the date said fishpond is
In the United States, which had ample impact on Castro's separate opinion, the balancing
test finds a close kin, referred to as the "less restrictive alternative "   doctrine, under
26
which the court searches for alternatives available to the Government outside of statutory
limits, or for "less drastic means"   open to the State, that would render the statute
27
unnecessary. In United States v. Robel,   legislation was assailed, banning members of
28
the (American) Communist Party from working in any defense facility. The U.S. Supreme
Court, in nullifying the statute, held that it impaired the right of association, and that in any
case, a screening process was available to the State that would have enabled it to Identify
dangerous elements holding defense positions.   In that event, the balance would have
29
been struck in favor of individual liberties. 
It should be noted that it is in free expression cases that the result is usually close. It is
said, however, that the choice of the courts is usually narrowed where the controversy
involves say, economic rights,   or as in the Levycase, military affairs, in which less
30
precision in analysis is required and in which the competence of the legislature is
presumed. 
In no way may the ordinances at bar be said to be tainted with the vice of vagueness. It is
unmistakable from their very provisions that the appellant falls within its coverage. As the
actual operator of the fishponds, he comes within the term " manager." He does not deny
the fact that he financed the construction of the fishponds, introduced fish fries into the
fishponds, and had employed laborers to maintain them.   While it appears that it is the
31
National Government which owns them,   the Government never shared in the profits they
32
had generated. It is therefore only logical that he shoulders the burden of tax under the
said ordinances. 
We agree with the trial court that the ordinances are in the character of revenue
measures   designed to assist the coffers of the municipality of Pagbilao. And obviously, it
33
cannot be the owner, the Government, on whom liability should attach, for one thing, upon
the ancient principle that the Government is immune from taxes and for another, since it is
not the Government that had been making money from the venture. 
Suffice it to say that as the actual operator of the fishponds in question, and as the
recipient of profits brought about by the business, the appellant is clearly liable for the
municipal taxes in question. He cannot say that he did not have a fair notice of such a
liability to make such ordinances vague. 
Neither are the said ordinances vague as to dates of payment. There is no merit to the
claim that "the imposition of tax has to depend upon an uncertain date yet to be
determined (three years after the 'approval of the fishpond' by the Bureau of Fisheries, and
upon an uncertain event (if the fishpond started operating before 1964), also to be
determined by an uncertain individual or individuals."   Ordinance No. 15, in making the
34
approved by the Bureau of Fisheries,"   is unequivocal about the date of payment, and its
35
Republic Act No. 2264, the Local Autonomy Act then in force. (Republic Act No. 2264
amendment by Ordinance No. 12, reckoning liability thereunder "beginning and taking likewise prohibited municipalities from imposing percentage taxes on sales.) 
effect from the year 1964 if the fishpond started operating before the year 1964 ,"   does
36

not give rise to any ambiguity. In either case, the dates of payment have been definitely First of all, the tax in question is not a tax on property, although the rate thereof is based
established. The fact that the appellant has been allegedly uncertain about the reckoning on the area of fishponds ("P3.00 per hectare"  ). Secondly, fishponds are not forest lands,
42

dates — as far as his liability for the years 1964, 1965, and 1966 is concerned — presents although we have held them to the agricultural lands.   By definition, "forest" is "a large
43

a mere problem in computation, but it does not make the ordinances vague. In addition, tract of land covered with a natural growth of trees and underbush; a large
the same would have been at most a difficult piece of legislation, which is not unfamiliar in wood."   (Accordingly, even if the challenged taxes were directed on the fishponds, they
44

this jurisdiction, but hardly a vague law.  would not have been taxes on forest products.) 

As it stands, then, liability for the tax accrues on January 1, 1964 for fishponds in operation They are, more accurately, privilege taxes on the business of fishpond maintenance. They
prior thereto (Ordinance No. 12), and for new fishponds, three years after their approval by are not charged against sales, which would have offended the doctrine enshrined
the Bureau of Fisheries (Ordinance No. 15). This is so since the amendatory act by Golden Ribbon Lumber,   but rather on occupation, which is allowed under Republic
45

(Ordinance No. 12) merely granted amnesty unto old, delinquent fishpond operators. It did Act No. 2264.   They are what have been classified as fixed annual taxes and this is
46

not repeal its mother ordinances (Nos. 4 and 15). With respect to new operators, obvious from the ordinances themselves. 
Ordinance No. 15 should still prevail. 
There is, then, no merit in the last objection. 
To the Court, the ordinances in question set forth enough standards that clarify imagined
ambiguities. While such standards are not apparent from the face thereof, they are visible WHEREFORE, the appeal is DISMISSED. Costs against the appellant.
from the intent of the said ordinances. 

The next inquiry is whether or not they can be said to be ex post facto measures. The
appellant argues that they are: "Amendment No. 12 passed on September 19, 1966,
clearly provides that the payment of the imposed tax shall "beginning and taking effect
from the year 1964, if the fishpond started operating before the year 1964.' In other words,
it penalizes acts or events occurring before its passage, that is to say, 1964 and even prior
thereto." 
37

The Court finds no merit in this contention. As the Solicitor General notes, "Municipal
Ordinance No. 4 was passed on May 14, 1955.   Hence, it cannot be said that the
38

amendment (under Ordinance No. 12) is being made to apply retroactively (to 1964) since
the reckoning period is 1955 (date of enactment). Essentially, Ordinances Nos. 12 and 15
are in the nature of curative measures intended to facilitate and enhance the collection of
revenues the originally act, Ordinance No. 4, had prescribed.   Moreover, the act (of non-
39

payment of the tax), had been, since 1955, made punishable, and it cannot be said that
Ordinance No. 12 imposes a retroactive penalty. As we have noted, it operates to grant
amnesty to operators who had been delinquent between 1955 and 1964. It does not mete
out a penalty, much less, a retrospective one. 

The appellant assails, finally, the power of the municipal council of Pagbilao to tax "public
forest land."   In Golden Ribbon Lumber Co., Inc. v. City of Butuan   we held that local
40 41

governments' taxing power does not extend to forest products or concessions under
 BELLOSILLO, J.:

May a Monetary Board resolution placing a private bank under receivership be annulled on
the ground of lack of prior notice and hearing?

This petition seeks review of the decision of the Court of Appeals in CA G.R. S.P. No.
07867 entitled "The Central Bank of the Philippines and Ramon V. Tiaoqui vs. Hon. Jose
C. de Guzman and Triumph Savings Bank," promulgated 26 September 1986, which
affirmed the twin orders of the Regional Trial Court of Quezon City issued 11 November
1985  denying herein petitioners' motion to dismiss Civil Case No. Q-45139, and directing
1

petitioner Ramon V. Tiaoqui to restore the private management of Triumph Savings Bank
(TSB) to its elected board of directors and officers, subject to Central Bank
comptrollership.2

The antecedent facts: Based on examination reports submitted by the Supervision and
Examination Sector (SES), Department II, of the Central Bank (CB) "that the financial
condition of TSB is one of insolvency and its continuance in business would involve
probable loss to its depositors and creditors,"  the Monetary Board (MB) issued on 31 May
3

1985 Resolution No. 596 ordering the closure of TSB, forbidding it from doing business in
the Philippines, placing it under receivership, and appointing Ramon V. Tiaoqui as
receiver. Tiaoqui assumed office on 3 June 1985. 4

On 11 June 1985, TSB filed a complaint with the Regional Trial Court of Quezon City,
docketed as Civil Case No. Q-45139, against Central Bank and Ramon V. Tiaoqui to annul
MB Resolution No. 596, with prayer for injunction, challenging in the process the
constitutionality of Sec. 29 of R.A. 269, otherwise known as "The Central Bank Act," as
amended, insofar as it authorizes the Central Bank to take over a banking institution even
if it is not charged with violation of any law or regulation, much less found guilty thereof.
5

On 1 July 1985, the trial court temporarily restrained petitioners from implementing MB
Resolution No. 596 "until further orders", thus prompting them to move for the quashal of
the restraining order (TRO) on the ground that it did not comply with said Sec. 29, i.e., that
TSB failed to show convincing proof of arbitrariness and bad faith on the part of
petitioners;' and, that TSB failed to post the requisite bond in favor of Central Bank.

On 19 July 1985, acting on the motion to quash the restraining order, the trial court
granted the relief sought and denied the application of TSB for injunction. Thereafter,
Triumph Savings Bank filed with Us a petition for certiorariunder Rule 65 of the Rules of
EN BANC G.R. No. 76118 March 30, 1993 Court  dated 25 July 1985 seeking to enjoin the continued implementation of the
6

questioned MB resolution.
THE CENTRAL BANK OF THE PHILIPPINES and RAMON V. TIAOQUI, petitioners, 
vs. COURT OF APPEALS and TRIUMPH SAVINGS BANK, respondents. Meanwhile, on 9 August 1985; Central Bank and Ramon Tiaoqui filed a motion to dismiss
the complaint before the RTC for failure to state a cause of action, i.e., it did not allege
ultimate facts showing that the action was plainly arbitrary and made in bad faith, which
are the only grounds for the annulment of Monetary Board resolutions placing a bank
under conservatorship, and that TSB was without legal capacity to sue except through its
receiver.
7
On 9 September 1985, TSB filed an urgent motion in the RTC to direct receiver Ramon V.
Tiaoqui to restore TSB to its private management. On 11 November 1985, the RTC in
separate orders denied petitioners' motion to dismiss and ordered receiver Tiaoqui to
restore the management of TSB to its elected board of directors and officers, subject to
CB comptrollership.
Since the orders of the trial court rendered moot the petition for certiorari then pending
before this Court, Central Bank and Tiaoqui moved on 2 December 1985 for the dismissal
of G.R. No. 71465 which We granted on 18 December 1985. 8
Instead of proceeding to trial, petitioners elevated the twin orders of the RTC to the Court
of Appeals on a petition for certiorari and prohibition under Rule 65.  On 26 September
9 action only being in line and congruent to the action of the Supreme Court
1986, the appellate court, upheld the orders of the trial court thus —
Petitioners' motion to dismiss was premised on two grounds, namely, that
the complaint failed to state a cause of action and that the Triumph
Savings Bank was without capacity to sue except through its appointed
receiver.
Concerning the first ground, petitioners themselves admit that the
Monetary Board resolution placing the Triumph Savings Bank under the
receivership of the officials of the Central Bank was done without prior
hearing, that is, without first hearing the side of the bank. They further
admit that said resolution can be the subject of judicial review and may be
set aside should it be found that the same was issued with arbitrariness
and in bad faith.
The charge of lack of due process in the complaint may be taken as
constitutive of allegations of arbitrariness and bad faith. This is not of
course to be taken as meaning that there must be previous hearing before
the Monetary Board may exercise its powers under Section 29 of its
Charter. Rather, judicial review of such action not being foreclosed, it
would be best should private respondent be given the chance to show and
prove arbitrariness and bad faith in the issuance of the questioned
resolution, especially so in the light of the statement of private respondent
that neither the bank itself nor its officials were even informed of any
charge of violating banking laws.
In regard to lack of capacity to sue on the part of Triumph Savings Bank,
we view such argument as being specious, for if we get the drift of
petitioners' argument, they mean to convey the impression that only the CB
appointed receiver himself may question the CB resolution appointing him
as such. This may be asking for the impossible, for it cannot be expected
that the master, the CB, will allow the receiver it has appointed to question
that very appointment. Should the argument of petitioners be given
circulation, then judicial review of actions of the CB would be effectively
checked and foreclosed to the very bank officials who may feel, as in the
case at bar, that the CB action ousting them from the bank deserves to be
set aside.
xxx xxx xxx
On the questioned restoration order, this Court must say that it finds
nothing whimsical, despotic, capricious, or arbitrary in its issuance, said
in the Banco Filipino Case (G.R. No. 70054) where management of the
bank was restored to its duly elected directors and officers, but subject to
the Central Bank comptrollership. 10
On 15 October 1986, Central Bank and its appointed receiver, Ramon V. Tiaoqui, filed this
petition under Rule 45 of the Rules of Court praying that the decision of the Court of
Appeals in CA-G.R. SP No. 07867 be set aside, and that the civil case pending before the
RTC of Quezon City, Civil Case No.
Q-45139, be dismissed. Petitioners allege that the Court of Appeals erred —
(1) in affirming that an insolvent bank that had been summarily closed by
the Monetary Board should be restored to its private management
supposedly because such summary closure was "arbitrary and in bad faith"
and a denial of "due process";
(2) in holding that the "charge of lack of due process" for "want of prior
hearing" in a complaint to annul a Monetary Board receivership resolution
under Sec. 29 of R.A. 265 "may be taken as . . allegations of arbitrariness
and bad faith"; and
(3) in holding that the owners and former officers of an insolvent bank may
still act or sue in the name and corporate capacity of such bank, even after
it had been ordered closed and placed under receivership. 11
The respondents, on the other hand, allege inter alia that in the Banco Filipino case,  We
12
held that CB violated the rule on administrative due process laid down in Ang Tibay vs.
CIR (69 Phil. 635) and Eastern Telecom Corp. vs. Dans, Jr. (137 SCRA 628) which
requires that prior notice and hearing be afforded to all parties in administrative
proceedings. Since MB Resolution No. 596 was adopted without TSB being previously
notified and heard, according to respondents, the same is void for want of due process;
consequently, the bank's management should be restored to its board of directors and
process demand that the correctness of the Monetary Board's resolution to stop operation
and proceed to liquidation be first adjudged before making the resolution effective. It is
enough that a subsequent judicial review be provided.
Even in Banco Filipino,   We reiterated that Sec. 29 of R.A. 265 does not require a
18

officers.
13
Petitioners claim that it is the essence of Sec. 29 of R.A. 265 that prior notice and hearing
in cases involving bank closures should not be required since in all probability a hearing
would not only cause unnecessary delay but also provide bank "insiders" and stockholders
the opportunity to further dissipate the bank's resources, create liabilities for the bank up to
the insured amount of P40,000.00, and even destroy evidence of fraud or irregularity in the
bank's operations to the prejudice of its depositors and creditors.   Petitioners further
14
argue that the legislative intent of Sec. 29 is to repose in the Monetary Board exclusive
power to determine the existence of statutory grounds for the closure and liquidation of
banks, having the required expertise and specialized competence to do so.
The first issue raised before Us is whether absence of prior notice and hearing may be
considered acts of arbitrariness and bad faith sufficient to annul a Monetary Board
resolution enjoining a bank from doing business and placing it under receivership.
Otherwise stated, is absence of prior notice and hearing constitutive of acts of
previous hearing before the Monetary Board can implement its resolution closing a bank,
since its action is subject to judicial scrutiny as provided by law.
It may be emphasized that Sec. 29 does not altogether divest a bank or a non-bank
financial institution placed under receivership of the opportunity to be heard and present
evidence on arbitrariness and bad faith because within ten (10) days from the date the
receiver takes charge of the assets of the bank, resort to judicial review may be had by
filing an appropriate pleading with the court. Respondent TSB did in fact avail of this
remedy by filing a complaint with the RTC of Quezon City on the 8th day following the
takeover by the receiver of the bank's assets on 3 June 1985.
This "close now and hear later" scheme is grounded on practical and legal considerations
to prevent unwarranted dissipation of the bank's assets and as a valid exercise of police
power to protect the depositors, creditors, stockholders and the general public.
In Rural Bank of Buhi, Inc. v. Court of Appeals,  We stated that —
19

arbitrariness and bad faith?

. . . due process does not necessarily require a prior hearing; a hearing or
Under Sec. 29 of R.A. 265,  the Central Bank, through the Monetary Board, is vested with
15
an opportunity to be heard may be subsequent to the closure. One can just
exclusive authority to assess, evaluate and determine the condition of any bank, and imagine the dire consequences of a prior hearing: bank runs would be the
finding such condition to be one of insolvency, or that its continuance in business would order of the day, resulting in panic and hysteria. In the process, fortunes
involve probable loss to its depositors or creditors, forbid the bank or non-bank financial may be wiped out and disillusionment will run the gamut of the entire
institution to do business in the Philippines; and shall designate an official of the CB or banking community.
other competent person as receiver to immediately take charge of its assets and liabilities.
The fourth paragraph,  which was then in effect at the time the action was commenced,
16

We stressed in Central Bank of the Philippines v. Court of Appeals  that —

20

allows the filing of a case to set aside the actions of the Monetary Board which are tainted
with arbitrariness and bad faith.
. . . the banking business is properly subject to reasonable regulation under
the police power of the state because of its nature and relation to the fiscal
Contrary to the notion of private respondent, Sec. 29 does not contemplate prior notice
affairs of the people and the revenues of the state (9 CJS 32). Banks are
and hearing before a bank may be directed to stop operations and placed under
affected with public interest because they receive funds from the general
receivership. When par. 4 (now par. 5, as amended by E.O. 289) provides for the filing of a
public in the form of deposits. Due to the nature of their transactions and
case within ten (10) days after the receiver takes charge of the assets of the bank, it is
functions, a fiduciary relationship is created between the banking
unmistakable that the assailed actions should precede the filing of the case. Plainly, the
institutions and their depositors. Therefore, banks are under the obligation
legislature could not have intended to authorize "no prior notice and hearing" in the closure
to treat with meticulous care and utmost fidelity the accounts of those who
of the bank and at the same time allow a suit to annul it on the basis of absence thereof.
have reposed their trust and confidence in them (Simex International
[Manila], Inc., v. Court of Appeals, 183 SCRA 360 [1990]).
In the early case of Rural Bank of Lucena, Inc. v. Arca [1965],  We held that a previous
17

hearing is nowhere required in Sec. 29 nor does the constitutional requirement of due
 It is then the Government's responsibility to see to it that the financial
interests of those who deal with the banks and banking institutions, as
depositors or otherwise, are protected. In this country, that task is
delegated to the Central Bank which, pursuant to its Charter (R.A. 265, as
amended), is authorized to administer the monetary, banking and credit
system of the Philippines. Under both the 1973 and 1987 Constitutions, the
Central Bank is tasked with providing policy direction in the areas of
money, banking and credit; corollarily, it shall have supervision over the
operations of banks (Sec. 14, Art. XV, 1973 Constitution, and Sec. 20, Art.
XII, 1987 Constitution). Under its charter, the CB is further authorized to
take the necessary steps against any banking institution if its continued
operation would cause prejudice to its depositors, creditors and the general
public as well. This power has been expressly recognized by this Court. In
Philippine Veterans Bank Employees Union-NUBE v. Philippine Veterans
Banks (189 SCRA 14 [1990], this Court held that:
. . . [u]nless adequate and determined efforts are taken by
the government against distressed and mismanaged
banks, public faith in the banking system is certain to
deteriorate to the prejudice of the national economy itself,
not to mention the losses suffered by the bank depositors,
creditors, and stockholders, who all deserve the protection
of the government. The government cannot simply cross its
arms while the assets of a bank are being depleted through
mismanagement or irregularities. It is the duty of the
Central Bank in such an event to step in and salvage the
remaining resources of the bank so that they may not
continue to be dissipated or plundered by those entrusted
with their management.
Section 29 of R.A. 265 should be viewed in this light; otherwise, We would be subscribing
to a situation where the procedural rights invoked by private respondent would take
precedence over the substantive interests of depositors, creditors and stockholders over
the assets of the bank.
Admittedly, the mere filing of a case for receivership by the Central Bank can trigger a
bank run and drain its assets in days or even hours leading to insolvency even if the bank
be actually solvent. The procedure prescribed in Sec. 29 is truly designed to protect the
interest of all concerned, i.e., the depositors, creditors and stockholders, the bank itself,
and the general public, and the summary closure pales in comparison to the protection
afforded public interest. At any rate, the bank is given full opportunity to
prove arbitrariness and bad faith in placing the bank under receivership, in which event,
the resolution may be properly nullified and the receivership lifted as the trial court may
determine.
The heavy reliance of respondents on the Banco Filipino case is misplaced in view of
factual circumstances therein which are not attendant in the present case. We ruled
in Banco Filipino that the closure of the bank was arbitrary and attendant with grave abuse
of discretion, not because of the absence of prior notice and hearing, but that the
Monetary Board had no sufficient basis to arrive at a sound conclusion of insolvency to
justify the closure. In other words, the arbitrariness, bad faith and abuse of discretion were
determined only after the bank was placed under conservatorship and evidence thereon
was received by the trial court. As this Court found in that case, the Valenzuela, Aurellano
and Tiaoqui Reports contained unfounded assumptions and deductions which did not
reflect the true financial condition of the bank. For instance, the subtraction of an uncertain
amount as valuation reserve from the assets of the bank would merely result in its net
worth or the unimpaired capital and surplus; it did not reflect the total financial condition of
Banco Filipino.
Furthermore, the same reports showed that the total assets of Banco Filipino far exceeded
its total liabilities. Consequently, on the basis thereof, the Monetary Board had no valid
reason to liquidate the bank; perhaps it could have merely ordered its reorganization or
rehabilitation, if need be. Clearly, there was in that case a manifest arbitrariness, abuse of
discretion and bad faith in the closure of Banco Filipino by the Monetary Board. But, this is
not the case before Us. For here, what is being raised as arbitrary by private respondent is
the denial of prior notice and hearing by the Monetary Board, a matter long settled in this
jurisdiction, and not the arbitrariness which the conclusions of the Supervision and
Examination Sector (SES), Department II, of the Central Bank were reached.
Once again We refer to Rural Bank of Buhi, Inc. v. Court of Appeals,  and reiterate Our
21
pronouncement therein that —
. . . the law is explicit as to the conditions prerequisite to the action of the
Monetary Board to forbid the institution to do business in the Philippines
and to appoint a receiver to immediately take charge of the bank's assets
and liabilities. They are: (a) an examination made by the examining
department of the Central Bank; (b) report by said department to the
Monetary Board; and (c) prima facie showing that its continuance in
business would involve probable loss to its depositors or creditors.
In sum, appeal to procedural due process cannot just outweigh the evil sought to be
prevented; hence, We rule that Sec. 29 of R.A. 265 is a sound legislation promulgated in
accordance with the Constitution in the exercise of police power of the state.
Consequently, the absence of notice and hearing is not a valid ground to annul a Monetary
Board resolution placing a bank under receivership. The absence of prior notice and
hearing cannot be deemed acts of arbitrariness and bad faith. Thus, an MB resolution
placing a bank under receivership, or conservatorship for that matter, may only be
annulled after a determination has been made by the trial court that its issuance was
tainted with arbitrariness and bad faith. Until such determination is made, the Let this case be remanded to the Regional Trial Court of Quezon City for further
status quo  shall be maintained, i.e., the bank shall continue to be under receivership. proceedings to determine whether the issuance of Resolution No. 596 of the Monetary
Board was tainted with arbitrariness and bad faith and to decide the case accordingly.
As regards the second ground, to rule that only the receiver may bring suit in behalf of the
bank is, to echo the respondent appellate court, "asking for the impossible, for it cannot be SO ORDERED.
expected that the master, the CB, will allow the receiver it has appointed to question that
very appointment." Consequently, only stockholders of a bank could file an action for
annulment of a Monetary Board resolution placing the bank under receivership and
prohibiting it from continuing operations.  In Central Bank v. Court of Appeals,   We
22 23

explained the purpose of the law —

. . . in requiring that only the stockholders of record representing the

majority of the capital stock may bring the action to set aside a resolution
to place a bank under conservatorship is to ensure that it be not frustrated
or defeated by the incumbent Board of Directors or officers who may
immediately resort to court action to prevent its implementation or
enforcement. It is presumed that such a resolution is directed principally
against acts of said Directors and officers which place the bank in a state
of continuing inability to maintain a condition of liquidity adequate to protect
the interest of depositors and creditors. Indirectly, it is likewise intended to
protect and safeguard the rights and interests of the stockholders.
Common sense and public policy dictate then that the authority to decide
on whether to contest the resolution should be lodged with the
stockholders owning a majority of the shares for they are expected to be
more objective in determining whether the resolution is plainly arbitrary and
issued in bad faith.

It is observed that the complaint in this case was filed on 11 June 1985 or two (2) years
prior to 25 July 1987 when E.O. 289 was issued, to be effective sixty (60) days after its
approval (Sec. 5). The implication is that before E.O. 289, any party in interest could
institute court proceedings to question a Monetary Board resolution placing a bank under
receivership. Consequently, since the instant complaint was filed by parties representing
themselves to be officers of respondent Bank (Officer-in-Charge and Vice President), the
case before the trial court should now take its natural course. However, after the effectivity
of E.O. 289, the procedure stated therein should be followed and observed.

PREMISES considered, the Decision of the Court of Appeals in CA-G.R. SP No. 07867
is AFFIRMED, except insofar as it upholds the Order of the trial court of 11 November
1985 directing petitioner RAMON V. TIAOQUI to restore the management of TRIUMPH
SAVINGS BANK to its elected Board of Directors and Officers, which is hereby SET
ASIDE.

EN BANC G.R. No. 163583             August 20, 2008
BRITISH AMERICAN TOBACCO, petitioner,  vs. JOSE ISIDRO N. CAMACHO, in his
capacity as Secretary of the Department of Finance and GUILLERMO L. PARAYNO, JR.,
in his capacity as Commissioner of the Bureau of Internal Revenue, respondents.
Philip Morris Philippines Manufacturing, Inc., fortune tobacco, corp., MIGHTY
CORPORATION, and JT InTERNATIONAL, S.A., respondents-in-intervention.
YNARES-SANTIAGO, J.:
This petition for review assails the validity of: (1) Section 145 of the National Internal Revenue
Code (NIRC), as recodified by Republic Act (RA) 8424; (2) RA 9334, which further amended
Section 145 of the NIRC on January 1, 2005; (3) Revenue Regulations Nos. 1-97, 9-2003, and
22-2003; and (4) Revenue Memorandum Order No. 6-2003. Petitioner argues that the said
provisions are violative of the equal protection and uniformity clauses of the Constitution.
RA 8240, entitled "An Act Amending Sections 138, 139, 140, and 142 of the NIRC, as
Amended and For Other Purposes," took effect on January 1, 1997. In the same year,
Congress passed RA 8424 or The Tax Reform Act of 1997, re-codifying the NIRC. Section 142
was renumbered as Section 145 of the NIRC.  sold on retail in 20 major supermarkets in Metro Manila (for brands of cigarettes
Paragraph (c) of Section 145 provides for four tiers of tax rates based on the net retail
price per pack of cigarettes. To determine the applicable tax rates of existing cigarette brands,
a survey of the net retail prices per pack of cigarettes was conducted as of October 1, 1996,
the results of which were embodied in Annex "D" of the NIRC as the duly registered, existing
or active brands of cigarettes. 
1 price as of October 1, 1996, as set forth in Annex "D" of this Act, shall remain in
Paragraph (c) of Section 145,   states –
SEC. 145. Cigars and cigarettes. – 
xxxx
(c) Cigarettes packed by machine. – There shall be levied, assessed and collected on
cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the value-added tax) is
above Ten pesos (P10.00) per pack, the tax shall be Thirteen pesos and forty-
four centavos (P13.44) per pack;
(2) If the net retail price (excluding the excise tax and the value-added tax)
exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos
(10.00) per pack, the tax shall be Eight pesos and ninety-six centavos (P8.96)
per pack;
(3) If the net retail price (excluding the excise tax and the value-added tax) is
Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50)
per pack, the tax shall be Five pesos and sixty centavos (P5.60) per pack;
(4) If the net retail price (excluding the excise tax and the value-added tax) is
below Five pesos (P5.00) per pack, the tax shall be One peso and twelve
centavos (P1.12) per pack.
Variants of existing brands of cigarettes which are introduced in the domestic market
after the effectivity of this Act shall be taxed under the highest classification of any
variant of that brand.
xxxx
New brands shall be classified according to their current net retail price.
For the above purpose, net retail price shall mean the price at which the cigarette is
marketed nationally), excluding the amount intended to cover the applicable excise tax
and the value-added tax. For brands which are marketed only outside Metro Manila,
the net retail price shall mean the price at which the cigarette is sold in five major
supermarkets in the region excluding the amount intended to cover the applicable
excise tax and the value-added tax.
The classification of each brand of cigarettes based on its average net retail
force until revised by Congress. (Emphasis supplied)
As such, new brands of cigarettes shall be taxed according to their current net retail
price while existing or "old" brands shall be taxed based on their net retail price as of
October 1, 1996.
To implement RA 8240, the Bureau of Internal Revenue (BIR) issued Revenue Regulations
No. 1-97,2 which classified the existing brands of cigarettes as those duly registered or active
brands prior to January 1, 1997. New brands, or those registered after January 1, 1997, shall
be initially assessed at their suggested retail price until such time that the appropriate survey to
determine their current net retail price is conducted. Pertinent portion of the regulations reads –
SECTION 2. Definition of Terms.
xxxx
3. Duly registered or existing brand of cigarettes – shall include duly registered,
existing or active brands of cigarettes, prior to January 1, 1997.
xxxx
6. New Brands – shall mean brands duly registered after January 1, 1997 and shall
include duly registered, inactive brands of cigarette not sold in commercial quantity
before January 1, 1997.
Section 4. Classification and Manner of Taxation of Existing Brands, New Brands and
Variant of Existing Brands.
xxxx
B. New Brand
New brands shall be classified according to their current net retail price. In the
meantime that the current net retail price has not yet been established, the suggested
net retail price shall be used to determine the specific tax classification. Thereafter, a
survey shall be conducted in 20 major supermarkets or retail outlets in Metro Manila
(for brands of cigarette marketed nationally) or in five (5) major supermarkets or retail
outlets in the region (for brands which are marketed only outside Metro Manila) at
which the cigarette is sold on retail in reams/cartons, three (3) months after the initial
removal of the new brand to determine the actual net retail price excluding the excise
tax and value added tax which shall then be the basis in determining the specific tax
classification. In case the current net retail price is higher than the suggested net retail
price, the former shall prevail. Any difference in specific tax due shall be assessed and
collected inclusive of increments as provided for by the National Internal Revenue
Code, as amended.
In June 2001, petitioner British American Tobacco introduced into the market Lucky Strike
Filter, Lucky Strike Lights and Lucky Strike Menthol Lights cigarettes, with a suggested retail
price of P9.90 per pack.3 Pursuant to Sec. 145 (c) quoted above, the Lucky Strike brands were
initially assessed the excise tax at P8.96 per pack.
On February 17, 2003, Revenue Regulations No. 9-2003,4 amended Revenue Regulations
No. 1-97 by providing, among others, a periodic review every two years or earlier of the current
net retail price of new brands and variants thereof for the purpose of establishing and updating
their tax classification, thus:
For the purpose of establishing or updating the tax classification of new brands and
variant(s) thereof, their current net retail price shall be reviewed periodically through
the conduct of survey or any other appropriate activity, as mentioned above, every two
(2) years unless earlier ordered by the Commissioner. However, notwithstanding any
increase in the current net retail price, the tax classification of such new brands shall
remain in force until the same is altered or changed through the issuance of an
appropriate Revenue Regulations.
Pursuant thereto, Revenue Memorandum Order No. 6-20035 was issued on March 11, 2003,
prescribing the guidelines and procedures in establishing current net retail prices of new
brands of cigarettes and alcohol products. 
Subsequently, Revenue Regulations No. 22-20036 was issued on August 8, 2003 to
implement the revised tax classification of certain new brands introduced in the market after
January 1, 1997, based on the survey of their current net retail price. The survey revealed that
Lucky Strike Filter, Lucky Strike Lights, and Lucky Strike Menthol Lights, are sold at the current
net retail price of P22.54, P22.61 and P21.23, per pack, respectively.7 Respondent
Commissioner of the Bureau of Internal Revenue thus recommended the applicable tax rate of
P13.44 per pack inasmuch as Lucky Strike’s average net retail price is above P10.00 per pack.
Thus, on September 1, 2003, petitioner filed before the Regional Trial Court (RTC) of Makati,
Branch 61, a petition for injunction with prayer for the issuance of a temporary restraining order
(TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 03-1032. Said petition
sought to enjoin the implementation of Section 145 of the NIRC, Revenue Regulations Nos. 1-
97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003 on the ground that they
discriminate against new brands of cigarettes, in violation of the equal protection and uniformity
provisions of the Constitution.
Respondent Commissioner of Internal Revenue filed an Opposition8 to the application for the
issuance of a TRO. On September 4, 2003, the trial court denied the application for TRO,
holding that the courts have no authority to restrain the collection of taxes.9 Meanwhile,
respondent Secretary of Finance filed a Motion to Dismiss,10 contending that the petition is
premature for lack of an actual controversy or urgent necessity to justify judicial intervention.
In an Order dated March 4, 2004, the trial court denied the motion to dismiss and issued a writ Pertinent portions, of RA 9334, provides:
of preliminary injunction to enjoin the implementation of Revenue Regulations Nos. 1-97, 9-
2003, 22-2003 and Revenue Memorandum Order No. 6-2003.11 Respondents filed a Motion for SEC. 145. Cigars and Cigarettes. –
Reconsideration12 and Supplemental Motion for Reconsideration.13 At the hearing on the said
motions, petitioner and respondent Commissioner of Internal Revenue stipulated that the only xxxx
issue in this case is the constitutionality of the assailed law, order, and regulations.14
(C) Cigarettes Packed by Machine. – There shall be levied, assessed and collected on
On May 12, 2004, the trial court rendered a decision15 upholding the constitutionality of Section cigarettes packed by machine a tax at the rates prescribed below:
145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue
Memorandum Order No. 6-2003. The trial court also lifted the writ of preliminary injunction. The
dispositive portion of the decision reads: (1) If the net retail price (excluding the excise tax and the value-added tax) is below
Five pesos (P5.00) per pack, the tax shall be: 
WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for
lack of merit. The Writ of Preliminary Injunction previously issued is hereby lifted and Effective on January 1, 2005, Two pesos (P2.00) per pack;
dissolved.
Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23) per pack;
16
SO ORDERED.
Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per pack;
Petitioner brought the instant petition for review directly with this Court on a pure question of and 
law.
Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack.
While the petition was pending, RA 9334 (An Act Increasing The Excise Tax Rates Imposed on
Alcohol And Tobacco Products, Amending For The Purpose Sections 131, 141, 143, 144, 145 (2) If the net retail price (excluding the excise tax and the value-added tax) is Five
and 288 of the NIRC of 1997, As Amended), took effect on January 1, 2005. The statute, pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the
among others,–  tax shall be:

(1) increased the excise tax rates provided in paragraph (c) of Section 145;  Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per pack;

(2) mandated that new brands of cigarettes shall initially be classified according to their Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per pack;
suggested net retail price, until such time that their correct tax bracket is finally determined
under a specified period and, after which, their classification shall remain in force until revised Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per pack;
by Congress;  and 

(3) retained Annex "D" as tax base of those surveyed as of October 1, 1996 including the Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per pack.
classification of brands for the same products which, although not set forth in said Annex "D,"
were registered on or before January 1, 1997 and were being commercially produced and (3) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six
marketed on or after October 1, 1996, and which continue to be commercially produced and pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack,
marketed after the effectivity of this Act. Said classification shall remain in force until revised by the tax shall be:
Congress; and
Effective on January 1, 2005, Ten pesos and thirty-five centavos (10.35) per pack;
(4) provided a legislative freeze on brands of cigarettes introduced between the period January
2, 199717 to December 31, 2003, such that said cigarettes shall remain in the classification
Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88) per pack;
under which the BIR has determined them to belong as of December 31, 2003, until revised by
Congress.
Effective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43) per
pack; and  survey to be conducted by the Bureau of Internal Revenue itself, or the National
Effective on January 1, 2011, Twelve pesos (P12.00) per pack.
(4) If the net retail price (excluding the excise tax and the value-added tax) is above
Ten pesos (P10.00) per pack, the tax shall be:
Effective on January 1, 2005, Twenty-five pesos (P25.00) per pack;
Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per pack;
Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos (P27.16) per
pack; and  were registered and were being commercially produced and marketed on or after
Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30) per
pack.
xxxx
New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price.
New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240.
Suggested net retail price shall mean the net retail price at which new brands, as
defined above, of locally manufactured or imported cigarettes are intended by the
manufacturer or importer to be sold on retail in major supermarkets or retail outlets in
Metro Manila for those marketed nationwide, and in other regions, for those with
regional markets. At the end of three (3) months from the product launch, the Bureau
of Internal Revenue shall validate the suggested net retail price of the new brand
against the net retail price as defined herein and determine the correct tax bracket
under which a particular new brand of cigarette, as defined above, shall be classified.
After the end of eighteen (18) months from such validation, the Bureau of Internal
Revenue shall revalidate the initially validated net retail price against the net retail price
as of the time of revalidation in order to finally determine the correct tax bracket under
which a particular new brand of cigarettes shall be classified; Provided however, That
brands of cigarettes introduced in the domestic market between January 1,
1997 [should be January 2, 1997] and December 31, 2003 shall remain in the
classification under which the Bureau of Internal Revenue has determined them
to belong as of December 31, 2003. Such classification of new brands and
brands introduced between January 1, 1997 and December 31, 2003 shall not be
revised except by an act of Congress.
Net retail price, as determined by the Bureau of Internal Revenue through a price
Statistics Office when deputized for the purpose by the Bureau of Internal Revenue,
shall mean the price at which the cigarette is sold in retail in at least twenty (20) major
supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding
the amount intended to cover the applicable excise tax and the value-added tax. For
brands which are marketed only outside Metro Manila, the "net retail price" shall mean
the price at which the cigarette is sold in at least five (5) major supermarkets in the
region excluding the amount intended to cover the applicable excise tax and value-
added tax.
The classification of each brand of cigarettes based on its average net retail
price as of October 1, 1996, as set forth in Annex "D", including the classification
of brands for the same products which, although not set forth in said Annex "D",
October 1, 1996, and which continue to be commercially produced and marketed
after the effectivity of this Act, shall remain in force until revised by
Congress. (Emphasis added)
Under RA 9334, the excise tax due on petitioner’s products was increased to P25.00 per pack.
In the implementation thereof, respondent Commissioner assessed petitioner’s importation of
911,000 packs of Lucky Strike cigarettes at the increased tax rate of P25.00 per pack,
rendering it liable for taxes in the total sum of P22,775,000.00.18
Hence, petitioner filed a Motion to Admit Attached Supplement19 and a Supplement20 to the
petition for review, assailing the constitutionality of RA 9334 insofar as it retained Annex "D"
and praying for a downward classification of Lucky Strike products at the bracket taxable at
P8.96 per pack. Petitioner contended that the continued use of Annex "D" as the tax base of
existing brands of cigarettes gives undue protection to said brands which are still taxed based
on their price as of October 1996 notwithstanding that they are now sold at the same or even at
a higher price than new brands like Lucky Strike. Thus, old brands of cigarettes such as
Marlboro and Philip Morris which, like Lucky Strike, are sold at or more than P22.00 per pack,
are taxed at the rate of P10.88 per pack, while Lucky Strike products are taxed at P26.06 per
pack.
In its Comment to the supplemental petition, respondents, through the Office of the Solicitor
General (OSG), argued that the passage of RA 9334, specifically the provision imposing a
legislative freeze on the classification of cigarettes introduced into the market between January
2, 1997 and December 31, 2003, rendered the instant petition academic. The OSG claims that
the provision in Section 145, as amended by RA 9334, prohibiting the reclassification of
cigarettes introduced during said period, "cured’ the perceived defect of Section 145
considering that, like the cigarettes under Annex "D," petitioner’s brands and other brands
introduced between January 2, 1997 and December 31, 2003, shall remain in the classification
under which the BIR has placed them and only Congress has the power to reclassify them.
On March 20, 2006, Philip Morris Philippines Manufacturing Incorporated filed a Motion for
Leave to Intervene with attached Comment-in-Intervention.21 This was followed by the Motions
for Leave to Intervene of Fortune Tobacco Corporation,22Mighty Corporation, 23 and JT
International, S.A., with their respective Comments-in-Intervention. The Intervenors claim that
they are parties-in-interest who stand to be affected by the ruling of the Court on the
constitutionality of Section 145 of the NIRC and its Annex "D" because they are manufacturers
of cigarette brands which are included in the said Annex. Hence, their intervention is proper
since the protection of their interest cannot be addressed in a separate proceeding.
According to the Intervenors, no inequality exists because cigarettes classified by the BIR
based on their net retail price as of December 31, 2003 now enjoy the same status
quo provision that prevents the BIR from reclassifying cigarettes included in Annex "D." It
added that the Court has no power to pass upon the wisdom of the legislature in retaining
Annex "D" in RA 9334; and that the nullification of said Annex would bring about tremendous
loss of revenue to the government, chaos in the collection of taxes, illicit trade of cigarettes,
and cause decline in cigarette demand to the detriment of the farmers who depend on the
tobacco industry.  have jurisdiction to pass upon the same. The determination of whether a specific rule or set of
Intervenor Fortune Tobacco further contends that petitioner is estopped from questioning the
constitutionality of Section 145 and its implementing rules and regulations because it entered
into the cigarette industry fully aware of the existing tax system and its consequences.
Petitioner imported cigarettes into the country knowing that its suggested retail price, which will
be the initial basis of its tax classification, will be confirmed and validated through a survey by
the BIR to determine the correct tax that would be levied on its cigarettes.  includes the duty of the courts of justice to settle actual controversies involving rights which are
Moreover, Fortune Tobacco claims that the challenge to the validity of the BIR issuances
should have been brought by petitioner before the Court of Tax Appeals (CTA) and not the
RTC because it is the CTA which has exclusive appellate jurisdiction over decisions of the BIR
in tax disputes.  In Drilon v. Lim,27 it was held:
On August 7, 2006, the OSG manifested that it interposes no objection to the motions for
intervention.24 Therefore, considering the substantial interest of the intervenors, and in the
higher interest of justice, the Court admits their intervention.
Before going into the substantive issues of this case, we must first address the matter of
jurisdiction, in light of Fortune Tobacco’s contention that petitioner should have brought its
petition before the Court of Tax Appeals rather than the regional trial court.  in his defense the constitutionality of a law he is charged with violating and of the
The jurisdiction of the Court of Tax Appeals is defined in Republic Act No. 1125, as amended
by Republic Act No. 9282. Section 7 thereof states, in pertinent part:
Sec. 7. Jurisdiction. — The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action, in which case the inaction
shall be deemed a denial; xxx.25
While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this
does not include cases where the constitutionality of a law or rule is challenged. Where what is
assailed is the validity or constitutionality of a law, or a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative function, the regular courts
rules issued by an administrative agency contravenes the law or the constitution is within the
jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or
the power to declare a law, treaty, international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This
is within the scope of judicial power, which includes the authority of the courts to determine in
an appropriate action the validity of the acts of the political departments. Judicial power
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.26
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general definition
of the judicial power to determine what are the valid and binding laws by the criterion of
their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the litigation is incapable of
pecuniary estimation, even as the accused in a criminal action has the right to question
proceedings taken against him, particularly as they contravene the Bill of Rights.
Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court
appellate jurisdiction over final judgments and orders of lower courts in all cases in
which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or
regulation is in question.
The petition for injunction filed by petitioner before the RTC is a direct attack on the
constitutionality of Section 145(C) of the NIRC, as amended, and the validity of its
implementing rules and regulations. In fact, the RTC limited the resolution of the subject case
to the issue of the constitutionality of the assailed provisions. The determination of whether the
assailed law and its implementing rules and regulations contravene the Constitution is within
the jurisdiction of regular courts. The Constitution vests the power of judicial review or the
power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts.28 Petitioner,
therefore, properly filed the subject case before the RTC.
We come now to the issue of whether petitioner is estopped from assailing the authority of the
Commissioner of Internal Revenue. Fortune Tobacco raises this objection by pointing out that
when petitioner requested the Commissioner for a ruling that its Lucky Strike Soft Pack
cigarettes was a "new brand" rather than a variant of an existing brand, and thus subject to a
lower specific tax rate, petitioner executed an undertaking to comply with the procedures under
existing regulations for the assessment of deficiency internal revenue taxes.
Fortune Tobacco argues that petitioner, after invoking the authority of the Commissioner of
Internal Revenue, cannot later on turn around when the ruling is adverse to it. 
Estoppel, an equitable principle rooted in natural justice, prevents persons from going back on
their own acts and representations, to the prejudice of others who have relied on them.29 The
principle is codified in Article 1431 of the Civil Code, which provides:
Through estoppel, an admission or representation is rendered conclusive upon the person
making it and cannot be denied or disproved as against the person relying thereon.
Estoppel can also be found in Rule 131, Section 2 (a) of the Rules of Court, viz:
Sec. 2. Conclusive presumptions. — The following are instances of conclusive
presumptions: 
(a) Whenever a party has by his own declaration, act or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such declaration, act or omission be permitted
to falsify it.
The elements of estoppel are: first, the actor who usually must have knowledge, notice or
suspicion of the true facts, communicates something to another in a misleading way, either by
words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably,
upon that communication; third, the other would be harmed materially if the actor is later
permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows,
expects or foresees that the other would act upon the information given or that a reasonable
person in the actor's position would expect or foresee such action.30
In the early case of Kalalo v. Luz,31 the elements of estoppel, as related to the party to be
estopped, are: (1) conduct amounting to false representation or concealment of material facts;
or at least calculated to convey the impression that the facts are other than, and inconsistent
with, those which the party subsequently attempts to assert; (2) intent, or at least expectation
that this conduct shall be acted upon by, or at least influence, the other party; and (3)
knowledge, actual or constructive, of the real facts.
We find that petitioner was not guilty of estoppel. When it made the undertaking to comply with
all issuances of the BIR, which at that time it considered as valid, petitioner did not commit any
false misrepresentation or misleading act. Indeed, petitioner cannot be faulted for initially
undertaking to comply with, and subjecting itself to the operation of Section 145(C), and only
later on filing the subject case praying for the declaration of its unconstitutionality when the
circumstances change and the law results in what it perceives to be unlawful discrimination.
The mere fact that a law has been relied upon in the past and all that time has not been
attacked as unconstitutional is not a ground for considering petitioner estopped from assailing
its validity. For courts will pass upon a constitutional question only when presented before it
in bona fide cases for determination, and the fact that the question has not been raised before
is not a valid reason for refusing to allow it to be raised later.32
Now to the substantive issues.
To place this case in its proper context, we deem it necessary to first discuss how the assailed
law operates in order to identify, with precision, the specific provisions which, according to
petitioner, have created a grossly discriminatory classification scheme between old and new
brands. The pertinent portions of RA 8240, as amended by RA 9334, are reproduced below for
ready reference:
SEC. 145. Cigars and Cigarettes. –
xxxx
(C) Cigarettes Packed by Machine. – There shall be levied, assessed and collected on
cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the value-added tax) is below
Five pesos (P5.00) per pack, the tax shall be: 
Effective on January 1, 2005, Two pesos (P2.00) per pack;
Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23)
per pack;
Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per
pack; and 
 Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72)
per pack.
(2) If the net retail price (excluding the excise tax and the value-added tax) is Five
pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the
tax shall be:
Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per
pack;
Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per
pack;
Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per
pack; and  defined above, of locally manufactured or imported cigarettes are intended by the
Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per
pack.
(3) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six
pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack,
the tax shall be:
Effective on January 1, 2005, Ten pesos and thirty-five centavos (10.35) per
pack;
Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88)
per pack;
Effective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43)
per pack; and 
Effective on January 1, 2011, Twelve pesos (P12.00) per pack.
(4) If the net retail price (excluding the excise tax and the value-added tax) is above
Ten pesos (P10.00) per pack, the tax shall be:
Effective on January 1, 2005, Twenty-five pesos (P25.00) per pack;
Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per
pack;
Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos
(P27.16) per pack; and 
Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30)
per pack.
xxxx
New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price.
New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240.
Suggested net retail price shall mean the net retail price at which new brands, as
manufacturer or importer to be sold on retail in major supermarkets or retail outlets in
Metro Manila for those marketed nationwide, and in other regions, for those with
regional markets. At the end of three (3) months from the product launch, the Bureau
of Internal Revenue shall validate the suggested net retail price of the new brand
against the net retail price as defined herein and determine the correct tax bracket
under which a particular new brand of cigarette, as defined above, shall be classified.
After the end of eighteen (18) months from such validation, the Bureau of Internal
Revenue shall revalidate the initially validated net retail price against the net retail price
as of the time of revalidation in order to finally determine the correct tax bracket under
which a particular new brand of cigarettes shall be classified; Provided however, That
brands of cigarettes introduced in the domestic market between January 1, 1997
[should be January 2, 1997] and December 31, 2003 shall remain in the classification
under which the Bureau of Internal Revenue has determined them to belong as of
December 31, 2003. Such classification of new brands and brands introduced between
January 1, 1997 and December 31, 2003 shall not be revised except by an act of
Congress.
Net retail price, as determined by the Bureau of Internal Revenue through a price
survey to be conducted by the Bureau of Internal Revenue itself, or the National
Statistics Office when deputized for the purpose by the Bureau of Internal Revenue,
shall mean the price at which the cigarette is sold in retail in at least twenty (20) major
supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding
the amount intended to cover the applicable excise tax and the value-added tax. For
brands which are marketed only outside Metro Manila, the "net retail price" shall mean
the price at which the cigarette is sold in at least five (5) major supermarkets in the
region excluding the amount intended to cover the applicable excise tax and value-
added tax.
The classification of each brand of cigarettes based on its average net retail price as of
October 1, 1996, as set forth in Annex "D", including the classification of brands for the
 same products which, although not set forth in said Annex "D", were registered and
were being commercially produced and marketed on or after October 1, 1996, and
which continue to be commercially produced and marketed after the effectivity of this
Act, shall remain in force until revised by Congress.  It is apparent that, contrary to its assertions, petitioner is not only questioning the undue
As can be seen, the law creates a four-tiered system which we may refer to as the low-
priced,33 medium-priced,34 high-priced,35 and premium-priced36 tax brackets. When a brand is
introduced in the market, the current net retail price is determined through the aforequoted
specified procedure. The current net retail price is then used to classify under which tax bracket
the brand belongs in order to finally determine the corresponding excise tax rate on a per pack
basis. The assailed feature of this law pertains to the mechanism where, after a brand is
classified based on its current net retail price, the classification is frozen and only Congress
can thereafter reclassify the same. From a practical point of view, Annex "D" is merely a by-
product of the whole mechanism and philosophy of the assailed law. That is, the brands under
Annex "D" were also classified based on their current net retail price, the only difference being
that they were the first ones so classified since they were the only brands surveyed as of
October 1, 1996, or prior to the effectivity of RA 8240 on January 1, 1997.37
Due to this legislative classification scheme, it is possible that over time the net retail price of a
previously classified brand, whether it be a brand under Annex "D" or a new brand classified
after the effectivity of RA 8240 on January 1, 1997, would increase (due to inflation, increase of
production costs, manufacturer’s decision to increase its prices, etc.) to a point that its net retail
price pierces the tax bracket to which it was previously classified.38 Consequently, even if its
present day net retail price would make it fall under a higher tax bracket, the previously
classified brand would continue to be subject to the excise tax rate under the lower tax bracket
by virtue of the legislative classification freeze.  net retail price and which, thus, produced different classes of brands based on the time of their
Petitioner claims that this is what happened in 2004 to the Marlboro and Philip Morris brands,
which were permanently classified under Annex "D." As of October 1, 1996, Marlboro had net
retail prices ranging from P6.78 to P6.84 while Philip Morris had net retail prices ranging from
P7.39 to P7.48. Thus, pursuant to RA 8240,39 Marlboro and Philip Morris were classified under
the high-priced tax bracket and subjected to an excise tax rate of P8.96 per pack. Petitioner
then presented evidence showing that after the lapse of about seven years or sometime in
2004, Marlboro’s and Philip Morris’ net retail prices per pack both increased to about
P15.59.40 This meant that they would fall under the premium-priced tax bracket, with a higher
excise tax rate of P13.44 per pack,41 had they been classified based on their 2004 net retail
prices. However, due to the legislative classification freeze, they continued to be classified
under the high-priced tax bracket with a lower excise tax rate. Petitioner thereafter deplores the
fact that its Lucky Strike Filter, Lucky Strike Lights, and Lucky Strike Menthol Lights cigarettes,
introduced in the market sometime in 2001 and validated by a BIR survey in 2003, were found
to have net retail prices of P11.53, P11.59 and P10.34,42 respectively, which are lower than
those of Marlboro and Philip Morris. However, since petitioner’s cigarettes were newly
introduced brands in the market, they were taxed based on their current net retail prices and,
thus, fall under the premium-priced tax bracket with a higher excise tax rate of P13.44 per
pack. This unequal tax treatment between Marlboro and Philip Morris, on the one hand, and
Lucky Strike, on the other, is the crux of petitioner’s contention that the legislative classification
freeze violates the equal protection and uniformity of taxation clauses of the Constitution.
favoritism accorded to brands under Annex "D," but the entire mechanism and philosophy of
the law which freezes the tax classification of a cigarette brand based on its current net retail
price. Stated differently, the alleged discrimination arising from the legislative classification
freeze between the brands under Annex "D" and petitioner’s newly introduced brands
arose only because the former were classified based on their "current" net retail price as of
October 1, 1996 and petitioner’s newly introduced brands were classified based on their
"current" net retail price as of 2003. Without this corresponding freezing of the classification of
petitioner’s newly introduced brands based on their current net retail price, it would be
impossible to establish that a disparate tax treatment occurred between the Annex "D" brands
and petitioner’s newly introduced brands. 
This clarification is significant because, under these circumstances, a declaration of
unconstitutionality would necessarily entail nullifying the whole mechanism of the law and not
just Annex "D." Consequently, if the assailed law is declared unconstitutional on equal
protection grounds, the entire method by which a brand of cigarette is classified would have to
be invalidated. As a result, no method to classify brands under Annex "D" as well as new
brands would be left behind and the whole Section 145 of the NIRC, as amended, would
become inoperative.43
To simplify the succeeding discussions, we shall refer to the whole mechanism and philosophy
of the assailed law which freezes the tax classification of a cigarette brand based on its current
introduction in the market (starting with the brands in Annex "D" since they were the first
brands so classified as of October 1, 1996) as the classification freeze provision.44
As thus formulated, the central issue is whether or not the classification freeze
provision violates the equal protection and uniformity of taxation clauses of the Constitution.
In Sison, Jr. v. Ancheta,45 this Court, through Chief Justice Fernando, explained the applicable
standard in deciding equal protection and uniformity of taxation challenges:
Now for equal protection. The applicable standard to avoid the charge that there is a
denial of this constitutional mandate whether the assailed act is in the exercise of the
police power or the power of eminent domain is to demonstrate "that the governmental
act assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds no
support in reason. It suffices then that the laws operate equally and uniformly on all
persons under similar circumstances or that all persons must be treated in the same
manner, the conditions not being different, both in the privileges conferred and the
liabilities imposed. Favoritism and undue preference cannot be allowed. For the
principle is that equal protection and security shall be given to every person under
 circumstances, which if not identical are analogous. If law be looks upon in terms of
burden or charges, those that fall within a class should be treated in the same fashion,
whatever restrictions cast on some in the group equally binding on the rest." That same
formulation applies as well to taxation measures. The equal protection clause is, of
course, inspired by the noble concept of approximating the ideal of the laws's benefits
being available to all and the affairs of men being governed by that serene and
impartial uniformity, which is of the very essence of the idea of law. There is, however,
wisdom, as well as realism, in these words of Justice Frankfurter: "The equality at
which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth
Amendment enjoins 'the equal protection of the laws,' and laws are not abstract
propositions. They do not relate to abstract units A, B and C, but are expressions of
policy arising out of specific difficulties, addressed to the attainment of specific ends by
the use of specific remedies. The Constitution does not require things which are
different in fact or opinion to be treated in law as though they were the same." Hence
the constant reiteration of the view that classification if rational in character is
allowable. As a matter of fact, in a leading case of Lutz v. Araneta, this Court, through
Justice J.B.L. Reyes, went so far as to hold "at any rate, it is inherent in the power to
tax that a state be free to select the subjects of taxation, and it has been repeatedly
held that 'inequalities which result from a singling out of one particular class for
taxation, or exemption infringe no constitutional limitation.'"  and practical choice. Further, with the amendments introduced by RA 9334, the freezing of the
Petitioner likewise invoked the kindred concept of uniformity. According to the
Constitution: "The rule of taxation shall be uniform and equitable." This requirement is
met according to Justice Laurel in Philippine Trust Company v. Yatco, decided in 1940,
when the tax "operates with the same force and effect in every place where the subject
may be found." He likewise added: "The rule of uniformity does not call for perfect
uniformity or perfect equality, because this is hardly attainable." The problem of
classification did not present itself in that case. It did not arise until nine years later,
when the Supreme Court held: "Equality and uniformity in taxation means that all
taxable articles or kinds of property of the same class shall be taxed at the same
rate. The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation, . . . As clarified by Justice Tuason, where
"the differentiation" complained of "conforms to the practical dictates of justice and
equity" it "is not discriminatory within the meaning of this clause and is therefore
uniform." There is quite a similarity then to the standard of equal protection for all that
is required is that the tax "applies equally to all persons, firms and corporations placed
in similar situation."46 (Emphasis supplied)  government.
In consonance thereto, we have held that "in our jurisdiction, the standard and analysis of
equal protection challenges in the main have followed the ‘rational basis’ test, coupled with a
deferential attitude to legislative classifications and a reluctance to invalidate a law unless there
is a showing of a clear and unequivocal breach of the Constitution."47 Within the present
context of tax legislation on sin products which neither contains a suspect classification nor
impinges on a fundamental right, the rational-basis test thus finds application. Under this test, a
legislative classification, to survive an equal protection challenge, must be shown to rationally
further a legitimate state interest.48 The classifications must be reasonable and rest upon some
ground of difference having a fair and substantial relation to the object of the legislation.49 Since
every law has in its favor the presumption of constitutionality, the burden of proof is on the one
attacking the constitutionality of the law to prove beyond reasonable doubt that the legislative
classification is without rational basis.50 The presumption of constitutionality can be overcome
only by the most explicit demonstration that a classification is a hostile and oppressive
discrimination against particular persons and classes, and that there is no conceivable basis
which might support it.51
A legislative classification that is reasonable does not offend the constitutional guaranty of the
equal protection of the laws. The classification is considered valid and reasonable provided
that: (1) it rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it
applies, all things being equal, to both present and future conditions; and (4) it applies equally
to all those belonging to the same class.52
The first, third and fourth requisites are satisfied. The classification freeze provision was
inserted in the law for reasons of practicality and expediency. That is, since a new brand was
not yet in existence at the time of the passage of RA 8240, then Congress needed a uniform
mechanism to fix the tax bracket of a new brand. The current net retail price, similar to what
was used to classify the brands under Annex "D" as of October 1, 1996, was thus the logical
tax classifications now expressly applies not just to Annex "D" brands but to newer brands
introduced after the effectivity of RA 8240 on January 1, 1997 and any new brand that will be
introduced in the future.53 (However, as will be discussed later, the intent to apply the freezing
mechanism to newer brands was already in place even prior to the amendments introduced by
RA 9334 to RA 8240.) This does not explain, however, why the classification is "frozen" after its
determination based on current net retail price and how this is germane to the purpose of the
assailed law. An examination of the legislative history of RA 8240 provides interesting answers
to this question.
RA 8240 was the first of three parts in the Comprehensive Tax Reform Package then being
pushed by the Ramos Administration. It was enacted with the following objectives stated in the
Sponsorship Speech of Senator Juan Ponce Enrile (Senator Enrile), viz: 
First, to evolve a tax structure which will promote fair competition among the players in
the industries concerned and generate buoyant and stable revenue for the
Second, to ensure that the tax burden is equitably distributed not only amongst the
industries affected but equally amongst the various levels of our society that are
involved in various markets that are going to be affected by the excise tax on distilled
spirits, fermented liquor, cigars and cigarettes.
In the case of firms engaged in the industries producing the products that we are about
to tax, this means relating the tax burden to their market share, not only in terms of
quantity, Mr. President, but in terms of value.
 In case of consumers, this will mean evolving a multi-tiered rate structure so that low-
priced products are subject to lower tax rates and higher-priced products are subject to
higher tax rates.
Third, to simplify the tax administration and compliance with the tax laws that are
about to unfold in order to minimize losses arising from inefficiencies and tax
avoidance scheme, if not outright tax evasion.54
In the initial stages of the crafting of the assailed law, the Department of Finance (DOF)
recommended to Congress a shift from the then existing ad valorem taxation system to a
specific taxation system with respect to sin products, including cigarettes. The DOF noted that
the ad valorem taxation system was a source of massive tax leakages because the taxpayer
was able to evade paying the correct amount of taxes through the undervaluation of the price
of cigarettes using various marketing arms and dummy corporations. In order to address this
problem, the DOF proposed a specific taxation system where the cigarettes would be taxed
based on volume or on a per pack basis which was believed to be less susceptible to price
manipulation. The reason was that the BIR would only need to monitor the sales volume of
cigarettes, from which it could easily compute the corresponding tax liability of cigarette
manufacturers. Thus, the DOF suggested the use of a three-tiered system which operates in
substantially the same manner as the four-tiered system under RA 8240 as earlier discussed.
The proposal of the DOF was embodied in House Bill (H.B.) No. 6060, the pertinent portions of
which states—
SEC. 142. Cigars and cigarettes.—
(c) Cigarettes packed by machine.— There shall be levied, assessed and collected on
cigarettes packed by machine a tax at the rates prescribed below:
(1) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-
added tax) per pack exceeds four pesos and twenty centavos (P4.20), the tax shall be
seven pesos and fifty centavos (P7.50);
(2) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-
added tax) per pack exceeds three pesos and ninety centavos (P3.90) but does not
exceed four pesos and twenty centavos (P4.20), the tax shall be five pesos and fifty
centavos (P5.50): provided, that after two (2) years from the effectivity of this Act,
cigarettes otherwise subject to tax under this subparagraph shall be taxed under
subparagraph (1) above.
(3) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-
added tax) per pack does not exceeds three pesos and ninety centavos (P3.90), the
tax rate shall be one peso (P1.00).
Variants of existing brands and new brands of cigarettes packed by machine to be
introduced in the domestic market after the effectivity of this Act, shall be taxed under
paragraph (c)(1) hereof. 
The rates of specific tax on cigars and cigarettes under paragraphs (a), (b), and
(c) hereof, including the price levels for purposes of classifying cigarettes
packed by machine, shall be revised upward two (2) years after the effectivity of
this Act and every two years thereafter by the Commissioner of Internal
Revenue, subject to the approval of the Secretary of Finance, taking into account
the movement of the consumer price index for cigars and cigarettes as
established by the National Statistics Office: provided, that the increase in taxes
and/or price levels shall be equal to the present change in such consumer price
index for the two-year period: provided, further, that the President, upon the
recommendation of the Secretary of Finance, may suspend or defer the
adjustment in price levels and tax rates when the interest of the national
economy and general welfare so require, such as the need to obviate
unemployment, and economic and social dislocation: provided, finally, that the
revised price levels and tax rates authorized herein shall in all cases be rounded
off to the nearest centavo and shall be in force and effect on the date of
publication thereof in a newspaper of general circulation. x x x (Emphasis
supplied)
What is of particular interest with respect to the proposal of the DOF is that it contained a
provision for the periodic adjustment of the excise tax rates and tax brackets, and a
corresponding periodic resurvey and reclassification of cigarette brands based on the increase
in the consumer price index as determined by the Commissioner of Internal Revenue subject to
certain guidelines. The evident intent was to prevent inflation from eroding the value of the
excise taxes that would be collected from cigarettes over time by adjusting the tax rate and tax
brackets based on the increase in the consumer price index. Further, under this proposal, old
brands as well as new brands introduced thereafter would be subjected to a resurvey and
reclassification based on their respective values at the end of every two years in order to align
them with the adjustment of the excise tax rate and tax brackets due to the movement in the
consumer price index.55
Of course, we now know that the DOF proposal, insofar as the periodic adjustment of tax rates
and tax brackets, and the periodic resurvey and reclassification of cigarette brands are
concerned, did not gain approval from Congress. The House and Senate pushed through with
their own versions of the excise tax system on beers and cigarettes both denominated as H.B.
No. 7198. For convenience, we shall refer to the bill deliberated upon by the House as the
House Version and that of the Senate as the Senate Version.
The House’s Committee on Ways and Means, then chaired by Congressman Exequiel B.
Javier (Congressman Javier), roundly rejected the DOF proposal. Instead, in its Committee
Report submitted to the plenary, it proposed a different excise tax system which used a specific
tax as a basic tax with an ad valorem comparator. Further, it deleted the proposal to have a
periodic adjustment of tax rates and the tax brackets as well as periodic resurvey and
reclassification of cigarette brands, to wit:
The rigidity of the specific tax system calls for the need for frequent congressional
intervention to adjust the tax rates to inflation and to keep pace with the expanding
needs of government for more revenues. The DOF admits this flaw inherent in the tax
system it proposed. Hence, to obviate the need for remedial legislation, the DOF is
asking Congress to grant to the Commissioner the power to revise, one, the specific
tax rates: and two, the price levels of beer and cigarettes. What the DOF is asking, Mr.
Speaker, is for Congress to delegate to the Commissioner of Internal Revenue the
power to fix the tax rates and classify the subjects of taxation based on their price
levels for purposes of fixing the tax rates. While we sympathize with the predicament of
the DOF, it is not for Congress to abdicate such power. The power sought to be
delegated to be exercised by the Commissioner of Internal Revenue is a legislative
power vested by the Constitution in Congress pursuant to Section 1, Article VI of the
Constitution. Where the power is vested, there it must remain— in Congress, a body of
representatives elected by the people. Congress may not delegate such power, much
less abdicate it.
x x x x  SEC. 4 Section 142 of the National Internal Revenue Code, as amended, is hereby
Moreover, the grant of such power, if at all constitutionally permissible, to the
Commissioner of Internal Revenue is fraught with ethical implications. The debates on
how much revenue will be raised, how much money will be taken from the pockets of
taxpayers, will inexorably shift from the democratic Halls of Congress to the secret and
non-transparent corridors of unelected agencies of government, the Department of
Finance and the Bureau of Internal Revenue, which are not accountable to our people.
We cannot countenance the shift for ethical reasons, lest we be accused of betraying
the trust reposed on this Chamber by the people. x x x 
A final point on this proposal, Mr. Speaker, is the exercise of the taxing power of the
Commissioner of Internal Revenue which will be triggered by inflation rates based on
the consumer price index. Simply stated, Mr. Speaker, the specific tax rates will be
fixed by the Commissioner depending on the price levels of beers and cigarettes as
determined by the consumers’ price index. This is a novel idea, if not necessarily weird
in the field of taxation. What if the brewer or the cigarette manufacturer sells at a price
below the consumers’ price index? Will it be taxed on the basis of the consumer’s price
index which is over and above its wholesale or retail price as the case may be? This is
a weird form of exaction where the tax is based not on what the brewer or
manufacturer actually realized but on an imaginary wholesale or retail price. This
amounts to a taxation based on presumptive price levels and renders the specific tax a
presumptive tax. We hope, the DOF and the BIR will also honor a presumptive tax
payment.
Moreover, specific tax rates based on price levels tied to consumer’s price index as
proposed by the DOF engenders anti-trust concerns. The proposal if enacted into law
will serve as a barrier to the entry of new players in the beer and cigarette industries
which are presently dominated by shared monopolies. A new player in these industries
will be denied business flexibility to fix its price levels to promote its product and
penetrate the market as the price levels are dictated by the consumer price index. The
proposed tax regime, Mr. Speaker, will merely enhance the stranglehold of the
oligopolies in the beer and cigarette industries, thus, reversing the government’s policy
of dismantling monopolies and combinations in restraint of trade.56
For its part, the Senate’s Committee on Ways and Means, then chaired by Senator Juan Ponce
Enrile (Senator Enrile), developed its own version of the excise tax system on cigarettes. The
Senate Version consisted of a four-tiered system and, interestingly enough, contained a
periodic excise tax rate and tax bracket adjustment as well as a periodic resurvey and
reclassification of brands provision ("periodic adjustment and reclassification provision," for
brevity) to be conducted by the DOF in coordination with the BIR and the National Statistics
Office based on the increase in the consumer price index— similar to the one proposed by the
DOF, viz:
further amended to read as follows:
"SEC. 142. Cigars and cigarettes. – 
xxxx
(c) Cigarettes packed by machine. – There shall be levied, assessed and collected on
cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the value-added tax) is above
Ten pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) per pack;
(2) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six
pesos and fifty centavos (P6.50) per pack, the tax shall be Eight pesos (P8.00) per
pack;
(3) If the net retail price (excluding the excise tax and the value-added tax) is Five
pesos (P5.00) up to Six pesos and fifty centavos (P6.50) per pack, the tax shall be Five
pesos (P5.00) per pack;
(4) If the net retail price (excluding the excise tax and the value-added tax) is below
Five pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack.
 Variants of existing brands of cigarettes which are introduced in the domestic market
after the effectivity of this Act shall be taxed under the highest classification of any
variant of that brand.
x x x  But what is the reason?
The rates of specific tax on cigars and cigarettes under subparagraph (a), (b)
and (c) hereof, including the net retail prices for purposes of classification, shall
be adjusted on the sixth of January three years after the effectivity of this Act
and every three years thereafter. The adjustment shall be in accordance with the
inflation rate measured by the average increase in the consumer price index
over the three-year period. The adjusted tax rates and net price levels shall be in
force on the eighth of January.
Within the period hereinabove mentioned, the Secretary of Finance shall direct
the conduct of a survey of retail prices of each brand of cigarettes in
coordination with the Bureau of Internal Revenue and the National Statistics
Office.  tiers with different specific tax rates from moving upwards and piercing their own tiers
For purposes of this Section, net retail price shall mean the price at which the cigarette
is sold on retail in 20 major supermarkets in Metro Manila (for brands of cigarettes
marketed nationally), excluding the amount intended to cover the applicable excise tax
and the value-added tax. For brands which are marketed only outside Metro Manila,
the net retail price shall mean the price at which the cigarette is sold in five major
supermarkets in the region excluding the amount intended to cover the applicable
excise tax and the value-added tax.
The classification of each brand of cigarettes in the initial year of implementation
of this Act shall be based on its average net retail price as of October 1, 1996.
The said classification by brand shall remain in force until January 7, 2000.
New brands shall be classified according to their current net retail price.57 (Emphasis
supplied) 
During the period of interpellations, the late Senator Raul S. Roco (Senator Roco) expressed
doubts as to the legality and wisdom of putting a periodic adjustment and reclassification
provision:
Senator Enrile: This will be the first time that a tax burden will be allowed to be
automatically adjusted upwards based on a system of indexing tied up with the
Consumers Price Index (CPI). Although I must add that we have adopted a similar
system in adjusting the personal tax exemption from income tax of our individual
taxpayers.  of the Committee on Ways and Means who made this Chamber very conscious of this
Senator Roco: They are not exactly the same, Mr. President. But even then, we do
note that this the first time we are trying to put an automatic adjustment. My concern is,
why do we propose now this automatic adjustment? What is the reason that impels the
committee? Maybe we can be enlightened and maybe we shall embrace it forthwith.
Senator Enrile: Mr. President, we will recall that in the House of Representatives, it has
adopted a tax proposal on these products based on a specific tax as a basic tax with
an ad valorem comparator. The Committee on Ways and Means of the Senate has not
seen it fit to adopt this system, but it recognized the possibility that there may be an
occasion where the price movement in the country might unwarrantedly move
upwards, in which case, if we peg the government to a specific tax rate of P6.30, P9.30
and P12.30 for beer, since we are talking of beer, 58 the government might lose in the
process.
In order to consider the interest of the government in this, Mr. President, and in order
to obviate the possibility that some of these products categorized under the different
and thereby expose themselves to an incremental tax of higher magnitude, it was felt
that we should adopt a system where, in spite of any escalation in the price of these
products in the future, the tax rates could be adjusted upwards so that none of these
products would leave their own tier. That was the basic principle under which we
crafted this portion of the tax proposal.
Senator Roco: Mr. President, we certainly share the judgment of the distinguished
gentleman as regards the comparator provision in the House of Representatives and
we appreciate the reasons given. But we are under the impression that the House also,
aside from the comparator, has an adjustment clause that is fixed. It has fixed rates for
the adjustment. So that one of the basic differences between the Senate proposed
version now and the House version is that, the House of Representatives has
manifested its will and judgment as regards the tax to which we will adjust, whereas
the Senate version relegates fundamentally that judgment to the Department of
Finance.
Senator Enrile: That is correct, Mr. President, because we felt that in imposing a fixed
adjustment, we might be fixing an amount that is either too high or too low. We cannot
foresee the economic trends in this country over a period of two years, three years, let
alone ten years. So we felt that a mechanism ought to be adopted in order to serve the
interest of the government, the interest of the producers, and the interest of the
consuming public. 
Senator Roco: This is where, Mr. President, my policy difficulties start. Under the
Constitution— I think it is Article VI, Section 24, and it was the distinguished chairman
 provision— revenue measures and tariff measures shall originate exclusively from the
House of Representatives.
The reason for this, Mr. President, is, there is a long history why the House of
Representatives must originate judgments on tax. The House members represent
specific districts. They represent specific constituencies, and the whole history of
parliamentarism, the whole history of Congress as an institution is founded on the
proposition that the direct representatives of the people must speak about taxes.  Let me now submit, Mr. President, that in so doing, it is more advantageous to
Mr. President, while the Senate can concur and can introduce amendments, the
proposed change here is radical. This is the policy difficulty that I wish to clarify with
the gentleman because the judgment call now on the amount of tax to be imposed is
not coming from Congress. It is shifted to the Department of Finance. True, the
Secretary of Finance may have been the best finance officer two years ago and now
the best finance officer in Asia, but that does not make him qualified to replace the
judgment call of the House of Representatives. That is my first difficulty.
Senator Enrile: Mr. President, precisely the law, in effect, authorizes this rate
beforehand. The computation of the rate is the only thing that was left to the
Department of Finance as a tax implementor of Congress. This is not unusual because
we have already, as I said, adopted a system similar to this. If we adjust the personal
exemption of an individual taxpayer, we are in effect adjusting the applicable tax rate to
him.
Senator Roco: But the point I was trying to demonstrate, Mr. President, is that we
depart precisely from the mandate of the Constitution that judgment on revenue must
emanate from Congress. Here, it is shifted to the Department of Finance for no visible
or patent reason insofar as I could understand. The only difference is, who will make
the judgment? Should it be Congress?
Senator Enrile: Mr. President, forgive me for answering sooner than I should. My
understanding of the Constitution is that all revenue measures must emanate from the
House. That is all the Constitution says.
Now, it does not say that the judgment call must belong to the House. The judgment
call can belong both to the House and to the Senate. We can change whatever
proposal the House did. Precisely, we are now crafting a measure, and we are saying
that this is the rate subject to an adjustment which we also provide. We are not giving
any unusual power to the Secretary of Finance because we tell him, "This is the
formula that you must adopt in arriving at the adjustment so that you do not have to
come back to us."59
Apart from his doubts as to the legality of the delegation of taxing power to the DOF and BIR,
Senator Roco also voiced out his concern about the possible abuse and corruption that will
arise from the periodic adjustment and reclassification provision. Continuing—
Senator Roco: Mr. President, if that is the argument, that the distinguished gentleman
has a different legal interpretation, we will then now examine the choice. Because his
legal interpretation is different from mine, then the issues becomes: Is it more
advantageous that this judgment be exercised by the House? Should we not
concur or modify in terms of the exercise by the House of its power or are we
better off giving this judgment call to the Department of Finance?
fix the rate so that even if we modify the rates identified by Congress, it is better
and less susceptible to abuse. 
For instance, Mr. President, would the gentlemen wish to demonstrate to us how this
will be done? On page 8, lines 5 to 9, there is a provision here as to when the
Secretary of Finance shall direct the conduct of survey of retail prices of each brand of
fermented liquor in coordination with the Bureau of Internal Revenue and the National
Statistics Office.
These offices are not exactly noted, Mr. President, for having been sanctified by the
Holy Spirit in their noble intentions. x x x60 (Emphasis supplied)
Pressing this point, Senator Roco continued his query:
Senator Roco: x x x [On page 8, lines 5 to 9] it says that during the two-year period, the
Secretary of Finance shall direct the conduct of the survey. How? When? Which retail
prices and what brand shall he consider? When he coordinates with the Bureau of
Internal Revenue, what is the Bureau of Internal Revenue supposed to be doing? What
is the National Statistics Office supposed to be doing, and under what guides and
standards? 
May the gentleman wish to demonstrate how this will be done? My point, Mr.
President, is, by giving the Secretary of Finance, the BIR and the National
Statistics Office discretion over a two-year period will invite corruption and
arbitrariness, which is more dangerous than letting the House of
Representatives and this Chamber set the adjustment rate. Why not set the
adjustment rate? Why should Congress not exercise that judgment now? x x x
Senator Enrile: x x x
Senator Roco: x x x We respectfully submit that the Chairman consider choosing the
judgment of this Chamber and the House of Representatives over a delegated
judgment of the Department of Finance.
Again, it is not to say that I do not trust the Department of Finance. It has won awards,
and I also trust the undersecretary. But that is beside the point. Tomorrow, they may
not be there.61 (Emphasis supplied)
This point was further dissected by the two senators. There was a genuine difference of
opinion as to which system— one with a fixed excise tax rate and classification or the other
with a periodic adjustment of excise tax rate and reclassification— was less susceptible to
abuse, as the following exchanges show:
Senator Enrile: Mr. President, considering the sensitivity of these products from the
viewpoint of exerted pressures because of the understandable impact of this measure
on the pockets of the major players producing these products, the committee felt that
perhaps to lessen such pressures, it is best that we now establish a norm where the
tax will be adjusted without incurring too much political controversy as has happened in
the case of this proposal.
Senator Roco: But that is exactly the same reason we say we must rely upon
Congress because Congress, if it is subjected to pressure, at least balances off
because of political factors.
When the Secretary of Finance is now subjected to pressure, are we saying that the
Secretary of Finance and the Department of Finance is better-suited to withstand the
pressure? Or are we saying "Let the Finance Secretary decide whom to yield"?
I am saying that the temptation and the pressure on the Secretary of Finance is more
dangerous and more corruption-friendly than ascertaining for ourselves now a fixed
rate of increase for a fixed period.
Senator Enrile: Mr. President, perhaps the gentleman may not agree with this
representation, but in my humble opinion, this formulation is less susceptible to
pressure because there is a definite point of reference which is the consumer price
index, and that consumer price index is not going to be used only for this purpose. The
CPI is used for a national purpose, and there is less possibility of tinkering with it.62
Further, Senator Roco, like Congressman Javier, expressed the view that the periodic
adjustment and reclassification provision would create an anti-competitive atmosphere. Again,
Senators Roco and Enrile had genuine divergence of opinions on this matter, to wit:  underwent major changes. The Senate Panel prevailed upon the House Panel to abandon the
Senator Roco: x x x On the marketing level, an adjustment clause may, in fact, be
disadvantageous to both companies, whether it is the Lucio Tan companies or the San
Miguel companies. If we have to adjust our marketing position every two years based
on the adjustment clause, the established company may survive, but the new ones will
have tremendous difficulty. Therefore, this provision tends to indicate an
anticompetitive bias.
It is good for San Miguel and the Lucio Tan companies, but the new companies—
assuming there may be new companies and we want to encourage them because of
the old point of liberalization— will be at a disadvantage under this situation. If this
observation will find receptivity in the policy consideration of the distinguished
Gentleman, maybe we can also further, later on, seek amendments to this automatic
adjustment clause in some manner. 
Senator Enrile: Mr. President, I cannot foresee any anti-competitiveness of this
provision with respect to a new entrant, because a new entrant will not just come in
without studying the market. He is a lousy businessman if he will just come in without
studying the market. If he comes in, he will determine at what retail price level he will
market his product, and he will be coming under any of the tiers depending upon his
net retail price. Therefore, I do not see how this particular provision will affect a new
entrant.
Senator Roco: Be that as it may, Mr. President, we obviously will not resort to debate
until this evening, and we will have to look for other ways of resolving the policy
options.
Let me just close that particular area of my interpellation, by summarizing the points we
were hoping could be clarified.
1. That the automatic adjustment clause is at best questionable in law.
2. It is corruption-friendly in the sense that it shifts the discretion from the
House of Representatives and this Chamber to the Secretary of Finance, no
matter how saintly he may be.
3. There is,— although the judgment call of the gentleman disagrees— to our
view, an anticompetitive situation that is geared at…63
After these lengthy exchanges, it appears that the views of Senator Enrile were sustained by
the Senate Body because the Senate Version was passed on Third Reading without
substantially altering the periodic adjustment and reclassification provision. 
It was actually at the Bicameral Conference Committee level where the Senate Version
basic excise tax rate and ad valorem comparator as the means to determine the applicable
excise tax rate. Thus, the Senate’s four-tiered system was retained with minor adjustments as
to the excise tax rate per tier. However, the House Panel prevailed upon the Senate Panel to
delete the power of the DOF and BIR to periodically adjust the excise tax rate and tax brackets,
and periodically resurvey and reclassify the cigarette brands based on the increase in the
consumer price index. 
In lieu thereof, the classification of existing brands based on their average net retail price as of
October 1, 1996 was "frozen" and a fixed across-the-board 12% increase in the excise tax rate
of each tier after three years from the effectivity of the Act was put in place. There is a dearth of
discussion in the deliberations as to the applicability of the freezing mechanism to new brands
after their classification is determined based on their current net retail price. But a plain reading
of the text of RA 8240, even before its amendment by RA 9334, as well as the previously
discussed deliberations would readily lead to the conclusion that the intent of Congress was to
likewise apply the freezing mechanism to new brands. Precisely, Congress rejected the
proposal to allow the DOF and BIR to periodically adjust the excise tax rate and tax brackets as
well as to periodically resurvey and reclassify cigarettes brands which would have
encompassed old and new brands alike. Thus, it would be absurd for us to conclude that
Congress intended to allow the periodic reclassification of new brands by the BIR after their
classification is determined based on their current net retail price. We shall return to this point
when we tackle the second issue.
In explaining the changes made at the Bicameral Conference Committee level, Senator Enrile,
in his report to the Senate plenary, noted that the fixing of the excise tax rates was done to
avoid confusion.64 Congressman Javier, for his part, reported to the House plenary the reasons
for fixing the excise tax rate and freezing the classification, thus:
Finally, this twin feature, Mr. Speaker, fixed specific tax rates and frozen classification,
rejects the Senate version which seeks to abdicate the power of Congress to tax by
pegging the rates as well as the classification of sin products to consumer price
index which practically vests in the Secretary of Finance the power to fix the
rates and to classify the products for tax purposes.65 (Emphasis supplied)
Congressman Javier later added that the frozen classification was intended to give stability to
the industry as the BIR would be prevented from tinkering with the classification since it would
remain unchanged despite the increase in the net retail prices of the previously classified
brands.66 This would also assure the industry players that there would be no new impositions
as long as the law is unchanged.67
From the foregoing, it is quite evident that the classification freeze provision could hardly be
considered arbitrary, or motivated by a hostile or oppressive attitude to unduly favor older
brands over newer brands. Congress was unequivocal in its unwillingness to delegate the
power to periodically adjust the excise tax rate and tax brackets as well as to periodically
resurvey and reclassify the cigarette brands based on the increase in the consumer price index
to the DOF and the BIR. Congress doubted the constitutionality of such delegation of power,
and likewise, considered the ethical implications thereof. Curiously, the classification freeze
provision was put in place of the periodic adjustment and reclassification provision because of
the belief that the latter would foster an anti-competitive atmosphere in the market. Yet, as it is,
this same criticism is being foisted by petitioner upon the classification freeze provision.
To our mind, the classification freeze provision was in the main the result of Congress’s
earnest efforts to improve the efficiency and effectivity of the tax administration over sin
products while trying to balance the same with other state interests. In particular, the
questioned provision addressed Congress’s administrative concerns regarding delegating too
much authority to the DOF and BIR as this will open the tax system to potential areas for abuse
and corruption. Congress may have reasonably conceived that a tax system which would give
the least amount of discretion to the tax implementers would address the problems of tax
avoidance and tax evasion. 
To elaborate a little, Congress could have reasonably foreseen that, under the DOF proposal
and the Senate Version, the periodic reclassification of brands would tempt the cigarette
manufacturers to manipulate their price levels or bribe the tax implementers in order to allow
their brands to be classified at a lower tax bracket even if their net retail prices have already
migrated to a higher tax bracket after the adjustment of the tax brackets to the increase in the
consumer price index. Presumably, this could be done when a resurvey and reclassification is
forthcoming. As briefly touched upon in the Congressional deliberations, the difference of the
excise tax rate between the medium-priced and the high-priced tax brackets under RA 8240,
prior to its amendment, was P3.36. For a moderately popular brand which sells around 100
million packs per year, this easily translates to P336,000,000.68 The incentive for tax
avoidance, if not outright tax evasion, would clearly be present. Then again, the tax
implementers may use the power to periodically adjust the tax rate and reclassify the brands as
a tool to unduly oppress the taxpayer in order for the government to achieve its revenue targets
for a given year. 
Thus, Congress sought to, among others, simplify the whole tax system for sin products to
remove these potential areas of abuse and corruption from both the side of the taxpayer and
the government. Without doubt, the classification freeze provision was an integral part of this
overall plan. This is in line with one of the avowed objectives of the assailed law "to simplify the
tax administration and compliance with the tax laws that are about to unfold in order to
minimize losses arising from inefficiencies and tax avoidance scheme, if not outright tax
evasion."69 RA 9334 did not alter this classification freeze provision of RA 8240. On the
contrary, Congress affirmed this freezing mechanism by clarifying the wording of the law. We
can thus reasonably conclude, as the deliberations on RA 9334 readily show, that the
administrative concerns in tax administration, which moved Congress to enact
the classification freeze provision in RA 8240, were merely continued by RA 9334. Indeed,
administrative concerns may provide a legitimate, rational basis for legislative
classification.70 In the case at bar, these administrative concerns in the measurement and
collection of excise taxes on sin products are readily apparent as afore-discussed. 
Aside from the major concern regarding the elimination of potential areas for abuse and
corruption from the tax administration of sin products, the legislative deliberations also show
that the classification freeze provision was intended to generate buoyant and stable revenues
for government. With the frozen tax classifications, the revenue inflow would remain stable and
the government would be able to predict with a greater degree of certainty the amount of taxes
that a cigarette manufacturer would pay given the trend in its sales volume over time. The
reason for this is that the previously classified cigarette brands would be prevented from
moving either upward or downward their tax brackets despite the changes in their net retail
prices in the future and, as a result, the amount of taxes due from them would remain
predictable. The classification freeze provision would, thus, aid in the revenue planning of the
government.71
All in all, the classification freeze provision addressed Congress’s administrative concerns in
the simplification of tax administration of sin products, elimination of potential areas for abuse
and corruption in tax collection, buoyant and stable revenue generation, and ease of projection
of revenues. Consequently, there can be no denial of the equal protection of the laws since the
rational-basis test is amply satisfied.
Going now to the contention of petitioner that the classification freeze provision unduly favors
older brands over newer brands, we must first contextualize the basis of this claim. As
previously discussed, the evidence presented by the petitioner merely showed that in 2004,
Marlboro and Philip Morris, on the one hand, and Lucky Strike, on the other, would have been
taxed at the same rate had the classification freeze provision been not in place. But due to the
operation of the classification freeze provision, Lucky Strike was taxed higher. From here,
petitioner generalizes that this differential tax treatment arising from the classification freeze
provision adversely impacts the fairness of the playing field in the industry, particularly,
between older and newer brands. Thus, it is virtually impossible for new brands to enter the
market. 
Petitioner did not, however, clearly demonstrate the exact extent of such impact. It has not
been shown that the net retail prices of other older brands previously classified under this
classification system have already pierced their tax brackets, and, if so, how this has affected
the overall competition in the market. Further, it does not necessarily follow that newer brands
cannot compete against older brands because price is not the only factor in the market as there
are other factors like consumer preference, brand loyalty, etc. In other words, even if the newer
brands are priced higher due to the differential tax treatment, it does not mean that they cannot
compete in the market especially since cigarettes contain addictive ingredients so that a
consumer may be willing to pay a higher price for a particular brand solely due to its unique
formulation. It may also be noted that in 2003, the BIR surveyed 29 new brands72 that were
introduced in the market after the effectivity of RA 8240 on January 1, 1997, thus negating the
sweeping generalization of petitioner that the classification freeze provision has become an
insurmountable barrier to the entry of new brands. Verily, where there is a claim of breach of
the due process and equal protection clauses, considering that they are not fixed rules but
rather broad standards, there is a need for proof of such persuasive character as would lead to
such a conclusion. Absent such a showing, the presumption of validity must prevail.73
Be that as it may, petitioner’s evidence does suggest that, at least in 2004, Philip Morris and
Marlboro, older brands, would have been taxed at the same rate as Lucky Strike, a newer
brand, due to certain conditions (i.e., the increase of the older brands’ net retail prices beyond
the tax bracket to which they were previously classified after the lapse of some time) were it not
for the classification freeze provision. It may be conceded that this has adversely affected, to a
certain extent, the ability of petitioner to competitively price its newer brands vis-à-vis the
subject older brands. Thus, to a limited extent, the assailed law seems to derogate one of its
avowed objectives, i.e. promoting fair competition among the players in the industry. Yet, will
this occurrence, by itself, render the assailed law unconstitutional on equal protection grounds?
We answer in the negative.
Whether Congress acted improvidently in derogating, to a limited extent, the state’s interest in
promoting fair competition among the players in the industry, while pursuing other state
interests regarding the simplification of tax administration of sin products, elimination of
potential areas for abuse and corruption in tax collection, buoyant and stable revenue
generation, and ease of projection of revenues through the classification freeze provision, and
whether the questioned provision is the best means to achieve these state interests,
necessarily go into the wisdom of the assailed law which we cannot inquire into, much less
overrule. The classification freeze provision has not been shown to be precipitated by a veiled
attempt, or hostile attitude on the part of Congress to unduly favor older brands over newer
brands. On the contrary, we must reasonably assume, owing to the respect due a co-equal
branch of government and as revealed by the Congressional deliberations, that the enactment
of the questioned provision was impelled by an earnest desire to improve the efficiency and
effectivity of the tax administration of sin products. For as long as the legislative classification is
rationally related to furthering some legitimate state interest, as here, the rational-basis test is
satisfied and the constitutional challenge is perfunctorily defeated. 
We do not sit in judgment as a supra-legislature to decide, after a law is passed by Congress,
which state interest is superior over another, or which method is better suited to achieve one,
some or all of the state’s interests, or what these interests should be in the first place. This
policy-determining power, by constitutional fiat, belongs to Congress as it is its function to
determine and balance these interests or choose which ones to pursue. Time and again we
have ruled that the judiciary does not settle policy issues. The Court can only declare what the
law is and not what the law should be. Under our system of government, policy issues are
within the domain of the political branches of government and of the people themselves as the
repository of all state power.74 Thus, the legislative classification under the classification freeze
provision, after having been shown to be rationally related to achieve certain legitimate state
interests and done in good faith, must, perforce, end our inquiry.
Concededly, the finding that the assailed law seems to derogate, to a limited extent, one of its
avowed objectives (i.e. promoting fair competition among the players in the industry) would
suggest that, by Congress’s own standards, the current excise tax system on sin products is
imperfect. But, certainly, we cannot declare a statute unconstitutional merely because it can be
improved or that it does not tend to achieve all of its stated objectives.75 This is especially true
for tax legislation which simultaneously addresses and impacts multiple state
interests.76 Absent a clear showing of breach of constitutional limitations, Congress, owing to its
vast experience and expertise in the field of taxation, must be given sufficient leeway to
formulate and experiment with different tax systems to address the complex issues and
problems related to tax administration. Whatever imperfections that may occur, the same
should be addressed to the democratic process to refine and evolve a taxation system which
ideally will achieve most, if not all, of the state’s objectives. 
In fine, petitioner may have valid reasons to disagree with the policy decision of Congress and
the method by which the latter sought to achieve the same. But its remedy is with Congress
and not this Court. As succinctly articulated in Vance v. Bradley:77
 The Constitution presumes that, absent some reason to infer antipathy, even
improvident decisions will eventually be rectified by the democratic process, and that
judicial intervention is generally unwarranted no matter how unwisely we may think a
political branch has acted. Thus, we will not overturn such a statute unless the varying
treatment of different groups or persons is so unrelated to the achievement of any
combination of legitimate purposes that we can only conclude that the legislature's
actions were irrational.78
We now tackle the second issue.
Petitioner asserts that Revenue Regulations No. 1-97, as amended by Revenue Regulations
No. 9-2003, Revenue Regulations No. 22-2003 and Revenue Memorandum Order No. 6-2003,
are invalid insofar as they empower the BIR to reclassify or update the classification of new
brands of cigarettes based on their current net retail prices every two years or earlier. It claims
that RA 8240, even prior to its amendment by RA 9334, did not authorize the BIR to conduct
said periodic resurvey and reclassification.
The questioned provisions are found in the following sections of the assailed issuances:  officers who shall be designated to conduct the said activity(ies).
(1) Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section
2 of Revenue Regulations 9-2003, viz:
For the purpose of establishing or updating the tax classification of new brands and
variant(s) thereof, their current net retail price shall be reviewed periodically through
the conduct of survey or any other appropriate activity, as mentioned above, every two
(2) years unless earlier ordered by the Commissioner. However, notwithstanding any
increase in the current net retail price, the tax classification of such new brands shall
remain in force until the same is altered or changed through the issuance of an
appropriate Revenue Regulations.
(2) Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of
Revenue Memorandum Order No. 6-2003, insofar as pertinent to cigarettes packed by
machine, viz:
II. POLICIES AND GUIDELINES
1. The conduct of survey covered by this Order, for purposes of determining the
current retail prices of new brands of cigarettes and alcohol products introduced in the
market on or after January 1, 1997, shall be undertaken in the following instances: 
xxxx
III. PROCEDURES
b. For reclassification of new brands of said excisable products that were introduced in
the market after January 1, 1997.
xxxx
4. The determination of the current retail prices of new brands of the aforesaid
excisable products shall be initiated as follows:
xxxx
b. After the lapse of the prescribed two-year period or as the Commissioner may
otherwise direct, the appropriate tax reclassification of these brands based on the
current net retail prices thereof shall be determined by a survey to be conducted upon
a written directive by the Commissioner.
For this purpose, a memorandum order to the Assistant Commissioner, Large
Taxpayers Service, Heads, Excise Tax Areas, and Regional Directors of all Revenue
Regions, except Revenue Region Nos. 4, 5, 6, 7, 8 and 9, shall be issued by the
Commissioner for the submission of the list of major supermarkets/retail outlets where
the above excisable products are being sold, as well as the list of selected revenue
xxxx
6. The results of the survey conducted in Revenue Region Nos. 4 to 9 shall be
submitted directly to the Chief, LT Assistance Division II (LTAD II), National Office for
consolidation. On the other hand, the results of the survey conducted in Revenue
Regions other than Revenue Region Nos. 4 to 9, shall be submitted to the Office of the
Regional Director for regional consolidation. The consolidated regional survey,
together with the accomplished survey forms shall be transmitted to the Chief, LTAD II
for national consolidation within three (3) days from date of actual receipt from the
survey teams. The LTAD II shall be responsible for the evaluation and analysis of the
submitted survey forms and the preparation of the recommendation for the
updating/revision of the tax classification of each brand of cigarettes and alcohol
products. The said recommendation, duly validated by the ACIR, LTS, shall be
submitted to the Commissioner for final review within ten (10) days from the date of
actual receipt of complete reports from all the surveying Offices.
7. Upon final review by the Commissioner of the revised tax classification of the
different new brands of cigarettes and alcohol products, the appropriate revenue
regulations shall be prepared and submitted for approval by the Secretary of Finance.
xxxx
xxxx
 Large Taxpayers Assistance Division II
xxxx
1. Perform the following preparatory procedures on the identification of brands to be
surveyed, supermarkets/retail outlets where the survey shall be conducted, and the
personnel selected to conduct the survey.
xxxx
b. On the tax reclassification of new brands
i. Submit a master list of registered brands covered by the survey pursuant to the
provisions of Item II.2 of this Order containing the complete description of each brand,
existing net retail price and the corresponding tax rate thereof.
ii. Submit to the ACIR, LTS, a list of major supermarkets/retail outlets within the
territorial jurisdiction of the concerned revenue regions where the survey will be
conducted to be used as basis in the issuance of Mission Orders. Ensure that the
minimum number of establishments to be surveyed, as prescribed under existing
revenue laws and regulations, is complied with. In addition, the names and
designations of revenue officers selected to conduct the survey shall be clearly
indicated opposite the names of the establishments to be surveyed.
There is merit to the contention.
In order to implement RA 8240 following its effectivity on January 1, 1997, the BIR issued
Revenue Regulations No. 1-97, dated December 13, 1996, which mandates a one-time
classification only.79 Upon their launch, new brands shall be initially taxed based on their
suggested net retail price. Thereafter, a survey shall be conducted within three (3) months to
determine their current net retail prices and, thus, fix their official tax classifications. However,
the BIR made a turnaround by issuing Revenue Regulations No. 9-2003, dated February 17,
2003, which partly amended Revenue Regulations No. 1-97, by authorizing the BIR to
periodically reclassify new brands (i.e., every two years or earlier) based on their current net
retail prices. Thereafter, the BIR issued Revenue Memorandum Order No. 6-2003, dated
March 11, 2003, prescribing the guidelines on the implementation of Revenue Regulations No.
9-2003. This was patent error on the part of the BIR for being contrary to the plain text and
legislative intent of RA 8240.
It is clear that the afore-quoted portions of Revenue Regulations No. 1-97, as amended by
Section 2 of Revenue Regulations 9-2003, and Revenue Memorandum Order No. 6-2003
unjustifiably emasculate the operation of Section 145 of the NIRC because they authorize the
Commissioner of Internal Revenue to update the tax classification of new brands every two
years or earlier subject only to its issuance of the appropriate Revenue Regulations, when
nowhere in Section 145 is such authority granted to the Bureau. Unless expressly granted to
the BIR, the power to reclassify cigarette brands remains a prerogative of the legislature which
cannot be usurped by the former. 
More importantly, as previously discussed, the clear legislative intent was for new brands to
benefit from the same freezing mechanism accorded to Annex "D" brands. To reiterate, in
enacting RA 8240, Congress categorically rejected the DOF proposal and Senate Version
which would have empowered the DOF and BIR to periodically adjust the excise tax rate and
tax brackets, and to periodically resurvey and reclassify cigarette brands. (This resurvey and
reclassification would have naturally encompassed both old and new brands.) It would thus, be
absurd for us to conclude that Congress intended to allow the periodic reclassification of new
brands by the BIR after their classification is determined based on their current net retail price
while limiting the freezing of the classification to Annex "D" brands. Incidentally, Senator Ralph
G. Recto expressed the following views during the deliberations on RA 9334, which later
amended RA 8240:
Senator Recto: Because, like I said, when Congress agreed to adopt a specific tax
system [under R.A. 8240], when Congress did not index the brackets, and Congress
did not index the rates but only provided for a one rate increase in the year 2000, we
shifted from ad valorem which was based on value to a system of specific which is
based on volume. Congress then, in effect, determined the classification based on the
prices at that particular period of time and classified these products accordingly.
Of course, Congress then decided on what will happen to the new brands or variants of
existing brands. To favor government, a variant would be classified as the highest rate
of tax for that particular brand. In case of a new brand, Mr. President, then the BIR
should classify them. But I do not think it was the intention of Congress then to give the
BIR the authority to reclassify them every so often. I do not think it was the intention of
Congress to allow the BIR to classify a new brand every two years, for example,
because it will be arbitrary for the BIR to do so. x x x80 (Emphasis supplied)
For these reasons, the amendments introduced by RA 9334 to RA 8240, insofar as the
freezing mechanism is concerned, must be seen merely as underscoring the legislative intent
already in place then, i.e. new brands as being covered by the freezing mechanism after their
classification based on their current net retail prices. 
Unfortunately for petitioner, this result will not cause a downward reclassification of Lucky
Strike. It will be recalled that petitioner introduced Lucky Strike in June 2001. However, as
admitted by petitioner itself, the BIR did not conduct the required market survey within three
months from product launch. As a result, Lucky Strike was never classified based on its actual
current net retail price. Petitioner failed to timely seek redress to compel the BIR to conduct the
requisite market survey in order to fix the tax classification of Lucky Strike. In the meantime,
Lucky Strike was taxed based on its suggestednet retail price of P9.90 per pack, which is within
the high-priced tax bracket. It was only after the lapse of two years or in 2003 that the BIR
conducted a market survey which was the first time that Lucky Strike’s actual current net retail
price was surveyed and found to be from P10.34 to P11.53 per pack, which is within the
premium-priced tax bracket. The case of petitioner falls under a situation where there was no
reclassification based on its current net retail price which would have been invalid as previously
explained. Thus, we cannot grant petitioner’s prayer for a downward reclassification of Lucky
Strike because it was never reclassified by the BIR based on its actual current net retail price.
It should be noted though that on August 8, 2003, the BIR issued Revenue Regulations No. 22-
2003 which implemented the revised tax classifications of new brands based on their current
net retail prices through the market survey conducted pursuant to Revenue Regulations No. 9-
2003. Annex "A" of Revenue Regulations No. 22-2003 lists the result of the market survey and
the corresponding recommended tax classification of the new brands therein aside from Lucky
Strike. However, whether these other brands were illegally reclassified based on their actual
current net retail prices by the BIR must be determined on a case-to-case basis because it is
possible that these brands were classified based on their actual current net retail price for the
first time in the year 2003 just like Lucky Strike. Thus, we shall not make any pronouncement
as to the validity of the tax classifications of the other brands listed therein.
Finally, it must be noted that RA 9334 introduced changes in the manner by which the current
net retail price of a new brand is determined and how its classification is permanently fixed, to
wit:
New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price.
New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240
[on January 1, 1997].
Suggested net retail price shall mean the net retail price at which new brands, as
defined above, of locally manufactured or imported cigarettes are intended by the
manufacture or importer to be sold on retail in major supermarkets or retail outlets in
Metro Manila for those marketed nationwide, and in other regions, for those with
regional markets. At the end of three (3) months from the product launch, the
Bureau of Internal Revenue shall validate the suggested net retail price of the
new brand against the net retail price as defined herein and determine the
correct tax bracket under which a particular new brand of cigarette, as defined
above, shall be classified. After the end of eighteen (18) months from such
validation, the Bureau of Internal Revenue shall revalidate the initially validated
net retail price against the net retail price as of the time of revalidation in order
to finally determine the correct tax bracket under which a particular new brand of
cigarettes shall be classified; Provided however, That brands of cigarettes
introduced in the domestic market between January 1, 1997 and December 31, 2003
shall remain in the classification under which the Bureau of Internal Revenue has
determined them to belong as of December 31, 2003. Such classification of new
brands and brands introduced between January 1, 1997 and December 31, 2003
shall not be revised except by an act of Congress. (Emphasis supplied)
Thus, Revenue Regulations No. 9-2003 and Revenue Memorandum Order No. 6-2003 should
be deemed modified by the above provisions from the date of effectivity of RA 9334 on January
1, 2005.
In sum, Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by
Section 2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b), II(6), II(7), III (Large
Tax Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, as
pertinent to cigarettes packed by machine, are invalid insofar as they grant the BIR the power
to reclassify or update the classification of new brands every two years or earlier. Further,
these provisions are deemed modified upon the effectivity of RA 9334 on January 1, 2005
insofar as the manner of determining the permanent classification of new brands is concerned. 
We now tackle the last issue.
Petitioner contends that RA 8240, as amended by RA 9334, and its implementing rules and
regulations violate the General Agreement on Tariffs and Trade (GATT) of 1947, as amended,
specifically, Paragraph 2, Article III, Part II:
2. The products of the territory of any contracting party imported into the territory of any
other contracting party shall not be subject, directly or indirectly, to internal taxes or
other internal charges of any kind in excess of those applied, directly or indirectly, to
like domestic products. Moreover, no contracting party shall otherwise apply internal
taxes or other internal charges to imported or domestic products in a manner contrary
to the principles set forth in paragraph 1. 
It claims that it is the duty of this Court to correct, in favor of the GATT, whatever inconsistency
exists between the assailed law and the GATT in order to prevent triggering the international
dispute settlement mechanism under the GATT-WTO Agreement.
We disagree.
The classification freeze provision uniformly applies to all newly introduced brands in the
market, whether imported or locally manufactured. It does not purport to single out imported
cigarettes in order to unduly favor locally produced ones. Further, petitioner’s evidence was
anchored on the alleged unequal tax treatment between old and new brands which involves a
different frame of reference vis-à-vis local and imported products. Petitioner has, therefore,
failed to clearly prove its case, both factually and legally, within the parameters of the GATT.
At any rate, even assuming arguendo that petitioner was able to prove that the classification
freeze provision violates the GATT, the outcome would still be the same. The GATT is a treaty
duly ratified by the Philippine Senate and under Article VII, Section 2181 of the Constitution, it
merely acquired the status of a statute.82 Applying the basic principles of statutory construction
in case of irreconcilable conflict between statutes, RA 8240, as amended by RA 9334, would
prevail over the GATT either as a later enactment by Congress or as a special law dealing with
the taxation of sin products. Thus, in Abbas v. Commission on Elections,83 we had occasion to
explain:

Petitioners premise their arguments on the assumption that the Tripoli Agreement is
part of the law of the land, being a binding international agreement. The Solicitor
General asserts that the Tripoli Agreement is neither a binding treaty, not having been
entered into by the Republic of the Philippines with a sovereign state and ratified
according to the provisions of the 1973 or 1987 Constitutions, nor a binding
international agreement.

We find it neither necessary nor determinative of the case to rule on the nature of the
Tripoli Agreement and its binding effect on the Philippine Government whether under
public international or internal Philippine law. In the first place, it is now the Constitution
itself that provides for the creation of an autonomous region in Muslim Mindanao. The
standard for any inquiry into the validity of R.A. No. 6734 would therefore be what is so
provided in the Constitution. Thus, any conflict between the provisions of R.A. No.
6734 and the provisions of the Tripoli Agreement will not have the effect of enjoining
the implementation of the Organic Act. Assuming for the sake of argument that the
Tripoli Agreement is a binding treaty or international agreement, it would then
constitute part of the law of the land. But as internal law it would not be superior to R.A.
No. 6734, an enactment of the Congress of the Philippines, rather it would be in the EN BANC G.R. No. L-10572 December 21, 1915
same class as the latter [SALONGA, PUBLIC INTERNATIONAL LAW 320 (4th ed.,
1974), citing Head Money Cases, 112 U.S. 580 (1884) and Foster v. Nelson, 2 Pet. FRANCIS A. CHURCHILL and STEWART TAIT, plaintiffs-appellees, 
253 (1829)]. Thus, if at all, R.A. No. 6734 would be amendatory of the Tripoli vs. JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.
Agreement, being a subsequent law. Only a determination by this Court that R.A. No.
6734 contravenes the Constitution would result in the granting of the reliefs sought. TRENT, J.:
(Emphasis supplied)
The judgment appealed from in this case perpetually restrains and prohibits the defendant
WHEREFORE, the petition is PARTIALLY GRANTED and the decision of the Regional Trial and his deputies from collecting and enforcing against the plaintiffs and their property the
Court of Makati, Branch 61, in Civil Case No. 03-1032, is AFFIRMED with MODIFICATION. As annual tax mentioned and described in subsection (b) of section 100 of Act No. 2339,
modified, this Court declares that:  effective July 1, 1914, and from destroying or removing any sign, signboard, or billboard,
the property of the plaintiffs, for the sole reason that such sign, signboard, or billboard is,
(1) Section 145 of the NIRC, as amended by Republic Act No. 9334, is CONSTITUTIONAL; or may be, offensive to the sight; and decrees the cancellation of the bond given by the
and that plaintiffs to secure the issuance of the preliminary injunction granted soon after the
commencement of this action. 
(2) Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section
2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax This case divides itself into two parts and gives rise to two main questions; (1) that relating
Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, insofar as
to the power of the court to restrain by injunction the collection of the tax complained of,
pertinent to cigarettes packed by machine, are INVALID insofar as they grant the BIR the
and (2) that relating to the validity of those provisions of subsection (b) of section 100 of
power to reclassify or update the classification of new brands every two years or earlier. 
Act No. 2339, conferring power upon the Collector of Internal Revenue to remove any
sign, signboard, or billboard upon the ground that the same is offensive to the sight or is
SO ORDERED.
otherwise a nuisance. 
The first question is one of the jurisdiction and is of vital importance to the Government.
The sections of Act No. 2339, which bear directly upon the subject, are 139 and 140. The
first expressly forbids the use of an injunction to stay the collection of any internal revenue
tax; the second provides a remedy for any wrong in connection with such taxes, and this
remedy was intended to be exclusive, thereby precluding the remedy by injunction, which
remedy is claimed to be constitutional. The two sections, then, involve the right of a
dissatisfied taxpayers to use an exceptional remedy to test the validity of any tax or to
determine any other question connected therewith, and the question whether the remedy
by injunction is exceptional.  deliberation, exercising their power in this respect with the greatest possible
Preventive remedies of the courts are extraordinary and are not the usual remedies. The
origin and history of the writ of injunction show that it has always been regarded as an
extraordinary, preventive remedy, as distinguished from the common course of the law to
redress evils after they have been consummated. No injunction issues as of course, but is
granted only upon the oath of a party and when there is no adequate remedy at law. The
Government does, by section 139 and 140, take away the preventive remedy of injunction,
if it ever existed, and leaves the taxpayer, in a contest with it, the same ordinary remedial
actions which prevail between citizen and citizen. The Attorney-General, on behalf of the
defendant, contends that there is no provisions of the paramount law which prohibits such
a course. While, on the other hand, counsel for plaintiffs urge that the two sections are
unconstitutional because (a) they attempt to deprive aggrieved taxpayers of all substantial
remedy for the protection of their property, thereby, in effect, depriving them of their
property without due process of law, and (b) they attempt to diminish the jurisdiction of the
courts, as conferred upon them by Acts Nos. 136 and 190, which jurisdiction was ratified
and confirmed by the Act of Congress of July 1, 1902.  though it generally implies and includes regular allegations, opportunity to answer, and a
In the first place, it has been suggested that section 139 does not apply to the tax in
question because the section, in speaking of a "tax," means only legal taxes; and that an
illegal tax (the one complained of) is not a tax, and, therefore, does not fall within the
inhibition of the section, and may be restrained by injunction. There is no force in this
suggestion. The inhibition applies to all internal revenue taxes imposes, or authorized to
be imposed, by Act No. 2339. (Snyder vs. Marks, 109 U.S., 189.) And, furthermore, the
mere fact that a tax is illegal, or that the law, by virtue of which it is imposed, is
unconstitutional, does not authorize a court of equity to restrain its collection by injunction.
There must be a further showing that there are special circumstances which bring the case
under some well recognized head of equity jurisprudence, such as that irreparable injury,
multiplicity of suits, or a cloud upon title to real estate will result, and also that there is, as
we have indicated, no adequate remedy at law. This is the settled law in the United States,
even in the absence of statutory enactments such as sections 139 and 140.
(Hannewinkle vs. Mayor, etc., of Georgetown, 82 U.S., 547; Indiana Mfg. Co. vs. Koehne,
188 U.S., 681; Ohio Tax cases, 232 U. S., 576, 587; Pittsburgh C. C. & St. L. R.
Co. vs. Board of Public Works, 172 U. S., 32; Shelton vs. Plat, 139 U.S., 591; State
Railroad Tax Cases, 92 U. S., 575.) Therefore, this branch of the case must be controlled
by sections 139 and 140, unless the same be held unconstitutional, and consequently, null
and void. 
The right and power of judicial tribunals to declare whether enactments of the
legislature exceed the constitutional limitations and are invalid has always been
considered a grave responsibility, as well as a solemn duty. The courts invariably
give the most careful consideration to questions involving the interpretation and
application of the Constitution, and approach constitutional questions with great
caution and even reluctance; and they should never declare a statute void, unless
its invalidity is, in their judgment, beyond reasonable doubt. To justify a court in
pronouncing a legislative act unconstitutional, or a provision of a state constitution
to be in contravention of the Constitution of the United States, the case must be so
clear to be free from doubt, and the conflict of the statute with the constitution must
be irreconcilable, because it is but a decent respect to the wisdom, the integrity,
and the patriotism of the legislative body by which any law is passed to presume in
favor of its validity until the contrary is shown beyond reasonable doubt. Therefore,
in no doubtful case will the judiciary pronounce a legislative act to be contrary to
the constitution. To doubt the constitutionality of a law is to resolve the doubt in
favor of its validity. (6 Ruling Case Law, secs. 71, 72, and 73, and cases cited
therein.) 
It is also the settled law in the United States that "due process of law" does not always
require, in respect to the Government, the same process that is required between citizens,
trial according to some well settled course of judicial proceedings. The case with which we
are dealing is in point. A citizen's property, both real and personal, may be taken, and
usually is taken, by the government in payment of its taxes without any judicial
proceedings whatever. In this country, as well as in the United States, the officer charged
with the collection of taxes is authorized to seize and sell the property of delinquent
taxpayers without applying to the courts for assistance, and the constitutionality of the law
authorizing this procedure never has been seriously questioned. (City of
Philadelphia vs. [Diehl] The Collector, 5 Wall., 720; Nicholl vs. U.S., 7 Wall., 122, and
cases cited.) This must necessarily be the course, because it is upon taxation that the
Government chiefly relies to obtain the means to carry on its operations, and it is of the
utmost importance that the modes adopted to enforce the collection of the taxes levied
should be summary and interfered with as little as possible. No government could exist if
every litigious man were permitted to delay the collection of its taxes. This principle of
public policy must be constantly borne in mind in determining cases such as the one under
consideration. 
With these principles to guide us, we will proceed to inquire whether there is any merit in
the two propositions insisted upon by counsel for the plaintiffs. Section 5 of the Philippine
Bill provides: "That no law shall be enacted in said Islands which shall deprive any person
of life, liberty, or property without due process of law, or deny to any person therein the apply alone to taxes levied by the United States, it shows the sense of Congress of the
equal protection of the law."  evils to be feared if courts of justice could, in any case, interfere with the process of
collecting taxes on which the government depends for its continued existence. It is a wise
The origin and history of these provisions are well-known. They are found in substance in policy. It is founded in the simple philosophy derived from the experience of ages, that the
the Constitution of the United States and in that of ever state in the Union.  payment of taxes has to be enforced by summary and stringent means against a reluctant
and often adverse sentiment; and to do this successfully, other instrumentalities and other
Section 3224 of the Revised Statutes of the United States, effective since 1867, provides modes of procedure are necessary, than those which belong to courts of justice." 
that: "No suit for the purpose of restraining the assessment or collection of any tax shall be
maintained in any court."  And again, in Snyder vs. Marks (109 U.S., 189), the court said: "The remedy of a suit to
recover back the tax after it is paid is provided by statute, and a suit to restrain its
Section 139, with which we have been dealing, reads: "No court shall have authority to collection is forbidden. The remedy so given is exclusive, and no other remedy can be
grant an injunction to restrain the collection of any internal-revenue tax."  substituted for it. Such has been the current of decisions in the Circuit Courts of the United
States, and we are satisfied it is a correct view of the law."
itc-a1f

A comparison of these two sections show that they are essentially the same. Both
expressly prohibit the restraining of taxes by injunction. If the Supreme Court of the United
States has clearly and definitely held that the provisions of section 3224 do not violate the
"due process of law" and "equal protection of the law" clauses in the Constitution, we
would be going too far to hold that section 139 violates those same provisions in the
Philippine Bill. That the Supreme Court of the United States has so held, cannot be
doubted. 
In Cheatham vs. United States (92 U.S., 85,89) which involved the validity of an income
tax levied by an act of Congress prior to the one in issue in the case of
Pollock vs. Farmers' Loan & Trust Co. (157 U.S., 429) the court, through Mr. Justice Miller,
said: "If there existed in the courts, state or National, any general power of impeding or
controlling the collection of taxes, or relieving the hardship incident to taxation, the very
existence of the government might be placed in the power of a hostile judiciary.
(Dows vs. The City of Chicago, 11 Wall., 108.) While a free course of remonstrance and
appeal is allowed within the departments before the money is finally exacted, the General
Government has wisely made the payment of the tax claimed, whether of customs or of
internal revenue, a condition precedent to a resort to the courts by the party against whom
the tax is assessed. In the internal revenue branch it has further prescribed that no such
suit shall be brought until the remedy by appeal has been tried; and, if brought after this, it
must be within six months after the decision on the appeal. We regard this as a condition
on which alone the government consents to litigate the lawfulness of the original tax. It is
not a hard condition. Few governments have conceded such a right on any condition. If
the compliance with this condition requires the party aggrieved to pay the money, he must
do it."  enacted in 1901, authorize municipal councils and provincial boards to impose an ad
Again, in State Railroad Tax Cases (92 U.S., 575, 613), the court said: "That there might
be no misunderstanding of the universality of this principle, it was expressly enacted, in
1867, that "no suit for the purpose of restraining the assessment or collection of any tax
shall be maintained in any court." (Rev, Stat., sec. 3224.) And though this was intended to
In the consideration of the plaintiffs' second proposition, we will attempt to show (1) that
the Philippine courts never have had, since the American occupation, the power to restrain
by injunction the collection of any tax imposed by the Insular Government for its own
purpose and benefit, and (2) that assuming that our courts had or have such power, this
power has not been diminished or curtailed by sections 139 and 140. 
We will first review briefly the former and present systems of taxation. Upon the American
occupation of the Philippine, there was found a fairly complete system of taxation. This
system was continued in force by the military authorities, with but few changes, until the
Civil Government assumed charge of the subject. The principal sources of revenue under
the Spanish regime were derived from customs receipts, the so-called industrial taxes, the
urbana taxes, the stamp tax, the personal cedula tax, and the sale of the public domain.
The industrial and urbana taxes constituted practically an income tax of some 5 per cent
on the net income of persons engaged in industrial and commercial pursuits and on the
income of owners of improved city property. The sale of stamped paper and adhesive
stamp tax. The cedula tax was a graduated tax, ranging from nothing up to P37.50. The
revenue derived from the sale of the public domain was not considered a tax. The
American authorities at once abolished the cedula tax, but later restored it in a modified
form, charging for each cedula twenty centavos, an amount which was supposed to be just
sufficient to cover the cost of issuance. The urbana tax was abolished by Act No. 223,
effective September 6, 1901. 
The "Municipal Code" (Act No. 82) and the Provincial Government Act (No. 83), both
valorem tax on real estate. The Municipal Code did not apply to the city of Manila. This city
was given a special charter (Act No. 183), effective August 30, 1901; Under this charter
the Municipal Board of Manila is authorized and empowered to impose taxes upon real
estate and, like municipal councils, to license and regulate certain occupations. Customs
matters were completely reorganized by Act No. 355, effective at the port of Manila on
February 7, 1902, and at other ports in the Philippine Islands the day after the receipt of a
certified copy of the Act. The Internal Revenue Law of 1904 (Act No. 1189), repealed all 7. Said courts and their judges, or any of them, shall have power to issue writs of
existing laws, ordinances, etc., imposing taxes upon the persons, objects, or occupations injunction, mandamus, certiorari, prohibition, quo warranto, and habeas corpus in
taxed under that act, and all industrial taxes and stamp taxes imposed under the Spanish their respective provinces and districts, in the manner provided in the Code of Civil
regime were eliminated, but the industrial tax was continued in force until January 1, 1905. Procedure.
This Internal Revenue Law did not take away from municipal councils, provincial boards,
and the Municipal Board of the city of Manila the power to impose taxes upon real estate. The provisions of the Code of Civil Procedure (Act No. 190), effective October 1, 1901,
This Act (No. 1189), with its amendments, was repealed by Act No. 2339, an act "revising which deals with the subject of injunctions, are sections 162 to 172, inclusive. Injunctions,
and consolidating the laws relative to internal revenue."  as here defined, are of two kinds; preliminary and final. The former may be granted at any
time after the commencement of the action and before final judgment, and the latter at the
Section 84 of Act No. 82 provides that "No court shall entertain any suit assailing the termination of the trial as the relief or part of the relief prayed for (sec. 162). Any judge of
validity of a tax assessed under this act until the taxpayer shall have paid, under protest, the Supreme Court may grant a preliminary injunction in any action pending in that court or
the taxes assessed against him, . . . ."  in any Court of First Instance. A preliminary injunction may also be granted by a judge of
the Court of First Instance in actions pending in his district in which he has original
This inhibition was inserted in section 17 of Act No. 83 and applies to taxes imposed by jurisdiction (sec. 163). But such injunctions may be granted only when the complaint
provincial boards. The inhibition was not inserted in the Manila Charter until the passage shows facts entitling the plaintiff to the relief demanded (sec. 166), and before a final or
of Act No. 1793, effective October 12, 1907. Act No. 355 expressly makes the payment of permanent injunction can be granted, it must appear upon the trial of the action that the
the exactions claimed a condition precedent to a resort to the courts by dissatisfied plaintiff is entitled to have commission or continuance of the acts complained of
importers. Section 52 of Act No. 1189 provides "That no courts shall have authority to perpetually restrained (sec. 171). These provisions authorize the institution in Courts of
grant an injunction restraining the collection of any taxes imposed by virtue of the First Instance of what are known as "injunction suits," the sole object of which is to obtain
provisions of this Act, but the remedy of the taxpayer who claims that he is unjustly the issuance of a final injunction. They also authorize the granting of injunctions as aiders
assessed or taxed shall be by payment under protest of the sum claimed from him by the in ordinary civil actions. We have defined in Davesa vs. Arbes (13 Phil. Rep., 273), an
Collector of Internal Revenue and by action to recover back the sum claimed to have been injunction to be "A "special remedy" adopted in that code (Act 190) from American
illegally collected."  practice, and originally borrowed from English legal procedure, which was there issued by
the authority and under the seal of a court of equity, and limited, as in other cases where
Sections 139 and 140 of Act No. 2339 contain, as we have indicated, the same prohibition equitable relief is sought, to those cases where there is no "plain, adequate, and complete
and remedy. The result is that the courts have been expressly forbidden, in every act remedy at law,"which will not be granted while the rights between the parties are
creating or imposing taxes or imposts enacted by the legislative body of the Philippines undetermined, except in extraordinary cases where material and irreparable injury will be
since the American occupation, to entertain any suit assailing the validity of any tax or done,"which cannot be compensated in damages . . . 
impost thus imposed until the tax shall have been paid under protest. The only taxes which
have not been brought within the express inhibition were those included in that part of the By paragraph 2 of section 56 of Act No. 136, supra, and the provisions of the various
old Spanish system which completely disappeared on or before January 1, 1905, and subsequent Acts heretofore mentioned, the Insular Government has consented to litigate
possibly the old customs duties which disappeared in February, 1902.  with aggrieved persons the validity of any original tax or impost imposed by it on condition
that this be done in ordinary civil actions after the taxes or exactions shall have been paid.
Section 56 of the Organic Act (No. 136), effective June 16, 1901, provides that "Courts of But it is said that paragraph 2 confers original jurisdiction upon Courts of First Instance to
First Instance shall have original jurisdiction:  hear and determine "all civil actions" which involve the validity of any tax, impost or
assessment, and that if the all-inclusive words "all" and "any" be given their natural and
unrestricted meaning, no action wherein that question is involved can arise over which
x x x           x x x          x x x
such courts do not have jurisdiction. (Barrameda vs. Moir, 25 Phil. Rep., 44.) This is true.
But the term "civil actions" had its well defined meaning at the time the paragraph was
2. In all civil actions which involve the ... legality of any tax, impost, or assessment, enacted. The same legislative body which enacted paragraph 2 on June 16, 1901, had,
. . . .  just a few months prior to that time, defined the only kind of action in which the legality of
any tax imposed by it might be assailed. (Sec. 84, Act 82, enacted January 31, 1901, and
x x x           x x x          x x x sec. 17, Act No. 83, enacted February 6, 1901.) That kind of action being payment of the
tax under protest and an ordinary suit to recover and no other, there can be no doubt that
Courts of First Instance have jurisdiction over all such actions. The subsequent legislation
on the same subject shows clearly that the Commission, in enacting paragraph 2, supra,
did not intend to change or modify in any way section 84 of Act No. 82 and section 17 of
Act No. 83, but, on the contrary, it was intended that "civil actions," mentioned in said
paragraph, should be understood to mean, in so far as testing the legality of taxes were
concerned, only those of the kind and character provided for in the two sections above
mentioned. It is also urged that the power to restrain by injunction the collection of taxes or
imposts is conferred upon Courts of First Instance by paragraph 7 of section 56, supra.
This paragraph does empower those courts to grant injunctions, both preliminary and final,
in any civil action pending in their districts, provided always, that the complaint shows facts
entitling the plaintiff to the relief demanded. Injunction suits, such as the one at bar, are
"civil actions," but of a special or extraordinary character. It cannot be said that the
Commission intended to give a broader or different meaning to the word "action," used in
Chapter 9 of the Code of Civil Procedure in connection with injunctions, than it gave to the
same word found in paragraph 2 of section 56 of the Organic Act. The Insular
Government, in exercising the power conferred upon it by the Congress of the United
States, has declared that the citizens and residents of this country shall pay certain
specified taxes and imposts. The power to tax necessarily carries with it the power to
collect the taxes. This being true, the weight of authority supports the proposition that the
Government may fix the conditions upon which it will consent to litigate the validity of its
original taxes. (Tennessee vs. Sneed, 96 U.S., 69.) 
We must, therefore, conclude that paragraph 2 and 7 of section 56 of Act No. 136,
construed in the light of the prior and subsequent legislation to which we have referred,
and the legislative and judicial history of the same subject in the United States with which
the Commission was familiar, do not empower Courts of firs Instance to interfere by
injunction with the collection of the taxes in question in this case.1awphil.net
If we are in error as to the scope of paragraph 2 and 7, supra, and the Commission did
intend to confer the power upon the courts to restrain the collection of taxes, it does not
necessarily follow that this power or jurisdiction has been taken away by section 139 of Act
No. 2339, for the reason that all agree that an injunction will not issue in any case if there
is an adequate remedy at law. The very nature of the writ itself prevents its issuance under
such circumstances. Legislation forbidding the issuing of injunctions in such cases is
unnecessary. So the only question to be here determined is whether the remedy provided
for in section 140 of Act No. 2339 is adequate. If it is, the writs which form the basis of this
appeal should not have been issued. If this is the correct view, the authority to issue
injunctions will not have been taken away by section 139, but rendered inoperative only by
reason of an adequate remedy having been made available.  2. That there shall be no other remedy, in any case of the collection of revenue, or
The legislative body of the Philippine Islands has declared from the beginning (Act No. 82)
that payment under protest and suit to recover is an adequate remedy to test the legality of
any tax or impost, and that this remedy is exclusive. Can we say that the remedy is not
adequate or that it is not exclusive, or both? The plaintiffs in the case at bar are the first, in
so far as we are aware, to question either the adequacy or exclusiveness of this remedy.
We will refer to a few cases in the United States where statutes similar to sections 139 and
140 have been construed and applied. 
In May, 1874, one Bloomstein presented a petition to the circuit court sitting in Nashville,
Tennessee, stating that his real and personal property had been assessed for state taxes
in the year 1872 to the amount of $132.60; that he tendered to the collector this amount in
"funds receivable by law for such purposes;" and that the collector refused to receive the
same. He prayed for an alternative writ of mandamus to compel the collector to receive the
bills in payment for such taxes, or to show cause to the contrary. To this petition the
collector, in his answer, set up the defense that the petitioner's suit was expressly
prohibited by the Act of the General Assembly of the State of Tennessee, passed in 1873.
The petition was dismissed and the relief prayed for refused. An appeal to the supreme
court of the State resulted in the affirmance of the judgment of the lower court. The case
was then carried to the Supreme Court of the United States (Tennessee vs. Sneed, 96 U.
S., 69), where the judgment was again affirmed. 
The two sections of the Act of [March 21,] 1873, drawn in question in that cases, read as
follows: 
1. That in all cases in which an officer, charged by law with the collection of
revenue due the State, shall institute any proceeding, or take any steps for the
collection of the same, alleged or claimed to be due by said officer from any
citizen, the party against whom the proceeding or step is taken shall, if he
conceives the same to be unjust or illegal, or against any statute or clause of the
Constitution of the State, pay the same under protest; and, upon his making said
payment, the officer or collector shall pay such revenue into the State Treasury,
giving notice at the time of payment to the Comptroller that the same was paid
under protest; and the party paying said revenue may, at any time within thirty
days after making said payment, and not longer thereafter, sue the said officer
having collected said sum, for the recovery thereof. And the same may be tried in
any court having the jurisdiction of the amount and parties; and, if it be determined
that the same was wrongfully collected, as not being due from said party to the
State, for any reason going to the merits of the same, then the court trying the
case may certify of record that the same was wrongfully paid and ought to be
refunded; and thereupon the Comptroller shall issue his warrant for the same,
which shall be paid in preference to other claims on the Treasury. 
attempt to collect revenue illegally, or attempt to collect revenue in funds only
receivable by said officer under the law, the same being other or different funds
than such as the tax payer may tender, or claim the right to pay, than that above
provided; and no writ for the prevention of the collection of any revenue claimed, or
to hinder or delay the collection of the same, shall in anywise issue, either
 injunction, supersedeas, prohibition, or any other writ or process whatever; but in
all cases in which, for any reason, any person shall claim that the tax so collected
was wrongfully or illegally collected, the remedy for said party shall be as above
provided, and in no other manner."  In Eddy vs. The Township of Lee (73 Mich., 123), the complainants sought to enjoin the
In discussing the adequacy of the remedy provided by the Tennessee Legislature, as
above set forth, the Supreme Court of the United States, in the case just cited, said: "This
remedy is simple and effective. A suit at law to recover money unlawfully exacted is as
speedy, as easily tried, and less complicated than a proceeding by mandamus. ... In
revenue cases, whether arising upon its (United States) Internal Revenue Laws or those
providing for the collection of duties upon foreign imports, it (United States) adopts the rule
prescribed by the State of Tennessee. It requires the contestant to pay the amount as
fixed by the Government, and gives him power to sue the collector, and in such suit to test
the legality of the tax. There is nothing illegal or even harsh in this. It is a wise and
reasonable precaution for the security of the Government."  warranto, certiorari, and other writs necessary to carry into effect their orders, judgments,
Thomas C. Platt commenced an action in the Circuit Court of the United States for the
Eastern District of Tennessee to restrain the collection of a license tax from the company
which he represented. The defense was that sections 1 and 2 of the Act of 1873, supra,
prohibited the bringing of that suit. This case also reached the Supreme Court of the
United States. (Shelton vs. Platt, 139 U. 591.) In speaking of the inhibitory provisions of
sections 1 and 2 of the Act of 1873, the court said: "This Act has been sanctioned and
applied by the Courts of Tennessee. (Nashville vs.Smith, 86 Tenn., 213; Louisville & N. R.
Co. vs. State, 8 Heisk., 663, 804.) It is, as counsel observe, similar to the Act of Congress
forbidding suit for the purpose of restraining the assessment or collection of taxes under
the Internal Revenue Laws, in respect to which this court held that the remedy by suit to
recover back the tax after payment, provided for by the Statute, was exclusive.
(Snyder vs. Marks, of this character has been called for by the embarrassments resulting
from the improvident employment of the writ of injunction in arresting the collection of the
public revenue; and, even in its absence, the strong arm of the court of chancery ought not
to be interposed in that direction except where resort to that court is grounded upon the
settled principles which govern its jurisdiction." 
In Louisville & N.R. Co. vs. State (8 Heisk. [64 Tenn.], 663, 804), cited by the Supreme
Court of the United States in Shelton vs. Platt, supra, the court said: "It was urged that this
statute (sections 1 and 2 of the Act of 1873, supra) is unconstitutional and void, as it
deprives the citizen of the remedy by certiorari, guaranteed by the organic law."  the power to do this, there can be no doubt, provided some other adequate remedy is
By the 10th section of the sixth article of the Constitution, [Tennessee] it is provided that:
"The judges or justices of inferior courts of law and equity shall have power in all civil
cases to issue writs of certiorari, to remove any cause, or the transcript of the record
thereof, from any inferior jurisdiction into such court of law, on sufficient cause, supported
by oath or affirmation."  impair the value of the right."
The court held the act valid as not being in conflict with these provisions of the State
constitution. 
collection of certain taxes for the year 1886. The defendants, in support of their demurrer,
insisted that the remedy by injunction had been taken away by section 107 of the Act of
1885, which section reads as follows: "No injunction shall issue to stay proceedings for the
assessment or collection of taxes under this Act." 
It was claimed by the complainants that the above quoted provisions of the Act of 1885
were unconstitutional and void as being in conflict with article 6, sec. 8, of the Constitution,
which provides that: "The circuit courts shall have original jurisdiction in all matters, civil
and criminal, not excepted in this Constitution, and not prohibited by law. ... They shall
also have power to issue writs of habeas corpus, mandamus, injunction, quo
and decrees." 
Mr. Justice Champlin, speaking for the court, said: "I have no doubt that the Legislature
has the constitutional authority, where it has provided a plain, adequate, and complete
remedy at law to recover back taxes illegally assessed and collected, to take away the
remedy by injunction to restrain their collection." 
Section 9 of the Philippine Bill reads in part as follows: "That the Supreme Court and the
Courts of First Instance of the Philippine Islands shall possess and exercise jurisdiction as
heretofore provided and such additional jurisdiction as shall hereafter be prescribed by the
Government of said Islands, subject to the power of said Government to change the
practice and method of procedure." 
It will be seen that this section has not taken away from the Philippine Government the
power to change the practice and method of procedure. If sections 139 and 140,
considered together, and this must always be done, are nothing more than a mode of
procedure, then it would seem that the Legislature did not exceed its constitutional
authority in enacting them. Conceding for the moment that the duly authorized procedure
for the determination of the validity of any tax, impost, or assessment was by injunction
suits and that this method was available to aggrieved taxpayers prior to the passage of Act
No. 2339, may the Legislature change this method of procedure? That the Legislature has
substituted in lieu thereof. In speaking of the modes of enforcing rights created by
contracts, the Supreme Court of the United States, in Tennessee vs. Sneed, supra, said:
"The rule seems to be that in modes of proceedings and of forms to enforce the contract
the Legislature has the control, and may enlarge, limit or alter them, provided that it does
not deny a remedy, or so embarrass it with conditions and restrictions as seriously to
 
In that case the petitioner urged that the Acts of 1873 were laws impairing the obligation of
the contract contained in the charter of the Bank of Tennessee, which contract was
entered into with the State in 1838. It was claimed that this was done by placing such
impediments and obstructions in the way of its enforcement, thereby so impairing the
remedies as practically to render the obligation of no value. In disposing of this contention,
the court said: "If we assume that prior to 1873 the relator had authority to prosecute his
claim against the State by mandamus, and that by the statutes of that year the further use
of that form was prohibited to him, the question remains. whether an effectual remedy was
left to him or provided for him. We think the regulation of the statute gave him an abundant
means of enforcing such right as he possessed. It provided that he might pay his claim to
the collector under protest, giving notice thereof to the Comptroller of the Treasury; that at
any time within thirty days thereafter he might sue the officer making the collection; that
the case should be tried by any court having jurisdiction and, if found in favor of the
plaintiff on the merits, the court should certify that the same was wrongfully paid and ought
to be refunded and the Comptroller should thereupon issue his warrant therefor, which
should be paid in preference to other claim on the Treasury."  The defendant denies these allegations in his answer and claims that after due
But great stress is laid upon the fact that the plaintiffs in the case under consideration are
unable to pay the taxes assessed against them and that if the law is enforced, they will be
compelled to suspend business. This point may be best answered by quoting from the
case of Youngblood vs. Sexton (32 Mich., 406), wherein Judge Cooley, speaking for the
court, said: "But if this consideration is sufficient to justify the transfer of a controversy from
a court of law to a court of equity, then every controversy where money is demanded may
be made the subject of equitable cognizance. To enforce against a dealer a promissory
note may in some cases as effectually break up his business as to collect from him a tax
of equal amount. This is not what is known to the law as irreparable injury. The courts
have never recognized the consequences of the mere enforcement of a money demand
as falling within that category."  billboard displayed or exposed to public view is offensive to the sight or is otherwise a
Certain specified sections of Act No. 2339 were amended by Act No. 2432, enacted
December 23, 1914, effective January 1, 1915, by imposing increased and additional
taxes. Act No. 2432 was amended, were ratified by the Congress of the United States on
March 4, 1915. The opposition manifested against the taxes imposed by Acts Nos. 2339
and 2432 is a matter of local history. A great many business men thought the taxes thus
imposed were too high. If the collection of the new taxes on signs, signboards, and
billboards may be restrained, we see no well-founded reason why injunctions cannot be
granted restraining the collection of all or at least a number of the other increased taxes.
The fact that this may be done, shows the wisdom of the Legislature in denying the use of
the writ of injunction to restrain the collection of any tax imposed by the Acts. When this
was done, an equitable remedy was made available to all dissatisfied taxpayers. 
The question now arises whether, the case being one of which the court below had no
jurisdiction, this court, on appeal, shall proceed to express an opinion upon the validity of
provisions of subsection (b) of section 100 of Act No. 2339, imposing the taxes
complained of. As a general rule, an opinion on the merits of a controversy ought to be
declined when the court is powerless to give the relief demanded. But it is claimed that this
case is, in many particulars, exceptional. It is true that it has been argued on the merits,
and there is no reason for any suggestion or suspicion that it is not a bona fide
controversy. The legal points involved in the merits have been presented with force,
clearness, and great ability by the learned counsel of both sides. If the law assailed were
still in force, we would feel that an opinion on its validity would be justifiable, but, as the
amendment became effective on January 1, 1915, we think it advisable to proceed no
further with this branch of the case. 
The next question arises in connection with the supplementary complaint, the object of
which is to enjoin the Collector of Internal Revenue from removing certain billboards, the
property of the plaintiffs located upon private lands in the Province of Rizal. The plaintiffs
allege that the billboards here in question "in no sense constitute a nuisance and are not
deleterious to the health, morals, or general welfare of the community, or of any persons."
investigation made upon the complaints of the British and German Consuls, he "decided
that the billboard complained of was and still is offensive to the sight, and is otherwise a
nuisance." The plaintiffs proved by Mr. Churchill that the "billboards were quite a distance
from the road and that they were strongly built, not dangerous to the safety of the people,
and contained no advertising matter which is filthy, indecent, or deleterious to the morals
of the community." The defendant presented no testimony upon this point. In the agreed
statement of facts submitted by the parties, the plaintiffs "admit that the billboards
mentioned were and still are offensive to the sight." 
The pertinent provisions of subsection (b) of section 100 of Act No. 2339 read: "If after due
investigation the Collector of Internal Revenue shall decide that any sign, signboard, or
nuisance, he may by summary order direct the removal of such sign, signboard, or
billboard, and if same is not removed within ten days after he has issued such order he my
himself cause its removal, and the sign, signboard, or billboard shall thereupon be forfeited
to the Government, and the owner thereof charged with the expenses of the removal so
effected. When the sign, signboard, or billboard ordered to be removed as herein provided
shall not comply with the provisions of the general regulations of the Collector of Internal
Revenue, no rebate or refund shall be allowed for any portion of a year for which the tax
may have been paid. Otherwise, the Collector of Internal Revenue may in his discretion
make a proportionate refund of the tax for the portion of the year remaining for which the
taxes were paid. An appeal may be had from the order of the Collector of Internal
Revenue to the Secretary of Finance and Justice whose decision thereon shall be final." 
The Attorney-General, on behalf of the defendant, says: "The question which the case
presents under this head for determination, resolves itself into this inquiry: Is the
suppression of advertising signs displayed or exposed to public view, which are admittedly
offensive to the sight, conducive to the public interest?" 
And cunsel for the plaintiffs states the question thus: "We contend that that portion of
section 100 of Act No. 2339, empowering the Collector of Internal Revenue to remove
billboards as nuisances, if objectionable to the sight, is unconstitutional, as constituting a
deprivation of property without due process of law."  members of a well governed family, are bound to conform their general behavior to the
From the position taken by counsel for both sides, it is clear that our inquiry is limited to
the question whether the enactment assailed by the plaintiffs was a legitimate exercise of
the police power of the Government; for all property is held subject to that power.  Chanceller Kent considered the police power the authority of the state "to regulate
As a consequence of the foregoing, all discussion and authorities cited, which go to the
power of the state to authorize administrative officers to find, as a fact, that legitimate
trades, callings, and businesses are, under certain circumstances, statutory nuisances,
and whether the procedure prescribed for this purpose is due process of law, are foreign
to the issue here presented.  subjects of the same." (Com. vs. Alger, 7 Cush., 53.)
There can be no doubt that the exercise of the police power of the Philippine Government
belongs to the Legislature and that this power is limited only by the Acts of Congress and
those fundamentals principles which lie at the foundation of all republican forms of
government. An Act of the Legislature which is obviously and undoubtedly foreign to any
of the purposes of the police power and interferes with the ordinary enjoyment of property
would, without doubt, be held to be invalid. But where the Act is reasonably within a proper
consideration of and care for the public health, safety, or comfort, it should not be
disturbed by the courts. The courts cannot substitute their own views for what is proper in
the premises for those of the Legislature. In Munn vs. Illinois (94 U.S., 113), the United
States Supreme Court states the rule thus: "If no state of circumstances could exist to
justify such statute, then we may declare this one void because in excess of the legislative
power of this state; but if it could, we must presume it did. Of the propriety of legislative
interference, within the scope of the legislative power, a legislature is the exclusive judge." 
This rule very fully discussed and declared in Powell vs. Pennsylvania (127 U.S., 678) —
"oleo-margarine" case. (See also Crowley vs. Christensen, 137 U.S., 86, 87;
Camfield vs. U.S., 167 U.S., 518.) While the state may interfere wherever the public
interests demand it, and in this particular a large discretion is necessarily vested in the
legislature to determine, not only what the interest of the public require, but what
measures are necessary for the protection of such interests; yet, its determination in these
matters is not final or conclusive, but is subject to the supervision of the courts.
(Lawton vs. Steele, 152 U.S., 133.) Can it be said judicially that signs, signboards, and
billboards, which are admittedly offensive to the sight, are not with the category of things
which interfere with the public safety, welfare, and comfort, and therefore beyond the
reach of the police power of the Philippine Government?  number."Courts have consistently and wisely declined to set any fixed limitations upon
The numerous attempts which have been made to limit by definition the scope of the
police power are only interesting as illustrating its rapid extension within comparatively
recent years to points heretofore deemed entirely within the field of private liberty and
property rights. Blackstone's definition of the police power was as follows: "The due
regulation and domestic order of the kingdom, whereby the individuals of the state, like
rules of propriety, good neigborhood, and good manners, to be decent, industrious, and
inoffensive in their respective stations." (Commentaries, vol. 4, p. 162.) 
unwholesome trades, slaughter houses, operations offensive to the senses." Chief Justice
Shaw of Massachusetts defined it as follows: "The power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes, and ordinances, either with penalties or without, not repugnant to the constitution,
as they shall judge to be for the good and welfare of the commonwealth, and of the
 
In the case of Butchers' Union Slaughter-house, etc. Co. vs. Crescent City Live Stock
Landing, etc. Co. (111 U.S., 746), it was suggested that the public health and public
morals are matters of legislative concern of which the legislature cannot divest itself. (See
State vs. Mountain Timber Co. [1913], 75 Wash., 581, where these definitions are
collated.) 
In Champer vs. Greencastle (138 Ind., 339), it was said: "The police power of the State, so
far, has not received a full and complete definition. It may be said, however, to be the right
of the State, or state functionary, to prescribe regulations for the good order, peace,
health, protection, comfort, convenience and morals of the community, which do not ...
violate any of the provisions of the organic law." (Quoted with approval in
Hopkins vs. Richmond [Va., 1915], 86 S.E., 139.) 
In Com. vs. Plymouth Coal Co. ([1911] 232 Pa., 141), it was said: "The police power of the
state is difficult of definition, but it has been held by the courts to be the right to prescribe
regulations for the good order, peace, health, protection, comfort, convenience and morals
of the community, which does not encroach on a like power vested in congress or state
legislatures by the federal constitution, or does not violate the provisions of the organic
law; and it has been expressly held that the fourteenth amendment to the federal
constitution was not designed to interfere with the exercise of that power by the state." 
In People vs. Brazee ([Mich., 1914], 149 N.W., 1053), it was said: "It [the police power] has
for its object the improvement of social and economic conditioned affecting the community
at large and collectively with a view to bring about "he greatest good of the greatest
subjects calling for the exercise of this power. It is elastic and is exercised from time to
time as varying social conditions demand correction." 
In 8 Cyc., 863, it is said: "Police power is the name given to that inherent sovereignty
which it is the right and duty of the government or its agents to exercise whenever public
policy, in a broad sense, demands, for the benefit of society at large, regulations to guard
its morals, safety, health, order or to insure in any respect such economic conditions as an
advancing civilization of a high complex character requires." (As quoted with approval in
Stettler vs.O'Hara [1914], 69 Ore, 519.)  consumption goods. To the extent that these businesses affect not only the public health,
Finally, the Supreme Court of the United States has said in Noble State Bank vs. Haskell
(219 U.S. [1911], 575: "It may be said in a general way that the police power extends to all
the great public needs. It may be put forth in aid of what is sanctioned by usage, or held by
the prevailing morality or strong and preponderant opinion to be greatly and immediately
necessary to the public welfare."  work in industrial establishments have only a very indirect bearing upon the public health,
This statement, recent as it is, has been quoted with approval by several courts.
(Cunningham vs. Northwestern Imp. Co. [1911], 44 Mont., 180; State vs. Mountain Timber
Co. [1913], 75 Wash., 581; McDavid vs. Bank of Bay Minette [Ala., 1915], 69 Sou., 452;
Hopkins vs. City of Richmond [Va., 1915], 86 S.E., 139; State vs. Philipps [Miss. 1915], 67
Sou., 651.)  himself. It is within the province of the police power to render assistance to the people to
It was said in Com. vs. Alger (7 Cush., 53, 85), per Shaw, C.J., that: "It is much easier to
perceive and realize the existence and sources of this police power than to mark its
boundaries, or to prescribe limits to its exercise." In Stone vs. Mississippi (101 U.S., 814),
it was said: "Many attempts have been made in this court and elsewhere to define the
police power, but never with entire success. It is always easier to determine whether a
particular case comes within the general scope of the power, than to give an abstract
definition of the power itself, which will be in all respects accurate." 
Other courts have held the same vow of efforts to evolve a satisfactory definition of the
police power. Manifestly, definitions which fail to anticipate cases properly within the scope
of the police power are deficient. It is necessary, therefore, to confine our discussion to the
principle involved and determine whether the cases as they come up are within that
principle. The basic idea of civil polity in the United States is that government should
interfere with individual effort only to the extent necessary to preserve a healthy social and
economic condition of the country. State interference with the use of private property may
be exercised in three ways. First, through the power of taxation, second, through the
power of eminent domain, and third, through the police power. Buy the first method it is
assumed that the individual receives the equivalent of the tax in the form of protection and
benefit he receives from the government as such. By the second method he receives the
market value of the property taken from him. But under the third method the benefits he
derived are only such as may arise from the maintenance of a healthy economic standard
of society and is often referred to as damnum absque injuria. (Com. vs. Plymouth Coal Co.
232 Pa., 141; Bemis vs. Guirl Drainage Co., 182 Ind., 36.) There was a time when state
interference with the use of private property under the guise of the police power was
practically confined to the suppression of common nuisances. At the present day,
however, industry is organized along lines which make it possible for large combinations of
capital to profit at the expense of the socio-economic progress of the nation by controlling
prices and dictating to industrial workers wages and conditions of labor. Not only this but
the universal use of mechanical contrivances by producers and common carriers has
enormously increased the toll of human life and limb in the production and distribution of
safety, and morals, but also the general social and economic life of the nation, it has been
and will continue to be necessary for the state to interfere by regulation. By so doing, it is
true that the enjoyment of private property is interfered with in no small degree and in
ways that would have been considered entirely unnecessary in years gone by. The
regulation of rates charged by common carriers, for instance, or the limitation of hours of
safety, and morals, but do bear directly upon social and economic conditions. To permit
each individual unit of society to feel that his industry will bring a fair return; to see that his
work shall be done under conditions that will not either immediately or eventually ruin his
health; to prevent the artificial inflation of prices of the things which are necessary for his
physical well being are matters which the individual is no longer capable of attending to
the extent that may be necessary to safeguard these rights. Hence, laws providing for the
regulation of wages and hours of labor of coal miners (Rail & River Coal Co. vs. Taylor,
234 U.S., 224); requiring payment of employees of railroads and other industrial concerns
in legal tender and requiring salaries to be paid semimonthly (Erie R.R. Co. vs. Williams,
233 U.S., 685); providing a maximum number of hours of labor for women
(Miller vs. Wilson, U.S. Sup. Ct. [Feb. 23, 1915], Adv. Opns., p. 342); prohibiting child
labor (Sturges & Burn vs. Beauchamp, 231 U.S., 320); restricting the hours of labor in
public laundries (In re Wong Wing, 167 Cal., 109); limiting hours of labor in industrial
establishment generally (State vs. Bunting, 71 Ore., 259); Sunday Closing Laws
(State vs. Nicholls [Ore., 1915], 151 Pac., 473; People vs. C. Klinck Packing Co. [N.Y.,
1915], 108 N. E., 278; Hiller vs. State [Md., 1914], 92 Atl., 842; State vs. Penny, 42 Mont.,
118; City of Springfield vs. Richter, 257 Ill., 578, 580; State vs. Hondros [S.C., 1915], 84
S.E., 781); have all been upheld as a valid exercise of the police power. Again, workmen's
compensation laws have been quite generally upheld. These statutes discard the common
law theory that employers are not liable for industrial accidents and make them
responsible for all accidents resulting from trade risks, it being considered that such
accidents are a legitimate charge against production and that the employer by controlling
the prices of his product may shift the burden to the community. Laws requiring state
banks to join in establishing a depositors' guarantee fund have also been upheld by the
Federal Supreme Court in Noble State Bank vs. Haskell (219 U. S., 104), and Assaria
State Bank vs. Dolley (219 U.S., 121). 
Offensive noises and smells have been for a long time considered susceptible of
suppression in thickly populated districts. Barring livery stables from such locations was
approved of in Reinman vs. Little Rock (U.S. Sup. Ct. [Apr. 5, 1915], U.S. Adv. Opns., p.
511). And a municipal ordinance was recently upheld (People vs. Ericsson, 263 Ill., 368),
which prohibited the location of garages within two hundred feet of any hospital, church, or
school, or in any block used exclusively for residential purposes, unless the consent of the
majority of the property owners be obtained. Such statutes as these are usually upheld on
the theory of safeguarding the public health. But we apprehend that in point of fact they
have little bearing upon the health of the normal person, but a great deal to do with his
physical comfort and convenience and not a little to do with his peace of mind. Without
entering into the realm of psychology, we think it quite demonstrable that sight is as
valuable to a human being as any of his other senses, and that the proper ministration to
this sense conduces as much to his contentment as the care bestowed upon the senses of
hearing or smell, and probably as much as both together. Objects may be offensive to the
eye as well as to the nose or ear. Man's esthetic feelings are constantly being appealed to
through his sense of sight. Large investments have been made in theaters and other forms
of amusement, in paintings and spectacular displays, the success of which depends in
great part upon the appeal made through the sense of sight. Moving picture shows could
not possible without the sense of sight. Governments have spent millions on parks and
boulevards and other forms of civic beauty, the first aim of which is to appeal to the sense
of sight. Why, then, should the Government not interpose to protect from annoyance this
most valuable of man's senses as readily as to protect him from offensive noises and
smells?  to regulation. But their regulation in the United states is hampered by what we conceive an
The advertising industry is a legitimate one. It is at the same time a cause and an effect of
the great industrial age through which the world is now passing. Millions are spent each
year in this manner to guide the consumer to the articles which he needs. The sense of
sight is the primary essential to advertising success. Billboard advertising, as it is now
conducted, is a comparatively recent form of advertising. It is conducted out of doors and
along the arteries of travel, and compels attention by the strategic locations of the boards,
which obstruct the range of vision at points where travelers are most likely to direct their
eyes. Beautiful landscapes are marred or may not be seen at all by the traveler because of
the gaudy array of posters announcing a particular kind of breakfast food, or underwear,
the coming of a circus, an incomparable soap, nostrums or medicines for the curing of all
the ills to which the flesh is heir, etc. It is quite natural for people to protest against this
indiscriminate and wholesale use of the landscape by advertisers and the intrusion of
tradesmen upon their hours of leisure and relaxation from work. Outdoor life must lose
much of its charm and pleasure if this form of advertising is permitted to continue
unhampered until it converts the streets and highways into veritable canyons through
which the world must travel in going to work or in search of outdoor pleasure.  denying equal protection of the laws. In Keokee Coke Co. vs. Taylor (234 U.S., 224), it
The success of billboard advertising depends not so much upon the use of private
property as it does upon the use of the channels of travel used by the general public.
Suppose that the owner of private property, who so vigorously objects to the restriction of
this form of advertising, should require the advertiser to paste his posters upon the
billboards so that they would face the interior of the property instead of the exterior.
Billboard advertising would die a natural death if this were done, and its real dependency
not upon the unrestricted use of private property but upon the unrestricted use of the
public highways is at once apparent. Ostensibly located on private property, the real and
sole value of the billboard is its proximity to the public thoroughfares. Hence, we conceive
that the regulation of billboards and their restriction is not so much a regulation of private
property as it is a regulation of the use of the streets and other public thoroughfares. 
We would not be understood as saying that billboard advertising is not a legitimate
business any more than we would say that a livery stable or an automobile garage is not.
Even a billboard is more sightly than piles of rubbish or an open sewer. But all these
businesses are offensive to the senses under certain conditions. 
It has been urged against ministering to the sense of sight that tastes are so diversified
that there is no safe standard of legislation in this direction. We answer in the language of
the Supreme Court in Noble State Bank vs.Haskell (219 U.S., 104), and which has already
been adopted by several state courts (see supra), that "the prevailing morality or strong
and preponderating opinion" demands such legislation. The agitation against the
unrestrained development of the billboard business has produced results in nearly all the
countries of Europe. (Ency. Britannica, vol. 1, pp. 237-240.) Many drastic ordinances and
state laws have been passed in the United States seeking to make the business amenable
unwarranted restriction upon the scope of the police power by the courts. If the police
power may be exercised to encourage a healthy social and economic condition in the
country, and if the comfort and convenience of the people are included within those
subjects, everything which encroaches upon such territory is amenable to the police
power. A source of annoyance and irritation to the public does not minister to the comfort
and convenience of the public. And we are of the opinion that the prevailing sentiment is
manifestly against the erection of billboards which are offensive to the sight. 
We do not consider that we are in conflict with the decision in Eubank vs. Richmond (226
U.S., 137), where a municipal ordinance establishing a building line to which property
owners must conform was held unconstitutional. As we have pointed out, billboard
advertising is not so much a use of private property as it is a use of the public
thoroughfares. It derives its value to the power solely because the posters are exposed to
the public gaze. It may well be that the state may not require private property owners to
conform to a building line, but may prescribe the conditions under which they shall make
use of the adjoining streets and highways. Nor is the law in question to be held invalid as
was said: "It is more pressed that the act discriminates unconstitutionally against certain
classes. But while there are differences of opinion as to the degree and kind of
discrimination permitted by the Fourteenth Amendment, it is established by repeated
decisions that a statute aimed at what is deemed an evil, and hitting it presumably where
experience shows it to be most felt, is not to be upset by thinking up and enumerating
other instances to which it might have been applied equally well, so far as the court can
see. That is for the legislature to judge unless the case is very clear." 
But we have not overlooked the fact that we are not in harmony with the highest courts of
a number of the states in the American Union upon this point. Those courts being of the
opinion that statutes which are prompted and inspired by esthetic considerations merely,
having for their sole purpose the promotion and gratification of the esthetic sense, and not
the promotion or protection of the public safety, the public peace and good order of
society, must be held invalid and contrary to constitutional provisions holding inviolate the
rights of private property. Or, in other words, the police power cannot interfere with private
property rights for purely esthetic purposes. The courts, taking this view, rest their
decisions upon the proposition that the esthetic sense is disassociated entirely from any
relation to the public health, morals, comfort, or general welfare and is, therefore, beyond
the police power of the state. But we are of the opinion, as above indicated, that unsightly
advertisements or signs, signboards, or billboards which are offensive to the sight, are not
disassociated from the general welfare of the public. This is not establishing a new
principle, but carrying a well recognized principle to further application. (Fruend on Police
Power, p. 166.)  event.
For the foregoing reasons the judgment appealed from is hereby reversed and the action
dismissed upon the merits, with costs. So ordered.  under which and the purposes for which they were enacted, will show that, unlike the
Arellano, C.J., Torres, Carson, and Araullo, JJ., concur.  on the part of the Legislature to prevent dissatisfied taxpayers "from resorting to the courts
DECISION ON THE MOTION FOR A REHEARING, JANUARY 24, 1916.  While section 139 does prevent the testing of the validity of subsection (b) of section 100
TRENT, J.: 
Counsel for the plaintiffs call our attention to the case of Ex parte Young (209 U.S., 123);
and say that they are of the opinion that this case "is the absolutely determinative of the
question of jurisdiction in injunctions of this kind." We did not refer to this case in our
former opinion because we were satisfied that the reasoning of the case is not applicable
to section 100 (b), 139 and 140 of Act No. 2339. The principles announced in the Young
case are stated as follows: "It may therefore be said that when the penalties for
disobedience are by fines so enormous and imprisonment so severe as to intimidate the
company and its officers from resorting to the courts to test the validity of the legislation,
the result is the same as if the law in terms prohibited the company from seeking judicial
construction of laws which deeply affect its rights. 
It is urged that there is no principle upon which to base the claim that a person is
entitled to disobey a statute at least once, for the purpose of testing its validity
without subjecting himself to the penalties for disobedience provided by the statute
in case it is valid. This is not an accurate statement of the case. Ordinarily a law
creating offenses in the nature of misdemeanors or felonies relates to a subject
over which the jurisdiction of the legislature is complete in any event. In these
case, however, of the establishment of certain rates without any hearing, the
validity of such rates necessarily depends upon whether they are high enough to
permit at least some return upon the investment (how much it is not now
necessary to state), and an inquiry as to that fact is a proper subject of judicial
investigation. If it turns out that the rates are too low for that purpose, then they are
illegal. Now, to impose upon a party interested the burden of obtaining a judicial
decision of such a question (no prior hearing having ever been given) only upon
the condition that, if unsuccessful, he must suffer imprisonment and pay fines as
provided in these acts, is, in effect, to close up all approaches to the courts, and
thus prevent any hearing upon the question whether the rates as provided by the
acts are not too low, and therefore invalid. The distinction is obvious between a
case where the validity of the acts depends upon the existence of a fact which can
be determined only after investigation of a very complicated and technical
character, and the ordinary case of a statute upon a subject requiring no such
investigation and over which the jurisdiction of the legislature is complete in any
An examination of the sections of our Internal Revenue Law and of the circumstances
statutes under consideration in the above cited case, their enactment involved no attempt
to test the validity of the legislation;" no effort to prevent any inquiry as to their validity.
in injunction suits instituted for the purpose of restraining the collection of internal revenue
taxes, section 140 provides a complete remedy for that purpose. And furthermore, the
validity of subsection (b) does not depend upon "the existence of a fact which can be
determined only after investigation of a very complicated and technical character," but the
jurisdiction of the Legislature over the subject with which the subsection deals "is complete
in any event." The judgment of the court in the Young case rests upon the proposition that
the aggrieved parties had no adequate remedy at law. 
Neither did we overlook the case of General Oil Co. vs. Crain (209 U.S., 211),
decided the same day and citing Ex parte Young, supra. In that case the plaintiff
was a Tennessee corporation, with its principal place of business in Memphis,
Tennessee. It was engaged in the manufacture and sale of coal oil, etc. Its wells
and plant were located in Pennsylvania and Ohio. Memphis was not only its place
of business, at which place it sold oil to the residents of Tennessee, but also a
distributing point to which oils were shipped from Pennsylvania and Ohio and
unloaded into various tanks for the purpose of being forwarded to the Arkansas,
Louisiana, and Mississippi customers. Notwithstanding the fact that the company
separated its oils, which were designated to meet the requirements of the orders
from those States, from the oils for sale in Tennessee, the defendant insisted that
he had a right, under the Act of the Tennessee Legislature, approved April 21,
1899, to inspect all the oils unlocated in Memphis, whether for sale in that State or
not, and charge and collect for such inspection a regular fee of twenty-five cents
 per barrel. The company, being advised that the defendant had no such right,
instituted this action in the inferior States court for the purpose of enjoining the
defendant, upon the grounds stated in the bill, from inspecting or attempting to
inspect its oils. Upon trial, the preliminary injunction which had been granted at the
commencement of the action, was continued in force. Upon appeal, the supreme
court of the State of Tennessee decided that the suit was one against the State
and reversed the judgment of the Chancellor. In the Supreme Court of the United
States, where the case was reviewed upon a writ of error, the contentions of the
parties were stated by the court as follows: "It is contended by defendant in error
that this court is without jurisdiction because no matter sought to be litigated by
plaintiff in error was determined by the Supreme Court of Tennessee. The court
simply held, it is paid, that, under the laws of the State, it had no jurisdiction to
entertain the suit for any purpose. And it is insisted "hat this holding involved no
Federal question, but only the powers and jurisdiction of the courts of the State of
Tennessee, in respect to which the Supreme Court of Tennessee is the final
arbiter."
Opposing these contentions, plaintiff in error urges that whether a suit is one
against a State cannot depend upon the declaration of a statute, but depends
upon the essential nature ofthe suit, and that the Supreme Court recognized that
the statute "aded nothing to the axiomatic principle that the State, as a sovereign,
is not subject to suit save by its own consent."And it is hence insisted that the court
by dismissing the bill gave effect to the law which was attacked. It is further
insisted that the bill undoubtedly present rights under the Constitution of the United
States and conditions which entitle plaintiff in error to an injunction for the
protection of such rights, and that a statute of the State which operates to deny
such rights, or such relief, `is itself in conflict with the Constitution of the United
States."  payment under protest and suit to recover — while the Act approved February 28, 1873,
That statute of Tennessee, which the supreme court of that State construed and held to be
prohibitory of the suit, was an act passed February 28, 1873, which provides: "That no
court in the State of Tennessee has, nor shall hereafter have, any power, jurisdiction, or
authority to entertain any suit against the State, or any officer acting by the authority of the
State, with a view to reach the State, its treasury, funds or property; and all such suits now
pending, or hereafter brought, shall be dismissed as to the State, or such officer, on
motion, plea or demurrer of the law officer of the State, or counsel employed by the
State."  consents required. It shall be unlawful for any person, firm or corporation to erect or
The Supreme Court of the United States, after reviewing many cases, said: "Necessarily,
to give adequate protection to constitutional rights a distinction must be made between
valid and invalid state laws, as determining the character of the suit against state officers.
And the suit at bar illustrates the necessity. If a suit against state officer is precluded in the
national courts by the Eleventh Amendment to the Constitution, and may be forbidden by a
State to its courts, as it is contended in the case at bar that it may be, without power of
review by this court, it must be evident that an easy way is open to prevent the
enforcement of many provisions of the Constitution; and the Fourteenth Amendment,
which is directed at state action, could be nullified as to much of its operation. ... It being
then the right of a party to be protected against a law which violates a constitutional right,
whether by its terms or the manner of its enforcement, it is manifest that a decision which
denies such protection gives effect to the law, and the decision is reviewable by this
court." 
The court then proceeded to consider whether the law of 1899 would, if administered
against the oils in question, violate any constitutional right of the plaintiff and after finding
and adjudging that the oils were not in movement through the States, that they had
reached the destination of their first shipment, and were held there, not in necessary delay
at means of transportation but for the business purposes and profit of the company, and
resting its judgment upon the taxing power of the State, affirmed the decree of the
supreme court of the State of Tennessee. 
From the foregoing it will be seen that the Supreme Court of Tennessee dismissed the
case for want of jurisdiction because the suit was one against the State, which was
prohibited by the Tennessee Legislature. The Supreme Court of the United States took
jurisdiction of the controversy for the reasons above quoted and sustained the Act of 1899
as a revenue law. 
The case of Tennessee vs. Sneed (96 U.S., 69), and Shelton vs. Platt (139 U.S., 591),
relied upon in our former opinion, were not cited in General Oil Co. vs. Crain, supra,
because the questions presented and the statutes under consideration were entirely
different. The Act approved March 31, 1873, expressly prohibits the courts from restraining
the collection of any tax, leaving the dissatisfied taxpayer to his exclusive remedy —
prohibits suits against the State. 
In upholding the statute which authorizes the removal of signboards or billboards upon the
sole ground that they are offensive to the sight, we recognized the fact that we are not in
harmony with various state courts in the American Union. We have just examined the
decision of the Supreme Court of the State of Illinois in the recent case (October
[December], 1914) of Thomas Cusack Co. vs. City of Chicago (267 Ill., 344), wherein the
court upheld the validity of a municipal ordinances, which reads as follows: "707. Frontage
construct any bill-board or sign-board in any block on any public street in which one-half of
the buildings on both sides of the street are used exclusively for residence purposes,
without first obtaining the consent, in writing, of the owners or duly authorized agents of
said owners owning a majority of the frontage of the property, on both sides of the street,
in the block in which such bill-board or sign-board is to be erected, constructed or located.
Such written consent shall be filed with the commissioner of buildings before a permit shall
be issued for the erection, construction or location of such bill-board or sign-board." 
The evidence which the Illinois court relied upon was the danger of fires, the fact that The motion for a rehearing is therefore denied.
billboards promote the commission of various immoral and filthy acts by disorderly
persons, and the inadequate police protection furnished to residential districts. The last
objection has no virtue unless one or the other of the other objections are valid. If the
billboard industry does, in fact, promote such municipal evils to noticeable extent, it seems
a curious inconsistency that a majority of the property owners on a given block may
legalize the business. However, the decision is undoubtedly a considerable advance over
the views taken by other high courts in the United States and distinguishes several Illinois
decisions. It is an advance because it permits the suppression of billboards where they are
undesirable. The ordinance which the court approved will no doubt cause the virtual
suppression of the business in the residential districts. Hence, it is recognized that under
certain circumstances billboards may be suppressed as an unlawful use of private
property. Logically, it would seem that the premise of fact relied upon is not very solid.
Objections to the billboard upon police, sanitary, and moral grounds have been, as pointed
out by counsel for Churchill and Tait, duly considered by numerous high courts in the
United States, and, with one exception, have been rejected as without foundation. The
exception is the Supreme Court of Missouri, which advances practically the same line of
reasoning as has the Illinois court in this recent case. (St. Louis Gunning Advt. Co. vs. City
of St. Louis, 137 S. W., 929.) In fact, the Illinois court, in Haller Sign Works vs. Physical
Culture Training School (249 Ill., 436), "distinguished" in the recent case, said: "There is
nothing inherently dangerous to the health or safety of the public in structures that are
properly erected for advertising purposes." 

If a billboard is so constructed as to offer no room for objections on sanitary or moral

grounds, it would seem that the ordinance above quoted would have to be sustained upon
the very grounds which we have advanced in sustaining our own statute. 

It might be well to note that billboard legislation in the United States is attempting to
eradicate a business which has already been firmly established. This business was
allowed to expand unchecked until its very extent called attention to its objectionable
features. In the Philippine Islands such legislation has almost anticipated the business,
which is not yet of such proportions that it can be said to be fairly established. It may be
that the courts in the United States have committed themselves to a course of decisions EN BANC 
with respect to billboard advertising, the full consequences of which were not perceived for
the reason that the development of the business has been so recent that the objectionable G.R. No. L-12172             August 29, 1958
features of it did not present themselves clearly to the courts nor to the people. We, in this
country, have the benefit of the experience of the people of the United States and may THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,  vs.
make our legislation preventive rather than corrective. There are in this country, moreover, JUAN F. FAJARDO, ET AL., defendants-appellants.
on every hand in those districts where Spanish civilization has held sway for so many
centuries, examples of architecture now belonging to a past age, and which are attractive REYES, J. B. L., J.:
not only to the residents of the country but to visitors. If the billboard industry is permitted
without constraint or control to hide these historic sites from the passerby, the country will
Appeal from the decision of the Court of First Instance of Camarines Sur convicting
be less attractive to the tourist and the people will suffer a district economic loss. 
defendants-appellants Juan F. Fajardo and Pedro Babilonia of a violation of Ordinance
No. 7, Series of 1950, of the Municipality of Baao, Camarines Sur, for having constructed
without a permit from the municipal mayor a building that destroys the view of the public
plaza.
It appears that on August 15, 1950, during the incumbency of defendant-appellant Juan F.
Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council
passed the ordinance in question providing as follows:
SECTION 1. Any person or persons who will construct or repair a building should,
before constructing or repairing, obtain a written permit from the Municipal Mayor.
SEC. 2. A fee of not less than P2.00 should be charged for each building permit
and P1.00 for each repair permit issued.
SEC. 3. PENALTY — Any violation of the provisions of the above, this ordinance,
shall make the violation liable to pay a fine of not less than P25 nor more than P50
or imprisonment of not less than 12 days nor more than 24 days or both, at the
discretion of the court. If said building destroys the view of the Public Plaza or
occupies any public property, it shall be removed at the expense of the owner of
the building or house.
SEC. 4. EFFECTIVITY — This ordinance shall take effect on its approval. (Orig.
Recs., P. 3)
Four years later, after the term of appellant Fajardo as mayor had expired, he and his son
in-law, appellant Babilonia, filed a written request with the incumbent municipal mayor for
a permit to construct a building adjacent to their gasoline station on a parcel of land
registered in Fajardo's name, located along the national highway and separated from the
public plaza by a creek (Exh. D). On January 16, 1954, the request was denied, for the
reason among others that the proposed building would destroy the view or beauty of the
public plaza (Exh. E). On January 18, 1954, defendants reiterated their request for a
building permit (Exh. 3), but again the request was turned down by the mayor.
Whereupon, appellants proceeded with the construction of the building without a permit,
because they needed a place of residence very badly, their former house having been
destroyed by a typhoon and hitherto they had been living on leased property.
On February 26, 1954, appellants were charged before and convicted by the justice of the
peace court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants
appealed to the Court of First Instance, which affirmed the conviction, and sentenced
appellants to pay a fine of P35 each and the costs, as well as to demolish the building in
question because it destroys the view of the public plaza of Baao, in that "it hinders the
view of travelers from the National Highway to the said public plaza." From this decision,
the accused appealed to the Court of Appeals, but the latter forwarded the records to us
because the appeal attacks the constitutionality of the ordinance in question.
We find that the appealed conviction can not stand.
A first objection to the validity of the ordinance in question is that under it the mayor has
absolute discretion to issue or deny a permit. The ordinance fails to state any policy, or to
set up any standard to guide or limit the mayor's action. No purpose to be attained by
requiring the permit is expressed; no conditions for its grant or refusal are enumerated. It
is not merely a case of deficient standards; standards are entirely lacking. The ordinance
thus confers upon the mayor arbitrary and unrestricted power to grant or deny the
issuance of building permits, and it is a settled rule that such an undefined and unlimited
delegation of power to allow or prevent an activity, per se lawful, is invalid (People vs.
Vera, 65 Phil., 56; Primicias vs. Fugoso, 80 Phil., 71; Schloss Poster Adv. Co. vs. Rock
Hill, 2 SE (2d) 392)
The ordinance in question in no way controls or guides the discretion vested
thereby in the respondents. It prescribes no uniform rule upon which the special
permission of the city is to be granted. Thus the city is clothed with the
uncontrolled power to capriciously grant the privilege to some and deny it others;
to refuse the application of one landowner or lessee and to grant that of another,
when for all material purposes, the two applying for precisely the same privileges
under the same circumstances. The danger of such an ordinance is that it makes
possible arbitrary discriminations and abuses in its execution, depending upon no
conditions or qualifications whatever, other than the unregulated arbitrary will of
the city authorities as the touchstone by which its validity is to be tested.
Fundamental rights under our government do not depend for their existence upon
such a slender and uncertain thread. Ordinances which thus invest a city council
with a discretion which is purely arbitrary, and which may be exercised in the
interest of a favored few, are unreasonable and invalid. The ordinance should have
established a rule by which its impartial enforcement could be secured. All of the
authorities cited above sustain this conclusion.
As was said in City of Richmond vs. Dudley, 129 Ind. 112,28 N. E. 312, 314 13 L.
R. A. 587, 28 Am. St. Rep. 180: "It seems from the foregoing authorities to be well
established that municipal ordinances placing restrictions upon lawful conduct or
the lawful use of property must, in order to be valid, specify the rules and
conditions to be observed in such conduct or business; and must admit of the
 exercise of the privilege of all citizens alike who will comply with such rules and ownership therein. Regardless of the opinion of zealots that property may properly,
conditions; and must not admit of the exercise, or of an opportunity for the by zoning, be utterly destroyed without compensation, such principle finds no
exercise, of any arbitrary discrimination by the municipal authorities between support in the genius of our government nor in the principles of justice as we
citizens who will so comply. (Schloss Poster Adv. Co., Inc. vs. City of Rock Hill, et known them. Such a doctrine shocks the sense of justice. If it be of public benefit
al., 2 SE (2d), pp. 394-395). that property remain open and unused, then certainly the public, and not the
private individuals, should bear the cost of reasonable compensation for such
It is contended, on the other hand, that the mayor can refuse a permit solely in case that property under the rules of law governing the condemnation of private property for
the proposed building "destroys the view of the public plaza or occupies any public public use. (Tews vs. Woolhiser (1933) 352 I11. 212, 185 N.E. 827) (Emphasis
property" (as stated in its section 3); and in fact, the refusal of the Mayor of Baao to issue supplied.)
a building permit to the appellant was predicated on the ground that the proposed building
would "destroy the view of the public plaza" by preventing its being seen from the public The validity of the ordinance in question was justified by the court below under section
highway. Even thus interpreted, the ordinance is unreasonable and oppressive, in that it 2243, par. (c), of the Revised Administrative Code, as amended. This section provides:
operates to permanently deprive appellants of the right to use their own property; hence, it
oversteps the bounds of police power, and amounts to a taking of appellants property SEC. 2243. Certain legislative powers of discretionary character. — The municipal
without just compensation. We do not overlook that the modern tendency is to regard the council shall have authority to exercise the following discretionary powers:
beautification of neighborhoods as conducive to the comfort and happiness of residents.
But while property may be regulated in the interest of the general welfare, and in its xxx     xxx     xxx
pursuit, the State may prohibit structures offensive to the sight (Churchill and Tait vs.
Rafferty, 32 Phil. 580), the State may not, under the guise of police power, permanently
(c) To establish fire limits in populous centers, prescribe the kinds of buildings that
divest owners of the beneficial use of their property and practically confiscate them solely
may be constructed or repaired within them, and issue permits for the creation or
to preserve or assure the aesthetic appearance of the community. As the case now
repair thereof, charging a fee which shall be determined by the municipal council
stands, every structure that may be erected on appellants' land, regardless of its own
and which shall not be less than two pesos for each building permit and one peso
beauty, stands condemned under the ordinance in question, because it would interfere
for each repair permit issued. The fees collected under the provisions of this
with the view of the public plaza from the highway. The appellants would, in effect, be
subsection shall accrue to the municipal school fund.
constrained to let their land remain idle and unused for the obvious purpose for which it is
best suited, being urban in character. To legally achieve that result, the municipality must
give appellants just compensation and an opportunity to be heard. Under the provisions of the section above quoted, however, the power of the municipal
council to require the issuance of building permits rests upon its first establishing fire limits
in populous parts of the town and prescribing the kinds of buildings that may be
An ordinance which permanently so restricts the use of property that it can not be
constructed or repaired within them. As there is absolutely no showing in this case that the
used for any reasonable purpose goes, it is plain, beyond regulation and must be
municipal council had either established fire limits within the municipality or set standards
recognized as a taking of the property. The only substantial difference, in such
for the kind or kinds of buildings to be constructed or repaired within them before it passed
case, between restriction and actual taking, is that the restriction leaves the owner
the ordinance in question, it is clear that said ordinance was not conceived and
subject to the burden of payment of taxation, while outright confiscation would
promulgated under the express authority of sec. 2243 (c) aforequoted.
relieve him of that burden. (Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR.
1110, 1116).
We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the
Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to
A regulation which substantially deprives an owner of all beneficial use of his
enact, and is therefore null and void. Hence, the conviction of herein appellants is
property is confiscation and is a deprivation within the meaning of the 14th
reversed, and said accused are acquitted, with costs de oficio. So ordered.
Amendment. (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny, 177
NE 412; Taylor vs. Jacksonville, 133 So. 114).

Zoning which admittedly limits property to a use which can not reasonably be
made of it cannot be said to set aside such property to a use but constitutes the
taking of such property without just compensation. Use of property is an element of
 ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS,
ENTITY OR CORPORATION ENGAGED IN THE BUSINESS OF
SELLING ADMISSION TICKETS TO ANY MOVIE OR OTHER PUBLIC
EXHIBITIONS, GAMES, CONTESTS OR OTHER PERFORMANCES TO
REQUIRE CHILDREN BETWEEN SEVEN (7) AND TWELVE (12) YEARS
OF AGE TO PAY FULL PAYMENT FOR TICKETS INTENDED FOR
ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF THE SAID
TICKET 

xxx xxx xxx

Be it ordained by the Municipal Board of the City of Butuan in session

assembled, that: 

SECTION 1—It shall be unlawful for any person, group of persons, entity,

or corporation engaged in the business of selling admission tickets to any
movie or other public exhibitions, games, contests, or other performances
to require children between seven (7) and twelve (12) years of age to pay
full payment for admission tickets intended for adults but should charge
only one-half of the value of the said tickets. 

SECTION 2—Any person violating the provisions of this Ordinance shall

upon conviction be punished by a fine of not less than TWO HUNDRED
PESOS (P200.00) but not more than SIX HUNDRED PESOS (P600.00) or
an imprisonment of not less than TWO (2) MONTHS or not more than SIX
(6) MONTHS or both such firm and imprisonment in the discretion of the
Court. 

If the violator be a firm or corporation the penalty shall be imposed upon

EN BANC  G.R. No. L-38429 June 30, 1988 the Manager, Agent or Representative of such firm or corporation. 

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners- SECTION 3—This ordinance shall take effect upon its approval.
appellants, vs. COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN
CITY, Branch 11, and the CITY OF BUTUAN, respondents-appellees Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the
Maya and Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively.
GANCAYCO, J.: Aggrieved by the effect of Ordinance No. 640, they filed a complaint before the Court of
First Instance of Agusan del Norte and Butuan City docketed as Special Civil Case No.
At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640 passed by the Municipal
237 on June 30, 1969 praying, inter alia, that the subject ordinance be declared
Board of the City of Butuan on April 21, 1969, the title and text of which are reproduced below:  unconstitutional and, therefore, void and unenforceable. 1

ORDINANCE--640
Upon motion of the petitioners,   a temporary restraining order was issued on July 14,
2
1969 by the court a quo enjoining the respondent City of Butuan and its officials from
enforcing Ordinance No. 640.   On July 29, 1969, respondents filed their answer sustaining
3
the validity of the ordinance.4
On January 30, 1973, the litigants filed their stipulation of facts.   On June 4, 1973, the
5
respondent court rendered its decision,   the dispositive part of which reads: 
6
IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in
favor of the respondents and against the petitioners, as follows: 
1. Declaring Ordinance No. 640 of the City of Butuan constitutional and
valid: Provided, however, that the fine for a single offense shall not exceed
TWO HUNDRED PESOS, as prescribed in the aforequoted Section 15
(nn) of Rep. Act No. 523;  necessary to carry into effect and discharge the powers and duties
2. Dissolving the restraining order issued by this Court; and;
3. Dismissing the complaint, with costs against the petitioners. 
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration   of the decision of the court a quo which
8
was denied in a resolution of the said court dated November 10, 1973. 9
Hence, this petition. 
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds
that it is ultra vires and an invalid exercise of police power.  of fixing the prices of admission to these places. Previous decisions of this Court involved
Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board
to enact as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of
Butuan, which states:  fees have been held to be invalid for these impositions were considered as not merely
Sec. 15. General powers and duties of the Board — Except as otherwise
provided by law, and subject to the conditions and limitations thereof, the
Municipal Board shall have the following legislative powers:
xxx xxx xxx
(n) To regulate and fix the amount of the license fees for the following; . . .
theaters, theatrical performances, cinematographs, public exhibitions and
all other performances and places of amusements ... 
xxx xxx xxx
Respondent City of Butuan, on the other hand, attempts to justify the enactment of the
ordinance by invoking the general welfare clause embodied in Section 15 (nn) of the cited
law, which provides: 
(nn) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion
of the morality, peace, good order, comfort, convenience, and general
welfare of the city and its inhabitants, and such others as may be
conferred by this Act, and to fix the penalties for the violation of the
ordinances, which shall not exceed a two hundred peso fine or six months
imprisonment, or both such fine and imprisonment, for a single offense. 
We can see from the aforecited Section 15(n) that the power to regulate and fix the
amount of license fees for theaters, theatrical performances, cinematographs, public
exhibitions and other places of amusement has been expressly granted to the City of
Butuan under its charter. But the question which needs to be resolved is this: does this
power to regulate include the authority to interfere in the fixing of prices of admission to
these places of exhibition and amusement whether under its general grant of power or
under the general welfare clause as invoked by the City? 
This is the first time this Court is confronted with the question of direct interference by the
local government with the operation of theaters, cinematographs and the like to the extent
the power to impose license fees upon businesses of this nature as a corollary to the
power of the local government to regulate them. Ordinances which required moviehouses
or theaters to increase the price of their admission tickets supposedly to cover the license
license fees but taxes for purposes of revenue and not regulation which the cities have no
power to exact,   unless expressly granted by its charter. 
10 11
Applying the ruling in Kwong Sing v. City of Manila,   where the word "regulate" was
12
interpreted to include the power to control, to govern and to restrain, it would seem that
under its power to regulate places of exhibitions and amusement, the Municipal Board of
the City of Butuan could make proper police regulations as to the mode in which the
business shall be exercised. 
While in a New York case,   an ordinance which regulates the business of selling
13
admission tickets to public exhibitions or performances by virtue of the power of cities
under the General City Law "to maintain order, enforce the laws, protect property and
preserve and care for the safety, health, comfort and general welfare of the inhabitants of
the city and visitors thereto; and for any of said purposes, to regulate and license
occupations" was considered not to be within the scope of any duty or power implied in the
charter. It was held therein that the power of regulation of public exhibitions and places of
amusement within the city granted by the charter does not carry with it any authority to
interfere with the price of admission to such places or the resale of tickets or tokens of
admission.
In this jurisdiction, it is already settled that the operation of theaters, cinematographs and
other places of public exhibition are subject to regulation by the municipal council in the
exercise of delegated police power by the local government.   Thus, in People v.
14
Chan,   an ordinance of the City of Manila prohibiting first run cinematographs from selling
15
tickets beyond their seating capacity was upheld as constitutional for being a valid
exercise of police power. Still in another case,   the validity of an ordinance of the City of
16
Bacolod prohibiting admission of two or more persons in moviehouses and other
amusement places with the use of only one ticket was sustained as a valid regulatory
police measure not only in the interest of preventing fraud in so far as municipal taxes are
concerned but also in accordance with public health, public safety, and the general
welfare.  price of admission for their children is too financially burdensome.
The City of Butuan, apparently realizing that it has no authority to enact the ordinance in
question under its power to regulate embodied in Section 15(n), now invokes the police
power as delegated to it under the general welfare clause to justify the enactment of said
ordinance.  size, children between the ages of seven and twelve cannot fully grasp the nuance of
To invoke the exercise of police power, not only must it appear that the interest of the
public generally requires an interference with private rights, but the means adopted must
be reasonably necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.   The legislature may not, under the guise of protecting the
17
public interest, arbitrarily interfere with private business, or impose unusual and
unnecessary restrictions upon lawful occupations. In other words, the determination as to
what is a proper exercise of its police power is not final or conclusive, but is subject to the
supervision of the courts. 18
Petitioners maintain that Ordinance No. 640 violates the due process clause of the
Constitution for being oppressive, unfair, unjust, confiscatory, and an undue restraint of
trade, and violative of the right of persons to enter into contracts, considering that the
theater owners are bound under a contract with the film owners for just admission prices
for general admission, balcony and lodge.  welfare, and a reasonable relation must exist between purposes and means.  The evident
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of
Manila,   this Court held: 
19
The authority of municipal corporations to regulate is essentially police
power, Inasmuch as the same generally entails a curtailment of the liberty,
the rights and/or the property of persons, which are protected and even
guaranteed by the Constitution, the exercise of police power is necessarily
subject to a qualification, limitation or restriction demanded by the regard,
the respect and the obedience due to the prescriptions of the fundamental
law, particularly those forming part of the Constitution of Liberty, otherwise
known as the Bill of Rights — the police power measure must be
reasonable. In other words, individual rights may be adversely affected by
the exercise of police power to the extent only — and only to the extent--
that may be fairly required by the legitimate demands of public interest or
public welfare. 
What is the reason behind the enactment of Ordinance No. 640? 
A reading of the minutes of the regular session of the Municipal Board when the ordinance
in question was passed shows that a certain Councilor Calo, the proponent of the
measure, had taken into account the complaints of parents that for them to pay the full
The trial court advances the view that "even if the subject ordinance does not spell out
its raison d'etre in all probability the respondents were impelled by the awareness that
children are entitled to share in the joys of their elders, but that considering that, apart from
movies or other public exhibitions, games, contests or other performances, the admission
prices with respect to them ought to be reduced.  a  19
We must bear in mind that there must be public necessity which demands the adoption of
proper measures to secure the ends sought to be attained by the enactment of the
ordinance, and the large discretion is necessarily vested in the legislative authority to
determine not only what the interests of the public require, but what measures are
necessary for the protection of such interests.   The methods or means used to protect the
20
public health, morals, safety or welfare, must have some relation to the end in view, for
under the guise of the police power, personal rights and those pertaining to private
property will not be permitted to be arbitralily invaded by the legislative department.  21
We agree with petitioners that the ordinance is not justified by any necessity for the public
interest. The police power legislation must be firmly grounded on public interest and
22
purpose of the ordinance is to help ease the burden of cost on the part of parents who
have to shell out the same amount of money for the admission of their children, as they
would for themselves, A reduction in the price of admission would mean corresponding
savings for the parents; however, the petitioners are the ones made to bear the cost of
these savings. The ordinance does not only make the petitioners suffer the loss of
earnings but it likewise penalizes them for failure to comply with it. Furthermore, as
petitioners point out, there will be difficulty in its implementation because as already
experienced by petitioners since the effectivity of the ordinance, children over 12 years of
age tried to pass off their age as below 12 years in order to avail of the benefit of the
ordinance. The ordinance does not provide a safeguard against this undesirable practice
and as such, the respondent City of Butuan now suggests that birth certificates be
exhibited by movie house patrons to prove the age of children. This is, however, not at all
practicable. We can see that the ordinance is clearly unreasonable if not unduly
oppressive upon the business of petitioners. Moreover, there is no discernible relation
between the ordinance and the promotion of public health, safety, morals and the general
welfare.  an admission ticket as against the right of the state to interfere in this regard and which
Respondent City of Butuan claims that it was impelled to protect the youth from the
pernicious practice of movie operators and other public exhibitions promoters or the like of
demanding equal price for their admission tickets along with the adults. This practice is
allegedly repugnant and unconscionable to the interest of the City in the furtherance of the
prosperity, peace, good order, comfort, convenience and the general well-being of its
inhabitants.  right, Positive or conditional, as the case may be, according to the terms of the original
There is nothing pernicious in demanding equal price for both children and adults. The
petitioners are merely conducting their legitimate businesses. The object of every business
entrepreneur is to make a profit out of his venture. There is nothing immoral or injurious in
charging the same price for both children and adults. In fact, no person is under
compulsion to purchase a ticket. It is a totally voluntary act on the part of the purchaser if
he buys a ticket to such performances.  of property.
Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to
lessen the economic burden of parents whose minor children are lured by the attractive
nuisance being maintained by the petitioners. Respondent further alleges that by charging
the full price, the children are being exploited by movie house operators. We fail to see
how the children are exploited if they pay the full price of admission. They are treated with
the same quality of entertainment as the adults. The supposition of the trial court that
because of their age children cannot fully grasp the nuances of such entertainment as
adults do fails to convince Us that the reduction in admission ticket price is justifiable. In
fact, by the very claim of respondent that movies and the like are attractive nuisances, it is
difficult to comprehend why the municipal board passed the subject ordinance. How can
the municipal authorities consider the movies an attractive nuisance and yet encourage
parents and children to patronize them by lowering the price of admission for children?
Perhaps, there is some ,truth to the argument of petitioners that Ordinance No. 640 is
detrimental to the public good and the general welfare of society for it encourages children
of tender age to frequent the movies, rather than attend to their studies in school or be in
their homes. 
Moreover, as a logical consequence of the ordinance, movie house and theater operators
will be discouraged from exhibiting wholesome movies for general patronage, much less
children's pictures if only to avoid compliance with the ordinance and still earn profits for
themselves. For after all, these movie house and theater operators cannot be compelled to
exhibit any particular kind of film except those films which may be dictated by public
demand and those which are restricted by censorship laws. So instead of children being
able to share in the joys of their elders as envisioned by the trial court, there will be a
dearth of wholesome and educational movies for them to enjoy. 
There are a number of cases decided by the Supreme Court and the various state courts
of the United States which upheld the right of the proprietor of a theater to fix the price of
We consider applicable to the case at bar. 
A theater ticket has been described to be either a mere license, revocable at the will of the
proprietor of the theater or it may be evidence of a contract whereby, for a valuable
consideration, the purchaser has acquired the right to enter the theater and observe the
performance on condition that he behaves properly.   Such ticket, therefore, represents a
23
contract of sale. This right is clearly a right of property. The ticket which represents that
right is also, necessarily, a species of property. As such, the owner thereof, in the absence
of any condition to the contrary in the contract by which he obtained it, has the clear right
to dispose of it, to sell it to whom he pleases and at such price as he can obtain.   So that
24
an act prohibiting the sale of tickets to theaters or other places of amusement at more than
the regular price was held invalid as conflicting with the state constitution securing the right
 
25
In Collister vs. Hayman,   it was held: 
26
The defendants were conducting a private business, which, even if clothed
with a public interest, was without a franchise to accommodate the public,
and they had the right to control it, the same as the proprietors of any other
business, subject to such obligations as were placed upon them by statute.
Unlike a carrier of passengers, for instance, with a franchise from the state,
and hence under obligation to transport anyone who applies and to
continue the business year in and year out, the proprietors of a theater can
open and close their place at will, and no one can make a lawful complaint.
They can charge what they choose for admission to their theater. They can
limit the number admitted. They can refuse to sell tickets and collect the
price of admission at the door. They can preserve order and enforce quiet
 while the performance is going on. They can make it a part of the contract
and condition of admission, by giving due notice and printing the condition
in the ticket that no one shall be admitted under 21 years of age, or that
men only or women only shall be admitted, or that a woman cannot enter
unless she is accompanied by a male escort, and the like. The proprietors,
in the control of their business, may regulate the terms of admission in any
reasonable way. If those terms are not satisfactory, no one is obliged to
buy a ticket or make the contract. If the terms are satisfactory, and the
contract is made, the minds of the parties meet upon the condition, and the
purchaser impliedly promises to perform it.  power, the same must be resolved in the negative. While it is true that a business may be
In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton,   the United States
27
Supreme Court held:  amounting to an arbitrary interference with the business or calling subject of regulation. A
... And certainly a place of entertainment is in no legal sense a public utility;
and quite as certainly, its activities are not such that their enjoyment can be
regarded under any conditions from the point of view of an emergency.  legitimate and lawful exercise by the citizens of their property rights.  The right of the
The interest of the public in theaters and other places of entertainment may
be more nearly, and with better reason, assimilated to the like interest in
provision stores and markets and in the rental of houses and apartments
for residence purposes; although in importance it fails below such an
interest in the proportion that food and shelter are of more moment than
amusement or instruction. As we have shown there is no legislative power
to fix the prices of provisions or clothing, or the rental charges for houses
and apartments, in the absence of some controlling emergency; and we
are unable to perceive any dissimilarities of such quality or degree as to
justify a different rule in respect of amusements and entertainment ...  appears on the face of the ordinance itself or is established by proper evidence.  The
We are in consonance with the foregoing observations and conclusions of American
courts. In this jurisdiction, legislation had been passed controlling the prices of goods
commodities and drugs during periods of emergency,  limiting the net profits of public
28
utility   as well as regulating rentals of residential apartments for a limited period,  as a
29 30
matter of national policy in the interest of public health and safety, economic security and
the general welfare of the people. And these laws cannot be impugned as unconstitutional
for being violative of the due process clause.  of the property and personal rights of citizens. For being unreasonable and an undue
However, the same could not be said of theaters, cinematographs and other exhibitions. In
no sense could these businesses be considered public utilities. The State has not found it
appropriate as a national policy to interfere with the admission prices to these
performances. This does not mean however, that theaters and exhibitions are not affected
with public interest even to a certain degree. Motion pictures have been considered
important both as a medium for the communication of Ideas and expression of the artistic
impulse. Their effects on the perceptions by our people of issues and public officials or
public figures as well as the prevailing cultural traits are considerable.  People of all ages
31
flock to movie houses, games and other public exhibitions for recreation and relaxation.
The government realizing their importance has seen it fit to enact censorship laws to
regulate the movie industry.   Their aesthetic entertainment and even educational values
32
cannot be underestimated. Even police measures regulating the operation of these
businesses have been upheld in order to safeguard public health and safety. 
Nonetheless, as to the question of the subject ordinance being a valid exercise of police
regulated, it is equally true that such regulation must be within the bounds of reason, that
is, the regulatory ordinance must be reasonable, and its provisions cannot be oppressive
lawful business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power.  A police measure for the regulation
33
of the conduct, control and operation of a business should not encroach upon the
34
owner to fix a price at which his property shall be sold or used is an inherent attribute of
the property itself and, as such, within the protection of the due process clause."" Hence,
the proprietors of a theater have a right to manage their property in their own way, to fix
what prices of admission they think most for their own advantage, and that any person
who did not approve could stay away.  36
Respondent City of Butuan argues that the presumption is always in favor of the validity of
the ordinance. This maybe the rule but it has already been held that although the
presumption is always in favor of the validity or reasonableness of the ordinance, such
presumption must nevertheless be set aside when the invalidity or unreasonableness
37
exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy
or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 38
Ordinance No. 640 clearly invades the personal and property rights of petitioners for even
if We could assume that, on its face, the interference was reasonable, from the foregoing
considerations, it has been fully shown that it is an unwarranted and unlawful curtailment
restraint of trade, it cannot, under the guise of exercising police power, be upheld as valid. 
WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby
REVERSED and SET ASIDE and a new judgment is hereby rendered declaring Ordinance
No. 640 unconstitutional and, therefore, null and void. This decision is immediately
executory. 
SO ORDERED.
EN BANC
[G.R. NO. 148339 : February 23, 2005]
LUCENA GRAND CENTRAL TERMINAL, INC., Petitioner, v. JAC LINER,
INC., Respondent.
DECISION
CARPIO MORALES, J.:
Respondent, JAC Liner, Inc., a common carrier operating buses which ply
various routes to and from Lucena City, assailed, via a petition for prohibition
and injunction1 against the City of Lucena, its Mayor, and the Sangguniang
Panlungsod of Lucena before the Regional Trial Court (RTC) of Lucena City,
City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground
that, inter alia, the same constituted an invalid exercise of police power, an
undue taking of private property, and a violation of the constitutional
prohibition against monopolies. The salient provisions of the ordinances are:
Ordinance No. 1631 2 out-of-town passenger jeepneys is hereby regulated as follows:
AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A
FRANCHISE TO CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND MAINTAIN
A COMMON BUS-JEEPNEY TERMINAL FACILITY IN THE CITY OF LUCENA
xxx
SECTION 1. 'There is hereby granted to the Lucena Grand Central Terminal,
Inc., its successors or assigns, hereinafter referred to as the "grantee", a
franchise to construct, finance, establish, operate, and maintain a common
bus-jeepney terminal facility in the City of Lucena.
SECTION 2. 'This franchise shall continue for a period of twenty-five years,
counted from the approval of this Ordinance, and renewable at the option of
the grantee for another period of twenty-five (25) years upon such expiration.
xxx
SECTION 4. 'Responsibilities and Obligations of the City Government of
Lucena. 'During the existence of the franchise, the City Government of Lucena
shall have the following responsibilities and obligations:
xxx
(c) It shall not grant any third party any privilege and/or concession to operate
a bus, mini-bus and/or jeepney terminal.
xxx
Ordinance No. 17783
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL
BUSES, MINI-BUSES AND OUT-OF-TOWN PASSENGER JEEPNEYS AND FOR
THIS PURPOSE, AMENDING ORDINACE NO. 1420, SERIES OF 1993, AND
ORDINANCE NO. 1557, SERIES OF 1995
xxx
SECTION 1. 'The entrance to the City of Lucena of all buses, mini-buses and
(a) All buses, mini-buses and out-of-town passenger jeepneys shall
be prohibited from entering the city and are hereby directed to proceed to
the common terminal, for picking-up and/or dropping of their passengers.
(b) All temporary terminals in the City of Lucena are hereby declared
inoperable starting from the effectivity of this ordinance.
xxx
SECTION 3. 'a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby
amended to read as follows:
Buses, mini-buses, and jeepney type mini-buses from other municipalities
and/or local government units going to Lucena City are directed to proceed to
the Common Terminal located at Diversion Road, Brgy. Ilayang Dupay, to
unload and load passengers.
xxx
c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read
as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other
municipalities and/or local government units shall utilize the facilities of the
Lucena Grand Central Terminal at Diversion Road, Brgy. Ilayang Dupay, this
City, and no other terminals shall be situated inside or within the City
of Lucena;
d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to
read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other
municipalities and/or local government units shall avail of the facilities of the
Lucena Grand Central Terminal which is hereby designated as the officially
sanctioned common terminal for the City of Lucena;
e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read
as follows:
The Lucena Grand Central Terminal is the permanent commonterminal  finance, establish, operate and maintain common bus-jeepney terminal facility
as this is the entity which was given the exclusivefranchise by the San
gguniang Panglungsod under Ordinance No. 1631; (Emphasis and
underscoring supplied) ςrαlαωlιbrαrÿ
These ordinances, by granting an exclusive franchise for twenty five years,
renewable for another twenty five years, to one entity for the construction and
operation of one common bus and jeepney terminal facility in Lucena City, to
be located outside the city proper, were professedly aimed towards alleviating
the traffic congestion alleged to have been caused by the existence of various
bus and jeepney terminals within the city, as the "Explanatory Note"-Whereas
Clause adopting Ordinance No. 1778 states:
WHEREAS, in line with the worsening traffic condition of the City of Lucena,
and with the purpose of easing and regulating the flow of the same, it is
imperative that the Buses, Mini-Buses and out-of-town jeepneys be prohibited
from maintaining terminals within the City, but instead directing to proceed to
the Lucena Grand Central Terminal for purposes of picking-up and/or dropping
off their passengers;4
Respondent, who had maintained a terminal within the city, was one of those
affected by the ordinances.
Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the
grantee of the exclusive franchise for the operation of the common
terminal,5 was allowed to intervene in the petition before the trial court. 
In the hearing conducted on November 25, 1998, all the parties agreed to
dispense with the presentation of evidence and to submit the case for
resolution solely on the basis of the pleadings filed.6
By Order of March 31, 1999,7 Branch 54 of the Lucena RTC rendered
judgment, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered,
as follows:
1. Declaring City Ordinance No. 1631 as valid, having been issued in the
exercise of the police power of the City Government of Lucena insofar as the
grant of franchise to the Lucena Grand Central Terminal, Inc., to construct,
in the City of Lucena;
2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to
the effect that the City Government shall not grant any third party any
privilege and/or concession to operate a bus, mini-bus and/or jeepney
terminal, as illegal and ultra vires because it contravenes the provisions of
Republic Act No. 7160, otherwise known as "The Local Government Code";
3. Declaring City Ordinance No. 1778 as null and void, the same being also an
ultra vires act of the City Government of Lucena arising from an invalid,
oppressive and unreasonable exercise of the police power, more specifically,
declaring illegal [sections 1(b), 3(c) and 3(e)];
4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing the
respondents public officials, the City Mayor and the Sangguniang Panglungsod
of Lucena, to cease and desist from implementing Ordinance No. 1778
insofar as said ordinance prohibits or curtails petitioner from
maintaining and operating its own bus terminalsubject to the conditions
provided for in Ordinance No. 1557, Sec. 3, which authorizes the construction
of terminal outside the poblacion of Lucena City; and likewise, insofar as said
ordinance directs and compels the petitioner to use the Lucena Grand
Central Terminal Inc., and furthermore, insofar as it declares that no
other terminals shall be situated, constructed, maintained or
established inside or within the City of Lucena; and furthermore,
5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central
Terminal Inc., dated October 19, 1998, is hereby DENIED for lack of merit.
SO ORDERED. (Emphasis and underscoring supplied)8
Petitioner's Motion for Reconsideration9 of the trial court's order having been
denied by Order of August 6, 1999,10 it elevated it via Petition for Review
under Rule 45 before this Court.11 This Court, by Resolution of November 24,
1999,12 referred the petition to the Court of Appeals with which it has
concurrent jurisdiction, no special and important reason having been cited for
it to take cognizance thereof in the first instance.
By Decision of December 15, 2000,13 the appellate court dismissed the petition
and affirmed the challenged orders of the trial court. Its motion for
reconsideration14 having been denied by the appellate court by Resolution
dated June 5, 2001,15 petitioner once again comes to this Court via Petition for
Review ,16 this time assailing the Decision and Resolution of the Court of
Appeals.
Decision on the petition hinges on two issues, to wit: (1) whether the trial
court has jurisdiction over the case, it not having furnished the Office of the
Solicitor General copy of the orders it issued therein, and (2) whether the City
of Lucena properly exercised its police power when it enacted the subject
ordinances.
Petitioner argues that since the trial court failed to serve a copy of its assailed
orders upon the Office of the Solicitor General, it never acquired jurisdiction
over the case, it citing Section 22, Rule 3 of the Rules which provides:
SEC. 22. Notice to the Solicitor General. In any action involving the validity of
any treaty, law, ordinance, executive order, presidential decree, rules or
regulations, the court in its discretion, may require the appearance of the
Solicitor General who may be heard in person or through representative duly
designated by him. (Emphasis and underscoring supplied) ςrαlαωlιbrαrÿ
Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which
respectively provide:
SEC. 3. Notice on Solicitor General. - In any action which involves
the validity of a statute, executive order or regulation, or any other
governmental regulation, the Solicitor General shall be notified by the party
assailing the same and shall be entitled to be heard upon such question.
SEC. 4. Local government ordinances. - In any action involving the validity of a
local government ordinance, the corresponding prosecutor or attorney of the
local government unit involved shall be similarly notified and entitled to be
heard. If such ordinance is alleged to be unconstitutional, the Solicitor
General shall also be notified and entitled to be heard. (Emphasis and
underscoring supplied) ςrαlαωlιbrαrÿ
Nowhere, however, is it stated in the above-quoted rules that failure to notify
the Solicitor General about the action is a jurisdictional defect.
In fact, Rule 3, Section 22 gives the courts in any action involving the
"validity" of any ordinance, inter alia, "discretion" to notify the Solicitor
General.
Section 4 of Rule 63, which more specifically deals with cases assailing
the constitutionality, not just the validity, of a local government ordinance,
directs that the Solicitor General "shall also be notified and entitled to be
heard." Who will notify him, Sec. 3 of the same rule provides - it is the party
which is assailing the local government's ordinance.
More importantly, however, this Court finds that no procedural defect, fatal or
otherwise, attended the disposition of the case. For respondent actually served
a copy of its petition upon the Office of the Solicitor General on October 1,
1998, two days after it was filed. The Solicitor General has issued a
Certification to that effect.17 There was thus compliance with above-quoted
rules.
Respecting the issue of whether police power was properly exercised when the
subject ordinances were enacted: As with the State, the local government may
be considered as having properly exercised its police power only if the
following requisites are met: (1) the interests of the public generally, as
distinguished from those of a particular class, require the interference of the
State, and (2) the means employed are reasonably necessary for the
attainment of the object sought to be accomplished and not unduly oppressive
upon individuals. Otherwise stated, there must be a concurrence of a lawful
subject and lawful method.18
That traffic congestion is a public, not merely a private, concern, cannot be
gainsaid. In Calalang v. Williams19 which involved a statute authorizing the
Director of Public Works to promulgate rules and regulations to regulate and
control traffic on national roads, this Court held:
In enacting said law, therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was inspired by a
desire to relieve congestion of traffic, which is, to say the least, a menace to
public safety. Public welfare, then, lies at the bottom of the enactment of said
law, and the state in order to promote the general welfare may interfere with
personal liberty, with property, and with business and
occupations.20 (Emphasis supplied) Ï‚rαlαωlιbrαrÿ
The questioned ordinances having been enacted with the objective of relieving
traffic congestion in the City of Lucena, they involve public interest warranting
the interference of the State. The first requisite for the proper exercise of
police power is thus present.
Respondent's suggestion to have this Court look behind the explicit objective
of the ordinances which, to it, was actually to benefit the private interest of
petitioner by coercing all bus operators to patronize its terminal does not
lie.21 Lim v. Pacquing22 instructs:
. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to
benefit a select group which was later given authority to operate the jai-alai
under PD No. 810. The examination of legislative motivation is generally
prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per
Black, J.) There is, in the first place, absolute lack of evidence to support ADC's
allegation of improper motivation in the issuance of PD No. 771. In the second
place, as already averred, this Court cannot go behind the expressed and
proclaimed purposes of PD No. 771, which are reasonable and even laudable.
(Underscoring supplied)23
This leaves for determination the issue of whether the means employed by the
Lucena Sangguniang Panlungsod to attain its professed objective were
reasonably necessary and not unduly oppressive upon individuals.
With the aim of localizing the source of traffic congestion in the city to a single
location,24 the subject ordinances prohibit the operation of all bus and jeepney
terminals within Lucena, including those already existing, and allow the
operation of only one common terminal located outside the city proper, the
franchise for which was granted to petitioner. The common carriers plying
routes to and from Lucena City are thus compelled to close down their existing
terminals and use the facilities of petitioner.
In De la Cruz v. Paras,25 this Court declared unconstitutional an ordinance
characterized by overbreadth. In that case, the Municipality of Bocaue, Bulacan
prohibited the operation of all night clubs, cabarets and dance halls within its
jurisdiction for the protection of public morals. Held the Court:
It cannot be said that such a sweeping exercise of a lawmaking power byBocau
e could qualify under the term reasonable. The objective of fosteringpublic mor
als, a worthy and desirable end can be attained by a measurethat does not enc
ompass too wide a field. Certainly the ordinance on itsface is characterized by 
overbreadth. The purpose sought to be achievedcould have been attained by r
easonable restrictions rather than by anabsolute prohibition. The admonition in
Salaveria should be heeded: "The Judiciary should not lightly set aside
legislative action when there is not a clear invasion of personal or property
rights under the guise of police regulation." It is clear that in the guise of a
police regulation, there was in this instance a clear invasion of personal or
property rights, personal in the case of those individuals desirous of
patronizing those night clubs and property in terms of the investments made
and salaries to be earned by those therein employed. (Underscoring supplied)26
In Lupangco v. Court of Appeals,27 this Court, in declaring unconstitutional the
resolution subject thereof, advanced a similar consideration. That case
involved a resolution issued by the Professional Regulation Commission which
prohibited examinees from attending review classes and receiving handout
materials, tips, and the like three days before the date of examination in order
to preserve the integrity and purity of the licensure examinations in
accountancy. Besides being unreasonable on its face and violative of academic
freedom, the measure was found to be more sweeping than what was
necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that
the alleged leakages in the licensure examinations will be eradicated or at least
minimized. Making the examinees suffer by depriving them of legitimate
means of review or preparation on those last three precious days when they
should be refreshing themselves with all that they have learned in the review
classes and preparing their mental and psychological make-up for the
examination day itself - would be like uprooting the tree to get rid of a
rotten branch. What is needed to be done by the respondent is to find
out the source of such leakages and stop it right there. If corrupt
officials or personnel should be terminated from their loss, then so be it. Fixers
or swindlers should be flushed out. Strict guidelines to be observed by
examiners should be set up and if violations are committed, then licenses
should be suspended or revoked. x x x (Emphasis and underscoring supplied)28
As in De la Cruz29 and Lupangco,30 the ordinances assailed herein are
characterized by overbreadth. They go beyond what is reasonably necessary to
solve the traffic problem. Additionally, since the compulsory use of the
terminal operated by petitioner would subject the users thereof to fees, rentals
and charges, such measure is unduly oppressive, as correctly found by the
appellate court.31 What should have been done was to determine exactly where
the problem lies and then to stop it right there.
The true role of Constitutional Law is to effect an equilibrium between
authority and liberty so that rights are exercised within the framework of the
law and the laws are enacted with due deference to rights. (Underscoring
supplied)32
A due deference to the rights of the individual thus requires a more careful
formulation of solutions to societal problems.
From the memorandum33 filed before this Court by petitioner, it is gathered
that the Sangguniang Panlungsod had identified the cause of traffic congestion
to be the indiscriminate loading and unloading of passengers by buses on the
streets of the city proper, hence, the conclusion that the terminals contributed
to the proliferation of buses obstructing traffic on the city streets. 
Bus terminals per se do not, however, impede or help impede the flow of
traffic. How the outright proscription against the existence of all terminals,
apart from that franchised to petitioner, can be considered as reasonably
necessary to solve the traffic problem, this Court has not been enlightened. If
terminals lack adequate space such that bus drivers are compelled to load and
unload passengers on the streets instead of inside the terminals, then
reasonable specifications for the size of terminals could be instituted, with
permits to operate the same denied those which are unable to meet the
specifications.
In the subject ordinances, however, the scope of the proscription against the
maintenance of terminals is so broad that even entities which might be able to
provide facilities better than the franchised terminal are barred from operating
at all.
Petitioner argues, however, that other solutions for the traffic problem have
already been tried but proven ineffective. But the grant of an exclusive
franchise to petitioner has not been shown to be the only solution to the
problem.
While the Sangguniang Panlungsod, via Ordinance No. 1557,34 previously
directed bus owners and operators to put up their terminals "outside the
poblacion of Lucena City," petitioner informs that said ordinance only resulted
in the relocation of terminals to other well-populated barangays, thereby
giving rise to traffic congestion in those areas.35 Assuming that information to
be true, the Sangguniang Panlungsod was not without remedy. It could have
defined, among other considerations, in a more precise manner, the area of
relocation to avoid such consequences.
As for petitioner's argument that the challenged ordinances were enacted
pursuant to the power of the Sangguniang Panlungsod to "[r]egulate traffic on
all streets and bridges; prohibit encroachments or obstacles thereon and, when
necessary in the interest of public welfare, authorize the removal of
encroachments and illegal constructions in public places":36 Absent any
showing, nay allegation, that the terminals are encroaching upon public roads,
they are not obstacles. The buses which indiscriminately load and unload its reasonableness, not its effectiveness, which bears upon its constitutionality.
passengers on the city streets are. The power then of the Sangguniang If the constitutionality of a law were measured by its effectiveness, then even
Panlungsod to prohibit encroachments and obstacles does not extend to tyrannical laws may be justified whenever they happen to be effective.
terminals.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The Court is not unaware of the resolutions of various barangays in Lucena

Neither are terminals public nuisances as petitioner argues. For their operation
is a legitimate business which, by itself, cannot be said to be injurious to the
rights of property, health, or comfort of the community.
But even assuming that terminals are nuisances due to their alleged indirect
effects upon the flow of traffic, at most they are nuisance per accidens, not per
se.
Unless a thing is nuisance per se, however, it may not be abated via an
ordinance, without judicial proceedings, as was done in the case at bar.
City supporting the establishment of a common terminal, and similar
expressions of support from the private sector, copies of which were submitted
to this Court by petitioner. The weight of popular opinion, however, must be
balanced with that of an individual's rights.
There is no question that not even the strongest moral conviction or the most
urgent public need, subject only to a few notable exceptions, will excuse the
bypassing of an individual's rights. It is no exaggeration to say that a person
invoking a right guaranteed under Article III of the Constitution is a majority of
one even as against the rest of the nation who would deny him that right.40

In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held: WHEREFORE, the petition is hereby DENIED.

Respondents can not seek cover under the general welfare clause authorizing SO ORDERED.
the abatement of nuisances without judicial proceedings. That tenet applies to
a nuisance per se, or one which affects the immediate safety of persons and
property and may be summarily abated under the undefined law of necessity
(Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the
quonset building is a legitimate business. By its nature, it can not be said to be
injurious to rights of property, of health or of comfort of the community. If it
be a nuisance per accidens it may be so proven in a hearing conducted for that
purpose. It is not per se a nuisance warranting its summary abatement
without judicial intervention. ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

(Underscoring supplied)38  ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-

municipality similarly argued that the terminal involved therein is a nuisance
that may be abated by the Municipal Council via an ordinance, this Court held:
"Suffice it to say that in the abatement of nuisances the provisions of the Civil
Code (Articles 694-707) must be observed and followed. This appellant failed
to do."
EN BANC
As for petitioner's claim that the challenged ordinances have actually been
proven effective in easing traffic congestion: Whether an ordinance is effective [G.R. NO. 180906 : October 7, 2008]
is an issue different from whether it is reasonably necessary. It is
 THE SECRETARY OF NATIONAL DEFENSE, THE CHIEF OF STAFF,
ARMED FORCES OF THE PHILIPPINES, Petitioners, v. RAYMOND
MANALO and REYNALDO MANALO, Respondents.
DECISION
PUNO, C.J.:
While victims of enforced disappearances are separated from the rest of
the world behind secret walls, they are not separated from the
constitutional protection of their basic rights. The constitution is an
overarching sky that covers all in its protection. The case at bar involves
the rights to life, liberty and security in the first petition for a writ
of Amparo filed before this Court.
This is an appeal via Petition for Review under Rule 45 of the Rules of Court
in relation to Section 191 of the Rule on the Writ of Amparo, seeking to
reverse and set aside on both questions of fact and law, the Decision
promulgated by the Court of Appeals in C.A. G.R. AMPARO No. 00001,
entitled "Raymond Manalo and Reynaldo Manalo, petitioners, v. The
Secretary of National Defense, the Chief of Staff, Armed Forces of the
Philippines, respondents."
This case was originally a Petition for Prohibition, Injunction, and
Temporary Restraining Order (TRO)2 filed before this Court by herein
respondents (therein petitioners) on August 23, 2007 to stop herein
petitioners (therein respondents) and/or their officers and agents from
depriving them of their right to liberty and other basic rights. Therein
petitioners also sought ancillary remedies, Protective Custody Orders,
Appointment of Commissioner, Inspection and Access Orders, and all other
legal and equitable reliefs under Article VIII, Section 5(5)3 of the 1987
Constitution and Rule 135, Section 6 of the Rules of Court. In our
Resolution dated August 24, 2007, we (1) ordered the Secretary of the
Department of National Defense and the Chief of Staff of the AFP, their
agents, representatives, or persons acting in their stead, including but not
limited to the Citizens Armed Forces Geographical Unit (CAFGU) to submit
their Comment; and (2) enjoined them from causing the arrest of therein
petitioners, or otherwise restricting, curtailing, abridging, or depriving them
of their right to life, liberty, and other basic rights as guaranteed under
Article III, Section 14 of the 1987 Constitution.5
While the August 23, 2007 Petition was pending, the Rule on the Writ
of Amparo took effect on October 24, 2007. Forthwith, therein petitioners
filed a Manifestation and Omnibus Motion to Treat Existing Petition
as Amparo Petition, to Admit Supporting Affidavits, and to Grant Interim
and Final Amparo Reliefs. They prayed that: (1) the petition be considered
a Petition for the Writ of Amparo under Sec. 266 of the Amparo Rule; (2)
the Court issue the writ commanding therein respondents to make a
verified return within the period provided by law and containing the specific
matter required by law; (3) they be granted the interim reliefs allowed by
the Amparo Rule and all other reliefs prayed for in the petition but not
covered by the Amparo Rule; (4) the Court, after hearing, render judgment
as required in Sec. 187 of the Amparo Rule; and (5) all other just and
equitable reliefs.8
On October 25, 2007, the Court resolved to treat the August 23, 2007
Petition as a petition under the Amparo Rule and further resolved, viz:
WHEREFORE, let a WRIT OF AMPARO be issued to respondents requiring
them to file with the CA (Court of Appeals) a verified written return within
five (5) working days from service of the writ. We REMAND the petition to
the CA and designate the Division of Associate Justice Lucas P. Bersamin to
conduct the summary hearing on the petition on November 8, 2007 at 2:00
p.m. and decide the petition in accordance with the Rule on the Writ
of Amparo.9
On December 26, 2007, the Court of Appeals rendered a decision in favor
of therein petitioners (herein respondents), the dispositive portion of which
reads, viz:
ACCORDINGLY, the PRIVILEGE OF THE WRIT OF
AMPARO is GRANTED.
The respondents SECRETARY OF NATIONAL DEFENSE and AFP CHIEF
OF STAFF are hereby REQUIRED:
1. To furnish to the petitioners and to this Court within five days from
notice of this decision all official and unofficial reports of the investigation
undertaken in connection with their case, except those already on file
herein;
2. To confirm in writing the present places of official assignment of M/Sgt
Hilario aka Rollie Castillo and Donald Caigas within five days from notice of
this decision.
3. To cause to be produced to this Court all medical reports, records and
charts, reports of any treatment given or recommended and medicines
prescribed, if any, to the petitioners, to include a list of medical and (sic)
personnel (military and civilian) who attended to them from February 14,
2006 until August 12, 2007 within five days from notice of this decision.
The compliance with this decision shall be made under the signature and
oath of respondent AFP Chief of Staff or his duly authorized deputy, the
latter's authority to be express and made apparent on the face of the
sworn compliance with this directive.
SO ORDERED.10
Hence, this appeal. In resolving this appeal, we first unfurl the facts as
alleged by herein respondents:
Respondent Raymond Manalo recounted that about one or two weeks
before February 14, 2006, several uniformed and armed soldiers and
members of the CAFGU summoned to a meeting all the residents of
their barangay in San Idelfonso, Bulacan. Respondents were not able to
attend as they were not informed of the gathering, but Raymond saw some
of the soldiers when he passed by the barangay hall.11
On February 14, 2006, Raymond was sleeping in their house in Buhol na
Mangga, San Ildefonso, Bulacan. At past noon, several armed soldiers
wearing white shirts, fatigue pants and army boots, entered their house
and roused him. They asked him if he was Bestre, but his mother, Ester
Manalo, replied that he was Raymond, not Bestre. The armed soldier
slapped him on both cheeks and nudged him in the stomach. He was then
handcuffed, brought to the rear of his house, and forced to the ground face
down. He was kicked on the hip, ordered to stand and face up to the light,
then forcibly brought near the road. He told his mother to follow him, but
three soldiers stopped her and told her to stay.12
Among the men who came to take him, Raymond recognized brothers
Michael de la Cruz, Madning de la Cruz, "Puti" de la Cruz, and "Pula" de la
Cruz, who all acted as lookout. They were all members of the CAFGU and
residing in Manuzon, San Ildefonso, Bulacan. He also recognized brothers
Randy Mendoza and Rudy Mendoza, also members of the CAFGU. While he
was being forcibly taken, he also saw outside of his house
two barangay councilors, Pablo Cunanan and Bernardo Lingasa, with some
soldiers and armed men.13
The men forced Raymond into a white L300 van. Once inside, he was
blindfolded. Before being blindfolded, he saw the faces of the soldiers who
took him. Later, in his 18 months of captivity, he learned their names. The
one who drove the van was Rizal Hilario alias Rollie Castillo, whom he
estimated was about 40 years of age or older. The leader of the team who
entered his house and abducted him was "Ganata." He was tall, thin, curly-
haired and a bit old. Another one of his abductors was "George" who was
tall, thin, white-skinned and about 30 years old.14
The van drove off, then came to a stop. A person was brought inside the
van and made to sit beside Raymond. Both of them were beaten up. On
the road, he recognized the voice of the person beside him as his brother
Reynaldo's. The van stopped several times until they finally arrived at a
house. Raymond and Reynaldo were each brought to a different room. With
the doors of their rooms left open, Raymond saw several soldiers
continuously hitting his brother Reynaldo on the head and other parts of his
body with the butt of their guns for about 15 minutes. After which,
Reynaldo was brought to his (Raymond's) room and it was his (Raymond's)
turn to be beaten up in the other room. The soldiers asked him if he was a
member of the New People's Army. Each time he said he was not, he was
hit with the butt of their guns. He was questioned where his comrades
were, how many soldiers he had killed, and how many NPA members he
had helped. Each time he answered none, they hit him.15
In the next days, Raymond's interrogators appeared to be high officials as
the soldiers who beat him up would salute them, call them "sir," and treat
them with respect. He was in blindfolds when interrogated by the high
officials, but he saw their faces when they arrived and before the blindfold
was put on. He noticed that the uniform of the high officials was different
from those of the other soldiers. One of those officials was tall and thin,
wore white pants, tie, and leather shoes, instead of combat boots. He
spoke in Tagalog and knew much about his parents and family, and
a habeas corpus case filed in connection with the respondents'
abduction.16 While these officials interrogated him, Raymond was not
manhandled. But once they had left, the soldier guards beat him up. When
the guards got drunk, they also manhandled respondents. During this time,
Raymond was fed only at night, usually with left-over and rotten food.17
On the third week of respondents' detention, two men arrived while
Raymond was sleeping and beat him up. They doused him with urine and
hot water, hit his stomach with a piece of wood, slapped his forehead twice
with a .45 pistol, punched him on the mouth, and burnt some parts of his
body with a burning wood. When he could no longer endure the torture and
could hardly breathe, they stopped. They then subjected Reynaldo to the
same ordeal in another room. Before their torturers left, they warned
Raymond that they would come back the next day and kill him.18
The following night, Raymond attempted to escape. He waited for the
guards to get drunk, then made noise with the chains put on him to see if
they were still awake. When none of them came to check on him, he
managed to free his hand from the chains and jumped through the window.
He passed through a helipad and firing range and stopped near a fishpond
where he used stones to break his chains. After walking through a forested
area, he came near a river and an Iglesia ni Kristo church. He talked to
some women who were doing the laundry, asked where he was and the
road to Gapan. He was told that he was in Fort Magsaysay.19 He reached
the highway, but some soldiers spotted him, forcing him to run away. The
soldiers chased him and caught up with him. They brought him to another
place near the entrance of what he saw was Fort Magsaysay. He was boxed
repeatedly, kicked, and hit with chains until his back bled. They poured
gasoline on him. Then a so-called "Mam" or "Madam" suddenly called,
saying that she wanted to see Raymond before he was killed. The soldiers
ceased the torture and he was returned inside Fort Magsaysay where
Reynaldo was detained.20
For some weeks, the respondents had a respite from all the torture. Their
wounds were treated. When the wounds were almost healed, the torture
resumed, particularly when respondents' guards got drunk.21
Raymond recalled that sometime in April until May 2006, he was detained
in a room enclosed by steel bars. He stayed all the time in that small room
measuring 1 x 2 meters, and did everything there, including urinating,
removing his bowels, bathing, eating and sleeping. He counted that
eighteen people22 had been detained in that bartolina, including his brother
Reynaldo and himself.23
For about three and a half months, the respondents were detained in Fort
Magsaysay. They were kept in a small house with two rooms and a kitchen.
One room was made into the bartolina. The house was near the firing
range, helipad and mango trees. At dawn, soldiers marched by their house.
They were also sometimes detained in what he only knew as the "DTU."24
At the DTU, a male doctor came to examine respondents. He checked their
body and eyes, took their urine samples and marked them. When asked
how they were feeling, they replied that they had a hard time urinating,
their stomachs were aching, and they felt other pains in their body. The
next day, two ladies in white arrived. They also examined respondents and
gave them medicines, including orasol, amoxicillin and mefenamic acid.
They brought with them the results of respondents' urine test and advised
them to drink plenty of water and take their medicine. The two ladies
returned a few more times. Thereafter, medicines were sent through the
"master" of the DTU, "Master" Del Rosario alias Carinyoso at Puti.
Respondents were kept in the DTU for about two weeks. While there, he
met a soldier named Efren who said that Gen. Palparan ordered him to
monitor and take care of them.25
One day, Rizal Hilario fetched respondents in a Revo vehicle. They, along
with Efren and several other armed men wearing fatigue suits, went to a
detachment in Pinaud, San Ildefonso, Bulacan. Respondents were detained
for one or two weeks in a big two-storey house. Hilario and Efren stayed
with them. While there, Raymond was beaten up by Hilario's men.26
From Pinaud, Hilario and Efren brought respondents to Sapang, San Miguel,
Bulacan on board the Revo. They were detained in a big unfinished house
inside the compound of "Kapitan" for about three months. When they
arrived in Sapang, Gen. Palparan talked to them. They were brought out of
the house to a basketball court in the center of the compound and made to
sit. Gen. Palparan was already waiting, seated. He was about two arms'
length away from respondents. He began by asking if respondents felt well
already, to which Raymond replied in the affirmative. He asked Raymond if
he knew him. Raymond lied that he did not. He then asked Raymond if he
would be scared if he were made to face Gen. Palparan. Raymond
responded that he would not be because he did not believe that Gen.
Palparan was an evil man.27
Raymond narrated his conversation with Gen. Palparan in his affidavit, viz:
Tinanong ako ni Gen. Palparan, "Ngayon na kaharap mo na ako, di ka ba
natatakot sa akin?"
Sumagot akong, "Siyempre po, natatakot din..."
Sabi ni Gen. Palparan: "Sige, bibigyan ko kayo ng isang pagkakataon na
mabuhay, basta't sundin n'yo ang lahat ng sasabihin ko... sabihin mo sa
magulang mo - huwag pumunta sa mga rali, sa hearing, sa Karapatan at sa
Human Right dahil niloloko lang kayo. Sabihin sa magulang at lahat sa
bahay na huwag paloko doon. Tulungan kami na kausapin si Bestre na
sumuko na sa gobyerno."28
Respondents agreed to do as Gen. Palparan told them as they felt they
could not do otherwise. At about 3:00 in the morning, Hilario, Efren and
the former's men - the same group that abducted them - brought them to
their parents' house. Raymond was shown to his parents while Reynaldo
stayed in the Revo because he still could not walk. In the presence of
Hilario and other soldiers, Raymond relayed to his parents what Gen.
Palparan told him. As they were afraid, Raymond's parents acceded. Hilario
threatened Raymond's parents that if they continued to join human rights
rallies, they would never see their children again. The respondents were
then brought back to Sapang.29
When respondents arrived back in Sapang, Gen. Palparan was about to
leave. He was talking with the four "masters" who were there: Arman,
Ganata, Hilario and Cabalse.30 When Gen. Palparan saw Raymond, he called
for him. He was in a big white vehicle. Raymond stood outside the vehicle
as Gen. Palparan told him to gain back his strength and be healthy and to
take the medicine he left for him and Reynaldo. He said the medicine was
expensive at Php35.00 each, and would make them strong. He also said
that they should prove that they are on the side of the military and warned
that they would not be given another chance.31 During his testimony,
Raymond identified Gen. Palparan by his picture.32
One of the soldiers named Arman made Raymond take the medicine left by
Gen. Palparan. The medicine, named "Alive," was green and yellow.
Raymond and Reynaldo were each given a box of this medicine and
instructed to take one capsule a day. Arman checked if they were getting
their dose of the medicine. The "Alive" made them sleep each time they
took it, and they felt heavy upon waking up.33
After a few days, Hilario arrived again. He took Reynaldo and left Raymond
at Sapang. Arman instructed Raymond that while in Sapang, he should
introduce himself as "Oscar," a military trainee from Sariaya, Quezon,
assigned in Bulacan. While there, he saw again Ganata, one of the men
who abducted him from his house, and got acquainted with other military
men and civilians.34
After about three months in Sapang, Raymond was brought to Camp
Tecson under the 24th Infantry Battalion. He was fetched by three
unidentified men in a big white vehicle. Efren went with them. Raymond
was then blindfolded. After a 30-minute ride, his blindfold was removed.
Chains were put on him and he was kept in the barracks.35
The next day, Raymond's chains were removed and he was ordered to
clean outside the barracks. It was then he learned that he was in a
detachment of the Rangers. There were many soldiers, hundreds of them
were training. He was also ordered to clean inside the barracks. In one of
the rooms therein, he met Sherlyn Cadapan from Laguna. She told him
that she was a student of the University of the Philippines and was
abducted in Hagonoy, Bulacan. She confided that she had been subjected
to severe torture and raped. She was crying and longing to go home and
be with her parents. During the day, her chains were removed and she was
made to do the laundry.36
After a week, Reynaldo was also brought to Camp Tecson. Two days from
his arrival, two other captives, Karen Empeño and Manuel Merino,
arrived. Karen and Manuel were put in the room with "Allan" whose name
they later came to know as Donald Caigas, called "master" or "commander"
by his men in the 24th Infantry Battalion. Raymond and Reynaldo were put
in the adjoining room. At times, Raymond and Reynaldo were threatened,
and Reynaldo was beaten up. In the daytime, their chains were removed,
but were put back on at night. They were threatened that if they escaped,
their families would all be killed.37
On or about October 6, 2006, Hilario arrived in Camp Tecson. He told the
detainees that they should be thankful they were still alive and should
continue along their "renewed life." Before the hearing of November 6 or 8,
2006, respondents were brought to their parents to instruct them not to
attend the hearing. However, their parents had already left for Manila.
Respondents were brought back to Camp Tecson. They stayed in that camp
from September 2006 to November 2006, and Raymond was instructed to
continue using the name "Oscar" and holding himself out as a military
trainee. He got acquainted with soldiers of the 24th Infantry Battalion
whose names and descriptions he stated in his affidavit.38
On November 22, 2006, respondents, along with Sherlyn, Karen, and
Manuel, were transferred to a camp of the 24th Infantry Battalion in Limay,
Bataan. There were many huts in the camp. They stayed in that camp until
May 8, 2007. Some soldiers of the battalion stayed with them. While there,
battalion soldiers whom Raymond knew as "Mar" and "Billy" beat him up
and hit him in the stomach with their guns. Sherlyn and Karen also
suffered enormous torture in the camp. They were all made to clean, cook,
and help in raising livestock.39
Raymond recalled that when "Operation Lubog" was launched, Caigas and
some other soldiers brought him and Manuel with them to take and kill all
sympathizers of the NPA. They were brought to Barangay Bayan-bayanan,
Bataan where he witnessed the killing of an old man doing kaingin. The
soldiers said he was killed because he had a son who was a member of the
NPA and he coddled NPA members in his house.40 Another time, in another
"Operation Lubog," Raymond was brought to Barangay Orion in a house
where NPA men stayed. When they arrived, only the old man of the house
who was sick was there. They spared him and killed only his son right
before Raymond's eyes.41
From Limay, Raymond, Reynaldo, Sherlyn, Karen, and Manuel were
transferred to Zambales, in a safehouse near the sea. Caigas and some of
his men stayed with them. A retired army soldier was in charge of the
house. Like in Limay, the five detainees were made to do errands and
chores. They stayed in Zambales from May 8 or 9, 2007 until June 2007.42
In June 2007, Caigas brought the five back to the camp in Limay.
Raymond, Reynaldo, and Manuel were tasked to bring food to detainees
brought to the camp. Raymond narrated what he witnessed and
experienced in the camp, viz:
Isang gabi, sinabihan kami ni Donald (Caigas) na matulog na kami. Nakita
ko si Donald na inaayos ang kanyang baril, at nilagyan ng silenser. Sabi ni
Donald na kung mayroon man kaming makita o marinig, walang nangyari.
Kinaumagahan, nakita naming ang bangkay ng isa sa mga bihag na dinala
sa kampo. Mayroong binuhos sa kanyang katawan at ito'y sinunog.
Masansang ang amoy.
Makaraan ang isang lingo, dalawang bangkay and ibinaba ng mga
unipormadong sundalo mula sa 6 x 6 na trak at dinala sa loob ng kampo.
May naiwang mga bakas ng dugo habang hinihila nila ang mga bangkay.
Naamoy ko iyon nang nililinis ang bakas.
Makalipas ang isa o dalawang lingo, may dinukot sila na dalawang Ita.
Itinali sila sa labas ng kubo, piniringan, ikinadena at labis na binugbog.
Nakita kong nakatakas ang isa sa kanila at binaril siya ng sundalo ngunit
hindi siya tinamaan. Iyong gabi nakita kong pinatay nila iyong isang Ita
malapit sa Post 3; sinilaban ang bangkay at ibinaon ito.
Pagkalipas ng halos 1 buwan, 2 pang bangkay ang dinala sa kampo.
Ibinaba ang mga bangkay mula sa pick up trak, dinala ang mga bangkay
sa labas ng bakod. Kinaumagahan nakita kong mayroong sinilaban, at
napakamasangsang ang amoy.
May nakilala rin akong 1 retiradong koronel at 1 kasama niya. Pinakain ko
sila. Sabi nila sa akin na dinukot sila sa Bataan. Iyong gabi, inilabas sila at
hindi ko na sila nakita.
xxx xxx xxx
Ikinadena kami ng 3 araw. Sa ikatlong araw, nilabas ni Lat si Manuel dahil
kakausapin daw siya ni Gen. Palparan. Nakapiring si Manuel, wala siyang
suot pang-itaas, pinosasan. Nilakasan ng mga sundalo ang tunog na galing
sa istiryo ng sasakyan. Di nagtagal, narinig ko ang hiyaw o ungol ni
Manuel. Sumilip ako sa isang haligi ng kamalig at nakita kong sinisilaban si
Manuel.
Kinaumagahan, naka-kadena pa kami. Tinanggal ang mga kadena mga 3 o
4 na araw pagkalipas. Sinabi sa amin na kaya kami nakakadena ay dahil
pinagdedesisyunan pa ng mga sundalo kung papatayin kami o hindi.
Tinanggal ang aming kadena. Kinausap kami ni Donald. Tinanong kami
kung ano ang sabi ni Manuel sa amin. Sabi ni Donald huwag na raw naming
hanapin ang dalawang babae at si Manuel, dahil magkakasama na yung
tatlo. Sabi pa ni Donald na kami ni Reynaldo ay magbagong buhay at ituloy
namin ni Reynaldo ang trabaho. Sa gabi, hindi na kami kinakadena.43
On or about June 13, 2007, Raymond and Reynaldo were brought to
Pangasinan, ostensibly to raise poultry for Donald (Caigas). Caigas told
respondents to also farm his land, in exchange for which, he would take
care of the food of their family. They were also told that they could farm a
small plot adjoining his land and sell their produce. They were no longer
put in chains and were instructed to use the names Rommel (for Raymond)
and Rod (for Reynaldo) and represent themselves as cousins from Rizal,
Laguna.44
Respondents started to plan their escape. They could see the highway from
where they stayed. They helped farm adjoining lands for which they were
paid Php200.00 or Php400.00 and they saved their earnings. When they
had saved Php1,000.00 each, Raymond asked a neighbor how he could get
a cellular phone as he wanted to exchange text messages with a girl who
lived nearby. A phone was pawned to him, but he kept it first and did not
use it. They earned some more until they had saved Php1,400.00 between
them.
There were four houses in the compound. Raymond and Reynaldo were
housed in one of them while their guards lived in the other three. Caigas
entrusted respondents to Nonong, the head of the guards. Respondents'
house did not have electricity. They used a lamp. There was no television,
but they had a radio. In the evening of August 13, 2007, Nonong and his
cohorts had a drinking session. At about 1:00 a.m., Raymond turned up
the volume of the radio. When none of the guards awoke and took notice,
Raymond and Reynaldo proceeded towards the highway, leaving behind
their sleeping guards and barking dogs. They boarded a bus bound for
Manila and were thus freed from captivity.45
Reynaldo also executed an affidavit affirming the contents of Raymond's
affidavit insofar as they related to matters they witnessed together.
Reynaldo added that when they were taken from their house on February
14, 2006, he saw the faces of his abductors before he was blindfolded with
his shirt. He also named the soldiers he got acquainted with in the 18
months he was detained. When Raymond attempted to escape from Fort
Magsaysay, Reynaldo was severely beaten up and told that they were
indeed members of the NPA because Raymond escaped. With a .45 caliber
pistol, Reynaldo was hit on the back and punched in the face until he could
no longer bear the pain.
At one point during their detention, when Raymond and Reynaldo were in
Sapang, Reynaldo was separated from Raymond and brought to Pinaud by
Rizal Hilario. He was kept in the house of Kapitan, a friend of Hilario, in a
mountainous area. He was instructed to use the name "Rodel" and to
represent himself as a military trainee from Meycauayan, Bulacan.
Sometimes, Hilario brought along Reynaldo in his trips. One time, he was
brought to a market in San Jose, del Monte, Bulacan and made to wait in
the vehicle while Hilario was buying. He was also brought to Tondo, Manila
where Hilario delivered boxes of "Alive" in different houses. In these trips,
Hilario drove a black and red vehicle. Reynaldo was blindfolded while still in
Bulacan, but allowed to remove the blindfold once outside the province. In
one of their trips, they passed by Fort Magsaysay and Camp Tecson where
Reynaldo saw the sign board, "Welcome to Camp Tecson."46
Dr. Benito Molino, M.D., corroborated the accounts of respondents
Raymond and Reynaldo Manalo. Dr. Molino specialized in forensic medicine
and was connected with the Medical Action Group, an organization handling
cases of human rights violations, particularly cases where torture was
involved. He was requested by an NGO to conduct medical examinations on
the respondents after their escape. He first asked them about their ordeal,
then proceeded with the physical examination. His findings showed that the
scars borne by respondents were consistent with their account of physical
injuries inflicted upon them. The examination was conducted on August 15,
2007, two days after respondents' escape, and the results thereof were
reduced into writing. Dr. Molino took photographs of the scars. He testified
that he followed the Istanbul Protocol in conducting the examination.47
Petitioners dispute respondents' account of their alleged abduction and
torture. In compliance with the October 25, 2007 Resolution of the Court,
they filed a Return of the Writ of Amparo admitting the abduction but
denying any involvement therein, viz:
13. Petitioners Raymond and Reynaldo Manalo were not at any time
arrested, forcibly abducted, detained, held incommunicado, disappeared or
under the custody by the military. This is a settled issue laid to rest in
the habeas corpus case filed in their behalf by petitioners' parents before
the Court of Appeals in C.A.-G.R. SP No. 94431 against M/Sgt. Rizal Hilario
aka Rollie Castillo, as head of the 24th Infantry Battalion; Maj. Gen. Jovito
Palparan, as Commander of the 7th Infantry Division in Luzon; Lt. Gen.
Hermogenes Esperon, in his capacity as the Commanding General of the
Philippine Army, and members of the Citizens Armed Forces Geographical
Unit (CAFGU), namely: Michael dela Cruz, Puti dela Cruz, Madning dela
Cruz, Pula dela Cruz, Randy Mendoza and Rudy Mendoza. The respondents
therein submitted a return of the writ... On July 4, 2006, the Court of
Appeals dropped as party respondents Lt. Gen. Hermogenes C. Esperon,
Jr., then Commanding General of the Philippine Army, and on September
19, 2006, Maj. (sic) Jovito S. Palparan, then Commanding General,
7th Infantry Division, Philippine Army, stationed at Fort Magsaysay, Palayan
City, Nueva Ecija, upon a finding that no evidence was introduced to
establish their personal involvement in the taking of the Manalo brothers.
In a Decision dated June 27, 2007..., it exonerated M/Sgt. Rizal Hilario aka
Rollie Castillo for lack of evidence establishing his involvement in any
capacity in the disappearance of the Manalo brothers, although it held that
the remaining respondents were illegally detaining the Manalo brothers and
ordered them to release the latter.48
Attached to the Return of the Writ was the affidavit of therein respondent
(herein petitioner) Secretary of National Defense, which attested that he
assumed office only on August 8, 2007 and was thus unaware of the
Manalo brothers' alleged abduction. He also claimed that:
7. The Secretary of National Defense does not engage in actual military
directional operations, neither does he undertake command directions of
the AFP units in the field, nor in any way micromanage the AFP operations.
The principal responsibility of the Secretary of National Defense is focused
in providing strategic policy direction to the Department (bureaus and
agencies) including the Armed Forces of the Philippines;
8. In connection with the Writ of Amparo issued by the Honorable Supreme
Court in this case, I have directed the Chief of Staff, AFP to institute
immediate action in compliance with Section 9(d) of the Amparo Rule and
to submit report of such compliance... Likewise, in a Memorandum
Directive also dated October 31, 2007, I have issued a policy directive
addressed to the Chief of Staff, AFP that the AFP should adopt the following
rules of action in the event the Writ of Amparo is issued by a competent
court against any members of the AFP:
(1) to verify the identity of the aggrieved party;
(2) to recover and preserve evidence related to the death or disappearance
of the person identified in the petition which may aid in the prosecution of
the person or persons responsible;
(3) to identify witnesses and obtain statements from them concerning the
death or disappearance;
(4) to determine the cause, manner, location and time of death or
disappearance as well as any pattern or practice that may have brought
about the death or disappearance;
(5) to identify and apprehend the person or persons involved in the death
or disappearance; and cralawlibrary
(6) to bring the suspected offenders before a competent court.49
Therein respondent AFP Chief of Staff also submitted his own affidavit,
attached to the Return of the Writ, attesting that he received the above
directive of therein respondent Secretary of National Defense and that
acting on this directive, he did the following:
3.1. As currently designated Chief of Staff, Armed Forces of the Philippines
(AFP), I have caused to be issued directive to the units of the AFP for the
purpose of establishing the circumstances of the alleged disappearance and
the recent reappearance of the petitioners.
3.2. I have caused the immediate investigation and submission of the
result thereof to Higher headquarters and/or direct the immediate conduct
of the investigation on the matter by the concerned unit/s, dispatching
Radio Message on November 05, 2007, addressed to the Commanding
General, Philippine Army (Info: COMNOLCOM, CG, 71D PA and CO 24 IB
PA). A Copy of the Radio Message is attached as ANNEX "3" of this
Affidavit.
3.3. We undertake to provide result of the investigations conducted or to
be conducted by the concerned unit relative to the circumstances of the
alleged disappearance of the persons in whose favor the Writ
of Amparo has been sought for as soon as the same has been furnished
Higher headquarters.
3.4. A parallel investigation has been directed to the same units relative to
another Petition for the Writ of Amparo (G.R. No. 179994) filed at the
instance of relatives of a certain Cadapan and Empeño pending before the
Supreme Court.
3.5. On the part of the Armed Forces, this respondent will exert earnest
efforts to establish the surrounding circumstances of the disappearances of
the petitioners and to bring those responsible, including any military
personnel if shown to have participated or had complicity in the
commission of the complained acts, to the bar of justice, when warranted
by the findings and the competent evidence that may be gathered in the
process.50
Also attached to the Return of the Writ was the affidavit of Lt. Col. Felipe
Anontado, INF (GSC) PA, earlier filed in G.R. No. 179994,
another Amparo case in this Court, involving Cadapan, Empeño and
Merino, which averred among others, viz:
10) Upon reading the allegations in the Petition implicating the 24th Infantry
Batallion detachment as detention area, I immediately went to the 24th IB
detachment in Limay, Bataan and found no untoward incidents in the area
nor any detainees by the name of Sherlyn Cadapan, Karen Empeño and
Manuel Merino being held captive;
11) There was neither any reports of any death of Manuel Merino in the
24th IB in Limay, Bataan;
12) After going to the 24th IB in Limay, Bataan, we made further inquiries
with the Philippine National Police, Limay, Bataan regarding the alleged
detentions or deaths and were informed that none was reported to their
good office;
13) I also directed Company Commander 1st Lt. Romeo Publico to inquire
into the alleged beachhouse in Iba, Zambales also alleged to be a detention
place where Sherlyn Cadapan, Karen Empeño and Manuel Merino were
detained. As per the inquiry, however, no such beachhouse was used as a
detention place found to have been used by armed men to detain Cadapan,
Empeño and Merino.51
It was explained in the Return of the Writ that for lack of sufficient time,
the affidavits of Maj. Gen Jovito S. Palparan (Ret.), M/Sgt. Rizal Hilario aka
Rollie Castillo, and other persons implicated by therein petitioners could not
be secured in time for the submission of the Return and would be
subsequently submitted.52
Herein petitioners presented a lone witness in the summary hearings, Lt.
Col. Ruben U. Jimenez, Provost Marshall, 7th Infantry Division, Philippine
Army, based in Fort Magsaysay, Palayan City, Nueva Ecija. The territorial
jurisdiction of this Division covers Nueva Ecija, Aurora, Bataan, Bulacan,
Pampanga, Tarlac and a portion of Pangasinan.53 The 24th Infantry Battalion
is part of the 7th Infantry Division.54
On May 26, 2006, Lt. Col. Jimenez was directed by the Commanding
General of the 7th Infantry Division, Maj. Gen. Jovito Palaran,55 through his
Assistant Chief of Staff,56 to investigate the alleged abduction of the
respondents by CAFGU auxiliaries under his unit, namely: CAA Michael de
la Cruz; CAA Roman de la Cruz, aka Puti; CAA Maximo de la Cruz, aka
Pula; CAA Randy Mendoza; ex-CAA Marcelo de la Cruz aka Madning; and a
civilian named Rudy Mendoza. He was directed to determine: (1) the
veracity of the abduction of Raymond and Reynaldo Manalo by the alleged
elements of the CAFGU auxiliaries; and (2) the administrative liability of
said auxiliaries, if any.57 Jimenez testified that this particular investigation
was initiated not by a complaint as was the usual procedure, but because
the Commanding General saw news about the abduction of the Manalo
brothers on the television, and he was concerned about what was
happening within his territorial jurisdiction.58
Jimenez summoned all six implicated persons for the purpose of having
them execute sworn statements and conducting an investigation on May
29, 2006.59 The investigation started at 8:00 in the morning and finished at
10:00 in the evening.60 The investigating officer, Technical Sgt. Eduardo
Lingad, took the individual sworn statements of all six persons on that day.
There were no other sworn statements taken, not even of the Manalo
family, nor were there other witnesses summoned and investigated61 as
according to Jimenez, the directive to him was only to investigate the six
persons.62
Jimenez was beside Lingad when the latter took the statements.63 The six
persons were not known to Jimenez as it was in fact his first time to meet
them.64 During the entire time that he was beside Lingad, a subordinate of
his in the Office of the Provost Marshall, Jimenez did not propound a single
question to the six persons.65
Jimenez testified that all six statements were taken on May 29, 2006, but
Marcelo Mendoza and Rudy Mendoza had to come back the next day to sign
their statements as the printing of their statements was interrupted by a
power failure. Jimenez testified that the two signed on May 30, 2006, but
the jurats of their statements indicated that they were signed on May 29,
2006.66 When the Sworn Statements were turned over to Jimenez, he
personally wrote his investigation report. He began writing it in the
afternoon of May 30, 2006 and finished it on June 1, 2006.67 He then gave
his report to the Office of the Chief of Personnel.68
As petitioners largely rely on Jimenez's Investigation Report dated June 1,
2006 for their evidence, the report is herein substantially quoted:
III. BACKGROUND OF THE CASE
4. This pertains to the abduction of RAYMOND MANALO and REYNALDO
MANALO who were forcibly taken from their respective homes in Brgy.
Buhol na Mangga, San Ildefonso, Bulacan on 14 February 2006 by
unidentified armed men and thereafter were forcibly disappeared. After the
said incident, relatives of the victims filed a case for Abduction in the civil
court against the herein suspects: Michael dela Cruz, Madning dela Cruz,
Puti Dela Cruz, Pula Dela Cruz, Randy Mendoza and Rudy Mendoza as
alleged members of the Citizen Armed Forces Geographical Unit (CAFGU).
a) Sworn statement of CAA Maximo F. dela Cruz, aka Pula dated 29 May
2006 in (Exhibit "B") states that he was at Sitio Mozon, Brgy. Bohol na
Mangga, San Ildefonso, Bulacan doing the concrete building of a church
located nearby his residence, together with some neighbor thereat. He
claims that on 15 February 2006, he was being informed by Brgy. Kagawad
Pablo Umayan about the abduction of the brothers Raymond and Reynaldo
Manalo. As to the allegation that he was one of the suspects, he claims that
they only implicated him because he was a CAFGU and that they claimed
that those who abducted the Manalo brothers are members of the Military
and CAFGU. Subject vehemently denied any participation or involvement
on the abduction of said victims.
b) Sworn statement of CAA Roman dela Cruz y Faustino Aka Puti dtd 29
May 2006 in (Exhibit "C") states that he is a resident of Sitio Muzon, Brgy.
Buhol na Mangga, San Ildefonso, Bulacan and a CAA member based at Biak
na Bato Detachment, San Miguel, Bulacan. He claims that Raymond and
Reynaldo Manalo being his neighbors are active members/sympathizers of
the CPP/NPA and he also knows their elder Rolando Manalo @ KA BESTRE
of being an NPA Leader operating in their province. That at the time of the
alleged abduction of the two (2) brothers and for accusing him to be one of
the suspects, he claims that on February 14, 2006, he was one of those
working at the concrete chapel being constructed nearby his residence. He
claims further that he just came only to know about the incident on other
day (15 Feb 06) when he was being informed by Kagawad Pablo Kunanan.
That subject CAA vehemently denied any participation about the incident
and claimed that they only implicated him because he is a member of the
CAFGU.
c) Sworn Statement of CAA Randy Mendoza y Lingas dated 29 May 2006 in
(Exhibit "O") states that he is a resident of Brgy. Buhol na Mangga, San
Ildefonso, Bulacan and a member of CAFGU based at Biak na Bato
Detachment. That being a neighbor, he was very much aware about the
background of the two (2) brothers Raymond and Reynaldo as active
supporters of the CPP NPA in their Brgy. and he also knew their elder
brother "KUMANDER BESTRE" TN: Rolando Manalo. Being one of the
accused, he claims that on 14 February 2006, he was at Brgy. Magmarate,
San Miguel, Bulacan in the house of his aunt and he learned only about the
incident when he arrived home in their place. He claims further that the
only reason why they implicated him was due to the fact that his mother
has filed a criminal charge against their brother Rolando Manalo @ KA
BESTRE who is an NPA Commander who killed his father and for that
reason they implicated him in support of their brother. Subject CAA
vehemently denied any involvement on the abduction of said Manalo
brothers.
d) Sworn Statement of Rudy Mendoza y Lingasa dated May 29, 2006 in
(Exhibit "E") states that he is a resident of Brgy. Marungko, Angat,
Bulacan. He claims that Raymond and Reynaldo Manalo are familiar to him
being his barriomate when he was still unmarried and he knew them since
childhood. Being one of the accused, he claims that on 14 February 2006,
he was at his residence in Brgy. Marungko, Angat, Bulacan. He claims that
he was being informed only about the incident lately and he was not aware
of any reason why the two (2) brothers were being abducted by alleged
members of the military and CAFGU. The only reason he knows why they
implicated him was because there are those people who are angry with
their family particularly victims of summary execution (killing) done by
their brother @ KA Bestre Rolando Manalo who is an NPA leader. He claims
further that it was their brother @ KA BESTRE who killed his father and he
was living witness to that incident. Subject civilian vehemently denied any
involvement on the abduction of the Manalo brothers.
e) Sworn statement of Ex-CAA Marcelo dala Cruz dated 29 May 2006 in
(Exhibit "F") states that he is a resident of Sitio Muzon, Brgy. Buhol na
Mangga, San Ildefonso, Bulacan, a farmer and a former CAA based at Biak
na Bato, San Miguel, Bulacan. He claims that Raymond and Reynaldo
Manalo are familiar to him being their barrio mate. He claims further that
they are active supporters of CPP/NPA and that their brother Rolando
Manalo @ KA BESTRE is an NPA leader. Being one of the accused, he
claims that on 14 February 2006, he was in his residence at Sitio Muzon,
Brgy. Buhol na Mangga, San Ildefonso, Bulacan. That he vehemently
denied any participation of the alleged abduction of the two (2) brothers
and learned only about the incident when rumors reached him by his barrio
mates. He claims that his implication is merely fabricated because of his
relationship to Roman and Maximo who are his brothers.
f) Sworn statement of Michael dela Cruz y Faustino dated 29 May 2006 in
(Exhibit "G") states that he is a resident of Sitio Muzon, Brgy. Buhol na
Mangga, San Ildefonso, Bulacan, the Chief of Brgy. Tanod and a CAFGU
member based at Biak na Bato Detachment, San Miguel, Bulacan. He
claims that he knew very well the brothers Raymond and Reynaldo Manalo
in their barangay for having been the Tanod Chief for twenty (20) years.
He alleged further that they are active supporters or sympathizers of the
CPP/NPA and whose elder brother Rolando Manalo @ KA BESTRE is an NPA
leader operating within the area. Being one of the accused, he claims that
on 14 Feb 2006 he was helping in the construction of their concrete chapel
in their place and he learned only about the incident which is the abduction
of Raymond and Reynaldo Manalo when one of the Brgy. Kagawad in the
person of Pablo Cunanan informed him about the matter. He claims further
that he is truly innocent of the allegation against him as being one of the
abductors and he considers everything fabricated in order to destroy his
name that remains loyal to his service to the government as a CAA
member.
IV. DISCUSSION
5. Based on the foregoing statements of respondents in this particular
case, the proof of linking them to the alleged abduction and disappearance
of Raymond and Reynaldo Manalo that transpired on 14 February 2006 at
Sitio Muzon, Brgy. Buhol na Mangga, San Ildefonso, Bulacan, is
unsubstantiated. Their alleged involvement theretofore to that incident is
considered doubtful, hence, no basis to indict them as charged in this
investigation.
Though there are previous grudges between each families (sic) in the past
to quote: the killing of the father of Randy and Rudy Mendoza by @ KA
BESTRE TN: Rolando Manalo, this will not suffice to establish a fact that
they were the ones who did the abduction as a form of revenge. As it was
also stated in the testimony of other accused claiming that the Manalos are
active sympathizers/supporters of the CPP/NPA, this would not also mean,
however, that in the first place, they were in connivance with the
abductors. Being their neighbors and as members of CAFGU's, they ought
to be vigilant in protecting their village from any intervention by the leftist
group, hence inside their village, they were fully aware of the activities of
Raymond and Reynaldo Manalo in so far as their connection with the
CPP/NPA is concerned.
V. CONCLUSION
6. Premises considered surrounding this case shows that the alleged
charges of abduction committed by the above named respondents has not
been established in this investigation. Hence, it lacks merit to indict them
for any administrative punishment and/or criminal liability. It is therefore
concluded that they are innocent of the charge.
VI. RECOMMENDATIONS
7. That CAAs Michael F. dela Cruz, Maximo F. Dela Cruz, Roman dela Cruz,
Randy Mendoza, and two (2) civilians Maximo F. Dela Cruz and Rudy L.
Mendoza be exonerated from the case.
8. Upon approval, this case can be dropped and closed.69
In this appeal under Rule 45, petitioners question the appellate court's
assessment of the foregoing evidence and assail the December 26, 2007
Decision on the following grounds, viz:
I.
THE COURT OF APPEALS SERIOUSLY AND GRIEVOUSLY ERRED IN
BELIEVING AND GIVING FULL FAITH AND CREDIT TO THE INCREDIBLE,
UNCORROBORATED, CONTRADICTED, AND OBVIOUSLY SCRIPTED,
REHEARSED AND SELF-SERVING AFFIDAVIT/TESTIMONY OF HEREIN
RESPONDENT RAYMOND MANALO.
II.
THE COURT OF APPEALS SERIOUSLY AND GRIEVOUSLY ERRED IN
REQUIRING RESPONDENTS (HEREIN PETITIONERS) TO: (A) FURNISH TO
THE MANALO BROTHER(S) AND TO THE COURT OF APPEALS ALL OFFICIAL
AND UNOFFICIAL REPORTS OF THE INVESTIGATION UNDERTAKEN IN
CONNECTION WITH THEIR CASE, EXCEPT THOSE ALREADY IN FILE WITH
THE COURT; (B) CONFIRM IN WRITING THE PRESENT PLACES OF OFFICIAL
ASSIGNMENT OF M/SGT. HILARIO aka ROLLIE CASTILLO AND DONALD
CAIGAS; AND (C) CAUSE TO BE PRODUCED TO THE COURT OF APPEALS
ALL MEDICAL REPORTS, RECORDS AND CHARTS, AND REPORTS OF ANY
TREATMENT GIVEN OR RECOMMENDED AND MEDICINES PRESCRIBED, IF
ANY, TO THE MANALO BROTHERS, TO INCLUDE A LIST OF MEDICAL
PERSONNEL (MILITARY AND CIVILIAN) WHO ATTENDED TO THEM FROM
FEBRUARY 14, 2006 UNTIL AUGUST 12, 2007.70
The case at bar is the first decision on the application of the Rule on the
Writ of Amparo (Amparo Rule). Let us hearken to its beginning.
The adoption of the Amparo Rule surfaced as a recurring proposition in the
recommendations that resulted from a two-day National Consultative
Summit on Extrajudicial Killings and Enforced Disappearances sponsored by
the Court on July 16-17, 2007. The Summit was "envisioned to provide a
broad and fact-based perspective on the issue of extrajudicial killings and
enforced disappearances,"71 hence "representatives from all sides of the
political and social spectrum, as well as all the stakeholders in the justice
system"72 participated in mapping out ways to resolve the crisis.
On October 24, 2007, the Court promulgated the Amparo Rule "in light of
the prevalence of extralegal killing and enforced disappearances."73 It was
an exercise for the first time of the Court's expanded power to promulgate
rules to protect our people's constitutional rights, which made its maiden
appearance in the 1987 Constitution in response to the Filipino experience
of the martial law regime.74 As the Amparo Rule was intended to address
the intractable problem of "extralegal killings" and "enforced
disappearances," its coverage, in its present form, is confined to these two
instances or to threats thereof. "Extralegal killings" are "killings committed
without due process of law, i.e., without legal safeguards or judicial
proceedings."75 On the other hand, "enforced disappearances" are
"attended by the following characteristics: an arrest, detention or
abduction of a person by a government official or organized groups or
private individuals acting with the direct or indirect acquiescence of the
government; the refusal of the State to disclose the fate or whereabouts of
the person concerned or a refusal to acknowledge the deprivation of liberty
which places such persons outside the protection of law."76
The writ of Amparo originated in Mexico. "Amparo" literally means
"protection" in Spanish.77 In 1837, de Tocqueville's Democracy in
America became available in Mexico and stirred great interest. Its
description of the practice of judicial review in the U.S. appealed to many
Mexican jurists.78 One of them, Manuel Crescencio Rejón, drafted a
constitutional provision for his native state, Yucatan,79 which granted
judges the power to protect all persons in the enjoyment of their
constitutional and legal rights. This idea was incorporated into the national
constitution in 1847, viz:
The federal courts shall protect any inhabitant of the Republic in the
exercise and preservation of those rights granted to him by this
Constitution and by laws enacted pursuant hereto, against attacks by the
Legislative and Executive powers of the federal or state governments,
limiting themselves to granting protection in the specific case in litigation,
making no general declaration concerning the statute or regulation that
motivated the violation.80
Since then, the protection has been an important part of Mexican
constitutionalism.81 If, after hearing, the judge determines that a
constitutional right of the petitioner is being violated, he orders the official,
or the official's superiors, to cease the violation and to take the necessary
measures to restore the petitioner to the full enjoyment of the right in
question. Amparo thus combines the principles of judicial review derived
from the U.S. with the limitations on judicial power characteristic of the
civil law tradition which prevails in Mexico. It enables courts to enforce the
constitution by protecting individual rights in particular cases, but prevents
them from using this power to make law for the entire nation.82
The writ of Amparo then spread throughout the Western Hemisphere,
gradually evolving into various forms, in response to the particular needs of
each country.83 It became, in the words of a justice of the Mexican Federal
Supreme Court, one piece of Mexico's self-attributed "task of conveying to
the world's legal heritage that institution which, as a shield of human
dignity, her own painful history conceived."84 What began as a protection
against acts or omissions of public authorities in violation of constitutional
rights later evolved for several purposes: (1) Amparo libertad for the
protection of personal freedom, equivalent to the habeas corpus writ;
(2) Amparo contra leyes for the judicial review of the constitutionality of
statutes; (3) Amparo casacion for the judicial review of the constitutionality
and legality of a judicial decision; (4) Amparo administrativo for the judicial
review of administrative actions; and (5) Amparo agrario for the protection
of peasants' rights derived from the agrarian reform process.85
In Latin American countries, except Cuba, the writ of Amparo has been
constitutionally adopted to protect against human rights abuses especially
committed in countries under military juntas. In general, these countries
adopted an all-encompassing writ to protect the whole gamut of
constitutional rights, including socio-economic rights.86 Other countries like
Colombia, Chile, Germany and Spain, however, have chosen to limit the
protection of the writ of Amparo only to some constitutional guarantees or
fundamental rights.87
In the Philippines, while the 1987 Constitution does not explicitly provide
for the writ of Amparo, several of the above Amparo protections are
guaranteed by our charter. The second paragraph of Article VIII, Section 1
of the 1987 Constitution, the Grave Abuse Clause, provides for the judicial
power "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 Clause accords a similar
general protection to human rights extended by the Amparo contra
leyes, Amparo casacion, and Amparo administrativo. Amparo libertad is
comparable to the remedy of habeas corpus found in several provisions of
the 1987 Constitution.88 The Clause is an offspring of the U.S. common law
tradition of judicial review, which finds its roots in the 1803 case
of Marbury v. Madison.89
While constitutional rights can be protected under the Grave Abuse Clause
through remedies of injunction or prohibition under Rule 65 of the Rules of
Court and a petition for habeas corpus under Rule 102,90 these remedies
may not be adequate to address the pestering problem of extralegal killings
and enforced disappearances. However, with the swiftness required to
resolve a petition for a writ of Amparo through summary proceedings and
the availability of appropriate interim and permanent reliefs under
the Amparo Rule, this hybrid writ of the common law and civil law
traditions - borne out of the Latin American and Philippine experience of
human rights abuses - offers a better remedy to extralegal killings and
enforced disappearances and threats thereof. The remedy provides rapid
judicial relief as it partakes of a summary proceeding that requires only
substantial evidence to make the appropriate reliefs available to the
petitioner; it is not an action to determine criminal guilt requiring proof
beyond reasonable doubt, or liability for damages requiring preponderance
of evidence, or administrative responsibility requiring substantial evidence
that will require full and exhaustive proceedings.91
The writ of Amparo serves both preventive and curative roles in addressing
the problem of extralegal killings and enforced disappearances. It is
preventive in that it breaks the expectation of impunity in the commission
of these offenses; it is curative in that it facilitates the subsequent
punishment of perpetrators as it will inevitably yield leads to subsequent
investigation and action. In the long run, the goal of both the preventive
and curative roles is to deter the further commission of extralegal killings
and enforced disappearances.
In the case at bar, respondents initially filed an action for "Prohibition,
Injunction, and Temporary Restraining Order"92 to stop petitioners and/or
their officers and agents from depriving the respondents of their right to
liberty and other basic rights on August 23, 2007,93 prior to the
promulgation of the Amparo Rule. They also sought ancillary remedies
including Protective Custody Orders, Appointment of Commissioner,
Inspection and Access Orders and other legal and equitable remedies under
Article VIII, Section 5(5) of the 1987 Constitution and Rule 135, Section 6
of the Rules of Court. When the Amparo Rule came into effect on October
24, 2007, they moved to have their petition treated as an Amparo petition
as it would be more effective and suitable to the circumstances of the
Manalo brothers' enforced disappearance. The Court granted their motion.
With this backdrop, we now come to the arguments of the petitioner.
Petitioners' first argument in disputing the Decision of the Court of Appeals
states, viz:
The Court of Appeals seriously and grievously erred in believing and giving
full faith and credit to the incredible uncorroborated, contradicted, and
obviously scripted, rehearsed and self-serving affidavit/testimony of herein
respondent Raymond Manalo.94
In delving into the veracity of the evidence, we need to mine and refine the
ore of petitioners' cause of action, to determine whether the evidence
presented is metal-strong to satisfy the degree of proof required.
Section 1 of the Rule on the Writ of Amparo provides for the following
causes of action, viz:
Section 1. Petition . - The petition for a writ of Amparo is a remedy
available to any person whose right to life, liberty and security is
violated or threatened with violation by an unlawful act or omission of
a public official or employee, or of a private individual or entity.
The writ shall cover extralegal killings and enforced disappearances or
threats thereof. (emphasis supplied) cralawlibrary
Sections 17 and 18, on the other hand, provide for the degree of proof
required, viz:
Sec. 17. Burden of Proof and Standard of Diligence Required. - The parties
shall establish their claims by substantial evidence.
xxx xxx xxx
Sec. 18. Judgment. - ... If the allegations in the petition are proven by
substantial evidence, the court shall grant the privilege of the writ and
such reliefs as may be proper and appropriate; otherwise, the privilege
shall be denied. (emphases supplied) cralawlibrary
Substantial evidence has been defined as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.95
After careful perusal of the evidence presented, we affirm the findings of
the Court of Appeals that respondents were abducted from their houses in
Sito Muzon, Brgy. Buhol na Mangga, San Ildefonso, Bulacan on February
14, 2006 and were continuously detained until they escaped on August 13,
2007. The abduction, detention, torture, and escape of the respondents
were narrated by respondent Raymond Manalo in a clear and convincing
manner. His account is dotted with countless candid details of respondents'
harrowing experience and tenacious will to escape, captured through his
different senses and etched in his memory. A few examples are the
following: "Sumilip ako sa isang haligi ng kamalig at nakita kong sinisilaban
si Manuel."96 "(N)ilakasan ng mga sundalo ang tunog na galing sa istiryo ng
sasakyan. Di nagtagal, narinig ko ang hiyaw o ungol ni Manuel."97 "May
naiwang mga bakas ng dugo habang hinihila nila ang mga bangkay.
Naamoy ko iyon nang nililinis ang bakas."98 "Tumigil ako sa may palaisdaan
kung saan ginamit ko ang bato para tanggalin ang mga
kadena."99 "Tinanong ko sa isang kapit-bahay kung paano ako makakakuha
ng cell phone; sabi ko gusto kong i-text ang isang babae na nakatira sa
malapit na lugar."100
We affirm the factual findings of the appellate court, largely based on
respondent Raymond Manalo's affidavit and testimony, viz:
...the abduction was perpetrated by armed men who were sufficiently
identified by the petitioners (herein respondents) to be military personnel
and CAFGU auxiliaries. Raymond recalled that the six armed men who
barged into his house through the rear door were military men based on
their attire of fatigue pants and army boots, and the CAFGU auxiliaries,
namely: Michael de la Cruz, Madning de la Cruz, Puti de la Cruz and Pula
de la Cruz, all members of the CAFGU and residents of Muzon, San
Ildefonso, Bulacan, and the brothers Randy Mendoza and Rudy Mendoza,
also CAFGU members, served as lookouts during the abduction. Raymond
was sure that three of the six military men were Ganata, who headed the
abducting team, Hilario, who drove the van, and George. Subsequent
incidents of their long captivity, as narrated by the petitioners, validated
their assertion of the participation of the elements of the 7th Infantry
Division, Philippine Army, and their CAFGU auxiliaries.
We are convinced, too, that the reason for the abduction was the suspicion
that the petitioners were either members or sympathizers of the NPA,
considering that the abductors were looking for Ka Bestre, who turned out
to be Rolando, the brother of petitioners.
The efforts exerted by the Military Command to look into the abduction
were, at best, merely superficial. The investigation of the Provost Marshall
of the 7th Infantry Division focused on the one-sided version of the CAFGU
auxiliaries involved. This one-sidedness might be due to the fact that the
Provost Marshall could delve only into the participation of military
personnel, but even then the Provost Marshall should have refrained from
outrightly exculpating the CAFGU auxiliaries he perfunctorily investigated...
Gen. Palparan's participation in the abduction was also established. At the
very least, he was aware of the petitioners' captivity at the hands of men in
uniform assigned to his command. In fact, he or any other officer tendered
no controversion to the firm claim of Raymond that he (Gen. Palparan) met
them in person in a safehouse in Bulacan and told them what he wanted
them and their parents to do or not to be doing. Gen. Palparan's direct and
personal role in the abduction might not have been shown but his
knowledge of the dire situation of the petitioners during their long captivity
at the hands of military personnel under his command bespoke of his
indubitable command policy that unavoidably encouraged and not merely
tolerated the abduction of civilians without due process of law and without
probable cause.
In the habeas proceedings, the Court, through the Former Special Sixth
Division (Justices Buzon, chairman; Santiago-Lagman, Sr., member; and
Romilla-Lontok, Jr., member/ponente.) found no clear and convincing
evidence to establish that M/Sgt. Rizal Hilario had anything to do with the
abduction or the detention. Hilario's involvement could not, indeed, be then
established after Evangeline Francisco, who allegedly saw Hilario drive the
van in which the petitioners were boarded and ferried following the
abduction, did not testify. (See the decision of the habeas proceedings at
rollo, p. 52)
However, in this case, Raymond attested that Hilario drove the white L-300
van in which the petitioners were brought away from their houses on
February 14, 2006. Raymond also attested that Hilario participated in
subsequent incidents during the captivity of the petitioners, one of which
was when Hilario fetched them from Fort Magsaysay on board a Revo and
conveyed them to a detachment in Pinaud, San Ildefonso, Bulacan where
they were detained for at least a week in a house of strong materials
(Exhibit D, rollo, p. 205) and then Hilario (along with Efren) brought them
to Sapang, San Miguel, Bulacan on board the Revo, to an unfinished house
inside the compound of Kapitan where they were kept for more or less
three months. (Exhibit D, rollo, p. 205) It was there where the petitioners
came face to face with Gen. Palparan. Hilario and Efren also brought the
petitioners one early morning to the house of the petitioners' parents,
where only Raymond was presented to the parents to relay the message
from Gen. Palparan not to join anymore rallies. On that occasion, Hilario
warned the parents that they would not again see their sons should they
join any rallies to denounce human rights violations. (Exhibit D, rollo, pp.
205-206) Hilario was also among four Master Sergeants (the others being
Arman, Ganata and Cabalse) with whom Gen. Palparan conversed on the
occasion when Gen. Palparan required Raymond to take the medicines for
his health. (Exhibit D, rollo, p. 206) There were other occasions when the
petitioners saw that Hilario had a direct hand in their torture.
It is clear, therefore, that the participation of Hilario in the abduction and
forced disappearance of the petitioners was established. The participation
of other military personnel like Arman, Ganata, Cabalse and Caigas, among
others, was similarly established.
xxx xxx xxx
As to the CAFGU auxiliaries, the habeas Court found them personally
involved in the abduction. We also do, for, indeed, the evidence of their
participation is overwhelming.101
We reject the claim of petitioners that respondent Raymond Manalo's
statements were not corroborated by other independent and credible
pieces of evidence.102 Raymond's affidavit and testimony were corroborated
by the affidavit of respondent Reynaldo Manalo. The testimony and medical
reports prepared by forensic specialist Dr. Molino, and the pictures of the
scars left by the physical injuries inflicted on respondents,103 also
corroborate respondents' accounts of the torture they endured while in
detention. Respondent Raymond Manalo's familiarity with the facilities in
Fort Magsaysay such as the "DTU," as shown in his testimony and
confirmed by Lt. Col. Jimenez to be the "Division Training Unit,"104 firms up
respondents' story that they were detained for some time in said military
facility.
In Ortiz v. Guatemala,105 a case decided by the Inter-American
Commission on Human Rights, the Commission considered similar
evidence, among others, in finding that complainant Sister Diana Ortiz was
abducted and tortured by agents of the Guatemalan government. In this
case, Sister Ortiz was kidnapped and tortured in early November 1989. The
Commission's findings of fact were mostly based on the consistent and
credible statements, written and oral, made by Sister Ortiz regarding her
ordeal.106 These statements were supported by her recognition of portions
of the route they took when she was being driven out of the military
installation where she was detained.107 She was also examined by a
medical doctor whose findings showed that the 111 circular second degree
burns on her back and abrasions on her cheek coincided with her account
of cigarette burning and torture she suffered while in detention.108
With the secret nature of an enforced disappearance and the torture
perpetrated on the victim during detention, it logically holds that much of
the information and evidence of the ordeal will come from the victims
themselves, and the veracity of their account will depend on their
credibility and candidness in their written and/or oral statements. Their
statements can be corroborated by other evidence such as physical
evidence left by the torture they suffered or landmarks they can identify in
the places where they were detained. Where powerful military officers are
implicated, the hesitation of witnesses to surface and testify against them
comes as no surprise.
We now come to the right of the respondents to the privilege of the writ
of Amparo. There is no quarrel that the enforced disappearance of both
respondents Raymond and Reynaldo Manalo has now passed as they have
escaped from captivity and surfaced. But while respondents admit that they
are no longer in detention and are physically free, they assert that they are
not "free in every sense of the word"109 as their "movements continue to be
restricted for fear that people they have named in their Judicial Affidavits
and testified against (in the case of Raymond) are still at large and have
not been held accountable in any way. These people are directly connected
to the Armed Forces of the Philippines and are, thus, in a position
to threaten respondents' rights to life, liberty and
security."110 (emphasis supplied) Respondents claim that they are
under threat of being once again abducted, kept captive or even
killed, which constitute a direct violation of their right to security of
person.111
Elaborating on the "right to security, in general," respondents point out
that this right is "often associated with liberty;" it is also seen as an
"expansion of rights based on the prohibition against torture and cruel and
unusual punishment." Conceding that there is no right to security expressly
mentioned in Article III of the 1987 Constitution, they submit that their
rights "to be kept free from torture and from incommunicado detention and
solitary detention places112 fall under the general coverage of the right to
security of person under the writ of Amparo." They submit that the Court
ought to give an expansive recognition of the right to security of person in
view of the State Policy under Article II of the 1987 Constitution which
enunciates that, "The State values the dignity of every human person and
guarantees full respect for human rights." Finally, to justify a liberal
interpretation of the right to security of person, respondents cite the
teaching in Moncupa v. Enrile113 that "the right to liberty may be made
more meaningful only if there is no undue restraint by the State on the
exercise of that liberty"114 such as a requirement to "report under
unreasonable restrictions that amounted to a deprivation of liberty"115 or
being put under "monitoring and surveillance."116
In sum, respondents assert that their cause of action consists in the threat
to their right to life and liberty, and a violation of their right to
security.
Let us put this right to security under the lens to determine if it has indeed
been violated as respondents assert. The right to security or the right to
security of person findsa textual hook in Article III, Section 2 of the 1987
Constitution which provides, viz:
Sec. 2. The right of the people to be secure in their persons, houses,
papers and effects against unreasonable searches and seizures of whatever
nature and for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined
personally by the judge...
At the core of this guarantee is the immunity of one's person, including the
extensions of his/her person - houses, papers, and effects - against
government intrusion. Section 2 not only limits the state's power over a
person's home and possessions, but more importantly, protects the privacy
and sanctity of the person himself.117 The purpose of this provision was
enunciated by the Court in People v. CFI of Rizal, Branch IX, Quezon
City, viz: 118
The purpose of the constitutional guarantee against unreasonable searches
and seizures is to prevent violations of private security in person and
property and unlawful invasion of the security of the home by officers of
the law acting under legislative or judicial sanction and to give remedy
against such usurpation when attempted. (Adams v. New York, 192 U.S.
858; Alvero v. Dizon, 76 Phil. 637 [1946]). The right to privacy is
an essential condition to the dignity and happiness and to the peace
and security of every individual, whether it be of home or of
persons and correspondence. (Tañada and Carreon, Political Law of
the Philippines, Vol. 2, 139 [1962]). The constitutional inviolability of this
great fundamental right against unreasonable searches and seizures must
be deemed absolute as nothing is closer to a man's soul than the
serenity of his privacy and the assurance of his personal security.
Any interference allowable can only be for the best causes and
reasons.119 (emphases supplied) cralawlibrary
While the right to life under Article III, Section 1120 guarantees essentially
the right to be alive121 - upon which the enjoyment of all other rights is
preconditioned - the right to security of person is a guarantee of the secure
quality of this life, viz: "The life to which each person has a right is not a
life lived in fear that his person and property may be unreasonably violated
by a powerful ruler. Rather, it is a life lived with the assurance that the
government he established and consented to, will protect the security of
his person and property. The ideal of security in life and property...
pervades the whole history of man. It touches every aspect of man's
existence."122 In a broad sense, the right to security of person "emanates in
a person's legal and uninterrupted enjoyment of his life, his limbs, his
body, his health, and his reputation. It includes the right to exist, and the
right to enjoyment of life while existing, and it is invaded not only by a
deprivation of life but also of those things which are necessary to the
enjoyment of life according to the nature, temperament, and lawful desires
of the individual."123
A closer look at the right to security of person would yield various
permutations of the exercise of this right.
First, the right to security of person is "freedom from fear." In its
"whereas" clauses, the Universal Declaration of Human Rights (UDHR)
enunciates that "a world in which human beings shall enjoy freedom of
speech and belief and freedom from fear and want has been proclaimed
as the highest aspiration of the common people." (emphasis supplied)
Some scholars postulate that "freedom from fear" is not only an
aspirational principle, but essentially an individual international human
right.124 It is the "right to security of person" as the word "security" itself
means "freedom from fear."125 Article 3 of the UDHR provides, viz:
Everyone has the right to life, liberty and security of
person.126 (emphasis supplied) cralawlibrary
In furtherance of this right declared in the UDHR, Article 9(1) of
the International Covenant on Civil and Political Rights (ICCPR) also
provides for the right to security of person, viz:
1. Everyone has the right to liberty and security of person. No one shall
be subjected to arbitrary arrest or detention. No one shall be deprived of
his liberty except on such grounds and in accordance with such procedure
as are established by law. (emphasis supplied) cralawlibrary
The Philippines is a signatory to both the UDHR and the ICCPR.
In the context of Section 1 of the Amparo Rule, "freedom from fear" is the
right and any threat to the rights to life, liberty or security is
the actionable wrong. Fear is a state of mind, a reaction; threat is a
stimulus, a cause of action. Fear caused by the same stimulus can range
from being baseless to well-founded as people react differently. The degree
of fear can vary from one person to another with the variation of the
prolificacy of their imagination, strength of character or past experience
with the stimulus. Thus, in the Amparo context, it is more correct to say
that the "right to security" is actually the "freedom from threat." Viewed
in this light, the "threatened with violation" Clause in the latter part of
Section 1 of the Amparo Rule is a form of violation of the right to security
mentioned in the earlier part of the provision.127
Second, the right to security of person is a guarantee of bodily and
psychological integrity or security. Article III, Section II of the 1987
Constitution guarantees that, as a general rule, one's body cannot be
searched or invaded without a search warrant.128 Physical injuries inflicted
in the context of extralegal killings and enforced disappearances constitute
more than a search or invasion of the body. It may constitute
dismemberment, physical disabilities, and painful physical intrusion. As the
degree of physical injury increases, the danger to life itself escalates.
Notably, in criminal law, physical injuries constitute a crime against
persons because they are an affront to the bodily integrity or security of a
person.129
Physical torture, force, and violence are a severe invasion of bodily
integrity. When employed to vitiate the free will such as to force the victim
to admit, reveal or fabricate incriminating information, it constitutes an
invasion of both bodily and psychological integrity as the dignity of the
human person includes the exercise of free will. Article III, Section 12 of
the 1987 Constitution more specifically proscribes bodily and psychological
invasion, viz:
(2) No torture, force, violence, threat or intimidation, or any other means
which vitiate the free will shall be used against him (any person under
investigation for the commission of an offense). Secret detention places,
solitary, incommunicado or other similar forms of detention are prohibited.
Parenthetically, under this provision, threat and intimidation that vitiate the
free will - although not involving invasion of bodily integrity - nevertheless
constitute a violation of the right to security in the sense of "freedom from
threat" as afore-discussed.
Article III, Section 12 guarantees freedom from dehumanizing abuses of
persons under investigation for the commission of an offense. Victims of
enforced disappearances who are not even under such investigation should
all the more be protected from these degradations.
An overture to an interpretation of the right to security of person as a right
against torture was made by the European Court of Human Rights (ECHR)
in the recent case of Popov v. Russia.130 In this case,the claimant, who
was lawfully detained, alleged that the state authorities had physically
abused him in prison, thereby violating his right to security of person.
Article 5(1) of the European Convention on Human Rights provides, viz:
"Everyone has the right to liberty and security of person. No one shall be
deprived of his liberty save in the following cases and in accordance with a
procedure prescribed by law ..." (emphases supplied) Article 3, on the
other hand, provides that "(n)o one shall be subjected to torture or to
inhuman or degrading treatment or punishment." Although the application
failed on the facts as the alleged ill-treatment was found baseless, the
ECHR relied heavily on the concept of security in holding, viz:
...the applicant did not bring his allegations to the attention of domestic
authorities at the time when they could reasonably have been expected to
take measures in order to ensure his security and to investigate the
circumstances in question.
xxx xxx xxx
... the authorities failed to ensure his security in custody or to comply with
the procedural obligation under Art.3 to conduct an effective investigation
into his allegations.131 (emphasis supplied)
The U.N. Committee on the Elimination of Discrimination against Women
has also made a statement that the protection of the bodily integrity of
women may also be related to the right to security and liberty, viz:
...gender-based violence which impairs or nullifies the enjoyment by
women of human rights and fundamental freedoms under general
international law or under specific human rights conventions is
discrimination within the meaning of article 1 of the Convention (on the
Elimination of All Forms of Discrimination Against Women). These rights
and freedoms include . . . the right to liberty and security of person.132
Third, the right to security of person is a guarantee of protection of
one's rights by the government. In the context of the writ of Amparo,
this right is built into the guarantees of the right to life and
liberty under Article III, Section 1 of the 1987 Constitution and the right
to security of person (as freedom from threat and guarantee of bodily
and psychological integrity) under Article III, Section 2. The right to
security of person in this third sense is a corollary of the policy that the
State "guarantees full respect for human rights" under Article II, Section 11
of the 1987 Constitution.133 As the government is the chief guarantor of
order and security, the Constitutional guarantee of the rights to life, liberty
and security of person is rendered ineffective if government does not afford
protection to these rights especially when they are under threat. Protection
includes conducting effective investigations, organization of the
government apparatus to extend protection to victims of extralegal killings
or enforced disappearances (or threats thereof) and/or their families, and
bringing offenders to the bar of justice. The Inter-American Court of
Human Rights stressed the importance of investigation in the Velasquez
Rodriguez Case,134 viz:
(The duty to investigate) must be undertaken in a serious manner and
not as a mere formality preordained to be ineffective. An
investigation must have an objective and be assumed by the State as its
own legal duty, not as a step taken by private interests that
depends upon the initiative of the victim or his family or upon their
offer of proof, without an effective search for the truth by the
government.135
This third sense of the right to security of person as a guarantee of
government protection has been interpreted by the United Nations' Human
Rights Committee136 in not a few cases involving Article 9137 of the ICCPR.
While the right to security of person appears in conjunction with the right
to liberty under Article 9, the Committee has ruled that the right to
security of person can exist independently of the right to liberty. In
other words, there need not necessarily be a deprivation of liberty for the
right to security of person to be invoked. In Delgado Paez v.
Colombia,138 a case involving death threats to a religion teacher at a
secondary school in Leticia, Colombia, whose social views differed from
those of the Apostolic Prefect of Leticia, the Committee held, viz:
The first sentence of article 9 does not stand as a separate paragraph. Its
location as a part of paragraph one could lead to the view that the right to
security arises only in the context of arrest and detention. The travaux
préparatoires indicate that the discussions of the first sentence did indeed
focus on matters dealt with in the other provisions of article 9. The
Universal Declaration of Human Rights, in article 3, refers to the
right to life, the right to liberty and the right to security of the
person. These elements have been dealt with in separate clauses in
the Covenant. Although in the Covenant the only reference to the
right of security of person is to be found in article 9, there is no
evidence that it was intended to narrow the concept of the right to
security only to situations of formal deprivation of liberty. At the
same time, States parties have undertaken to guarantee the rights
enshrined in the Covenant. It cannot be the case that, as a matter
of law, States can ignore known threats to the life of persons under
their jurisdiction, just because that he or she is not arrested or
otherwise detained. States parties are under an obligation to take
reasonable and appropriate measures to protect them. An
interpretation of article 9 which would allow a State party to ignore
threats to the personal security of non-detained persons within its
jurisdiction would render totally ineffective the guarantees of the
Covenant.139 (emphasis supplied)
The Paez ruling was reiterated in Bwalya v. Zambia,140 which involved a
political activist and prisoner of conscience who continued to be
intimidated, harassed, and restricted in his movements following his
release from detention. In a catena of cases, the ruling of the Committee
was of a similar import: Bahamonde v. Equatorial Guinea,141 involving
discrimination, intimidation and persecution of opponents of the ruling
party in that state; Tshishimbi v. Zaire,142 involving the abduction of the
complainant's husband who was a supporter of democratic reform in
Zaire; Dias v. Angola,143 involving the murder of the complainant's
partner and the harassment he (complainant) suffered because of
his investigation of the murder; and Chongwe v. Zambia,144 involving
an assassination attempt on the chairman of an opposition alliance.
Similarly, the European Court of Human Rights (ECHR) has interpreted the
"right to security" not only as prohibiting the State from arbitrarily
depriving liberty, but imposing a positive duty on the State to afford
protection of the right to liberty.145 The ECHR interpreted the "right to
security of person" under Article 5(1) of the European Convention of
Human Rights in the leading case on disappearance of persons, Kurt v.
Turkey.146 In this case, theclaimant's son had been arrested by state
authorities and had not been seen since. The family's requests for
information and investigation regarding his whereabouts proved futile. The
claimant suggested that this was a violation of her son's right to security of
person. The ECHR ruled, viz:
... any deprivation of liberty must not only have been effected in
conformity with the substantive and procedural rules of national law but
must equally be in keeping with the very purpose of Article 5, namely to
protect the individual from arbitrariness... Having assumed control over
that individual it is incumbent on the authorities to account for his or her
whereabouts. For this reason, Article 5 must be seen as requiring the
authorities to take effective measures to safeguard against the risk
of disappearance and to conduct a prompt effective investigation
into an arguable claim that a person has been taken into custody
and has not been seen since.147 (emphasis supplied)
Applying the foregoing concept of the right to security of person to the case
at bar, we now determine whether there is a continuing violation of
respondents' right to security.
First, the violation of the right to security as freedom from threat to
respondents' life, liberty and security.
While respondents were detained, they were threatened that if they
escaped, their families, including them, would be killed. In Raymond's
narration, he was tortured and poured with gasoline after he was caught
the first time he attempted to escape from Fort Magsaysay. A call from a
certain "Mam," who wanted to see him before he was killed, spared him.
This time, respondents have finally escaped. The condition of the threat to
be killed has come to pass. It should be stressed that they are now free
from captivity not because they were released by virtue of a lawful order or
voluntarily freed by their abductors. It ought to be recalled that towards
the end of their ordeal, sometime in June 2007 when respondents were
detained in a camp in Limay, Bataan, respondents' captors even told them
that they were still deciding whether they should be executed. Respondent
Raymond Manalo attested in his affidavit, viz:
Kinaumagahan, naka-kadena pa kami. Tinanggal ang mga kadena mga 3 o
4 na araw pagkalipas. Sinabi sa amin na kaya kami nakakadena ay dahil
pinagdedesisyunan pa ng mga sundalo kung papatayin kami o hindi.148
The possibility of respondents being executed stared them in the eye while
they were in detention. With their escape, this continuing threat to their life
is apparent, moreso now that they have surfaced and implicated specific
officers in the military not only in their own abduction and torture, but also
in those of other persons known to have disappeared such as Sherlyn
Cadapan, Karen Empeño, and Manuel Merino, among others.
Understandably, since their escape, respondents have been under
concealment and protection by private citizens because of the threat to
their life, liberty and security. The threat vitiates their free will as they are
forced to limit their movements or activities.149 Precisely because
respondents are being shielded from the perpetrators of their abduction,
they cannot be expected to show evidence of overt acts of threat such as
face-to-face intimidation or written threats to their life, liberty and security.
Nonetheless, the circumstances of respondents' abduction, detention,
torture and escape reasonably support a conclusion that there is an
apparent threat that they will again be abducted, tortured, and this time,
even executed. These constitute threats to their liberty, security, and life,
actionable through a petition for a writ of Amparo.
Next, the violation of the right to security as protection by the
government. Apart from the failure of military elements to provide
protection to respondents by themselves perpetrating the abduction,
detention, and torture, they also miserably failed in conducting an effective
investigation of respondents' abduction as revealed by the testimony and In sum, we conclude that respondents' right to security as "freedom from
investigation report of petitioners' own witness, Lt. Col. Ruben Jimenez, threat" is violated by the apparent threat to their life, liberty and security
Provost Marshall of the 7th Infantry Division. of person. Their right to security as a guarantee of protection by the
government is likewise violated by the ineffective investigation and
The one-day investigation conducted by Jimenez was very limited, protection on the part of the military.
superficial, and one-sided. He merely relied on the Sworn Statements of
the six implicated members of the CAFGU and civilians whom he met in the Finally, we come to the reliefs granted by the Court of Appeals, which
investigation for the first time. He was present at the investigation when petitioners question.
his subordinate Lingad was taking the sworn statements, but he did not
propound a single question to ascertain the veracity of their statements or First, that petitioners furnish respondents all official and unofficial
their credibility. He did not call for other witnesses to test the alibis given reports of the investigation undertaken in connection with their case,
by the six implicated persons nor for the family or neighbors of the except those already in file with the court.
respondents.
Second, that petitioners confirm in writing the present places of
In his affidavit, petitioner Secretary of National Defense attested that in a official assignment of M/Sgt. Hilario aka Rollie Castillo and Donald
Memorandum Directive dated October 31, 2007, he issued a policy Caigas.
directive addressed to the AFP Chief of Staff, that the AFP should adopt
rules of action in the event the writ of Amparo is issued by a competent Third, that petitioners cause to be produced to the Court of Appeals
court against any members of the AFP, which should essentially include all medical reports, records and charts, and reports of any
verification of the identity of the aggrieved party; recovery and treatment given or recommended and medicines prescribed, if any,
preservation of relevant evidence; identification of witnesses and securing to the Manalo brothers, to include a list of medical personnel
statements from them; determination of the cause, manner, location and (military and civilian) who attended to them from February 14, 2006
time of death or disappearance; identification and apprehension of the until August 12, 2007.
person or persons involved in the death or disappearance; and bringing of
the suspected offenders before a competent court.150 Petitioner AFP Chief of
Staff also submitted his own affidavit attesting that he received the above
directive of respondent Secretary of National Defense and that acting on
this directive, he immediately caused to be issued a directive to the units of
the AFP for the purpose of establishing the circumstances of the alleged
disappearance and the recent reappearance of the respondents, and
undertook to provide results of the investigations to respondents.151 To this
day, however, almost a year after the policy directive was issued by
petitioner Secretary of National Defense on October 31, 2007, respondents
have not been furnished the results of the investigation which they now
seek through the instant petition for a writ of Amparo.

Under these circumstances, there is substantial evidence to warrant the

conclusion that there is a violation of respondents' right to security as a
guarantee of protection by the government.
With respect to the first and second reliefs, petitioners argue that the
production order sought by respondents partakes of the characteristics of a
search warrant. Thus, they claim that the requisites for the issuance of a
search warrant must be complied with prior to the grant of the production
order, namely: (1) the application must be under oath or affirmation; (2)
the search warrant must particularly describe the place to be searched and
the things to be seized; (3) there exists probable cause with one specific
offense; and (4) the probable cause must be personally determined by the
judge after examination under oath or affirmation of the complainant and
the witnesses he may produce.152 In the case at bar, however, petitioners
point out that other than the bare, self-serving and vague allegations made
by respondent Raymond Manalo in his unverified declaration and affidavit,
the documents respondents seek to be produced are only mentioned
generally by name, with no other supporting details. They also argue that
the relevancy of the documents to be produced must be apparent, but this
is not true in the present case as the involvement of petitioners in the
abduction has not been shown.
Petitioners' arguments do not hold water. The production order under
the Amparo Rule should not be confused with a search warrant for law
enforcement under Article III, Section 2 of the 1987 Constitution. This
Constitutional provision is a protection of the people from the unreasonable
intrusion of the government, not a protection of the government from the
demand of the people such as respondents.
Instead, the Amparo production order may be likened to the production of
documents or things under Section 1, Rule 27 of the Rules of Civil
Procedure which provides in relevant part, viz:
Section 1. Motion for production or inspection order.
Upon motion of any party showing good cause therefor, the court in which
an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving
party, of any designated documents, papers, books of accounts, letters,
photographs, objects or tangible things, not privileged, which constitute or
contain evidence material to any matter involved in the action and which
are in his possession, custody or control...
In Material Distributors (Phil.) Inc. v. Judge Natividad,153 the
respondent judge, under authority of Rule 27, issued a subpoena duces
tecum for the production and inspection of among others, the books and
papers of Material Distributors (Phil.) Inc. The company questioned the
issuance of the subpoena on the ground that it violated the search and
seizure clause. The Court struck down the argument and held that
the subpoena pertained to a civil procedure that "cannot be identified or
confused with unreasonable searches prohibited by the Constitution..."
Moreover, in his affidavit, petitioner AFP Chief of Staff himself undertook
"to provide results of the investigations conducted or to be conducted by
the concerned unit relative to the circumstances of the alleged
disappearance of the persons in whose favor the Writ of Amparo has been
sought for as soon as the same has been furnished Higher headquarters."
With respect to the second and third reliefs, petitioners assert that the
disclosure of the present places of assignment of M/Sgt. Hilario aka Rollie
Castillo and Donald Caigas, as well as the submission of a list of medical
personnel, is irrelevant, improper, immaterial, and unnecessary in the
resolution of the petition for a writ of Amparo. They add that it will
unnecessarily compromise and jeopardize the exercise of official functions
and duties of military officers and even unwittingly and unnecessarily
expose them to threat of personal injury or even death.
On the contrary, the disclosure of the present places of assignment of
M/Sgt. Hilario aka Rollie Castillo and Donald Caigas, whom respondents
both directly implicated as perpetrators behind their abduction and
detention, is relevant in ensuring the safety of respondents by avoiding
their areas of territorial jurisdiction. Such disclosure would also help ensure
that these military officers can be served with notices and court processes
in relation to any investigation and action for violation of the respondents'
rights. The list of medical personnel is also relevant in securing information
to create the medical history of respondents and make appropriate medical
interventions, when applicable and necessary.
In blatant violation of our hard-won guarantees to life, liberty and security,
these rights are snuffed out from victims of extralegal killings and enforced
disappearances. The writ of Amparo is a tool that gives voice to preys of
silent guns and prisoners behind secret walls.
WHEREFORE, premises considered, the petition is DISMISSED. The
Decision of the Court of Appeals dated December 26, 2007 is affirmed.

SO ORDERED.

EN BANC [G.R. NO. 122846 : January 20, 2009]

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA.

MESA TOURIST & DEVELOPMENT CORPORATION, Petitioners, v. CITY
OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM,
Respondent.

DECISION

TINGA, J.:
With another city ordinance of Manila also principally involving the tourist
district as subject, the Court is confronted anew with the incessant clash
between government power and individual liberty in tandem with the
archetypal tension between law and morality.
In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city
ordinance barring the operation of motels and inns, among other
establishments, within the Ermita-Malate area. The petition at bar assails a
similarly-motivated city ordinance that prohibits those same establishments
from offering short-time admission, as well as pro-rated or "wash up" rates for
such abbreviated stays. Our earlier decision tested the city ordinance against
our sacred constitutional rights to liberty, due process and equal protection of
law. The same parameters apply to the present petition.
This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which
seeks the reversal of the Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of
Appeals, challenges the validity of Manila City Ordinance No. 7774 entitled, "An
Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and
Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension
Houses, and Similar Establishments in the City of Manila" (the Ordinance).
I.
The facts are as follows:
On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law
the Ordinance.4 The Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the declared policy of the City
Government to protect the best interest, health and welfare, and the morality
of its constituents in general and the youth in particular.
SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting
short time admission in hotels, motels, lodging houses, pension houses and
similar establishments in the City of Manila.
SEC. 3. Pursuant to the above policy, short-time admission and rate [sic],
wash-up rate or other similarly concocted terms, are hereby prohibited in
hotels, motels, inns, lodging houses, pension houses and similar
establishments in the City of Manila.
SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and
charging of room rate for less than twelve (12) hours at any given time or the
renting out of rooms more than twice a day or any other term that may be
concocted by owners or managers of said establishments but would mean the
same or would bear the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who shall violate any
provision of this ordinance shall upon conviction thereof be punished by a fine
of Five Thousand (P5,000.00) Pesos or imprisonment for a period of not
exceeding one (1) year or both such fine and imprisonment at the discretion of
the court; Provided, That in case of [a] juridical person, the president, the
manager, or the persons in charge of the operation thereof shall be liable:
Provided, further, That in case of subsequent conviction for the same offense,
the business license of the guilty party shall automatically be cancelled.
SEC. 6. Repealing Clause. Any or all provisions of City ordinances not
consistent with or contrary to this measure or any portion hereof are hereby
deemed repealed.
SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.
Enacted by the city Council of Manila at its regular session today, November
10, 1992.
Approved by His Honor, the Mayor on December 3, 1992.
On December 15, 1992, the Malate Tourist and Development Corporation
(MTDC) filed a complaint for declaratory relief with prayer for a writ of
preliminary injunction and/or temporary restraining order ( TRO)5 with the
Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein
respondent City of Manila (the City) represented by Mayor Lim.6 MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional. MTDC
claimed that as owner and operator of the Victoria Court in Malate, Manila it
was authorized by Presidential Decree (P.D.) No. 259 to admit customers on a
short time basis as well as to charge customers wash up rates for stays of only
three hours.
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium
Corporation (TC) and Sta. Mesa Tourist and Development Corporation (STDC)
filed a motion to intervene and to admit attached complaint-in-intervention7
on the ground that the Ordinance directly affects their business interests as
operators of drive-in-hotels and motels in Manila.8 The three companies are
components of the Anito Group of Companies which owns and operates several
hotels and motels in Metro Manila.9
On December 23, 1992, the RTC granted the motion to intervene.10 The RTC
also notified the Solicitor General of the proceedings pursuant to then Rule 64,
Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw
as plaintiff.11
On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The
RTC issued a TRO on January 14, 1993, directing the City to cease and desist
from enforcing the Ordinance.13 The City filed an Answer dated January 22,
1993 alleging that the Ordinance is a legitimate exercise of police power.14
On February 8, 1993, the RTC issued a writ of preliminary injunction ordering
the city to desist from the enforcement of the Ordinance.15 A month later, on
March 8, 1993, the Solicitor General filed his Comment arguing that the
Ordinance is constitutional.
During the pre-trial conference, the WLC, TC and STDC agreed to submit the
case for decision without trial as the case involved a purely legal question.16
On October 20, 1993, the RTC rendered a decision declaring the Ordinance null
and void. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of
Manila is hereby declared null and void.
Accordingly, the preliminary injunction heretofor issued is hereby made
permanent. SO ORDERED.17
The RTC noted that the ordinance "strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution."18 Reference
was made to the provisions of the Constitution encouraging private enterprises
and the incentive to needed investment, as well as the right to operate
economic enterprises. Finally, from the observation that the illicit relationships
the Ordinance sought to dissuade could nonetheless be consummated by
simply paying for a 12-hour stay, the RTC likened the law to the ordinance
annulled in Ynot v. Intermediate Appellate Court,19 where the legitimate
purpose of preventing indiscriminate slaughter of carabaos was sought to be
effected through an inter-province ban on the transport of carabaos and
carabeef.
The City later filed a Petition for Review on Certiorariwith the Supreme
Court.20 The petition was docketed as G.R. No. 112471. However in a
resolution dated January 26, 1994, the Court treated the petition as a Petition
for Certiorariand referred the petition to the Court of Appeals.21
Before the Court of Appeals, the City asserted that the Ordinance is a valid
exercise of police power pursuant to Section 458 (4)(iv) of the Local
Government Code which confers on cities, among other local government
units, the power:
[To] regulate the establishment, operation and maintenance of cafes,
restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses
and other similar establishments, including tourist guides and transports.22
The Ordinance, it is argued, is also a valid exercise of the power of the City
under Article III, Section 18(kk) of the Revised Manila Charter, thus:
"to enact all ordinances it may deem necessary and proper for the sanitation
and safety, the furtherance of the prosperity and the promotion of the
morality, peace, good order, comfort, convenience and general welfare of the
city and its inhabitants, and such others as be necessary to carry into effect
and discharge the powers and duties conferred by this Chapter; and to fix
penalties for the violation of ordinances which shall not exceed two hundred
pesos fine or six months imprisonment, or both such fine and imprisonment for
a single offense.23
Petitioners argued that the Ordinance is unconstitutional and void since it
violates the right to privacy and the freedom of movement; it is an invalid
exercise of police power; and it is an unreasonable and oppressive interference
in their business.
The Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.24 First, it held that the Ordinance did not
violate the right to privacy or the freedom of movement, as it only penalizes
the owners or operators of establishments that admit individuals for short time
stays. Second, the virtually limitless reach of police power is only constrained
by having a lawful object obtained through a lawful method. The lawful
objective of the Ordinance is satisfied since it aims to curb immoral activities.
There is a lawful method since the establishments are still allowed to operate.
Third, the adverse effect on the establishments is justified by the well-being of
its constituents in general. Finally, as held in Ermita-Malate Motel Operators
Association v. City Mayor of Manila, liberty is regulated by law.
TC, WLC and STDC come to this Court via Petition for Review on Certiorari .25
In their petition and Memorandum, petitioners in essence repeat the assertions
they made before the Court of Appeals. They contend that the assailed
Ordinance is an invalid exercise of police power.
II. We must address the threshold issue of petitioners' standing. Petitioners
allege that as owners of establishments offering "wash-up" rates, their
business is being unlawfully interfered with by the Ordinance. However,
petitioners also allege that the equal protection rights of their clients are also
being interfered with. Thus, the crux of the matter is whether or not these
establishments have the requisite standing to plead for protection of their
patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate to the court
sufficient connection to and harm from the law or action challenged to support
that party's participation in the case. More importantly, the doctrine of
standing is built on the principle of separation of powers,26 sparing as it does
unnecessary interference or invalidation by the judicial branch of the actions
rendered by its co-equal branches of government.
The requirement of standing is a core component of the judicial system derived
directly from the Constitution.27 The constitutional component of standing
doctrine incorporates concepts which concededly are not susceptible of precise
definition.28 In this jurisdiction, the extancy of "a direct and personal interest"
presents the most obvious cause, as well as the standard test for a petitioner's
standing.29 In a similar vein, the United States Supreme Court reviewed and
elaborated on the meaning of the three constitutional standing requirements of
injury, causation, and redressability in Allen v. Wright.30
Nonetheless, the general rules on standing admit of several exceptions such as
the overbreadth doctrine, taxpayer suits, third party standing and, especially in
the Philippines, the doctrine of transcendental importance.31
For this particular set of facts, the concept of third party standing as an
exception and the overbreadth doctrine are appropriate. In Powers v. Ohio,32
the United States Supreme Court wrote that: "We have recognized the right of
litigants to bring actions on behalf of third parties, provided three important
criteria are satisfied: the litigant must have suffered an 'injury-in-fact,' thus
giving him or her a "sufficiently concrete interest" in the outcome of the issue
in dispute; the litigant must have a close relation to the third party; and there
must exist some hindrance to the third party's ability to protect his or her own
interests."33 Herein, it is clear that the business interests of the petitioners are
likewise injured by the Ordinance. They rely on the patronage of their
customers for their continued viability which appears to be threatened by the
enforcement of the Ordinance. The relative silence in constitutional litigation of
such special interest groups in our nation such as the American Civil Liberties
Union in the United States may also be construed as a hindrance for customers
to bring suit.34
American jurisprudence is replete with examples where parties-in-interest
were allowed standing to advocate or invoke the fundamental due process or
equal protection claims of other persons or classes of persons injured by state
action. In Griswold v. Connecticut,35 the United States Supreme Court held
that physicians had standing to challenge a reproductive health statute that
would penalize them as accessories as well as to plead the constitutional
protections available to their patients. The Court held that:
"The rights of husband and wife, pressed here, are likely to be diluted or
adversely affected unless those rights are considered in a suit involving those
who have this kind of confidential relation to them."36
An even more analogous example may be found in Craig v. Boren,37 wherein
the United States Supreme Court held that a licensed beverage vendor has
standing to raise the equal protection claim of a male customer challenging a
statutory scheme prohibiting the sale of beer to males under the age of 21 and
to females under the age of 18. The United States High Court explained that
the vendors had standing "by acting as advocates of the rights of third parties
who seek access to their market or function."38
Assuming arguendo that petitioners do not have a relationship with their
patrons for the former to assert the rights of the latter, the overbreadth
doctrine comes into play. In overbreadth analysis, challengers to government
action are in effect permitted to raise the rights of third parties. Generally
applied to statutes infringing on the freedom of speech, the overbreadth
doctrine applies when a statute needlessly restrains even constitutionally
guaranteed rights.39 In this case, the petitioners claim that the Ordinance
makes a sweeping intrusion into the right to liberty of their clients. We can see
that based on the allegations in the petition, the Ordinance suffers from
overbreadth.
We thus recognize that the petitioners have a right to assert the constitutional
rights of their clients to patronize their establishments for a "wash-rate" time
frame.
III. To students of jurisprudence, the facts of this case will recall to mind not
only the recent City of Manila ruling, but our 1967 decision in Ermita-Malate
Hotel and Motel Operations Association, Inc., v. Hon. City Mayor of Manila.40
Ermita-Malate concerned the City ordinance requiring patrons to fill up a
prescribed form stating personal information such as name, gender,
nationality, age, address and occupation before they could be admitted to a
motel, hotel or lodging house. This earlier ordinance was precisely enacted to
minimize certain practices deemed harmful to public morals. A purpose similar
to the annulled ordinance in City of Manila which sought a blanket ban on
motels, inns and similar establishments in the Ermita-Malate area. However,
the constitutionality of the ordinance in Ermita-Malate was sustained by the
Court.
The common thread that runs through those decisions and the case at bar
goes beyond the singularity of the localities covered under the respective
ordinances. All three ordinances were enacted with a view of regulating public
morals including particular illicit activity in transient lodging establishments.
This could be described as the middle case, wherein there is no wholesale ban
on motels and hotels but the services offered by these establishments have
been severely restricted. At its core, this is another case about the extent to
which the State can intrude into and regulate the lives of its citizens.
The test of a valid ordinance is well established. A long line of decisions
including City of Manila has held that for an ordinance to be valid, it must not
only be within the corporate powers of the local government unit to enact and
pass according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution
or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be
general and consistent with public policy; and (6) must not be
unreasonable.41
The Ordinance prohibits two specific and distinct business practices, namely
wash rate admissions and renting out a room more than twice a day. The ban
is evidently sought to be rooted in the police power as conferred on local
government units by the Local Government Code through such implements as
the general welfare clause.
A. Police power, while incapable of an exact definition, has been purposely
veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response as
the conditions warrant.42 Police power is based upon the concept of necessity
of the State and its corresponding right to protect itself and its people.43
Police power has been used as justification for numerous and varied actions by
the State. These range from the regulation of dance halls,44 movie theaters,45
gas stations46 and cockpits.47 The awesome scope of police power is best
demonstrated by the fact that in its hundred or so years of presence in our
nation's legal system, its use has rarely been denied.
The apparent goal of the Ordinance is to minimize if not eliminate the use of
the covered establishments for illicit sex, prostitution, drug use and alike.
These goals, by themselves, are unimpeachable and certainly fall within the
ambit of the police power of the State. Yet the desirability of these ends do not
sanctify any and all means for their achievement. Those means must align with
the Constitution, and our emerging sophisticated analysis of its guarantees to
the people. The Bill of Rights stands as a rebuke to the seductive theory of
Macchiavelli, and, sometimes even, the political majorities animated by his
cynicism.
Even as we design the precedents that establish the framework for analysis of
due process or equal protection questions, the courts are naturally inhibited by
a due deference to the co-equal branches of government as they exercise their
political functions. But when we are compelled to nullify executive or legislative
actions, yet another form of caution emerges. If the Court were animated by
the same passing fancies or turbulent emotions that motivate many political
decisions, judicial integrity is compromised by any perception that the judiciary
is merely the third political branch of government. We derive our respect and
good standing in the annals of history by acting as judicious and neutral
arbiters of the rule of law, and there is no surer way to that end than through
the development of rigorous and sophisticated legal standards through which
the courts analyze the most fundamental and far-reaching constitutional
questions of the day.
B. The primary constitutional question that confronts us is one of due process,
as guaranteed under Section 1, Article III of the Constitution. Due process
evades a precise definition.48 The purpose of the guaranty is to prevent
arbitrary governmental encroachment against the life, liberty and property of
individuals. The due process guaranty serves as a protection against arbitrary
regulation or seizure. Even corporations and partnerships are protected by the
guaranty insofar as their property is concerned.
The due process guaranty has traditionally been interpreted as imposing two
related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures
that the government must follow before it deprives a person of life, liberty, or
property.49 Procedural due process concerns itself with government action
adhering to the established process when it makes an intrusion into the private
sphere. Examples range from the form of notice given to the level of formality
of a hearing.
If due process were confined solely to its procedural aspects, there would arise
absurd situation of arbitrary government action, provided the proper
formalities are followed. Substantive due process completes the protection
envisioned by the due process clause. It inquires whether the government has
sufficient justification for depriving a person of life, liberty, or property.50
The question of substantive due process, moreso than most other fields of law,
has reflected dynamism in progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power, traditionally awesome as it
may be, is now confronted with a more rigorous level of analysis before it can
be upheld. The vitality though of constitutional due process has not been
predicated on the frequency with which it has been utilized to achieve a liberal
result for, after all, the libertarian ends should sometimes yield to the
prerogatives of the State. Instead, the due process clause has acquired
potency because of the sophisticated methodology that has emerged to
determine the proper metes and bounds for its application.
C. The general test of the validity of an ordinance on substantive due process
grounds is best tested when assessed with the evolved footnote 4 test laid
down by the U.S. Supreme Court in U.S. v. Carolene Products.51 Footnote 4 of
the Carolene Products case acknowledged that the judiciary would defer to the
legislature unless there is a discrimination against a "discrete and insular"
minority or infringement of a "fundamental right."52 Consequently, two
standards of judicial review were established: strict scrutiny for laws dealing
with freedom of the mind or restricting the political process, and the rational
basis standard of review for economic legislation.
A third standard, denominated as heightened or immediate scrutiny, was later
adopted by the U.S. Supreme Court for evaluating classifications based on
gender53 and legitimacy.54 Immediate scrutiny was adopted by the U.S.
Supreme Court in Craig,55 after the Court declined to do so in Reed v.
Reed.56 While the test may have first been articulated in equal protection
analysis, it has in the United States since been applied in all substantive due
process cases as well.
We ourselves have often applied the rational basis test mainly in analysis of
equal protection challenges.57 Using the rational basis examination, laws or
ordinances are upheld if they rationally further a legitimate governmental
interest.58 Under intermediate review, governmental interest is extensively
examined and the availability of less restrictive measures is considered.59
Applying strict scrutiny, the focus is on the presence of compelling, rather than
substantial, governmental interest and on the absence of less restrictive
means for achieving that interest.
In terms of judicial review of statutes or ordinances, strict scrutiny refers to
the standard for determining the quality and the amount of governmental
interest brought to justify the regulation of fundamental freedoms.60 Strict
scrutiny is used today to test the validity of laws dealing with the regulation of
speech, gender, or race as well as other fundamental rights as expansion from
its earlier applications to equal protection.61 The United States Supreme Court
has expanded the scope of strict scrutiny to protect fundamental rights such as
suffrage,62 judicial access63 and interstate travel.64
If we were to take the myopic view that an Ordinance should be analyzed
strictly as to its effect only on the petitioners at bar, then it would seem that
the only restraint imposed by the law which we are capacitated to act upon is
the injury to property sustained by the petitioners, an injury that would
warrant the application of the most deferential standard - the rational basis
test. Yet as earlier stated, we recognize the capacity of the petitioners to
invoke as well the constitutional rights of their patrons - those persons who
would be deprived of availing short time access or wash-up rates to the
lodging establishments in question.
Viewed cynically, one might say that the infringed rights of these customers
were are trivial since they seem shorn of political consequence. Concededly,
these are not the sort of cherished rights that, when proscribed, would impel
the people to tear up their cedulas. Still, the Bill of Rights does not shelter
gravitas alone. Indeed, it is those "trivial" yet fundamental freedoms - which
the people reflexively exercise any day without the impairing awareness of
their constitutional consequence - that accurately reflect the degree of liberty
enjoyed by the people. Liberty, as integrally incorporated as a fundamental
right in the Constitution, is not a Ten Commandments-style enumeration of
what may or what may not be done; but rather an atmosphere of freedom
where the people do not feel labored under a Big Brother presence as they
interact with each other, their society and nature, in a manner innately
understood by them as inherent, without doing harm or injury to others.
D. The rights at stake herein fall within the same fundamental rights to liberty
which we upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that
most primordial of rights, thus:
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to
include "the right to exist and the right to be free from arbitrary restraint or
servitude. The term cannot be dwarfed into mere freedom from physical
restraint of the person of the citizen, but is deemed to embrace the right of
man to enjoy the facilities with which he has been endowed by his Creator,
subject only to such restraint as are necessary for the common welfare."[65]
In accordance with this case, the rights of the citizen to be free to use his
faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed
embraced in the concept of liberty.[66]
The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to
clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness the liberty . . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire useful
knowledge, to marry, establish a home and bring up children, to worship God
according to the dictates of his own conscience, and generally to enjoy those
privileges long recognized . . . as essential to the orderly pursuit of happiness
by free men. In a Constitution for a free people, there can be no doubt that the
meaning of "liberty" must be broad indeed.67 [Citations omitted]
It cannot be denied that the primary animus behind the ordinance is the
curtailment of sexual behavior. The City asserts before this Court that the
subject establishments "have gained notoriety as venue of 'prostitution,
adultery and fornications' in Manila since they 'provide the necessary
atmosphere for clandestine entry, presence and exit and thus became the
'ideal haven for prostitutes and thrill-seekers.' "68 Whether or not this
depiction of a mise-en-scene of vice is accurate, it cannot be denied that
legitimate sexual behavior among willing married or consenting single adults
which is constitutionally protected69 will be curtailed as well, as it was in the
City of Manila case. Our holding therein retains significance for our purposes:
The concept of liberty compels respect for the individual whose claim to
privacy and interference demands respect. As the case of Morfe v. Mutuc,
borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His
separateness, his isolation, are indefeasible; indeed, they are so fundamental
that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to
himself. If he surrenders his will to others, he surrenders himself. If his will is
set by the will of others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe,
the invasion of which should be justified by a compelling state interest. Morfe
accorded recognition to the right to privacy independently of its identification
with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal
life of the citizen.70
We cannot discount other legitimate activities which the Ordinance would
proscribe or impair. There are very legitimate uses for a wash rate or renting
the room out for more than twice a day. Entire families are known to choose
pass the time in a motel or hotel whilst the power is momentarily out in their
homes. In transit passengers who wish to wash up and rest between trips have
a legitimate purpose for abbreviated stays in motels or hotels. Indeed any
person or groups of persons in need of comfortable private spaces for a span
of a few hours with purposes other than having sex or using illegal drugs can
legitimately look to staying in a motel or hotel as a convenient alternative.
E. That the Ordinance prevents the lawful uses of a wash rate depriving
patrons of a product and the petitioners of lucrative business ties in with
another constitutional requisite for the legitimacy of the Ordinance as a police
power measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of private rights.71
It must also be evident that no other alternative for the accomplishment of the
purpose less intrusive of private rights can work. More importantly, a
reasonable relation must exist between the purposes of the measure and the
means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.72
Lacking a concurrence of these requisites, the police measure shall be struck
down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc,
the exercise of police power is subject to judicial review when life, liberty or
property is affected.73 However, this is not in any way meant to take it away
from the vastness of State police power whose exercise enjoys the
presumption of validity.74
Similar to the Comelec resolution requiring newspapers to donate advertising
space to candidates, this Ordinance is a blunt and heavy instrument.75 The
Ordinance makes no distinction between places frequented by patrons engaged
in illicit activities and patrons engaged in legitimate actions. Thus it prevents
legitimate use of places where illicit activities are rare or even unheard of. A
plain reading of section 3 of the Ordinance shows it makes no classification of
places of lodging, thus deems them all susceptible to illicit patronage and
subject them without exception to the unjustified prohibition.
The Court has professed its deep sentiment and tenderness of the Ermita-
Malate area, its longtime home,76 and it is skeptical of those who wish to
depict our capital city - the Pearl of the Orient - as a modern-day Sodom or
Gomorrah for the Third World set. Those still steeped in Nick Joaquin-dreams
of the grandeur of Old Manila will have to accept that Manila like all evolving
big cities, will have its problems. Urban decay is a fact of mega cities such as
Manila, and vice is a common problem confronted by the modern metropolis
wherever in the world. The solution to such perceived decay is not to prevent
legitimate businesses from offering a legitimate product. Rather, cities revive
themselves by offering incentives for new businesses to sprout up thus
attracting the dynamism of individuals that would bring a new grandeur to
Manila.
The behavior which the Ordinance seeks to curtail is in fact already prohibited
and could in fact be diminished simply by applying existing laws. Less intrusive
measures such as curbing the proliferation of prostitutes and drug dealers
through active police work would be more effective in easing the situation. So
would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on
the businesses of the petitioners and other legitimate merchants. Further, it is
apparent that the Ordinance can easily be circumvented by merely paying the
whole day rate without any hindrance to those engaged in illicit activities.
Moreover, drug dealers and prostitutes can in fact collect "wash rates" from
their clientele by charging their customers a portion of the rent for motel
rooms and even apartments.
IV. We reiterate that individual rights may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public interest
or public welfare. The State is a leviathan that must be restrained from
needlessly intruding into the lives of its citizens. However well' -intentioned the
Ordinance may be, it is in effect an arbitrary and whimsical intrusion into the
rights of the establishments as well as their patrons. The Ordinance needlessly
restrains the operation of the businesses of the petitioners as well as
restricting the rights of their patrons without sufficient justification. The WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is
Ordinance rashly equates wash rates and renting out a room more than twice REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 9, is
a day with immorality without accommodating innocuous intentions. REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.
The promotion of public welfare and a sense of morality among citizens
deserves the full endorsement of the judiciary provided that such measures do SO ORDERED.
not trample rights this Court is sworn to protect.77 The notion that the
promotion of public morality is a function of the State is as old as Aristotle.78
The advancement of moral relativism as a school of philosophy does not de-
legitimize the role of morality in law, even if it may foster wider debate on
which particular behavior to penalize. It is conceivable that a society with
relatively little shared morality among its citizens could be functional so long
as the pursuit of sharply variant moral perspectives yields an adequate
accommodation of different interests.79

To be candid about it, the oft-quoted American maxim that "you cannot
legislate morality" is ultimately illegitimate as a matter of law, since as
explained by Calabresi, that phrase is more accurately interpreted as meaning
that efforts to legislate morality will fail if they are widely at variance with
public attitudes about right and wrong.80 Our penal laws, for one, are founded
on age-old moral traditions, and as long as there are widely accepted
distinctions between right and wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen not only the
acceptance of the right-wrong distinction, but also the advent of fundamental
liberties as the key to the enjoyment of life to the fullest. Our democracy is
distinguished from non-free societies not with any more extensive elaboration
on our part of what is moral and immoral, but from our recognition that the
individual liberty to make the choices in our lives is innate, and protected by
the State. Independent and fair-minded judges themselves are under a moral
duty to uphold the Constitution as the embodiment of the rule of law, by
reason of their expression of consent to do so when they take the oath of
office, and because they are entrusted by the people to uphold the law.81

Even as the implementation of moral norms remains an indispensable

complement to governance, that prerogative is hardly absolute, especially in
the face of the norms of due process of liberty. And while the tension may
often be left to the courts to relieve, it is possible for the government to avoid
the constitutional conflict by employing more judicious, less drastic means to
promote morality.

EN BANC
G.R. No. 159110, December 10, 2013
VALENTINO L. LEGASPI, Petitioner, v. CITY OF CEBU, T.C. (TITO)
SAYSON AND RICARDO HAPITAN, Respondents.
[G.R. No. 159692]
BIENVENIDO P. JABAN, SR., AND BIENVENIDO DOUGLAS LUKE
BRADBURY JABAN, Petitioners, v. COURT OF APPEALS, CITY OF
CEBU, CITY MAYOR ALVIN GARCIA, SANGGUNIANG PANLUNSOD OF
CITY OF CEBU, HON. RENATO V. OSMEÑA, AS PRESIDING OFFICER
OF THE SANGGUNIANG PANLUNSOD, AND CITOM CHAIRMAN ALAN
GAVIOLA, AS CITOM CHIEF, CITOM TRAFFIC ENFORCER E. A.
ROMERO, AND LITO GILBUENA, Respondents.
DECISION
BERSAMIN, J.:
The goal of the decentralization of powers to the local government units
(LGUs) is to ensure the enjoyment by each of the territorial and political
subdivisions of the State of a genuine and meaningful local autonomy. To
attain the goal, the National Legislature has devolved the three great
inherent powers of the State to the LGUs. Each political subdivision is
thereby vested with such powers subject to constitutional and statutory
limitations.
In particular, the Local Government Code (LGC) has expressly empowered
the LGUs to enact and adopt ordinances to regulate vehicular traffic and to
prohibit illegal parking within their jurisdictions. Now challenged before the
Court are the constitutionality and validity of one such ordinance on the
ground that the ordinance constituted a contravention of the guaranty of
due process under the Constitution by authorizing the immobilization of
offending vehicles through the clamping of tires. The challenge originated
in the Regional Trial Court (RTC) at the instance of the petitioners – vehicle
owners who had borne the brunt of the implementation of the ordinance –
with the RTC declaring the ordinance unconstitutional, but it has now
reached the Court as a consolidated appeal taken in due course by the
petitioners after the Court of Appeals (CA) reversed the judgment of the
RTC.
Antecedents
On January 27, 1997 the Sangguniang Panlungsod of the City of Cebu
enacted Ordinance No. 1664 to authorize the traffic enforcers of Cebu City
to immobilize any motor vehicle violating the parking restrictions and
prohibitions defined in Ordinance No. 801 (Traffic Code of Cebu City).1 The
pertinent provisions of Ordinance No. 1664 read: chanRoblesvirtualLawlibrary
Section 1. POLICY – It is the policy of the government of the City of Cebu
to immobilize any motor vehicle violating any provision of any City
Ordinance on Parking Prohibitions or Restrictions, more particularly
Ordinance No. 801, otherwise known as the Traffic Code of Cebu City, as
amended, in order to have a smooth flow of vehicular traffic in all the
streets in the City of Cebu at all times.
Section 2. IMMOBILIZATION OF VEHICLES – Any vehicle found violating
any provision of any existing ordinance of the City of Cebu which prohibits,
regulates or restricts the parking of vehicles shall be immobilized by
clamping any tire of the said violating vehicle with the use of a denver boot
vehicle immobilizer or any other special gadget designed to immobilize
motor vehicles. For this particular purpose, any traffic enforcer of the City
(regular PNP Personnel or Cebu City Traffic Law Enforcement Personnel) is
hereby authorized to immobilize any violating vehicle as hereinabove
provided.
Section 3. PENALTIES – Any motor vehicle, owner or driver violating any
ordinance on parking prohibitions, regulations and/or restrictions, as may
be provided under Ordinance No. 801, as amended, or any other existing
ordinance, shall be penalized in accordance with the penalties imposed in
the ordinance so violated, provided that the vehicle immobilizer may not be
removed or released without its owner or driver paying first to the City
Treasurer of Cebu City through the Traffic Violations Bureau (TVB) all the
accumulated penalties for all prior traffic law violations that remain unpaid
or unsettled, plus the administrative penalty of Five Hundred Pesos
(P500.00) for the immobilization of the said vehicle, and receipts of such
payments presented to the concerned personnel of the bureau responsible
for the release of the immobilized vehicle, unless otherwise ordered
released by any of the following officers: ch
a) Chairman, CITOM
b) Chairman, Committee on Police, Fire and Penology
c) Asst. City Fiscal Felipe Belciña
3.1 Any person who tampers or tries to release an immobilized or clamped
motor vehicle by destroying the denver boot vehicle immobilizer or other
such special gadgets, shall be liable for its loss or destruction and shall be
prosecuted for such loss or destruction  under pain or penalty under the
Revised Penal Code and any other existing ordinance of the City of Cebu for
the criminal act, in addition to his/her civil liabilities under the Civil Code of
the Philippines; Provided that any such act may not be compromised nor
settled amicably extrajudicially.
3.2 Any immobilized vehicle which is unattended and constitute an
obstruction to the free flow of traffic or a hazard thereof shall be towed to
the city government impounding area for safekeeping and may be released
only after the provision of Section 3 hereof shall have been fully complied
with.
3.3 Any person who violates any provision of this ordinance shall, upon
conviction, be penalized with imprisonment of not less than one (1) month
nor more than six (6) months or of a fine of not less than Two Thousand
Pesos (P2,000.00) nor more than Five Thousand Pesos (P5,000.00), or
both such imprisonment and fine at the discretion of the court.2 ChanRoblesVirtualawlibrary
On July 29, 1997, Atty. Bienvenido Jaban (Jaban, Sr.) and his son Atty.
Bienvenido Douglas Luke Bradbury Jaban (Jaban, Jr.) brought suit in the
RTC in Cebu City against the City of Cebu, then represented by Hon. Alvin
Garcia, its City Mayor, the Sangguniang Panlungsod of Cebu City and its
Presiding Officer, Hon. Renato V. Osmeña, and the chairman and
operatives or officers of the City Traffic Operations Management (CITOM),
seeking the declaration of Ordinance No. 1644 as unconstitutional for being
in violation of due process and for being contrary to law, and damages.3 
Their complaint alleged that on June 23, 1997, Jaban Sr. had properly
parked his car in a paying parking area on Manalili Street, Cebu City to get
certain records and documents from his office;4 that upon his return after
less than 10 minutes, he had found his car being immobilized by a steel
clamp, and a notice being posted on the car to the effect that it would be a
criminal offense to break the clamp;5 that he had been infuriated by the
immobilization of his car because he had been thereby rendered unable to
meet an important client on that day; that his car was impounded for three
days, and was informed at the office of the CITOM that he had first to pay
P4,200.00 as a fine to the City Treasurer of Cebu City for the release of his
car;6 that the fine was imposed without any court hearing and without due
process of law, for he was not even told why his car had been immobilized;
that he had undergone a similar incident of clamping of his car on the early
morning of November 20, 1997 while his car was parked properly in a
parking lot in front of the San Nicolas Pasil Market in Cebu City without
violating any traffic regulation or causing any obstruction; that he was
compelled to pay P1,500.00 (itemized as P500.00 for the clamping and
P1,000.00 for the violation) without any court hearing and final judgment;
that on May 19, 1997, Jaban, Jr. parked his car in a very secluded place
where there was no sign prohibiting parking; that his car was immobilized
by CITOM operative Lito Gilbuena; and that he was compelled to pay the
total sum of P1,400.00 for the release of his car without a court hearing
and a final judgment rendered by a court of justice.7cralawred
On August 11, 1997, Valentino Legaspi (Legaspi) likewise sued in the RTC
the City of Cebu, T.C. Sayson, Ricardo Hapitan and John Does to demand
the delivery of personal property, declaration of nullity of the Traffic Code
of Cebu City, and damages.8 He averred that on the morning of July 29,
1997, he had left his car occupying a portion of the sidewalk and the street
outside the gate of his house to make way for the vehicle of
the anay exterminator who had asked to be allowed to unload his materials
and equipment from the front of the residence inasmuch as his daughter’s
car had been parked in the carport, with the assurance that the unloading
would not take too long;9 that while waiting for the anay exterminator to
finish unloading, the phone in his office inside the house had rung,
impelling him to go into the house to answer the call; that after a short
while, his son–in–law informed him that unknown persons had clamped the
front wheel of his car;10 that he rushed outside and found a traffic citation
stating that his car had been clamped by CITOM representatives with a
warning that the unauthorized removal of the clamp would subject the
remover to criminal charges;11 and that in the late afternoon a group
headed by Ricardo Hapitan towed the car even if it was not obstructing the
flow of traffic.12
In separate answers for the City of Cebu and its co–defendants,13 the City
Attorney of Cebu presented similar defenses, essentially stating that the
traffic enforcers had only upheld the law by clamping the vehicles of the
plaintiffs;14 and that Ordinance No. 1664 enjoyed the presumption of
constitutionality and validity.15
The cases were consolidated before Branch 58 of the RTC, which, after
trial, rendered on January 22, 1999 its decision declaring Ordinance No.
1664 as null and void upon the following ratiocination:chanRoblesvirtualLawlibrary
In clear and simple phrase, the essence of due process was expressed by
Daniel Webster as a “law which hears before it condemns”. In another
case[s], “procedural due process is that which hears before it condemns,
which proceeds upon inquiry and renders judgment only after trial.” It
contemplate(s) notice and opportunity to be heard before judgment is
rendered affecting ones (sic) person or property.” In both procedural and
substantive due process, a hearing is always a pre–requisite, hence, the
taking or deprivation of one’s life, liberty or property must be done upon
and with observance of the “due process” clause of the Constitution and
the non–observance or violation thereof is, perforce, unconstitutional.
Under Ordinance No. 1664, when a vehicle is parked in a prohibited,
restrycted (sic) or regulated area in the street or along the street, the
vehicle is immobilized by clamping any tire of said vehicle with the use of a
denver boot vehicle immobilizer or any other special gadget which
immobilized the motor vehicle. The violating vehicle is immobilized, thus,
depriving its owner of the use thereof at the sole determination of any
traffic enforcer or regular PNP personnel or Cebu City Traffic Law
Enforcement Personnel. The vehicle immobilizer cannot be removed or
released without the owner or driver paying first to the City Treasurer of
Cebu through the Traffic Violations Bureau all the accumulated penalties of
all unpaid or unsettled traffic law violations, plus the administrative penalty
of P500.00 and, further, the immobilized vehicle shall be released only
upon presentation of the receipt of said payments and upon release order
by the Chairman, CITOM, or Chairman, Committee on Police, Fire and
Penology, or Asst. City Fiscal Felipe Belcina. It should be stressed that the
owner of the immobilized vehicle shall have to undergo all these ordeals at
the mercy of the Traffic Law Enforcer who, as the Ordinance in question
mandates, is the arresting officer, prosecutor, Judge and collector.
Otherwise stated, the owner of the immobilized motor vehicle is deprived of
his right to the use of his/her vehicle and penalized without a hearing by a
person who is not legally or duly vested with such rights, power or
authority. The Ordinance in question is penal in nature, and it has been
held;
xxx
WHEREFORE, premised (sic) considered, judgment is hereby rendered
declaring Ordinance No. 1664 unconstitutional and directing the defendant
City of Cebu to pay the plaintiff Valentino Legaspi the sum of P110,000.00
representing the value of his car, and to all the plaintiffs, Valentino L.
Legaspi, Bienvenido P. Jaban and Bienvenido Douglas Luke Bradbury
Jaban, the sum of P100,000.00 each or P300,000.00 all as nominal
damages and another P100,000.00 each or P300,000.00 all as temperate
or moderate damages. With costs against defendant City of Cebu.
SO ORDERED.16 (citations omitted) chanrblesvirtualawlibrary
The City of Cebu and its co–defendants appealed to the CA, assigning the
following errors to the RTC, namely: (a) the RTC erred in declaring that
Ordinance No. 1664 was unconstitutional; (b) granting, arguendo, that
Ordinance No. 1664 was unconstitutional, the RTC gravely erred in holding
that any violation prior to its declaration as being unconstitutional was
irrelevant; (c) granting, arguendo, that Ordinance No. 1664 was
unconstitutional, the RTC gravely erred in awarding damages to the
plaintiffs; (d) granting, arguendo, that the plaintiffs were entitled to
damages, the damages awarded were excessive and contrary to law; and
(e) the decision of the RTC was void, because the Office of the Solicitor
General (OSG) had not been notified of the proceedings.
On June 16, 2003, the CA promulgated its assailed decision,17 overturning
the RTC and declaring Ordinance No. 1664 valid, to wit:
The principal thrust of this appeal is the constitutionality of Ordinance
1664. Defendants–appellants contend that the passage of Ordinance 1664
is in accordance with the police powers exercised by the City of Cebu
through the Sangguniang Panlungsod and granted by RA 7160, otherwise
known as the Local Government Code. A thematic analysis of the law on
municipal corporations confirms this view. As in previous legislation, the
Local Government Code delegates police powers to the local governments
in two ways. Firstly, it enumerates the subjects on which the Sangguniang
Panlungsod may exercise these powers. Thus, with respect to the use of
public streets, Section 458 of the Code states:
chanRoblesvirtualLawlibrary
Section 458 (a) The sangguniang panlungsod, as the legislative branch of
the city, x x x shall x x x
(5) (v) Regulate the use of streets, avenues, alleys, sidewalks, bridges,
park and other public places and approve the construction, improvement,
repair and maintenance of the same; establish bus and vehicle stops and
terminals or regulate the use of the same by privately owned vehicles
which serve the public; regulate garages and the operation of conveyances
for hire; designate stands to be occupied by public vehicles when not in
use; regulate the putting up of signs, signposts, awnings and awning posts
on the streets; and provide for the lighting, cleaning and sprinkling of
streets and public places;
(vi) Regulate traffic on all streets and bridges; prohibit encroachments or
obstacles thereon and, when necessary in the interest of public welfare,
authorize the removal of encroachments and illegal constructions in public
places.
chanRoblesvirtualLawlibrary
It then makes a general grant of the police power. The scope of the
legislative authority of the local government is set out in Section 16, to
wit:chanRoblesvirtualLawlibrary
Section 16. General Welfare. – Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well
as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare.
This provision contains what is traditionally known as the general welfare
clause. As expounded in United States vs. Salaveria, 39 Phil 102, the
general welfare clause has two branches. One branch attaches itself to the
main trunk of municipal authority, and relates to such ordinances and
regulations as may be necessary to carry into effect and discharge the
powers and duties conferred upon the municipal council by law. The second
branch of the clause is much more independent of the specific functions of
the council, and authorizes such ordinances as shall seem necessary and
proper to provide for health, safety, prosperity and convenience of the
municipality and its inhabitants.
In a vital and critical way, the general welfare clause complements the
more specific powers granted a local government. It serves as a catch–all
provision that ensures that the local government will be equipped to meet
any local contingency that bears upon the welfare of its constituents but
has not been actually anticipated. So varied and protean are the activities
that affect the legitimate interests of the local inhabitants that it is well–
nigh impossible to say beforehand what may or may not be done
specifically through law. To ensure that a local government can react
positively to the people’s needs and expectations, the general welfare
clause has been devised and interpreted to allow the local legislative
council to enact such measures as the occasion requires.
Founded on clear authority and tradition, Ordinance 1664 may be deemed
a legitimate exercise of the police powers of the Sangguniang Panlungsod
of the City of Cebu. This local law authorizes traffic enforcers to immobilize
and tow for safekeeping vehicles on the streets that are illegally parked
and to release them upon payment of the announced penalties. As
explained in the preamble, it has become necessary to resort to these
measures because of the traffic congestion caused by illegal parking and
the inability of existing penalties to curb it. The ordinance is designed to
improve traffic conditions in the City of Cebu and thus shows a real and
substantial relation to the welfare, comfort and convenience of the people
of Cebu. The only restrictions to an ordinance passed under the general
welfare clause, as declared in Salaveria, is that the regulation must be
reasonable, consonant with the general powers and purposes of the
corporation, consistent with national laws and policies, and not
unreasonable or discriminatory. The measure in question undoubtedly
comes within these parameters.
Upon the denial of their respective motions for reconsideration on August
4, 2003, the Jabans and Legaspi came to the Court via separate petitions
for review on certiorari. The appeals were consolidated.
Issues
Based on the submissions of the parties, the following issues are decisive
of the challenge, to wit: chanRoblesvirtualLawlibrary
1. Whether Ordinance No. 1664 was enacted within the ambit of
the legislative powers of the City of Cebu; and
2. Whether Ordinance No. 1664 complied with the requirements
for validity and constitutionality, particularly the limitations set
by the Constitution and the relevant statutes.
Ruling
The petitions for review have no merit.
A.
Tests for a valid ordinance
In City of Manila v. Laguio, Jr.,18 the Court restates the tests of a valid
ordinance thusly:chanRoblesvirtualLawlibrary
The tests of a valid ordinance are well established. A long line of decisions
has held that for an ordinance to be valid, it must not only be within the
corporate powers of the local government unit to enact and must be passed
according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3) must
not be partial or discriminatory; (4) must not prohibit but may regulate
trade; (5) must be general and consistent with public policy; and (6) must
not be unreasonable.19 ChanRoblesVirtualawlibrary
As jurisprudence indicates, the tests are divided into the formal (i.e.,
whether the ordinance was enacted within the corporate powers of the
LGU, and whether it was passed in accordance with the procedure
prescribed by law), and the substantive (i.e., involving inherent merit, like
the conformity of the ordinance with the limitations under the Constitution
and the statutes, as well as with the requirements of fairness and reason,
and its consistency with public policy).
B.
Compliance of Ordinance No. 1664 with the formal requirements
Was the enactment of Ordinance No. 1664 within the corporate powers of
the LGU of the City of Cebu?
The answer is in the affirmative. Indeed, with no issues being hereby
raised against the formalities attendant to the enactment of Ordinance No.
1664, we presume its full compliance with the test in that regard. Congress
enacted the LGC as the implementing law for the delegation to the various
LGUs of the State’s great powers, namely: the police power, the power of
eminent domain, and the power of taxation. The LGC was fashioned to
delineate the specific parameters and limitations to be complied with by
each LGU in the exercise of these delegated powers with the view of
making each LGU a fully functioning subdivision of the State subject to the
constitutional and statutory limitations.
In particular, police power is regarded as “the most essential, insistent and
the least limitable of powers, extending as it does ‘to all the great public
needs.’”20 It is unquestionably “the power vested in the legislature by the
constitution, to make, ordain and establish all manner of wholesome and
reasonable laws, statutes and ordinances, either with penalties or without,
not repugnant to the constitution, as they shall judge to be for the good
and welfare of the commonwealth, and of the subject of the
same.”21 According to Cooley: “[The police power] embraces the whole
system of internal regulation by which the state seeks not only to preserve
the public order and to prevent offences against itself, but also to establish
for the intercourse of citizens with citizens, those rules of good manners
and good neighborhood which are calculated to prevent the conflict of
rights and to insure to each the uninterrupted enjoyment of his own, so far
as it is reasonably consistent with the right enjoyment of rights by
others.”22
In point is the exercise by the LGU of the City of Cebu of delegated police
power. In Metropolitan Manila Development Authority v. Bel–Air Village
Association, Inc.,23 the Court cogently observed:
It bears stressing that police power is lodged primarily in the National
Legislature. It cannot be exercised by any group or body of individuals not
possessing legislative power. The National Legislature, however, may
delegate this power to the President and administrative boards as
well as the lawmaking bodies of municipal corporations or local
government units. Once delegated, the agents can exercise only
such legislative powers as are conferred on them by the national
lawmaking body. (emphasis supplied) chanroblesvirtualawlibrary
The CA opined, and correctly so, that vesting cities like the City of Cebu
with the legislative power to enact traffic rules and regulations was
expressly done through Section 458 of the LGC, and also generally by
virtue of the General Welfare Clause embodied in Section 16 of the LGC.24
Section 458 of the LGC relevantly states: chanRoblesvirtualLawlibrary
Section 458. Powers, Duties, Functions and Composition. – (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code
and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
xxx
(5) Approve ordinances which shall ensure the efficient and
effective delivery of the basic services and facilities as provided for
under Section 17 of this Code, and in addition to said services and
facilities, shall:
xxx
(v) Regulate the use of streets, avenues, alleys, sidewalks, bridges,
parks and other public places and approve the construction,
improvement repair and maintenance of the same; establish bus
and vehicle stops and terminals or regulate the use of the same by
privately–owned vehicles which serve the public; regulate garages
and operation of conveyances for hire; designate stands to be
occupied by public vehicles when not in use; regulate the putting
up of signs, signposts, awnings and awning posts on the streets;
and provide for the lighting, cleaning and sprinkling of streets and
public places;
chanRoblesvirtualLawlibrary
(vi) Regulate traffic on all streets and bridges; prohibit
encroachments or obstacles thereon and, when necessary in the
interest of public welfare, authorize the removal of encroachments
and illegal constructions in public places; (emphasis supplied) chanroblesvirtualawlibrary
The foregoing delegation reflected the desire of Congress to leave to the
cities themselves the task of confronting the problem of traffic congestions
associated with development and progress because they were directly
familiar with the situations in their respective jurisdictions. Indeed, the
LGUs would be in the best position to craft their traffic codes because of
their familiarity with the conditions peculiar to their communities. With the
broad latitude in this regard allowed to the LGUs of the cities, their traffic
regulations must be held valid and effective unless they infringed the
constitutional limitations and statutory safeguards.
C.
Compliance of Ordinance No. 1664with the substantive
requirements
The first substantive requirement for a valid ordinance is the adherence to
the constitutional guaranty of due process of law. The guaranty is
embedded in Article III, Section 1 of the Constitution, which ordains: chanRoblesvirtualLawlibrary
Section 1. No person shall be deprived of life, liberty or property without
due process of law, nor shall any person be denied the equal protection of
the laws.
The guaranty of due process of law is a constitutional safeguard against
any arbitrariness on the part of the Government, whether committed by
the Legislature, the Executive, or the Judiciary. It is a protection essential
to every inhabitant of the country, for, as a commentator on Constitutional
Law has vividly written:25
x x x. If the law itself unreasonably deprives a person of his life, liberty, or
property, he is denied the protection of due process. If the enjoyment of
his rights is conditioned on an unreasonable requirement, due process is
likewise violated. Whatsoever be the source of such rights, be it the
Constitution itself or merely a statute, its unjustified withholding would also
be a violation of due process. Any government act that militates against
the ordinary norms of justice or fair play is considered an infraction of the
great guaranty of due process; and this is true whether the denial involves
violation merely of the procedure prescribed by the law or affects the very
validity of the law itself.
In City of Manila v. Laguio, Jr.,26 the Court expounded on the aspects of the
guaranty of due process of law as a limitation on the acts of
government, viz: chanRoblesvirtualLawlibrary
This clause has been interpreted as imposing two separate limits on
government, usually called “procedural due process” and “substantive due
process.”
Procedural due process, as the phrase implies, refers to the procedures
that the government must follow before it deprives a person of life, liberty,
or property. Classic procedural due process issues are concerned with that
kind of notice and what form of hearing the government must provide
when it takes a particular action.
Substantive due process, as that phrase connotes, asks whether the
government has an adequate reason for taking away a person’s life, liberty,
or property. In other words, substantive due process looks to whether
there is sufficient justification for the government’s action. Case law in the
United States (U.S.) tells us that whether there is such a justification
depends very much on the level of scrutiny used. For example, if a law is in
an area where only rational basis review is applied, substantive due
process is met so long as the law is rationally related to a legitimate
government purpose. But if it is an area where strict scrutiny is used, such
as for protecting fundamental rights, then the government will meet
substantive due process only if it can prove that the law is necessary to
achieve a compelling government purpose.
The police power granted to local government units must always be
exercised with utmost observance of the rights of the people to due
process and equal protection of the law. Such power cannot be exercised
whimsically, arbitrarily or despotically as its exercise is subject to a
qualification, limitation or restriction demanded by the respect and regard
due to the prescription of the fundamental law, particularly those forming
part of the Bill of Rights. Individual rights, it bears emphasis, may be
adversely affected only to the extent that may fairly be required by the
legitimate demands of public interest or public welfare. Due process
requires the intrinsic validity of the law in interfering with the rights of the
person to his life, liberty and property.27ChanRoblesVirtualawlibrary
The Jabans contend that Ordinance No. 1664, by leaving the confiscation
and immobilization of the motor vehicles to the traffic enforcers or the
regular personnel of the Philippine National Police (PNP) instead of to
officials exercising judicial authority, was violative of the constitutional
guaranty of due process; that such confiscation and immobilization should
only be after a hearing on the merits by courts of law; and that the
immobilization and the clamping of the cars and motor vehicles by the
police or traffic enforcers could be subject to abuse.
On his part, Legaspi likewise contends that Ordinance No. 1664 violated
the constitutional guaranty of due process for being arbitrary and
oppressive; and that its provisions conferring upon the traffic enforcers the
absolute discretion to be the enforcers, prosecutors, judges and collectors
all at the same time were vague and ambiguous.28 He reminds that the
grant of police powers for the general welfare under the LGC was not
unlimited but subject to constitutional limitations;29 and that these
consolidated cases should not be resolved differently from the resolution of
a third case assailing the validity of Ordinance No. 1664 (Astillero case), in
which the decision of the same RTC declaring Ordinance No. 1664 as
unconstitutional had attained finality following the denial of due course to
the appeal of the City of Cebu and its co–defendants.
Judged according to the foregoing enunciation of the guaranty of due
process of law, the contentions of the petitioners cannot be sustained. Even
under strict scrutiny review, Ordinance No. 1664 met the substantive tests
of validity and constitutionality by its conformity with the limitations under
the Constitution and the statutes, as well as with the requirements of
fairness and reason, and its consistency with public policy.
To us, the terms encroachment and obstacles used in Section 458 of the
LGC, supra, were broad enough to include illegally parked vehicles or
whatever else obstructed the streets, alleys and sidewalks, which were
precisely the subject of Ordinance No. 1664 in avowedly aiming to ensure
“a smooth flow of vehicular traffic in all the streets in the City of Cebu at all
times” (Section 1). This aim was borne out by its Whereas Clauses, viz: chanRoblesvirtualLawlibrary
WHEREAS, the City of Cebu enacted the Traffic Code (Ordinance No. 801)
as amended, provided for Parking Restrictions and Parking Prohibitions in
the streets of Cebu City;
WHEREAS, despite the restrictions and prohibitions of parking on
certain streets of Cebu City, violations continued unabated due,
among others, to the very low penalties imposed under the Traffic
Code of Cebu City;
WHEREAS, City Ordinance 1642 was enacted in order to address
the traffic congestions caused by illegal parkings in the streets of
Cebu City;
WHEREAS, there is a need to amend City Ordinance No.1642 in
order to fully address and solve the problem of illegal parking and
other violations of the Traffic Code of Cebu City;30 (emphasis
supplied)chanroblesvirtualawlibrary
Considering that traffic congestions were already retarding the growth and
progress in the population and economic centers of the country, the plain
objective of Ordinance No. 1664 was to serve the public interest and
advance the general welfare in the City of Cebu. Its adoption was,
therefore, in order to fulfill the compelling government purpose of
immediately addressing the burgeoning traffic congestions caused by
illegally parked vehicles obstructing the streets of the City of Cebu.
Legaspi’s attack against the provisions of Ordinance No. 1664 for being
vague and ambiguous cannot stand scrutiny. As can be readily seen, its
text was forthright and unambiguous in all respects. There could be no
confusion on the meaning and coverage of the ordinance. But should there
be any vagueness and ambiguity in the provisions, which the OSG does not
concede,31 there was nothing that a proper application of the basic rules of
statutory construction could not justly rectify.
The petitioners further assert that drivers or vehicle owners affected by
Ordinance No. 1664 like themselves were not accorded the opportunity to
protest the clamping, towing, and impounding of the vehicles, or even to
be heard and to explain their side prior to the immobilization of their
vehicles; and that the ordinance was oppressive and arbitrary for that
reason.
The adverse assertions against Ordinance No. 1664 are unwarranted.
Firstly, Ordinance No. 1664 was far from oppressive and arbitrary. Any
driver or vehicle owner whose vehicle was immobilized by clamping could
protest such action of a traffic enforcer or PNP personnel enforcing the
ordinance. Section 3 of Ordinance No. 1664, supra, textually afforded an
administrative escape in the form of permitting the release of the
immobilized vehicle upon a protest directly made to the Chairman of
CITOM; or to the Chairman of the Committee on Police, Fire and Penology
of the City of Cebu; or to Asst. City Prosecutor Felipe Belciña – officials
named in the ordinance itself. The release could be ordered by any of such
officials even without the payment of the stipulated fine. That none of the
petitioners, albeit lawyers all, resorted to such recourse did not diminish
the fairness and reasonableness of the escape clause written in the
ordinance. Secondly, the immobilization of a vehicle by clamping pursuant
to the ordinance was not necessary if the driver or vehicle owner was
around at the time of the apprehension for illegal parking or obstruction. In
that situation, the enforcer would simply either require the driver to move
the vehicle or issue a traffic citation should the latter persist in his
violation. The clamping would happen only to prevent the transgressor
from using the vehicle itself to escape the due sanctions. And, lastly, the
towing away of the immobilized vehicle was not equivalent to a summary
impounding, but designed to prevent the immobilized vehicle from
obstructing traffic in the vicinity of the apprehension and thereby ensure
the smooth flow of traffic. The owner of the towed vehicle would not be
deprived of his property.
In fine, the circumstances set forth herein indicate that Ordinance No. 1664
complied with the elements of fairness and reasonableness.
Did Ordinance No. 1664 meet the requirements of procedural due process?
Notice and hearing are the essential requirements of procedural due
process. Yet, there are many instances under our laws in which the
absence of one or both of such requirements is not necessarily a denial or
deprivation of due process. Among the instances are the cancellation of the
passport of a person being sought for the commission of a crime, the
preventive suspension of a civil servant facing administrative charges, the
distraint of properties to answer for tax delinquencies, the padlocking of
restaurants found to be unsanitary or of theaters showing obscene movies, declaration of unconstitutionality by an inferior court was binding only on
and the abatement of nuisance per se.32 Add to them the arrest of a the parties, but that a declaration of unconstitutionality by the Court would
person in flagrante delicto.33 be a precedent binding on all.35

The clamping of the petitioners’ vehicles pursuant to Ordinance No. 1664 WHEREFORE, the Court DENIES the petitions for review on certiorari for
(and of the vehicles of others similarly situated) was of the same character their lack of merit; AFFIRMS the decision promulgated on June 16, 2003
as the aforecited established exceptions dispensing with notice and by the Court of Appeals; and ORDERS the petitioners to pay the costs of
hearing. As already said, the immobilization of illegally parked vehicles by suit.
clamping the tires was necessary because the transgressors were not
around at the time of apprehension. Under such circumstance, notice and SO ORDERED.
hearing would be superfluous. Nor should the lack of a trial–type hearing
prior to the clamping constitute a breach of procedural due process, for
giving the transgressors the chance to reverse the apprehensions through
a timely protest could equally satisfy the need for a hearing. In other
words, the prior intervention of a court of law was not indispensable to
ensure a compliance with the guaranty of due process.

To reiterate, the clamping of the illegally parked vehicles was a fair and
reasonable way to enforce the ordinance against its transgressors;
otherwise, the transgressors would evade liability by simply driving away.

Finally, Legaspi’s position, that the final decision of the RTC rendered in the
Astillero case declaring Ordinance No. 1664 unconstitutional bound the City
of Cebu, thereby precluding these consolidated appeals from being decided
differently, is utterly untenable. For one, Legaspi undeservedly extends too
much importance to an irrelevant decision of the RTC – irrelevant, because
the connection between that case to these cases was not at all shown. For
another, he ignores that it should be the RTC that had improperly acted for
so deciding the Astillero case despite the appeals in these cases being
already pending in the CA. Being the same court in the three cases, the
RTC should have anticipated that in the regular course of proceedings, the
outcome of the appeal in these cases then pending before the CA would
ultimately be elevated to and determined by no less than the Court itself.
Such anticipation should have made it refrain from declaring Ordinance No.
1664 unconstitutional, for a lower court like itself, appreciating its position
in the “interrelation and operation of the integrated judicial system of the
nation,” should have exercised a “becoming modesty” on the issue of the
constitutionality of the same ordinance that the Constitution required the
majority vote of the Members of the Court sitting en banc to
determine.34 Such “becoming modesty” also forewarned that any
 REMMAN ENTERPRISES, INC. and CHAMBER OF REAL ESTATE AND
BUILDERS'ASSOCIATION, Petitioners, vs. PROFESSIONAL REGULATORY
BOARD OF REAL ESTATE SERVICE and PROFESSIONAL REGULATION
COMMISSION, Respondents.

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 is the Decision  dated July 12,
1

2011 of the Regional Trial Court (RTC) of Manila, Branch 42 denying the
petition to declare as unconstitutional Sections 28(a), 29 and 32 of Republic
Act (R.A.) No. 9646.

R.A. No. 9646, otherwise known as the "Real Estate Service Act of the
Philippines" was signed into law on June 29, 2009 by President Gloria
Macapagal-Arroyo. It aims to professionalize the real estate service sector
under a regulatory scheme of licensing, registration and supervision of real
estate service practitioners (real estate brokers, appraisers, assessors,
consultants and salespersons) in the country. Prior to its enactment, real
estate service practitioners were under the supervision of the Department of
Trade and Industry (DTI) through the Bureau of Trade Regulation and
Consumer Protection (BTRCP), in the exercise of its consumer regulation
functions. Such authority is now transferred to the Professional Regulation
Commission (PRC) through the Professional Regulatory Board of Real Estate
Service (PRBRES) created under the new law.

The implementing rules and regulations (IRR) of R.A. No. 9646 were
promulgated on July 21, 2010 by the PRC and PRBRES under Resolution No.
02, Series of 2010.

On December 7, 2010, herein petitioners Remman Enterprises, Inc. (REI) and

the Chamber of Real Estate and Builders’ Association (CREBA) instituted Civil
Case No. 10-124776 in the Regional Trial Court of Manila, Branch 42.
Petitioners sought to declare as void and unconstitutional the following
provisions of R.A. No. 9646:

SEC. 28. Exemptions from the Acts Constituting the Practice of Real Estate
EN BANC G.R. No. 197676               February 4, 2014 Service. – The provisions of this Act and its rules and regulations shall not
apply to the following:
(a) Any person, natural or juridical, who shall directly perform by
himself/herself the acts mentioned in Section 3 hereof with reference to
his/her or its own property, except real estate developers;
xxxx
SEC. 29. Prohibition Against the Unauthorized Practice of Real Estate Service.
– No person shall practice or offer to practice real estate service in the
Philippines or offer himself/herself as real estate service practitioner, or use
the title, word, letter, figure or any sign tending to convey the impression that
one is a real estate service practitioner, or advertise or indicate in any manner
whatsoever that one is qualified to practice the profession, or be appointed as
real property appraiser or assessor in any national government entity or local
government unit, unless he/she has satisfactorily passed the licensure
examination given by the Board, except as otherwise provided in this Act, a
holder of a valid certificate of registration, and professional identification card
or a valid special/temporary permit duly issued to him/her by the Board and
the Commission, and in the case of real estate brokers and private appraisers,
they have paid the required bond as hereto provided.
xxxx
SEC. 32. Corporate Practice of the Real Estate Service. – (a) No partnership or
corporation shall engage in the business of real estate service unless it is duly
registered with the Securities and Exchange Commission (SEC), and the
persons authorized to act for the partnership or corporation are all duly
registered and licensed real estate brokers, appraisers or consultants, as the
case may be. The partnership or corporation shall regularly submit a list of its
real estate service practitioners to the Commission and to the SEC as part of
its annual reportorial requirements. There shall at least be one (1) licensed
real estate broker for every twenty (20) accredited salespersons.
(b) Divisions or departments of partnerships and corporations engaged in
marketing or selling any real estate development project in the regular course
of business must be headed by full-time registered and licensed real estate
brokers.
(c) Branch offices of real estate brokers, appraisers or consultants must be
manned by a duly licensed real estate broker, appraiser or consultant as the
case may be.
In case of resignation or termination from employment of a real estate service
practitioner, the same shall be reported by the employer to the Board within a
period not to exceed fifteen (15) days from the date of effectivity of the
resignation or termination.
Subject to the provisions of the Labor Code, a corporation or partnership may
hire the services of registered and licensed real estate brokers, appraisers or
consultants on commission basis to perform real estate services and the latter
shall be deemed independent contractors and not employees of such
corporations. (Emphasis and underscoring supplied.)
According to petitioners, the new law is constitutionally infirm because (1) it
violates Article VI, Section 26 (1) of the 1987 Philippine Constitution which
mandates that "[e]very bill passed by Congress shall embrace only one subject
which shall be expressed in the title thereof"; (2) it is in direct conflict with
Executive Order (E.O.) No. 648 which transferred the exclusive jurisdiction of
the National Housing Authority (NHA) to regulate the real estate trade and
business to the Human Settlements Commission, now the Housing and Land
Use Regulatory Board (HLURB), which authority includes the issuance of
license to sell of subdivision owners and developers pursuant to Presidential
Decree (P.D.) No. 957; (3) it violates the due process clause as it impinges on
the real estate developers’ most basic ownership rights, the right to use and
dispose property, which is enshrined in Article 428 of the Civil Code; and (4)
Section 28(a) of R.A. No. 9646 violates the equal protection clause as no
substantial distinctions exist between real estate developers and the exempted
group mentioned since both are property owners dealing with their own
property.
Additionally, petitioners contended that the lofty goal of nurturing and
developing a "corps of technically competent, reasonable and respected
professional real estate service practitioners" is not served by curtailing the
right of real estate developers to conduct their business of selling properties.
On the contrary, these restrictions would have disastrous effects on the real
estate industry as the additional cost of commissions would affect the pricing
and affordability of real estate packages. When that happens, petitioners
claimed that the millions of jobs and billions in revenues that the real estate
industry generates for the government will be a thing of the past.
After a summary hearing, the trial court denied the prayer for issuance of a
writ of preliminary injunction.
On July 12, 2011, the trial court rendered its Decision  denying the petition.
2
The trial court held that the assailed provisions are relevant to the title of the
law as they are intended to regulate the practice of real estate service in the
country by ensuring that those who engage in it shall either be a licensed real
estate broker, or under the latter’s supervision. It likewise found no real
discord between E.O. No. 648 and R.A. No. 9646 as the latter does not render
nugatory the license to sell granted by the HLURB to real estate developers,
which license would still subsist. The only difference is that by virtue of the
new law, real estate developers will now be compelled to hire the services of
one licensed real estate broker for every twenty salespersons to guide and
supervise the coterie of salespersons under the employ of the real estate
developers.
On the issue of due process, the trial court said that the questioned provisions
do not preclude property owners from using, enjoying, or disposing of their
own property because they can still develop and sell their properties except
that they have to secure the services of a licensed real estate broker who shall
oversee the actions of the unlicensed real estate practitioners under their
employ. Since the subject provisions merely prescribe the requirements for the
regulation of the practice of real estate services, these are consistent with a
valid exercise of the State’s police power. The trial court further ruled that
Section 28(a) does not violate the equal protection clause because the
exemption of real estate developers was anchored on reasonable classification
aimed at protecting the buying public from the rampant misrepresentations
often committed by unlicensed real estate practitioners, and to prevent
unscrupulous and unethical real estate practices from flourishing considering
the large number of consumers in the regular course of business compared to
isolated sale transactions made by private individuals selling their own
property.
Hence, this appeal on the following questions of law:
1. Whether there is a justiciable controversy for this Honorable Court to
adjudicate;
2. Whether [R.A. No. 9646] is unconstitutional for violating the "one
title-one subject" rule under Article VI, Section 26 (1) of the Philippine
Constitution;
3. Whether [R.A. No. 9646] is in conflict with PD 957, as amended by
EO 648, with respect to the exclusive jurisdiction of the HLURB to
regulate real estate developers;
4. Whether Sections 28(a), 29, and 32 of [R.A. No. 9646], insofar as
they affect the rights of real estate developers, are unconstitutional for
violating substantive due process; and
5. Whether Section 28(a), which treats real estate developers differently
from other natural or juridical persons who directly perform acts of real
estate service with reference to their own property, is unconstitutional
for violating the equal protection clause. 3
The Court’s Ruling
The petition has no merit.
Justiciable Controversy
The Constitution  requires as a condition precedent for the exercise of judicial
4
power the existence of an actual controversy between litigants. An actual case
or controversy involves a conflict of legal rights, an assertion of opposite legal
claims susceptible to judicial resolution.  The controversy must be justiciable –
5
definite and concrete – touching on the legal relations of parties having
adverse legal interests, which may be resolved by a court of law through the
application of a law.  In other words, the pleadings must show an active
6
antagonistic assertion of a legal right, on the one hand, and a denial thereof on
the other; that is, it must concern a real and not a merely theoretical question
or issue. There ought to be an actual and substantial controversy admitting of
specific relief through a decree conclusive in nature, as distinguished from an
opinion advising what the law would be upon a hypothetical state of facts.  An
7
actual case is ripe for adjudication when the act being challenged has a direct
adverse effect on the individual challenging it.
8
There is no question here that petitioners who are real estate developers are
entities directly affected by the prohibition on performing acts constituting
practice of real estate service without first complying with the registration and
licensing requirements for brokers and agents under R.A. No. 9646. The
possibility of criminal sanctions for disobeying the mandate of the new law is
likewise real. Asserting that the prohibition violates their rights as property
owners to dispose of their properties, petitioners challenged on constitutional
grounds the implementation of R.A. No. 9646 which the respondents defended
as a valid legislation pursuant to the State’s police power. The Court thus finds
a justiciable controversy that calls for immediate resolution.
No Violation of One-Title One-Subject Rule
Section 26(1), Article VI of the Constitution states:
SEC. 26 (1). Every bill passed by the Congress shall embrace only one subject
which shall be expressed in the title thereof.
In Fariñas v. The Executive Secretary,  the Court explained the provision as
9 Congress to employ in the title of the enactment language of such precision as
follows:
The proscription is aimed against the evils of the so-called omnibus bills and
log-rolling legislation as well as surreptitious and/or unconsidered encroaches.
The provision merely calls for all parts of an act relating to its subject finding
expression in its title.
To determine whether there has been compliance with the constitutional
requirement that the subject of an act shall be expressed in its title, the Court
laid down the rule that –
Constitutional provisions relating to the subject matter and titles of statutes
should not be so narrowly construed as to cripple or impede the power of
legislation. The requirement that the subject of an act shall be expressed in its
title should receive a reasonable and not a technical construction. It is
sufficient if the title be comprehensive enough reasonably to include the
general object which a statute seeks to effect, without expressing each and
every end and means necessary or convenient for the accomplishing of that
object. Mere details need not be set forth. The title need not be an abstract or
index of the Act.  (Emphasis supplied.)
10
The Court has previously ruled that the one-subject requirement under the
Constitution is satisfied if all the parts of the statute are related, and are
germane to the subject matter expressed in the title, or as long as they are
not inconsistent with or foreign to the general subject and title.  An act having
11
a single general subject, indicated in the title, may contain any number of
provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying
out the general object.12
It is also well-settled that the "one title-one subject" rule does not require the
to mirror, fully index or catalogue all the contents and the minute details
therein. The rule is sufficiently complied with if the title is comprehensive
enough as to include the general object which the statute seeks to
effect.  Indeed, this Court has invariably adopted a liberal rather than
13
technical construction of the rule "so as not to cripple or impede legislation."
14
R.A. No. 9646 is entitled "An Act Regulating the Practice of Real Estate Service
in the Philippines, Creating for the Purpose a Professional Regulatory Board of
Real Estate Service, Appropriating Funds Therefor and For Other Purposes."
Aside from provisions establishing a regulatory system for the
professionalization of the real estate service sector, the new law extended its
coverage to real estate developers with respect to their own properties.
Henceforth, real estate developers are prohibited from performing acts or
transactions constituting real estate service practice without first complying
with registration and licensing requirements for their business, brokers or
agents, appraisers, consultants and salespersons.
Petitioners point out that since partnerships or corporations engaged in
marketing or selling any real estate development project in the regular course
of business are now required to be headed by full-time, registered and licensed
real estate brokers, this requirement constitutes limitations on the property
rights and business prerogatives of real estate developers which are not all
reflected in the title of R.A. No. 9646. Neither are real estate developers, who
are already regulated under a different law, P.D. No. 957, included in the
definition of real estate service practitioners.
We hold that R.A. No. 9646 does not violate the one-title, one-subject rule.
The primary objective of R.A. No. 9646 is expressed as follows:
SEC. 2. Declaration of Policy. – The State recognizes the vital role of real
estate service practitioners in the social, political, economic development and
progress of the country by promoting the real estate market, stimulating
economic activity and enhancing government income from real property-based
transactions. Hence, it shall develop and nurture through proper and effective
regulation and supervision a corps of technically competent, responsible and
respected professional real estate service practitioners whose standards of
practice and service shall be globally competitive and will promote the growth
of the real estate industry.
We find that the inclusion of real estate developers is germane to the law’s
primary goal of developing "a corps of technically competent, responsible and
respected professional real estate service practitioners whose standards of
practice and service shall be globally competitive and will promote the growth
of the real estate industry." Since the marketing aspect of real estate
development projects entails the performance of those acts and transactions
defined as real estate service practices under Section 3(g) of R.A. No. 9646, it
is logically covered by the regulatory scheme to professionalize the entire real
estate service sector.
No Conflict Between R.A. No. 9646
and P.D. No. 957, as amended by E.O. No. 648
Petitioners argue that the assailed provisions still cannot be sustained because
they conflict with P.D. No. 957 which decreed that the NHA shall have
"exclusive jurisdiction to regulate the real estate trade and business." Such
jurisdiction includes the authority to issue a license to sell to real estate
developers and to register real estate dealers, brokers or salesmen upon their
fulfillment of certain requirements under the law. By imposing limitations on
real estate developers’ property rights, petitioners contend that R.A. No. 9646
undermines the licenses to sell issued by the NHA (now the HLURB) to real
estate developers allowing them to sell subdivision lots or condominium units
directly to the public. Because the HLURB has been divested of its exclusive
jurisdiction over real estate developers, the result is an implied repeal of P.D.
No. 957 as amended by E.O. No. 648, which is not favored in law.
It is a well-settled rule of statutory construction that repeals by implication are
not favored. In order to effect a repeal by implication, the later statute must
be so irreconcilably inconsistent and repugnant with the existing law that they
cannot be made to reconcile and stand together. The clearest case possible
must be made before the inference of implied repeal may be drawn, for
inconsistency is never presumed. There must be a showing of repugnance
clear and convincing in character. The language used in the later statute must
be such as to render it irreconcilable with what had been formerly enacted. An
inconsistency that falls short of that standard does not suffice.  Moreover, the
15
failure to add a specific repealing clause indicates that the intent was not to
repeal any existing law, unless an irreconcilable inconsistency and repugnancy
exist in the terms of the new and old laws.16
There is nothing in R.A. No. 9646 that repeals any provision of P.D. No. 957,
as amended by E.O. No. 648. P.D. No. 957, otherwise known as "The
Subdivision and Condominium Buyers’ Protective Decree,"  vested the NHA
17
with exclusive jurisdiction to regulate the real estate trade and business in
accordance with its provisions. It empowered the NHA to register, approve and
monitor real estate development projects and issue licenses to sell to real
estate owners and developers. It further granted the NHA the authority to
register and issue/revoke licenses of brokers, dealers and salesmen engaged in
the selling of subdivision lots and condominium units.
E.O. No. 648, issued on February 7, 1981, reorganized the Human Settlements
Regulatory Commission (HSRC) and transferred the regulatory functions of the
NHA under P.D. 957 to the HSRC. Among these regulatory functions were the
(1) regulation of the real estate trade and business; (2) registration of
subdivision lots and condominium projects; (3) issuance of license to sell
subdivision lots and condominium units in the registered units; (4) approval of
performance bond and the suspension of license to sell; (5) registration of
dealers, brokers and salesman engaged in the business of selling subdivision
lots or condominium units; and (6) revocation of registration of dealers,
brokers and salesmen. 18
E.O. No. 90, issued on December 17, 1986, renamed the HSRC as the Housing
and Land Use Regulatory Board (HLURB) and was designated as the regulatory
body for housing and land development under the Housing and Urban
Development Coordinating Council (HUDCC). To date, HLURB continues to
carry out its mandate to register real estate brokers and salesmen dealing in
condominium, memorial parks and subdivision projects pursuant to Section 11
of P.D. No. 957, which reads:
SECTION 11. Registration of Dealers, Brokers and Salesmen. – No real estate
dealer, broker or salesman shall engage in the business of selling subdivision
lots or condominium units unless he has registered himself with the Authority
in accordance with the provisions of this section.
If the Authority shall find that the applicant is of good repute and has complied
with the applicable rules of the Authority, including the payment of the
prescribed fee, he shall register such applicant as a dealer, broker or salesman
upon filing a bond, or other security in lieu thereof, in such sum as may be
fixed by the Authority conditioned upon his faithful compliance with the
provisions of this Decree: Provided, that the registration of a salesman shall
cease upon the termination of his employment with a dealer or broker.
Every registration under this section shall expire on the thirty-first day of
December of each year. Renewal of registration for the succeeding year shall
be granted upon written application therefore made not less than thirty nor
more than sixty days before the first day of the ensuing year and upon
payment of the prescribed fee, without the necessity of filing further
statements or information, unless specifically required by the Authority. All
applications filed beyond said period shall be treated as original applications.
The names and addresses of all persons registered as dealers, brokers, or
salesmen shall be recorded in a Register of Brokers, Dealers and Salesmen
kept in the Authority which shall be open to public inspection.
On the other hand, Section 29 of R.A. No. 9646 requires as a condition
precedent for all persons who will engage in acts constituting real estate
service, including advertising in any manner one’s qualifications as a real
estate service practitioner, compliance with licensure examination and other
registration requirements including the filing of a bond for real estate brokers
and private appraisers. While Section 11 of P.D. No. 957 imposes registration
requirements for dealers, brokers and salespersons engaged in the selling of
subdivision lots and condominium units, Section 29 of R.A. No. 9646 regulates
all real estate service practitioners whether private or government. While P.D.
No. 957 seeks to supervise brokers and dealers who are engaged in the sale of
subdivision lots and condominium units, R.A. No. 9646 aims to regulate the
real estate service sector in general by professionalizing their ranks and raising
the level of ethical standards for licensed real estate professionals.
There is no conflict of jurisdiction because the HLURB supervises only those
real estate service practitioners engaged in the sale of subdivision lots and
condominium projects, specifically for violations of the provisions of P.D. No.
957, and not the entire real estate service sector which is now under the
regulatory powers of the PRBRES. HLURB’s supervision of brokers and dealers
to effectively implement the provisions of P.D. No. 957 does not foreclose
regulation of the real estate service as a profession. Real estate developers
already regulated by the HLURB are now further required to comply with the
professional licensure requirements under R.A. No. 9646, as provided in
Sections 28, 29 and 32. Plainly, there is no inconsistency or contradiction in
the assailed provisions of R.A. No. 9646 and P.D. No. 957, as amended.
The rule is that every statute must be interpreted and brought into accord with
other laws in a way that will form a uniform system of jurisprudence. The
legislature is presumed to have known existing laws on the subject and not to
have enacted conflicting laws.  Congress, therefore, could not be presumed to
19
have intended Sections 28, 29 and 32 of R.A. No. 9646 to run counter to P.D.
No. 957.
No Violation of Due Process
Petitioners contend that the assailed provisions of R.A. No. 9646 are unduly
oppressive and infringe the constitutional rule against deprivation of property
without due process of law. They stress that real estate developers are now
burdened by law to employ licensed real estate brokers to sell, market and
dispose of their properties. Despite having invested a lot of money, time and
resources in their projects, petitioners aver that real estate developers will still
have less control in managing their business and will be burdened with
additional expenses.
The contention has no basis. There is no deprivation of property as no
restriction on their use and enjoyment of property is caused by the
implementation of R.A. No. 9646. If petitioners as property owners feel
burdened by the new requirement of engaging the services of only licensed
real estate professionals in the sale and marketing of their properties, such is
an unavoidable consequence of a reasonable regulatory measure.
Indeed, no right is absolute, and the proper regulation of a profession, calling,
business or trade has always been upheld as a legitimate subject of a valid
exercise of the police power of the State particularly when their conduct affects
the execution of legitimate governmental functions, the preservation of the
State, public health and welfare and public morals.  In any case, where the
20
liberty curtailed affects at most the rights of property, the permissible scope of
regulatory measures is certainly much wider. To pretend that licensing or
accreditation requirements violate the due process clause is to ignore the
settled practice, under the mantle of police power, of regulating entry to the
practice of various trades or professions. 21
Here, the legislature recognized the importance of professionalizing the ranks
of real estate practitioners by increasing their competence and raising ethical
standards as real property transactions are "susceptible to manipulation and
corruption, especially if they are in the hands of unqualified persons working
under an ineffective regulatory system." The new regulatory regime aimed to
fully tap the vast potential of the real estate sector for greater contribution to
our gross domestic income, and real estate practitioners "serve a vital role in
spearheading the continuous flow of capital, in boosting investor confidence,
and in promoting overall national progress." 22
We thus find R.A. No. 9646 a valid exercise of the State’s police power. As we
said in another case challenging the constitutionality of a law granting
discounts to senior citizens:
The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not capable
of an exact definition, but has been purposely veiled in general terms to
underscore its comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response to conditions and circumstances,
thus assuring the greatest benefits. Accordingly, it has been described as "the
most essential, insistent and the least limitable of powers, extending as it does
to all the great public needs." It is "[t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and
welfare of the commonwealth, and of the subjects of the same."
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general
welfare.
Police power as an attribute to promote the common good would be diluted
considerably if on the mere plea of petitioners that they will suffer loss of
earnings and capital, the questioned provision is invalidated. Moreover, in the
absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor.  (Emphasis supplied.)
23
No Violation of Equal Protection Clause
Section 28 of R.A. No. 9646 exempts from its coverage natural and juridical
persons dealing with their own property, and other persons such as receivers,
trustees or assignees in insolvency or bankruptcy proceedings. However, real
estate developers are specifically mentioned as an exception from those
enumerated therein. Petitioners argue that this provision violates the equal
protection clause because it unjustifiably treats real estate developers
differently from those exempted persons who also own properties and desire to
sell them. They insist that no substantial distinctions exist between ordinary
property owners and real estate developers as the latter, in fact, are more
capable of entering into real estate transactions and do not need the services
of licensed real estate brokers.  They assail the RTC decision in citing the
1âwphi1
reported fraudulent practices as basis for the exclusion of real estate
developers from the exempted group of persons under Section 28(a).
We sustain the trial court’s ruling that R.A. No. 9646 does not violate the equal
protection clause.
In Ichong v. Hernandez,  the concept of equal protection was explained as
24
follows:
The equal protection of the law clause is against undue favor and individual or
class privilege, as well as hostile discrimination or the oppression of inequality.
It is not intended to prohibit legislation, which is limited either in the object to
which it is directed or by territory within which it is to operate. It does not
demand absolute equality among residents; it merely requires that all persons
shall be treated alike, under like circumstances and conditions both as to
privileges conferred and liabilities enforced. The equal protection clause is not
infringed by legislation which applies only to those persons falling within such
class, and reasonable grounds exists for making a distinction between those
who fall within such class and those who do not. (2 Cooley, Constitutional
Limitations, 824-825). 25
Although the equal protection clause of the Constitution does not forbid
classification, it is imperative that the classification should be based on real
and substantial differences having a reasonable relation to the subject of the
particular legislation.  If classification is germane to the purpose of the law,
26
concerns all members of the class, and applies equally to present and future
conditions, the classification does not violate the equal protection guarantee. 27
R.A. No. 9646 was intended to provide institutionalized government support
for the development of "a corps of highly respected, technically competent,
and disciplined real estate service practitioners, knowledgeable of WHEREFORE, the petition is DENIED. The Decision dated July 12, 2011 of the
internationally accepted standards and practice of the profession."  Real estate
28
Regional Trial Court of Manila, Branch 42 in Civil Case No. 10-124776 is hereby
developers at present constitute a sector that hires or employs the largest AFFIRMED and UPHELD.
number of brokers, salespersons, appraisers and consultants due to the sheer
number of products (lots, houses and condominium units) they advertise and No pronouncement as to costs.
sell nationwide. As early as in the ‘70s, there has been a proliferation of errant
developers, operators or sellers who have reneged on their representation and SO ORDERED.
obligations to comply with government regulations such as the provision and
maintenance of subdivision roads, drainage, sewerage, water system and other
basic requirements. To protect the interest of home and lot buyers from
fraudulent acts and manipulations perpetrated by these unscrupulous
subdivision and condominium sellers and operators, P.D. No. 957 was issued to
strictly regulate housing and real estate development projects. Hence, in
approving R.A. No. 9646, the legislature rightfully recognized the necessity of
imposing the new licensure requirements to all real estate service
practitioners, including and more importantly, those real estate service
practitioners working for real estate developers. Unlike individuals or entities
having isolated transactions over their own property, real estate developers
sell lots, houses and condominium units in the ordinary course of business, a
business which is highly regulated by the State to ensure the health and safety
of home and lot buyers.

The foregoing shows that substantial distinctions do exist between ordinary

property owners exempted under Section 28(a) and real estate developers like
petitioners, and the classification enshrined in R.A. No. 9646 is reasonable and
relevant to its legitimate purpose. The Court thus rules that R.A. No. 9646 is
valid and constitutional.

Since every law is presumed valid, the presumption of constitutionality can be

overcome only by the clearest showing that there was indeed an infraction of
the Constitution, and only when such a conclusion is reached by the required EN BANC
majority may the Court pronounce, in the discharge of the duty it cannot
escape, that the challenged act must be struck down. 29 G.R. No. 203335, February 18, 2014

Indeed, "all presumptions are indulged in favor of constitutionality; one who
attacks a statute, alleging unconstitutionality must prove its invalidity beyond
a reasonable doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which supports
the statute, it will be upheld, and the challenger must negate all possible
bases; that the courts are not concerned with the wisdom, justice, policy, or
expediency of a statute; and that a liberal interpretation of the constitution in
favor of the constitutionality of legislation should be adopted."
30
JOSE JESUS M. DISINI, JR., ROWENA S. DISINI, LIANNE IVY P. MEDINA,
JANETTE TORAL AND ERNESTO SONIDO, JR., Petitioners, v. THE
SECRETARY OF JUSTICE, THE SECRETARY OF THE DEPARTMENT OF
THE INTERIOR AND LOCAL GOVERNMENT, THE EXECUTIVE
DIRECTOR OF THE INFORMATION AND COMMUNICATIONS
TECHNOLOGY OFFICE, THE CHIEF OF THE PHILIPPINE NATIONAL
POLICE AND THE DIRECTOR OF THE NATIONAL BUREAU OF
 INVESTIGATION, Respondents.
[G.R. No. 203299]
LOUIS “BAROK” C. BIRAOGO, Petitioner, v. NATIONAL BUREAU OF
INVESTIGATION AND PHILIPPINE NATIONAL POLICE, Respondents.
[G.R. No. 203306]
ALAB NG MAMAMAHAYAG (ALAM), HUKUMAN NG MAMAMAYAN
MOVEMENT, INC., JERRY S. YAP, BERTENI “TOTO” CAUSING, HERNANI
Q. CUARE, PERCY LAPID, TRACY CABRERA, RONALDO E. RENTA,
CIRILO P. SABARRE, JR., DERVIN CASTRO, ET AL., Petitioners, v. OFFICE
OF THE PRESIDENT, REPRESENTED BY PRESIDENT BENIGNO SIMEON
AQUINO III, SENATE OF THE PHILIPPINES, AND HOUSE OF
REPRESENTATIVES, Respondents.
[G.R. No. 203359]
SENATOR TEOFISTO DL GUINGONA III, Petitioner, v. EXECUTIVE
SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF THE
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, THE CHIEF
OF THE PHILIPPINE NATIONAL POLICE, AND DIRECTOR OF THE
NATIONAL BUREAU OF INVESTIGATION, Respondents.
[G.R. No. 203378]
ALEXANDER ADONIS, ELLEN TORDESILLAS, MA. GISELA ORDENES-
CASCOLAN, H. HARRY L. ROQUE, JR., ROMEL R. BAGARES, AND
GILBERT T. ANDRES, Petitioners, v. THE EXECUTIVE SECRETARY, THE
DEPARTMENT OF BUDGET AND MANAGEMENT, THE DEPARTMENT OF
JUSTICE, THE DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, THE NATIONAL BUREAU OF INVESTIGATION, THE
PHILIPPINE NATIONAL POLICE, AND THE INFORMATION AND
COMMUNICATIONS TECHNOLOGY OFFICE-DEPARTMENT OF SCIENCE
AND TECHNOLOGY, Respondents.
[G.R. No. 203391]
HON. RAYMOND V. PALATINO, HON. ANTONIO TINIO, VENCER MARI
CRISOSTOMO OF ANAKBAYAN, MA. KATHERINE ELONA OF THE
PHILIPPINE COLLEGIAN, ISABELLE THERESE BAGUISI OF THE
NATIONAL UNION OF STUDENTS OF THE PHILIPPINES, ET
AL., Petitioners, v. PAQUITO N. OCHOA, JR., IN HIS CAPACITY AS
EXECUTIVE SECRETARY AND ALTER-EGO OF PRESIDENT BENIGNO
SIMEON AQUINO III, LEILA DE LIMA IN HER CAPACITY AS
SECRETARY OF JUSTICE, Respondents.
[G.R. No. 203407]
BAGONG ALYANSANG MAKABAYAN SECRETARY GENERAL RENATO
M. REYES, JR., NATIONAL ARTIST BIENVENIDO L. LUMBERA,
CHAIRPERSON OF CONCERNED ARTISTS OF THE PHILIPPINES, ELMER
C. LABOG, CHAIRPERSON OF KILUSANG MAYO UNO, CRISTINA E.
PALABAY, SECRETARY GENERAL OF KARAPATAN, FERDINAND R.
GAITE, CHAIRPERSON OF COURAGE, JOEL B. MAGLUNSOD, VICE
PRESIDENT OF ANAKPAWIS PARTY-LIST, LANA R. LINABAN,
SECRETARY GENERAL GABRIELA WOMEN’S PARTY, ADOLFO ARES P.
GUTIERREZ, AND JULIUS GARCIA MATIBAG, Petitioners, v. BENIGNO
SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES, PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY,
SENATE OF THE PHILIPPINES, REPRESENTED BY SENATE PRESIDENT
JUAN PONCE ENRILE, HOUSE OF REPRESENTATIVES, REPRESENTED
BY SPEAKER FELICIANO BELMONTE, JR., LEILA DE LIMA,
SECRETARY OF THE DEPARTMENT OF JUSTICE, LOUIS NAPOLEON C.
CASAMBRE, EXECUTIVE DIRECTOR OF THE INFORMATION AND
COMMUNICATIONS TECHNOLOGY OFFICE, NONNATUS CAESAR R.
ROJAS, DIRECTOR OF THE NATIONAL BUREAU OF INVESTIGATION,
D/GEN. NICANOR A. BARTOLOME, CHIEF OF THE PHILIPPINE
NATIONAL POLICE, MANUEL A. ROXAS II, SECRETARY OF THE
DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, Respondents.
[G.R. No. 203440]
MELENCIO S. STA. MARIA, SEDFREY M. CANDELARIA, AMPARITA STA.
MARIA, RAY PAOLO J. SANTIAGO, GILBERT V. SEMBRANO, AND RYAN
JEREMIAH D. QUAN (ALL OF THE ATENEO HUMAN RIGHTS
 CENTER), Petitioners, v. HONORABLE PAQUITO OCHOA IN HIS
CAPACITY AS EXECUTIVE SECRETARY, HONORABLE LEILA DE LIMA
IN HER CAPACITY AS SECRETARY OF JUSTICE, HONORABLE MANUEL
ROXAS IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF
INTERIOR AND LOCAL GOVERNMENT, THE CHIEF OF THE PHILIPPINE
NATIONAL POLICE, THE DIRECTOR OF THE NATIONAL BUREAU OF
INVESTIGATION (ALL OF THE EXECUTIVE DEPARTMENT OF
GOVERNMENT), Respondents.
[G.R. No. 203453]
NATIONAL UNION OF JOURNALISTS OF THE PHILIPPINES (NUJP),
PHILIPPINE PRESS INSTITUTE (PPI), CENTER FOR MEDIA FREEDOM
AND RESPONSIBILITY, ROWENA CARRANZA PARAAN, MELINDA
QUINTOS-DE JESUS, JOSEPH ALWYN ALBURO, ARIEL SEBELLINO AND
THE PETITIONERS IN THE E-PETITION HTTP://WWW.NUJP.ORG/NO-
TO-RA10175/, Petitioners, v. THE EXECUTIVE SECRETARY, THE
SECRETARY OF JUSTICE, THE SECRETARY OF THE INTERIOR AND
LOCAL GOVERNMENT, THE SECRETARY OF BUDGET AND
MANAGEMENT, THE DIRECTOR GENERAL OF THE PHILIPPINE
NATIONAL POLICE, THE DIRECTOR OF THE NATIONAL BUREAU OF
INVESTIGATION, THE CYBERCRIME INVESTIGATION AND
COORDINATING CENTER, AND ALL AGENCIES AND
INSTRUMENTALITIES OF GOVERNMENT AND ALL PERSONS ACTING
UNDER THEIR INSTRUCTIONS, ORDERS, DIRECTION IN RELATION TO
THE IMPLEMENTATION OF REPUBLIC ACT NO. 10175, Respondents.
[G.R. No. 203454]
PAUL CORNELIUS T. CASTILLO & RYAN D. ANDRES, Petitioners, v. THE
HON. SECRETARY OF JUSTICE, THE HON. SECRETARY OF INTERIOR
AND LOCAL GOVERNMENT, Respondents.
[G.R. No. 203469]
ANTHONY IAN M. CRUZ; MARCELO R. LANDICHO; BENJAMIN NOEL A.
ESPINA; MARCK RONALD C. RIMORIN; JULIUS D. ROCAS; OLIVER
RICHARD V. ROBILLO; AARON ERICK A. LOZADA; GERARD ADRIAN P.
MAGNAYE; JOSE REGINALD A. RAMOS; MA. ROSARIO T. JUAN;
BRENDALYN P. RAMIREZ; MAUREEN A. HERMITANIO; KRISTINE JOY
S. REMENTILLA; MARICEL O. GRAY; JULIUS IVAN F. CABIGON;
BENRALPH S. YU; CEBU BLOGGERS SOCIETY, INC. PRESIDENT RUBEN
B. LICERA, JR; AND PINOY EXPAT/OFW BLOG AWARDS, INC.
COORDINATOR PEDRO E. RAHON; PETITIONERS, VS. HIS
EXCELLENCY BENIGNO S. AQUINO III, IN HIS CAPACITY AS
PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; SENATE OF THE
PHILIPPINES, REPRESENTED BY HON. JUAN PONCE ENRILE, IN HIS
CAPACITY AS SENATE PRESIDENT; HOUSE OF REPRESENTATIVES,
REPRESENTED BY FELICIANO R. BELMONTE, JR., IN HIS CAPACITY AS
SPEAKER OF THE HOUSE OF REPRESENTATIVES; HON. PAQUITO N.
OCHOA, JR., IN HIS CAPACITY AS EXECUTIVE SECRETARY; HON.
LEILA M. DE LIMA, IN HER CAPACITY AS SECRETARY OF JUSTICE;
HON. LOUIS NAPOLEON C. CASAMBRE, IN HIS CAPACITY AS
EXECUTIVE DIRECTOR, INFORMATION AND COMMUNICATIONS
TECHNOLOGY OFFICE; HON. NONNATUS CAESAR R. ROJAS, IN HIS
CAPACITY AS DIRECTOR, NATIONAL BUREAU OF INVESTIGATION;
AND P/DGEN. NICANOR A. BARTOLOME, IN HIS CAPACITY AS CHIEF,
PHILIPPINE NATIONAL POLICE, Respondents.
[G.R. No. 203501]
PHILIPPINE BAR ASSOCIATION, INC., Petitioner, v. HIS EXCELLENCY
BENIGNO S. AQUINO III, IN HIS OFFICIAL CAPACITY AS PRESIDENT OF
THE REPUBLIC OF THE PHILIPPINES; HON. PAQUITO N. OCHOA, JR., IN
HIS OFFICIAL CAPACITY AS EXECUTIVE SECRETARY; HON. LEILA M.
DE LIMA, IN HER OFFICIAL CAPACITY AS SECRETARY OF JUSTICE;
LOUIS NAPOLEON C. CASAMBRE, IN HIS OFFICIAL CAPACITY AS
EXECUTIVE DIRECTOR, INFORMATION AND COMMUNICATIONS
TECHNOLOGY OFFICE; NONNATUS CAESAR R. ROJAS, IN HIS
OFFICIAL CAPACITY AS DIRECTOR OF THE NATIONAL BUREAU OF
INVESTIGATION; AND DIRECTOR GENERAL NICANOR A. BARTOLOME,
IN HIS OFFICIAL CAPACITY AS CHIEF OF THE PHILIPPINE NATIONAL
POLICE, Respondents.
[G.R. No. 203509]
BAYAN MUNA REPRESENTATIVE NERI J.
COLMENARES, Petitioner, v. THE EXECUTIVE SECRETARY PAQUITO
 OCHOA, JR., Respondents.
[G.R. No. 203515]
NATIONAL PRESS CLUB OF THE PHILIPPINES, INC. REPRESENTED BY
BENNY D. ANTIPORDA IN HIS CAPACITY AS PRESIDENT AND IN HIS
PERSONAL CAPACITY, Petitioner, v. OFFICE OF THE PRESIDENT, PRES.
BENIGNO SIMEON AQUINO III, DEPARTMENT OF JUSTICE,
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, PHILIPPINE
NATIONAL POLICE, NATIONAL BUREAU OF INVESTIGATION,
DEPARTMENT OF BUDGET AND MANAGEMENT AND ALL OTHER
GOVERNMENT INSTRUMENTALITIES WHO HAVE HANDS IN THE
PASSAGE AND/OR IMPLEMENTATION OF REPUBLIC ACT
10175, Respondents.
[G.R. No. 203518]
PHILIPPINE INTERNET FREEDOM ALLIANCE, COMPOSED OF DAKILA-
PHILIPPINE COLLECTIVE FOR MODERN HEROISM, REPRESENTED BY
LENI VELASCO, PARTIDO LAKAS NG MASA, REPRESENTED BY CESAR
S. MELENCIO, FRANCIS EUSTON R. ACERO, MARLON ANTHONY
ROMASANTA TONSON, TEODORO A. CASIÑO, NOEMI LARDIZABAL-
DADO, IMELDA MORALES, JAMES MATTHEW B. MIRAFLOR, JUAN G.M.
RAGRAGIO, MARIA FATIMA A. VILLENA, MEDARDO M. MANRIQUE,
JR., LAUREN DADO, MARCO VITTORIA TOBIAS SUMAYAO, IRENE
CHIA, ERASTUS NOEL T. DELIZO, CRISTINA SARAH E. OSORIO, ROMEO
FACTOLERIN, NAOMI L. TUPAS, KENNETH KENG, ANA ALEXANDRA C.
CASTRO, Petitioners, v. THE EXECUTIVE SECRETARY, THE SECRETARY
OF JUSTICE, THE SECRETARY OF INTERIOR AND LOCAL
GOVERNMENT, THE SECRETARY OF SCIENCE AND TECHNOLOGY,
THE EXECUTIVE DIRECTOR OF THE INFORMATION TECHNOLOGY
OFFICE, THE DIRECTOR OF THE NATIONAL BUREAU OF
INVESTIGATION, THE CHIEF, PHILIPPINE NATIONAL POLICE, THE
HEAD OF THE DOJ OFFICE OF CYBERCRIME, AND THE OTHER
MEMBERS OF THE CYBERCRIME INVESTIGATION AND
COORDINATING CENTER, Respondents
DECISION
ABAD, J.:
These consolidated petitions seek to declare several provisions of Republic
Act (R.A.) 10175, the Cybercrime Prevention Act of 2012, unconstitutional
and void.
The Facts and the Case
The cybercrime law aims to regulate access to and use of the cyberspace.
Using his laptop or computer, a person can connect to the internet, a
system that links him to other computers and enable him, among other
things, to:
chanRoblesVirtualawlibrary
1. Access virtual libraries and encyclopedias for all kinds of information that
he needs for research, study, amusement, upliftment, or pure curiosity;
2. Post billboard-like notices or messages, including pictures and videos,
for the general public or for special audiences like associates, classmates,
or friends and read postings from them;
3. Advertise and promote goods or services and make purchases and
payments;
4. Inquire and do business with institutional entities like government
agencies, banks, stock exchanges, trade houses, credit card companies,
public utilities, hospitals, and schools; and
5. Communicate in writing or by voice with any person through his e-mail
address or telephone.
This is cyberspace, a system that accommodates millions and billions of
simultaneous and ongoing individual accesses to and uses of the internet.
The cyberspace is a boon to the need of the current generation for greater
information and facility of communication. But all is not well with the
system since it could not filter out a number of persons of ill will who would
want to use cyberspace technology for mischiefs and crimes. One of them
can, for instance, avail himself of the system to unjustly ruin the reputation
of another or bully the latter by posting defamatory statements against him
that people can read.
 b. Section 4(a)(3) on Data Interference;
And because linking with the internet opens up a user to communications
from others, the ill-motivated can use the cyberspace for committing theft c. Section 4(a)(6) on Cyber-squatting;
by hacking into or surreptitiously accessing his bank account or credit card
or defrauding him through false representations. The wicked can use the d. Section 4(b)(3) on Identity Theft;
cyberspace, too, for illicit trafficking in sex or for exposing to pornography
guileless children who have access to the internet. For this reason, the e. Section 4(c)(1) on Cybersex;
government has a legitimate right to regulate the use of cyberspace and
contain and punish wrongdoings. f. Section 4(c)(2) on Child Pornography;

g. Section 4(c)(3) on Unsolicited Commercial Communications;

Notably, there are also those who would want, like vandals, to wreak or
cause havoc to the computer systems and networks of indispensable or h. Section 4(c)(4) on Libel;
highly useful institutions as well as to the laptop or computer programs and
memories of innocent individuals. They accomplish this by sending i. Section 5 on Aiding or Abetting and Attempt in the Commission of
electronic viruses or virtual dynamites that destroy those computer Cybercrimes;
systems, networks, programs, and memories. The government certainly
has the duty and the right to prevent these tomfooleries from happening j. Section 6 on the Penalty of One Degree Higher;
and punish their perpetrators, hence the Cybercrime Prevention Act.
But petitioners claim that the means adopted by the cybercrime law for k. Section 7 on the Prosecution under both the Revised Penal Code
regulating undesirable cyberspace activities violate certain of their (RPC) and R.A. 10175;
constitutional rights. The government of course asserts that the law merely
seeks to reasonably put order into cyberspace activities, punish l. Section 8 on Penalties;
wrongdoings, and prevent hurtful attacks on the system.
m. Section 12 on Real-Time Collection of Traffic Data;
Pending hearing and adjudication of the issues presented in these cases, on
February 5, 2013 the Court extended the original 120-day temporary n. Section 13 on Preservation of Computer Data;
restraining order (TRO) that it earlier issued on October 9, 2012, enjoining
respondent government agencies from implementing the cybercrime law o. Section 14 on Disclosure of Computer Data;
until further orders.
p. Section 15 on Search, Seizure and Examination of Computer Data;

q. Section 17 on Destruction of Computer Data;

The Issues Presented
r. Section 19 on Restricting or Blocking Access to Computer Data;
Petitioners challenge the constitutionality of the following provisions of the
cybercrime law that regard certain acts as crimes and impose penalties for s. Section 20 on Obstruction of Justice;
their commission as well as provisions that would enable the government
to track down and penalize violators. These provisions are: chanRoblesVirtualawlibrary
t. Section 24 on Cybercrime Investigation and Coordinating Center
(CICC); and

a. Section 4(a)(1) on Illegal Access; u. Section 26(a) on CICC’s Powers and Functions.
Some petitioners also raise the constitutionality of related Articles 353,
354, 361, and 362 of the RPC on the crime of libel.
The Rulings of the Court
Section 4(a)(1)
Section 4(a)(1) provides: chanRoblesVirtualawlibrary
Section 4. Cybercrime Offenses. - The following acts constitute the offense
of cybercrime punishable under this Act:
(a) Offenses against the confidentiality, integrity and availability of
computer data and systems: chanRoblesVirtualawlibrary
(1) Illegal Access. - The access to the whole or any part of a computer
system without right.
Petitioners contend that Section 4(a)(1) fails to meet the strict scrutiny
standard required of laws that interfere with the fundamental rights of the
people and should thus be struck down.
The Court has in a way found the strict scrutiny standard, an American
constitutional construct,1  useful  in  determining  the constitutionality of
laws that tend to target a class of things or persons. According to this
standard, a legislative classification that impermissibly interferes with the
exercise of fundamental right or operates to the peculiar class
disadvantage of a suspect class is presumed unconstitutional. The burden
is on the government to prove that the classification is necessary to
achieve a compelling state interest and that it is the least restrictive means
to protect such interest.2 Later, the strict scrutiny standard was used to
assess the validity of laws dealing with the regulation of speech, gender, or
race as well as other fundamental rights, as expansion from its earlier
applications to equal protection.3
In the cases before it, the Court finds nothing in Section 4(a)(1) that calls
for the application of the strict scrutiny standard since no fundamental
freedom, like speech, is involved in punishing what is essentially a
condemnable act - accessing the computer system of another without right.
It is a universally condemned conduct.4
Petitioners of course fear that this section will jeopardize the work of
ethical hackers, professionals who employ tools and techniques used by
criminal hackers but would neither damage the target systems nor steal
information. Ethical hackers evaluate the target system’s security and
report back to the owners the vulnerabilities they found in it and give
instructions for how these can be remedied. Ethical hackers are the
equivalent of independent auditors who come into an organization to verify
its bookkeeping records.5 crallawlibrary
chanRoblesVirtualawlibrary
Besides, a client’s engagement of an ethical hacker requires an agreement
between them as to the extent of the search, the methods to be used, and
the systems to be tested. This is referred to as the “get out of jail free
card.”6 Since the ethical hacker does his job with prior permission from the
client, such permission would insulate him from the coverage of Section
4(a)(1).
Section 4(a)(3) of the Cybercrime Law
Section 4(a)(3) provides: chanRoblesVirtualawlibrary
Section 4. Cybercrime Offenses. - The following acts constitute the offense
of cybercrime punishable under this Act: chanRoblesVirtualawlibrary
(a) Offenses against the confidentiality, integrity and availability of
computer data and systems: chanRoblesVirtualawlibrary
xxxx
(3) Data Interference. - The intentional or reckless alteration, damaging,
deletion or deterioration of computer data, electronic document, or
electronic data message, without right, including the introduction or
crallawlibrary
transmission of viruses.
Petitioners claim that Section 4(a)(3) suffers from overbreadth in that,
while it seeks to discourage data interference, it intrudes into the area of
protected speech and expression, creating a chilling and deterrent effect on
these guaranteed freedoms.
Under the overbreadth doctrine, a proper governmental purpose,
constitutionally subject to state regulation, may not be achieved by means
crallawlibrary
that unnecessarily sweep its subject broadly, thereby invading the area of
protected freedoms.7 But Section 4(a)(3) does not encroach on these
freedoms at all. It simply punishes what essentially is a form of
vandalism,8 the act of willfully destroying without right the things that
belong to others, in this case their computer data, electronic document, or
electronic data message. Such act has no connection to guaranteed
freedoms. There is no freedom to destroy other people’s computer systems
and private documents.
All penal laws, like the cybercrime law, have of course an inherent chilling
effect, an in terrorem effect 9 or the fear of possible prosecution that hangs
on the heads of citizens who are minded to step beyond the boundaries of
what is proper. But to prevent the State from legislating criminal laws
because they instill such kind of fear is to render the state powerless in
addressing and penalizing socially harmful conduct.10 Here, the chilling
effect that results in paralysis is an illusion since Section 4(a)(3) clearly
describes the evil that it seeks to punish and creates no tendency to
intimidate the free exercise of one’s constitutional rights.
Besides, the overbreadth challenge places on petitioners the heavy burden
of proving that under no set of circumstances will Section 4(a)(3) be
valid.11 Petitioner has failed to discharge this burden.
Section 4(a)(6) of the Cybercrime Law
Section 4(a)(6) provides:
chanRoblesVirtualawlibrary
registered with the appropriate government agency at the time of the
domain name registration;
(ii) Identical or in any way similar with the name of a person other than the
registrant, in case of a personal name; and
(iii) Acquired without right or with intellectual property interests in it.
Petitioners claim that Section 4(a)(6) or cyber-squatting violates the equal
protection clause12 in that, not being narrowly tailored, it will cause a user
using his real name to suffer the same fate as those who use aliases or
take the name of another in satire, parody, or any other literary device. For
example, supposing there exists a well known billionaire-philanthropist
named “Julio Gandolfo,” the law would punish for cyber-squatting both the
person who registers such name because he claims it to be his pseudo-
name and another who registers the name because it happens to be his
real name. Petitioners claim that, considering the substantial distinction
between the two, the law should recognize the difference.
But there is no real difference whether he uses “Julio Gandolfo” which
happens to be his real name or use it as a pseudo-name for it is the evil
purpose for which he uses the name that the law condemns. The law is
reasonable in penalizing him for acquiring the domain name in bad faith to
profit, mislead, destroy reputation, or deprive others who are not ill-
motivated of the rightful opportunity of registering the same. The challenge
to the constitutionality of Section 4(a)(6) on ground of denial of equal
protection is baseless.

Section 4. Cybercrime Offenses. - The following acts constitute the offense

Section 4(b)(3) of the Cybercrime Law
of cybercrime punishable under this Act: chanRoblesVirtualawlibrary

Section 4(b)(3) provides:

(a) Offenses against the confidentiality, integrity and availability of
chanRoblesVirtualawlibrary

computer data and systems:

Section 4. Cybercrime Offenses. - The following acts constitute the offense
chanRoblesVirtualawlibrary

x x x x of cybercrime punishable under this Act: chanRoblesVirtualawlibrary

(6) Cyber-squatting. - The acquisition of domain name over the internet in xxxx
bad faith to profit, mislead, destroy the reputation, and deprive others from
registering the same, if such a domain name is:chanRoblesVirtualawlibrary
b) Computer-related Offenses: chanRoblesVirtualawlibrary

(i) Similar, identical, or confusingly similar to an existing trademark xxxx

(3) Computer-related Identity Theft. - The intentional acquisition, use,
misuse, transfer, possession, alteration, or deletion of identifying
information belonging to another, whether natural or juridical, without
right: Provided: that if no damage has yet been caused, the penalty
imposable shall be one (1) degree lower.
Petitioners claim that Section 4(b)(3) violates the constitutional rights to
due process and to privacy and correspondence, and transgresses the
freedom of the press.
The right to privacy, or the right to be let alone, was institutionalized in the
1987 Constitution as a facet of the right protected by the guarantee against
unreasonable searches and seizures.13 But the Court acknowledged its
existence as early as 1968 in Morfe v. Mutuc,14 it ruled that the right to
privacy exists independently of its identification with liberty; it is in itself
fully deserving of constitutional protection.
Relevant to any discussion of the right to privacy is the concept known as
the “Zones of Privacy.” The Court explained in “In the Matter of the Petition
for Issuance of Writ of Habeas Corpus of Sabio v. Senator Gordon”15 the
relevance of these zones to the right to privacy: chanRoblesVirtualawlibrary
Zones of privacy are recognized and protected in our laws. Within these
zones, any form of intrusion is impermissible unless excused by law and in
accordance with customary legal process. The meticulous regard we accord
to these zones arises not only from our conviction that the right to privacy
is a “constitutional right” and “the right most valued by civilized men,” but
also from our adherence to the Universal Declaration of Human Rights
which mandates that, “no one shall be subjected to arbitrary interference
with his privacy” and “everyone has the right to the protection of the law
against such interference or attacks.”
Two constitutional guarantees create these zones of privacy: (a) the right
against unreasonable searches16 and seizures, which is the basis of the
right to be let alone, and (b) the right to privacy of communication and
correspondence.17
crallawlibrary
In assessing the challenge that the State has impermissibly intruded into
these zones of privacy, a court must determine whether a person has
exhibited a reasonable expectation of privacy and, if so, whether that
expectation has been violated by unreasonable government intrusion.18
crallawlibrary
The usual identifying information regarding a person includes his name, his
citizenship, his residence address, his contact number, his place and date
of birth, the name of his spouse if any, his occupation, and similar
data.19 The law punishes those who acquire or use such identifying
information without right, implicitly to cause damage. Petitioners simply fail
to show how government effort to curb computer-related identity theft
violates the right to privacy and correspondence as well as the right to due
process of law.
Also, the charge of invalidity of this section based on the overbreadth
doctrine will not hold water since the specific conducts proscribed do not
intrude into guaranteed freedoms like speech. Clearly, what this section
regulates are specific actions: the acquisition, use, misuse or deletion of
personal identifying data of another. There is no fundamental right to
acquire another’s personal data.
Further, petitioners fear that Section 4(b)(3) violates the freedom of the
press in that journalists would be hindered from accessing the unrestricted
user account of a person in the news to secure information about him that
could be published. But this is not the essence of identity theft that the law
seeks to prohibit and punish. Evidently, the theft of identity information
must be intended for an illegitimate purpose. Moreover, acquiring and
disseminating information made public by the user himself cannot be
regarded as a form of theft.
The Court has defined intent to gain as an internal act which can be
established through the overt acts of the offender, and it may be presumed
from the furtive taking of useful property pertaining to another, unless
special circumstances reveal a different intent on the part of the
perpetrator.20 As such, the press, whether in quest of news reporting or
social investigation, has nothing to fear since a special circumstance is
present to negate intent to gain which is required by this Section.
Section 4(c)(1) of the Cybercrime Law
Section 4(c)(1) provides: chanRoblesVirtualawlibrary
Sec. 4. Cybercrime Offenses.- The following acts constitute the offense of
cybercrime punishable under this Act:
chanRoblesVirtualawlibrary

x x x x
(c) Content-related Offenses:
(1) Cybersex.- The willful engagement, maintenance, control, or operation,
directly or indirectly, of any lascivious exhibition of sexual organs or sexual
activity, with the aid of a computer system, for favor or consideration.
Petitioners claim that the above violates the freedom of expression clause
of the Constitution.21 They express fear that private communications of
sexual character between husband and wife or consenting adults, which are
not regarded as crimes under the penal code, would now be regarded as
crimes when done “for favor” in cyberspace. In common usage, the term
“favor” includes “gracious kindness,” “a special privilege or right granted or
conceded,” or “a token of love (as a ribbon) usually worn
conspicuously.”22 This meaning given to the term “favor” embraces socially
tolerated trysts. The law as written would invite law enforcement agencies
into the bedrooms of married couples or consenting individuals.
But the deliberations of the Bicameral Committee of Congress on this
section of the Cybercrime Prevention Act give a proper perspective on the
issue. These deliberations show a lack of intent to penalize a “private
showing x x x between and among two private persons x x x although that
may be a form of obscenity to some.”23 The understanding of those who
drew up the cybercrime law is that the element of “engaging in a business”
is necessary to constitute the illegal cybersex.24 The Act actually seeks to
punish cyber prostitution, white slave trade, and pornography for favor and
consideration. This includes interactive prostitution and pornography, i.e.,
by webcam.25 crallawlibrary
The subject of Section 4(c)(1)—lascivious exhibition of sexual organs or
sexual activity—is not novel. Article 201 of the RPC punishes “obscene
publications and exhibitions and indecent shows.” The Anti-Trafficking in
Persons Act of 2003 penalizes those who “maintain or hire a person to
engage in prostitution or pornography.”26 The law defines prostitution as
any act, transaction, scheme, or design involving the use of a person by
another, for sexual intercourse or lascivious conduct in exchange for
money, profit, or any other consideration.27 crallawlibrary
The case of Nogales v. People28 shows the extent to which the State can
regulate materials that serve no other purpose than satisfy the market for
violence, lust, or pornography.29 The Court weighed the property rights of
chanRoblesVirtualawlibrary
individuals against the public welfare. Private property, if containing
pornographic materials, may be forfeited and destroyed. Likewise,
engaging in sexual acts privately through internet connection, perceived by
some as a right, has to be balanced with the mandate of the State to
eradicate white slavery and the exploitation of women.
In any event, consenting adults are protected by the wealth of
jurisprudence delineating the bounds of obscenity.30 The Court will not
declare Section 4(c)(1) unconstitutional where it stands a construction that
makes it apply only to persons engaged in the business of maintaining,
controlling, or operating, directly or indirectly, the lascivious exhibition of
sexual organs or sexual activity with the aid of a computer system as
Congress has intended.
Section 4(c)(2) of the Cybercrime Law
Section 4(c)(2) provides: chanRoblesVirtualawlibrary
Sec. 4. Cybercrime Offenses. - The following acts constitute the offense of
cybercrime punishable under this Act: chanRoblesVirtualawlibrary
x x x x
(c) Content-related Offenses: chanRoblesVirtualawlibrary
xxxx
(2) Child Pornography. — The unlawful or prohibited acts defined and punishable by
Republic Act No. 9775 or the Anti-Child Pornography Act of 2009, committed
through a computer system: Provided, That the penalty to be imposed shall be (1)
one degree higher than that provided for in Republic Act No. 9775.
It seems that the above merely expands the scope of the Anti-Child
Pornography Act of 200931 (ACPA) to cover identical activities in
cyberspace. In theory, nothing prevents the government from invoking the
ACPA when prosecuting persons who commit child pornography using a
computer system. Actually, ACPA’s definition of child pornography already
embraces the use of “electronic, mechanical, digital, optical, magnetic or
any other means.” Notably, no one has questioned this ACPA provision.
Of course, the law makes the penalty higher by one degree when the crime
is committed in cyberspace. But no one can complain since the intensity or
duration of penalty is a legislative prerogative and there is rational basis for
such higher penalty.32 The potential for uncontrolled proliferation of a
particular piece of child pornography when uploaded in the cyberspace is
incalculable.
Petitioners point out that the provision of ACPA that makes it unlawful for
any person to “produce, direct, manufacture or create any form of child
pornography”33 clearly relates to the prosecution of persons who aid and
abet the core offenses that ACPA seeks to punish.34 Petitioners are wary
that a person who merely doodles on paper and imagines a sexual abuse of
a 16-year-old is not criminally liable for producing child pornography but
one who formulates the idea on his laptop would be. Further, if the author
bounces off his ideas on Twitter, anyone who replies to the tweet could be
considered aiding and abetting a cybercrime.
The question of aiding and abetting the offense by simply commenting on it
will be discussed elsewhere below. For now the Court must hold that the
constitutionality of Section 4(c)(2) is not successfully challenged.
Section 4(c)(3) of the Cybercrime Law
Section 4(c)(3) provides: chanRoblesVirtualawlibrary
Sec. 4. Cybercrime Offenses. - The following acts constitute the offense of
cybercrime punishable under this Act:
chanRoblesVirtualawlibrary
xxxx
(c) Content-related Offenses:
chanRoblesVirtualawlibrary
xxxx
(3) Unsolicited Commercial Communications. - The transmission of
commercial electronic communication with the use of computer system
which seeks to advertise, sell, or offer for sale products and services are
prohibited unless: chanRoblesVirtualawlibrary
(i) There is prior affirmative consent from the recipient; or
(ii) The primary intent of the communication is for service and/or
administrative announcements from the sender to its existing users,
subscribers or customers; or
(iii) The following conditions are present: chanRoblesVirtualawlibrary
(aa)   The commercial electronic communication contains a simple, valid,
and reliable way for the recipient to reject receipt of further commercial
electronic messages (opt-out) from the same source;
(bb)   The commercial electronic communication does not purposely
disguise the source of the electronic message; and
(cc)   The commercial electronic communication does not purposely include
misleading information in any part of the message in order to induce the
recipients to read the message.
The above penalizes the transmission of unsolicited commercial
communications, also known as “spam.” The term “spam” surfaced in early
internet chat rooms and interactive fantasy games. One who repeats the
same sentence or comment was said to be making a “spam.” The term
referred to a Monty Python’s Flying Circus scene in which actors would keep
saying “Spam, Spam, Spam, and Spam” when reading options from a
menu.35 crallawlibrary
The Government, represented by the Solicitor General, points out that
unsolicited commercial communications or spams are a nuisance that
wastes the storage and network capacities of internet service providers,
reduces the efficiency of commerce and technology, and interferes with the
owner’s peaceful enjoyment of his property. Transmitting spams amounts
to trespass to one’s privacy since the person sending out spams enters the
recipient’s domain without prior permission. The OSG contends that
commercial speech enjoys less protection in law.
But, firstly, the government presents no basis for holding that unsolicited
electronic ads reduce the “efficiency of computers.” Secondly, people,
before the arrival of the age of computers, have already been receiving
such unsolicited ads by mail. These have never been outlawed as nuisance
since people might have interest in such ads. What matters is that the
recipient has the option of not opening or reading these mail ads. That is
true with spams. Their recipients always have the option to delete or not to
read them.
To prohibit the transmission of unsolicited ads would deny a person the
right to read his emails, even unsolicited commercial ads addressed to him.
Commercial speech is a separate category of speech which is not accorded
the same level of protection as that given to other constitutionally
guaranteed forms of expression but is nonetheless entitled to
protection.36 The State cannot rob him of this right without violating the
constitutionally guaranteed freedom of expression. Unsolicited
advertisements are legitimate forms of expression.
Articles 353, 354, and 355 of the Penal Code
Section 4(c)(4) of the Cyber Crime Law
Petitioners dispute the constitutionality of both the penal code provisions
on libel as well as Section 4(c)(4) of the Cybercrime Prevention Act on
cyberlibel.
The RPC provisions on libel read: chanRoblesVirtualawlibrary
Art. 353. Definition of libel. — A libel is public and malicious imputation of a
crime, or of a vice or defect, real or imaginary, or any act, omission,
condition, status, or circumstance tending to cause the dishonor, discredit,
or contempt of a natural or juridical person, or to blacken the memory of
one who is dead.
Art. 354. Requirement for publicity. — Every defamatory imputation is
presumed to be malicious, even if it be true, if no good intention and
justifiable motive for making it is shown, except in the following cases: chanRoblesVirtualawlibrary
1. A private communication made by any person to another in the
performance of any legal, moral or social duty; and
2. A fair and true report, made in good faith, without any comments or
remarks, of any judicial, legislative or other official proceedings which are
not of confidential nature, or of any statement, report or speech delivered
in said proceedings, or of any other act performed by public officers in the
exercise of their functions.
Art. 355. Libel means by writings or similar means. — A libel committed by
means of writing, printing, lithography, engraving, radio, phonograph,
painting, theatrical exhibition, cinematographic exhibition, or any similar
means, shall be punished by prision correccional in its minimum and
medium periods or a fine ranging from 200 to 6,000 pesos, or both, in
addition to the civil action which may be brought by the offended party.
The libel provision of the cybercrime law, on the other hand, merely
incorporates to form part of it the provisions of the RPC on libel. Thus
Section 4(c)(4) reads: chanRoblesVirtualawlibrary
Sec. 4. Cybercrime Offenses. — The following acts constitute the offense of
cybercrime punishable under this Act: chanRoblesVirtualawlibrary
x x x x
(c) Content-related Offenses: chanRoblesVirtualawlibrary
x x x x
(4) Libel. — The unlawful or prohibited acts of libel as defined in Article 355
of the Revised Penal Code, as amended, committed through a computer
system or any other similar means which may be devised in the future.
Petitioners lament that libel provisions of the penal code37 and, in effect,
the libel provisions of the cybercrime law carry with them the requirement
of “presumed malice” even when the latest jurisprudence already replaces
it with the higher standard of “actual malice” as a basis for
conviction.38 Petitioners argue that inferring “presumed malice” from the
accused’s defamatory statement by virtue of Article 354 of the penal code
infringes on his constitutionally guaranteed freedom of expression.
Petitioners would go further. They contend that the laws on libel should be
stricken down as unconstitutional for otherwise good jurisprudence
requiring “actual malice” could easily be overturned as the Court has done
in Fermin v. People39 even where the offended parties happened to be
public figures.
The elements of libel are: (a) the allegation of a discreditable act or
condition concerning another; (b) publication of the charge; (c) identity of
the person defamed; and (d) existence of malice.40 crallawlibrary
There is “actual malice” or malice in fact41 when the offender makes the
defamatory statement with the knowledge that it is false or with reckless
disregard of whether it was false or not.42 The reckless disregard standard
used here requires a high degree of awareness of probable falsity. There
must be sufficient evidence to permit the conclusion that the accused in
fact entertained serious doubts as to the truth of the statement he
published. Gross or even extreme negligence is not sufficient to establish
actual malice.43 crallawlibrary
The prosecution bears the burden of proving the presence of actual malice
in instances where such element is required to establish guilt. The defense
of absence of actual malice, even when the statement turns out to be false,
is available where the offended party is a public official or a public figure,
as in the cases of Vasquez (a barangay official) and Borjal (the Executive
Director, First National Conference on Land Transportation). Since the
penal code and implicitly, the cybercrime law, mainly target libel against
private persons, the Court recognizes that these laws imply a stricter
standard of “malice” to convict the author of a defamatory statement
where the offended party is a public figure. Society’s interest and the
maintenance of good government demand a full discussion of public
affairs.44
crallawlibrary
Parenthetically, the Court cannot accept the proposition that its ruling
in Fermin disregarded the higher standard of actual malice or malice in fact
when it found Cristinelli Fermin guilty of committing libel against
complainants who were public figures. Actually, the Court found the
presence of malice in fact in that case. Thus:chanRoblesVirtualawlibrary
It can be gleaned from her testimony that petitioner had the motive to
make defamatory imputations against complainants. Thus, petitioner
cannot, by simply making a general denial, convince us that there was no
malice on her part. Verily, not only was there malice in law, the article
being malicious in itself, but there was also malice in fact, as there was
motive to talk ill against complainants during the electoral campaign.
(Emphasis ours)
Indeed, the Court took into account the relatively wide leeway given to
utterances against public figures in the above case, cinema and television
personalities, when it modified the penalty of imprisonment to just a fine of
P6,000.00.
But, where the offended party is a private individual, the prosecution need
not prove the presence of malice. The law explicitly presumes its existence
(malice in law) from the defamatory character of the assailed
statement.45 For his defense, the accused must show that he has a
justifiable reason for the defamatory statement even if it was in fact
true.46
crallawlibrary
Petitioners peddle the view that both the penal code and the Cybercrime
Prevention Act violate the country’s obligations under the International
Covenant of Civil and Political Rights (ICCPR). They point out that in Adonis
v. Republic of the Philippines,47 the United Nations Human Rights
Committee (UNHRC) cited its General Comment 34 to the effect that penal
defamation laws should include the defense of truth.
But General Comment 34 does not say that the truth of the defamatory
statement should constitute an all-encompassing defense. As it happens,
Article 361 recognizes truth as a defense but under the condition that the
accused has been prompted in making the statement by good motives and
for justifiable ends. Thus:
chanRoblesVirtualawlibrary
Art. 361. Proof of the truth. — In every criminal prosecution for libel, the
truth may be given in evidence to the court and if it appears that the
matter charged as libelous is true, and, moreover, that it was published
with good motives and for justifiable ends, the defendants shall be
acquitted.
Proof of the truth of an imputation of an act or omission not constituting a
crime shall not be admitted, unless the imputation shall have been made
against Government employees with respect to facts related to the
discharge of their official duties.
In such cases if the defendant proves the truth of the imputation made by
him, he shall be acquitted.
Besides, the UNHRC did not actually enjoin the Philippines, as petitioners
urge, to decriminalize libel. It simply suggested that defamation laws be
crafted with care to ensure that they do not stifle freedom of
expression.48 Indeed, the ICCPR states that although everyone should
enjoy freedom of expression, its exercise carries with it special duties and
responsibilities. Free speech is not absolute. It is subject to certain
restrictions, as may be necessary and as may be provided by law.49 crallawlibrary
The Court agrees with the Solicitor General that libel is not a
constitutionally protected speech and that the government has an
obligation to protect private individuals from defamation. Indeed, cyberlibel
is actually not a new crime since Article 353, in relation to Article 355 of
the penal code, already punishes it. In effect, Section 4(c)(4) above merely
affirms that online defamation constitutes “similar means” for committing
libel.
But the Court’s acquiescence goes only insofar as the cybercrime law
penalizes the author of the libelous statement or article. Cyberlibel brings
with it certain intricacies, unheard of when the penal code provisions on
libel were enacted. The culture associated with internet media is distinct
from that of print.
The internet is characterized as encouraging a freewheeling, anything-goes
writing style.50 In a sense, they are a world apart in terms of quickness of
the reader’s reaction to defamatory statements posted in cyberspace,
facilitated by one-click reply options offered by the networking site as well
as by the speed with which such reactions are disseminated down the line
to other internet users. Whether these reactions to defamatory statement
posted on the internet constitute aiding and abetting libel, acts that Section
5 of the cybercrime law punishes, is another matter that the Court will deal
with next in relation to Section 5 of the law.
Section 5 of the Cybercrime Law
Section 5 provides: chanRoblesVirtualawlibrary
Sec. 5. Other Offenses. — The following acts shall also constitute an
offense:chanRoblesVirtualawlibrary
(a) Aiding or Abetting in the Commission of Cybercrime. - Any person who
willfully abets or aids in the commission of any of the offenses enumerated
in this Act shall be held liable.
(b) Attempt in the Commission of Cybercrime. — Any person who willfully
attempts to commit any of the offenses enumerated in this Act shall be
held liable.
Petitioners assail the constitutionality of Section 5 that renders criminally
liable any person who willfully abets or aids in the commission or attempts
to commit any of the offenses enumerated as cybercrimes. It suffers from
overbreadth, creating a chilling and deterrent effect on protected
expression.
The Solicitor General contends, however, that the current body of
jurisprudence and laws on aiding and abetting sufficiently protects the
freedom of expression of “netizens,” the multitude that avail themselves of
the services of the internet. He points out that existing laws and
jurisprudence sufficiently delineate the meaning of “aiding or abetting” a
crime as to protect the innocent. The Solicitor General argues that plain,
ordinary, and common usage is at times sufficient to guide law
enforcement agencies in enforcing the law.51 The legislature is not required
to define every single word contained in the laws they craft.
Aiding or abetting has of course well-defined meaning and application in
existing laws. When a person aids or abets another in destroying a
forest,52 smuggling merchandise into the country,53 or interfering in the
peaceful picketing of laborers,54 his action is essentially physical and so is
susceptible to easy assessment as criminal in character. These forms of
aiding or abetting lend themselves to the tests of common sense and
human experience.
But, when it comes to certain cybercrimes, the waters are muddier and the
line of sight is somewhat blurred. The idea of “aiding or abetting”
wrongdoings online threatens the heretofore popular and unchallenged
dogmas of cyberspace use.
According to the 2011 Southeast Asia Digital Consumer Report, 33% of
Filipinos have accessed the internet within a year, translating to about 31
million users.55 Based on a recent survey, the Philippines ranks 6th in the
top 10 most engaged countries for social networking.56 Social networking
sites build social relations among people who, for example, share interests,
activities, backgrounds, or real-life connections.57crallawlibrary

Two of the most popular of these sites are Facebook and Twitter. As of late
2012, 1.2 billion people with shared interests use Facebook to get in
touch.58 Users register at this site, create a personal profile or an open
book of who they are, add other users as friends, and exchange messages,
including automatic notifications when they update their profile.59 A user
can post a statement, a photo, or a video on Facebook, which can be made
visible to anyone, depending on the user’s privacy settings.
If the post is made available to the public, meaning to everyone and not
only to his friends, anyone on Facebook can react to the posting, clicking
any of several buttons of preferences on the program’s screen such as
“Like,” “Comment,” or “Share.” “Like” signifies that the reader likes the
posting while “Comment” enables him to post online his feelings or views
about the same, such as “This is great!” When a Facebook user “Shares” a
posting, the original “posting” will appear on his own Facebook profile,
consequently making it visible to his down-line Facebook Friends.
Twitter, on the other hand, is an internet social networking and
microblogging service that enables its users to send and read short text-
based messages of up to 140 characters. These are known as “Tweets.”
Microblogging is the practice of posting small pieces of digital content—
which could be in the form of text, pictures, links, short videos, or other
media—on the internet. Instead of friends, a Twitter user has “Followers,”
those who subscribe to this particular user’s posts, enabling them to read
the same, and “Following,” those whom this particular user is subscribed
to, enabling him to read their posts. Like Facebook, a Twitter user can
make his tweets available only to his Followers, or to the general public. If
a post is available to the public, any Twitter user can “Retweet” a given
posting. Retweeting is just reposting or republishing another person’s tweet
without the need of copying and pasting it.
In the cyberworld, there are many actors: a) the blogger who originates
the assailed statement; b) the blog service provider like Yahoo; c) the
internet service provider like PLDT, Smart, Globe, or Sun; d) the internet
café that may have provided the computer used for posting the blog; e)
the person who makes a favorable comment on the blog; and f) the person
who posts a link to the blog site.60 Now, suppose Maria (a blogger)
maintains a blog on WordPress.com (blog service provider). She needs the
internet to access her blog so she subscribes to Sun Broadband (Internet
Service Provider).
One day, Maria posts on her internet account the statement that a certain
married public official has an illicit affair with a movie star. Linda, one of
Maria’s friends who sees this post, comments online, “Yes, this is so true!
They are so immoral.” Maria’s original post is then multiplied by her friends
and the latter’s friends, and down the line to friends of friends almost ad
infinitum. Nena, who is a stranger to both Maria and Linda, comes across
this blog, finds it interesting and so shares the link to this apparently
defamatory blog on her Twitter account. Nena’s “Followers” then “Retweet”
the link to that blog site.
Pamela, a Twitter user, stumbles upon a random person’s “Retweet” of
Nena’s original tweet and posts this on her Facebook account. Immediately,
Pamela’s Facebook Friends start Liking and making Comments on the
assailed posting. A lot of them even press the Share button, resulting in
the further spread of the original posting into tens, hundreds, thousands,
and greater postings.
The question is: are online postings such as “Liking” an openly defamatory
statement, “Commenting” on it, or “Sharing” it with others, to be regarded
as “aiding or abetting?” In libel in the physical world, if Nestor places on
the office bulletin board a small poster that says, “Armand is a thief!,” he
could certainly be charged with libel. If Roger, seeing the poster, writes on
it, “I like this!,” that could not be libel since he did not author the poster. If
Arthur, passing by and noticing the poster, writes on it, “Correct!,” would
that be libel? No, for he merely expresses agreement with the statement
on the poster. He still is not its author. Besides, it is not clear if aiding or
abetting libel in the physical world is a crime.
But suppose Nestor posts the blog, “Armand is a thief!” on a social
networking site. Would a reader and his Friends or Followers, availing
themselves of any of the “Like,” “Comment,” and “Share” reactions, be
guilty of aiding or abetting libel? And, in the complex world of cyberspace
expressions of thoughts, when will one be liable for aiding or abetting
cybercrimes? Where is the venue of the crime?
Except for the original author of the assailed statement, the rest (those
who pressed Like, Comment and Share) are essentially knee-jerk
sentiments of readers who may think little or haphazardly of their response
to the original posting. Will they be liable for aiding or abetting? And,
considering the inherent impossibility of joining hundreds or thousands of
responding “Friends” or “Followers” in the criminal charge to be filed in
court, who will make a choice as to who should go to jail for the outbreak
of the challenged posting?
The old parameters for enforcing the traditional form of libel would be a
square peg in a round hole when applied to cyberspace libel. Unless the
legislature crafts a cyber libel law that takes into account its unique
circumstances and culture, such law will tend to create a chilling effect on
the millions that use this new medium of communication in violation of
their constitutionally-guaranteed right to freedom of expression.
The United States Supreme Court faced the same issue in Reno v.
American Civil Liberties Union,61 a case involving the constitutionality of the
Communications Decency Act of 1996. The law prohibited (1) the knowing
transmission, by means of a telecommunications device, of “obscene or
indecent” communications to any recipient under 18 years of age; and (2)
the knowing use of an interactive computer service to send to a specific
person or persons under 18 years of age or to display in a manner
available to a person under 18 years of age communications that, in
context, depict or describe, in terms “patently offensive” as measured by
contemporary community standards, sexual or excretory activities or
organs.
Those who challenged the Act claim that the law violated the First
Amendment’s guarantee of freedom of speech for being overbroad. The
U.S. Supreme Court agreed and ruled: chanRoblesVirtualawlibrary
The vagueness of the Communications Decency Act of 1996 (CDA), 47
U.S.C.S. §223, is a matter of special concern for two reasons. First, the
CDA is a content-based regulation of speech. The vagueness of such a
regulation raises special U.S. Const. amend. I concerns because of
its obvious chilling effect on free speech. Second, the CDA is a criminal
statute. In addition to the opprobrium and stigma of a criminal conviction,
the CDA threatens violators with penalties including up to two years in
prison for each act of violation. The severity of criminal sanctions may
well cause speakers to remain silent rather than communicate even
arguably unlawful words, ideas, and images. As a practical matter,
this increased deterrent effect, coupled with the risk of discriminatory
enforcement of vague regulations, poses greater U.S. Const. amend. I
concerns than those implicated by certain civil regulations.
x x x x
The Communications Decency Act of 1996 (CDA), 47 U.S.C.S. §
223, presents a great threat of censoring speech that, in fact, falls
outside the statute’s scope. Given the vague contours of the
coverage of the statute, it unquestionably silences some speakers
whose messages would be entitled to constitutional protection.
That danger provides further reason for insisting that the statute not be
overly broad. The CDA’s burden on protected speech cannot be
justified if it could be avoided by a more carefully drafted
statute. (Emphasis ours)
Libel in the cyberspace can of course stain a person’s image with just one
click of the mouse. Scurrilous statements can spread and travel fast across
the globe like bad news. Moreover, cyberlibel often goes hand in hand with
cyberbullying that oppresses the victim, his relatives, and friends, evoking
from mild to disastrous reactions. Still, a governmental purpose, which
seeks to regulate the use of this cyberspace communication technology to
protect a person’s reputation and peace of mind, cannot adopt means that
will unnecessarily and broadly sweep, invading the area of protected
freedoms.62crallawlibrary
If such means are adopted, self-inhibition borne of fear of what sinister
predicaments await internet users will suppress otherwise robust discussion
of public issues. Democracy will be threatened and with it, all liberties.
Penal laws should provide reasonably clear guidelines for law enforcement
officials and triers of facts to prevent arbitrary and discriminatory
enforcement.63 The terms “aiding or abetting” constitute broad sweep that
generates chilling effect on those who express themselves through
cyberspace posts, comments, and other messages.64 Hence, Section 5 of
the cybercrime law that punishes “aiding or abetting” libel on the
cyberspace is a nullity.
When a penal statute encroaches upon the freedom of speech, a facial
challenge grounded on the void-for-vagueness doctrine is acceptable. The
inapplicability of the doctrine must be carefully delineated. As Justice
Antonio T. Carpio explained in his dissent in Romualdez v. Commission on
Elections,65 “we must view these statements of the Court on the
inapplicability of the overbreadth and vagueness doctrines to penal statutes
as appropriate only insofar as these doctrines are used to mount ‘facial’
challenges to penal statutes not involving free speech.”
In an “as applied” challenge, the petitioner who claims a violation of his
constitutional right can raise any constitutional ground - absence of due
process, lack of fair notice, lack of ascertainable standards, overbreadth, or
vagueness. Here, one can challenge the constitutionality of a statute only if
he asserts a violation of his own rights. It prohibits one from assailing the
constitutionality of the statute based solely on the violation of the rights of
third persons not before the court. This rule is also known as the
prohibition against third-party standing.66crallawlibrary
But this rule admits of exceptions. A petitioner may for instance mount a
“facial” challenge to the constitutionality of a statute even if he claims no
violation of his own rights under the assailed statute where it involves free
speech on grounds of overbreadth or vagueness of the statute. The
rationale for this exception is to counter the “chilling effect” on protected
speech that comes from statutes violating free speech. A person who does
not know whether his speech constitutes a crime under an overbroad or
vague law may simply restrain himself from speaking in order to avoid
being charged of a crime. The overbroad or vague law thus chills him into
silence.67
crallawlibrary
As already stated, the cyberspace is an incomparable, pervasive medium of
communication. It is inevitable that any government threat of punishment
regarding certain uses of the medium creates a chilling effect on the
constitutionally-protected freedom of expression of the great masses that
use it. In this case, the particularly complex web of interaction on social
media websites would give law enforcers such latitude that they could
arbitrarily or selectively enforce the law.
Who is to decide when to prosecute persons who boost the visibility of a
posting on the internet by liking it? Netizens are not given “fair notice” or
warning as to what is criminal conduct and what is lawful conduct. When a
case is filed, how will the court ascertain whether or not one netizen’s
comment aided and abetted a cybercrime while another comment did not?
Of course, if the “Comment” does not merely react to the original posting
but creates an altogether new defamatory story against Armand like “He
beats his wife and children,” then that should be considered an original
posting published on the internet. Both the penal code and the cybercrime
law clearly punish authors of defamatory publications. Make no mistake,
libel destroys reputations that society values. Allowed to cascade in the
internet, it will destroy relationships and, under certain circumstances, will
generate enmity and tension between social or economic groups, races, or
religions, exacerbating existing tension in their relationships.
In regard to the crime that targets child pornography, when “Google
procures, stores, and indexes child pornography and facilitates the
completion of transactions involving the dissemination of child
pornography,” does this make Google and its users aiders and abettors in
the commission of child pornography crimes?68 Byars highlights a feature in
the American law on child pornography that the Cybercrimes law lacks—the
exemption of a provider or notably a plain user of interactive computer
service from civil liability for child pornography as follows:chanRoblesVirtualawlibrary
No provider or user of an interactive computer service shall be treated as
the publisher or speaker of any information provided by another
information content provider and cannot be held civilly liable for any action
voluntarily taken in good faith to restrict access to or availability of material
that the provider or user considers to be obscene...whether or not such
material is constitutionally protected.69crallawlibrary
When a person replies to a Tweet containing child pornography, he
effectively republishes it whether wittingly or unwittingly. Does this make
him a willing accomplice to the distribution of child pornography? When a
user downloads the Facebook mobile application, the user may give
consent to Facebook to access his contact details. In this way, certain
information is forwarded to third parties and unsolicited commercial
communication could be disseminated on the basis of this information.70 As
the source of this information, is the user aiding the distribution of this
communication? The legislature needs to address this clearly to relieve
users of annoying fear of possible criminal prosecution.
Section 5 with respect to Section 4(c)(4) is unconstitutional. Its vagueness
raises apprehension on the part of internet users because of its obvious
chilling effect on the freedom of expression, especially since the crime of
aiding or abetting ensnares all the actors in the cyberspace front in a fuzzy
way. What is more, as the petitioners point out, formal crimes such as libel
are not punishable unless consummated.71 In the absence of legislation
tracing the interaction of netizens and their level of responsibility such as in
other countries, Section 5, in relation to Section 4(c)(4) on Libel, Section
4(c)(3) on Unsolicited Commercial Communications, and Section 4(c)(2) on
Child Pornography, cannot stand scrutiny.
But the crime of aiding or abetting the commission of cybercrimes under
Section 5 should be permitted to apply to Section 4(a)(1) on Illegal Access,
Section 4(a)(2) on Illegal Interception, Section 4(a)(3) on Data
Interference, Section 4(a)(4) on System Interference, Section 4(a)(5) on
Misuse of Devices, Section 4(a)(6) on Cyber-squatting, Section 4(b)(1) on
Computer-related Forgery, Section 4(b)(2) on Computer-related Fraud,
Section 4(b)(3) on Computer-related Identity Theft, and Section 4(c)(1) on
Cybersex. None of these offenses borders on the exercise of the freedom of
expression.
The crime of willfully attempting to commit any of these offenses is for the
same reason not objectionable. A hacker may for instance have done all
that is necessary to illegally access another party’s computer system but
the security employed by the system’s lawful owner could frustrate his
effort. Another hacker may have gained access to usernames and
passwords of others but fail to use these because the system supervisor is
alerted.72 If Section 5 that punishes any person who willfully attempts to
commit this specific offense is not upheld, the owner of the username and
password could not file a complaint against him for attempted hacking. But
this is not right. The hacker should not be freed from liability simply
because of the vigilance of a lawful owner or his supervisor.
Petitioners of course claim that Section 5 lacks positive limits and could
cover the innocent.73 While this may be true with respect to cybercrimes
that tend to sneak past the area of free expression, any attempt to commit
the other acts specified in Section 4(a)(1), Section 4(a)(2), Section 4(a)
(3), Section 4(a)(4), Section 4(a)(5), Section 4(a)(6), Section 4(b)(1),
Section 4(b)(2), Section 4(b)(3), and Section 4(c)(1) as well as the actors
aiding and abetting the commission of such acts can be identified with
some reasonable certainty through adroit tracking of their works. Absent
concrete proof of the same, the innocent will of course be spared.
Section 6 of the Cybercrime Law
Section 6 provides: chanRoblesVirtualawlibrary
Sec. 6. All crimes defined and penalized by the Revised Penal Code, as
amended, and special laws, if committed by, through and with the use of
information and communications technologies shall be covered by the
relevant provisions of this Act: Provided, That the penalty to be imposed
shall be one (1) degree higher than that provided for by the Revised Penal
Code, as amended, and special laws, as the case may be.
Section 6 merely makes commission of existing crimes through the internet
a qualifying circumstance. As the Solicitor General points out, there exists a
substantial distinction between crimes committed through the use of
information and communications technology and similar crimes committed
using other means. In using the technology in question, the offender often
evades identification and is able to reach far more victims or cause greater
harm. The distinction, therefore, creates a basis for higher penalties for
cybercrimes.
Section 7 of the Cybercrime Law
Section 7 provides: chanRoblesVirtualawlibrary
Sec. 7. Liability under Other Laws. — A prosecution under this Act shall be
without prejudice to any liability for violation of any provision of the
Revised Penal Code, as amended, or special laws.
The Solicitor General points out that Section 7 merely expresses the settled
doctrine that a single set of acts may be prosecuted and penalized
simultaneously under two laws, a special law and the Revised Penal Code.
When two different laws define two crimes, prior jeopardy as to one does
not bar prosecution of the other although both offenses arise from the
same fact, if each crime involves some important act which is not an
essential element of the other.74 With the exception of the crimes of online
libel and online child pornography, the Court would rather leave the
determination of the correct application of Section 7 to actual cases.
Online libel is different. There should be no question that if the published
material on print, said to be libelous, is again posted online or vice versa,
that identical material cannot be the subject of two separate libels. The two
offenses, one a violation of Article 353 of the Revised Penal Code and the
other a violation of Section 4(c)(4) of R.A. 10175 involve essentially the
same elements and are in fact one and the same offense. Indeed, the OSG
itself claims that online libel under Section 4(c)(4) is not a new crime but is
one already punished under Article 353. Section 4(c)(4) merely establishes
the computer system as another means of publication.75 Charging the
offender under both laws would be a blatant violation of the proscription
against double jeopardy.76 crallawlibrary
The same is true with child pornography committed online. Section 4(c)(2)
merely expands the ACPA’s scope so as to include identical activities in
cyberspace. As previously discussed, ACPA’s definition of child pornography
in fact already covers the use of “electronic, mechanical, digital, optical,
magnetic or any other means.” Thus, charging the offender under both
Section 4(c)(2) and ACPA would likewise be tantamount to a violation of
the constitutional prohibition against double jeopardy.
Section 8 of the Cybercrime Law
Section 8 provides: chanRoblesVirtualawlibrary
Sec. 8. Penalties. — Any person found guilty of any of the punishable acts
enumerated in Sections 4(a) and 4(b) of this Act shall be punished with
imprisonment of prision mayor or a fine of at least Two hundred thousand
pesos (PhP200,000.00) up to a maximum amount commensurate to the
damage incurred or both.
Any person found guilty of the punishable act under Section 4(a)(5) shall
be punished with imprisonment of prision mayor or a fine of not more than
Five hundred thousand pesos (PhP500,000.00) or both.
If punishable acts in Section 4(a) are committed against critical
infrastructure, the penalty of reclusion temporal or a fine of at least Five
hundred thousand pesos (PhP500,000.00) up to maximum amount
commensurate to the damage incurred or both, shall be imposed.
Any person found guilty of any of the punishable acts enumerated in
Section 4(c)(1) of this Act shall be punished with imprisonment of prision
mayor or a fine of at least Two hundred thousand pesos (PhP200,000.00)
but not exceeding One million pesos (PhP1,000,000.00) or both.
Any person found guilty of any of the punishable acts enumerated in
Section 4(c)(2) of this Act shall be punished with the penalties as
enumerated in Republic Act No. 9775 or the “Anti-Child Pornography Act of
2009:” Provided, That the penalty to be imposed shall be one (1) degree
higher than that provided for in Republic Act No. 9775, if committed
through a computer system.
Any person found guilty of any of the punishable acts enumerated in
Section 4(c)(3) shall be punished with imprisonment of arresto mayor or a
fine of at least Fifty thousand pesos (PhP50,000.00) but not exceeding Two
hundred fifty thousand pesos (PhP250,000.00) or both.
Any person found guilty of any of the punishable acts enumerated in
Section 5 shall be punished with imprisonment one (1) degree lower than
that of the prescribed penalty for the offense or a fine of at least One
hundred thousand pesos (PhP100,000.00) but not exceeding Five hundred
thousand pesos (PhP500,000.00) or both.
Section 8 provides for the penalties for the following crimes: Sections 4(a)
on Offenses Against the Confidentiality, Integrity and Availability of
Computer Data and Systems; 4(b) on Computer-related Offenses; 4(a)(5)
on Misuse of Devices; when the crime punishable under 4(a) is committed
against critical infrastructure; 4(c)(1) on Cybersex; 4(c)(2) on Child
Pornography; 4(c)(3) on Unsolicited Commercial Communications; and
Section 5 on Aiding or Abetting, and Attempt in the Commission of
Cybercrime.
The matter of fixing penalties for the commission of crimes is as a rule a
legislative prerogative. Here the legislature prescribed a measure of severe
penalties for what it regards as deleterious cybercrimes. They appear
proportionate to the evil sought to be punished. The power to determine
penalties for offenses is not diluted or improperly wielded simply because
at some prior time the act or omission was but an element of another
offense or might just have been connected with another crime.77 Judges
and magistrates can only interpret and apply them and have no authority
to modify or revise their range as determined by the legislative
department. The courts should not encroach on this prerogative of the
lawmaking body.78 crallawlibrary
Section 12 of the Cybercrime Law
Section 12 provides: chanRoblesVirtualawlibrary
Sec. 12. Real-Time Collection of Traffic Data. — Law enforcement
authorities, with due cause, shall be authorized to collect or record by
technical or electronic means traffic data in real-time associated with
specified communications transmitted by means of a computer system.
Traffic data refer only to the communication’s origin, destination, route,
time, date, size, duration, or type of underlying service, but not content,
nor identities.
All other data to be collected or seized or disclosed will require a court
warrant.
Service providers are required to cooperate and assist law enforcement
authorities in the collection or recording of the above-stated information.
The court warrant required under this section shall only be issued or
granted upon written application and the examination under oath or
affirmation of the applicant and the witnesses he may produce and the
showing: (1) that there are reasonable grounds to believe that any of the
crimes enumerated hereinabove has been committed, or is being
committed, or is about to be committed; (2) that there are reasonable
grounds to believe that evidence that will be obtained is essential to the
conviction of any person for, or to the solution of, or to the prevention of,
any such crimes; and (3) that there are no other means readily available
for obtaining such evidence.
Petitioners assail the grant to law enforcement agencies of the power to
collect or record traffic data in real time as tending to curtail civil liberties
or provide opportunities for official abuse. They claim that data showing
where digital messages come from, what kind they are, and where they are
destined need not be incriminating to their senders or recipients before
they are to be protected. Petitioners invoke the right of every individual to
privacy and to be protected from government snooping into the messages
or information that they send to one another.
The first question is whether or not Section 12 has a proper governmental
purpose since a law may require the disclosure of matters normally
considered private but then only upon showing that such requirement has a
rational relation to the purpose of the law,79 that there is a compelling
State interest behind the law, and that the provision itself is narrowly
drawn.80 In assessing regulations affecting privacy rights, courts should
balance the legitimate concerns of the State against constitutional
guarantees.81 crallawlibrary
Undoubtedly, the State has a compelling interest in enacting the
cybercrime law for there is a need to put order to the tremendous activities
in cyberspace for public good.82 To do this, it is within the realm of reason
that the government should be able to monitor traffic data to enhance its
ability to combat all sorts of cybercrimes.
Chapter IV of the cybercrime law, of which the collection or recording of
traffic data is a part, aims to provide law enforcement authorities with the
power they need for spotting, preventing, and investigating crimes
committed in cyberspace. Crime-fighting is a state business. Indeed, as
Chief Justice Sereno points out, the Budapest Convention on Cybercrimes
requires signatory countries to adopt legislative measures to empower
state authorities to collect or record “traffic data, in real time, associated
with specified communications.”83 And this is precisely what Section 12
does. It empowers law enforcement agencies in this country to collect or
record such data.
But is not evidence of yesterday’s traffic data, like the scene of the crime
after it has been committed, adequate for fighting cybercrimes and,
therefore, real-time data is superfluous for that purpose? Evidently, it is
not. Those who commit the crimes of accessing a computer system without
right,84 transmitting viruses,85 lasciviously exhibiting sexual organs or
sexual activity for favor or consideration;86 and producing child
pornography87 could easily evade detection and prosecution by simply
moving the physical location of their computers or laptops from day to day.
In this digital age, the wicked can commit cybercrimes from virtually
anywhere: from internet cafés, from kindred places that provide free
internet services, and from unregistered mobile internet connectors.
Criminals using cellphones under pre-paid arrangements and with
unregistered SIM cards do not have listed addresses and can neither be
located nor identified. There are many ways the cyber criminals can quickly
erase their tracks. Those who peddle child pornography could use relays of
computers to mislead law enforcement authorities regarding their places of
operations. Evidently, it is only real-time traffic data collection or recording
and a subsequent recourse to court-issued search and seizure warrant that
can succeed in ferreting them out.
Petitioners of course point out that the provisions of Section 12 are too
broad and do not provide ample safeguards against crossing legal
boundaries and invading the people’s right to privacy. The concern is
understandable. Indeed, the Court recognizes in Morfe v. Mutuc88 that
certain constitutional guarantees work together to create zones of privacy
wherein governmental powers may not intrude, and that there exists an
independent constitutional right of privacy. Such right to be left alone has
been regarded as the beginning of all freedoms.89 crallawlibrary
But that right is not unqualified. In Whalen v. Roe,90 the United States
Supreme Court classified privacy into two categories: decisional privacy
and informational privacy. Decisional privacy involves the right to
independence in making certain important decisions, while informational
privacy refers to the interest in avoiding disclosure of personal matters. It
is the latter right—the right to informational privacy—that those who
oppose government collection or recording of traffic data in real-time seek
to protect.
Informational privacy has two aspects: the right not to have private
information disclosed, and the right to live freely without surveillance and
intrusion.91 In determining whether or not a matter is entitled to the right
to privacy, this Court has laid down a two-fold test. The first is a subjective
test, where one claiming the right must have an actual or legitimate
expectation of privacy over a certain matter. The second is an objective
test, where his or her expectation of privacy must be one society is
prepared to accept as objectively reasonable.92
crallawlibrary
Since the validity of the cybercrime law is being challenged, not in relation
to its application to a particular person or group, petitioners’ challenge to
Section 12 applies to all information and communications technology (ICT)
users, meaning the large segment of the population who use all sorts of
electronic devices to communicate with one another. Consequently, the
expectation of privacy is to be measured from the general public’s point of
view. Without reasonable expectation of privacy, the right to it would have
no basis in fact.
As the Solicitor General points out, an ordinary ICT user who courses his
communication through a service provider, must of necessity disclose to
the latter, a third person, the traffic data needed for connecting him to the
recipient ICT user. For example, an ICT user who writes a text message
intended for another ICT user must furnish his service provider with his
cellphone number and the cellphone number of his recipient, accompanying
the message sent. It is this information that creates the traffic data.
Transmitting communications is akin to putting a letter in an envelope
properly addressed, sealing it closed, and sending it through the postal
service. Those who post letters have no expectations that no one will read
the information appearing outside the envelope.
Computer data—messages of all kinds—travel across the internet in
packets and in a way that may be likened to parcels of letters or things
that are sent through the posts. When data is sent from any one source,
the content is broken up into packets and around each of these packets is a
wrapper or header. This header contains the traffic data: information that
tells computers where the packet originated, what kind of data is in the
packet (SMS, voice call, video, internet chat messages, email, online
browsing data, etc.), where the packet is going, and how the packet fits
together with other packets.93 The difference is that traffic data sent
through the internet at times across the ocean do not disclose the actual
names and addresses (residential or office) of the sender and the recipient,
only their coded internet protocol (IP) addresses. The packets travel from
one computer system to another where their contents are pieced back
together. Section 12 does not permit law enforcement authorities to look
into the contents of the messages and uncover the identities of the sender
and the recipient.
For example, when one calls to speak to another through his cellphone, the
service provider’s communication’s system will put his voice message into
packets and send them to the other person’s cellphone where they are
refitted together and heard. The latter’s spoken reply is sent to the caller in
the same way. To be connected by the service provider, the sender reveals
his cellphone number to the service provider when he puts his call through.
He also reveals the cellphone number to the person he calls. The other
ways of communicating electronically follow the same basic pattern.
In Smith v. Maryland,94 cited by the Solicitor General, the United States
Supreme Court reasoned that telephone users in the ‘70s must realize that
they necessarily convey phone numbers to the telephone company in order
to complete a call. That Court ruled that even if there is an expectation that
phone numbers one dials should remain private, such expectation is not
one that society is prepared to recognize as reasonable.
In much the same way, ICT users must know that they cannot
communicate or exchange data with one another over cyberspace except
through some service providers to whom they must submit certain traffic
data that are needed for a successful cyberspace communication. The
conveyance of this data takes them out of the private sphere, making the
expectation to privacy in regard to them an expectation that society is not
prepared to recognize as reasonable.
The Court, however, agrees with Justices Carpio and Brion that when
seemingly random bits of traffic data are gathered in bulk, pooled together,
and analyzed, they reveal patterns of activities which can then be used to
create profiles of the persons under surveillance. With enough traffic data,
analysts may be able to determine a person’s close associations, religious
views, political affiliations, even sexual preferences. Such information is
likely beyond what the public may expect to be disclosed, and clearly falls
within matters protected by the right to privacy. But has the procedure that
Section 12 of the law provides been drawn narrowly enough to protect
individual rights?
Section 12 empowers law enforcement authorities, “with due cause,” to
collect or record by technical or electronic means traffic data in real-time.
Petitioners point out that the phrase “due cause” has no precedent in law
or jurisprudence and that whether there is due cause or not is left to the
discretion of the police. Replying to this, the Solicitor General asserts that
Congress is not required to define the meaning of every word it uses in
drafting the law.
Indeed, courts are able to save vague provisions of law through statutory
construction. But the cybercrime law, dealing with a novel situation, fails to
hint at the meaning it intends for the phrase “due cause.” The Solicitor
General suggests that “due cause” should mean “just reason or motive”
and “adherence to a lawful procedure.” But the Court cannot draw this
meaning since Section 12 does not even bother to relate the collection of
data to the probable commission of a particular crime. It just says, “with
due cause,” thus justifying a general gathering of data. It is akin to the use
of a general search warrant that the Constitution prohibits.
Due cause is also not descriptive of the purpose for which data collection
will be used. Will the law enforcement agencies use the traffic data to
identify the perpetrator of a cyber attack? Or will it be used to build up a
case against an identified suspect? Can the data be used to prevent
cybercrimes from happening?
The authority that Section 12 gives law enforcement agencies is too
sweeping and lacks restraint. While it says that traffic data collection
should not disclose identities or content data, such restraint is but an
illusion. Admittedly, nothing can prevent law enforcement agencies holding
these data in their hands from looking into the identity of their sender or
receiver and what the data contains. This will unnecessarily expose the
citizenry to leaked information or, worse, to extortion from certain bad
elements in these agencies.
Section 12, of course, limits the collection of traffic data to those
“associated with specified communications.” But this supposed limitation is
no limitation at all since, evidently, it is the law enforcement agencies that
would specify the target communications. The power is virtually limitless,
enabling law enforcement authorities to engage in “fishing expedition,”
choosing whatever specified communication they want. This evidently
threatens the right of individuals to privacy.
The Solicitor General points out that Section 12 needs to authorize
collection of traffic data “in real time” because it is not possible to get a
court warrant that would authorize the search of what is akin to a “moving
vehicle.” But warrantless search is associated with a police officer’s
determination of probable cause that a crime has been committed, that
there is no opportunity for getting a warrant, and that unless the search is
immediately carried out, the thing to be searched stands to be removed.
These preconditions are not provided in Section 12.
The Solicitor General is honest enough to admit that Section 12 provides
minimal protection to internet users and that the procedure envisioned by
the law could be better served by providing for more robust safeguards. His
bare assurance that law enforcement authorities will not abuse the
provisions of Section 12 is of course not enough. The grant of the power to
track cyberspace communications in real time and determine their sources
and destinations must be narrowly drawn to preclude abuses.95 crallawlibrary
Petitioners also ask that the Court strike down Section 12 for being
violative of the void-for-vagueness doctrine and the overbreadth doctrine.
These doctrines however, have been consistently held by this Court to
apply only to free speech cases. But Section 12 on its own neither
regulates nor punishes any type of speech. Therefore, such analysis is
unnecessary.
This Court is mindful that advances in technology allow the government
and kindred institutions to monitor individuals and place them under
surveillance in ways that have previously been impractical or even
impossible. “All the forces of a technological age x x x operate to narrow
the area of privacy and facilitate intrusions into it. In modern terms, the
capacity to maintain and support this enclave of private life marks the
difference between a democratic and a totalitarian society.”96 The Court
must ensure that laws seeking to take advantage of these technologies be
written with specificity and definiteness as to ensure respect for the rights
that the Constitution guarantees.
Section 13 of the Cybercrime Law
Section 13 provides: chanRoblesVirtualawlibrary
Sec. 13. Preservation of Computer Data. — The integrity of traffic data and
subscriber information relating to communication services provided by a
service provider shall be preserved for a minimum period of six (6) months
from the date of the transaction. Content data shall be similarly preserved
for six (6) months from the date of receipt of the order from law
enforcement authorities requiring its preservation.
Law enforcement authorities may order a one-time extension for another
six (6) months: Provided, That once computer data preserved, transmitted
or stored by a service provider is used as evidence in a case, the mere
furnishing to such service provider of the transmittal document to the
Office of the Prosecutor shall be deemed a notification to preserve the
computer data until the termination of the case.
The service provider ordered to preserve computer data shall keep
confidential the order and its compliance.
Petitioners in G.R. 20339197 claim that Section 13 constitutes an undue
deprivation of the right to property. They liken the data preservation order
that law enforcement authorities are to issue as a form of garnishment of
personal property in civil forfeiture proceedings. Such order prevents
internet users from accessing and disposing of traffic data that essentially
belong to them.
No doubt, the contents of materials sent or received through the internet
belong to their authors or recipients and are to be considered private
communications. But it is not clear that a service provider has an obligation
to indefinitely keep a copy of the same as they pass its system for the
benefit of users. By virtue of Section 13, however, the law now requires
service providers to keep traffic data and subscriber information relating to
communication services for at least six months from the date of the
transaction and those relating to content data for at least six months from
receipt of the order for their preservation.
Actually, the user ought to have kept a copy of that data when it crossed
his computer if he was so minded. The service provider has never assumed
responsibility for their loss or deletion while in its keep.
At any rate, as the Solicitor General correctly points out, the data that
service providers preserve on orders of law enforcement authorities are not
made inaccessible to users by reason of the issuance of such orders. The
process of preserving data will not unduly hamper the normal transmission
or use of the same.
Section 14 of the Cybercrime Law
Section 14 provides: chanRoblesVirtualawlibrary
Sec. 14. Disclosure of Computer Data. — Law enforcement authorities,
upon securing a court warrant, shall issue an order requiring any person or
service provider to disclose or submit subscriber’s information, traffic data
or relevant data in his/its possession or control within seventy-two (72)
hours from receipt of the order in relation to a valid complaint officially
docketed and assigned for investigation and the disclosure is necessary and
relevant for the purpose of investigation.
The process envisioned in Section 14 is being likened to the issuance of a
subpoena. Petitioners’ objection is that the issuance of subpoenas is a
judicial function. But it is well-settled that the power to issue subpoenas is
not exclusively a judicial function. Executive agencies have the power to
issue subpoena as an adjunct of their investigatory powers.98 crallawlibrary

Besides, what Section 14 envisions is merely the enforcement of a duly
issued court warrant, a function usually lodged in the hands of law
enforcers to enable them to carry out their executive functions. The
prescribed procedure for disclosure would not constitute an unlawful search
or seizure nor would it violate the privacy of communications and
correspondence. Disclosure can be made only after judicial intervention.
Section 15 of the Cybercrime Law
Section 15 provides:
make a return thereon but in no case for a period longer than thirty (30)
days from date of approval by the court.
Petitioners challenge Section 15 on the assumption that it will supplant
established search and seizure procedures. On its face, however, Section
15 merely enumerates the duties of law enforcement authorities that would
ensure the proper collection, preservation, and use of computer system or
data that have been seized by virtue of a court warrant. The exercise of
these duties do not pose any threat on the rights of the person from whom
they were taken. Section 15 does not appear to supersede existing search
and seizure rules but merely supplements them.
chanRoblesVirtualawlibrary

Section 17 of the Cybercrime Law

Sec. 15. Search, Seizure and Examination of Computer Data. — Where a
search and seizure warrant is properly issued, the law enforcement Section 17 provides: chanRoblesVirtualawlibrary

authorities shall likewise have the following powers and duties.

Sec. 17. Destruction of Computer Data. — Upon expiration of the periods
Within the time period specified in the warrant, to conduct interception, as as provided in Sections 13 and 15, service providers and law enforcement
defined in this Act, and: chanRoblesVirtualawlibrary authorities, as the case may be, shall immediately and completely destroy
the computer data subject of a preservation and examination.
(a) To secure a computer system or a computer data storage medium; Section 17 would have the computer data, previous subject of preservation
or examination, destroyed or deleted upon the lapse of the prescribed
(b) To make and retain a copy of those computer data secured; period. The Solicitor General justifies this as necessary to clear up the
service provider’s storage systems and prevent overload. It would also
(c) To maintain the integrity of the relevant stored computer data; ensure that investigations are quickly concluded.

(d) To conduct forensic analysis or examination of the computer data Petitioners claim that such destruction of computer data subject of previous
storage medium; and preservation or examination violates the user’s right against deprivation of
property without due process of law. But, as already stated, it is unclear
(e) To render inaccessible or remove those computer data in the accessed that the user has a demandable right to require the service provider to
computer or computer and communications network. have that copy of the data saved indefinitely for him in its storage system.
If he wanted them preserved, he should have saved them in his computer
Pursuant thereof, the law enforcement authorities may order any person when he generated the data or received it. He could also request the
who has knowledge about the functioning of the computer system and the service provider for a copy before it is deleted.
measures to protect and preserve the computer data therein to provide, as
is reasonable, the necessary information, to enable the undertaking of the Section 19 of the Cybercrime Law
search, seizure and examination.
Section 19 empowers the Department of Justice to restrict or block access
Law enforcement authorities may request for an extension of time to to computer data: chanRoblesVirtualawlibrary

complete the examination of the computer data storage medium and to

Sec. 19. Restricting or Blocking Access to Computer Data.— When a
computer data is prima facie found to be in violation of the provisions of
this Act, the DOJ shall issue an order to restrict or block access to such
computer data.
Petitioners contest Section 19 in that it stifles freedom of expression and
violates the right against unreasonable searches and seizures. The Solicitor
General concedes that this provision may be unconstitutional. But since
laws enjoy a presumption of constitutionality, the Court must satisfy itself
that Section 19 indeed violates the freedom and right mentioned.
Computer data99 may refer to entire programs or lines of code, including
malware, as well as files that contain texts, images, audio, or video
recordings. Without having to go into a lengthy discussion of property
rights in the digital space, it is indisputable that computer data, produced
or created by their writers or authors may constitute personal property.
Consequently, they are protected from unreasonable searches and
seizures, whether while stored in their personal computers or in the service
provider’s systems.
Section 2, Article III of the 1987 Constitution provides that the right to be
secure in one’s papers and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be inviolable.
Further, it states that no search warrant shall issue except upon probable
cause to be determined personally by the judge. Here, the Government, in
effect, seizes and places the computer data under its control and
disposition without a warrant. The Department of Justice order cannot
substitute for judicial search warrant.
The content of the computer data can also constitute speech. In such a
case, Section 19 operates as a restriction on the freedom of expression
over cyberspace. Certainly not all forms of speech are protected.
Legislature may, within constitutional bounds, declare certain kinds of
expression as illegal. But for an executive officer to seize content alleged to
be unprotected without any judicial warrant, it is not enough for him to be
of the opinion that such content violates some law, for to do so would
make him judge, jury, and executioner all rolled into one.100 crallawlibrary
Not only does Section 19 preclude any judicial intervention, but it also
disregards jurisprudential guidelines established to determine the validity
of restrictions on speech. Restraints on free speech are generally evaluated
on one of or a combination of three tests: the dangerous tendency
doctrine, the balancing of interest test, and the clear and present danger
rule.101 Section 19, however, merely requires that the data to be blocked
be found prima facie in violation of any provision of the cybercrime law.
Taking Section 6 into consideration, this can actually be made to apply in
relation to any penal provision. It does not take into consideration any of
the three tests mentioned above.
The Court is therefore compelled to strike down Section 19 for being
violative of the constitutional guarantees to freedom of expression and
against unreasonable searches and seizures.
Section 20 of the Cybercrime Law
Section 20 provides: chanRoblesVirtualawlibrary
Sec. 20. Noncompliance. — Failure to comply with the provisions of
Chapter IV hereof specifically the orders from law enforcement authorities
shall be punished as a violation of Presidential Decree No. 1829 with
imprisonment of prision correctional in its maximum period or a fine of One
hundred thousand pesos (Php100,000.00) or both, for each and every
noncompliance with an order issued by law enforcement authorities.
Petitioners challenge Section 20, alleging that it is a bill of attainder. The
argument is that the mere failure to comply constitutes a legislative finding
of guilt, without regard to situations where non-compliance would be
reasonable or valid.
But since the non-compliance would be punished as a violation of
Presidential Decree (P.D.) 1829,102 Section 20 necessarily incorporates
elements of the offense which are defined therein. If Congress had
intended for Section 20 to constitute an offense in and of itself, it would not
have had to make reference to any other statue or provision.
P.D. 1829 states: chanRoblesVirtualawlibrary
Section 1. The penalty of prision correccional in its maximum period, or a
fine ranging from 1,000 to 6,000 pesos, or both, shall be imposed upon
any person who knowingly or willfully obstructs, impedes, frustrates or
delays the apprehension of suspects and the investigation and prosecution
of criminal cases by committing any of the following acts:   x x x.
Thus, the act of non-compliance, for it to be punishable, must still be done
“knowingly or willfully.” There must still be a judicial determination of guilt,
during which, as the Solicitor General assumes, defense and justifications
for non-compliance may be raised. Thus, Section 20 is valid insofar as it
applies to the provisions of Chapter IV which are not struck down by the
Court.
Sections 24 and 26(a) of the Cybercrime Law
Sections 24 and 26(a) provide: chanRoblesVirtualawlibrary
Sec. 24. Cybercrime Investigation and Coordinating Center.- There is
hereby created, within thirty (30) days from the effectivity of this Act, an
inter-agency body to be known as the Cybercrime Investigation and
Coordinating Center (CICC), under the administrative supervision of the
Office of the President, for policy coordination among concerned agencies
and for the formulation and enforcement of the national cybersecurity plan.
Sec. 26. Powers and Functions.- The CICC shall have the following powers
and functions:
(a) To formulate a national cybersecurity plan and extend immediate
assistance of real time commission of cybercrime offenses through a
computer emergency response team (CERT); x x x.
Petitioners mainly contend that Congress invalidly delegated its power
when it gave the Cybercrime Investigation and Coordinating Center (CICC)
the power to formulate a national cybersecurity plan without any sufficient
standards or parameters for it to follow.
In order to determine whether there is undue delegation of legislative
power, the Court has adopted two tests: the completeness test and the
sufficient standard test. Under the first test, the law must be complete in
all its terms and conditions when it leaves the legislature such that when it
reaches the delegate, the only thing he will have to do is to enforce it. The
second test mandates adequate guidelines or limitations in the law to
determine the boundaries of the delegate’s authority and prevent the
delegation from running riot.103 crallawlibrary
Here, the cybercrime law is complete in itself when it directed the CICC to
formulate and implement a national cybersecurity plan. Also, contrary to
the position of the petitioners, the law gave sufficient standards for the
CICC to follow when it provided a definition of cybersecurity.
Cybersecurity refers to the collection of tools, policies, risk management
approaches, actions, training, best practices, assurance and technologies
that can be used to protect cyber environment and organization and user’s
assets.104 This definition serves as the parameters within which CICC
should work in formulating the cybersecurity plan.
Further, the formulation of the cybersecurity plan is consistent with the
policy of the law to “prevent and combat such [cyber] offenses by
facilitating their detection, investigation, and prosecution at both the
domestic and international levels, and by providing arrangements for fast
and reliable international cooperation.”105 This policy is clearly adopted in
the interest of law and order, which has been considered as sufficient
standard.106 Hence, Sections 24 and 26(a) are likewise valid.
1. VOID for being UNCONSTITUTIONAL: chanRoblesVirtualawlibrary
chanRoblesVirtualawlibrary
a. Section 4(c)(3) of Republic Act 10175 that penalizes posting of
unsolicited commercial communications;
   
b. Section 12 that authorizes the collection or recording of traffic data
in real-time; and
   
c. Section 19 of the same Act that authorizes the Department of Justice
to restrict or block access to suspected Computer Data.
2. VALID and CONSTITUTIONAL:
chanRoblesVirtualawlibrary
a. Section 4(a)(1) that penalizes accessing a computer system without
right;
b. Section 4(a)(3) that penalizes data interference, including
transmission of viruses;
c. Section 4(a)(6) that penalizes cyber-squatting or acquiring domain
name over the internet in bad faith to the prejudice of others;
 d. Section 4(b)(3) that penalizes identity theft or the use or misuse of
identifying information belonging to another;
e. Section 4(c)(1) that penalizes cybersex or the lascivious exhibition of
sexual organs or sexual activity for favor or consideration;
f. Section 4(c)(2) that penalizes the production of child pornography;
g. Section 6 that imposes penalties one degree higher when crimes
defined under the Revised Penal Code are committed with the use of
information and communications technologies;
h. Section 8 that prescribes the penalties for cybercrimes;
i. Section 13 that permits law enforcement authorities to require
service providers to preserve traffic data and subscriber information
as well as specified content data for six months;
j. Section 14 that authorizes the disclosure of computer data under a
court-issued warrant;
k. Section 15 that authorizes the search, seizure, and examination of
computer data under a court-issued warrant;
l. Section 17 that authorizes the destruction of previously preserved
computer data after the expiration of the prescribed holding periods;
m. Section 20 that penalizes obstruction of justice in relation to
cybercrime investigations;
   
n. Section 24 that establishes a Cybercrime Investigation and
Coordinating Center (CICC);
o. Section 26(a) that defines the CICC’s Powers and Functions; and
p. Articles 353, 354, 361, and 362 of the Revised Penal Code that
penalizes libel.
Further, the Court DECLARES: chanRoblesVirtualawlibrary
1. Section 4(c)(4) that penalizes online libel
as VALID and CONSTITUTIONAL with respect to the original author of
the post; but VOID and UNCONSTITUTIONAL with respect to others who
simply receive the post and react to it; and
2. Section 5 that penalizes aiding or abetting and attempt in the
commission of cybercrimes as VALID and CONSTITUTIONAL only in
relation to Section 4(a)(1) on Illegal Access, Section 4(a)(2) on Illegal
Interception, Section 4(a)(3) on Data Interference, Section 4(a)(4) on
System Interference, Section 4(a)(5) on Misuse of Devices, Section 4(a)(6)
on Cyber-squatting, Section 4(b)(1) on Computer-related Forgery, Section
4(b)(2) on Computer-related Fraud, Section 4(b)(3) on Computer-related
Identity Theft, and Section 4(c)(1) on Cybersex;
but VOID and UNCONSTITUTIONAL with respect to Sections 4(c)(2) on
Child Pornography, 4(c)(3) on Unsolicited Commercial Communications,
and 4(c)(4) on online Libel.
Lastly, the Court RESOLVES to LEAVE THE DETERMINATION of the
correct application of Section 7 that authorizes prosecution of the offender
under both the Revised Penal Code and Republic Act 10175 to actual
cases, WITH THE EXCEPTION of the crimes of: chanRoblesVirtualawlibrary
1. Online libel as to which, charging the offender under both Section 4(c)
(4) of Republic Act 10175 and Article 353 of the Revised Penal Code
constitutes a violation of the proscription against double jeopardy; as well
as
2. Child pornography committed online as to which, charging the offender
under both Section 4(c)(2) of Republic Act 10175 and Republic Act 9775 or
the Anti-Child Pornography Act of 2009 also constitutes a violation of the
same proscription, and, in respect to these,
is VOID and UNCONSTITUTIONAL.
SO ORDERED.
EN BANC G.R. No. L-23794             February 17, 1968

ORMOC SUGAR COMPANY, INC., plaintiff-appellant, vs. THE TREASURER

OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON.
ESTEBAN C. CONEJOS as Mayor of Ormoc City and ORMOC
CITY, defendants-appellees.

BENGZON, J.P., J.:

          On January 29, 1964, the Municipal Board of Ormoc City

passed 1 Ordinance No. 4, Series of 1964, imposing "on any and all productions
of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a
municipal tax equivalent to one per centum (1%) per export sale to the United
States of America and other foreign countries." 2

          Payments for said tax were made, under protest, by Ormoc Sugar
Company, Inc. on March 20, 1964 for P7,087.50 and on April 20, 1964 for
P5,000, or a total of P12,087.50.

          On June 1, 1964, Ormoc Sugar Company, Inc. filed before the Court of
First Instance of Leyte, with service of a copy upon the Solicitor General, a
complaint 3 against the City of Ormoc as well as its Treasurer, Municipal Board
and Mayor, alleging that the afore-stated ordinance is unconstitutional for
being violative of the equal protection clause (Sec. 1[1], Art. III, Constitution)
and the rule of uniformity of taxation (Sec. 22[1]), Art. VI, Constitution), aside
from being an export tax forbidden under Section 2287 of the Revised
Administrative Code. It further alleged that the tax is neither a production nor
a license tax which Ormoc City under Section 15-kk of its charter and under
Section 2 of Republic Act 2264, otherwise known as the Local Autonomy Act, is
authorized to impose; and that the tax amounts to a customs duty, fee or
charge in violation of paragraph 1 of Section 2 of Republic Act 2264 because
the tax is on both the sale and export of sugar.
          Answering, the defendants asserted that the tax ordinance was within
defendant city's power to enact under the Local Autonomy Act and that the
same did not violate the afore-cited constitutional limitations. After pre-trial
and submission of the case on memoranda, the Court of First Instance, on
August 6, 1964, rendered a decision that upheld the constitutionality of the
ordinance and declared the taxing power of defendant chartered city
broadened by the Local Autonomy Act to include all other forms of taxes,
licenses or fees not excluded in its charter.
          Appeal therefrom was directly taken to Us by plaintiff Ormoc Sugar
Company, Inc. Appellant alleges the same statutory and constitutional
violations in the aforesaid taxing ordinance mentioned earlier.
          Section 1 of the ordinance states: "There shall be paid to the City
Treasurer on any and all productions of centrifugal sugar milled at the Ormoc
Sugar Company, Incorporated, in Ormoc City, a municipal tax equivalent to
one per centum (1%) per export sale to the United States of America and
other foreign countries." Though referred to as a tax on the export of
centrifugal sugar produced at Ormoc Sugar Company, Inc. For production of
sugar alone is not taxable; the only time the tax applies is when the sugar
produced is exported.
          Appellant questions the authority of the defendant Municipal Board to
levy such an export tax, in view of Section 2287 of the Revised Administrative
Code which denies from municipal councils the power to impose an export tax.
Section 2287 in part states: "It shall not be in the power of the municipal
council to impose a tax in any form whatever, upon goods and merchandise
carried into the municipality, or out of the same, and any attempt to impose
an import or export tax upon such goods in the guise of an unreasonable
charge for wharfage use of bridges or otherwise, shall be void."
          Subsequently, however, Section 2 of Republic Act 2264 effective June
19, 1959, gave chartered cities, municipalities and municipal districts authority
to levy for public purposes just and uniform taxes, licenses or fees. Anent the
inconsistency between Section 2287 of the Revised Administrative Code and
Section 2 of Republic Act 2264, this Court, in Nin Bay Mining Co. v.
Municipality of Roxas  4 held the former to have been repealed by the latter.
And expressing Our awareness of the transcendental effects that municipal
export or import taxes or licenses will have on the national economy, due to
Section 2 of Republic Act 2264, We stated that there was no other alternative
until Congress acts to provide remedial measures to forestall any unfavorable
results.
          The point remains to be determined, however, whether constitutional
limits on the power of taxation, specifically the equal protection clause and rule
of uniformity of taxation, were infringed.
          The Constitution in the bill of rights provides: ". . . nor shall any person
be denied the equal protection of the laws." (Sec. 1 [1], Art. III) In Felwa vs.
Salas, 5 We ruled that the equal protection clause applies only to persons or
things identically situated and does not bar a reasonable classification of the
subject of legislation, and a classification is reasonable where (1) it is based on
substantial distinctions which make real differences; (2) these are germane to
the purpose of the law; (3) the classification applies not only to present
conditions but also to future conditions which are substantially identical to
those of the present; (4) the classification applies only to those who belong to
the same class.
          A perusal of the requisites instantly shows that the questioned
ordinance does not meet them, for it taxes only centrifugal sugar produced
and exported by the Ormoc Sugar Company, Inc. and none other. At the time
of the taxing ordinance's enactment, Ormoc Sugar Company, Inc., it is true,
was the only sugar central in the city of Ormoc. Still, the classification, to be
reasonable, should be in terms applicable to future conditions as well. The
taxing ordinance should not be singular and exclusive as to exclude any
subsequently established sugar central, of the same class as plaintiff, for the
coverage of the tax. As it is now, even if later a similar company is set up, it
cannot be subject to the tax because the ordinance expressly points only to
Ormoc City Sugar Company, Inc. as the entity to be levied upon.
          Appellant, however, is not entitled to interest; on the refund because
the taxes were not arbitrarily collected (Collector of Internal Revenue v.
Binalbagan). 6 At the time of collection, the ordinance provided a sufficient basis
to preclude arbitrariness, the same being then presumed constitutional until
declared otherwise.
          WHEREFORE, the decision appealed from is hereby reversed, the
challenged ordinance is declared unconstitutional and the defendants-appellees
are hereby ordered to refund the P12,087.50 plaintiff-appellant paid under
protest. No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro,
Angeles and Fernando, JJ., concur. 1äwphï1.ñët
EN BANC G.R. No. 148208             December 15, 2004
CENTRAL BANK (now Bangko Sentral ng Pilipinas) EMPLOYEES
ASSOCIATION, INC., petitioner, vs. BANGKO SENTRAL NG PILIPINAS and
the EXECUTIVE SECRETARY, respondents.
PUNO, J.:
Can a provision of law, initially valid, become subsequently unconstitutional, on
the ground that its continued operation would violate the equal protection of the
law? We hold that with the passage of the subsequent laws amending the charter
of seven (7) other governmental financial institutions (GFIs), the continued
operation of the last proviso of Section 15(c), Article II of Republic Act (R.A.) No.
7653, constitutes invidious discrimination on the 2,994 rank-and-file
employees of the Bangko Sentral ng Pilipinas (BSP).
I. The Case
First the facts.
On July 3, 1993, R.A. No. 7653 (the New Central Bank Act) took effect. It
abolished the old Central Bank of the Philippines, and created a new BSP.
On June 8, 2001, almost eight years after the effectivity of R.A. No. 7653,
petitioner Central Bank (now BSP) Employees Association, Inc., filed a petition for
prohibition against BSP and the Executive Secretary of the Office of the President,
to restrain respondents from further implementing the last proviso in Section
15(c), Article II of R.A. No. 7653, on the ground that it is unconstitutional.
Article II, Section 15(c) of R.A. No. 7653 provides:
Section 15. Exercise of Authority - In the exercise of its authority, the Monetary
Board shall:
xxx       xxx       xxx
(c) establish a human resource management system which shall govern the
selection, hiring, appointment, transfer, promotion, or dismissal of all
personnel. Such system shall aim to establish professionalism and
excellence at all levels of the Bangko Sentral in accordance with sound
principles of management.
A compensation structure, based on job evaluation studies and wage
surveys and subject to the Board's approval, shall be instituted as an
integral component of the Bangko Sentral's human resource development
program: Provided, That the Monetary Board shall make its own system
conform as closely as possible with the principles provided for under
Republic Act No. 6758 [Salary Standardization Act]. Provided, however,
That compensation and wage structure of employees whose
positions fall under salary grade 19 and below shall be in
accordance with the rates prescribed under Republic Act No.
6758. [emphasis supplied]
The thrust of petitioner's challenge is that the above proviso makes
an unconstitutional cut between two classes of employees in the BSP, viz: (1)
the BSP officers or those exempted from the coverage of the Salary
Standardization Law (SSL) (exempt class); and (2) the rank-and-file (Salary
Grade [SG] 19 and below), or those not exempted from the coverage of the SSL
(non-exempt class). It is contended that this classification is "a classic case of
class legislation," allegedly not based on substantial distinctions which make real
differences, but solely on the SG of the BSP personnel's position. Petitioner also
claims that it is not germane to the purposes of Section 15(c), Article II of R.A. No.
7653, the most important of which is to establish professionalism and
excellence at all levels in the BSP.1 Petitioner offers the following sub-set of
arguments:
a. the legislative history of R.A. No. 7653 shows that the
questioned proviso does not appear in the original and amended versions of
House Bill No. 7037, nor in the original version of Senate Bill No. 1235; 2
b. subjecting the compensation of the BSP rank-and-file employees to the
rate prescribed by the SSL actually defeats the purpose of the law3 of
establishing professionalism and excellence at all levels in the
BSP; 4 (emphasis supplied)
c. the assailed proviso was the product of amendments introduced during
the deliberation of Senate Bill No. 1235, without showing its relevance to
the objectives of the law, and even admitted by one senator as
discriminatory against low-salaried employees of the BSP;5
d. GSIS, LBP, DBP and SSS personnel are all exempted from the coverage
of the SSL; thus within the class of rank-and-file personnel of government
financial institutions (GFIs), the BSP rank-and-file are also discriminated
upon;6 and
e. the assailed proviso has caused the demoralization among the BSP rank-
and-file and resulted in the gross disparity between their compensation and
that of the BSP officers'.7
In sum, petitioner posits that the classification is not reasonable but arbitrary
and capricious, and violates the equal protection clause of the
Constitution.8 Petitioner also stresses: (a) that R.A. No. 7653 has a separability
clause, which will allow the declaration of the unconstitutionality of the proviso in
question without affecting the other provisions; and (b) the urgency and propriety
of the petition, as some 2,994 BSP rank-and-file employees have
been prejudiced since 1994 when the proviso was implemented. Petitioner
concludes that: (1) since the inequitable proviso has no force and effect of law,
respondents' implementation of such amounts to lack of jurisdiction; and (2) it has
no appeal nor any other plain, speedy and adequate remedy in the ordinary course
except through this petition for prohibition, which this Court should take
cognizance of, considering the transcendental importance of the legal issue
involved.9
Respondent BSP, in its comment,10 contends that the provision does not violate the
equal protection clause and can stand the constitutional test, provided it is
construed in harmony with other provisions of the same law, such as "fiscal and
administrative autonomy of BSP," and the mandate of the Monetary Board to
"establish professionalism and excellence at all levels in accordance with sound
principles of management."
The Solicitor General, on behalf of respondent Executive Secretary, also defends
the validity of the provision. Quite simplistically, he argues that the classification is
based on actual and real differentiation, even as it adheres to the enunciated
policy of R.A. No. 7653 to establish professionalism and excellence within the BSP
subject to prevailing laws and policies of the national government.11
II.
Issue
Thus, the sole - albeit significant - issue to be resolved in this case is whether the
last paragraph of Section 15(c), Article II of R.A. No. 7653, runs afoul of the
constitutional mandate that "No person shall be. . . denied the equal protection of
the laws."12
III.
Ruling
A. UNDER THE PRESENT STANDARDS OF EQUAL PROTECTION,
SECTION 15(c), ARTICLE II OF R.A. NO. 7653 IS VALID.
Jurisprudential standards for equal protection challenges indubitably show that the
classification created by the questioned proviso, on its face and in its operation,
bears no constitutional infirmities.
It is settled in constitutional law that the "equal protection" clause does not
prevent the Legislature from establishing classes of individuals or objects upon
which different rules shall operate - so long as the classification is not
unreasonable. As held in Victoriano v. Elizalde Rope Workers' Union,13 and
reiterated in a long line of cases:14
The guaranty of equal protection of the laws is not a guaranty of equality in
the application of the laws upon all citizens of the state. It is not, therefore,
a requirement, in order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be affected alike by a
statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of
rights. The Constitution does not require that things which are different in
fact be treated in law as though they were the same. The equal protection
clause does not forbid discrimination as to things that are different. It does
not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. The very idea of classification is that of
inequality, so that it goes without saying that the mere fact of inequality in
no manner determines the matter of constitutionality. All that is required of
a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for
real differences, that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply
equally to each member of the class. This Court has held that the standard
is satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary.
In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is recognized as
enjoying a wide range of discretion. It is not necessary that the
classification be based on scientific or marked differences of things or in
their relation. Neither is it necessary that the classification be made with
mathematical nicety. Hence, legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does
not preclude the legislature from recognizing degrees of evil or harm, and
legislation is addressed to evils as they may appear. (citations omitted)
Congress is allowed a wide leeway in providing for a valid classification.15 The equal
protection clause is not infringed by legislation which applies only to those persons
falling within a specified class.16 If the groupings are characterized by substantial
distinctions that make real differences, one class may be treated and regulated
differently from another.17 The classification must also be germane to the purpose
of the law and must apply to all those belonging to the same class.18
In the case at bar, it is clear in the legislative deliberations that the exemption of
officers (SG 20 and above) from the SSL was intended to address the BSP's lack of
competitiveness in terms of attracting competent officers and executives. It was
not intended to discriminate against the rank-and-file. If the end-result did in fact
lead to a disparity of treatment between the officers and the rank-and-file in terms
of salaries and benefits, the discrimination or distinction has a rational basis and is
not palpably, purely, and entirely arbitrary in the legislative sense. 19
That the provision was a product of amendments introduced during the
deliberation of the Senate Bill does not detract from its validity. As early as 1947
and reiterated in subsequent cases,20 this Court has subscribed to the
conclusiveness of an enrolled bill to refuse invalidating a provision of law, on the
ground that the bill from which it originated contained no such provision and was
merely inserted by the bicameral conference committee of both Houses.
Moreover, it is a fundamental and familiar teaching that all reasonable doubts
should be resolved in favor of the constitutionality of a statute.21 An act of the
legislature, approved by the executive, is presumed to be within constitutional
limitations.22 To justify the nullification of a law, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and equivocal breach.23
B. THE ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS -
EXEMPTING ALL OTHER RANK-AND-FILE EMPLOYEES
OF GFIs FROM THE SSL - RENDERS THE CONTINUED
APPLICATION OF THE CHALLENGED PROVISION
A VIOLATION OF THE EQUAL PROTECTION CLAUSE.
While R.A. No. 7653 started as a valid measure well within the legislature's power,
we hold that the enactment of subsequent laws exempting all rank-and-file
employees of other GFIs leeched all validity out of the challenged proviso.
1. The concept of relative constitutionality.
The constitutionality of a statute cannot, in every instance, be determined by a
mere comparison of its provisions with applicable provisions of the Constitution,
since the statute may be constitutionally valid as applied to one set of facts and
invalid in its application to another.24
A statute valid at one time may become void at another time because of altered
circumstances.25 Thus, if a statute in its practical operation becomes arbitrary or
confiscatory, its validity, even though affirmed by a former adjudication, is open to
inquiry and investigation in the light of changed conditions.26
Demonstrative of this doctrine is Vernon Park Realty v. City of Mount
Vernon,27 where the Court of Appeals of New York declared as unreasonable and
arbitrary a zoning ordinance which placed the plaintiff's property in a residential
district, although it was located in the center of a business area. Later
amendments to the ordinance then prohibited the use of the property except for
parking and storage of automobiles, and service station within a parking area. The
Court found the ordinance to constitute an invasion of property rights which was
contrary to constitutional due process. It ruled:
While the common council has the unquestioned right to enact zoning laws
respecting the use of property in accordance with a well-considered and
comprehensive plan designed to promote public health, safety and general
welfare, such power is subject to the constitutional limitation that it may
not be exerted arbitrarily or unreasonably and this is so whenever the
zoning ordinance precludes the use of the property for any purpose for
which it is reasonably adapted. By the same token, an ordinance valid
when adopted will nevertheless be stricken down as invalid when,
at a later time, its operation under changed conditions proves
confiscatory such, for instance, as when the greater part of its value is
destroyed, for which the courts will afford relief in an appropriate
case.28 (citations omitted, emphasis supplied)
In the Philippine setting, this Court declared the continued enforcement of a
valid law as unconstitutional as a consequence of significant changes in
circumstances. Rutter v. Esteban29 upheld the constitutionality of the moratorium
law - its enactment and operation being a valid exercise by the State of its police
power30 - but also ruled that the continued enforcement of the otherwise valid
law would be unreasonable and oppressive. It noted the subsequent
changes in the country's business, industry and agriculture. Thus, the law was set
aside because its continued operation would be grossly discriminatory and lead to
the oppression of the creditors. The landmark ruling states:31
The question now to be determined is, is the period of eight (8)
years which Republic Act No. 342 grants to debtors of a monetary
obligation contracted before the last global war and who is a war sufferer
with a claim duly approved by the Philippine War Damage Commission
reasonable under the present circumstances?
It should be noted that Republic Act No. 342 only extends relief to debtors
of prewar obligations who suffered from the ravages of the last war and
who filed a claim for their losses with the Philippine War Damage
Commission. It is therein provided that said obligation shall not be due and
demandable for a period of eight (8) years from and after settlement of the
claim filed by the debtor with said Commission. The purpose of the law is to
afford to prewar debtors an opportunity to rehabilitate themselves by giving
them a reasonable time within which to pay their prewar debts so as to
prevent them from being victimized by their creditors. While it is admitted
in said law that since liberation conditions have gradually returned to
normal, this is not so with regard to those who have suffered the ravages of
war and so it was therein declared as a policy that as to them the debt
moratorium should be continued in force (Section 1).
But we should not lose sight of the fact that these obligations had been
pending since 1945 as a result of the issuance of Executive Orders Nos. 25
and 32 and at present their enforcement is still inhibited because of the
enactment of Republic Act No. 342 and would continue to be unenforceable
during the eight-year period granted to prewar debtors to afford them an
opportunity to rehabilitate themselves, which in plain language means that
the creditors would have to observe a vigil of at least twelve (12) years
before they could effect a liquidation of their investment dating as far back
as 1941. his period seems to us unreasonable, if not oppressive. While the
purpose of Congress is plausible, and should be commended, the relief
accorded works injustice to creditors who are practically left at the mercy of
the debtors. Their hope to effect collection becomes extremely remote,
more so if the credits are unsecured. And the injustice is more patent when,
under the law, the debtor is not even required to pay interest during the
operation of the relief, unlike similar statutes in the United States.
xxx       xxx       xxx
In the face of the foregoing observations, and consistent with what we
believe to be as the only course dictated by justice, fairness and
righteousness, we feel that the only way open to us under the present
circumstances is to declare that the continued operation and
enforcement of Republic Act No. 342 at the present time is
unreasonable and oppressive, and should not be prolonged a
minute longer, and, therefore, the same should be declared null and
void and without effect. (emphasis supplied, citations omitted)
2. Applicability of the equal protection clause.
In the realm of equal protection, the U.S. case of Atlantic Coast Line R. Co.
v. Ivey32 is illuminating. The Supreme Court of Florida ruled against the continued
application of statutes authorizing the recovery of double damages plus attorney's
fees against railroad companies, for animals killed on unfenced railroad right of
way without proof of negligence. Competitive motor carriers, though creating
greater hazards, were not subjected to similar liability because they were not yet
in existence when the statutes were enacted. The Court ruled that the statutes
became invalid as denying "equal protection of the law," in view of changed
conditions since their enactment.
In another U.S. case, Louisville & N.R. Co. v. Faulkner,33 the Court of Appeals of
Kentucky declared unconstitutional a provision of a statute which imposed a duty
upon a railroad company of proving that it was free from negligence in the killing
or injury of cattle by its engine or cars. This, notwithstanding that the
constitutionality of the statute, enacted in 1893, had been previously
sustained. Ruled the Court:
The constitutionality of such legislation was sustained because it applied to
all similar corporations and had for its object the safety of persons on a
train and the protection of property…. Of course, there were no automobiles
in those days. The subsequent inauguration and development of
transportation by motor vehicles on the public highways by common
carriers of freight and passengers created even greater risks to the safety
of occupants of the vehicles and of danger of injury and death of domestic
animals. Yet, under the law the operators of that mode of competitive
transportation are not subject to the same extraordinary legal responsibility
for killing such animals on the public roads as are railroad companies for
killing them on their private rights of way.
The Supreme Court, speaking through Justice Brandeis in Nashville, C. &
St. L. Ry. Co. v. Walters, 294 U.S. 405, 55 S.Ct. 486, 488, 79 L.Ed. 949,
stated, "A statute valid when enacted may become invalid by change
in the conditions to which it is applied. The police power is subject to
the constitutional limitation that it may not be exerted arbitrarily or
unreasonably." A number of prior opinions of that court are cited in support
of the statement. The State of Florida for many years had a statute, F.S.A.
§ 356.01 et seq. imposing extraordinary and special duties upon railroad
companies, among which was that a railroad company was liable for double
damages and an attorney's fee for killing livestock by a train without the
owner having to prove any act of negligence on the part of the carrier in the
operation of its train. In Atlantic Coast Line Railroad Co. v. Ivey, it was held
that the changed conditions brought about by motor vehicle transportation
rendered the statute unconstitutional since if a common carrier by motor
vehicle had killed the same animal, the owner would have been required to
prove negligence in the operation of its equipment. Said the court, "This
certainly is not equal protection of the law."34 (emphasis supplied)
Echoes of these rulings resonate in our case law, viz:
[C]ourts are not confined to the language of the statute under challenge in
determining whether that statute has any discriminatory effect. A statute
nondiscriminatory on its face may be grossly discriminatory in its
operation. Though the law itself be fair on its face and impartial in
appearance, yet, if it is applied and administered by public authority with an
evil eye and unequal hand, so as practically to make unjust and illegal
discriminations between persons in similar circumstances, material to their
rights, the denial of equal justice is still within the prohibition of the
Constitution.35 (emphasis supplied, citations omitted)
[W]e see no difference between a law which denies equal protection
and a law which permits of such denial. A law may appear to be fair on
its face and impartial in appearance, yet, if it permits of unjust and illegal
discrimination, it is within the constitutional prohibition….. In other words,
statutes may be adjudged unconstitutional because of their effect in
operation…. If a law has the effect of denying the equal protection of the
law it is unconstitutional. ….36 (emphasis supplied, citations omitted
3. Enactment of R.A. Nos. 7907 + 8282 + 8289 + 8291 + 8523 + 8763
+ 9302 = consequential unconstitutionality of challenged proviso.
According to petitioner, the last proviso of Section 15(c), Article II of R.A. No.
7653 is also violative of the equal protection clause because after it was enacted,
the charters of the GSIS, LBP, DBP and SSS were also amended, but the personnel
of the latter GFIs were all exempted from the coverage of the SSL.37 Thus, within
the class of rank-and-file personnel of GFIs, the BSP rank-and-file are also
discriminated upon.
Indeed, we take judicial notice that after the new BSP charter was enacted in
1993, Congress also undertook the amendment of the charters of the GSIS, LBP,
DBP and SSS, and three other GFIs, from 1995 to 2004, viz:
1. R.A. No. 7907 (1995) for Land Bank of the Philippines (LBP);
2. R.A. No. 8282 (1997) for Social Security System (SSS);
 3. R.A. No. 8289 (1997) for Small Business Guarantee and Finance
Corporation, (SBGFC);
4. R.A. No. 8291 (1997) for Government Service Insurance System (GSIS);
5. R.A. No. 8523 (1998) for Development Bank of the Philippines (DBP);
6. R.A. No. 8763 (2000) for Home Guaranty Corporation (HGC);38 and
7. R.A. No. 9302 (2004) for Philippine Deposit Insurance Corporation
(PDIC).
It is noteworthy, as petitioner points out, that the subsequent charters of the
seven other GFIs share this common proviso: a blanket exemption of all
their employees from the coverage of the SSL, expressly or impliedly, as
illustrated below:
1. LBP (R.A. No. 7907)
Section 10. Section 90 of [R.A. No. 3844] is hereby amended to read as
follows:
Section 90. Personnel. -
xxx       xxx       xxx
All positions in the Bank shall be governed by a compensation, position
classification system and qualification standards approved by the Bank's
Board of Directors based on a comprehensive job analysis and audit of
actual duties and responsibilities. The compensation plan shall be
comparable with the prevailing compensation plans in the private sector
and shall be subject to periodic review by the Board no more than once
every two (2) years without prejudice to yearly merit reviews or increases
based on productivity and profitability. The Bank shall therefore be
exempt from existing laws, rules and regulations on compensation,
position classification and qualification standards. It shall however
endeavor to make its system conform as closely as possible with the
principles under Republic Act No. 6758. (emphasis supplied)
xxx       xxx       xxx
2. SSS (R.A. No. 8282)
Section 1. [Amending R.A. No. 1161, Section 3(c)]:
xxx       xxx       xxx
(c)The Commission, upon the recommendation of the SSS President, shall
appoint an actuary and such other personnel as may [be] deemed
necessary; fix their reasonable compensation, allowances and other
benefits; prescribe their duties and establish such methods and procedures
as may be necessary to insure the efficient, honest and economical
administration of the provisions and purposes of this Act: Provided,
however, That the personnel of the SSS below the rank of Vice President
shall be appointed by the SSS President: Provided, further, That the
personnel appointed by the SSS President, except those below the rank of
assistant manager, shall be subject to the confirmation by the
Commission; Provided further, That the personnel of the SSS shall be
selected only from civil service eligibles and be subject to civil service rules
and regulations: Provided, finally, That the SSS shall be exempt from
the provisions of Republic Act No. 6758 and Republic Act No.
7430. (emphasis supplied)
3. SBGFC (R.A. No. 8289)
Section 8. [Amending R.A. No. 6977, Section 11]:
xxx       xxx       xxx
The Small Business Guarantee and Finance Corporation shall:
xxx       xxx       xxx
(e) notwithstanding the provisions of Republic Act No. 6758, and
Compensation Circular No. 10, series of 1989 issued by the
Department of Budget and Management, the Board of Directors of
SBGFC shall have the authority to extend to the employees and
personnel thereof the allowance and fringe benefits similar to those
extended to and currently enjoyed by the employees and personnel
of other government financial institutions. (emphases supplied)
4. GSIS (R.A. No. 8291)
Section 1. [Amending Section 43(d)].
 xxx       xxx       xxx
Sec. 43. Powers and Functions of the Board of Trustees. - The Board of
Trustees shall have the following powers and functions:
xxx       xxx       xxx
(d) upon the recommendation of the President and General Manager, to
approve the GSIS' organizational and administrative structures and staffing
pattern, and to establish, fix, review, revise and adjust the appropriate
compensation package for the officers and employees of the GSIS with
reasonable allowances, incentives, bonuses, privileges and other benefits as
may be necessary or proper for the effective management, operation and
administration of the GSIS, which shall be exempt from Republic Act
No. 6758, otherwise known as the Salary Standardization Law and
Republic Act No. 7430, otherwise known as the Attrition
Law. (emphasis supplied)
xxx       xxx       xxx
5. DBP (R.A. No. 8523)
Section 6. [Amending E.O. No. 81, Section 13]:
Section 13. Other Officers and Employees. - The Board of Directors shall
provide for an organization and staff of officers and employees of the Bank
and upon recommendation of the President of the Bank, fix their
remunerations and other emoluments. All positions in the Bank shall be
governed by the compensation, position classification system and
qualification standards approved by the Board of Directors based on a
comprehensive job analysis of actual duties and responsibilities. The
compensation plan shall be comparable with the prevailing compensation
plans in the private sector and shall be subject to periodic review by the
Board of Directors once every two (2) years, without prejudice to yearly
merit or increases based on the Bank's productivity and profitability. The
Bank shall, therefore, be exempt from existing laws, rules, and
regulations on compensation, position classification and
qualification standards. The Bank shall however, endeavor to make
its system conform as closely as possible with the principles under
Compensation and Position Classification Act of 1989 (Republic Act
No. 6758, as amended). (emphasis supplied)
6. HGC (R.A. No. 8763)
Section 9. Powers, Functions and Duties of the Board of Directors. - The Board
shall have the following powers, functions and duties:
xxx       xxx       xxx
(e) To create offices or positions necessary for the efficient management,
operation and administration of the Corporation: Provided, That all positions
in the Home Guaranty Corporation (HGC) shall be governed by a
compensation and position classification system and qualifications
standards approved by the Corporation's Board of Directors based on a
comprehensive job analysis and audit of actual duties and
responsibilities: Provided, further, That the compensation plan shall be
comparable with the prevailing compensation plans in the private
sector and which shall be exempt from Republic Act No. 6758,
otherwise known as the Salary Standardization Law, and from other
laws, rules and regulations on salaries and compensations; and to
establish a Provident Fund and determine the Corporation's and the
employee's contributions to the Fund; (emphasis supplied)
xxx       xxx       xxx
7. PDIC (R.A. No. 9302)
Section 2. Section 2 of [Republic Act No. 3591, as amended] is hereby further
amended to read:
xxx       xxx       xxx
3.
xxx       xxx       xxx
A compensation structure, based on job evaluation studies and wage
surveys and subject to the Board's approval, shall be instituted as an
integral component of the Corporation's human resource development
program: Provided, That all positions in the Corporation shall be governed
by a compensation, position classification system and qualification
standards approved by the Board based on a comprehensive job analysis
and audit of actual duties and responsibilities. The compensation plan
shall be comparable with the prevailing compensation plans of
other government financial institutions and shall be subject to review
by the Board no more than once every two (2) years without prejudice to
yearly merit reviews or increases based on productivity and
 profitability. The Corporation shall therefore be exempt from existing
laws, rules and regulations on compensation, position classification
and qualification standards. It shall however endeavor to make its
system conform as closely as possible with the principles under Republic Act
No. 6758, as amended. (emphases supplied)
Thus, eleven years after the amendment of the BSP charter, the rank-and-
file of seven other GFIs were granted the exemption that was specifically
denied to the rank-and-file of the BSP. And as if to add insult to petitioner's
injury, even the Securities and Exchange Commission (SEC) was granted the same
blanket exemption from the SSL in 2000!39
The prior view on the constitutionality of R.A. No. 7653 was confined to an
evaluation of its classification between the rank-and-file and the officers
of the BSP, found reasonable because there were substantial distinctions that
made real differences between the two classes.
The above-mentioned subsequent enactments, however, constitute
significant changes in circumstance that considerably alter the
reasonability of the continued operation of the last proviso of Section
15(c), Article II of Republic Act No. 7653, thereby exposing the proviso to
more serious scrutiny. This time, the scrutiny relates to the constitutionality of
the classification - albeit made indirectly as a consequence of the passage of eight
other laws - between the rank-and-file of the BSP and the seven other
GFIs. The classification must not only be reasonable, but must also apply
equally to all members of the class. The proviso may be fair on its face and
impartial in appearance but it cannot be grossly discriminatory in its
operation, so as practically to make unjust distinctions between persons who are
without differences.40
Stated differently, the second level of inquiry deals with the following questions:
Given that Congress chose to exempt other GFIs (aside the BSP) from the
coverage of the SSL, can the exclusion of the rank-and-file employees of the BSP
stand constitutional scrutiny in the light of the fact that Congress did not exclude
the rank-and-file employees of the other GFIs? Is Congress' power to classify so
unbridled as to sanction unequal and discriminatory treatment, simply because the
inequity manifested itself, not instantly through a single overt act, but gradually
and progressively, through seven separate acts of Congress? Is the right to equal
protection of the law bounded in time and space that: (a) the right can only be
invoked against a classification made directly and deliberately, as opposed to a
discrimination that arises indirectly, or as a consequence of several other acts; and
(b) is the legal analysis confined to determining the validity within the parameters
of the statute or ordinance (where the inclusion or exclusion is articulated),
thereby proscribing any evaluation vis-à-vis the grouping, or the lack thereof,
among several similar enactments made over a period of time?
In this second level of scrutiny, the inequality of treatment cannot be justified on
the mere assertion that each exemption (granted to the seven other GFIs) rests
"on a policy determination by the legislature." All legislative enactments
necessarily rest on a policy determination - even those that have been
declared to contravene the Constitution. Verily, if this could serve as a magic wand
to sustain the validity of a statute, then no due process and equal protection
challenges would ever prosper. There is nothing inherently sacrosanct in a policy
determination made by Congress or by the Executive; it cannot run riot and
overrun the ramparts of protection of the Constitution.
In fine, the "policy determination" argument may support the inequality of
treatment between the rank-and-file and the officers of the BSP, but it cannot
justify the inequality of treatment between BSP rank-and-file and other GFIs' who
are similarly situated. It fails to appreciate that what is at issue in the second
level of scrutiny is not the declared policy of each law per se, but the
oppressive results of Congress' inconsistent and unequal policy towards the
BSP rank-and-file and those of the seven other GFIs. At bottom, the second
challenge to the constitutionality of Section 15(c), Article II of Republic Act No.
7653 is premised precisely on the irrational discriminatory policy adopted
by Congress in its treatment of persons similarly situated. In the field of
equal protection, the guarantee that "no person shall be … denied the equal
protection of the laws" includes the prohibition against enacting laws that allow
invidious discrimination, directly or indirectly. If a law has the effect of denying
the equal protection of the law, or permits such denial, it is unconstitutional.41
It is against this standard that the disparate treatment of the BSP rank-and-file
from the other GFIs cannot stand judicial scrutiny. For as regards the exemption
from the coverage of the SSL, there exist no substantial distinctions so as to
differentiate, the BSP rank-and-file from the other rank-and-file of the seven GFIs.
On the contrary, our legal history shows that GFIs have long been
recognized as comprising one distinct class, separate from other
governmental entities.
Before the SSL, Presidential Decree (P.D.) No. 985 (1976) declared it as a
State policy (1) to provide equal pay for substantially equal work, and (2) to base
differences in pay upon substantive differences in duties and responsibilities, and
qualification requirements of the positions. P.D. No. 985 was passed to address
disparities in pay among similar or comparable positions which had given rise to
dissension among government employees. But even then, GFIs and
government-owned and/or controlled corporations (GOCCs) were already
identified as a distinct class among government employees. Thus, Section 2
also provided, "[t]hat notwithstanding a standardized salary system established for
all employees, additional financial incentives may be established by government
corporation and financial institutions for their employees to be supported fully from
their corporate funds and for such technical positions as may be approved by the
President in critical government agencies."42
The same favored treatment is made for the GFIs and the GOCCs under the SSL.
Section 3(b) provides that one of the principles governing the Compensation and
Position Classification System of the Government is that: "[b]asic compensation for
all personnel in the government and government-owned or controlled corporations
and financial institutions shall generally be comparable with those in the private
sector doing comparable work, and must be in accordance with prevailing laws on
minimum wages."
Thus, the BSP and all other GFIs and GOCCs were under the unified Compensation
and Position Classification System of the SSL,43 but rates of pay under the SSL
were determined on the basis of, among others, prevailing rates in the private
sector for comparable work. Notably, the Compensation and Position Classification
System was to be governed by the following principles: (a) just and equitable
wages, with the ratio of compensation between pay distinctions maintained at
equitable levels;44 and (b) basic compensation generally comparable with the
private sector, in accordance with prevailing laws on minimum wages.45 Also, the
Department of Budget and Management was directed to use, as guide for
preparing the Index of Occupational Services, the Benchmark Position Schedule,
and the following factors:46
(1) the education and experience required to perform the duties and
responsibilities of the positions;
(2) the nature and complexity of the work to be performed;
(3) the kind of supervision received;
(4) mental and/or physical strain required in the completion of the work;
(5) nature and extent of internal and external relationships;
(6) kind of supervision exercised;
(7) decision-making responsibility;
(8) responsibility for accuracy of records and reports;
(9) accountability for funds, properties and equipment; and
(10) hardship, hazard and personal risk involved in the job.
The Benchmark Position Schedule enumerates the position titles that fall within
Salary Grades 1 to 20.
Clearly, under R.A. No. 6758, the rank-and-file of all GFIs were similarly situated
in all aspects pertaining to compensation and position classification, in consonance
with Section 5, Article IX-B of the 1997 Constitution.47
Then came the enactment of the amended charter of the BSP, implicitly
exempting the Monetary Board from the SSL by giving it express authority to
determine and institute its own compensation and wage structure. However,
employees whose positions fall under SG 19 and below were specifically limited to
the rates prescribed under the SSL.
Subsequent amendments to the charters of other GFIs
followed. Significantly, each government financial institution (GFI) was not only
expressly authorized to determine and institute its own compensation and wage
structure, but also explicitly exempted - without distinction as to salary
grade or position - all employees of the GFI from the SSL.
It has been proffered that legislative deliberations justify the grant or withdrawal
of exemption from the SSL, based on the perceived need "to fulfill the mandate of
the institution concerned considering, among others, that: (1) the GOCC or GFI is
essentially proprietary in character; (2) the GOCC or GFI is in direct competition
with their [sic] counterparts in the private sector, not only in terms of the
provisions of goods or services, but also in terms of hiring and retaining competent
personnel; and (3) the GOCC or GFI are or were [sic] experiencing difficulties
filling up plantilla positions with competent personnel and/or retaining these
personnel. The need for the scope of exemption necessarily varies with the
particular circumstances of each institution, and the corresponding variance in the
benefits received by the employees is merely incidental."
The fragility of this argument is manifest. First, the BSP is the central monetary
authority,48 and the banker of the government and all its political
subdivisions.49 It has the sole power and authority to issue currency;50 provide
policy directions in the areas of money, banking, and credit; and supervise banks
and regulate finance companies and non-bank financial institutions performing
quasi-banking functions, including the exempted GFIs.51 Hence, the argument
that the rank-and-file employees of the seven GFIs were exempted because of the
importance of their institution's mandate cannot stand any more than an empty
sack can stand.
Second, it is certainly misleading to say that "the need for the scope of exemption
necessarily varies with the particular circumstances of each institution." Nowhere
in the deliberations is there a cogent basis for the exclusion of the BSP rank-and-
file from the exemption which was granted to the rank-and-file of the other GFIs
and the SEC. As point in fact, the BSP and the seven GFIs are similarly situated in
so far as Congress deemed it necessary for these institutions to be exempted from
the SSL. True, the SSL-exemption of the BSP and the seven GFIs was granted in
the amended charters of each GFI, enacted separately and over a period of time.
But it bears emphasis that, while each GFI has a mandate different and distinct
from that of another, the deliberations show that the raison d'être of the SSL-
exemption was inextricably linked to and for the most part based on factors
common to the eight GFIs, i.e., (1) the pivotal role they play in the economy; (2)
the necessity of hiring and retaining qualified and effective personnel to carry out
the GFI's mandate; and (3) the recognition that the compensation package of
these GFIs is not competitive, and fall substantially below industry standards.
Considering further that (a) the BSP was the first GFI granted SSL exemption; and
(b) the subsequent exemptions of other GFIs did not distinguish between the
officers and the rank-and-file; it is patent that the classification made between
the BSP rank-and-file and those of the other seven GFIs was inadvertent,
and NOT intended, i.e., it was not based on any substantial distinction vis-à-vis the
particular circumstances of each GFI. Moreover, the exemption granted to two
GFIs makes express reference to allowance and fringe benefits similar to those
extended to and currently enjoyed by the employees and personnel of other
GFIs,52 underscoring that GFIs are a particular class within the realm of
government entities.
It is precisely this unpremeditated discrepancy in treatment of the rank-and-file of
the BSP - made manifest and glaring with each and every consequential grant of
blanket exemption from the SSL to the other GFIs - that cannot be rationalized or
justified. Even more so, when the SEC - which is not a GFI - was given leave to
have a compensation plan that "shall be comparable with the prevailing
compensation plan in the [BSP] and other [GFIs],"53 then granted a blanket
exemption from the SSL, and its rank-and-file endowed a more preferred
treatment than the rank-and-file of the BSP.
The violation to the equal protection clause becomes even more pronounced when
we are faced with this undeniable truth: that if Congress had enacted a law for the
sole purpose of exempting the eight GFIs from the coverage of the SSL, the
exclusion of the BSP rank-and-file employees would have been devoid of any
substantial or material basis. It bears no moment, therefore, that the unlawful
discrimination was not a direct result arising from one law. "Nemo potest facere
per alium quod non potest facere per directum." No one is allowed to do indirectly
what he is prohibited to do directly.
It has also been proffered that "similarities alone are not sufficient to support the
conclusion that rank-and-file employees of the BSP may be lumped together with
similar employees of the other GOCCs for purposes of compensation, position
classification and qualification standards. The fact that certain persons have some
attributes in common does not automatically make them members of the same
class with respect to a legislative classification." Cited is the ruling in Johnson v.
Robinson:54 "this finding of similarity ignores that a common characteristic shared
by beneficiaries and nonbeneficiaries alike, is not sufficient to invalidate a statute
when other characteristics peculiar to only one group rationally explain the
statute's different treatment of the two groups."
The reference to Johnson is inapropos. In Johnson, the US Court sustained the
validity of the classification as there were quantitative and qualitative
distinctions, expressly recognized by Congress, which formed a rational
basis for the classification limiting educational benefits to military service
veterans as a means of helping them readjust to civilian life. The Court listed the
peculiar characteristics as follows:
First, the disruption caused by military service is quantitatively greater than
that caused by alternative civilian service. A conscientious objector
performing alternative service is obligated to work for two years. Service in
the Armed Forces, on the other hand, involves a six-year commitment…
xxx       xxx       xxx
Second, the disruptions suffered by military veterans and alternative
service performers are qualitatively different. Military veterans suffer a far
greater loss of personal freedom during their service careers. Uprooted
from civilian life, the military veteran becomes part of the military
establishment, subject to its discipline and potentially hazardous duty.
Congress was acutely aware of the peculiar disabilities caused by military
service, in consequence of which military servicemen have a special need
for readjustment benefits…55 (citations omitted)
In the case at bar, it is precisely the fact that as regards the exemption from
the SSL, there are no characteristics peculiar only to the seven GFIs or
their rank-and-file so as to justify the exemption which BSP rank-and-file
employees were denied (not to mention the anomaly of the SEC getting one).
The distinction made by the law is not only superficial,56 but also arbitrary. It is not
based on substantial distinctions that make real differences between the BSP rank-
and-file and the seven other GFIs.
Moreover, the issue in this case is not - as the dissenting opinion of Mme. Justice
Carpio-Morales would put it - whether "being an employee of a GOCC or GFI is
reasonable and sufficient basis for exemption" from R.A. No. 6758. It is Congress
itself that distinguished the GFIs from other government agencies, not
once but eight times, through the enactment of R.A. Nos. 7653, 7907, 8282, 8289,
8291, 8523, 8763, and 9302. These laws may have created a "preferred sub-class
within government employees," but the present challenge is not directed at the
wisdom of these laws. Rather, it is a legal conundrum involving the exercise of
legislative power, the validity of which must be measured not only by looking at
the specific exercise in and by itself (R.A. No. 7653), but also as to the legal
effects brought about by seven separate exercises - albeit indirectly and without
intent.
Thus, even if petitioner had not alleged "a comparable change in the factual milieu
as regards the compensation, position classification and qualification standards of
the employees of the BSP (whether of the executive level or of the rank-and-file)
since the enactment of the new Central Bank Act" is of no moment. In GSIS v.
Montesclaros,57 this Court resolved the issue of constitutionality notwithstanding
that claimant had manifested that she was no longer interested in pursuing the
case, and even when the constitutionality of the said provision was not squarely
raised as an issue, because the issue involved not only the claimant but also others
similarly situated and whose claims GSIS would also deny based on the
challenged proviso. The Court held that social justice and public interest demanded
the resolution of the constitutionality of the proviso. And so it is with the
challenged proviso in the case at bar.
It bears stressing that the exemption from the SSL is a "privilege" fully within the
legislative prerogative to give or deny. However, its subsequent grant to the rank-
and-file of the seven other GFIs and continued denial to the BSP rank-and-file
employees breached the latter's right to equal protection. In other words, while the
granting of a privilege per se is a matter of policy exclusively within the domain
and prerogative of Congress, the validity or legality of the exercise of this
prerogative is subject to judicial review.58 So when the distinction made is
superficial, and not based on substantial distinctions that make real differences
between those included and excluded, it becomes a matter of arbitrariness that
this Court has the duty and the power to correct.59 As held in the United Kingdom
case of Hooper v. Secretary of State for Work and Pensions,60 once the State
has chosen to confer benefits, "discrimination" contrary to law may occur where
favorable treatment already afforded to one group is refused to another, even
though the State is under no obligation to provide that favorable treatment. 61
The disparity of treatment between BSP rank-and-file and the rank-and-file of the
other seven GFIs definitely bears the unmistakable badge of invidious
discrimination - no one can, with candor and fairness, deny the discriminatory
character of the subsequent blanket and total exemption of the seven other GFIs
from the SSL when such was withheld from the BSP. Alikes are being treated as
unalikes without any rational basis.
Again, it must be emphasized that the equal protection clause does not demand
absolute equality but it requires that all persons shall be treated alike,
under like circumstances and conditions both as to privileges conferred
and liabilities enforced. Favoritism and undue preference cannot be allowed. For
the principle is that equal protection and security shall be given to every person
under circumstances which, if not identical, are analogous. If law be looked upon
in terms of burden or charges, those that fall within a class should be treated in
the same fashion; whatever restrictions cast on some in the group is equally
binding on the rest.62
In light of the lack of real and substantial distinctions that would justify the
unequal treatment between the rank-and-file of BSP from the seven other GFIs, it
is clear that the enactment of the seven subsequent charters has rendered the
continued application of the challenged proviso anathema to the equal protection
of the law, and the same should be declared as an outlaw.
IV.
Equal Protection Under International Lens
In our jurisdiction, the standard and analysis of equal protection challenges in
the main have followed the "rational basis" test, coupled with a deferential
attitude to legislative classifications63 and a reluctance to invalidate a law unless
there is a showing of a clear and unequivocal breach of the Constitution. 64
A. Equal Protection in the United States
In contrast, jurisprudence in the U.S. has gone beyond the static "rational
basis" test. Professor Gunther highlights the development in equal protection
jurisprudential analysis, to wit: 65
Traditionally, equal protection supported only minimal judicial intervention
in most contexts. Ordinarily, the command of equal protection was only
that government must not impose differences in treatment "except upon
some reasonable differentiation fairly related to the object of regulation."
The old variety of equal protection scrutiny focused solely on
the means used by the legislature: it insisted merely that the classification
in the statute reasonably relates to the legislative purpose. Unlike
substantive due process, equal protection scrutiny was not typically
concerned with identifying "fundamental values" and restraining
legislative ends. And usually the rational classification requirement was
readily satisfied: the courts did not demand a tight fit between classification
and purpose; perfect congruence between means and ends was not
required.
xxx       xxx       xxx
[From marginal intervention to major cutting edge: The Warren
Court's "new equal protection" and the two-tier approach.]
From its traditional modest role, equal protection burgeoned into a
major intervention tool during the Warren era, especially in the 1960s.
The Warren Court did not abandon the deferential ingredients of the old
equal protection: in most areas of economic and social legislation, the
demands imposed by equal protection remained as minimal as ever…But
the Court launched an equal protection revolution by finding large new
areas for strict rather than deferential scrutiny. A sharply
differentiated two-tier approach evolved by the late 1960s: in addition to
the deferential "old" equal protection, a "new" equal protection,
connoting strict scrutiny, arose…. The intensive review associated with the
new equal protection imposed two demands - a demand not only as to
means but also one as to ends. Legislation qualifying for strict scrutiny
required a far closer fit between classification and statutory purpose than
the rough and ready flexibility traditionally tolerated by the old equal
protection: means had to be shown "necessary" to achieve statutory
ends, not merely "reasonably related" ones. Moreover, equal
protection became a source of ends scrutiny as well: legislation in the areas
of the new equal protection had to be justified by "compelling" state
interests, not merely the wide spectrum of "legitimate" state ends.
The Warren Court identified the areas appropriate for strict
scrutiny by searching for two characteristics: the presence of a
"suspect" classification; or an impact on "fundamental" rights or interests.
In the category of "suspect classifications," the Warren Court's major
contribution was to intensify the strict scrutiny in the traditionally
interventionist area of racial classifications. But other cases also suggested
that there might be more other suspect categories as well: illegitimacy and
wealth for example. But it was the 'fundamental interests" ingredient of the
new equal protection that proved particularly dynamic, open-ended, and
amorphous….. [Other fundamental interests included voting, criminal
appeals, and the right of interstate travel ….]
xxx       xxx       xxx
The Burger Court and Equal Protection.
The Burger Court was reluctant to expand the scope of the new equal
protection, although its best established ingredient retains
vitality. There was also mounting discontent with the rigid two-tier
formulations of the Warren Court's equal protection doctrine. It was
prepared to use the clause as an interventionist tool without resorting to
the strict language of the new equal protection…. [Among the fundamental
interests identified during this time were voting and access to the ballot,
while "suspect" classifications included sex, alienage and illegitimacy.]
xxx       xxx       xxx
Even while the two-tier scheme has often been adhered to in form, there
has also been an increasingly noticeable resistance to the sharp difference
between deferential "old" and interventionist "new" equal protection. A
number of justices sought formulations that would blur the sharp
distinctions of the two-tiered approach or that would narrow the gap
between strict scrutiny and deferential review. The most elaborate attack
came from Justice Marshall, whose frequently stated position was
developed most elaborately in his dissent in the Rodriguez case: 66
The Court apparently seeks to establish [that] equal protection cases fall
into one of two neat categories which dictate the appropriate standard of
review - strict scrutiny or mere rationality. But this (sic) Court's
[decisions] defy such easy categorization. A principled reading of what this
Court has done reveals that it has applied a spectrum of standards in
reviewing discrimination allegedly violative of the equal protection clause.
This spectrum clearly comprehends variations in the degree of care with
which Court will scrutinize particular classification, depending, I believe, on
the constitutional and societal importance of the interests adversely
affected and the recognized invidiousness of the basis upon which the
particular classification is drawn.
 Justice Marshall's "sliding scale" approach describes many of the modern
decisions, although it is a formulation that the majority refused to
embrace. But the Burger Court's results indicate at least two
significant changes in equal protection law: First, invocation of the
"old" equal protection formula no longer signals, as it did with the Warren
Court, an extreme deference to legislative classifications and a virtually
automatic validation of challenged statutes. Instead, several cases, even
while voicing the minimal "rationality" "hands-off" standards of the old
equal protection, proceed to find the statute unconstitutional. Second, in
some areas the modern Court has put forth standards for equal protection
review that, while clearly more intensive than the deference of the "old"
equal protection, are less demanding than the strictness of the "new" equal
protection. Sex discrimination is the best established example of
an "intermediate" level of review. Thus, in one case, the Court said that
"classifications by gender must serve important governmental objectives
and must be substantially related to achievement of those objectives."
That standard is "intermediate" with respect to both ends and means:
where ends must be "compelling" to survive strict scrutiny and merely
"legitimate" under the "old" mode, "important" objectives are required
here; and where means must be "necessary" under the "new" equal
protection, and merely "rationally related" under the "old" equal protection,
they must be "substantially related" to survive the "intermediate" level of
review. (emphasis supplied, citations omitted)
B. Equal Protection in Europe
The United Kingdom and other members of the European Community have
also gone forward in discriminatory legislation and jurisprudence. Within the United
Kingdom domestic law, the most extensive list of protected grounds can be found
in Article 14 of the European Convention on Human Rights (ECHR). It
prohibits discrimination on grounds such as "sex, race, colour, language, religion,
political or other opinion, national or social origin, association with a national
minority, property, birth or other status." This list is illustrative and not
exhaustive. Discrimination on the basis of race, sex and religion is regarded
as grounds that require strict scrutiny. A further indication that certain forms
of discrimination are regarded as particularly suspect under the Covenant can be
gleaned from Article 4, which, while allowing states to derogate from certain
Covenant articles in times of national emergency, prohibits derogation by
measures that discriminate solely on the grounds of "race, colour, language,
religion or social origin."67
Moreover, the European Court of Human Rights has developed a test of
justification which varies with the ground of discrimination. In the Belgian
Linguistics case68 the European Court set the standard of justification at a low
level: discrimination would contravene the Convention only if it had no legitimate
aim, or there was no reasonable relationship of proportionality between the means
employed and the aim sought to be realised.69 But over the years, the European
Court has developed a hierarchy of grounds covered by Article 14 of the
ECHR, a much higher level of justification being required in respect of
those regarded as "suspect" (sex, race, nationality, illegitimacy, or sexual
orientation) than of others. Thus, in Abdulaziz, 70 the European Court declared
that:
. . . [t]he advancement of the equality of the sexes is today a major goal in
the member States of the Council of Europe. This means that very weighty
reasons would have to be advanced before a difference of treatment on the
ground of sex could be regarded as compatible with the Convention.
And in Gaygusuz v. Austria,71 the European Court held that "very weighty
reasons would have to be put forward before the Court could regard a difference
of treatment based exclusively on the ground of nationality as compatible with the
Convention."72 The European Court will then permit States a very much
narrower margin of appreciation in relation to discrimination on grounds of
sex, race, etc., in the application of the Convention rights than it will in relation to
distinctions drawn by states between, for example, large and small land-owners. 73
C. Equality under International Law
The principle of equality has long been recognized under international law. Article
1 of the Universal Declaration of Human Rights proclaims that all human
beings are born free and equal in dignity and rights. Non-discrimination,
together with equality before the law and equal protection of the law without any
discrimination, constitutes basic principles in the protection of human rights. 74
Most, if not all, international human rights instruments include some
prohibition on discrimination and/or provisions about equality.75 The general
international provisions pertinent to discrimination and/or equality are the
International Covenant on Civil and Political Rights (ICCPR);76 the International
Covenant on Economic, Social and Cultural Rights (ICESCR); the International
Convention on the Elimination of all Forms of Racial Discrimination (CERD);77 the
Convention on the Elimination of all Forms of Discrimination against Women
(CEDAW); and the Convention on the Rights of the Child (CRC).
In the broader international context, equality is also enshrined in regional
instruments such as the American Convention on Human Rights;78 the African
Charter on Human and People's Rights;79 the European Convention on Human
Rights;80 the European Social Charter of 1961 and revised Social Charter of 1996;
and the European Union Charter of Rights (of particular importance to European
states). Even the Council of the League of Arab States has adopted the Arab
Charter on Human Rights in 1994, although it has yet to be ratified by the Member
States of the League.81
The equality provisions in these instruments do not merely function as
traditional "first generation" rights, commonly viewed as concerned only
with constraining rather than requiring State action. Article 26 of the ICCPR
requires "guarantee[s]" of "equal and effective protection against discrimination"
while Articles 1 and 14 of the American and European Conventions oblige States
Parties "to ensure ... the full and free exercise of [the rights guaranteed] ...
without any discrimination" and to "secure without discrimination" the enjoyment
of the rights guaranteed.82 These provisions impose a measure of positive
obligation on States Parties to take steps to eradicate discrimination.
In the employment field, basic detailed minimum standards ensuring equality
and prevention of discrimination, are laid down in the ICESCR83 and in a very large
number of Conventions administered by the International Labour Organisation, a
United Nations body. 84 Additionally, many of the other international and regional
human rights instruments have specific provisions relating to employment.85
The United Nations Human Rights Committee has also gone beyond the
earlier tendency to view the prohibition against discrimination (Article 26) as
confined to the ICCPR rights.86 In Broeks87 and Zwaan-de Vries,88 the issue before
the Committee was whether discriminatory provisions in the Dutch Unemployment
Benefits Act (WWV) fell within the scope of Article 26. The Dutch government
submitted that discrimination in social security benefit provision was not within the
scope of Article 26, as the right was contained in the ICESCR and not the ICCPR.
They accepted that Article 26 could go beyond the rights contained in the
Covenant to other civil and political rights, such as discrimination in the field of
taxation, but contended that Article 26 did not extend to the social, economic, and
cultural rights contained in ICESCR. The Committee rejected this argument. In its
view, Article 26 applied to rights beyond the Covenant including the rights in other
international treaties such as the right to social security found in ICESCR:
Although Article 26 requires that legislation should prohibit discrimination, it
does not of itself contain any obligation with respect to the matters that
may be provided for by legislation. Thus it does not, for example, require
any state to enact legislation to provide for social security. However, when
such legislation is adopted in the exercise of a State's sovereign power,
then such legislation must comply with Article 26 of the Covenant.89
Breaches of the right to equal protection occur directly or indirectly. A classification
may be struck down if it has the purpose or effect of violating the right to equal
protection. International law recognizes that discrimination may occur
indirectly, as the Human Rights Committee90 took into account the definitions of
discrimination adopted by CERD and CEDAW in declaring that:
. . . "discrimination" as used in the [ICCPR] should be understood to imply
any distinction, exclusion, restriction or preference which is based on any
ground such as race, colour, sex, language, religion, political or other
opinion, national or social origin, property, birth or other status, and
which has the purpose or effect of nullifying or impairing the
recognition, enjoyment or exercise by all persons, on an equal footing,
of all rights and freedoms. 91 (emphasis supplied)
Thus, the two-tier analysis made in the case at bar of the challenged
provision, and its conclusion of unconstitutionality by subsequent
operation, are in cadence and in consonance with the progressive trend of
other jurisdictions and in international law. There should be no hesitation in
using the equal protection clause as a major cutting edge to eliminate every
conceivable irrational discrimination in our society. Indeed, the social justice
imperatives in the Constitution, coupled with the special status and protection
afforded to labor, compel this approach.92
Apropos the special protection afforded to labor under our Constitution and
international law, we held in International School Alliance of Educators v.
Quisumbing: 93
That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against these evils.
The Constitution in the Article on Social Justice and Human Rights exhorts
Congress to "give highest priority to the enactment of measures that
protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities." The very broad Article 19 of the Civil
Code requires every person, "in the exercise of his rights and in the
performance of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith."
International law, which springs from general principles of law, likewise
proscribes discrimination. General principles of law include principles of
equity, i.e., the general principles of fairness and justice, based on the test
of what is reasonable. The Universal Declaration of Human Rights, the
International Covenant on Economic, Social, and Cultural Rights, the
International Convention on the Elimination of All Forms of Racial
Discrimination, the Convention against Discrimination in Education, the
Convention (No. 111) Concerning Discrimination in Respect of Employment
and Occupation - all embody the general principle against discrimination,
the very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often
skewed in favor of capital, inequality and discrimination by the employer
are all the more reprehensible.
The Constitution specifically provides that labor is entitled to "humane
conditions of work." These conditions are not restricted to the physical
workplace - the factory, the office or the field - but include as well the
manner by which employers treat their employees.
The Constitution also directs the State to promote "equality of employment
opportunities for all." Similarly, the Labor Code provides that the State shall
"ensure equal work opportunities regardless of sex, race or creed." It would
be an affront to both the spirit and letter of these provisions if the State, in
spite of its primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms and
conditions of employment.
xxx       xxx       xxx
Notably, the International Covenant on Economic, Social, and Cultural
Rights, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone
to the enjoyment of just and [favorable] conditions of work, which ensure,
in particular:
a. Remuneration which provides all workers, as a minimum, with:
i. Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed
by men, with equal pay for equal work;
xxx       xxx       xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the
long honored legal truism of "equal pay for equal work." Persons who work
with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. (citations omitted)
Congress retains its wide discretion in providing for a valid classification, and its
policies should be accorded recognition and respect by the courts of justice except
when they run afoul of the Constitution.94 The deference stops where the
classification violates a fundamental right, or prejudices persons accorded
special protection by the Constitution. When these violations arise, this Court
must discharge its primary role as the vanguard of constitutional guaranties, and
require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or
English jurisprudence. Nevertheless, these foreign decisions and authorities are
not per se controlling in this jurisdiction. At best, they are persuasive and have
been used to support many of our decisions.95 We should not place undue and
fawning reliance upon them and regard them as indispensable mental crutches
without which we cannot come to our own decisions through the employment of
our own endowments. We live in a different ambience and must decide our own
problems in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and
justice.96 Our laws must be construed in accordance with the intention of our own
lawmakers and such intent may be deduced from the language of each law and the
context of other local legislation related thereto. More importantly, they must be
construed to serve our own public interest which is the be-all and the end-all of all
our laws. And it need not be stressed that our public interest is distinct and
different from others.97
In the 2003 case of Francisco v. House of Representatives, this Court has stated
that: "[A]merican jurisprudence and authorities, much less the American
Constitution, are of dubious application for these are no longer controlling within
our jurisdiction and have only limited persuasive merit insofar as Philippine
constitutional law is concerned....[I]n resolving constitutional disputes, [this Court]
should not be beguiled by foreign jurisprudence some of which are hardly
applicable because they have been dictated by different constitutional settings and
needs."98 Indeed, although the Philippine Constitution can trace its origins to that
of the United States, their paths of development have long since diverged. 99
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
 Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims "equality" as an ideal precisely in
protest against crushing inequities in Philippine society. The command to
promote social justice in Article II, Section 10, in "all phases of national
development," further explicitated in Article XIII, are clear commands to
the State to take affirmative action in the direction of greater equality.…
[T]here is thus in the Philippine Constitution no lack of doctrinal support for
a more vigorous state effort towards achieving a reasonable measure of
equality.100
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor.101 Under the
policy of social justice, the law bends over backward to accommodate the interests
of the working class on the humane justification that those with less privilege in
life should have more in law.102 And the obligation to afford protection to labor is
incumbent not only on the legislative and executive branches but also on the
judiciary to translate this pledge into a living reality.103 Social justice calls for the
humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least
be approximated.104
V.
A Final Word
Finally, concerns have been raised as to the propriety of a ruling voiding the
challenged provision. It has been proffered that the remedy of petitioner is not
with this Court, but with Congress, which alone has the power to erase any
inequity perpetrated by R.A. No. 7653. Indeed, a bill proposing the exemption of
the BSP rank-and-file from the SSL has supposedly been filed.
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the "rational
basis" test, and the legislative discretion would be given deferential treatment. 105
But if the challenge to the statute is premised on the denial of a
fundamental right, or the perpetuation of prejudice against persons
favored by the Constitution with special protection, judicial scrutiny ought
to be more strict. A weak and watered down view would call for the abdication of
this Court's solemn duty to strike down any law repugnant to the Constitution and
the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the character
or nature of the actor. 106
Accordingly, when the grant of power is qualified, conditional or subject to
limitations, the issue on whether or not the prescribed qualifications or
conditions have been met, or the limitations respected, is justiciable or non-
political, the crux of the problem being one of legality or validity of the
contested act, not its wisdom. Otherwise, said qualifications, conditions or
limitations - particularly those prescribed or imposed by the Constitution -
would be set at naught. What is more, the judicial inquiry into such issue
and the settlement thereof are the main functions of courts of justice under
the Presidential form of government adopted in our 1935 Constitution, and
the system of checks and balances, one of its basic predicates. As a
consequence, We have neither the authority nor the discretion to
decline passing upon said issue, but are under the ineluctable
obligation - made particularly more exacting and peremptory by our
oath, as members of the highest Court of the land, to support and
defend the Constitution - to settle it. This explains why, in Miller v.
Johnson, it was held that courts have a "duty, rather than a power", to
determine whether another branch of the government has "kept within
constitutional limits." Not satisfied with this postulate, the court went
farther and stressed that, if the Constitution provides how it may be
amended - as it is in our 1935 Constitution - "then, unless the manner is
followed, the judiciary as the interpreter of that constitution, will declare
the amendment invalid." In fact, this very Court - speaking through Justice
Laurel, an outstanding authority on Philippine Constitutional Law, as well as
one of the highly respected and foremost leaders of the Convention that
drafted the 1935 Constitution - declared, as early as July 15, 1936, that
"(i)n times of social disquietude or political excitement, the great landmarks
of the Constitution are apt to be forgotten or marred, if not entirely
obliterated. In cases of conflict, the judicial department is the only
constitutional organ which can be called upon to determine the proper
allocation of powers between the several departments" of the
government.107 (citations omitted; emphasis supplied)
In the case at bar, the challenged proviso operates on the basis of the salary grade
or officer-employee status. It is akin to a distinction based on economic class
and status, with the higher grades as recipients of a benefit specifically withheld
from the lower grades. Officers of the BSP now receive higher compensation
packages that are competitive with the industry, while the poorer, low-salaried
employees are limited to the rates prescribed by the SSL. The implications are
quite disturbing: BSP rank-and-file employees are paid the strictly regimented
rates of the SSL while employees higher in rank - possessing higher and better
education and opportunities for career advancement - are given higher
compensation packages to entice them to stay. Considering that majority, if
not all, the rank-and-file employees consist of people whose status and
rank in life are less and limited, especially in terms of job marketability, it
is they - and not the officers - who have the real economic and
financial need for the adjustment This is in accord with the policy of the
Constitution "to free the people from poverty, provide adequate social services,
extend to them a decent standard of living, and improve the quality of life for
all."108 Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it
can pass muster.
To be sure, the BSP rank-and-file employees merit greater concern from
this Court. They represent the more impotent rank-and-file government
employees who, unlike employees in the private sector, have no specific right to
organize as a collective bargaining unit and negotiate for better terms and
conditions of employment, nor the power to hold a strike to protest unfair labor
practices. Not only are they impotent as a labor unit, but their efficacy to lobby in
Congress is almost nil as R.A. No. 7653 effectively isolated them from the other
GFI rank-and-file in compensation. These BSP rank-and-file employees
represent the politically powerless and they should not be compelled to
seek a political solution to their unequal and iniquitous treatment. Indeed,
they have waited for many years for the legislature to act. They cannot be asked
to wait some more for discrimination cannot be given any waiting time. Unless the
equal protection clause of the Constitution is a mere platitude, it is the Court's
duty to save them from reasonless discrimination.
IN VIEW WHEREOF, we hold that the continued operation and implementation of
the last proviso of Section 15(c), Article II of Republic Act No. 7653 is
unconstitutional.
EN BANC
G.R. No. 211833, April 07, 2015
FERDINAND R. VILLANUEVA, PRESIDING JUDGE, MCTC, COMPOSTELA-
NEW BATAAN, COMPOSTELA VALLEY PROVINCE, Petitioner, v. JUDICIAL
AND BAR COUNCIL, Respondent.
DECISION
REYES, J.:
Presiding Judge Ferdinand R. Villanueva (petitioner) directly came to this
Court via a Petition for Prohibition, Mandamus, and Certiorari, and Declaratory
Relief1 under Rules 65 and 63 of the Rules of Court, respectively, with prayer
for the issuance of a temporary restraining order and/or writ of preliminary
injunction, to assail the policy of the Judicial and Bar Council (JBC), requiring
five years of service as judges of first-level courts before they can qualify as
applicant to second-level courts, on the ground that it is unconstitutional, and
was issued with grave abuse of discretion. chanRoblesvirtualLawlibrary
The Facts
The petitioner was appointed on September 18, 2012 as the Presiding Judge of
the Municipal Circuit Trial Court, Compostela-New Bataan, Poblacion,
Compostela Valley Province, Region XI, which is a first-level court. On
September 27, 2013, he applied for the vacant position of Presiding Judge in
the following Regional Trial Courts (RTCs): Branch 31, Tagum City; Branch 13,
Davao City; and Branch 6, Prosperidad, Agusan Del Sur.
In a letter2 dated December 18, 2013, JBC's Office of Recruitment, Selection
and Nomination, informed the petitioner that he was not included in the list of
candidates for the said stations. On the same date, the petitioner sent a letter,
through electronic mail, seeking reconsideration of his non-inclusion in the list
of considered applicants and protesting the inclusion of applicants who did not
pass the prejudicature examination.
The petitioner was informed by the JBC Executive Officer, through a
letter3 dated February 3, 2014, that his protest and reconsideration was duly
noted by the JBC en banc. However, its decision not to include his name in the
list of applicants was upheld due to the JBC's long-standing policy of opening
the chance for promotion to second-level courts to, among others, incumbent
judges who have served in their current position for at least five years, and
since the petitioner has been a judge only for more than a year, he was
excluded from the list. This caused the petitioner to take recourse to this
Court.
In his petition, he argued that: (1) the Constitution already prescribed the
qualifications of an RTC judge, and the JBC could add no more; (2) the JBC's
five-year requirement violates the equal protection and due process clauses of
the Constitution; and (3) the JBC's five-year requirement violates the
constitutional provision on Social Justice and Human Rights for Equal
Opportunity of Employment. The petitioner also asserted that the requirement
of the Prejudicature Program mandated by Section 104 of Republic Act (R.A.)
No. 85575 should not be merely directory and should be fully implemented. He
further alleged that he has all the qualifications for the position prescribed by
the Constitution and by Congress, since he has already complied with the
requirement of 10 years of practice of law.
In compliance with the Court's Resolution6 dated April 22, 2014, the JBC7 and
the Office of the Solicitor General (OSG)8separately submitted their Comments.
Summing up the arguments of the JBC and the OSG, they essentially stated
that the petition is procedurally infirm and that the assailed policy does not
violate the equal protection and due process clauses. They posited that: (1)
the writ of certiorari and prohibition cannot issue to prevent the JBC from
performing its principal function under the Constitution to recommend
appointees to the Judiciary because the JBC is not a tribunal exercising judicial
or quasi-judicial function; (2) the remedy of mandamus and declaratory relief
will not lie because the petitioner has no clear legal right that needs to be
protected; (3) the equal protection clause is not violated because the
classification of lower court judges who have served at least five years and
those who have served less than five years is valid as it is performance and
experience based; and (4) there is no violation of due process as the policy is
merely internal in nature.chanRoblesvirtualLawlibrary
The Issue
The crux of this petition is whether or not the policy of JBC requiring five years
of service as judges of first-level courts before they can qualify as applicant to
second-level courts is constitutional.
Ruling of the Court
Procedural Issues:
Before resolving the substantive issues, the Court considers it necessary to
first determine whether or not the action for certiorari, prohibition and
mandamus, and declaratory relief commenced by the petitioner was proper.
One. The remedies of certiorari and prohibition are tenable. "The present
Rules of Court uses two special civil actions for determining and correcting
grave abuse of discretion amounting to lack or excess of jurisdiction. These are
the special civil actions for certiorari and prohibition, and both are governed by
Rule 65."9 As discussed in the case of Maria Carolina P. Araullo, etc., et al. v.
Benigno Simeon C. Aquino III, etc., et al.,10 this Court explained that: chanroblesvirtuallawlibrary
With respect to the Court, however, the remedies of certiorari and prohibition
are necessarily broader in scope and reach, and the writ of certiorari or
prohibition may be issued to correct errors of jurisdiction committed not only
by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or
ministerial functions but also to set right, undo and restrain any act of grave
abuse of discretion amounting to lack or excess of jurisdiction by any branch or
instrumentality of the Government, even if the latter does not exercise judicial,
quasi-judicial or ministerial functions. This application is expressly authorized
by the text of the second paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise
constitutional issues and to review and/or prohibit or nullify the acts of
legislative and executive officials.11 (Citation omitted)
In this case, it is clear that the JBC does not fall within the scope of a tribunal,
board, or officer exercising judicial or quasi-judicial functions. In the process of
selecting and screening applicants, the JBC neither acted in any judicial or
quasi-judicial capacity nor assumed unto itself any performance of judicial or
quasi-judicial prerogative. However, since the formulation of guidelines and
criteria, including the policy that the petitioner now assails, is necessary and
incidental to the exercise of the JBC's constitutional mandate, a determination
must be made on whether the JBC has acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing and enforcing the said
policy.
Besides, the Court can appropriately take cognizance of this case by virtue of
the Court's power of supervision over the JBC. Jurisprudence provides that the
power of supervision is the power of oversight, or the authority to see that
subordinate officers perform their duties. It ensures that the laws and the rules
governing the conduct of a government entity are observed and complied with.
Supervising officials see to it that rules are followed, but they themselves do
not lay down such rules, nor do they have the discretion to modify or replace
them. If the rules are not observed, they may order the work done or redone,
but only to conform to such rules. They may not prescribe their own manner of
execution of the act. They have no discretion on this matter except to see to it
that the rules are followed.12
Following this definition, the supervisory authority of the Court over the JBC is
to see to it that the JBC complies with its own rules and procedures. Thus,
when the policies of the JBC are being attacked, then the Court, through its
supervisory authority over the JBC, has the duty to inquire about the matter
and ensure that the JBC complies with its own rules.
Two. The remedy of mandamus cannot be availed of by the petitioner in
assailing JBC's policy. The petitioner insisted that mandamus is proper because
his right was violated when he was not included in the list of candidates for the
RTC courts he applied for. He said that his non-inclusion in the list of
candidates for these stations has caused him direct injury.
It is essential to the issuance of a writ of mandamus that the applicant should
have a clear legal right to the thing demanded and it must be the imperative
duty of the respondent to perform the act required.13 The petitioner bears the
burden to show that there is such a clear legal right to the performance of the
act, and a corresponding compelling duty on the part of the respondent to
perform the act. The remedy of mandamus, as an extraordinary writ, lies only
to compel an officer to perform a ministerial duty, not a discretionary
one.14 Clearly, the use of discretion and the performance of a ministerial act
are mutually exclusive.
The writ of mandamus does not issue to control or review the exercise of
discretion or to compel a course of conduct, which, it quickly seems to us, was
what the petitioner would have the JBC do in his favor. The function of the JBC
to select and recommend nominees for vacant judicial positions is
discretionary, not ministerial. Moreso, the petitioner cannot claim any legal
right to be included in the list of nominees for judicial vacancies. Possession of
the constitutional and statutory qualifications for appointment to the judiciary
may not be used to legally demand that one's name be included in the list of
candidates for a judicial vacancy. One's inclusion in the list of the candidates
depends on the discretion of the JBC, thus: chanroblesvirtuallawlibrary
The fact that an individual possesses the constitutional and statutory
qualifications for appointment to the Judiciary does not create an entitlement
or expectation that his or her name be included in the list of candidates for a
judicial vacancy. By submitting an application or accepting a recommendation,
one submits to the authority of the JBC to subject the former to the search,
screening, and selection process, and to use its discretion in deciding whether
or not one should be included in the list. Indeed, assuming that if one has the
legal right to be included in the list of candidates simply because he or she
possesses the constitutional and statutory qualifications, then the application
process would then be reduced to a mere mechanical function of the JBC; and
the search, screening, and selection process would not only be unnecessary,
but also improper. However, this is clearly not the constitutional intent. One's
inclusion in the list of candidates is subject to the discretion of the JBC
over the selection of nominees for a particular judicial post. Such
candidate's inclusion is not, therefore, a legally demandable right, but simply a
privilege the conferment of which is subject to the JBC's sound discretion.
Moreover, petitioner is essentially seeking a promotional appointment, that is,
a promotion from a first-level court to a second level court. There is no law,
however, that grants him the right to a promotion to second-level
courts.15 (Emphasis in the original)
Clearly, to be included as an applicant to second-level judge is not properly
compellable by mandamus inasmuch as it involves the exercise of sound
discretion by the JBC.
Three. The petition for declaratory relief is improper. "An action for
declaratory relief should be filed by a person interested under a deed, a will, a
contract or other written instrument, and whose rights are affected by a
statute, an executive order, a regulation or an ordinance. The relief sought
under this remedy includes the interpretation and determination of the validity
of the written instrument and the judicial declaration of the parties' rights or
duties thereunder."16 "[T]he purpose of the action is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed,
contract, etc., for their guidance in its enforcement or compliance and not to
settle issues arising from its alleged breach."17
In this case, the petition for declaratory relief did not involve an unsound
policy. Rather, the petition specifically sought a judicial declaration that the
petitioner has the right to be included in the list of applicants although he
failed to meet JBC's five-year requirement policy. Again, the Court reiterates
that no person possesses a legal right under the Constitution to be included in
the list of nominees for vacant judicial positions. The opportunity of
appointment to judicial office is a mere privilege, and not a judicially
enforceable right that may be properly claimed by any person. The inclusion in
the list of candidates, which is one of the incidents of such appointment, is not
a right either. Thus, the petitioner cannot claim any right that could have been
affected by the assailed policy.
Furthermore, the instant petition must necessarily fail because this Court does
not have original jurisdiction over a petition for declaratory relief even if only
questions of law are involved.18 The special civil action of declaratory relief falls
under the exclusive jurisdiction of the appropriate RTC pursuant to Section
1919 of Batas Pambansa Blg. 129, as amended by R.A.No. 7691.20
Therefore, by virtue of the Court's supervisory duty over the JBC and in the
exercise of its expanded judicial power, the Court assumes jurisdiction over the
present petition. But in any event, even if the Court will set aside procedural
infirmities, the instant petition should still be dismissed.chanRoblesvirtualLawlibrary
 Substantive Issues
As an offspring of the 1987 Constitution, the JBC is mandated to recommend
appointees to the judiciary and only those nominated by the JBC in a list
officially transmitted to the President may be appointed by the latter as justice
or judge in the judiciary. Thus, the JBC is burdened with a great responsibility
that is imbued with public interest as it determines the men and women who
will sit on the judicial bench. While the 1987 Constitution has provided the
qualifications of members of the judiciary, this does not preclude the JBC from
having its own set of rules and procedures and providing policies to effectively
ensure its mandate.
The functions of searching, screening, and selecting are necessary and
incidental to the JBC's principal function of choosing and recommending
nominees for vacancies in the judiciary for appointment by the President.
However, the Constitution did not lay down in precise terms the process that
the JBC shall follow in determining applicants' qualifications. In carrying out its
main function, the JBC has the authority to set the standards/criteria in
choosing its nominees for every vacancy in the judiciary, subject only to the
minimum qualifications required by the Constitution and law for every position.
The search for these long held qualities necessarily requires a degree of
flexibility in order to determine who is most fit among the applicants. Thus, the
JBC has sufficient but not unbridled license to act in performing its duties.
JBC's ultimate goal is to recommend nominees and not simply to fill up judicial
vacancies in order to promote an effective and efficient administration of
justice. Given this pragmatic situation, the JBC had to establish a set of
uniform criteria in order to ascertain whether an applicant meets the minimum
constitutional qualifications and possesses the qualities expected of him and
his office. Thus, the adoption of the five-year requirement policy applied by
JBC to the petitioner's case is necessary and incidental to the function
conferred by the Constitution to the JBC.
Equal Protection
There is no question that JBC employs standards to have a rational basis to
screen applicants who cannot be all accommodated and appointed to a
vacancy in the judiciary, to determine who is best qualified among the
applicants, and not to discriminate against any particular individual or class.
The equal protection clause of the Constitution does not require the universal
application of the laws to all persons or things without distinction; what it
requires is simply equality among equals as determined according to a valid
classification. Hence, the Court has affirmed that if a law neither burdens a
fundamental right nor targets a suspect class, the classification stands as long
as it bears a rational relationship to some legitimate government end.21 ChanRoblesVirtualawlibrary
"The equal protection clause, therefore, does not preclude classification of
individuals who may be accorded different treatment under the law as long as
the classification is reasonable and not arbitrary."22 "The mere fact that the
legislative classification may result in actual inequality is not violative of the
right to equal protection, for every classification of persons or things for
regulation by law produces inequality in some degree, but the law is not
thereby rendered invalid."23
That is the situation here. In issuing the assailed policy, the JBC merely
exercised its discretion in accordance with the constitutional requirement and
its rules that a member of the Judiciary must be of proven competence,
integrity, probity and independence.24"To ensure the fulfillment of these
standards in every member of the Judiciary, the JBC has been tasked to screen
aspiring judges and justices, among others, making certain that the nominees
submitted to the President are all qualified and suitably best for appointment.
In this way, the appointing process itself is shielded from the possibility of
extending judicial appointment to the undeserving and mediocre and, more
importantly, to the ineligible or disqualified."25
Consideration of experience by JBC as one factor in choosing recommended
appointees does not constitute a violation of the equal protection clause. The
JBC does not discriminate when it employs number of years of service to
screen and differentiate applicants from the competition. The number of years
of service provides a relevant basis to determine proven competence which
may be measured by experience, among other factors. The difference in
treatment between lower court judges who have served at least five years and
those who have served less than five years, on the other hand, was
rationalized by JBC as follows:chanroblesvirtuallawlibrary
Formulating policies which streamline the selection process falls squarely under
the purview of the JBC. No other constitutional body is bestowed with the
mandate and competency to set criteria for applicants that refer to the more
general categories of probity, integrity and independence.
The assailed criterion or consideration for promotion to a second-level court,
which is five years experience as judge of a first-level court, is a direct
adherence to the qualities prescribed by the Constitution. Placing a premium
on many years of judicial experience, the JBC is merely applying one of the
stringent constitutional standards requiring that a member of the judiciary be
of "proven competence." In determining competence, the JBC considers,
among other qualifications, experience and performance.
Based on the JBC's collective judgment, those who have been judges of first-
level courts for five (5) years are better qualified for promotion to second-level
courts. It deems length of experience as a judge as indicative of conversance
with the law and court procedure. Five years is considered as a sufficient span
of time for one to acquire professional skills for the next level court, declog the
dockets, put in place improved procedures and an efficient case management
system, adjust to the work environment, and gain extensive experience in the
judicial process.
A five-year stint in the Judiciary can also provide evidence of the integrity,
probity, and independence of judges seeking promotion. To merit JBC's
nomination for their promotion, they must have had a "record of, and
reputation for, honesty, integrity, incorruptibility, irreproachable conduct, and
fidelity to sound moral and ethical standards." Likewise, their decisions must
be reflective of the soundness of their judgment, courage, rectitude, cold
neutrality and strength of character.
Hence, for the purpose of determining whether judges are worthy of promotion
to the next level court, it would be premature or difficult to assess their merit if
they have had less than one year of service on the bench.26 (Citations omitted
and emphasis in the original)
At any rate, five years of service as a lower court judge is not the only factor
that determines the selection of candidates for RTC judge to be appointed by
the President. Persons with this qualification are neither automatically selected
nor do they automatically become nominees. The applicants are chosen based
on an array of factors and are evaluated based on their individual merits. Thus,
it cannot be said that the questioned policy was arbitrary, capricious, or made
without any basis.
Clearly, the classification created by the challenged policy satisfies the rational
basis test. The foregoing shows that substantial distinctions do exist between
lower court judges with five year experience and those with less than five
years of experience, like the petitioner, and the classification enshrined in the
assailed policy is reasonable and relevant to its legitimate purpose. The Court,
thus, rules that the questioned policy does not infringe on the equal protection
clause as it is based on reasonable classification intended to gauge the proven
competence of the applicants. Therefore, the said policy is valid and
constitutional.
Due Process
The petitioner averred that the assailed policy violates procedural due process
for lack of publication and non-submission to the University of the Philippines
Law Center Office of the National Administrative Register (ONAR). The
petitioner said that the assailed policy will affect all applying judges, thus, the
said policy should have been published.
Contrary to the petitioner's contention, the assailed JBC policy need not be
filed in the ONAR because the publication requirement in the ONAR is confined
to issuances of administrative agencies under the Executive branch of the
government.27 Since the JBC is a body under the supervision of the Supreme
Court,28 it is not covered by the publication requirements of the Administrative
Code.
Nevertheless, the assailed JBC policy requiring five years of service as judges
of first-level courts before they can qualify as applicants to second-level courts
should have been published. As a general rule, publication is indispensable in
order that all statutes, including administrative rules that are intended to
enforce or implement existing laws, attain binding force and effect. There are,
however, several exceptions to the requirement of publication, such as
interpretative regulations and those merely internal in nature, which regulate
only the personnel of the administrative agency and not the public. Neither is
publication required of the so-called letters of instructions issued by
administrative superiors concerning the rules or guidelines to be followed by
their subordinates in the performance of their duties.29
Here, the assailed JBC policy does not fall within the administrative rules and
regulations exempted from the publication requirement. The assailed policy
involves a qualification standard by which the JBC shall determine proven
competence of an applicant. It is not an internal regulation, because if it were,
it would regulate and affect only the members of the JBC and their staff.
Notably, the selection process involves a call to lawyers who meet the
qualifications in the Constitution and are willing to serve in the Judiciary to
apply to these vacant positions. Thus, it is but a natural consequence thereof
that potential applicants be informed of the requirements to the judicial
positions, so that they would be able to prepare for and comply with them.
The Court also noted the fact that in JBC-009, otherwise known as the Rules of
the Judicial and Bar Council, the JBC had put its criteria in writing and listed
the guidelines in determining competence, independence, integrity and
probity. Section 1, Paragraph 1 of Rule 9 expressly provides that applicants for
the Court of Appeals and the Sandiganbayan, should, as a general rule, have
at least five years of experience as an RTC judge, thus: chanroblesvirtuallawlibrary
RULE 9 - SPECIAL GUIDELINES FOR NOMINATION TO A VACANCY IN THE
COURT OF APPEALS AND SANDIGANBAYAN
Section 1. Additional criteria for nomination to the Court of Appeals and the
Sandiganbayan. - In addition to the foregoing guidelines the Council should
consider the following in evaluating the merits of applicants for a vacancy in
the Court of Appeals and Sandiganbayan:
1. As a general rule, he must have at least five years of experience as a
judge of Regional Trial Court, except when he has in his favor outstanding
credentials, as evidenced by, inter alia, impressive scholastic or educational
record and performance in the Bar examinations, excellent reputation for
honesty, integrity, probity and independence of mind; at least very satisfactory
performance rating for three (3) years preceding the filing of his application for
nomination; and excellent potentials for appellate judgeship.
x x x x (Emphasis ours)
The express declaration of these guidelines in JBC-009, which have been duly
published on the website of the JBC and in a newspaper of general circulation
suggests that the JBC is aware that these are not mere internal rules, but are
rules implementing the Constitution that should be published. Thus, if the JBC
were so-minded to add special guidelines for determining competence of
applicants for RTC judges, then it could and should have amended its rules and
published the same. This, the JBC did not do as JBC-009 and its amendatory
rule do not have special guidelines for applicants to the RTC.
Moreover, jurisprudence has held that rules implementing a statute should be
published. Thus, by analogy, publication is also required for the five-year
requirement because it seeks to implement a constitutional provision requiring
proven competence from members of the judiciary.
Nonetheless, the JBC's failure to publish the assailed policy has not prejudiced
the petitioner's private interest. At the risk of being repetitive, the petitioner
has no legal right to be included in the list of nominees for judicial vacancies
since the possession of the constitutional and statutory qualifications for
appointment to the Judiciary may not be used to legally demand that one's
name be included in the list of candidates for a judicial vacancy. One's
inclusion in the shortlist is strictly within the discretion of the JBC.30
As to the issue that the JBC failed or refused to implement the completion of
the prejudicature program as a requirement for appointment or promotion in
the judiciary under R.A. No. 8557, this ground of the petition, being
unsubstantiated, was unfounded. Clearly, it cannot be said that JBC unlawfully
neglects the performance of a duty enjoined by law.
Finally, the petitioner argued but failed to establish that the assailed policy
violates the constitutional provision under social justice and human rights for
equal opportunity of employment. The OSG explained: chanroblesvirtuallawlibrary
[T]he questioned policy does not violate equality of employment opportunities.
The constitutional provision does not call for appointment to the Judiciary of all
who might, for any number of reasons, wish to apply. As with all professions, it
is regulated by the State. The office of a judge is no ordinary office. It is
imbued with public interest and is central in the administration of justice x x x.
Applicants who meet the constitutional and legal qualifications must vie and
withstand the competition and rigorous screening and selection process. They
must submit themselves to the selection criteria, processes and discretion of
respondent JBC, which has the constitutional mandate of screening and
selecting candidates whose names will be in the list to be submitted to the
President. So long as a fair opportunity is available for all applicants who are
evaluated on the basis of their individual merits and abilities, the questioned
policy cannot be struck down as unconstitutional.31 (Citations omitted)
From the foregoing, it is apparent that the petitioner has not established a
clear legal right to justify the issuance of a preliminary injunction. The
petitioner has merely filed an application with the JBC for the position of RTC
judge, and he has no clear legal right to be nominated for that office nor to be
selected and included in the list to be submitted to the President which is
subject to the discretion of the JBC. The JBC has the power to determine who
shall be recommended to the judicial post. To be included in the list of
applicants is a privilege as one can only be chosen under existing criteria
imposed by the JBC itself. As such, prospective applicants, including the
petitioner, cannot claim any demandable right to take part in it if they fail to
meet these criteria. Hence, in the absence of a clear legal right, the issuance of
an injunctive writ is not justified.
As the constitutional body granted with the power of searching for, screening,
and selecting applicants relative to recommending appointees to the Judiciary,
the JBC has the authority to determine how best to perform such constitutional
mandate. Pursuant to this authority, the JBC issues various policies setting
forth the guidelines to be observed in the evaluation of applicants, and
formulates rules and guidelines in order to ensure that the rules are updated to
respond to existing circumstances. Its discretion is freed from legislative,
executive or judicial intervention to ensure that the JBC is shielded from any
outside pressure and improper influence. Limiting qualified applicants in this
case to those judges with five years of experience was an exercise of discretion
by the JBC. The potential applicants, however, should have been informed of
the requirements to the judicial positions, so that they could properly prepare
for and comply with them. Hence, unless there are good and compelling
reasons to do so, the Court will refrain from interfering with the exercise of
JBC's powers, and will respect the initiative and independence inherent in the
latter.
cralawred

WHEREFORE, premises considered, the petition is DISMISSED. The Court,

however, DIRECTS that the Judicial and Bar Council comply with the
publication requirement of (1) the assailed policy requiring five years of
experience as judges of first-level courts before they can qualify as applicant
to the Regional Trial Court, and (2) other special guidelines that the Judicial
and Bar Council is or will be implementing.

SO ORDERED. chanroblesvirtuallawlibrary
 taxpayer availing this tax credit must be a taxpayer in good standing as
certified by the City Treasurer and City Assessor.

The tax credit to be granted shall be equivalent to the total amount of the
EN BANC G.R. No. 210551, June 30, 2015 special assessment paid by the property owner, which shall be given as
follows:
chanRoblesvirtualLawlibrary

JOSE J. FERRER, JR., Petitioner, v. CITY MAYOR HERBERT BAUTISTA, 1.  6th year  -   20%
CITY COUNCIL OF QUEZON CITY, CITY TREASURER OF QUEZON CITY,
AND CITY ASSESSOR OF QUEZON CITY, Respondents. 2.  7th year  -   20%

PERALTA, J.: 3.  8th year  -   20%

Before this Court is a petition for certiorari under Rule 65 of the Rules of Court 4.  9th year  -   20%
with prayer for the issuance of a temporary restraining order (TRO) seeking to
declare unconstitutional and illegal Ordinance Nos. SP-2095, S-2011 and SP- 5.  10th year  -   20%
chanroblesvirtuallawlibrary

2235, S-2013 on the Socialized Housing Tax and Garbage Fee, respectively,
which are being imposed by the respondents.
The Case
Furthermore, only the registered owners may avail of the tax credit and may
not be continued by the subsequent property owners even if they are buyers in
good faith, heirs or possessor of a right in whatever legal capacity over the
subject property.4
chanroblesvirtuallawlibrary

On the other hand, Ordinance No. SP-2235, S-20135 was enacted on

On October 17, 2011,1 respondent Quezon City Council enacted Ordinance
No. SP-2095, S-2011,2 or the Socialized Housing Tax of Quezon City, Section
3 of which provides:
chanRoblesvirtualLawlibrary
December 16, 2013 and took effect ten days after when it was approved by
respondent City Mayor.6 The proceeds collected from the garbage fees on
residential properties shall be deposited solely and exclusively in an earmarked
special account under the general fund to be utilized for garbage

SECTION 3. IMPOSITION. A special assessment equivalent to one-half percent

(0.5%) on the assessed value of land in excess of One Hundred Thousand collections.7 Section 1 of the Ordinance set forth the schedule and manner for
Pesos (Php100,000.00) shall be collected by the City Treasurer which shall the collection of garbage fees:
chanRoblesvirtualLawlibrary

accrue to the Socialized Housing Programs of the Quezon City Government.
The special assessment shall accrue to the General Fund under a special
account to be established for the purpose.
chanroblesvirtuallawlibrary
SECTION 1. The City Government of Quezon City in conformity with and in
relation to Republic Act No. 7160, otherwise known as the Local Government
Code of 1991 HEREBY IMPOSES THE FOLLOWING SCHEDULE AND MANNER
FOR THE ANNUAL COLLECTION OF GARBAGE FEES, AS FOLLOWS:

Effective for five (5) years, the Socialized Housing Tax (SHT) shall be utilized
by the Quezon City Government for the following projects: (a) land
purchase/land banking; (b) improvement of current/existing socialized housing On all domestic households in Quezon City;
facilities; (c) land development; (d) construction of core houses, sanitary LAND AREA IMPOSABLE FEE
cores, medium-rise buildings and other similar structures; and (e) financing of Less than 200 sq. m. PHP 100.00
public-private partnership agreement of the Quezon City Government and 201 sq. m. – 500 sq. m. PHP 200.00
National Housing Authority (NHA) with the private sector.3 Under certain
conditions, a tax credit shall be enjoyed by taxpayers regularly paying the
501 sq. m. – 1,000 sq. m. PHP 300.00
special assessment: 1,001 sq. m. – 1,500 sq. m. PHP 400.00
1,501 sq. m. – 2,000 sq. m. or more PHP 500.00
chanRoblesvirtualLawlibrary

SECTION 7. TAX CREDIT. Taxpayers dutifully paying the special assessment

tax as imposed by this ordinance shall enjoy a tax credit. The tax credit may On all condominium unit and socialized housing projects/units in Quezon City;
be availed of only after five (5) years of continue[d] payment. Further, the FLOOR AREA IMPOSABLE FEE
Less than 40 sq. m.
41 sq. m. – 60 sq. m.
61 sq. m. – 100 sq. m.
101 sq. m. – 150 sq. m.
151 sq. m. – 200 sq. [m.] or more
On high-rise Condominium Units
a) High-rise Condominium – The Homeowners Association of high- rise
condominiums shall pay the annual garbage fee on the total size of the entire
condominium and socialized Housing Unit and an additional garbage fee shall be
collected based on area occupied for every unit already sold or being amortized.
b) High-rise apartment units – Owners of high-rise apartment units shall pay the
annual garbage fee on the total lot size of the entire apartment and an additional
garbage fee based on the schedule prescribed herein for every unit occupied.
The collection of the garbage fee shall accrue on the first day of January and
shall be paid simultaneously with the payment of the real property tax, but not
later than the first quarter installment.8 In case a household owner refuses to
pay, a penalty of 25% of the garbage fee due, plus an interest of 2% per
month or a fraction thereof, shall be charged.9 ChanRoblesVirtualawlibrary
Petitioner alleges that he is a registered co-owner of a 371-square-meter
residential property in Quezon City which is covered by Transfer Certificate of
Title (TCT) No. 216288, and that, on January 7, 2014, he paid his realty tax
which already included the garbage fee in the sum of Php100.00.10
The instant petition was filed on January 17, 2014. We issued a TRO on
February 5, 2014, which enjoined the enforcement of Ordinance Nos. SP-2095
and SP-2235 and required respondents to comment on the petition without
necessarily giving due course thereto.11
ChanRoblesVirtualawlibrary
Respondents filed their Comment12 with urgent motion to dissolve the TRO on
February 17, 2014. Thereafter, petitioner filed a Reply and a Memorandum on
March 3, 2014 and September 8, 2014, respectively.
Procedural Matters
A.  Propriety of a Petition for Certiorari
Respondents are of the view that this petition for certiorari is improper since
they are not tribunals, boards or officers exercising judicial or quasi-judicial
PHP25.00 functions. Petitioner, however, counters that in enacting Ordinance Nos. SP-
PHP50.00 2095 and SP-2235, the Quezon City Council exercised quasi-judicial function
because the ordinances ruled against the property owners who must pay the
PHP75.00 SHT and the garbage fee, exacting from them funds for basic essential public
PHP100.00 services that they should not be held liable. Even if a Rule 65 petition is
PHP200.00 improper, petitioner still asserts that this Court, in a number of cases like
in Rosario v. Court of Appeals,13 has taken cognizance of an improper remedy
in the interest of justice.
We agree that respondents neither acted in any judicial or quasi-judicial
capacity nor arrogated unto themselves any judicial or quasi-judicial
prerogatives.
A respondent is said to be exercising judicial function where he has the power
to determine what the law is and what the legal rights of the parties are, and
then undertakes to determine these questions and adjudicate upon the rights
of the parties.
Quasi-judicial function, on the other hand, is “a term which applies to the
actions, discretion, etc., of public administrative officers or bodies … required
to investigate facts or ascertain the existence of facts, hold hearings, and draw
conclusions from them as a basis for their official action and to exercise
discretion of a judicial nature.”
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts,
it is necessary that there be a law that gives rise to some specific rights of
ChanRoblesVirtualawlibrary
persons or property under which adverse claims to such rights are made, and
the controversy ensuing therefrom is brought before a tribunal, board, or
officer clothed with power and authority to determine the law and adjudicate
the respective rights of the contending parties.14
chanroblesvirtuallawlibrary
For a writ of certiorari to issue, the following requisites must concur: (1) it
must be directed against a tribunal, board, or officer exercising judicial or
quasi-judicial functions; (2) the tribunal, board, or officer must have acted
without or in excess of jurisdiction or with grave abuse of discretion amounting
to lack or excess of jurisdiction; and (3) there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law. The enactment by
the Quezon City Council of the assailed ordinances was done in the exercise of
its legislative, not judicial or quasi-judicial, function. Under Republic Act
(R.A.) No. 7160, or the Local Government Code of 1991 (LGC), local legislative
power shall be exercised by the Sangguniang Panlungsod for the city.15 Said
law likewise is specific in providing that the power to impose a tax, fee, or
charge, or to generate revenue shall be exercised by the sanggunian of the
local government unit concerned through an appropriate ordinance.16 ChanRoblesVirtualawlibrary

Also, although the instant petition is styled as a petition for certiorari, it
essentially seeks to declare the unconstitutionality and illegality of the
questioned ordinances. It, thus, partakes of the nature of a petition for
declaratory relief over which this Court has only appellate, not original,
jurisdiction.17 ChanRoblesVirtualawlibrary
Despite these, a petition for declaratory relief may be treated as one for
prohibition or mandamus, over which We exercise original jurisdiction, in cases
with far-reaching implications or one which raises transcendental issues or
questions that need to be resolved for the public good.18 The judicial policy is
that this Court will entertain direct resort to it when the redress sought cannot
be obtained in the proper courts or when exceptional and compelling
circumstances warrant availment of a remedy within and calling for the
exercise of Our primary jurisdiction.19 ChanRoblesVirtualawlibrary
Section 2, Rule 65 of the Rules of Court lay down under what circumstances a
petition for prohibition may be filed:
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SEC. 2. Petition for prohibition. - When the proceedings of any tribunal,
corporation, board, officer or person, whether exercising judicial, quasi-judicial
or ministerial functions, are without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that judgment
be rendered commanding the respondent to desist from further proceeding in
the action or matter specified therein, or otherwise granting such incidental
reliefs as law and justice may require.
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In a petition for prohibition against any tribunal, corporation, board, or person
– whether exercising judicial, quasi-judicial, or ministerial functions – who has
acted without or in excess of jurisdiction or with grave abuse of discretion, the
petitioner prays that judgment be rendered, commanding the respondents to
desist from further proceeding in the action or matter specified in the petition.
In this case, petitioner's primary intention is to prevent respondents from
implementing Ordinance Nos. SP-2095 and SP-2235. Obviously, the writ being
sought is in the nature of a prohibition, commanding desistance.
We consider that respondents City Mayor, City Treasurer, and City Assessor
are performing ministerial functions. A ministerial function is one that an
officer or tribunal performs in the context of a given set of facts, in a
prescribed manner and without regard for the exercise of his or its own
judgment, upon the propriety or impropriety of the act done.20 Respondent
Mayor, as chief executive of the city government, exercises such powers and
performs such duties and functions as provided for by the LGC and other
laws.21 Particularly, he has the duty to ensure that all taxes and other revenues
of the city are collected, and that city funds are applied to the payment of
expenses and settlement of obligations of the city, in accordance with law or
ordinance.22 On the other hand, under the LGC, all local taxes, fees, and
charges shall be collected by the provincial, city, municipal, or barangay
treasurer, or their duly-authorized deputies, while the assessor shall take
charge, among others, of ensuring that all laws and policies governing the
appraisal and assessment of real properties for taxation purposes are properly
executed.23 Anent the SHT, the Department of Finance (DOF) Local Finance
Circular No. 1-97, dated April 16, 1997, is more specific:
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6.3 The Assessor’s office of the Id.ntified LGU shall:
a. immediately undertake an inventory of lands within its
jurisdiction which shall be subject to the levy of the Social
Housing Tax (SHT) by the local sanggunian concerned;
b. inform the affected registered owners of the effectivity of the
SHT; a list of the lands and registered owners shall also be
posted in 3 conspicuous places in the city/municipality;
c. furnish the Treasurer’s office and the local sanggunian concerned
of the list of lands affected;
6.4 The Treasurer’s office shall:
a. collect the Social Housing Tax on top of the Real Property Tax,
SEF Tax and other special assessments;
b. report to the DOF, thru the Bureau of Local Government Finance,
and the Mayor’s office the monthly collections on Social Housing
Tax (SHT). An annual report should likewise be submitted to the
HUDCC on the total revenues raised during the year pursuant to
Sec. 43, R.A. 7279 and the manner in which the same was
disbursed.
Petitioner has adduced special and important reasons as to why direct recourse
to Us should be allowed. Aside from presenting a novel question of law, this
case calls for immediate resolution since the challenged ordinances adversely
affect the property interests of all paying constituents of Quezon City. As well,
this petition serves as a test case for the guidance of other local government
units (LGUs). Indeed, the petition at bar is of transcendental importance
warranting a relaxation of the doctrine of hierarchy of courts. In Social Justice
Society (SJS) Officers, et al. v. Lim,24 the Court cited the case of Senator
Jaworski v. Phil. Amusement & Gaming Corp.,25 where We ratiocinated:
chanRoblesvirtualLawlibrary
Granting arguendo that the present action cannot be properly treated as a
petition for prohibition, the transcendental importance of the issues
involved in this case warrants that we set aside the technical defects
and take primary jurisdiction over the petition at bar. x x x This is in
accordance with the well-entrenched principle that rules of procedure
are not inflexible tools designed to hinder or delay, but to facilitate
and promote the administration of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate,
rather than promote substantial justice, must always be eschewed. 26
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B.  Locus Standi of Petitioner
Respondents challenge petitioner’s legal standing to file this case on the
ground that, in relation to Section 3 of Ordinance No. SP-2095, petitioner
failed to allege his ownership of a property that has an assessed value of more
than Php100,000.00 and, with respect to Ordinance No. SP-2335, by what
standing or personality he filed the case to nullify the same. According to
respondents, the petition is not a class suit, and that, for not having
specifically alleged that petitioner filed the case as a taxpayer, it could only be
surmised whether he is a party-in-interest who stands to be directly benefited
or injured by the judgment in this case.
It is a general rule that every action must be prosecuted or defended in the
name of the real party-in-interest, who stands to be benefited or injured by
the judgment in the suit, or the party entitled to the avails of the suit.
Jurisprudence defines interest as "material interest, an interest in issue and to
be affected by the decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. By real interest is meant a present
substantial interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest." "To qualify a person to be
a real party-in-interest in whose name an action must be prosecuted, he must
appear to be the present real owner of the right sought to be enforced."27
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“Legal standing” or locus standi calls for more than just a generalized
grievance.28 The concept has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct
injury as a result of the governmental act that is being challenged.29 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.30 ChanRoblesVirtualawlibrary
A party challenging the constitutionality of a law, act, or statute must show
“not only that the law is invalid, but also that he has sustained or is in
immediate, or imminent danger of sustaining some direct injury as a result of
its enforcement, and not merely that he suffers thereby in some indefinite
way.” It must be shown that he has been, or is about to be, denied some right
or privilege to which he is lawfully entitled, or that he is about to be subjected
to some burdens or penalties by reason of the statute complained of.31 ChanRoblesVirtualawlibrary
Tested by the foregoing, petitioner in this case clearly has legal standing to file
the petition. He is a real party-in-interest to assail the constitutionality and
legality of Ordinance Nos. SP-2095 and SP-2235 because respondents did not
dispute that he is a registered co-owner of a residential property in Quezon
City and that he paid property tax which already included the SHT and the
garbage fee. He has substantial right to seek a refund of the payments he
made and to stop future imposition. While he is a lone petitioner, his cause of
action to declare the validity of the subject ordinances is substantial and of
paramount interest to similarly situated property owners in Quezon City.
C.  Litis Pendentia
Respondents move for the dismissal of this petition on the ground of litis
pendentia. They claim that, as early as February 22, 2012, a case
entitled Alliance of Quezon City Homeowners, Inc., et al., v. Hon. Herbert
Bautista, et al., docketed as Civil Case No. Q-12-7-820, has been pending in
the Quezon City Regional Trial Court, Branch 104, which assails the legality of
Ordinance No. SP-2095. Relying on City of Makati, et al. v. Municipality (now
City) of Taguig, et al.,32 respondents assert that there is substantial identity of
parties between the two cases because petitioner herein and plaintiffs in the
civil case filed their respective cases as taxpayers of Quezon City.
For petitioner, however, respondents’ contention is untenable since he is not a
party in Alliance and does not even have the remotest identity or association
with the plaintiffs in said civil case. Moreover, respondents’ arguments would
deprive this Court of its jurisdiction to determine the constitutionality of laws
under Section 5, Article VIII of the 1987 Constitution.33 ChanRoblesVirtualawlibrary
Litis pendentia is a Latin term which literally means “a pending suit” and is
variously referred to in some decisions as lis pendens and auter action
pendant.34 While it is normally connected with the control which the court has
on a property involved in a suit during the continuance proceedings, it is more
interposed as a ground for the dismissal of a civil action pending in
court.35 In Film Development Council of the Philippines v. SM Prime Holdings,
Inc.,36 We elucidated:
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Litis pendentia, as a ground for the dismissal of a civil action, refers to a
situation where two actions are pending between the same parties for the
same cause of action, so that one of them becomes unnecessary and
vexatious. It is based on the policy against multiplicity of suit and authorizes a
court to dismiss a case motu proprio.
xxxx
The requisites in order that an action may be dismissed on the ground of litis
pendentia are: (a) the identity of parties, or at least such as representing the
same interest in both actions; (b) the identity of rights asserted and relief
prayed for, the relief being founded on the same facts, and (c) the identity of
the two cases such that judgment in one, regardless of which party is
successful, would amount to res judicata in the other.
xxxx
The underlying principle of litis pendentia is the theory that a party is not
allowed to vex another more than once regarding the same subject matter and
for the same cause of action. This theory is founded on the public policy that
the same subject matter should not be the subject of controversy in courts
more than once, in order that possible conflicting judgments may be avoided
for the sake of the stability of the rights and status of persons, and also to
avoid the costs and expenses incident to numerous suits.
Among the several tests resorted to in ascertaining whether two suits relate to
a single or common cause of action are: (1) whether the same evidence would
support and sustain both the first and second causes of action; and (2)
whether the defenses in one case may be used to substantiate the complaint in
the other.
The determination of whether there is an identity of causes of action for
purposes of litis pendentia is inextricably linked with that of res judicata, each
constituting an element of the other. In either case, both relate to the sound
practice of including, in a single litigation, the disposition of all issues relating
to a cause of action that is before a court.37
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There is substantial identity of the parties when there is a community of
interest between a party in the first case and a party in the second case albeit
the latter was not impleaded in the first case.38 Moreover, the fact that the
positions of the parties are reversed, i.e., the plaintiffs in the first case are the
defendants in the second case or vice-versa, does not negate the identity of
parties for purposes of determining whether the case is dismissible on the
ground of litis pendentia.39
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In this case, it is notable that respondents failed to attach any pleading
connected with the alleged civil case pending before the Quezon City trial
court. Granting that there is substantial identity of parties between said case
and this petition, dismissal on the ground of litis pendentia still cannot be had
in view of the absence of the second and third requisites. There is no way for
Us to determine whether both cases are based on the same set of facts that
require the presentation of the same evidence. Even if founded on the same
set of facts, the rights asserted and reliefs prayed for could be different.
Moreover, there is no basis to rule that the two cases are intimately related
and/or intertwined with one another such that the judgment that may be
rendered in one, regardless of which party would be successful, would amount
to res judicata in the other.
D. Failure to Exhaust Administrative Remedies
Respondents contend that petitioner failed to exhaust administrative remedies
for his non-compliance with Section 187 of the LGC, which mandates:
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Section 187. Procedure for Approval and Effectivity of Tax Ordinances and
Revenue Measures; Mandatory Public Hearings. – The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with the
provisions of this Code: Provided, That public hearings shall be conducted for
the purpose prior to the enactment thereof: Provided, further, That any
question on the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days from the effectivity
thereof to the Secretary of Justice who shall render a decision within sixty (60)
days from the date of receipt of the appeal: Provided, however, That such
appeal shall not have the effect of suspending the effectivity of the ordinance
and the accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the decision or
the lapse of the sixty-day period without the Secretary of Justice acting upon
the appeal, the aggrieved party may file appropriate proceedings with a court
of competent jurisdiction.
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The provision, the constitutionality of which was sustained in Drilon v.
Lim,40 has been construed as mandatory41 considering that –
A municipal tax ordinance empowers a local government unit to impose taxes.
The power to tax is the most effective instrument to raise needed revenues to
finance and support the myriad activities of local government units for the
delivery of basic services essential to the promotion of the general welfare and
enhancement of peace, progress, and prosperity of the people. Consequently,
any delay in implementing tax measures would be to the detriment of the
public. It is for this reason that protests over tax ordinances are required to be
done within certain time frames. x x x.42
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The obligatory nature of Section 187 was underscored in Hagonoy Market
Vendor Asso. v. Municipality of Hagonoy:43 cralawlawlibrary
x x x [T]he timeframe fixed by law for parties to avail of their legal remedies
before competent courts is not a “mere technicality” that can be easily brushed
aside. The periods stated in Section 187 of the Local Government Code are
mandatory. x x x Being its lifeblood, collection of revenues by the government
is of paramount importance. The funds for the operation of its agencies and
provision of basic services to its inhabitants are largely derived from its
revenues and collections. Thus, it is essential that the validity of revenue
measures is not left uncertain for a considerable length of time. Hence, the law
provided a time limit for an aggrieved party to assail the legality of revenue
measures and tax ordinances.”44
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Despite these cases, the Court, in Ongsuco, et al. v. Hon. Malones,45 held that
there was no need for petitioners therein to exhaust administrative remedies
before resorting to the courts, considering that there was only a pure question
of law, the parties did not dispute any factual matter on which they had to
present evidence. Likewise, in Cagayan Electric Power and Light Co., Inc. v.
City of Cagayan de Oro,46 We relaxed the application of the rules in view of the
more substantive matters. For the same reasons, this petition is an exception
to the general rule.
Substantive Issues
Petitioner asserts that the protection of real properties from informal settlers
and the collection of garbage are basic and essential duties and functions of
the Quezon City Government. By imposing the SHT and the garbage fee, the
latter has shown a penchant and pattern to collect taxes to pay for public
services that could be covered by its revenues from taxes imposed on
property, idle land, business, transfer, amusement, etc., as well as the Internal
Revenue Allotment (IRA) from the National Government. For petitioner, it is
noteworthy that respondents did not raise the issue that the Quezon City
Government is in dire financial state and desperately needs money to fund
housing for informal settlers and to pay for garbage collection. In fact, it has
not denied that its revenue collection in 2012 is in the sum of P13.69 billion.
Moreover, the imposition of the SHT and the garbage fee cannot be justified by
the Quezon City Government as an exercise of its power to create sources of
income under Section 5, Article X of the 1987 Constitution.47 According to
petitioner, the constitutional provision is not a carte blanche for the LGU to tax
everything under its territorial and political jurisdiction as the provision itself
admits of guidelines and limitations.
Petitioner further claims that the annual property tax is an ad valorem tax, a
percentage of the assessed value of the property, which is subject to revision
every three (3) years in order to reflect an increase in the market value of the
property. The SHT and the garbage fee are actually increases in the property
tax which are not based on the assessed value of the property or its
reassessment every three years; hence, in violation of Sections 232 and 233 of
the LGC.48ChanRoblesVirtualawlibrary
For their part, respondents relied on the presumption in favor of the
constitutionality of Ordinance Nos. SP-2095 and SP-2235, invoking Victorias
Milling Co., Inc. v. Municipality of Victorias, etc.,49People v. Siton, et
al.,50 and Hon. Ermita v. Hon. Aldecoa-Delorino.51 They argue that the burden
of establishing the invalidity of an ordinance rests heavily upon the party
challenging its constitutionality. They insist that the questioned ordinances are
proper exercises of police power similar to Telecom. & Broadcast Attys. of the
Phils., Inc. v. COMELEC52 and Social Justice Society (SJS), et al. v. Hon.
Atienza, Jr.53 and that their enactment finds basis in the social justice principle
enshrined in Section 9,54 Article II of the 1987 Constitution.
As to the issue of publication, respondents argue that where the law provides
for its own effectivity, publication in the Official Gazette is not necessary so
long as it is not punitive in character, citing Balbuna, et al. v. Hon. Secretary
of Education, et al.55 and Askay v. Cosalan.56 Thus, Ordinance No. SP-2095
took effect after its publication, while Ordinance No. SP-2235 became effective
after its approval on December 26, 2013.
Additionally, the parties articulate the following positions:
On the Socialized Housing Tax
Respondents emphasize that the SHT is pursuant to the social justice principle
found in Sections 1 and 2, Article XIII57 of the 1987 Constitution and Sections
2 (a)58 and 4359 of R.A. No. 7279, or the “Urban Development and Housing Act
of 1992 (UDHA).
Relying on Manila Race Horse Trainers Assn., Inc. v. De La
Fuente,60 and Victorias Milling Co., Inc. v. Municipality of Victorias,
etc.,61 respondents assert that Ordinance No. SP-2095 applies equally to all
real property owners without discrimination. There is no way that the
ordinance could violate the equal protection clause because real property
owners and informal settlers do not belong to the same class.
Ordinance No. SP-2095 is also not oppressive since the tax rate being imposed
is consistent with the UDHA. While the law authorizes LGUs to collect SHT on
properties with an assessed value of more than P50,000.00, the questioned
ordinance only covers properties with an assessed value exceeding
P100,000.00. As well, the ordinance provides for a tax credit equivalent to the
total amount of the special assessment paid by the property owner beginning
in the sixth (6th) year of the effectivity of the ordinance.
On the contrary, petitioner claims that the collection of the SHT is tantamount
to a penalty imposed on real property owners due to the failure of respondent
Quezon City Mayor and Council to perform their duty to secure and protect real
property owners from informal settlers, thereby burdening them with the
expenses to provide funds for housing. For petitioner, the SHT cannot be
viewed as a “charity” from real property owners since it is forced, not
voluntary.
Also, petitioner argues that the collection of the SHT is a kind of class
legislation that violates the right of property owners to equal protection of the
laws since it favors informal settlers who occupy property not their own and
pay no taxes over law-abiding real property owners who pay income and realty
taxes.
Petitioner further contends that respondents’ characterization of the SHT as
“nothing more than an advance payment on the real property tax” has no
statutory basis. Allegedly, property tax cannot be collected before it is due
because, under the LGC, chartered cities are authorized to impose property tax
based on the assessed value and the general revision of assessment that is
made every three (3) years.
As to the rationale of SHT stated in Ordinance No. SP-2095, which, in turn,
was based on Section 43 of the UDHA, petitioner asserts that there is no
specific provision in the 1987 Constitution stating that the ownership and
enjoyment of property bear a social function. And even if there is, it is
seriously doubtful and far-fetched that the principle means that property
owners should provide funds for the housing of informal settlers and for home
site development. Social justice and police power, petitioner believes, does not
mean imposing a tax on one, or that one has to give up something, for the
benefit of another. At best, the principle that property ownership and
enjoyment bear a social function is but a reiteration of the Civil Law principle
that property should not be enjoyed and abused to the injury of other
properties and the community, and that the use of the property may be
restricted by police power, the exercise of which is not involved in this case.
Finally, petitioner alleges that 6 Bistekvilles will be constructed out of the SHT
collected. Bistek is the monicker of respondent City Mayor.
The Bistekvilles makes it clear, therefore, that politicians will take the credit for
the tax imposed on real property owners.
On the Garbage Fee
Respondents claim that Ordinance No. S-2235, which is an exercise of police
power, collects on the average from every household a garbage fee in the
meager amount of thirty-three (33) centavos per day compared with the sum
of P1,659.83 that the Quezon City Government annually spends for every
household for garbage collection and waste management.62 ChanRoblesVirtualawlibrary
In addition, there is no double taxation because the ordinance involves a fee.
Even assuming that the garbage fee is a tax, the same cannot be a direct
duplicate tax as it is imposed on a different subject matter and is of a different
kind or character. Based on Villanueva, et al. v. City of Iloilo63 and Victorias
Milling Co., Inc. v. Municipality of Victorias, etc.,64 there is no “taxing twice”
because the real property tax is imposed on ownership based on its assessed
value, while the garbage fee is required on the domestic household. The only
reference to the property is the determination of the applicable rate and the
facility of collection.
Petitioner argues, however, that Ordinance No. S-2235 cannot be justified as
an exercise of police power. The cases of Calalang v. Williams,65Patalinghug v.
Court of Appeals,66 and Social Justice Society (SJS), et al. v. Hon. Atienza,
Jr.,67 which were cited by respondents, are inapplicable since the assailed
ordinance is a revenue measure and does not regulate the disposal or other
aspect of garbage.
The subject ordinance, for petitioner, is discriminatory as it collects garbage
fee only from domestic households and not from restaurants, food courts, fast
food chains, and other commercial dining places that spew garbage much more
than residential property owners.
Petitioner likewise contends that the imposition of garbage fee is tantamount
to double taxation because garbage collection is a basic and essential public
service that should be paid out from property tax, business tax, transfer tax,
amusement tax, community tax certificate, other taxes, and the IRA of the
Quezon City Government. To bolster the claim, he states that the revenue
collection of the Quezon City Government reached Php13.69 billion in 2012. A
small portion of said amount could be spent for garbage collection and other
essential services.
It is further noted that the Quezon City Government already collects garbage
fee under Section 4768 of R.A. No. 9003, or the Ecological Solid Waste
Management Act of 2000, which authorizes LGUs to impose fees in amounts
sufficient to pay the costs of preparing, adopting, and implementing a solid
waste management plan, and that LGUs have access to the Solid Waste
Management (SWM) Fund created under Section 4669 of the same law. Also,
according to petitioner, it is evident that Ordinance No. S-2235 is inconsistent
with R.A. No. 9003 for while the law encourages segregation, composting, and
recycling of waste, the ordinance only emphasizes the collection and payment
of garbage fee; while the law calls for an active involvement of the barangay in
the collection, segregation, and recycling of garbage, the ordinance skips such
mandate.
Lastly, in challenging the ordinance, petitioner avers that the garbage fee was
collected even if the required publication of its approval had not yet elapsed.
He notes that on January 7, 2014, he paid his realty tax which already
included the garbage fee.
The Court’s Ruling
Respondents correctly argued that an ordinance, as in every law, is presumed
valid.
An ordinance carries with it the presumption of validity. The question of
reasonableness though is open to judicial inquiry. Much should be left thus to
the discretion of municipal authorities. Courts will go slow in writing off an
ordinance as unreasonable unless the amount is so excessive as to be
prohibitive, arbitrary, unreasonable, oppressive, or confiscatory. A rule which
has gained acceptance is that factors relevant to such an inquiry are the
municipal conditions as a whole and the nature of the business made subject
to imposition.70
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For an ordinance to be valid though, it must not only be within the corporate
powers of the LGU to enact and must be passed according to the procedure
prescribed by law, it should also conform to the following requirements: (1)
not contrary to the Constitution or any statute; (2) not unfair or oppressive;
(3) not partial or discriminatory; (4) not prohibit but may regulate trade; (5)
general and consistent with public policy; and (6) not unreasonable.71 As
jurisprudence indicates, the tests are divided into the formal (i.e., whether the
ordinance was enacted within the corporate powers of the LGU and whether it
was passed in accordance with the procedure prescribed by law), and the
substantive (i.e., involving inherent merit, like the conformity of the ordinance
with the limitations under the Constitution and the statutes, as well as with the
requirements of fairness and reason, and its consistency with public
policy).72 ChanRoblesVirtualawlibrary
An ordinance must pass muster under the test of constitutionality and the test
of consistency with the prevailing laws.73 If not, it is void.74 Ordinance should
uphold the principle of the supremacy of the Constitution.75 As to conformity
with existing statutes, Batangas CATV, Inc. v. Court of Appeals76 has this to
say:
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It is a fundamental principle that municipal ordinances are inferior in status
and subordinate to the laws of the state. An ordinance in conflict with a state
law of general character and statewide application is universally held to be
invalid. The principle is frequently expressed in the declaration that municipal
authorities, under a general grant of power, cannot adopt ordinances which
infringe the spirit of a state law or repugnant to the general policy of the state.
In every power to pass ordinances given to a municipality, there is an implied
restriction that the ordinances shall be consistent with the general law. In the
language of Justice Isagani Cruz (ret.), this Court, in Magtajas vs. Pryce
Properties Corp., Inc., ruled that:
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The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers
conferred on them by Congress as the national lawmaking body. The delegate
cannot be superior to the principal or exercise powers higher than those of the
latter. It is a heresy to suggest that the local government units can undo the
acts of Congress, from which they have derived their power in the first place,
and negate by mere ordinance the mandate of the statute.
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Municipal corporations owe their origin to, and derive their powers and rights
wholly from the legislature. It breathes into them the breath of life, without
which they cannot exist. As it creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some constitutional limitation on the
right, the legislature might, by a single act, and if we can suppose it capable of
so great a folly and so great a wrong, sweep from existence all of the
municipal corporations in the State, and the corporation could not prevent it.
We know of no limitation on the right so far as to the corporation themselves
are concerned. They are, so to phrase it, the mere tenants at will of the
legislature.
This basic relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning to
detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power
to destroy. The power to grant still includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the direct
conferment on the local government units of the power to tax, which cannot
now be withdrawn by mere statute. By and large, however, the national
legislature is still the principal of the local government units, which cannot defy
its will or modify or violate it.77
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LGUs must be reminded that they merely form part of the whole; that the
policy of ensuring the autonomy of local governments was never intended by
the drafters of the 1987 Constitution to create an imperium in imperio and
install an intra-sovereign political subdivision independent of a single sovereign
state.78 “[M]unicipal corporations are bodies politic and corporate, created not
only as local units of local self-government, but as governmental agencies of
the state. The legislature, by establishing a municipal corporation, does not
divest the State of any of its sovereignty; absolve itself from its right and duty
to administer the public affairs of the entire state; or divest itself of any power
over the inhabitants of the district which it possesses before the charter was
granted.”79 ChanRoblesVirtualawlibrary
LGUs are able to legislate only by virtue of a valid delegation of legislative
power from the national legislature; they are mere agents vested with what is
called the power of subordinate legislation.80 “Congress enacted the LGC as the
implementing law for the delegation to the various LGUs of the State’s great
powers, namely: the police power, the power of eminent domain, and the
power of taxation. The LGC was fashioned to delineate the specific parameters
and limitations to be complied with by each LGU in the exercise of these
delegated powers with the view of making each LGU a fully functioning
subdivision of the State subject to the constitutional and statutory
limitations.”81 ChanRoblesVirtualawlibrary
Specifically, with regard to the power of taxation, it is indubitably the most
effective instrument to raise needed revenues in financing and supporting
myriad activities of the LGUs for the delivery of basic services essential to the
promotion of the general welfare and the enhancement of peace, progress, and
prosperity of the people.82 As this Court opined in National Power Corp. v. City
of Cabanatuan:83 cralawlawlibrary
In recent years, the increasing social challenges of the times expanded the
scope of state activity, and taxation has become a tool to realize social justice
and the equitable distribution of wealth, economic progress and the protection
of local industries as well as public welfare and similar objectives. Taxation
assumes even greater significance with the ratification of the 1987
Constitution. Thenceforth, the power to tax is no longer vested exclusively on
Congress; local legislative bodies are now given direct authority to levy taxes,
fees and other charges pursuant to Article X, Section 5 of the 1987
Constitution, viz:
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“Section 5. Each Local Government unit shall have the power to create its own
sources of revenue, to levy taxes, fees and charges subject to such guidelines
and limitations as the Congress may provide, consistent with the basic policy
of local autonomy. Such taxes, fees and charges shall accrue exclusively to the
local governments.”
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This paradigm shift results from the realization that genuine development can
be achieved only by strengthening local autonomy and promoting
decentralization of governance. For a long time, the country’s highly
centralized government structure has bred a culture of dependence among
local government leaders upon the national leadership. It has also “dampened
the spirit of initiative, innovation and imaginative resilience in matters of local
development on the part of local government leaders.” The only way to shatter
this culture of dependence is to give the LGUs a wider role in the delivery of
basic services, and confer them sufficient powers to generate their own
sources for the purpose. To achieve this goal, Section 3 of Article X of the 1987
Constitution mandates Congress to enact a local government code that
will, consistent with the basic policy of local autonomy, set the guidelines and
limitations to this grant of taxing powers x x x84
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Fairly recently, We also stated in Pelizloy Realty Corporation v. Province of
Benguet85 that:
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The rule governing the taxing power of provinces, cities, municipalities and
barangays is summarized in Icard v. City Council of Baguio:
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It is settled that a municipal corporation unlike a sovereign state is clothed
with no inherent power of taxation. The charter or statute must plainly show
an intent to confer that power or the municipality, cannot assume it. And the
power when granted is to be construed in strictissimi juris. Any doubt or
ambiguity arising out of the term used in granting that power must be resolved
against the municipality. Inferences, implications, deductions – all these –
have no place in the interpretation of the taxing power of a municipal
corporation. [Underscoring supplied]

xxxx
Per Section 5, Article X of the 1987 Constitution, “the power to tax is no longer
vested exclusively on Congress; local legislative bodies are now given direct
authority to levy taxes, fees and other charges.” Nevertheless, such authority
is “subject to such guidelines and limitations as the Congress may provide.”
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In conformity with Section 3, Article X of the 1987 Constitution, Congress
enacted Republic Act No. 7160, otherwise known as the Local Government
Code of 1991. Book II of the LGC governs local taxation and fiscal matters.86
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Indeed, LGUs have no inherent power to tax except to the extent that such
power might be delegated to them either by the basic law or by the
statute.87 “Under the now prevailing Constitution, where there is neither a
grant nor a prohibition by statute, the tax power must be deemed to exist
although Congress may provide statutory limitations and guidelines. The
basic rationale for the current rule is to safeguard the viability and self-
sufficiency of local government units by directly granting them general and
broad tax powers. Nevertheless, the fundamental law did not intend the
delegation to be absolute and unconditional; the constitutional objective
obviously is to ensure that, while the local government units are being
strengthened and made more autonomous, the legislature must still see to it
that (a) the taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions; (b) each local government unit will have its fair
share of available resources; (c) the resources of the national government will
not be unduly disturbed; and (d) local taxation will be fair, uniform, and
just.”88
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Subject to the provisions of the LGC and consistent with the basic policy of
local autonomy, every LGU is now empowered and authorized to create its own
sources of revenue and to levy taxes, fees, and charges which shall accrue
exclusively to the local government unit as well as to apply its resources and
assets for productive, developmental, or welfare purposes, in the exercise or
furtherance of their governmental or proprietary powers and functions.89 The
relevant provisions of the LGC which establish the parameters of the taxing
power of the LGUs are as follows:
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SECTION 130. Fundamental Principles. – The following fundamental principles
shall govern the exercise of the taxing and other revenue-raising powers of
local government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall:
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(1) be equitable and based as far as practicable on the taxpayer’s ability to
pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) not be contrary to law, public policy, national economic policy, or in
restraint of trade;
(c) The collection of local taxes, fees, charges and other impositions shall in no
case be let to any private person;
(d) The revenue collected pursuant to the provisions of this Code shall inure
solely to the benefit of, and be subject to the disposition by, the local
government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a
progressive system of taxation.
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SECTION 133. Common Limitations on the Taxing Powers of Local Government
Units. – Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of
the following:
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(a) Income tax, except when levied on banks and other financial institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis
causa, except as otherwise provided herein;
(d) Customs duties, registration fees of vessel and wharfage on wharves,
tonnage dues, and all other kinds of customs fees, charges and dues except
wharfage on wharves constructed and maintained by the local government unit
concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into or
out of, or passing through, the territorial jurisdictions of local government units
in the guise of charges for wharfage, tolls for bridges or otherwise, or other
taxes, fees, or charges in any form whatsoever upon such goods or
merchandise;

(f) Taxes, fees or charges on agricultural and aquatic products when sold by
marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as
pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
from the date of registration;
(h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products;
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or
similar transactions on goods or services except as otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractors and persons
engaged in the transportation of passengers or freight by hire and common
carriers by air, land or water, except as provided in this Code;
(k) Taxes on premiums paid by way of reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for the driving thereof, except
tricycles;
(m) Taxes, fees, or other charges on Philippine products actually exported,
except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises
and cooperatives duly registered under R.A. No. 6810 and Republic Act
Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as
the “Cooperative Code of the Philippines” respectively; and
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities, and local government units.
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SECTION 151. Scope of Taxing Powers. – Except as otherwise provided in this
Code, the city, may levy the taxes, fees, and charges which the province or
municipality may impose: Provided, however, That the taxes, fees and charges
levied and collected by highly urbanized and independent component cities
shall accrue to them and distributed in accordance with the provisions of this
Code.
The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes.
SECTION 186. Power To Levy Other Taxes, Fees or Charges. – Local
government units may exercise the power to levy taxes, fees or charges on
any base or subject not otherwise specifically enumerated herein or taxed
under the provisions of the National Internal Revenue Code, as amended, or
other applicable laws: Provided, That the taxes, fees, or charges shall not be
unjust, excessive, oppressive, confiscatory or contrary to declared national
policy: Provided, further, That the ordinance levying such taxes, fees or
charges shall not be enacted without any prior public hearing conducted for the
purpose.
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On the Socialized Housing Tax
Contrary to petitioner’s submission, the 1987 Constitution explicitly espouses
the view that the use of property bears a social function and that all economic
agents shall contribute to the common good.90 The Court already recognized
this in Social Justice Society (SJS), et al. v. Hon. Atienza, Jr.:91 cralawlawlibrary
Property has not only an individual function, insofar as it has to provide for the
needs of the owner, but also a social function insofar as it has to provide for
the needs of the other members of society. The principle is this:
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Police power proceeds from the principle that every holder of property,
however absolute and unqualified may be his title, holds it under the implied
liability that his use of it shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property, nor injurious to the
right of the community. Rights of property, like all other social and
conventional rights, are subject to reasonable limitations in their enjoyment as
shall prevent them from being injurious, and to such reasonable restraints and
regulations established by law as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary and
expedient.92
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Police power, which flows from the recognition that salus populi est suprema
lex (the welfare of the people is the supreme law), is the plenary power vested
in the legislature to make statutes and ordinances to promote the health,
morals, peace, education, good order or safety and general welfare of the
people.93 Property rights of individuals may be subjected to restraints and
burdens in order to fulfill the objectives of the government in the exercise of
police power. 94 In this jurisdiction, it is well-entrenched that taxation may be
made the implement of the state’s police power.95 ChanRoblesVirtualawlibrary
Ordinance No. SP-2095 imposes a Socialized Housing Tax equivalent to 0.5%
on the assessed value of land in excess of Php100,000.00. This special
assessment is the same tax referred to in R.A. No. 7279 or the UDHA.96 The
SHT is one of the sources of funds for urban development and housing
program.97 Section 43 of the law provides:
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Sec. 43. Socialized Housing Tax. – Consistent with the constitutional principle
that the ownership and enjoyment of property bear a social function and to
raise funds for the Program, all local government units are hereby authorized
to impose an additional one-half percent (0.5%) tax on the assessed value of
all lands in urban areas in excess of Fifty thousand pesos (P50,000.00).
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The rationale of the SHT is found in the preambular clauses of the subject
ordinance, to wit:
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WHEREAS, the imposition of additional tax is intended to provide the City
Government with sufficient funds to initiate, implement and undertake
Socialized Housing Projects and other related preliminary activities;
WHEREAS, the imposition of 0.5% tax will benefit the Socialized Housing
Programs and Projects of the City Government, specifically the marginalized
sector through the acquisition of properties for human settlements;
WHEREAS, the removal of the urban blight will definitely increase fair market
value of properties in the city[.]
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The above-quoted are consistent with the UDHA, which the LGUs are charged
to implement in their respective localities in coordination with the Housing and
Urban Development Coordinating Council, the national housing agencies, the
Presidential Commission for the Urban Poor, the private sector, and other non-
government organizations.98 It is the declared policy of the State to undertake
a comprehensive and continuing urban development and housing program that
shall, among others, uplift the conditions of the underprivileged and homeless
citizens in urban areas and in resettlement areas, and provide for the rational
use and development of urban land in order to bring about, among others,
reduction in urban dysfunctions, particularly those that adversely affect public
health, safety and ecology, and access to land and housing by the
underprivileged and homeless citizens.99 Urban renewal and resettlement shall
include the rehabilitation and development of blighted and slum areas100 and
the resettlement of program beneficiaries in accordance with the provisions of
the UDHA.101
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Under the UDHA, socialized housing102 shall be the primary strategy in
providing shelter for the underprivileged and homeless.103 The LGU or the NHA,
in cooperation with the private developers and concerned agencies, shall
provide socialized housing or resettlement areas with basic services and
facilities such as potable water, power and electricity, and an adequate power
distribution system, sewerage facilities, and an efficient and adequate solid
waste disposal system; and access to primary roads and transportation
facilities.104 The provisions for health, education, communications, security,
recreation, relief and welfare shall also be planned and be given priority for
implementation by the LGU and concerned agencies in cooperation with the
private sector and the beneficiaries themselves.105 ChanRoblesVirtualawlibrary
Moreover, within two years from the effectivity of the UDHA, the LGUs, in
coordination with the NHA, are directed to implement the relocation and
resettlement of persons living in danger areas such as esteros, railroad tracks,
garbage dumps, riverbanks, shorelines, waterways, and other public places
like sidewalks, roads, parks, and playgrounds.106 In coordination with the NHA,
the LGUs shall provide relocation or resettlement sites with basic services and
facilities and access to employment and livelihood opportunities sufficient to
meet the basic needs of the affected families.107 ChanRoblesVirtualawlibrary
Clearly, the SHT charged by the Quezon City Government is a tax which is
within its power to impose. Aside from the specific authority vested by Section
43 of the UDHA, cities are allowed to exercise such other powers and discharge
such other functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic services and facilities
which include, among others, programs and projects for low-cost housing and
other mass dwellings.108 The collections made accrue to its socialized housing
programs and projects. The tax is not a pure exercise of taxing power or
merely to raise revenue; it is levied with a regulatory purpose. The levy is
primarily in the exercise of the police power for the general welfare of the
entire city. It is greatly imbued with public interest. Removing slum areas in
Quezon City is not only beneficial to the underprivileged and homeless
constituents but advantageous to the real property owners as well. The
situation will improve the value of the their property investments, fully
enjoying the same in view of an orderly, secure, and safe community, and will
enhance the quality of life of the poor, making them law-abiding constituents
and better consumers of business products.
Though broad and far-reaching, police power is subordinate to constitutional
limitations and is subject to the requirement that its exercise must be
reasonable and for the public good.109 In the words of City of Manila v. Hon.
Laguio, Jr.:110
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The police power granted to local government units must always be exercised
with utmost observance of the rights of the people to due process and equal
protection of the law. Such power cannot be exercised whimsically, arbitrarily
or despotically as its exercise is subject to a qualification, limitation or
restriction demanded by the respect and regard due to the prescription of the
fundamental law, particularly those forming part of the Bill of Rights. Individual
rights, it bears emphasis, may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or public
welfare. Due process requires the intrinsic validity of the law in interfering with
the rights of the person to his life, liberty and property.
xxxx
To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of
constitutional infirmity, not only must it appear that the interests of the public
generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably
necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals. It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure
and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.
Lacking a concurrence of these two requisites, the police measure shall be
struck down as an arbitrary intrusion into private rights – a violation of the due
process clause.111
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As with the State, LGUs may be considered as having properly exercised their
police power only if there is a lawful subject and a lawful method or, to be
precise, if the following requisites are met: (1) the interests of the public
generally, as distinguished from those of a particular class, require its exercise
and (2) the means employed are reasonably necessary for the accomplishment
of the purpose and not unduly oppressive upon individuals.112 ChanRoblesVirtualawlibrary
In this case, petitioner argues that the SHT is a penalty imposed on real
property owners because it burdens them with expenses to provide funds for
the housing of informal settlers, and that it is a class legislation since it favors
the latter who occupy properties which is not their own and pay no taxes.
We disagree.
Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed.113 The
guarantee means that no person or class of persons shall be denied the same
protection of laws which is enjoyed by other persons or other classes in like
circumstances.114 Similar subjects should not be treated differently so as to
give undue favor to some and unjustly discriminate against others.115 The law
may, therefore, treat and regulate one class differently from another class
provided there are real and substantial differences to distinguish one class
from another.116 ChanRoblesVirtualawlibrary
An ordinance based on reasonable classification does not violate the
constitutional guaranty of the equal protection of the law. The requirements for
a valid and reasonable classification are: (1) it must rest on substantial
distinctions; (2) it must be germane to the purpose of the law; (3) it must not
be limited to existing conditions only; and (4) it must apply equally to all
members of the same class.117 ChanRoblesVirtualawlibrary
For the purpose of undertaking a comprehensive and continuing urban
development and housing program, the disparities between a real property
owner and an informal settler as two distinct classes are too obvious and need
not be discussed at length. The differentiation conforms to the practical
dictates of justice and equity and is not discriminatory within the meaning of
the Constitution. Notably, the public purpose of a tax may legally exist even if
the motive which impelled the legislature to impose the tax was to favor one
over another.118 It is inherent in the power to tax that a State is free to select
the subjects of taxation.119 Inequities which result from a singling out of one
particular class for taxation or exemption infringe no constitutional
limitation.120
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Further, the reasonableness of Ordinance No. SP-2095 cannot be disputed. It
is not confiscatory or oppressive since the tax being imposed therein is below
what the UDHA actually allows. As pointed out by respondents, while the law
authorizes LGUs to collect SHT on lands with an assessed value of more than
P50,000.00, the questioned ordinance only covers lands with an assessed
value exceeding P100,000.00. Even better, on certain conditions, the
ordinance grants a tax credit equivalent to the total amount of the special
assessment paid beginning in the sixth (6th) year of its effectivity. Far from
being obnoxious, the provisions of the subject ordinance are fair and just.
On the Garbage Fee
In the United States of America, it has been held that the authority of a
municipality to regulate garbage falls within its police power to protect public
health, safety, and welfare.121 As opined, the purposes and policy
underpinnings of the police power to regulate the collection and disposal of
solid waste are: (1) to preserve and protect the public health and welfare as
well as the environment by minimizing or eliminating a source of disease and
preventing and abating nuisances; and (2) to defray costs and ensure financial
stability of the system for the benefit of the entire community, with the sum of
all charges marshalled and designed to pay for the expense of a systemic
refuse disposal scheme.122 ChanRoblesVirtualawlibrary
Ordinances regulating waste removal carry a strong presumption of
validity.123 Not surprisingly, the overwhelming majority of U.S. cases
addressing a city's authority to impose mandatory garbage service and fees
have upheld the ordinances against constitutional and statutory
challenges.124 ChanRoblesVirtualawlibrary
A municipality has an affirmative duty to supervise and control the collection of
garbage within its corporate limits.125 The LGC specifically assigns the
responsibility of regulation and oversight of solid waste to local governing
bodies because the Legislature determined that such bodies were in the best
position to develop efficient waste management programs.126 To impose on
local governments the responsibility to regulate solid waste but not grant them
the authority necessary to fulfill the same would lead to an absurd
result.”127 As held in one U.S. case:
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x x x When a municipality has general authority to regulate a particular subject
matter, the manner and means of exercising those powers, where not
specifically prescribed by the legislature, are left to the discretion of the
municipal authorities. x x x Leaving the manner of exercising municipal powers
to the discretion of municipal authorities "implies a range of reasonableness
within which a municipality's exercise of discretion will not be interfered with or
upset by the judiciary."128
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In this jurisdiction, pursuant to Section 16 of the LGC and in the proper
exercise of its corporate powers under Section 22 of the same,
the Sangguniang Panlungsod of Quezon City, like other local legislative bodies,
is empowered to enact ordinances, approve resolutions, and appropriate funds
for the general welfare of the city and its inhabitants.129 Section 16 of the LGC
provides:
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SECTION 16. General Welfare. – Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
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The general welfare clause is the delegation in statutory form of the police
power of the State to LGUs.130 The provisions related thereto are liberally
interpreted to give more powers to LGUs in accelerating economic
development and upgrading the quality of life for the people in the
community.131 Wide discretion is vested on the legislative authority to
determine not only what the interests of the public require but also what
measures are necessary for the protection of such interests since
the Sanggunian is in the best position to determine the needs of its
constituents.132 ChanRoblesVirtualawlibrary
One of the operative principles of decentralization is that, subject to the
provisions of the LGC and national policies, the LGUs shall share with the
national government the responsibility in the management and maintenance of
ecological balance within their territorial jurisdiction.133 In this regard, cities are
allowed to exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and
effective provision of the basic services and facilities which include, among
others, solid waste disposal system or environmental management system and
services or facilities related to general hygiene and sanitation.134 R.A. No.
9003, or the Ecological Solid Waste Management Act of 2000,135 affirms this
authority as it expresses that the LGUs shall be primarily responsible for the
implementation and enforcement of its provisions within their respective
jurisdictions while establishing a cooperative effort among the national
government, other local government units, non-government organizations, and
the private sector.136
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Necessarily, LGUs are statutorily sanctioned to impose and collect such
reasonable fees and charges for services rendered.137 “Charges” refer to
pecuniary liability, as rents or fees against persons or property, while “Fee”
means a charge fixed by law or ordinance for the regulation or inspection of a
business or activity.138
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The fee imposed for garbage collections under Ordinance No. SP-2235 is a
charge fixed for the regulation of an activity. The basis for this could be
discerned from the foreword of said Ordinance, to wit:
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WHEREAS, Quezon City being the largest and premiere city in the Philippines in
terms of population and urban geographical areas, apart from being competent
and efficient in the delivery of public service, apparently requires a big
budgetary allocation in order to address the problems relative and connected
to the prompt and efficient delivery of basic services such as the effective
system of waste management, public information programs on proper garbage
and proper waste disposal, including the imposition of waste regulatory
measures;
WHEREAS, to help augment the funds to be spent for the city’s waste
management system, the City Government through the Sangguniang
Panlungsod deems it necessary to impose a schedule of reasonable fees or
charges for the garbage collection services for residential (domestic household)
that it renders to the public.
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Certainly, as opposed to petitioner’s opinion, the garbage fee is not a tax.
In Smart Communications, Inc. v. Municipality of Malvar, Batangas,139 the
Court had the occasion to distinguish these two concepts:
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In Progressive Development Corporation v. Quezon City, the Court declared
that “if the generating of revenue is the primary purpose and regulation is
merely incidental, the imposition is a tax; but if regulation is the primary
purpose, the fact that incidentally revenue is also obtained does not make the
imposition a tax.”
In Victorias Milling Co., Inc. v. Municipality of Victorias, the Court reiterated
that the purpose and effect of the imposition determine whether it is a tax or a
fee, and that the lack of any standards for such imposition gives the
presumption that the same is a tax.
We accordingly say that the designation given by the municipal authorities
does not decide whether the imposition is properly a license tax or a license
fee. The determining factors are the purpose and effect of the imposition as
may be apparent from the provisions of the ordinance. Thus, “[w]hen no police
inspection, supervision, or regulation is provided, nor any standard set for the
applicant to establish, or that he agrees to attain or maintain, but any and all
persons engaged in the business designated, without qualification or
hindrance, may come, and a license on payment of the stipulated sum will
issue, to do business, subject to no prescribed rule of conduct and under no
guardian eye, but according to the unrestrained judgment or fancy of the
applicant and licensee, the presumption is strong that the power of taxation,
and not the police power, is being exercised.”
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In Georgia, U.S.A., assessments for garbage collection services have been
consistently treated as a fee and not a tax.140 In another U.S. case,141 the
garbage fee was considered as a "service charge" rather than a tax as it was
actually a fee for a service given by the city which had previously been
provided at no cost to its citizens.
Hence, not being a tax, the contention that the garbage fee under Ordinance
No. SP-2235 violates the rule on double taxation142 must necessarily fail.
Nonetheless, although a special charge, tax, or assessment may be imposed
by a municipal corporation, it must be reasonably commensurate to the cost of
providing the garbage service.143 To pass judicial scrutiny, a regulatory fee
must not produce revenue in excess of the cost of the regulation because such
fee will be construed as an illegal tax when the revenue generated by the
regulation exceeds the cost of the regulation.144
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Petitioner argues that the Quezon City Government already collects garbage
fee under Section 47 of R.A. No. 9003, which authorizes LGUs to impose fees
in amounts sufficient to pay the costs of preparing, adopting, and
implementing a solid waste management plan, and that it has access to the
SWM Fund under Section 46 of the same law. Moreover, Ordinance No. S-2235
is inconsistent with R.A. No. 9003, because the ordinance emphasizes the
collection and payment of garbage fee with no concern for segregation,
composting and recycling of wastes. It also skips the mandate of the law
calling for the active involvement of the barangay in the collection,
segregation, and recycling of garbage.
We now turn to the pertinent provisions of R.A. No. 9003.
Under R.A. No. 9003, it is the declared policy of the State to adopt a
systematic, comprehensive and ecological solid waste management program
which shall, among others, ensure the proper segregation, collection,
transport, storage, treatment and disposal of solid waste through the
formulation and adoption of the best environmental practices in ecological
waste management.145 The law provides that segregation and collection of solid
waste shall be conducted at the barangay level, specifically for biodegradable,
compostable and reusable wastes, while the collection of non-recyclable
materials and special wastes shall be the responsibility of the municipality or
city.146 Mandatory segregation of solid wastes shall primarily be conducted at
the source, to include household, institutional, industrial, commercial and
agricultural sources.147Segregation at source refers to a solid waste
management practice of separating, at the point of origin, different materials
found in solid waste in order to promote recycling and re-use of resources and
to reduce the volume of waste for collection and disposal.148 Based on Rule
XVII of the Department of Environment and Natural Resources (DENR)
Administrative Order No. 2001-34, Series of 2001,149 which is the
Implementing Rules and Regulations (IRR) of R.A. No. 9003, barangays shall
be responsible for the collection, segregation, and recycling of biodegradable,
recyclable, compostable and reusable wastes.150 For the purpose, a Materials
Recovery Facility (MRF), which shall receive biodegradable wastes for
composting and mixed non-biodegradable wastes for final segregation, re-use
and recycling, is to be established in every barangay or cluster of
barangays.151 ChanRoblesVirtualawlibrary
According to R.A. 9003, an LGU, through its local solid waste management
board, is mandated by law to prepare a 10-year solid waste management plan
consistent with the National Solid Waste Management Framework.152 The plan
shall be for the re-use, recycling and composting of wastes generated in its
jurisdiction; ensure the efficient management of solid waste generated within
its jurisdiction; and place primary emphasis on implementation of all feasible
re-use, recycling, and composting programs while identifying the amount of
landfill and transformation capacity that will be needed for solid waste which
cannot be re-used, recycled, or composted.153 One of the components of the
solid waste management plan is source reduction:
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(e) Source reduction – The source reduction component shall include a
program and implementation schedule which shows the methods by which the
LGU will, in combination with the recycling and composting components,
reduce a sufficient amount of solid waste disposed of in accordance with the
diversion requirements of Section 20.
The source reduction component shall describe the following:
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(1) strategies in reducing the volume of solid waste generated at source;
(2) measures for implementing such strategies and the resources necessary to
carry out such activities;
(3) other appropriate waste reduction technologies that may also be
considered, provided that such technologies conform with the standards set
pursuant to this Act;
(4) the types of wastes to be reduced pursuant to Section 15 of this Act;
(5) the methods that the LGU will use to determine the categories of solid
wastes to be diverted from disposal at a disposal facility through re-use,
recycling and composting; and
(6) new facilities and of expansion of existing facilities which will be needed to
implement re-use, recycling and composting.
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The LGU source reduction component shall include the evaluation and
identification of rate structures and fees for the purpose of reducing the
amount of waste generated, and other source reduction strategies, including
but not limited to, programs and economic incentives provided under Sec. 45
of this Act to reduce the use of non-recyclable materials, replace disposable
materials and products with reusable materials and products, reduce
packaging, and increase the efficiency of the use of paper, cardboard, glass,
metal, and other materials. The waste reduction activities of the community
shall also take into account, among others, local capability, economic viability,
technical requirements, social concerns, disposition of residual waste and
environmental impact: Provided, That, projection of future facilities needed
and estimated cost shall be incorporated in the plan. x x x154
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The solid waste management plan shall also include an implementation
schedule for solid waste diversion:
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SEC. 20. Establishing Mandatory Solid Waste Diversion. – Each LGU plan shall
include an implementation schedule which shows that within five (5) years
after the effectivity of this Act, the LGU shall divert at least 25% of all solid
waste from waste disposal facilities through re-use, recycling, and composting
activities and other resource recovery activities: Provided, That the waste
diversion goals shall be increased every three (3) years thereafter: Provided,
further, That nothing in this Section prohibits a local government unit from
implementing re-use, recycling, and composting activities designed to exceed
the goal.
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The baseline for the twenty-five percent (25%) shall be derived from the waste
characterization result155 that each LGU is mandated to undertake.156ChanRoblesVirtualawlibrary
In accordance with Section 46 of R.A. No. 9003, the LGUs are entitled to avail
of the SWM Fund on the basis of their approved solid waste management plan.
Aside from this, they may also impose SWM Fees under Section 47 of the law,
which states:
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SEC. 47. Authority to Collect Solid Waste Management Fees – The local
government unit shall impose fees in amounts sufficient to pay the costs of
preparing, adopting, and implementing a solid waste management plan
prepared pursuant to this Act. The fees shall be based on the following
minimum factors:
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(a) types of solid waste;
(b) amount/volume of waste; and
(c) distance of the transfer station to the waste management facility.
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The fees shall be used to pay the actual costs incurred by the LGU in collecting
the local fees. In determining the amounts of the fees, an LGU shall include
only those costs directly related to the adoption and implementation of the
plan and the setting and collection of the local fees.
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Rule XVII of the IRR of R.A. No. 9003 sets forth the details:
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Section 1. Power to Collect Solid Waste Management Fees. – The Local SWM
Board/Local SWM Cluster Board shall impose fees on the SWM services
provided for by the LGU and/or any authorized organization or unit. In
determining the amounts of the fees, a Local SWM Board/Local SWM Cluster
Board shall include only those costs directly related to the adoption and
implementation of the SWM Plan and the setting and collection of the local
fees. This power to impose fees may be ceded to the private sector and civil
society groups which have been duly accredited by the Local SWM Board/Local
SWM Cluster Board; provided, the SWM fees shall be covered by a Contract or
Memorandum of Agreement between the respective board and the private
sector or civil society group.
The fees shall pay for the costs of preparing, adopting and implementing a
SWM Plan prepared pursuant to the Act. Further, the fees shall also be used to
pay the actual costs incurred in collecting the local fees and for project
sustainability.
Section 2. Basis of SWM Service Fees
Reasonable SWM service fees shall be computed based on but not limited to
the following minimum factors:
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a) Types of solid waste to include special waste
b) amount/volume of waste
c) distance of the transfer station to the waste management facility
d) capacity or type of LGU constituency
e) cost of construction
f) cost of management
g) type of technology
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Section 3. Collection of Fees. – Fees may be collected corresponding to the
following levels:
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a) Barangay – The Barangay may impose fees for collection and segregation of
biodegradable, compostable and reusable wastes from households, commerce,
other sources of domestic wastes, and for the use of Barangay MRFs. The
computation of the fees shall be established by the respective SWM boards.
The manner of collection of the fees shall be dependent on the style of
administration of respective Barangay Councils. However, all transactions shall
follow the Commission on Audit rules on collection of fees.
b) Municipality – The municipal and city councils may impose fees on the
barangay MRFs for the collection and transport of non-recyclable and special
wastes and for the disposal of these into the sanitary landfill. The level and
procedure for exacting fees shall be defined by the Local SWM Board/Local
SWM Cluster Board and supported by LGU ordinances, however, payments
shall be consistent with the accounting system of government.
c) Private Sector/Civil Society Group – On the basis of the stipulations of
contract or Memorandum of Agreement, the private sector or civil society
group shall impose fees for collection, transport and tipping in their SLFs.
Receipts and invoices shall be issued to the paying public or to the
government.
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From the afore-quoted provisions, it is clear that the authority of a municipality
or city to impose fees is limited to the collection and transport of non-
recyclable and special wastes and for the disposal of these into the sanitary
landfill. Barangays, on the other hand, have the authority to impose fees for
the collection and segregation of biodegradable, compostable and
reusable wastes from households, commerce, other sources of domestic
wastes, and for the use of barangay MRFs. This is but consistent with Section
10 of R.A. No. 9003 directing that segregation and collection of biodegradable,
compostable and reusable wastes shall be conducted at the barangay level,
while the collection of non-recyclable materials and special wastes shall be the
responsibility of the municipality or city.
In this case, the alleged bases of Ordinance No. S-2235 in imposing the
garbage fee is the volume of waste currently generated by each person in
Quezon City, which purportedly stands at 0.66 kilogram per day, and the
increasing trend of waste generation for the past three years.157 Respondents
did not elaborate any further. The figure presented does not reflect the specific
types of wastes generated – whether residential, market, commercial,
industrial, construction/demolition, street waste, agricultural, agro-industrial,
institutional, etc. It is reasonable, therefore, for the Court to presume that
such amount pertains to the totality of wastes, without any distinction,
generated by Quezon City constituents. To reiterate, however, the authority of
a municipality or city to impose fees extends only to those related to the
collection and transport of non-recyclable and special wastes.
Granting, for the sake of argument, that the 0.66 kilogram of solid waste per hand. Most likely, garbage output produced by these types of occupants is
day refers only to non-recyclable and special wastes, still, We cannot sustain uniform and does not vary to a large degree; thus, a similar schedule of fee is
the validity of Ordinance No. S-2235. It violates the equal protection clause of both just and equitable.159 ChanRoblesVirtualawlibrary

the Constitution and the provisions of the LGC that an ordinance must be
equitable and based as far as practicable on the taxpayer’s ability to pay, and The rates being charged by the ordinance are unjust and inequitable: a
not unjust, excessive, oppressive, confiscatory.158 ChanRoblesVirtualawlibrary resident of a 200 sq. m. unit in a condominium or socialized housing project
has to pay twice the amount than a resident of a lot similar in size; unlike unit
In the subject ordinance, the rates of the imposable fee depend on land or occupants, all occupants of a lot with an area of 200 sq. m. and less have to
floor area and whether the payee is an occupant of a lot, condominium, social pay a fixed rate of Php100.00; and the same amount of garbage fee is
housing project or apartment. For easy reference, the relevant provision is imposed regardless of whether the resident is from a condominium or from a
again quoted below:
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socialized housing project.
On all domestic households in Quezon City;
LAND AREA IMPOSABLE FEE Indeed, the classifications under Ordinance No. S-2235 are not germane to its
declared purpose of “promoting shared responsibility with the residents to
Less than 200 sq. m. PHP 100.00
attack their common mindless attitude in over-consuming the present
201 sq. m. – 500 sq. m. PHP 200.00 resources and in generating waste.”160 Instead of simplistically categorizing the
501 sq. m. – 1,000 sq. m. PHP 300.00 payee into land or floor occupant of a lot or unit of a condominium, socialized
1,001 sq. m. – 1,500 sq. m. PHP 400.00 housing project or apartment, respondent City Council should have considered
1,501 sq. m. – 2,000 sq. m. or factors that could truly measure the amount of wastes generated and the
PHP 500.00 appropriate fee for its collection. Factors include, among others, household age
more
and size, accessibility to waste collection, population density of the barangay
On all condominium unit and socialized housing projects/units in Quezon City;
or district, capacity to pay, and actual occupancy of the property. R.A. No.
FLOOR AREA IMPOSABLE FEE 9003 may also be looked into for guidance. Under said law, SWM service fees
Less than 40 sq. m. PHP25.00 may be computed based on minimum factors such as types of solid waste to
41 sq. m. – 60 sq. m. PHP50.00 include special waste, amount/volume of waste, distance of the transfer station
61 sq. m. – 100 sq. m. PHP75.00 to the waste management facility, capacity or type of LGU constituency, cost of
construction, cost of management, and type of technology. With respect to
101 sq. m. – 150 sq. m. PHP100.00
utility rates set by municipalities, a municipality has the right to classify
151 sq. m. – 200 sq. [m.] or more PHP200.00 consumers under reasonable classifications based upon factors such as the
On high-rise Condominium Units cost of service, the purpose for which the service or the product is received,
the quantity or the amount received, the different character of the service
a) High-rise Condominium – The Homeowners Association of high rise furnished, the time of its use or any other matter which presents a substantial
condominiums shall pay the annual garbage fee on the total size of the entire difference as a ground of distinction.161 cralawlawlibrary

condominium and socialized Housing Unit and an additional garbage fee shall be
collected based on area occupied for every unit already sold or being amortized.
b) High-rise apartment units – Owners of high-rise apartment units shall pay the
annual garbage fee on the total lot size of the entire apartment and an additional
garbage fee based on the schedule prescribed herein for every unit occupied.
For the purpose of garbage collection, there is, in fact, no substantial
distinction between an occupant of a lot, on one hand, and an occupant of a
unit in a condominium, socialized housing project or apartment, on the other
[A] lack of uniformity in the rate charged is not necessarily unlawful
discrimination. The establishment of classifications and the charging of
different rates for the several classes is not unreasonable and does not violate
the requirements of equality and uniformity. Discrimination to be unlawful
must draw an unfair line or strike an unfair balance between those in like
circumstances having equal rights and privileges. Discrimination with respect
to rates charged does not vitiate unless it is arbitrary and without a reasonable
fact basis or justification.162
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On top of an unreasonable classification, the penalty clause of Ordinance No.
SP-2235, which states:
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SECTION 3. Penalty Clause – A penalty of 25% of the garbage fee due plus an
interest of 2% per month or a fraction thereof (interest) shall be charged
against a household owner who refuses to pay the garbage fee herein
imposed.
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lacks the limitation required by Section 168 of the LGC, which provides:
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SECTION 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. –
The sanggunian may impose a surcharge not exceeding twenty-five (25%) of
the amount of taxes, fees or charges not paid on time and an interest at the
rate not exceeding two percent (2%) per month of the unpaid taxes, fees or
charges including surcharges, until such amount is fully paid but in no case
shall the total interest on the unpaid amount or portion thereof exceed
thirty-six (36) months. (Emphasis supplied)
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Finally, on the issue of publication of the two challenged ordinances.
Petitioner argues that the garbage fee was collected even if the required
publication of its approval had not yet elapsed. He notes that he paid his realty
tax on January 7, 2014 which already included the garbage fee. Respondents
counter that if the law provides for its own effectivity, publication in the Official
Gazette is not necessary so long as it is not penal in nature. Allegedly,
Ordinance No. SP-2095 took effect after its publication while Ordinance No.
SP-2235 became effective after its approval on December 26, 2013.
The pertinent provisions of the LGC state:
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SECTION 59. Effectivity of Ordinances or Resolutions. – (a) Unless otherwise
stated in the ordinance or the resolution approving the local development
plan and public investment program, the same shall take effect after ten
(10) days from the date a copy thereof is posted in a bulletin board at
the entrance of the provincial capitol or city, municipal, or barangay hall, as
the case may be, and in at least two (2) other conspicuous places in the local
government unit concerned.
(b) The secretary to the sanggunian concerned shall cause the posting of an
ordinance or resolution in the bulletin board at the entrance of the provincial
capitol and the city, municipal, or barangay hall in at least two (2) conspicuous
places in the local government unit concerned not later than five (5) days after
approval thereof.
The text of the ordinance or resolution shall be disseminated and posted in
Filipino or English and in the language or dialect understood by the majority of
the people in the local government unit concerned, and the secretary to the
sanggunian shall record such fact in a book kept for the purpose, stating the
dates of approval and posting.
(c) The gist of all ordinances with penal sanctions shall be published in a
newspaper of general circulation within the province where the local legislative
body concerned belongs. In the absence of any newspaper of general
circulation within the province, posting of such ordinances shall be made in all
municipalities and cities of the province where the sanggunian of origin is
situated.
(d) In the case of highly urbanized and independent component cities, the
main features of the ordinance or resolution duly enacted or adopted shall, in
addition to being posted, be published once in a local newspaper of
general circulation within the city: Provided, That in the absence
thereof the ordinance or resolution shall be published in any
newspaper of general circulation.
SECTION 188. Publication of Tax Ordinances and Revenue Measures. – Within
ten (10) days after their approval, certified true copies of all provincial,
city, and municipal tax ordinances or revenue measures shall be published in
full for three (3) consecutive days in a newspaper of local circulation:
Provided, however, That in provinces, cities and municipalities where there are
no newspapers of local circulation, the same may be posted in at least two (2)
conspicuous and publicly accessible places. (Emphasis supplied)
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On October 17, 2011, respondent Quezon City Council enacted Ordinance No.
SP-2095, which provides that it would take effect after its publication in a
newspaper of general circulation.163 On the other hand, Ordinance No. SP-
2235, which was passed by the City Council on December 16, 2013, provides
that it would be effective upon its approval.164 Ten (10) days after its
enactment, or on December 26, 2013, respondent City Mayor approved the
same.165 ChanRoblesVirtualawlibrary
The case records are bereft of any evidence to prove petitioner’s negative
allegation that respondents did not comply with the posting and publication
requirements of the law. Thus, We are constrained not to give credit to his
unsupported claim.
WHEREFORE, the petition is PARTIALLY GRANTED. The constitutionality
and legality of Ordinance No. SP-2095, S-2011, or the “Socialized Housing Tax
of Quezon City,” is SUSTAINED for being consistent with Section 43 of
Republic Act No. 7279. On the other hand, Ordinance No. SP-2235, S-2013,
which collects an annual garbage fee on all domestic households in Quezon
City, is hereby declared as UNCONSTITUTIONAL AND ILLEGAL.
Respondents are DIRECTED to REFUND with reasonable dispatch the sums of
money collected relative to its enforcement.

The temporary restraining order issued by the Court on February 5, 2014

is LIFTED with respect to Ordinance No. SP-2095. In contrast, respondents
are PERMANENTLY ENJOINED from taking any further action to enforce
Ordinance No. SP. 2235.

SO ORDERED. cralawlaw

EN BANC

G.R. No. 206020, April 14, 2015

1-UNITED TRANSPORT KOALISYON (1-

UTAK), Petitioner, v. COMMISSION ON ELECTIONS, Respondent.

DECISION

REYES, J.:

The right to participate in electoral processes is a basic and fundamental right

in any democracy. It includes not only the right to vote, but also the right to
urge others to vote for a particular candidate. The right to express one's
preference for a candidate is likewise part of the fundamental right to free
speech. Thus, any governmental restriction on the right to convince others to
vote for a candidate carries with it a heavy presumption of invalidity.

This is a petition for certiorari1 under Rule 64 and Rule 65 of the Rules of Court

filed by 1-United Transport Koalisyon (petitioner), a party-list organization,
assailing Section 7(g) items (5) and (6), in relation to Section 7(f), of
Resolution No. 96152 of the Commission on Elections (COMELEC).
The Facts
On February 12, 2001, Republic Act (R.A.) No. 9006, otherwise known as the
"Fair Elections Act", was passed. Section 9 thereof provides:
Sec. 9. Posting of Campaign Materials. - The COMELEC may authorize political
parties and party-list groups to erect common poster areas for their candidates
in not more than ten (10) public places such as plazas, markets, barangay
centers and the like, wherein candidates can post, display or exhibit election
propaganda: Provided that the size of the poster areas shall not exceed twelve
(12) by sixteen (16) feet or its equivalent.
Independent candidates with no political parties may likewise be authorized to
erect common poster areas in not more than ten (10) public places, the size of
which shall not exceed four (4) by six (6) feet or its equivalent.
Candidates may post any lawful propaganda material in private places with the
consent of the owner thereof, and in public places or property which shall be
allocated equitably and impartially among the candidates.
On January 15, 2013, the COMELEC promulgated Resolution No. 9615, which
provided for the rules implementing R.A. No. 9006 in connection with the May
13, 2013 national and local elections and subsequent elections. Section 7
thereof, which enumerates the prohibited forms of election propaganda,
pertinently provides:
SEC. 7. Prohibited Forms of Election Propaganda. - During the campaign
period, it is unlawful:
xxxx
(f) To post, display or exhibit any election campaign or propaganda material
outside of authorized common poster areas, in public places, or in private
properties without the consent of the owner thereof.
(g) Public places referred to in the previous subsection (f) include any of the
following:
xxxx
5. Public utility vehicles such as buses, jeepneys, trains, taxi cabs, ferries,
pedicabs and tricycles, whether motorized or not;
6. Within the premises of public transport terminals, such as bus terminals,
airports, seaports, docks, piers, train stations, and the like.
The violation of items [5 and 6] under subsection (g) shall be a cause for the
revocation of the public utility franchise and will make the owner and/or
operator of the transportation service and/or terminal liable for an election
offense under Section 9 of Republic Act No. 9006 as implemented by Section
18 (n) of these Rules.3
In its letter4 dated January 30, 2013, the petitioner, through its president,
Melencio F. Vargas, sought clarification from the COMELEC as regards the
application of Resolution No. 9615, particularly Section 7(g) items (5) and (6),
in relation to Section 7(f), vis-a-vis privately owned public utility vehicles
(PUVs) and transport terminals. The petitioner explained that the prohibition
stated in the aforementioned provisions impedes the right to free speech of the
private owners of PUVs and transport terminals. The petitioner then requested
the COMELEC to reconsider the implementation of the assailed provisions and
allow private owners of PUVs and transport terminals to post election campaign
materials on their vehicles and transport terminals.
On February 5, 2013, the COMELEC en banc issued Minute Resolution No. 13-
0214,5 which denied the petitioner's request to reconsider the implementation
of Section 7(g) items (5) and (6), in relation to Section 7(f), of Resolution No.
9615. The COMELEC en banc, adopting the recommendation of Commissioner
Christian Robert S. Lim, opined that:
From the foregoing, x x x the primary fact in consideration here is actually
whether 1 -UTAK or any other [PUV] owners in the same position do in fact
possess a franchise and/or certificate of public convenience and
operate as a public utility. If it does not, then the ruling in Adiong applies
squarely. If it does, then its operations, pursuant to Section 4, Article IX-C of
the Constitution, will be placed directly under the supervision and regulation of
the Commission for the duration of the election period so as to ensure equality
of opportunity, time, and space for all candidates in the placement of political
advertisements. Having placed their property for use by the general public and
having secured a license or permit to do so, 1-UTAK and other PUV owners, as
well as transport terminal owners, cannot now complain that their property is
subject to regulation by the State. Securing a franchise or a certificate of
public convenience in their favor does not exempt them from the burdens
imposed by the Constitution, Republic Act No. 9006 x x x, and other related
statutes. It must be stressed that the Constitution itself, under Section 6,
Article XII, commands that the use of property bears a social function
and all economic agents shall contribute to the common good; and
there is no higher Common good than that as espoused in R.A. No. 9006 - the
equalization of opportunities for all candidates for political office during
elections - a policy which Res. No. 9615 merely implements.
As required in Adiong, and in compliance with the O'Brien standards, the
prohibition furthers two important and substantial governmental interests -
equalizing opportunity, time, and space for all candidates, and putting to a
stop excessive campaign spending. The regulation bears a clear and
reasonable nexus with these Constitutionally- and statutorily-sanctioned
objectives, and the infringement of freedom is merely incidental and limited as
to time. The Commission has not taken away all avenues of expression
available to PUV and transport terminal owners. They may express their
political preferences elsewhere.
The exact purpose for placing political advertisements on a PUV or in transport
terminals is exactly because it is public and can be seen by all; and
although it is true that private vehicles ply the same route as public vehicles,
the exposure of a [PUV] servicing the general, riding public is much more
compared to private vehicles. Categorizing PUVs and transport terminals
as 'public places' under Section 7 (f) of Reso. No. 9615 is therefore
logical. The same reasoning for limiting political advertisements in print
media, in radio, and in television therefore holds true for political
advertisements in PUVs and transport terminals.6
Hence, the instant petition.
Arguments of the Petitioner
The petitioner maintains that Section 7(g) items (5) and (6), in relation to
Section 7(f), of Resolution No. 9615 violate the right to free speech of the
owners of PUVs and transport terminals; that the prohibition curtails their
ideas of who should be voted by the public. The petitioner also claims that
there is no substantial public interest threatened by the posting of political
advertisements on PUVs and transport terminals to warrant the prohibition
imposed by the COMELEC. Further, the petitioner posits that the ownership of
the PUVs per se, as well as the transport terminals, remains private and,
hence, the owners thereof could not be prohibited by the COMELEC from
expressing their political opinion lest their property rights be unduly intruded
upon.
Further, assuming that substantial public interest exists in the said prohibition
imposed under Resolution No. 9615, the petitioner claims that the curtailment
of the right to free speech of the owners of PUVs and transport terminals is
much greater than is necessary to achieve the desired governmental
purpose, i.e., ensuring equality of opportunity to all candidates in elective
office.
Arguments of COMELEC
On the other hand, the COMELEC posits that privately-owned PUVs and
transport terminals are public spaces that are subject to its regulation. It
explains that under the Constitution, the COMELEC has the power to enforce
and administer all laws and regulations relative to the conduct of an election,
including the power to regulate the enjoyment or utilization of all franchises
and permits for the operation of transportation utilities.
The COMELEC points out that PUVs and private transport terminals hold a
captive audience - the commuters, who have no choice but be subjected to the
blare of political propaganda. Thus, the COMELEC avers, it is within its
constitutional authority to prevent privately-owned PUVs and transport
terminals from concurrently serving campaign materials to the captive
audience that they transport.
The COMELEC further claims that Resolution No. 9615 is a valid content-
neutral regulation and, thus, does not impinge on the constitutional right to
freedom of speech. It avers that the assailed regulation is within the
constitutional power of the COMELEC pursuant to Section 4, Article IX-C of the
Constitution. The COMELEC alleges that the regulation simply aims to ensure
equal campaign opportunity, time, and space for all candidates - an important
and substantial governmental interest, which is totally unrelated to the
suppression of free expression; that any restriction on free speech is merely
incidental and is no greater than is essential to the furtherance of the said
governmental interest.
The Issue
The petitioner presents the following issues for the Court's resolution:
I. [WHETHER] RESOLUTION NO. 9615 VIOLATES THE RIGHT TO FREE SPEECH
OF THE OWNERS OF [PUVs] AND TRANSPORT TERMINALS.
II. [WHETHER] RESOLUTION NO. 9615 IS VOID AS A RESTRAINT TO FREE
SPEECH AND EXPRESSION FOR FAILURE TO SATISFY THE O'BRIEN TEST.
III. [WHETHER] THE CONSTITUTIONAL OBJECTIVE TO GIVE AN EQUAL
OPPORTUNITY TO INFORM THE ELECTORATE IS NOT IMPAIRED BY POSTING
POLITICAL  ADVERTISEMENTS ON  PUVs  AND TRANSPORT TERMINALS.
IV. [WHETHER] THE OWNERSHIP OF FACILITIES IS DIFFERENT AND
INDEPENDENT FROM THE FRANCHISE OR OPERATION OF THE PUBLIC
UTILITY, THE FORMER BEING BEYOND THE POWER OF REGULATION BY THE
COMELEC.7
In sum, the issue presented for the Court's resolution is whether Section 7(g)
items (5) and (6), in relation to Section 7(f), of Resolution No. 9615, which
prohibits the posting of any election campaign or propaganda material, inter
alia, in PUVs and public transport terminals are valid regulations.
Ruling of the Court
The petition is meritorious.
Resolution No. 9615, which was promulgated pursuant to Section 4, Article IX-
C of the Constitution and the provisions of R.A. No. 9006, lays down the
administrative rules relative to the COMELEC's exercise of its supervisory and
regulatory powers over all franchises and permits for the operation of
transportation and other public utilities, media of communication or
information, and all grants, special privileges, or concessions granted by the
Government.
Like any other administrative regulations, Resolution No. 9615, or any part
thereof, must not run counter to the Constitution. It is basic that if a law or an
administrative rule violates any norm of the Constitution, that issuance is null
and void and has no effect. The Constitution is the basic law to which all laws
must conform; no act shall be valid if it conflicts with the Constitution.8 In this
regard, an administrative regulation, even if it purports to advance a legitimate
governmental interest, may not be permitted to run roughshod over the
cherished rights of the people enshrined in the Constitution.
Section 7(g) items (5) and (6), in
relation to Section 7(f), of Resolution No.
9615 are prior restraints on speech.
Free speech may be identified with the liberty to discuss publicly and truthfully
any matter of public concern without prior restraint or censorship and
subsequent punishment.9 Prior restraint refers to official governmental
restrictions on the press or other forms of expression in advance of actual
publication or dissemination. Freedom from prior restraint is largely freedom
from government censorship of publications, whatever the form of censorship,
and regardless of whether it is wielded by the executive, legislative or judicial
branch of the government.10 Any system of prior restraints of expression
comes to this Court bearing a heavy presumption against its validity.11
Section 7(g) items (5) and (6), in relation to Section 7(f), of Resolution No.
9615 unduly infringe on the fundamental right of the people to freedom of
speech. Central to the prohibition is the freedom of individuals, i.e., the owners
of PUVs and private transport terminals, to express their preference, through
the posting of election campaign material in their property, and convince
others to agree with them.
Pursuant to the assailed provisions of Resolution No. 9615, posting an election
campaign material during an election period in PUVs and transport terminals
carries with it the penalty of revocation of the public utility franchise and shall
make the owner thereof liable for an election offense.
The prohibition constitutes a clear prior restraint on the right to free
expression of the owners of PUVs and transport terminals. As a result of the
prohibition, owners of PUVs and transport terminals are forcefully and
effectively inhibited from expressing their preferences under the pain of
indictment for an election offense and the revocation of their franchise or
permit to operate.
It is now deeply embedded in our jurisprudence that freedom of speech and of
the press enjoys a preferred status in our hierarchy of rights. The rationale is
that the preservation of other rights depends on how well we protect our
freedom of speech and of the press.12 It has been our constant holding that
this preferred freedom calls all the more for utmost respect when what may be
curtailed is the dissemination of information to make more meaningful the
equally vital right of suffrage.13
Thus, in Adiong v. COMELEC,14 the Court struck down the COMELEC's
prohibition against the posting of decals and stickers on "mobile places." The
Court ratiocinated that:
Significantly, the freedom of expression curtailed by the questioned prohibition
is not so much that of the candidate or the political party. The regulation
strikes at the freedom of an individual to express his preference and,
by displaying it on his car, to convince others to agree with him. A
sticker may be furnished by a candidate but once the car owner agrees to have
it placed on his private vehicle, the expression becomes a statement by the
owner, primarily his own and not of anybody else. If, in the National Press
Club case, the Court was careful to rule out restrictions on reporting by
newspaper or radio and television stations and commentators or columnists as
long as these are not correctly paid-for advertisements or purchased
opinions with less reason can we sanction the prohibition against a
sincere manifestation of support and a proclamation of belief by an
individual person who pastes a sticker or decal on his private
property.15 (Emphases ours)
The assailed prohibition on posting
election campaign materials is an
invalid content-neutral regulation
repugnant to the free speech clause.
The COMELEC claims that while Section 7(g) items (5) and (6) of Resolution
No. 9615 may incidentally restrict the right to free speech of owners of PUVs
and transport terminals, the same is nevertheless constitutionally permissible
since it is a valid content-neutral regulation. The Court does not agree.
A content-neutral regulation, i.e., which is merely concerned with the incidents
of the speech, or one that merely controls the time, place or manner, and
under well-defined standards,16 is constitutionally permissible, even if it
restricts the right to free speech, provided that the following requisites
concur: first, the government regulation is within the constitutional power of
the Government; second, it furthers an important or substantial governmental
interest; third, the governmental interest is unrelated to the suppression of
free expression; and fourth, the incidental restriction on freedom of expression
is no greater than is essential to the furtherance of that interest.17
Section 7(g) items (5) and (6) of Resolution No. 9615 are content-neutral
regulations since they merely control the place where election campaign
materials may be posted. However, the prohibition is still repugnant to the free
speech clause as it fails to satisfy all of the requisites for a valid content-
neutral regulation.
It is conceded that Resolution No. 9615, including the herein assailed
provisions, furthers an important and substantial governmental interest, i.e.,
ensuring equal opportunity, time and space among candidates aimed at the
holding of free, orderly, honest, peaceful, and credible elections. It is further
conceded that the governmental interest in imposing the said prohibition is
unrelated to the suppression of free expression. However, Section 7(g) items
(5) and (6), in relation to Section 7(f), of Resolution No. 9615, are not within
the constitutionally delegated power of the COMELEC under Section 4, Article
IX-C of the Constitution. Also, there is absolutely no necessity to restrict the
right to free speech of the owners of PUVs and transport terminals.
The COMELEC may only regulate
the franchise or permit to operate and
not the ownership per se of PUVs
and transport terminals.
The prohibition under Section 7(g) items (5) and (6), in relation to Section
7(f), of Resolution No. 9615 is not within the COMELEC's constitutionally
delegated power of supervision or regulation. It is not disputed that the
COMELEC has the power to supervise or regulate the enjoyment or utilization
of all franchises or permits for the operation of transportation utilities during
an election period. Section 4, Article IX-C of the Constitution, thus provides:
Section 4. The Commission may, during the election period, supervise or
regulate the enjoyment or utilization of all franchises or permits for the
operation of transportation and other public utilities, media of communication
or information, all grants, special privileges, or concessions granted by the
Government or any subdivision, agency, or instrumentality thereof, including
any government-owned or controlled corporation or its subsidiary. Such
supervision or regulation shall aim to ensure equal opportunity, time, and
space, and the right to reply, including reasonable, equal rates therefor, for
public information campaigns and forums among candidates in connection with
the objective of holding free, orderly, honest, peaceful, and credible elections.
Nevertheless, the constitutional grant of supervisory and regulatory powers to
the COMELEC over franchises and permits to operate, though seemingly
unrestrained, has its limits. Notwithstanding the ostensibly broad supervisory
and regulatory powers granted to the COMELEC during an election period
under Section 4, Article IX-C of the Constitution, the Court had previously set
out the limitations thereon. In Adiong, the Court, while recognizing that the
COMELEC has supervisory power vis-a-vis the conduct and manner of elections
under Section 4, Article IX-C of the Constitution, nevertheless held that such
supervisory power does not extend to the very freedom of an individual to
express his preference of candidates in an election by placing election
campaign stickers on his vehicle.
In National Press Club v. COMELEC, 18 while the Court upheld the
constitutionality of a prohibition on the selling or giving free of charge, except
to the COMELEC, of advertising space and commercial time during an election
period, it was emphasized that the grant of supervisory and regulatory powers
to the COMELEC under Section 4, Article IX-C of the Constitution, is limited to
ensuring equal opportunity, time, space, and the right to reply among
candidates.
Further, in Social Weather Stations, Inc. v. COMELEC,19 the Court,
notwithstanding the grant of supervisory and regulatory powers to the
COMELEC under Section 4, Article IX-C of the Constitution, declared
unconstitutional a regulation prohibiting the release of election surveys prior to
the election since it "actually suppresses a whole class of expression, while
allowing the expression of opinion concerning the same subject matter by
newspaper columnists, radio and [television (TV)] commentators, armchair
theorists, and other opinion makers."20
In the instant case, the Court further delineates the constitutional grant of
supervisory and regulatory powers to the COMELEC during an election period.
As worded, Section 4, Article IX-C of the Constitution only grants COMELEC
supervisory and regulatory powers over the enjoyment or utilization "of all
franchises or permits for the operation," inter alia, of transportation and other
public utilities. The COMELEC's constitutionally delegated powers of supervision
and regulation do not extend to the ownership per se of PUVs and transport
terminals, but only to the franchise or permit to operate the same.
There is a marked difference between the franchise or permit to operate
transportation for the use of the public and the ownership per se of the
vehicles used for public transport. Thus, in Tatad v. Garcia, Jr.,21 the Court
explained that:
What private respondent owns are the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant, not a public utility. While
a franchise is needed to operate these facilities to serve the public, they do not
by themselves constitute a public utility. What constitutes a public utility is not
their ownership but their use to serve the public x x x.
The Constitution, in no uncertain terms, requires a franchise for the operation
of a public utility. However, it does not require a franchise before one can own
the facilities needed to operate a public utility so long as it does not operate
them to serve the public.
xxxx
In law, there is a clear distinction between the "operation" of a public
utility and the ownership of the facilities and equipment used to serve
the public.
xxxx
The right to operate a public utility may exist independently and
separately from the ownership of the facilities thereof. One can own
said facilities without operating them as a public utility, or conversely,
one may operate a public utility without owning the facilities used to
serve the public. The devotion of property to serve the public may be done
by the owner or by the person in control thereof who may not necessarily be
the owner thereof.
This dichotomy between the operation of a public utility and the ownership of
the facilities used to serve the public can be very well appreciated when we
consider the transportation industry. Enfranchised airline and shipping
companies may lease their aircraft and vessels instead of owning them
themselves.22 (Emphases ours)
The franchise or permit to operate transportation utilities is a privilege granted
to certain persons to engage in the business of transporting people or goods; it
does not refer to the ownership of the vehicle  per se. Ownership is a relation in
private law by virtue of which a thing pertaining to one person is completely
subjected to his will in everything not prohibited by public law or the
concurrence with the rights of another.23 Thus, the owner of a thing has the
right to enjoy and dispose of a thing, without other limitations than those
established by law.24
One such limitation established by law, as regards PUVs, is the franchise or
permit to operate. However, a franchise or permit to operate a PUV is a
limitation only on certain aspects of the ownership of the vehicle pertinent to
the franchise or permit granted, but not on the totality of the rights of the
owner over the vehicle. Otherwise stated, a restriction on the franchise or
permit to operate transportation utilities is necessarily a limitation on
ownership, but a limitation on the rights of ownership over the PUV is not
necessarily a regulation on the franchise or permit to operate the same.
A franchise or permit to operate transportation utilities pertains to
considerations affecting the operation of the PUV as such, e.g., safety of the
passengers, routes or zones of operation, maintenance of the vehicle, of
reasonable fares, rates, and other charges, or, in certain cases,
nationality.25 Thus, a government issuance, which purports to regulate a
franchise or permit to operate PUVs, must pertain to the considerations
affecting its operation as such. Otherwise, it becomes a regulation or
supervision not on the franchise or permit to operate, but on the very
ownership of the vehicle used for public transport.
The expression of ideas or opinion of an owner of a PUV, through the posting
of election campaign materials on the vehicle, does not affect considerations
pertinent to the operation of the PUV. Surely, posting a decal expressing
support for a certain candidate in an election will not in any manner affect the
operation of the PUV as such. Regulating the expression of ideas or opinion in
a PUV, through the posting of an election campaign material thereon, is not a
regulation of the franchise or permit to operate, but a regulation on the very
ownership of the vehicle.
The dichotomy between the regulation of the franchise or permit to operate of
a PUV and that of the very ownership thereof is better exemplified in the case
of commercial advertisements posted on the vehicle. A prohibition on the
posting of commercial advertisements on a PUV is considered a regulation on
the ownership of the vehicle per se; the restriction on the enjoyment of the
ownership of the vehicle does not have any relation to its operation as a PUV.
On the other hand, prohibitions on the posting of commercial advertisements
on windows of buses, because it hinders police authorities from seeing whether
the passengers inside are safe, is a regulation on the franchise or permit to
operate. It has a direct relation to the operation of the vehicle as a
PUV, i.e., the safety of the passengers.
In the same manner, the COMELEC does not have the constitutional power to
regulate public transport terminals owned by private persons. The ownership
of transport terminals, even if made available for use by the public commuters,
likewise remains private. Although owners of public transport terminals may be
required by local governments to obtain permits in order to operate, the
permit only pertains to circumstances affecting the operation of the transport
terminal as such. The regulation of such permit to operate should similarly be
limited to circumstances affecting the operation of the transport terminal. A
regulation of public transport terminals based on extraneous circumstances,
such as prohibiting the posting of election campaign materials thereon,
amounts to regulating the ownership of the transport terminal and not merely
the permit to operate the same.
Accordingly, Section 7(g) items (5) and (6) of Resolution No. 9615 are not
within the constitutionally delegated power of the COMELEC to supervise or
regulate the franchise or permit to operate of transportation utilities. The
posting of election campaign material on vehicles used for public transport or
on transport terminals is not only a form of political expression, but also an act
of ownership - it has nothing to do with the franchise or permit to operate the
PUV or transport terminal.
The rulings in National Press Club
and Osmena v. COMELEC26
find no application to this case.
The COMELEC pointed out that the issue presented in the instant case is akin
to the Court's rulings in National Press Club and Osmeña. It explained that in
both cases, the Court sustained Section II(b) of R.A. No. 6646 or the Electoral
Reforms Law of 1997, which prohibits newspapers, radio broadcasting or TV
stations, and other mass media from selling or giving print space or airtime for
campaign or other political purposes, except to the COMELEC, during the
election campaign. The COMELEC averred that if the legislature can empower it
to impose an advertising ban on mass media, it could likewise empower it to
impose a similar ban on PUVs and transport terminals.
The Court does not agree.
The restriction imposed under Section ll(b) of R.A. No. 6646 has a direct
relation to the enjoyment and utilization of the franchise or permit to operate
of newspapers, radio broadcasting and TV stations, and other mass media,
which the COMELEC has the power to regulate pursuant to Section 4, Article
IX-C of the Constitution. The print space or airtime is an integral part of the
franchise or permit to operate of mass media utilities. Thus, the restriction
under Section ll(b) of R.A. No. 6646 is within the confines of the
constitutionally delegated power of the COMELEC under Section 4, Article IX-C
of the Constitution.
On the other hand, the prohibition on the posting of election campaign
materials under Section 7(g) items (5) and (6) of Resolution No. 9615, as
already explained, does not have any relation to the franchise or permit of
PUVs and transport terminals to operate as such and, hence, is beyond the
power of the COMELEC under Section 4, Article IX-C of the Constitution.
The restriction on free speech of
owners of PUVs and transport
terminals is not necessary to
further the stated governmental
interest.
Section 7(g) items (5) and (6) of Resolution No. 9615 likewise failed to satisfy
the fourth requisite of a valid content-neutral regulation, i.e., the incidental
restriction on freedom of expression is no greater than is essential to the
furtherance of that interest. There is absolutely no necessity to restrict the
right of the owners of PUVs and transport terminals to free speech to further
the governmental interest. While ensuring equality of time, space, and
opportunity to candidates is an important and substantial governmental
interest and is essential to the conduct of an orderly election, this lofty aim
may be achieved sans any intrusion on the fundamental right of expression.
First, while Resolution No. 9615 was promulgated by the COMELEC to
implement the provisions of R.A. No. 9006, the prohibition on posting of
election campaign materials on PUVs and transport terminals was not provided
for therein.
Second, there are more than sufficient provisions in our present election laws
that would ensure equal time, space, and opportunity to candidates in
elections. Section 6 of R.A. No. 9006 mandates that "all registered parties and
bona fide candidates shall have equal access to media time and space" and
outlines the guidelines to be observed in the implementation thereof, viz:
Section 6. Equal Access to Media Time and Space. - All registered parties and
bona fide candidates shall have equal access to media time and space. The
following guidelines may be amplified on by the COMELEC:
6.1  Print advertisements shall not exceed one-fourth (1/4) page in broadsheet
and one-half (1/2) page in tabloids thrice a week per newspaper, magazine or
other publications, during the campaign period.
6.2  a. Each bona fide candidate or registered political party for a nationally
elective office shall be entitled to not more than one hundred twenty (120)
minutes of television advertisement and one hundred eighty (180) minutes of
radio advertisement whether by purchase or donation.
b. Each bona fide candidate or registered political party for a locally elective
office shall be entitled to not more than sixty (60) minutes of television
advertisement and ninety (90) minutes of radio advertisement whether by
purchase or donation.
For this purpose, the COMELEC shall require any broadcast station or entity to
submit to the COMELEC a copy of its broadcast logs and certificates of
performance for the review and verification of the frequency, date, time and
duration of advertisements broadcast for any candidate or political party.
6.3  All mass media entities shall furnish the COMELEC with a copy of all
contracts for advertising, promoting or opposing any political party or the
candidacy of any person for public office within five (5) days after its signing.
In every case, it shall be signed by the donor, the candidate concerned or by
the duly authorized representative of the political party.
6.4   No franchise or permit to operate a radio or television station shall be
granted or issued, suspended or cancelled during the election period. In all
instances, the COMELEC shall supervise the use and employment of press,
radio and television facilities insofar as the placement of political
advertisements is concerned to ensure that candidates are given equal
opportunities under equal circumstances to make known their qualifications
and their stand on public issues within the limits set forth in the Omnibus
Election Code and Republic Act No. 7166 on election spending.
The COMELEC shall ensure that radio or television or cable television
broadcasting entities shall not allow the scheduling of any program or permit
any sponsor to manifestly favor or oppose any candidate or political party by
unduly or repeatedly referring to or including said candidate and/or political
party in such program respecting, however, in all instances the right of said
broadcast entities to air accounts of significant news or news worthy events
and views on matters of public interest.
6.5 All members of media, television, radio or print, shall scrupulously report
and interpret the news, taking care not to suppress essential facts nor to
distort the truth by omission or improper emphasis. They shall recognize the
duty to air the other side and the duty to correct substantive errors promptly.
6.6   Any mass media columnist, commentator, announcer, reporter, on-air
correspondent or personality who is a candidate for any elective public office or
is a campaign volunteer for or employed or retained in any capacity by any
candidate or political party shall be deemed resigned, if so required by their
employer, or shall take a leave of absence from his/her work as such during
the campaign period: Provided, That any media practitioner who is an official
of a political party or a member of the campaign staff of a candidate or political
party shall not use his/her time or space to favor any candidate or political
party.
6.7 No movie, cinematograph or documentary portraying the life or biography
of a candidate shall be publicly exhibited in a theater, television station or any
public forum during the campaign period.
6.8 No movie, cinematograph or documentary portrayed by an actor or media
personality who is himself a candidate shall likewise be publicly exhibited in a
theater or any public forum during the campaign period.
Section 9 of R.A. No. 9006 authorizes political parties and party-list groups and
independent candidates to erect common poster areas and candidates to post
lawful election campaign materials in private places, with the consent of the
owner thereof, and in public places or property, which are allocated equitably
and impartially.
Further, Section 1327 of R.A. No. 716628 provides for the authorized expenses
of registered political parties and candidates for every voter; it affords
candidates equal opportunity in their election campaign by regulating the
amount that should be spent for each voter.  Likewise, Section 1429 of R.A. No.
7166 requires all candidates and treasurers of registered political parties to
submit a statement of all contributions and expenditures in connection with the
election. Section 14 is a post-audit measure that aims to ensure that the
candidates did not overspend in their election campaign, thereby enforcing the
grant of equal opportunity to candidates under Section 13.
A strict implementation of the foregoing provisions of law would suffice to
achieve the governmental interest of ensuring equal time, space, and
opportunity for candidates in elections. There is thus no necessity of still
curtailing the right to free speech of the owners of PUVs and transport
terminals by prohibiting them from posting election campaign materials on
their properties.
Section 7(g) items (5) and (6) of
Resolution No. 9615 are not justified under
the captive-audience doctrine.
The COMELEC further points out that PUVs and transport terminals hold a
"captive audience" - commuters who have no choice but be subjected to the
blare of political propaganda. The COMELEC further claims that while owners of
privately owned PUVs and transport terminals have a right to express their
views to those who wish to listen, they have no right to force their message
upon an audience incapable of declining to receive it.
The COMELEC's claim is untenable.
The captive-audience doctrine states that when a listener cannot, as a practical
matter, escape from intrusive speech, the speech can be restricted.30 The
"captive-audience" doctrine recognizes that a listener has a right not to be
exposed to an unwanted message in circumstances in which the
communication cannot be avoided.31
A regulation based on the captive-audience doctrine is in the guise of
censorship, which undertakes selectively to shield the public from some kinds
of speech on the ground that they are more offensive than others. Such
selective restrictions have been upheld only when the speaker intrudes on the
privacy of the home or the degree of captivity makes it either impossible or
impractical for the unwilling viewer or auditor to avoid exposure.32
In Consolidated Edison Co. v. Public Service Commission, 33 the Supreme Court
of the United States of America (U.S. Supreme Court) struck down the order of
New York Public Service Commission, which prohibits public utility companies
from including inserts in monthly bills discussing controversial issues of public
policy. The U.S. Supreme Court held that "[t]he prohibition cannot be justified
as being necessary to avoid forcing appellant's views on a captive audience,
since customers may escape exposure to objectionable material simply by
throwing the bill insert into a wastebasket."34
Similarly, in Erznoznik v. City of Jacksonville,35 the U.S. Supreme Court
nullified a city ordinance, which made it a public nuisance and a punishable
offense for a drive-in movie theater to exhibit films containing nudity, when
the screen is visible from a public street or place. The U.S. Supreme Court
opined that the degree of captivity is not so great as to make it impracticable
for an unwilling viewer to avoid exposure, thus:
The Jacksonville ordinance discriminates among movies solely on the basis of
content. Its effect is to deter drive-in theaters from showing movies containing
any nudity, however innocent or even educational. This discrimination cannot
be justified as a means of preventing significant intrusions on privacy. The
ordinance seeks only to keep these films from being seen from public streets
and places where the offended viewer readily can avert his eyes. In short,
the screen of a drive-in theater is not "so obtrusive as to make it
impossible for an unwilling individual to avoid exposure to it." x x x
Thus, we conclude that the limited privacy interest of persons on the public
streets cannot justify this censorship of otherwise protected speech on the
basis of its content.36 (Emphasis ours)
Thus, a government regulation based on the captive-audience doctrine may
not be justified if the supposed "captive audience" may avoid exposure to the
otherwise intrusive speech. The prohibition under Section 7(g) items (5) and
(6) of Resolution No. 9615 is not justified under the captive-audience doctrine;
the commuters are not forced or compelled to read the election campaign
materials posted on PUVs and transport terminals. Nor are they incapable of
declining to receive the messages contained in the posted election campaign
materials since they may simply avert their eyes if they find the same
unbearably intrusive.
The COMELEC, in insisting that it has the right to restrict the posting of
election campaign materials on PUVs and transport terminals, cites Lehman v.
City of Shaker Heights,37 a case decided by the U.S. Supreme Court.
In Lehman, a policy of the city government, which prohibits political
advertisements on government-run buses, was upheld by the U.S. Supreme
Court. The U.S. Supreme Court held that the advertising space on the buses
was not a public forum, pointing out that advertisement space on government-
run buses, "although incidental to the provision of public transportation, is a
part of commercial venture."38 In the same way that other commercial
ventures need not accept every proffer of advertising from the general public,
the city's transit system has the discretion on the type of advertising that may
be displayed on its vehicles.
Concurring in the judgment, Justice Douglas opined that while Lehman, a
candidate for state office who sought to avail himself of advertising space on
government-run buses, "clearly has a right to express his views to those who
wish to listen, he has no right to force his message upon an audience incapable
of declining to receive it."39 Justice Douglas concluded: "the right of the
commuters to be free from forced intrusions on their privacy precludes the city
from transforming its vehicles of public transportation into forums for the
dissemination of ideas upon this captive audience."40
The COMELEC's reliance on Lehman is utterly misplaced.
In Lehman, the political advertisement was intended for PUVs owned by the
city government; the city government, as owner of the buses, had the right to
decide which type of advertisements would be placed on its buses. The U.S.
Supreme Court gave primacy to the city government's exercise of its
managerial decision, viz:
Revenue earned from long-term commercial advertising could be jeopardized
by a requirement that short-term candidacy or issue-oriented advertisements
be displayed on car cards. Users would be subjected to the blare of political
propaganda. There could be lurking doubts about favoritism, and sticky
administrative problems might arise in parceling out limited space to eager
politicians. In these circumstances, the managerial decision to limit car
card space to innocuous and less controversial commercial and
service-oriented advertising does not rise to the dignity of First
Amendment violation. Were we to hold to the contrary, display cases in
public hospitals, libraries, office buildings, military compounds, and other
public facilities immediately would become Hyde Parks open to every would be
pamphleteer and politician. This the Constitution does not require.41 (Emphasis
ours)
Lehman actually upholds the freedom of the owner of the utility vehicles, i.e.,
the city government, in choosing the types of advertisements that would be
placed on its properties. In stark contrast, Section 7(g) items (5) and (6) of
Resolution No. 9615 curtail the choice of the owners of PUVs and transport
terminals on the advertisements that may be posted on their properties.
Also, the city government in Lehman had the right, nay the duty, to refuse
political advertisements on their buses. Considering that what were involved
were facilities owned by the city government, impartiality, or the appearance
thereof, was a necessity. In the instant case, the ownership of PUVs and
transport terminals remains private; there exists no valid reason to suppress
their political views by proscribing the posting of election campaign materials
on their properties.
Prohibiting owners of PUVs and transport
terminals from posting election campaign
materials violates the equal protection
clause.
Section 7(g) items (5) and (6) of Resolution No. 9615 do not only run afoul of
the free speech clause, but also of the equal protection clause. One of the
basic principles on which this government was founded is that of the equality
of right, which is embodied in Section 1, Article III of the 1987
Constitution.42 "Equal protection requires that all persons or things similarly
situated should be treated alike, both as to rights conferred and responsibilities
imposed. Similar subjects, in other words, should not be treated differently, so
as to give undue favor to some and unjustly discriminate against others."43
"The equal protection clause is aimed at all official state actions, not just those
of the legislature. Its inhibitions cover all the departments of the government
including the political and executive departments, and extend to all actions of a
state denying equal protection of the laws, through whatever agency or
whatever guise is taken."44
Nevertheless, the guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws to all citizens of the state. Equality of
operation of statutes does not mean their indiscriminate operation on persons
merely as such, but on persons according to the circumstances surrounding
them. It guarantees equality, not identity of rights. The Constitution does not
require that things, which are different in fact, be treated in law as though
they were the same. The equal protection clause does not forbid discrimination
as to things that are different.45
In order that there can be valid classification so that a discriminatory
governmental act may pass the constitutional norm of equal protection, it is
necessary that the four requisites of valid classification be complied with,
namely: (1) it must be based upon substantial distinctions; (2) it must be
germane to the purposes of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all members of the class.46
It is conceded that the classification under Section 7(g) items (5) and (6) of
Resolution No. 9615 is not limited to existing conditions and applies equally to
the members of the purported class. However, the classification remains
constitutionally impermissible since it is not based on substantial distinction
and is not germane to the purpose of the law.
A distinction exists between PUVs and transport terminals and private vehicles
and other properties in that the former, to be considered as such, needs to
secure from the government either a franchise or a permit to operate.
Nevertheless, as pointed out earlier, the prohibition imposed under Section
7(g) items (5) and (6) of Resolution No. 9615 regulates the ownership per
se of the PUV and transport terminals; the prohibition does not in any manner
affect the franchise or permit to operate of the PUV and transport terminals.
As regards ownership, there is no substantial distinction between owners of
PUVs and transport terminals and owners of private vehicles and other
properties. As already explained, the ownership of PUVs and transport
terminals, though made available for use by the public, remains private. If
owners of private vehicles and other properties are allowed to express their
political ideas and opinion by posting election campaign materials on their
properties, there is no cogent reason to deny the same preferred right to
owners of PUVs and transport terminals. In terms of ownership, the distinction
between owners of PUVs and transport terminals and owners of private
vehicles and properties is merely superficial. Superficial differences do not
make for a valid classification.47
The fact that PUVs and transport terminals are made available for use by the
public is likewise not substantial justification to set them apart from private
vehicles and other properties. Admittedly, any election campaign material that
would be posted on PUVs and transport terminals would be seen by many
people. However, election campaign materials posted on private vehicles and
other places frequented by the public, e.g., commercial establishments, would
also be seen by many people. Thus, there is no reason to single out owners of
PUVs and transport terminals in the prohibition against posting of election
campaign materials.
Further, classifying owners of PUVs and transport terminals apart from owners
of private vehicles and other properties bears no relation to the stated purpose
of Section 7(g) items (5) and (6) of Resolution No. 9615, i.e., to provide equal
time, space and opportunity to candidates in elections. To stress, PUVs and
transport terminals are private properties. Indeed, the nexus between the
restriction on the freedom of expression of owners of PUVs and transport
terminals and the government's interest in ensuring equal time, space, and
opportunity for candidates in elections was not established by the COMELEC.
In sum, Section 7(g) items (5) and (6), in relation to Section 7(f), of
Resolution No. 9615 violate the free speech clause; they are content-neutral
regulations, which are not within the constitutional power of the COMELEC
issue and are not necessary to further the objective of ensuring equal time,
space and opportunity to the candidates. They are not only repugnant to the
free speech clause, but are also violative of the equal protection clause, as
there is
no substantial distinction between owners of PUVs and transport terminals and
owners of private vehicles and other properties.
On a final note, it bears stressing that the freedom to advertise one's political
candidacy is clearly a significant part of our freedom of expression. A
restriction on this freedom without rhyme or reason is a violation of the most
valuable feature of the democratic way of life.48

WHEREFORE, in light of the foregoing disquisitions, the instant petition is

hereby GRANTED. Section 7(g) items (5) and (6), in relation to Section 7(f),
of Resolution No. 9615 issued by the Commission on Elections are hereby
declared NULL and VOID for being repugnant to Sections 1 and 4, Article III
of the 1987 Constitution.

SO ORDERED.