MODULE 5:

CONSTRUCTION AND INTERPRETATION

I. Definition

1. Caltex (Phils.), Inc. v. Palomar, G.R. No. 19650, 29 September 1966

G.R. No. L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the
groundwork for a promotional scheme calculated to drum up patronage for its oil products.
Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual
number of liters a hooded gas pump at each Caltex station will dispense during a specified period.
Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and their immediate
families excepted, participation is to be open indiscriminately to all "motor vehicle owners and/or
licensed drivers". For the privilege to participate, no fee or consideration is required to be paid, no
purchase of Caltex products required to be made. Entry forms are to be made available upon request at
each Caltex station where a sealed can will be provided for the deposit of accomplished entry stubs.

A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the
contestant whose estimate is closest to the actual number of liters dispensed by the hooded pump
thereat is to be awarded the first prize; the next closest, the second; and the next, the third. Prizes at
this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac hunter lantern
for second; and an Everready Magnet-lite flashlight with batteries and a screwdriver set for third. The
first-prize winner in each station will then be qualified to join in the "Regional Contest" in seven
different regions. The winning stubs of the qualified contestants in each region will be deposited in a
sealed can from which the first-prize, second-prize and third-prize winners of that region will be drawn.
The regional first-prize winners will be entitled to make a three-day all-expenses-paid round trip to
Manila, accompanied by their respective Caltex dealers, in order to take part in the "National Contest".
The regional second-prize and third-prize winners will receive cash prizes of P500 and P300,
respectively. At the national level, the stubs of the seven regional first-prize winners will be placed inside
a sealed can from which the drawing for the final first-prize, second-prize and third-prize winners will be
made. Cash prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500
for third; and P650 as consolation prize for each of the remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but
also for the transmission of communications relative thereto, representations were made by Caltex with
the postal authorities for the contest to be cleared in advance for mailing, having in view sections
1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of which read as
follows:

SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the following
classes, whether sealed as first-class matter or not, shall be imported into the Philippines
through the mails, or to be deposited in or carried by the mails of the Philippines, or be
delivered to its addressee by any officer or employee of the Bureau of Posts:

Written or printed matter in any form advertising, describing, or in any manner pertaining to, or
conveying or purporting to convey any information concerning any lottery, gift enterprise, or
similar scheme depending in whole or in part upon lot or chance, or any scheme, device, or
enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.

"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is
engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of
any kind through the mails by means of false or fraudulent pretenses, representations, or
promises, the Director of Posts may instruct any postmaster or other officer or employee of the
Bureau to return to the person, depositing the same in the mails, with the word "fraudulent"
plainly written or stamped upon the outside cover thereof, any mail matter of whatever class
mailed by or addressed to such person or company or the representative or agent of such
person or company.

SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.—The
Director of Posts may, upon evidence satisfactory to him that any person or company is engaged
in conducting any lottery, gift enterprise or scheme for the distribution of money, or of any real
or personal property by lot, chance, or drawing of any kind, or that any person or company is
conducting any scheme, device, or enterprise for obtaining money or property of any kind
through the mails by means of false or fraudulent pretenses, representations, or promise, forbid
the issue or payment by any postmaster of any postal money order or telegraphic transfer to
said person or company or to the agent of any such person or company, whether such agent is
acting as an individual or as a firm, bank, corporation, or association of any kind, and may
provide by regulation for the return to the remitters of the sums named in money orders or
telegraphic transfers drawn in favor of such person or company or its agent.

The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its
position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed, the
then Acting Postmaster General opined that the scheme falls within the purview of the provisions
aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960,
Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on an
unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General maintained his
view that the contest involves consideration, or that, if it does not, it is nevertheless a "gift enterprise"
which is equally banned by the Postal Law, and in his letter of December 10, 1960 not only denied the
use of the mails for purposes of the proposed contest but as well threatened that if the contest was
conducted, "a fraud order will have to be issued against it (Caltex) and all its representatives".

Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against
Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded
Pump Contest' not to be violative of the Postal Law, and ordering respondent to allow petitioner the use
of the mails to bring the contest to the attention of the public". After issues were joined and upon the
respective memoranda of the parties, the trial court rendered judgment as follows:

In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump
Contest' announced to be conducted by the petitioner under the rules marked as Annex B of the
petitioner does not violate the Postal Law and the respondent has no right to bar the public
distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed
"Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal
basis for the remedy at the time it was invoked, declaratory relief is available to any person "whose
rights are affected by a statute . . . to determine any question of construction or validity arising under
the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64, Revised Rules of
Court). In amplification, this Court, conformably to established jurisprudence on the matter, laid down
certain conditions sine qua non therefor, to wit: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are adverse; (3) the party seeking declaratory
relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial
determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951;
Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et
al., G.R. No. L-8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein
states no sufficient cause of action for declaratory relief, our duty is to assay the factual bases thereof
upon the foregoing crucible.

As we look in retrospect at the incidents that generated the present controversy, a number of significant
points stand out in bold relief. The appellee (Caltex), as a business enterprise of some consequence,
concededly has the unquestioned right to exploit every legitimate means, and to avail of all appropriate
media to advertise and stimulate increased patronage for its products. In contrast, the appellant, as the
authority charged with the enforcement of the Postal Law, admittedly has the power and the duty to
suppress transgressions thereof — particularly thru the issuance of fraud orders, under Sections 1982
and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously pursuing
its right aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To
forestall possible difficulties in the dissemination of information thereon thru the mails, amongst other
media, it was found expedient to request the appellant for an advance clearance therefor. However,
likewise by virtue of his jurisdiction in the premises and construing the pertinent provisions of the Postal
Law, the appellant saw a violation thereof in the proposed scheme and accordingly declined the request.
A point of difference as to the correct construction to be given to the applicable statute was thus
reached. Communications in which the parties expounded on their respective theories were exchanged.
The confidence with which the appellee insisted upon its position was matched only by the obstinacy
with which the appellant stood his ground. And this impasse was climaxed by the appellant's open
warning to the appellee that if the proposed contest was "conducted, a fraud order will have to be
issued against it and all its representatives."

Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live controversy.
The justiciability of the dispute cannot be gainsaid. There is an active antagonistic assertion of a legal
right on one side and a denial thereof on the other, concerning a real — not a mere theoretical —
question or issue. The contenders are as real as their interests are substantial. To the appellee, the
uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its
freedom to enhance its business. To the appellant, the suppression of the appellee's proposed contest
believed to transgress a law he has sworn to uphold and enforce is an unavoidable duty. With the
appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried
out, the contenders are confronted by the ominous shadow of an imminent and inevitable litigation
unless their differences are settled and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs.
Republic of the Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the
appellant, the time is long past when it can rightly be said that merely the appellee's "desires are
thwarted by its own doubts, or by the fears of others" — which admittedly does not confer a cause of
action. Doubt, if any there was, has ripened into a justiciable controversy when, as in the case at bar, it
was translated into a positive claim of right which is actually contested (III Moran, Comments on the
Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284
Pac. 350).

We cannot hospitably entertain the appellant's pretense that there is here no question of construction
because the said appellant "simply applied the clear provisions of the law to a given set of facts as
embodied in the rules of the contest", hence, there is no room for declaratory relief. The infirmity of this
pose lies in the fact that it proceeds from the assumption that, if the circumstances here presented, the
construction of the legal provisions can be divorced from the matter of their application to the
appellee's contest. This is not feasible. Construction, verily, is the art or process of discovering and
expounding the meaning and intention of the authors of the law with respect to its application to a
given case, where that intention is rendered doubtful, amongst others, by reason of the fact that the
given case is not explicitly provided for in the law (Black, Interpretation of Laws, p. 1). This is precisely
the case here. Whether or not the scheme proposed by the appellee is within the coverage of the
prohibitive provisions of the Postal Law inescapably requires an inquiry into the intended meaning of
the words used therein. To our mind, this is as much a question of construction or interpretation as any
other.

Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a
declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed and
final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the battle
lines drawn, in a manner of speaking, the propriety — nay, the necessity — of setting the dispute at rest
before it accumulates the asperity distemper, animosity, passion and violence of a full-blown battle
which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132 and cases cited),
cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal.
Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in
the situation into which it has been cast, would be to force it to choose between undesirable
alternatives. If it cannot obtain a final and definitive pronouncement as to whether the anti-lottery
provisions of the Postal Law apply to its proposed contest, it would be faced with these choices: If it
launches the contest and uses the mails for purposes thereof, it not only incurs the risk, but is also
actually threatened with the certain imposition, of a fraud order with its concomitant stigma which may
attach even if the appellee will eventually be vindicated; if it abandons the contest, it becomes a self-
appointed censor, or permits the appellant to put into effect a virtual fiat of previous censorship which
is constitutionally unwarranted. As we weigh these considerations in one equation and in the spirit of
liberality with which the Rules of Court are to be interpreted in order to promote their object (section 1,
Rule 1, Revised Rules of Court) — which, in the instant case, is to settle, and afford relief from
uncertainty and insecurity with respect to, rights and duties under a law — we can see in the present
case any imposition upon our jurisdiction or any futility or prematurity in our intervention.

The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this
case if he believes that it will not have the final and pacifying function that a declaratory judgment is
calculated to subserve. At the very least, the appellant will be bound. But more than this, he obviously
overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law shall form a part of
the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial decisions assume the same
authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent
that they are applicable, the criteria which must control the actuations not only of those called upon to
abide thereby but also of those in duty bound to enforce obedience thereto. Accordingly, we entertain
no misgivings that our resolution of this case will terminate the controversy at hand.

It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation
engaged in promotional advertising was advised by the county prosecutor that its proposed sales
promotion plan had the characteristics of a lottery, and that if such sales promotion were conducted,
the corporation would be subject to criminal prosecution, it was held that the corporation was entitled
to maintain a declaratory relief action against the county prosecutor to determine the legality of its sales
promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d.,
435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case for declaratory relief.

2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in
sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-mailable, and empowers
the Postmaster General to issue fraud orders against, or otherwise deny the use of the facilities of the
postal service to, any information concerning "any lottery, gift enterprise, or scheme for the distribution
of money, or of any real or personal property by lot, chance, or drawing of any kind". Upon these words
hinges the resolution of the second issue posed in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under
the abovementioned provisions of the Postal Law, this Court declared that —

While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with the
 power of the United States Postmaster General, viz.: The term "lottery" extends to all schemes
for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize concerts,
raffles at fairs, etc., and various forms of gambling. The three essential elements of a lottery are:
First, consideration; second, prize; and third, chance. (Horner vs. States [1892], 147 U.S. 449;
Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil.,
80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla
Hotel Construction Company vs. Carmona, p. 233, ante.)

Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious
in the disputed scheme to be the subject of contention. Consequently as the appellant himself
concedes, the field of inquiry is narrowed down to the existence of the element of consideration
therein. Respecting this matter, our task is considerably lightened inasmuch as in the same case just
cited, this Court has laid down a definitive yard-stick in the following terms —

In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly from the
party receiving the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a prize.

Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the
invitation to participate therein is couched. Thus —

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at your
favorite Caltex dealer will dispense from — to —, and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to go to a Caltex station, request for the entry form which is available on demand,
and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned
inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in order
to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate",
Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only appear to be,
but actually is, a gratuitous distribution of property by chance.

There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products
simply to win a prize would actually be indirectly paying a consideration for the privilege to join the
contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of any Caltex
service were a pre-requisite to participation. But it is not. A contestant, it hardly needs reiterating, does
not have to buy anything or to give anything of value.1awphîl.nèt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to
prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The required
element of consideration does not consist of the benefit derived by the proponent of the contest. The
true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the
participant pays a valuable consideration for the chance, and not whether those conducting the
enterprise receive something of value in return for the distribution of the prize. Perspective properly
oriented, the standpoint of the contestant is all that matters, not that of the sponsor. The following,
culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some
benefit in the way of patronage or otherwise, as a result of the drawing; does not supply the
element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844"
(54 C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed
by the appellee is not a lottery that may be administratively and adversely dealt with under the Postal
Law.

But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed?
Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration, this
aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing effect as
an instrument of both curative and preventive justice. Recalling that the appellant's action was
predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice, which
opined in effect that a scheme, though not a lottery for want of consideration, may nevertheless be a
gift enterprise in which that element is not essential, the determination of whether or not the proposed
contest — wanting in consideration as we have found it to be — is a prohibited gift enterprise, cannot
be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words,
there appears to be a consensus among lexicographers and standard authorities that the term is
commonly applied to a sporting artifice of under which goods are sold for their market value but by way
of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black,
Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail
Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State,
193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived,
the term clearly cannot embrace the scheme at bar. As already noted, there is no sale of anything to
which the chance offered is attached as an inducement to the purchaser. The contest is open to all
qualified contestants irrespective of whether or not they buy the appellee's products.

Going a step farther, however, and assuming that the appellee's contest can be encompassed within the
broadest sweep that the term "gift enterprise" is capable of being extended, we think that the
appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of
consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So.
73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs. Fox-Great Falls
Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin.
Equally impressive authorities declare that, like a lottery, a gift enterprise comes within the prohibitive
statutes only if it exhibits the tripartite elements of prize, chance and consideration (E.g.: Bills vs. People,
157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs.
Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A.,
N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705;
18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is explained by the
fact that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in
54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra);
in others, the necessity for the element of consideration or chance has been specifically eliminated by
statute. (54 C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls
Theater Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable statutory
provision.

Taking this cue, we note that in the Postal Law, the term in question is used in association with the word
"lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis — which Opinion 217 aforesaid also relied upon although only insofar as
the element of chance is concerned — it is only logical that the term under a construction should be
accorded no other meaning than that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to
eliminate that element of consideration from the "gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed matters
which on grounds of public policy are declared non-mailable. As applied to lotteries, gift enterprises and
similar schemes, justification lies in the recognized necessity to suppress their tendency to inflame the
gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208). Since in
gambling it is inherent that something of value be hazarded for a chance to gain a larger amount, it
follows ineluctably that where no consideration is paid by the contestant to participate, the reason
behind the law can hardly be said to obtain. If, as it has been held —

Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not
resorted to as a device to evade the law and no consideration is derived, directly or indirectly,
from the party receiving the chance, gambling spirit not being cultivated or stimulated thereby.
City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases, perm. ed., p.
695, emphasis supplied).

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold
that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the
appellee may not be denied the use of the mails for purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief,
and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the appellee does
not transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed. No costs.

 II. Purpose of Construction

1. City of Baguio v. Marcos, G.R. No. 26100, 28 February 1969

G.R. No. L-26100 February 28, 1969

CITY OF BAGUlO, REFORESTATION ADMINISTRATION,

FRANCISCO G. JOAQUIN, SR., FRANCISCO G. JOAQUIN, JR., and TERESITA J. BUCHHOLZ petitioners,
vs.
HON. PIO R. MARCOS, Judge of the Court of First Instance of Baguio,
BELONG LUTES, and the HONORABLE COURT OF APPEALS, respondents.

1st Assistant City Fiscal Dionisio C. Claridad, Augusto Tobias and Feria, Feria, Lugtu and La'O for
petitioners.
Bernardo C. Ronquillo for respondents.

SANCHEZ, J.:

Petitioners attack the jurisdiction of the Court of First Instance of Baguio to reopen cadastral
proceedings under Republic Act 931. Private petitioner's specifically question the ruling of the Court of
Appeals that they have no personality to oppose reopening. The three-pronged contentions of all the
petitioners are: (1) the reopening petition was filed outside the 40-year period next preceding the
approval of Republic Act 931; (2) said petition was not published; and (3) private petitioners, as lessees
of the public land in question, have court standing under Republic Act 931. The facts follow:

On April 12, 1912, the cadastral proceedings sought to be reopened, Civil Reservation Case No. 1, GLRO
Record No. 211, Baguio Townsite, were instituted by the Director of Lands in the Court of First Instance
of Baguio. It is not disputed that the land here involved (described in Plan Psu-186187) was amongst
those declared public lands by final decision rendered in that case on November 13, 1922.

On July 25, 1961, respondent Belong Lutes petitioned the cadastral court to reopen said Civil
Reservation Case No. 1 as to the parcel of land he claims. His prayer was that the land be registered in
his name upon the grounds that: (1) he and his predecessors have been in actual, open, adverse,
peaceful and continuous possession and cultivation of the land since Spanish times, or before July 26,
1894, paying the taxes thereon; and (2) his predecessors were illiterate Igorots without personal notice
of the cadastral proceedings aforestated and were not able to file their claim to the land in question
within the statutory period.

On December 18, 1961, private petitioners Francisco G. Joaquin, Sr., Francisco G. Joaquin, Jr., and
Teresita J. Buchholz registered opposition to the reopening. Ground: They are tree farm lessees upon
agreements executed by the Bureau of Forestry in their favor for 15,395.65 square meters on March. 16,
1959, for 12,108 square meters on July 24, 1959, and for 14,771 square meters on July 17, 1959,
respectively.

On May 5, 1962, the City of Baguio likewise opposed reopening.

On May 8, 1962, upon Lutes' opposition, the cadastral court denied private petitioners' right to
intervene in the case because of a final declaratory relief judgment dated March 9, 1962 in Yaranon vs.
Castrillo [Civil Case 946, Court of First Instance of Baguio] which declared that such tree farm leases
were null and void.

On May 18, 1962, private petitioners moved to reconsider. They averred that said declaratory relief
judgment did not bind them, for they were not parties to that action.

On September 14, 1962, the cadastral court reversed its own ruling of May 8, 1962, allowed petitioners
to cross-examine the witnesses of respondent Lutes.

On October 16, 1962, Lutes replied to and moved to dismiss private petitioners' opposition to his
reopening petition. On October 25, 1962, private petitioners' rejoinder was filed.

On August 5, 1963, the cadastral court dismissed private petitioners' opposition to the reopening. A
motion to reconsider was rejected by the court on November 5, 1963.

On January 6, 1964, it was the turn of the City of Baguio to lodge a motion to dismiss the petition to
reopen. This motion was adopted as its own by the Reforestation Administration. They maintained the
position that the declaratory judgment in Civil Case 946 was not binding on those not parties thereto.
Respondent Lutes opposed on February 24, 1964. On April 6, 1964, private petitioners reiterated their
motion to dismiss on jurisdictional grounds.

On September 17, 1964, the court denied for lack of merit the City's motion as well as the April 6, 1964
motion to dismiss made by private petitioners.

On November 13, 1964, all the petitioners went to the Court of Appeals on certiorari, prohibition, and
mandamus with preliminary injunction. 1 They then questioned the cadastral court's jurisdiction over the
petition to reopen and the latter's order of August 5, 1963 dismissing private petitioners' opposition.
The appellate court issued a writ of preliminary injunction upon a P500-bond.

Then came the judgment of the Court of Appeals of September 30, 1965. The court held that petitioners
were not bound by the declaratory judgment heretofore hated. Nevertheless, the appellate court ruled
that as lessees, private petitioners had no right to oppose the reopening of the cadastral case.
Petitioners moved to reconsider. It was thwarted on May 6, 1966.

Petitioners now seek redress from this Court. On July 6, 1966, respondents moved to dismiss the
petition before us. On August 5, 1966, petitioners opposed. On August 12, 1966, we gave due course.

1. Do private petitioners have personality to appear in the reopening proceedings?

First, to the controlling statute, Republic Act 931, effective June 20, 1953.

The title of the Act reads —

AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN
CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF
 JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS
ACT.

Section 1 thereof provides —

SECTION 1. All persons claiming title to parcels of land that have been the object of cadastral
proceedings, who at the time of the survey were in actual possession of the same, but for some
justifiable reason had been unable to file their claim in the proper court during the time limit
established by law, in case such parcels of land, on account of their failure to file such claims,
have been, or are about to be declared land of the public domain by virtue of judicial proceedings
instituted within the forty years next preceding the approval of this Act, are hereby granted the
right within five years 2 after the date on which this Act shall take effect, to petition for a
reopening of the judicial proceedings under the provisions of Act Numbered Twenty-two
hundred and fifty-nine, as amended, only with respect to such of said parcels of land as
have not been alienated, reserved, leased, granted, or
otherwise provisionally or permanently disposed of by the Government, and the competent
Court of First Instance, upon receiving such petition, shall notify the Government through the
Solicitor General, and if after hearing the parties, said court shall find that all conditions herein
established have been complied with, and that all taxes, interests and penalties thereof have
been paid from the time when land tax should have been collected until the day when the
motion is presented, it shall order said judicial proceedings reopened as if no action has been
taken on such parcels. 3

We concede that in Leyva vs. Jandoc, L-16965, February 28, 1962, a land registration case where
oppositors were "foreshore lessees of public land", a principle was hammered out that although Section
34, Land Registration Act, 4 "apparently authorizes any person claiming any kind of interest to file an
opposition to an application for registration, ... nevertheless ... the opposition must be based on a right
of dominion or some other real right independent of, and not at all subordinate to, the rights of the
Government."5 The opposition, according to the Leyva decision, "must necessarily be predicated upon
the property in question being part of the public domain." Leyva thus pronounced that "it is incumbent
upon the duly authorized representatives of the Government to represent its interests as well as private
claims intrinsically dependent upon it."

But the Leyva case concerned an ordinary land registration proceeding under the provisions of the Land
Registration Act. Normally and logically, lessees cannot there present issues of ownership. The case at
bar, however, stands on a different footing. It involves a special statute R.A. 931, which allows a petition
for reopening on lands "about to be declared" or already "declared land of the public domain" by virtue
of judicial proceedings. Such right, however, is made to cover limited cases, i.e., "only with respect to
such of said parcels of land as have not been alienated, reserved, leased, granted, or
otherwise provisionally or permanently disposed of by the Government." 6 The lessee's right is thus
impliedly recognized by R.A. 931. This statutory phrase steers the present case clear from the impact of
the precept forged by Leyva. So it is, that if the land subject of a petition to reopen has already been
leased by the government, that petition can no longer prosper.

This was the holding in Director of Land vs. Benitez, L-21368, March 31, 1966. The reopening petition
there filed was opposed by the Director of Lands in behalf of 62 lessees of public land holding revocable
permits issued by the government. We struck down the petition in that Case because the public land,
subject-matter of the suit, had already been leased by the government to private persons.
Of course, the Benitez ruling came about not by representations of the lessees alone, but through the
Director of Lands. But we may well scale the heights of injustice or abet violations of R.A. 931 if we
entertain the view that only the Director of Lands 7 can here properly oppose the reopening petition.
Suppose the lands office fails to do so? Will legitimate lessees be left at the mercy of government
officials? Should the cadastral court close its eyes to the fact of lease that may be proved by the lessees
themselves, and which is enough to bar the reopening petition? R.A. 931 could not have intended that
this situation should happen. The point is that, with the fact of lease, no question of ownership need be
inquired into pursuant to R.A. 931. From this standpoint, lessees have sufficient legal interest in the
proceedings.

The right of private petitioners to oppose a reopening petition here becomes the more patent when we
take stock of their averment that they have introduced improvements on the land affected. It would
seem to us that lessees insofar as R.A. 931 is concerned, come within the purview of those who,
according to the Rules of Court, 8 may intervene in an action. For, they are persons who have "legal
interest in the matter in litigation, or in the success of either of the parties." 9 In the event herein private
petitioners are able to show that they are legitimate lessees, then their lease will continue. And this
because it is sufficient that it be proven that the land is leased to withdraw it from the operation of
Republic Act 931 and place it beyond the reach of a petition for reopening. 10

In line with the Court of Appeals' conclusion, not disputed by respondent Lutes herein, the cadastral
court should have ruled on the validity of private petitioners 'tree farm leases — on the merits. Because
there is need for Lutes' right to reopen and petitioners' right to continue as lessees to be threshed out in
that court.

We, accordingly, hold that private petitioners, who aver that they are lessees, have the necessary
personality to intervene in and oppose respondent Lutes' petition for reopening.

2. Petitioners next contend that the reopening petition below, filed under R.A. 931, should have been
published in accordance with the Cadastral Act.

To resolve this contention, we need but refer to a very recent decision of this Court in De Castro vs.
Marcos, supra, involving exactly the same set of facts bearing upon the question. We there held, after a
discussion of law and jurisprudence, that: "In sum, the subject matter of the petition for reopening — a
parcel of land claimed by respondent Akia — was already embraced in the cadastral proceedings filed by
the Director of Lands. Consequently, the Baguio cadastral court already acquired jurisdiction over the
said property. The petition, therefore, need not be published." We find no reason to break away from
such conclusion.

Respondent Lutes attached to the record a certified true copy of the November 13, 1922 decision in the
Baguio Townsite Reservation case to show, amongst others, that the land here involved was part of that
case. Petitioners do not take issue with respondent Lutes on this point of fact.

We here reiterate our ruling in De Castro, supra, that the power of the cadastral court below over
petitions to reopen, as in this case, is not jurisdictionally tainted by want of publication.

3. A question of transcendental importance is this: Does the cadastral court have power to reopen the
cadastral proceedings upon the application of respondent Lutes?
The facts are: The cadastral proceedings sought to be reopened were instituted on April 12, 1912. Final
decision was rendered on November 13, 1922. Lutes filed the petition to reopen on July 25, 1961.

It will be noted that the title of R.A. 931, heretofore transcribed, authorizes "the filing in the proper
court, under certain conditions, of certain claims of title to parcels of land that have been declared
public land, by virtue of judicial decisions rendered within the forty years next preceding the approval of
this Act." The body of the statute, however, in its Section 1, speaks of parcels of land that "have been, or
are about to be declared land of the public domain, by virtue of judicial proceedings instituted within
the forty years next preceding the approval of this Act." There thus appears to be a seeming
inconsistency between title and body.

It must be stressed at this point that R.A. 931 is not under siege on constitutional grounds. No charge
has been made hero or in the courts below that the statute offends the constitutional injunction that
the subject of legislation must be expressed in the title thereof. Well-entrenched in constitutional law is
the precept that constitutional questions will not be entertained by courts unless they are "specifically
raised, insisted upon and adequately argued." 11 At any rate it cannot be seriously disputed that the
subject of R.A. 931 is expressed in its title.

This narrows our problem down to one of legal hermeneutics.

Many are the principles evolved in the interpretation of laws. It is thus not difficult to stray away from
the true path of construction, unless we constantly bear in mind the goal we seek. The office of
statutory interpretation, let us not for a moment forget, is to determine legislative intent. In the words
of a well-known authority, "[t]he true object of all interpretation is to ascertain the meaning and will of
the law-making body, to the end that it may be enforced." 12 In varying language, "the, purpose of all
rules or maxims" in interpretation "is to discover the true intention of the law." 13 They "are only
valuable when they subserve this purpose." 14 In fact, "the spirit or intention of a statute prevails over
the letter thereof." 15 A statute "should be construed according to its spirit and reason, disregarding as
far as necessary, the letter of the law." 16 By this, we do not "correct the act of the Legislature, but rather
... carry out and give due course to" its true intent. 17

It should be certain by now that when engaged in the task of construing an obscure expression in the
law 18 or where exact or literal rendering of the words would not carry out the legislative intent, 19 the
title thereof may be resorted to in the ascertainment of congressional will. Reason therefor is that the
title of the law may properly be regarded as an index of or clue or guide to legislative intention. 20 This is
especially true in this jurisdiction. For the reason that by specific constitutional precept, "[n]o bill which
may be enacted into law shall embrace more than one subject which shall be expressed in the title of the
bill." 21 In such case, courts "are compelled by the Constitution to consider both the body and the title in
order to arrive at the legislative intention." 22

With the foregoing guideposts on hand, let us go back to the situation that confronts us. We take
another look at the title of R.A. 931, viz: "AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT,
UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN
DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT
PRECEDING THE APPROVAL OF THIS ACT." Readily to be noted is that the title is not merely composed of
catchwords. 23 It expresses in language clear the very substance of the law itself. From this, it is easy to
see that Congress intended to give some effect to the title of R.A. 931.
To be carefully noted is that the same imperfection in the language of R.A. 931 aforesaid — from which
surfaces a seeming inconsistency between the title and the body — attended Commonwealth Act 276,
the present statute's predecessor. That prior law used the very same language in the body thereof and
in its title. We attach meaning to this circumstance. Had the legislature meant to shake off any legal
effects that the title of the statute might have, it had a chance to do so in the reenactment of the law.
Congress could have altered with great facility the wording of the title of R.A. 931. The fact is that it did
not.

It has been observed that "in modern practice the title is adopted by the Legislature, more thoroughly
read than the act itself, and in many states is the subject of constitutional regulation." 24 The
constitutional in jurisdiction that the subject of the statute must be expressed in the title of the bill,
breathes the spirit of command because "the Constitution does not exact of Congress the obligation to
read during its deliberations the entire text of the bill." 25 Reliance, therefore, may be placed on the title
of a bill, which, while not an enacting part, no doubt "is in some sort a part of the act, although only a
formal part." 26 These considerations are all the more valid here because R.A. 931 was passed without
benefit of congressional debate in the House from which it originated as House Bill 1410, 27 and in the
Senate. 28

The title now under scrutiny possesses the strength of clarity and positiveness. It recites that it
authorizes court proceedings of claims to parcels of land declared public land "by virtue of
judicial decisions rendered within the forty years next preceding the approval of this Act." That title is
written "in capital letters" — by Congress itself; such kind of a title then "is not to be classed with words
or titles used by compilers of statutes" because "it is the legislature speaking." 29 Accordingly, it is not
hard to come to a deduction that the phrase last quoted from R.A. 931 — "by virtue of judicial decisions
rendered" — was but inadvertently omitted from the body. Parting from this premise, there is, at
bottom, no contradiction between title and body. In line with views herein stated, the title belongs to
that type of titles which; should be regarded as part of the rules or provisions expressed in the
body. 30 At the very least, the words "by virtue of judicial decisions rendered" in the title of the law stand
in equal importance to the phrase in Section 1 thereof, "by virtue of judicial proceedings instituted."

Given the fact then that there are two phrases to consider the choice of construction we must give to
the statute does not need such reflection. We lean towards a liberal view. And this, because of the
principle long accepted that remedial legislation should receive the blessings of liberal
construction. 31 And, there should be no quibbling as to the fact that R.A. 931 is a piece of remedial
legislation. In essence, it provides a mode of relief to landowners who, before the Act, had no legal
means of perfecting their titles. This is plainly evident from the explanatory note thereof, which reads:

This bill is intended to give an opportunity to any person or claimant who has any interest in any
parcel of land which has been declared as public land in cadastral proceeding for failure of said
person or claimant to present his claim within the time prescribed by law.

There are many meritorious cases wherein claimants to certain parcels of land have not had the
opportunity to answer or appear at the hearing of cases affecting their claims in the
corresponding cadastral proceedings for lack of sufficient notice or for other reasons and
circumstances which are beyond their control. Under C.A. No. 276, said persons or claimants
have no more legal remedy as the effectivity of said Act expired in 1940.
 This measure seeks to remedy the lack of any existing law within said persons or claimants with
meritorious claims or interests in parcels of land may seek justice and protection. This bill
proposes to give said persons or claimants their day in court. Approval of this bill is earnestly
requested.

In fine, we say that lingual imperfections in the drafting of a statute should never be permitted to
hamstring judicial search for legislative intent, which can otherwise be discovered. Legal technicalities
should not abort the beneficent effects intended by legislation.

The sum of all the foregoing is that, as we now view Republic Act 931, claims of title that may be filed
thereunder embrace those parcels of land that have been declared public land "by virtue of judicial
decisions rendered within the forty years next preceding the approval of this Act." Therefore, by that
statute, the July 25, 1961 petition of respondent Belong Lutes to reopen Civil Reservation Case No. 1,
GLRO Record No. 211 of the cadastral court of Baguio, the decision on which was rendered on
November 13, 1922, comes within the 40-year period.lawphi1.nêt

FOR THE REASONS GIVEN, the petition for certiorari is hereby granted; the cadastral court's orders of
August 5, 1963, November 5, 1963 and September 17, 1964 are hereby declared null and void and the
cadastral court is hereby directed to admit petitioners' oppositions and proceed accordingly. No costs.
So ordered.

III. When construction is resorted to

1. Garcia v. Social Security Commission, G.R. No. 170735, 17 December 2007

G.R. No. 170735 December 17, 2007

IMMACULADA L. GARCIA, petitioner,

vs.
SOCIAL SECURITY COMMISSION LEGAL AND COLLECTION, SOCIAL SECURITY SYSTEM, respondents.

DECISION

CHICO-NAZARIO, J.:

This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2 June 2005
Decision1 and 8 December 2005 Resolution2 both of the Court of Appeals in CA-G.R. SP No. 85923. the
appellate court affirmed the --- Order and --- Resolution both of the Social Security Commission (SSC) in
SSC Case No. 10048, finding Immaculada L. Garcia (Garcia), the sole surviving director of Impact
Corporation, petitioner herein, liable for unremitted, albeit collected, SSS contributions.

Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and Consuelo
Villanueva were directors3 of Impact Corporation. The corporation was engaged in the business of
manufacturing aluminum tube containers and operated two factories. One was a "slug" foundry-factory
located in Cuyapo, Nueva Ecija, while the other was an Extrusion Plant in Cainta, Metro Manila, which
processed the "slugs" into aluminum collapsible tubes and similar containers for toothpaste and other
related products.

Records show that around 1978, Impact Corporation started encountering financial problems. By 1980,
labor unrest besieged the corporation.

In March 1983, Impact Corporation filed with the Securities and Exchange Commission (SEC) a Petition
for Suspension of Payments,4 docketed as SEC Case No. 02423, in which it stated that:

[Impact Corporation] has been and still is engaged in the business of manufacturing aluminum
tube containers x x x.

xxxx

In brief, it is an on-going, viable, and profitable enterprise.

On 8 May 1985, the union of Impact Corporation filed a Notice of Strike with the Ministry of Labor which
was followed by a declaration of strike on 28 July 1985. Subsequently, the Ministry of Labor certified the
labor dispute for compulsory arbitration to the National Labor Relations Commission (NLRC) in an
Order5 dated 25 August 1985. The Ministry of Labor, in the same Order, noted the inability of Impact
Corporation to pay wages, 13th month pay, and SSS remittances due to cash liquidity problems. A
portion of the order reads:

On the claims of unpaid wages, unpaid 13th month pay and non-remittance of loan amortization
and SSS premiums, we are for directing the company to pay the same to the workers and to
remit loan amortizations and SSS premiums previously deducted from their wages to the Social
Security System. Such claims were never contested by the company both during the hearing
below and in our office. In fact, such claims were admitted by the company although it alleged
cash liquidity as the main reason for such non-payment.

WHEREFORE, the dispute at Impact Corporation is hereby certified to the National Labor
Relations Commission for compulsory arbitration in accordance with Article 264 (g) of the Labor
Code, as amended.

xxxx

The company is directed to pay all the entitled workers unpaid wages, unpaid 13th month pay
and to remit to the Social Security System loan amortizations and SSS premiums previously
deducted from the wages of the workers.6

On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division (LCD), filed a
case before the SSC for the collection of unremitted SSS premium contributions withheld by Impact
Corporation from its employees. The case which impleaded Impact Corporation as respondent was
docketed as SSC Case No. 10048.7

Impact Corporation was compulsorily covered by the SSS as an employer effective 15 July 1963 and was
assigned Employer I.D. No. 03-2745100-21.
In answer to the allegations raised in SSC Case No. 10048, Impact Corporation, through its then Vice
President Ricardo de Leon, explained in a letter dated 18 July 1985 that it had been confronted with
strikes in 1984 and layoffs were effected thereafter. It further argued that the P402,988.93 is erroneous.
It explained among other things, that its operations had been suspended and that it was waiting for the
resolution on its Petition for Suspension of Payments by the SEC under SEC Case No. 2423. Despite due
notice, the corporation failed to appear at the hearings. The SSC ordered the investigating team of the
SSS to determine if it can still file its claim for unpaid premium contributions against the corporation
under the Petition for Suspension of Payments.

In the meantime, the Petition for Suspension of Payments was dismissed which was pending before the
SEC in an Order8 dated 12 December 1985. Impact Corporation resumed operations but only for its
winding up and dissolution.9 Due to Impact Corporation’s liability and cash flow problems, all of its
assets, namely, its machineries, equipment, office furniture and fixtures, were sold to scrap dealers to
answer for its arrears in rentals.

On 1 December 1995, the SSS-LCD filed an amended Petition10 in SSC Case No. 10048 wherein the
directors of Impact Corporation were directly impleaded as respondents, namely: Eduardo de Leon,
Ricardo de Leon,11 Pacita Fernandez, Consuelo Villanueva, and petitioner. The amounts sought to be
collected totaled P453,845.78 and P10,856.85 for the periods August 1980 to December 1984 and
August 1981 to July 1984, respectively, and the penalties for late remittance at the rate of 3% per month
from the date the contributions fell due until fully paid pursuant to Section 22(a) of the Social Security
Law,12 as amended, in the amounts of P49,941.67 and P2,474,662.82.

Period Unremitted Penalties Total

Amount (3% Interest Per Month)
August 1980 to December 1984 P 453,845.78 P49, 941.67 503,787.45
August 1981 to July 1984 P 10,856.85 P2, 474, 662.82 2,485,519.67

Summonses were not served upon Eduardo de Leon, Pacita Fernandez, and Consuelo Villanueva, their
whereabouts unknown. They were all later determined to be deceased. On the other hand, due to
failure to file his responsive pleading, Ricardo de Leon was declared in default.

Petitioner filed with the SSC a Motion to Dismiss13 on grounds of prescription, lack of cause of action and
cessation of business, but the Motion was denied for lack of merit.14 In her Answer with
Counterclaim15 dated 20 May 1999, petitioner averred that Impact Corporation had ceased operations
in 1980. In her defense, she insisted that she was a mere director without managerial functions, and she
ceased to be such in 1982. Even as a stockholder and director of Impact Corporation, petitioner
contended that she cannot be made personally liable for the corporate obligations of Impact
Corporation since her liability extended only up to the extent of her unpaid subscription, of which she
had none since her subscription was already fully paid. The petitioner raised the same arguments in her
Position Paper. 16

On 23 January 1998, Ricardo de Leon died following the death, too, of Pacita Fernandez died on 7
February 2000. In an Order dated 11 April 2000, the SSC directed the System to check if Impact
Corporation had leviable properties to which the investigating team of respondent SSS manifested that
the Impact Corporation had already been dissolved and its assets disposed of.17
In a Resolution dated 28 May 2003, the Social Security Commission ruled in favor of SSS and declared
petitioner liable to pay the unremitted contributions and penalties, stating the following:

WHEREFORE, premises considered, this Commission finds, and so holds, that respondents
Impact Corporation and/or Immaculada L. Garcia, as director and responsible officer of the said
corporation, is liable to pay the SSS the amounts of P442,988.93, representing the unpaid SS
contributions of their employees for the period August 1980 to December 1984, not inclusive,
and P10,856.85, representing the balance of the unpaid SS contributions in favor of Donato
Campos, Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period August 1980 to
December 1984, not inclusive, as well as the 3% per month penalty imposed thereon for late
payment in the amounts of P3,194,548.63 and P78,441.33, respectively, computed as of April
30, 2003. This is without prejudice to the right of the SSS to collect the penalties accruing after
April 30, 2003 and to institute other appropriate actions against the respondent corporation
and/or its responsible officers.

Should the respondents pay their liability for unpaid SSS contributions within sixty (60) days
from receipt of a copy of this Resolution, the 3% per month penalty for late payment thereof
shall be deemed condoned pursuant to SSC Res. No. 397-S.97, as amended by SSC Res. Nos. 112-
S.98 and 982-S.99, implementing the provision on condonation of penalty under Section 30 of
R.A. No. 8282.

In the event the respondents fail to pay their liabilities within the aforestated period, let a writ
of execution be issued, pursuant to Section 22 (c) [2] of the SS Law, as amended, for the
satisfaction of their liabilities to the SSS.18

Petitioner filed a Motion for Reconsideration19 of the afore-quoted Decision but it was denied for lack of
merit in an Order20 dated 4 August 2004, thus:

Nowhere in the questioned Resolution dated May 28, 2003 is it stated that the other directors
of the defunct Impact Corporation are absolved from their contribution and penalty liabilities to
the SSS. It is certainly farthest from the intention of the petitioner SSS or this Commission to pin
the entire liability of Impact Corporation on movant Immaculada L. Garcia, to the exclusion of
the directors of the corporation namely: Eduardo de Leon, Ricardo de Leon, Pacita Fernandez
and Conzuelo Villanueva, who were all impleaded as parties-respondents in this case.

The case record shows that there was failure of service of summonses upon respondents
Eduardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who are all deceased, for the
reason that their whereabouts are unknown. Moreover, neither the legal heirs nor the estate of
the defaulted respondent Ricardo de Leon were substituted as parties-respondents in this case
when he died on January 23, 1998. Needless to state, the Commission did not acquire
jurisdiction over the persons or estates of the other directors of Impact Corporation, hence, it
could not validly render any pronouncement as to their liabilities in this case.

Furthermore, the movant cannot raise in a motion for reconsideration the defense that she was
no longer a director of Impact Corporation in 1982, when she was allegedly eased out by the
managing directors of Impact Corporation as purportedly shown in the Deed of Sale and
Assignment of Shares of Stock dated January 22, 1982. This defense was neither pleaded in her
 Motion to Dismiss dated January 17, 1996 nor in her Answer with Counterclaim dated May 18,
1999 and is, thus, deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of Civil
Procedure, which has suppletory application to the Revised Rules of Procedure of the
Commission.

Finally, this Commission has already ruled in the Order dated April 27, 1999 that since the
original Petition was filed by the SSS on July 3, 1985, and was merely amended on December 1,
1995 to implead the responsible officers of Impact Corporation, without changing its causes of
action, the same was instituted well within the 20-year prescriptive period provided under
Section 22 (b) of the SS Law, as amended, considering that the contribution delinquency
assessment covered the period August 1980 to December 1984.

In view thereof, the instant Motion for Reconsideration is hereby denied for lack of merit.

Petitioner elevated her case to the Court of Appeals via a Petition for Review. Respondent SSS filed its
Comment dated 20 January 2005, and petitioner submitted her Reply thereto on 4 April 2005.

The Court of Appeals, applying Section 28(f) of the Social Security Law,21 again ruled against petitioner. It
dismissed the petitioner’s Petition in a Decision dated 2 June 2005, the dispositive portion of which
reads:

WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The assailed
Resolution dated 28 May 2003 and the Order dated 4 August 2004 of the Social Security
Commission are AFFIRMED in toto.22

Aggrieved, petitioner filed a Motion for Reconsideration of the appellate court’s Decision but her
Motion was denied in a Resolution dated 8 December 2005.

Hence, the instant Petition in which petitioner insists that the Court of Appeals committed grave error in
holding her solely liable for the collected but unremitted SSS premium contributions and the consequent
late penalty payments due thereon. Petitioner anchors her Petition on the following arguments:

I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING HEAD, DIRECTOR OR PARTNER
IS LIABLE ONLY FOR THE PENALTIES OF THE EMPLOYER CORPORATION AND NOT FOR UNPAID
SSS CONTRIBUTIONS OF THE EMPLOYER CORPORATION.

II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS OR PARTNERS WHO SHALL BE
LIABLE TOGETHER WITH THE CORPORATION. IN THIS CASE, PETITIONER HAS CEASED TO BE A
STOCKHOLDER OF IMPACT CORPORATION IN 1982. EVEN WHILE SHE WAS A STOCKHOLDER, SHE
NEVER PARTICIPATED IN THE DAILY OPERATIONS OF IMPACT CORPORATION.

III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY DIRECTORS, TRUSTEES OR OFFICERS
WHO PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY OF GROSS NEGLIGENCE AND BAD FAITH
SHALL BE PERSONALLY LIABLE. OTHERWISE, BEING A MERE STOCKHOLDER, SHE IS LIABLE ONLY
TO THE EXTENT OF HER SUBSCRIPTION.
 IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC LOSSES, EVENTS WHICH WERE
NEITHER DESIRED NOR CAUSED BY ANY ACT OF THE PETITIONER. THUS, BY REASON OF
FORTUITOUS EVENTS, THE PETITIONER SHOULD BE ABSOLVED FROM LIABILITY.

V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN EXERTING EFFORTS TO

ACQUIRE JURISDICTION OVER THE LEVIABLE ASSETS OF IMPACT CORPORATION, PERSON/S
AND/OR ESTATE/S OF THE OTHER DIRECTORS OR OFFICERS OF IMPACT CORPORATION.

VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT RENDERING A JUDGMENT BY

DEFAULT AGAINST THE DIRECTORS UPON WHOM IT ACQUIRED JURISDICTION.

Based on the foregoing, petitioner prays that the Decision dated 2 June 2005 and the Resolution dated 8
December 2005 of the Court of Appeals be reversed and set aside, and a new one be rendered absolving
her of any and all liabilities under the Social Security Law.

In sum, the core issue to be resolved in this case is whether or not petitioner, as the only surviving
director of Impact Corporation, can be made solely liable for the corporate obligations of Impact
Corporation pertaining to unremitted SSS premium contributions and penalties therefore.

As a covered employer under the Social Security Law, it is the obligation of Impact Corporation under
the provisions of Sections 18, 19 and 22 thereof, as amended, to deduct from its duly covered
employee’s monthly salaries their shares as premium contributions and remit the same to the SSS,
together with the employer’s shares of the contributions to the petitioner, for and in their behalf.

From all indications, the corporation has already been dissolved. Respondents are now going after
petitioner who is the only surviving director of Impact Corporation.

A cursory review of the alleged grave errors of law committed by the Court of Appeals above reveals
there seems to be no dispute as to the assessed liability of Impact Corporation for the unremitted SSS
premiums of its employees for the period January 1980 to December 1984.

There is also no dispute as to the fact that the employees’ SSS premium contributions have been
deducted from their salaries by Impact Corporation.

Petitioner in assailing the Court of Appeals Decision, distinguishes the penalties from the unremitted or
unpaid SSS premium contributions. She points out that although the appellate court is of the opinion
that the concerned officers of an employer corporation are liable for the penalties for non-remittance of
premiums, it still affirmed the SSC Resolution holding petitioner liable for the unpaid SSS premium
contributions in addition to the penalties.

Petitioner avers that under the aforesaid provision, the liability does not include liability for the
unremitted SSS premium contributions.

Petitioner’s argument is ridiculous. The interpretation petitioner would like us to adopt finds no support
in law or in jurisprudence. While the Court of Appeals Decision provided that Section 28(f) refers to the
liabilities pertaining to penalty for the non-remittance of SSS employee contributions, holding that it is
distinct from the amount of the supposed SSS remittances, petitioner mistakenly concluded that Section
28(f) is applicable only to penalties and not to the liability of the employer for the unremitted premium
contributions. Clearly, a simplistic interpretation of the law is untenable. It is a rule in statutory
construction that every part of the statute must be interpreted with reference to the context, i.e., that
every part of the statute must be considered together with the other parts, and kept subservient to the
general intent of the whole enactment.23 The liability imposed as contemplated under the foregoing
Section 28(f) of the Social Security Law does not preclude the liability for the unremitted amount.
Relevant to Section 28(f) is Section 22 of the same law.

SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Section
shall be remitted to the SSS within the first ten (10) days of each calendar month following the
month for which they are applicable or within such time as the Commission may prescribe.
Every employer required to deduct and to remit such contributions shall be liable for their
payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides
the contribution a penalty thereon of three percent (3%) per month from the date the
contribution falls due until paid. If deemed expedient and advisable by the Commission, the
collection and remittance of contributions shall be made quarterly or semi-annually in advance,
the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in advance
but not due shall be credited or refunded to his employer.

Under Section 22(a), every employer is required to deduct and remit such contributions penalty refers to
the 3% penalty that automatically attaches to the delayed SSS premium contributions. The spirit, rather
than the letter of a law determines construction of a provision of law. It is a cardinal rule in statutory
construction that in interpreting the meaning and scope of a term used in the law, a careful review of
the whole law involved, as well as the intendment of the law, must be made.24 Nowhere in the provision
or in the Decision can it be inferred that the persons liable are absolved from paying the unremitted
premium contributions.

Elementary is the rule that when laws or rules are clear, it is incumbent upon the judge to apply them
regardless of personal belief or predilections - when the law is unambiguous and unequivocal,
application not interpretation thereof is imperative.25 However, where the language of a statute is vague
and ambiguous, an interpretation thereof is resorted to. An interpretation thereof is necessary in
instances where a literal interpretation would be either impossible or absurd or would lead to an
injustice. A law is deemed ambiguous when it is capable of being understood by reasonably well-
informed persons in either of two or more senses.26 The fact that a law admits of different
interpretations is the best evidence that it is vague and ambiguous.27 In the instant case, petitioner
interprets Section 28(f) of the Social Security Law as applicable only to penalties and not to the liability
of the employer for the unremitted premium contributions. Respondents present a more logical
interpretation that is consistent with the provisions as a whole and with the legislative intent behind the
Social Security Law.

This Court cannot be made to accept an interpretation that would defeat the intent of the law and its
legislators.28

Petitioner also challenges the finding of the Court of Appeals that under Section 28(f) of the Social
Security Law, a mere director or officer of an employer corporation, and not necessarily a "managing"
director or officer, can be held liable for the unpaid SSS premium contributions.
Section 28(f) of the Social Security Law provides the following:

(f) If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be liable to
the penalties provided in this Act for the offense.

This Court agrees in petitioner’s observation that the SSS did not even deny nor rebut the claim that
petitioner was not the "managing head" of Impact Corporation. However, the Court of Appeals rightly
held that petitioner, as a director of Impact Corporation, is among those officers covered by Section
28(f) of the Social Security Law.

Petitioner invokes the rule in statutory construction called ejusdem generic; that is, where 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. According to petitioner, to
be held liable under Section 28(f) of the Social Security Law, one must be the "managing head,"
"managing director," or "managing partner." This Court though finds no need to resort to statutory
construction. Section 28(f) of the Social Security Law imposes penalty on:

(1) the managing head;

(2) directors; or

(3) partners, for offenses committed by a juridical person

The said provision does not qualify that the director or partner should likewise be a "managing director"
or "managing partner."29 The law is clear and unambiguous.

Petitioner nonetheless raises the defense that under Section 31 of the Corporation Code, only directors,
trustees or officers who participate in unlawful acts or are guilty of gross negligence and bad faith shall
be personally liable, and that being a mere stockholder, she is liable only to the extent of her
subscription.

Section 31 of the Corporation Code, stipulating on the liability of directors, trustees, or officers,
provides:

SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any personal
or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.

Basic is the rule that a corporation is invested by law with a personality separate and distinct from that
of the persons composing it as well as from that of any other legal entity to which it may be related. A
corporation is a juridical entity with legal personality separate and distinct from those acting for and in
its behalf and, in general, from the people comprising it. Following this, the general rule applied is that
obligations incurred by the corporation, acting through its directors, officers and employees, are its sole
liabilities.30 A director, officer, and employee of a corporation are generally not held personally liable for
obligations incurred by the corporation.

Being a mere fiction of law, however, there are peculiar situations or valid grounds that can exist to
warrant the disregard of its independent being and the lifting of the corporate veil. This situation might
arise when a corporation is used to evade a just and due obligation or to justify a wrong, to shield or
perpetrate fraud, to carry out other similar unjustifiable aims or intentions, or as a subterfuge to commit
injustice and so circumvent the law.31 Thus, Section 31 of the Corporation Law provides:

Taking a cue from the above provision, a corporate director, a trustee or an officer, may be held
solidarily liable with the corporation in the following instances:

1. When directors and trustees or, in appropriate cases, the officers of

a corporation--

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;

(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders
or members, and other persons.

2. When a director or officer has consented to the issuance of watered stocks or who, having
knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto.

3. When a director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarily liable with the Corporation.

4. When a director, trustee or officer is made, by specific provision of law, personally liable for
his corporate action. 32

The aforesaid provision states:

SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any personal
or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.

The situation of petitioner, as a director of Impact Corporation when said corporation failed to remit the
SSS premium contributions falls exactly under the fourth situation. Section 28(f) of the Social Security
Law imposes a civil liability for any act or omission pertaining to the violation of the Social Security Law,
to wit:
 (f) If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be liable to
the penalties provided in this Act for the offense.

In fact, criminal actions for violations of the Social Security Law are also provided under the Revised
Penal Code. The Social Security Law provides, in Section 28 thereof, to wit:

(h) Any employer who, after deducting the monthly contributions or loan amortizations from his
employees’ compensation, fails to remit the said deductions to the SSS within thirty (30) days
from the date they became due shall be presumed to have misappropriated such contributions
or loan amortizations and shall suffer the penalties provided in Article Three hundred fifteen of
the Revised Penal Code.

(i) Criminal action arising from a violation of the provisions of this Act may be commenced by
the SSS or the employee concerned either under this Act or in appropriate cases under the
Revised Penal Code: x x x.

Respondents would like this Court to apply another exception to the rule that the persons comprising a
corporation are not personally liable for acts done in the performance of their duties.

The Court of Appeals in the appealed Decision stated:

Anent the unpaid SSS contributions of Impact Corporation’s employees, the officers of a
corporation are liable in behalf of a corporation, which no longer exists or has ceased
operations. Although as a rule, the officers and members of a corporation are not personally
liable for acts done in performance of their duties, this rule admits of exception, one of which is
when the employer corporation is no longer existing and is unable to satisfy the judgment in
favor of the employee, the officers should be held liable for acting on behalf of the corporation.
Following the foregoing pronouncement, petitioner, as one of the directors of Impact
Corporation, together with the other directors of the defunct corporation, are liable for the
unpaid SSS contributions of their employees.33

On the other hand, the SSC, in its Resolution, presented this discussion:

Although as a rule, the officers and members of a corporation are not personally liable for acts
done in the performance of their duties, this rule admits of exceptions, one of which is when the
employer corporation is no longer existing and is unable to satisfy the judgment in favor of the
employee, the officers should be held liable for acting on behalf of the corporation. x x x.34

The rationale cited by respondents in the two preceding paragraphs need not have been applied
because the personal liability for the unremitted SSS premium contributions and the late penalty thereof
attaches to the petitioner as a director of Impact Corporation during the period the amounts became
due and demandable by virtue of a direct provision of law.

Petitioner’s defense that since Impact Corporation suffered irreversible economic losses, and by reason
of fortuitous events, she should be absolved from liability, is also untenable. The evidence adduced
totally belies this claim. A reference to the copy of the Petition for Suspension of Payments filed by
Impact Corporation on 18 March 1983 before the SEC contained an admission that:

"[I]t has been and still is engaged in business" and "has been and still is engaged in the business
of manufacturing aluminum tube containers" and "in brief, it is an on-going, viable, and
profitable enterprise" which has "sufficient assets" and "actual and potential income-generation
capabilities."

The foregoing document negates petitioner’s assertion and supports the contention that during the
period involved Impact Corporation was still engaged in business and was an ongoing, viable, profitable
enterprise. In fact, the latest SSS form RIA submitted by Impact Corporation is dated 7 May 1984. The
assessed SSS premium contributions and penalty are obligations imposed upon Impact Corporation by
law, and should have been remitted to the SSS within the first 10 days of each calendar month following
the month for which they are applicable or within such time as the SSC prescribes.35

This Court also notes the evident failure on the part of SSS to issue a judgment in default against Ricardo
de Leon, who was the vice-president and officer of the corporation, upon his non-filing of a responsive
pleading after summons was served on him. As can be gleaned from Section 11 of the SSS Revised Rules
of Procedure, the Commissioner is mandated to render a decision either granting or denying the
petition. Under the aforesaid provision, if respondent fails to answer within the time prescribed, the
Hearing Commissioner may, upon motion of petitioner, or motu proprio, declare respondent in default
and proceed to receive petitioner’s evidence ex parte and thereafter recommend to the Commission
either the granting or denial of the petition as the evidence may warrant.36

On a final note, this Court sees it proper to quote verbatim respondents’ prefatory statement in
their Comment:

The Social Security System is a government agency imbued with a salutary purpose to carry out
the policy of the State to establish, develop, promote and perfect a sound and viable tax exempt
social security system suitable to the needs of the people throughout the Philippines which shall
promote social justice and provide meaningful protection to members and their beneficiaries
against the hazards of disability, sickness, maternity, old-age, death and other contingencies
resulting in loss of income or financial burden.

The soundness and viability of the funds of the SSS in turn depends on the contributions of its
covered employee and employer members, which it invests in order to deliver the basic social
benefits and privileges to its members. The entitlement to and amount of benefits and privileges
of the covered members are contribution-based. Both the soundness and viability of the funds
of the SSS as well as the entitlement and amount of benefits and privileges of its members are
adversely affected to a great extent by the non-remittance of the much-needed contributions.37

The sympathy of the law on social security is toward its beneficiaries. This Court will not turn a blind eye
on the perpetration of injustice. This Court cannot and will not allow itself to be made an instrument nor
be privy to any attempt at the perpetration of injustice.

Following the doctrine laid down in Laguna Transportation Co., Inc. v. Social Security System,38 this Court
rules that although a corporation once formed is conferred a juridical personality separate and distinct
from the persons comprising it, it is but a legal fiction introduced for purposes of convenience and to
subserve the ends of justice. The concept cannot be extended to a point beyond its reasons and policy,
and when invoked in support of an end subversive of this policy, will be disregarded by the courts.

WHEREFORE, pursuant to the foregoing, the Decision of the Court of Appeals dated 2 June 2005 in CA-
G.R. SP No. 85923 is hereby AFFIRMED WITH FINALITY. Petitioner Immaculada L. Garcia, as sole
surviving director of Impact Corporation is hereby ORDERED to pay for the collected and unremitted SSS
contributions of Impact Corporation. The case is REMANDED to the SSS for computation of the exact
amount and collection thereof.

SO ORDERED.

IV. Executive Construction

1. Commissioner of Customs v. Hypermix Feeds, G.R. No. 150947, 15 July 2003

G.R. No. 179579 February 1, 2012

COMMISSIONER OF CUSTOMS and the DISTRICT COLLECTOR OF THE PORT OF SUBIC, Petitioners,
vs.
HYPERMIX FEEDS CORPORATION, Respondent.

DECISION

SERENO, J.:

Before us is a Petition for Review under Rule 45,1 assailing the Decision2 and the Resolution3 of the Court
of Appeals (CA), which nullified the Customs Memorandum Order (CMO) No. 27-20034 on the tariff
classification of wheat issued by petitioner Commissioner of Customs.

The antecedent facts are as follows:

On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the
Memorandum, for tariff purposes, wheat was classified according to the following: (1) importer or
consignee; (2) country of origin; and (3) port of discharge.5 The regulation provided an exclusive list of
corporations, ports of discharge, commodity descriptions and countries of origin. Depending on these
factors, wheat would be classified either as food grade or feed grade. The corresponding tariff for food
grade wheat was 3%, for feed grade, 7%.

CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification
Review Committee (VCRC) cases. Under this procedure, the release of the articles that were the subject
of protest required the importer to post a cash bond to cover the tariff differential.6

A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a Petition for
Declaratory Relief7 with the Regional Trial Court (RTC) of Las Piñas City. It anticipated the
implementation of the regulation on its imported and perishable Chinese milling wheat in transit from
China.8 Respondent contended that CMO 27-2003 was issued without following the mandate of the
Revised Administrative Code on public participation, prior notice, and publication or registration with
the University of the Philippines Law Center.

Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without
the benefit of prior assessment and examination; thus, despite having imported food grade wheat, it
would be subjected to the 7% tariff upon the arrival of the shipment, forcing them to pay 133% more
than was proper.

Furthermore, respondent claimed that the equal protection clause of the Constitution was violated
when the regulation treated non-flour millers differently from flour millers for no reason at all.

Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature.

On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days
from notice.9

Petitioners thereafter filed a Motion to Dismiss.10 They alleged that: (1) the RTC did not have jurisdiction
over the subject matter of the case, because respondent was asking for a judicial determination of the
classification of wheat; (2) an action for declaratory relief was improper; (3) CMO 27-2003 was an
internal administrative rule and not legislative in nature; and (4) the claims of respondent were
speculative and premature, because the Bureau of Customs (BOC) had yet to examine respondent’s
products. They likewise opposed the application for a writ of preliminary injunction on the ground that
they had not inflicted any injury through the issuance of the regulation; and that the action would be
contrary to the rule that administrative issuances are assumed valid until declared otherwise.

On 28 February 2005, the parties agreed that the matters raised in the application for preliminary
injunction and the Motion to Dismiss would just be resolved together in the main case. Thus, on 10
March 2005, the RTC rendered its Decision11 without having to resolve the application for preliminary
injunction and the Motion to Dismiss.

The trial court ruled in favor of respondent, to wit:

WHEREFORE, in view of the foregoing, the Petition is GRANTED and the subject Customs Memorandum
Order 27-2003 is declared INVALID and OF NO FORCE AND EFFECT. Respondents Commissioner of
Customs, the District Collector of Subic or anyone acting in their behalf are to immediately cease and
desist from enforcing the said Customs Memorandum Order 27-2003.

SO ORDERED.12

The RTC held that it had jurisdiction over the subject matter, given that the issue raised by respondent
concerned the quasi-legislative powers of petitioners. It likewise stated that a petition for declaratory
relief was the proper remedy, and that respondent was the proper party to file it. The court considered
that respondent was a regular importer, and that the latter would be subjected to the application of the
regulation in future transactions.
With regard to the validity of the regulation, the trial court found that petitioners had not followed the
basic requirements of hearing and publication in the issuance of CMO 27-2003. It likewise held that
petitioners had "substituted the quasi-judicial determination of the commodity by a quasi-legislative
predetermination."13 The lower court pointed out that a classification based on importers and ports of
discharge were violative of the due process rights of respondent.

Dissatisfied with the Decision of the lower court, petitioners appealed to the CA, raising the same
allegations in defense of CMO 27-2003.14 The appellate court, however, dismissed the appeal. It held
that, since the regulation affected substantial rights of petitioners and other importers, petitioners
should have observed the requirements of notice, hearing and publication.

Hence, this Petition.

Petitioners raise the following issues for the consideration of this Court:

I. THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN ACCORD

WITH THE LAW AND PREVAILING JURISPRUDENCE.

II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE TRIAL COURT HAS
JURISDICTION OVER THE CASE.

The Petition has no merit.

We shall first discuss the propriety of an action for declaratory relief.

Rule 63, Section 1 provides:

Who may file petition. – Any person interested under a deed, will, contract or other written instrument,
or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation thereof, bring an action in the appropriate
Regional Trial Court to determine any question of construction or validity arising, and for a declaration
of his rights or duties, thereunder.

The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must
be ripe for judicial determination.15 We find that the Petition filed by respondent before the lower court
meets these requirements.

First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner
Commissioner of Customs. In Smart Communications v. NTC,16 we held:

The determination of whether a specific rule or set of 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 includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)

Meanwhile, in Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance

Secretary,17 we said:

xxx [A] legislative rule is in the nature of subordinate legislation, designed to implement a primary
legislation by providing the details thereof. xxx

In addition such rule must be published. On the other hand, interpretative rules are designed to provide
guidelines to the law which the administrative agency is in charge of enforcing.

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is
within the delegated authority of the administrative agency; (ii) whether it is reasonable;
and (iii) whether it was issued pursuant to proper procedure. But the court is not free to substitute its
judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of
administrative judgment, has committed those questions to administrative judgments and not to judicial
judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the
correctness or propriety of the rule. As a matter of power a court, when confronted with an
interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and
substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the
interpretative rule. (Emphasis supplied)

Second, the controversy is between two parties that have adverse interests. Petitioners are summarily
imposing a tariff rate that respondent is refusing to pay.

Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-
2003. Respondent has adequately shown that, as a regular importer of wheat, on 14 August 2003, it has
actually made shipments of wheat from China to Subic. The shipment was set to arrive in December
2003. Upon its arrival, it would be subjected to the conditions of CMO 27-2003. The regulation calls for
the imposition of different tariff rates, depending on the factors enumerated therein. Thus, respondent
alleged that it would be made to pay the 7% tariff applied to feed grade wheat, instead of the 3% tariff
on food grade wheat. In addition, respondent would have to go through the procedure under CMO 27-
2003, which would undoubtedly toll its time and resources. The lower court correctly pointed out as
follows:

xxx As noted above, the fact that petitioner is precisely into the business of importing wheat, each and
every importation will be subjected to constant disputes which will result into (sic) delays in the delivery,
setting aside of funds as cash bond required in the CMO as well as the resulting expenses thereof. It is
easy to see that business uncertainty will be a constant occurrence for petitioner. That the sums
involved are not minimal is shown by the discussions during the hearings conducted as well as in the
pleadings filed. It may be that the petitioner can later on get a refund but such has been foreclosed
because the Collector of Customs and the Commissioner of Customs are bound by their own CMO.
Petitioner cannot get its refund with the said agency. We believe and so find that Petitioner has
presented such a stake in the outcome of this controversy as to vest it with standing to file this
petition.18 (Emphasis supplied)

Finally, the issue raised by respondent is ripe for judicial determination, because litigation is
inevitable19 for the simple and uncontroverted reason that respondent is not included in the
enumeration of flour millers classified as food grade wheat importers. Thus, as the trial court stated, it
would have to file a protest case each time it imports food grade wheat and be subjected to the 7%
tariff.

It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of
the case.

Considering that the questioned regulation would affect the substantive rights of respondent as
explained above, it therefore follows that petitioners should have applied the pertinent provisions of
Book VII, Chapter 2 of the Revised Administrative Code, to wit:

Section 3. Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3)
certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which
are not filed within three (3) months from that date shall not thereafter be the bases of any sanction
against any party of persons.

xxx xxx xxx

Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as
practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity
to submit their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have
been published in a newspaper of general circulation at least two (2) weeks before the first
hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

When an administrative rule is merely interpretative in nature, its applicability needs nothing further
than its bare issuance, for it gives no real consequence more than what the law itself has already
prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the
means that can facilitate or render least cumbersome the implementation of the law but substantially
increases the burden of those governed, it behooves the agency to accord at least to those directly
affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the
force and effect of law.20

Likewise, in Tañada v. Tuvera,21 we held:

The clear object of the above-quoted provision is to give the general public adequate notice of the
various laws which are to regulate their actions and conduct as citizens. Without such notice and
publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It
would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of
which he had no notice whatsoever, not even a constructive one.

Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken
so vital significance that at this time when the people have bestowed upon the President a power
heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the
debates and deliberations in the Batasan Pambansa – and for the diligent ones, ready access to the
legislative records – no such publicity accompanies the law-making process of the President. Thus,
without publication, the people have no means of knowing what presidential decrees have actually been
promulgated, much less a definite way of informing themselves of the specific contents and texts of
such decrees. (Emphasis supplied)

Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code,
the assailed regulation must be struck down.

Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for being violative
of the equal protection clause of the Constitution.

The equal protection clause means that no person or class of persons shall be deprived of the same
protection of laws enjoyed by other persons or other classes in the same place in like circumstances.
Thus, the guarantee of the equal protection of laws is not violated if there is a reasonable classification.
For a classification to be reasonable, it must be shown that (1) it rests on substantial distinctions; (2) it is
germane to the purpose of the law; (3) it is not limited to existing conditions only; and (4) it applies
equally to all members of the same class.22

Unfortunately, CMO 27-2003 does not meet these requirements. We do not see how the quality of
wheat is affected by who imports it, where it is discharged, or which country it came from.

Thus, on the one hand, even if other millers excluded from CMO 27-2003 have imported food grade
wheat, the product would still be declared as feed grade wheat, a classification subjecting them to 7%
tariff. On the other hand, even if the importers listed under CMO 27-2003 have imported feed grade
wheat, they would only be made to pay 3% tariff, thus depriving the state of the taxes due. The
regulation, therefore, does not become disadvantageous to respondent only, but even to the state.

It is also not clear how the regulation intends to "monitor more closely wheat importations and thus
prevent their misclassification." A careful study of CMO 27-2003 shows that it not only fails to achieve
this end, but results in the opposite. The application of the regulation forecloses the possibility that
other corporations that are excluded from the list import food grade wheat; at the same time, it creates
an assumption that those who meet the criteria do not import feed grade wheat. In the first case,
importers are unnecessarily burdened to prove the classification of their wheat imports; while in the
second, the state carries that burden.

Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the
customs officer’s duties mandated by Section 1403 of the Tariff and Customs Law, as amended. The law
provides:
Section 1403. – Duties of Customs Officer Tasked to Examine, Classify, and Appraise Imported Articles. –
The customs officer tasked to examine, classify, and appraise imported articles shall determine whether
the packages designated for examination and their contents are in accordance with the declaration in
the entry, invoice and other pertinent documents and shall make return in such a manner as to indicate
whether the articles have been truly and correctly declared in the entry as regard their quantity,
measurement, weight, and tariff classification and not imported contrary to law. He shall submit
samples to the laboratory for analysis when feasible to do so and when such analysis is necessary for the
proper classification, appraisal, and/or admission into the Philippines of imported articles.

Likewise, the customs officer shall determine the unit of quantity in which they are usually bought and
sold, and appraise the imported articles in accordance with Section 201 of this Code.

Failure on the part of the customs officer to comply with his duties shall subject him to the penalties
prescribed under Section 3604 of this Code.1âwphi1

The provision mandates that the customs officer must first assess and determine the classification of the
imported article before tariff may be imposed. Unfortunately, CMO 23-2007 has already classified the
article even before the customs officer had the chance to examine it. In effect, petitioner Commissioner
of Customs diminished the powers granted by the Tariff and Customs Code with regard to wheat
importation when it no longer required the customs officer’s prior examination and assessment of the
proper classification of the wheat.

It is well-settled that rules and regulations, which are the product of a delegated power to create new
and additional legal provisions that have the effect of law, should be within the scope of the statutory
authority granted by the legislature to the administrative agency. It is required that the regulation be
germane to the objects and purposes of the law; and that it be not in contradiction to, but in conformity
with, the standards prescribed by law.23

In summary, petitioners violated respondent’s right to due process in the issuance of CMO 27-2003
when they failed to observe the requirements under the Revised Administrative Code. Petitioners
likewise violated respondent’s right to equal protection of laws when they provided for an unreasonable
classification in the application of the regulation. Finally, petitioner Commissioner of Customs went
beyond his powers of delegated authority when the regulation limited the powers of the customs officer
to examine and assess imported articles.

WHEREFORE, in view of the foregoing, the Petition is DENIED.

SO ORDERED.

2. Victorias Milling Co. Inc. v. Social Security Commission, 4 SCRA 627

G.R. No. L-16704 March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant,

vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.

BARRERA, J.:

On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: .

Effective November 1, 1958, all Employers in computing the premiums due the System, will take
into consideration and include in the Employee's remuneration all bonuses and overtime pay, as
well as the cash value of other media of remuneration. All these will comprise the Employee's
remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will be based, up to
a maximum of P500 for any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the
Social Security Commission in effect protesting against the circular as contradictory to a previous
Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of
the employers' and employees' respective monthly premium contributions, and submitting, "In order to
assist your System in arriving at a proper interpretation of the term 'compensation' for the purposes of"
such computation, their observations on Republic Act 1161 and its amendment and on the general
interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned
the validity of the circular for lack of authority on the part of the Social Security Commission to
promulgate it without the approval of the President and for lack of publication in the Official Gazette.

Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or
regulation that needed the approval of the President and publication in the Official Gazette to be
effective, but a mere administrative interpretation of the statute, a mere statement of general policy or
opinion as to how the law should be construed.

Not satisfied with this ruling, petitioner comes to this Court on appeal.

The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as
contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to
adopt, amend and repeal subject to the approval of the President such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act."

There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body. When
an administrative agency promulgates rules and regulations, it "makes" a new law with the force and
effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets
a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and
regulations when promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and compliance therewith may be
enforced by a penal sanction provided in the law. This is so because statutes are usually couched in
general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the
legislature. The details and the manner of carrying out the law are often times left to the administrative
agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the
product of a delegated power to create new or additional legal provisions that have the effect of law.
(Davis, op. cit., p. 194.) .

A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its
scope is within the statutory authority granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other
hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally
determine what the law means.

Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of
the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of
Republic Act No. 1161 which, before its amendment, reads as follows: .

(f) Compensation — All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except (1) that part of the remuneration in
excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3)
dismissal and all other payments which the employer may make, although not legally required
to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation — All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except that part of the remuneration in
excess of P500.00 received during the month.

It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given
in addition to the regular or base pay were expressly excluded, or exempted from the definition of the
term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became
necessary for the Social Security Commission to interpret the effect of such deletion or elimination.
Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding
of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or
detail that was not already in the law as amended. It merely stated and circularized the opinion of the
Commission as to how the law should be construed. 1äwphï1.ñët

The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does
not support its contention that the circular in question is a rule or regulation. What was there said was
merely that a regulation may be incorporated in the form of a circular. Such statement simply meant
that the substance and not the form of a regulation is decisive in determining its nature. It does not lay
down a general proposition of law that any circular, regardless of its substance and even if it is only
interpretative, constitutes a rule or regulation which must be published in the Official Gazette before it
could take effect.

The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present
case, because the penalty that may be incurred by employers and employees if they refuse to pay the
corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not
by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions
contained in Section 27(c) and (f) of Republic Act No. 1161.
We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of
what, in the light of the amendment of the law, they should include in determining the monthly
compensation of their employees upon which the social security contributions should be based, and
that such circular did not require presidential approval and publication in the Official Gazette for its
effectivity.

It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular
No. 22, is correct. The express elimination among the exemptions excluded in the old law, of all
bonuses, allowances and overtime pay in the determination of the "compensation" paid to employees
makes it imperative that such bonuses and overtime pay must now be included in the employee's
remuneration in pursuance of the amendatory law. It is true that in previous cases, this Court has held
that bonus is not demandable because it is not part of the wage, salary, or compensation of the
employee. But the question in the instant case is not whether bonus is demandable or not as part of
compensation, but whether, after the employer does, in fact, give or pay bonus to his employees, such
bonuses shall be considered compensation under the Social Security Act after they have been received
by the employees. While it is true that terms or words are to be interpreted in accordance with their
well-accepted meaning in law, nevertheless, when such term or word is specifically defined in a
particular law, such interpretation must be adopted in enforcing that particular law, for it can not be
gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning
for some other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined
what "compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such
definition by deleting same exemptions authorized in the original Act. By virtue of this express
substantial change in the phraseology of the law, whatever prior executive or judicial construction may
have been given to the phrase in question should give way to the clear mandate of the new law.

IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against
appellant. So ordered.

V. Judicial Construction

A. Basis, Extent, and Limitations

1. Article VIII, Section 1 and Section 4 of the 1987 Constitution

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government.

Section 4. (1) The Supreme Court shall be composed of a Chief Justice and fourteen Associate Justices. It
may sit en banc or in its discretion, in division of three, five, or seven Members. Any vacancy shall be filled
within ninety days from the occurrence thereof.
(2) All cases involving the constitutionality of a treaty, international or executive agreement, or law, which
shall be heard by the Supreme Court en banc, and all other cases which under the Rules of Court are
required to be heard en banc, including those involving the constitutionality, application, or operation of
presidential decrees, proclamations, orders, instructions, ordinances, and other regulations, shall be
decided with the concurrence of a majority of the Members who actually took part in the deliberations
on the issues in the case and voted thereon.

(3) Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority
of the Members who actually took part in the deliberations on the issues in the case and voted thereon,
and in no case without the concurrence of at least three of such Members. When the required number is
not obtained, the case shall be decided en banc: Provided, that no doctrine or principle of law laid down
by the court in a decision rendered en banc or in division may be modified or reversed except by the court
sitting en banc.

2. Record of the Constitutional Commission, 434-436 (1986)

3. Endencia v. David, 93 Phil. 696 (1953)

G.R. No. L-6355-56 August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,

vs.
SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of
Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino David as Collector of
Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of P1,744.45, representing the
income tax collected on his salary as Associate Justice of the Court of Appeals in 1951, and to Justice
Fernando Jugo the amount of P2,345.46, representing the income tax collected on his salary from
January 1,1950 to October 19, 1950, as Presiding Justice of the Court of Appeals, and from October 20,
1950 to December 31,1950, as Associate Justice of the Supreme Court, without special pronouncement
as to costs.

Because of the similarity of the two cases, involving as they do the same question of law, they were
jointly submitted for determination in the lower court. Judge Higinio B. Macadaeg presiding, in a rather
exhaustive and well considered decision found and held that under the doctrine laid down by this Court
in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of income taxes from the salaries of Justice
Jugo and Justice Endencia was a diminution of their compensation and therefore was in violation of the
Constitution of the Philippines, and so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the arguments
pro and cons involved in the case of Perfecto vs. Meer, supra, which are raised, brought up and
presented here. In that case, we have held despite the ruling enunciated by the United States Federal
Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S., 277, that taxing the salary of a judicial
officer in the Philippines is a diminution of such salary and so violates the Constitution. We shall now
confine our-selves to a discussion and determination of the remaining question of whether or not
Republic Act No. 590, particularly section 13, can justify and legalize the collection of income tax on the
salary of judicial officers.

According to the brief of the Solicitor General on behalf of appellant Collector of Internal Revenue, our
decision in the case of Perfecto vs. Meer, supra, was not received favorably by Congress, because
immediately after its promulgation, Congress enacted Republic Act No. 590. To bring home his point, the
Solicitor General reproduced what he considers the pertinent discussion in the Lower House of House
Bill No. 1127 which became Republic Act No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office
during good behavior, until they reach the age of seventy years, or become incapacitated to
discharge the duties of their office. They shall receive such compensation as may be fixed by
law, which shall not be diminished during their continuance in office. Until the Congress shall
provide otherwise, the Chief Justice of the Supreme Court shall receive an annual compensation
of sixteen thousand pesos, and each Associate Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the Perfecto
case that judicial officers are exempt from the payment of income tax on their salaries, because the
collection thereof by the Government was a decrease or diminution of their salaries during their
continuance in office, a thing which is expressly prohibited by the Constitution. Thereafter, according to
the Solicitor General, because Congress did not favorably receive the decision in the Perfecto case,
Congress promulgated Republic Act No. 590, if not to counteract the ruling in that decision, at least now
to authorize and legalize the collection of income tax on the salaries of judicial officers. We quote
section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the Philippines shall
be considered as exempt from the income tax, payment of which is hereby declared not to be
dimunition of his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly
section 9, Article VIII, has held that judicial officers are exempt from payment of income tax on their
salaries, because the collection thereof was a diminution of such salaries, specifically prohibited by the
Constitution. Now comes the Legislature and in section 13, Republic Act No. 590, says that "no salary
wherever received by any public officer of the Republic (naturally including a judicial officer) shall be
considered as exempt from the income tax," and proceeds to declare that payment of said income tax is
not a diminution of his compensation. Can the Legislature validly do this? May the Legislature lawfully
declare the collection of income tax on the salary of a public official, specially a judicial officer, not a
decrease of his salary, after the Supreme Court has found and decided otherwise? To determine this
question, we shall have to go back to the fundamental principles regarding separation of powers.
Under our system of constitutional government, the Legislative department is assigned the power to
make and enact laws. The Executive department is charged with the execution of carrying out of the
provisions of said laws. But the interpretation and application of said laws belong exclusively to the
Judicial department. And this authority to interpret and apply the laws extends to the Constitution.
Before the courts can determine whether a law is constitutional or not, it will have to interpret and
ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in order
to decide whether there is a conflict between the two, because if there is, then the law will have to give
way and has to be declared invalid and unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may not limit or
restrict the power granted to the courts by the Constitution. (Bandy vs. Mickelson et al., 44N.
W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the
Constitution, it is the duty of the courts to declare the act unconstitutional because they cannot
shrink from it without violating their oaths of office. This duty of the courts to maintain the
Constitution as the fundamental law of the state is imperative and unceasing; and, as Chief
Justice Marshall said, whenever a statute is in violation of the fundamental law, the courts must
so adjudge and thereby give effect to the Constitution. Any other course would lead to the
destruction of the Constitution. Since the question as to the constitutionality of a statute is a
judicial matter, the courts will not decline the exercise of jurisdiction upon the suggestion that
action might be taken by political agencies in disregard of the judgment of the judicial tribunals.
(11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important functions
in trusted to the judiciary are the interpreting of Constitutions and, as a closely connected
power, the determination of whether laws and acts of the legislature are or are not contrary to
the provisions of the Federal and State Constitutions. (11 Am. Jur., 905.).

By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that taxing the salary
of a judicial officer is not a decrease of compensation. This is a clear example of interpretation or
ascertainment of the meaning of the phrase "which shall not be diminished during their continuance in
office," found in section 9, Article VIII of the Constitution, referring to the salaries of judicial officers. This
act of interpreting the Constitution or any part thereof by the Legislature is an invasion of the well-
defined and established province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act
declaratory of what the law was before its passage, so as to give it any binding weight with the
courts. A legislative definition of a word as used in a statute is not conclusive of its meaning as
used elsewhere; otherwise, the legislature would be usurping a judicial function in defining a
term. (11 Am. Jur., 914, emphasis supplied)

The legislature cannot, upon passing a law which violates a constitutional provision, validate it
so as to prevent an attack thereon in the courts, by a declaration that it shall be so construed as
not to violate the constitutional inhibition. (11 Am. Jur., 919, emphasis supplied)
We have already said that the Legislature under our form of government is assigned the task and the
power to make and enact laws, but not to interpret them. This is more true with regard to the
interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative
department. If the Legislature may declare what a law means, or what a specific portion of the
Constitution means, especially after the courts have in actual case ascertain its meaning by
interpretation and applied it in a decision, this would surely cause confusion and instability in judicial
processes and court decisions. Under such a system, a final court determination of a case based on a
judicial interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the Legislative department.
That would be neither wise nor desirable, besides being clearly violative of the fundamental, principles
of our constitutional system of government, particularly those governing the separation of powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we believe that
the collection of income tax on a salary is an actual and evident diminution thereof. Under the old
system where the in-come tax was paid at the end of the year or sometime thereafter, the decrease
may not be so apparent and clear. All that the official who had previously received his full salary was
called upon to do, was to fulfill his obligation and to exercise his privilege of paying his income tax on his
salary. His salary fixed by law was received by him in the amount of said tax comes from his other
sources of income, he may not fully realize the fact that his salary had been decreased in the amount of
said income tax. But under the present system of withholding the income tax at the source, where the
full amount of the income tax corresponding to his salary is computed in advance and divided into equal
portions corresponding to the number of pay-days during the year and actually deducted from his salary
corresponding to each payday, said official actually does not receive his salary in full, because the
income tax is deducted therefrom every payday, that is to say, twice a month. Let us take the case of
Justice Endencia. As Associate Justice of the Court of Appeals, his salary is fixed at p12,000 a year, that is
to say, he should receive P1,000 a month or P500 every payday, — fifteenth and end of month. In the
present case, the amount collected by the Collector of Internal Revenue on said salary is P1,744.45 for
one year. Divided by twelve (months) we shall have P145.37 a month. And further dividing it by two
paydays will bring it down to P72.685, which is the income tax deducted form the collected on his salary
each half month. So, if Justice Endencia's salary as a judicial officer were not exempt from payment of
the income tax, instead of receiving P500 every payday, he would be actually receiving P427.31 only,
and instead of receiving P12,000 a year, he would be receiving but P10,255.55. Is it not therefor clear
that every payday, his salary is actually decreased by P72.685 and every year is decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No. 1127, which became
Republic Act No. 590, it would seem that one of the main reasons behind the enactment of the law was
the feeling among certain legislators that members of the Supreme Court should not enjoy any
exemption and that as citizens, out of patriotism and love for their country, they should pay income tax
on their salaries. It might be stated in this connection that the exemption is not enjoyed by the members
of the Supreme Court alone but also by all judicial officers including Justices of the Court of Appeals and
judges of inferior courts. The exemption also extends to other constitutional officers, like the President
of the Republic, the Auditor General, the members of the Commission on Elections, and possibly
members of the Board of Tax Appeals, commissioners of the Public Service Commission, and judges of
the Court of Industrial Relations. Compares to the number of all these officials, that of the Supreme
Court Justices is relatively insignificant. There are more than 990 other judicial officers enjoying the
exemption, including 15 Justices of the Court of Appeals, about 107 Judges of First Instance, 38
Municipal Judges and about 830 Justices of the Peace. The reason behind the exemption in the
Constitution, as interpreted by the United States Federal Supreme Court and this Court, is to preserve
the independence of the Judiciary, not only of this High Tribunal but of the other courts, whose present
membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on public
policy. As said by Justice Van Devanter of the United States Supreme Court in the case of Evans vs. Gore
(253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the judges, but,
like the clause in respect of tenure, to attract good and competent men to the bench and to
promote that independence of action and judgment which is essential to the maintenance of
the guaranties, limitations and pervading principles of the Constitution and to the
administration of justice without respect to person and with equal concern for the poor and the
rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation
imposed in the public interest; in other words, not restrictively, but in accord with its spirit and
the principle on which it proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this exemption,
especially when the great bulk thereof are justices of the peace, many of them receiving as low as P200
a month, and considering further the other exemptions allowed by the income tax law, such as P3,000
for a married person and P600 for each dependent, the amount of national revenue to be derived from
income tax on the salaries of judicial officers, were if not for the constitutional exemption, could not be
large or substantial. But even if it were otherwise, it should not affect, much less outweigh the purpose
and the considerations that prompted the establishment of the constitutional exemption. In the same
case of Evans vs. Gore, supra, the Federal Supreme Court declared "that they (fathers of the
Constitution) regarded the independence of the judges as far as greater importance than any revenue
that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of income
tax on his salary, as a privilege . It is already attached to his office, provided and secured by the
fundamental law, not primarily for his benefit, but based on public interest, to secure and preserve his
independence of judicial thought and action. When we come to the members of the Supreme Court, this
excemption to them is relatively of short duration. Because of the limited membership in this High
Tribunal, eleven, and due to the high standards of experience, practice and training required, one
generally enters its portals and comes to join its membership quite late in life, on the aver-age, around
his sixtieth year, and being required to retire at seventy, assuming that he does not die or become
incapacitated earlier, naturally he is not in a position to receive the benefit of exemption for long. It is
rather to the justices of the peace that the exemption can give more benefit. They are relatively more
numerous, and because of the meager salary they receive, they can less afford to pay the income tax on
it and its diminution by the amount of the income tax if paid would be real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based
on public policy or public interest. While all other citizens are subject to arrest when charged with the
commission of a crime, members of the Senate and House of Representatives except in cases of treason,
felony and breach of the peace are exempt from arrest, during their attendance in the session of the
Legislature; and while all other citizens are generally liable for any speech, remark or statement, oral or
written, tending to cause the dishonor, discredit or contempt of a natural or juridical person or to
blacken the memory of one who is dead, Senators and Congressmen in making such statements during
their sessions are extended immunity and exemption.
And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and
juridical, are exempt from taxes on their lands, buildings and improvements thereon when used
exclusively for educational purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].) Holders
of government bonds are exempted from the payment of taxes on the income or interest they receive
therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by Republic Act No. 566).
Payments or income received by any person residing in the Philippines under the laws of the United
States administered by the United States Veterans Administration are exempt from taxation. (Republic
Act No. 360). Funds received by officers and enlisted men of the Philippine Army who served in the
Armed Forces of the United States, allowances earned by virtue of such services corresponding to the
taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No. 210). The
payment of wages and allowances of officers and enlisted men of the Army Forces of the Philippines
sent to Korea are also exempted from taxation. (Republic Act No. 35). In other words, for reasons of
public policy and public interest, a citizen may justifiably by constitutional provision or statute be
exempted from his ordinary obligation of paying taxes on his income. Under the same public policy and
perhaps for the same it not higher considerations, the framers of the Constitution deemed it wise and
necessary to exempt judicial officers from paying taxes on their salaries so as not to decrease their
compensation, thereby insuring the independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect
that the collection of income tax on the salary of a judicial officer is a diminution thereof and so violates
the Constitution. We further hold that the interpretation and application of the Constitution and of
statutes is within the exclusive province and jurisdiction of the Judicial department, and that in enacting
a law, the Legislature may not legally provide therein that it be interpreted in such a way that it may not
violate a Constitutional prohibition, thereby tying the hands of the courts in their task of later
interpreting said statute, specially when the interpretation sought and provided in said statute runs
counter to a previous interpretation already given in a case by the highest court of the land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed, with no
pronouncement as to costs.

4. Marcos v. Manglapus, G.R. No. 88211, 15 September 1989

G.R. No. 88211 September 15, 1989

FERDINAND E. MARCOS, IMELDA R. MARCOS, FERDINAND R. MARCOS, JR., IRENE M. ARANETA, IMEE
MANOTOC, TOMAS MANOTOC, GREGORIO ARANETA, PACIFICO E. MARCOS, NICANOR YÑIGUEZ and
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), represented by its President, CONRADO F.
ESTRELLA, petitioners,
vs.
HONORABLE RAUL MANGLAPUS, CATALINO MACARAIG, SEDFREY ORDOÑEZ, MIRIAM DEFENSOR
SANTIAGO, FIDEL RAMOS, RENATO DE VILLA, in their capacity as Secretary of Foreign Affairs,
Executive Secretary, Secretary of Justice, Immigration Commissioner, Secretary of National Defense
and Chief of Staff, respectively, respondents.
CORTES, J.:

Before the Court is a contreversy of grave national importance. While ostensibly only legal issues are
involved, the Court's decision in this case would undeniably have a profound effect on the political,
economic and other aspects of national life.

We recall that in February 1986, Ferdinand E. Marcos was deposed from the presidency via the non-
violent "people power" revolution and forced into exile. In his stead, Corazon C. Aquino was declared
President of the Republic under a revolutionary government. Her ascension to and consilidation of power
have not been unchallenged. The failed Manila Hotel coup in 1986 led by political leaders of Mr. Marcos,
the takeover of television station Channel 7 by rebel troops led by Col. Canlas with the support of
"Marcos loyalists" and the unseccessful plot of the Marcos spouses to surreptitiously return from Hawii
with mercenaries aboard an aircraft chartered by a Lebanese arms dealer [Manila Bulletin, January 30,
1987] awakened the nation to the capacity of the Marcoses to stir trouble even from afar and to the
fanaticism and blind loyalty of their followers in the country. The ratification of the 1987 Constitution
enshrined the victory of "people power" and also clearly reinforced the constitutional moorings of Mrs.
Aquino's presidency. This did not, however, stop bloody challenges to the government. On August 28,
1987, Col. Gregorio Honasan, one of the major players in the February Revolution, led a failed coup that
left scores of people, both combatants and civilians, dead. There were several other armed sorties of
lesser significance, but the message they conveyed was the same — a split in the ranks of the military
establishment that thraetened civilian supremacy over military and brought to the fore the realization
that civilian government could be at the mercy of a fractious military.

But the armed threats to the Government were not only found in misguided elements and among rabid
followers of Mr. Marcos. There are also the communist insurgency and the seccessionist movement in
Mindanao which gained ground during the rule of Mr. Marcos, to the extent that the communists have
set up a parallel government of their own on the areas they effectively control while the separatist are
virtually free to move about in armed bands. There has been no let up on this groups' determination to
wrest power from the govermnent. Not only through resort to arms but also to through the use of
propaganda have they been successful in dreating chaos and destabilizing the country.

Nor are the woes of the Republic purely political. The accumulated foreign debt and the plunder of the
nation attributed to Mr. Marcos and his cronies left the economy devastated. The efforts at economic
recovery, three years after Mrs. Aquino assumed office, have yet to show concrete results in alleviating
the poverty of the masses, while the recovery of the ill-gotten wealth of the Marcoses has remained
elusive.

Now, Mr. Marcos, in his deathbed, has signified his wish to return to the Philipppines to die. But Mrs.
Aquino, considering the dire consequences to the nation of his return at a time when the stability of
government is threatened from various directions and the economy is just beginning to rise and move
forward, has stood firmly on the decision to bar the return of Mr. Marcos and his family.

The Petition

This case is unique. It should not create a precedent, for the case of a dictator forced out of office and
into exile after causing twenty years of political, economic and social havoc in the country and who
within the short space of three years seeks to return, is in a class by itself.
This petition for mandamus and prohibition asks the Courts to order the respondents to issue travel
documents to Mr. Marcos and the immediate members of his family and to enjoin the implementation of
the President's decision to bar their return to the Philippines.

The Issue

Th issue is basically one of power: whether or not, in the exercise of the powers granted by the
Constitution, the President may prohibit the Marcoses from returning to the Philippines.

According to the petitioners, the resolution of the case would depend on the resolution of the following
issues:

1. Does the President have the power to bar the return of former President Marcos and
family to the Philippines?

a. Is this a political question?

2. Assuming that the President has the power to bar former President Marcos and his
family from returning to the Philippines, in the interest of "national security, public
safety or public health

a. Has the President made a finding that the return of former President Marcos and his
family to the Philippines is a clear and present danger to national security, public safety
or public health?

b. Assuming that she has made that finding

(1) Have the requirements of due process been complied with in making
such finding?

(2) Has there been prior notice to petitioners?

(3) Has there been a hearing?

(4) Assuming that notice and hearing may be dispensed with, has the
President's decision, including the grounds upon which it was based,
been made known to petitioners so that they may controvert the same?

c. Is the President's determination that the return of former President Marcos and his
family to the Philippines is a clear and present danger to national security, public safety,
or public health a political question?

d. Assuming that the Court may inquire as to whether the return of former President
Marcos and his family is a clear and present danger to national security, public safety, or
public health, have respondents established such fact?
 3. Have the respondents, therefore, in implementing the President's decision to bar the
return of former President Marcos and his family, acted and would be acting without
jurisdiction, or in excess of jurisdiction, or with grave abuse of discretion, in performing
any act which would effectively bar the return of former President Marcos and his family
to the Philippines? [Memorandum for Petitioners, pp. 5-7; Rollo, pp. 234-236.1

The case for petitioners is founded on the assertion that the right of the Marcoses to return to the
Philippines is guaranteed under the following provisions of the Bill of Rights, to wit:

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.

xxx xxx xxx

Section 6. The liberty of abode and of changing the same within the limits prescribed by
law shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law.

The petitioners contend that the President is without power to impair the liberty of abode of the
Marcoses because only a court may do so "within the limits prescribed by law." Nor may the President
impair their right to travel because no law has authorized her to do so. They advance the view that
before the right to travel may be impaired by any authority or agency of the government, there must be
legislation to that effect.

The petitioners further assert that under international law, the right of Mr. Marcos and his family to
return to the Philippines is guaranteed.

The Universal Declaration of Human Rights provides:

Article 13. (1) Everyone has the right to freedom of movement and residence within the
borders of each state.

(2) Everyone has the right to leave any country, including his own, and to return to his
country.

Likewise, the International Covenant on Civil and Political Rights, which had been ratified by the
Philippines, provides:

Article 12

1) Everyone lawfully within the territory of a State shall, within that territory, have the
right to liberty of movement and freedom to choose his residence.

2) Everyone shall be free to leave any country, including his own.

 3) The above-mentioned rights shall not be subject to any restrictions except those which
are provided by law, are necessary to protect national security, public order (order
public), public health or morals or the rights and freedoms of others, and are consistent
with the other rights recognized in the present Covenant.

4) No one shall be arbitrarily deprived of the right to enter his own country.

On the other hand, the respondents' principal argument is that the issue in this case involves a political
question which is non-justiciable. According to the Solicitor General:

As petitioners couch it, the question involved is simply whether or not petitioners
Ferdinand E. Marcos and his family have the right to travel and liberty of abode.
Petitioners invoke these constitutional rights in vacuo without reference to attendant
circumstances.

Respondents submit that in its proper formulation, the issue is whether or not petitioners
Ferdinand E. Marcos and family have the right to return to the Philippines and reside
here at this time in the face of the determination by the President that such return and
residence will endanger national security and public safety.

It may be conceded that as formulated by petitioners, the question is not a political

question as it involves merely a determination of what the law provides on the matter
and application thereof to petitioners Ferdinand E. Marcos and family. But when the
question is whether the two rights claimed by petitioners Ferdinand E. Marcos and
family impinge on or collide with the more primordial and transcendental right of the
State to security and safety of its nationals, the question becomes political and this
Honorable Court can not consider it.

There are thus gradations to the question, to wit:

Do petitioners Ferdinand E. Marcos and family have the right to return to the Philippines
and reestablish their residence here? This is clearly a justiciable question which this
Honorable Court can decide.

Do petitioners Ferdinand E. Marcos and family have their right to return to the
Philippines and reestablish their residence here even if their return and residence here
will endanger national security and public safety? this is still a justiciable question which
this Honorable Court can decide.

Is there danger to national security and public safety if petitioners Ferdinand E. Marcos
and family shall return to the Philippines and establish their residence here? This is now
a political question which this Honorable Court can not decide for it falls within the
exclusive authority and competence of the President of the Philippines. [Memorandum
for Respondents, pp. 9-11; Rollo, pp. 297-299.]

Respondents argue for the primacy of the right of the State to national security over individual rights. In
support thereof, they cite Article II of the Constitution, to wit:
 Section 4. The prime duty of the Government is to serve and protect the people. The
Government may call upon the people to defend the State and, in the fulfillment thereof,
all citizens may be required, under conditions provided by law, to render personal,
military, or civil service.

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

Respondents also point out that the decision to ban Mr. Marcos and family from returning to the
Philippines for reasons of national security and public safety has international precedents. Rafael Trujillo
of the Dominican Republic, Anastacio Somoza Jr. of Nicaragua, Jorge Ubico of Guatemala, Fulgencio
batista of Cuba, King Farouk of Egypt, Maximiliano Hernandez Martinez of El Salvador, and Marcos Perez
Jimenez of Venezuela were among the deposed dictators whose return to their homelands was
prevented by their governments. [See Statement of Foreign Affairs Secretary Raul S. Manglapus, quoted
in Memorandum for Respondents, pp. 26-32; Rollo, pp. 314-319.]

The parties are in agreement that the underlying issue is one of the scope of presidential power and its
limits. We, however, view this issue in a different light. Although we give due weight to the parties'
formulation of the issues, we are not bound by its narrow confines in arriving at a solution to the
controversy.

At the outset, we must state that it would not do to view the case within the confines of the right to
travel and the import of the decisions of the U.S. Supreme Court in the leading cases of Kent v.
Dulles [357 U.S. 116, 78 SCt 1113, 2 L Ed. 2d 1204] and Haig v. Agee [453 U.S. 280, 101 SCt 2766, 69 L Ed.
2d 640) which affirmed the right to travel and recognized exceptions to the exercise thereof, respectively.

It must be emphasized that the individual right involved is not the right to travel from the Philippines to
other countries or within the Philippines. These are what the right to travel would normally connote.
Essentially, the right involved is the right to return to one's country, a totally distinct right under
international law, independent from although related to the right to travel. Thus, the Universal
Declaration of Humans Rights and the International Covenant on Civil and Political Rights treat the right
to freedom of movement and abode within the territory of a state, the right to leave a country, and the
right to enter one's country as separate and distinct rights. The Declaration speaks of the "right to
freedom of movement and residence within the borders of each state" [Art. 13(l)] separately from the
"right to leave any country, including his own, and to return to his country." [Art. 13(2).] On the other
hand, the Covenant guarantees the "right to liberty of movement and freedom to choose his residence"
[Art. 12(l)] and the right to "be free to leave any country, including his own." [Art. 12(2)] which rights
may be restricted by such laws as "are necessary to protect national security, public order, public health
or morals or enter qqqs own country" of which one cannot be "arbitrarily deprived." [Art. 12(4).] It would
therefore be inappropriate to construe the limitations to the right to return to one's country in the same
context as those pertaining to the liberty of abode and the right to travel.

The right to return to one's country is not among the rights specifically guaranteed in the Bill of Rights,
which treats only of the liberty of abode and the right to travel, but it is our well-considered view that the
right to return may be considered, as a generally accepted principle of international law and, under our
Constitution, is part of the law of the land [Art. II, Sec. 2 of the Constitution.] However, it is distinct and
separate from the right to travel and enjoys a different protection under the International Covenant of
Civil and Political Rights, i.e., against being "arbitrarily deprived" thereof [Art. 12 (4).]

Thus, the rulings in the cases Kent and Haig which refer to the issuance of passports for the purpose of
effectively exercising the right to travel are not determinative of this case and are only tangentially
material insofar as they relate to a conflict between executive action and the exercise of a protected
right. The issue before the Court is novel and without precedent in Philippine, and even in American
jurisprudence.

Consequently, resolution by the Court of the well-debated issue of whether or not there can be
limitations on the right to travel in the absence of legislation to that effect is rendered unnecessary. An
appropriate case for its resolution will have to be awaited.

Having clarified the substance of the legal issue, we find now a need to explain the methodology for its
resolution. Our resolution of the issue will involve a two-tiered approach. We shall first resolve whether
or not the President has the power under the Constitution, to bar the Marcoses from returning to the
Philippines. Then, we shall determine, pursuant to the express power of the Court under the Constitution
in Article VIII, Section 1, whether or not the President acted arbitrarily or with grave abuse of discretion
amounting to lack or excess of jurisdiction when she determined that the return of the Marcose's to the
Philippines poses a serious threat to national interest and welfare and decided to bar their return.

Executive Power

The 1987 Constitution has fully restored the separation of powers of the three great branches of
government. To recall the words of Justice Laurel in Angara v. Electoral Commission [63 Phil. 139 (1936)],
"the Constitution has blocked but with deft strokes and in bold lines, allotment of power to the executive,
the legislative and the judicial departments of the government." [At 157.1 Thus, the 1987 Constitution
explicitly provides that "[the legislative power shall be vested in the Congress of the Philippines" Art VI,
Sec. 11, "[t]he executive power shall bevested in the President of the Philippines" [Art. VII, Sec. 11, and
"[te judicial power shall be vested in one Supreme Court and in such lower courts as may be established
by law" [Art. VIII, Sec. 1.] These provisions not only establish a separation of powers by actual division
[Angara v. Electoral Commission, supra] but also confer plenary legislative, executive and judicial powers
subject only to limitations provided in the Constitution. For as the Supreme Court in Ocampo v.
Cabangis [15 Phil. 626 (1910)] pointed out "a grant of the legislative power means a grant of all
legislative power; and a grant of the judicial power means a grant of all the judicial power which may be
exercised under the government." [At 631-632.1 If this can be said of the legislative power which is
exercised by two chambers with a combined membership of more than two hundred members and of the
judicial power which is vested in a hierarchy of courts, it can equally be said of the executive power which
is vested in one official the President.

As stated above, the Constitution provides that "[t]he executive power shall be vested in the President of
the Philippines." [Art. VII, Sec. 1]. However, it does not define what is meant by executive power"
although in the same article it touches on the exercise of certain powers by the President, i.e., the power
of control over all executive departments, bureaus and offices, the power to execute the laws, the
appointing power, the powers under the commander-in-chief clause, the power to grant reprieves,
commutations and pardons, the power to grant amnesty with the concurrence of Congress, the power to
contract or guarantee foreign loans, the power to enter into treaties or international agreements, the
power to submit the budget to Congress, and the power to address Congress [Art. VII, Sec. 14-23].
The inevitable question then arises: by enumerating certain powers of the President did the framers of
the Constitution intend that the President shall exercise those specific powers and no other? Are these se
enumerated powers the breadth and scope of "executive power"? Petitioners advance the view that the
President's powers are limited to those specifically enumerated in the 1987 Constitution. Thus, they
assert: "The President has enumerated powers, and what is not enumerated is impliedly denied to
her. Inclusion unius est exclusio alterius[Memorandum for Petitioners, p. 4- Rollo p. 233.1 This argument
brings to mind the institution of the U.S. Presidency after which ours is legally patterned.**

Corwin, in his monumental volume on the President of the United States grappled with the same
problem. He said:

Article II is the most loosely drawn chapter of the Constitution. To those who think that a
constitution ought to settle everything beforehand it should be a nightmare; by the same
token, to those who think that constitution makers ought to leave considerable leeway
for the future play of political forces, it should be a vision realized.

We encounter this characteristic of Article 11 in its opening words: "The executive power
shall be vested in a President of the United States of America." . . .. [The President: Office
and Powers, 17871957, pp. 3-4.]

Reviewing how the powers of the U.S. President were exercised by the different persons who held the
office from Washington to the early 1900's, and the swing from the presidency by commission to
Lincoln's dictatorship, he concluded that "what the presidency is at any particular moment depends in
important measure on who is President." [At 30.]

This view is shared by Schlesinger who wrote in The Imperial Presidency:

For the American Presidency was a peculiarly personal institution. it remained of course,
an agency of government subject to unvarying demands and duties no remained, of cas
President. But, more than most agencies of government, it changed shape, intensity and
ethos according to the man in charge. Each President's distinctive temperament and
character, his values, standards, style, his habits, expectations, Idiosyncrasies,
compulsions, phobias recast the WhiteHouse and pervaded the entire government. The
executive branch, said Clark Clifford, was a chameleon, taking its color from the
character and personality of the President. The thrust of the office, its impact on the
constitutional order, therefore altered from President to President. Above all, the way
each President understood it as his personal obligation to inform and involve the
Congress, to earn and hold the confidence of the electorate and to render an accounting
to the nation and posterity determined whether he strengthened or weakened the
constitutional order. [At 212- 213.]

We do not say that the presidency is what Mrs. Aquino says it is or what she does but, rather, that the
consideration of tradition and the development of presidential power under the different constitutions
are essential for a complete understanding of the extent of and limitations to the President's powers
under the 1987 Constitution. The 1935 Constitution created a strong President with explicitly broader
powers than the U.S. President. The 1973 Constitution attempted to modify the system of government
into the parliamentary type, with the President as a mere figurehead, but through numerous
amendments, the President became even more powerful, to the point that he was also the de facto
Legislature. The 1987 Constitution, however, brought back the presidential system of government and
restored the separation of legislative, executive and judicial powers by their actual distribution among
three distinct branches of government with provision for checks and balances.

It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for
the President is head of state as well as head of government and whatever powers inhere in such
positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution
itself provides that the execution of the laws is only one of the powers of the President. It also grants the
President other powers that do not involve the execution of any provision of law, e.g., his power over the
country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the
exercise of specific powers of the President, it maintains intact what is traditionally considered as within
the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only
to the specific powers enumerated in the Constitution. In other words, executive power is more than the
sum of specific powers so enumerated,

It has been advanced that whatever power inherent in the government that is neither legislative nor
judicial has to be executive. Thus, in the landmark decision of Springer v. Government of the Philippine
Islands, 277 U.S. 189 (1928), on the issue of who between the Governor-General of the Philippines and
the Legislature may vote the shares of stock held by the Government to elect directors in the National
Coal Company and the Philippine National Bank, the U.S. Supreme Court, in upholding the power of the
Governor-General to do so, said:

...Here the members of the legislature who constitute a majority of the "board" and
"committee" respectively, are not charged with the performance of any legislative
functions or with the doing of anything which is in aid of performance of any such
functions by the legislature. Putting aside for the moment the question whether the
duties devolved upon these members are vested by the Organic Act in the Governor-
General, it is clear that they are not legislative in character, and still more clear that they
are not judicial. The fact that they do not fall within the authority of either of these two
constitutes logical ground for concluding that they do fall within that of the remaining
one among which the powers of government are divided ....[At 202-203; Emphasis
supplied.]

We are not unmindful of Justice Holmes' strong dissent. But in his enduring words of dissent we find
reinforcement for the view that it would indeed be a folly to construe the powers of a branch of
government to embrace only what are specifically mentioned in the Constitution:

The great ordinances of the Constitution do not establish and divide fields of black and
white. Even the more specific of them are found to terminate in a penumbra shading
gradually from one extreme to the other. ....

xxx xxx xxx

 It does not seem to need argument to show that however we may disguise it by veiling
words we do not and cannot carry out the distinction between legislative and executive
action with mathematical precision and divide the branches into watertight
compartments, were it ever so desirable to do so, which I am far from believing that it is,
or that the Constitution requires. [At 210- 211.]

The Power Involved

The Constitution declares among the guiding principles that "[t]he prime duty of theGovernment is to
serve and protect the people" and that "[t]he maintenance of peace and order,the protection of life,
liberty, and property, and the promotion of the general welfare are essential for the enjoyment by all the
people of the blessings of democracy." [Art. II, Secs. 4 and 5.]

Admittedly, service and protection of the people, the maintenance of peace and order, the protection of
life, liberty and property, and the promotion of the general welfare are essentially ideals to guide
governmental action. But such does not mean that they are empty words. Thus, in the exercise of
presidential functions, in drawing a plan of government, and in directing implementing action for these
plans, or from another point of view, in making any decision as President of the Republic, the President
has to consider these principles, among other things, and adhere to them.

Faced with the problem of whether or not the time is right to allow the Marcoses to return to the
Philippines, the President is, under the Constitution, constrained to consider these basic principles in
arriving at a decision. More than that, having sworn to defend and uphold the Constitution, the President
has the obligation under the Constitution to protect the people, promote their welfare and advance the
national interest. It must be borne in mind that the Constitution, aside from being an allocation of power
is also a social contract whereby the people have surrendered their sovereign powers to the State for the
common good. Hence, lest the officers of the Government exercising the powers delegated by the people
forget and the servants of the people become rulers, the Constitution reminds everyone that
"[s]overeignty resides in the people and all government authority emanates from them." [Art. II, Sec. 1.]

The resolution of the problem is made difficult because the persons who seek to return to the country are
the deposed dictator and his family at whose door the travails of the country are laid and from whom
billions of dollars believed to be ill-gotten wealth are sought to be recovered. The constitutional
guarantees they invoke are neither absolute nor inflexible. For the exercise of even the preferred
freedoms of speech and ofexpression, although couched in absolute terms, admits of limits and must be
adjusted to the requirements of equally important public interests [Zaldivar v. Sandiganbayan, G.R. Nos.
79690-707, October 7, 1981.]

To the President, the problem is one of balancing the general welfare and the common good against the
exercise of rights of certain individuals. The power involved is the President's residual power to protect
the general welfare of the people. It is founded on the duty of the President, as steward of the people. To
paraphrase Theodore Roosevelt, it is not only the power of the President but also his duty to do anything
not forbidden by the Constitution or the laws that the needs of the nation demand [See Corwin, supra, at
153]. It is a power borne by the President's duty to preserve and defend the Constitution. It also may be
viewed as a power implicit in the President's duty to take care that the laws are faithfully executed
[see Hyman, The American President, where the author advances the view that an allowance of
discretionary power is unavoidable in any government and is best lodged in the President].
More particularly, this case calls for the exercise of the President's powers as protector of the peace.
Rossiter The American Presidency].The power of the President to keep the peace is not limited merely to
exercising the commander-in-chief powers in times of emergency or to leading the State against external
and internal threats to its existence. The President is not only clothed with extraordinary powers in times
of emergency, but is also tasked with attending to the day-to-day problems of maintaining peace and
order and ensuring domestic tranquility in times when no foreign foe appears on the horizon. Wide
discretion, within the bounds of law, in fulfilling presidential duties in times of peace is not in any way
diminished by the relative want of an emergency specified in the commander-in-chief provision. For in
making the President commander-in-chief the enumeration of powers that follow cannot be said to
exclude the President's exercising as Commander-in- Chief powers short of the calling of the armed
forces, or suspending the privilege of the writ of habeas corpus or declaring martial law, in order to keep
the peace, and maintain public order and security.

That the President has the power under the Constitution to bar the Marcose's from returning has been
recognized by memembers of the Legislature, and is manifested by the Resolution proposed in the House
of Representatives and signed by 103 of its members urging the President to allow Mr. Marcos to return
to the Philippines "as a genuine unselfish gesture for true national reconciliation and as irrevocable proof
of our collective adherence to uncompromising respect for human rights under the Constitution and our
laws." [House Resolution No. 1342, Rollo, p. 321.1 The Resolution does not question the President's
power to bar the Marcoses from returning to the Philippines, rather, it appeals to the President's sense of
compassion to allow a man to come home to die in his country.

What we are saying in effect is that the request or demand of the Marcoses to be allowed to return to
the Philippines cannot be considered in the light solely of the constitutional provisions guaranteeing
liberty of abode and the right to travel, subject to certain exceptions, or of case law which clearly never
contemplated situations even remotely similar to the present one. It must be treated as a matter that is
appropriately addressed to those residual unstated powers of the President which are implicit in and
correlative to the paramount duty residing in that office to safeguard and protect general welfare. In
that context, such request or demand should submit to the exercise of a broader discretion on the part of
the President to determine whether it must be granted or denied.

The Extent of Review

Under the Constitution, judicial power includes the duty 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." [Art. VIII, Sec. 1] Given this wording, we cannot agree with the
Solicitor General that the issue constitutes a political question which is beyond the jurisdiction of the
Court to decide.

The present Constitution limits resort to the political question doctrine and broadens the scope of judicial
inquiry into areas which the Court, under previous constitutions, would have normally left to the political
departments to decide. But nonetheless there remain issues beyond the Court's jurisdiction the
determination of which is exclusively for the President, for Congress or for the people themselves through
a plebiscite or referendum. We cannot, for example, question the President's recognition of a foreign
government, no matter how premature or improvident such action may appear. We cannot set aside a
presidential pardon though it may appear to us that the beneficiary is totally undeserving of the grant.
Nor can we amend the Constitution under the guise of resolving a dispute brought before us because the
power is reserved to the people.
There is nothing in the case before us that precludes our determination thereof on the political question
doctrine. The deliberations of the Constitutional Commission cited by petitioners show that the framers
intended to widen the scope of judicial review but they did not intend courts of justice to settle all actual
controversies before them. When political questions are involved, the Constitution limits the
determination to whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the official whose action is being questioned. If grave abuse is not
established, the Court will not substitute its judgment for that of the official concerned and decide a
matter which by its nature or by law is for the latter alone to decide. In this light, it would appear clear
that the second paragraph of Article VIII, Section 1 of the Constitution, defining "judicial power," which
specifically empowers the courts to determine whether or not there has been a grave abuse of discretion
on the part of any branch or instrumentality of the government, incorporates in the fundamental law the
ruling in Lansang v. Garcia [G.R. No. L-33964, December 11, 1971, 42 SCRA 4481 that:]

Article VII of the [1935] Constitution vests in the Executive the power to suspend the
privilege of the writ of habeas corpus under specified conditions. Pursuant to the
principle of separation of powers underlying our system of government, the Executive is
supreme within his own sphere. However, the separation of powers, under the
Constitution, is not absolute. What is more, it goes hand in hand with the system of
checks and balances, under which the Executive is supreme, as regards the suspension of
the privilege, but only if and when he acts within the sphere alloted to him by the Basic
Law, and the authority to determine whether or not he has so acted is vested in the
Judicial Department, which, in this respect, is, in turn, constitutionally supreme. In the
exercise of such authority, the function of the Court is merely to check — not to supplant
the Executive, or to ascertain merely whether he has gone beyond the constitutional
limits of his jurisdiction, not to exercise the power vested in him or to determine the
wisdom of his act [At 479-480.]

Accordingly, the question for the Court to determine is whether or not there exist factual bases for the
President to conclude that it was in the national interest to bar the return of the Marcoses to the
Philippines. If such postulates do exist, it cannot be said that she has acted, or acts, arbitrarily or that she
has gravely abused her discretion in deciding to bar their return.

We find that from the pleadings filed by the parties, from their oral arguments, and the facts revealed
during the briefing in chambers by the Chief of Staff of the Armed Forces of the Philippines and the
National Security Adviser, wherein petitioners and respondents were represented, there exist factual
bases for the President's decision..

The Court cannot close its eyes to present realities and pretend that the country is not besieged from
within by a well-organized communist insurgency, a separatist movement in Mindanao, rightist
conspiracies to grab power, urban terrorism, the murder with impunity of military men, police officers
and civilian officials, to mention only a few. The documented history of the efforts of the Marcose's and
their followers to destabilize the country, as earlier narrated in this ponencia bolsters the conclusion that
the return of the Marcoses at this time would only exacerbate and intensify the violence directed against
the State and instigate more chaos.

As divergent and discordant forces, the enemies of the State may be contained. The military
establishment has given assurances that it could handle the threats posed by particular groups. But it is
the catalytic effect of the return of the Marcoses that may prove to be the proverbial final straw that
would break the camel's back. With these before her, the President cannot be said to have acted
arbitrarily and capriciously and whimsically in determining that the return of the Marcoses poses a
serious threat to the national interest and welfare and in prohibiting their return.

It will not do to argue that if the return of the Marcoses to the Philippines will cause the escalation of
violence against the State, that would be the time for the President to step in and exercise the
commander-in-chief powers granted her by the Constitution to suppress or stamp out such violence. The
State, acting through the Government, is not precluded from taking pre- emptive action against threats
to its existence if, though still nascent they are perceived as apt to become serious and direct. Protection
of the people is the essence of the duty of government. The preservation of the State the fruition of the
people's sovereignty is an obligation in the highest order. The President, sworn to preserve and defend
the Constitution and to see the faithful execution the laws, cannot shirk from that responsibility.

We cannot also lose sight of the fact that the country is only now beginning to recover from the
hardships brought about by the plunder of the economy attributed to the Marcoses and their close
associates and relatives, many of whom are still here in the Philippines in a position to destabilize the
country, while the Government has barely scratched the surface, so to speak, in its efforts to recover the
enormous wealth stashed away by the Marcoses in foreign jurisdictions. Then, We cannot ignore the
continually increasing burden imposed on the economy by the excessive foreign borrowing during the
Marcos regime, which stifles and stagnates development and is one of the root causes of widespread
poverty and all its attendant ills. The resulting precarious state of our economy is of common knowledge
and is easily within the ambit of judicial notice.

The President has determined that the destabilization caused by the return of the Marcoses would wipe
away the gains achieved during the past few years and lead to total economic collapse. Given what is
within our individual and common knowledge of the state of the economy, we cannot argue with that
determination.

WHEREFORE, and it being our well-considered opinion that the President did not act arbitrarily or with
grave abuse of discretion in determining that the return of former President Marcos and his family at the
present time and under present circumstances poses a serious threat to national interest and welfare
and in prohibiting their return to the Philippines, the instant petition is hereby DISMISSED.

SO ORDERED.

Separate Opinions

FERNAN, C.J., concurring:

"The threats to national security and public order are real the mounting Communist insurgency, a
simmering separatist movement, a restive studentry, widespread labor disputes, militant farmer groups.
. . . Each of these threats is an explosive ingredient in a steaming cauldron which could blow up if not
handled properly." 1
These are not my words. They belong to my distinguished colleague in the Court, Mr. Justice Hugo E.
Gutierrez, Jr. But they express eloquently the basis of my full concurrence to the exhaustive and well-
written ponencia of Mme. Justice Irene R. Cortes.

Presidential powers and prerogatives are not fixed but fluctuate. They are not derived solely from a
particular constitutional clause or article or from an express statutory grant. Their limits are likely to
depend on the imperatives of events and contemporary imponderables rather than on abstract theories
of law. History and time-honored principles of constitutional law have conceded to the Executive Branch
certain powers in times of crisis or grave and imperative national emergency. Many terms are applied to
these powers: "residual," "inherent," 44 moral," "implied," "aggregate," "emergency." whatever they
may be called, the fact is that these powers exist, as they must if the governance function of the
Executive Branch is to be carried out effectively and efficiently. It is in this context that the power of the
President to allow or disallow the Marcoses to return to the Philippines should be viewed. By reason of its
impact on national peace and order in these admittedly critical times, said question cannot be
withdrawn from the competence of the Executive Branch to decide.

And indeed, the return of the deposed President, his wife and children cannot but pose a clear and
present danger to public order and safety. One needs only to recall the series of destabilizing actions
attempted by the so-called Marcos loyalists as well as the ultra-rightist groups during the EDSA
Revolution's aftermath to realize this. The most publicized of these offensives is the Manila Hotel incident
which occurred barely five (5) months after the People's Power Revolution. Around 10,000 Marcos
supporters, backed by 300 loyalist soldiers led by Brigadier General Jose Zumel and Lt. Col. Reynaldo
Cabauatan converged at the Manila Hotel to witness the oath-taking of Arturo Tolentino as acting
president of the Philippines. The public disorder and peril to life and limb of the citizens engendered by
this event subsided only upon the eventual surrender of the loyalist soldiers to the authorities.

Then followed the Channel 7, Sangley, Villamor, Horseshoe Drive and Camp Aguinaldo incidents. Military
rebels waged simultaneous offensives in different parts of Metro Manila and Sangley Point in Cavite. A
hundred rebel soldiers took over Channel 7 and its radio station DZBB. About 74 soldier rebels attacked
Villamor Air Base, while another group struck at Sangley Point in Cavite and held the 15th Air Force Strike
wing commander and his deputy hostage. Troops on board several vehicles attempted to enter Gate I of
Camp Aguinaldo even as another batch of 200 soldiers encamped at Horseshoe Village.

Another destabilization plot was carried out in April, 1987 by enlisted personnel who forced their way
through Gate 1 of Fort Bonifacio. They stormed into the army stockade but having failed to convince
their incarcerated members to unite in their cause, had to give up nine (9) hours later.

And who can forget the August 28, 1987 coup attempt which almost toppled the Aquino Government?
Launched not by Marcos loyalists, but by another ultra-rightist group in the military led by Col. Gregorio
"Gringo" Honasan who remains at large to date, this most serious attempt to wrest control of the
government resulted in the death of many civilians.

Members of the so-called Black Forest Commando were able to cart away high-powered firearms and
ammunition from the Camp Crame Armory during a raid conducted in June 1988. Most of the group
members were, however, captured in Antipolo, Rizal. The same group was involved in an unsuccessful
plot known as Oplan Balik Saya which sought the return of Marcos to the country.
A more recent threat to public order, peace and safety was the attempt of a group named CEDECOR to
mobilize civilians from nearby provinces to act as blockading forces at different Metro Manila areas for
the projected link-up of Marcos military loyalist troops with the group of Honasan. The pseudo "people
power" movement was neutralized thru checkpoints set up by the authorities along major road arteries
where the members were arrested or forced to turn back.

While not all of these disruptive incidents may be traced directly to the Marcoses, their occurrence
militates heavily against the wisdom of allowing the Marcoses' return. Not only will the Marcoses'
presence embolden their followers toward similar actions, but any such action would be seized upon as
an opportunity by other enemies of the State, such as the Communist Party of the Philippines and the
NPA'S, the Muslim secessionists and extreme rightists of the RAM, to wage an offensive against the
government. Certainly, the state through its executive branch has the power, nay, the responsibility and
obligation, to prevent a grave and serious threat to its safety from arising.

Apparently lost amidst the debate on whether or not to allow the Marcoses to return to the Philippines is
one factor, which albeit, at first blush appears to be extra legal, constitutes a valid justification for
disallowing the requested return. I refer to the public pulse. It must be remembered that the ouster of the
Marcoses from the Philippines came about as an unexpected, but certainly welcomed, result of the
unprecedented peoples power" revolution. Millions of our people braved military tanks and firepower,
kept vigil, prayed, and in countless manner and ways contributed time, effort and money to put an end
to an evidently untenable claim to power of a dictator. The removal of the Marcoses from the Philippines
was a moral victory for the Filipino people; and the installation of the present administration, a
realization of and obedience to the people's Will.

Failing in legal arguments for the allowance of the Marcoses' return, appeal is being made to sympathy,
compassion and even Filipino tradition. The political and economic gains we have achieved during the
past three years are however too valuable and precious to gamble away on purely compassionate
considerations. Neither could public peace, order and safety be sacrificed for an individual's wish to die in
his own country. Verily in the balancing of interests, the scales tilt in favor of presidential prerogative,
which we do not find to have been gravely abused or arbitrarily exercised, to ban the Marcoses from
returning to the Philippines.

GUTIERREZ, JR., J., dissenting

"The Constitution ... is a law for rulers and people, equally in war and in peace, and covers with the shield
of its protection all classes of men, at all times, and under all circumstances. No doctrine involving more
pernicious consequences was ever invented by the wit of man than that any of its provisions can be
suspended during any of the great exigencies of government." (Ex Parte Milligan, 4 Wall. 2; 18 L. Ed. 281
[1866])

Since our days as law students, we have proclaimed the stirring words of Ex Parte Milligan as self-evident
truth. But faced with a hard and delicate case, we now hesitate to qive substance to their meaning. The
Court has permitted a basic freedom enshrined in the Bill of Rights to be taken away by Government.

There is only one Bill of Rights with the same interpretation of liberty and the same guarantee of
freedom for both unloved and despised persons on one hand and the rest who are not so stigmatized on
the other.
I am, therefore, disturbed by the majority ruling which declares that it should not be a precedent. We are
interpreting the Constitution for only one person and constituting him into a class by himself. The
Constitution is a law for all classes of men at all times. To have a person as one class by himself smacks
of unequal protection of the laws.

With all due respect for the majority in the Court, I believe that the issue before us is one of rights and
not of power. Mr. Marcos is insensate and would not live if separated from the machines which have
taken over the functions of his kidneys and other organs. To treat him at this point as one with full
panoply of power against whom the forces of Government should be marshalled is totally unrealistic. The
Government has the power to arrest and punish him. But does it have the power to deny him his right to
come home and die among familiar surroundings?

Hence, this dissent.

The Bill of Rights provides:

Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law. (Emphasis supplied, Section 6, Art. 111, Constitution)

To have the petition dismissed, the Solicitor General repeats a ritual invocation of national security and
public safety which is hauntingly familiar because it was pleaded so often by petitioner Ferdinand E.
Marcos to justify his acts under martial law. There is, however, no showing of the existence of a law
prescribing the limits of the power to impair and the occasions for its exercise. And except for citing
breaches of law and order, the more serious of which were totally unrelated to Mr. Marcos and which
the military was able to readily quell, the respondents have not pointed to any grave exigency which
permits the use of untrammeled Governmental power in this case and the indefinite suspension of the
constitutional right to travel.

The respondents' basic argument is that the issue before us is a political question beyond our jurisdiction
to consider. They contend that the decision to ban former President Marcos, and his family on grounds of
national security and public safety is vested by the Constitution in the President alone. The determination
should not be questioned before this Court. The President's finding of danger to the nation should be
conclusive on the Court.

What is a political question?

In Vera v. Avelino (77 Phil. 192, 223 [1946], the Court stated:

xxx xxx xxx

It is a well-settled doctrine that political questions are not within the province of the
judiciary, except to the extent that power to deal with such questions has been conferred
on the courts by express constitutional or statutory provisions. It is not so easy, however,
to define the phrase political question, nor to determine what matters fall within its
scope. It is frequently used to designate all questions that he outside the scope of the
 judicial power. More properly, however, it means those questions which, under the
constitution, are to be decided by the people in their sovereign capacity, or in regard to
which full discretionary authority has been delegated to the legislative or executive
branch of the government.

We defined a political question in Taniada v. Cuenco (103 Phil. 1051, 1066 [1957]), as follows:

In short, the term 'Political question' connotes, in legal parlance, what it means in
ordinary parlance, namely, a question of policy. In other words, in the language
of Corpus Juris Secundum (supra), it refers to 'those questions which, under the
Constitution, are to be decided by the people in their sovereign capacity, or in regard to
which full discretionary authority has been delegated to the Legislature or executive
branch of the Government. It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.

The most often quoted definition of political question was made by Justice William J. Brennan Jr., who
penned the decision of the United States Supreme Court in Baker v. Carr (369 US 186,82, S. Ct. 691, L. Ed.
2d. 663 [1962]). The ingredients of a political question as formulated in Baker v. Carr are:

It is apparent that several formulations which vary slightly according to the settings in
which the questions arise may describe a political question, which identifies it as
essentially a function of the separation of powers. Prominent on the surface of any case
held to involve a political question is found a textually demonstrable constitutional
commitment of the issue to a coordinate political department; or a lack of judicially
discoverable and manageable standards for resolving it; or the impossibility of deciding
without an initial policy determination of a kind clearly for non-judicial discretion; or the
impossibility of a court's undertaking independent resolution without expressing lack of
the respect due coordinate branches of government; or an unusual need for
unquestioning adherence to a political decision already made; or potentiality of
embarrassment from multifarious pronouncements by various departments on one
question.

For a political question to exist, there must be in the Constitution a power vested exclusively in the
President or Congress, the exercise of which the court should not examine or prohibit. A claim of plenary
or inherent power against a civil right which claim is not found in a specific provision is dangerous.
Neither should we validate a roving commission allowing public officials to strike where they please and
to override everything which to them represents evil. The entire Government is bound by the rule of law.

The respondents have not pointed to any provision of the Constitution which commits or vests the
determination of the question raised to us solely in the President.

The authority implied in Section 6 of the Bill of Rights itself does not exist because no law has been
enacted specifying the circumstances when the right may be impaired in the interest of national security
or public safety. The power is in Congress, not the Executive.

The closest resort to a textile demonstrable constitutional commitment of power may be found in the
commander-in-chief clause which allows the President to call out the armed forces in case of lawless
violence, invasion or rebellion and to suspend the privilege of the writ of habeas corpus or proclaim
martial law in the event of invasion or rebellion, when the public safety requires it.

There is, however, no showing, not even a claim that the followers of former President Marcos are
engaging in rebellion or that he is in a position to lead them. Neither is it claimed that there is a need to
suspend the privilege of the writ of habeas corpus or proclaim martial law because of the arrival of Mr.
Marcos and his family. To be sure, there may be disturbances but not of a magnitude as would compel
this Court to resort to a doctrine of non- justiceability and to ignore a plea for the enforcement of an
express Bill of Rights guarantee.

The respondents themselves are hard-pressed to state who or what constitutes a Marcos "loyalist." The
constant insinuations that the "loyalist" group is heavily funded by Mr. Marcos and his cronies and that
the "loyalists" engaging in rallies and demonstrations have to be paid individual allowances to do so
constitute the strongest indication that the hard core "loyalists" who would follow Marcos right or wrong
are so few in number that they could not possibly destabilize the government, much less mount a serious
attempt to overthrow it.

Not every person who would allow Mr. Marcos to come home can be tagged a "loyalist." It is in the best
of Filipino customs and traditions to allow a dying person to return to his home and breath his last in his
native surroundings. Out of the 103 Congressmen who passed the House resolution urging permission for
his return, there are those who dislike Mr. Marcos intensely or who suffered under his regime. There are
also many Filipinos who believe that in the spirit of national unity and reconciliation Mr. Marcos and his
family should be permitted to return to the Philippines and that such a return would deprive his fanatic
followers of any further reason to engage in rallies and demonstrations.

The Court, however, should view the return of Mr. Marcos and his family solely in the light of the
constitutional guarantee of liberty of abode and the citizen's right to travel as against the respondents'
contention that national security and public safety would be endangered by a grant of the petition.

Apart from the absence of any text in the Constitution committing the issue exclusively to the President,
there is likewise no dearth of decisional data, no unmanageable standards which stand in the way of a
judicial determination.

Section 6 of the Bill of Rights states categorically that the liberty of abode and of changing the same
within the limits prescribed by law may be impaired only upon a lawful order of a court. Not by an
executive officer. Not even by the President. Section 6 further provides that the right to travel, and this
obviously includes the right to travel out of or back into the Philippines, cannot be impaired except in the
interest of national security, public safety, or public health, as may be provided by law.

There is no law setting the limits on a citizen's right to move from one part of the country to another or
from the Philippines to a foreign country or from a foreign country to the Philippines. The laws cited by
the Solicitor General immigration, health, quarantine, passports, motor vehicle, destierro probation, and
parole are all inapplicable insofar as the return of Mr. Marcos and family is concerned. There is
absolutely no showing how any of these statutes and regulations could serve as a basis to bar their
coming home.
There is also no disrespect for a Presidential determination if we grant the petition. We would simply be
applying the Constitution, in the preservation and defense of which all of us in Government, the President
and Congress included, are sworn to participate. Significantly, the President herself has stated that the
Court has the last word when it comes to constitutional liberties and that she would abide by our
decision.

As early as 1983, it was noted that this Court has not been very receptive to the invocation of the
political question doctrine by government lawyers. (See Morales, Jr. .v Ponce Enrile, 121 SCRA 538
[1983]).

Many of those now occupying the highest positions in the executive departments, Congress, and the
judiciary criticized this Court for using what they felt was a doctrine of convenience, expediency, utility
or subservience. Every major challenge to the acts of petitioner Ferdinand E. Marcos under his
authoritarian regime the proclamation of martial law, the ratification of a new constitution, the arrest
and detention of "enemies of the State" without charges being filed against them, the dissolution of
Congress and the exercise by the President of legislative powers, the trial of civilians for civil offenses by
military tribunals, the seizure of some of the country's biggest corporations, the taking over or closure of
newspaper offices, radio and television stations and other forms of media, the proposals to amend the
Constitution, etc. was invariably met by an invocation that the petition involved a political question. It is
indeed poetic justice that the political question doctrine so often invoked by then President Marcos to
justify his acts is now being used against him and his family. Unfortunately, the Court should not and is
not allowed to indulge in such a persiflage. We are bound by the Constitution.

The dim view of the doctrine's use was such that when the present Constitution was drafted, a broad
definition of judicial power was added to the vesting in the Supreme Court and statutory courts of said
power.

The second paragraph of Section 1, Article VIII of the Constitution provides:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.

This new provision was enacted to preclude this Court from using the political question doctrine as a
means to avoid having to make decisions simply because they are too controversial, displeasing to the
President or Congress, inordinately unpopular, or which may be ignored and not enforced.

The framers of the Constitution believed that the free use of the political question doctrine allowed the
Court during the Marcos years to fall back on prudence, institutional difficulties, complexity of issues,
momentousness of consequences or a fear that it was extravagantly extending judicial power in the
cases where it refused to examine and strike down an exercise of authoritarian power. Parenthetically, at
least two of the respondents and their counsel were among the most vigorous critics of Mr. Marcos (the
main petitioner) and his use of the political question doctrine. The Constitution was accordingly
amended. We are now precluded by its mandate from refusing to invalidate a political use of power
through a convenient resort to the question doctrine. We are compelled to decide what would have been
non-justiceable under our decisions interpreting earlier fundamental charters.
This is not to state that there can be no more political questions which we may refuse to resolve. There
are still some political questions which only the President, Congress, or a plebiscite may decide.
Definitely, the issue before us is not one of them.

The Constitution requires the Court "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction."

How do we determine a grave abuse of discretion?

The tested procedure is to require the parties to present evidence. Unfortunately, considerations of
national security do not readily lend themselves to the presentation of proof before a court of justice. The
vital information essential to an objective determination is usually highly classified and it cannot be
rebutted by those who seek to overthrow the government. As early as Barcelon v. Baker (5 Phil. 87, 93
[19051), the Court was faced with a similar situation. It posed a rhetorical question. If after investigating
conditions in the Archipelago or any part thereof, the President finds that public safety requires the
suspension of the privilege of the writ of habeas corpus, can the judicial department investigate the
same facts and declare that no such conditions exist?

In the effort to follow the "grave abuse of discretion" formula in the second paragraph of Section 1,
Article VIII of the Constitution, the court granted the Solicitor General's offer that the military give us a
closed door factual briefing with a lawyer for the petitioners and a lawyer for the respondents present.

The results of the briefing call to mind the concurrence of Justice Vicente Abad Santos in Morales, Jr. v.
Enrile, (121 SCRA 538, 592 [19831):

How can this Court determine the factual basis in order that it can ascertain whether or
not the president acted arbitrarily in suspending the writ when, in the truth words of
Montenegro, with its very limited machinery fit] cannot be in better position [than the
Executive Branch] to ascertain or evaluate the conditions prevailing in the Archipelago?
(At p. 887). The answer is obvious. It must rely on the Executive Branch which has the
appropriate civil and military machinery for the facts. This was the method which had to
be used in Lansang. This Court relied heavily on classified information supplied by the
military. Accordingly, an incongruous situation obtained. For this Court, relied on the
very branch of the government whose act was in question to obtain the facts. And as
should be expected the Executive Branch supplied information to support its position and
this Court was in no situation to disprove them. It was a case of the defendant judging
the suit. After all is said and done, the attempt by its Court to determine whether or not
the President acted arbitrarily in suspending the writ was a useless and futile exercise.

There is still another reason why this Court should maintain a detached attitude and
refrain from giving the seal of approval to the act of the Executive Branch. For it is
possible that the suspension of the writ lacks popular support because of one reason or
another. But when this Court declares that the suspension is not arbitrary (because it
cannot do otherwise upon the facts given to it by the Executive Branch) it in effect
participates in the decision-making process. It assumes a task which it is not equipped to
handle; it lends its prestige and credibility to an unpopular act.
The other method is to avail of judicial notice. In this particular case, judicial notice would be the only
basis for determining the clear and present danger to national security and public safety. The majority of
the Court has taken judicial notice of the Communist rebellion, the separatist movement, the rightist
conspiracies, and urban terrorism. But is it fair to blame the present day Marcos for these incidents? All
these problems are totally unrelated to the Marcos of today and, in fact, are led by people who have
always opposed him. If we use the problems of Government as excuses for denying a person's right to
come home, we will never run out of justifying reasons. These problems or others like them will always
be with us.

Significantly, we do not have to look into the factual bases of the ban Marcos policy in order to ascertain
whether or not the respondents acted with grave abuse of discretion. Nor are we forced to fall back
upon judicial notice of the implications of a Marcos return to his home to buttress a conclusion.

In the first place, there has never been a pronouncement by the President that a clear and present
danger to national security and public safety will arise if Mr. Marcos and his family are allowed to return
to the Philippines. It was only after the present petition was filed that the alleged danger to national
security and public safety conveniently surfaced in the respondents' pleadings. Secondly, President
Aquino herself limits the reason for the ban Marcos policy to — (1) national welfare and interest and (2)
the continuing need to preserve the gains achieved in terms of recovery and stability. (See page 7,
respondents' Comment at page 73 of Rollo). Neither ground satisfies the criteria of national security and
public safety. The President has been quoted as stating that the vast majority of Filipinos support her
position. (The Journal, front page, January 24,1989) We cannot validate their stance simply because it is
a popular one. Supreme Court decisions do not have to be popular as long as they follow the Constitution
and the law. The President's original position "that it is not in the interest of the nation that Marcos be
allowed to return at this time" has not changed. (Manila Times, front page, February 7, 1989). On
February 11, 1989, the President is reported to have stated that "considerations of the highest national
good dictate that we preserve the substantial economic and political gains of the past three years" in
justifying her firm refusal to allow the return of Mr. Marcos despite his failing health. (Daily Globe, front
page, February 15, 1989). "Interest of the nation national good," and "preserving economic and political
gains," cannot be equated with national security or public order. They are too generic and sweeping to
serve as grounds for the denial of a constitutional right. The Bill of Rights commands that the right to
travel may not be impaired except on the stated grounds of national security, public safety, or public
health and with the added requirement that such impairment must be "as provided by law." The
constitutional command cannot be negated by mere generalizations.

There is an actual rebellion not by Marcos followers but by the New Peoples' Army. Feeding as it does on
injustice, ignorance, poverty, and other aspects at under-development, the Communist rebellion is the
clearest and most present danger to national security and constitutional freedoms. Nobody has
suggested that one way to quell it would be to catch and exile its leaders, Mr. Marcos himself was forced
to flee the country because of "peoples' power." Yet, there is no move to arrest and exile the leaders of
student groups, teachers' organizations, pea ant and labor federations, transport workers, and
government unions whose threatened mass actions would definitely endanger national security and the
stability of government. We fail to see how Mr. Marcos could be a greater danger.

The fear that Communist rebels, Bangsa Moro secessionists, the Honasan ex-soldiers, the hard core
loyalists, and other dissatisfied elements would suddenly unite to overthrow the Republic should a dying
Marcos come home is too speculative and unsubstantial a ground for denying a constitutional right. It is
not shown how extremists from the right and the left who loathe each other could find a rallying point in
the coming of Mr. Marcos.

The "confluence theory" of the Solicitor General or what the majority calls "catalytic effect," which alone
sustains the claim of danger to national security is fraught with perilous implications. Any difficult
problem or any troublesome person can be substituted for the Marcos threat as the catalysing factor.
The alleged confluence of NPAs, secessionists, radical elements, renegade soldiers, etc., would still be
present. Challenged by any critic or any serious problem, the Government can state that the situation
threatens a confluence of rebel forces and proceed to ride roughshod over civil liberties in the name of
national security. Today, a passport is denied. Tomorrow, a newspaper may be closed. Public assemblies
may be prohibited. Human rights may be violated. Yesterday, the right to travel of Senators Benigno
Aquino, Jr. and Jovito Salonga was curtailed. Today, it is the right of Mr. Marcos and family. Who will be
tomorrow's pariahs I deeply regret that the Court's decision to use the political question doctrine in a
situation where it does not apply raises all kinds of disturbing possibilities.

I must emphasize that General Renato de Villa, the Chief of Staff of the Armed Forces, has personally
assured the Court that a rebellion of the above combined groups will not succeed and that the military is
on top of the situation. Where then is the clear danger to national security? The Court has taken judicial
notice of something which even the military denies. There would be severe strains on military capabilities
according to General de Villa. There would be set-backs in the expected eradication of the Communist
threat. There would be other serious problems but all can be successfully contained by the military. I
must stress that no reference was made to a clear and present danger to national security as would
allow an overriding of the Bill of Rights.

The Solicitor General's argument that the failure of Congress to enact a statute defining the parameters
of the right to travel and to freely choose one's abode has constrained the President to fill in the vacuum,
is too reminiscent of Amendment No. 6 of the martial law Constitution to warrant serious consideration.
Amendment No. 6 allowed Marcos to issue decrees whenever the Batasang Pambansa failed or was
unable to act adequately on any matter for any reason that in his judgment required immediate action.
When the Bill of Rights provides that a right may not be impaired except in the interest of national
security, public safety, or public health and further requires that a law must provide when such
specifically defined interests are prejudiced or require protection, the inaction of Congress does not give
reason for the respondents to assume the grounds for its impairment.

The fact that the Marcoses have been indicted before American federal courts does not obstruct us from
ruling against an unconstitutional assertion of power by Philippine officials. Let the United States apply
its laws. We have to be true to our own.

Mr. Marcos may be too ill to withstand the rigors of a transpacific flight. The agony of traveling while
hooked up to machines which have taken over the functions of his heart, lungs, and kidneys may hasten
his death. The physical condition of Mr. Marcos does not justify our ignoring or refusing to act on his
claim to a basic right which is legally demandable and enforceable. For his own good, it might be
preferable to stay where he is. But he invokes a constitutional right. We have no power to deny it to him.

The issuance of a passport may be discretionary but it should not be withheld if to do so would run
counter to a constitutional guarantee. Besides, the petitioners are not asking for passports and nothing
else. Any travel documents or any formal lifting of the Marcos ban as would allow international airlines
to sell them tickets would suffice.
With all due respect for the majority opinion, I disagree with its dictum on the right to travel. I do not
think we should differentiate the right to return home from the right to go abroad or to move around in
the Philippines. If at all, the right to come home must be more preferred than any other aspect of the
right to travel. It was precisely the banning by Mr. Marcos of the right to travel by Senators Benigno
Aquino, Jr., Jovito Salonga, and scores of other "undesirables" and "threats to national security" during
that unfortunate period which led the framers of our present Constitution not only to re-enact but to
strengthen the declaration of this right. Media often asks, "what else is new?" I submit that we now have
a freedom loving and humane regime. I regret that the Court's decision in this case sets back the gains
that our country has achieved in terms of human rights, especially human rights for those whom we do
not like or those who are against us.

The respondent Secretary of Foreign Affairs, Raul S. Manglapus has disclosed a list of former dictators
who were barred by their successors from returning to their respective countries. There is no showing
that the countries involved have constitutions which guarantee the liberty of abode and the freedom to
travel and that despite such constitutional protections, the courts have validated the "ban a return"
policy. Neither is it shown that the successors of the listed dictators are as deeply committed to
democratic principles and as observant of constitutional protections as President Aquino.

It is indeed regrettable that some followers of the former President are conducting a campaign to sow
discord and to divide the nation. Opposition to the government no matter how odious or disgusting is,
however, insufficient ground to ignore a constitutional guarantee.

During the protracted deliberations on this case, the question was asked is the Government helpless to
defend itself against a threat to national security? Does the President have to suspend the privilege of
the writ of habeas corpus or proclaim martial law? Can she not take less drastic measures?

Of course, the Government can act. It can have Mr. Marcos arrested and tried in court. The Government
has more than ample powers under eixisting law to deal with a person who transgresses the peace and
imperils public safety. But the denial of travel papers is not one of those powers because the Bill of Rights
says so. There is no law prescribing exile in a foreign land as the penalty for hurting the Nation.

Considering all the foregoing, I vote to GRANT the petition.

CRUZ, J., dissenting:

It is my belief that the petitioner, as a citizen of the Philippines, is entitled to return to and live — and die
— in his own country. I say this with a heavy heart but say it nonetheless. That conviction is not
diminished one whit simply because many believe Marcos to be beneath contempt and undeserving of
the very liberties he flounted when he was the absolute ruler of this land.

The right of the United States government to detain him is not the question before us, nor can we resolve
it. The question we must answer is whether or not, assuming that Marcos is permitted to leave Hawaii
(which may depend on the action we take today), the respondents have acted with grave abuse of
discretion in barring him from his own country.

My reluctant conclusion is that they have, absent the proof they said they were prepared to offer, but
could not, that the petitioner's return would prejudice the security of the State.
I was the one who, in the open hearing held on June 27,1989, asked the Solicitor General if the
government was prepared to prove the justification for opposing the herein petition, i.e. that it had not
acted arbitrarily. He said it was. Accordingly, the Court, appreciating the classified nature of the
information expected, scheduled a closed-door hearing on July 25,1988. The Solicitor General and three
representatives from the military appeared for the respondents, together with former Senator Arturo M.
Tolentino, representing the petitioners.

In about two hours of briefing, the government failed dismally to show that the return of Marcos dead or
alive would pose a threat to the national security as it had alleged. The fears expressed by its
representatives were based on mere conjectures of political and economic destabilization without any
single piece of concrete evidence to back up their apprehensions.

Amazingly, however, the majority has come to the conclusion that there exist "factual bases for the
President's decision" to bar Marcos's return. That is not my recollection of the impressions of the Court
after that hearing.

In holding that the President of the Philippines has residual powers in addition to the specific powers
granted by the Constitution, the Court is taking a great leap backward and reinstating the discredited
doctrine announced in Planas v. Gil (67 Phil. 62). This does not square with the announced policy of the
Constitutional Commission, which was precisely to limit rather than expand presidential powers, as a
reaction to the excesses of the past dictatorship.

I can only repeat Justice Black's wry observation in the Steel Seizure Case (343 U.S. 579) that if it was true
that the President had been granted the totality of executive power, "it is difficult to see why our
forefathers bothered to add several specific items, including some trifling ones, . . . I cannot accept the
view that this clause is a grant in bulk of all conceivable executive power but regard it as an allocation to
the presidential office of the generic powers thereafter stated."

I have no illusion that the stand I am taking will be met with paeans of praise, considering that Marcos is
perhaps the most detested man in the entire history of our country. But we are not concerned here with
popularity and personalities. As a judge, I am not swayed by what Justice Cardozo called the "hooting
throng" that may make us see things through the prisms of prejudice. I bear in mind that when I sit in
judgment as a member of this Court, I must cast all personal feelings aside.

The issue before us must be resolved with total objectivity, on the basis only of the established facts and
the applicable law and not of wounds that still fester and scars that have not healed. And not even of
fear, for fear is a phantom. That phantom did not rise when the people stood fast at EDSA against the
threat of total massacre in defense at last of their freedom.

I cannot turn back on the lessons of liberty that I taught for more than three decades as a professor of
Constitutional Law. These principles have not changed simply because I am now on the Court or a new
administration is in power and the shoe is on the other foot.

Like the martyred Ninoy Aquino who also wanted to come back to the Philippines against the
prohibitions of the government then, Marcos is entitled to the same right to travel and the liberty of
abode that his adversary invoked. These rights are guaranteed by the Constitution to all individuals,
including the patriot and the homesick and the prodigal son returning, and tyrants and charlatans and
scoundrels of every stripe.

I vote to grant the petition.

PARAS, J., dissenting:

I dissent. Already, some people refer to us as a nation without discipline. Are we ready to be also called a
society without compassion?

The issue as to whether or not former President Ferdinand E. Marcos should be allowed to return to the
Philippines may be resolved by answering two simple questions: Does he have the right to return to his
own country and should national safety and security deny him this right?

There is no dispute that the former President is still a Filipino citizen and both under the Universal
Declaration of Human Rights and the 1987 Constitution of the Philippines, he has the right to return to
his own country except only if prevented by the demands of national safety and national security.

Our Armed Forces have failed to prove this danger. They are bereft of hard evidence, and all they can rely
on is sheer speculation. True, there is some danger but there is no showing as to the extent.

It is incredible that one man alone together with his family, who had been ousted from this country by
popular will, can arouse an entire country to rise in morbid sympathy for the cause he once espoused.

It is therefore clear to me, all other opinions to the contrary notwithstanding, that the former President
should be allowed to return to our country under the conditions that he and the members of his family be
under house arrest in his hometown in Ilocos Norte, and should President Marcos or any member of his
family die, the body should not be taken out of the municipality of confinement and should be buried
within ten (10) days from date.

If we do this, our country shall have maintained its regard for fundamental human rights, for national
discipline, and for human compassion.

PADILLA, J., dissenting:

I dissent. As I see it, the core issue in this case is, which right will prevail in the conflict between the right
of a Filipino, Ferdinand E. Marcos, to return to the Philippines, and the right of the Philippine
Government to bar such return in the interest of national security and public safety. In this context, the
issue is clearly justiciable involving, as it does, colliding assertions of individual right and governmental
power. Issues of this nature more than explain why the 1986 Constitutional Commission, led by the
illustrious former Chief Justice Roberto Concepcion, incorporated in the 1987 Constitution, the new
provision on the power of Judicial Review, viz:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
 whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government. Article VIII,
Section 1, par. 2; (Emphasis supplied)

Mr. Marcos invokes in his favor the specific and precise constitutional right of every Filipino to travel
which, in the language of the Constitution, shall not be impaired "except in the interest of national
security, public safety, or public health, as may be provided by law" (Art. III, Sec. 6). That the right to
travel comprises the right to travel within the country, to travel out of the country and to return to the
country (Philippines), is hardly disputable. Short of all such components, the right to travel is
meaningless. The real question arises in the interpretation of the qualifications attached by the
Constitution to such right to travel.

Petitioners contend that, in the absence of restricting legislation, the right to travel is absolute. I do not
agree. It is my view that, with or without restricting legislation, the interest of national security, public
safety or public health can justify and even require restrictions on the right to travel, and that the clause
"as may be provided by law" contained in Article III, Section 6 of the 1987 Constitution merely declares a
constitutional leave or permission for Congress to enact laws that may restrict the right to travel in the
interest of national security, public safety or public health. I do not, therefore, accept the petitioners'
submission that, in the absence of enabling legislation, the Philippine Government is powerless to restrict
travel even when such restriction is demanded by national security, public safety or public health, The
power of the State, in particular cases, to restrict travel of its citizens finds abundant support in the
police power of the state wich may be exercised to preserve and maintain government as well as
promote the general welfare of the greatest number of people.

And yet, the power of the State, acting through a government in authority at any given time, to restrict
travel, even if founded on police power, cannot be absolute and unlimited under all circumstances, much
less, can it be arbitrary and irrational.

Mr. Marcos, I repeat, comes before the Court as a Filipino, invoking a specific constitutional right, i.e.,
the right to return to the country. 1 Have the respondents presented sufficient evidence to offset or
override the exercise of this right invoked by Mr. Marcos? Stated differently, have the respondents shown
to the Court sufficient factual bases and data which would justify their reliance on national security and
public safety in negating the right to return invoked by Mr. Marcos?

I have given these questions a searching examination. I have carefully weighed and assessed the
"briefing" given the Court by the highest military authorities of the land last 28 July 1989. 1 have
searched, but in vain, for convincing evidence that would defeat and overcome the right of Mr.
Marcos as a Filipino to return to this country. It appears to me that the apprehensions entertained and
expressed by the respondents, including those conveyed through the military, do not, with all due
respect, escalate to proportions of national security or public safety. They appear to be more speculative
than real, obsessive rather than factual. Moreover, such apprehensions even if translated into realities,
would be "under control," as admitted to the Court by said military authorities, given the resources and
facilities at the command of government. But, above all, the Filipino people themselves, in my opinion,
will know how to handle any situation brought about by a political recognition of Mr. Marcos' right to
return, and his actual return, to this country. The Court, in short, should not accept respondents' general
apprehensions, concerns and perceptions at face value, in the light of a countervailing and even
irresistible, specific, clear, demandable, and enforceable right asserted by a Filipino.
Deteriorating political, social, economic or exceptional conditions, if any, are not to be used as a pretext
to justify derogation of human rights. 2

As a member of the United Nations, the Philippines has obligations under its charter. By adopting the
generally accepted principles of international law as part of the law of the land, (Art. II, Sec. 2 of the
Constitution), the Philippine government cannot just pay lip service to Art. 13, par. 2 of the Universal
Declaration of Human Rights which provides that everyone has the right to leave any country, including
his own, and to return to his country. This guarantee is reiterated in Art. XII, par. 2 of the International
Covenant on Civil and Political Rights which states that "no one shall be arbitrarily deprived of the right
to enter his own country." (Emphasis supplied) "Arbitrary" or "arbitrarily" was specifically chosen by the
drafters of the Covenant 3 hoping to protect an individual against unexpected, irresponsible or excessive
encroachment on his rights by the state based on national traditions or a particular sense of justice
which falls short of international law or standards. 4

The Solicitor General maintains that because the respondents, as alter egos of the President, have raised
the argument of "national security" and "public safety," it is the duty of this Court to unquestioningly
yield thereto, thus casting the controversy to the realm of a political question. I do not agree. I believe
that it is one case where the human and constitutional light invoked by one party is so specific,
substantial and clear that it cannot be overshadowed, much less, nullified by simplistic generalities;
worse, the Court neglects its duty under the Constitution when it allows the theory of political question to
serve as a convenient, and yet, lame excuse for evading what, to me, is its clearly pressing and
demandable duty to the Constitution.

During the oral arguments in this case, I asked the Solicitor General how one could validly defend the
right of former Senator Benigno S. Aquino, Jr., a Filipino, to return to the Philippines in 1983 and, at the
same time, credibly deny the right of Mr. Marcos, also a Filipino, to return to the Philippines in 1989. I
still have not found a satisfactory answer to that question. Instead, it has become clearer by the day that
the drama today is the same drama in 1983 with the only difference that the actors are in opposite roles,
which really makes one hope, in the national interest, that the mistake in 1983 should not be made to
persist in 1989.

To one who owes Mr. Marcos, his wife and followers absolutely nothing, personal, political or otherwise,
the following are the cogent and decisive propositions in this case —

1. Mr. Marcos is a Filipino and, as such, entitled to return to die and be buried in this
country;

2. respondents have not shown any "hard evidence" or convincing proof why his right as
a Filipino to return should be denied him. All we have are general conclusions of
"national security" and "public safety" in avoidance of a specific demandable and
enforceable constitutional and basic human right to return;

3. the issue of Marcos' return to the Philippines, perhaps more than any issue today,
requires of all members of the Court, in what appears to be an extended political
contest, the "cold neutrality of an impartial judge." It is only thus that we fortify the
independence of this Court, with fidelity, not to any person, party or group but to the
Constitution and only to the Constitution.
ACCORDINGLY, I vote to GRANT the petition.

SARMIENTO, J., dissenting:

I vote to grant the petition.

The only issue that saddles the Court is simply: "whether or not, in the exercise of the powers granted by
the Constitution, the President may prohibit the Marcoses from returning to the Philippines." 1 I therefore
take exception to allusions 2 anent "the capacity of the Marcoses to stir trouble even from afar." 3 I have
legitimate reason to fear that my brethren, in passing judgment on the Marcoses (insofar as their
"capacity to stir trouble" is concerned), have overstepped the bounds of judicial restraint, or even worse,
convicted them without trial.

I also find quite strained what the majority would have as the "real issues" facing the Court: "The right to
return to one's country," pitted against "the right of travel and freedom of abode", and their supposed
distinctions under international law, as if such distinctions, under international law in truth and in fact
exist. There is only one right involved here, whether under municipal or international law: the light of
travel, whether within one's own country, or to another, and the right to return thereto. The Constitution
itself makes no distinctions; let then, no one make a distinction. Ubi lex non distinguish nec nos
distinguere debemus.

As the majority would indeed have it, the issue is one of power: Does the Executive have the power to
deny a citizen his right to travel (back to the country or to another)? It is a question that, in essence,
involves the application, and no more, of the provisions of the 1987 Constitution:

Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law. 4

The majority says, with ample help from American precedents, that the President is possessed of the
power, thus:

On these premises, we hold the view that although the 1987 Constitution imposes
limitations on the exercise of specific powers of the President, it maintains intact what is
traditionally considered as within the scope of "executive power." Corollarily, the powers
of the President cannot be said to be limited only to the specific powers enumerated in
the Constitution. In other words, executive power is more than the sum of specific
powers so enumerated. 5

So also:

Faced with the problem of whether or not the time is right to allow the Marcoses to
return to the Philippines, the President is, under the Constitution, constrained to consider
these basic principles in arriving at a decision. More than that, having sworn to defend
and uphold the Constitution, the President has the obligation under the Constitution to
protect the people, promote their welfare and advance the national interest. It must be
 borne in mind that the Constitution, aside from being an allocation of power is also a
social contract whereby the people have surrendered their sovereign powers to the State
for the common good. Hence, lest the officers of the Government exercising the powers
delegated by the people forget and the servants of the people become rulers, the
Constitution reminds everyone that "sovereignty resides in the people and all
government authority emanates from them." [Art. II, Sec. 1 . ] 6

And finally:

To the President, the problem is one of balancing the general welfare and the common
good against the exercise of rights of certain individuals. The power involved is the
President's residual power to protect the general welfare of the people. It is founded on
the duty of the President, as steward of the people. To paraphrase Theodore Roosevelt,
it is not only the power of the President but also his duty to do anything not forbidden by
the Constitution or the laws that the needs of the nation demanded [See Corwin, supra,
at 153]. It is a power borne by the President's duty to preserve and defend the
Constitution. It also may be viewed as a power implicit in the President's duty to take
care that the laws are faithfully executed [See Hyman, The American President, where
the author advances the view that an allowance of discretionary power is unavoidable in
any government and is best lodged in the President]. 7

I am not persuaded.

First: While the Chief Executive exercises powers not found expressly in the Charter, but has them by
constitutional implication* the latter must yield to the paramountcy of the Bill of Rights. According to
Fernando: "A regime of constitutionalism is thus unthinkable without an assurance of the primacy of a
big of rights. Precisely a constitution exists to assure that in the discharge of the governmental functions,
the dignity that is the birthright of every human being is duly safeguarded. To be true to its primordial
aim a constitution must lay down the boundaries beyond which he's forbidden territory for state
action" 8

My brethren have not demonstrated, to my satisfaction, how the President may override the direct
mandate of the fundamental law. It will not suffice, so I submit, to say that the President's plenitude of
powers, as provided in the Constitution, or by sheer constitutional implication, prevail over express
constitutional commands. "Clearly," so I borrow J.B.L. Reyes, in his own right, a titan in the field of public
law, "this argument ... rests ... not upon the text of the (Constitution] ... but upon a mere inference
therefrom." 9 For if it were, indeed, the intent of the Charter to create an exception, that is, by
Presidential action, to the right of travel or liberty of abode and of changing the same other than what it
explicitly says already ("limits prescribed by law" 10 or "upon lawful order of the court" 11 the Charter
could have specifically declared so. As it is, the lone deterrents to the right in question are: (1) decree of
statute, or (2) lawful judicial mandate. Had the Constitution intended a third exception, that is, by
Presidential initiative, it could have so averred. It would also have made the Constitution, as far as limits
to the said right are concerned, come full circle: Limits by legislative, judicial, and executive processes.
Obviously, none of the twin legal bars exist. There is no law banning the Marcoses from the country;
neither is there any court decree banishing him from Philippine territory.

It is to be noted that under the 1973 Constitution, the right to travel is worded as follows:

Sec. 5. The liberty of abode and of travel shall not be impaired except upon lawful order
of the court, or when necessary in the interest of national security, public safety, or
public health. 12

Under this provision, the right may be abated: (1) upon a lawful court order, or (2) "when necessary in
the interest of national security, public safety, or public health. 13 Arguably, the provision enabled the
Chief Executive (Marcos) to moderate movement of citizens, which, Bernas says, justified such practices
as "hamletting", forced relocations, or the establishment of free-fire zones.14

The new Constitution, however, so it clearly appears, has divested the Executive's implied power. And, as
it so appears, the right may be impaired only "within the limits provided by law .15 The President is out of
the picture.

Admittedly, the Chief Executive is the "sole" judge of all matters affecting national security 16 and foreign
affairs; 17 the Bill of Rights precisely, a form of check against excesses of officialdom is, in this case, a
formidable barrier against Presidential action. (Even on matters of State security, this Constitution
prescribes limits to Executive's powers as Commander-in-Chief.)

Second: Assuming, ex hypothesis that the President may legally act, the question that emerges is: Has it
been proved that Marcos, or his return, will, in fact, interpose a threat to the national security , public
safety, or public health?" What appears in the records are vehement insistences that Marcos does pose a
threat to the national good and yet, at the same time, we have persistent claims, made by the military
top brass during the lengthy closed-door hearing on July 25, 1989, that "this Government will not fall"
should the former first family in exile step on Philippine soil. which is which?

At any rate, it is my opinion that we can not leave that determination solely to the Chief Executive. The
Court itself must be content that the threat is not only clear, but more so, present.18

That the President "has the obligation under the Constitution to protect the people ... " 19 is an obligation
open to no doubt. But the question, and so I ask again and again, is: From whom? If we say "from
Marcos," we unravel chinks in our political armor. It also flies in the face of claims, so confidently
asserted, that "this Government will not fall" even if we allowed Marcos to return.

It flies, finally, in the face of the fact that a good number of the henchmen trusted allies, implementors of
martial law, and pathetic parasites of the ex-first couple are, in fact, in the Government, in the comfort
of its offices, and or at the helm of its key agencies. Let us not, therefore, joke ourselves of moral factors
warranting the continued banishment of Marcos. Morality is the last refuge of the self-righteous.

Third: The problem is not of balancing the general welfare against the exercise of individual
liberties. 20 As I indicated, not one shred of evidence, let alone solid evidence, other than surmises of
possibilities, has been shown to justify the 'balancing act" referred to. Worse, these conjectures
contradict contentions that as far as Philippine society is concerned, Marcos is "history".
The power of the President, so my brethren declaim, "calls for the exercise of the President's power as
protector of peace. 21

This is the self-same falsehood Marcos foisted on the Filipino people to justify the authoritarian rule. It
also means that we are no better than he has.

That "[t]he power of the President to keep the peace is not limited merely to exercising the commander-
in-chief powers in times of emergency or to leading the State against external and internal threats to its
existence" 22 is a bigger fantasy: It not only summons the martial law decisions of pre-"EDSA" (especially
with respect to the detestable Amendment No. 6), it is inconsistent with the express provisions of the
commander-in-chief clause of the 1987 Charter, a Charter that has perceptibly reduced the Executive's
powers vis-a-vis its 1973 counterpart. 23

II.

The undersigned would be lacking in candor to conceal his dislike, to say the least, for Marcos. Because
of Marcos, the writer of it's dissent lost a son His son's only "offense" was that he openly and unabatedly
criticized the dictator, his associates, and his military machinery. He would pay dearly for it; he was
arrested and detained, without judicial warrant or decision, for seven months and seven days. He was
held incommunicado a greater part of the time, in the military stockade of Camp Crame. In his last week
in detention, he was, grudgingly, hospitalized (prison hospital) and confined for chronic asthma. The
deplorable conditions of his imprisonment exacerbated his delicate health beyond cure. He died, on
November 11, 1977, a martyr on the altar of the martial law apparatus.

The undersigned also counts himself as one of the victims of Marcos' ruthless apparatchiki. On August
14, 1979, he was, along with former President Diosdado Macapagal, and Congressmen Rogaciano
Mercado and Manuel Concordia, charged, "ASSOed"and placed under house arrest, for "inciting to
sedition" and "rumor mongering " 24 in the midst of the distribution of Ang Demokrasya Sa Pilipinas
(Democracy In the Philippines), a book extremely critical of martial rule, published by him and former
Congressman Concordia, authored by President Macapagal and translated into Tagalog by Congressman
Rogaciano Mercado. In addition, they were also all accused of libel in more than two dozens of criminal
complaints filed by the several military officers named in the "condemned" book as having violated the
human rights of dissenters, and for other crimes, in the office of the Provincial Fiscal of Rizal. It had to
take the events at "EDSA" to set them free from house arrest and these political offenses. I am for
Marcos' return not because I have a score to settle with him. Ditto's death or my arrest are scores that
can not be settled.

I feel the ex-President's death abroad (presented in the dailies as 'imminent") would leave him
'unpunished for his crimes to country and countrymen. If punishment is due, let this leadership inflict it.
But let him stand trial and accord him due process.

Modesty aside, I have staunchly and consistently advocated the human right of travel and movement
and the liberty of abode. 25 We would have betrayed our own Ideals if we denied Marcos his rights. It is
his constitutional right, a right that can not be abridged by personal hatred, fear, founded or unfounded,
and by speculations of the "man's "capacity" "to stir trouble" Now that the shoe is on the other foot, let
no more of human rights violations be repeated against any one, friend or foe. In a democratic
framework, there is no this as getting even.
The majority started this inquiry on the question of power. I hold that the President, under the present
Constitution and existing laws, does not have it. Mandamus, I submit, lies.

Narvasa, Melencio-Herrera, Gancayco, Griño- Aquino, Medialdea and Regalado, JJ., concur.

Feliciano, J., is on leave.

Separate Opinions

FERNAN, C.J., concurring:

"The threats to national security and public order are real the mounting Communist insurgency, a
simmering separatist movement, a restive studentry, widespread labor disputes, militant farmer groups.
. . . Each of these threats is an explosive ingredient in a steaming cauldron which could blow up if not
handled properly." 1

These are not my words. They belong to my distinguished colleague in the Court, Mr. Justice Hugo E.
Gutierrez, Jr. But they express eloquently the basis of my full concurrence to the exhaustive and well-
written ponencia of Mme. Justice Irene R. Cortes.

Presidential powers and prerogatives are not fixed but fluctuate. They are not derived solely from a
particular constitutional clause or article or from an express statutory grant. Their limits are likely to
depend on the imperatives of events and contemporary imponderables rather than on abstract theories
of law. History and time-honored principles of constitutional law have conceded to the Executive Branch
certain powers in times of crisis or grave and imperative national emergency. Many terms are applied to
these powers: "residual," "inherent," 44 moral," "implied," "aggregate," 'emergency." whatever they
may be called, the fact is that these powers exist, as they must if the governance function of the
Executive Branch is to be carried out effectively and efficiently. It is in this context that the power of the
President to allow or disallow the Marcoses to return to the Philippines should be viewed. By reason of its
impact on national peace and order in these admittedly critical times, said question cannot be
withdrawn from the competence of the Executive Branch to decide.

And indeed, the return of the deposed President, his wife and children cannot but pose a clear and
present danger to public order and safety. One needs only to recall the series of destabilizing actions
attempted by the so-called Marcos loyalists as well as the ultra-rightist groups during the EDSA
Revolution's aftermath to realize this. The most publicized of these offensives is the Manila Hotel incident
which occurred barely five (5) months after the People's Power Revolution. Around 10,000 Marcos
supporters, backed by 300 loyalist soldiers led by Brigadier General Jose Zumel and Lt. Col. Reynaldo
Cabauatan converged at the Manila Hotel to witness the oath-taking of Arturo Tolentino as acting
president of the Philippines. The public disorder and peril to life and limb of the citizens engendered by
this event subsided only upon the eventual surrender of the loyalist soldiers to the authorities.
Then followed the Channel 7, Sangley, Villamor, Horseshoe Drive and Camp Aguinaldo incidents. Military
rebels waged simultaneous offensives in different parts of Metro Manila and Sangley Point in Cavite. A
hundred rebel soldiers took over Channel 7 and its radio station DZBB. About 74 soldier rebels attacked
Villamor Air Base, while another group struck at Sangley Point in Cavite and held the 15th Air Force Strike
wing commander and his deputy hostage. Troops on board several vehicles attempted to enter Gate I of
Camp Aguinaldo even as another batch of 200 soldiers encamped at Horseshoe Village.

Another destabilization plot was carried out in April, 1987 by enlisted personnel who forced their way
through Gate 1 of Fort Bonifacio. They stormed into the army stockade but having failed to convince
their incarcerated members to unite in their cause, had to give up nine (9) hours later.

And who can forget the August 28, 1987 coup attempt which almost toppled the Aquino Government?
Launched not by Marcos loyalists, but by another ultra-rightist group in the military led by Col. Gregorio
"Gringo" Honasan who remains at large to date, this most serious attempt to wrest control of the
government resulted in the death of many civilians.

Members of the so-called Black Forest Commando were able to cart away high-powered firearms and
ammunition from the Camp Crame Armory during a raid conducted in June 1988. Most of the group
members were, however, captured in Antipolo, Rizal. The same group was involved in an unsuccessful
plot known as Oplan Balik Saya which sought the return of Marcos to the country.

A more recent threat to public order, peace and safety was the attempt of a group named CEDECOR to
mobilize civilians from nearby provinces to act as blockading forces at different Metro Manila areas for
the projected link-up of Marcos military loyalist troops with the group of Honasan. The pseudo "people
power" movement was neutralized thru checkpoints set up by the authorities along major road arteries
where the members were arrested or forced to turn back.

While not all of these disruptive incidents may be traced directly to the Marcoses, their occurrence
militates heavily against the wisdom of allowing the Marcoses' return. Not only will the Marcoses'
presence embolden their followers toward similar actions, but any such action would be seized upon as
an opportunity by other enemies of the State, such as the Communist Party of the Philippines and the
NPA'S, the Muslim secessionists and extreme rightists of the RAM, to wage an offensive against the
government. Certainly, the state through its executive branch has the power, nay, the responsibility and
obligation, to prevent a grave and serious threat to its safety from arising.

Apparently lost amidst the debate on whether or not to allow the Marcoses to return to the Philippines is
one factor, which albeit, at first blush appears to be extra legal, constitutes a valid justification for
disallowing the requested return. I refer to the public pulse. It must be remembered that the ouster of the
Marcoses from the Philippines came about as an unexpected, but certainly welcomed, result of the
unprecedented peoples power" revolution. Millions of our people braved military tanks and firepower,
kept vigil, prayed, and in countless manner and ways contributed time, effort and money to put an end
to an evidently untenable claim to power of a dictator. The removal of the Marcoses from the Philippines
was a moral victory for the Filipino people; and the installation of the present administration, a
realization of and obedience to the people's Will.

Failing in legal arguments for the allowance of the Marcoses' return, appeal is being made to sympathy,
compassion and even Filipino tradition. The political and economic gains we have achieved during the
past three years are however too valuable and precious to gamble away on purely compassionate
considerations. Neither could public peace, order and safety be sacrificed for an individual's wish to die in
his own country. Verily in the balancing of interests, the scales tilt in favor of presidential prerogative,
which we do not find to have been gravely abused or arbitrarily exercised, to ban the Marcoses from
returning to the Philippines.

GUTIERREZ, JR., J., dissenting

"The Constitution ... is a law for rulers and people, equally in war and in peace, and covers with the shield
of its protection all classes of men, at all times, and under all circumstances. No doctrine involving more
pernicious consequences was ever invented by the wit of man than that any of its provisions can be
suspended during any of the great exigencies of government." (Ex Parte Milligan, 4 Wall. 2; 18 L. Ed. 281
[1866])

Since our days as law students, we have proclaimed the stirring words of Ex Parte Milligan as self-evident
truth. But faced with a hard and delicate case, we now hesitate to qive substance to their meaning. The
Court has permitted a basic freedom enshrined in the Bill of Rights to be taken away by Government.

There is only one Bill of Rights with the same interpretation of liberty and the same guarantee of
freedom for both unloved and despised persons on one hand and the rest who are not so stigmatized on
the other.

I am, therefore, disturbed by the majority ruling which declares that it should not be a precedent. We are
interpreting the Constitution for only one person and constituting him into a class by himself. The
Constitution is a law for all classes of men at all times. To have a person as one class by himself smacks
of unequal protection of the laws.

With all due respect for the majority in the Court, I believe that the issue before us is one of rights and
not of power. Mr. Marcos is insensate and would not live if separated from the machines which have
taken over the functions of his kidneys and other organs. To treat him at this point as one with full
panoply of power against whom the forces of Government should be marshalled is totally unrealistic. The
Government has the power to arrest and punish him. But does it have the power to deny him his right to
come home and die among familiar surroundings?

Hence, this dissent.

The Bill of Rights provides:

Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law. (Emphasis supplied, Section 6, Art. 111, Constitution)

To have the petition dismissed, the Solicitor General repeats a ritual invocation of national security and
public safety which is hauntingly familiar because it was pleaded so often by petitioner Ferdinand E.
Marcos to justify his acts under martial law. There is, however, no showing of the existence of a law
prescribing the limits of the power to impair and the occasions for its exercise. And except for citing
breaches of law and order, the more serious of which were totally unrelated to Mr. Marcos and which
the military was able to readily quell, the respondents have not pointed to any grave exigency which
permits the use of untrammeled Governmental power in this case and the indefinite suspension of the
constitutional right to travel.

The respondents' basic argument is that the issue before us is a political question beyond our jurisdiction
to consider. They contend that the decision to ban former President Marcos, and his family on grounds of
national security and public safety is vested by the Constitution in the President alone. The determination
should not be questioned before this Court. The President's finding of danger to the nation should be
conclusive on the Court.

What is a political question?

In Vera v. Avelino (77 Phil. 192, 223 [1946], the Court stated:

xxxxxxxxx

It is a well-settled doctrine that political questions are not within the province of the
judiciary, except to the extent that power to deal with such questions has been conferred
on the courts by express constitutional or statutory provisions. It is not so easy, however,
to define the phrase political question, nor to determine what matters fall within its
scope. It is frequently used to designate all questions that he outside the scope of the
judicial power. More properly, however, it means those questions which, under the
constitution, are to be decided by the people in their sovereign capacity, or in regard to
which full discretionary authority has been delegated to the legislative or executive
branch of the government.

We defined a political question in Taniada v. Cuenco (103 Phil. 1051, 1066 [1957]), as follows:

In short, the term 'Political question' connotes, in legal parlance, what it means in
ordinary parlance, namely, a question of policy. In other words, in the language of
Corpus Juris Secundum (supra), it refers to 'those questions which, under the
Constitution, are to be decided by the people in their sovereign capacity, or in regard to
which full discretionary authority has been delegated to the Legislature or executive
branch of the Government. It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.

The most often quoted definition of political question was made by Justice Wilham J. Brennan Jr., who
penned the decision of the United States Supreme Court in Baker v. Carr (369 US 186,82, S. Ct. 691, L. Ed.
2d. 663 [1962]). The ingredients of a political question as formulated in Baker v. Carr are:

It is apparent that several formulations which vary slightly according to the settings in
which the questions arise may describe a political question, which Identifies it as
essentially a function of the separation of powers. Prominent on the surface of any case
held to involve a political question is found a textually demonstrable constitutional
commitment of the issue to a coordinate political department; or a lack of judicially
discoverable and manageable standards for resolving it; or the impossibility of deciding
 without an initial policy determination of a kind clearly for non-judicial discretion; or the
impossibility of a court's undertaking independent resolution without expressing lack of
the respect due coordinate branches of government; or an unusual need for
unquestioning adherence to a political decision already made; or potentiality of
embarrassment from multifarious pronouncements by various departments on one
question.

For a political question to exist, there must be in the Constitution a power vested exclusively in the
President or Congress, the exercise of which the court should not examine or prohibit. A claim of plenary
or inherent power against a civil right which claim is not found in a specific provision is dangerous.
Neither should we validate a roving commission allowing public officials to strike where they please and
to override everything which to them represents evil. The entire Govern ment is bound by the rule of law.

The respondents have not pointed to any provision of the Constitution which commits or vests the
determination of the question raised to us solely in the President.

The authority implied in Section 6 of the Bill of Rights itself does not exist because no law has been
enacted specifying the circumstances when the right may be impaired in the interest of national security
or public safety. The power is in Congress, not the Executive.

The closest resort to a textile demonstrable constitutional commitment of power may be found in the
commander-in-chief clause which allows the President to call out the armed forces in case of lawless
violence, invasion or rebellion and to suspend the privilege of the writ of habeas corpus or proclaim
martial law in the event of invasion or rebellion, when the public safety requires it.

There is, however, no showing, not even a claim that the followers of former President Marcos are
engaging in rebellion or that he is in a position to lead them. Neither is it claimed that there is a need to
suspend the privilege of the writ of habeas corpus or proclaim martial law because of the arrival of Mr.
Marcos and his family. To be sure, there may be disturbances but not of a magnitude as would compel
this Court to resort to a doctrine of non- justiceability and to ignore a plea for the enforcement of an
express Bill of Rights guarantee.

The respondents themselves are hard-pressed to state who or what constitutes a Marcos "loyalist." The
constant insinuations that the "loyalist" group is heavily funded by Mr. Marcos and his cronies and that
the "loyalists" engaging in rallies and demonstrations have to be paid individual allowances to do so
constitute the strongest indication that the hard core "loyalists" who would follow Marcos right or wrong
are so few in number that they could not possibly destabilize the government, much less mount a serious
attempt to overthrow it.

Not every person who would allow Mr. Marcos to come home can be tagged a "loyalist." It is in the best
of Filipino customs and traditions to allow a dying person to return to his home and breath his last in his
native surroundings. Out of the 103 Congressmen who passed the House resolution urging permission for
his return, there are those who dislike Mr. Marcos intensely or who suffered under his regime. There are
also many Filipinos who believe that in the spirit of national unity and reconciliation Mr. Marcos and his
family should be permitted to return to the Philippines and that such a return would deprive his fanatic
followers of any further reason to engage in rallies and demonstrations.
The Court, however, should view the return of Mr. Marcos and his family solely in the light of the
constitutional guarantee of liberty of abode and the citizen's right to travel as against the respondents'
contention that national security and public safety would be endangered by a grant of the petition.

Apart from the absence of any text in the Constitution committing the issue exclusively to the President,
there is likewise no dearth of decisional data, no unmanageable standards which stand in the way of a
judicial determination.

Section 6 of the Bill of Rights states categorically that the liberty of abode and of changing the same
within the limits prescribed by law may be impaired only upon a lawful order of a court. Not by an
executive officer. Not even by the President. Section 6 further provides that the right to travel, and this
obviously includes the right to travel out of or back into the Philippines, cannot be impaired except in the
interest of national security, public safety, or public health, as may be provided by law.

There is no law setting the limits on a citizen's right to move from one part of the country to another or
from the Philippines to a foreign country or from a foreign country to the Philippines. The laws cited by
the Solicitor General immigration, health, quarantine, passports, motor vehicle, destierro probation, and
parole are all inapplicable insofar as the return of Mr. Marcos and family is concerned. There is
absolutely no showing how any of these statutes and regulations could serve as a basis to bar their
coming home.

There is also no disrespect for a Presidential determination if we grant the petition. We would simply be
applying the Constitution, in the preservation and defense of which all of us in Government, the President
and Congress included, are sworn to participate. Significantly, the President herself has stated that the
Court has the last word when it comes to constitutional liberties and that she would abide by our
decision.

As early as 1983, it was noted that this Court has not been very receptive to the invocation of the
political question doctrine by government lawyers. (See Morales, Jr. .v Ponce Enrile, 121 SCRA 538
[1983]).

Many of those now occupying the highest positions in the executive departments, Congress, and the
judiciary criticized this Court for using what they felt was a doctrine of convenience, expediency, utility
or subservience. Every major challenge to the acts of petitioner Ferdinand E. Marcos under his
authoritarian regime the proclamation of martial law, the ratification of a new constitution, the arrest
and detention of "enemies of the State" without charges being filed against them, the dissolution of
Congress and the exercise by the President of legislative powers, the trial of civilians for civil offenses by
military tribunals, the seizure of some of the country's biggest corporations, the taking over or closure of
newspaper offices, radio and television stations and other forms of media, the proposals to amend the
Constitution, etc. was invariably met by an invocation that the petition involved a political question. It is
indeed poetic justice that the political question doctrine so often invoked by then President Marcos to
justify his acts is now being used against him and his family. Unfortunately, the Court should not and is
not allowed to indulge in such a persiflage. We are bound by the Constitution.

The dim view of the doctrine's use was such that when the present Constitution was drafted, a broad
definition of judicial power was added to the vesting in the Supreme Court and statutory courts of said
power.
The second paragraph of Section 1, Article VIII of the Constitution provides:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.

This new provision was enacted to preclude this Court from using the political question doctrine as a
means to avoid having to make decisions simply because they are too controversial, displeasing to the
President or Congress, inordinately unpopular, or which may be ignored and not enforced.

The framers of the Constitution believed that the free use of the political question doctrine allowed the
Court during the Marcos years to fall back on prudence, institutional difficulties, complexity of issues,
momentousness of consequences or a fear that it was extravagantly extending judicial power in the
cases where it refused to examine and strike down an exercise of authoritarian power. Parenthetically, at
least two of the respondents and their counsel were among the most vigorous critics of Mr. Marcos (the
main petitioner) and his use of the political question doctrine. The Constitution was accordingly
amended. We are now precluded by its mandate from refusing to invalidate a political use of power
through a convenient resort to the question doctrine. We are compelled to decide what would have been
non-justiceable under our decisions interpreting earlier fundamental charters.

This is not to state that there can be no more political questions which we may refuse to resolve. There
are still some political questions which only the President, Congress, or a plebiscite may decide.
Definitely, the issue before us is not one of them.

The Constitution requires the Court "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction."

How do we determine a grave abuse of discretion?

The tested procedure is to require the parties to present evidence. Unfortunately, considerations of
national security do not readily lend themselves to the presentation of proof before a court of justice. The
vital information essential to an objective determination is usually highly classified and it cannot be
rebutted by those who seek to overthrow the government. As early as Barcelon v. Baker (5 Phil. 87, 93
[19051), the Court was faced with a similar situation. It posed a rhetorical question. If after investigating
conditions in the Archipelago or any part thereof, the President finds that public safety requires the
suspension of the privilege of the writ of habeas corpus, can the judicial department investigate the
same facts and declare that no such conditions exist?

In the effort to follow the "grave abuse of discretion" formula in the second paragraph of Section 1,
Article VIII of the Constitution, the court granted the Solicitor General's offer that the military give us a
closed door factual briefing with a lawyer for the petitioners and a lawyer for the respondents present.

The results of the briefing call to mind the concurrence of Justice Vicente Abad Santos in Morales, Jr. v.
Enrile, (121 SCRA 538, 592 [19831):
 How can this Court determine the factual basis in order that it can ascertain whether or
not the president acted arbitrarily in suspending the writ when, in the truth words of
Montenegro, with its very limited machinery fit] cannot be in better position [than the
Executive Branch] to ascertain or evaluate the conditions prevailing in the Archipelago?
(At p. 887). The answer is obvious. It must rely on the Executive Branch which has the
appropriate civil and military machinery for the facts. This was the method which had to
be used in Lansang. This Court relied heavily on classified information supplied by the
military. Accordingly, an incongruous situation obtained. For this Court, relied on the
very branch of the government whose act was in question to obtain the facts. And as
should be expected the Executive Branch supplied information to support its position and
this Court was in no situation to disprove them. It was a case of the defendant judging
the suit. After all is said and done, the attempt by its Court to determine whether or not
the President acted arbitrarily in suspending the writ was a useless and futile exercise.

There is still another reason why this Court should maintain a detached attitude and
refrain from giving the seal of approval to the act of the Executive Branch. For it is
possible that the suspension of the writ lacks popular support because of one reason or
another. But when this Court declares that the suspension is not arbitrary (because it
cannot do otherwise upon the facts given to it by the Executive Branch) it in effect
participates in the decision-making process. It assumes a task which it is not equipped to
handle; it lends its prestige and credibility to an unpopular act.

The other method is to avail of judicial notice. In this particular case, judicial notice would be the only
basis for determining the clear and present danger to national security and public safety. The majority of
the Court has taken judicial notice of the Communist rebellion, the separatist movement, the rightist
conspiracies, and urban terrorism. But is it fair to blame the present day Marcos for these incidents? All
these problems are totally unrelated to the Marcos of today and, in fact, are led by people who have
always opposed him. If we use the problems of Government as excuses for denying a person's right to
come home, we will never run out of justifying reasons. These problems or others like them will always
be with us.

Significantly, we do not have to look into the factual bases of the ban Marcos policy in order to ascertain
whether or not the respondents acted with grave abuse of discretion. Nor are we forced to fall back
upon judicial notice of the implications of a Marcos return to his home to buttress a conclusion.

In the first place, there has never been a pronouncement by the President that a clear and present
danger to national security and public safety will arise if Mr. Marcos and his family are allowed to return
to the Philippines. It was only after the present petition was filed that the alleged danger to national
security and public safety conveniently surfaced in the respondents' pleadings. Secondly, President
Aquino herself limits the reason for the ban Marcos policy to-41) national welfare and interest and (2)
the continuing need to preserve the gains achieved in terms of recovery and stability. (See page 7,
respondents' Comment at page 73 of Rollo). Neither ground satisfies the criteria of national security and
public safety. The President has been quoted as stating that the vast majority of Filipinos support her
position. (The Journal, front page, January 24,1989) We cannot validate their stance simply because it is
a popular one. Supreme Court decisions do not have to be popular as long as they follow the Constitution
and the law. The President's original position "that it is not in the interest of the nation that Marcos be
allowed to return at this time" has not changed. (Manila Times, front page, February 7, 1989). On
February 11, 1989, the President is reported to have stated that "considerations of the highest national
good dictate that we preserve the substantial economic and political gains of the past three years" in
justifying her firm refusal to allow the return of Mr. Marcos despite his failing health. (Daily Globe, front
page, February 15, 1989). "Interest of the nation national good," and "preserving economic and political
gains," cannot be equated with national security or public order. They are too generic and sweeping to
serve as grounds for the denial of a constitutional right. The Bill of Rights commands that the right to
travel may not be impaired except on the stated grounds of national security, public safety, or public
health and with the added requirement that such impairment must be "as provided by law." The
constitutional command cannot be negated by mere generalizations.

There is an actual rebellion not by Marcos followers but by the New Peoples' Army. Feeding as it does on
injustice, ignorance, poverty, and other aspects at under-development, the Communist rebellion is the
clearest and most present danger to national security and constitutional freedoms. Nobody has
suggested that one way to quell it would be to catch and exile its leaders, Mr. Marcos himself was forced
to flee the country because of "peoples' power." Yet, there is no move to arrest and exile the leaders of
student groups, teachers' organizations, pea ant and labor federations, transport workers, and
government unions whose threatened mass actions would definitely endanger national security and the
stability of government. We fail to see how Mr. Marcos could be a greater danger.

The fear that Communist rebels, Bangsa Moro secessionists, the Honasan ex-soldiers, the hard core
loyalists, and other dissatisfied elements would suddenly unite to overthrow the Republic should a dying
Marcos come home is too speculative and unsubstantial a ground for denying a constitutional right. It is
not shown how extremists from the right and the left who loathe each other could find a rallying point in
the coming of Mr. Marcos.

The "confluence theory" of the Solicitor General or what the majority calls "catalytic effect," which alone
sustains the claim of danger to national security is fraught with perilous implications. Any difficult
problem or any troublesome person can be substituted for the Marcos threat as the catalysing factor.
The alleged confluence of NPAS, secessionists, radical elements, renegade soldiers, etc., would still be
present. Challenged by any critic or any serious problem, the Government can state that the situation
threatens a confluence of rebel forces and proceed to ride roughshod over civil liberties in the name of
national security. Today, a passport is denied. Tomorrow, a newspaper may be closed. Public assemblies
may be prohibited. Human rights may be violated. Yesterday, the right to travel of Senators Benigno
Aquino, Jr. and Jovito Salonga was curtailed. Today, it is the right of Mr. Marcos and family. Who will be
tomorrow's pariahs I deeply regret that the Court's decision to use the political question doctrine in a
situation where it does not apply raises all kinds of disturbing possibilities.

I must emphasize that General Renato de Villa, the Chief of Staff of the Armed Forces, has personally
assured the Court that a rebellion of the above combined groups will not succeed and that the military is
on top of the situation. Where then is the clear danger to national security? The Court has taken judicial
notice of something which even the military denies. There would be severe strains on military capabilities
according to General de Villa. There would be set-backs in the expected eradication of the Communist
threat. There would be other serious problems but all can be successfully contained by the military. I
must stress that no reference was made to a clear and present danger to national security as would
allow an overriding of the Bill of Rights.

The Solicitor General's argument that the failure of Congress to enact a statute defining the parameters
of the right to travel and to freely choose one's abode has constrained the President to fill in the vacuum,
is too reminiscent of Amendment No. 6 of the martial law Constitution to warrant serious consideration.
Amendment No. 6 allowed Marcos to issue decrees whenever the Batasang Pambansa failed or was
unable to act adequately on any matter for any reason that in his judgment required immediate action.
When the Bill of Rights provides that a right may not be impaired except in the interest of national
security, public safety, or public health and further requires that a law must provide when such
specifically defined interests are prejudiced or require protection, the inaction of Congress does not give
reason for the respondents to assume the grounds for its impairment.

The fact that the Marcoses have been indicted before American federal courts does not obstruct us from
ruling against an unconstitutional assertion of power by Philippine officials. Let the United States apply
its laws. We have to be true to our own.

Mr. Marcos may be too ill to withstand the rigors of a transpacific flight. The agony of traveling while
hooked up to machines which have taken over the functions of his heart, lungs, and kidneys may hasten
his death. The physical condition of Mr. Marcos does not justify our ignoring or refusing to act on his
claim to a basic right which is legally demandable and enforceable. For his own good, it might be
preferable to stay where he is. But he invokes a constitutional right. We have no power to deny it to him.

The issuance of a passport may be discretionary but it should not be withheld if to do so would run
counter to a constitutional guarantee. Besides, the petitioners are not asking for passports and nothing
else. Any travel documents or any formal lifting of the Marcos ban as would allow international airlines
to sell them tickets would suffice.

With all due respect for the majority opinion, I disagree with its dictum on the right to travel. I do not
think we should differentiate the right to return home from the right to go abroad or to move around in
the Philippines. If at all, the right to come home must be more preferred than any other aspect of the
right to travel. It was precisely the banning by Mr. Marcos of the right to travel by Senators Benigno
Aquino, Jr., Jovito Salonga, and scores of other "undesirables" and "threats to national security" during
that unfortunate period which led the framers of our present Constitution not only to re-enact but to
strengthen the declaration of this right. Media often asks, "what else is new?" I submit that we now have
a freedom loving and humane regime. I regret that the Court's decision in this case sets back the gains
that our country has achieved in terms of human rights, especially human rights for those whom we do
not like or those who are against us.

The respondent Secretary of Foreign Affairs, Raul S. Manglapus has disclosed a list of former dictators
who were barred by their successors from returning to their respective countries. There is no showing
that the countries involved have constitutions which guarantee the liberty of abode and the freedom to
travel and that despite such constitutional protections, the courts have validated the "ban a return"
policy. Neither is it shown that the successors of the listed dictators are as deeply committed to
democratic principles and as observant of constitutional protections as President Aquino.

It is indeed regrettable that some followers of the former President are conducting a campaign to sow
discord and to divide the nation. Opposition to the government no matter how odious or disgusting is,
however, insufficient ground to ignore a constitutional guarantee.

During the protracted deliberations on this case, the question was asked is the Government helpless to
defend itself against a threat to national security? Does the President have to suspend the privilege of
the writ of habeas corpus or proclaim martial law? Can she not take less drastic measures?
Of course, the Government can act. It can have Mr. Marcos arrested and tried in court. The Government
has more than ample powers under eixisting law to deal with a person who transgresses the peace and
imperils public safety. But the denial of travel papers is not one of those powers because the Bill of Rights
says so. There is no law prescribing exile in a foreign land as the penalty for hurting the Nation.

Considering all the foregoing, I vote to GRANT the petition.

CRUZ, J., dissenting:

It is my belief that the petitioner, as a citizen of the Philippines, is entitled to return to and live-and die-in
his own country. I say this with a heavy heart but say it nonetheless. That conviction is not diminished
one whit simply because many believe Marcos to be beneath contempt and undeserving of the very
liberties he flounted when he was the absolute ruler of this land.

The right of the United States government to detain him is not the question before us, nor can we resolve
it. The question we must answer is whether or not, assuming that Marcos is permitted to leave Hawaii
(which may depend on the action we take today), the respondents have acted with grave abuse of
discretion in barring him from his own country.

My reluctant conclusion is that they have, absent the proof they said they were prepared to offer, but
could not, that the petitioner's return would prejudice the security of the State.

I was the one who, in the open hearing held on June 27,1989, asked the Solicitor General if the
government was prepared to prove the justification for opposing the herein petition, i. that it had not
acted arbitrarily. He said it was. Accordingly, the Court, appreciating the classified nature of the
information expected, scheduled a closed-door hearing on July 25,1988. The Solicitor General and three
representatives from the military appeared for the respondents, together with former Senator Arturo M.
Tolentino, representing the petitioners.

In about two hours of briefing, the government failed dismally to show that the return of Marcos dead or
alive would pose a threat to the national security as it had alleged. The fears expressed by its
representatives were based on mere conjectures of political and economic destabilization without any
single piece of concrete evidence to back up their apprehensions.

Amazingly, however, the majority has come to the conclusion that there exist "factual bases for the
President's decision" to bar Marcos's return. That is not my recollection of the impressions of the Court
after that hearing.

In holding that the President of the Philippines has residual powers in addition to the specific powers
granted by the Constitution, the Court is taking a great leap backward and reinstating the discredited
doctrine announced in Planas v. Gil (67 Phil. 62). This does not square with the announced policy of the
Constitutional Commission, which was precisely to limit rather than expand presidential powers, as a
reaction to the excesses of the past dictatorship.

I can only repeat Justice Black's wry observation in the Steel Seizure Case (343 U.S. 579) that if it was true
that the President had been granted the totality of executive power, "it is difficult to see why our
forefathers bothered to add several specific items, including some trifling ones, . . . I cannot accept the
view that this clause is a grant in bulk of all conceivable executive power but regard it as an allocation to
the presidential office of the generic powers thereafter stated."

I have no illusion that the stand I am taking will be met with paeans of praise, considering that Marcos is
perhaps the most detested man in the entire history of our country. But we are not concerned here with
popularity and personalities. As a judge, I am not swayed by what Justice Cardozo called the "hooting
throng" that may make us see things through the prisms of prejudice. I bear in mind that when I sit in
judgment as a member of this Court, I must cast all personal feelings aside.

The issue before us must be resolved with total objectivity, on the basis only of the established facts and
the applicable law and not of wounds that still fester and scars that have not healed. And not even of
fear, for fear is a phantom. That phantom did not rise when the people stood fast at EDSA against the
threat of total massacre in defense at last of their freedom.

I cannot turn back on the lessons of liberty that I taught for more than three decades as a professor of
Constitutional Law. These principles have not changed simply because I am now on the Court or a new
administration is in power and the shoe is on the other foot.

Like the martyred Ninoy Aquino who also wanted to come back to the Philippines against the
prohibitions of the government then, Marcos is entitled to the same right to travel and the liberty of
abode that his adversary invoked. These rights are guaranteed by the Constitution to all individuals,
including the patriot and the homesick and the prodigal son returning, and tyrants and charlatans and
scoundrels of every stripe.

I vote to grant the petition.

PARAS, J., dissenting:

I dissent. Already, some people refer to us as a nation without discipline. Are we ready to be also called a
society without compassion?

The issue as to whether or not former President Ferdinand E. Marcos should be allowed to return to the
Philippines may be resolved by answering two simple questions: Does he have the right to return to his
own country and should national safety and security deny him this right?

There is no dispute that the former President is still a Filipino citizen and both under the Universal
Declaration of Human Rights and the 1987 Constitution of the Philippines, he has the right to return to
his own country except only if prevented by the demands of national safety and national security.

Our Armed Forces have failed to prove this danger. They are bereft of hard evidence, and all they can rely
on is sheer speculation. True, there is some danger but there is no showing as to the extent.

It is incredible that one man alone together with his family, who had been ousted from this country by
popular will, can arouse an entire country to rise in morbid sympathy for the cause he once espoused.

It is therefore clear to me, all other opinions to the contrary notwithstanding, that the former President
should be allowed to return to our country under the conditions that he and the members of his family be
under house arrest in his hometown in Ilocos Norte, and should President Marcos or any member of his
family die, the body should not be taken out of the municipality of confinement and should be buried
within ten (10) days from date.

If we do this, our country shall have maintained its regard for fundamental human rights, for national
discipline, and for human compassion.

PADILLA, J., dissenting:

I dissent. As I see it, the core issue in this case is, which right will prevail in the conflict between the right
of a Filipino, Ferdinand E. Marcos, to return to the Philippines, and the right of the Philippine
Government to bar such return in the interest of national security and public safety. In this context, the
issue is clearly justiciable involving, as it does, colliding assertions of individual right and governmental
power. Issues of this nature more than explain why the 1986 Constitutional Commission, led by the
illustrious former Chief Justice Roberto Concepcion, incorporated in the 1987 Constitution, the new
provision on the power of Judicial Review, viz:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government. Article VIII,
Section 1, par. 2; (Emphasis supplied)

Mr. Marcos invokes in his favor the specific and precise constitutional right of every Filipino to travel
which, in the language of the Constitution, shall not be impaired "except in the interest of national
security, public safety, or public health, as may be provided by law" (Art. III, Sec. 6). That the right to
travel comprises the right to travel within the country, to travel out of the country and to return to the
country (Philippines), is hardly disputable. Short of all such components, the right to travel is
meaningless. The real question arises in the interpretation of the qualifications attached by the
Constitution to such right to travel.

Petitioners contend that, in the absence of restricting legislation, the right to travel is absolute. I do not
agree. It is my view that, with or without restricting legislation, the interest of national security, public
safety or public health can justify and even require restrictions on the right to travel, and that the clause
"as may be provided by law" contained in Article III, Section 6 of the 1987 Constitution merely declares a
constitutional leave or permission for Congress to enact laws that may restrict the right to travel in the
interest of national security, public safety or public health. I do not, therefore, accept the petitioners'
submission that, in the absence of enabling legislation, the Philippine Government is powerless to restrict
travel even when such restriction is demanded by national security, public safety or public health, The
power of the State, in particular cases, to restrict travel of its citizens finds abundant support in the
police power of the state wich may be exercised to preserve and maintain government as well as
promote the general welfare of the greatest number of people.

And yet, the power of the State, acting through a government in authority at any given time, to restrict
travel, even if founded on police power, cannot be absolute and unlimited under all circumstances, much
less, can it be arbitrary and irrational.
Mr. Marcos, I repeat, comes before the Court as a Filipino, invoking a specific constitutional right, i.e.,
the right to return to the country. 1 Have the respondents presented sufficient evidence to offset or
override the exercise of this right invoked by Mr. Marcos? Stated differently, have the respondents shown
to the Court sufficient factual bases and data which would justify their reliance on national security and
public safety in negating the right to return invoked by Mr. Marcos?

I have given these questions a searching examination. I have carefully weighed and assessed the
"briefing" given the Court by the highest military authorities of the land last 28 July 1989. 1 have
searched, but in vain, for convincing evidence that would defeat and overcome the right of Mr.
Marcos as a Filipino to return to this country. It appears to me that the apprehensions entertained and
expressed by the respondents, including those conveyed through the military, do not, with all due
respect, escalate to proportions of national security or public safety. They appear to be more speculative
than real, obsessive rather than factual. Moreover, such apprehensions even if translated into realities,
would be "under control," as admitted to the Court by said military authorities, given the resources and
facilities at the command of government. But, above all, the Filipino people themselves, in my opinion,
will know how to handle any situation brought about by a political recognition of Mr. Marcos' right to
return, and his actual return, to this country. The Court, in short, should not accept respondents' general
apprehensions, concerns and perceptions at face value, in the light of a countervailing and even
irresistible, specific, clear, demandable, and enforceable right asserted by a Filipino.

Deteriorating political, social, economic or exceptional conditions, if any, are not to be used as a pretext
to justify derogation of human rights. 2

As a member of the United Nations, the Philippines has obligations under its charter. By adopting the
generally accepted principles of international law as part of the law of the land, (Art. II, Sec. 2 of the
Constitution), the Philippine government cannot just pay lip service to Art. 13, par. 2 of the Universal
Declaration of Human Rights which provides that everyone has the right to leave any country, including
his own, and to return to his country. This guarantee is reiterated in Art. XII, par. 2 of the International
Covenant on Civil and Political Rights which states that "no one shall be arbitrarily deprived of the right
to enter his own country." (Emphasis supplied) "Arbitrary" or "arbitrarily" was specifically chosen by the
drafters of the Covenant 3 hoping to protect an individual against unexpected, irresponsible or excessive
encroachment on his rights by the state based on national traditions or a particular sense of justice
which falls short of international law or standards. 4

The Solicitor General maintains that because the respondents, as alter egos of the President, have raised
the argument of "national security" and "public safety," it is the duty of this Court to unquestioningly
yield thereto, thus casting the controversy to the realm of a political question. I do not agree. I believe
that it is one case where the human and constitutional light invoked by one party is so specific,
substantial and clear that it cannot be overshadowed, much less, nullified by simplistic generalities;
worse, the Court neglects its duty under the Constitution when it allows the theory of political question to
serve as a convenient, and yet, lame excuse for evading what, to me, is its clearly pressing and
demandable duty to the Constitution.

During the oral arguments in this case, I asked the Solicitor General how one could validly defend the
right of former Senator Benigno S. Aquino, Jr., a Filipino, to return to the Philippines in 1983 and, at the
same time, credibly deny the right of Mr. Marcos, also a Filipino, to return to the Philippines in 1989. I
still have not found a satisfactory answer to that question. Instead, it has become clearer by the day that
the drama today is the same drama in 1983 with the only difference that the actors are in opposite roles,
which really makes one hope, in the national interest, that the mistake in 1983 should not be made to
persist in 1989.

To one who owes Mr. Marcos, his wife and followers absolutely nothing, personal, political or otherwise,
the following are the cogent and decisive propositions in this case-

1. Mr. Marcos is a Filipino and, as such, entitled to return to die and be buried in this
country;

2. respondents have not shown any "hard evidence" or con- vincing proof why his
right as a Filipino to return should be denied him. All we have are general conclusions of
"national security" and "public safety" in avoidance of a specific demandable and
enforceable constitutional and basic human right to return;

3. the issue of Marcos' return to the Philippines, perhaps more than any issue today,
requires of all members of the Court, in what appears to be an extended political
contest, the "cold neutrality of an impartial judge." It is only thus that we fortify the
independence of this Court, with fidelity, not to any person, party or group but to the
Constitution and only to the Constitution.

ACCORDINGLY, I vote to GRANT the petition.

SARMIENTO, J., dissenting:

I vote to grant the petition.

The only issue that saddles the Court is simply: "whether or not, in the exercise of the powers granted by
the Constitution, the President may prohibit the Marcoses from returning to the Philippines." 1 I therefore
take exception to allusions 2 anent "the capacity of the Marcoses to stir trouble even from afar." 3 I have
legitimate reason to fear that my brethren, in passing judgment on the Marcoses (insofar as their
"capacity to stir trouble" is concerned), have overstepped the bounds of judicial restraint, or even worse,
convicted them without trial.

I also find quite strained what the majority would have as the "real issues" facing the Court: "The right to
return to one's country," pitted against "the right of travel and freedom of abode", and their supposed
distinctions under international law, as if such distinctions, under international law in truth and in fact
exist. There is only one right involved here, whether under municipal or international law: the light of
travel, whether within one's own country, or to another, and the right to return thereto. The Constitution
itself makes no distinctions; let then, no one make a distinction. Ubi lex non distinguish nec nos
distinguere debemus.

As the majority would indeed have it, the issue is one of power: Does the Executive have the power to
deny a citizen his right to travel (back to the country or to another)? It is a question that, in essence,
involves the application, and no more, of the provisions of the 1987 Constitution:

Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
 travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law. 4

The majority says, with ample help from American precedents, that the President is possessed of the
power, thus:

On these premises, we hold the view that although the 1987 Constitution imposes
limitations on the exercise of specific powers of the President, it maintains intact what is
traditionally considered as within the scope of "executive power." Corollarily, the powers
of the President cannot be said to be limited only to the specific powers enumerated in
the Constitution. In other words, executive power is more than the sum of specific
powers so enumerated. 5

So also:

Faced with the problem of whether or not the time is right to allow the Marcoses to
return to the Philippines, the President is, under the Constitution, constrained to consider
these basic principles in arriving at a decision. More than that, having sworn to defend
and uphold the Constitution, the President has the obligation under the Constitution to
protect the people, promote their welfare and advance the national interest. It must be
borne in mind that the Constitution, aside from being an allocation of power is also a
social contract whereby the people have surrendered their sovereign powers to the State
for the common good. Hence, lest the officers of the Government exercising the powers
delegated by the people forget and the servants of the people become rulers, the
Constitution reminds everyone that "sovereignty resides in the people and all
government authority emanates from them." [Art. II, Sec. 1 . ] 6

And finally:

To the President, the problem is one of balancing the general welfare and the common
good against the exercise of rights of certain individuals. The power involved is the
President's residual power to protect the general welfare of the people. It is founded on
the duty of the President, as steward of the people. To paraphrase Theodore Roosevelt,
it is not only the power of the President but also his duty to do anything not forbidden by
the Constitution or the laws that the needs of the nation demanded [See Corwin, supra,
at 153]. It is a power borne by the President's duty to preserve and defend the
Constitution. It also may be viewed as a power implicit in the President's duty to take
care that the laws are faithfully executed [See Hyman, The American President, where
the author advances the view that an allowance of discretionary power is unavoidable in
any government and is best lodged in the President]. 7

I am not persuaded.

First: While the Chief Executive exercises powers not found expressly in the Charter, but has them by
constitutional implication* the latter must yield to the paramountcy of the Bill of Rights. According to
Fernando: "A regime of constitutionalism is thus unthinkable without an assurance of the primacy of a
big of rights. Precisely a constitution exists to assure that in the discharge of the governmental functions,
the dignity that is the birthright of every human being is duly safeguarded. To be true to its primordial
aim a constitution must lay down the boundaries beyond which he's forbidden territory for state
action" 8

My brethren have not demonstrated, to my satisfaction, how the President may override the direct
mandate of the fundamental law. It will not suffice, so I submit, to say that the President's plenitude of
powers, as provided in the Constitution, or by sheer constitutional implication, prevail over express
constitutional commands. "Clearly," so I borrow J.B.L. Reyes, in Ms own right, a titan in the field of public
law, "this argument ... rests ... not upon the text of the (Constitution] ... but upon a mere inference
therefrom." 9 For if it were, indeed, the intent of the Charter to create an exception, that is, by
Presidential action, to the right of travel or liberty of abode and of changing the same other than what it
explicitly says already ("limits prescribed by law" 10 or "upon lawful order of the court" 11 the Charter
could have specifically declared so. As it is, the lone deterrents to the right in question are: (1) decree of
statute, or (2) lawful judicial mandate. Had the Constitution intended a third exception, that is, by
Presidential initiative, it could have so averred. It would also have made the Constitution, as far as limits
to the said right are concerned, come full circle: Limits by legislative, judicial, and executive processes.

Obviously, none of the twin legal bars exist. There is no law banning the Marcoses from the country;
neither is there any court decree banishing him from Philippine territory.

It is to be noted that under the 1973 Constitution, the right to travel is worded as follows:

Sec. 5. The liberty of abode and of travel shall not be impaired except upon lawful order
of the court, or when necessary in the interest of national security, public safety, or
public health. 12

Under this provision, the right may be abated: (1) upon a lawful court order, or (2) "when necessary in
the interest of national security, public safety, or public health. 13 Arguably, the provision enabled the
Chief Executive (Marcos) to moderate movement of citizens, which, Bernas says, justified such practices
as "hamletting", forced relocations, or the establishment of free-fire zones.14

The new Constitution, however, so it clearly appears, has divested the Executive's implied power. And, as
it so appears, the right may be impaired only "within the limits provided by law .15 The President is out of
the picture.

Admittedly, the Chief Executive is the "sole" judge of all matters affecting national security 16 and foreign
affairs; 17 the Bill of Rights precisely, a form of check against excesses of officialdom is, in this case, a
formidable barrier against Presidential action. (Even on matters of State security, this Constitution
prescribes limits to Executive's powers as Commander-in-Chief.)

Second: Assuming, ex hypothesis that the President may legally act, the question that emerges is: Has it
been proved that Marcos, or his return, will, in fact, interpose a threat to the national security , public
safety, or public health?" What appears in the records are vehement insistences that Marcos does pose a
threat to the national good and yet, at the same time, we have persistent claims, made by the military
top brass during the lengthy closed-door hearing on July 25, 1989, that "this Government will not fall"
should the former first family in exile step on Philippine soil. which is which?

At any rate, it is my opinion that we can not leave that determination solely to the Chief Executive. The
Court itself must be content that the threat is not only clear, but more so, present.18

That the President "has the obligation under the Constitution to protect the people ... " 19 is an obligation
open to no doubt. But the question, and so I ask again and again, is: From whom? If we say "from
Marcos," we unravel chinks in our political armor. It also flies in the face of claims, so confidently
asserted, that "this Government will not fall" even if we allowed Marcos to return.

It flies, finally, in the face of the fact that a good number of the henchmen trusted allies, implementors of
martial law, and pathetic parasites of the ex-first couple are, in fact, in the Government, in the comfort
of its offices, and or at the helm of its key agencies. Let us not, therefore, joke ourselves of moral factors
warranting the continued banishment of Marcos. Morality is the last refuge of the self-righteous.

Third: The problem is not of balancing the general welfare against the exercise of individual
liberties. 20 As I indicated, not one shred of evidence, let alone solid evidence, other than surmises of
possibilities, has been shown to justify the 'balancing act" referred to. Worse, these conjectures
contradict contentions that as far as Philippine society is concerned, Marcos is "history".

The power of the President, so my brethren declaim, "calls for the exercise of the President's power as
protector of peace. 21

This is the self-same falsehood Marcos foisted on the Filipino people to justify the authoritarian rule. It
also means that we are no better than he has.

That "[t]he power of the President to keep the peace is not limited merely to exercising the commander-
in-chief powers in times of emergency or to leading the State against external and internal threats to its
existence" 22 is a bigger fantasy: It not only summons the martial law decisions of pre-"EDSA" (especially
with respect to the detestable Amendment No. 6), it is inconsistent with the express provisions of the
commander-in-chief clause of the 1987 Charter, a Charter that has perceptibly reduced the Executive's
powers vis-a-vis its 1973 counterpart. 23

II.

The undersigned would be lacking in candor to conceal his dislike, to say the least, for Marcos. Because
of Marcos, the writer of it's dissent lost a son His son's only "offense" was that he openly and unabatedly
criticized the dictator, his associates, and his military machinery. He would pay dearly for it; he was
arrested and detained, without judicial warrant or decision, for seven months and seven days. He was
held incommunicado a greater part of the time, in the military stockade of Camp Crame. In his last week
in detention, he was, grudgingly, hospitalized (prison hospital) and confined for chronic asthma. The
deplorable conditions of his imprisonment exacerbated his delicate health beyond cure. He died, on
November 11, 1977, a martyr on the altar of the martial law apparatus.

The undersigned also counts himself as one of the victims of Marcos' ruthless apparatchiki. On August
14, 1979, he was, along with former President Diosdado Macapagal, and Congressmen Rogaciano
Mercado and Manuel Concordia, charged, "ASSOed"and placed under house arrest, for "inciting to
sedition" and "rumor mongering " 24 in the midst of the distribution of Ang Demokrasya Sa Pilipinas
(Democracy In the Philippines), a book extremely critical of martial rule, published by him and former
Congressman Concordia, authored by President Macapagal and translated into Tagalog by Congressman
Rogaciano Mercado. In addition, they were also all accused of libel in more than two dozens of criminal
complaints filed by the several military officers named in the "condemned" book as having violated the
human rights of dissenters, and for other crimes, in the office of the Provincial Fiscal of Rizal. It had to
take the events at "EDSA" to set them free from house arrest and these political offenses. I am for
Marcos' return not because I have a score to settle with him. Ditto's death or my arrest are scores that
can not be settled.

I feel the ex-President's death abroad (presented in the dailies as 'imminent") would leave him
'unpunished for Ms crimes to country and countrymen. If punishment is due, let this leadership inflict it.
But let him stand trial and accord him due process.

Modesty aside, I have staunchly and consistently advocated the human right of travel and movement
and the liberty of abode. 25 We would have betrayed our own Ideals if we denied Marcos his rights. It is
his constitutional right, a right that can not be abridged by personal hatred, fear, founded or unfounded,
and by speculations of the "man's "capacity" "to stir trouble" Now that the shoe is on the other foot, let
no more of human rights violations be repeated against any one, friend or foe. In a democratic
framwork, there is no this as getting even.

The majority started this inquiry on the question of power. I hold that the President, under the present
Constitution and existing laws, does not have it. Mandamus, I submit, lies.

Narvasa, Melencio-Herrera, Gancayco, Griño- Aquino, Medialdea and Regalado, JJ., concur.
 B. Requisites for Judicial Review

1. Southern Hemisphere Engagement Network, Inc. v. Anti-Terrorism Council, G.R. No.

178552, 5 October 2010

G.R. No. 178552 October 5, 2010

SOUTHERN HEMISPHERE ENGAGEMENT NETWORK, INC., on behalf of the South-South Network (SSN)
for Non-State Armed Group Engagement, and ATTY. SOLIMAN M. SANTOS, JR., Petitioners,
vs.
ANTI-TERRORISM COUNCIL, THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY
OF FOREIGN AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE, THE SECRETARY OF THE INTERIOR AND
LOCAL GOVERNMENT, THE SECRETARY OF FINANCE, THE NATIONAL SECURITY ADVISER, THE CHIEF OF
STAFF OF THE ARMED FORCES OF THE PHILIPPINES, AND THE CHIEF OF THE PHILIPPINE NATIONAL
POLICE, Respondents.

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

G.R. No. 178554

KILUSANG MAYO UNO (KMU), represented by its Chairperson Elmer Labog, NATIONAL FEDERATION
OF LABOR UNIONS-KILUSANG MAYO UNO (NAFLU-KMU), represented by its National President
Joselito V. Ustarez and Secretary General Antonio C. Pascual, and CENTER FOR TRADE UNION AND
HUMAN RIGHTS, represented by its Executive Director Daisy Arago, Petitioners,
vs.
HON. EDUARDO ERMITA, in his capacity as Executive Secretary, NORBERTO GONZALES, in his capacity
as Acting Secretary of National Defense, HON. RAUL GONZALES, in his capacity as Secretary of Justice,
HON. RONALDO PUNO, in his capacity as Secretary of the Interior and Local Government, GEN.
HERMOGENES ESPERON, in his capacity as AFP Chief of Staff, and DIRECTOR GENERAL OSCAR
CALDERON, in his capacity as PNP Chief of Staff, Respondents.

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

G.R. No. 178581

BAGONG ALYANSANG MAKABAYAN (BAYAN), GENERAL ALLIANCE BINDING WOMEN FOR REFORMS,
INTEGRITY, EQUALITY, LEADERSHIP AND ACTION (GABRIELA), KILUSANG MAGBUBUKID NG PILIPINAS
(KMP), MOVEMENT OF CONCERNED CITIZENS FOR CIVIL LIBERTIES (MCCCL), CONFEDERATION FOR
UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES (COURAGE), KALIPUNAN
NG DAMAYANG MAHIHIRAP (KADAMAY), SOLIDARITY OF CAVITE WORKERS, LEAGUE OF FILIPINO
STUDENTS (LFS), ANAKBAYAN, PAMBANSANG LAKAS NG KILUSANG MAMAMALAKAYA
(PAMALAKAYA), ALLIANCE OF CONCERNED TEACHERS (ACT), MIGRANTE, HEALTH ALLIANCE FOR
DEMOCRACY (HEAD), AGHAM, TEOFISTO GUINGONA, JR., DR. BIENVENIDO LUMBERA, RENATO
CONSTANTINO, JR., SISTER MARY JOHN MANANSAN OSB, DEAN CONSUELO PAZ, ATTY. JOSEFINA
LICHAUCO, COL. GERRY CUNANAN (ret.), CARLITOS SIGUION-REYNA, DR. CAROLINA PAGADUAN-
ARAULLO, RENATO REYES, DANILO RAMOS, EMERENCIANA DE LESUS, RITA BAUA, REY CLARO
CASAMBRE, Petitioners,
vs.
GLORIA MACAPAGAL-ARROYO, in her capacity as President and Commander-in-Chief, EXECUTIVE
SECRETARY EDUARDO ERMITA, DEPARTMENT OF JUSTICE SECRETARY RAUL GONZALES, DEPARTMENT
OF FOREIGN AFFAIRS SECRETARY ALBERTO ROMULO, DEPARTMENT OF NATIONAL DEFENSE ACTING
SECRETARY NORBERTO GONZALES, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT SECRETARY
RONALDO PUNO. DEPARTMENT OF FINANCE SECRETARY MARGARITO TEVES, NATIONAL SECURITY
ADVISER NORBERTO GONZALES, THE NATIONAL INTELLIGENCE COORDINATING AGENCY (NICA), THE
NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF IMMIGRATION, THE OFFICE OF CIVIL
DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED FORCES OF THE PHILIPPINES (ISAFP), THE ANTI-
MONEY LAUNDERING COUNCIL (AMLC), THE PHILIPPINE CENTER ON TRANSNATIONAL CRIME, THE
CHIEF OF THE PHILIPPINE NATIONAL POLICE GEN. OSCAR CALDERON, THE PNP, including its
intelligence and investigative elements, AFP CHIEF GEN. HERMOGENES ESPERON, Respondents.

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

G.R. No. 178890

KARAPATAN, ALLIANCE FOR THE ADVANCEMENT OF PEOPLE'S RIGHTS, represented herein by Dr.
Edelina de la Paz, and representing the following organizations: HUSTISYA, represented by Evangeline
Hernandez and also on her own behalf; DESAPARECIDOS, represented by Mary Guy Portajada and also
on her own behalf, SAMAHAN NG MGA EX-DETAINEES LABAN SA DETENSYON AT PARA SA
AMNESTIYA (SELDA), represented by Donato Continente and also on his own behalf, ECUMENICAL
MOVEMENT FOR JUSTICE AND PEACE (EMJP), represented by Bishop Elmer M. Bolocon, UCCP, and
PROMOTION OF CHURCH PEOPLE'S RESPONSE, represented by Fr. Gilbert Sabado,
OCARM, Petitioners,
vs.
GLORIA MACAPAGAL-ARROYO, in her capacity as President and Commander-in-Chief, EXECUTIVE
SECRETARTY EDUARDO ERMITA, DEPARTMENT OF JUSTICE SECRETARY RAUL GONZALEZ,
DEPARTMENT OF FOREIGN AFFAIRS SECRETARY ALBERTO ROMULO, DEPARTMENT OF NATIONAL
DEFENSE ACTING SECRETARY NORBERTO GONZALES, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT SECRETARY RONALDO PUNO, DEPARTMENT OF FINANCE SECRETARY MARGARITO
TEVES, NATIONAL SECURITY ADVISER NORBERTO GONZALES, THE NATIONAL INTELLIGENCE
COORDINATING AGENCY (NICA), THE NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF
IMMIGRATION, THE OFFICE OF CIVIL DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED FORCES OF
THE PHILIPPINES (ISAFP), THE ANTI-MONEY LAUNDERING COUNCIL (AMLC), THE PHILIPPINE CENTER
ON TRANSNATIONAL CRIME, THE CHIEF OF THE PHILIPPINE NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including its intelligence and investigative elements, AFP CHIEF GEN.
HERMOGENES ESPERON, Respondents.

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

G.R. No. 179157

THE INTEGRATED BAR OF THE PHILIPPINES (IBP), represented by Atty. Feliciano M. Bautista,
COUNSELS FOR THE DEFENSE OF LIBERTY (CODAL), SEN. MA. ANA CONSUELO A.S. MADRIGAL and
FORMER SENATORS SERGIO OSMEÑA III and WIGBERTO E. TAÑADA, Petitioners,
vs.
EXECUTIVE SECRETARY EDUARDO ERMITA AND THE MEMBERS OF THE ANTI-TERRORISM COUNCIL
(ATC), Respondents.

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

G.R. No. 179461

BAGONG ALYANSANG MAKABAYAN-SOUTHERN TAGALOG (BAYAN-ST), GABRIELA-ST, KATIPUNAN NG

MGA SAMAHYANG MAGSASAKA-TIMOG KATAGALUGAN (KASAMA-TK), MOVEMENT OF CONCERNED
CITIZENS FOR CIVIL LIBERTIES (MCCCL), PEOPLES MARTYRS, ANAKBAYAN-ST, PAMALAKAYA-ST,
CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES
(COURAGE-ST), PAGKAKAISA'T UGNAYAN NG MGA MAGBUBUKID SA LAGUNA (PUMALAG),
SAMAHAN NG MGA MAMAMAYAN SA TABING RILES (SMTR-ST), LEAGUE OF FILIPINO STUDENTS (LFS),
BAYAN MUNA-ST, KONGRESO NG MGA MAGBUBUKID PARA SA REPORMANG AGRARYO KOMPRA,
BIGKIS AT LAKAS NG MGA KATUTUBO SA TIMOG KATAGALUGAN (BALATIK), SAMAHAN AT UGNAYAN
NG MGA MAGSASAKANG KABABAIHAN SA TIMOG KATAGALUGAN (SUMAMAKA-TK), STARTER,
LOSÑOS RURAL POOR ORGANIZATION FOR PROGRESS & EQUALITY, CHRISTIAN NIÑO LAJARA,
TEODORO REYES, FRANCESCA B. TOLENTINO, JANNETTE E. BARRIENTOS, OSCAR T. LAPIDA, JR., DELFIN
DE CLARO, SALLY P. ASTRERA, ARNEL SEGUNE BELTRAN, Petitioners,
vs.
GLORIA MACAPAGAL-ARROYO, in her capacity as President and Commander-in-Chief, EXECUTIVE
SECRETARY EDUARDO ERMITA, DEPARTMENT OF JUSTICE SECRETARY RAUL GONZALEZ, DEPARTMENT
OF FOREIGN AFFAIRS SECRETARY ALBERTO ROMULO, DEPARTMENT OF NATIONAL DEFENSE ACTING
SECRETARY NORBERTO GONZALES, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMEN T
SECRETARY RONALDO PUNO, DEPARTMENT OF FINCANCE SECRETARY MARGARITO TEVES, NATIONAL
SECURITY ADVISER NORBERTO GONZALES, THE NATIONAL INTELLIGENCE COORDINATING AGENCY
(NICA), THE NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF IMMIGRATION, THE OFFICE
OF CIVIL DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED FORCES OF THE PHILIPPINES (ISAFP),
THE ANTI-MONEY LAUNDERING COUNCIL (AMLC), THE PHILIPPINE CENTER ON TRANSNATIONAL
CRIME, THE CHIEF OF THE PHILIPPINE NATIONAL POLICE GEN. OSCAR CALDERON, THE PNP, including
its intelligence and investigative elements, AFP CHIEF GEN. HERMOGENES ESPERON, Respondents.

DECISION

CARPIO MORALES, J.:

Before the Court are six petitions challenging the constitutionality of Republic Act No. 9372 (RA 9372),
"An Act to Secure the State and Protect our People from Terrorism," otherwise known as the Human
Security Act of 2007,1 signed into law on March 6, 2007.

Following the effectivity of RA 9372 on July 15, 2007,2 petitioner Southern Hemisphere Engagement
Network, Inc., a non-government organization, and Atty. Soliman Santos, Jr., a concerned citizen,
taxpayer and lawyer, filed a petition for certiorari and prohibition on July 16, 2007 docketed as G.R. No.
178552. On even date, petitioners Kilusang Mayo Uno (KMU), National Federation of Labor Unions-
Kilusang Mayo Uno (NAFLU-KMU), and Center for Trade Union and Human Rights (CTUHR), represented
by their respective officers3 who are also bringing the action in their capacity as citizens, filed a petition
for certiorari and prohibition docketed as G.R. No. 178554.
The following day, July 17, 2007, organizations Bagong Alyansang Makabayan (BAYAN), General Alliance
Binding Women for Reforms, Integrity, Equality, Leadership and Action (GABRIELA), Kilusang
Magbubukid ng Pilipinas (KMP), Movement of Concerned Citizens for Civil Liberties (MCCCL),
Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE),
Kalipunan ng Damayang Mahihirap (KADAMAY), Solidarity of Cavite Workers (SCW), League of Filipino
Students (LFS), Anakbayan, Pambansang Lakas ng Kilusang Mamamalakaya (PAMALAKAYA), Alliance of
Concerned Teachers (ACT), Migrante, Health Alliance for Democracy (HEAD), and Agham, represented
by their respective officers,4 and joined by concerned citizens and taxpayers Teofisto Guingona, Jr., Dr.
Bienvenido Lumbera, Renato Constantino, Jr., Sister Mary John Manansan, OSB, Dean Consuelo Paz,
Atty. Josefina Lichauco, Retired Col. Gerry Cunanan, Carlitos Siguion-Reyna, Dr. Carolina Pagaduan-
Araullo, Renato Reyes, Danilo Ramos, Emerenciana de Jesus, Rita Baua and Rey Claro Casambre filed a
petition for certiorari and prohibition docketed as G.R. No. 178581.

On August 6, 2007, Karapatan and its alliance member organizations Hustisya, Desaparecidos, Samahan
ng mga Ex-Detainees Laban sa Detensyon at para sa Amnestiya (SELDA), Ecumenical Movement for
Justice and Peace (EMJP), and Promotion of Church People’s Response (PCPR), which were represented
by their respective officers5 who are also bringing action on their own behalf, filed a petition for
certiorari and prohibition docketed as G.R. No. 178890.

On August 29, 2007, the Integrated Bar of the Philippines (IBP), Counsels for the Defense of Liberty
(CODAL),6 Senator Ma. Ana Consuelo A.S. Madrigal, Sergio Osmeña III, and Wigberto E. Tañada filed a
petition for certiorari and prohibition docketed as G.R. No. 179157.

Bagong Alyansang Makabayan-Southern Tagalog (BAYAN-ST), other regional chapters and organizations
mostly based in the Southern Tagalog Region,7 and individuals8 followed suit by filing on September 19,
2007 a petition for certiorari and prohibition docketed as G.R. No. 179461 that replicates the allegations
raised in the BAYAN petition in G.R. No. 178581.

Impleaded as respondents in the various petitions are the Anti-Terrorism Council9 composed of, at the
time of the filing of the petitions, Executive Secretary Eduardo Ermita as Chairperson, Justice Secretary
Raul Gonzales as Vice Chairperson, and Foreign Affairs Secretary Alberto Romulo, Acting Defense
Secretary and National Security Adviser Norberto Gonzales, Interior and Local Government Secretary
Ronaldo Puno, and Finance Secretary Margarito Teves as members. All the petitions, except that of the
IBP, also impleaded Armed Forces of the Philippines (AFP) Chief of Staff Gen. Hermogenes Esperon and
Philippine National Police (PNP) Chief Gen. Oscar Calderon.

The Karapatan, BAYAN and BAYAN-ST petitions likewise impleaded President Gloria Macapagal-Arroyo
and the support agencies for the Anti-Terrorism Council like the National Intelligence Coordinating
Agency, National Bureau of Investigation, Bureau of Immigration, Office of Civil Defense, Intelligence
Service of the AFP, Anti-Money Laundering Center, Philippine Center on Transnational Crime, and the
PNP intelligence and investigative elements.

The petitions fail.

Petitioners’ resort to certiorari is improper

Preliminarily, certiorari does not lie against respondents who do not exercise judicial or quasi-judicial
functions. Section 1, Rule 65 of the Rules of Court is clear:

Section 1. Petition for certiorari.—When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted 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, nor any 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 annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require. (Emphasis and underscoring supplied)

Parenthetically, petitioners do not even allege with any modicum of particularity how respondents acted
without or in excess of their respective jurisdictions, or with grave abuse of discretion amounting to lack
or excess of jurisdiction.

The impropriety of certiorari as a remedy aside, the petitions fail just the same.

In constitutional litigations, the power of judicial review is limited by four exacting requisites, viz: (a)
there must be an actual case or controversy; (b) petitioners must possess locus standi; (c) the question
of constitutionality must be raised at the earliest opportunity; and (d) the issue of constitutionality must
be the lis mota of the case.10

In the present case, the dismal absence of the first two requisites, which are the most essential, renders
the discussion of the last two superfluous.

Petitioners lack locus standi

Locus standi or legal standing requires a personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court so largely
depends for illumination of difficult constitutional questions.11

Anak Mindanao Party-List Group v. The Executive Secretary12 summarized the rule on locus standi, thus:

Locus standi or legal standing has been defined as a personal and substantial interest in a case such that
the party has sustained or will sustain direct injury as a result of the governmental act that is being
challenged. The gist of the question on 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.

[A] party who assails the constitutionality of a statute must have a direct and personal interest. It must
show not only that the law or any governmental act is invalid, but also that it sustained or is in
immediate danger of sustaining some direct injury as a result of its enforcement, and not merely that it
suffers thereby in some indefinite way. It must show that it has been or is about to be denied some right
or privilege to which it is lawfully entitled or that it is about to be subjected to some burdens or
penalties by reason of the statute or act complained of.
For a concerned party to be allowed to raise a constitutional question, it must show that (1) it
has personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of
the government, (2) the injury is fairly traceable to the challenged action, and (3) the injury is likely to be
redressed by a favorable action. (emphasis and underscoring supplied.)

Petitioner-organizations assert locus standi on the basis of being suspected "communist fronts" by the
government, especially the military; whereas individual petitioners invariably invoke the "transcendental
importance" doctrine and their status as citizens and taxpayers.

While Chavez v. PCGG13 holds that transcendental public importance dispenses with the requirement
that petitioner has experienced or is in actual danger of suffering direct and personal injury, cases
involving the constitutionality of penal legislation belong to an altogether different genus of
constitutional litigation. Compelling State and societal interests in the proscription of harmful conduct,
as will later be elucidated, necessitate a closer judicial scrutiny of locus standi.

Petitioners have not presented any personal stake in the outcome of the controversy. None of them
faces any charge under RA 9372.

KARAPATAN, Hustisya, Desaparecidos, SELDA, EMJP and PCR, petitioners in G.R. No. 178890, allege that
they have been subjected to "close security surveillance by state security forces," their members
followed by "suspicious persons" and "vehicles with dark windshields," and their offices monitored by
"men with military build." They likewise claim that they have been branded as "enemies of the
[S]tate."14

Even conceding such gratuitous allegations, the Office of the Solicitor General (OSG) correctly points out
that petitioners have yet to show any connection between the
purported "surveillance" and the implementation of RA 9372.

BAYAN, GABRIELA, KMP, MCCCL, COURAGE, KADAMAY, SCW, LFS, Anakbayan, PAMALAKAYA, ACT,
Migrante, HEAD and Agham, petitioner-organizations in G.R. No. 178581, would like the Court to take
judicial notice of respondents’ alleged action of tagging them as militant organizations fronting for the
Communist Party of the Philippines (CPP) and its armed wing, the National People’s Army (NPA). The
tagging, according to petitioners, is tantamount to the effects of proscription without following the
procedure under the law.15 The petition of BAYAN-ST, et al. in G.R. No. 179461 pleads the same
allegations.

The Court cannot take judicial notice of the alleged "tagging" of petitioners.

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be
one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful
or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The
principal guide in determining what facts may be assumed to be judicially known is that of notoriety.
Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of
general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in
that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of
accurate and ready determination by resorting to sources whose accuracy cannot reasonably be
questionable.
Things of "common knowledge," of which courts take judicial matters coming to the knowledge of men
generally in the course of the ordinary experiences of life, or they may be matters which are generally
accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts
which are universally known, and which may be found in encyclopedias, dictionaries or other
publications, are judicially noticed, provided, they are of such universal notoriety and so generally
understood that they may be regarded as forming part of the common knowledge of every person. As
the common knowledge of man ranges far and wide, a wide variety of particular facts have been
judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any
fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no
constructive knowledge.16 (emphasis and underscoring supplied.)

No ground was properly established by petitioners for the taking of judicial notice. Petitioners’
apprehension is insufficient to substantiate their plea. That no specific charge or proscription under RA
9372 has been filed against them, three years after its effectivity, belies any claim of imminence of their
perceived threat emanating from the so-called tagging.

The same is true with petitioners KMU, NAFLU and CTUHR in G.R. No. 178554, who merely harp as well
on their supposed "link" to the CPP and NPA. They fail to particularize how the implementation of
specific provisions of RA 9372 would result in direct injury to their organization and members.

While in our jurisdiction there is still no judicially declared terrorist organization, the United States of
America17 (US) and the European Union18 (EU) have both classified the CPP, NPA and Abu Sayyaf Group
as foreign terrorist organizations. The Court takes note of the joint statement of Executive Secretary
Eduardo Ermita and Justice Secretary Raul Gonzales that the Arroyo Administration would adopt the US
and EU classification of the CPP and NPA as terrorist organizations.19 Such statement notwithstanding,
there is yet to be filed before the courts an application to declare the CPP and NPA organizations as
domestic terrorist or outlawed organizations under RA 9372. Again, RA 9372 has been in effect for three
years now. From July 2007 up to the present, petitioner-organizations have conducted their activities
fully and freely without any threat of, much less an actual, prosecution or proscription under RA 9372.

Parenthetically, the Fourteenth Congress, in a resolution initiated by Party-list Representatives

Saturnino Ocampo, Teodoro Casiño, Rafael Mariano and Luzviminda Ilagan,20 urged the government to
resume peace negotiations with the NDF by removing the impediments thereto, one of which is the
adoption of designation of the CPP and NPA by the US and EU as foreign terrorist organizations.
Considering the policy statement of the Aquino Administration21 of resuming peace talks with the NDF,
the government is not imminently disposed to ask for the judicial proscription of the CPP-NPA
consortium and its allied organizations.

More important, there are other parties not before the Court with direct and specific interests in the
questions being raised.22 Of recent development is the filing of the first case for proscription under
Section 1723 of RA 9372 by the Department of Justice before the Basilan Regional Trial Court against the
Abu Sayyaf Group.24 Petitioner-organizations do not in the least allege any link to the Abu Sayyaf Group.

Some petitioners attempt, in vain though, to show the imminence of a prosecution under RA 9372 by
alluding to past rebellion charges against them.
In Ladlad v. Velasco,25 the Court ordered the dismissal of rebellion charges filed in 2006 against then
Party-List Representatives Crispin Beltran and Rafael Mariano of Anakpawis, Liza Maza of GABRIELA, and
Joel Virador, Teodoro Casiño and Saturnino Ocampo of Bayan Muna. Also named in the dismissed
rebellion charges were petitioners Rey Claro Casambre, Carolina Pagaduan-Araullo, Renato Reyes, Rita
Baua, Emerencia de Jesus and Danilo Ramos; and accused of being front organizations for the
Communist movement were petitioner-organizations KMU, BAYAN, GABRIELA, PAMALAKAYA, KMP,
KADAMAY, LFS and COURAGE.26

The dismissed rebellion charges, however, do not save the day for petitioners. For one, those charges
were filed in 2006, prior to the enactment of RA 9372, and dismissed by this Court. For another,
rebellion is defined and punished under the Revised Penal Code. Prosecution for rebellion is not made
more imminent by the enactment of RA 9372, nor does the enactment thereof make it easier to charge
a person with rebellion, its elements not having been altered.

Conversely, previously filed but dismissed rebellion charges bear no relation to prospective charges
under RA 9372. It cannot be overemphasized that three years after the enactment of RA 9372, none of
petitioners has been charged.

Petitioners IBP and CODAL in G.R. No. 179157 base their claim of locus standi on their sworn duty to
uphold the Constitution. The IBP zeroes in on Section 21 of RA 9372 directing it to render assistance to
those arrested or detained under the law.

The mere invocation of the duty to preserve the rule of law does not, however, suffice to clothe the IBP
or any of its members with standing.27 The IBP failed to sufficiently demonstrate how its mandate under
the assailed statute revolts against its constitutional rights and duties. Moreover, both the IBP and
CODAL have not pointed to even a single arrest or detention effected under RA 9372.

Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject of "political
surveillance," also lacks locus standi. Prescinding from the veracity, let alone legal basis, of the claim of
"political surveillance," the Court finds that she has not shown even the slightest threat of being charged
under RA 9372. Similarly lacking in locus standi are former Senator Wigberto Tañada and Senator Sergio
Osmeña III, who cite their being respectively a human rights advocate and an oppositor to the passage
of RA 9372. Outside these gratuitous statements, no concrete injury to them has been pinpointed.

Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos Jr. in G.R. No. 178552
also conveniently state that the issues they raise are of transcendental importance, "which must be
settled early" and are of "far-reaching implications," without mention of any specific provision of RA
9372 under which they have been charged, or may be charged. Mere invocation of human rights
advocacy has nowhere been held sufficient to clothe litigants with locus standi. Petitioners must show
an actual, or immediate danger of sustaining, direct injury as a result of the law’s enforcement. To rule
otherwise would be to corrupt the settled doctrine of locus standi, as every worthy cause is an interest
shared by the general public.

Neither can locus standi be conferred upon individual petitioners as taxpayers and citizens. A taxpayer
suit is proper only when there is an exercise of the spending or taxing power of Congress,28 whereas
citizen standing must rest on direct and personal interest in the proceeding.29
RA 9372 is a penal statute and does not even provide for any appropriation from Congress for its
implementation, while none of the individual petitioner-citizens has alleged any direct and personal
interest in the implementation of the law.

It bears to stress that generalized interests, albeit accompanied by the assertion of a public right, do not
establish locus standi. Evidence of a direct and personal interest is key.

Petitioners fail to present an actual case or controversy

By constitutional fiat, judicial power operates only when there is an actual case or controversy.

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.30 (emphasis and underscoring supplied.)

As early as Angara v. Electoral Commission,31 the Court ruled that the power of judicial review is limited
to actual cases or controversies to be exercised after full opportunity of argument by the parties. Any
attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities.

An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory, lest the decision of the court would amount to an
advisory opinion.32

Information Technology Foundation of the Philippines v. COMELEC33 cannot be more emphatic:

[C]ourts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however
intellectually challenging. The controversy must be justiciable—definite and concrete, touching on the
legal relations of parties having adverse legal interests. In other words, the pleadings must show an
active antagonistic assertion of a legal right, on the one hand, and a denial thereof on the other hand;
that is, it must concern a real and not merely a 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.
(Emphasis and underscoring supplied)

Thus, a petition to declare unconstitutional a law converting the Municipality of Makati into a Highly
Urbanized City was held to be premature as it was tacked on uncertain, contingent events.34 Similarly, a
petition that fails to allege that an application for a license to operate a radio or television station has
been denied or granted by the authorities does not present a justiciable controversy, and merely
wheedles the Court to rule on a hypothetical problem.35

The Court dismissed the petition in Philippine Press Institute v. Commission on Elections36 for failure to
cite any specific affirmative action of the Commission on Elections to implement the assailed resolution.
It refused, in Abbas v. Commission on Elections,37 to rule on the religious freedom claim of the therein
petitioners based merely on a perceived potential conflict between the provisions of the Muslim Code
and those of the national law, there being no actual controversy between real litigants.

The list of cases denying claims resting on purely hypothetical or anticipatory grounds goes on ad
infinitum.

The Court is not unaware that a reasonable certainty of the occurrence of a perceived threat to any
constitutional interest suffices to provide a basis for mounting a constitutional challenge. This, however,
is qualified by the requirement that there must be sufficient facts to enable the Court to intelligently
adjudicate the issues.38

Very recently, the US Supreme Court, in Holder v. Humanitarian Law Project,39 allowed the pre-
enforcement review of a criminal statute, challenged on vagueness grounds, since plaintiffs faced a
"credible threat of prosecution" and "should not be required to await and undergo a criminal
prosecution as the sole means of seeking relief."40 The plaintiffs therein filed an action before a federal
court to assail the constitutionality of the material support statute, 18 U.S.C. §2339B (a)
(1),41 proscribing the provision of material support to organizations declared by the Secretary of State as
foreign terrorist organizations. They claimed that they intended to provide support for the humanitarian
and political activities of two such organizations.

Prevailing American jurisprudence allows an adjudication on the merits when an anticipatory petition
clearly shows that the challenged prohibition forbids the conduct or activity that a petitioner seeks to
do, as there would then be a justiciable controversy.42

Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that the challenged
provisions of RA 9372 forbid constitutionally protected conduct or activity that they seek to do. No
demonstrable threat has been established, much less a real and existing one.

Petitioners’ obscure allegations of sporadic "surveillance" and supposedly being tagged as "communist
fronts" in no way approximate a credible threat of prosecution. From these allegations, the Court is
being lured to render an advisory opinion, which is not its function.43

Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which
the Court has no original jurisdiction. Then again, declaratory actions characterized by "double
contingency," where both the activity the petitioners intend to undertake and the anticipated reaction
to it of a public official are merely theorized, lie beyond judicial review for lack of ripeness.44

The possibility of abuse in the implementation of RA 9372 does not avail to take the present petitions
out of the realm of the surreal and merely imagined. Such possibility is not peculiar to RA 9372 since the
exercise of any power granted by law may be abused.45 Allegations of abuse must be anchored on real
events before courts may step in to settle actual controversies involving rights which are legally
demandable and enforceable.

A facial invalidation of a statute is allowed only in free speech cases, wherein certain rules of
constitutional litigation are rightly excepted
Petitioners assail for being intrinsically vague and impermissibly broad the definition of the crime of
terrorism46 under RA 9372 in that terms like "widespread and extraordinary fear and panic among the
populace" and "coerce the government to give in to an unlawful demand" are nebulous, leaving law
enforcement agencies with no standard to measure the prohibited acts.

Respondents, through the OSG, counter that the doctrines of void-for-vagueness and overbreadth find
no application in the present case since these doctrines apply only to free speech cases; and that RA
9372 regulates conduct, not speech.

For a jurisprudentially guided understanding of these doctrines, it is imperative to outline the schools of
thought on whether the void-for-vagueness and overbreadth doctrines are equally applicable grounds
to assail a penal statute.

Respondents interpret recent jurisprudence as slanting toward the idea of limiting the application of the
two doctrines to free speech cases. They particularly cite Romualdez v. Hon.
Sandiganbayan47 and Estrada v. Sandiganbayan.48

The Court clarifies.

At issue in Romualdez v. Sandiganbayan was whether the word "intervene" in Section 549 of the Anti-
Graft and Corrupt Practices Act was intrinsically vague and impermissibly broad. The Court stated that
"the overbreadth and the vagueness doctrines have special application only to free-speech cases," and
are "not appropriate for testing the validity of penal statutes."50 It added that, at any rate, the
challenged provision, under which the therein petitioner was charged, is not vague.51

While in the subsequent case of Romualdez v. Commission on Elections,52 the Court stated that a facial
invalidation of criminal statutes is not appropriate, it nonetheless proceeded to conduct a vagueness
analysis, and concluded that the therein subject election offense53 under the Voter’s Registration Act of
1996, with which the therein petitioners were charged, is couched in precise language.54

The two Romualdez cases rely heavily on the Separate Opinion55 of Justice Vicente V. Mendoza in
the Estrada case, where the Court found the Anti-Plunder Law (Republic Act No. 7080) clear and free
from ambiguity respecting the definition of the crime of plunder.

The position taken by Justice Mendoza in Estrada relates these two doctrines to the concept of a "facial"
invalidation as opposed to an "as-applied" challenge. He basically postulated that allegations that a
penal statute is vague and overbroad do not justify a facial review of its validity. The pertinent portion of
the Concurring Opinion of Justice Mendoza, which was quoted at length in the main Estrada decision,
reads:

A facial challenge is allowed to be made to a vague statute and to one which is overbroad because of
possible "chilling effect" upon protected speech. The theory is that "[w]hen statutes regulate or
proscribe speech and no readily apparent construction suggests itself as a vehicle for rehabilitating the
statutes in a single prosecution, the transcendent value to all society of constitutionally protected
expression is deemed to justify allowing attacks on overly broad statutes with no requirement that the
person making the attack demonstrate that his own conduct could not be regulated by a statute drawn
with narrow specificity." The possible harm to society in permitting some unprotected speech to go
unpunished is outweighed by the possibility that the protected speech of others may be deterred and
perceived grievances left to fester because of possible inhibitory effects of overly broad statutes.

This rationale does not apply to penal statutes. Criminal statutes have general in terrorem effect
resulting from their very existence, and, if facial challenge is allowed for this reason alone, the State may
well be prevented from enacting laws against socially harmful conduct. In the area of criminal law, the
law cannot take chances as in the area of free speech.

The overbreadth and vagueness doctrines then have special application only to free speech cases. They
are inapt for testing the validity of penal statutes. As the U.S. Supreme Court put it, in an opinion by
Chief Justice Rehnquist, "we have not recognized an 'overbreadth' doctrine outside the limited context
of the First Amendment." In Broadrick v. Oklahoma, the Court ruled that "claims of facial overbreadth
have been entertained in cases involving statutes which, by their terms, seek to regulate only spoken
words" and, again, that "overbreadth claims, if entertained at all, have been curtailed when invoked
against ordinary criminal laws that are sought to be applied to protected conduct." For this reason, it
has been held that "a facial challenge to a legislative act is the most difficult challenge to mount
successfully, since the challenger must establish that no set of circumstances exists under which the Act
would be valid." As for the vagueness doctrine, it is said that a litigant may challenge a statute on its face
only if it is vague in all its possible applications. "A plaintiff who engages in some conduct that is clearly
proscribed cannot complain of the vagueness of the law as applied to the conduct of others."

In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools developed for
testing "on their faces" statutes in free speech cases or, as they are called in American law, First
Amendment cases. They cannot be made to do service when what is involved is a criminal statute. With
respect to such statute, the established rule is that "one to whom application of a statute is
constitutional will not be heard to attack the statute on the ground that impliedly it might also be taken
as applying to other persons or other situations in which its application might be unconstitutional." As
has been pointed out, "vagueness challenges in the First Amendment context, like overbreadth
challenges typically produce facial invalidation, while statutes found vague as a matter of due process
typically are invalidated [only] 'as applied' to a particular defendant." Consequently, there is no basis for
petitioner's claim that this Court review the Anti-Plunder Law on its face and in its entirety.

Indeed, "on its face" invalidation of statutes results in striking them down entirely on the ground that
they might be applied to parties not before the Court whose activities are constitutionally protected. It
constitutes a departure from the case and controversy requirement of the Constitution and permits
decisions to be made without concrete factual settings and in sterile abstract contexts. But, as the U.S.
Supreme Court pointed out in Younger v. Harris

[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring correction of these
deficiencies before the statute is put into effect, is rarely if ever an appropriate task for the judiciary.
The combination of the relative remoteness of the controversy, the impact on the legislative process of
the relief sought, and above all the speculative and amorphous nature of the required line-by-line
analysis of detailed statutes, . . . ordinarily results in a kind of case that is wholly unsatisfactory for
deciding constitutional questions, whichever way they might be decided.

For these reasons, "on its face" invalidation of statutes has been described as "manifestly strong
medicine," to be employed "sparingly and only as a last resort," and is generally disfavored. In
determining the constitutionality of a statute, therefore, its provisions which are alleged to have been
violated in a case must be examined in the light of the conduct with which the defendant is
charged.56 (Underscoring supplied.)

The confusion apparently stems from the interlocking relation of the overbreadth and vagueness
doctrines as grounds for a facial or as-applied challenge against a penal statute (under a claim of
violation of due process of law) or a speech regulation (under a claim of abridgement of the freedom of
speech and cognate rights).

To be sure, the doctrine of vagueness and the doctrine of overbreadth do not operate on the same
plane.

A statute or act suffers from the defect of vagueness 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 violates due process for failure to accord persons,
especially the parties targeted 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.57 The overbreadth doctrine, meanwhile, decrees that a governmental purpose to control or
prevent activities constitutionally subject to state regulations may not be achieved by means which
sweep unnecessarily broadly and thereby invade the area of protected freedoms.58

As distinguished from the vagueness doctrine, the overbreadth doctrine assumes that individuals will
understand what a statute prohibits and will accordingly refrain from that behavior, even though some
of it is protected.59

A "facial" challenge is likewise different from an "as-applied" challenge.

Distinguished from an as-applied challenge which considers only extant facts affecting real litigants,
a facial invalidation is an examination of the entire law, pinpointing its flaws and defects, not only on the
basis of its actual operation to the parties, but also on the assumption or prediction that its very
existence may cause others not before the court to refrain from constitutionally protected speech or
activities.60

Justice Mendoza accurately phrased the subtitle61 in his concurring opinion that the vagueness and
overbreadth doctrines, as grounds for a facial challenge, are not applicable to penal laws. A litigant
cannot thus successfully mount a facial challenge against a criminal statute on either vagueness or
overbreadth grounds.

The allowance of a facial challenge in free speech cases is justified by the aim to avert the "chilling
effect" on protected speech, the exercise of which should not at all times be abridged.62 As reflected
earlier, this rationale is inapplicable to plain penal statutes that generally bear an "in terrorem effect" in
deterring socially harmful conduct. In fact, the legislature may even forbid and penalize acts formerly
considered innocent and lawful, so long as it refrains from diminishing or dissuading the exercise of
constitutionally protected rights.63

The Court reiterated that there are "critical limitations by which a criminal statute may be challenged"
and "underscored that an ‘on-its-face’ invalidation of penal statutes x x x may not be allowed."64
[T]he rule established in our jurisdiction is, only statutes on free speech, religious freedom, and other
fundamental rights may be facially challenged. Under no case may ordinary penal statutes be subjected
to a facial challenge. The rationale is obvious. If a facial challenge to a penal statute is permitted, the
prosecution of crimes may be hampered. No prosecution would be possible. A strong criticism against
employing a facial challenge in the case of penal statutes, if the same is allowed, would effectively go
against the grain of the doctrinal requirement of an existing and concrete controversy before judicial
power may be appropriately exercised. A facial challenge against a penal statute is, at best, amorphous
and speculative. It would, essentially, force the court to consider third parties who are not before it. As I
have said in my opposition to the allowance of a facial challenge to attack penal statutes, such a test will
impair the State’s ability to deal with crime. If warranted, there would be nothing that can hinder an
accused from defeating the State’s power to prosecute on a mere showing that, as applied to third
parties, the penal statute is vague or overbroad, notwithstanding that the law is clear as applied to
him.65 (Emphasis and underscoring supplied)

It is settled, on the other hand, that the application of the overbreadth doctrine is limited to a facial
kind of challenge and, owing to the given rationale of a facial challenge, applicable only to free speech
cases.

By its nature, the overbreadth doctrine has to necessarily apply a facial type of invalidation in order to
plot areas of protected speech, inevitably almost always under situations not before the court, that are
impermissibly swept by the substantially overbroad regulation. Otherwise stated, a statute cannot be
properly analyzed for being substantially overbroad if the court confines itself only to facts as applied to
the litigants.

The most distinctive feature of the overbreadth technique is that it marks an exception to some of the
usual rules of constitutional litigation. Ordinarily, a particular litigant claims that a statute is
unconstitutional as applied to him or her; if the litigant prevails, the courts carve away the
unconstitutional aspects of the law by invalidating its improper applications on a case to case basis.
Moreover, challengers to a law are not permitted to raise the rights of third parties and can only assert
their own interests. In overbreadth analysis, those rules give way; challenges are permitted to raise the
rights of third parties; and the court invalidates the entire statute "on its face," not merely "as applied
for" so that the overbroad law becomes unenforceable until a properly authorized court construes it
more narrowly. The factor that motivates courts to depart from the normal adjudicatory rules is the
concern with the "chilling;" deterrent effect of the overbroad statute on third parties not courageous
enough to bring suit. The Court assumes that an overbroad law’s "very existence may cause others not
before the court to refrain from constitutionally protected speech or expression." An overbreadth ruling
is designed to remove that deterrent effect on the speech of those third parties.66 (Emphasis in the
original omitted; underscoring supplied.)

In restricting the overbreadth doctrine to free speech claims, the Court, in at least two cases,67 observed
that the US Supreme Court has not recognized an overbreadth doctrine outside the limited context of
the First Amendment,68 and that claims of facial overbreadth have been entertained in cases involving
statutes which, by their terms, seek to regulate only spoken words.69 In Virginia v. Hicks,70 it was held
that rarely, if ever, will an overbreadth challenge succeed against a law or regulation that is not
specifically addressed to speech or speech-related conduct. Attacks on overly broad statutes are
justified by the "transcendent value to all society of constitutionally protected expression."71
Since a penal statute may only be assailed for being vague as applied to petitioners, a limited
vagueness analysis of the definition of "terrorism" in RA 9372 is legally impermissible absent an actual or
imminent charge against them

While Estrada did not apply the overbreadth doctrine, it did not preclude the operation of the
vagueness test on the Anti-Plunder Law as applied to the therein petitioner, finding, however, that there
was no basis to review the law "on its face and in its entirety."72 It stressed that "statutes found vague as
a matter of due process typically are invalidated only 'as applied' to a particular defendant."73

American jurisprudence74 instructs that "vagueness challenges that do not involve the First Amendment
must be examined in light of the specific facts of the case at hand and not with regard to the statute's
facial validity."

For more than 125 years, the US Supreme Court has evaluated defendants’ claims that criminal statutes
are unconstitutionally vague, developing a doctrine hailed as "among the most important guarantees of
liberty under law."75

In this jurisdiction, the void-for-vagueness doctrine asserted under the due process clause has been
utilized in examining the constitutionality of criminal statutes. In at least three cases,76 the Court
brought the doctrine into play in analyzing an ordinance penalizing the non-payment of municipal tax on
fishponds, the crime of illegal recruitment punishable under Article 132(b) of the Labor Code, and the
vagrancy provision under Article 202 (2) of the Revised Penal Code. Notably, the petitioners in these
three cases, similar to those in the two Romualdez and Estrada cases, were actually charged with the
therein assailed penal statute, unlike in the present case.

There is no merit in the claim that RA 9372 regulates speech so as to permit a facial analysis of its
validity

From the definition of the crime of terrorism in the earlier cited Section 3 of RA 9372, the following
elements may be culled: (1) the offender commits an act punishable under any of the cited provisions of
the Revised Penal Code, or under any of the enumerated special penal laws; (2) the commission of the
predicate crime sows and creates a condition of widespread and extraordinary fear and panic among the
populace; and (3) the offender is actuated by the desire to coerce the government to give in to
an unlawful demand.

In insisting on a facial challenge on the invocation that the law penalizes speech, petitioners contend
that the element of "unlawful demand" in the definition of terrorism77 must necessarily be transmitted
through some form of expression protected by the free speech clause.

The argument does not persuade. What the law seeks to penalize is conduct, not speech.

Before a charge for terrorism may be filed under RA 9372, there must first be a predicate crime actually
committed to trigger the operation of the key qualifying phrases in the other elements of the crime,
including the coercion of the government to accede to an "unlawful demand." Given the presence of the
first element, any attempt at singling out or highlighting the communicative component of the
prohibition cannot recategorize the unprotected conduct into a protected speech.
Petitioners’ notion on the transmission of message is entirely inaccurate, as it unduly focuses on just one
particle of an element of the crime. Almost every commission of a crime entails some mincing of words
on the part of the offender like in declaring to launch overt criminal acts against a victim, in haggling on
the amount of ransom or conditions, or in negotiating a deceitful transaction. An analogy in one U.S.
case78 illustrated that the fact that the prohibition on discrimination in hiring on the basis of race will
require an employer to take down a sign reading "White Applicants Only" hardly means that the law
should be analyzed as one regulating speech rather than conduct.

Utterances not elemental but inevitably incidental to the doing of the criminal conduct alter neither the
intent of the law to punish socially harmful conduct nor the essence of the whole act as conduct and not
speech. This holds true a fortiori in the present case where the expression figures only as an inevitable
incident of making the element of coercion perceptible.

[I]t is true that the agreements and course of conduct here were as in most instances brought about
through speaking or writing. But it has never been deemed an abridgement of freedom of speech or
press to make a course of conduct illegal merely because the conduct was, in part, initiated, evidenced,
or carried out by means of language, either spoken, written, or printed. Such an expansive
interpretation of the constitutional guaranties of speech and press would make it practically impossible
ever to enforce laws against agreements in restraint of trade as well as many other agreements and
conspiracies deemed injurious to society.79 (italics and underscoring supplied)

Certain kinds of speech have been treated as unprotected conduct, because they merely evidence a
prohibited conduct.80 Since speech is not involved here, the Court cannot heed the call for a facial
analysis.1avvphi1

IN FINE, Estrada and the other cited authorities engaged in a vagueness analysis of the therein subject
penal statute as applied to the therein petitioners inasmuch as they were actually charged with the
pertinent crimes challenged on vagueness grounds. The Court in said cases, however, found no basis to
review the assailed penal statute on its face and in its entirety.

In Holder, on the other hand, the US Supreme Court allowed the pre-enforcement review of a criminal
statute, challenged on vagueness grounds, since the therein plaintiffs faced a "credible threat of
prosecution" and "should not be required to await and undergo a criminal prosecution as the sole
means of seeking relief."

As earlier reflected, petitioners have established neither an actual charge nor a credible threat of
prosecution under RA 9372. Even a limited vagueness analysis of the assailed definition of "terrorism" is
thus legally impermissible. The Court reminds litigants that judicial power neither contemplates
speculative counseling on a statute’s future effect on hypothetical scenarios nor allows the courts to be
used as an extension of a failed legislative lobbying in Congress.

WHEREFORE, the petitions are DISMISSED.

SO ORDERED.
 2. David v. Arroyo, G.R. No. 171396, 3 May 2006

G.R. No. 171396 May 3, 2006

PROF. RANDOLF S. DAVID, LORENZO TAÑADA III, RONALD LLAMAS, H. HARRY L. ROQUE, JR., JOEL
RUIZ BUTUYAN, ROGER R. RAYEL, GARY S. MALLARI, ROMEL REGALADO BAGARES, CHRISTOPHER F.C.
BOLASTIG, Petitioners,
vs.
GLORIA MACAPAGAL-ARROYO, AS PRESIDENT AND COMMANDER-IN-CHIEF, EXECUTIVE SECRETARY
EDUARDO ERMITA, HON. AVELINO CRUZ II, SECRETARY OF NATIONAL DEFENSE, GENERAL GENEROSO
SENGA, CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, DIRECTOR GENERAL ARTURO LOMIBAO,
CHIEF, PHILIPPINE NATIONAL POLICE, Respondents.

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

G.R. No. 171409 May 3, 2006

NIÑEZ CACHO-OLIVARES AND TRIBUNE PUBLISHING CO., INC., Petitioners,

vs.
HONORABLE SECRETARY EDUARDO ERMITA AND HONORABLE DIRECTOR GENERAL ARTURO C.
LOMIBAO, Respondents.

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

G.R. No. 171485 May 3, 2006

FRANCIS JOSEPH G. ESCUDERO, JOSEPH A. SANTIAGO, TEODORO A. CASINO, AGAPITO A. AQUINO,

MARIO J. AGUJA, SATUR C. OCAMPO, MUJIV S. HATAMAN, JUAN EDGARDO ANGARA, TEOFISTO DL.
GUINGONA III, EMMANUEL JOSEL J. VILLANUEVA, LIZA L. MAZA, IMEE R. MARCOS, RENATO B.
MAGTUBO, JUSTIN MARC SB. CHIPECO, ROILO GOLEZ, DARLENE ANTONINO-CUSTODIO, LORETTA ANN
P. ROSALES, JOSEL G. VIRADOR, RAFAEL V. MARIANO, GILBERT C. REMULLA, FLORENCIO G. NOEL, ANA
THERESIA HONTIVEROS-BARAQUEL, IMELDA C. NICOLAS, MARVIC M.V.F. LEONEN, NERI JAVIER
COLMENARES, MOVEMENT OF CONCERNED CITIZENS FOR CIVIL LIBERTIES REPRESENTED BY AMADO
GAT INCIONG, Petitioners,
vs.
EDUARDO R. ERMITA, EXECUTIVE SECRETARY, AVELINO J. CRUZ, JR., SECRETARY, DND RONALDO V.
PUNO, SECRETARY, DILG, GENEROSO SENGA, AFP CHIEF OF STAFF, ARTURO LOMIBAO, CHIEF
PNP, Respondents.

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

G.R. No. 171483 May 3, 2006

KILUSANG MAYO UNO, REPRESENTED BY ITS CHAIRPERSON ELMER C. LABOG AND SECRETARY
GENERAL JOEL MAGLUNSOD, NATIONAL FEDERATION OF LABOR UNIONS – KILUSANG MAYO UNO
(NAFLU-KMU), REPRESENTED BY ITS NATIONAL PRESIDENT, JOSELITO V. USTAREZ, ANTONIO C.
PASCUAL, SALVADOR T. CARRANZA, EMILIA P. DAPULANG, MARTIN CUSTODIO, JR., AND ROQUE M.
TAN, Petitioners,
vs.
HER EXCELLENCY, PRESIDENT GLORIA MACAPAGAL-ARROYO, THE HONORABLE EXECUTIVE
SECRETARY, EDUARDO ERMITA, THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, GENEROSO
SENGA, AND THE PNP DIRECTOR GENERAL, ARTURO LOMIBAO, Respondents.

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

G.R. No. 171400 May 3, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,

vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, LT. GEN. GENEROSO SENGA, AND DIRECTOR GENERAL
ARTURO LOMIBAO, Respondents.

G.R. No. 171489 May 3, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR M. AMORADO,
ALICIA A. RISOS-VIDAL, FELIMON C. ABELITA III, MANUEL P. LEGASPI, J.B. JOVY C. BERNABE, BERNARD
L. DAGCUTA, ROGELIO V. GARCIA AND INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioners,
vs.
HON. EXECUTIVE SECRETARY EDUARDO ERMITA, GENERAL GENEROSO SENGA, IN HIS CAPACITY AS
AFP CHIEF OF STAFF, AND DIRECTOR GENERAL ARTURO LOMIBAO, IN HIS CAPACITY AS PNP
CHIEF, Respondents.

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

G.R. No. 171424 May 3, 2006

LOREN B. LEGARDA, Petitioner,

vs.
GLORIA MACAPAGAL-ARROYO, IN HER CAPACITY AS PRESIDENT AND COMMANDER-IN-CHIEF;
ARTURO LOMIBAO, IN HIS CAPACITY AS DIRECTOR-GENERAL OF THE PHILIPPINE NATIONAL POLICE
(PNP); GENEROSO SENGA, IN HIS CAPACITY AS CHIEF OF STAFF OF THE ARMED FORCES OF THE
PHILIPPINES (AFP); AND EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

All powers need some restraint; practical adjustments rather than rigid formula are necessary.1 Superior
strength – the use of force – cannot make wrongs into rights. In this regard, the courts should be vigilant
in safeguarding the constitutional rights of the citizens, specifically their liberty.

Chief Justice Artemio V. Panganiban’s philosophy of liberty is thus most relevant. He said: "In cases
involving liberty, the scales of justice should weigh heavily against government and in favor of the
poor, the oppressed, the marginalized, the dispossessed and the weak." Laws and actions that restrict
fundamental rights come to the courts "with a heavy presumption against their constitutional validity."2

These seven (7) consolidated petitions for certiorari and prohibition allege that in issuing Presidential
Proclamation No. 1017 (PP 1017) and General Order No. 5 (G.O. No. 5), President Gloria Macapagal-
Arroyo committed grave abuse of discretion. Petitioners contend that respondent officials of the
Government, in their professed efforts to defend and preserve democratic institutions, are actually
trampling upon the very freedom guaranteed and protected by the Constitution. Hence, such issuances
are void for being unconstitutional.

Once again, the Court is faced with an age-old but persistently modern problem. How does the
Constitution of a free people combine the degree of liberty, without which, law becomes tyranny, with
the degree of law, without which, liberty becomes license?3

On February 24, 2006, as the nation celebrated the 20th Anniversary of the Edsa People Power I,
President Arroyo issued PP 1017 declaring a state of national emergency, thus:

NOW, THEREFORE, I, Gloria Macapagal-Arroyo, President of the Republic of the Philippines and
Commander-in-Chief of the Armed Forces of the Philippines, by virtue of the powers vested upon me by
Section 18, Article 7 of the Philippine Constitution which states that: "The President. . . whenever it
becomes necessary, . . . may call out (the) armed forces to prevent or suppress. . .rebellion. . .," and in
my capacity as their Commander-in-Chief, do hereby command the Armed Forces of the Philippines, to
maintain law and order throughout the Philippines, prevent or suppress all forms of lawless violence
as well as any act of insurrection or rebellion and to enforce obedience to all the laws and to all
decrees, orders and regulations promulgated by me personally or upon my direction; and as provided
in Section 17, Article 12 of the Constitution do hereby declare a State of National Emergency.

She cited the following facts as bases:

WHEREAS, over these past months, elements in the political opposition have conspired with
authoritarians of the extreme Left represented by the NDF-CPP-NPA and the extreme Right,
represented by military adventurists – the historical enemies of the democratic Philippine State – who
are now in a tactical alliance and engaged in a concerted and systematic conspiracy, over a broad front,
to bring down the duly constituted Government elected in May 2004;

WHEREAS, these conspirators have repeatedly tried to bring down the President;

WHEREAS, the claims of these elements have been recklessly magnified by certain segments of the
national media;

WHEREAS, this series of actions is hurting the Philippine State – by obstructing governance
including hindering the growth of the economy and sabotaging the people’s confidence in government
and their faith in the future of this country;

WHEREAS, these actions are adversely affecting the economy;

WHEREAS, these activities give totalitarian forces of both the extreme Left and extreme Right the
opening to intensify their avowed aims to bring down the democratic Philippine State;

WHEREAS, Article 2, Section 4 of the our Constitution makes the defense and preservation of the
democratic institutions and the State the primary duty of Government;

WHEREAS, the activities above-described, their consequences, ramifications and collateral effects
constitute a clear and present danger to the safety and the integrity of the Philippine State and of the
Filipino people;

On the same day, the President issued G. O. No. 5 implementing PP 1017, thus:

WHEREAS, over these past months, elements in the political opposition have conspired with
authoritarians of the extreme Left, represented by the NDF-CPP-NPA and the extreme Right,
represented by military adventurists - the historical enemies of the democratic Philippine State – and
who are now in a tactical alliance and engaged in a concerted and systematic conspiracy, over a broad
front, to bring down the duly-constituted Government elected in May 2004;

WHEREAS, these conspirators have repeatedly tried to bring down our republican government;

WHEREAS, the claims of these elements have been recklessly magnified by certain segments of the
national media;

WHEREAS, these series of actions is hurting the Philippine State by obstructing governance, including
hindering the growth of the economy and sabotaging the people’s confidence in the government and
their faith in the future of this country;

WHEREAS, these actions are adversely affecting the economy;

WHEREAS, these activities give totalitarian forces; of both the extreme Left and extreme Right the
opening to intensify their avowed aims to bring down the democratic Philippine State;

WHEREAS, Article 2, Section 4 of our Constitution makes the defense and preservation of the
democratic institutions and the State the primary duty of Government;

WHEREAS, the activities above-described, their consequences, ramifications and collateral effects
constitute a clear and present danger to the safety and the integrity of the Philippine State and of the
Filipino people;

WHEREAS, Proclamation 1017 date February 24, 2006 has been issued declaring a State of National
Emergency;

NOW, THEREFORE, I GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me under the
Constitution as President of the Republic of the Philippines, and Commander-in-Chief of the Republic of
the Philippines, and pursuant to Proclamation No. 1017 dated February 24, 2006, do hereby call upon
the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP), to prevent and
suppress acts of terrorism and lawless violence in the country;
I hereby direct the Chief of Staff of the AFP and the Chief of the PNP, as well as the officers and men of
the AFP and PNP, to immediately carry out the necessary and appropriate actions and measures to
suppress and prevent acts of terrorism and lawless violence.

On March 3, 2006, exactly one week after the declaration of a state of national emergency and after all
these petitions had been filed, the President lifted PP 1017. She issued Proclamation No. 1021 which
reads:

WHEREAS, pursuant to Section 18, Article VII and Section 17, Article XII of the Constitution,
Proclamation No. 1017 dated February 24, 2006, was issued declaring a state of national emergency;

WHEREAS, by virtue of General Order No.5 and No.6 dated February 24, 2006, which were issued on the
basis of Proclamation No. 1017, the Armed Forces of the Philippines (AFP) and the Philippine National
Police (PNP), were directed to maintain law and order throughout the Philippines, prevent and suppress
all form of lawless violence as well as any act of rebellion and to undertake such action as may be
necessary;

WHEREAS, the AFP and PNP have effectively prevented, suppressed and quelled the acts lawless
violence and rebellion;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic of the Philippines, by

virtue of the powers vested in me by law, hereby declare that the state of national emergency has
ceased to exist.

In their presentation of the factual bases of PP 1017 and G.O. No. 5, respondents stated that the
proximate cause behind the executive issuances was the conspiracy among some military officers, leftist
insurgents of the New People’s Army (NPA), and some members of the political opposition in a plot to
unseat or assassinate President Arroyo.4 They considered the aim to oust or assassinate the President
and take-over the reigns of government as a clear and present danger.

During the oral arguments held on March 7, 2006, the Solicitor General specified the facts leading to the
issuance of PP 1017 and G.O. No. 5. Significantly, there was no refutation from petitioners’ counsels.

The Solicitor General argued that the intent of the Constitution is to give full discretionary powers to
the President in determining the necessity of calling out the armed forces. He emphasized that none of
the petitioners has shown that PP 1017 was without factual bases. While he explained that it is not
respondents’ task to state the facts behind the questioned Proclamation, however, they are presenting
the same, narrated hereunder, for the elucidation of the issues.

On January 17, 2006, Captain Nathaniel Rabonza and First Lieutenants Sonny Sarmiento, Lawrence San
Juan and Patricio Bumidang, members of the Magdalo Group indicted in the Oakwood mutiny, escaped
their detention cell in Fort Bonifacio, Taguig City. In a public statement, they vowed to remain defiant
and to elude arrest at all costs. They called upon the people to "show and proclaim our displeasure at
the sham regime. Let us demonstrate our disgust, not only by going to the streets in protest, but also by
wearing red bands on our left arms." 5
On February 17, 2006, the authorities got hold of a document entitled "Oplan Hackle I " which detailed
plans for bombings and attacks during the Philippine Military Academy Alumni Homecoming in Baguio
City. The plot was to assassinate selected targets including some cabinet members and President Arroyo
herself.6 Upon the advice of her security, President Arroyo decided not to attend the Alumni
Homecoming. The next day, at the height of the celebration, a bomb was found and detonated at the
PMA parade ground.

On February 21, 2006, Lt. San Juan was recaptured in a communist safehouse in Batangas province.
Found in his possession were two (2) flash disks containing minutes of the meetings between members
of the Magdalo Group and the National People’s Army (NPA), a tape recorder, audio cassette cartridges,
diskettes, and copies of subversive documents.7 Prior to his arrest, Lt. San Juan announced through
DZRH that the "Magdalo’s D-Day would be on February 24, 2006, the 20th Anniversary of Edsa I."

On February 23, 2006, PNP Chief Arturo Lomibao intercepted information that members of the PNP-
Special Action Force were planning to defect. Thus, he immediately ordered SAF Commanding General
Marcelino Franco, Jr. to "disavow" any defection. The latter promptly obeyed and issued a public
statement: "All SAF units are under the effective control of responsible and trustworthy officers with
proven integrity and unquestionable loyalty."

On the same day, at the house of former Congressman Peping Cojuangco, President Cory Aquino’s
brother, businessmen and mid-level government officials plotted moves to bring down the Arroyo
administration. Nelly Sindayen of TIME Magazine reported that Pastor Saycon, longtime Arroyo critic,
called a U.S. government official about his group’s plans if President Arroyo is ousted. Saycon also
phoned a man code-named Delta. Saycon identified him as B/Gen. Danilo Lim, Commander of the
Army’s elite Scout Ranger. Lim said "it was all systems go for the planned movement against Arroyo."8

B/Gen. Danilo Lim and Brigade Commander Col. Ariel Querubin confided to Gen. Generoso Senga, Chief
of Staff of the Armed Forces of the Philippines (AFP), that a huge number of soldiers would join the
rallies to provide a critical mass and armed component to the Anti-Arroyo protests to be held on
February 24, 2005. According to these two (2) officers, there was no way they could possibly stop the
soldiers because they too, were breaking the chain of command to join the forces foist to unseat the
President. However, Gen. Senga has remained faithful to his Commander-in-Chief and to the chain of
command. He immediately took custody of B/Gen. Lim and directed Col. Querubin to return to the
Philippine Marines Headquarters in Fort Bonifacio.

Earlier, the CPP-NPA called for intensification of political and revolutionary work within the military and
the police establishments in order to forge alliances with its members and key officials. NPA spokesman
Gregorio "Ka Roger" Rosal declared: "The Communist Party and revolutionary movement and the entire
people look forward to the possibility in the coming year of accomplishing its immediate task of bringing
down the Arroyo regime; of rendering it to weaken and unable to rule that it will not take much longer to
end it."9

On the other hand, Cesar Renerio, spokesman for the National Democratic Front (NDF) at North Central
Mindanao, publicly announced: "Anti-Arroyo groups within the military and police are growing rapidly,
hastened by the economic difficulties suffered by the families of AFP officers and enlisted personnel who
undertake counter-insurgency operations in the field." He claimed that with the forces of the national
democratic movement, the anti-Arroyo conservative political parties, coalitions, plus the groups that
have been reinforcing since June 2005, it is probable that the President’s ouster is nearing its concluding
stage in the first half of 2006.

Respondents further claimed that the bombing of telecommunication towers and cell sites in Bulacan
and Bataan was also considered as additional factual basis for the issuance of PP 1017 and G.O. No. 5. So
is the raid of an army outpost in Benguet resulting in the death of three (3) soldiers. And also the
directive of the Communist Party of the Philippines ordering its front organizations to join 5,000 Metro
Manila radicals and 25,000 more from the provinces in mass protests.10

By midnight of February 23, 2006, the President convened her security advisers and several cabinet
members to assess the gravity of the fermenting peace and order situation. She directed both the AFP
and the PNP to account for all their men and ensure that the chain of command remains solid and
undivided. To protect the young students from any possible trouble that might break loose on the
streets, the President suspended classes in all levels in the entire National Capital Region.

For their part, petitioners cited the events that followed after the issuance of PP 1017 and G.O. No. 5.

Immediately, the Office of the President announced the cancellation of all programs and activities
related to the 20th anniversary celebration of Edsa People Power I; and revoked the permits to hold
rallies issued earlier by the local governments. Justice Secretary Raul Gonzales stated that political
rallies, which to the President’s mind were organized for purposes of destabilization, are
cancelled.Presidential Chief of Staff Michael Defensor announced that "warrantless arrests and take-
over of facilities, including media, can already be implemented."11

Undeterred by the announcements that rallies and public assemblies would not be allowed, groups of
protesters (members of Kilusang Mayo Uno [KMU] and National Federation of Labor Unions-Kilusang
Mayo Uno [NAFLU-KMU]), marched from various parts of Metro Manila with the intention of converging
at the EDSA shrine. Those who were already near the EDSA site were violently dispersed by huge
clusters of anti-riot police. The well-trained policemen used truncheons, big fiber glass shields, water
cannons, and tear gas to stop and break up the marching groups, and scatter the massed participants.
The same police action was used against the protesters marching forward to Cubao, Quezon City and to
the corner of Santolan Street and EDSA. That same evening, hundreds of riot policemen broke up an
EDSA celebration rally held along Ayala Avenue and Paseo de Roxas Street in Makati City.12

According to petitioner Kilusang Mayo Uno, the police cited PP 1017 as the ground for the dispersal of
their assemblies.

During the dispersal of the rallyists along EDSA, police arrested (without warrant) petitioner Randolf S.
David, a professor at the University of the Philippines and newspaper columnist. Also arrested was his
companion, Ronald Llamas, president of party-list Akbayan.

At around 12:20 in the early morning of February 25, 2006, operatives of the Criminal Investigation and
Detection Group (CIDG) of the PNP, on the basis of PP 1017 and G.O. No. 5, raided the Daily
Tribune offices in Manila. The raiding team confiscated news stories by reporters, documents, pictures,
and mock-ups of the Saturday issue. Policemen from Camp Crame in Quezon City were stationed inside
the editorial and business offices of the newspaper; while policemen from the Manila Police District
were stationed outside the building.13
A few minutes after the search and seizure at the Daily Tribune offices, the police surrounded the
premises of another pro-opposition paper, Malaya, and its sister publication, the tabloid Abante.

The raid, according to Presidential Chief of Staff Michael Defensor, is "meant to show a ‘strong
presence,’ to tell media outlets not to connive or do anything that would help the rebels in bringing down
this government." The PNP warned that it would take over any media organization that would not
follow "standards set by the government during the state of national emergency." Director General
Lomibao stated that "if they do not follow the standards – and the standards are - if they would
contribute to instability in the government, or if they do not subscribe to what is in General Order No. 5
and Proc. No. 1017 – we will recommend a ‘takeover.’" National Telecommunications’ Commissioner
Ronald Solis urged television and radio networks to "cooperate" with the government for the duration
of the state of national emergency. He asked for "balanced reporting" from broadcasters when covering
the events surrounding the coup attempt foiled by the government. He warned that his agency will not
hesitate to recommend the closure of any broadcast outfit that violates rules set out for media coverage
when the national security is threatened.14

Also, on February 25, 2006, the police arrested Congressman Crispin Beltran, representing
the Anakpawis Party and Chairman of Kilusang Mayo Uno (KMU), while leaving his farmhouse in
Bulacan. The police showed a warrant for his arrest dated 1985. Beltran’s lawyer explained that the
warrant, which stemmed from a case of inciting to rebellion filed during the Marcos regime, had long
been quashed. Beltran, however, is not a party in any of these petitions.

When members of petitioner KMU went to Camp Crame to visit Beltran, they were told they could not
be admitted because of PP 1017 and G.O. No. 5. Two members were arrested and detained, while the
rest were dispersed by the police.

Bayan Muna Representative Satur Ocampo eluded arrest when the police went after him during a public
forum at the Sulo Hotel in Quezon City. But his two drivers, identified as Roel and Art, were taken into
custody.

Retired Major General Ramon Montaño, former head of the Philippine Constabulary, was arrested while
with his wife and golfmates at the Orchard Golf and Country Club in Dasmariñas, Cavite.

Attempts were made to arrest Anakpawis Representative Satur Ocampo, Representative Rafael
Mariano, Bayan Muna Representative Teodoro Casiño and Gabriela Representative Liza Maza. Bayan
Muna Representative Josel Virador was arrested at the PAL Ticket Office in Davao City. Later, he was
turned over to the custody of the House of Representatives where the "Batasan 5" decided to stay
indefinitely.

Let it be stressed at this point that the alleged violations of the rights of Representatives Beltran, Satur
Ocampo, et al., are not being raised in these petitions.

On March 3, 2006, President Arroyo issued PP 1021 declaring that the state of national emergency has
ceased to exist.
In the interim, these seven (7) petitions challenging the constitutionality of PP 1017 and G.O. No. 5 were
filed with this Court against the above-named respondents. Three (3) of these petitions impleaded
President Arroyo as respondent.

In G.R. No. 171396, petitioners Randolf S. David, et al. assailed PP 1017 on the grounds that (1) it
encroaches on the emergency powers of Congress; (2) itis a subterfuge to avoid the constitutional
requirements for the imposition of martial law; and (3) it violates the constitutional guarantees of
freedom of the press, of speech and of assembly.

In G.R. No. 171409, petitioners Ninez Cacho-Olivares and Tribune Publishing Co., Inc. challenged the
CIDG’s act of raiding the Daily Tribune offices as a clear case of "censorship" or "prior restraint." They
also claimed that the term "emergency" refers only to tsunami, typhoon, hurricane and similar
occurrences, hence, there is "absolutely no emergency" that warrants the issuance of PP 1017.

In G.R. No. 171485, petitioners herein are Representative Francis Joseph G. Escudero, and twenty one
(21) other members of the House of Representatives, including Representatives Satur Ocampo, Rafael
Mariano, Teodoro Casiño, Liza Maza, and Josel Virador. They asserted that PP 1017 and G.O. No. 5
constitute "usurpation of legislative powers"; "violation of freedom of expression" and "a declaration of
martial law." They alleged that President Arroyo "gravely abused her discretion in calling out the armed
forces without clear and verifiable factual basis of the possibility of lawless violence and a showing that
there is necessity to do so."

In G.R. No. 171483,petitioners KMU, NAFLU-KMU, and their members averred that PP 1017 and G.O.
No. 5 are unconstitutional because (1) they arrogate unto President Arroyo the power to enact laws and
decrees; (2) their issuance was without factual basis; and (3) they violate freedom of expression and the
right of the people to peaceably assemble to redress their grievances.

In G.R. No. 171400, petitioner Alternative Law Groups, Inc. (ALGI) alleged that PP 1017 and G.O. No. 5
are unconstitutional because they violate (a) Section 415 of Article II, (b) Sections 1,16 2,17 and 418 of
Article III, (c) Section 2319 of Article VI, and (d) Section 1720 of Article XII of the Constitution.

In G.R. No. 171489, petitioners Jose Anselmo I. Cadiz et al., alleged that PP 1017 is an "arbitrary and
unlawful exercise by the President of her Martial Law powers." And assuming that PP 1017 is not really a
declaration of Martial Law, petitioners argued that "it amounts to an exercise by the President of
emergency powers without congressional approval." In addition, petitioners asserted that PP 1017 "goes
beyond the nature and function of a proclamation as defined under the Revised Administrative Code."

And lastly, in G.R. No. 171424,petitionerLoren B. Legarda maintained that PP 1017 and G.O. No. 5 are
"unconstitutional for being violative of the freedom of expression, including its cognate rights such as
freedom of the press and the right to access to information on matters of public concern, all guaranteed
under Article III, Section 4 of the 1987 Constitution." In this regard, she stated that these issuances
prevented her from fully prosecuting her election protest pending before the Presidential Electoral
Tribunal.

In respondents’ Consolidated Comment, the Solicitor General countered that: first, the petitions should
be dismissed for being moot; second,petitioners in G.R. Nos. 171400 (ALGI), 171424 (Legarda), 171483
(KMU et al.), 171485 (Escudero et al.) and 171489 (Cadiz et al.) have no legal standing; third, it is not
necessary for petitioners to implead President Arroyo as respondent; fourth, PP 1017 has constitutional
and legal basis; and fifth, PP 1017 does not violate the people’s right to free expression and redress of
grievances.

On March 7, 2006, the Court conducted oral arguments and heard the parties on the above interlocking
issues which may be summarized as follows:

A. PROCEDURAL:

1) Whether the issuance of PP 1021 renders the petitions moot and academic.

2) Whether petitioners in 171485 (Escudero et al.), G.R. Nos. 171400 (ALGI), 171483 (KMU et
al.), 171489 (Cadiz et al.), and 171424 (Legarda) have legal standing.

B. SUBSTANTIVE:

1) Whetherthe Supreme Court can review the factual bases of PP 1017.

2) Whether PP 1017 and G.O. No. 5 are unconstitutional.

a. Facial Challenge

b. Constitutional Basis

c. As Applied Challenge

A. PROCEDURAL

First, we must resolve the procedural roadblocks.

I- Moot and Academic Principle

One of the greatest contributions of the American system to this country is the concept of judicial
review enunciated in Marbury v. Madison.21 This concept rests on the extraordinary simple foundation --

The Constitution is the supreme law. It was ordained by the people, the ultimate source of all political
authority. It confers limited powers on the national government. x x x If the government consciously or
unconsciously oversteps these limitations there must be some authority competent to hold it in
control, to thwart its unconstitutional attempt, and thus to vindicate and preserve inviolate the will of
the people as expressed in the Constitution. This power the courts exercise. This is the beginning and
the end of the theory of judicial review.22

But the power of judicial review does not repose upon the courts a "self-starting capacity."23 Courts may
exercise such power only when the following requisites are present: first, there must be an actual case
or controversy; second, petitioners have to raise a question of constitutionality; third, the constitutional
question must be raised at the earliest opportunity; and fourth, the decision of the constitutional
question must be necessary to the determination of the case itself.24
Respondents maintain that the first and second requisites are absent, hence, we shall limit our
discussion thereon.

An actual case or controversy involves a conflict of legal right, an opposite legal claims susceptible of
judicial resolution. It is "definite and concrete, touching the legal relations of parties having adverse
legal interest;" a real and substantial controversy admitting of specific relief.25 The Solicitor General
refutes the existence of such actual case or controversy, contending that the present petitions were
rendered "moot and academic" by President Arroyo’s issuance of PP 1021.

Such contention lacks merit.

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events,26 so that a declaration thereon would be of no practical use or value.27 Generally,
courts decline jurisdiction over such case28 or dismiss it on ground of mootness.29

The Court holds that President Arroyo’s issuance of PP 1021 did not render the present petitions moot
and academic. During the eight (8) days that PP 1017 was operative, the police officers, according to
petitioners, committed illegal acts in implementing it. Are PP 1017 and G.O. No. 5 constitutional or
valid? Do they justify these alleged illegal acts? These are the vital issues that must be resolved in the
present petitions. It must be stressed that "an unconstitutional act is not a law, it confers no rights, it
imposes no duties, it affords no protection; it is in legal contemplation, inoperative."30

The "moot and academic" principle is not a magical formula that can automatically dissuade the courts
in resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave
violation of the Constitution;31 second, the exceptional character of the situation and the paramount
public interest is involved;32 third, when constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public;33 and fourth, the case is capable of repetition yet
evading review.34

All the foregoing exceptions are present here and justify this Court’s assumption of jurisdiction over the
instant petitions. Petitioners alleged that the issuance of PP 1017 and G.O. No. 5 violates the
Constitution. There is no question that the issues being raised affect the public’s interest, involving as
they do the people’s basic rights to freedom of expression, of assembly and of the press. Moreover, the
Court has the duty to formulate guiding and controlling constitutional precepts, doctrines or rules. It has
the symbolic function of educating the bench and the bar, and in the present petitions, the military and
the police, on the extent of the protection given by constitutional guarantees.35 And lastly, respondents’
contested actions are capable of repetition. Certainly, the petitions are subject to judicial review.

In their attempt to prove the alleged mootness of this case, respondents cited Chief Justice Artemio V.
Panganiban’s Separate Opinion in Sanlakas v. Executive Secretary.36 However, they failed to take into
account the Chief Justice’s very statement that an otherwise "moot" case may still be decided "provided
the party raising it in a proper case has been and/or continues to be prejudiced or damaged as a direct
result of its issuance." The present case falls right within this exception to the mootness rule pointed out
by the Chief Justice.

II- Legal Standing

In view of the number of petitioners suing in various personalities, the Court deems it imperative to
have a more than passing discussion on legal standing or locus standi.

Locus standi is defined as "a right of appearance in a court of justice on a given question."37 In private
suits, standing is governed by the "real-parties-in interest" rule as contained in Section 2, Rule 3 of the
1997 Rules of Civil Procedure, as amended. It provides that "every action must be prosecuted or
defended in the name of the real party in interest." Accordingly, the "real-party-in interest" is "the
party who stands to be benefited or injured by the judgment in the suit or the party entitled to the
avails of the suit."38 Succinctly put, the plaintiff’s standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a "public
right" in assailing an allegedly illegal official action, does so as a representative of the general public. He
may be a person who is affected no differently from any other person. He could be suing as a "stranger,"
or in the category of a "citizen," or ‘taxpayer." In either case, he has to adequately show that he is
entitled to seek judicial protection. In other words, he has to make out a sufficient interest in the
vindication of the public order and the securing of relief as a "citizen" or "taxpayer.

Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk,39 where it was held that the plaintiff in a taxpayer’s
suit is in a different category from the plaintiff in a citizen’s suit. In the former, the plaintiff is affected
by the expenditure of public funds, while in the latter, he is but the mere instrument of the public
concern. As held by the New York Supreme Court in People ex rel Case v. Collins:40 "In matter of mere
public right, however…the people are the real parties…It is at least the right, if not the duty, of every
citizen to interfere and see that a public offence be properly pursued and punished, and that a public
grievance be remedied." With respect to taxpayer’s suits, Terr v. Jordan41 held that "the right of a
citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to
his injury cannot be denied."

However, to prevent just about any person from seeking judicial interference in any official policy or act
with which he disagreed with, and thus hinders the activities of governmental agencies engaged in
public service, the United State Supreme Court laid down the more stringent "direct injury" test in Ex
Parte Levitt,42 later reaffirmed in Tileston v. Ullman.43 The same Court ruled that for a private individual
to invoke the judicial power to determine the validity of an executive or legislative action, he must show
that he has sustained a direct injury as a result of that action, and it is not sufficient that he has a
general interest common to all members of the public.

This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera,44 it held that the person
who impugns the validity of a statute must have "a personal and substantial interest in the case such
that he has sustained, or will sustain direct injury as a result." The Vera doctrine was upheld in a litany
of cases, such as, Custodio v. President of the Senate,45 Manila Race Horse Trainers’ Association v. De la
Fuente,46 Pascual v. Secretary of Public Works47 and Anti-Chinese League of the Philippines v. Felix.48

However, being a mere procedural technicality, the requirement of locus standi may be waived by the
Court in the exercise of its discretion. This was done in the 1949 Emergency Powers Cases, Araneta v.
Dinglasan,49 where the "transcendental importance" of the cases prompted the Court to act liberally.
Such liberality was neither a rarity nor accidental. In Aquino v. Comelec,50 this Court resolved to pass
upon the issues raised due to the "far-reaching implications" of the petition notwithstanding its
categorical statement that petitioner therein had no personality to file the suit. Indeed, there is a chain
of cases where this liberal policy has been observed, allowing ordinary citizens, members of Congress,
and civic organizations to prosecute actions involving the constitutionality or validity of laws, regulations
and rulings.51

Thus, the Court has adopted a rule that even where the petitioners have failed to show direct injury,
they have been allowed to sue under the principle of "transcendental importance." Pertinent are the
following cases:

(1) Chavez v. Public Estates Authority,52 where the Court ruled that the enforcement of the
constitutional right to information and the equitable diffusion of natural resources are
matters of transcendental importance which clothe the petitioner with locus standi;

(2) Bagong Alyansang Makabayan v. Zamora,53 wherein the Court held that "given the
transcendental importance of the issues involved, the Court may relax the standing
requirements and allow the suit to prosper despite the lack of direct injury to the parties
seeking judicial review" of the Visiting Forces Agreement;

(3) Lim v. Executive Secretary,54 while the Court noted that the petitioners may not file suit in
their capacity as taxpayers absent a showing that "Balikatan 02-01" involves the exercise of
Congress’ taxing or spending powers, it reiterated its ruling in Bagong Alyansang Makabayan v.
Zamora,55that in cases of transcendental importance, the cases must be settled promptly and
definitely and standing requirements may be relaxed.

By way of summary, the following rules may be culled from the cases decided by this Court. Taxpayers,
voters, concerned citizens, and legislators may be accorded standing to sue, provided that the following
requirements are met:

(1) the cases involve constitutional issues;

(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax
measure is unconstitutional;

(3) for voters, there must be a showing of obvious interest in the validity of the election law in
question;

(4) for concerned citizens, there must be a showing that the issues raised are of transcendental
importance which must be settled early; and

(5) for legislators, there must be a claim that the official action complained of infringes upon
their prerogatives as legislators.

Significantly, recent decisions show a certain toughening in the Court’s attitude toward legal standing.

In Kilosbayan, Inc. v. Morato,56 the Court ruled that the status of Kilosbayan as a people’s organization
does not give it the requisite personality to question the validity of the on-line lottery contract, more so
where it does not raise any issue of constitutionality. Moreover, it cannot sue as a taxpayer absent any
allegation that public funds are being misused. Nor can it sue as a concerned citizen as it does not allege
any specific injury it has suffered.

In Telecommunications and Broadcast Attorneys of the Philippines, Inc. v. Comelec,57 the Court
reiterated the "direct injury" test with respect to concerned citizens’ cases involving constitutional
issues. It held that "there must be a showing that the citizen personally suffered some actual or
threatened injury arising from the alleged illegal official act."

In Lacson v. Perez,58 the Court ruled that one of the petitioners, Laban ng Demokratikong Pilipino (LDP),
is not a real party-in-interest as it had not demonstrated any injury to itself or to its leaders, members or
supporters.

In Sanlakas v. Executive Secretary,59 the Court ruled that only the petitioners who are members of
Congress have standing to sue, as they claim that the President’s declaration of a state of rebellion is a
usurpation of the emergency powers of Congress, thus impairing their legislative powers. As to
petitioners Sanlakas, Partido Manggagawa, and Social Justice Society, the Court declared them to be
devoid of standing, equating them with the LDP in Lacson.

Now, the application of the above principles to the present petitions.

The locus standi of petitioners in G.R. No. 171396, particularly David and Llamas, is beyond doubt. The
same holds true with petitioners in G.R. No. 171409, Cacho-Olivares and Tribune Publishing Co. Inc. They
alleged "direct injury" resulting from "illegal arrest" and "unlawful search" committed by police
operatives pursuant to PP 1017. Rightly so, the Solicitor General does not question their legal standing.

In G.R. No. 171485, the opposition Congressmen alleged there was usurpation of legislative powers.
They also raised the issue of whether or not the concurrence of Congress is necessary whenever the
alarming powers incident to Martial Law are used. Moreover, it is in the interest of justice that those
affected by PP 1017 can be represented by their Congressmen in bringing to the attention of the Court
the alleged violations of their basic rights.

In G.R. No. 171400, (ALGI), this Court applied the liberality rule in Philconsa v. Enriquez,60 Kapatiran Ng
Mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,61 Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform,62 Basco v. Philippine Amusement and Gaming
Corporation,63 and Tañada v. Tuvera,64 that when the issue concerns a public right, it is sufficient that
the petitioner is a citizen and has an interest in the execution of the laws.

In G.R. No. 171483, KMU’s assertion that PP 1017 and G.O. No. 5 violated its right to peaceful assembly
may be deemed sufficient to give it legal standing. Organizations may be granted standing to assert the
rights of their members.65 We take judicial notice of the announcement by the Office of the President
banning all rallies and canceling all permits for public assemblies following the issuance of PP 1017 and
G.O. No. 5.

In G.R. No. 171489, petitioners, Cadiz et al., who are national officers of the Integrated Bar of the
Philippines (IBP) have no legal standing, having failed to allege any direct or potential injury which the
IBP as an institution or its members may suffer as a consequence of the issuance of PP No. 1017 and
G.O. No. 5. In Integrated Bar of the Philippines v. Zamora,66 the Court held that the mere invocation by
the IBP of its duty to preserve the rule of law and nothing more, while undoubtedly true, is not sufficient
to clothe it with standing in this case. This is too general an interest which is shared by other groups and
the whole citizenry. However, in view of the transcendental importance of the issue, this Court declares
that petitioner have locus standi.

In G.R. No. 171424, Loren Legarda has no personality as a taxpayer to file the instant petition as there
are no allegations of illegal disbursement of public funds. The fact that she is a former Senator is of no
consequence. She can no longer sue as a legislator on the allegation that her prerogatives as a lawmaker
have been impaired by PP 1017 and G.O. No. 5. Her claim that she is a media personality will not
likewise aid her because there was no showing that the enforcement of these issuances prevented her
from pursuing her occupation. Her submission that she has pending electoral protest before the
Presidential Electoral Tribunal is likewise of no relevance. She has not sufficiently shown that PP 1017
will affect the proceedings or result of her case. But considering once more the transcendental
importance of the issue involved, this Court may relax the standing rules.

It must always be borne in mind that the question of locus standi is but corollary to the bigger question
of proper exercise of judicial power. This is the underlying legal tenet of the "liberality doctrine" on legal
standing. It cannot be doubted that the validity of PP No. 1017 and G.O. No. 5 is a judicial question
which is of paramount importance to the Filipino people. To paraphrase Justice Laurel, the whole of
Philippine society now waits with bated breath the ruling of this Court on this very critical matter. The
petitions thus call for the application of the "transcendental importance" doctrine, a relaxation of the
standing requirements for the petitioners in the "PP 1017 cases."1avvphil.net

This Court holds that all the petitioners herein have locus standi.

Incidentally, it is not proper to implead President Arroyo as respondent. Settled is the doctrine that the
President, during his tenure of office or actual incumbency,67 may not be sued in any civil or criminal
case, and there is no need to provide for it in the Constitution or law. It will degrade the dignity of the
high office of the President, the Head of State, if he can be dragged into court litigations while serving as
such. Furthermore, it is important that he be freed from any form of harassment, hindrance or
distraction to enable him to fully attend to the performance of his official duties and functions. Unlike
the legislative and judicial branch, only one constitutes the executive branch and anything which impairs
his usefulness in the discharge of the many great and important duties imposed upon him by the
Constitution necessarily impairs the operation of the Government. However, this does not mean that
the President is not accountable to anyone. Like any other official, he remains accountable to the
people68 but he may be removed from office only in the mode provided by law and that is by
impeachment.69

B. SUBSTANTIVE

I. Review of Factual Bases

Petitioners maintain that PP 1017 has no factual basis. Hence, it was not "necessary" for President
Arroyo to issue such Proclamation.

The issue of whether the Court may review the factual bases of the President’s exercise of his
Commander-in-Chief power has reached its distilled point - from the indulgent days of Barcelon v.
Baker70 and Montenegro v. Castaneda71 to the volatile era of Lansang v. Garcia,72 Aquino, Jr. v.
Enrile,73 and Garcia-Padilla v. Enrile.74 The tug-of-war always cuts across the line defining "political
questions," particularly those questions "in regard to which full discretionary authority has been
delegated to the legislative or executive branch of the government."75 Barcelon and Montenegro were in
unison in declaring that the authority to decide whether an exigency has arisen belongs to the
President and his decision is final and conclusive on the courts. Lansang took the opposite view. There,
the members of the Court were unanimous in the conviction that the Court has the authority to inquire
into the existence of factual bases in order to determine their constitutional sufficiency. From the
principle of separation of powers, it shifted the focus to the system of checks and balances, "under
which the President is supreme, x x x only if and when he acts within the sphere allotted to him by the
Basic Law, and the authority to determine whether or not he has so acted is vested in the Judicial
Department, which in this respect, is, in turn, constitutionally supreme."76 In 1973, the unanimous
Court of Lansang was divided in Aquino v. Enrile.77 There, the Court was almost evenly divided on the
issue of whether the validity of the imposition of Martial Law is a political or justiciable question.78 Then
came Garcia-Padilla v. Enrile which greatly diluted Lansang. It declared that there is a need to re-
examine the latter case, ratiocinating that "in times of war or national emergency, the President must
be given absolute control for the very life of the nation and the government is in great peril. The
President, it intoned, is answerable only to his conscience, the People, and God."79

The Integrated Bar of the Philippines v. Zamora80 -- a recent case most pertinent to these cases at bar -
- echoed a principle similar to Lansang. While the Court considered the President’s "calling-out" power
as a discretionary power solely vested in his wisdom, it stressed that "this does not prevent an
examination of whether such power was exercised within permissible constitutional limits or whether
it was exercised in a manner constituting grave abuse of discretion."This ruling is mainly a result of the
Court’s reliance on Section 1, Article VIII of 1987 Constitution which fortifies the authority of the courts
to determine in an appropriate action the validity of the acts of the political departments. Under the
new definition of judicial power, the courts are authorized not only "to settle actual controversies
involving rights which are legally demandable and enforceable," but also "to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government." The latter part of the authority represents a
broadening of judicial power to enable the courts of justice to review what was before a forbidden
territory, to wit, the discretion of the political departments of the government.81 It speaks of judicial
prerogative not only in terms of power but also of duty.82

As to how the Court may inquire into the President’s exercise of power, Lansang adopted the test that
"judicial inquiry can go no further than to satisfy the Court not that the President’s decision is correct,"
but that "the President did not act arbitrarily." Thus, the standard laid down is not correctness, but
arbitrariness.83 In Integrated Bar of the Philippines, this Court further ruled that "it is incumbent upon
the petitioner to show that the President’s decision is totally bereft of factual basis" and that if he
fails, by way of proof, to support his assertion, then "this Court cannot undertake an independent
investigation beyond the pleadings."

Petitioners failed to show that President Arroyo’s exercise of the calling-out power, by issuing PP 1017,
is totally bereft of factual basis. A reading of the Solicitor General’s Consolidated Comment and
Memorandum shows a detailed narration of the events leading to the issuance of PP 1017, with
supporting reports forming part of the records. Mentioned are the escape of the Magdalo Group, their
audacious threat of the Magdalo D-Day, the defections in the military, particularly in the Philippine
Marines, and the reproving statements from the communist leaders. There was also the Minutes of the
Intelligence Report and Security Group of the Philippine Army showing the growing alliance between the
NPA and the military. Petitioners presented nothing to refute such events. Thus, absent any contrary
allegations, the Court is convinced that the President was justified in issuing PP 1017 calling for military
aid.

Indeed, judging the seriousness of the incidents, President Arroyo was not expected to simply fold her
arms and do nothing to prevent or suppress what she believed was lawless violence, invasion or
rebellion. However, the exercise of such power or duty must not stifle liberty.

II. Constitutionality of PP 1017 and G.O. No. 5

Doctrines of Several Political Theorists
on the Power of the President in Times of Emergency

This case brings to fore a contentious subject -- the power of the President in times of emergency. A
glimpse at the various political theories relating to this subject provides an adequate backdrop for our
ensuing discussion.

John Locke, describing the architecture of civil government, called upon the English doctrine of
prerogative to cope with the problem of emergency. In times of danger to the nation, positive law
enacted by the legislature might be inadequate or even a fatal obstacle to the promptness of action
necessary to avert catastrophe. In these situations, the Crown retained a prerogative "power to act
according to discretion for the public good, without the proscription of the law and sometimes even
against it."84 But Locke recognized that this moral restraint might not suffice to avoid abuse of
prerogative powers. Who shall judge the need for resorting to the prerogative and how may its abuse
be avoided? Here, Locke readily admitted defeat, suggesting that "the people have no other remedy in
this, as in all other cases where they have no judge on earth, but to appeal to Heaven."85

Jean-Jacques Rousseau also assumed the need for temporary suspension of democratic processes of
government in time of emergency. According to him:

The inflexibility of the laws, which prevents them from adopting themselves to circumstances, may, in
certain cases, render them disastrous and make them bring about, at a time of crisis, the ruin of the
State…

It is wrong therefore to wish to make political institutions as strong as to render it impossible to suspend
their operation. Even Sparta allowed its law to lapse...

If the peril is of such a kind that the paraphernalia of the laws are an obstacle to their preservation, the
method is to nominate a supreme lawyer, who shall silence all the laws and suspend for a moment the
sovereign authority. In such a case, there is no doubt about the general will, and it clear that the
people’s first intention is that the State shall not perish.86

Rosseau did not fear the abuse of the emergency dictatorship or "supreme magistracy" as he termed it.
For him, it would more likely be cheapened by "indiscreet use." He was unwilling to rely upon an
"appeal to heaven." Instead, he relied upon a tenure of office of prescribed duration to avoid
perpetuation of the dictatorship.87
John Stuart Mill concluded his ardent defense of representative government: "I am far from
condemning, in cases of extreme necessity, the assumption of absolute power in the form of a
temporary dictatorship."88

Nicollo Machiavelli’s view of emergency powers, as one element in the whole scheme of limited
government, furnished an ironic contrast to the Lockean theory of prerogative. He recognized and
attempted to bridge this chasm in democratic political theory, thus:

Now, in a well-ordered society, it should never be necessary to resort to extra –constitutional measures;
for although they may for a time be beneficial, yet the precedent is pernicious, for if the practice is once
established for good objects, they will in a little while be disregarded under that pretext but for evil
purposes. Thus, no republic will ever be perfect if she has not by law provided for everything, having a
remedy for every emergency and fixed rules for applying it.89

Machiavelli – in contrast to Locke, Rosseau and Mill – sought to incorporate into the constitution a
regularized system of standby emergency powers to be invoked with suitable checks and controls in
time of national danger. He attempted forthrightly to meet the problem of combining a capacious
reserve of power and speed and vigor in its application in time of emergency, with effective
constitutional restraints.90

Contemporary political theorists, addressing themselves to the problem of response to emergency by

constitutional democracies, have employed the doctrine of constitutional dictatorship.91 Frederick M.
Watkins saw "no reason why absolutism should not be used as a means for the defense of liberal
institutions," provided it "serves to protect established institutions from the danger of permanent
injury in a period of temporary emergency and is followed by a prompt return to the previous forms
of political life."92 He recognized the two (2) key elements of the problem of emergency governance, as
well as all constitutional governance: increasing administrative powers of the executive, while at the
same time "imposing limitation upon that power."93 Watkins placed his real faith in a scheme of
constitutional dictatorship. These are the conditions of success of such a dictatorship: "The period of
dictatorship must be relatively short…Dictatorship should always be strictly legitimate in
character…Final authority to determine the need for dictatorship in any given case must never rest
with the dictator himself…"94 and the objective of such an emergency dictatorship should be "strict
political conservatism."

Carl J. Friedrich cast his analysis in terms similar to those of Watkins.95 "It is a problem of concentrating
power – in a government where power has consciously been divided – to cope with… situations of
unprecedented magnitude and gravity. There must be a broad grant of powers, subject to equally strong
limitations as to who shall exercise such powers, when, for how long, and to what end."96 Friedrich, too,
offered criteria for judging the adequacy of any of scheme of emergency powers, to wit: "The
emergency executive must be appointed by constitutional means – i.e., he must be legitimate; he
should not enjoy power to determine the existence of an emergency; emergency powers should be
exercised under a strict time limitation; and last, the objective of emergency action must be the
defense of the constitutional order."97

Clinton L. Rossiter, after surveying the history of the employment of emergency powers in Great Britain,
France, Weimar, Germany and the United States, reverted to a description of a scheme of
"constitutional dictatorship" as solution to the vexing problems presented by emergency.98 Like Watkins
and Friedrich, he stated a priori the conditions of success of the "constitutional dictatorship," thus:
 1) No general regime or particular institution of constitutional dictatorship should be initiated
unless it is necessary or even indispensable to the preservation of the State and its
constitutional order…

2) …the decision to institute a constitutional dictatorship should never be in the hands of the
man or men who will constitute the dictator…

3) No government should initiate a constitutional dictatorship without making specific

provisions for its termination…

4) …all uses of emergency powers and all readjustments in the organization of the government
should be effected in pursuit of constitutional or legal requirements…

5) … no dictatorial institution should be adopted, no right invaded, no regular procedure altered

any more than is absolutely necessary for the conquest of the particular crisis . . .

6) The measures adopted in the prosecution of the a constitutional dictatorship should never be
permanent in character or effect…

7) The dictatorship should be carried on by persons representative of every part of the citizenry
interested in the defense of the existing constitutional order. . .

8) Ultimate responsibility should be maintained for every action taken under a constitutional
dictatorship. . .

9) The decision to terminate a constitutional dictatorship, like the decision to institute one
should never be in the hands of the man or men who constitute the dictator. . .

10) No constitutional dictatorship should extend beyond the termination of the crisis for which
it was instituted…

11) …the termination of the crisis must be followed by a complete return as possible to the
political and governmental conditions existing prior to the initiation of the constitutional
dictatorship…99

Rossiter accorded to legislature a far greater role in the oversight exercise of emergency powers than
did Watkins. He would secure to Congress final responsibility for declaring the existence or termination
of an emergency, and he places great faith in the effectiveness of congressional investigating
committees.100

Scott and Cotter, in analyzing the above contemporary theories in light of recent experience, were one
in saying that, "the suggestion that democracies surrender the control of government to an
authoritarian ruler in time of grave danger to the nation is not based upon sound constitutional
theory." To appraise emergency power in terms of constitutional dictatorship serves merely to distort
the problem and hinder realistic analysis. It matters not whether the term "dictator" is used in its
normal sense (as applied to authoritarian rulers) or is employed to embrace all chief executives
administering emergency powers. However used, "constitutional dictatorship" cannot be divorced from
the implication of suspension of the processes of constitutionalism. Thus, they favored instead the
"concept of constitutionalism" articulated by Charles H. McIlwain:

A concept of constitutionalism which is less misleading in the analysis of problems of emergency

powers, and which is consistent with the findings of this study, is that formulated by Charles H.
McIlwain. While it does not by any means necessarily exclude some indeterminate limitations upon the
substantive powers of government, full emphasis is placed upon procedural limitations, and political
responsibility. McIlwain clearly recognized the need to repose adequate power in government. And in
discussing the meaning of constitutionalism, he insisted that the historical and proper test of
constitutionalism was the existence of adequate processes for keeping government responsible. He
refused to equate constitutionalism with the enfeebling of government by an exaggerated emphasis
upon separation of powers and substantive limitations on governmental power. He found that the really
effective checks on despotism have consisted not in the weakening of government but, but rather in
the limiting of it; between which there is a great and very significant difference. In associating
constitutionalism with "limited" as distinguished from "weak" government, McIlwain meant
government limited to the orderly procedure of law as opposed to the processes of force. The two
fundamental correlative elements of constitutionalism for which all lovers of liberty must yet fight are
the legal limits to arbitrary power and a complete political responsibility of government to the
governed.101

In the final analysis, the various approaches to emergency of the above political theorists –- from Lock’s
"theory of prerogative," to Watkins’ doctrine of "constitutional dictatorship" and, eventually, to
McIlwain’s "principle of constitutionalism" --- ultimately aim to solve one real problem in emergency
governance, i.e., that of allotting increasing areas of discretionary power to the Chief Executive, while
insuring that such powers will be exercised with a sense of political responsibility and under effective
limitations and checks.

Our Constitution has fairly coped with this problem. Fresh from the fetters of a repressive regime, the
1986 Constitutional Commission, in drafting the 1987 Constitution, endeavored to create a government
in the concept of Justice Jackson’s "balanced power structure."102 Executive, legislative, and judicial
powers are dispersed to the President, the Congress, and the Supreme Court, respectively. Each is
supreme within its own sphere. But none has the monopoly of power in times of emergency. Each
branch is given a role to serve as limitation or check upon the other. This system does not weaken the
President, it just limits his power, using the language of McIlwain. In other words, in times of
emergency, our Constitution reasonably demands that we repose a certain amount of faith in the basic
integrity and wisdom of the Chief Executive but, at the same time, it obliges him to operate within
carefully prescribed procedural limitations.

a. "Facial Challenge"

Petitioners contend that PP 1017 is void on its face because of its "overbreadth." They claim that its
enforcement encroached on both unprotected and protected rights under Section 4, Article III of the
Constitution and sent a "chilling effect" to the citizens.

A facial review of PP 1017, using the overbreadth doctrine, is uncalled for.

First and foremost, the overbreadth doctrine is an analytical tool developed for testing "on their faces"
statutes in free speech cases, also known under the American Law as First Amendment cases.103

A plain reading of PP 1017 shows that it is not primarily directed to speech or even speech-related
conduct. It is actually a call upon the AFP to prevent or suppress all forms of lawless violence. In United
States v. Salerno,104 the US Supreme Court held that "we have not recognized an ‘overbreadth’ doctrine
outside the limited context of the First Amendment" (freedom of speech).

Moreover, the overbreadth doctrine is not intended for testing the validity of a law that "reflects
legitimate state interest in maintaining comprehensive control over harmful, constitutionally
unprotected conduct." Undoubtedly, lawless violence, insurrection and rebellion are considered
"harmful" and "constitutionally unprotected conduct." In Broadrick v. Oklahoma,105 it was held:

It remains a ‘matter of no little difficulty’ to determine when a law may properly be held void on its face
and when ‘such summary action’ is inappropriate. But the plain import of our cases is, at the very least,
that facial overbreadth adjudication is an exception to our traditional rules of practice and that its
function, a limited one at the outset, attenuates as the otherwise unprotected behavior that it forbids
the State to sanction moves from ‘pure speech’ toward conduct and that conduct –even if expressive –
falls within the scope of otherwise valid criminal laws that reflect legitimate state interests in
maintaining comprehensive controls over harmful, constitutionally unprotected conduct.

Thus, claims of facial overbreadth are entertained in cases involving statutes which, by their terms, seek
to regulate only "spoken words" and again, that "overbreadth claims, if entertained at all, have been
curtailed when invoked against ordinary criminal laws that are sought to be applied to protected
conduct."106 Here, the incontrovertible fact remains that PP 1017 pertains to a spectrum of conduct, not
free speech, which is manifestly subject to state regulation.

Second, facial invalidation of laws is considered as "manifestly strong medicine," to be used "sparingly
and only as a last resort," and is "generally disfavored;"107 The reason for this is obvious. Embedded in
the traditional rules governing constitutional adjudication is the principle that a person to whom a law
may be applied will not be heard to challenge a law on the ground that it may conceivably be applied
unconstitutionally to others, i.e., in other situations not before the Court.108 A writer and scholar in
Constitutional Law explains further:

The most distinctive feature of the overbreadth technique is that it marks an exception to some of the
usual rules of constitutional litigation. Ordinarily, a particular litigant claims that a statute is
unconstitutional as applied to him or her; if the litigant prevails, the courts carve away the
unconstitutional aspects of the law by invalidating its improper applications on a case to case basis.
Moreover, challengers to a law are not permitted to raise the rights of third parties and can only
assert their own interests. In overbreadth analysis, those rules give way; challenges are permitted to
raise the rights of third parties; and the court invalidates the entire statute "on its face," not merely "as
applied for" so that the overbroad law becomes unenforceable until a properly authorized court
construes it more narrowly. The factor that motivates courts to depart from the normal adjudicatory
rules is the concern with the "chilling;" deterrent effect of the overbroad statute on third parties not
courageous enough to bring suit. The Court assumes that an overbroad law’s "very existence may cause
others not before the court to refrain from constitutionally protected speech or expression." An
overbreadth ruling is designed to remove that deterrent effect on the speech of those third parties.
In other words, a facial challenge using the overbreadth doctrine will require the Court to examine PP
1017 and pinpoint its flaws and defects, not on the basis of its actual operation to petitioners, but on the
assumption or prediction that its very existence may cause others not before the Court to refrain from
constitutionally protected speech or expression. In Younger v. Harris,109 it was held that:

[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring correction of these
deficiencies before the statute is put into effect, is rarely if ever an appropriate task for the judiciary.
The combination of the relative remoteness of the controversy, the impact on the legislative process
of the relief sought, and above all the speculative and amorphous nature of the required line-by-line
analysis of detailed statutes,...ordinarily results in a kind of case that is wholly unsatisfactory for
deciding constitutional questions, whichever way they might be decided.

And third, a facial challenge on the ground of overbreadth is the most difficult challenge to mount
successfully, since the challenger must establish that there can be no instance when the assailed law
may be valid. Here, petitioners did not even attempt to show whether this situation exists.

Petitioners likewise seek a facial review of PP 1017 on the ground of vagueness. This, too, is
unwarranted.

Related to the "overbreadth" doctrine is the "void for vagueness doctrine" which holds that "a law is
facially invalid if men of common intelligence must necessarily guess at its meaning and differ as to its
application."110 It is subject to the same principles governing overbreadth doctrine. For one, it is also an
analytical tool for testing "on their faces" statutes in free speech cases. And like overbreadth, it is said
that a litigant may challenge a statute on its face only if it is vague in all its possible applications. Again,
petitioners did not even attempt to show that PP 1017 is vague in all its application. They also failed to
establish that men of common intelligence cannot understand the meaning and application of PP 1017.

b. Constitutional Basis of PP 1017

Now on the constitutional foundation of PP 1017.

The operative portion of PP 1017 may be divided into three important provisions, thus:

First provision:

"by virtue of the power vested upon me by Section 18, Artilce VII … do hereby command the Armed
Forces of the Philippines, to maintain law and order throughout the Philippines, prevent or suppress all
forms of lawless violence as well any act of insurrection or rebellion"

Second provision:

"and to enforce obedience to all the laws and to all decrees, orders and regulations promulgated by me
personally or upon my direction;"

Third provision:
"as provided in Section 17, Article XII of the Constitution do hereby declare a State of National
Emergency."

First Provision: Calling-out Power

The first provision pertains to the President’s calling-out power. In Sanlakas v. Executive
Secretary,111 this Court, through Mr. Justice Dante O. Tinga, held that Section 18, Article VII of the
Constitution reproduced as follows:

Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines
and whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless
violence, invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he
may, for a period not exceeding sixty days, suspend the privilege of the writ of habeas corpus or place
the Philippines or any part thereof under martial law. Within forty-eight hours from the proclamation of
martial law or the suspension of the privilege of the writ of habeas corpus, the President shall submit a
report in person or in writing to the Congress. The Congress, voting jointly, by a vote of at least a
majority of all its Members in regular or special session, may revoke such proclamation or suspension,
which revocation shall not be set aside by the President. Upon the initiative of the President, the
Congress may, in the same manner, extend such proclamation or suspension for a period to be
determined by the Congress, if the invasion or rebellion shall persist and public safety requires it.

The Congress, if not in session, shall within twenty-four hours following such proclamation or
suspension, convene in accordance with its rules without need of a call.

The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of the
factual bases of the proclamation of martial law or the suspension of the privilege of the writ or the
extension thereof, and must promulgate its decision thereon within thirty days from its filing.

A state of martial law does not suspend the operation of the Constitution, nor supplant the functioning
of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military
courts and agencies over civilians where civil courts are able to function, nor automatically suspend the
privilege of the writ.

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion or
offenses inherent in or directly connected with invasion.

During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released.

grants the President, as Commander-in-Chief, a "sequence" of graduated powers. From the most to the
least benign, these are: the calling-out power, the power to suspend the privilege of the writ of habeas
corpus, and the power to declare Martial Law. Citing Integrated Bar of the Philippines v. Zamora,112 the
Court ruled that the only criterion for the exercise of the calling-out power is that "whenever it
becomes necessary," the President may call the armed forces "to prevent or suppress lawless violence,
invasion or rebellion." Are these conditions present in the instant cases? As stated earlier, considering
the circumstances then prevailing, President Arroyo found it necessary to issue PP 1017. Owing to her
Office’s vast intelligence network, she is in the best position to determine the actual condition of the
country.

Under the calling-out power, the President may summon the armed forces to aid him in
suppressing lawless violence, invasion and rebellion. This involves ordinary police action. But every act
that goes beyond the President’s calling-out power is considered illegal or ultra vires. For this reason, a
President must be careful in the exercise of his powers. He cannot invoke a greater power when he
wishes to act under a lesser power. There lies the wisdom of our Constitution, the greater the power,
the greater are the limitations.

It is pertinent to state, however, that there is a distinction between the President’s authority to declare
a "state of rebellion" (in Sanlakas) and the authority to proclaim a state of national emergency. While
President Arroyo’s authority to declare a "state of rebellion" emanates from her powers as Chief
Executive, the statutory authority cited in Sanlakas was Section 4, Chapter 2, Book II of the Revised
Administrative Code of 1987, which provides:

SEC. 4. – Proclamations. – Acts of the President fixing a date or declaring a status or condition of public
moment or interest, upon the existence of which the operation of a specific law or regulation is made to
depend, shall be promulgated in proclamations which shall have the force of an executive order.

President Arroyo’s declaration of a "state of rebellion" was merely an act declaring a status or condition
of public moment or interest, a declaration allowed under Section 4 cited above. Such declaration, in the
words of Sanlakas, is harmless, without legal significance, and deemed not written. In these cases, PP
1017 is more than that. In declaring a state of national emergency, President Arroyo did not only rely on
Section 18, Article VII of the Constitution, a provision calling on the AFP to prevent or suppress lawless
violence, invasion or rebellion. She also relied on Section 17, Article XII, a provision on the State’s
extraordinary power to take over privately-owned public utility and business affected with public
interest. Indeed, PP 1017 calls for the exercise of an awesome power. Obviously, such Proclamation
cannot be deemed harmless, without legal significance, or not written, as in the case of Sanlakas.

Some of the petitioners vehemently maintain that PP 1017 is actually a declaration of Martial Law. It is
no so. What defines the character of PP 1017 are its wordings. It is plain therein that what the President
invoked was her calling-out power.

The declaration of Martial Law is a "warn[ing] to citizens that the military power has been called upon by
the executive to assist in the maintenance of law and order, and that, while the emergency lasts, they
must, upon pain of arrest and punishment, not commit any acts which will in any way render more
difficult the restoration of order and the enforcement of law."113

In his "Statement before the Senate Committee on Justice" on March 13, 2006, Mr. Justice Vicente V.
Mendoza,114 an authority in constitutional law, said that of the three powers of the President as
Commander-in-Chief, the power to declare Martial Law poses the most severe threat to civil liberties. It
is a strong medicine which should not be resorted to lightly. It cannot be used to stifle or persecute
critics of the government. It is placed in the keeping of the President for the purpose of enabling him to
secure the people from harm and to restore order so that they can enjoy their individual freedoms. In
fact, Section 18, Art. VII, provides:
A state of martial law does not suspend the operation of the Constitution, nor supplant the functioning
of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military
courts and agencies over civilians where civil courts are able to function, nor automatically suspend the
privilege of the writ.

Justice Mendoza also stated that PP 1017 is not a declaration of Martial Law. It is no more than a call by
the President to the armed forces to prevent or suppress lawless violence. As such, it cannot be used to
justify acts that only under a valid declaration of Martial Law can be done. Its use for any other purpose
is a perversion of its nature and scope, and any act done contrary to its command is ultra vires.

Justice Mendoza further stated that specifically, (a) arrests and seizures without judicial warrants; (b)
ban on public assemblies; (c) take-over of news media and agencies and press censorship; and (d)
issuance of Presidential Decrees, are powers which can be exercised by the President as Commander-in-
Chief only where there is a valid declaration of Martial Law or suspension of the writ of habeas corpus.

Based on the above disquisition, it is clear that PP 1017 is not a declaration of Martial Law. It is merely
an exercise of President Arroyo’s calling-out power for the armed forces to assist her in preventing or
suppressing lawless violence.

Second Provision: "Take Care" Power

The second provision pertains to the power of the President to ensure that the laws be faithfully
executed. This is based on Section 17, Article VII which reads:

SEC. 17. The President shall have control of all the executive departments, bureaus, and offices. He shall
ensure that the laws be faithfully executed.

As the Executive in whom the executive power is vested,115 the primary function of the President is to
enforce the laws as well as to formulate policies to be embodied in existing laws. He sees to it that all
laws are enforced by the officials and employees of his department. Before assuming office, he is
required to take an oath or affirmation to the effect that as President of the Philippines, he will, among
others, "execute its laws."116 In the exercise of such function, the President, if needed, may employ the
powers attached to his office as the Commander-in-Chief of all the armed forces of the
country,117 including the Philippine National Police118 under the Department of Interior and Local
Government.119

Petitioners, especially Representatives Francis Joseph G. Escudero, Satur Ocampo, Rafael Mariano,
Teodoro Casiño, Liza Maza, and Josel Virador argue that PP 1017 is unconstitutional as it arrogated upon
President Arroyo the power to enact laws and decrees in violation of Section 1, Article VI of the
Constitution, which vests the power to enact laws in Congress. They assail the clause "to enforce
obedience to all the laws and to all decrees, orders and regulations promulgated by me personally or
upon my direction."

Petitioners’ contention is understandable. A reading of PP 1017 operative clause shows that it was
lifted120 from Former President Marcos’ Proclamation No. 1081, which partly reads:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines by virtue of the powers
vested upon me by Article VII, Section 10, Paragraph (2) of the Constitution, do hereby place the entire
Philippines as defined in Article 1, Section 1 of the Constitution under martial law and, in my capacity as
their Commander-in-Chief, do hereby command the Armed Forces of the Philippines, to maintain law
and order throughout the Philippines, prevent or suppress all forms of lawless violence as well as any
act of insurrection or rebellion and to enforce obedience to all the laws and decrees, orders and
regulations promulgated by me personally or upon my direction.

We all know that it was PP 1081 which granted President Marcos legislative power. Its enabling clause
states: "to enforce obedience to all the laws and decrees, orders and regulations promulgated by me
personally or upon my direction." Upon the other hand, the enabling clause of PP 1017 issued by
President Arroyo is: to enforce obedience to all the laws and to all decrees, orders and regulations
promulgated by me personally or upon my direction."

Is it within the domain of President Arroyo to promulgate "decrees"?

PP 1017 states in part: "to enforce obedience to all the laws and decrees x x x promulgated by me
personally or upon my direction."

The President is granted an Ordinance Power under Chapter 2, Book III of Executive Order No. 292
(Administrative Code of 1987). She may issue any of the following:

Sec. 2. Executive Orders. — Acts of the President providing for rules of a general or permanent character
in implementation or execution of constitutional or statutory powers shall be promulgated in executive
orders.

Sec. 3. Administrative Orders. — Acts of the President which relate to particular aspect of governmental
operations in pursuance of his duties as administrative head shall be promulgated in administrative
orders.

Sec. 4. Proclamations. — Acts of the President fixing a date or declaring a status or condition of public
moment or interest, upon the existence of which the operation of a specific law or regulation is made to
depend, shall be promulgated in proclamations which shall have the force of an executive order.

Sec. 5. Memorandum Orders. — Acts of the President on matters of administrative detail or of

subordinate or temporary interest which only concern a particular officer or office of the Government
shall be embodied in memorandum orders.

Sec. 6. Memorandum Circulars. — Acts of the President on matters relating to internal administration,
which the President desires to bring to the attention of all or some of the departments, agencies,
bureaus or offices of the Government, for information or compliance, shall be embodied in
memorandum circulars.

Sec. 7. General or Special Orders. — Acts and commands of the President in his capacity as Commander-
in-Chief of the Armed Forces of the Philippines shall be issued as general or special orders.
President Arroyo’s ordinance power is limited to the foregoing issuances. She cannot
issue decrees similar to those issued by Former President Marcos under PP 1081. Presidential Decrees
are laws which are of the same category and binding force as statutes because they were issued by the
President in the exercise of his legislative power during the period of Martial Law under the 1973
Constitution.121

This Court rules that the assailed PP 1017 is unconstitutional insofar as it grants President Arroyo the
authority to promulgate "decrees." Legislative power is peculiarly within the province of the
Legislature. Section 1, Article VI categorically states that "[t]he legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate and a House of Representatives." To be
sure, neither Martial Law nor a state of rebellion nor a state of emergency can justify President Arroyo’s
exercise of legislative power by issuing decrees.

Can President Arroyo enforce obedience to all decrees and laws through the military?

As this Court stated earlier, President Arroyo has no authority to enact decrees. It follows that these
decrees are void and, therefore, cannot be enforced. With respect to "laws," she cannot call the military
to enforce or implement certain laws, such as customs laws, laws governing family and property
relations, laws on obligations and contracts and the like. She can only order the military, under PP 1017,
to enforce laws pertinent to its duty to suppress lawless violence.

Third Provision: Power to Take Over

The pertinent provision of PP 1017 states:

x x x and to enforce obedience to all the laws and to all decrees, orders, and regulations promulgated by
me personally or upon my direction; and as provided in Section 17, Article XII of the Constitution do
hereby declare a state of national emergency.

The import of this provision is that President Arroyo, during the state of national emergency under PP
1017, can call the military not only to enforce obedience "to all the laws and to all decrees x x x" but also
to act pursuant to the provision of Section 17, Article XII which reads:

Sec. 17. In times of national emergency, when the public interest so requires, the State may, during the
emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation
of any privately-owned public utility or business affected with public interest.

What could be the reason of President Arroyo in invoking the above provision when she issued PP 1017?

The answer is simple. During the existence of the state of national emergency, PP 1017 purports to grant
the President, without any authority or delegation from Congress, to take over or direct the operation of
any privately-owned public utility or business affected with public interest.

This provision was first introduced in the 1973 Constitution, as a product of the "martial law" thinking of
the 1971 Constitutional Convention.122 In effect at the time of its approval was President Marcos’ Letter
of Instruction No. 2 dated September 22, 1972 instructing the Secretary of National Defense to take over
"the management, control and operation of the Manila Electric Company, the Philippine Long Distance
Telephone Company, the National Waterworks and Sewerage Authority, the Philippine National
Railways, the Philippine Air Lines, Air Manila (and) Filipinas Orient Airways . . . for the successful
prosecution by the Government of its effort to contain, solve and end the present national emergency."

Petitioners, particularly the members of the House of Representatives, claim that President Arroyo’s
inclusion of Section 17, Article XII in PP 1017 is an encroachment on the legislature’s emergency powers.

This is an area that needs delineation.

A distinction must be drawn between the President’s authority to declare "a state of national
emergency" and to exercise emergency powers. To the first, as elucidated by the Court, Section 18,
Article VII grants the President such power, hence, no legitimate constitutional objection can be raised.
But to the second, manifold constitutional issues arise.

Section 23, Article VI of the Constitution reads:

SEC. 23. (1) The Congress, by a vote of two-thirds of both Houses in joint session assembled, voting
separately, shall have the sole power to declare the existence of a state of war.

(2) In times of war or other national emergency, the Congress may, by law, authorize the President, for
a limited period and subject to such restrictions as it may prescribe, to exercise powers necessary and
proper to carry out a declared national policy. Unless sooner withdrawn by resolution of the Congress,
such powers shall cease upon the next adjournment thereof.

It may be pointed out that the second paragraph of the above provision refers not only to war but also
to "other national emergency." If the intention of the Framers of our Constitution was to withhold from
the President the authority to declare a "state of national emergency" pursuant to Section 18, Article VII
(calling-out power) and grant it to Congress (like the declaration of the existence of a state of war), then
the Framers could have provided so. Clearly, they did not intend that Congress should first authorize the
President before he can declare a "state of national emergency." The logical conclusion then is that
President Arroyo could validly declare the existence of a state of national emergency even in the
absence of a Congressional enactment.

But the exercise of emergency powers, such as the taking over of privately owned public utility or
business affected with public interest, is a different matter. This requires a delegation from Congress.

Courts have often said that constitutional provisions in pari materia are to be construed together.
Otherwise stated, different clauses, sections, and provisions of a constitution which relate to the same
subject matter will be construed together and considered in the light of each other.123 Considering
that Section 17 of Article XII and Section 23 of Article VI, previously quoted, relate to national
emergencies, they must be read together to determine the limitation of the exercise of emergency
powers.

Generally, Congress is the repository of emergency powers. This is evident in the tenor of Section 23
(2), Article VI authorizing it to delegate such powers to the President. Certainly, a body cannot delegate
a power not reposed upon it. However, knowing that during grave emergencies, it may not be possible
or practicable for Congress to meet and exercise its powers, the Framers of our Constitution deemed it
wise to allow Congress to grant emergency powers to the President, subject to certain conditions, thus:

(1) There must be a war or other emergency.

(2) The delegation must be for a limited period only.

(3) The delegation must be subject to such restrictions as the Congress may prescribe.

(4) The emergency powers must be exercised to carry out a national policy declared by
Congress.124

Section 17, Article XII must be understood as an aspect of the emergency powers clause. The taking over
of private business affected with public interest is just another facet of the emergency powers generally
reposed upon Congress. Thus, when Section 17 states that the "the State may, during the emergency
and under reasonable terms prescribed by it, temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest," it refers to Congress, not the
President. Now, whether or not the President may exercise such power is dependent on whether
Congress may delegate it to him pursuant to a law prescribing the reasonable terms
thereof. Youngstown Sheet & Tube Co. et al. v. Sawyer,125 held:

It is clear that if the President had authority to issue the order he did, it must be found in some provision
of the Constitution. And it is not claimed that express constitutional language grants this power to the
President. The contention is that presidential power should be implied from the aggregate of his powers
under the Constitution. Particular reliance is placed on provisions in Article II which say that "The
executive Power shall be vested in a President . . . .;" that "he shall take Care that the Laws be faithfully
executed;" and that he "shall be Commander-in-Chief of the Army and Navy of the United States.

The order cannot properly be sustained as an exercise of the President’s military power as Commander-
in-Chief of the Armed Forces. The Government attempts to do so by citing a number of cases upholding
broad powers in military commanders engaged in day-to-day fighting in a theater of war. Such cases
need not concern us here. Even though "theater of war" be an expanding concept, we cannot with
faithfulness to our constitutional system hold that the Commander-in-Chief of the Armed Forces has
the ultimate power as such to take possession of private property in order to keep labor disputes
from stopping production. This is a job for the nation’s lawmakers, not for its military authorities.

Nor can the seizure order be sustained because of the several constitutional provisions that grant
executive power to the President. In the framework of our Constitution, the President’s power to see
that the laws are faithfully executed refutes the idea that he is to be a lawmaker. The Constitution
limits his functions in the lawmaking process to the recommending of laws he thinks wise and the
vetoing of laws he thinks bad. And the Constitution is neither silent nor equivocal about who shall
make laws which the President is to execute. The first section of the first article says that "All
legislative Powers herein granted shall be vested in a Congress of the United States. . ."126

Petitioner Cacho-Olivares, et al. contends that the term "emergency" under Section 17, Article XII refers
to "tsunami," "typhoon," "hurricane"and"similar occurrences." This is a limited view of "emergency."
Emergency, as a generic term, connotes the existence of conditions suddenly intensifying the degree of
existing danger to life or well-being beyond that which is accepted as normal. Implicit in this definitions
are the elements of intensity, variety, and perception.127 Emergencies, as perceived by legislature or
executive in the United Sates since 1933, have been occasioned by a wide range of situations,
classifiable under three (3) principal heads: a) economic,128 b) natural disaster,129 and c) national
security.130

"Emergency," as contemplated in our Constitution, is of the same breadth. It may include rebellion,
economic crisis, pestilence or epidemic, typhoon, flood, or other similar catastrophe of nationwide
proportions or effect.131 This is evident in the Records of the Constitutional Commission, thus:

MR. GASCON. Yes. What is the Committee’s definition of "national emergency" which appears in Section
13, page 5? It reads:

When the common good so requires, the State may temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest.

MR. VILLEGAS. What I mean is threat from external aggression, for example, calamities or natural
disasters.

MR. GASCON. There is a question by Commissioner de los Reyes. What about strikes and riots?

MR. VILLEGAS. Strikes, no; those would not be covered by the term "national emergency."

MR. BENGZON. Unless they are of such proportions such that they would paralyze government
service.132

xxxxxx

MR. TINGSON. May I ask the committee if "national emergency" refers to military national
emergency or could this be economic emergency?"

MR. VILLEGAS. Yes, it could refer to both military or economic dislocations.

MR. TINGSON. Thank you very much.133

It may be argued that when there is national emergency, Congress may not be able to convene and,
therefore, unable to delegate to the President the power to take over privately-owned public utility or
business affected with public interest.

In Araneta v. Dinglasan,134 this Court emphasized that legislative power, through which extraordinary
measures are exercised, remains in Congress even in times of crisis.

"x x x

After all the criticisms that have been made against the efficiency of the system of the separation of
powers, the fact remains that the Constitution has set up this form of government, with all its defects
and shortcomings, in preference to the commingling of powers in one man or group of men. The Filipino
people by adopting parliamentary government have given notice that they share the faith of other
democracy-loving peoples in this system, with all its faults, as the ideal. The point is, under this
framework of government, legislation is preserved for Congress all the time, not excepting periods of
crisis no matter how serious. Never in the history of the United States, the basic features of whose
Constitution have been copied in ours, have specific functions of the legislative branch of enacting laws
been surrendered to another department – unless we regard as legislating the carrying out of a
legislative policy according to prescribed standards; no, not even when that Republic was fighting a total
war, or when it was engaged in a life-and-death struggle to preserve the Union. The truth is that under
our concept of constitutional government, in times of extreme perils more than in normal circumstances
‘the various branches, executive, legislative, and judicial,’ given the ability to act, are called upon ‘to
perform the duties and discharge the responsibilities committed to them respectively."

Following our interpretation of Section 17, Article XII, invoked by President Arroyo in issuing PP 1017,
this Court rules that such Proclamation does not authorize her during the emergency to temporarily
take over or direct the operation of any privately owned public utility or business affected with public
interest without authority from Congress.

Let it be emphasized that while the President alone can declare a state of national emergency, however,
without legislation, he has no power to take over privately-owned public utility or business affected with
public interest. The President cannot decide whether exceptional circumstances exist warranting the
take over of privately-owned public utility or business affected with public interest. Nor can he
determine when such exceptional circumstances have ceased. Likewise, without legislation, the
President has no power to point out the types of businesses affected with public interest that should be
taken over. In short, the President has no absolute authority to exercise all the powers of the State
under Section 17, Article VII in the absence of an emergency powers act passed by Congress.

c. "AS APPLIED CHALLENGE"

One of the misfortunes of an emergency, particularly, that which pertains to security, is that military
necessity and the guaranteed rights of the individual are often not compatible. Our history reveals that
in the crucible of conflict, many rights are curtailed and trampled upon. Here, the right against
unreasonable search and seizure; the right against warrantless arrest; and the freedom of speech, of
expression, of the press, and of assembly under the Bill of Rights suffered the greatest blow.

Of the seven (7) petitions, three (3) indicate "direct injury."

In G.R. No. 171396, petitioners David and Llamas alleged that, on February 24, 2006, they were arrested
without warrants on their way to EDSA to celebrate the 20th Anniversary of People Power I. The
arresting officers cited PP 1017 as basis of the arrest.

In G.R. No. 171409, petitioners Cacho-Olivares and Tribune Publishing Co., Inc. claimed that on February
25, 2006, the CIDG operatives "raided and ransacked without warrant" their office. Three policemen
were assigned to guard their office as a possible "source of destabilization." Again, the basis was PP
1017.
And in G.R. No. 171483, petitioners KMU and NAFLU-KMU et al. alleged that their members were
"turned away and dispersed" when they went to EDSA and later, to Ayala Avenue, to celebrate the 20th
Anniversary of People Power I.

A perusal of the "direct injuries" allegedly suffered by the said petitioners shows that they resulted from
the implementation, pursuant to G.O. No. 5, of PP 1017.

Can this Court adjudge as unconstitutional PP 1017 and G.O. No 5 on the basis of these illegal acts? In
general, does the illegal implementation of a law render it unconstitutional?

Settled is the rule that courts are not at liberty to declare statutes invalid although they may be abused
and misabused135 and may afford an opportunity for abuse in the manner of application.136 The validity
of a statute or ordinance is to be determined from its general purpose and its efficiency to accomplish
the end desired, not from its effects in a particular case.137 PP 1017 is merely an invocation of the
President’s calling-out power. Its general purpose is to command the AFP to suppress all forms of
lawless violence, invasion or rebellion. It had accomplished the end desired which prompted President
Arroyo to issue PP 1021. But there is nothing in PP 1017 allowing the police, expressly or impliedly, to
conduct illegal arrest, search or violate the citizens’ constitutional rights.

Now, may this Court adjudge a law or ordinance unconstitutional on the ground that its implementor
committed illegal acts? The answer is no. The criterion by which the validity of the statute or ordinance
is to be measured is the essential basis for the exercise of power, and not a mere incidental result
arising from its exertion.138 This is logical. Just imagine the absurdity of situations when laws maybe
declared unconstitutional just because the officers implementing them have acted arbitrarily. If this
were so, judging from the blunders committed by policemen in the cases passed upon by the Court,
majority of the provisions of the Revised Penal Code would have been declared unconstitutional a long
time ago.

President Arroyo issued G.O. No. 5 to carry into effect the provisions of PP 1017. General orders are
"acts and commands of the President in his capacity as Commander-in-Chief of the Armed Forces of the
Philippines." They are internal rules issued by the executive officer to his subordinates precisely for
the proper and efficient administration of law. Such rules and regulations create no relation except
between the official who issues them and the official who receives them.139 They are based on and are
the product of, a relationship in which power is their source, and obedience, their object.140 For these
reasons, one requirement for these rules to be valid is that they must be reasonable, not arbitrary or
capricious.

G.O. No. 5 mandates the AFP and the PNP to immediately carry out the "necessary and appropriate
actions and measures to suppress and prevent acts of terrorism and lawless violence."

Unlike the term "lawless violence" which is unarguably extant in our statutes and the Constitution, and
which is invariably associated with "invasion, insurrection or rebellion," the phrase "acts of terrorism" is
still an amorphous and vague concept. Congress has yet to enact a law defining and punishing acts of
terrorism.
In fact, this "definitional predicament" or the "absence of an agreed definition of terrorism" confronts
not only our country, but the international community as well. The following observations are quite
apropos:

In the actual unipolar context of international relations, the "fight against terrorism" has become one of
the basic slogans when it comes to the justification of the use of force against certain states and against
groups operating internationally. Lists of states "sponsoring terrorism" and of terrorist organizations are
set up and constantly being updated according to criteria that are not always known to the public, but
are clearly determined by strategic interests.

The basic problem underlying all these military actions – or threats of the use of force as the most
recent by the United States against Iraq – consists in the absence of an agreed definition of terrorism.

Remarkable confusion persists in regard to the legal categorization of acts of violence either by states,
by armed groups such as liberation movements, or by individuals.

The dilemma can by summarized in the saying "One country’s terrorist is another country’s freedom
fighter." The apparent contradiction or lack of consistency in the use of the term "terrorism" may
further be demonstrated by the historical fact that leaders of national liberation movements such as
Nelson Mandela in South Africa, Habib Bourgouiba in Tunisia, or Ahmed Ben Bella in Algeria, to mention
only a few, were originally labeled as terrorists by those who controlled the territory at the time, but
later became internationally respected statesmen.

What, then, is the defining criterion for terrorist acts – the differentia specifica distinguishing those acts
from eventually legitimate acts of national resistance or self-defense?

Since the times of the Cold War the United Nations Organization has been trying in vain to reach a
consensus on the basic issue of definition. The organization has intensified its efforts recently, but has
been unable to bridge the gap between those who associate "terrorism" with any violent act by non-
state groups against civilians, state functionaries or infrastructure or military installations, and those
who believe in the concept of the legitimate use of force when resistance against foreign occupation or
against systematic oppression of ethnic and/or religious groups within a state is concerned.

The dilemma facing the international community can best be illustrated by reference to the
contradicting categorization of organizations and movements such as Palestine Liberation Organization
(PLO) – which is a terrorist group for Israel and a liberation movement for Arabs and Muslims – the
Kashmiri resistance groups – who are terrorists in the perception of India, liberation fighters in that of
Pakistan – the earlier Contras in Nicaragua – freedom fighters for the United States, terrorists for the
Socialist camp – or, most drastically, the Afghani Mujahedeen (later to become the Taliban movement):
during the Cold War period they were a group of freedom fighters for the West, nurtured by the United
States, and a terrorist gang for the Soviet Union. One could go on and on in enumerating examples of
conflicting categorizations that cannot be reconciled in any way – because of opposing political interests
that are at the roots of those perceptions.

How, then, can those contradicting definitions and conflicting perceptions and evaluations of one and
the same group and its actions be explained? In our analysis, the basic reason for these striking
inconsistencies lies in the divergent interest of states. Depending on whether a state is in the position of
an occupying power or in that of a rival, or adversary, of an occupying power in a given territory, the
definition of terrorism will "fluctuate" accordingly. A state may eventually see itself as protector of the
rights of a certain ethnic group outside its territory and will therefore speak of a "liberation struggle,"
not of "terrorism" when acts of violence by this group are concerned, and vice-versa.

The United Nations Organization has been unable to reach a decision on the definition of terrorism
exactly because of these conflicting interests of sovereign states that determine in each and every
instance how a particular armed movement (i.e. a non-state actor) is labeled in regard to the terrorists-
freedom fighter dichotomy. A "policy of double standards" on this vital issue of international affairs has
been the unavoidable consequence.

This "definitional predicament" of an organization consisting of sovereign states – and not of peoples, in
spite of the emphasis in the Preamble to the United Nations Charter! – has become even more serious
in the present global power constellation: one superpower exercises the decisive role in the Security
Council, former great powers of the Cold War era as well as medium powers are increasingly being
marginalized; and the problem has become even more acute since the terrorist attacks of 11 September
2001 I the United States.141

The absence of a law defining "acts of terrorism" may result in abuse and oppression on the part of the
police or military. An illustration is when a group of persons are merely engaged in a drinking spree. Yet
the military or the police may consider the act as an act of terrorism and immediately arrest them
pursuant to G.O. No. 5. Obviously, this is abuse and oppression on their part. It must be remembered
that an act can only be considered a crime if there is a law defining the same as such and imposing the
corresponding penalty thereon.

So far, the word "terrorism" appears only once in our criminal laws, i.e., in P.D. No. 1835 dated January
16, 1981 enacted by President Marcos during the Martial Law regime. This decree is entitled "Codifying
The Various Laws on Anti-Subversion and Increasing The Penalties for Membership in Subversive
Organizations." The word "terrorism" is mentioned in the following provision: "That one who conspires
with any other person for the purpose of overthrowing the Government of the Philippines x x x by force,
violence, terrorism, x x x shall be punished by reclusion temporal x x x."

P.D. No. 1835 was repealed by E.O. No. 167 (which outlaws the Communist Party of the Philippines)
enacted by President Corazon Aquino on May 5, 1985. These two (2) laws, however, do not define "acts
of terrorism." Since there is no law defining "acts of terrorism," it is President Arroyo alone, under G.O.
No. 5, who has the discretion to determine what acts constitute terrorism. Her judgment on this aspect
is absolute, without restrictions. Consequently, there can be indiscriminate arrest without warrants,
breaking into offices and residences, taking over the media enterprises, prohibition and dispersal of all
assemblies and gatherings unfriendly to the administration. All these can be effected in the name of
G.O. No. 5. These acts go far beyond the calling-out power of the President. Certainly, they violate the
due process clause of the Constitution. Thus, this Court declares that the "acts of terrorism" portion of
G.O. No. 5 is unconstitutional.

Significantly, there is nothing in G.O. No. 5 authorizing the military or police to commit acts beyond what
are necessary and appropriate to suppress and prevent lawless violence, the limitation of their
authority in pursuing the Order. Otherwise, such acts are considered illegal.
We first examine G.R. No. 171396 (David et al.)

The Constitution provides that "the right of the people to be secured in their persons, houses, papers
and effects against unreasonable search and seizure 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 after examination under oath or affirmation of the complainant and
the witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized."142 The plain import of the language of the Constitution is that searches, seizures
and arrests are normally unreasonable unless authorized by a validly issued search warrant or warrant
of arrest. Thus, the fundamental protection given by this provision is that between person and police
must stand the protective authority of a magistrate clothed with power to issue or refuse to issue search
warrants or warrants of arrest.143

In the Brief Account144 submitted by petitioner David, certain facts are established: first, he was arrested
without warrant; second, the PNP operatives arrested him on the basis of PP 1017; third, he was brought
at Camp Karingal, Quezon City where he was fingerprinted, photographed and booked like a criminal
suspect; fourth,he was treated brusquely by policemen who "held his head and tried to push him" inside
an unmarked car; fifth, he was charged with Violation of Batas Pambansa Bilang No. 880145 and Inciting
to Sedition; sixth, he was detained for seven (7) hours; and seventh,he was eventually released for
insufficiency of evidence.

Section 5, Rule 113 of the Revised Rules on Criminal Procedure provides:

Sec. 5. Arrest without warrant; when lawful. - A peace officer or a private person may, without a
warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense.

(b) When an offense has just been committed and he has probable cause to believe based on
personal knowledge of facts or circumstances that the person to be arrested has committed it;
and

x x x.

Neither of the two (2) exceptions mentioned above justifies petitioner David’s warrantless arrest. During
the inquest for the charges of inciting to sedition and violation of BP 880, all that the arresting officers
could invoke was their observation that some rallyists were wearing t-shirts with the invective "Oust
Gloria Now" and their erroneous assumption that petitioner David was the leader of the
rally.146 Consequently, the Inquest Prosecutor ordered his immediate release on the ground of
insufficiency of evidence. He noted that petitioner David was not wearing the subject t-shirt and even if
he was wearing it, such fact is insufficient to charge him with inciting to sedition. Further, he also stated
that there is insufficient evidence for the charge of violation of BP 880 as it was not even known
whether petitioner David was the leader of the rally.147

But what made it doubly worse for petitioners David et al. is that not only was their right against
warrantless arrest violated, but also their right to peaceably assemble.
Section 4 of Article III guarantees:

No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of
the people peaceably to assemble and petition the government for redress of grievances.

"Assembly" means a right on the part of the citizens to meet peaceably for consultation in respect to
public affairs. It is a necessary consequence of our republican institution and complements the right of
speech. As in the case of freedom of expression, this right is not to be limited, much less denied, except
on a showing of a clear and present danger of a substantive evil that Congress has a right to prevent. In
other words, like other rights embraced in the freedom of expression, the right to assemble is not
subject to previous restraint or censorship. It may not be conditioned upon the prior issuance of a
permit or authorization from the government authorities except, of course, if the assembly is intended
to be held in a public place, a permit for the use of such place, and not for the assembly itself, may be
validly required.

The ringing truth here is that petitioner David, et al. were arrested while they were exercising their right
to peaceful assembly. They were not committing any crime, neither was there a showing of a clear and
present danger that warranted the limitation of that right. As can be gleaned from circumstances, the
charges of inciting to sedition and violation of BP 880 were mere afterthought. Even the Solicitor
General, during the oral argument, failed to justify the arresting officers’ conduct. In De Jonge v.
Oregon,148 it was held that peaceable assembly cannot be made a crime, thus:

Peaceable assembly for lawful discussion cannot be made a crime. The holding of meetings for
peaceable political action cannot be proscribed. Those who assist in the conduct of such meetings
cannot be branded as criminals on that score. The question, if the rights of free speech and peaceful
assembly are not to be preserved, is not as to the auspices under which the meeting was held but as to
its purpose; not as to the relations of the speakers, but whether their utterances transcend the bounds
of the freedom of speech which the Constitution protects. If the persons assembling have committed
crimes elsewhere, if they have formed or are engaged in a conspiracy against the public peace and
order, they may be prosecuted for their conspiracy or other violations of valid laws. But it is a different
matter when the State, instead of prosecuting them for such offenses, seizes upon mere participation
in a peaceable assembly and a lawful public discussion as the basis for a criminal charge.

On the basis of the above principles, the Court likewise considers the dispersal and arrest of the
members of KMU et al. (G.R. No. 171483) unwarranted. Apparently, their dispersal was done merely on
the basis of Malacañang’s directive canceling all permits previously issued by local government units.
This is arbitrary. The wholesale cancellation of all permits to rally is a blatant disregard of the principle
that "freedom of assembly is not to be limited, much less denied, except on a showing of a clear and
present danger of a substantive evil that the State has a right to prevent."149 Tolerance is the rule and
limitation is the exception. Only upon a showing that an assembly presents a clear and present danger
that the State may deny the citizens’ right to exercise it. Indeed, respondents failed to show or convince
the Court that the rallyists committed acts amounting to lawless violence, invasion or rebellion. With the
blanket revocation of permits, the distinction between protected and unprotected assemblies was
eliminated.

Moreover, under BP 880, the authority to regulate assemblies and rallies is lodged with the local
government units. They have the power to issue permits and to revoke such permits after due notice
and hearing on the determination of the presence of clear and present danger. Here, petitioners were
not even notified and heard on the revocation of their permits.150 The first time they learned of it was at
the time of the dispersal. Such absence of notice is a fatal defect. When a person’s right is restricted by
government action, it behooves a democratic government to see to it that the restriction is fair,
reasonable, and according to procedure.

G.R. No. 171409, (Cacho-Olivares, et al.) presents another facet of freedom of speech i.e., the freedom
of the press. Petitioners’ narration of facts, which the Solicitor General failed to refute, established the
following: first, the Daily Tribune’s offices were searched without warrant;second, the police operatives
seized several materials for publication; third, the search was conducted at about 1:00 o’ clock in the
morning of February 25, 2006; fourth, the search was conducted in the absence of any official of
the Daily Tribune except the security guard of the building; and fifth, policemen stationed themselves at
the vicinity of the Daily Tribune offices.

Thereafter, a wave of warning came from government officials. Presidential Chief of Staff Michael
Defensor was quoted as saying that such raid was "meant to show a ‘strong presence,’ to tell media
outlets not to connive or do anything that would help the rebels in bringing down this
government." Director General Lomibao further stated that "if they do not follow the standards –and
the standards are if they would contribute to instability in the government, or if they do not subscribe
to what is in General Order No. 5 and Proc. No. 1017 – we will recommend a ‘takeover.’" National
Telecommunications Commissioner Ronald Solis urged television and radio networks
to "cooperate" with the government for the duration of the state of national emergency. He warned
that his agency will not hesitate to recommend the closure of any broadcast outfit that violates rules
set out for media coverage during times when the national security is threatened.151

The search is illegal. Rule 126 of The Revised Rules on Criminal Procedure lays down the steps in the
conduct of search and seizure. Section 4 requires that a search warrant be issued upon probable cause
in connection with one specific offence to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may produce. Section 8 mandates
that the search of a house, room, or any other premise be made in the presence of the lawful
occupant thereof or any member of his family or in the absence of the latter, in the presence of two (2)
witnesses of sufficient age and discretion residing in the same locality. And Section 9 states that the
warrant must direct that it be served in the daytime, unless the property is on the person or in the place
ordered to be searched, in which case a direction may be inserted that it be served at any time of the
day or night. All these rules were violated by the CIDG operatives.

Not only that, the search violated petitioners’ freedom of the press. The best gauge of a free and
democratic society rests in the degree of freedom enjoyed by its media. In the Burgos v. Chief of
Staff152 this Court held that --

As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan
Mail" and the "We Forum" newspapers. As a consequence of the search and seizure, these premises
were padlocked and sealed, with the further result that the printing and publication of said
newspapers were discontinued.

Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press
guaranteed under the fundamental law, and constitutes a virtual denial of petitioners' freedom to
express themselves in print. This state of being is patently anathematic to a democratic framework
where a free, alert and even militant press is essential for the political enlightenment and growth of
the citizenry.

While admittedly, the Daily Tribune was not padlocked and sealed like the "Metropolitan Mail" and "We
Forum" newspapers in the above case, yet it cannot be denied that the CIDG operatives exceeded their
enforcement duties. The search and seizure of materials for publication, the stationing of policemen in
the vicinity of the The Daily Tribune offices, and the arrogant warning of government officials to media,
are plain censorship. It is that officious functionary of the repressive government who tells the citizen
that he may speak only if allowed to do so, and no more and no less than what he is permitted to say on
pain of punishment should he be so rash as to disobey.153 Undoubtedly, the The Daily Tribune was
subjected to these arbitrary intrusions because of its anti-government sentiments. This Court cannot
tolerate the blatant disregard of a constitutional right even if it involves the most defiant of our citizens.
Freedom to comment on public affairs is essential to the vitality of a representative democracy. It is the
duty of the courts to be watchful for the constitutional rights of the citizen, and against any stealthy
encroachments thereon. The motto should always be obsta principiis.154

Incidentally, during the oral arguments, the Solicitor General admitted that the search of
the Tribune’s offices and the seizure of its materials for publication and other papers are illegal; and that
the same are inadmissible "for any purpose," thus:

JUSTICE CALLEJO:

You made quite a mouthful of admission when you said that the policemen, when inspected the Tribune
for the purpose of gathering evidence and you admitted that the policemen were able to get the
clippings. Is that not in admission of the admissibility of these clippings that were taken from the
Tribune?

SOLICITOR GENERAL BENIPAYO:

Under the law they would seem to be, if they were illegally seized, I think and I know, Your Honor, and
these are inadmissible for any purpose.155

xxxxxxxxx

SR. ASSO. JUSTICE PUNO:

These have been published in the past issues of the Daily Tribune; all you have to do is to get those past
issues. So why do you have to go there at 1 o’clock in the morning and without any search warrant? Did
they become suddenly part of the evidence of rebellion or inciting to sedition or what?

SOLGEN BENIPAYO:

Well, it was the police that did that, Your Honor. Not upon my instructions.

SR. ASSO. JUSTICE PUNO:

Are you saying that the act of the policeman is illegal, it is not based on any law, and it is not based on
Proclamation 1017.

SOLGEN BENIPAYO:

It is not based on Proclamation 1017, Your Honor, because there is nothing in 1017 which says that the
police could go and inspect and gather clippings from Daily Tribune or any other newspaper.

SR. ASSO. JUSTICE PUNO:

Is it based on any law?

SOLGEN BENIPAYO:

As far as I know, no, Your Honor, from the facts, no.

SR. ASSO. JUSTICE PUNO:

So, it has no basis, no legal basis whatsoever?

SOLGEN BENIPAYO:

Maybe so, Your Honor. Maybe so, that is why I said, I don’t know if it is premature to say this, we do not
condone this. If the people who have been injured by this would want to sue them, they can sue and
there are remedies for this.156

Likewise, the warrantless arrests and seizures executed by the police were, according to the Solicitor
General, illegal and cannot be condoned, thus:

CHIEF JUSTICE PANGANIBAN:

There seems to be some confusions if not contradiction in your theory.

SOLICITOR GENERAL BENIPAYO:

I don’t know whether this will clarify. The acts, the supposed illegal or unlawful acts committed on the
occasion of 1017, as I said, it cannot be condoned. You cannot blame the President for, as you said, a
misapplication of the law. These are acts of the police officers, that is their responsibility.157

The Dissenting Opinion states that PP 1017 and G.O. No. 5 are constitutional in every aspect and "should
result in no constitutional or statutory breaches if applied according to their letter."

The Court has passed upon the constitutionality of these issuances. Its ratiocination has been
exhaustively presented. At this point, suffice it to reiterate that PP 1017 is limited to the calling out by
the President of the military to prevent or suppress lawless violence, invasion or rebellion. When in
implementing its provisions, pursuant to G.O. No. 5, the military and the police committed acts which
violate the citizens’ rights under the Constitution, this Court has to declare such acts unconstitutional
and illegal.

In this connection, Chief Justice Artemio V. Panganiban’s concurring opinion, attached hereto, is
considered an integral part of this ponencia.

SUMMATION

In sum, the lifting of PP 1017 through the issuance of PP 1021 – a supervening event – would have
normally rendered this case moot and academic. However, while PP 1017 was still operative, illegal acts
were committed allegedly in pursuance thereof. Besides, there is no guarantee that PP 1017, or one
similar to it, may not again be issued. Already, there have been media reports on April 30, 2006 that
allegedly PP 1017 would be reimposed "if the May 1 rallies" become "unruly and violent." Consequently,
the transcendental issues raised by the parties should not be "evaded;" they must now be resolved to
prevent future constitutional aberration.

The Court finds and so holds that PP 1017 is constitutional insofar as it constitutes a call by the President
for the AFP to prevent or suppress lawless violence. The proclamation is sustained by Section 18, Article
VII of the Constitution and the relevant jurisprudence discussed earlier. However, PP 1017’s extraneous
provisions giving the President express or implied power (1) to issue decrees; (2) to direct the AFP to
enforce obedience to all laws even those not related to lawless violence as well as decrees promulgated
by the President; and (3) to impose standards on media or any form of prior restraint on the press,
are ultra vires and unconstitutional. The Court also rules that under Section 17, Article XII of the
Constitution, the President, in the absence of a legislation, cannot take over privately-owned public
utility and private business affected with public interest.

In the same vein, the Court finds G.O. No. 5 valid. It is an Order issued by the President – acting as
Commander-in-Chief – addressed to subalterns in the AFP to carry out the provisions of PP 1017.
Significantly, it also provides a valid standard – that the military and the police should take only the
"necessary and appropriate actions and measures to suppress and prevent acts of lawless
violence."But the words "acts of terrorism" found in G.O. No. 5 have not been legally defined and made
punishable by Congress and should thus be deemed deleted from the said G.O. While "terrorism" has
been denounced generally in media, no law has been enacted to guide the military, and eventually the
courts, to determine the limits of the AFP’s authority in carrying out this portion of G.O. No. 5.

On the basis of the relevant and uncontested facts narrated earlier, it is also pristine clear that (1) the
warrantless arrest of petitioners Randolf S. David and Ronald Llamas; (2) the dispersal of the rallies and
warrantless arrest of the KMU and NAFLU-KMU members; (3) the imposition of standards on media or
any prior restraint on the press; and (4) the warrantless search of the Tribune offices and the whimsical
seizures of some articles for publication and other materials, are not authorized by the Constitution, the
law and jurisprudence. Not even by the valid provisions of PP 1017 and G.O. No. 5.

Other than this declaration of invalidity, this Court cannot impose any civil, criminal or administrative
sanctions on the individual police officers concerned. They have not been individually identified and
given their day in court. The civil complaints or causes of action and/or relevant criminal Informations
have not been presented before this Court. Elementary due process bars this Court from making any
specific pronouncement of civil, criminal or administrative liabilities.
It is well to remember that military power is a means to an end and substantive civil rights are ends in
themselves. How to give the military the power it needs to protect the Republic without unnecessarily
trampling individual rights is one of the eternal balancing tasks of a democratic state.During
emergency, governmental action may vary in breadth and intensity from normal times, yet they should
not be arbitrary as to unduly restrain our people’s liberty.

Perhaps, the vital lesson that we must learn from the theorists who studied the various competing
political philosophies is that, it is possible to grant government the authority to cope with crises without
surrendering the two vital principles of constitutionalism: the maintenance of legal limits to arbitrary
power, and political responsibility of the government to the governed.158

WHEREFORE, the Petitions are partly granted. The Court rules that PP 1017 is CONSTITUTIONAL insofar
as it constitutes a call by President Gloria Macapagal-Arroyo on the AFP to prevent or suppress lawless
violence. However, the provisions of PP 1017 commanding the AFP to enforce laws not related to
lawless violence, as well as decrees promulgated by the President, are declared UNCONSTITUTIONAL. In
addition, the provision in PP 1017 declaring national emergency under Section 17, Article VII of the
Constitution is CONSTITUTIONAL, but such declaration does not authorize the President to take over
privately-owned public utility or business affected with public interest without prior legislation.

G.O. No. 5 is CONSTITUTIONAL since it provides a standard by which the AFP and the PNP should
implement PP 1017, i.e. whatever is "necessary and appropriate actions and measures to suppress and
prevent acts of lawless violence." Considering that "acts of terrorism" have not yet been defined and
made punishable by the Legislature, such portion of G.O. No. 5 is declared UNCONSTITUTIONAL.

The warrantless arrest of Randolf S. David and Ronald Llamas; the dispersal and warrantless arrest of the
KMU and NAFLU-KMU members during their rallies, in the absence of proof that these petitioners were
committing acts constituting lawless violence, invasion or rebellion and violating BP 880; the imposition
of standards on media or any form of prior restraint on the press, as well as the warrantless search of
the Tribune offices and whimsical seizure of its articles for publication and other materials, are
declared UNCONSTITUTIONAL.

No costs.

SO ORDERED.

C. Effect of Unconstitutionality

1. Article 7, New Civil Code

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not
be excused by disuse, or custom or practice to the contrary.
 2. Peralta v. Civil Service Commission, G.R. No. 95832, 10 August 1992
[G.R. No. 95832. August 10, 1992.]

MAYNARD R. PERALTA, Petitioner, v. CIVIL SERVICE COMMISSION, Respondent.

Tranquilino F. Meris Law Office for Petitioner.

DECISION

PADILLA, J.:

Petitioner was appointed Trade-Specialist II on 25 September 1989 in the Department of Trade and
Industry (DTI). His appointment was classified as "Reinstatement/Permanent." Before said appointment,
he was working at the Philippine Cotton Corporation, a government-owned and controlled corporation
under the Department of Agriculture.chanrobles.com:cralaw:red

On 8 December 1989, petitioner received his initial salary, covering the period from 25 September to 31
October 1989. Since he had no accumulated leave credits, DTI deducted from his salary the amount
corresponding to his absences during the covered period, namely, 29 September 1989 and 20 October
1989, inclusive of Saturdays and Sundays. More specifically, the dates of said absences for which salary
deductions were made, are as follows:chanrob1es virtual 1aw library

1. 29 September 1989 — Friday

2. 30 September 1989 — Saturday

3. 01 October 1989 — Sunday

4. 20 October 1989 — Friday

5. 21 October 1989 — Saturday

6. 22 October 1989 — Sunday

Petitioner sent a memorandum to Amando T. Alvis (Chief, General Administrative Service) on 15

December 1989 inquiring as to the law on salary deductions, if the employee has no leave credits.

Amando T. Alvis answered petitioner’s query in a memorandum dated 30 January 1990 citing Chapter
5.49 of the Handbook of Information on the Philippine Civil Service which states that "when an
employee is on leave without pay on a day before or on a day immediately preceding a Saturday, Sunday
or Holiday, such Saturday, Sunday, or Holiday shall also be without pay (CSC, 2nd Ind., February 12,
1965)."cralaw virtua1aw library

Petitioner then sent a letter dated 20 February 1990 addressed to Civil Service Commission (CSC)
Chairman Patricia A. Sto. Tomas raising the following question:jgc:chanrobles.com.ph
"Is an employee who was on leave of absence without pay on a day before or on a day immediately
preceding a Saturday, Sunday or Holiday, also considered on leave of absence without pay on such
Saturday, Sunday or Holiday?" 1

Petitioner in his said letter to the CSC Chairman argued that a reading of the General Leave Law as
contained in the Revised Administrative Code, as well as the old Civil Service Law (Republic Act No.
2260), the Civil Service Decree (Presidential Decree No. 807), and the Civil Service Rules and Regulations
fails to disclose a specific provision which supports the CSC rule at issue. That being the case, the
petitioner contended that he cannot be deprived of his pay or salary corresponding to the intervening
Saturdays, Sundays or Holidays (in the factual situation posed), and that the withholding (or deduction)
of the same is tantamount to a deprivation of property without due process of law.chanrobles lawlibrary
: rednad

On 25 May 1990, respondent Commission promulgated Resolution No. 90-497, ruling that the action of
the DTI in deducting from the salary of petitioner, a part thereof corresponding to six (6) days
(September 29, 30, October 1, 20, 21, 22, 1989) is in order. 2 The CSC stated that:jgc:chanrobles.com.ph

"In a 2nd Indorsement dated February 12, 1965 of this Commission, which embodies the policy on leave
of absence without pay incurred on a Friday and a Monday, reads:chanrob1es virtual 1aw library

‘Mrs. Rosalinda Gonzales is not entitled to payment of salary corresponding to January 23 and 24, 1965,
Saturday and Sunday, respectively, it appearing that she was present on Friday, January 22, 1965 but
was on leave without pay beginning January 25, the succeeding Monday. It is the view of this Office that
an employee who has no more leave credit in his favor is not entitled to the payment of salary on
Saturdays, Sundays or holidays unless such non-working days occur within the period of service actually
rendered.’ (Emphasis supplied)

The rationale for the above ruling which applies only to those employees who are being paid on monthly
basis, rests on the assumption that having been absent on either Monday or Friday, one who has no
leave credits, could not be favorably credited with intervening days had the game been working days.
Hence, the above policy that for an employee on leave without pay to be entitled to salary on Saturdays,
Sundays or holidays, the same must occur between the dates where the said employee actually renders
service. To rule otherwise would allow an employee who is on leave of absent (sic) without pay for a
long period of time to be entitled to payment of his salary corresponding to Saturdays, Sundays or
holidays. It also discourages the employees who have exhausted their leave credits from absenting
themselves on a Friday or Monday in order to have a prolonged weekend, resulting in the prejudice of
the government and the public in general." 3

Petitioner filed a motion for reconsideration and in Resolution No. 90-797, the respondent Commission
denied said motion for lack of merit. The respondent Commission in explaining its action
held:jgc:chanrobles.com.ph

"The Primer on the Civil Service dated February 21, 1978, embodies the Civil Service Commission rulings
to be observed whenever an employee of the government who has no more leave credits, is absent on a
Friday and/or a Monday is credits, is absent on a Friday and/or a Monday is enough basis for the
deduction of his salaries corresponding to the intervening Saturdays and Sundays. What the Commission
perceived to be without basis is the demand of Peralta for the payment of his salaries corresponding to
Saturdays and Sundays when he was in fact on leave of absence without pay on a Friday prior to the said
days. A reading of Republic Act No. 2260 (sic) does not show that a government employee who is on
leave of absence without pay on a day before or immediately preceding Saturday, Sunday or legal
holiday is entitled to payment of his salary for said days. Further, a reading of Senate Journal No. 67
dated May 4, 1960 of House Bill No. 41 (Republic Act No. 2625) reveals that while the law excludes
Saturdays, Sundays and holidays in the computation of leave credits, it does not, however, include a
case where the leave of absence is without pay. Hence, applying the principle of inclusio unius est
exclusio alterius, the claim of Peralta has no merit. Moreover, to take a different posture would be in
effect giving more premium to employees who are frequently on leave of absence without pay, instead
of discouraging them from incurring further absence without pay." 4

Petitioner’s motion for reconsideration having been denied, petitioner filed the present petition.

What is primarily questioned by the petitioner is the validity of the respondent Commission’s policy
mandating salary deductions corresponding to the intervening Saturdays, Sundays or Holidays where an
employee without leave credits was absent on the immediately preceding working day.

During the pendency of this petition, the respondent Commission promulgated Resolution No. 91-540
dated 23 April 1991 amending the questioned policy, considering that employees paid on a monthly
basis are not required to work on Saturdays, Sundays or Holidays. In said amendatory Resolution, the
respondent Commission resolved "to adopt the policy that when an employee, regardless of whether he
has leave credits or not, is absent without pay on day immediately preceding or succeeding Saturday,
Sunday or holiday, he shall not be considered absent on those days." Memorandum Circular No. 16
Series of 1991 dated 26 April 1991, was also issued by CSC Chairman Sto. Tomas adopting and
promulgating the new policy and directing the Heads of Departments, Bureaus and Agencies in the
national and local governments, including government-owned or controlled corporations with original
charters, to oversee the strict implementation of the circular.

Because of these developments, it would seem at first blush that this petition has become moot and
academic since the very CSC policy being questioned has already been amended and, in effect,
Resolutions No. 90-497 and 90-797, subject of this petition for certiorari, have already been set aside
and superseded. But the issue of whether or not the policy that had been adopted and in force since
1965 is valid or not, remains unresolved. Thus, for reasons of public interest and public policy, it is the
duty of the Court to make a formal ruling on the validity or invalidity of such questioned
policy.chanrobles lawlibrary : rednad

The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the Commissioner of Civil Service the
following powers and duties:jgc:chanrobles.com.ph

"Sec. 16 (e) with the approval by the President to prescribe, amend and enforce suitable rules and
regulations for carrying into effect the provisions of this Civil Service Law, and the rules prescribed
pursuant to the provisions of this law shall become effective thirty days after publication in the Official
Gazette;

x x x

(k) To perform other functions that properly belong to a central personnel agency." 5
Pursuant to the foregoing provisions, the Commission promulgated the herein challenged policy. Said
policy was embodied in a 2nd Indorsement dated 12 February 1965 of the respondent Commission
involving the case of a Mrs. Rosalinda Gonzales. The respondent Commission ruled that an employee
who has no leave credits in his favor is not entitled to the payment of salary on Saturdays, Sundays or
Holidays unless such non-working days occur within the period of service actually rendered. The same
policy is reiterated in the Handbook of Information on the Philippine Civil Service. 6 Chapter Five on
leave of absence provides that:jgc:chanrobles.com.ph

"5.51 When intervening Saturday, Sunday or holiday considered as leave without pay — when an
employee is on leave without pay on a day before or on a day immediately preceding a Saturday, Sunday
or holiday, such Saturday, Sunday or holiday shall also be without pay. (CSC, 2nd Ind., Feb. 12,
1965)."cralaw virtua1aw library

It is likewise illustrated in the Primer on the Civil Service 7 in the section referring to Questions and
Answers on Leave of Absences, which states the following:jgc:chanrobles.com.ph

"27. How is leave of an employee who has no more leave credits computed if:chanrob1es virtual 1aw
library

(1) he is absent on a Friday and the following Monday?

(2) if he is absent on Friday but reports to work the following Monday?

(3) if he is absent on a Monday but present the preceding Friday?

— (1) He is considered on leave without pay for 4 days covering Friday to Monday;

— (2) He is considered on leave without pay for 3 days from Friday to Sunday;

— (3) He is considered on leave without pay for 3 days from Saturday to Monday."cralaw virtua1aw
library

When an administrative or executive agency renders an opinion or issues a statement of policy, it

merely interprets a pre-existing law; and the administrative interpretation of the law is at best advisory,
for it is the courts that finally determine what the law means. 8 It has also been held that interpretative
regulations need not be published. 9

In promulgating as early as 12 February 1965 the questioned policy, the Civil Service Commission
interpreted the provisions of Republic Act No. 2625 (which took effect on 17 June 1960) amending the
Revised Administrative Code, and which stated as follows:jgc:chanrobles.com.ph

"SECTION 1. Sections two hundred eighty-four and two hundred eighty-five-A of the Administrative
Code, as amended, are further amended to read as follows:chanrob1es virtual 1aw library

‘SEC. 284. After at least six months’ continues (sic) faithful, and satisfactory service, the President or
proper head of department, or the chief of office in the case of municipal employees may, in his
discretion, grant to an employee or laborer, whether permanent or temporary, of the national
government, the provincial government, the government of a chartered city, of a municipality, of a
municipal district or of government-owned or controlled corporations other than those mentioned in
Section two hundred sixty-eight, two hundred seventy-one and two hundred seventy-four hereof,
fifteen days vacation leave of absence with full pay, exclusive of Saturdays, Sundays and holidays, for
each calendar year of service.

‘SEC. 285-A. In addition to the vacation leave provided in the two preceding sections each employee or
laborer, whether permanent or temporary, of the national government, the provincial government, the
government of a chartered city, of a municipality or municipal district in any regularly and specially
organized province, other than those mentioned in Section two hundred sixty-eight, two hundred
seventy-one and two hundred seventy-four hereof, shall be entitled to fifteen days of sick leave for each
year of service with full pay, exclusive of Saturdays, Sundays and holidays: Provided, That such sick leave
will be granted by the President, Head of Department or independent office concerned, or the chief of
office in case of municipal employees, only on account of sickness on the part of the employee or
laborer concerned or of any member of his immediate family.’"

The Civil Service Commission in its here questioned Resolution No. 90-797 construed R.A. 2625 as
referring only to government employees who have earned leave credits against which their absences
may be charged with pay, as its letters speak only of leaves of absence with full pay. The respondent
Commission ruled that a reading of R.A. 2625 does not show that a government employee who is on
leave of absence without pay on a day before or immediately preceding a Saturday, Sunday or legal
holiday is entitled to payment of his salary for said days.

Administrative construction, if we may repeat, is not necessarily binding upon the courts. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is an error of
law, or abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either
the letter or the spirit of a legislative enactment. 10

We find this petition to be impressed with merit.

As held in Hidalgo v. Hidalgo: 11

". . . where the true intent of the law is clear that calls for the application of the cardinal rule of statutory
construction that such intent or spirit must prevail over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice
and contradictions and would defeat the plain and vital purpose of the statute."cralaw virtua1aw library

The intention of the legislature in the enactment of R.A. 2625 may be gleaned from, among others, the
sponsorship speech of Senator Arturo M. Tolentino during the second reading of House Bill No. 41
(which became R.A. 2625). He said:jgc:chanrobles.com.ph

"The law actually provides for sick leave and vacation leave of 15 days each year of service to be with full
pay. But under the present law, in computing these periods of leaves, Saturday, Sunday and holidays are
included in the computation so that if an employee should become sick and absent himself on a Friday
and then he reports for work on a Tuesday, in the computation of the leave the Saturday and Sunday
will be included, so that he will be considered as having had a leave of Friday, Saturday, Sunday and
Monday, or four days.chanrobles lawlibrary : rednad

"The purpose of the present bill is to exclude from the computation of the leave those days, Saturdays
and Sundays, as well as holidays, because actually the employee is entitled not to go to office during
those days. And it is unfair and unjust to him that those days should be counted in the computation of
leaves." 12

With this in mind, the construction by the respondent Commission of R.A. 2625 is not in accordance
with the legislative intent. R.A. 2625 specifically provides that government employees are entitled to
fifteen (15) days vacation leave of absence with full pay and fifteen (15) days sick leave with full pay,
exclusive of Saturdays, Sundays and Holidays in both cases. Thus, the law speaks of the granting of a
right and the law does not provide for a distinction between those who have accumulated leave credits
and those who have exhausted their leave credits in order to enjoy such right. Ubi lex non distinguit nec
nos distinguere debemus. The fact remains that government employees, whether or not they have
accumulated leave credits, are not required by law to work on Saturdays, Sundays and Holidays and thus
they can not be declared absent on such non-working days. They cannot be or are not considered
absent on non-working days; they cannot and should not be deprived of their salary corresponding to
said non-working days just because they were absent without pay on the day immediately prior to, or
after said non-working days. A different rule would constitute a deprivation of property without due
process.

Furthermore, before their amendment by R.A. 2625, Sections 284 and 285-A of the Revised
Administrative Code applied to all government employees without any distinction. It follows that the
effect of the amendment similarly applies to all employees enumerated in Sections 284 and 285-A,
whether or not they have accumulated leave credits.

As the questioned CSC policy is here declared invalid, we are next confronted with the question of what
effect such invalidity will have. Will all government employees on a monthly salary basis, deprived of
their salaries corresponding to Saturdays, Sundays or legal holidays (as herein petitioner was so
deprived) since 12 February 1965, be entitled to recover the amounts corresponding to such non-
working days?

The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative
as though it had never been passed. 13

But, as held in Chicot County Drainage District v. Baxter State Bank: 14

". . . . It is quite clear, however, that such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such
determination is an operative fact and may have consequences which cannot always be ignored. The
past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects — with respect to particular relations, individual
and corporate; and particular conduct, private and official."cralaw virtua1aw library

To allow all the affected government employees, similarly situated as petitioner herein, to claim their
deducted salaries resulting from the past enforcement of the herein invalidated CSC policy, would cause
quite a heavy financial burden on the national and local governments considering the length of time that
such policy has been effective. Also, administrative and practical considerations must be taken into
account if this ruling will have a strict restrospective application. The Court, in this connection, calls
upon the respondent Commission and the Congress of the Philippines, if necessary, to handle this
problem with justice and equity to all affected government employees.

It must be pointed out, however, that after CSC Memorandum Circular No. 16 Series of 1991 —
amending the herein invalidated policy — was promulgated on 26 April 1991, deductions from salaries,
made after said date in contravention of the new CSC policy must be restored to the government
employees concerned.chanrobles.com.ph : virtual law library

WHEREFORE, the petition is GRANTED, CSC Resolutions No. 90-497 and 90-797 are declared NULL and
VOID. The respondent Commission is directed to take the appropriate action so that petitioner shall be
paid the amounts previously but unlawfully deducted from his monthly salary as above indicated. No
costs.

SO ORDERED.

3. Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, 8
October 2013

G.R. No. 187485 February 12, 2013

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
SAN ROQUE POWER CORPORATION, Respondent.

X----------------------------X

G.R. No. 196113

TAGANITO MINING CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

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

G.R. No. 197156

PHILEX MINING CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

DECISION

CARPIO, J.:

The Cases

G.R. No. 187485 is a petitiOn for review1 assailing the Decision2 promulgated on 25 March 2009 as well
as the Resolution3 promulgated on 24 April 2009 by the Court of Tax Appeals En Banc (CTA EB) in CTA EB
No. 408. The CTA EB affirmed the 29 November 2007 Amended Decision4 as well as the 11 July 2008
Resolution5 of the Second Division of the Court of Tax Appeals (CTA Second Division) in CTA Case No.
6647. The CTA Second Division ordered the Commissioner of Internal Revenue (Commissioner) to refund
or issue a tax credit for P483,797,599.65 to San Roque Power Corporation (San Roque) for unutilized
input value-added tax (VAT) on purchases of capital goods and services for the taxable year 2001.

G.R. No. 196113 is a petition for review6 assailing the Decision7 promulgated on 8 December 2010 as
well as the Resolution8 promulgated on 14 March 2011 by the CTA EB in CTA EB No. 624. In its Decision,
the CTA EB reversed the 8 January 2010 Decision9 as well as the 7 April 2010 Resolution10of the CTA
Second Division and granted the CIR’s petition for review in CTA Case No. 7574. The CTA EB dismissed,
for having been prematurely filed, Taganito Mining Corporation’s (Taganito) judicial claim for
P8,365,664.38 tax refund or credit.

G.R. No. 197156 is a petition for review11 assailing the Decision12promulgated on 3 December 2010 as
well as the Resolution13 promulgated on 17 May 2011 by the CTA EB in CTA EB No. 569. The CTA EB
affirmed the 20 July 2009 Decision as well as the 10 November 2009 Resolution of the CTA Second
Division in CTA Case No. 7687. The CTA Second Division denied, due to prescription, Philex Mining
Corporation’s (Philex) judicial claim for P23,956,732.44 tax refund or credit.

On 3 August 2011, the Second Division of this Court resolved14 to consolidate G.R. No. 197156 with G.R.
No. 196113, which were pending in the same Division, and with G.R. No. 187485, which was assigned to
the Court En Banc. The Second Division also resolved to refer G.R. Nos. 197156 and 196113 to the
Court En Banc, where G.R. No. 187485, the lower-numbered case, was assigned.

G.R. No. 187485

CIR v. San Roque Power Corporation

The Facts

The CTA EB’s narration of the pertinent facts is as follows:

[CIR] is the duly appointed Commissioner of Internal Revenue, empowered, among others, to act upon
and approve claims for refund or tax credit, with office at the Bureau of Internal Revenue ("BIR")
National Office Building, Diliman, Quezon City.

[San Roque] is a domestic corporation duly organized and existing under and by virtue of the laws of the
Philippines with principal office at Barangay San Roque, San Manuel, Pangasinan. It was incorporated in
October 1997 to design, construct, erect, assemble, own, commission and operate power-generating
plants and related facilities pursuant to and under contract with the Government of the Republic of the
Philippines, or any subdivision, instrumentality or agency thereof, or any governmentowned or
controlled corporation, or other entity engaged in the development, supply, or distribution of energy.

As a seller of services, [San Roque] is duly registered with the BIR with TIN/VAT No. 005-017-501. It is
likewise registered with the Board of Investments ("BOI") on a preferred pioneer status, to engage in the
design, construction, erection, assembly, as well as to own, commission, and operate electric power-
generating plants and related activities, for which it was issued Certificate of Registration No. 97-356 on
February 11, 1998.
On October 11, 1997, [San Roque] entered into a Power Purchase Agreement ("PPA") with the National
Power Corporation ("NPC") to develop hydro-potential of the Lower Agno River and generate additional
power and energy for the Luzon Power Grid, by building the San Roque Multi-Purpose Project located in
San Manuel, Pangasinan. The PPA provides, among others, that [San Roque] shall be responsible for the
design, construction, installation, completion, testing and commissioning of the Power Station and shall
operate and maintain the same, subject to NPC instructions. During the cooperation period of twenty-
five (25) years commencing from the completion date of the Power Station, NPC will take and pay for all
electricity available from the Power Station.

On the construction and development of the San Roque Multi- Purpose Project which comprises of the
dam, spillway and power plant, [San Roque] allegedly incurred, excess input VAT in the amount of
₱559,709,337.54 for taxable year 2001 which it declared in its Quarterly VAT Returns filed for the same
year. [San Roque] duly filed with the BIR separate claims for refund, in the total amount of
₱559,709,337.54, representing unutilized input taxes as declared in its VAT returns for taxable year
2001.

However, on March 28, 2003, [San Roque] filed amended Quarterly VAT Returns for the year 2001 since
it increased its unutilized input VAT to the amount of ₱560,200,283.14. Consequently, [San Roque] filed
with the BIR on even date, separate amended claims for refund in the aggregate amount of
₱560,200,283.14.

[CIR’s] inaction on the subject claims led to the filing by [San Roque] of the Petition for Review with the
Court [of Tax Appeals] in Division on April 10, 2003.

Trial of the case ensued and on July 20, 2005, the case was submitted for decision.15

The Court of Tax Appeals’ Ruling: Division

The CTA Second Division initially denied San Roque’s claim. In its Decision16 dated 8 March 2006, it cited
the following as bases for the denial of San Roque’s claim: lack of recorded zero-rated or effectively
zero-rated sales; failure to submit documents specifically identifying the purchased goods/services
related to the claimed input VAT which were included in its Property, Plant and Equipment account; and
failure to prove that the related construction costs were capitalized in its books of account and
subjected to depreciation.

The CTA Second Division required San Roque to show that it complied with the following requirements
of Section 112(B) of Republic Act No. 8424 (RA 8424)17 to be entitled to a tax refund or credit of input
VAT attributable to capital goods imported or locally purchased: (1) it is a VAT-registered entity; (2) its
input taxes claimed were paid on capital goods duly supported by VAT invoices and/or official receipts;
(3) it did not offset or apply the claimed input VAT payments on capital goods against any output VAT
liability; and (4) its claim for refund was filed within the two-year prescriptive period both in the
administrative and judicial levels.

The CTA Second Division found that San Roque complied with the first, third, and fourth requirements,
thus:
The fact that [San Roque] is a VAT registered entity is admitted (par. 4, Facts Admitted, Joint Stipulation
of Facts, Records, p. 157). It was also established that the instant claim of ₱560,200,823.14 is already net
of the ₱11,509.09 output tax declared by [San Roque] in its amended VAT return for the first quarter of
2001. Moreover, the entire amount of ₱560,200,823.14 was deducted by [San Roque] from the total
available input tax reflected in its amended VAT returns for the last two quarters of 2001 and first two
quarters of 2002 (Exhibits M-6, O-6, OO-1 & QQ-1). This means that the claimed input taxes of
₱560,200,823.14 did not form part of the excess input taxes of ₱83,692,257.83, as of the second quarter
of 2002 that was to be carried-over to the succeeding quarters. Further, [San Roque’s] claim for
refund/tax credit certificate of excess input VAT was filed within the two-year prescriptive period
reckoned from the dates of filing of the corresponding quarterly VAT returns.

For the first, second, third, and fourth quarters of 2001, [San Roque] filed its VAT returns on April 25,
2001, July 25, 2001, October 23, 2001 and January 24, 2002, respectively (Exhibits "H, J, L, and N").
These returns were all subsequently amended on March 28, 2003 (Exhibits "I, K, M, and O"). On the
other hand, [San Roque] originally filed its separate claims for refund on July 10, 2001, October 10, 2001,
February 21, 2002, and May 9, 2002 for the first, second, third, and fourth quarters of 2001,
respectively, (Exhibits "EE, FF, GG, and HH") and subsequently filed amended claims for all quarters on
March 28, 2003 (Exhibits "II, JJ, KK, and LL"). Moreover, the Petition for Review was filed on April 10,
2003. Counting from the respective dates when [San Roque] originally filed its VAT returns for the first,
second, third and fourth quarters of 2001, the administrative claims for refund (original and amended)
and the Petition for Review fall within the two-year prescriptive period.18

San Roque filed a Motion for New Trial and/or Reconsideration on 7 April 2006. In its 29 November 2007
Amended Decision,19 the CTA Second Division found legal basis to partially grant San Roque’s claim. The
CTA Second Division ordered the Commissioner to refund or issue a tax credit in favor of San Roque in
the amount of ₱483,797,599.65, which represents San Roque’s unutilized input VAT on its purchases of
capital goods and services for the taxable year 2001. The CTA based the adjustment in the amount on
the findings of the independent certified public accountant. The following reasons were cited for the
disallowed claims: erroneous computation; failure to ascertain whether the related purchases are in the
nature of capital goods; and the purchases pertain to capital goods. Moreover, the reduction of claims
was based on the following: the difference between San Roque’s claim and that appearing on its books;
the official receipts covering the claimed input VAT on purchases of local services are not within the
period of the claim; and the amount of VAT cannot be determined from the submitted official receipts
and invoices. The CTA Second Division denied San Roque’s claim for refund or tax credit of its unutilized
input VAT attributable to its zero-rated or effectively zero-rated sales because San Roque had no record
of such sales for the four quarters of 2001.

The dispositive portion of the CTA Second Division’s 29 November 2007 Amended Decision reads:

WHEREFORE, [San Roque’s] "Motion for New Trial and/or Reconsideration" is hereby PARTIALLY
GRANTED and this Court’s Decision promulgated on March 8, 2006 in the instant case is hereby
MODIFIED.

Accordingly, [the CIR] is hereby ORDERED to REFUND or in the alternative, to ISSUE A TAX CREDIT
CERTIFICATE in favor of [San Roque] in the reduced amount of Four Hundred Eighty Three Million Seven
Hundred Ninety Seven Thousand Five Hundred Ninety Nine Pesos and Sixty Five Centavos
(₱483,797,599.65) representing unutilized input VAT on purchases of capital goods and services for the
taxable year 2001.
SO ORDERED.20

The Commissioner filed a Motion for Partial Reconsideration on 20 December 2007. The CTA Second
Division issued a Resolution dated 11 July 2008 which denied the CIR’s motion for lack of merit.

The Court of Tax Appeals’ Ruling: En Banc

The Commissioner filed a Petition for Review before the CTA EB praying for the denial of San Roque’s
claim for refund or tax credit in its entirety as well as for the setting aside of the 29 November 2007
Amended Decision and the 11 July 2008 Resolution in CTA Case No. 6647.

The CTA EB dismissed the CIR’s petition for review and affirmed the challenged decision and resolution.

The CTA EB cited Commissioner of Internal Revenue v. Toledo Power, Inc.21 and Revenue Memorandum
Circular No. 49-03,22 as its bases for ruling that San Roque’s judicial claim was not prematurely filed. The
pertinent portions of the Decision state:

More importantly, the Court En Banc has squarely and exhaustively ruled on this issue in this wise:

It is true that Section 112(D) of the abovementioned provision applies to the present case. However,
what the petitioner failed to consider is Section 112(A) of the same provision. The respondent is also
covered by the two (2) year prescriptive period. We have repeatedly held that the claim for refund with
the BIR and the subsequent appeal to the Court of Tax Appeals must be filed within the two-year period.

Accordingly, the Supreme Court held in the case of Atlas Consolidated Mining and Development
Corporation vs. Commissioner of Internal Revenue that the two-year prescriptive period for filing a claim
for input tax is reckoned from the date of the filing of the quarterly VAT return and payment of the tax
due. If the said period is about to expire but the BIR has not yet acted on the application for refund,
the taxpayer may interpose a petition for review with this Court within the two year period.

In the case of Gibbs vs. Collector, the Supreme Court held that if, however, the Collector (now
Commissioner) takes time in deciding the claim, and the period of two years is about to end, the suit or
proceeding must be started in the Court of Tax Appeals before the end of the two-year period without
awaiting the decision of the Collector.

Furthermore, in the case of Commissioner of Customs and Commissioner of Internal Revenue vs. The
Honorable Court of Tax Appeals and Planters Products, Inc., the Supreme Court held that the taxpayer
need not wait indefinitely for a decision or ruling which may or may not be forthcoming and which he
has no legal right to expect. It is disheartening enough to a taxpayer to keep him waiting for an
indefinite period of time for a ruling or decision of the Collector (now Commissioner) of Internal
Revenue on his claim for refund. It would make matters more exasperating for the taxpayer if we were
to close the doors of the courts of justice for such a relief until after the Collector (now Commissioner)
of Internal Revenue, would have, at his personal convenience, given his go signal.

This Court ruled in several cases that once the petition is filed, the Court has already acquired
jurisdiction over the claims and the Court is not bound to wait indefinitely for no reason for whatever
action respondent (herein petitioner) may take. At stake are claims for refund and unlike disputed
assessments, no decision of respondent (herein petitioner) is required before one can go to this
Court. (Emphasis supplied and citations omitted)

Lastly, it is apparent from the following provisions of Revenue Memorandum Circular No. 49-03 dated
August 18, 2003, that [the CIR] knows that claims for VAT refund or tax credit filed with the Court [of Tax
Appeals] can proceed simultaneously with the ones filed with the BIR and that taxpayers need not wait
for the lapse of the subject 120-day period, to wit:

In response to [the] request of selected taxpayers for adoption of procedures in handling refund cases
that are aligned to the statutory requirements that refund cases should be elevated to the Court of Tax
Appeals before the lapse of the period prescribed by law, certain provisions of RMC No. 42-2003 are
hereby amended and new provisions are added thereto.

In consonance therewith, the following amendments are being introduced to RMC No. 42-2003, to wit:

I.) A-17 of Revenue Memorandum Circular No. 42-2003 is hereby revised to read as follows:

In cases where the taxpayer has filed a "Petition for Review" with the Court of Tax Appeals involving a
claim for refund/TCC that is pending at the administrative agency (Bureau of Internal Revenue or OSS-
DOF), the administrative agency and the tax court may act on the case separately. While the case is
pending in the tax court and at the same time is still under process by the administrative agency, the
litigation lawyer of the BIR, upon receipt of the summons from the tax court, shall request from the
head of the investigating/processing office for the docket containing certified true copies of all the
documents pertinent to the claim. The docket shall be presented to the court as evidence for the BIR in
its defense on the tax credit/refund case filed by the taxpayer. In the meantime, the
investigating/processing office of the administrative agency shall continue processing the refund/TCC
case until such time that a final decision has been reached by either the CTA or the administrative
agency.

If the CTA is able to release its decision ahead of the evaluation of the administrative agency, the
latter shall cease from processing the claim. On the other hand, if the administrative agency is able to
process the claim of the taxpayer ahead of the CTA and the taxpayer is amenable to the findings thereof,
the concerned taxpayer must file a motion to withdraw the claim with the CTA.23 (Emphasis supplied)

G.R. No. 196113

Taganito Mining Corporation v. CIR

The Facts

The CTA Second Division’s narration of the pertinent facts is as follows:

Petitioner, Taganito Mining Corporation, is a corporation duly organized and existing under and by
virtue of the laws of the Philippines, with principal office at 4th Floor, Solid Mills Building, De La Rosa St.,
Lega[s]pi Village, Makati City. It is duly registered with the Securities and Exchange Commission with
Certificate of Registration No. 138682 issued on March 4, 1987 with the following primary purpose:
To carry on the business, for itself and for others, of mining lode and/or placer mining, developing,
exploiting, extracting, milling, concentrating, converting, smelting, treating, refining, preparing for
market, manufacturing, buying, selling, exchanging, shipping, transporting, and otherwise producing and
dealing in nickel, chromite, cobalt, gold, silver, copper, lead, zinc, brass, iron, steel, limestone, and all
kinds of ores, metals and their by-products and which by-products thereof of every kind and description
and by whatsoever process the same can be or may hereafter be produced, and generally and without
limit as to amount, to buy, sell, locate, exchange, lease, acquire and deal in lands, mines, and mineral
rights and claims and to conduct all business appertaining thereto, to purchase, locate, lease or
otherwise acquire, mining claims and rights, timber rights, water rights, concessions and mines,
buildings, dwellings, plants machinery, spare parts, tools and other properties whatsoever which this
corporation may from time to time find to be to its advantage to mine lands, and to explore, work,
exercise, develop or turn to account the same, and to acquire, develop and utilize water rights in such
manner as may be authorized or permitted by law; to purchase, hire, make, construct or otherwise,
acquire, provide, maintain, equip, alter, erect, improve, repair, manage, work and operate private roads,
barges, vessels, aircraft and vehicles, private telegraph and telephone lines, and other communication
media, as may be needed by the corporation for its own purpose, and to purchase, import, construct,
machine, fabricate, or otherwise acquire, and maintain and operate bridges, piers, wharves, wells,
reservoirs, plumes, watercourses, waterworks, aqueducts, shafts, tunnels, furnaces, cook ovens,
crushing works, gasworks, electric lights and power plants and compressed air plants, chemical works of
all kinds, concentrators, smelters, smelting plants, and refineries, matting plants, warehouses,
workshops, factories, dwelling houses, stores, hotels or other buildings, engines, machinery, spare parts,
tools, implements and other works, conveniences and properties of any description in connection with
or which may be directly or indirectly conducive to any of the objects of the corporation, and to
contribute to, subsidize or otherwise aid or take part in any operations;

and is a VAT-registered entity, with Certificate of Registration (BIR Form No. 2303) No. OCN
8RC0000017494. Likewise, [Taganito] is registered with the Board of Investments (BOI) as an exporter of
beneficiated nickel silicate and chromite ores, with BOI Certificate of Registration No. EP-88-306.

Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue vested with
authority to exercise the functions of the said office, including inter alia, the power to decide refunds of
internal revenue taxes, fees and other charges, penalties imposed in relation thereto, or other matters
arising under the National Internal Revenue Code (NIRC) or other laws administered by Bureau of
Internal Revenue (BIR) under Section 4 of the NIRC. He holds office at the BIR National Office Building,
Diliman, Quezon City.

[Taganito] filed all its Monthly VAT Declarations and Quarterly Vat Returns for the period January 1,
2005 to December 31, 2005. For easy reference, a summary of the filing dates of the original and
amended Quarterly VAT Returns for taxable year 2005 of [Taganito] is as follows:

Exhibit(s) Quarter Nature of Mode of filing Filing Date

the Return

L to L-4 1st Original Electronic April 15, 2005

M to M-3 Amended Electronic July 20, 2005

N to N-4 Amended Electronic October 18, 2006

 Q to Q-3 2nd Original Electronic July 20, 2005

R to R-4 Amended Electronic October 18, 2006

U to U-4 3rd Original Electronic October 19, 2005

V to V-4 Amended Electronic October 18, 2006

Y to Y-4 4th Original Electronic January 20, 2006

Z to Z-4 Amended Electronic October 18, 2006

As can be gleaned from its amended Quarterly VAT Returns, [Taganito] reported zero-rated sales
amounting to P1,446,854,034.68; input VAT on its domestic purchases and importations of goods (other
than capital goods) and services amounting to P2,314,730.43; and input VAT on its domestic purchases
and importations of capital goods amounting to P6,050,933.95, the details of which are summarized as
follows:

Period Zero-Rated Sales Input VAT on Input VAT on Total Input VAT
Covered Domestic Domestic
Purchases and Purchases and
Importations Importations
of Goods and of Capital
Services Goods

01/01/05 - P551,179,871.58 P1,491,880.56 P239,803.22 P1,731,683.78

03/31/05

04/01/05 - 64,677,530.78 204,364.17 5,811,130.73 6,015,494.90

06/30/05

07/01/05 - 480,784,287.30 144,887.67 - 144,887.67

09/30/05

10/01/05 - 350,212,345.02 473,598.03 - 473,598.03

12/31/05

TOTAL P1,446,854,034.68 P2,314,730.43 P6,050,933.95 P8,365,664.38

On November 14, 2006, [Taganito] filed with [the CIR], through BIR’s Large Taxpayers Audit and
Investigation Division II (LTAID II), a letter dated November 13, 2006 claiming a tax credit/refund of its
supposed input VAT amounting to ₱8,365,664.38 for the period covering January 1, 2004 to December
31, 2004. On the same date, [Taganito] likewise filed an Application for Tax Credits/Refunds for the
period covering January 1, 2005 to December 31, 2005 for the same amount.

On November 29, 2006, [Taganito] sent again another letter dated November 29, 2004 to [the CIR], to
correct the period of the above claim for tax credit/refund in the said amount of ₱8,365,664.38 as
actually referring to the period covering January 1, 2005 to December 31, 2005.
As the statutory period within which to file a claim for refund for said input VAT is about to lapse
without action on the part of the [CIR], [Taganito] filed the instant Petition for Review on February 17,
2007.

In his Answer filed on March 28, 2007, [the CIR] interposes the following defenses:

4. [Taganito’s] alleged claim for refund is subject to administrative investigation/examination by

the Bureau of Internal Revenue (BIR);

5. The amount of ₱8,365,664.38 being claimed by [Taganito] as alleged unutilized input VAT on
domestic purchases of goods and services and on importation of capital goods for the period
January 1, 2005 to December 31, 2005 is not properly documented;

6. [Taganito] must prove that it has complied with the provisions of Sections 112 (A) and (D) and
229 of the National Internal Revenue Code of 1997 (1997 Tax Code) on the prescriptive period
for claiming tax refund/credit;

7. Proof of compliance with the prescribed checklist of requirements to be submitted involving

claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98, otherwise there
would be no sufficient compliance with the filing of administrative claim for refund, the
administrative claim thereof being mere proforma, which is a condition sine qua non prior to
the filing of judicial claim in accordance with the provision of Section 229 of the 1997 Tax Code.
Further, Section 112 (D) of the Tax Code, as amended, requires the submission of complete
documents in support of the application filed with the BIR before the 120-day audit period shall
apply, and before the taxpayer could avail of judicial remedies as provided for in the
law. Hence, [Taganito’s] failure to submit proof of compliance with the above-stated
requirements warrants immediate dismissal of the petition for review.

8. [Taganito] must prove that it has complied with the invoicing requirements mentioned in
Sections 110 and 113 of the 1997 Tax Code, as amended, in relation to provisions of Revenue
Regulations No. 7-95.

9. In an action for refund/credit, the burden of proof is on the taxpayer to establish its right to
refund, and failure to sustain the burden is fatal to the claim for refund/credit (Asiatic
Petroleum Co. vs. Llanes, 49 Phil. 466 cited in Collector of Internal Revenue vs. Manila Jockey
Club, Inc., 98 Phil. 670);

10. Claims for refund are construed strictly against the claimant for the same partake the nature
of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and
as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of
Internal Revenue, 124 SCRA 1211).

SPECIAL AND AFFIRMATIVE DEFENSES

11. The Court of Tax Appeals has no jurisdiction to entertain the instant petition for review for failure on
the part of [Taganito] to comply with the provision of Section 112 (D) of the 1997 Tax Code which
provides, thus:
Section 112. Refunds or Tax Credits of Input Tax. –

xxx xxx xxx

(D) Period within which refund or Tax Credit of Input Taxes shall be Made. – In proper cases, the
Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one
hundred (120) days from the date of submission of complete documents in support of the application
filed in accordance with Subsections (A) and (B) hereof.

In cases of full or partial denial for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration
of the one hundred twenty dayperiod, appeal the decision or the unacted claim with the Court of Tax
Appeals. (Emphasis supplied.)

12. As stated, [Taganito] filed the administrative claim for refund with the Bureau of Internal Revenue
on November 14, 2006. Subsequently on February 14, 2007, the instant petition was filed. Obviously the
120 days given to the Commissioner to decide on the claim has not yet lapsed when the petition was
filed. The petition was prematurely filed, hence it must be dismissed for lack of jurisdiction.

During trial, [Taganito] presented testimonial and documentary evidence primarily aimed at proving its
supposed entitlement to the refund in the amount of ₱8,365,664.38, representing input taxes for the
period covering January 1, 2005 to December 31, 2005. [The CIR], on the other hand, opted not to
present evidence. Thus, in the Resolution promulgated on January 22, 2009, this case was submitted for
decision as of such date, considering [Taganito’s] "Memorandum" filed on January 19, 2009 and [the
CIR’s] "Memorandum" filed on December 19, 2008.24

The Court of Tax Appeals’ Ruling: Division

The CTA Second Division partially granted Taganito’s claim. In its Decision25 dated 8 January 2010, the
CTA Second Division found that Taganito complied with the requirements of Section 112(A) of RA 8424,
as amended, to be entitled to a tax refund or credit of input VAT attributable to zero-rated or effectively
zero-rated sales.26

The pertinent portions of the CTA Second Division’s Decision read:

Finally, records show that [Taganito’s] administrative claim filed on November 14, 2006, which was
amended on November 29, 2006, and the Petition for Review filed with this Court on February 14, 2007
are well within the two-year prescriptive period, reckoned from March 31, 2005, June 30, 2005,
September 30, 2005, and December 31, 2005, respectively, the close of each taxable quarter covering
the period January 1, 2005 to December 31, 2005.

In fine, [Taganito] sufficiently proved that it is entitled to a tax credit certificate in the amount of
₱8,249,883.33 representing unutilized input VAT for the four taxable quarters of 2005.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY
GRANTED. Accordingly, [the CIR] is hereby ORDERED to REFUND to [Taganito] the amount of EIGHT
MILLION TWO HUNDRED FORTY NINE THOUSAND EIGHT HUNDRED EIGHTY THREE PESOS AND THIRTY
THREE CENTAVOS (P8,249,883.33) representing its unutilized input taxes attributable to zero-rated sales
from January 1, 2005 to December 31, 2005.

SO ORDERED.27

The Commissioner filed a Motion for Partial Reconsideration on 29 January 2010. Taganito, in turn, filed
a Comment/Opposition on the Motion for Partial Reconsideration on 15 February 2010.

In a Resolution28 dated 7 April 2010, the CTA Second Division denied the CIR’s motion. The CTA Second
Division ruled that the legislature did not intend that Section 112 (Refunds or Tax Credits of Input Tax)
should be read in isolation from Section 229 (Recovery of Tax Erroneously or Illegally Collected) or vice
versa. The CTA Second Division applied the mandatory statute of limitations in seeking judicial recourse
prescribed under Section 229 to claims for refund or tax credit under Section 112.

The Court of Tax Appeals’ Ruling: En Banc

On 29 April 2010, the Commissioner filed a Petition for Review before the CTA EB assailing the 8 January
2010 Decision and the 7 April 2010 Resolution in CTA Case No. 7574 and praying that Taganito’s entire
claim for refund be denied.

In its 8 December 2010 Decision,29 the CTA EB granted the CIR’s petition for review and reversed and set
aside the challenged decision and resolution.

The CTA EB declared that Section 112(A) and (B) of the 1997 Tax Code both set forth the reckoning of
the two-year prescriptive period for filing a claim for tax refund or credit over input VAT to be the close
of the taxable quarter when the sales were made. The CTA EB also relied on this Court’s rulings in the
cases of Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.
(Aichi)30 and Commisioner of Internal Revenue v. Mirant Pagbilao Corporation
(Mirant).31 Both Aichi and Mirant ruled that the two-year prescriptive period to file a refund for input
VAT arising from zero-rated sales should be reckoned from the close of the taxable quarter when the
sales were made. Aichi further emphasized that the failure to await the decision of the Commissioner or
the lapse of 120-day period prescribed in Section 112(D) amounts to a premature filing.

The CTA EB found that Taganito filed its administrative claim on 14 November 2006, which was well
within the period prescribed under Section 112(A) and (B) of the 1997 Tax Code. However, the CTA EB
found that Taganito’s judicial claim was prematurely filed. Taganito filed its Petition for Review before
the CTA Second Division on 14 February 2007. The judicial claim was filed after the lapse of only 92 days
from the filing of its administrative claim before the CIR, in violation of the 120-day period prescribed in
Section 112(D) of the 1997 Tax Code.

The dispositive portion of the Decision states:

WHEREFORE, the instant Petition for Review is hereby GRANTED. The assailed Decision dated January 8,
2010 and Resolution dated April 7, 2010 of the Special Second Division of this Court are hereby
REVERSED and SET ASIDE. Another one is hereby entered DISMISSING the Petition for Review filed in
CTA Case No. 7574 for having been prematurely filed.
SO ORDERED.32

In his dissent,33 Associate Justice Lovell R. Bautista insisted that Taganito timely filed its claim before the
CTA. Justice Bautista read Section 112(C) of the 1997 Tax Code (Period within which Refund or Tax Credit
of Input Taxes shall be Made) in conjunction with Section 229 (Recovery of Tax Erroneously or Illegally
Collected). Justice Bautista also relied on this Court’s ruling in Atlas Consolidated Mining and
Development Corporation v. Commissioner of Internal Revenue (Atlas),34 which stated that refundable or
creditable input VAT and illegally or erroneously collected national internal revenue tax are the same,
insofar as both are monetary amounts which are currently in the hands of the government but must
rightfully be returned to the taxpayer. Justice Bautista concluded:

Being merely permissive, a taxpayer claimant has the option of seeking judicial redress for refund or tax
credit of excess or unutilized input tax with this Court, either within 30 days from receipt of the denial of
its claim, or after the lapse of the 120-day period in the event of inaction by the Commissioner, provided
that both administrative and judicial remedies must be undertaken within the 2-year period.35

Taganito filed its Motion for Reconsideration on 29 December 2010. The Commissioner filed an
Opposition on 26 January 2011. The CTA EB denied for lack of merit Taganito’s motion in a
Resolution36 dated 14 March 2011. The CTA EB did not see any justifiable reason to depart from this
Court’s rulings in Aichi and Mirant.

G.R. No. 197156

Philex Mining Corporation v. CIR

The Facts

The CTA EB’s narration of the pertinent facts is as follows:

[Philex] is a corporation duly organized and existing under the laws of the Republic of the Philippines,
which is principally engaged in the mining business, which includes the exploration and operation of
mine properties and commercial production and marketing of mine products, with office address at 27
Philex Building, Fairlaine St., Kapitolyo, Pasig City.

[The CIR], on the other hand, is the head of the Bureau of Internal Revenue ("BIR"), the government
entity tasked with the duties/functions of assessing and collecting all national internal revenue taxes,
fees, and charges, and enforcement of all forfeitures, penalties and fines connected therewith, including
the execution of judgments in all cases decided in its favor by [the Court of Tax Appeals] and the
ordinary courts, where she can be served with court processes at the BIR Head Office, BIR Road, Quezon
City.

On October 21, 2005, [Philex] filed its Original VAT Return for the third quarter of taxable year 2005 and
Amended VAT Return for the same quarter on December 1, 2005.

On March 20, 2006, [Philex] filed its claim for refund/tax credit of the amount of ₱23,956,732.44 with
the One Stop Shop Center of the Department of Finance. However, due to [the CIR’s] failure to act on
such claim, on October 17, 2007, pursuant to Sections 112 and 229 of the NIRC of 1997, as amended,
[Philex] filed a Petition for Review, docketed as C.T.A. Case No. 7687.
In [her] Answer, respondent CIR alleged the following special and affirmative defenses:

4. Claims for refund are strictly construed against the taxpayer as the same partake the nature
of an exemption;

5. The taxpayer has the burden to show that the taxes were erroneously or illegally paid. Failure
on the part of [Philex] to prove the same is fatal to its cause of action;

6. [Philex] should prove its legal basis for claiming for the amount being refunded.37

The Court of Tax Appeals’ Ruling: Division

The CTA Second Division, in its Decision dated 20 July 2009, denied Philex’s claim due to prescription.
The CTA Second Division ruled that the two-year prescriptive period specified in Section 112(A) of RA
8424, as amended, applies not only to the filing of the administrative claim with the BIR, but also to the
filing of the judicial claim with the CTA. Since Philex’s claim covered the 3rd quarter of 2005, its
administrative claim filed on 20 March 2006 was timely filed, while its judicial claim filed on 17 October
2007 was filed late and therefore barred by prescription.

On 10 November 2009, the CTA Second Division denied Philex’s Motion for Reconsideration.

The Court of Tax Appeals’ Ruling: En Banc

Philex filed a Petition for Review before the CTA EB praying for a reversal of the 20 July 2009 Decision
and the 10 November 2009 Resolution of the CTA Second Division in CTA Case No. 7687.

The CTA EB, in its Decision38 dated 3 December 2010, denied Philex’s petition and affirmed the CTA
Second Division’s Decision and Resolution.

The pertinent portions of the Decision read:

In this case, while there is no dispute that [Philex’s] administrative claim for refund was filed within the
two-year prescriptive period; however, as to its judicial claim for refund/credit, records show that on
March 20, 2006, [Philex] applied the administrative claim for refund of unutilized input VAT in the
amount of ₱23,956,732.44 with the One Stop Shop Center of the Department of Finance, per
Application No. 52490. From March 20, 2006, which is also presumably the date [Philex] submitted
supporting documents, together with the aforesaid application for refund, the CIR has 120 days, or until
July 18, 2006, within which to decide the claim. Within 30 days from the lapse of the 120-day period, or
from July 19, 2006 until August 17, 2006, [Philex] should have elevated its claim for refund to the CTA.
However, [Philex] filed its Petition for Review only on October 17, 2007, which is 426 days way beyond
the 30- day period prescribed by law.

Evidently, the Petition for Review in CTA Case No. 7687 was filed 426 days late. Thus, the Petition for
Review in CTA Case No. 7687 should have been dismissed on the ground that the Petition for Review
was filed way beyond the 30-day prescribed period; thus, no jurisdiction was acquired by the CTA in
Division; and not due to prescription.
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED DUE COURSE, and
accordingly, DISMISSED. The assailed Decision dated July 20, 2009, dismissing the Petition for Review in
CTA Case No. 7687 due to prescription, and Resolution dated November 10, 2009 denying [Philex’s]
Motion for Reconsideration are hereby AFFIRMED, with modification that the dismissal is based on the
ground that the Petition for Review in CTA Case No. 7687 was filed way beyond the 30-day prescribed
period to appeal.

SO ORDERED.39

G.R. No. 187485

CIR v. San Roque Power Corporation

The Commissioner raised the following grounds in the Petition for Review:

I. The Court of Tax Appeals En Banc erred in holding that [San Roque’s] claim for refund was not
prematurely filed.

II. The Court of Tax Appeals En Banc erred in affirming the amended decision of the Court of Tax
Appeals (Second Division) granting [San Roque’s] claim for refund of alleged unutilized input VAT
on its purchases of capital goods and services for the taxable year 2001 in the amount of
P483,797,599.65. 40

G.R. No. 196113

Taganito Mining Corporation v. CIR

Taganito raised the following grounds in its Petition for Review:

I. The Court of Tax Appeals En Banc committed serious error and acted with grave abuse of
discretion tantamount to lack or excess of jurisdiction in erroneously applying the Aichi doctrine
in violation of [Taganito’s] right to due process.

II. The Court of Tax Appeals committed serious error and acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in erroneously interpreting the provisions of Section
112 (D).41

G.R. No. 197156

Philex Mining Corporation v. CIR

Philex raised the following grounds in its Petition for Review:

I. The CTA En Banc erred in denying the petition due to alleged prescription. The fact is that the
petition was filed with the CTA within the period set by prevailing court rulings at the time it was
filed.

II. The CTA En Banc erred in retroactively applying the Aichi ruling in denying the petition in this
instant case.42
 The Court’s Ruling

For ready reference, the following are the provisions of the Tax Code applicable to the present cases:

Section 105:

Persons Liable. — Any person who, in the course of trade or business, sells, barters, exchanges,
leases goods or properties, renders services, and any person who imports goods shall be subject to the
value-added tax (VAT) imposed in Sections 106 to 108 of this Code.

The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer,
transferee or lessee of the goods, properties or services. This rule shall likewise apply to existing
contracts of sale or lease of goods, properties or services at the time of the effectivity of Republic Act
No. 7716.

xxxx

Section 110(B):

Sec. 110. Tax Credits. —

(B) Excess Output or Input Tax. — If at the end of any taxable quarter the output tax exceeds the input
tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the
excess shall be carried over to the succeeding quarter or quarters: [Provided, That the input tax
inclusive of input VAT carried over from the previous quarter that may be credited in every quarter shall
not exceed seventy percent (70%) of the output VAT:]43 Provided, however, That any input tax
attributable to zero-rated sales by a VAT-registered person may at his option be refunded or credited
against other internal revenue taxes, subject to the provisions of Section 112.

Section 112:44

Sec. 112. Refunds or Tax Credits of Input Tax. —

(A) Zero-Rated or Effectively Zero-Rated Sales.— Any VAT-registered person, whose sales are
zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax credit certificate or refund
of creditable input tax due or paid attributable to such sales, except transitional input tax, to
the extent that such input tax has not been applied against output tax: Provided, however, That
in the case of zero-rated sales under Section 106(A)(2) (a)(1), (2) and (B) and Section 108(B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted
for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):
Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated
sale and also in taxable or exempt sale of goods or properties or services, and the amount of
creditable input tax due or paid cannot be directly and entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of the volume of sales.
 (B) Capital Goods.- A VAT — registered person may apply for the issuance of a tax credit
certificate or refund of input taxes paid on capital goods imported or locally purchased, to the
extent that such input taxes have not been applied against output taxes. The application may be
made only within two (2) years after the close of the taxable quarter when the importation or
purchase was made.

(C) Cancellation of VAT Registration. — A person whose registration has been cancelled due to
retirement from or cessation of business, or due to changes in or cessation of status under
Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for the
issuance of a tax credit certificate for any unused input tax which may be used in payment of his
other internal revenue taxes

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. — In proper cases,
the Commissioner shall grant a refund or issue the tax credit certificate for creditable input
taxes within one hundred twenty (120) days from the date of submission of complete
documents in support of the application filed in accordance with Subsection (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part
of the Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the claim or after
the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim
with the Court of Tax Appeals.

(E) Manner of Giving Refund. — Refunds shall be made upon warrants drawn by the
Commissioner or by his duly authorized representative without the necessity of being
countersigned by the Chairman, Commission on Audit, the provisions of the Administrative Code
of 1987 to the contrary notwithstanding: Provided, that refunds under this paragraph shall be
subject to post audit by the Commission on Audit.

Section 229:

Recovery of Tax Erroneously or Illegally Collected. — No suit or proceeding shall be maintained in any
court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously
or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or
of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for
refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date
of payment of the tax or penalty regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit
any tax, where on the face of the return upon which payment was made, such payment appears clearly
to have been erroneously paid.

(All emphases supplied)

I. Application of the 120+30 Day Periods

a. G.R. No. 187485 - CIR v. San Roque Power Corporation

On 10 April 2003, a mere 13 days after it filed its amended administrative claim with the Commissioner
on 28 March 2003, San Roque filed a Petition for Review with the CTA docketed as CTA Case No. 6647.
From this we gather two crucial facts: first, San Roque did not wait for the 120-day period to lapse
before filing its judicial claim; second, San Roque filed its judicial claim more than four (4)
years before the Atlas45 doctrine, which was promulgated by the Court on 8 June 2007.

Clearly, San Roque failed to comply with the 120-day waiting period, the time expressly given by law to
the Commissioner to decide whether to grant or deny San Roque’s application for tax refund or credit. It
is indisputable that compliance with the 120-day waiting period is mandatory and jurisdictional. The
waiting period, originally fixed at 60 days only, was part of the provisions of the first VAT law, Executive
Order No. 273, which took effect on 1 January 1988. The waiting period was extended to 120 days
effective 1 January 1998 under RA 8424 or the Tax Reform Act of 1997. Thus, the waiting period has
been in our statute books for more than fifteen (15) years before San Roque filed its judicial claim.

Failure to comply with the 120-day waiting period violates a mandatory provision of law. It violates the
doctrine of exhaustion of administrative remedies and renders the petition premature and thus without
a cause of action, with the effect that the CTA does not acquire jurisdiction over the taxpayer’s petition.
Philippine jurisprudence is replete with cases upholding and reiterating these doctrinal principles.46

The charter of the CTA expressly provides that its jurisdiction is to review on appeal "decisions of the
Commissioner of Internal Revenue in cases involving x x x refunds of internal revenue taxes."47 When a
taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without waiting for the
decision of the Commissioner, there is no "decision" of the Commissioner to review and thus the CTA as
a court of special jurisdiction has no jurisdiction over the appeal. The charter of the CTA also expressly
provides that if the Commissioner fails to decide within "a specific period" required by law, such
"inaction shall be deemed a denial"48 of the application for tax refund or credit. It is the Commissioner’s
decision, or inaction "deemed a denial," that the taxpayer can take to the CTA for review. Without a
decision or an "inaction x x x deemed a denial" of the Commissioner, the CTA has no jurisdiction over a
petition for review.49

San Roque’s failure to comply with the 120-day mandatory period renders its petition for review with
the CTA void. Article 5 of the Civil Code provides, "Acts executed against provisions of mandatory or
prohibitory laws shall be void, except when the law itself authorizes their validity." San Roque’s void
petition for review cannot be legitimized by the CTA or this Court because Article 5 of the Civil Code
states that such void petition cannot be legitimized "except when the law itself authorizes [its] validity."
There is no law authorizing the petition’s validity.

It is hornbook doctrine that a person committing a void act contrary to a mandatory provision of law
cannot claim or acquire any right from his void act. A right cannot spring in favor of a person from his
own void or illegal act. This doctrine is repeated in Article 2254 of the Civil Code, which states, "No
vested or acquired right can arise from acts or omissions which are against the law or which infringe
upon the rights of others."50 For violating a mandatory provision of law in filing its petition with the CTA,
San Roque cannot claim any right arising from such void petition. Thus, San Roque’s petition with the
CTA is a mere scrap of paper.
This Court cannot brush aside the grave issue of the mandatory and jurisdictional nature of the 120-day
period just because the Commissioner merely asserts that the case was prematurely filed with the CTA
and does not question the entitlement of San Roque to the refund. The mere fact that a taxpayer has
undisputed excess input VAT, or that the tax was admittedly illegally, erroneously or excessively
collected from him, does not entitle him as a matter of right to a tax refund or credit. Strict compliance
with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is
essential and necessary for such claim to prosper. Well-settled is the rule that tax refunds or credits,
just like tax exemptions, are strictly construed against the taxpayer.51 The burden is on the taxpayer to
show that he has strictly complied with the conditions for the grant of the tax refund or credit.

This Court cannot disregard mandatory and jurisdictional conditions mandated by law simply because
the Commissioner chose not to contest the numerical correctness of the claim for tax refund or credit of
the taxpayer. Non-compliance with mandatory periods, non-observance of prescriptive periods, and
non-adherence to exhaustion of administrative remedies bar a taxpayer’s claim for tax refund or credit,
whether or not the Commissioner questions the numerical correctness of the claim of the taxpayer. This
Court should not establish the precedent that non-compliance with mandatory and jurisdictional
conditions can be excused if the claim is otherwise meritorious, particularly in claims for tax refunds or
credit. Such precedent will render meaningless compliance with mandatory and jurisdictional
requirements, for then every tax refund case will have to be decided on the numerical correctness of the
amounts claimed, regardless of non-compliance with mandatory and jurisdictional conditions.

San Roque cannot also claim being misled, misguided or confused by the Atlas doctrine because San
Roque filed its petition for review with the CTA more than four years before Atlas was
promulgated. The Atlas doctrine did not exist at the time San Roque failed to comply with the 120- day
period. Thus, San Roque cannot invoke the Atlas doctrine as an excuse for its failure to wait for the 120-
day period to lapse. In any event, the Atlas doctrine merely stated that the two-year prescriptive period
should be counted from the date of payment of the output VAT, not from the close of the taxable
quarter when the sales involving the input VAT were made. The Atlas doctrine does not interpret,
expressly or impliedly, the 120+3052 day periods.

In fact, Section 106(b) and (e) of the Tax Code of 1977 as amended, which was the law cited by the Court
in Atlas as the applicable provision of the law did not yet provide for the 30-day period for the taxpayer
to appeal to the CTA from the decision or inaction of the Commissioner.53 Thus, the Atlas doctrine
cannot be invoked by anyone to disregard compliance with the 30-day mandatory and jurisdictional
period. Also, the difference between the Atlas doctrine on one hand, and the Mirant54 doctrine on the
other hand, is a mere 20 days. The Atlas doctrine counts the two-year prescriptive period from the date
of payment of the output VAT, which means within 20 days after the close of the taxable quarter. The
output VAT at that time must be paid at the time of filing of the quarterly tax returns, which were to be
filed "within 20 days following the end of each quarter."

Thus, in Atlas, the three tax refund claims listed below were deemed timely filed because the
administrative claims filed with the Commissioner, and the petitions for review filed with the CTA, were
all filed within two years from the date of payment of the output VAT, following Section 229:

Date of Filing Return Date of Filing Date of Filing

Period Covered
& Payment of Tax Administrative Claim Petition With CTA
 2nd Quarter, 1990 20 July 1990 21 August 1990 20 July 1992
Close of Quarter
30 June 1990

3rd Quarter, 1990 18 October 1990 21 November 1990 9 October 1992

Close of Quarter
30 September 1990

4th Quarter, 1990 20 January 1991 19 February 1991 14 January 1993

Close of Quarter
31 December 1990

Atlas paid the output VAT at the time it filed the quarterly tax returns on the 20th, 18th, and 20th
day after the close of the taxable quarter. Had the twoyear prescriptive period been counted from the
"close of the taxable quarter" as expressly stated in the law, the tax refund claims of Atlas would have
already prescribed. In contrast, the Mirant doctrine counts the two-year prescriptive period from the
"close of the taxable quarter when the sales were made" as expressly stated in the law, which means
the last day of the taxable quarter. The 20-day difference55 between the Atlas doctrine and the
later Mirant doctrine is not material to San Roque’s claim for tax refund.

Whether the Atlas doctrine or the Mirant doctrine is applied to San Roque is immaterial because what is
at issue in the present case is San Roque’s non-compliance with the 120-day mandatory and
jurisdictional period, which is counted from the date it filed its administrative claim with the
Commissioner. The 120-day period may extend beyond the two-year prescriptive period, as long as the
administrative claim is filed within the two-year prescriptive period. However, San Roque’s fatal mistake
is that it did not wait for the Commissioner to decide within the 120-day period, a mandatory period
whether the Atlas or the Mirant doctrine is applied.

At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods
were already in the law. Section 112(C)56 expressly grants the Commissioner 120 days within which to
decide the taxpayer’s claim. The law is clear, plain, and unequivocal: "x x x the Commissioner shall grant
a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120)
days from the date of submission of complete documents." Following the verba legis doctrine, this law
must be applied exactly as worded since it is clear, plain, and unequivocal. The taxpayer cannot simply
file a petition with the CTA without waiting for the Commissioner’s decision within the 120-day
mandatory and jurisdictional period. The CTA will have no jurisdiction because there will be no
"decision" or "deemed a denial" decision of the Commissioner for the CTA to review. In San Roque’s
case, it filed its petition with the CTA a mere 13 days after it filed its administrative claim with the
Commissioner. Indisputably, San Roque knowingly violated the mandatory 120-day period, and it cannot
blame anyone but itself.

Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or
inaction of the Commissioner, thus:

x x x the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the
claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted
claim with the Court of Tax Appeals. (Emphasis supplied)
This law is clear, plain, and unequivocal. Following the well-settled verba legis doctrine, this law should
be applied exactly as worded since it is clear, plain, and unequivocal. As this law states, the taxpayer
may, if he wishes, appeal the decision of the Commissioner to the CTA within 30 days from receipt of the
Commissioner’s decision, or if the Commissioner does not act on the taxpayer’s claim within the 120-day
period, the taxpayer may appeal to the CTA within 30 days from the expiration of the 120-day period.

b. G.R. No. 196113 - Taganito Mining Corporation v. CIR

Like San Roque, Taganito also filed its petition for review with the CTA without waiting for the 120-day
period to lapse. Also, like San Roque, Taganito filed its judicial claim before the promulgation of
the Atlas doctrine. Taganito filed a Petition for Review on 14 February 2007 with the CTA. This is almost
four months before the adoption of the Atlas doctrine on 8 June 2007. Taganito is similarly situated as
San Roque - both cannot claim being misled, misguided, or confused by the Atlas doctrine.

However, Taganito can invoke BIR Ruling No. DA-489-0357 dated 10 December 2003, which expressly
ruled that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could
seek judicial relief with the CTA by way of Petition for Review." Taganito filed its judicial claim after the
issuance of BIR Ruling No. DA-489-03 but before the adoption of the Aichi doctrine. Thus, as will be
explained later, Taganito is deemed to have filed its judicial claim with the CTA on time.

c. G.R. No. 197156 – Philex Mining Corporation v. CIR

Philex (1) filed on 21 October 2005 its original VAT Return for the third quarter of taxable year 2005; (2)
filed on 20 March 2006 its administrative claim for refund or credit; (3) filed on 17 October 2007 its
Petition for Review with the CTA. The close of the third taxable quarter in 2005 is 30 September 2005,
which is the reckoning date in computing the two-year prescriptive period under Section 112(A).

Philex timely filed its administrative claim on 20 March 2006, within the two-year prescriptive period.
Even if the two-year prescriptive period is computed from the date of payment of the output VAT under
Section 229, Philex still filed its administrative claim on time. Thus, the Atlas doctrine is immaterial in
this case. The Commissioner had until 17 July 2006, the last day of the 120-day period, to decide Philex’s
claim. Since the Commissioner did not act on Philex’s claim on or before 17 July 2006, Philex had until 17
August 2006, the last day of the 30-day period, to file its judicial claim. The CTA EB held that 17 August
2006 was indeed the last day for Philex to file its judicial claim. However, Philex filed its Petition for
Review with the CTA only on 17 October 2007, or four hundred twenty-six (426) days after the last day
of filing. In short, Philex was late by one year and 61 days in filing its judicial claim. As the CTA EB
correctly found:

Evidently, the Petition for Review in C.T.A. Case No. 7687 was filed 426 days late. Thus, the Petition for
Review in C.T.A. Case No. 7687 should have been dismissed on the ground that the Petition for Review
was filed way beyond the 30-day prescribed period; thus, no jurisdiction was acquired by the CTA
Division; x x x58 (Emphasis supplied)

Unlike San Roque and Taganito, Philex’s case is not one of premature filing but of late filing. Philex did
not file any petition with the CTA within the 120-day period. Philex did not also file any petition with the
CTA within 30 days after the expiration of the 120-day period. Philex filed its judicial claim long after the
expiration of the 120-day period, in fact 426 days after the lapse of the 120-day period. In any event,
whether governed by jurisprudence before, during, or after the Atlas case, Philex’s judicial claim will
have to be rejected because of late filing. Whether the two-year prescriptive period is counted from
the date of payment of the output VAT following the Atlas doctrine, or from the close of the taxable
quarter when the sales attributable to the input VAT were made following
the Mirant and Aichi doctrines, Philex’s judicial claim was indisputably filed late.

The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of the
Commissioner on Philex’s claim during the 120-day period is, by express provision of law, "deemed a
denial" of Philex’s claim. Philex had 30 days from the expiration of the 120-day period to file its judicial
claim with the CTA. Philex’s failure to do so rendered the "deemed a denial" decision of the
Commissioner final and inappealable. The right to appeal to the CTA from a decision or "deemed a
denial" decision of the Commissioner is merely a statutory privilege, not a constitutional right. The
exercise of such statutory privilege requires strict compliance with the conditions attached by the
statute for its exercise.59 Philex failed to comply with the statutory conditions and must thus bear the
consequences.

II. Prescriptive Periods under Section 112(A) and (C)

There are three compelling reasons why the 30-day period need not necessarily fall within the two-year
prescriptive period, as long as the administrative claim is filed within the two-year prescriptive period.

First, Section 112(A) clearly, plainly, and unequivocally provides that the taxpayer "may, within
two (2) years after the close of the taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of the creditable input tax due or paid to such
sales." In short, the law states that the taxpayer may apply with the Commissioner for a refund
or credit "within two (2) years," which means at anytime within two years. Thus, the
application for refund or credit may be filed by the taxpayer with the Commissioner on the last
day of the two-year prescriptive period and it will still strictly comply with the law. The twoyear
prescriptive period is a grace period in favor of the taxpayer and he can avail of the full period
before his right to apply for a tax refund or credit is barred by prescription.

Second, Section 112(C) provides that the Commissioner shall decide the application for refund or
credit "within one hundred twenty (120) days from the date of submission of complete
documents in support of the application filed in accordance with Subsection (A)." The reference
in Section 112(C) of the submission of documents "in support of the application filed in
accordance with Subsection A" means that the application in Section 112(A) is the
administrative claim that the Commissioner must decide within the 120-day period. In short, the
two-year prescriptive period in Section 112(A) refers to the period within which the taxpayer
can file an administrative claim for tax refund or credit. Stated otherwise, the two-year
prescriptive period does not refer to the filing of the judicial claim with the CTA but to the
filing of the administrative claim with the Commissioner. As held in Aichi, the "phrase ‘within
two years x x x apply for the issuance of a tax credit or refund’ refers to applications for
refund/credit with the CIR and not to appeals made to the CTA."

Third, if the 30-day period, or any part of it, is required to fall within the two-year prescriptive
period (equivalent to 730 days60), then the taxpayer must file his administrative claim for refund
or credit within the first 610 days of the two-year prescriptive period. Otherwise, the filing of
the administrative claim beyond the first 610 days will result in the appeal to the CTA being
 filed beyond the two-year prescriptive period. Thus, if the taxpayer files his administrative
claim on the 611th day, the Commissioner, with his 120-day period, will have until the 731st day
to decide the claim. If the Commissioner decides only on the 731st day, or does not decide at all,
the taxpayer can no longer file his judicial claim with the CTA because the two-year prescriptive
period (equivalent to 730 days) has lapsed. The 30-day period granted by law to the taxpayer to
file an appeal before the CTA becomes utterly useless, even if the taxpayer complied with the
law by filing his administrative claim within the two-year prescriptive period.

The theory that the 30-day period must fall within the two-year prescriptive period adds a condition that
is not found in the law. It results in truncating 120 days from the 730 days that the law grants the
taxpayer for filing his administrative claim with the Commissioner. This Court cannot interpret a law to
defeat, wholly or even partly, a remedy that the law expressly grants in clear, plain, and unequivocal
language.

Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal language. The
taxpayer can file his administrative claim for refund or credit at anytime within the two-year prescriptive
period. If he files his claim on the last day of the two-year prescriptive period, his claim is still filed on
time. The Commissioner will have 120 days from such filing to decide the claim. If the Commissioner
decides the claim on the 120th day, or does not decide it on that day, the taxpayer still has 30 days to
file his judicial claim with the CTA. This is not only the plain meaning but also the only logical
interpretation of Section 112(A) and (C).

III. "Excess" Input VAT and "Excessively" Collected Tax

The input VAT is not "excessively" collected as understood under Section 229 because at the time the
input VAT is collected the amount paid is correct and proper. The input VAT is a tax liability of, and
legally paid by, a VAT-registered seller61 of goods, properties or services used as input by another VAT-
registered person in the sale of his own goods, properties, or services. This tax liability is true even if the
seller passes on the input VAT to the buyer as part of the purchase price. The second VAT-registered
person, who is not legally liable for the input VAT, is the one who applies the input VAT as credit for his
own output VAT.62 If the input VAT is in fact "excessively" collected as understood under Section 229,
then it is the first VAT-registered person - the taxpayer who is legally liable and who is deemed to have
legally paid for the input VAT - who can ask for a tax refund or credit under Section 229 as an ordinary
refund or credit outside of the VAT System. In such event, the second VAT-registered taxpayer will have
no input VAT to offset against his own output VAT.

In a claim for refund or credit of "excess" input VAT under Section 110(B) and Section 112(A), the input
VAT is not "excessively" collected as understood under Section 229. At the time of payment of the input
VAT the amount paid is the correct and proper amount. Under the VAT System, there is no claim or issue
that the input VAT is "excessively" collected, that is, that the input VAT paid is more than what is legally
due. The person legally liable for the input VAT cannot claim that he overpaid the input VAT by the mere
existence of an "excess" input VAT. The term "excess" input VAT simply means that the input VAT
available as credit exceeds the output VAT, not that the input VAT is excessively collected because it is
more than what is legally due. Thus, the taxpayer who legally paid the input VAT cannot claim for refund
or credit of the input VAT as "excessively" collected under Section 229.

Under Section 229, the prescriptive period for filing a judicial claim for refund is two years from the date
of payment of the tax "erroneously, x x x illegally, x x x excessively or in any manner wrongfully
collected." The prescriptive period is reckoned from the date the person liable for the tax pays the tax.
Thus, if the input VAT is in fact "excessively" collected, that is, the person liable for the tax actually pays
more than what is legally due, the taxpayer must file a judicial claim for refund within two years from his
date of payment. Only the person legally liable to pay the tax can file the judicial claim for refund. The
person to whom the tax is passed on as part of the purchase price has no personality to file the
judicial claim under Section 229.63

Under Section 110(B) and Section 112(A), the prescriptive period for filing a judicial claim for "excess"
input VAT is two years from the close of the taxable quarter when the sale was made by the person
legally liable to pay the output VAT. This prescriptive period has no relation to the date of payment of
the "excess" input VAT. The "excess" input VAT may have been paid for more than two years but this
does not bar the filing of a judicial claim for "excess" VAT under Section 112(A), which has a different
reckoning period from Section 229. Moreover, the person claiming the refund or credit of the input VAT
is not the person who legally paid the input VAT. Such person seeking the VAT refund or credit does not
claim that the input VAT was "excessively" collected from him, or that he paid an input VAT that is more
than what is legally due. He is not the taxpayer who legally paid the input VAT.

As its name implies, the Value-Added Tax system is a tax on the value added by the taxpayer in the chain
of transactions. For simplicity and efficiency in tax collection, the VAT is imposed not just on the value
added by the taxpayer, but on the entire selling price of his goods, properties or services. However, the
taxpayer is allowed a refund or credit on the VAT previously paid by those who sold him the inputs for
his goods, properties, or services. The net effect is that the taxpayer pays the VAT only on the value that
he adds to the goods, properties, or services that he actually sells.

Under Section 110(B), a taxpayer can apply his input VAT only against his output VAT. The only
exception is when the taxpayer is expressly "zero-rated or effectively zero-rated" under the law, like
companies generating power through renewable sources of energy.64 Thus, a non zero-rated VAT-
registered taxpayer who has no output VAT because he has no sales cannot claim a tax refund or credit
of his unused input VAT under the VAT System. Even if the taxpayer has sales but his input VAT exceeds
his output VAT, he cannot seek a tax refund or credit of his "excess" input VAT under the VAT
System. He can only carry-over and apply his "excess" input VAT against his future output VAT. If such
"excess" input VAT is an "excessively" collected tax, the taxpayer should be able to seek a refund or
credit for such "excess" input VAT whether or not he has output VAT. The VAT System does not allow
such refund or credit. Such "excess" input VAT is not an "excessively" collected tax under Section 229.
The "excess" input VAT is a correctly and properly collected tax. However, such "excess" input VAT can
be applied against the output VAT because the VAT is a tax imposed only on the value added by the
taxpayer. If the input VAT is in fact "excessively" collected under Section 229, then it is the person legally
liable to pay the input VAT, not the person to whom the tax was passed on as part of the purchase price
and claiming credit for the input VAT under the VAT System, who can file the judicial claim under Section
229.

Any suggestion that the "excess" input VAT under the VAT System is an "excessively" collected tax under
Section 229 may lead taxpayers to file a claim for refund or credit for such "excess" input VAT under
Section 229 as an ordinary tax refund or credit outside of the VAT System. Under Section 229, mere
payment of a tax beyond what is legally due can be claimed as a refund or credit. There is no
requirement under Section 229 for an output VAT or subsequent sale of goods, properties, or services
using materials subject to input VAT.
From the plain text of Section 229, it is clear that what can be refunded or credited is a tax that is
"erroneously, x x x illegally, x x x excessively or in any manner wrongfully collected." In short, there
must be a wrongful payment because what is paid, or part of it, is not legally due. As the Court held
in Mirant, Section 229 should "apply only to instances of erroneous payment or illegal collection of
internal revenue taxes." Erroneous or wrongful payment includes excessive payment because they all
refer to payment of taxes not legally due. Under the VAT System, there is no claim or issue that the
"excess" input VAT is "excessively or in any manner wrongfully collected." In fact, if the "excess" input
VAT is an "excessively" collected tax under Section 229, then the taxpayer claiming to apply such
"excessively" collected input VAT to offset his output VAT may have no legal basis to make such
offsetting. The person legally liable to pay the input VAT can claim a refund or credit for such
"excessively" collected tax, and thus there will no longer be any "excess" input VAT. This will upend the
present VAT System as we know it.

IV. Effectivity and Scope of the Atlas , Mirant and Aichi Doctrines

The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-
year prescriptive period under Section 229, should be effective only from its promulgation on 8 June
2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the
reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to
the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should be
governed by Section 112(A) following the verba legis rule. The Mirant ruling, which abandoned
the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two-year
prescriptive period in claiming refund or credit of input VAT.

The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because the
application of the 120+30 day periods was not in issue in Atlas. The application of the 120+30 day
periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day
periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and
unambiguous. When Section 112(C) states that "the Commissioner shall grant a refund or issue the tax
credit within one hundred twenty (120) days from the date of submission of complete documents," the
law clearly gives the Commissioner 120 days within which to decide the taxpayer’s claim. Resort to the
courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of
administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine
jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of administrative
remedies.65 Such doctrine is basic and elementary.

When Section 112(C) states that "the taxpayer affected may, within thirty (30) days from receipt of the
decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the
decision or the unacted claim with the Court of Tax Appeals," the law does not make the 120+30 day
periods optional just because the law uses the word "may." The word "may" simply means that the
taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the
decision, or within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the
imagination can the word "may" be construed as making the 120+30 day periods optional, allowing the
taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner.

The old rule66 that the taxpayer may file the judicial claim, without waiting for the Commissioner’s
decision if the two-year prescriptive period is about to expire, cannot apply because that rule was
adopted before the enactment of the 30-day period. The 30-day period was adopted precisely to do
away with the old rule, so that under the VAT System the taxpayer will always have 30 days to file the
judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the
120-day period. With the 30-day period always available to the taxpayer, the taxpayer can no longer file
a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until
the expiration of the 120-day period.

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the
taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is
compliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the
120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the
effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on
10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the
120+30 day periods as mandatory and jurisdictional.

V. Revenue Memorandum Circular No. 49-03 (RMC 49-03) dated 15 April 2003

There is nothing in RMC 49-03 that states, expressly or impliedly, that the taxpayer need not wait for the
120-day period to expire before filing a judicial claim with the CTA. RMC 49-03 merely authorizes the BIR
to continue processing the administrative claim even after the taxpayer has filed its judicial claim,
without saying that the taxpayer can file its judicial claim before the expiration of the 120-day period.
RMC 49-03 states: "In cases where the taxpayer has filed a ‘Petition for Review’ with the Court of Tax
Appeals involving a claim for refund/TCC that is pending at the administrative agency (either the Bureau
of Internal Revenue or the One- Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the
Department of Finance), the administrative agency and the court may act on the case separately." Thus,
if the taxpayer files its judicial claim before the expiration of the 120-day period, the BIR will
nevertheless continue to act on the administrative claim because such premature filing cannot divest
the Commissioner of his statutory power and jurisdiction to decide the administrative claim within the
120-day period.

On the other hand, if the taxpayer files its judicial claim after the 120- day period, the Commissioner can
still continue to evaluate the administrative claim. There is nothing new in this because even after the
expiration of the 120-day period, the Commissioner should still evaluate internally the administrative
claim for purposes of opposing the taxpayer’s judicial claim, or even for purposes of determining if the
BIR should actually concede to the taxpayer’s judicial claim. The internal administrative evaluation of the
taxpayer’s claim must necessarily continue to enable the BIR to oppose intelligently the judicial claim or,
if the facts and the law warrant otherwise, for the BIR to concede to the judicial claim, resulting in the
termination of the judicial proceedings.

What is important, as far as the present cases are concerned, is that the mere filing by a taxpayer of a
judicial claim with the CTA before the expiration of the 120-day period cannot operate to divest the
Commissioner of his jurisdiction to decide an administrative claim within the 120-day mandatory
period, unless the Commissioner has clearly given cause for equitable estoppel to apply as expressly
recognized in Section 246 of the Tax Code.67

VI. BIR Ruling No. DA-489-03 dated 10 December 2003

BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the Tax
Code. BIR Ruling No. DA-489-03 expressly states that the "taxpayer-claimant need not wait for the
lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for
Review." Prior to this ruling, the BIR held, as shown by its position in the Court of Appeals,68 that the
expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed.

There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not
acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There
are, however, two exceptions to this rule. The first exception is if the Commissioner, through a specific
ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific
ruling is applicable only to such particular taxpayer. The second exception is where the
Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all
taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot
be allowed to later on question the CTA’s assumption of jurisdiction over such claim since equitable
estoppel has set in as expressly authorized under Section 246 of the Tax Code.

Section 4 of the Tax Code, a new provision introduced by RA 8424, expressly grants to the Commissioner
the power to interpret tax laws, thus:

Sec. 4. Power of the Commissioner To Interpret Tax Laws and To Decide Tax Cases. — The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary of Finance.

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals.

Since the Commissioner has exclusive and original jurisdiction to interpret tax laws, taxpayers acting in
good faith should not be made to suffer for adhering to general interpretative rules of the Commissioner
interpreting tax laws, should such interpretation later turn out to be erroneous and be reversed by the
Commissioner or this Court. Indeed, Section 246 of the Tax Code expressly provides that a reversal of a
BIR regulation or ruling cannot adversely prejudice a taxpayer who in good faith relied on the BIR
regulation or ruling prior to its reversal. Section 246 provides as follows:

Sec. 246. Non-Retroactivity of Rulings. — Any revocation, modification or reversal of any of the rules
and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars
promulgated by the Commissioner shall not be given retroactive application if the revocation,
modification or reversal will be prejudicial to the taxpayers, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return or any
document required of him by the Bureau of Internal Revenue;

(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially
different from the facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith. (Emphasis supplied)

Thus, a general interpretative rule issued by the Commissioner may be relied upon by taxpayers from
the time the rule is issued up to its reversal by the Commissioner or this Court. Section 246 is not limited
to a reversal only by the Commissioner because this Section expressly states, "Any revocation,
modification or reversal" without specifying who made the revocation, modification or reversal. Hence,
a reversal by this Court is covered under Section 246.

Taxpayers should not be prejudiced by an erroneous interpretation by the Commissioner, particularly on

a difficult question of law. The abandonment of the Atlas doctrine by Mirant and Aichi69 is proof that the
reckoning of the prescriptive periods for input VAT tax refund or credit is a difficult question of law. The
abandonment of the Atlas doctrine did not result in Atlas, or other taxpayers similarly situated, being
made to return the tax refund or credit they received or could have received under Atlas prior to its
abandonment. This Court is applying Mirant and Aichi prospectively. Absent fraud, bad faith or
misrepresentation, the reversal by this Court of a general interpretative rule issued by the
Commissioner, like the reversal of a specific BIR ruling under Section 246, should also apply
prospectively. As held by this Court in CIR v. Philippine Health Care Providers, Inc.:70

In ABS-CBN Broadcasting Corp. v. Court of Tax Appeals, this Court held that under Section 246 of the
1997 Tax Code, the Commissioner of Internal Revenue is precluded from adopting a position contrary
to one previously taken where injustice would result to the taxpayer. Hence, where an assessment for
deficiency withholding income taxes was made, three years after a new BIR Circular reversed a previous
one upon which the taxpayer had relied upon, such an assessment was prejudicial to the taxpayer. To
rule otherwise, opined the Court, would be contrary to the tenets of good faith, equity, and fair play.

This Court has consistently reaffirmed its ruling in ABS-CBN Broadcasting Corp.1âwphi1 in the later cases
of Commissioner of Internal Revenue v. Borroughs, Ltd., Commissioner of Internal Revenue v. Mega Gen.
Mdsg. Corp., Commissioner of Internal Revenue v. Telefunken Semiconductor (Phils.) Inc.,
and Commissioner of Internal Revenue v. Court of Appeals. The rule is that the BIR rulings have no
retroactive effect where a grossly unfair deal would result to the prejudice of the taxpayer, as in this
case.

More recently, in Commissioner of Internal Revenue v. Benguet Corporation, wherein the taxpayer was
entitled to tax refunds or credits based on the BIR’s own issuances but later was suddenly saddled with
deficiency taxes due to its subsequent ruling changing the category of the taxpayer’s transactions for the
purpose of paying its VAT, this Court ruled that applying such ruling retroactively would be prejudicial to
the taxpayer. (Emphasis supplied)

Thus, the only issue is whether BIR Ruling No. DA-489-03 is a general interpretative rule applicable to all
taxpayers or a specific ruling applicable only to a particular taxpayer.

BIR Ruling No. DA-489-03 is a general interpretative rule because it was a response to a query made, not
by a particular taxpayer, but by a government agency tasked with processing tax refunds and credits,
that is, the One Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of
Finance. This government agency is also the addressee, or the entity responded to, in BIR Ruling No. DA-
489-03. Thus, while this government agency mentions in its query to the Commissioner the
administrative claim of Lazi Bay Resources Development, Inc., the agency was in fact asking the
Commissioner what to do in cases like the tax claim of Lazi Bay Resources Development, Inc., where the
taxpayer did not wait for the lapse of the 120-day period.
Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR
Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court
in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are mandatory and
jurisdictional

However, BIR Ruling No. DA-489-03 cannot be given retroactive effect for four reasons: first, it is
admittedly an erroneous interpretation of the law; second, prior to its issuance, the BIR held that the
120-day period was mandatory and jurisdictional, which is the correct interpretation of the law; third,
prior to its issuance, no taxpayer can claim that it was misled by the BIR into filing a judicial claim
prematurely; and fourth, a claim for tax refund or credit, like a claim for tax exemption, is strictly
construed against the taxpayer.

San Roque, therefore, cannot benefit from BIR Ruling No. DA-489-03 because it filed its judicial claim
prematurely on 10 April 2003, before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003.
To repeat, San Roque cannot claim that it was misled by the BIR into filing its judicial claim prematurely
because BIR Ruling No. DA-489-03 was issued only after San Roque filed its judicial claim. At the time
San Roque filed its judicial claim, the law as applied and administered by the BIR was that the
Commissioner had 120 days to act on administrative claims. This was in fact the position of the BIR prior
to the issuance of BIR Ruling No. DA-489-03. Indeed, San Roque never claimed the benefit of BIR Ruling
No. DA-489-03 or RMC 49-03, whether in this Court, the CTA, or before the Commissioner.

Taganito, however, filed its judicial claim with the CTA on 14 February 2007, after the issuance of BIR
Ruling No. DA-489-03 on 10 December 2003. Truly, Taganito can claim that in filing its judicial claim
prematurely without waiting for the 120-day period to expire, it was misled by BIR Ruling No. DA-489-
03. Thus, Taganito can claim the benefit of BIR Ruling No. DA-489-03, which shields the filing of its
judicial claim from the vice of prematurity.

Philex’s situation is not a case of premature filing of its judicial claim but of late filing, indeed very late
filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means non-
exhaustion of the 120-day period for the Commissioner to act on an administrative claim. Philex cannot
claim the benefit of BIR Ruling No. DA-489-03 because Philex did not file its judicial claim prematurely
but filed it long after the lapse of the 30-day period following the expiration of the 120-day period. In
fact, Philex filed its judicial claim 426 days after the lapse of the 30-day period.

VII. Existing Jurisprudence

There is no basis whatsoever to the claim that in five cases this Court had already made a ruling that the
filing dates of the administrative and judicial claims are inconsequential, as long as they are within the
two-year prescriptive period. The effect of the claim of the dissenting opinions is that San Roque’s
failure to wait for the 120-day mandatory period to lapse is inconsequential, thus allowing San Roque to
claim the tax refund or credit. However, the five cases cited by the dissenting opinions do not support
even remotely the claim that this Court had already made such a ruling. None of these five cases
mention, cite, discuss, rule or even hint that compliance with the 120-day mandatory period is
inconsequential as long as the administrative and judicial claims are filed within the two-year
prescriptive period.
In CIR v. Toshiba Information Equipment (Phils.), Inc.,71 the issue was whether any output VAT was
actually passed on to Toshiba that it could claim as input VAT subject to tax credit or refund. The
Commissioner argued that "although Toshiba may be a VAT-registered taxpayer, it is not engaged in a
VAT-taxable business." The Commissioner cited Section 4.106-1 of Revenue Regulations No. 75 that
"refund of input taxes on capital goods shall be allowed only to the extent that such capital goods are
used in VAT-taxable business." In the words of the Court, "Ultimately, however, the issue still to be
resolved herein shall be whether respondent Toshiba is entitled to the tax credit/refund of its input VAT
on its purchases of capital goods and services, to which this Court answers in the affirmative." Nowhere
in this case did the Court discuss, state, or rule that the filing dates of the administrative and judicial
claims are inconsequential, as long as they are within the two-year prescriptive period.

In Intel Technology Philippines, Inc. v. CIR,72 the Court stated: "The issues to be resolved in the instant
case are (1) whether the absence of the BIR authority to print or the absence of the TIN-V in petitioner’s
export sales invoices operates to forfeit its entitlement to a tax refund/credit of its unutilized input VAT
attributable to its zero-rated sales; and (2) whether petitioner’s failure to indicate "TIN-V" in its sales
invoices automatically invalidates its claim for a tax credit certification." Again, nowhere in this case did
the Court discuss, state, or rule that the filing dates of the administrative and judicial claims are
inconsequential, as long as they are within the two-year prescriptive period.

In AT&T Communications Services Philippines, Inc. v. CIR,73 the Court stated: "x x x the CTA First Division,
conceding that petitioner’s transactions fall under the classification of zero-rated sales, nevertheless
denied petitioner’s claim ‘for lack of substantiation,’ x x x." The Court quoted the ruling of the First
Division that "valid VAT official receipts, and not mere sale invoices, should have been submitted" by
petitioner to substantiate its claim. The Court further stated: "x x x the CTA En Banc, x x x affirmed x x x
the CTA First Division," and "petitioner’s motion for reconsideration having been denied x x x, the
present petition for review was filed." Clearly, the sole issue in this case is whether petitioner complied
with the substantiation requirements in claiming for tax refund or credit. Again, nowhere in this case did
the Court discuss, state, or rule that the filing dates of the administrative and judicial claims are
inconsequential, as long as they are within the two-year prescriptive period.

In CIR v. Ironcon Builders and Development Corporation,74 the Court put the issue in this manner:
"Simply put, the sole issue the petition raises is whether or not the CTA erred in granting respondent
Ironcon’s application for refund of its excess creditable VAT withheld." The Commissioner argued that
"since the NIRC does not specifically grant taxpayers the option to refund excess creditable VAT
withheld, it follows that such refund cannot be allowed." Thus, this case is solely about whether the
taxpayer has the right under the NIRC to ask for a cash refund of excess creditable VAT withheld. Again,
nowhere in this case did the Court discuss, state, or rule that the filing dates of the administrative and
judicial claims are inconsequential, as long as they are within the two-year prescriptive period.

In CIR v. Cebu Toyo Corporation,75 the issue was whether Cebu Toyo was exempt or subject to VAT.
Compliance with the 120-day period was never an issue in Cebu Toyo. As the Court explained:

Both the Commissioner of Internal Revenue and the Office of the Solicitor General argue that
respondent Cebu Toyo Corporation, as a PEZA-registered enterprise, is exempt from national and local
taxes, including VAT, under Section 24 of Rep. Act No. 7916 and Section 109 of the NIRC. Thus, they
contend that respondent Cebu Toyo Corporation is not entitled to any refund or credit on input taxes it
previously paid as provided under Section 4.103-1 of Revenue Regulations No. 7-95, notwithstanding its
registration as a VAT taxpayer. For petitioner claims that said registration was erroneous and did not
confer upon the respondent any right to claim recognition of the input tax credit.

The respondent counters that it availed of the income tax holiday under E.O. No. 226 for four years from
August 7, 1995 making it exempt from income tax but not from other taxes such as VAT. Hence,
according to respondent, its export sales are not exempt from VAT, contrary to petitioner’s claim, but
its export sales is subject to 0% VAT. Moreover, it argues that it was able to establish through a report
certified by an independent Certified Public Accountant that the input taxes it incurred from April 1,
1996 to December 31, 1997 were directly attributable to its export sales. Since it did not have any
output tax against which said input taxes may be offset, it had the option to file a claim for refund/tax
credit of its unutilized input taxes.

Considering the submission of the parties and the evidence on record, we find the petition bereft of
merit.

Petitioner’s contention that respondent is not entitled to refund for being exempt from VAT is
untenable. This argument turns a blind eye to the fiscal incentives granted to PEZA-registered
enterprises under Section 23 of Rep. Act No. 7916. Note that under said statute, the respondent had
two options with respect to its tax burden. It could avail of an income tax holiday pursuant to provisions
of E.O. No. 226, thus exempt it from income taxes for a number of years but not from other internal
revenue taxes such as VAT; or it could avail of the tax exemptions on all taxes, including VAT under P.D.
No. 66 and pay only the preferential tax rate of 5% under Rep. Act No. 7916. Both the Court of Appeals
and the Court of Tax Appeals found that respondent availed of the income tax holiday for four (4) years
starting from August 7, 1995, as clearly reflected in its 1996 and 1997 Annual Corporate Income Tax
Returns, where respondent specified that it was availing of the tax relief under E.O. No. 226. Hence,
respondent is not exempt from VAT and it correctly registered itself as a VAT taxpayer. In fine, it is
engaged in taxable rather than exempt transactions. (Emphasis supplied)

Clearly, the issue in Cebu Toyo was whether the taxpayer was exempt from VAT or subject to VAT at
0% tax rate. If subject to 0% VAT rate, the taxpayer could claim a refund or credit of its input VAT. Again,
nowhere in this case did the Court discuss, state, or rule that the filing dates of the administrative and
judicial claims are inconsequential, as long as they are within the two-year prescriptive period.

While this Court stated in the narration of facts in Cebu Toyo that the taxpayer "did not bother to wait
for the Resolution of its (administrative) claim by the CIR" before filing its judicial claim with the CTA,
this issue was not raised before the Court. Certainly, this statement of the Court is not a binding
precedent that the taxpayer need not wait for the 120-day period to lapse.

Any issue, whether raised or not by the parties, but not passed upon by the Court, does not have any
value as precedent. As this Court has explained as early as 1926:

It is contended, however, that the question before us was answered and resolved against the contention
of the appellant in the case of Bautista vs. Fajardo (38 Phil. 624). In that case no question was raised nor
was it even suggested that said section 216 did not apply to a public officer. That question was not
discussed nor referred to by any of the parties interested in that case. It has been frequently decided
that the fact that a statute has been accepted as valid, and invoked and applied for many years in cases
where its validity was not raised or passed on, does not prevent a court from later passing on its validity,
where that question is squarely and properly raised and presented. Where a question passes the
Court sub silentio, the case in which the question was so passed is not binding on the Court (McGirr vs.
Hamilton and Abreu, 30 Phil. 563), nor should it be considered as a precedent. (U.S. vs. Noriega and
Tobias, 31 Phil. 310; Chicote vs. Acasio, 31 Phil. 401; U.S. vs. More, 3 Cranch [U.S.] 159, 172; U.S. vs.
Sanges, 144 U.S. 310, 319; Cross vs. Burke, 146 U.S. 82.) For the reasons given in the case of McGirr vs.
Hamilton and Abreu, supra, the decision in the case of Bautista vs. Fajardo, supra, can have no binding
force in the interpretation of the question presented here.76 (Emphasis supplied)

In Cebu Toyo, the nature of the 120-day period, whether it is mandatory or optional, was not even
raised as an issue by any of the parties. The Court never passed upon this issue. Thus, Cebu Toyo does
not constitute binding precedent on the nature of the 120-day period.

There is also the claim that there are numerous CTA decisions allegedly supporting the argument that
the filing dates of the administrative and judicial claims are inconsequential, as long as they are within
the two-year prescriptive period. Suffice it to state that CTA decisions do not constitute precedents, and
do not bind this Court or the public. That is why CTA decisions are appealable to this Court, which may
affirm, reverse or modify the CTA decisions as the facts and the law may warrant. Only decisions of this
Court constitute binding precedents, forming part of the Philippine legal system.77 As held by this Court
in The Philippine Veterans Affairs Office v. Segundo:78

x x x Let it be admonished that decisions of the Supreme Court "applying or interpreting the laws or the
Constitution . . . form part of the legal system of the Philippines," and, as it were, "laws" by their own
right because they interpret what the laws say or mean. Unlike rulings of the lower courts, which bind
the parties to specific cases alone, our judgments are universal in their scope and application, and
equally mandatory in character. Let it be warned that to defy our decisions is to court contempt.
(Emphasis supplied)

The same basic doctrine was reiterated by this Court in De Mesa v. Pepsi Cola Products Phils., Inc.:79

The principle of stare decisis et non quieta movere is entrenched in Article 8 of the Civil Code, to wit:

ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines.

It enjoins adherence to judicial precedents. It requires our courts to follow a rule already established in
a final decision of the Supreme Court. That decision becomes a judicial precedent to be followed in
subsequent cases by all courts in the land. The doctrine of stare decisis is based on the principle that
once a question of law has been examined and decided, it should be deemed settled and closed to
further argument. (Emphasis supplied)

VIII. Revenue Regulations No. 7-95 Effective 1 January 1996

Section 4.106-2(c) of Revenue Regulations No. 7-95, by its own express terms, applies only if the
taxpayer files the judicial claim "after" the lapse of the 60-day period, a period with which San Roque
failed to comply. Under Section 4.106-2(c), the 60-day period is still mandatory and jurisdictional.
Moreover, it is a hornbook principle that a prior administrative regulation can never prevail over a later
contrary law, more so in this case where the later law was enacted precisely to amend the prior
administrative regulation and the law it implements.

The laws and regulation involved are as follows:

1977 Tax Code, as amended by Republic Act No. 7716 (1994)

Sec. 106. Refunds or tax credits of creditable input tax. —

(a) x x x x

(d) Period within which refund or tax credit of input tax shall be made - In proper cases, the
Commissioner shall grant a refund or issue the tax credit for creditable input taxes within sixty
(60) days from the date of submission of complete documents in support of the application filed
in accordance with subparagraphs (a) and (b) hereof. In case of full or partial denial of the claim
for tax refund or tax credit, or the failure on the part of the Commissioner to act on the
application within the period prescribed above, the taxpayer affected may, within thirty (30)
days from receipt of the decision denying the claim or after the expiration of the sixty-day
period, appeal the decision or the unacted claim with the Court of Tax Appeals.

Revenue Regulations No. 7-95 (1996)

Section 4.106-2. Procedures for claiming refunds or tax credits of input tax — (a) x x x

xxxx

(c) Period within which refund or tax credit of input taxes shall be made. — In proper cases, the
Commissioner shall grant a tax credit/refund for creditable input taxes within sixty (60) days from the
date of submission of complete documents in support of the application filed in accordance with
subparagraphs (a) and (b) above.

In case of full or partial denial of the claim for tax credit/refund as decided by the Commissioner of
Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from the
receipt of said denial, otherwise the decision will become final. However, if no action on the claim for
tax credit/refund has been taken by the Commissioner of Internal Revenue after the sixty (60) day
period from the date of submission of the application but before the lapse of the two (2) year period
from the date of filing of the VAT return for the taxable quarter, the taxpayer may appeal to the Court
of Tax Appeals.

xxxx

1997 Tax Code

Section 112. Refunds or Tax Credits of Input Tax —

(A) x x x
 xxxx

(D) Period within which Refund or Tax Credit of Input Taxes shall be made. — In proper cases, the
Commissioner shall grant the refund or issue the tax credit certificate for creditable input taxes within
one hundred twenty (120) days from the date of submission of complete documents in support of the
application filed in accordance with Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration
of the hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax
Appeals.

There can be no dispute that under Section 106(d) of the 1977 Tax Code, as amended by RA 7716, the
Commissioner has a 60-day period to act on the administrative claim. This 60-day period is mandatory
and jurisdictional.

Did Section 4.106-2(c) of Revenue Regulations No. 7-95 change this, so that the 60-day period is no
longer mandatory and jurisdictional? The obvious answer is no.

Section 4.106-2(c) itself expressly states that if, "after the sixty (60) day period," the Commissioner fails
to act on the administrative claim, the taxpayer may file the judicial claim even "before the lapse of the
two (2) year period." Thus, under Section 4.106-2(c) the 60-day period is still mandatory and
jurisdictional.

Section 4.106-2(c) did not change Section 106(d) as amended by RA 7716, but merely implemented it,
for two reasons. First, Section 4.106-2(c) still expressly requires compliance with the 60-day period.
This cannot be disputed.1âwphi1

Second, under the novel amendment introduced by RA 7716, mere inaction by the Commissioner during
the 60-day period is deemed a denial of the claim. Thus, Section 4.106-2(c) states that "if no action on
the claim for tax refund/credit has been taken by the Commissioner after the sixty (60) day period," the
taxpayer "may" already file the judicial claim even long before the lapse of the two-year prescriptive
period. Prior to the amendment by RA 7716, the taxpayer had to wait until the two-year prescriptive
period was about to expire if the Commissioner did not act on the claim.80 With the amendment by RA
7716, the taxpayer need not wait until the two-year prescriptive period is about to expire before filing
the judicial claim because mere inaction by the Commissioner during the 60-day period is deemed a
denial of the claim. This is the meaning of the phrase "but before the lapse of the two (2) year period"
in Section 4.106-2(c). As Section 4.106- 2(c) reiterates that the judicial claim can be filed only "after the
sixty (60) day period," this period remains mandatory and jurisdictional. Clearly, Section 4.106-2(c) did
not amend Section 106(d) but merely faithfully implemented it.

Even assuming, for the sake of argument, that Section 4.106-2(c) of Revenue Regulations No. 7-95, an
administrative issuance, amended Section 106(d) of the Tax Code to make the period given to the
Commissioner non-mandatory, still the 1997 Tax Code, a much later law, reinstated the original intent
and provision of Section 106(d) by extending the 60-day period to 120 days and re-adopting the original
wordings of Section 106(d). Thus, Section 4.106-2(c), a mere administrative issuance, becomes
inconsistent with Section 112(D), a later law. Obviously, the later law prevails over a prior inconsistent
administrative issuance.

Section 112(D) of the 1997 Tax Code is clear, unequivocal, and categorical that the Commissioner has
120 days to act on an administrative claim. The taxpayer can file the judicial claim (1) only within thirty
days after the Commissioner partially or fully denies the claim within the 120- day period, or (2) only
within thirty days from the expiration of the 120- day period if the Commissioner does not act within
the 120-day period.

There can be no dispute that upon effectivity of the 1997 Tax Code on 1 January 1998, or more than five
years before San Roque filed its administrative claim on 28 March 2003, the law has been clear: the
120- day period is mandatory and jurisdictional. San Roque’s claim, having been filed administratively on
28 March 2003, is governed by the 1997 Tax Code, not the 1977 Tax Code. Since San Roque filed its
judicial claim before the expiration of the 120-day mandatory and jurisdictional period, San Roque’s
claim cannot prosper.

San Roque cannot also invoke Section 4.106-2(c), which expressly provides that the taxpayer can only
file the judicial claim "after" the lapse of the 60-day period from the filing of the administrative
claim. San Roque filed its judicial claim just 13 days after filing its administrative claim. To recall, San
Roque filed its judicial claim on 10 April 2003, a mere 13 days after it filed its administrative claim.

Even if, contrary to all principles of statutory construction as well as plain common sense, we
gratuitously apply now Section 4.106-2(c) of Revenue Regulations No. 7-95, still San Roque cannot
recover any refund or credit because San Roque did not wait for the 60-day period to lapse, contrary
to the express requirement in Section 4.106-2(c). In short, San Roque does not even comply with
Section 4.106-2(c). A claim for tax refund or credit is strictly construed against the taxpayer, who must
prove that his claim clearly complies with all the conditions for granting the tax refund or credit. San
Roque did not comply with the express condition for such statutory grant.

A final word. Taxes are the lifeblood of the nation. The Philippines has been struggling to improve its tax
efficiency collection for the longest time with minimal success. Consequently, the Philippines has
suffered the economic adversities arising from poor tax collections, forcing the government to continue
borrowing to fund the budget deficits. This Court cannot turn a blind eye to this economic malaise by
being unduly liberal to taxpayers who do not comply with statutory requirements for tax refunds or
credits. The tax refund claims in the present cases are not a pittance. Many other companies stand to
gain if this Court were to rule otherwise. The dissenting opinions will turn on its head the well-settled
doctrine that tax refunds are strictly construed against the taxpayer.

WHEREFORE, the Court hereby (1) GRANTS the petition of the Commissioner of Internal Revenue in G.R.
No. 187485 to DENY the P483,797,599.65 tax refund or credit claim of San Roque Power Corporation;
(2) GRANTS the petition of Taganito Mining Corporation in G.R. No. 196113 for a tax refund or credit of
P8,365,664.38; and (3) DENIES the petition of Philex Mining Corporation in G.R. No. 197156 for a tax
refund or credit of P23,956,732.44.

SO ORDERED.
 4. Araullo v. Aquino, G.R. No. 209287, July 1, 2014

G.R. No. 209287 July 1, 2014

MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN; JUDY M.

TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON,
PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA
WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAY AN MUNA PARTY-LIST
REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT,
CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN;
VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO N.
OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF
BUDGET AND MANAGEMENT, Respondents.

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

G.R. No. 209135

AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,

vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET AND
MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A CITY AS THE SENATE
PRESIDENT OF THE PHILIPPINES, Respondents.

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

G.R. No. 209136

MANUELITO R. LUNA, Petitioner,

vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT OF BUDGET
AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS OFFICIAL CAPACITY AS
ALTER EGO OF THE PRESIDENT, Respondents.

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

G.R. No. 209155

ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner,

vs.
THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY OF BUDGET
AND MANAGEMENT FLORENCIO B. ABAD, Respondents.

x-----------------------x
G.R. No. 209164

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN M.

BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B. ABAD, Respondents.

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

G.R. No. 209260

INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,

vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT
(DBM), Respondent.

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

G.R. No. 209442

GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L.
GONZALEZ, Petitioners,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES, REPRESENTED BY
SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF REPRESENTATIVES, REPRESENTED BY
SPEAKER FELICIANO BELMONTE, JR.; THE EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY
PAQUITO N. OCHOA, JR.; THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY
SECRETARY FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY CESAR V.
PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE LEON, Respondents.

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

G.R. No. 209517

CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT EMPLOYEES

(COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO DASMARINAS, JR.; ROSALINDA
NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE CONSOLIDATED UNION OF
EMPLOYEES NATIONAL HOUSING AUTHORITY (CUENHA); MANUEL BACLAGON, FOR HIMSELF AND AS
PRESIDENT OF THE SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES, DEPARTMENT OF
SOCIAL WELFARE AND DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO); ANTONIA PASCUAL, FOR
HERSELF AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF AGRARIAN REFORM EMPLOYEES
ASSOCIATION (DAREA); ALBERT MAGALANG, FOR HIMSELF AND AS PRESIDENT OF THE ENVIRONMENT
AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL ARABA, FOR HIMSELF AND
AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG MGA KAW ANI NG MMDA
(KKKMMDA), Petitioners,
vs.
BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO OCHOA,
JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF
BUDGET AND MANAGEMENT, Respondents.

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

G.R. No. 209569

VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE L.

JIMENEZ, Petitioner,
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

DECISION

BERSAMIN, J.:

For resolution are the consolidated petitions assailing the constitutionality of the Disbursement
Acceleration Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of the
Department of Budget and Management (DBM) implementing the DAP.

At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision of the
fundamental law that firmly ordains that "[n]o money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." The tenor and context of the challenges posed by the
petitioners against the DAP indicate that the DAP contravened this provision by allowing the Executive
to allocate public money pooled from programmed and unprogrammed funds of its various agencies in
the guise of the President exercising his constitutional authority under Section 25(5) of the 1987
Constitution to transfer funds out of savings to augment the appropriations of offices within the
Executive Branch of the Government. But the challenges are further complicated by the interjection of
allegations of transfer of funds to agencies or offices outside of the Executive.

Antecedents

What has precipitated the controversy?

On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the
Philippines to reveal that some Senators, including himself, had been allotted an additional ₱50 Million
each as "incentive" for voting in favor of the impeachment of Chief Justice Renato C. Corona.

Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the DBM issued a public statement
entitled Abad: Releases to Senators Part of Spending Acceleration Program,1 explaining that the funds
released to the Senators had been part of the DAP, a program designed by the DBM to ramp up
spending to accelerate economic expansion. He clarified that the funds had been released to the
Senators based on their letters of request for funding; and that it was not the first time that releases
from the DAP had been made because the DAP had already been instituted in 2011 to ramp up spending
after sluggish disbursements had caused the growth of the gross domestic product (GDP) to slow down.
He explained that the funds under the DAP were usually taken from (1) unreleased appropriations under
Personnel Services;2 (2) unprogrammed funds; (3) carry-over appropriations unreleased from the
previous year; and (4) budgets for slow-moving items or projects that had been realigned to support
faster-disbursing projects.

The DBM soon came out to claim in its website3 that the DAP releases had been sourced from savings
generated by the Government, and from unprogrammed funds; and that the savings had been derived
from (1) the pooling of unreleased appropriations, like unreleased Personnel Services4 appropriations
that would lapse at the end of the year, unreleased appropriations of slow-moving projects and
discontinued projects per zero based budgeting findings;5 and (2) the withdrawal of unobligated
allotments also for slow-moving programs and projects that had been earlier released to the agencies of
the National Government.

The DBM listed the following as the legal bases for the DAP’s use of savings,6 namely: (1) Section 25(5),
Article VI of the 1987 Constitution, which granted to the President the authority to augment an item for
his office in the general appropriations law; (2) Section 49 (Authority to Use Savings for Certain
Purposes) and Section 38 (Suspension of Expenditure Appropriations), Chapter 5, Book VI of Executive
Order (EO) No. 292 (Administrative Code of 1987); and (3) the General Appropriations Acts (GAAs) of
2011, 2012 and 2013, particularly their provisions on the (a) use of savings; (b) meanings of savings and
augmentation; and (c) priority in the use of savings.

As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special
provisions on unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.

The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to the
consciousness of the Nation for the first time, and made this present controversy inevitable. That the
issues against the DAP came at a time when the Nation was still seething in anger over Congressional
pork barrel – "an appropriation of government spending meant for localized projects and secured solely
or primarily to bring money to a representative’s district"7 – excited the Nation as heatedly as the pork
barrel controversy.

Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP were filed
within days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013; G.R. No. 209136
(Luna), on October 7, 2013; G.R. No. 209155 (Villegas),8 on October 16, 2013; G.R. No. 209164
(PHILCONSA), on October 8, 2013; G.R. No. 209260 (IBP), on October 16, 2013; G.R. No. 209287
(Araullo), on October 17, 2013; G.R. No. 209442 (Belgica), on October 29, 2013; G.R. No. 209517
(COURAGE), on November6, 2013; and G.R. No. 209569 (VACC), on November 8, 2013.

In G.R. No. 209287 (Araullo), the petitioners brought to the Court’s attention NBC No. 541 (Adoption of
Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012),
alleging that NBC No. 541, which was issued to implement the DAP, directed the withdrawal of
unobligated allotments as of June 30, 2012 of government agencies and offices with low levels of
obligations, both for continuing and current allotments.

In due time, the respondents filed their Consolidated Comment through the Office of the Solicitor
General (OSG).

The Court directed the holding of oral arguments on the significant issues raised and joined.
 Issues

Under the Advisory issued on November 14, 2013, the presentations of the parties during the oral
arguments were limited to the following, to wit:

Procedural Issue:

A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the
constitutionality and validity of the Disbursement Acceleration Program (DAP), National Budget Circular
(NBC) No. 541, and all other executive issuances allegedly implementing the DAP. Subsumed in this issue
are whether there is a controversy ripe for judicial determination, and the standing of petitioners.

Substantive Issues:

B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides: "No money
shall be paid out of the Treasury except in pursuance of an appropriation made by law."

C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing the
DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

(a)They treat the unreleased appropriations and unobligated allotments withdrawn

from government agencies as "savings" as the term is used in Sec. 25(5), in relation to
the provisions of the GAAs of 2011, 2012 and 2013;

(b)They authorize the disbursement of funds for projects or programs not provided in
the GAAs for the Executive Department; and

(c)They "augment" discretionary lump sum appropriations in the GAAs.

D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and
balances, and (3) the principle of public accountability enshrined in the 1987 Constitution considering
that it authorizes the release of funds upon the request of legislators.

E. Whether or not factual and legal justification exists to issue a temporary restraining order to restrain
the implementation of the DAP, NBC No. 541, and all other executive issuances allegedly implementing
the DAP.

In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to support its
argument regarding the President’s power to spend. During the oral arguments, the propriety of
releasing unprogrammed funds to support projects under the DAP was considerably discussed. The
petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) dwelled on unprogrammed funds
in their respective memoranda. Hence, an additional issue for the oral arguments is stated as follows:

F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.

During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to submit a list of
savings brought under the DAP that had been sourced from (a) completed programs; (b) discontinued or
abandoned programs; (c) unpaid appropriations for compensation; (d) a certified copy of the President’s
directive dated June 27, 2012 referred to in NBC No. 541; and (e) all circulars or orders issued in relation
to the DAP.9

In compliance, the OSG submitted several documents, as follows:

(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus
Authority to Consolidate Savings/Unutilized Balances and their Realignment);10

(2) Circulars and orders, which the respondents identified as related to the DAP, namely:

a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);

b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY
2012);

c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure –
Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012);

d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);

e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of
Commitments/Obligations of the National Government);

f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the
Submission of Quarterly Accountability Reports on Appropriations, Allotments,
Obligations and Disbursements);

g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in
the Government).

(3) A breakdown of the sources of savings, including savings from discontinued projects and
unpaid appropriations for compensation from 2011 to 2013

On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014 directing the
respondents to submit the documents not yet submitted in compliance with the directives of the Court
or its Members, submitted several evidence packets to aid the Court in understanding the factual bases
of the DAP, to wit:

(1) First Evidence Packet11 – containing seven memoranda issued by the DBM through Sec.
Abad, inclusive of annexes, listing in detail the 116 DAP identified projects approved and duly
signed by the President, as follows:

a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed
Disbursement Acceleration Program (Projects and Sources of Funds);
 b. Memorandum for the President dated December 12, 2011 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and its Realignment);

c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment);

d. Memorandum for the President dated September 4, 2012 (Release of funds for other
priority projects and expenditures of the Government);

e. Memorandum for the President dated December 19, 2012 (Proposed Priority Projects
and Expenditures of the Government);

f. Memorandum for the President dated May 20, 2013 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment to Fund the Quarterly
Disbursement Acceleration Program); and

g. Memorandum for the President dated September 25, 2013 (Funding for the Task
Force Pablo Rehabilitation Plan).

(2) Second Evidence Packet12 – consisting of 15 applications of the DAP, with their corresponding
Special Allotment Release Orders (SAROs) and appropriation covers;

(3) Third Evidence Packet13 – containing a list and descriptions of 12 projects under the DAP;

(4) Fourth Evidence Packet14 – identifying the DAP-related portions of the Annual Financial
Report (AFR) of the Commission on Audit for 2011 and 2012;

(5) Fifth Evidence Packet15 – containing a letter of Department of Transportation and

Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the
withdrawal of funds from his agency, inclusive of annexes; and

(6) Sixth Evidence Packet16 – a print-out of the Solicitor General’s visual presentation for the
January 28, 2014 oral arguments.

On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet,18 which listed the sources of
funds brought under the DAP, the uses of such funds per project or activity pursuant to DAP, and the
legal bases thereof.

On February 14, 2014, the OSG submitted another set of documents in further compliance with the
Resolution dated January 28, 2014, viz:

(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the revenue
collections exceeded the original revenue targets for the years 2011, 2012 and 2013, including
collections arising from sources not considered in the original revenue targets, which certifications were
required for the release of the unprogrammed funds as provided in Special Provision No. 1 of Article
XLV, Article XVI, and Article XLV of the 2011, 2012 and 2013 GAAs; and (2) A report on releases of
savings of the Executive Department for the use of the Constitutional Commissions and other branches
of the Government, as well as the fund releases to the Senate and the Commission on Elections
(COMELEC).

RULING

I.

Procedural Issue:

a) The petitions under Rule 65 are proper remedies

All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the issuance
of writs of preliminary prohibitory injunction or temporary restraining orders. More specifically, the
nature of the petitions is individually set forth hereunder, to wit:

G.R. No. 209135 (Syjuco) Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna) Certiorariand Prohibition

G.R. No. 209155 (Villegas) Certiorariand Prohibition

G.R. No. 209164 (PHILCONSA) Certiorariand Prohibition

G.R. No. 209260 (IBP) Prohibition

G.R. No. 209287 (Araullo) Certiorariand Prohibition

G.R. No. 209442 (Belgica) Certiorari

G.R. No. 209517 (COURAGE) Certiorari and Prohibition

G.R. No. 209569 (VACC) Certiorari and Prohibition

The respondents submit that there is no actual controversy that is ripe for adjudication in the absence of
adverse claims between the parties;19 that the petitioners lacked legal standing to sue because no
allegations were made to the effect that they had suffered any injury as a result of the adoption of the
DAP and issuance of NBC No. 541; that their being taxpayers did not immediately confer upon the
petitioners the legal standing to sue considering that the adoption and implementation of the DAP and
the issuance of NBC No. 541 were not in the exercise of the taxing or spending power of Congress;20 and
that even if the petitioners had suffered injury, there were plain, speedy and adequate remedies in the
ordinary course of law available to them, like assailing the regularity of the DAP and related issuances
before the Commission on Audit (COA) or in the trial courts.21

The respondents aver that the special civil actions of certiorari and prohibition are not proper actions for
directly assailing the constitutionality and validity of the DAP, NBC No. 541, and the other executive
issuances implementing the DAP.22
In their memorandum, the respondents further contend that there is no authorized proceeding under
the Constitution and the Rules of Court for questioning the validity of any law unless there is an actual
case or controversy the resolution of which requires the determination of the constitutional question;
that the jurisdiction of the Court is largely appellate; that for a court of law to pass upon the
constitutionality of a law or any act of the Government when there is no case or controversy is for that
court to set itself up as a reviewer of the acts of Congress and of the President in violation of the
principle of separation of powers; and that, in the absence of a pending case or controversy involving
the DAP and NBC No. 541, any decision herein could amount to a mere advisory opinion that no court
can validly render.23

The respondents argue that it is the application of the DAP to actual situations that the petitioners can
question either in the trial courts or in the COA; that if the petitioners are dissatisfied with the ruling
either of the trial courts or of the COA, they can appeal the decision of the trial courts by petition for
review on certiorari, or assail the decision or final order of the COA by special civil action for certiorari
under Rule 64 of the Rules of Court.24

The respondents’ arguments and submissions on the procedural issue are bereft of merit.

Section 1, Article VIII of the 1987 Constitution expressly provides:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.

Thus, the Constitution vests judicial power in the Court and in such lower courts as may be established
by law. In creating a lower court, Congress concomitantly determines the jurisdiction of that court, and
that court, upon its creation, becomes by operation of the Constitution one of the repositories of judicial
power.25 However, only the Court is a constitutionally created court, the rest being created by Congress
in its exercise of the legislative power.

The Constitution states that judicial power includes the duty of the courts of justice not only "to settle
actual controversies involving rights which are legally demandable and enforceable" but also "to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government." It has thereby expanded
the concept of judicial power, which up to then was confined to its traditional ambit of settling actual
controversies involving rights that were legally demandable and enforceable.

The background and rationale of the expansion of judicial power under the 1987 Constitution were laid
out during the deliberations of the 1986 Constitutional Commission by Commissioner Roberto R.
Concepcion (a former Chief Justice of the Philippines) in his sponsorship of the proposed provisions on
the Judiciary, where he said:–
The Supreme Court, like all other courts, has one main function: to settle actual controversies involving
conflicts of rights which are demandable and enforceable. There are rights which are guaranteed by law
but cannot be enforced by a judicial party. In a decided case, a husband complained that his wife was
unwilling to perform her duties as a wife. The Court said: "We can tell your wife what her duties as such
are and that she is bound to comply with them, but we cannot force her physically to discharge her main
marital duty to her husband. There are some rights guaranteed by law, but they are so personal that to
enforce them by actual compulsion would be highly derogatory to human dignity." This is why the first
part of the second paragraph of Section 1 provides that: Judicial power includes the duty of courts to
settle actual controversies involving rights which are legally demandable or enforceable…

The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a presidential
system of government, the Supreme Court has, also, another important function. The powers of
government are generally considered divided into three branches: the Legislative, the Executive and the
Judiciary. Each one is supreme within its own sphere and independent of the others. Because of that
supremacy power to determine whether a given law is valid or not is vested in courts of justice.

Briefly stated, courts of justice determine the limits of power of the agencies and offices of the
government as well as those of its officers. In other words, the judiciary is the final arbiter on the
question whether or not a branch of government or any of its officials has acted without jurisdiction or
in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of
jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass judgmenton matters
of this nature.

This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade
the duty to settle matters of this nature, by claiming that such matters constitute a political question.
(Bold emphasis supplied)26

Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of judicial
power in the following manner:–

MR. NOLLEDO. x x x

The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice to settle
actual controversies…" The term "actual controversies" according to the Commissioner should refer to
questions which are political in nature and, therefore, the courts should not refuse to decide those
political questions. But do I understand it right that this is restrictive or only an example? I know there
are cases which are not actual yet the court can assume jurisdiction. An example is the petition for
declaratory relief.

May I ask the Commissioner’s opinion about that?

MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments.

MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested in the
Supreme Court alone but also in other lower courts as may be created by law.

MR. CONCEPCION. Yes.

MR. NOLLEDO. And so, is this only an example?

MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions with
jurisdictional questions. But there is a difference.

MR. NOLLEDO. Because of the expression "judicial power"?

MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a question as
to whether the government had authority or had abused its authority to the extent of lacking
jurisdiction or excess of jurisdiction, that is not a political question. Therefore, the court has the duty to
decide.27

Our previous Constitutions equally recognized the extent of the power of judicial review and the great
responsibility of the Judiciary in maintaining the allocation of powers among the three great branches of
Government. Speaking for the Court in Angara v. Electoral Commission,28 Justice Jose P. Laurel intoned:

x x x In 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 department and among the integral or constituent units thereof.

xxxx

The Constitution is a definition of the powers of government. Who is to determine the nature, scope
and extent of such powers? The Constitution itself has provided for the instrumentality of the judiciary
as the rational way. And when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other department; it does not in reality nullify or invalidate an act of the
legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to them. This is in truth all
that is involved in what is termed "judicial supremacy" which properly is the power of judicial review
under the Constitution. x x x29

What are the remedies by which the grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government may be determined under
the Constitution?

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. A similar remedy of certiorari exists under Rule 64, but
the remedy is expressly applicable only to the judgments and final orders or resolutions of the
Commission on Elections and the Commission on Audit.

The ordinary nature and function of the writ of certiorari in our present system are aptly explained in
Delos Santos v. Metropolitan Bank and Trust Company:30
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of
Chancery, or the King’s Bench, commanding agents or officers of the inferior courts to return the record
of a cause pending before them, so as to give the party more sure and speedy justice, for the writ would
enable the superior court to determine from an inspection of the record whether the inferior court’s
judgment was rendered without authority. The errors were of such a nature that, if allowed to stand,
they would result in a substantial injury to the petitioner to whom no other remedy was available. If the
inferior court acted without authority, the record was then revised and corrected in matters of law. The
writ of certiorari was limited to cases in which the inferior court was said to be exceeding its jurisdiction
or was not proceeding according to essential requirements of law and would lie only to review judicial or
quasi-judicial acts.

The concept of the remedy of certiorari in our judicial system remains much the same as it has been in
the common law. In this jurisdiction, however, the exercise of the power to issue the writ of certiorari is
largely regulated by laying down the instances or situations in the Rules of Court in which a superior
court may issue the writ of certiorari to an inferior court or officer. Section 1, Rule 65 of the Rules of
Court compellingly provides the requirements for that purpose, viz:

xxxx

The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the
commission of grave abuse of discretion amounting to lack of jurisdiction. In this regard, mere abuse of
discretion is not enough to warrant the issuance of the writ. The abuse of discretion must be grave,
which means either that the judicial or quasi-judicial power was exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, or that the respondent judge, tribunal or board
evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of
law, such as when such judge, tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction.31

Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be
distinguished from prohibition by the fact that it is a corrective remedy used for the re-examination of
some action of an inferior tribunal, and is directed to the cause or proceeding in the lower court and not
to the court itself, while prohibition is a preventative remedy issuing to restrain future action, and is
directed to the court itself.32 The Court expounded on the nature and function of the writ of prohibition
in Holy Spirit Homeowners Association, Inc. v. Defensor:33

A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a quasi-
legislative function. Prohibition is an extraordinary writ directed against any tribunal, corporation,
board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, ordering said
entity or person to desist from further proceedings when said proceedings are without or in excess of
said entity’s or person’s jurisdiction, or are accompanied with grave abuse of discretion, and there is no
appeal or any other plain, speedy and adequate remedy in the ordinary course of law. Prohibition lies
against judicial or ministerial functions, but not against legislative or quasi-legislative functions.
Generally, the purpose of a writ of prohibition is to keep a lower court within the limits of its jurisdiction
in order to maintain the administration of justice in orderly channels. Prohibition is the proper remedy
to afford relief against usurpation of jurisdiction or power by an inferior court, or when, in the exercise
of jurisdiction in handling matters clearly within its cognizance the inferior court transgresses the
bounds prescribed to it by the law, or where there is no adequate remedy available in the ordinary
course of law by which such relief can be obtained. Where the principal relief sought is to invalidate an
IRR, petitioners’ remedy is an ordinary action for its nullification, an action which properly falls under
the jurisdiction of the Regional Trial Court. In any case, petitioners’ allegation that "respondents are
performing or threatening to perform functions without or in excess of their jurisdiction" may
appropriately be enjoined by the trial court through a writ of injunction or a temporary restraining
order.

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.34

Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of grave abuse
of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the
Government, the Court is not at all precluded from making the inquiry provided the challenge was
properly brought by interested or affected parties. The Court has been thereby entrusted expressly or
by necessary implication with both the duty and the obligation of determining, in appropriate cases, the
validity of any assailed legislative or executive action. This entrustment is consistent with the republican
system of checks and balances.35

Following our recent dispositions concerning the congressional pork barrel, the Court has become more
alert to discharge its constitutional duty. We will not now refrain from exercising our expanded judicial
power in order to review and determine, with authority, the limitations on the Chief Executive’s
spending power.

b) Requisites for the exercise of the

power of judicial review were
complied with

The requisites for the exercise of the power of judicial review are the following, namely: (1) there must
bean actual case or justiciable controversy before the Court; (2) the question before the Court must be
ripe for adjudication; (3) the person challenging the act must be a proper party; and (4) the issue of
constitutionality must be raised at the earliest opportunity and must be the very litis mota of the case.36

The first requisite demands that there be an actual case calling for the exercise of judicial power by the
Court.37 An actual case or controversy, in the words of Belgica v. Executive Secretary Ochoa:38

x x x is one which involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of
judicial resolution as distinguished from a hypothetical or abstract difference or dispute. In other words,
"[t]here must be a contrariety of legal rights that can be interpreted and enforced on the basis of
existing law and jurisprudence." Related to the requirement of an actual case or controversy is the
requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are already ripe
for adjudication. "A question is ripe for adjudication when the act being challenged has had a direct
adverse effect on the individual challenging it. It is a prerequisite that something had then been
accomplished or performed by either branch before a court may come into the picture, and the
petitioner must allege the existence of an immediate or threatened injury to itself as a result of the
challenged action." "Withal, courts will decline to pass upon constitutional issues through advisory
opinions, bereft as they are of authority to resolve hypothetical or moot questions."

An actual and justiciable controversy exists in these consolidated cases. The incompatibility of the
perspectives of the parties on the constitutionality of the DAP and its relevant issuances satisfy the
requirement for a conflict between legal rights. The issues being raised herein meet the requisite
ripeness considering that the challenged executive acts were already being implemented by the DBM,
and there are averments by the petitioners that such implementation was repugnant to the letter and
spirit of the Constitution. Moreover, the implementation of the DAP entailed the allocation and
expenditure of huge sums of public funds. The fact that public funds have been allocated, disbursed or
utilized by reason or on account of such challenged executive acts gave rise, therefore, to an actual
controversy that is ripe for adjudication by the Court.

It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the DAP as a
program had been meanwhile discontinued because it had fully served its purpose, saying: "In
conclusion, Your Honors, may I inform the Court that because the DAP has already fully served its
purpose, the Administration’s economic managers have recommended its termination to the President.
x x x."39

The Solicitor General then quickly confirmed the termination of the DAP as a program, and urged that its
termination had already mooted the challenges to the DAP’s constitutionality, viz:

DAP as a program, no longer exists, thereby mooting these present cases brought to challenge its
constitutionality. Any constitutional challenge should no longer be at the level of the program, which is
now extinct, but at the level of its prior applications or the specific disbursements under the now
defunct policy. We challenge the petitioners to pick and choose which among the 116 DAP projects they
wish to nullify, the full details we will have provided by February 5. We urge this Court to be cautious in
limiting the constitutional authority of the President and the Legislature to respond to the dynamic
needs of the country and the evolving demands of governance, lest we end up straight jacketing our
elected representatives in ways not consistent with our constitutional structure and democratic
principles.40

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value.41

The Court cannot agree that the termination of the DAP as a program was a supervening event that
effectively mooted these consolidated cases. Verily, the Court had in the past exercised its power of
judicial review despite the cases being rendered moot and academic by supervening events, like: (1)
when there was a grave violation of the Constitution; (2) when the case involved a situation of
exceptional character and was of paramount public interest; (3) when the constitutional issue raised
required the formulation of controlling principles to guide the Bench, the Bar and the public; and (4)
when the case was capable of repetition yet evading review.42
Assuming that the petitioners’ several submissions against the DAP were ultimately sustained by the
Court here, these cases would definitely come under all the exceptions. Hence, the Court should not
abstain from exercising its power of judicial review.

Did the petitioners have the legal standing to sue?

Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance in a
court of justice on a given question."43 The concept of legal standing, or locus standi, was particularly
discussed in De Castro v. Judicial and Bar Council,44 where the Court said:

In public or constitutional litigations, the Court is often burdened with the determination of the locus
standi of the petitioners due to the ever-present need to regulate the invocation of the intervention of
the Court to correct any official action or policy in order to avoid obstructing the efficient functioning of
public officials and offices involved in public service. It is required, therefore, that the petitioner must
have a personal stake in the outcome of the controversy, for, as indicated in Agan, Jr. v. Philippine
International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional questions."
Accordingly, it has been held that the interest of a person assailing the constitutionality of a statute
must be direct and personal. He must be able to show, not only that the law or any government act is
invalid, but also that he sustained or is in 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 appear that the
person complaining 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 or act
complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for
determining whether a petitioner in a public action had locus standi. There, the Court held that the
person who would assail the validity of a statute must have "a personal and substantial interest in the
case such that he has sustained, or will sustain direct injury as a result." Vera was followed in Custodio v.
President of the Senate, Manila Race Horse Trainers’ Association v. De la Fuente, Anti-Chinese League of
the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere procedural technicality,
can be waived by the Court in the exercise of its discretion. For instance, in 1949, in Araneta v.
Dinglasan, the Court liberalized the approach when the cases had "transcendental importance." Some
notable controversies whose petitioners did not pass the direct injury test were allowed to be treated in
the same way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues
raised by the petition due to their "far reaching implications," even if the petitioner had no personality
to file the suit. The liberal approach of Aquino v. Commission on Elections has been adopted in several
notable cases, permitting ordinary citizens, legislators, and civic organizations to bring their suits
involving the constitutionality or validity of laws, regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly illegal or
unconstitutional executive or legislative action rests on the theory that the petitioner represents the
public in general. Although such petitioner may not be as adversely affected by the action complained
against as are others, it is enough that he sufficiently demonstrates in his petition that he is entitled to
protection or relief from the Court in the vindication of a public right.

Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus standi.
That is not surprising, for even if the issue may appear to concern only the public in general, such
capacities nonetheless equip the petitioner with adequate interest to sue. In David v. Macapagal-Arroyo,
the Court aptly explains why:

Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayer’s
suit is in a different category from the plaintiff in a citizen’s suit. In the former, the plaintiff is affected by
the expenditure of public funds, while in the latter, he is but the mere instrument of the public concern.
As held by the New York Supreme Court in People ex rel Case v. Collins: "In matter of mere public right,
however…the people are the real parties…It is at least the right, if not the duty, of every citizen to
interfere and see that a public offence be properly pursued and punished, and that a public grievance be
remedied." With respect to taxpayer’s suits, Terr v. Jordan held that "the right of a citizen and a
taxpayer to maintain an action in courts to restrain the unlawful use of public funds to his injury cannot
be denied."45

The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co., Inc.46 that
"[s]tanding is a peculiar concept in constitutional law because in some cases, suits are not brought by
parties who have been personally injured by the operation of a law or any other government act but by
concerned citizens, taxpayers or voters who actually sue in the public interest."

Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their capacities as
taxpayers who, by averring that the issuance and implementation of the DAP and its relevant issuances
involved the illegal disbursements of public funds, have an interest in preventing the further dissipation
of public funds. The petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert
their right as citizens to sue for the enforcement and observance of the constitutional limitations on the
political branches of the Government.47

On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring
cases upon constitutional issues.48 Luna, the petitioner in G.R. No. 209136, cites his additional capacity
as a lawyer. The IBP, the petitioner in G.R. No. 209260, stands by "its avowed duty to work for the rule
of law and of paramount importance of the question in this action, not to mention its civic duty as the
official association of all lawyers in this country."49

Under their respective circumstances, each of the petitioners has established sufficient interest in the
outcome of the controversy as to confer locus standi on each of them.

In addition, considering that the issues center on the extent of the power of the Chief Executive to
disburse and allocate public funds, whether appropriated by Congress or not, these cases pose issues
that are of transcendental importance to the entire Nation, the petitioners included. As such, the
determination of such important issues call for the Court’s exercise of its broad and wise discretion "to
waive the requirement and so remove the impediment to its addressing and resolving the serious
constitutional questions raised."50

II.
Substantive Issues

1.
Overview of the Budget System

An understanding of the Budget System of the Philippines will aid the Court in properly appreciating and
justly resolving the substantive issues.

a) Origin of the Budget System

The term "budget" originated from the Middle English word bouget that had derived from the Latin
word bulga (which means bag or purse).51

In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined "budget" as the financial
program of the National Government for a designated fiscal year, consisting of the statements of
estimated receipts and expenditures for the fiscal year for which it was intended to be effective based
on the results of operations during the preceding fiscal years. The term was given a different meaning
under Republic Act No. 992 (Revised Budget Act) by describing the budget as the delineation of the
services and products, or benefits that would accrue to the public together with the estimated unit cost
of each type of service, product or benefit.52 For a forthright definition, budget should simply be
identified as the financial plan of the Government,53 or "the master plan of government."54

The concept of budgeting has not been the product of recent economies. In reality, financing public
goals and activities was an idea that existed from the creation of the State.55 To protect the people, the
territory and sovereignty of the State, its government must perform vital functions that required public
expenditures. At the beginning, enormous public expenditures were spent for war activities,
preservation of peace and order, security, administration of justice, religion, and supply of limited goods
and services.56 In order to finance those expenditures, the State raised revenues through taxes and
impositions.57 Thus, budgeting became necessary to allocate public revenues for specific government
functions.58 The State’s budgeting mechanism eventually developed through the years with the growing
functions of its government and changes in its market economy.

The Philippine Budget System has been greatly influenced by western public financial institutions. This is
because of the country’s past as a colony successively of Spain and the United States for a long period of
time. Many aspects of the country’s public fiscal administration, including its Budget System, have been
naturally patterned after the practices and experiences of the western public financial institutions. At
any rate, the Philippine Budget System is presently guided by two principal objectives that are vital to
the development of a progressive democratic government, namely: (1) to carry on all government
activities under a comprehensive fiscal plan developed, authorized and executed in accordance with the
Constitution, prevailing statutes and the principles of sound public management; and (2) to provide for
the periodic review and disclosure of the budgetary status of the Government in such detail so that
persons entrusted by law with the responsibility as well as the enlightened citizenry can determine the
adequacy of the budget actions taken, authorized or proposed, as well as the true financial position of
the Government.59

b) Evolution of the Philippine Budget System

The budget process in the Philippines evolved from the early years of the American Regime up to the
passage of the Jones Law in 1916. A Budget Office was created within the Department of Finance by the
Jones Law to discharge the budgeting function, and was given the responsibility to assist in the
preparation of an executive budget for submission to the Philippine Legislature.60

As early as under the 1935 Constitution, a budget policy and a budget procedure were established, and
subsequently strengthened through the enactment of laws and executive acts.61 EO No. 25, issued by
President Manuel L. Quezon on April 25, 1936, created the Budget Commission to serve as the agency
that carried out the President’s responsibility of preparing the budget.62 CA No. 246, the first budget
law, went into effect on January 1, 1938 and established the Philippine budget process. The law also
provided a line-item budget as the framework of the Government’s budgeting system,63 with emphasis
on the observance of a "balanced budget" to tie up proposed expenditures with existing revenues.

CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act (RA) No.
992,whereby Congress introduced performance-budgeting to give importance to functions, projects and
activities in terms of expected results.64 RA No. 992 also enhanced the role of the Budget Commission as
the fiscal arm of the Government.65

The 1973 Constitution and various presidential decrees directed a series of budgetary reforms that
culminated in the enactment of PD No. 1177 that President Marcos issued on July30, 1977, and of PD
No. 1405, issued on June 11, 1978. The latter decree converted the Budget Commission into the
Ministry of Budget, and gave its head the rank of a Cabinet member.

The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under EO No.
711. The OBM became the DBM pursuant to EO No. 292 effective on November 24, 1989.

c) The Philippine Budget Cycle66

Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget
Legislation; (3) Budget Execution; and (4) Accountability. Each phase is distinctly separate from the
others but they overlap in the implementation of the budget during the budget year.

c.1.Budget Preparation67

The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The
Budget Call contains budget parameters earlier set by the Development Budget Coordination
Committee (DBCC) as well as policy guidelines and procedures to aid government agencies in the
preparation and submission of their budget proposals. The Budget Call is of two kinds, namely: (1) a
National Budget Call, which is addressed to all agencies, including state universities and colleges; and (2)
a Corporate Budget Call, which is addressed to all government-owned and -controlled corporations
(GOCCs) and government financial institutions (GFIs).
Following the issuance of the Budget Call, the various departments and agencies submit their respective
Agency Budget Proposals to the DBM. To boost citizen participation, the current administration has
tasked the various departments and agencies to partner with civil society organizations and other
citizen-stakeholders in the preparation of the Agency Budget Proposals, which proposals are then
presented before a technical panel of the DBM in scheduled budget hearings wherein the various
departments and agencies are given the opportunity to defend their budget proposals. DBM bureaus
thereafter review the Agency Budget Proposals and come up with recommendations for the Executive
Review Board, comprised by the DBM Secretary and the DBM’s senior officials. The discussions of the
Executive Review Board cover the prioritization of programs and their corresponding support vis-à-vis
the priority agenda of the National Government, and their implementation.

The DBM next consolidates the recommended agency budgets into the National Expenditure Program
(NEP)and a Budget of Expenditures and Sources of Financing (BESF). The NEP provides the details of
spending for each department and agency by program, activity or project (PAP), and is submitted in the
form of a proposed GAA. The Details of Selected Programs and Projects is the more detailed
disaggregation of key PAPs in the NEP, especially those in line with the National Government’s
development plan. The Staffing Summary provides the staffing complement of each department and
agency, including the number of positions and amounts allocated.

The NEP and BESF are thereafter presented by the DBM and the DBCC to the President and the Cabinet
for further refinements or reprioritization. Once the NEP and the BESF are approved by the President
and the Cabinet, the DBM prepares the budget documents for submission to Congress. The budget
documents consist of: (1) the President’s Budget Message, through which the President explains the
policy framework and budget priorities; (2) the BESF, mandated by Section 22, Article VII of the
Constitution,68 which contains the macroeconomic assumptions, public sector context, breakdown of
the expenditures and funding sources for the fiscal year and the two previous years; and (3) the NEP.

Public or government expenditures are generally classified into two categories, specifically: (1) capital
expenditures or outlays; and (2) current operating expenditures. Capital expenditures are the expenses
whose usefulness lasts for more than one year, and which add to the assets of the Government,
including investments in the capital of government-owned or controlled corporations and their
subsidiaries.69 Current operating expenditures are the purchases of goods and services in current
consumption the benefit of which does not extend beyond the fiscal year.70 The two components of
current expenditures are those for personal services (PS), and those for maintenance and other
operating expenses(MOOE).

Public expenditures are also broadly grouped according to their functions into: (1) economic
development expenditures (i.e., expenditures on agriculture and natural resources, transportation and
communications, commerce and industry, and other economic development efforts);71 (2) social
services or social development expenditures (i.e., government outlay on education, public health and
medicare, labor and welfare and others);72 (3) general government or general public services
expenditures (i.e., expenditures for the general government, legislative services, the administration of
justice, and for pensions and gratuities);73 (4) national defense expenditures (i.e., sub-divided into
national security expenditures and expenditures for the maintenance of peace and order);74 and (5)
public debt.75

Public expenditures may further be classified according to the nature of funds, i.e., general fund, special
fund or bond fund.76
 On the other hand, public revenues complement public expenditures and cover all income or receipts of
the government treasury used to support government expenditures.77

Classical economist Adam Smith categorized public revenues based on two principal sources, stating:
"The revenue which must defray…the necessary expenses of government may be drawn either, first
from some fund which peculiarly belongs to the sovereign or commonwealth, and which is independent
of the revenue of the people, or, secondly, from the revenue of the people."78 Adam Smith’s
classification relied on the two aspects of the nature of the State: first, the State as a juristic person with
an artificial personality, and, second, the State as a sovereign or entity possessing supreme power.
Under the first aspect, the State could hold property and engage in trade, thereby deriving what is called
its quasi private income or revenues, and which "peculiarly belonged to the sovereign." Under the
second aspect, the State could collect by imposing charges on the revenues of its subjects in the form of
taxes.79

In the Philippines, public revenues are generally derived from the following sources, to wit: (1) tax
revenues(i.e., compulsory contributions to finance government activities); 80 (2) capital revenues(i.e.,
proceeds from sales of fixed capital assets or scrap thereof and public domain, and gains on such sales
like sale of public lands, buildings and other structures, equipment, and other properties recorded as
fixed assets); 81 (3) grants(i.e., voluntary contributions and aids given to the Government for its
operation on specific purposes in the form of money and/or materials, and do not require any monetary
commitment on the part of the recipient);82 (4) extraordinary income(i.e., repayment of loans and
advances made by government corporations and local governments and the receipts and shares in
income of the Banko Sentral ng Pilipinas, and other receipts);83 and (5) public borrowings(i.e., proceeds
of repayable obligations generally with interest from domestic and foreign creditors of the Government
in general, including the National Government and its political subdivisions).84

More specifically, public revenues are classified as follows:85

General Income Specific Income

1. Subsidy Income from National 1. Income Taxes
Government 2. Property Taxes
2. Subsidy from Central Office 3. Taxes on Goods and Services
3. Subsidy from Regional 4. Taxes on International Trade and
Office/Staff Bureaus Transactions
4. Income from Government 5. Other Taxes 6.Fines and Penalties-Tax Revenue
Services
7. Other Specific Income
5. Income from Government
Business Operations
6. Sales Revenue
7. Rent Income
8. Insurance Income
9. Dividend Income
10. Interest Income
11. Sale of Confiscated Goods and
Properties
12. Foreign Exchange (FOREX)
Gains
13. Miscellaneous Operating and
Service Income
14. Fines and Penalties-Government
Services and Business Operations
15. Income from Grants and
Donations

c.2. Budget Legislation86

The Budget Legislation Phase covers the period commencing from the time Congress receives the
President’s Budget, which is inclusive of the NEPand the BESF, up to the President’s approval of the GAA.
This phase is also known as the Budget Authorization Phase, and involves the significant participation of
the Legislative through its deliberations.

Initially, the President’s Budget is assigned to the House of Representatives’ Appropriations Committee
on First Reading. The Appropriations Committee and its various Sub-Committees schedule and conduct
budget hearings to examine the PAPs of the departments and agencies. Thereafter, the House of
Representatives drafts the General Appropriations Bill (GAB).87

The GABis sponsored, presented and defended by the House of Representatives’ Appropriations
Committee and Sub-Committees in plenary session. As with other laws, the GAB is approved on Third
Reading before the House of Representatives’ version is transmitted to the Senate.88

After transmission, the Senate conducts its own committee hearings on the GAB. To expedite
proceedings, the Senate may conduct its committee hearings simultaneously with the House of
Representatives’ deliberations. The Senate’s Finance Committee and its Sub-Committees may submit
the proposed amendments to the GAB to the plenary of the Senate only after the House of
Representatives has formally transmitted its version to the Senate. The Senate version of the GAB is
likewise approved on Third Reading.89

The House of Representatives and the Senate then constitute a panel each to sit in the Bicameral
Conference Committee for the purpose of discussing and harmonizing the conflicting provisions of their
versions of the GAB. The "harmonized" version of the GAB is next presented to the President for
approval.90 The President reviews the GAB, and prepares the Veto Message where budget items are
subjected to direct veto,91 or are identified for conditional implementation.

If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the ensuing fiscal year,
the GAA for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect
until the GAB is passed by the Congress.92
c.3. Budget Execution93

With the GAA now in full force and effect, the next step is the implementation of the budget. The
Budget Execution Phase is primarily the function of the DBM, which is tasked to perform the following
procedures, namely: (1) to issue the programs and guidelines for the release of funds; (2) to prepare an
Allotment and Cash Release Program; (3) to release allotments; and (4) to issue disbursement
authorities.

The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this, the
various departments and agencies are required to submit Budget Execution Documents(BED) to outline
their plans and performance targets by laying down the physical and financial plan, the monthly cash
program, the estimate of monthly income, and the list of obligations that are not yet due and
demandable.

Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release Program
(CRP).The ARP sets a limit for allotments issued in general and to a specific agency. The CRP fixes the
monthly, quarterly and annual disbursement levels.

Allotments, which authorize an agency to enter into obligations, are issued by the DBM. Allotments are
lesser in scope than appropriations, in that the latter embrace the general legislative authority to spend.
Allotments may be released in two forms – through a comprehensive Agency Budget Matrix (ABM),94 or,
individually, by SARO.95

Armed with either the ABM or the SARO, agencies become authorized to incur obligations96 on behalf of
the Government in order to implement their PAPs. Obligations may be incurred in various ways, like
hiring of personnel, entering into contracts for the supply of goods and services, and using utilities.

In order to settle the obligations incurred by the agencies, the DBM issues a disbursement authority so
that cash may be allocated in payment of the obligations. A cash or disbursement authority that is
periodically issued is referred to as a Notice of Cash Allocation (NCA),97 which issuance is based upon an
agency’s submission of its Monthly Cash Program and other required documents. The NCA specifies the
maximum amount of cash that can be withdrawn from a government servicing bank for the period
indicated. Apart from the NCA, the DBM may issue a Non-Cash Availment Authority(NCAA) to authorize
non-cash disbursements, or a Cash Disbursement Ceiling(CDC) for departments with overseas
operations to allow the use of income collected by their foreign posts for their operating requirements.

Actual disbursement or spending of government funds terminates the Budget Execution Phase and is
usually accomplished through the Modified Disbursement Scheme under which disbursements
chargeable against the National Treasury are coursed through the government servicing banks.

c.4. Accountability98

Accountability is a significant phase of the budget cycle because it ensures that the government funds
have been effectively and efficiently utilized to achieve the State’s socio-economic goals. It also allows
the DBM to assess the performance of agencies during the fiscal year for the purpose of implementing
reforms and establishing new policies.
An agency’s accountability may be examined and evaluated through (1) performance targets and
outcomes; (2) budget accountability reports; (3) review of agency performance; and (4) audit conducted
by the Commission on Audit(COA).

2.

Nature of the DAP as a fiscal plan

a. DAP was a program designed to

promote economic growth

Policy is always a part of every budget and fiscal decision of any Administration.99 The national budget
the Executive prepares and presents to Congress represents the Administration’s "blueprint for public
policy" and reflects the Government’s goals and strategies.100 As such, the national budget becomes a
tangible representation of the programs of the Government in monetary terms, specifying therein the
PAPs and services for which specific amounts of public funds are proposed and allocated.101 Embodied in
every national budget is government spending.102

When he assumed office in the middle of 2010, President Aquino made efficiency and transparency in
government spending a significant focus of his Administration. Yet, although such focus resulted in an
improved fiscal deficit of 0.5% in the gross domestic product (GDP) from January to July of 2011, it also
unfortunately decelerated government project implementation and payment schedules.103 The World
Bank observed that the Philippines’ economic growth could be reduced, and potential growth could be
weakened should the Government continue with its underspending and fail to address the large
deficiencies in infrastructure.104 The economic situation prevailing in the middle of 2011 thus paved the
way for the development and implementation of the DAP as a stimulus package intended to fast-track
public spending and to push economic growth by investing on high-impact budgetary PAPs to be funded
from the "savings" generated during the year as well as from unprogrammed funds.105 In that respect,
the DAP was the product of "plain executive policy-making" to stimulate the economy by way of
accelerated spending.106 The Administration would thereby accelerate government spending by: (1)
streamlining the implementation process through the clustering of infrastructure projects of the
Department of Public Works and Highways (DPWH) and the Department of Education (DepEd),and (2)
front loading PPP-related projects107 due for implementation in the following year.108

Did the stimulus package work?

The March 2012 report of the World Bank,109 released after the initial implementation of the DAP,
revealed that the DAP was partially successful. The disbursements under the DAP contributed 1.3
percentage points to GDP growth by the fourth quarter of 2011.110 The continued implementation of the
DAP strengthened growth by 11.8% year on year while infrastructure spending rebounded from a 29%
contraction to a 34% growth as of September 2013.111

The DAP thus proved to be a demonstration that expenditure was a policy instrument that the
Government could use to direct the economies towards growth and development.112 The Government,
by spending on public infrastructure, would signify its commitment of ensuring profitability for
prospective investors.113 The PAPs funded under the DAP were chosen for this reason based on their: (1)
multiplier impact on the economy and infrastructure development; (2) beneficial effect on the poor; and
(3) translation into disbursements.114

b. History of the implementation of

the DAP, and sources of funds
under the DAP

How the Administration’s economic managers conceptualized and developed the DAP, and finally
presented it to the President remains unknown because the relevant documents appear to be scarce.

The earliest available document relating to the genesis of the DAP was the memorandum of October
12,2011 from Sec. Abad seeking the approval of the President to implement the proposed DAP. The
memorandum, which contained a list of the funding sources for ₱72.11 billion and of the proposed
priority projects to be funded,115 reads:

MEMORANDUM FOR THE PRESIDENT

xxxx

SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS AND SOURCES OF

FUNDS)

DATE: OCTOBER 12, 2011

Mr. President, this is to formally confirm your approval of the Disbursement Acceleration Program
totaling ₱72.11 billion. We are already working with all the agencies concerned for the immediate
execution of the projects therein.

A. Fund Sources for the Acceleration Program

Amount
Action
Fund Sources (In million Description
Requested
Php)

FY 2011 30,000 Unreleased Personnel Declare as

Unreleased Services (PS) savings and
Personal appropriations which approve/
Services (PS) will lapse at the end of authorize its use
Appropriations FY 2011 but may be for the 2011
pooled as savings and Disbursement
realigned for priority Acceleration
programs that require Program
immediate funding
 FY 2011 482 Unreleased
Unreleased appropriations (slow
Appropriations moving projects and
programs for
discontinuance)

FY 2010 12,336 Supported by the GFI Approve and

Unprogrammed Dividends authorize its use
Fund for the 2011
Disbursement
Acceleration
Program

FY 2010 21,544 Unreleased With prior

Carryover appropriations (slow approval from
Appropriation moving projects and the President in
programs for November 2010
discontinuance) and to declare as
savings from Zero-based Budgeting savings and with
Initiative authority to use
for priority
projects

FY 2011 Budget 7,748 FY 2011 Agency For information

items for Budget items that can
realignment be realigned within the
agency to fund new fast
disbursing projects
DPWH-3.981 Billion
DA – 2.497 Billion
DOT – 1.000 Billion
DepEd – 270 Million

TOTAL 72.110

B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)

GOCCs and GFIs

Agency/Project Allotment
(SARO and NCA Release) (in Million Php)

1. LRTA: Rehabilitation of LRT 1 and 2 1,868

2. NHA: 11,050

a. Resettlement of North Triangle residents to 450

Camarin A7
b. Housing for BFP/BJMP 500
c. On-site development for families living 10,000
along dangerous
d. Relocation sites for informal settlers 100
along Iloilo River and its tributaries

3. PHIL. HEART CENTER: Upgrading of 357

ageing physical plant and medical equipment

4. CREDIT INFO CORP: Establishment of 75

centralized credit information system

5. PIDS: purchase of land to relocate the PIDS 100

office and building construction

6. HGC: Equity infusion for credit insurance 400

and mortgage guaranty operations of HGC

7. PHIC: Obligations incurred (premium 1,496

subsidy for indigent families) in January-June
2010, booked for payment in Jul[y] – Dec
2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
pay the full amount.

8. Philpost: Purchase of foreclosed property. 644

Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege

9. BSP: First equity infusion out of Php 40B 10,000

capitalization under the BSP Law

10. PCMC: Capital and Equipment Renovation 280

11. LCOP: 105

a. Pediatric Pulmonary Program
b. Bio-regenerative Technology Program 35
(Stem-Cell Research – subject to legal
review and presentation) 70

12. TIDCORP: NG Equity infusion 570

TOTAL 26,945
 NGAs/LGUs

Agency/Project Allotment
(SARO) Cash
(In Million Requirement
Php) (NCA)

13. DOF-BIR: NPSTAR

centralization of data
processing and others (To be
synchronized with GFMIS
activities) 758 758

14. COA: IT infrastructure

program and hiring of
additional litigational experts 144 144

15. DND-PAF: On Base Housing

Facilities and Communication
Equipment 30 30

16. DA: 2,959 2,223

a. Irrigation, FMRs and
Integrated Community Based Multi-Species
Hatchery and Aquasilvi
Farming 1,629 1,629
b. Mindanao Rural
Development Project 919 183

c. NIA Agno River Integrated

Irrigation Project 411 411

17. DAR: 1,293 1,293

a. Agrarian Reform
Communities Project 2 1,293 132
b. Landowners Compensation 5,432

18. DBM: Conduct of National

Survey of
Farmers/Fisherfolks/Ips 625 625

19. DOJ: Operating requirements

of 50 investigation agents and
15 state attorneys 11 11

20. DOT: Preservation of the Cine

Corregidor Complex 25 25
21. OPAPP: Activities for Peace
Process (PAMANA- Project
details: budget breakdown,
implementation plan, and
conditions on fund release
attached as Annex B) 1,819 1,819

22. DOST 425 425

a. Establishment of National
Meterological and Climate
Center 275 275
b. Enhancement of Doppler
Radar Network for National
Weather Watch, Accurate
Forecasting and Flood Early
Warning 190 190

23. DOF-BOC: To settle the

principal obligations with
PDIC consistent with the
agreement with the CISS and
SGS 2,800 2,800

24. OEO-FDCP: Establishment of

the National Film Archive and
local cinematheques, and other
local activities 20 20

25. DPWH: Various infrastructure

projects 5,500 5,500

26. DepEd/ERDT/DOST: Thin

Client Cloud Computing
Project 270 270

27. DOH: Hiring of nurses and

midwives 294 294

28. TESDA: Training Program in

partnership with BPO industry
and other sectors 1,100 1,100

29. DILG: Performance Challenge

Fund (People Empowered
Community Driven
Development with DSWD and
NAPC) 250 50
 30. ARMM: Comprehensive Peace
and Development Intervention 8,592 8,592

31. DOTC-MRT: Purchase of

additional MRT cars 4,500 -

32. LGU Support Fund 6,500 6,500

33. Various Other Local Projects 6,500 6,500

34. Development Assistance to the

Province of Quezon 750 750

TOTAL 45,165 44,000

C. Summary

Fund Sources
Identified for Allotments Cash
Approval for Release Requirements for
(In Million Release in FY
Php) 2011

Total 72,110 72,110 70,895

GOCCs 26,895 26,895

NGAs/LGUs 45,165 44,000

For His Excellency’s Consideration

(Sgd.) FLORENCIO B. ABAD

[/] APPROVED

[ ] DISAPPROVED

(Sgd.) H.E. BENIGNO S. AQUINO, III

OCT 12, 2011

The memorandum of October 12, 2011 was followed by another memorandum for the President dated
December 12, 2011116 requesting omnibus authority to consolidate the savings and unutilized balances
for fiscal year 2011. Pertinent portions of the memorandum of December 12, 2011 read:

MEMORANDUM FOR THE PRESIDENT

 xxxx

SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment

DATE: December 12, 2011

This is to respectfully request for the grant of Omnibus Authority to consolidate savings/unutilized
balances in FY 2011 corresponding to completed or discontinued projects which may be pooled to fund
additional projects or expenditures.

In addition, Mr. President, this measure will allow us to undertake projects even if their implementation
carries over to 2012 without necessarily impacting on our budget deficit cap next year.

BACKGROUND

1.0 The DBM, during the course of performance reviews conducted on the agencies’
operations, particularly on the implementation of their projects/activities, including
expenses incurred in undertaking the same, have identified savings out of the 2011
General Appropriations Act. Said savings correspond to completed or discontinued
projects under certain departments/agencies which may be pooled, for the following:

1.1 to provide for new activities which have not been anticipated during
preparation of the budget;

1.2 to augment additional requirements of on-going priority projects; and

1.3 to provide for deficiencies under the Special Purpose Funds, e.g., PDAF,
Calamity Fund, Contingent Fund

1.4 to cover for the modifications of the original allotment class allocation as a
result of on-going priority projects and implementation of new activities

2.0 x x x x

2.1 x x x

2.2 x x x

ON THE UTILIZATION OF POOLED SAVINGS

3.0 It may be recalled that the President approved our request for omnibus authority to
pool savings/unutilized balances in FY 2010 last November 25, 2010.

4.0 It is understood that in the utilization of the pooled savings, the DBM shall secure
the corresponding approval/confirmation of the President. Furthermore, it is assured
that the proposed realignments shall be within the authorized Expenditure level.
 5.0 Relative thereto, we have identified some expenditure items that may be sourced
from the said pooled appropriations in FY 2010 that will expire on December 31, 2011
and appropriations in FY 2011 that may be declared as savings to fund additional
expenditures.

5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to be

spent for the projects that we have identified to be immediate actual
disbursements considering that this same fund source will expire on December
31, 2011.

5.2 With respect to the proposed expenditure items to be funded from the FY
2011 Unreleased Appropriations, most of these are the same projects for which
the DBM is directed by the Office of the President, thru the Executive Secretary,
to source funds.

6.0 Among others, the following are such proposed additional projects that have been
chosen given their multiplier impact on economy and infrastructure development, their
beneficial effect on the poor, and their translation into disbursements. Please note that
we have classified the list of proposed projects as follows:

7.0 x x x

FOR THE PRESIDENT’S APPROVAL

8.0 Foregoing considered, may we respectfully request for the President’s approval for
the following:

8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized

balances and its realignment; and

8.2 The proposed additional projects identified for funding.

For His Excellency’s consideration and approval.

(Sgd.)

[/] APPROVED

[ ] DISAPPROVED

(Sgd.) H.E. BENIGNO S. AQUINO, III

DEC 21, 2011

Substantially identical requests for authority to pool savings and to fund proposed projects were
contained in various other memoranda from Sec. Abad dated June 25, 2012,117 September 4,
2012,118 December 19, 2012,119 May 20, 2013,120 and September 25, 2013.121 The President apparently
approved all the requests, withholding approval only of the proposed projects contained in the June 25,
2012 memorandum, as borne out by his marginal note therein to the effect that the proposed projects
should still be "subject to further discussions."122

In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541 (Adoption of
Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30,
2012),123 reproduced herein as follows:

NATIONAL BUDGET CIRCULAR No. 541

July 18, 2012

TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the National
Government, Budget and Planning Officers; Heads of Accounting Units and All Others Concerned

SUBJECT : Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated

Allotments as of June 30, 2012

1.0 Rationale

The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987), periodically
reviews and evaluates the departments/agencies’ efficiency and effectiveness in utilizing budgeted
funds for the delivery of services and production of goods, consistent with the government priorities.

In the event that a measure is necessary to further improve the operational efficiency of the
government, the President is authorized to suspend or stop further use of funds allotted for any agency
or expenditure authorized in the General Appropriations Act. Withdrawal and pooling of unutilized
allotment releases can be effected by DBM based on authority of the President, as mandated under
Sections 38 and 39, Chapter 5, Book VI of EO 292.

For the first five months of 2012, the National Government has not met its spending targets. In order to
accelerate spending and sustain the fiscal targets during the year, expenditure measures have to be
implemented to optimize the utilization of available resources.

Departments/agencies have registered low spending levels, in terms of obligations and disbursements
per initial review of their 2012 performance. To enhance agencies’ performance, the DBM conducts
continuous consultation meetings and/or send call-up letters, requesting them to identify slow-moving
programs/projects and the factors/issues affecting their performance (both pertaining to internal
systems and those which are outside the agencies’ spheres of control). Also, they are asked to formulate
strategies and improvement plans for the rest of 2012.

Notwithstanding these initiatives, some departments/agencies have continued to post low obligation
levels as of end of first semester, thus resulting to substantial unobligated allotments.

In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of
unobligated allotments of agencies with low levels of obligations as of June 30, 2012, both for
continuing and current allotments. This measure will allow the maximum utilization of available
allotments to fund and undertake other priority expenditures of the national government.

2.0 Purpose

2.1 To provide the conditions and parameters on the withdrawal of unobligated

allotments of agencies as of June 30, 2012 to fund priority and/or fast-moving
programs/projects of the national government;

2.2 To prescribe the reports and documents to be used as bases on the withdrawal of
said unobligated allotments; and

2.3 To provide guidelines in the utilization or reallocation of the withdrawn allotments.

3.0 Coverage

3.1 These guidelines shall cover the withdrawal of unobligated allotments as of June 30,
2012 of all national government agencies (NGAs) charged against FY 2011 Continuing
Appropriation (R.A. No.10147) and FY 2012 Current Appropriation (R.A. No. 10155),
pertaining to:

3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the

implementation of programs and projects, as well as capitalized MOOE; and

3.1.3 Personal Services corresponding to unutilized pension benefits declared as

savings by the agencies concerned based on their updated/validated list of
pensioners.

3.2 The withdrawal of unobligated allotments may cover the identified programs,
projects and activities of the departments/agencies reflected in the DBM list shown as
Annex A or specific programs and projects as may be identified by the agencies.

4.0 Exemption

These guidelines shall not apply to the following:

4.1 NGAs

4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal autonomy

under the Philippine Constitution; and

4.1.2 State Universities and Colleges, adopting the Normative Funding allocation
scheme i.e., distribution of a predetermined budget ceiling.

4.2 Fund Sources

 4.2.1 Personal Services other than pension benefits;

4.2.2 MOOE items earmarked for specific purposes or subject to realignment

conditions per General Provisions of the GAA:

• Confidential and Intelligence Fund;

• Savings from Traveling, Communication, Transportation and Delivery,

Repair and Maintenance, Supplies and Materials and Utility which shall
be used for the grant of Collective Negotiation Agreement incentive
benefit;

• Savings from mandatory expenditures which can be realigned only in

the last quarter after taking into consideration the agency’s full year
requirements, i.e., Petroleum, Oil and Lubricants, Water, Illumination,
Power Services, Telephone, other Communication Services and Rent.

4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);

4.2.4 Special Purpose Funds such as: E-Government Fund, International

Commitments Fund, PAMANA, Priority Development Assistance Fund, Calamity
Fund, Budgetary Support to GOCCs and Allocation to LGUs, among others;

4.2.5 Quick Response Funds; and

4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium and

Special Accounts in the General Fund.

5.0 Guidelines

5.1 National government agencies shall continue to undertake procurement activities

notwithstanding the implementation of the policy of withdrawal of unobligated
allotments until the end of the third quarter, FY 2012. Even without the allotments, the
agency shall proceed in undertaking the procurement processes (i.e., procurement
planning up to the conduct of bidding but short of awarding of contract) pursuant to
GPPB Circular Nos. 02-2008 and 01-2009 and DBM Circular Letter No. 2010-9.

5.2 For the purpose of determining the amount of unobligated allotments that shall be
withdrawn, all departments/agencies/operating units (OUs) shall submit to DBM not
later than July 30, 2012, the following budget accountability reports as of June 30, 2012;

• Statement of Allotments, Obligations and Balances (SAOB);

• Financial Report of Operations (FRO); and

• Physical Report of Operations.

5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the
agency’s latest report available shall be used by DBM as basis for withdrawal of
allotment. The DBM shall compute/approximate the agency’s obligation level as of June
30 to derive its unobligated allotments as of same period. Example: If the March 31
SAOB or FRO reflects actual obligations of P 800M then the June 30 obligation level shall
approximate to ₱1,600 M (i.e., ₱800 M x 2 quarters).

5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained
unobligated as of June 30, 2012 shall be immediately considered for withdrawal. This
policy is based on the following considerations:

5.4.1 The departments/agencies’ approved priority programs and projects are

assumed to be implementation-ready and doable during the given fiscal year;
and

5.4.2 The practice of having substantial carryover appropriations may imply that
the agency has a slower-than-programmed implementation capacity or agency
tends to implement projects within a two-year timeframe.

5.5. Consistent with the President’s directive, the DBM shall, based on evaluation of the
reports cited above and results of consultations with the departments/agencies,
withdraw the unobligated allotments as of June 30, 2012 through issuance of negative
Special Allotment Release Orders (SAROs).

5.6 DBM shall prepare and submit to the President, a report on the magnitude of
withdrawn allotments. The report shall highlight the agencies which failed to submit the
June 30 reports required under this Circular.

5.7 The withdrawn allotments may be:

5.7.1 Reissued for the original programs and projects of the agencies/OUs
concerned, from which the allotments were withdrawn;

5.7.2 Realigned to cover additional funding for other existing programs and
projects of the agency/OU; or

5.7.3 Used to augment existing programs and projects of any agency and to
fund priority programs and projects not considered in the 2012 budget but
expected to be started or implemented during the current year.

5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit to DBM a
Special Budget Request (SBR), supported with the following:

5.8.1 Physical and Financial Plan (PFP);

5.8.2 Monthly Cash Program (MCP); and

 5.8.3 Proof that the project/activity has started the procurement processes i.e.,
Proof of Posting and/or Advertisement of the Invitation to Bid.

5.9 The deadline for submission of request/s pertaining to these categories shall be until
the end of the third quarter i.e., September 30, 2012. After said cut-off date, the
withdrawn allotments shall be pooled and form part of the overall savings of the
national government.

5.10 Utilization of the consolidated withdrawn allotments for other priority programs
and projects as cited under item 5.7.3 of this Circular, shall be subject to approval of the
President. Based on the approval of the President, DBM shall issue the SARO to cover
the approved priority expenditures subject to submission by the agency/OU concerned
of the SBR and supported with PFP and MCP.

5.11 It is understood that all releases to be made out of the withdrawn allotments (both
2011 and 2012 unobligated allotments) shall be within the approved Expenditure
Program level of the national government for the current year. The SAROs to be issued
shall properly disclose the appropriation source of the release to determine the extent
of allotment validity, as follows:

• For charges under R.A. 10147 – allotments shall be valid up to December 31,
2012; and

• For charges under R.A. 10155 – allotments shall be valid up to December 31,
2013.

5.12 Timely compliance with the submission of existing BARs and other reportorial
requirements is reiterated for monitoring purposes.

6.0 Effectivity

This circular shall take effect immediately.

(Sgd.) FLORENCIO B. ABAD

Secretary

As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies and departments
as of June 30, 2012 that were charged against the continuing appropriations for fiscal year 2011 and the
2012 GAA (R.A. No. 10155) were subject to withdrawal through the issuance of negative SAROs, but
such allotments could be either: (1) reissued for the original PAPs of the concerned agencies from which
they were withdrawn; or (2) realigned to cover additional funding for other existing PAPs of the
concerned agencies; or (3) used to augment existing PAPs of any agency and to fund priority PAPs not
considered in the 2012 budget but expected to be started or implemented in 2012. Financing the other
priority PAPs was made subject to the approval of the President. Note here that NBC No. 541 used
terminologies like "realignment" and "augmentation" in the application of the withdrawn unobligated
allotments.
Taken together, all the issuances showed how the DAP was to be implemented and funded, that is — (1)
by declaring "savings" coming from the various departments and agencies derived from pooling
unobligated allotments and withdrawing unreleased appropriations; (2) releasing unprogrammed funds;
and (3) applying the "savings" and unprogrammed funds to augment existing PAPs or to support other
priority PAPs.

c. DAP was not an appropriation

measure; hence, no appropriation
law was required to adopt or to
implement it

Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a law to establish the
DAP, or to authorize the disbursement and release of public funds to implement the DAP. Villegas,
PHILCONSA, IBP, Araullo, and COURAGE observe that the appropriations funded under the DAP were
not included in the 2011, 2012 and 2013 GAAs. To petitioners IBP, Araullo, and COURAGE, the DAP,
being actually an appropriation that set aside public funds for public use, should require an enabling law
for its validity. VACC maintains that the DAP, because it involved huge allocations that were separate
and distinct from the GAAs, circumvented and duplicated the GAAs without congressional authorization
and control.

The petitioners contend in unison that based on how it was developed and implemented the DAP
violated the mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money shall be paid
out of the Treasury except in pursuance of an appropriation made by law."

The OSG posits, however, that no law was necessary for the adoption and implementation of the DAP
because of its being neither a fund nor an appropriation, but a program or an administrative system of
prioritizing spending; and that the adoption of the DAP was by virtue of the authority of the President as
the Chief Executive to ensure that laws were faithfully executed.

We agree with the OSG’s position.

The DAP was a government policy or strategy designed to stimulate the economy through accelerated
spending. In the context of the DAP’s adoption and implementation being a function pertaining to the
Executive as the main actor during the Budget Execution Stage under its constitutional mandate to
faithfully execute the laws, including the GAAs, Congress did not need to legislate to adopt or to
implement the DAP. Congress could appropriate but would have nothing more to do during the Budget
Execution Stage. Indeed, appropriation was the act by which Congress "designates a particular fund, or
sets apart a specified portion of the public revenue or of the money in the public treasury, to be applied
to some general object of governmental expenditure, or to some individual purchase or expense."124 As
pointed out in Gonzales v. Raquiza:125 ‘"In a strict sense, appropriation has been defined ‘as nothing
more than the legislative authorization prescribed by the Constitution that money may be paid out of
the Treasury,’ while appropriation made by law refers to ‘the act of the legislature setting apart or
assigning to a particular use a certain sum to be used in the payment of debt or dues from the State to
its creditors.’"126

On the other hand, the President, in keeping with his duty to faithfully execute the laws, had sufficient
discretion during the execution of the budget to adapt the budget to changes in the country’s economic
situation.127 He could adopt a plan like the DAP for the purpose. He could pool the savings and identify
the PAPs to be funded under the DAP. The pooling of savings pursuant to the DAP, and the identification
of the PAPs to be funded under the DAP did not involve appropriation in the strict sense because the
money had been already set apart from the public treasury by Congress through the GAAs. In such
actions, the Executive did not usurp the power vested in Congress under Section 29(1), Article VI of the
Constitution.

3.
Unreleased appropriations and withdrawn
unobligated allotments under the DAP
were not savings, and the use of such
appropriations contravened Section 25(5),
Article VI of the 1987 Constitution.

Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the Executive to
ramp up spending to accelerate economic growth, the challenges posed by the petitioners constrain us
to dissect the mechanics of the actual execution of the DAP. The management and utilization of the
public wealth inevitably demands a most careful scrutiny of whether the Executive’s implementation of
the DAP was consistent with the Constitution, the relevant GAAs and other existing laws.

a. Although executive discretion

and flexibility are necessary in
the execution of the budget, any
transfer of appropriated funds
should conform to Section 25(5),
Article VI of the Constitution

We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that may
come into play once the budget reaches its execution stage. Executive discretion is necessary at that
stage to achieve a sound fiscal administration and assure effective budget implementation. The heads of
offices, particularly the President, require flexibility in their operations under performance budgeting to
enable them to make whatever adjustments are needed to meet established work goals under changing
conditions.128 In particular, the power to transfer funds can give the President the flexibility to meet
unforeseen events that may otherwise impede the efficient implementation of the PAPs set by Congress
in the GAA.

Congress has traditionally allowed much flexibility to the President in allocating funds pursuant to the
GAAs,129 particularly when the funds are grouped to form lump sum accounts.130 It is assumed that the
agencies of the Government enjoy more flexibility when the GAAs provide broader appropriation
items.131 This flexibility comes in the form of policies that the Executive may adopt during the budget
execution phase. The DAP – as a strategy to improve the country’s economic position – was one policy
that the President decided to carry out in order to fulfill his mandate under the GAAs.

Denying to the Executive flexibility in the expenditure process would be counterproductive. In

Presidential Spending Power,132 Prof. Louis Fisher, an American constitutional scholar whose specialties
have included budget policy, has justified extending discretionary authority to the Executive thusly:
[T]he impulse to deny discretionary authority altogether should be resisted. There are many number of
reasons why obligations and outlays by administrators may have to differ from appropriations by
legislators. Appropriations are made many months, and sometimes years, in advance of expenditures.
Congress acts with imperfect knowledge in trying to legislate in fields that are highly technical and
constantly undergoing change. New circumstances will develop to make obsolete and mistaken the
decisions reached by Congress at the appropriation stage. It is not practicable for Congress to adjust to
each new development by passing separate supplemental appropriation bills. Were Congress to control
expenditures by confining administrators to narrow statutory details, it would perhaps protect its power
of the purse but it would not protect the purse itself. The realities and complexities of public policy
require executive discretion for the sound management of public funds.

xxxx

x x x The expenditure process, by its very nature, requires substantial discretion for administrators. They
need to exercise judgment and take responsibility for their actions, but those actions ought to be
directed toward executing congressional, not administrative policy. Let there be discretion, but channel
it and use it to satisfy the programs and priorities established by Congress.

In contrast, by allowing to the heads of offices some power to transfer funds within their respective
offices, the Constitution itself ensures the fiscal autonomy of their offices, and at the same time
maintains the separation of powers among the three main branches of the Government. The Court has
recognized this, and emphasized so in Bengzon v. Drilon,133 viz:

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and
flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and
constraints on the manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and violative not only of the express
mandate of the Constitution but especially as regards the Supreme Court, of the independence and
separation of powers upon which the entire fabric of our constitutional system is based.

In the case of the President, the power to transfer funds from one item to another within the Executive
has not been the mere offshoot of established usage, but has emanated from law itself. It has existed
since the time of the American Governors-General.134 Act No. 1902 (An Act authorizing the Governor-
General to direct any unexpended balances of appropriations be returned to the general fund of the
Insular Treasury and to transfer from the general fund moneys which have been returned thereto),
passed on May 18, 1909 by the First Philippine Legislature,135 was the first enabling law that granted
statutory authority to the President to transfer funds. The authority was without any limitation, for the
Act explicitly empowered the Governor-General to transfer any unexpended balance of appropriations
for any bureau or office to another, and to spend such balance as if it had originally been appropriated
for that bureau or office.

From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be
transferred, thereby limiting the power to transfer funds. Only 10% of the amounts appropriated for
contingent or miscellaneous expenses could be transferred to a bureau or office, and the transferred
funds were to be used to cover deficiencies in the appropriations also for miscellaneous expenses of said
bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous expenses
to any other item of a certain bureau or office was removed.

During the Commonwealth period, the power of the President to transfer funds continued to be
governed by the GAAs despite the enactment of the Constitution in 1935. It is notable that the 1935
Constitution did not include a provision on the power to transfer funds. At any rate, a shift in the extent
of the President’s power to transfer funds was again experienced during this era, with the President
being given more flexibility in implementing the budget. The GAAs provided that the power to transfer
all or portions of the appropriations in the Executive Department could be made in the "interest of the
public, as the President may determine."136

In its time, the 1971 Constitutional Convention wanted to curtail the President’s seemingly unbounded
discretion in transferring funds.137 Its Committee on the Budget and Appropriation proposed to prohibit
the transfer of funds among the separate branches of the Government and the independent
constitutional bodies, but to allow instead their respective heads to augment items of appropriations
from savings in their respective budgets under certain limitations.138 The clear intention of the
Convention was to further restrict, not to liberalize, the power to transfer appropriations.139 Thus, the
Committee on the Budget and Appropriation initially considered setting stringent limitations on the
power to augment, and suggested that the augmentation of an item of appropriation could be made "by
not more than ten percent if the original item of appropriation to be augmented does not exceed one
million pesos, or by not more than five percent if the original item of appropriation to be augmented
exceeds one million pesos."140 But two members of the Committee objected to the ₱1,000,000.00
threshold, saying that the amount was arbitrary and might not be reasonable in the future. The
Committee agreed to eliminate the ₱1,000,000.00 threshold, and settled on the ten percent
limitation.141

In the end, the ten percent limitation was discarded during the plenary of the Convention, which
adopted the following final version under Section 16, Article VIII of the 1973 Constitution, to wit:

(5) No law shall be passed authorizing any transfer of appropriations; however, the President, the Prime
Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions may by law be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.

The 1973 Constitution explicitly and categorically prohibited the transfer of funds from one item to
another, unless Congress enacted a law authorizing the President, the Prime Minister, the Speaker, the
Chief Justice of the Supreme Court, and the heads of the Constitutional omissions to transfer funds for
the purpose of augmenting any item from savings in another item in the GAA of their respective offices.
The leeway was limited to augmentation only, and was further constricted by the condition that the
funds to be transferred should come from savings from another item in the appropriation of the
office.142

On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:

Section 44. Authority to Approve Fund Transfers. The President shall have the authority to transfer any
fund appropriated for the different departments, bureaus, offices and agencies of the Executive
Department which are included in the General Appropriations Act, to any program, project, or activity of
any department, bureau or office included in the General Appropriations Act or approved after its
enactment.

The President shall, likewise, have the authority to augment any appropriation of the Executive
Department in the General Appropriations Act, from savings in the appropriations of another
department, bureau, office or agency within the Executive Branch, pursuant to the provisions of Article
VIII, Section 16 (5) of the Constitution.

In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for contravening
Section 16(5)of the 1973 Constitution, ruling:

Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under said Section
16. It empowers the President to indiscriminately transfer funds from one department, bureau, office or
agency of the Executive Department to any program, project or activity of any department, bureau or
office included in the General Appropriations Act or approved after its enactment, without regard as to
whether or not the funds to be transferred are actually savings in the item from which the same are to
be taken, or whether or not the transfer is for the purpose of augmenting the item to which said
transfer is to be made. It does not only completely disregard the standards set in the fundamental law,
thereby amounting to an undue delegation of legislative powers, but likewise goes beyond the tenor
thereof. Indeed, such constitutional infirmities render the provision in question null and void.143

It is significant that Demetria was promulgated 25 days after the ratification by the people of the 1987
Constitution, whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of the 1973
Constitution, to wit:

Section 25. x x x

xxxx

5) No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme
Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in
the general appropriations law for their respective offices from savings in other items of their respective
appropriations.

xxxx

The foregoing history makes it evident that the Constitutional Commission included Section 25(5), supra,
to keep a tight rein on the exercise of the power to transfer funds appropriated by Congress by the
President and the other high officials of the Government named therein. The Court stated in Nazareth v.
Villar:144

In the funding of current activities, projects, and programs, the general rule should still be that the
budgetary amount contained in the appropriations bill is the extent Congress will determine as sufficient
for the budgetary allocation for the proponent agency. The only exception is found in Section 25 (5),
Article VI of the Constitution, by which the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions are authorized to transfer appropriations to augmentany item in the GAA for their
respective offices from the savings in other items of their respective appropriations. The plain language
of the constitutional restriction leaves no room for the petitioner’s posture, which we should now
dispose of as untenable.

It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article VI of
the Constitution limiting the authority to transfer savings only to augment another item in the GAA is
strictly but reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v. Commission on
Elections:

When the statute itself enumerates the exceptions to the application of the general rule, the exceptions
are strictly but reasonably construed. The exceptions extend only as far as their language fairly warrants,
and all doubts should be resolved in favor of the general provision rather than the exceptions. Where
the general rule is established by a statute with exceptions, none but the enacting authority can curtail
the former. Not even the courts may add to the latter by implication, and it is a rule that an express
exception excludes all others, although it is always proper in determining the applicability of the rule to
inquire whether, in a particular case, it accords with reason and justice.

The appropriate and natural office of the exception is to exempt something from the scope of the
general words of a statute, which is otherwise within the scope and meaning of such general words.
Consequently, the existence of an exception in a statute clarifies the intent that the statute shall apply
to all cases not excepted. Exceptions are subject to the rule of strict construction; hence, any doubt will
be resolved in favor of the general provision and against the exception. Indeed, the liberal construction
of a statute will seem to require in many circumstances that the exception, by which the operation of
the statute is limited or abridged, should receive a restricted construction.

Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the President’s
discretion over the appropriations during the Budget Execution Phase.

b. Requisites for the valid transfer of

appropriated funds under Section
25(5), Article VI of the 1987
Constitution

The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a
concurrence of the following requisites, namely:

(1) There is a law authorizing the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the heads of the
Constitutional Commissions to transfer funds within their respective offices;

(2) The funds to be transferred are savings generated from the appropriations for their
respective offices; and (3) The purpose of the transfer is to augment an item in the general
appropriations law for their respective offices.

b.1. First Requisite–GAAs of 2011 and

2012 lacked valid provisions to
authorize transfers of funds under
the DAP; hence, transfers under the
DAP were unconstitutional

Section 25(5), supra, not being a self-executing provision of the Constitution, must have an
implementing law for it to be operative. That law, generally, is the GAA of a given fiscal year. To comply
with the first requisite, the GAAs should expressly authorize the transfer of funds.

Did the GAAs expressly authorize the transfer of funds?

In the 2011 GAA, the provision that gave the President and the other high officials the authority to
transfer funds was Section 59, as follows:

Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any
item in this Act from savings in other items of their respective appropriations.

In the 2012 GAA, the empowering provision was Section 53, to wit:

Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any
item in this Act from savings in other items of their respective appropriations.

In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as justification for
the use of savings under the DAP.145

A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were textually
unfaithful to the Constitution for not carrying the phrase "for their respective offices" contained in
Section 25(5), supra. The impact of the phrase "for their respective offices" was to authorize only
transfers of funds within their offices (i.e., in the case of the President, the transfer was to an item of
appropriation within the Executive). The provisions carried a different phrase ("to augment any item in
this Act"), and the effect was that the 2011 and 2012 GAAs thereby literally allowed the transfer of
funds from savings to augment any item in the GAAs even if the item belonged to an office outside the
Executive. To that extent did the 2011 and 2012 GAAs contravene the Constitution. At the very least, the
aforequoted provisions cannot be used to claim authority to transfer appropriations from the Executive
to another branch, or to a constitutional commission.

Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart provision in
the 2013 GAA, to wit:

Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in
their respective appropriations to augment actual deficiencies incurred for the current year in any item
of their respective appropriations.
Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed, there
still remained two other requisites to be met, namely: that the source of funds to be transferred were
savings from appropriations within the respective offices; and that the transfer must be for the purpose
of augmenting an item of appropriation within the respective offices.

b.2. Second Requisite – There were

no savings from which funds
could be sourced for the DAP
Were the funds used in the DAP actually savings?

The petitioners claim that the funds used in the DAP — the unreleased appropriations and withdrawn
unobligated allotments — were not actual savings within the context of Section 25(5), supra, and the
relevant provisions of the GAAs. Belgica argues that "savings" should be understood to refer to the
excess money after the items that needed to be funded have been funded, or those that needed to be
paid have been paid pursuant to the budget.146 The petitioners posit that there could be savings only
when the PAPs for which the funds had been appropriated were actually implemented and completed,
or finally discontinued or abandoned. They insist that savings could not be realized with certainty in the
middle of the fiscal year; and that the funds for "slow-moving" PAPs could not be considered as savings
because such PAPs had not actually been abandoned or discontinued yet.147 They stress that NBC No.
541, by allowing the withdrawn funds to be reissued to the "original program or project from which it
was withdrawn," conceded that the PAPs from which the supposed savings were taken had not been
completed, abandoned or discontinued.148

The OSG represents that "savings" were "appropriations balances," being the difference between the
appropriation authorized by Congress and the actual amount allotted for the appropriation; that the
definition of "savings" in the GAAs set only the parameters for determining when savings occurred; that
it was still the President (as well as the other officers vested by the Constitution with the authority to
augment) who ultimately determined when savings actually existed because savings could be
determined only during the stage of budget execution; that the President must be given a wide
discretion to accomplish his tasks; and that the withdrawn unobligated allotments were savings
inasmuch as they were clearly "portions or balances of any programmed appropriation…free from any
obligation or encumbrances which are (i) still available after the completion or final discontinuance or
abandonment of the work, activity or purpose for which the appropriation is authorized…"

We partially find for the petitioners.

In ascertaining the meaning of savings, certain principles should be borne in mind. The first principle is
that Congress wields the power of the purse. Congress decides how the budget will be spent; what PAPs
to fund; and the amounts of money to be spent for each PAP. The second principle is that the Executive,
as the department of the Government tasked to enforce the laws, is expected to faithfully execute the
GAA and to spend the budget in accordance with the provisions of the GAA.149 The Executive is expected
to faithfully implement the PAPs for which Congress allocated funds, and to limit the expenditures
within the allocations, unless exigencies result to deficiencies for which augmentation is authorized,
subject to the conditions provided by law. The third principle is that in making the President’s power to
augment operative under the GAA, Congress recognizes the need for flexibility in budget execution. In
so doing, Congress diminishes its own power of the purse, for it delegates a fraction of its power to the
Executive. But Congress does not thereby allow the Executive to override its authority over the purse as
to let the Executive exceed its delegated authority. And the fourth principle is that savings should be
actual. "Actual" denotes something that is real or substantial, or something that exists presently in fact,
as opposed to something that is merely theoretical, possible, potential or hypothetical.150

The foregoing principles caution us to construe savings strictly against expanding the scope of the power
to augment. It is then indubitable that the power to augment was to be used only when the purpose for
which the funds had been allocated were already satisfied, or the need for such funds had ceased to
exist, for only then could savings be properly realized. This interpretation prevents the Executive from
unduly transgressing Congress’ power of the purse.

The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this
interpretation and made it operational, viz:

Savings refer to portions or balances of any programmed appropriation in this Act free from any
obligation or encumbrance which are: (i) still available after the completion or final discontinuance or
abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from
appropriations balances arising from unpaid compensation and related costs pertaining to vacant
positions and leaves of absence without pay; and (iii) from appropriations balances realized from the
implementation of measures resulting in improved systems and efficiencies and thus enabled agencies
to meet and deliver the required or planned targets, programs and services approved in this Act at a
lesser cost.

The three instances listed in the GAAs’ aforequoted definition were a sure indication that savings could
be generated only upon the purpose of the appropriation being fulfilled, or upon the need for the
appropriation being no longer existent.

The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs conveyed
the notion that the appropriation was at that stage when the appropriation was already obligated and
the appropriation was already released. This interpretation was reinforced by the enumeration of the
three instances for savings to arise, which showed that the appropriation referred to had reached the
agency level. It could not be otherwise, considering that only when the appropriation had reached the
agency level could it be determined whether (a) the PAP for which the appropriation had been
authorized was completed, finally discontinued, or abandoned; or (b) there were vacant positions and
leaves of absence without pay; or (c) the required or planned targets, programs and services were
realized at a lesser cost because of the implementation of measures resulting in improved systems and
efficiencies.

The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the
year, unreleased appropriations of slow moving projects and discontinued projects per Zero-Based
Budgeting findings."

The declaration of the DBM by itself does not state the clear legal basis for the treatment of unreleased
or unalloted appropriations as savings.

The fact alone that the appropriations are unreleased or unalloted is a mere description of the status of
the items as unalloted or unreleased. They have not yet ripened into categories of items from which
savings can be generated. Appropriations have been considered "released" if there has already been an
allotment or authorization to incur obligations and disbursement authority. This means that the DBM
has issued either an ABM (for those not needing clearance), or a SARO (for those needing clearance),
and consequently an NCA, NCAA or CDC, as the case may be. Appropriations remain unreleased, for
instance, because of noncompliance with documentary requirements (like the Special Budget Request),
or simply because of the unavailability of funds. But the appropriations do not actually reach the
agencies to which they were allocated under the GAAs, and have remained with the DBM technically
speaking. Ergo, unreleased appropriations refer to appropriations with allotments but without
disbursement authority.

For us to consider unreleased appropriations as savings, unless these met the statutory definition of
savings, would seriously undercut the congressional power of the purse, because such appropriations
had not even reached and been used by the agency concerned vis-à-vis the PAPs for which Congress had
allocated them. However, if an agency has unfilled positions in its plantilla and did not receive an
allotment and NCA for such vacancies, appropriations for such positions, although unreleased, may
already constitute savings for that agency under the second instance.

Unobligated allotments, on the other hand, were encompassed by the first part of the definition of
"savings" in the GAA, that is, as "portions or balances of any programmed appropriation in this Act free
from any obligation or encumbrance." But the first part of the definition was further qualified by the
three enumerated instances of when savings would be realized. As such, unobligated allotments could
not be indiscriminately declared as savings without first determining whether any of the three instances
existed. This signified that the DBM’s withdrawal of unobligated allotments had disregarded the
definition of savings under the GAAs.

Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE appropriations are
deemed divided into twelve monthly allocations within the fiscal year; hence, savings could be
generated monthly from the excess or unused MOOE appropriations other than the Mandatory
Expenditures and Expenditures for Business-type Activities because of the physical impossibility to
obligate and spend such funds as MOOE for a period that already lapsed. Following this observation,
MOOE for future months are not savings and cannot be transferred.

The DBM’s Memorandum for the President dated June 25, 2012 (which became the basis of NBC No.
541) stated:

ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS

5.0 The DBM, during the course of performance reviews conducted on the agencies’ operations,
particularly on the implementation of their projects/activities, including expenses incurred in
undertaking the same, have been continuously calling the attention of all National Government
agencies (NGAs) with low levels of obligations as of end of the first quarter to speedup the
implementation of their programs and projects in the second quarter.

6.0 Said reminders were made in a series of consultation meetings with the concerned agencies
and with call-up letters sent.
 7.0 Despite said reminders and the availability of funds at the department’s disposal, the level of
financial performance of some departments registered below program, with the targeted
obligations/disbursements for the first semester still not being met.

8.0 In order to maximize the use of the available allotment, all unobligated balances as of June
30, 2012, both for continuing and current allotments shall be withdrawn and pooled to fund fast
moving programs/projects.

9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow
moving projects to be identified by the agencies and their catch up plans to be evaluated by the
DBM.

It is apparent from the foregoing text that the withdrawal of unobligated allotments would be based on
whether the allotments pertained to slow-moving projects, or not. However, NBC No. 541 did not set in
clear terms the criteria for the withdrawal of unobligated allotments, viz:

3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012
ofall national government agencies (NGAs) charged against FY 2011 Continuing Appropriation
(R.A. No. 10147) and FY 2012 Current Appropriation (R.A. No. 10155), pertaining to:

3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the

implementation of programs and projects, as well as capitalized MOOE; and

3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings

by the agencies concerned based on their undated/validated list of pensioners.

A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of unobligated
allotments of agencies with low levels of obligations"151 "to fund priority and/or fast-moving
programs/projects."152 But the fact that the withdrawn allotments could be "[r]eissued for the original
programs and projects of the agencies/OUs concerned, from which the allotments were
withdrawn"153 supported the conclusion that the PAPs had not yet been finally discontinued or
abandoned. Thus, the purpose for which the withdrawn funds had been appropriated was not yet
fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings impossible.

Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011 charged
against the 2011 GAA that had remained unobligated based on the following considerations, to wit:

5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be
implementation-ready and doable during the given fiscal year; and

5.4.2 The practice of having substantial carryover appropriations may imply that the agency has
a slower-than-programmed implementation capacity or agency tends to implement projects
within a two-year timeframe.
Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated allotments for
continuing and current appropriations as of June 30, 2012, disregarded the 2-year period of availability
of the appropriations for MOOE and capital outlay extended under Section 65, General Provisions of the
2011 GAA, viz:

Section 65. Availability of Appropriations. — Appropriations for MOOE and capital outlays authorized in
this Act shall be available for release and obligation for the purpose specified, and under the same
special provisions applicable thereto, for a period extending to one fiscal year after the end of the year
in which such items were appropriated: PROVIDED, That appropriations for MOOE and capital outlays
under R.A. No. 9970 shall be made available up to the end of FY 2011: PROVIDED, FURTHER, That a
report on these releases and obligations shall be submitted to the Senate Committee on Finance and the
House Committee on Appropriations.

and Section 63 General Provisions of the 2012 GAA, viz:

Section 63. Availability of Appropriations. — Appropriations for MOOE and capital outlays authorized in
this Act shall be available for release and obligation for the purpose specified, and under the same
special provisions applicable thereto, for a period extending to one fiscal year after the end of the year
in which such items were appropriated: PROVIDED, That a report on these releases and obligations shall
be submitted to the Senate Committee on Finance and the House Committee on Appropriations, either
in printed form or by way of electronic document.154

Thus, another alleged area of constitutional infirmity was that the DAP and its relevant issuances
shortened the period of availability of the appropriations for MOOE and capital outlays.

Congress provided a one-year period of availability of the funds for all allotment classes in the 2013 GAA
(R.A. No. 10352), to wit:

Section 63. Availability of Appropriations.— All appropriations authorized in this Act shall be available
for release and obligation for the purposes specified, and under the same special provisions applicable
thereto, until the end of FY 2013: PROVIDED, That a report on these releases and obligations shall be
submitted to the Senate Committee on Finance and House Committee on Appropriations, either in
printed form or by way of electronic document.

Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus authority to
consolidate savings and unutilized balances to fund the DAP on a quarterly basis, viz:

7.0 If the level of financial performance of some department will register below program, even
with the availability of funds at their disposal, the targeted obligations/disbursements for each
quarter will not be met. It is important to note that these funds will lapse at the end of the fiscal
year if these remain unobligated.

8.0 To maximize the use of the available allotment, all unobligated balances at the end of every
quarter, both for continuing and current allotments shall be withdrawn and pooled to fund fast
moving programs/projects.
 9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow
moving projects to be identified by the agencies and their catch up plans to be evaluated by the
DBM.

The validity period of the affected appropriations, already given the brief Lifes pan of one year, was
further shortened to only a quarter of a year under the DBM’s memorandum dated May 20, 2013.

The petitioners accuse the respondents of forcing the generation of savings in order to have a larger
fund available for discretionary spending. They aver that the respondents, by withdrawing unobligated
allotments in the middle of the fiscal year, in effect deprived funding for PAPs with existing
appropriations under the GAAs.155

The respondents belie the accusation, insisting that the unobligated allotments were being withdrawn
upon the instance of the implementing agencies based on their own assessment that they could not
obligate those allotments pursuant to the President’s directive for them to spend their appropriations as
quickly as they could in order to ramp up the economy.156

We agree with the petitioners.

Contrary to the respondents’ insistence, the withdrawals were upon the initiative of the DBM itself. The
text of NBC No. 541 bears this out, to wit:

5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all
departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the
following budget accountability reports as of June 30, 2012;

• Statement of Allotments, Obligation and Balances (SAOB);

• Financial Report of Operations (FRO); and

• Physical Report of Operations.

5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agency’s latest
report available shall be used by DBM as basis for withdrawal of allotment. The DBM shall
compute/approximate the agency’s obligation level as of June 30 to derive its unobligated allotments as
of same period. Example: If the March 31 SAOB or FRO reflects actual obligations of P 800M then the
June 30 obligation level shall approximate to ₱1,600 M (i.e., ₱800 M x 2 quarters).

The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments
and the pooling of unreleased appropriations; and that the unbridled withdrawal of unobligated
allotments and the retention of appropriated funds were akin to the impoundment of appropriations
that could be allowed only in case of "unmanageable national government budget deficit" under the
GAAs,157 thus violating the provisions of the GAAs of 2011, 2012 and 2013 prohibiting the retention or
deduction of allotments.158

In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a
last-ditch effort of the Executive to push agencies into actually spending their appropriations; that such
policy did not amount to an impoundment scheme, because impoundment referred to the decision of
the Executive to refuse to spend funds for political or ideological reasons; and that the withdrawal of
allotments under NBC No. 541 was made pursuant to Section 38, Chapter 5, Book VI of the
Administrative Code, by which the President was granted the authority to suspend or otherwise stop
further expenditure of funds allotted to any agency whenever in his judgment the public interest so
required.

The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and
the pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless,
such withdrawal of unobligated allotments and the retention of appropriated funds cannot be
considered as impoundment.

According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers to a refusal by the

President, for whatever reason, to spend funds made available by Congress. It is the failure to spend or
obligate budget authority of any type." Impoundment under the GAA is understood to mean the
retention or deduction of appropriations. The 2011 GAA authorized impoundment only in case of
unmanageable National Government budget deficit, to wit:

Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under

this Act shall be impounded through retention or deduction, unless in accordance with the rules and
regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for the purposes,
programs, projects and activities authorized under this Act, except those covered under the
Unprogrammed Fund, shall be released pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.

Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of

appropriations authorized in this Act shall be effected only in cases where there is an unmanageable
national government budget deficit.

Unmanageable national government budget deficit as used in this section shall be construed to mean
that (i) the actual national government budget deficit has exceeded the quarterly budget deficit targets
consistent with the full-year target deficit as indicated in the FY 2011 Budget of

Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant
to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending
occurrence of such condition, as determined by the Development Budget Coordinating Committee and
approved by the President.

The 2012 and 2013 GAAs contained similar provisions.

The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment
because it entailed only the transfer of funds, not the retention or deduction of appropriations.

Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs) be
applicable. They uniformly stated:

Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from appropriations
provided in this Act shall be transmitted intact or in full to the office or agency concerned. No retention
or deduction as reserves or overhead shall be made, except as authorized by law, or upon direction of
the President of the Philippines. The COA shall ensure compliance with this provision to the extent that
sub-allotments by agencies to their subordinate offices are in conformity with the release documents
issued by the DBM.

The provision obviously pertained to the retention or deduction of allotments upon their release from
the DBM, which was a different matter altogether. The Court should not expand the meaning of the
provision by applying it to the withdrawal of allotments.

The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the
withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of
further expenditures, not the withdrawal of unobligated allotments, to wit:

Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the General
Appropriations Act and whenever in his judgment the public interest so requires, the President, upon
notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure
of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act,
except for personal services appropriations used for permanent officials and employees.

Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra,
but instead transferred the funds to other PAPs.

It is relevant to remind at this juncture that the balances of appropriations that remained unexpended
at the end of the fiscal year were to be reverted to the General Fund.1âwphi1 This was the mandate of
Section 28, Chapter IV, Book VI of the Administrative Code, to wit:

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.-

Unexpended balances of appropriations authorized in the General Appropriation Act shall revert to the
unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be
available for expenditure except by subsequent legislative enactment: Provided, that appropriations for
capital outlays shall remain valid until fully spent or reverted: provided, further, that continuing
appropriations for current operating expenditures may be specifically recommended and approved as
such in support of projects whose effective implementation calls for multi-year expenditure
commitments: provided, finally, that the President may authorize the use of savings realized by an
agency during given year to meet non-recurring expenditures in a subsequent year.

The balances of continuing appropriations shall be reviewed as part of the annual budget preparation
process and the preparation process and the President may approve upon recommendation of the
Secretary, the reversion of funds no longer needed in connection with the activities funded by said
continuing appropriations.

The Executive could not circumvent this provision by declaring unreleased appropriations and
unobligated allotments as savings prior to the end of the fiscal year.

b.3. Third Requisite – No funds from

savings could be transferred under
the DAP to augment deficient items
not provided in the GAA

The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to augment
an item in the general appropriations law for the respective offices." The term "augment" means to
enlarge or increase in size, amount, or degree.160

The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for the
PAP item to be augmented must be deficient, to wit: –

x x x Augmentation implies the existence in this Act of a program, activity, or project with an
appropriation, which upon implementation, or subsequent evaluation of needed resources, is
determined to be deficient. In no case shall a non-existent program, activity, or project, be funded by
augmentation from savings or by the use of appropriations otherwise authorized in this Act.

In other words, an appropriation for any PAP must first be determined to be deficient before it could be
augmented from savings. Note is taken of the fact that the 2013 GAA already made this quite clear,
thus:

Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in
their respective appropriations to augment actual deficiencies incurred for the current year in any item
of their respective appropriations.

As of 2013, a total of ₱144.4 billion worth of PAPs were implemented through the DAP.161

Of this amount ₱82.5 billion were released in 2011 and ₱54.8 billion in 2012.162 Sec. Abad has reported
that 9% of the total DAP releases were applied to the PAPs identified by the legislators.163

The petitioners disagree, however, and insist that the DAP supported the following PAPs that had not
been covered with appropriations in the respective GAAs, namely:

(i) ₱1.5 billion for the Cordillera People’s Liberation Army;

(ii) ₱1.8 billion for the Moro National Liberation Front;

(iii) ₱700 million for assistance to Quezon Province;164

(iv) ₱50 million to ₱100 (million) each to certain senators;165

(v) ₱10 billion for the relocation of families living along dangerous zones under the National
Housing Authority;

(vi) ₱10 billion and ₱20 billion equity infusion under the Bangko Sentral;

(vii) ₱5.4 billion landowners’ compensation under the Department of Agrarian Reform;
 (viii) ₱8.6 billion for the ARMM comprehensive peace and development program;

(ix) ₱6.5 billion augmentation of LGU internal revenue allotments

(x) ₱5 billion for crucial projects like tourism road construction under the Department of
Tourism and the Department of Public Works and Highways;

(xi) ₱1.8 billion for the DAR-DPWH Tulay ng Pangulo;

(xii) ₱1.96 billion for the DOH-DPWH rehabilitation of regional health units; and

(xiii) ₱4 billion for the DepEd-PPP school infrastructure projects.166

In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented, had
appropriation covers, and could properly be accounted for because the funds were released following
and pursuant to the standard practices adopted by the DBM.167 In support of its argument, the OSG has
submitted seven evidence packets containing memoranda, SAROs, and other pertinent documents
relative to the implementation and fund transfers under the DAP.168

Upon careful review of the documents contained in the seven evidence packets, we conclude that the
"savings" pooled under the DAP were allocated to PAPs that were not covered by any appropriations in
the pertinent GAAs.

For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk, Exposure,
Assessment and Mitigation (DREAM) project under the Department of Science and Technology (DOST)
covered the amount of ₱1.6 Billion,169 broken down as follows:

APPROPRIATION PARTICULARS AMOUNT

CODE AUTHORIZED

A.03.a.01.a Generation of new knowledge and technologies

and research capability building in priority areas
identified as strategic to National Development
Personnel Services
Maintenance and Other Operating Expenses P 43,504,024
Capital Outlays 1,164,517,589
391,978,387
P 1,600,000,000

the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had appropriated only
₱537,910,000 for MOOE, but nothing for personnel services and capital outlays, to wit:

Personnel Maintenance Capital TOTAL

Services and Other Outlays
Operating
Expenditures
 III. Operations

a. Funding Assistance to 177,406,000 1,887,365,000 49,090,000 2,113,861,000

Science
and Technology Activities

1. Central Office 1,554,238,000 1,554,238,000

a. Generation of new
knowledge and
technologies and
research
capability building in
priority areas identified
as
strategic to National
Development 537,910,000 537,910,000

Aside from this transfer under the DAP to the DREAM project exceeding by almost 300% the
appropriation by Congress for the program Generation of new knowledge and technologies and
research capability building in priority areas identified as strategic to National Development, the
Executive allotted funds for personnel services and capital outlays. The Executive thereby substituted its
will to that of Congress. Worse, the Executive had not earlier proposed any amount for personnel
services and capital outlays in the NEP that became the basis of the 2011 GAA.170

It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for an
expense category sufficiently indicated that Congress purposely did not see fit to fund, much less
implement, the PAP concerned. This indication becomes clearer when even the President himself did
not recommend in the NEP to fund the PAP. The consequence was that any PAP requiring expenditure
that did not receive any appropriation under the GAAs could only be a new PAP, any funding for which
would go beyond the authority laid down by Congress in enacting the GAAs. That happened in some
instances under the DAP.

In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy and
Emerging Technology Research and Development (DOST-PCIEETRD)171 for Establishment of the
Advanced Failure Analysis Laboratory, which reads:

APPROPRIATION PARTICULARS AMOUNT

CODE AUTHORIZED

Development, integration and coordination of the

National Research System for Industry, Energy and
A.02.a
Emerging Technology and Related Fields
Capital Outlays P 300,000,000

the appropriation code and the particulars appearing in the SARO did not correspond to the program
specified in the GAA, whose particulars were Research and Management Services(inclusive of the
following activities: (1) Technological and Economic Assessment for Industry, Energy and Utilities; (2)
Dissemination of Science and Technology Information; and (3) Management of PCIERD Information
System for Industry, Energy and Utilities. Even assuming that Development, integration and
coordination of the National Research System for Industry, Energy and Emerging Technology and
Related Fields– the particulars stated in the SARO – could fall under the broad program description of
Research and Management Services– as appearing in the SARO, it would nonetheless remain a new
activity by reason of its not being specifically stated in the GAA. As such, the DBM, sans legislative
authorization, could not validly fund and implement such PAP under the DAP.

In defending the disbursements, however, the OSG contends that the Executive enjoyed sound
discretion in implementing the budget given the generality in the language and the broad policy
objectives identified under the GAAs;172 and that the President enjoyed unlimited authority to spend the
initial appropriations under his authority to declare and utilize savings,173 and in keeping with his duty to
faithfully execute the laws.

Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate
to faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered
discretion that allowed the President to substitute his own will for that of Congress. He was still required
to remain faithful to the provisions of the GAAs, given that his power to spend pursuant to the GAAs was
but a delegation to him from Congress. Verily, the power to spend the public wealth resided in Congress,
not in the Executive.174 Moreover, leaving the spending power of the Executive unrestricted would
threaten to undo the principle of separation of powers.175

Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse
whenever it deliberates and acts on the budget proposal submitted by the Executive.176 Its power of the
purse is touted as the very foundation of its institutional strength,177 and underpins "all other legislative
decisions and regulating the balance of influence between the legislative and executive branches of
government."178 Such enormous power encompasses the capacity to generate money for the
Government, to appropriate public funds, and to spend the money.179 Pertinently, when it exercises its
power of the purse, Congress wields control by specifying the PAPs for which public money should be
spent.

It is the President who proposes the budget but it is Congress that has the final say on matters of
appropriations.180 For this purpose, appropriation involves two governing principles, namely: (1) "a
Principle of the Public Fisc, asserting that all monies received from whatever source by any part of the
government are public funds;" and (2) "a Principle of Appropriations Control, prohibiting expenditure of
any public money without legislative authorization."181 To conform with the governing principles, the
Executive cannot circumvent the prohibition by Congress of an expenditure for a PAP by resorting to
either public or private funds.182 Nor could the Executive transfer appropriated funds resulting in an
increase in the budget for one PAP, for by so doing the appropriation for another PAP is necessarily
decreased. The terms of both appropriations will thereby be violated.

b.4 Third Requisite – Cross-border

augmentations from savings were
prohibited by the Constitution

By providing that the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the Heads of the Constitutional
Commissions may be authorized to augment any item in the GAA "for their respective offices," Section
25(5), supra, has delineated borders between their offices, such that funds appropriated for one office
are prohibited from crossing over to another office even in the guise of augmentation of a deficient item
or items. Thus, we call such transfers of funds cross-border transfers or cross-border augmentations.

To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire Executive,
with respect to the President; the Senate, with respect to the Senate President; the House of
Representatives, with respect to the Speaker; the Judiciary, with respect to the Chief Justice; the
Constitutional Commissions, with respect to their respective Chairpersons.

Did any cross-border transfers or augmentations transpire?

During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border
augmentations, to wit:

JUSTICE BERSAMIN:

Alright, the whole time that you have been Secretary of Department of Budget and Management, did
the Executive Department ever redirect any part of savings of the National Government under your
control cross border to another department?

SECRETARY ABAD:

Well, in the Memos that we submitted to you, such an instance, Your Honor

JUSTICE BERSAMIN:

Can you tell me two instances? I don’t recall having read your material.

SECRETARY ABAD:

Well, the first instance had to do with a request from the House of Representatives. They started
building their e-library in 2010 and they had a budget for about 207 Million but they lack about 43
Million to complete its 250 Million requirements. Prior to that, the COA, in an audit observation
informed the Speaker that they had to continue with that construction otherwise the whole building, as
well as the equipments therein may suffer from serious deterioration. And at that time, since the budget
of the House of Representatives was not enough to complete 250 Million, they wrote to the President
requesting for an augmentation of that particular item, which was granted, Your Honor. The second
instance in the Memos is a request from the Commission on Audit. At the time they were pushing very
strongly the good governance programs of the government and therefore, part of that is a requirement
to conduct audits as well as review financial reports of many agencies. And in the performance of that
function, the Commission on Audit needed information technology equipment as well as hire
consultants and litigators to help them with their audit work and for that they requested funds from the
Executive and the President saw that it was important for the Commission to be provided with those IT
equipments and litigators and consultants and the request was granted, Your Honor.

JUSTICE BERSAMIN:
These cross border examples, cross border augmentations were not supported by appropriations…

SECRETARY ABAD:

They were, we were augmenting existing items within their… (interrupted)

JUSTICE BERSAMIN:

No, appropriations before you augmented because this is a cross border and the tenor or text of the
Constitution is quite clear as far as I am concerned. It says here, "The power to augment may only be
made to increase any item in the General Appropriations Law for their respective offices." Did you not
feel constricted by this provision?

SECRETARY ABAD:

Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations, Your
Honor. What we thought we did was to transfer savings which was needed by the Commission to
address deficiency in an existing item in both the Commission as well as in the House of
Representatives; that’s how we saw…(interrupted)

JUSTICE BERSAMIN:

So your position as Secretary of Budget is that you could do that?

SECRETARY ABAD:

In an extreme instances because…(interrupted)

JUSTICE BERSAMIN:

No, no, in all instances, extreme or not extreme, you could do that, that’s your feeling.

SECRETARY ABAD:

Well, in that particular situation when the request was made by the Commission and the House of
Representatives, we felt that we needed to respond because we felt…(interrupted).183

The records show, indeed, that funds amounting to ₱143,700,000.00 and ₱250,000,000.00 were
transferred under the DAP respectively to the COA184 and the House of Representatives.185 Those
transfers of funds, which constituted cross-border augmentations for being from the Executive to the
COA and the House of Representatives, are graphed as follows:186

DATE AMOUNT
OFFICE PURPOSE
RELEASED (In thousand pesos)
 Reserve Releases
Imposed

Commission on IT Infrastructure Program and hiring of 11/11/11 143,700

Audit additional litigation experts

Congress – Completion of the construction of the 07/23/12 207,034 250,000

House of Legislative Library and Archives (Savings of HOR)
Representatives Building/Congressional e-library

The respondents further stated in their memorandum that the President "made available" to the
"Commission on Elections the savings of his department upon [its] request for funds…"187 This was
another instance of a cross-border augmentation.

The respondents justified all the cross-border transfers thusly:

99. The Constitution does not prevent the President from transferring savings of his department to
another department upon the latter’s request, provided it is the recipient department that uses such
funds to augment its own appropriation. In such a case, the President merely gives the other
department access to public funds but he cannot dictate how they shall be applied by that department
whose fiscal autonomy is guaranteed by the Constitution.188

In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza, representing Congress,
announced a different characterization of the cross-border transfers of funds as in the nature of "aid"
instead of "augmentation," viz:

HONORABLE MENDOZA:

The cross-border transfers, if Your Honors please, is not an application of the DAP. What were these
cross-border transfers? They are transfers of savings as defined in the various General Appropriations
Act. So, that makes it similar to the DAP, the use of savings. There was a cross-border which appears to
be in violation of Section 25, paragraph 5 of Article VI, in the sense that the border was crossed. But
never has it been claimed that the purpose was to augment a deficient item in another department of
the government or agency of the government. The cross-border transfers, if Your Honors please, were in
the nature of [aid] rather than augmentations. Here is a government entity separate and independent
from the Executive Department solely in need of public funds. The President is there 24 hours a day, 7
days a week. He’s in charge of the whole operation although six or seven heads of government offices
are given the power to augment. Only the President stationed there and in effect in-charge and has the
responsibility for the failure of any part of the government. You have election, for one reason or
another, the money is not enough to hold election. There would be chaos if no money is given as an aid,
not to augment, but as an aid to a department like COA. The President is responsible in a way that the
other heads, given the power to augment, are not. So, he cannot very well allow this, if Your Honor
please.189

JUSTICE LEONEN:
May I move to another point, maybe just briefly. I am curious that the position now, I think, of
government is that some transfers of savings is now considered to be, if I’m not mistaken, aid not
augmentation. Am I correct in my hearing of your argument?

HONORABLE MENDOZA:

That’s our submission, if Your Honor, please.

JUSTICE LEONEN:

May I know, Justice, where can we situate this in the text of the Constitution? Where do we actually
derive the concepts that transfers of appropriation from one branch to the other or what happened in
DAP can be considered a said? What particular text in the Constitution can we situate this?

HONORABLE MENDOZA:

There is no particular provision or statutory provision for that matter, if Your Honor please. It is drawn
from the fact that the Executive is the executive in-charge of the success of the government.

JUSTICE LEONEN:

So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of the
government?

HONORABLE MENDOZA:

Yes, if Your Honor, please.

JUSTICE LEONEN:

A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That there are
opportunities and there have been opportunities of the President to actually go to Congress and ask for
supplemental budgets?

HONORABLE MENDOZA:

If there is time to do that, I would say yes.

JUSTICE LEONEN:

So, the theory of aid rather than augmentation applies in extra-ordinary situation?

HONORABLE MENDOZA:

Very extra-ordinary situations.

JUSTICE LEONEN:
But Counsel, this would be new doctrine, in case?

HONORABLE MENDOZA:

Yes, if Your Honor please.190

Regardless of the variant characterizations of the cross-border transfers of funds, the plain text of
Section 25(5), supra, disallowing cross border transfers was disobeyed. Cross-border transfers, whether
as augmentation, or as aid, were prohibited under Section 25(5), supra.

4.
Sourcing the DAP from unprogrammed
funds despite the original revenue targets
not having been exceeded was invalid

Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for 2011,
2012,and 2013. The respondents stress, however, that the unprogrammed funds were not brought
under the DAP as savings, but as separate sources of funds; and that, consequently, the release and use
of unprogrammed funds were not subject to the restrictions under Section 25(5), supra.

The documents contained in the Evidence Packets by the OSG have confirmed that the unprogrammed
funds were treated as separate sources of funds. Even so, the release and use of the unprogrammed
funds were still subject to restrictions, for, to start with, the GAAs precisely specified the instances when
the unprogrammed funds could be released and the purposes for which they could be used.

The petitioners point out that a condition for the release of the unprogrammed funds was that the
revenue collections must exceed revenue targets; and that the release of the unprogrammed funds was
illegal because such condition was not met.191

The respondents disagree, holding that the release and use of the unprogrammed funds under the DAP
were in accordance with the pertinent provisions of the GAAs. In particular, the DBM avers that the
unprogrammed funds could be availed of when any of the following three instances occur, to wit: (1) the
revenue collections exceeded the original revenue targets proposed in the BESFs submitted by the
President to Congress; (2) new revenues were collected or realized from sources not originally
considered in the BESFs; or(3) newly-approved loans for foreign assisted projects were secured, or when
conditions were triggered for other sources of funds, such as perfected loan agreements for foreign-
assisted projects.192 This view of the DBM was adopted by all the respondents in their Consolidated
Comment.193

The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as
appropriations that provided standby authority to incur additional agency obligations for priority PAPs
when revenue collections exceeded targets, and when additional foreign funds are
generated.194 Contrary to the DBM’s averment that there were three instances when unprogrammed
funds could be released, the BESFs envisioned only two instances. The third mentioned by the DBM –
the collection of new revenues from sources not originally considered in the BESFs – was not included.
This meant that the collection of additional revenues from new sources did not warrant the release of
the unprogrammed funds. Hence, even if the revenues not considered in the BESFs were collected or
generated, the basic condition that the revenue collections should exceed the revenue targets must still
be complied with in order to justify the release of the unprogrammed funds.

The view that there were only two instances when the unprogrammed funds could be released was
bolstered by the following texts of the Special Provisions of the 2011 and 2012 GAAs, to wit:

2011 GAA

1. Release of Fund. The amounts authorized herein shall be released only when the revenue collections
exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant
to Section 22, Article VII of the Constitution, including savings generated from programmed
appropriations for the year: PROVIDED, That collections arising from sources not considered in the
aforesaid original revenue targets may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence
of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO
covering the loan proceeds: PROVIDED, FURTHERMORE, That if there are savings generated from the
programmed appropriations for the first two quarters of the year, the DBM may, subject to the approval
of the President, release the pertinent appropriations under the Unprogrammed Fund corresponding to
only fifty percent (50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That the release
of the balance of the total savings from programmed appropriations for the year shall be subject to
fiscal programming and approval of the President.

2012 GAA

1. Release of the Fund. The amounts authorized herein shall be released only when the revenue
collections exceed the original revenue targets submitted by the President of the Philippines to Congress
pursuant to Section 22, Article VII of the Constitution: PROVIDED, That collections arising from sources
not considered in the aforesaid original revenue targets may be used to cover releases from
appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis
for the issuance of a SARO covering the loan proceeds.

As can be noted, the provisos in both provisions to the effect that "collections arising from sources not
considered in the aforesaid original revenue targets may be used to cover releases from appropriations
in this Fund" gave the authority to use such additional revenues for appropriations funded from the
unprogrammed funds. They did not at all waive compliance with the basic requirement that revenue
collections must still exceed the original revenue targets.

In contrast, the texts of the provisos with regard to additional revenues generated from newly-approved
foreign loans were clear to the effect that the perfected loan agreement would be in itself "sufficient
basis" for the issuance of a SARO to release the funds but only to the extent of the amount of the loan.
In such instance, the revenue collections need not exceed the revenue targets to warrant the release of
the loan proceeds, and the mere perfection of the loan agreement would suffice.

It can be inferred from the foregoing that under these provisions of the GAAs the additional revenues
from sources not considered in the BESFs must be taken into account in determining if the revenue
collections exceeded the revenue targets. The text of the relevant provision of the 2013 GAA, which was
substantially similar to those of the GAAs for 2011 and 2012, already made this explicit, thus:

1. Release of the Fund. The amounts authorized herein shall be released only when the revenue
collections exceed the original revenue targets submitted by the President of the Philippines to Congress
pursuant to Section 22, Article VII of the Constitution, including collections arising from sources not
considered in the aforesaid original revenue target, as certified by the BTr: PROVIDED, That in case of
newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.

Consequently, that there were additional revenues from sources not considered in the revenue target
would not be enough. The total revenue collections must still exceed the original revenue targets to
justify the release of the unprogrammed funds (other than those from newly-approved foreign loans).

The present controversy on the unprogrammed funds was rooted in the correct interpretation of the
phrase "revenue collections should exceed the original revenue targets." The petitioners take the phrase
to mean that the total revenue collections must exceed the total revenue target stated in the BESF, but
the respondents understand the phrase to refer only to the collections for each source of revenue as
enumerated in the BESF, with the condition being deemed complied with once the revenue collections
from a particular source already exceeded the stated target.

The BESF provided for the following sources of revenue, with the corresponding revenue target stated
for each source of revenue, to wit:

TAX REVENUES

Taxes on Net Income and Profits

Taxes on Property
Taxes on Domestic Goods and Services

General Sales, Turnover or VAT

Selected Excises on Goods

Selected Taxes on Services

Taxes on the Use of Goods or Property or Permission to Perform Activities
Other Taxes
Taxes on International Trade and Transactions

NON-TAX REVENUES

Fees and Charges

BTR Income

Government Services
Interest on NG Deposits
Interest on Advances to Government Corporations
Income from Investments
 Interest on Bond Holdings

Guarantee Fee
Gain on Foreign Exchange
NG Income Collected by BTr

Dividends on Stocks
NG Share from Airport Terminal Fee
NG Share from PAGCOR Income
NG Share from MIAA Profit

Privatization
Foreign Grants

Thus, when the Court required the respondents to submit a certification from the Bureau of Treasury
(BTr) to the effect that the revenue collections had exceeded the original revenue targets,195 they
complied by submitting certifications from the BTr and Department of Finance (DOF) pertaining to only
one identified source of revenue – the dividends from the shares of stock held by the Government in
government-owned and controlled corporations.

To justify the release of the unprogrammed funds for 2011, the OSG presented the certification dated
March 4, 2011 issued by DOF Undersecretary Gil S. Beltran, as follows:

This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the
programmed income from dividends from shares of stock in government-owned and controlled
corporations is 5.5 billion.

This is to certify further that based on the records of the Bureau of Treasury, the National Government
has recorded dividend income amounting to ₱23.8 billion as of 31 January 2011.196

For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer Roberto
B. Tan, viz:

This is to certify that the actual dividend collections remitted to the National Government for the period
January to March 2012 amounted to ₱19.419 billion compared to the full year program of ₱5.5 billion
for 2012.197

And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National
Treasurer Rosalia V. De Leon, to wit:

This is to certify that the actual dividend collections remitted to the National Government for the period
January to May 2013 amounted to ₱12.438 billion compared to the full year program of ₱10.0198 billion
for 2013.

Moreover, the National Government accounted for the sale of the right to build and operate the NAIA
expressway amounting to ₱11.0 billion in June 2013.199
The certifications reflected that by collecting dividends amounting to ₱23.8 billion in 2011, ₱19.419
billion in 2012, and ₱12.438 billion in 2013 the BTr had exceeded only the ₱5.5 billion in target revenues
in the form of dividends from stocks in each of 2011 and 2012, and only the ₱10 billion in target
revenues in the form of dividends from stocks in 2013.

However, the requirement that revenue collections exceed the original revenue targets was to be
construed in light of the purpose for which the unprogrammed funds were incorporated in the GAAs as
standby appropriations to support additional expenditures for certain priority PAPs should the revenue
collections exceed the resource targets assumed in the budget or when additional foreign project loan
proceeds were realized. The unprogrammed funds were included in the GAAs to provide ready cover so
as not to delay the implementation of the PAPs should new or additional revenue sources be realized
during the year.200 Given the tenor of the certifications, the unprogrammed funds were thus not yet
supported by the corresponding resources.201

The revenue targets stated in the BESF were intended to address the funding requirements of the
proposed programmed appropriations. In contrast, the unprogrammed funds, as standby
appropriations, were to be released only when there were revenues in excess of what the programmed
appropriations required. As such, the revenue targets should be considered as a whole, not individually;
otherwise, we would be dealing with artificial revenue surpluses. The requirement that revenue
collections must exceed revenue target should be understood to mean that the revenue collections
must exceed the total of the revenue targets stated in the BESF. Moreover, to release the
unprogrammed funds simply because there was an excess revenue as to one source of revenue would
be an unsound fiscal management measure because it would disregard the budget plan and foster
budget deficits, in contravention of the Government’s surplus budget policy.202

We cannot, therefore, subscribe to the respondents’ view.

5.
Equal protection, checks and balances,
and public accountability challenges

The DAP is further challenged as violative of the Equal Protection Clause, the system of checks and
balances, and the principle of public accountability.

With respect to the challenge against the DAP under the Equal Protection Clause,203 Luna argues that
the implementation of the DAP was "unfair as it [was] selective" because the funds released under the
DAP was not made available to all the legislators, with some of them refusing to avail themselves of the
DAP funds, and others being unaware of the availability of such funds. Thus, the DAP practised "undue
favoritism" in favor of select legislators in contravention of the Equal Protection Clause.

Similarly, COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable
classification was used in distributing the funds under the DAP; and that the Senators who supposedly
availed themselves of said funds were differently treated as to the amounts they respectively received.

Anent the petitioners’ theory that the DAP violated the system of checks and balances, Luna submits
that the grant of the funds under the DAP to some legislators forced their silence about the issues and
anomalies surrounding the DAP. Meanwhile, Belgica stresses that the DAP, by allowing the legislators to
identify PAPs, authorized them to take part in the implementation and execution of the GAAs, a function
that exclusively belonged to the Executive; that such situation constituted undue and unjustified
legislative encroachment in the functions of the Executive; and that the President arrogated unto
himself the power of appropriation vested in Congress because NBC No. 541 authorized the use of the
funds under the DAP for PAPs not considered in the 2012 budget.

Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability
enshrined in the Constitution,204 because the legislators relinquished the power of appropriation to the
Executive, and exhibited a reluctance to inquire into the legality of the DAP.

The OSG counters the challenges, stating that the supposed discrimination in the release of funds under
the DAP could be raised only by the affected Members of Congress themselves, and if the challenge
based on the violation of the Equal Protection Clause was really against the constitutionality of the DAP,
the arguments of the petitioners should be directed to the entitlement of the legislators to the funds,
not to the proposition that all of the legislators should have been given such entitlement.

The challenge based on the contravention of the Equal Protection Clause, which focuses on the release
of funds under the DAP to legislators, lacks factual and legal basis. The allegations about Senators and
Congressmen being unaware of the existence and implementation of the DAP, and about some of them
having refused to accept such funds were unsupported with relevant data. Also, the claim that the
Executive discriminated against some legislators on the ground alone of their receiving less than the
others could not of itself warrant a finding of contravention of the Equal Protection Clause. The denial of
equal protection of any law should be an issue to be raised only by parties who supposedly suffer it, and,
in these cases, such parties would be the few legislators claimed to have been discriminated against in
the releases of funds under the DAP. The reason for the requirement is that only such affected
legislators could properly and fully bring to the fore when and how the denial of equal protection
occurred, and explain why there was a denial in their situation. The requirement was not met here.
Consequently, the Court was not put in the position to determine if there was a denial of equal
protection. To have the Court do so despite the inadequacy of the showing of factual and legal support
would be to compel it to speculate, and the outcome would not do justice to those for whose supposed
benefit the claim of denial of equal protection has been made.

The argument that the release of funds under the DAP effectively stayed the hands of the legislators
from conducting congressional inquiries into the legality and propriety of the DAP is speculative. That
deficiency eliminated any need to consider and resolve the argument, for it is fundamental that
speculation would not support any proper judicial determination of an issue simply because nothing
concrete can thereby be gained. In order to sustain their constitutional challenges against official acts of
the Government, the petitioners must discharge the basic burden of proving that the constitutional
infirmities actually existed.205 Simply put, guesswork and speculation cannot overcome the presumption
of the constitutionality of the assailed executive act.

We do not need to discuss whether or not the DAP and its implementation through the various circulars
and memoranda of the DBM transgressed the system of checks and balances in place in our
constitutional system. Our earlier expositions on the DAP and its implementing issuances infringing the
doctrine of separation of powers effectively addressed this particular concern.

Anent the principle of public accountability being transgressed because the adoption and
implementation of the DAP constituted an assumption by the Executive of Congress’ power of
appropriation, we have already held that the DAP and its implementing issuances were policies and acts
that the Executive could properly adopt and do in the execution of the GAAs to the extent that they
sought to implement strategies to ramp up or accelerate the economy of the country.

6.
Doctrine of operative fact was applicable

After declaring the DAP and its implementing issuances constitutionally infirm, we must now deal with
the consequences of the declaration.

Article 7 of the Civil Code provides:

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse, or custom or practice to the contrary.

When the courts declared a law to be inconsistent with the Constitution, the former shall be void and
the latter shall govern.

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary
to the laws or the Constitution.

A legislative or executive act that is declared void for being unconstitutional cannot give rise to any right
or obligation.206 However, the generality of the rule makes us ponder whether rigidly applying the rule
may at times be impracticable or wasteful. Should we not recognize the need to except from the rigid
application of the rule the instances in which the void law or executive act produced an almost
irreversible result?

The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has
been exhaustively explained in De Agbayani v. Philippine National Bank:207

The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an
executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of
any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the
fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of
paper. As the new Civil Code puts it: ‘When the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern.’ Administrative or executive acts,
orders and regulations shall be valid only when they are not contrary to the laws of the Constitution. It is
understandable why it should be so, the Constitution being supreme and paramount. Any legislative or
executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently
realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or
executive act must have been in force and had to be complied with. This is so as until after the judiciary,
in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting than that in a
subsequent litigation regard be had to what has been done while such legislative or executive act was in
operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely
because the judiciary is the governmental organ which has the final say on whether or not a legislative
or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: ‘The actual existence of a statute, prior to such
a determination [of unconstitutionality], is an operative fact and may have consequences which cannot
justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various aspects, with respect to
particular relations, individual and corporate, and particular conduct, private and official.’"

The doctrine of operative fact recognizes the existence of the law or executive act prior to the
determination of its unconstitutionality as an operative fact that produced consequences that cannot
always be erased, ignored or disregarded. In short, it nullifies the void law or executive act but sustains
its effects. It provides an exception to the general rule that a void or unconstitutional law produces no
effect.208 But its use must be subjected to great scrutiny and circumspection, and it cannot be invoked to
validate an unconstitutional law or executive act, but is resorted to only as a matter of equity and fair
play.209 It applies only to cases where extraordinary circumstances exist, and only when the
extraordinary circumstances have met the stringent conditions that will permit its application.

We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its
application to the DAP proceeds from equity and fair play. The consequences resulting from the DAP
and its related issuances could not be ignored or could no longer be undone.

To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The term
executive act is broad enough to include any and all acts of the Executive, including those that are quasi
legislative and quasi-judicial in nature. The Court held so in Hacienda Luisita, Inc. v. Presidential Agrarian
Reform Council:210

Nonetheless, the minority is of the persistent view that the applicability of the operative fact doctrine
should be limited to statutes and rules and regulations issued by the executive department that are
accorded the same status as that of a statute or those which are quasi-legislative in nature. Thus, the
minority concludes that the phrase ‘executive act’ used in the case of De Agbayani v. Philippine National
Bank refers only to acts, orders, and rules and regulations that have the force and effect of law. The
minority also made mention of the Concurring Opinion of Justice Enrique Fernando in Municipality of
Malabang v. Benito, where it was supposedly made explicit that the operative fact doctrine applies to
executive acts, which are ultimately quasi-legislative in nature.

We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang case elaborates
what ‘executive act’ mean. Moreover, while orders, rules and regulations issued by the President or the
executive branch have fixed definitions and meaning in the Administrative Code and jurisprudence, the
phrase ‘executive act’ does not have such specific definition under existing laws. It should be noted that
in the cases cited by the minority, nowhere can it be found that the term ‘executive act’ is confined to
the foregoing. Contrarily, the term ‘executive act’ is broad enough to encompass decisions of
administrative bodies and agencies under the executive department which are subsequently revoked by
the agency in question or nullified by the Court.
A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the
Presidential Commission on Good Government (PCGG) and as Chief Presidential Legal Counsel (CPLC)
which was declared unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In said case, this
Court ruled that the concurrent appointment of Elma to these offices is in violation of Section 7, par. 2,
Article IX-B of the 1987 Constitution, since these are incompatible offices. Notably, the appointment of
Elma as Chairman of the PCGG and as CPLC is, without a question, an executive act. Prior to the
declaration of unconstitutionality of the said executive act, certain acts or transactions were made in
good faith and in reliance of the appointment of Elma which cannot just be set aside or invalidated by its
subsequent invalidation.

In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the invalidity of the
jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to have
existed so as not to trample upon the rights of the accused therein. Relevant thereto, in Olaguer v.
Military Commission No. 34, it was ruled that ‘military tribunals pertain to the Executive Department of
the Government and are simply instrumentalities of the executive power, provided by the legislature for
the President as Commander-in-Chief to aid him in properly commanding the army and navy and
enforcing discipline therein, and utilized under his orders or those of his authorized military
representatives.’

Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by the
executive department that are accorded the same status as that of a statute or those which are quasi-
legislative in nature.

Even assuming that De Agbayani initially applied the operative fact doctrine only to executive issuances
like orders and rules and regulations, said principle can nonetheless be applied, by analogy, to decisions
made by the President or the agencies under the executive department. This doctrine, in the interest of
justice and equity, can be applied liberally and in a broad sense to encompass said decisions of the
executive branch. In keeping with the demands of equity, the Court can apply the operative fact
doctrine to acts and consequences that resulted from the reliance not only on a law or executive act
which is quasi-legislative in nature but also on decisions or orders of the executive branch which were
later nullified. This Court is not unmindful that such acts and consequences must be recognized in the
higher interest of justice, equity and fairness.

Significantly, a decision made by the President or the administrative agencies has to be complied with
because it has the force and effect of law, springing from the powers of the President under the
Constitution and existing laws. Prior to the nullification or recall of said decision, it may have produced
acts and consequences in conformity to and in reliance of said decision, which must be respected. It is
on this score that the operative fact doctrine should be applied to acts and consequences that resulted
from the implementation of the PARC Resolution approving the SDP of HLI. (Bold underscoring supplied
for emphasis)

In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court likewise declared
that "for the operative fact doctrine to apply, there must be a ‘legislative or executive measure,’
meaning a law or executive issuance." Thus, the Court opined there that the operative fact doctrine did
not apply to a mere administrative practice of the Bureau of Internal Revenue, viz:

Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time
the rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given
retroactive effect. This, in essence, is the doctrine of operative fact. There must, however, be a rule or
ruling issued by the Commissioner that is relied upon by the taxpayer in good faith. A mere
administrative practice, not formalized into a rule or ruling, will not suffice because such a mere
administrative practice may not be uniformly and consistently applied. An administrative practice, if not
formalized as a rule or ruling, will not be known to the general public and can be availed of only by those
with informal contacts with the government agency.

It is clear from the foregoing that the adoption and the implementation of the DAP and its related
issuances were executive acts.1avvphi1 The DAP itself, as a policy, transcended a merely administrative
practice especially after the Executive, through the DBM, implemented it by issuing various memoranda
and circulars. The pooling of savings pursuant to the DAP from the allotments made available to the
different agencies and departments was consistently applied throughout the entire Executive. With the
Executive, through the DBM, being in charge of the third phase of the budget cycle – the budget
execution phase, the President could legitimately adopt a policy like the DAP by virtue of his primary
responsibility as the Chief Executive of directing the national economy towards growth and
development. This is simply because savings could and should be determined only during the budget
execution phase.

As already mentioned, the implementation of the DAP resulted into the use of savings pooled by the
Executive to finance the PAPs that were not covered in the GAA, or that did not have proper
appropriation covers, as well as to augment items pertaining to other departments of the Government
in clear violation of the Constitution. To declare the implementation of the DAP unconstitutional
without recognizing that its prior implementation constituted an operative fact that produced
consequences in the real as well as juristic worlds of the Government and the Nation is to be impractical
and unfair. Unless the doctrine is held to apply, the Executive as the disburser and the offices under it
and elsewhere as the recipients could be required to undo everything that they had implemented in
good faith under the DAP. That scenario would be enormously burdensome for the Government. Equity
alleviates such burden.

The other side of the coin is that it has been adequately shown as to be beyond debate that the
implementation of the DAP yielded undeniably positive results that enhanced the economic welfare of
the country. To count the positive results may be impossible, but the visible ones, like public
infrastructure, could easily include roads, bridges, homes for the homeless, hospitals, classrooms and
the like. Not to apply the doctrine of operative fact to the DAP could literally cause the physical undoing
of such worthy results by destruction, and would result in most undesirable wastefulness.

Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact
does not always apply, and is not always the consequence of every declaration of constitutional
invalidity. It can be invoked only in situations where the nullification of the effects of what used to be a
valid law would result in inequity and injustice;212 but where no such result would ensue, the general
rule that an unconstitutional law is totally ineffective should apply.

In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs
that can no longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP,
but cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete
findings of good faith in their favor by the proper tribunals determining their criminal, civil,
administrative and other liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES
the following acts and practices under the Disbursement Acceleration Program, National Budget Circular
No. 541 and related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5),
Article VI of the 1987 Constitution and the doctrine of separation of powers, namely:

(a) The withdrawal of unobligated allotments from the implementing agencies, and the
declaration of the withdrawn unobligated allotments and unreleased appropriations as savings
prior to the end of the fiscal year and without complying with the statutory definition of savings
contained in the General Appropriations Acts;

(b) The cross-border transfers of the savings of the Executive to augment the appropriations of
other offices outside the Executive; and

(c) The funding of projects, activities and programs that were not covered by any appropriation
in the General Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification
by the National Treasurer that the revenue collections exceeded the revenue targets for non-compliance
with the conditions provided in the relevant General Appropriations Acts.

SO ORDERED.