G.R. No. 70853 March 12, 1987
90 reserving for settlement purposes, under
REPUBLIC OF THE PHILIPPINES, petitioner-appellee,
vs.
PABLO FELICIANO and INTERMEDIATE APPELLATE
COURT, respondents-appellants.
YAP, J.:
Petitioner seeks the review of the decision of the Intermediate
Appellate Court dated April 30, 1985 reversing the order of the Court
of First Instance of Camarines Sur, Branch VI, dated August 21,
1980, which dismissed the complaint of respondent Pablo Feliciano
for recovery of ownership and possession of a parcel of land on the
ground of non-suability of the State.
The background of the present controversy may be briefly
summarized as follows:
On January 22, 1970, respondent Feliciano filed a complaint with the
then Court of First Instance of Camarines Sur against the Republic of
the Philippines, represented by the Land Authority, for the recovery
of ownership and possession of a parcel of land, consisting of four
(4) lots with an aggregate area of 1,364.4177 hectares, situated in
the Barrio of Salvacion, Municipality of Tinambac, Camarines Sur.
Plaintiff alleged that he bought the property in question from Victor
Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed
by a Deed of Absolute Sale on October 30, 1954; that Gardiola had
acquired the property by purchase from the heirs of Francisco
Abrazado whose title to the said property was evidenced by
an informacion posesoria that upon plaintiff's purchase of the
property, he took actual possession of the same, introduced various
improvements therein and caused it to be surveyed in July 1952,
which survey was approved by the Director of Lands on October 24,
1954; that on November 1, 1954, President Ramon Magsaysay
issued Proclamation No.
the administration of the National Resettlement and Rehabilitation
Administration (NARRA), a tract of land situated in the Municipalities
of Tinambac and Siruma, Camarines Sur, after which the NARRA
and its successor agency, the Land Authority, started sub-dividing
and distributing the land to the settlers; that the property in question,
while located within the reservation established under Proclamation
No. 90, was the private property of plaintiff and should therefore be
excluded therefrom. Plaintiff prayed that he be declared the rightful
and true owner of the property in question consisting of 1,364.4177
hectares; that his title of ownership based on informacion
posesoria of his predecessor-in-interest be declared legal valid and
subsisting and that defendant be ordered to cancel and nullify all
awards to the settlers.
The defendant, represented by the Land Authority, filed an answer,
raising by way of affirmative defenses lack of sufficient cause of
action and prescription.
On August 29, 1970, the trial court, through Judge Rafael S. Sison,
rendered a decision declaring Lot No. 1, with an area of 701.9064
hectares, to be the private property of the plaintiff, "being covered by
a possessory information title in the name of his predecessor-in-
interest" and declaring said lot excluded from the NARRA settlement
reservation. The court declared the rest of the property claimed by
plaintiff, i.e. Lots 2, 3 and 4, reverted to the public domain.
A motion to intervene and to set aside the decision of August 29,
1970 was filed by eighty-six (86) settlers, together with the barrio
council of Pag-asay, alleging among other things that intervenors
had been in possession of the land in question for more than twenty
(20) years under claim of ownership.
On January 25, 1971, the court a quo reconsidered its decision,
reopened the case and directed the intervenors to file their
corresponding pleadings and present their evidence; all evidence
already presented were to remain but plaintiff, as well as the
Republic of the Philippines, could present additional evidence if they
so desire. The plaintiff presented additional evidence on July 30,
1971, and the case was set for hearing for the reception of
intervenors' evidence on August 30 and August 31, 1971.
On August 30, 1971, the date set for the presentation of the
evidence for intervenors, the latter did not appear but submitted a
motion for postponement and resetting of the hearing on the next
day, August 31, 1971. The trial court denied the motion for
postponement and allowed plaintiff to offer his evidence "en
ausencia," after which the case would be deemed submitted for
decision. On the following day, August 31, 1971, Judge Sison
rendered a decision reiterating his decision of August 29, 1970.
A motion for reconsideration was immediately filed by the
intervenors. But before this motion was acted upon, plaintiff filed a
motion for execution, dated November 18, 1971. On December 10,
1971, the lower court, this time through Judge Miguel Navarro,
issued an order denying the motion for execution and setting aside
the order denying intervenors' motion for postponement. The case
was reopened to allow intervenors to present their evidence. Unable
to secure a reconsideration of Judge Navarro's order, the plaintiff
went to the Intermediate Appellate Court on a petition for certiorari.
Said petition was, however, denied by the Intermediate Appellate
Court, and petitioners brought the matter to this Court in G.R. No.
36163, which was denied on May 3, 1973 Consequently, the case
was remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally
on the ground that the Republic of the Philippines cannot be sued
without its consent and hence the action cannot prosper. The motion
was opposed by the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising,
issued the questioned order dismissing the case for lack of
jurisdiction. Respondent moved for reconsideration, while the
Solicitor General, on behalf of the Republic of the Philippines filed its
opposition thereto, maintaining that the dismissal was proper on the
ground of non-suability of the State and also on the ground that the
existence and/or authenticity of the purported possessory information
title of the respondents' predecessor-in-interest had not been
demonstrated and that at any rate, the same is not evidence of title,
or if it is, its efficacy has been lost by prescription and laches.
Upon denial of the motion for reconsideration, plaintiff again went to
the Intermediate Appellate Court on petition for certiorari. On April
30, 1985, the respondent appellate court rendered its decision
reversing the order of Judge Lising and remanding the case to the
court a quo for further proceedings. Hence this petition.
We find the petition meritorious. The doctrine of non-suability of the
State has proper application in this case. The plaintiff has impleaded
the Republic of the Philippines as defendant in an action for recovery
of ownership and possession of a parcel of land, bringing the State
to court just like any private person who is claimed to be usurping a
piece of property. A suit for the recovery of property is not an
action in rem, but an action in personam. 1 It is an action directed
against a specific party or parties, and any judgment therein binds
only such party or parties. The complaint filed by plaintiff, the private
respondent herein, is directed against the Republic of the
Philippines, represented by the Land Authority, a governmental
agency created by Republic Act No. 3844.
By its caption and its allegation and prayer, the complaint is clearly a
suit against the State, which under settled jurisprudence is not
permitted, except upon a showing that the State has consented to be
sued, either expressly or by implication through the use of statutory
language too plain to be misinterpreted.2 There is no such showing
in the instant case. Worse, the complaint itself fails to allege the
existence of such consent. This is a fatal defect, 3 and on this basis
alone, the complaint should have been dismissed.
The failure of the petitioner to assert the defense of immunity from
suit when the case was tried before the court a quo, as alleged by
private respondent, is not fatal. It is now settled that such defense
"may be invoked by the courts sua sponte at any stage of the
proceedings." 4
Private respondent contends that the consent of petitioner may be
read from the Proclamation itself, when it established the reservation
" subject to private rights, if any there be. " We do not agree. No
such consent can be drawn from the language of the Proclamation.
The exclusion of existing private rights from the reservation
established by Proclamation No. 90 can not be construed as a
waiver of the immunity of the State from suit. Waiver of immunity,
being a derogation of sovereignty, will not be inferred lightly. but
must be construed in strictissimi juris. 5 Moreover, the Proclamation
is not a legislative act. The consent of the State to be sued must
emanate from statutory authority. Waiver of State immunity can only
be made by an act of the legislative body.
Neither is there merit in respondent's submission, which the
respondent appellate court sustained, on the basis of our decision in
the Begosa case, 6 that the present action is not a suit against the
State within the rule of State immunity from suit, because plaintiff
does not seek to divest the Government of any of its lands or its
funds. It is contended that the complaint involves land not owned by
the State, but private land belonging to the plaintiff, hence the
Government is not being divested of any of its properties. There is
some sophistry involved in this argument, since the character of the
land sought to be recovered still remains to be established, and the
plaintiff's action is directed against the State precisely to compel the
latter to litigate the ownership and possession of the property. In
other words, the plaintiff is out to establish that he is the owner of the
land in question based, incidentally, on an informacion posesoria of
dubious value, and he seeks to establish his claim of ownership by
suing the Republic of the Philippines in an action in personam.
The inscription in the property registry of an informacion
posesoria under the Spanish Mortgage Law was a means provided
by the law then in force in the Philippines prior to the transfer of
sovereignty from Spain to the United States of America, to record a
claimant's actual possession of a piece of land, established through
an ex parte proceeding conducted in accordance with prescribed
rules. 7 Such inscription merely furnishes, at best, prima
facie evidence of the fact that at the time the proceeding was held,
the claimant was in possession of the land under a claim of right as
set forth in his application. 8 The possessory information could ripen
into a record of ownership after the lapse of 20 years (later reduced
to 10 years), upon the fulfillment of the requisites prescribed in
Article 393 of the Spanish Mortgage Law.
There is no showing in the case at bar that the informacion
posesoria held by the respondent had been converted into a record
of ownership. Such possessory information, therefore, remained at
best mere prima facie evidence of possession. Using this possessory
information, the respondent could have applied for judicial
confirmation of imperfect title under the Public Land Act, which is an
action in rem. However, having failed to do so, it is rather late for him
to pursue this avenue at this time. Respondent must also contend,
as the records disclose, with the fact admitted by him and stated in
the decision of the Court a quo that settlers have been occupying
and cultivating the land in question since even before the outbreak of
the war, which puts in grave doubt his own claim of possession.
Worthy of note is the fact, as pointed out by the Solicitor General,
that the informacion posesoria registered in the Office of the Register
of Deed of Camarines Sur on September 23, 1952 was a
"reconstituted" possessory information; it was "reconstituted from the
duplicate presented to this office (Register of Deeds) by Dr. Pablo
Feliciano," without the submission of proof that the alleged duplicate
was authentic or that the original thereof was lost. Reconstitution can
be validly made only in case of loss of the original. 10 These
circumstances raise grave doubts as to the authenticity and validity
of the "informacion posesoria" relied upon by respondent Feliciano.
Adding to the dubiousness of said document is the fact that
"possessory information calls for an area of only 100
hectares," 11 whereas the land claimed by respondent Feliciano
comprises 1,364.4177 hectares, later reduced to 701-9064 hectares.
Courts should be wary in accepting "possessory information
documents, as well as other purportedly old Spanish titles, as proof
of alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting
aside the appealed decision of the Intermediate Appellate Court,
dated April 30, 1985, and affirming the order of the court a quo,
dated August 21, 1980, dismissing the complaint filed by respondent
Pablo Feliciano against the Republic of the Philippines. No costs.
SO ORDERED.
Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.
Melencio-Herrera, J., is on leave.
G.R. No. L-11154 March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-
appellant.
Crossfield and O'Brien for plaintiff.
Attorney-General Avanceña for defendant..
TRENT, J.:
This is an appeal by both parties from a judgment of the Court of
First Instance of the city of Manila in favor of the plaintiff for the sum
of P14,741, together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting
the general damages which the plaintiff suffered to P5,000, instead
of P25,000 as claimed in the complaint," and (2) "in limiting the time
when plaintiff was entirely disabled to two months and twenty-one
days and fixing the damage accordingly in the sum of P2,666,
instead of P6,000 as claimed by plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the trial
court erred: (a) in finding that the collision between the plaintiff's
motorcycle and the ambulance of the General Hospital was due to
the negligence of the chauffeur; (b) in holding that the Government of
the Philippine Islands is liable for the damages sustained by the
plaintiff as a result of the collision, even if it be true that the collision
was due to the negligence of the chauffeur; and (c) in rendering
judgment against the defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the
record, are as follows:
It is a fact not disputed by counsel for the defendant that when
the plaintiff, riding on a motorcycle, was going toward the
western part of Calle Padre Faura, passing along the west
side thereof at a speed of ten to twelve miles an hour, upon
crossing Taft Avenue and when he was ten feet from the
southwestern intersection of said streets, the General Hospital
ambulance, upon reaching said avenue, instead of turning
toward the south, after passing the center thereof, so that it
would be on the left side of said avenue, as is prescribed by
the ordinance and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the
street, into the right side of Taft Avenue, without having
sounded any whistle or horn, by which movement it struck the
plaintiff, who was already six feet from the southwestern point
or from the post place there.
By reason of the resulting collision, the plaintiff was so
severely injured that, according to Dr. Saleeby, who examined
him on the very same day that he was taken to the General
Hospital, he was suffering from a depression in the left
parietal region, a would in the same place and in the back part
of his head, while blood issued from his nose and he was
entirely unconscious.
The marks revealed that he had one or more fractures of the
skull and that the grey matter and brain was had suffered
material injury. At ten o'clock of the night in question, which
was the time set for performing the operation, his pulse was
so weak and so irregular that, in his opinion, there was little
hope that he would live. His right leg was broken in such a
way that the fracture extended to the outer skin in such
manner that it might be regarded as double and the would be
exposed to infection, for which reason it was of the most
serious nature.
At another examination six days before the day of the trial, Dr.
Saleeby noticed that the plaintiff's leg showed a contraction of
an inch and a half and a curvature that made his leg very
weak and painful at the point of the fracture. Examination of
his head revealed a notable readjustment of the functions of
the brain and nerves. The patient apparently was slightly deaf,
had a light weakness in his eyes and in his mental condition.
This latter weakness was always noticed when the plaintiff
had to do any difficult mental labor, especially when he
attempted to use his money for mathematical calculations.
According to the various merchants who testified as
witnesses, the plaintiff's mental and physical condition prior to
the accident was excellent, and that after having received the
injuries that have been discussed, his physical condition had
undergone a noticeable depreciation, for he had lost the
agility, energy, and ability that he had constantly displayed
before the accident as one of the best constructors of wooden
buildings and he could not now earn even a half of the income
that he had secured for his work because he had lost 50 per
cent of his efficiency. As a contractor, he could no longer, as
he had before done, climb up ladders and scaffoldings to
reach the highest parts of the building.
As a consequence of the loss the plaintiff suffered in the
efficiency of his work as a contractor, he had to dissolved the
partnership he had formed with the engineer. Wilson, because
he was incapacitated from making mathematical calculations
on account of the condition of his leg and of his mental
faculties, and he had to give up a contract he had for the
construction of the Uy Chaco building."
We may say at the outset that we are in full accord with the trial court
to the effect that the collision between the plaintiff's motorcycle and
the ambulance of the General Hospital was due solely to the
negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which are
drawn in question by the plaintiff are (a) P5,000, the award awarded
for permanent injuries, and (b) the P2,666, the amount allowed for
the loss of wages during the time the plaintiff was incapacitated from
pursuing his occupation. We find nothing in the record which would
justify us in increasing the amount of the first. As to the second, the
record shows, and the trial court so found, that the plaintiff's services
as a contractor were worth P1,000 per month. The court, however,
limited the time to two months and twenty-one days, which the
plaintiff was actually confined in the hospital. In this we think there
was error, because it was clearly established that the plaintiff was
wholly incapacitated for a period of six months. The mere fact that he
remained in the hospital only two months and twenty-one days while
the remainder of the six months was spent in his home, would not
prevent recovery for the whole time. We, therefore, find that the
amount of damages sustained by the plaintiff, without any fault on his
part, is P18,075.
As the negligence which caused the collision is a tort committed by
an agent or employee of the Government, the inquiry at once arises
whether the Government is legally-liable for the damages resulting
therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the
Government of the Philippine Islands and authorizing the
Attorney-General of said Islands to appear in said suit.
Whereas a claim has been filed against the Government of
the Philippine Islands by Mr. E. Merritt, of Manila, for damages
resulting from a collision between his motorcycle and the
ambulance of the General Hospital on March twenty-fifth,
nineteen hundred and thirteen;
Whereas it is not known who is responsible for the accident
nor is it possible to determine the amount of damages, if any,
to which the claimant is entitled; and
Whereas the Director of Public Works and the Attorney-
General recommended that an Act be passed by the
Legislature authorizing Mr. E. Merritt to bring suit in the courts
against the Government, in order that said questions may be
decided: Now, therefore,
By authority of the United States, be it enacted by the
Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized to bring suit in the
Court of First Instance of the city of Manila against the
Government of the Philippine Islands in order to fix the
responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the
amount of the damages, if any, to which Mr. E. Merritt is
entitled on account of said collision, and the Attorney-General
of the Philippine Islands is hereby authorized and directed to
appear at the trial on the behalf of the Government of said
Islands, to defendant said Government at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply waive its
immunity from suit or did it also concede its liability to the plaintiff? If
only the former, then it cannot be held that the Act created any new
cause of action in favor of the plaintiff or extended the defendant's
liability to any case not previously recognized.
All admit that the Insular Government (the defendant) cannot be
sued by an individual without its consent. It is also admitted that the
instant case is one against the Government. As the consent of the
Government to be sued by the plaintiff was entirely voluntary on its
part, it is our duty to look carefully into the terms of the consent, and
render judgment accordingly.
The plaintiff was authorized to bring this action against the
Government "in order to fix the responsibility for the collision
between his motorcycle and the ambulance of the General Hospital
and to determine the amount of the damages, if any, to which Mr. E.
Merritt is entitled on account of said collision, . . . ." These were the
two questions submitted to the court for determination. The Act was
passed "in order that said questions may be decided." We have
"decided" that the accident was due solely to the negligence of the
chauffeur, who was at the time an employee of the defendant, and
we have also fixed the amount of damages sustained by the plaintiff
as a result of the collision. Does the Act authorize us to hold that the
Government is legally liable for that amount? If not, we must look
elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled
after the Federal and State Governments in the United States," we
may look to the decisions of the high courts of that country for aid in
determining the purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts
committed by its officers or agents whom it employs, except when
expressly made so by legislative enactment, is well settled. "The
Government," says Justice Story, "does not undertake to guarantee
to any person the fidelity of the officers or agents whom it employs,
since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive
of the public interest." (Claussen vs. City of Luverne, 103 Minn., 491,
citing U. S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers
vs. States, 20 How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to
recover damages from the state for personal injuries received on
account of the negligence of the state officers at the state fair, a state
institution created by the legislature for the purpose of improving
agricultural and kindred industries; to disseminate information
calculated to educate and benefit the industrial classes; and to
advance by such means the material interests of the state, being
objects similar to those sought by the public school system. In
passing upon the question of the state's liability for the negligent acts
of its officers or agents, the court said:
No claim arises against any government is favor of an
individual, by reason of the misfeasance, laches, or
unauthorized exercise of powers by its officers or agents.
(Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State, 86
N. C., 51, 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal.,
690; 43 Am. St. Rep., 158; Green vs. State, 73 Cal., 29;
Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203; Story on
Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to
sue the state where the cause of action arises out of either fort or
contract, the rule is stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply waives its immunity
from suit. It does not thereby concede its liability to plaintiff, or
create any cause of action in his favor, or extend its liability to
any cause not previously recognized. It merely gives a
remedy to enforce a preexisting liability and submits itself to
the jurisdiction of the court, subject to its right to interpose any
lawful defense.
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided
April 16, 1915, the Act of 1913, which authorized the bringing of this
suit, read:
SECTION 1. Authority is hereby given to George Apfelbacher,
of the town of Summit, Waukesha County, Wisconsin, to bring
suit in such court or courts and in such form or forms as he
may be advised for the purpose of settling and determining all
controversies which he may now have with the State of
Wisconsin, or its duly authorized officers and agents, relative
to the mill property of said George Apfelbacher, the fish
hatchery of the State of Wisconsin on the Bark River, and the
mill property of Evan Humphrey at the lower end of
 Nagawicka Lake, and relative to the use of the waters of said
Bark River and Nagawicka Lake, all in the county of
Waukesha, Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature
admitted liability on the part of the state for the acts of its
officers, and that the suit now stands just as it would stand
between private parties. It is difficult to see how the act does,
or was intended to do, more than remove the state's immunity
from suit. It simply gives authority to commence suit for the
purpose of settling plaintiff's controversies with the estate.
Nowhere in the act is there a whisper or suggestion that the
court or courts in the disposition of the suit shall depart from
well established principles of law, or that the amount of
damages is the only question to be settled. The act opened
the door of the court to the plaintiff. It did not pass upon the
question of liability, but left the suit just where it would be in
the absence of the state's immunity from suit. If the
Legislature had intended to change the rule that obtained in
this state so long and to declare liability on the part of the
state, it would not have left so important a matter to mere
inference, but would have done so in express terms. (Murdock
Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.E., 854; 8
L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions of the Act of
1893, relied upon and considered, are as follows:
All persons who have, or shall hereafter have, claims on
contract or for negligence against the state not allowed by the
state board of examiners, are hereby authorized, on the terms
and conditions herein contained, to bring suit thereon against
the state in any of the courts of this state of competent
jurisdiction, and prosecute the same to final judgment. The
rules of practice in civil cases shall apply to such suits, except
as herein otherwise provided.
And the court said:
This statute has been considered by this court in at least two
cases, arising under different facts, and in both it was held
that said statute did not create any liability or cause of action
against the state where none existed before, but merely gave
an additional remedy to enforce such liability as would have
existed if the statute had not been enacted. (Chapman vs.
State, 104 Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State,
121 Cal., 16.)
A statute of Massachusetts enacted in 1887 gave to the superior
court "jurisdiction of all claims against the commonwealth, whether at
law or in equity," with an exception not necessary to be here
mentioned. In construing this statute the court, in Murdock Grate Co.
vs. Commonwealth (152 Mass., 28), said:
The statute we are discussing disclose no intention to create
against the state a new and heretofore unrecognized class of
liabilities, but only an intention to provide a judicial tribunal
where well recognized existing liabilities can be adjudicated.
In Sipple vs. State (99 N. Y., 284), where the board of the canal
claims had, by the terms of the statute of New York, jurisdiction of
claims for damages for injuries in the management of the canals
such as the plaintiff had sustained, Chief Justice Ruger remarks: "It
must be conceded that the state can be made liable for injuries
arising from the negligence of its agents or servants, only by force of
some positive statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend the
Government's liability to any cause not previously recognized, we will
now examine the substantive law touching the defendant's liability for
the negligent acts of its officers, agents, and employees. Paragraph
5 of article 1903 of the Civil Code reads:
The state is liable in this sense when it acts through a special
agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act
performed, in which case the provisions of the preceding
article shall be applicable.
The supreme court of Spain in defining the scope of this paragraph
said:
That the obligation to indemnify for damages which a third
person causes to another by his fault or negligence is based,
as is evidenced by the same Law 3, Title 15, Partida 7, on that
the person obligated, by his own fault or negligence, takes
part in the act or omission of the third party who caused the
damage. It follows therefrom that the state, by virtue of such
provisions of law, is not responsible for the damages suffered
by private individuals in consequence of acts performed by its
employees in the discharge of the functions pertaining to their
office, because neither fault nor even negligence can be
presumed on the part of the state in the organization of
branches of public service and in the appointment of its
agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of
service serves the general weal an that of private persons
interested in its operation. Between these latter and the state,
therefore, no relations of a private nature governed by the civil
law can arise except in a case where the state acts as a
judicial person capable of acquiring rights and contracting
obligations. (Supreme Court of Spain, January 7, 1898; 83
Jur. Civ., 24.)
That the Civil Code in chapter 2, title 16, book 4, regulates the
obligations which arise out of fault or negligence; and whereas
in the first article thereof. No. 1902, where the general
principle is laid down that where a person who by an act or
omission causes damage to another through fault or
negligence, shall be obliged to repair the damage so done,
reference is made to acts or omissions of the persons who
directly or indirectly cause the damage, the following articles
refers to this persons and imposes an identical obligation
upon those who maintain fixed relations of authority and
superiority over the authors of the damage, because the law
presumes that in consequence of such relations the evil
caused by their own fault or negligence is imputable to them.
This legal presumption gives way to proof, however, because,
as held in the last paragraph of article 1903, responsibility for
acts of third persons ceases when the persons mentioned in
said article prove that they employed all the diligence of a
good father of a family to avoid the damage, and among these
persons, called upon to answer in a direct and not a
subsidiary manner, are found, in addition to the mother or the
father in a proper case, guardians and owners or directors of
an establishment or enterprise, the state, but not always,
except when it acts through the agency of a special agent,
doubtless because and only in this case, the fault or
negligence, which is the original basis of this kind of
objections, must be presumed to lie with the state.
That although in some cases the state might by virtue of the
general principle set forth in article 1902 respond for all the
damage that is occasioned to private parties by orders or
resolutions which by fault or negligence are made by
branches of the central administration acting in the name and
representation of the state itself and as an external expression
of its sovereignty in the exercise of its executive powers, yet
said article is not applicable in the case of damages said to
have been occasioned to the petitioners by an executive
official, acting in the exercise of his powers, in proceedings to
enforce the collections of certain property taxes owing by the
owner of the property which they hold in sublease.
 That the responsibility of the state is limited by article 1903 to
the case wherein it acts through a special agent (and a
special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his office if
he is a special official) so that in representation of the state
and being bound to act as an agent thereof, he executes the
trust confided to him. This concept does not apply to any
executive agent who is an employee of the acting
administration and who on his own responsibility performs the
functions which are inherent in and naturally pertain to his
office and which are regulated by law and the regulations."
(Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389,
390.)
meaning of paragraph 5 of article 1903, supra, and that the chauffeur
of the ambulance of the General Hospital was not such an agent.
For the foregoing reasons, the judgment appealed from must be
reversed, without costs in this instance. Whether the Government
intends to make itself legally liable for the amount of damages above
set forth, which the plaintiff has sustained by reason of the negligent
acts of one of its employees, by legislative enactment and by
appropriating sufficient funds therefor, we are not called upon to
determine. This matter rests solely with the Legislature and not with
the courts.
Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.

That according to paragraph 5 of article 1903 of the Civil Code

and the principle laid down in a decision, among others, of the
18th of May, 1904, in a damage case, the responsibility of the
state is limited to that which it contracts through a special
agent, duly empowered by a definite order or commission to
perform some act or charged with some definite purpose
which gives rise to the claim, and not where the claim is
based on acts or omissions imputable to a public official
charged with some administrative or technical office who can
be held to the proper responsibility in the manner laid down by
the law of civil responsibility. Consequently, the trial court in
not so deciding and in sentencing the said entity to the
payment of damages, caused by an official of the second
class referred to, has by erroneous interpretation infringed the
provisions of articles 1902 and 1903 of the Civil Code.
(Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146.)

It is, therefore, evidence that the State (the Government of the

Philippine Islands) is only liable, according to the above quoted
decisions of the Supreme Court of Spain, for the acts of its agents,
officers and employees when they act as special agents within the
G.R. No. 134887 July 27, 2006
PHILIPPINE AGILA SATELLITE, INC. represented by MICHAEL
C. U. DE GUZMAN, petitioner,
vs.
SEC. JOSEFINA TRINIDAD LICHAUCO and the HON.
OMBUDSMAN, respondents.
DECISION
CARPIO MORALES, J.:
On June 6, 1994, a Memorandum of Understanding 1 (MOU) was
entered into by a consortium of private telecommunications carriers
and the Department of Transportation and Communications (DOTC)
represented by then Secretary Jesus B. Garcia, Jr. relative to the
launching, ownership, operation and management of a Philippine
satellite by a Filipino-owned or controlled private consortium or
corporation.
Pursuant to Article IV of the MOU, the consortium of private
telecommunications carriers formed a corporation and adopted the
corporate name Philippine Agila Satellite, Inc. (PASI), herein
petitioner.
By letter2 dated June 28, 1996, PASI president Rodrigo A. Silverio
(Silverio) requested the then DOTC Secretary Amado S. Lagdameo,
Jr. for official government confirmation of the assignment of
Philippine orbital slots 161ºE and 153ºE to PASI for its AGILA
satellites.
In response to Silverio’s letter, Secretary Lagdameo, by letter 3 dated
July 3, 1996, confirmed the government’s assignment of Philippine
orbital slots 161ºE and 153ºE to PASI for its AGILA satellites.
PASI thereupon undertook preparations for the launching, operation
and management of its satellites by, among other things, obtaining
loans, increasing its capital, conducting negotiations with its business
partners, and making an initial payment of US$ 3.5 million to
Aerospatiale, a French satellite manufacturer.
Michael de Guzman (de Guzman), PASI President and Chief
Executive Officer (CEO), later informed Jesli Lapuz (Lapuz),
President and CEO of the Landbank of the Philippines, by letter 4 of
December 3, 1996, of the government’s assignment to PASI of
orbital slots 161ºE and 153ºE and requested the bank’s confirmation
of its participation in a club loan in the amount of US$ 11 million, the
proceeds of which would be applied to PASI’s interim satellite.
It appears that Lapuz sent a copy of De Guzman’s letter to then
DOTC Undersecretary Josefina T. Lichauco, (Lichauco) who, by
letter5 of December 5, 1996, wrote Lapuz as follows:
1. Kindly be informed that there is simply no basis for Michael
de Guzman to allege that the DOTC has assigned two (2)
slots to PASI. He conveniently neglected to attach as another
annex, in addition to Sec. Lagdameo’s letter of 3 July 1996
(Annex "A") the letter of 28 June (Annex "B") in response to
which the July 3rd letter had been sent to PASI. Annex "B"
precisely provides that one slot (153º E, to which the interim
satellite was supposed to migrate) was to be used for the
migration of the Russian satellite in time for the APEC
Leaders’ Summit. This particular endeavor was not
successful. The interim satellite "Gorizont" never moved from
its orbital location of 130ºE Longitude. Annex "C" is a letter
from an official of the Subic Bay Satellite Systems Inc., with its
attachments, addressed to me stating that as of the 13th of
November, no such voyage to 153ºE orbital slot had been
commenced. In fact DHI hid this fact from me, and in fact
stated that Gorizont had already moved and was on its way to
153ºE.
 Since this timely migration did not happen in time for the
APEC Leaders Meeting on 24 November, this 153ºE
Longitude slot can no longer be assigned to PASI.
The other slot 161ºE Longitude is the one that can be made
available for PASI’s eventual launch, in 1998 most likely, in
exchange for one free satellite transponder unit utilization, for
all requirements of Government. These have yet to be
embodied in a contract between PASI and the DOTC.
2. I understand from my meeting with DHI/PASI this morning,
and from the de Guzman letter you sent to me, that the latter
are still interested in pursuing their "interim satellite project"
and are applying for a loan with your bank. Of course they can
always pursue this as a business venture of DHI/PASI which
is their own corporate business decision. The DOTC supports
this venture but they will be getting only one orbital slot for
both the Interim Satellite Project and for the Launch Project. I
understand from today’s meeting with them that this is
technically feasible.
3. As regards the use of the name "Agila", Mr. de Guzman’s
allegation that DHI/PASI has registered "Agila" as a
"corporate alias/trademark" is FALSE. There is no such thing
as registration of a "corporate alias". Nor for that matter can
the trade name of a satellite be registered for just any satellite,
where it was the President who chose the name for the first
Philippine satellite in orbit. No one else coined that name but
he. He has therefore given the name "Agila I" to the Mabuhay
satellite now in orbit at 144ºE, being the first Philippine
satellite in orbit. He made this announcement in the presence
of all the APEC Heads of State just before the presentation to
him of the Manila Action Plan for APEC. (Underscoring
supplied)
Lichauco subsequently issued, in December 1997, a Notice of
Offer6 for several orbital slots including 153ºE.
PASI, claiming that the offer was without its knowledge and that it
subsequently came to learn that another company whose identity
had not been disclosed had submitted a bid and won the award for
orbital slot 153ºE, filed on January 23, 1998 a complaint 7 before the
Regional Trial Court (RTC) of Mandaluyong City against Lichauco
and the "Unknown Awardee," for injunction to enjoin the award of
orbital slot 153ºE, declare its nullity, and for damages.
PASI also filed on February 23, 1998 a complaint before the Office of
the Ombudsman against Secretary Josefina Trinidad Lichauco. In his
affidavit-complaint, de Guzman charged Lichauco with gross
violation of Section 3(e) of Republic Act No. 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act, as amended, reading:
(e) Causing any undue injury to any party, including the
Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his
official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence.
This provision shall apply to officers and employees of officers
or government corporations charged with the grant of licenses
or permits or other concessions.
The complaint was docketed as OMB Case No. 0-98-0416. The
Evaluation and Preliminary Investigation Bureau (EPIB) of the Office
of the Ombudsman, by Evaluation Report8 dated April 15, 1998,
found the existence of a prejudicial question after considering that
"the case filed with the RTC involves facts intimately related to those
upon which the criminal prosecution would be based and that the
guilt or the innocence of the accused would necessarily be
determined in the resolution of the issues raised in the civil case." It
thus concluded that the filing of the complaint before the
Ombudsman "is premature since the issues involved herein are now
subject of litigation in the case filed with the RTC," and accordingly
recommended its dismissal. Then Ombudsman Aniano A. Desierto
approved on April 24, 1998 the recommendation of the EPIB.
PASI moved to reconsider9 the dismissal of the complaint, but was
denied by Order10 dated July 17, 1998.
In the meantime, a motion to dismiss the civil case against
respondent was denied by the trial court. On elevation of the order of
denial to the Court of Appeals, said court, by Decision dated
February 21, 2000, ordered the dismissal of the case. This Court, by
Decision dated May 3, 2006, ordered the reinstatement of the case,
however.11
PASI is now before this Court via petition for review on certiorari,
arguing that the Ombudsman erred in dismissing the complaint.
In issue are 1) whether there exists a prejudicial question and, if in
the affirmative, 2) whether the dismissal of the complaint on that
account is in order.
Section 7, Rule 111 of the Rules on Criminal Procedure provides:
Section 7. Elements of prejudicial question. – The elements of
a prejudicial question are: (a) the previously instituted civil
action involves an issue similar or intimately related to the
issue raised in the subsequent criminal action, and (b) the
resolution of such issue determines whether or not the
criminal action may proceed.
The rationale for the principle of prejudicial question is that although
it does not conclusively resolve the guilt or innocence of the
accused, it tests the sufficiency of the allegations in the complaint or
information in order to sustain the further prosecution of the criminal
case.12 Hence, the need for its prior resolution before further
proceedings in the criminal action may be had.
PASI concedes that the issues in the civil case are similar or
intimately related to the issue raised in the criminal case. It contends,
however, that the resolution of the issues in the civil case is not
determinative of the guilt or innocence of Lichauco, it arguing that
even if she is adjudged liable for damages, it does not necessarily
follow that she would be convicted of the crime charged.
To determine the existence of a prejudicial question in the case
before the Ombudsman, it is necessary to examine the elements of
Section 3(e) of R.A. 3019 for which Lichauco was charged and the
causes of action in the civil case.
Section 3(e) of R.A. 3019 which was earlier quoted has the following
elements:
1. The accused is a public officer discharging administrative or
official functions or private persons charged in conspiracy with
them;
2. The public officer committed the prohibited act during the
performance of his official duty or in relation to his public
position;
3. The public officer acted with manifest partiality, evident bad
faith or gross, inexcusable negligence; and
4. His action caused undue injury to the Government or any
private party, or gave any party any unwarranted benefit,
advantage or preference to such parties.13
The civil case against Lichauco on the other hand involves three
causes of action. The first, for injunction, seeks to enjoin the award
of orbital slot 153ºE, the DOTC having previously assigned the same
to PASI; the second, for declaration of nullity of award, seeks to
nullify the award given to the undisclosed bidder for being beyond
Lichauco’s authority; and the third, for damages arising from
Lichauco’s questioned acts.
If the award to the undisclosed bidder of orbital slot 153ºE is, in the
civil case, declared valid for being within Lichauco’s scope of
authority to thus free her from liability for damages, there would be
no prohibited act to speak of nor would there be basis for undue
injury claimed to have been suffered by petitioner. The finding by
the Ombudsman of the existence of a prejudicial question is thus
well-taken.
Respecting the propriety of the dismissal by the Ombudsman of the
complaint due to the pendency of a prejudicial question, PASI argues
that since the Rules of Procedure of the Office of the Ombudsman is
silent on the matter, the Rules of Court, specifically Section 6, Rule
111 of the Rules of Court, which now reads:
SECTION 6. Suspension by reason of prejudicial question. –
A petition for suspension of the criminal action based upon the
pendency of a prejudicial question in a civil action may be filed
in the office of the prosecutor or the court conducting the
preliminary investigation. When the criminal action has been
filed in court for trial, the petition to suspend shall be filed in
the same criminal action at any time before the prosecution
rests. (Underscoring supplied),
applies in a suppletory character.
The Ombudsman, on the other hand, argues that the above-quoted
provision of the Rules of Court applies to cases which are at the
preliminary or trial stage and not to those, like the case subject of the
present petition, at the evaluation stage.
The Ombudsman goes on to proffer that at the evaluation stage, the
investigating officer may recommend any of several causes of action
including dismissal of the complaint for want of palpable merit or
subjecting the complaint to preliminary investigation, and the
evaluation of the complaint involves the discretion of the
investigating officer which this Court cannot interfere with.
While the evaluation of a complaint involves the discretion of the
investigating officer, its exercise should not be abused 14 or wanting
in legal basis.
Rule II, Section 2 of the Rules of Procedure of the Office of the
Ombudsman reads:
SECTION 2. Evaluation. – Upon evaluating the complaint, the
investigating officer shall recommend whether it may be:
a) dismissed outright for want of palpable merit;
b) referred to respondent for comment;
c) indorsed to the proper government office or agency which
has jurisdiction over the case;
d) forwarded to the appropriate office or official for fact-finding
investigation;
e) referred for administrative adjudication; or
f) subjected to a preliminary investigation. (Underscoring
supplied)
From the above-quoted provision, a complaint at the evaluation
stage may be dismissed outright only for want of palpable merit.
Want of palpable merit obviously means that there is no basis for the
charge or charges. If the complaint has prima facie merit, however,
the investigating officer shall recommend the adoption of any of the
actions enumerated above from (b) to (f).15
When, in the course of the actions taken by those to whom the
complaint is endorsed or forwarded, a prejudicial question is found to
be pending, Section 6, Rule 111 of the Rules of Court should be
applied in a suppletory character.16 As laid down in Yap v.
Paras,17 said rule directs that the proceedings may only
be suspended, not dismissed, and that it may be made only upon
petition,and not at the instance of the judge alone or as in this case,
the investigating officer.
To give imprimatur to the Ombudsman’s dismissal of petitioner’s
criminal complaint due to prejudicial question would not only run
counter to the provision of Section 6 of Rule 111 of the Rules of
Court. It would sanction the extinguishment of criminal liability, if
there be any, through prescription under Article 89 vis a vis Articles
90 and 91 of the Revised Penal Code which respectively read:
ART. 89. How criminal liability is totally extinguished. —
Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal
penalties; and as to pecuniary penalties, liability
therefore is extinguished only when the death of the
offender occurs before final judgment;
2. By service of the sentence;
3. By amnesty, which completely extinguishes the
penalty and all its effects;
4. By absolute pardon;
5. By prescription of the crime;
6. By prescription of the penalty;
7. By the marriage of the offended woman, as provided
in Article 344 of this Code. (Underscoring supplied)
ART. 90. Prescription of crimes. — Crimes punishable by
death, reclusion perpetua or reclusion temporal shall
prescribe in twenty years.
Crimes punishable by other afflictive penalties shall prescribe
in fifteen years.
Those punishable by a correctional penalty shall prescribe in
ten years; with the exception of those punishable by arresto
mayor, which shall prescribe in five years.
The crime of libel or other similar offenses shall prescribe in
one year.
The offenses of oral defamation and slander by deed shall
prescribe in six months.
Light offenses prescribe in two months.
When the penalty fixed by law is a compound one, the highest
penalty shall be made the basis of the application of the rules
contained in the first, second, and third paragraphs of this
article. x x x
ART. 91. Computation of prescription of offenses. — The
period of prescription shall commence to run from the day on
which the crime is discovered by the offended party, the
authorities, or their agents, and shall be interrupted by the
filing of the complaint or information, and shall commence to
run again when such proceedings terminate without the
accused being convicted or acquitted, or are unjustifiably
stopped for any reason not imputable to him.
x x x x (Emphasis and underscoring supplied)
WHEREFORE, the Order dated July 17, 1998 of respondent
Ombudsman dismissing OMB Case No. 0-98-0416 against
respondent then Secretary Josefina Trinidad Lichauco is SET
ASIDE.
The Ombudsman is ORDERED to REINSTATE to its docket for
further proceedings, in line with the foregoing ratiocination, OMB
Case No. 0-98-0416.
SO ORDERED G.R. No. 142396 February 11, 2003

Quisumbing, Chairman, Carpio, Tinga, Velasco, Jr., J.J., concur. KHOSROW MINUCHER, petitioner,
vs.
HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.

DECISION

VITUG, J.:

Sometime in May 1986, an Information for violation of Section 4 of

Republic Act No. 6425, otherwise also known as the "Dangerous
Drugs Act of 1972," was filed against petitioner Khosrow Minucher
and one Abbas Torabian with the Regional Trial Court, Branch 151,
of Pasig City. The criminal charge followed a "buy-bust operation"
conducted by the Philippine police narcotic agents in the house of
Minucher, an Iranian national, where a quantity of heroin, a
prohibited drug, was said to have been seized. The narcotic agents
were accompanied by private respondent Arthur Scalzo who would,
in due time, become one of the principal witnesses for the
prosecution. On 08 January 1988, Presiding Judge Eutropio Migrino
rendered a decision acquitting the two accused.

On 03 August 1988, Minucher filed Civil Case No. 88-45691 before

the Regional Trial Court (RTC), Branch 19, of Manila for damages on
account of what he claimed to have been trumped-up charges of
drug trafficking made by Arthur Scalzo. The Manila RTC detailed
what it had found to be the facts and circumstances surrounding the
case.

"The testimony of the plaintiff disclosed that he is an Iranian national.

He came to the Philippines to study in the University of the
Philippines in 1974. In 1976, under the regime of the Shah of Iran, he
was appointed Labor Attaché for the Iranian Embassies in Tokyo,
Japan and Manila, Philippines. When the Shah of Iran was deposed
by Ayatollah Khomeini, plaintiff became a refugee of the United
Nations and continued to stay in the Philippines. He headed the
Iranian National Resistance Movement in the Philippines.
"He came to know the defendant on May 13, 1986, when the latter
was brought to his house and introduced to him by a certain Jose
Iñigo, an informer of the Intelligence Unit of the military. Jose Iñigo,
on the other hand, was met by plaintiff at the office of Atty. Crisanto
Saruca, a lawyer for several Iranians whom plaintiff assisted as head
of the anti-Khomeini movement in the Philippines.
"During his first meeting with the defendant on May 13, 1986, upon
the introduction of Jose Iñigo, the defendant expressed his interest in
buying caviar. As a matter of fact, he bought two kilos of caviar from
plaintiff and paid P10,000.00 for it. Selling caviar, aside from that of
Persian carpets, pistachio nuts and other Iranian products was his
business after the Khomeini government cut his pension of over
$3,000.00 per month. During their introduction in that meeting, the
defendant gave the plaintiff his calling card, which showed that he is
working at the US Embassy in the Philippines, as a special agent of
the Drug Enforcement Administration, Department of Justice, of the
United States, and gave his address as US Embassy, Manila. At the
back of the card appears a telephone number in defendant’s own
handwriting, the number of which he can also be contacted.
"It was also during this first meeting that plaintiff expressed his desire
to obtain a US Visa for his wife and the wife of a countryman named
Abbas Torabian. The defendant told him that he [could] help plaintiff
for a fee of $2,000.00 per visa. Their conversation, however, was
more concentrated on politics, carpets and caviar. Thereafter, the
defendant promised to see plaintiff again.
"On May 19, 1986, the defendant called the plaintiff and invited the
latter for dinner at Mario's Restaurant at Makati. He wanted to buy
200 grams of caviar. Plaintiff brought the merchandize but for the
reason that the defendant was not yet there, he requested the
restaurant people to x x x place the same in the refrigerator.
Defendant, however, came and plaintiff gave him the caviar for which
he was paid. Then their conversation was again focused on politics
and business.
"On May 26, 1986, defendant visited plaintiff again at the latter's
residence for 18 years at Kapitolyo, Pasig. The defendant wanted to
buy a pair of carpets which plaintiff valued at $27,900.00. After some
haggling, they agreed at $24,000.00. For the reason that defendant
did not yet have the money, they agreed that defendant would come
back the next day. The following day, at 1:00 p.m., he came back
with his $24,000.00, which he gave to the plaintiff, and the latter, in
turn, gave him the pair of carpets.1awphi1.nét
"At about 3:00 in the afternoon of May 27, 1986, the defendant came
back again to plaintiff's house and directly proceeded to the latter's
bedroom, where the latter and his countryman, Abbas Torabian,
were playing chess. Plaintiff opened his safe in the bedroom and
obtained $2,000.00 from it, gave it to the defendant for the latter's
fee in obtaining a visa for plaintiff's wife. The defendant told him that
he would be leaving the Philippines very soon and requested him to
come out of the house for a while so that he can introduce him to his
cousin waiting in a cab. Without much ado, and without putting on his
shirt as he was only in his pajama pants, he followed the defendant
where he saw a parked cab opposite the street. To his complete
surprise, an American jumped out of the cab with a drawn high-
powered gun. He was in the company of about 30 to 40 Filipino
soldiers with 6 Americans, all armed. He was handcuffed and after
about 20 minutes in the street, he was brought inside the house by
the defendant. He was made to sit down while in handcuffs while the
defendant was inside his bedroom. The defendant came out of the
bedroom and out from defendant's attaché case, he took something
and placed it on the table in front of the plaintiff. They also took
plaintiff's wife who was at that time at the boutique near his house
and likewise arrested Torabian, who was playing chess with him in
the bedroom and both were handcuffed together. Plaintiff was not
told why he was being handcuffed and why the privacy of his house,
especially his bedroom was invaded by defendant. He was not
allowed to use the telephone. In fact, his telephone was unplugged.
He asked for any warrant, but the defendant told him to `shut up.’ He
was nevertheless told that he would be able to call for his lawyer who
can defend him.
"The plaintiff took note of the fact that when the defendant invited
him to come out to meet his cousin, his safe was opened where he
kept the $24,000.00 the defendant paid for the carpets and another
$8,000.00 which he also placed in the safe together with a bracelet
worth $15,000.00 and a pair of earrings worth $10,000.00. He also
discovered missing upon his release his 8 pieces hand-made
Persian carpets, valued at $65,000.00, a painting he bought for
P30,000.00 together with his TV and betamax sets. He claimed that
when he was handcuffed, the defendant took his keys from his
wallet. There was, therefore, nothing left in his house.
"That his arrest as a heroin trafficker x x x had been well publicized
throughout the world, in various newspapers, particularly in Australia,
America, Central Asia and in the Philippines. He was identified in the
papers as an international drug trafficker. x x x
In fact, the arrest of defendant and Torabian was likewise on
television, not only in the Philippines, but also in America and in
Germany. His friends in said places informed him that they saw him
on TV with said news.
"After the arrest made on plaintiff and Torabian, they were brought to
Camp Crame handcuffed together, where they were detained for
three days without food and water."1
During the trial, the law firm of Luna, Sison and Manas, filed a
special appearance for Scalzo and moved for extension of time to file
an answer pending a supposed advice from the United States
Department of State and Department of Justice on the defenses to
be raised. The trial court granted the motion. On 27 October 1988,
Scalzo filed another special appearance to quash the summons on
the ground that he, not being a resident of the Philippines and the
action being one in personam, was beyond the processes of the
court. The motion was denied by the court, in its order of 13
December 1988, holding that the filing by Scalzo of a motion for
extension of time to file an answer to the complaint was a voluntary
appearance equivalent to service of summons which could likewise
be construed a waiver of the requirement of formal notice. Scalzo
filed a motion for reconsideration of the court order, contending that
a motion for an extension of time to file an answer was not a
voluntary appearance equivalent to service of summons since it did
not seek an affirmative relief. Scalzo argued that in cases involving
the United States government, as well as its agencies and officials, a
motion for extension was peculiarly unavoidable due to the need (1)
for both the Department of State and the Department of Justice to
agree on the defenses to be raised and (2) to refer the case to a
Philippine lawyer who would be expected to first review the case.
The court a quo denied the motion for reconsideration in its order of
15 October 1989.
Scalzo filed a petition for review with the Court of Appeals, there
docketed CA-G.R. No. 17023, assailing the denial. In a decision,
dated 06 October 1989, the appellate court denied the petition and
affirmed the ruling of the trial court. Scalzo then elevated the incident
in a petition for review on certiorari, docketed G.R. No. 91173, to this
Court. The petition, however, was denied for its failure to comply with
SC Circular No. 1-88; in any event, the Court added, Scalzo had
failed to show that the appellate court was in error in its questioned
judgment.
Meanwhile, at the court a quo, an order, dated 09 February 1990,
was issued (a) declaring Scalzo in default for his failure to file a
responsive pleading (answer) and (b) setting the case for the
reception of evidence. On 12 March 1990, Scalzo filed a motion to
set aside the order of default and to admit his answer to the
complaint. Granting the motion, the trial court set the case for pre-
trial. In his answer, Scalzo denied the material allegations of the
complaint and raised the affirmative defenses (a) of Minucher’s
failure to state a cause of action in his complaint and (b) that Scalzo
had acted in the discharge of his official duties as being merely an
agent of the Drug Enforcement Administration of the United States
Department of Justice. Scalzo interposed a counterclaim of
P100,000.00 to answer for attorneys' fees and expenses of litigation.
Then, on 14 June 1990, after almost two years since the institution of
the civil case, Scalzo filed a motion to dismiss the complaint on the
ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic immunity.
He attached to his motion Diplomatic Note No. 414 of the United
States Embassy, dated 29 May 1990, addressed to the Department
of Foreign Affairs of the Philippines and a Certification, dated 11
June 1990, of Vice Consul Donna Woodward, certifying that the note
is a true and faithful copy of its original. In an order of 25 June 1990,
the trial court denied the motion to dismiss.
On 27 July 1990, Scalzo filed a petition for certiorari with injunction
with this Court, docketed G.R. No. 94257 and entitled "Arthur W.
Scalzo, Jr., vs. Hon. Wenceslao Polo, et al.," asking that the
complaint in Civil Case No. 88-45691 be ordered dismissed. The
case was referred to the Court of Appeals, there docketed CA-G.R.
SP No. 22505, per this Court’s resolution of 07 August 1990. On 31
October 1990, the Court of Appeals promulgated its decision
sustaining the diplomatic immunity of Scalzo and ordering the
dismissal of the complaint against him. Minucher filed a petition for
review with this Court, docketed G.R. No. 97765 and entitled
"Khosrow Minucher vs. the Honorable Court of Appeals, et. al." (cited
in 214 SCRA 242), appealing the judgment of the Court of Appeals.
In a decision, dated 24 September 1992, penned by Justice (now
Chief Justice) Hilario Davide, Jr., this Court reversed the decision of
the appellate court and remanded the case to the lower court for trial.
The remand was ordered on the theses (a) that the Court of Appeals
erred in granting the motion to dismiss of Scalzo for lack of
jurisdiction over his person without even considering the issue of the
authenticity of Diplomatic Note No. 414 and (b) that the complaint
contained sufficient allegations to the effect that Scalzo committed
the imputed acts in his personal capacity and outside the scope of
his official duties and, absent any evidence to the contrary, the issue
on Scalzo’s diplomatic immunity could not be taken up.
The Manila RTC thus continued with its hearings on the case. On 17
November 1995, the trial court reached a decision; it adjudged:
"WHEREFORE, and in view of all the foregoing considerations,
judgment is hereby rendered for the plaintiff, who successfully
established his claim by sufficient evidence, against the defendant in
the manner following:
"`Adjudging defendant liable to plaintiff in actual and compensatory
damages of P520,000.00; moral damages in the sum of P10 million;
exemplary damages in the sum of P100,000.00; attorney's fees in
the sum of P200,000.00 plus costs.
`The Clerk of the Regional Trial Court, Manila, is ordered to take
note of the lien of the Court on this judgment to answer for the
unpaid docket fees considering that the plaintiff in this case instituted
this action as a pauper litigant.’"2
While the trial court gave credence to the claim of Scalzo and the
evidence presented by him that he was a diplomatic agent entitled to
immunity as such, it ruled that he, nevertheless, should be held
accountable for the acts complained of committed outside his official
duties. On appeal, the Court of Appeals reversed the decision of the
trial court and sustained the defense of Scalzo that he was
sufficiently clothed with diplomatic immunity during his term of duty
and thereby immune from the criminal and civil jurisdiction of the
"Receiving State" pursuant to the terms of the Vienna Convention.
Hence, this recourse by Minucher. The instant petition for review
raises a two-fold issue: (1) whether or not the doctrine of
conclusiveness of judgment, following the decision rendered by this
Court in G.R. No. 97765, should have precluded the Court of
Appeals from resolving the appeal to it in an entirely different
manner, and (2) whether or not Arthur Scalzo is indeed entitled to
diplomatic immunity.
The doctrine of conclusiveness of judgment, or its kindred rule of res
judicata, would require 1) the finality of the prior judgment, 2) a valid
jurisdiction over the subject matter and the parties on the part of the
court that renders it, 3) a judgment on the merits, and 4) an identity
of the parties, subject matter and causes of action.3 Even while one
of the issues submitted in G.R. No. 97765 - "whether or not public
respondent Court of Appeals erred in ruling that private respondent
Scalzo is a diplomat immune from civil suit conformably with the
Vienna Convention on Diplomatic Relations" - is also a pivotal
question raised in the instant petition, the ruling in G.R. No. 97765,
however, has not resolved that point with finality. Indeed, the Court
there has made this observation -
"It may be mentioned in this regard that private respondent himself,
in his Pre-trial Brief filed on 13 June 1990, unequivocally states that
he would present documentary evidence consisting of DEA records
on his investigation and surveillance of plaintiff and on his position
and duties as DEA special agent in Manila. Having thus reserved his
right to present evidence in support of his position, which is the basis
for the alleged diplomatic immunity, the barren self-serving claim in
the belated motion to dismiss cannot be relied upon for a
reasonable, intelligent and fair resolution of the issue of diplomatic
immunity."4
Scalzo contends that the Vienna Convention on Diplomatic
Relations, to which the Philippines is a signatory, grants him
absolute immunity from suit, describing his functions as an agent of
the United States Drugs Enforcement Agency as "conducting
surveillance operations on suspected drug dealers in the Philippines
believed to be the source of prohibited drugs being shipped to the
U.S., (and) having ascertained the target, (he then) would inform the
Philippine narcotic agents (to) make the actual arrest." Scalzo has
submitted to the trial court a number of documents -
1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;
2. Exh. '1' - Certification of Vice Consul Donna K. Woodward
dated 11 June 1990;
3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;
4. Exh. '6' - Diplomatic Note No. 791 dated 17 November
1992; and
5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.
6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia,
Legal Adviser, Department of Foreign Affairs, dated 27 June
1990 forwarding Embassy Note No. 414 to the Clerk of Court
of RTC Manila, Branch 19 (the trial court);
7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st
Indorsement (Exh. '3'); and
8. Exh. '8' - Letter dated 18 November 1992 from the Office of
the Protocol, Department of Foreign Affairs, through Asst.
Sec. Emmanuel Fernandez, addressed to the Chief Justice of
this Court.5
The documents, according to Scalzo, would show that: (1) the United
States Embassy accordingly advised the Executive Department of
the Philippine Government that Scalzo was a member of the
diplomatic staff of the United States diplomatic mission from his
arrival in the Philippines on 14 October 1985 until his departure on
10 August 1988; (2) that the United States Government was firm
from the very beginning in asserting the diplomatic immunity of
Scalzo with respect to the case pursuant to the provisions of the
Vienna Convention on Diplomatic Relations; and (3) that the United
States Embassy repeatedly urged the Department of Foreign Affairs
to take appropriate action to inform the trial court of Scalzo’s
diplomatic immunity. The other documentary exhibits were presented
to indicate that: (1) the Philippine government itself, through its
Executive Department, recognizing and respecting the diplomatic
status of Scalzo, formally advised the "Judicial Department" of his
diplomatic status and his entitlement to all diplomatic privileges and
immunities under the Vienna Convention; and (2) the Department of
Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo
additionally presented Exhibits "9" to "13" consisting of his reports of
investigation on the surveillance and subsequent arrest of Minucher,
the certification of the Drug Enforcement Administration of the United
States Department of Justice that Scalzo was a special agent
assigned to the Philippines at all times relevant to the complaint, and
the special power of attorney executed by him in favor of his
previous counsel6 to show (a) that the United States Embassy,
affirmed by its Vice Consul, acknowledged Scalzo to be a member of
the diplomatic staff of the United States diplomatic mission from his
arrival in the Philippines on 14 October 1985 until his departure on
10 August 1988, (b) that, on May 1986, with the cooperation of the
Philippine law enforcement officials and in the exercise of his
functions as member of the mission, he investigated Minucher for
alleged trafficking in a prohibited drug, and (c) that the Philippine
Department of Foreign Affairs itself recognized that Scalzo during his
tour of duty in the Philippines (14 October 1985 up to 10 August
1988) was listed as being an Assistant Attaché of the United States
diplomatic mission and accredited with diplomatic status by the
Government of the Philippines. In his Exhibit 12, Scalzo described
the functions of the overseas office of the United States Drugs
Enforcement Agency, i.e., (1) to provide criminal investigative
expertise and assistance to foreign law enforcement agencies on
narcotic and drug control programs upon the request of the host
country, 2) to establish and maintain liaison with the host country and
counterpart foreign law enforcement officials, and 3) to conduct
complex criminal investigations involving international criminal
conspiracies which affect the interests of the United States.
The Vienna Convention on Diplomatic Relations was a codification of
centuries-old customary law and, by the time of its ratification on 18
April 1961, its rules of law had long become stable. Among the city
states of ancient Greece, among the peoples of the Mediterranean
before the establishment of the Roman Empire, and among the
states of India, the person of the herald in time of war and the person
of the diplomatic envoy in time of peace were universally held
sacrosanct.7 By the end of the 16th century, when the earliest
treatises on diplomatic law were published, the inviolability of
ambassadors was firmly established as a rule of customary
international law.8 Traditionally, the exercise of diplomatic intercourse
among states was undertaken by the head of state himself, as being
the preeminent embodiment of the state he represented, and the
foreign secretary, the official usually entrusted with the external
affairs of the state. Where a state would wish to have a more
prominent diplomatic presence in the receiving state, it would then
send to the latter a diplomatic mission. Conformably with the Vienna
Convention, the functions of the diplomatic mission involve, by and
large, the representation of the interests of the sending state and
promoting friendly relations with the receiving state. 9
The Convention lists the classes of heads of diplomatic missions to
include (a) ambassadors or nuncios accredited to the heads of
state,10 (b) envoys,11 ministers or internuncios accredited to the
heads of states; and (c) charges d' affairs12 accredited to the
ministers of foreign affairs.13 Comprising the "staff of the (diplomatic)
mission" are the diplomatic staff, the administrative staff and the
technical and service staff. Only the heads of missions, as well as
members of the diplomatic staff, excluding the members of the
administrative, technical and service staff of the mission, are
accorded diplomatic rank. Even while the Vienna Convention on
Diplomatic Relations provides for immunity to the members of
diplomatic missions, it does so, nevertheless, with an understanding
that the same be restrictively applied. Only "diplomatic agents,"
under the terms of the Convention, are vested with blanket
diplomatic immunity from civil and criminal suits. The Convention
defines "diplomatic agents" as the heads of missions or members of
the diplomatic staff, thus impliedly withholding the same privileges
from all others. It might bear stressing that even consuls, who
represent their respective states in concerns of commerce and
navigation and perform certain administrative and notarial duties,
such as the issuance of passports and visas, authentication of
documents, and administration of oaths, do not ordinarily enjoy the
traditional diplomatic immunities and privileges accorded diplomats,
mainly for the reason that they are not charged with the duty of
representing their states in political matters. Indeed, the main
yardstick in ascertaining whether a person is a diplomat entitled to
immunity is the determination of whether or not he performs duties of
diplomatic nature.
Scalzo asserted, particularly in his Exhibits "9" to "13," that he was
an Assistant Attaché of the United States diplomatic mission and
was accredited as such by the Philippine Government. An attaché
belongs to a category of officers in the diplomatic establishment who
may be in charge of its cultural, press, administrative or financial
affairs. There could also be a class of attaches belonging to certain
ministries or departments of the government, other than the foreign
ministry or department, who are detailed by their respective
ministries or departments with the embassies such as the military,
naval, air, commercial, agricultural, labor, science, and customs
attaches, or the like. Attaches assist a chief of mission in his duties
and are administratively under him, but their main function is to
observe, analyze and interpret trends and developments in their
respective fields in the host country and submit reports to their own
ministries or departments in the home government.14 These officials
are not generally regarded as members of the diplomatic mission,
nor are they normally designated as having diplomatic rank.
In an attempt to prove his diplomatic status, Scalzo presented
Diplomatic Notes Nos. 414, 757 and 791, all issued post litem
motam, respectively, on 29 May 1990, 25 October 1991 and 17
November 1992. The presentation did nothing much to alleviate the
Court's initial reservations in G.R. No. 97765, viz:
"While the trial court denied the motion to dismiss, the public
respondent gravely abused its discretion in dismissing Civil Case No.
88-45691 on the basis of an erroneous assumption that simply
because of the diplomatic note, the private respondent is clothed
with diplomatic immunity, thereby divesting the trial court of
jurisdiction over his person.
"x x x x x x x x x
"And now, to the core issue - the alleged diplomatic immunity of the
private respondent. Setting aside for the moment the issue of
authenticity raised by the petitioner and the doubts that surround
such claim, in view of the fact that it took private respondent one (1)
year, eight (8) months and seventeen (17) days from the time his
counsel filed on 12 September 1988 a Special Appearance and
Motion asking for a first extension of time to file the Answer because
the Departments of State and Justice of the United States of America
were studying the case for the purpose of determining his defenses,
before he could secure the Diplomatic Note from the US Embassy in
Manila, and even granting for the sake of argument that such note is
authentic, the complaint for damages filed by petitioner cannot be
peremptorily dismissed.
"x x x x x x x x x
"There is of course the claim of private respondent that the acts
imputed to him were done in his official capacity. Nothing supports
this self-serving claim other than the so-called Diplomatic Note. x x x.
The public respondent then should have sustained the trial court's
denial of the motion to dismiss. Verily, it should have been the most
proper and appropriate recourse. It should not have been
overwhelmed by the self-serving Diplomatic Note whose belated
issuance is even suspect and whose authenticity has not yet been
proved. The undue haste with which respondent Court yielded to the
private respondent's claim is arbitrary."
A significant document would appear to be Exhibit No. 08, dated 08
November 1992, issued by the Office of Protocol of the Department
of Foreign Affairs and signed by Emmanuel C. Fernandez, Assistant
Secretary, certifying that "the records of the Department (would)
show that Mr. Arthur W. Scalzo, Jr., during his term of office in the
Philippines (from 14 October 1985 up to 10 August 1988) was listed
as an Assistant Attaché of the United States diplomatic mission and
was, therefore, accredited diplomatic status by the Government of
the Philippines." No certified true copy of such "records," the
supposed bases for the belated issuance, was presented in
evidence.
Concededly, vesting a person with diplomatic immunity is a
prerogative of the executive branch of the government. In World
Health Organization vs. Aquino,15 the Court has recognized that, in
such matters, the hands of the courts are virtually tied. Amidst
apprehensions of indiscriminate and incautious grant of immunity,
designed to gain exemption from the jurisdiction of courts, it should
behoove the Philippine government, specifically its Department of
Foreign Affairs, to be most circumspect, that should particularly be
no less than compelling, in its post litem motam issuances. It might
be recalled that the privilege is not an immunity from the observance
of the law of the territorial sovereign or from ensuing legal liability; it
is, rather, an immunity from the exercise of territorial
jurisdiction.16 The government of the United States itself, which
Scalzo claims to be acting for, has formulated its standards for
recognition of a diplomatic agent. The State Department policy is to
only concede diplomatic status to a person who possesses an
acknowledged diplomatic title and "performs duties of diplomatic
nature."17 Supplementary criteria for accreditation are the possession
of a valid diplomatic passport or, from States which do not issue
such passports, a diplomatic note formally representing the intention
to assign the person to diplomatic duties, the holding of a non-
immigrant visa, being over twenty-one years of age, and performing
diplomatic functions on an essentially full-time basis.18 Diplomatic
missions are requested to provide the most accurate and descriptive
job title to that which currently applies to the duties performed. The
Office of the Protocol would then assign each individual to the
appropriate functional category.19
But while the diplomatic immunity of Scalzo might thus remain
contentious, it was sufficiently established that, indeed, he worked
for the United States Drug Enforcement Agency and was tasked to
conduct surveillance of suspected drug activities within the country
on the dates pertinent to this case. If it should be ascertained that
Arthur Scalzo was acting well within his assigned functions when he
committed the acts alleged in the complaint, the present controversy
could then be resolved under the related doctrine of State Immunity
from Suit.
The precept that a State cannot be sued in the courts of a
foreign state is a long-standing rule of customary international law
then closely identified with the personal immunity of a foreign
sovereign from suit20 and, with the emergence of democratic states,
made to attach not just to the person of the head of state, or his
representative, but also distinctly to the state itself in its sovereign
capacity.21 If the acts giving rise to a suit are those of a foreign
government done by its foreign agent, although not necessarily a
diplomatic personage, but acting in his official capacity, the complaint
could be barred by the immunity of the foreign sovereign from suit
without its consent. Suing a representative of a state is believed to
be, in effect, suing the state itself. The proscription is not accorded
for the benefit of an individual but for the State, in whose service he
is, under the maxim - par in parem, non habet imperium - that all
states are sovereign equals and cannot assert jurisdiction over one
another.22 The implication, in broad terms, is that if the judgment
against an official would require the state itself to perform an
affirmative act to satisfy the award, such as the appropriation of the
amount needed to pay the damages decreed against him, the suit
must be regarded as being against the state itself, although it has not
been formally impleaded.23
In United States of America vs. Guinto,24 involving officers of the
United States Air Force and special officers of the Air Force Office of
Special Investigators charged with the duty of preventing the
distribution, possession and use of prohibited drugs, this Court has
ruled -
"While the doctrine (of state immunity) appears to prohibit only suits
against the state without its consent, it is also applicable to
complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. x x x. It cannot for
a moment be imagined that they were acting in their private or
unofficial capacity when they apprehended and later testified against
the complainant. It follows that for discharging their duties as agents
of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be
sued. x x x As they have acted on behalf of the government, and
within the scope of their authority, it is that government, and not the
petitioners personally, [who were] responsible for their acts."25
This immunity principle, however, has its limitations. Thus, Shauf vs.
Court of Appeals26 elaborates:
"It is a different matter where the public official is made to account in
his capacity as such for acts contrary to law and injurious to the
rights of the plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications, et al., vs. Aligaen, et
al. (33 SCRA 368): `Inasmuch as the State authorizes only legal acts
by its officers, unauthorized acts of government officials or officers
are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such
acts, for the protection of his rights, is not a suit against the State
within the rule of immunity of the State from suit. In the same tenor, it
has been said that an action at law or suit in equity against a State
officer or the director of a State department on the ground that, while
claiming to act for the State, he violates or invades the personal and
property rights of the plaintiff, under an unconstitutional act or under
an assumption of authority which he does not have, is not a suit
against the State within the constitutional provision that the State
may not be sued without its consent. The rationale for this ruling is
that the doctrine of state immunity cannot be used as an instrument
for perpetrating an injustice.
"x x x x x x x x x
"(T)he doctrine of immunity from suit will not apply and may not be
invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection
afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private capacity
for whatever damage he may have caused by his act done with
malice and in bad faith or beyond the scope of his authority and
jurisdiction."27
A foreign agent, operating within a territory, can be cloaked with
immunity from suit but only as long as it can be established that he is
acting within the directives of the sending state. The consent of the
host state is an indispensable requirement of basic courtesy between
the two sovereigns. Guinto and Shauf both involve officers and
personnel of the United States, stationed within Philippine territory,
under the RP-US Military Bases Agreement. While evidence is
wanting to show any similar agreement between the governments of
the Philippines and of the United States (for the latter to send its
agents and to conduct surveillance and related activities of
suspected drug dealers in the Philippines), the consent
or imprimatur of the Philippine government to the activities of the
United States Drug Enforcement Agency, however, can be gleaned
from the facts heretofore elsewhere mentioned. The official
exchanges of communication between agencies of the government
of the two countries, certifications from officials of both the Philippine
Department of Foreign Affairs and the United States Embassy, as
well as the participation of members of the Philippine Narcotics
Command in the "buy-bust operation" conducted at the residence of
Minucher at the behest of Scalzo, may be inadequate to support the
"diplomatic status" of the latter but they give enough indication that
the Philippine government has given its imprimatur, if not consent, to
the activities within Philippine territory of agent Scalzo of the United
States Drug Enforcement Agency. The job description of Scalzo has
tasked him to conduct surveillance on suspected drug suppliers and,
after having ascertained the target, to inform local law enforcers who
would then be expected to make the arrest. In conducting
surveillance activities on Minucher, later acting as the poseur-buyer
during the buy-bust operation, and then becoming a principal witness
in the criminal case against Minucher, Scalzo hardly can be said to
have acted beyond the scope of his official function or duties.
All told, this Court is constrained to rule that respondent Arthur
Scalzo, an agent of the United States Drug Enforcement Agency
allowed by the Philippine government to conduct activities in the
country to help contain the problem on the drug traffic, is entitled to
the defense of state immunity from suit.
WHEREFORE, on the foregoing premises, the petition is DENIED.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna,
JJ., concur
G.R. No. 152318 April 16, 2009
DEUTSCHE GESELLSCHAFT FÜR TECHNISCHE
ZUSAMMENARBEIT, also known as GERMAN AGENCY FOR
TECHNICAL COOPERATION, (GTZ) HANS PETER PAULENZ and
ANNE NICOLAY, Petitioners,
vs.
HON. COURT OF APPEALS, HON. ARIEL CADIENTE SANTOS,
Labor Arbiter of the Arbitration Branch, National Labor
Relations Commission, and BERNADETTE CARMELLA
MAGTAAS, CAROLINA DIONCO, CHRISTOPHER RAMOS,
MELVIN DELA PAZ, RANDY TAMAYO and EDGARDO
RAMILLO, Respondents.
DECISION
TINGA, J.:
On 7 September 1971, the governments of the Federal Republic of
Germany and the Republic of the Philippines ratified an Agreement
concerning Technical Co-operation (Agreement) in Bonn, capital of
what was then West Germany. The Agreement affirmed the
countries’ "common interest in promoting the technical and economic
development of their States, and recogni[zed] the benefits to be
derived by both States from closer technical co-operation," and
allowed for the conclusion of "arrangements concerning individual
projects of technical co-operation."1 While the Agreement provided
for a limited term of effectivity of five (5) years, it nonetheless was
stated that "[t]he Agreement shall be tacitly extended for successive
periods of one year unless either of the two Contracting Parties
denounces it in writing three months prior to its expiry," and that
even upon the Agreement’s expiry, its provisions would "continue to
apply to any projects agreed upon x x x until their completion."2
On 10 December 1999, the Philippine government, through then
Foreign Affairs Secretary Domingo Siazon, and the German
government, agreed to an Arrangement in furtherance of the 1971
Agreement. This Arrangement affirmed the common commitment of
both governments to promote jointly a project called, Social Health
Insurance—Networking and Empowerment (SHINE), which was
designed to "enable Philippine families–especially poor ones–to
maintain their health and secure health care of sustainable
quality."3 It appears that SHINE had already been in existence even
prior to the effectivity of the Arrangement, though the record does not
indicate when exactly SHINE was constituted. Nonetheless, the
Arrangement stated the various obligations of the Filipino and
German governments. The relevant provisions of the Arrangement
are reproduced as follows:
3. The Government of the Federal Republic of Germany shall make
the following contributions to the project.
It shall
(a) second
- one expert in health economy, insurance and health
systems for up to 48 expert/months,
- one expert in system development for up to 10
expert/months
- short-term experts to deal with special tasks for a total
of up to 18 expert/months,
- project assistants/guest students as required, who
shall work on the project as part of their basic and
further training and assume specific project tasks under
the separately financed junior staff promotion
programme of the Deutsche Gesellschaft für
Technische Zusammenarbeit (GTZ);
(b) provide in situ
- short-term experts to deal with diverse special tasks
for a total of up to 27 expert/months,
- five local experts in health economy, health
insurance, community health systems, information
technology, information systems, training and
community mobilization for a total of up to 240
expert/months,
- local and auxiliary personnel for a total of up to 120
months;
(c) supply inputs, in particular
- two cross-country vehicles,
- ten computers with accessories,
- office furnishings and equipment
up to a total value of DM 310,000 (three hundred and
ten thousand Deutsche Mark);
(c) meet
- the cost of accommodation for the seconded experts
and their families in so far as this cost is not met by the
seconded experts themselves,
- the cost of official travel by the experts referred to in
sub-paragraph (a) above within and outside the
Republic of the Philippines,
- the cost of seminars and courses,
- the cost of transport and insurance to the project site
of inputs to be supplied pursuant to sub-paragraph (c)
 above, excluding the charges and storage fees referred
to in paragraph 4(d) below,
- a proportion of the operating and administrative costs;
xxx
4. The Government of the Republic of the Philippines shall make the
following contributions to the project:
It shall
(a) – provide the necessary Philippine experts for the project,
in particular one project coordinator in the Philippine Health
Insurance Corporation (Philhealth), at least three further
experts and a sufficient number of administrative and auxiliary
personnel, as well as health personnel in the pilot provinces
and in the other project partners, in particular one responsible
expert for each pilot province and for each association
representing the various target groups,
- release suitably qualified experts from their duties for
attendance at the envisaged basic and further training
activities; it shall only nominate such candidates as
have given an undertaking to work on the project for at
least five years after completing their training and shall
ensure that these Philippine experts receive
appropriate remuneration,
- ensure that the project field offices have sufficient
expendables,
- make available the land and buildings required for the
project;
(b) assume an increasing proportion of the running and
operating costs of the project;
(c) afford the seconded experts any assistance they may
require in carrying out the tasks assigned to them and place at
their disposal all necessary records and documents;
(d) guarantee that
- the project is provided with an itemized budget of its
own in order to ensure smooth continuation of the
project.
- the necessary legal and administrative framework is
created for the project,
- the project is coordinated in close cooperation with
other national and international agencies relevant to
implementation,
- the inputs supplied for the project on behalf of the
Government of the Federal Republic of Germany are
exempted from the cost of licenses, harbour dues,
import and export duties and other public charges and
fees, as well as storage fees, or that any costs thereof
are met, and that they are cleared by customs without
delay. The aforementioned exemptions shall, at the
request of the implementing agencies also apply to
inputs procured in the Republic of the Philippines,
- the tasks of the seconded experts are taken over as
soon as possible by Philippine experts,
- examinations passed by Philippine nationals pursuant
to this Arrangement are recognized in accordance with
their respective standards and that the persons
concerned are afforded such opportunities with regard
to careers, appointments and advancement as are
commensurate with their training.4
In the arraignment, both governments likewise named their
respective implementing organizations for SHINE. The Philippines
designated the Department of Health (DOH) and the Philippine
Health Insurance Corporation (Philhealth) with the implementation of
SHINE. For their part, the German government "charge[d] the
Deustche Gesellschaft für Technische Zusammenarbeit[5 ] (GTZ[6 ])
GmbH, Eschborn, with the implementation of its contributions."7
Private respondents were engaged as contract employees hired by
GTZ to work for SHINE on various dates between December of 1998
to September of 1999. Bernadette Carmela Magtaas was hired as an
"information systems manager and project officer of
SHINE;"8 Carolina Dionco as a "Project Assistant of
SHINE;"9 Christopher Ramos as "a project assistant and liason
personnel of NHI related SHINE activities by GTZ;"10 Melvin Dela
Paz and Randy Tamayo as programmers;11 and Edgardo Ramilo as
"driver, messenger and multipurpose service man."12 The
employment contracts of all six private respondents all specified Dr.
Rainer Tollkotter, identified as an adviser of GTZ, as the "employer."
At the same time, all the contracts commonly provided that "[i]t is
mutually agreed and understood that [Dr. Tollkotter, as employer] is
a seconded GTZ expert who is hiring the Employee on behalf of GTZ
and for a Philippine-German bilateral project named ‘Social Health
Insurance—Networking and Empowerment (SHINE)’ which will end
at a given time."13
In September of 1999, Anne Nicolay (Nicolay), a Belgian national,
assumed the post of SHINE Project Manager. Disagreements
eventually arose between Nicolay and private respondents in matters
such as proposed salary adjustments, and the course Nicolay was
taking in the implementation of SHINE different from her
predecessors. The dispute culminated in a letter14 dated 8 June
2000, signed by the private respondents, addressed to Nicolay, and
copies furnished officials of the DOH, Philheath, and the director of
the Manila office of GTZ. The letter raised several issues which
private respondents claim had been brought up several times in the
past, but have not been given appropriate response. It was claimed
that SHINE under Nicolay had veered away from its original purpose
to facilitate the development of social health insurance by shoring up
the national health insurance program and strengthening local
initiatives, as Nicolay had refused to support local partners and new
initiatives on the premise that community and local government unit
schemes were not sustainable—a philosophy that supposedly
betrayed Nicolay’s lack of understanding of the purpose of the
project. Private respondents further alleged that as a result of
Nicolay’s "new thrust, resources have been used inappropriately;"
that the new management style was "not congruent with the original
goals of the project;" that Nicolay herself suffered from "cultural
insensitivity" that consequently failed to sustain healthy relations with
SHINE’s partners and staff.
The letter ended with these ominous words:
The issues that we [the private respondents] have stated here are
very crucial to us in working for the project. We could no longer find
any reason to stay with the project unless ALL of these issues be
addressed immediately and appropriately.15
In response, Nicolay wrote each of the private respondents a letter
dated 21 June 2000, all similarly worded except for their respective
addressees. She informed private respondents that the "project’s
orientations and evolution" were decided in consensus with partner
institutions, Philhealth and the DOH, and thus no longer subject to
modifications. More pertinently, she stated:
You have firmly and unequivocally stated in the last paragraph of
your 8th June 2000 letter that you and the five other staff "could no
longer find any reason to stay with the project unless ALL of these
issues be addressed immediately and appropriately." Under the
foregoing premises and circumstances, it is now imperative that I am
to accept your resignation, which I expect to receive as soon as
possible.16
Taken aback, private respondents replied with a common letter,
clarifying that their earlier letter was not intended as a resignation
letter, but one that merely intended to raise attention to what they
perceived as vital issues.17 Negotiations ensued between private
respondents and Nicolay, but for naught. Each of the private
respondents received a letter from Nicolay dated 11 July 2000,
informing them of the pre-termination of their contracts of
employment on the grounds of "serious and gross insubordination,
among others, resulting to loss of confidence and trust."18
On 21 August 2000, the private respondents filed a complaint for
illegal dismissal with the NLRC. Named as respondents therein
where GTZ, the Director of its Manila office Hans Peter Paulenz, its
Assistant Project Manager Christian Jahn, and Nicolay.
On 25 October 2005, GTZ, through counsel, filed a Motion to
Dismiss, on the ground that the Labor Arbiter had no jurisdiction over
the case, as its acts were undertaken in the discharge of the
governmental functions and sovereign acts of the Government of the
Federal Republic of Germany. This was opposed by private
respondents with the arguments that GTZ had failed to secure a
certification that it was immune from suit from the Department of
Foreign Affairs, and that it was GTZ and not the German government
which had implemented the SHINE Project and entered into the
contracts of employment.
On 27 November 2000, the Labor Arbiter issued an Order19 denying
the Motion to Dismiss. The Order cited, among others, that GTZ was
a private corporation which entered into an employment contract;
and that GTZ had failed to secure from the DFA a certification as to
its diplomatic status.
On 7 February 2001, GTZ filed with the Labor Arbiter a "Reiterating
Motion to Dismiss," again praying that the Motion to Dismiss be
granted on the jurisdictional ground, and reprising the arguments for
dismissal it had earlier raised.20 No action was taken by the Labor
Arbiter on this new motion. Instead, on 15 October 2001, the Labor
Arbiter rendered a Decision21 granting the complaint for illegal
dismissal. The Decision concluded that respondents were dismissed
without lawful cause, there being "a total lack of due process both
substantive and procedural [sic]."22 GTZ was faulted for failing to
observe the notice requirements in the labor law. The Decision
likewise proceeded from the premise that GTZ had treated the letter
dated 8 June 2000 as a resignation letter, and devoted some focus
in debunking this theory.
The Decision initially offered that it "need not discuss the
jurisdictional aspect considering that the same had already been
lengthily discussed in the Order de[n]ying respondents’ Motion to
Dismiss."23 Nonetheless, it proceeded to discuss the jurisdictional
aspect, in this wise:
Under pain of being repetitious, the undersigned Labor Arbiter has
jurisdiction to entertain the complaint on the following grounds:
Firstly, under the employment contract entered into between
complainants and respondents, specifically Section 10
thereof, it provides that "contract partners agree that his
contract shall be subject to the LAWS of the jurisdiction of the
locality in which the service is performed."
Secondly, respondent having entered into contract, they can
no longer invoke the sovereignty of the Federal Republic of
Germany.
Lastly, it is imperative to be immune from suit, respondents
should have secured from the Department of Foreign Affairs a
certification of respondents’ diplomatic status and entitlement
to diplomatic privileges including immunity from suits. Having
failed in this regard, respondents cannot escape liability from
the shelter of sovereign immunity.[sic]24
Notably, GTZ did not file a motion for reconsideration to the
Labor Arbiter’s Decision or elevate said decision for appeal to
 the NLRC. Instead, GTZ opted to assail the decision by way
of a special civil action for certiorari filed with the Court of
Appeals.25 On 10 December 2001, the Court of Appeals
promulgated a Resolution26 dismissing GTZ’s petition, finding
that "judicial recourse at this stage of the case is uncalled
for[,] [t]he appropriate remedy of the petitioners [being] an
appeal to the NLRC x x x."27 A motion for reconsideration to
this Resolution proved fruitless for GTZ.28
Thus, the present petition for review under Rule 45, assailing the
decision and resolutions of the Court of Appeals and of the Labor
Arbiter. GTZ’s arguments center on whether the Court of Appeals
could have entertained its petition for certiorari despite its not having
undertaken an appeal before the NLRC; and whether the complaint
for illegal dismissal should have been dismissed for lack of
jurisdiction on account of GTZ’s insistence that it enjoys immunity
from suit. No special arguments are directed with respect to
petitioners Hans Peter Paulenz and Anne Nicolay, respectively the
then Director and the then Project Manager of GTZ in the
Philippines; so we have to presume that the arguments raised in
behalf of GTZ’s alleged immunity from suit extend to them as well.
The Court required the Office of the Solicitor General (OSG) to file a
Comment on the petition. In its Comment dated 7 November 2005,
the OSG took the side of GTZ, with the prayer that the petition be
granted on the ground that GTZ was immune from suit, citing in
particular its assigned functions in implementing the SHINE
program—a joint undertaking of the Philippine and German
governments which was neither proprietary nor commercial in
nature.
The Court of Appeals had premised the dismissal of GTZ’s petition
on its procedural misstep in bypassing an appeal to NLRC and
challenging the Labor Arbiter’s Decision directly with the appellate
court by way of a Rule 65 petition. In dismissing the petition, the
Court of Appeals relied on our ruling in Air Service Cooperative v.
Court of Appeals.29 The central issue in that case was whether a
decision of a Labor Arbiter rendered without jurisdiction over the
subject matter may be annulled in a petition before a Regional Trial
Court. That case may be differentiated from the present case, since
the Regional Trial Court does not have original or appellate
jurisdiction to review a decision rendered by a Labor Arbiter. In
contrast, there is no doubt, as affirmed by jurisprudence, that the
Court of Appeals has jurisdiction to review, by way of its original
certiorari jurisdiction, decisions ruling on complaints for illegal
dismissal.
Nonetheless, the Court of Appeals is correct in pronouncing the
general rule that the proper recourse from the decision of the Labor
Arbiter is to first appeal the same to the NLRC. Air Services is in fact
clearly detrimental to petitioner’s position in one regard. The Court
therein noted that on account of the failure to correctly appeal the
decision of the Labor Arbiter to the NLRC, such judgment
consequently became final and executory.30 GTZ goes as far as to
"request" that the Court re-examine Air Services, a suggestion that is
needlessly improvident under the circumstances. Air Services affirms
doctrines grounded in sound procedural rules that have allowed for
the considered and orderly disposition of labor cases.
The OSG points out, citing Heirs of Mayor Nemencio Galvez v. Court
of Appeals,31 that even when appeal is available, the Court has
nonetheless allowed a writ of certiorari when the orders of the lower
court were issued either in excess of or without jurisdiction. Indeed,
the Court has ruled before that the failure to employ available
intermediate recourses, such as a motion for reconsideration, is not
a fatal infirmity if the ruling assailed is a patent nullity. This approach
suggested by the OSG allows the Court to inquire directly into what
is the main issue–whether GTZ enjoys immunity from suit.
The arguments raised by GTZ and the OSG are rooted in several
indisputable facts. The SHINE project was implemented pursuant to
the bilateral agreements between the Philippine and German
governments. GTZ was tasked, under the 1991 agreement, with the
implementation of the contributions of the German government. The
activities performed by GTZ pertaining to the SHINE project are
governmental in nature, related as they are to the promotion of
health insurance in the Philippines. The fact that GTZ entered into
employment contracts with the private respondents did not disqualify
it from invoking immunity from suit, as held in cases such as Holy
See v. Rosario, Jr.,32 which set forth what remains valid doctrine:
Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the
start of the inquiry. The logical question is whether the foreign state
is engaged in the activity in the regular course of business. If the
foreign state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii, especially when it is not undertaken for gain or
profit.33
Beyond dispute is the tenability of the comment points raised by GTZ
and the OSG that GTZ was not performing proprietary functions
notwithstanding its entry into the particular employment contracts.
Yet there is an equally fundamental premise which GTZ and the
OSG fail to address, namely: Is GTZ, by conception, able to enjoy
the Federal Republic’s immunity from suit?
The principle of state immunity from suit, whether a local state or a
foreign state, is reflected in Section 9, Article XVI of the Constitution,
which states that "the State may not be sued without its consent."
Who or what consists of "the State"? For one, the doctrine is
available to foreign States insofar as they are sought to be sued in
the courts of the local State,34 necessary as it is to avoid "unduly
vexing the peace of nations."
If the instant suit had been brought directly against the Federal
Republic of Germany, there would be no doubt that it is a suit
brought against a State, and the only necessary inquiry is whether
said State had consented to be sued. However, the present suit was
brought against GTZ. It is necessary for us to understand what
precisely are the parameters of the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as "the implementing agency of
the Government of the Federal Republic of Germany," a depiction
similarly adopted by the OSG. Assuming that characterization is
correct, it does not automatically invest GTZ with the ability to invoke
State immunity from suit. The distinction lies in whether the agency is
incorporated or unincorporated. The following lucid discussion from
Justice Isagani Cruz is pertinent:
Where suit is filed not against the government itself or its officials but
against one of its entities, it must be ascertained whether or not the
State, as the principal that may ultimately be held liable, has given its
consent to be sued. This ascertainment will depend in the first
instance on whether the government agency impleaded is
incorporated or unincorporated.
An incorporated agency has a charter of its own that invests it with a
separate juridical personality, like the Social Security System, the
University of the Philippines, and the City of Manila. By contrast, the
unincorporated agency is so called because it has no separate
juridical personality but is merged in the general machinery of the
government, like the Department of Justice, the Bureau of Mines and
the Government Printing Office.
If the agency is incorporated, the test of its suability is found in its
charter. The simple rule is that it is suable if its charter says so, and
this is true regardless of the functions it is performing. Municipal
corporations, for example, like provinces and cities, are agencies of
the State when they are engaged in governmental functions and
therefore should enjoy the sovereign immunity from suit.
Nevertheless, they are subject to suit even in the performance of
such functions because their charter provides that they can sue and
be sued.35
State immunity from suit may be waived by general or special
law.36 The special law can take the form of the original charter of the
incorporated government agency. Jurisprudence is replete with
examples of incorporated government agencies which were ruled not
entitled to invoke immunity from suit, owing to provisions in their
charters manifesting their consent to be sued. These include the
National Irrigation Administration,37 the former Central Bank,38 and
the National Power Corporation.39 In SSS v. Court of Appeals,40 the
Court through Justice Melencio-Herrera explained that by virtue of an
express provision in its charter allowing it to sue and be sued, the
Social Security System did not enjoy immunity from suit:
We come now to the amendability of the SSS to judicial action and
legal responsibility for its acts. To our minds, there should be no
question on this score considering that the SSS is a juridical entity
with a personality of its own. It has corporate powers separate and
distinct from the Government. SSS' own organic act specifically
provides that it can sue and be sued in Court. These words "sue and
be sued" embrace all civil process incident to a legal action. So that,
even assuming that the SSS, as it claims, enjoys immunity from suit
as an entity performing governmental functions, by virtue of the
explicit provision of the aforecited enabling law, the Government
must be deemed to have waived immunity in respect of the SSS,
although it does not thereby concede its liability. That statutory law
has given to the private citizen a remedy for the enforcement and
protection of his rights. The SSS thereby has been required to
submit to the jurisdiction of the Courts, subject to its right to interpose
any lawful defense. Whether the SSS performs governmental or
proprietary functions thus becomes unnecessary to belabor. For by
that waiver, a private citizen may bring a suit against it for varied
objectives, such as, in this case, to obtain compensation in damages
arising from contract, and even for tort.
A recent case squarely in point anent the principle, involving the
National Power Corporation, is that of Rayo v. Court of First Instance
of Bulacan, 110 SCRA 457 (1981), wherein this Court, speaking
through Mr. Justice Vicente Abad Santos, ruled:
"It is not necessary to write an extended dissertation on whether or
not the NPC performs a governmental function with respect to the
management and operation of the Angat Dam. It is sufficient to say
that the government has organized a private corporation, put money
in it and has allowed it to sue and be sued in any court under its
charter. (R.A. No. 6395, Sec. 3[d]). As a government, owned and
controlled corporation, it has a personality of its own, distinct and
separate from that of the Government. Moreover, the charter
provision that the NPC can 'sue and be sued in any court' is without
qualification on the cause of action and accordingly it can include a
tort claim such as the one instituted by the petitioners."41
It is useful to note that on the part of the Philippine government, it
had designated two entities, the Department of Health and the
Philippine Health Insurance Corporation (PHIC), as the implementing
agencies in behalf of the Philippines. The PHIC was established
under Republic Act No. 7875, Section 16(g) of which grants the
corporation the power "to sue and be sued in court." Applying the
previously cited jurisprudence, PHIC would not enjoy immunity from
suit even in the performance of its functions connected with SHINE,
however, governmental in nature as they may be.
Is GTZ an incorporated agency of the German government? There is
some mystery surrounding that question. Neither GTZ nor the OSG
go beyond the claim that petitioner is "the implementing agency of
the Government of the Federal Republic of Germany." On the other
hand, private respondents asserted before the Labor Arbiter that
GTZ was "a private corporation engaged in the implementation of
development projects."42 The Labor Arbiter accepted that claim in his
Order denying the Motion to Dismiss,43 though he was silent on that
point in his Decision. Nevertheless, private respondents argue in
their Comment that the finding that GTZ was a private corporation
"was never controverted, and is therefore deemed admitted."44 In its
Reply, GTZ controverts that finding, saying that it is a matter of
public knowledge that the status of petitioner GTZ is that of the
"implementing agency," and not that of a private corporation. 45
In truth, private respondents were unable to adduce any evidence to
substantiate their claim that GTZ was a "private corporation," and the
Labor Arbiter acted rashly in accepting such claim without
explanation. But neither has GTZ supplied any evidence defining its
legal nature beyond that of the bare descriptive "implementing
agency." There is no doubt that the 1991 Agreement designated
GTZ as the "implementing agency" in behalf of the German
government. Yet the catch is that such term has no precise definition
that is responsive to our concerns. Inherently, an agent acts in behalf
of a principal, and the GTZ can be said to act in behalf of the
German state. But that is as far as "implementing agency" could take
us. The term by itself does not supply whether GTZ is incorporated
or unincorporated, whether it is owned by the German state or by
private interests, whether it has juridical personality independent of
the German government or none at all.
GTZ itself provides a more helpful clue, inadvertently, through its
own official Internet website.46 In the "Corporate Profile" section of
the English language version of its site, GTZ describes itself as
follows:
As an international cooperation enterprise for sustainable
development with worldwide operations, the federally owned
Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)
GmbH supports the German Government in achieving its
development-policy objectives. It provides viable, forward-looking
solutions for political, economic, ecological and social development
in a globalised world. Working under difficult conditions, GTZ
promotes complex reforms and change processes. Its corporate
objective is to improve people’s living conditions on a sustainable
basis.
GTZ is a federal enterprise based in Eschborn near Frankfurt am
Main. It was founded in 1975 as a company under private law. The
German Federal Ministry for Economic Cooperation and
Development (BMZ) is its major client. The company also operates
on behalf of other German ministries, the governments of other
countries and international clients, such as the European
Commission, the United Nations and the World Bank, as well as on
behalf of private enterprises. GTZ works on a public-benefit basis. All
surpluses generated are channeled [sic] back into its own
international cooperation projects for sustainable development. 47
GTZ’s own website elicits that petitioner is "federally owned," a
"federal enterprise," and "founded in 1975 as a company under
private law." GTZ clearly has a very meaningful relationship with the
Federal Republic of Germany, which apparently owns it. At the same
time, it appears that GTZ was actually organized not through a
legislative public charter, but under private law, in the same way that
Philippine corporations can be organized under the Corporation
Code even if fully owned by the Philippine government.
This self-description of GTZ in its own official website gives further
cause for pause in adopting petitioners’ argument that GTZ is
entitled to immunity from suit because it is "an implementing
agency." The above-quoted statement does not dispute the
characterization of GTZ as an "implementing agency of the Federal
Republic of Germany," yet it bolsters the notion that as a company
organized under private law, it has a legal personality independent of
that of the Federal Republic of Germany.
The Federal Republic of Germany, in its own official website, 48 also
makes reference to GTZ and describes it in this manner:
x x x Going by the principle of "sustainable development," the
German Technical Cooperation (Deutsche Gesellschaft für
Technische Zusammenarbeit GmbH, GTZ) takes on non-profit
projects in international "technical cooperation." The GTZ is a private
company owned by the Federal Republic of Germany.49
Again, we are uncertain of the corresponding legal implications
under German law surrounding "a private company owned by the
Federal Republic of Germany." Yet taking the description on face
value, the apparent equivalent under Philippine law is that of a
corporation organized under the Corporation Code but owned by the
Philippine government, or a government-owned or controlled
corporation without original charter. And it bears notice that Section
36 of the Corporate Code states that "[e]very corporation
incorporated under this Code has the power and capacity x x x to
sue and be sued in its corporate name."50
It is entirely possible that under German law, an entity such as GTZ
or particularly GTZ itself has not been vested or has been specifically
deprived the power and capacity to sue and/or be sued. Yet in the
proceedings below and before this Court, GTZ has failed to establish
that under German law, it has not consented to be sued despite it
being owned by the Federal Republic of Germany. We adhere to the
rule that in the absence of evidence to the contrary,
foreign laws on a particular subject are presumed to be the same as
those of the Philippines,51 and following the most intelligent
assumption we can gather, GTZ is akin to a governmental owned or
controlled corporation without original charter which, by virtue of the
Corporation Code, has expressly consented to be sued. At the very
least, like the Labor Arbiter and the Court of Appeals, this Court has
no basis in fact to conclude or presume that GTZ enjoys immunity
from suit.
This absence of basis in fact leads to another important point,
alluded to by the Labor Arbiter in his rulings. Our ruling in Holy See
v. Del Rosario52 provided a template on how a foreign entity desiring
to invoke State immunity from suit could duly prove such immunity
before our local courts. The principles enunciated in that case were
derived from public international law. We stated then:
In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court, it
requests the Foreign Office of the state where it is sued to convey to
the court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of
"suggestion," where the foreign state or the international organization
sued in an American court requests the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary
of State finds that the defendant is immune from suit, he, in turn,
asks the Attorney General to submit to the court a "suggestion" that
the defendant is entitled to immunity. In England, a similar procedure
is followed, only the Foreign Office issues a certification to that effect
instead of submitting a "suggestion" (O'Connell, I International Law
130 [1965]; Note: Immunity from Suit of Foreign Sovereign
Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of
its claim of sovereign or diplomatic immunity. But how the Philippine
Foreign Office conveys its endorsement to the courts varies. In
International Catholic Migration Commission v. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly
to the Secretary of Labor and Employment, informing the latter that
the respondent-employer could not be sued because it enjoyed
diplomatic immunity. In World Health Organization v. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court
a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the
U.S. Embassy asked the Secretary of Foreign Affairs to request the
Solicitor General to make, in behalf of the Commander of the United
States Naval Base at Olongapo City, Zambales, a "suggestion" to
respondent Judge. The Solicitor General embodied the "suggestion"
in a Manifestation and Memorandum as amicus curiae.53
It is to be recalled that the Labor Arbiter, in both of his rulings, noted
that it was imperative for petitioners to secure from the Department
of Foreign Affairs "a certification of respondents’ diplomatic status
and entitlement to diplomatic privileges including immunity from
suits."54 The requirement might not necessarily be imperative.
However, had GTZ obtained such certification from the DFA, it would
have provided factual basis for its claim of immunity that would, at
the very least, establish a disputable evidentiary presumption that
the foreign party is indeed immune which the opposing party will
have to overcome with its own factual evidence. We do not see why
GTZ could not have secured such certification or endorsement from
the DFA for purposes of this case. Certainly, it would have been
highly prudential for GTZ to obtain the same after the Labor Arbiter
had denied the motion to dismiss. Still, even at this juncture, we do
not see any evidence that the DFA, the office of the executive branch
in charge of our diplomatic relations, has indeed endorsed GTZ’s
claim of immunity. It may be possible that GTZ tried, but failed to
secure such certification, due to the same concerns that we have
discussed herein.
Would the fact that the Solicitor General has endorsed GTZ’s claim
of State’s immunity from suit before this Court sufficiently substitute
for the DFA certification? Note that the rule in public international law
quoted in Holy See referred to endorsement by the Foreign Office of
the State where the suit is filed, such foreign office in the Philippines
being the Department of Foreign Affairs. Nowhere in the Comment of
the OSG is it manifested that the DFA has endorsed GTZ’s claim, or
that the OSG had solicited the DFA’s views on the issue. The
arguments raised by the OSG are virtually the same as the
arguments raised by GTZ without any indication of any special and
distinct perspective maintained by the Philippine government on the
issue. The Comment filed by the OSG does not inspire the same
degree of confidence as a certification from the DFA would have
elicited.1avvphi1
Holy See made reference to Baer v. Tizon,55 and that in the said
case, the United States Embassy asked the Secretary of Foreign
Affairs to request the Solicitor General to make a "suggestion" to the
trial court, accomplished by way of a Manifestation and
Memorandum, that the petitioner therein enjoyed immunity as the
Commander of the Subic Bay Naval Base. Such circumstance is
actually not narrated in the text of Baer itself and was likely supplied
in Holy See because its author, Justice Camilio Quiason, had
appeared as the Solicitor in behalf of the OSG in Baer. Nonetheless,
as narrated in Holy See, it was the Secretary of Foreign Affairs which
directed the OSG to intervene in behalf of the United States
government in the Baer case, and such fact is manifest enough of
the endorsement by the Foreign Office. We do not find a similar
circumstance that bears here.
The Court is thus holds and so rules that GTZ consistently has been
unable to establish with satisfaction that it enjoys the immunity from
suit generally enjoyed by its parent country, the Federal Republic of
Germany. Consequently, both the Labor Arbiter and the Court of
Appeals acted within proper bounds when they refused to
acknowledge that GTZ is so immune by dismissing the complaint
against it. Our finding has additional ramifications on the failure of
GTZ to properly appeal the Labor Arbiter’s decision to the NLRC. As
pointed out by the OSG, the direct recourse to the Court of Appeals
while bypassing the NLRC could have been sanctioned had the
Labor Arbiter’s decision been a "patent nullity." Since the Labor
Arbiter acted properly in deciding the complaint, notwithstanding
GTZ’s claim of immunity, we cannot see how the decision could have
translated into a "patent nullity."
As a result, there was no basis for petitioners in foregoing the appeal
to the NLRC by filing directly with the Court of Appeals the petition
for certiorari. It then follows that the Court of Appeals acted correctly
in dismissing the petition on that ground. As a further consequence,
since petitioners failed to perfect an appeal from the Labor Arbiter’s
Decision, the same has long become final and executory. All other
questions related to this case, such as whether or not private
respondents were illegally dismissed, are no longer susceptible to
review, respecting as we do the finality of the Labor Arbiter’s
Decision.
A final note. This decision should not be seen as deviation from the
more common methodology employed in ascertaining whether a
party enjoys State immunity from suit, one which focuses on the
particular functions exercised by the party and determines whether
these are proprietary or sovereign in nature. The nature of the acts
performed by the entity invoking immunity remains the most
important barometer for testing whether the privilege of State
immunity from suit should apply. At the same time, our Constitution
stipulates that a State immunity from suit is conditional on its
withholding of consent; hence, the laws and circumstances
pertaining to the creation and legal personality of an instrumentality
or agency invoking immunity remain relevant. Consent to be sued,
as exhibited in this decision, is often conferred by the very same
statute or general law creating the instrumentality or agency.
WHEREFORE, the petition is DENIED. No pronouncement as to
costs.
SO ORDERED.
DANTE O. TINGA
Associate Justice
G.R. No. 180388 January 18, 2011
GREGORIO R. VIGILAR, SECRETARY OF THE DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS (DPWH), DPWH
UNDERSECRETARIES TEODORO E. ENCARNACION AND
EDMUNDO E. ENCARNACION AND EDMUNDO V. MIR, DPWH
ASSISTANT SECRETARY JOEL L. ALTEA, DPWH REGIONAL
DIRECTOR VICENTE B. LOPEZ, DPWH DISTRICT ENGINEER
ANGELITO M. TWAÑO, FELIX A. DESIERTO OF THE
TECHNICAL WORKING GROUP VALIDATION AND AUDITING
TEAM, AND LEONARDO ALVARO, ROMEO N. SUPAN,
VICTORINO C. SANTOS OF THE DPWH PAMPANGA 2ND
ENGINEERING DISTRICT, Petitioners,
vs.
ARNULFO D. AQUINO, Respondent.
DECISION
SERENO, J.:
Before the Court is a Petition for Review on Certiorari1 under Rule 45
of the Rules of Court, assailing the Decision 2 of the Court of Appeals
in C.A.-G.R. CV No. 82268, dated 25 September 2006.
The antecedent facts are as follows:
On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-
Charge (OIC)-District Engineer of the Department of Public Works
and Highways (DPWH) 2nd Engineering District of Pampanga sent
an Invitation to Bid to respondent Arnulfo D. Aquino, the owner of
A.D. Aquino Construction and Supplies. The bidding was for the
construction of a dike by bulldozing a part of the Porac River at
Barangay Ascomo-Pulungmasle, Guagua, Pampanga.
Subsequently, on 7 July 1992, the project was awarded to
respondent, and a "Contract of Agreement" was thereafter executed
between him and concerned petitioners for the amount of
PhP1,873,790.69, to cover the project cost.
By 9 July 1992, the project was duly completed by respondent, who
was then issued a Certificate of Project Completion dated 16 July
1992. The certificate was signed by Romeo M. Yumul, the Project
Engineer; as well as petitioner Romeo N. Supan, Chief of the
Construction Section, and by petitioner Twaño.
Respondent Aquino, however, claimed that PhP1,262,696.20 was
still due him, but petitioners refused to pay the amount. He thus filed
a Complaint3 for the collection of sum of money with damages before
the Regional Trial Court of Guagua, Pampanga. The complaint was
docketed as Civil Case No. 3137.
Petitioners, for their part, set up the defense4 that the Complaint was
a suit against the state; that respondent failed to exhaust
administrative remedies; and that the "Contract of Agreement"
covering the project was void for violating Presidential Decree No.
1445, absent the proper appropriation and the Certificate of
Availability of Funds.5
On 28 November 2003, the lower court ruled in favor of respondent,
to wit:
WHEREFORE, premises considered, defendant Department of
Public Works and Highways is hereby ordered to pay the plaintiff
Arnulfo D. Aquino the following:
1. PhP1,873,790.69, Philippine Currency, representing actual
amount for the completion of the project done by the plaintiff;
2. PhP50,000.00 as attorney’s fee and
3. Cost of this suit.
SO ORDERED. 6
It is to be noted that respondent was only asking for
PhP1,262,696.20; the award in paragraph 1 above, however,
conforms to the entire contract amount.
On appeal, the Court of Appeals reversed and set aside the Decision
of the lower court and disposed as follows:
WHEREFORE, premises considered, the appeal is GRANTED. The
"CONTRACT AGREEMENT" entered into between the plaintiff-
appellee’s construction company, which he represented, and the
government, through the Department of Public Works and Highway
(DPWH) – Pampanga 2nd Engineering District, is declared null and
void ab initio.
The assailed decision of the court a quo is hereby REVERSED AND
SET ASIDE.
In line with the pronouncement in Department of Health vs. C.V.
Canchela & Associates, Architects, 7 the Commission on Audit
(COA) is hereby ordered to determine and ascertain with dispatch,
on a quantum meruit basis, the total obligation due to the plaintiff-
appellee for his undertaking in implementing the subject contract of
public works, and to allow payment thereof, subject to COA Rules
and Regulations, upon the completion of the said determination.
No pronouncement as to costs.
SO ORDERED.8
Dissatisfied with the Decision of the Court of Appeals, petitioners are
now before this Court, seeking a reversal of the appellate court’s
Decision and a dismissal of the Complaint in Civil Case No. G-3137.
The Petition raises the following issues:
1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
HOLDING THAT THE DOCTRINE OF NON-SUABILITY OF THE
STATE HAS NO APPLICATION IN THIS CASE.
2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT
DISMISSING THE COMPLAINT FOR FAILURE OF RESPONDENT
TO EXHAUST ALL ADMINISTRATIVE REMEDIES.
3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
ORDERING THE COA TO ALLOW PAYMENT TO RESPONDENT
ON A QUANTUM MERUIT BASIS DESPITE THE LATTER’S
FAILURE TO COMPLY WITH THE REQUIREMENTS OF
PRESIDENTIAL DECREE NO. 1445.
After a judicious review of the case, the Court finds the Petition to be
without merit.
Firstly, petitioners claim that the Complaint filed by respondent
before the Regional Trial Court was done without exhausting
administrative remedies. Petitioners aver that respondent should
have first filed a claim before the Commission on Audit (COA) before
going to the courts. However, it has been established that the
doctrine of exhaustion of administrative remedies and the doctrine of
primary jurisdiction are not ironclad rules. In Republic of the
Philippines v. Lacap,9 this Court enumerated the numerous
exceptions to these rules, namely: (a) where there is estoppel on the
part of the party invoking the doctrine; (b) where the challenged
administrative act is patently illegal, amounting to lack of jurisdiction;
(c) where there is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; (d) where the amount
involved is relatively so small as to make the rule impractical and
oppressive; (e) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; (f) where
judicial intervention is urgent; (g) where the application of the
doctrine may cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) where the issue of non-
exhaustion of administrative remedies has been rendered moot; (j)
where there is no other plain, speedy and adequate remedy; (k)
where strong public interest is involved; and (l) in quo warranto
proceedings. In the present case, conditions (c) and (e) are present.
The government project contracted out to respondent was completed
almost two decades ago. To delay the proceedings by remanding the
case to the relevant government office or agency will definitely
prejudice respondent. More importantly, the issues in the present
case involve the validity and the enforceability of the "Contract of
Agreement" entered into by the parties. These are questions purely
of law and clearly beyond the expertise of the Commission on Audit
or the DPWH. In Lacap, this Court said:
... It does not involve an examination of the probative value of the
evidence presented by the parties. There is a question of law when
the doubt or difference arises as to what the law is on a certain state
of facts, and not as to the truth or the falsehood of alleged facts. Said
question at best could be resolved only tentatively by the
administrative authorities. The final decision on the matter rests not
with them but with the courts of justice. Exhaustion of administrative
remedies does not apply, because nothing of an administrative
nature is to be or can be done. The issue does not require technical
knowledge and experience but one that would involve the
interpretation and application of law. (Emphasis supplied.)
Secondly, in ordering the payment of the obligation due respondent
on a quantum meruit basis, the Court of Appeals correctly relied on
Royal Trust Corporation v. COA,10 Eslao v. COA,11 Melchor v.
COA,12 EPG Construction Company v. Vigilar,13 and Department of
Health v. C.V. Canchela & Associates, Architects.14 All these cases
involved government projects undertaken in violation of the relevant
laws, rules and regulations covering public bidding, budget
appropriations, and release of funds for the projects. Consistently in
these cases, this Court has held that the contracts were void for
failing to meet the requirements mandated by law; public interest and
equity, however, dictate that the contractor should be compensated
for services rendered and work done.
Specifically, C.V. Canchela & Associates is similar to the case at bar,
in that the contracts involved in both cases failed to comply with the
relevant provisions of Presidential Decree No. 1445 and the Revised
Administrative Code of 1987. Nevertheless, "(t)he illegality of the
subject Agreements proceeds, it bears emphasis, from an express
declaration or prohibition by law, not from any intrinsic illegality. As
such, the Agreements are not illegal per se, and the party claiming
thereunder may recover what had been paid or delivered."15
The government project involved in this case, the construction of a
dike, was completed way back on 9 July 1992. For almost two
decades, the public and the government benefitted from the work
done by respondent. Thus, the Court of Appeals was correct in
applying Eslao to the present case. In Eslao, this Court stated:
...the Court finds that the contractor should be duly compensated for
services rendered, which were for the benefit of the general public.
To deny the payment to the contractor of the two buildings which are
almost fully completed and presently occupied by the university
would be to allow the government to unjustly enrich itself at the
expense of another. Justice and equity demand compensation on the
basis of quantum meruit. (Emphasis supplied.)
Neither can petitioners escape the obligation to compensate
respondent for services rendered and work done by invoking the
state’s immunity from suit. This Court has long established in
Ministerio v. CFI of Cebu,16 and recently reiterated in Heirs of
Pidacan v. ATO,17 that the doctrine of governmental immunity from
suit cannot serve as an instrument for perpetrating an injustice to a
citizen. As this Court enunciated in EPG Construction: 181avvphi1
To our mind, it would be the apex of injustice and highly
inequitable to defeat respondent’s right to be duly compensated
for actual work performed and services rendered, where both
the government and the public have for years received and
accepted benefits from the project and reaped the fruits of
respondent’s honest toil and labor.
xxx xxx xxx
Under these circumstances, respondent may not validly invoke the
Royal Prerogative of Dishonesty and conveniently hide under the
State's cloak of invincibility against suit, considering that this
principle yields to certain settled exceptions. True enough, the rule,
in any case, is not absolute for it does not say that the state
may not be sued under any circumstance.
xxx xxx xxx
Although the Amigable and Ministerio cases generously tackled the
issue of the State's immunity from suit vis a vis the payment of just
compensation for expropriated property, this Court nonetheless finds
the doctrine enunciated in the aforementioned cases applicable to
the instant controversy, considering that the ends of justice
would be subverted if we were to uphold, in this particular
instance, the State's immunity from suit.
To be sure, this Court — as the staunch guardian of the citizens'
rights and welfare — cannot sanction an injustice so patent on
its face, and allow itself to be an instrument in the perpetration
thereof. Justice and equity sternly demand that the State's cloak
of invincibility against suit be shred in this particular instance,
and that petitioners-contractors be duly compensated — on the
basis of quantum meruit — for construction done on the public
works housing project. (Emphasis supplied.)
WHEREFORE, in view of the foregoing, the Petition is DENIED for
lack of merit. The assailed Decision of the Court of Appeals in CA-
G.R. No. 82268 dated 25 September 2006 is AFFIRMED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice
G.R. No. 185572 February 7, 2012
CHINA NATIONAL MACHINERY & EQUIPMENT CORP.
(GROUP), Petitioner,
vs.
HON. CESAR D. SANTAMARIA, in his official capacity as
Presiding Judge of Branch 145, Regional Trial Court of Makati
City, HERMINIO HARRY L. ROQUE, JR., JOEL R. BUTUYAN,
ROGER R. RAYEL, ROMEL R. BAGARES, CHRISTOPHER
FRANCISCO C. BOLASTIG, LEAGUE OF URBAN POOR FOR
ACTION (LUPA), KILUSAN NG MARALITA SA MEYCAUAYAN
(KMM-LUPA CHAPTER), DANILO M. CALDERON, VICENTE C.
ALBAN, MERLYN M. VAAL, LOLITA S. QUINONES, RICARDO D.
LANOZO, JR., CONCHITA G. GOZO, MA. TERESA D. ZEPEDA,
JOSEFINA A. LANOZO, and SERGIO C. LEGASPI, JR.,
KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY), EDY
CLERIGO, RAMMIL DINGAL, NELSON B. TERRADO, CARMEN
DEUNIDA, and EDUARDO LEGSON, Respondents.
DECISION
SERENO, J.:
This is a Petition for Review on Certiorari with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and/or
Preliminary Injunction assailing the 30 September 2008 Decision and
5 December 2008 Resolution of the Court of Appeals (CA) in CA–
G.R. SP No. 103351.1
On 14 September 2002, petitioner China National Machinery &
Equipment Corp. (Group) (CNMEG), represented by its chairperson,
Ren Hongbin, entered into a Memorandum of Understanding with the
North Luzon Railways Corporation (Northrail), represented by its
president, Jose L. Cortes, Jr. for the conduct of a feasibility study on
a possible railway line from Manila to San Fernando, La Union (the
Northrail Project).2
On 30 August 2003, the Export Import Bank of China (EXIM Bank)
and the Department of Finance of the Philippines (DOF) entered into
a Memorandum of Understanding (Aug 30 MOU), wherein China
agreed to extend Preferential Buyer’s Credit to the Philippine
government to finance the Northrail Project.3 The Chinese
government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower. 4 Under the
Aug 30 MOU, EXIM Bank agreed to extend an amount not
exceeding USD 400,000,000 in favor of the DOF, payable in 20
years, with a 5-year grace period, and at the rate of 3% per annum. 5
On 1 October 2003, the Chinese Ambassador to the Philippines,
Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose
Isidro Camacho (Sec. Camacho) informing him of CNMEG’s
designation as the Prime Contractor for the Northrail Project. 6
On 30 December 2003, Northrail and CNMEG executed a Contract
Agreement for the construction of Section I, Phase I of the North
Luzon Railway System from Caloocan to Malolos on a turnkey basis
(the Contract Agreement).7 The contract price for the Northrail
Project was pegged at USD 421,050,000.8
On 26 February 2004, the Philippine government and EXIM Bank
entered into a counterpart financial agreement – Buyer Credit Loan
Agreement No. BLA 04055 (the Loan Agreement).9 In the Loan
Agreement, EXIM Bank agreed to extend Preferential Buyer’s Credit
in the amount of USD 400,000,000 in favor of the Philippine
government in order to finance the construction of Phase I of the
Northrail Project.10
On 13 February 2006, respondents filed a Complaint for Annulment
of Contract and Injunction with Urgent Motion for Summary Hearing
to Determine the Existence of Facts and Circumstances Justifying
the Issuance of Writs of Preliminary Prohibitory and Mandatory
Injunction and/or TRO against CNMEG, the Office of the Executive
Secretary, the DOF, the Department of Budget and Management,
the National Economic Development Authority and Northrail. 11 The
case was docketed as Civil Case No. 06-203 before the Regional
Trial Court, National Capital Judicial Region, Makati City, Branch 145
(RTC Br. 145). In the Complaint, respondents alleged that the
Contract Agreement and the Loan Agreement were void for being
contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No.
9184), otherwise known as the Government Procurement Reform
Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292,
otherwise known as the Administrative Code.12
RTC Br. 145 issued an Order dated 17 March 2006 setting the case
for hearing on the issuance of injunctive reliefs. 13 On 29 March 2006,
CNMEG filed an Urgent Motion for Reconsideration of this
Order.14 Before RTC Br. 145 could rule thereon, CNMEG filed a
Motion to Dismiss dated 12 April 2006, arguing that the trial court did
not have jurisdiction over (a) its person, as it was an agent of the
Chinese government, making it immune from suit, and (b) the subject
matter, as the Northrail Project was a product of an executive
agreement.15
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying
CNMEG’s Motion to Dismiss and setting the case for summary
hearing to determine whether the injunctive reliefs prayed for should
be issued.16 CNMEG then filed a Motion for Reconsideration,17 which
was denied by the trial court in an Order dated 10 March
2008.18 Thus, CNMEG filed before the CA a Petition for Certiorari
with Prayer for the Issuance of TRO and/or Writ of Preliminary
Injunction dated 4 April 2008.19
In the assailed Decision dated 30 September 2008, the appellate
court dismissed the Petition for Certiorari.20 Subsequently, CNMEG
filed a Motion for Reconsideration,21 which was denied by the CA in a
Resolution dated 5 December 2008.22 Thus, CNMEG filed the instant
Petition for Review on Certiorari dated 21 January 2009, raising the
following issues: 23
Whether or not petitioner CNMEG is an agent of the sovereign
People’s Republic of China.
Whether or not the Northrail contracts are products of an executive
agreement between two sovereign states.
Whether or not the certification from the Department of Foreign
Affairs is necessary under the foregoing circumstances.
Whether or not the act being undertaken by petitioner CNMEG is an
act jure imperii.
Whether or not the Court of Appeals failed to avoid a procedural
limbo in the lower court.
Whether or not the Northrail Project is subject to competitive public
bidding.
Whether or not the Court of Appeals ignored the ruling of this
Honorable Court in the Neri case.
CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC
Br. 145 for lack of jurisdiction. It likewise requests this Court for the
issuance of a TRO and, later on, a writ of preliminary injunction to
restrain public respondent from proceeding with the disposition of
Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
1. Whether CNMEG is entitled to immunity, precluding it from
being sued before a local court.
2. Whether the Contract Agreement is an executive
agreement, such that it cannot be questioned by or before a
local court.
First issue: Whether CNMEG is entitled to immunity
This Court explained the doctrine of sovereign immunity in Holy See
v. Rosario,24 to wit:
There are two conflicting concepts of sovereign immunity, each
widely held and firmly established. According to the classical or
absolute theory, a sovereign cannot, without its consent, be
made a respondent in the courts of another
sovereign. According to the newer or restrictive theory, the
immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii of a state, but not with regard to
private acts or acts jure gestionis. (Emphasis supplied; citations
omitted.)
xxx xxx xxx
The restrictive theory came about because of the entry of sovereign
states into purely commercial activities remotely connected with the
discharge of governmental functions. This is particularly true with
respect to the Communist states which took control of nationalized
business activities and international trading.
In JUSMAG v. National Labor Relations Commission,25 this Court
affirmed the Philippines’ adherence to the restrictive theory as
follows:
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract
does not, per se, mean that sovereign states may, at all times, be
sued in local courts. The complexity of relationships between
sovereign states, brought about by their increasing commercial
activities, mothered a more restrictive application of the doctrine.
xxx xxx xxx
As it stands now, the application of the doctrine of immunity from suit
has been restricted to sovereign or governmental activities (jure
imperii). The mantle of state immunity cannot be extended to
commercial, private and proprietary acts (jure gestionis).26 (Emphasis
supplied.)
Since the Philippines adheres to the restrictive theory, it is crucial to
ascertain the legal nature of the act involved – whether the entity
claiming immunity performs governmental, as opposed to
proprietary, functions. As held in United States of America v. Ruiz –27
The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign
sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent
to be sued only when it enters into business contracts. It does not
apply where the contract relates to the exercise of its sovereign
functions.28
A. CNMEG is engaged in a proprietary activity.
A threshold question that must be answered is whether CNMEG
performs governmental or proprietary functions. A thorough
examination of the basic facts of the case would show that CNMEG
is engaged in a proprietary activity.
The parties executed the Contract Agreement for the purpose of
constructing the Luzon Railways, viz:29
WHEREAS the Employer (Northrail) desired to construct the railways
form Caloocan to Malolos, section I, Phase I of Philippine North
Luzon Railways Project (hereinafter referred to as THE PROJECT);
AND WHEREAS the Contractor has offered to provide the Project on
Turnkey basis, including design, manufacturing, supply, construction,
commissioning, and training of the Employer’s personnel;
AND WHEREAS the Loan Agreement of the Preferential Buyer’s
Credit between Export-Import Bank of China and Department of
Finance of Republic of the Philippines;
NOW, THEREFORE, the parties agree to sign this Contract for the
Implementation of the Project.
The above-cited portion of the Contract Agreement, however, does
not on its own reveal whether the construction of the Luzon railways
was meant to be a proprietary endeavor. In order to fully understand
the intention behind and the purpose of the entire undertaking, the
Contract Agreement must not be read in isolation. Instead, it must be
construed in conjunction with three other documents executed in
relation to the Northrail Project, namely: (a) the Memorandum of
Understanding dated 14 September 2002 between Northrail and
CNMEG;30 (b) the letter of Amb. Wang dated 1 October 2003
addressed to Sec. Camacho;31 and (c) the Loan Agreement.32
1. Memorandum of Understanding dated 14 September 2002
The Memorandum of Understanding dated 14 September 2002
shows that CNMEG sought the construction of the Luzon Railways
as a proprietary venture. The relevant parts thereof read:
WHEREAS, CNMEG has the financial capability, professional
competence and technical expertise to assess the state of the [Main
Line North (MLN)] and recommend implementation plans as well as
undertake its rehabilitation and/or modernization;
WHEREAS, CNMEG has expressed interest in the rehabilitation
and/or modernization of the MLN from Metro Manila to San
Fernando, La Union passing through the provinces of Bulacan,
Pampanga, Tarlac, Pangasinan and La Union (the ‘Project’);
WHEREAS, the NORTHRAIL CORP. welcomes CNMEG’s proposal
to undertake a Feasibility Study (the "Study") at no cost to
NORTHRAIL CORP.;
WHEREAS, the NORTHRAIL CORP. also welcomes CNMEG’s
interest in undertaking the Project with Supplier’s Credit and intends
to employ CNMEG as the Contractor for the Project subject to
compliance with Philippine and Chinese laws, rules and regulations
for the selection of a contractor;
WHEREAS, the NORTHRAIL CORP. considers CNMEG’s proposal
advantageous to the Government of the Republic of the Philippines
and has therefore agreed to assist CNMEG in the conduct of the
aforesaid Study;
xxx xxx xxx
II. APPROVAL PROCESS
2.1 As soon as possible after completion and presentation of the
Study in accordance with Paragraphs 1.3 and 1.4 above and in
compliance with necessary governmental laws, rules, regulations
and procedures required from both parties, the parties shall
commence the preparation and negotiation of the terms and
conditions of the Contract (the "Contract") to be entered into between
them on the implementation of the Project. The parties shall use their
best endeavors to formulate and finalize a Contract with a view to
signing the Contract within one hundred twenty (120) days from
CNMEG’s presentation of the Study.33 (Emphasis supplied)
Clearly, it was CNMEG that initiated the undertaking, and not the
Chinese government. The Feasibility Study was conducted not
because of any diplomatic gratuity from or exercise of sovereign
functions by the Chinese government, but was plainly a business
strategy employed by CNMEG with a view to securing this
commercial enterprise.
2. Letter dated 1 October 2003
That CNMEG, and not the Chinese government, initiated the
Northrail Project was confirmed by Amb. Wang in his letter dated 1
October 2003, thus:
1. CNMEG has the proven competence and capability to
undertake the Project as evidenced by the ranking of 42 given
by the ENR among 225 global construction companies.
2. CNMEG already signed an MOU with the North Luzon
,Railways Corporation last September 14, 2000 during the
visit of Chairman Li Peng. Such being the case, they have
already established an initial working relationship with your
North Luzon Railways Corporation. This would categorize
CNMEG as the state corporation within the People’s Republic
of China which initiated our Government’s involvement in the
Project.
3. Among the various state corporations of the People’s
Republic of China, only CNMEG has the advantage of being
fully familiar with the current requirements of the Northrail
Project having already accomplished a Feasibility Study which
was used as inputs by the North Luzon Railways Corporation
in the approvals (sic) process required by the Republic of the
Philippines.34 (Emphasis supplied.)
Thus, the desire of CNMEG to secure the Northrail Project was in the
ordinary or regular course of its business as a global construction
company. The implementation of the Northrail Project was intended
to generate profit for CNMEG, with the Contract Agreement placing a
contract price of USD 421,050,000 for the venture. 35 The use of the
term "state corporation" to refer to CNMEG was only descriptive of
its nature as a government-owned and/or -controlled corporation,
and its assignment as the Primary Contractor did not imply that it
was acting on behalf of China in the performance of the latter’s
sovereign functions. To imply otherwise would result in an absurd
situation, in which all Chinese corporations owned by the state would
be automatically considered as performing governmental activities,
even if they are clearly engaged in commercial or proprietary
pursuits.
3. The Loan Agreement
CNMEG claims immunity on the ground that the Aug 30 MOU on the
financing of the Northrail Project was signed by the Philippine and
Chinese governments, and its assignment as the Primary Contractor
meant that it was bound to perform a governmental function on
behalf of China. However, the Loan Agreement, which originated
from the same Aug 30 MOU, belies this reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery of
this Agreement by the Borrower constitute, and the Borrower’s
performance of and compliance with its obligations under this
Agreement will constitute, private and commercial acts done and
performed for commercial purposes under the laws of the
Republic of the Philippines and neither the Borrower nor any of
its assets is entitled to any immunity or privilege (sovereign or
otherwise) from suit, execution or any other legal process with
respect to its obligations under this Agreement, as the case
may be, in any jurisdiction. Notwithstanding the foregoing, the
Borrower does not waive any immunity with respect of its assets
which are (i) used by a diplomatic or consular mission of the
Borrower and (ii) assets of a military character and under control of a
military authority or defense agency and (iii) located in the
Philippines and dedicated to public or governmental use (as
distinguished from patrimonial assets or assets dedicated to
commercial use). (Emphasis supplied.)
(k) Proceedings to Enforce Agreement In any proceeding in the
Republic of the Philippines to enforce this Agreement, the choice of
the laws of the People’s Republic of China as the governing law
hereof will be recognized and such law will be applied. The waiver of
immunity by the Borrower, the irrevocable submissions of the
Borrower to the non-exclusive jurisdiction of the courts of the
People’s Republic of China and the appointment of the Borrower’s
Chinese Process Agent is legal, valid, binding and enforceable and
any judgment obtained in the People’s Republic of China will be if
introduced, evidence for enforcement in any proceedings against the
Borrower and its assets in the Republic of the Philippines provided
that (a) the court rendering judgment had jurisdiction over the subject
matter of the action in accordance with its jurisdictional rules, (b) the
Republic had notice of the proceedings, (c) the judgment of the court
was not obtained through collusion or fraud, and (d) such judgment
was not based on a clear mistake of fact or law. 36
Further, the Loan Agreement likewise contains this express waiver of
immunity:
15.5 Waiver of Immunity The Borrower irrevocably and
unconditionally waives, any immunity to which it or its property may
at any time be or become entitled, whether characterized as
sovereign immunity or otherwise, from any suit, judgment, service of
process upon it or any agent, execution on judgment, set-off,
attachment prior to judgment, attachment in aid of execution to which
it or its assets may be entitled in any legal action or proceedings with
respect to this Agreement or any of the transactions contemplated
hereby or hereunder. Notwithstanding the foregoing, the Borrower
does not waive any immunity in respect of its assets which are (i)
used by a diplomatic or consular mission of the Borrower, (ii) assets
of a military character and under control of a military authority or
defense agency and (iii) located in the Philippines and dedicated to a
public or governmental use (as distinguished from patrimonial assets
or assets dedicated to commercial use).37
Thus, despite petitioner’s claim that the EXIM Bank extended
financial assistance to Northrail because the bank was mandated by
the Chinese government, and not because of any motivation to do
business in the Philippines,38 it is clear from the foregoing provisions
that the Northrail Project was a purely commercial transaction.
Admittedly, the Loan Agreement was entered into between EXIM
Bank and the Philippine government, while the Contract Agreement
was between Northrail and CNMEG. Although the Contract
Agreement is silent on the classification of the legal nature of the
transaction, the foregoing provisions of the Loan Agreement, which
is an inextricable part of the entire undertaking, nonetheless reveal
the intention of the parties to the Northrail Project to classify the
whole venture as commercial or proprietary in character.
Thus, piecing together the content and tenor of the Contract
Agreement, the Memorandum of Understanding dated 14 September
2002, Amb. Wang’s letter dated 1 October 2003, and the Loan
Agreement would reveal the desire of CNMEG to construct the
Luzon Railways in pursuit of a purely commercial activity performed
in the ordinary course of its business.
B. CNMEG failed to adduce evidence that it is immune from suit
under Chinese law.
Even assuming arguendo that CNMEG performs governmental
functions, such claim does not automatically vest it with immunity.
This view finds support in Malong v. Philippine National Railways, in
which this Court held that "(i)mmunity from suit is determined by the
character of the objects for which the entity was organized."39
In this regard, this Court’s ruling in Deutsche Gesellschaft Für
Technische Zusammenarbeit (GTZ) v. CA40 must be examined. In
Deutsche Gesellschaft, Germany and the Philippines entered into a
Technical Cooperation Agreement, pursuant to which both signed an
arrangement promoting the Social Health Insurance–Networking and
Empowerment (SHINE) project. The two governments named their
respective implementing organizations: the Department of Health
(DOH) and the Philippine Health Insurance Corporation (PHIC) for
the Philippines, and GTZ for the implementation of Germany’s
contributions. In ruling that GTZ was not immune from suit, this Court
held:
The arguments raised by GTZ and the [Office of the Solicitor General
(OSG)] are rooted in several indisputable facts. The SHINE project
was implemented pursuant to the bilateral agreements between the
Philippine and German governments. GTZ was tasked, under the
1991 agreement, with the implementation of the contributions of the
German government. The activities performed by GTZ pertaining to
the SHINE project are governmental in nature, related as they are to
the promotion of health insurance in the Philippines. The fact that
GTZ entered into employment contracts with the private respondents
did not disqualify it from invoking immunity from suit, as held in cases
such as Holy See v. Rosario, Jr., which set forth what remains valid
doctrine:
Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the
start of the inquiry. The logical question is whether the foreign state
is engaged in the activity in the regular course of business. If the
foreign state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii, especially when it is not undertaken for gain or
profit.
Beyond dispute is the tenability of the comment points (sic) raised by
GTZ and the OSG that GTZ was not performing proprietary functions
notwithstanding its entry into the particular employment contracts.
Yet there is an equally fundamental premise which GTZ and the
OSG fail to address, namely: Is GTZ, by conception, able to enjoy
the Federal Republic’s immunity from suit?
The principle of state immunity from suit, whether a local state or a
foreign state, is reflected in Section 9, Article XVI of the Constitution,
which states that "the State may not be sued without its consent."
Who or what consists of "the State"? For one, the doctrine is
available to foreign States insofar as they are sought to be sued in
the courts of the local State, necessary as it is to avoid "unduly
vexing the peace of nations."
If the instant suit had been brought directly against the Federal
Republic of Germany, there would be no doubt that it is a suit
brought against a State, and the only necessary inquiry is whether
said State had consented to be sued. However, the present suit was
brought against GTZ. It is necessary for us to understand what
precisely are the parameters of the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as "the implementing
agency of the Government of the Federal Republic of
Germany," a depiction similarly adopted by the OSG. Assuming that
the characterization is correct, it does not automatically invest
GTZ with the ability to invoke State immunity from suit. The
distinction lies in whether the agency is incorporated or
unincorporated.
xxx xxx xxx
State immunity from suit may be waived by general or special law.
The special law can take the form of the original charter of the
incorporated government agency. Jurisprudence is replete with
examples of incorporated government agencies which were ruled not
entitled to invoke immunity from suit, owing to provisions in their
charters manifesting their consent to be sued.
xxx xxx xxx
It is useful to note that on the part of the Philippine government, it
had designated two entities, the Department of Health and the
Philippine Health Insurance Corporation (PHIC), as the implementing
agencies in behalf of the Philippines. The PHIC was established
under Republic Act No. 7875, Section 16 (g) of which grants the
corporation the power "to sue and be sued in court." Applying the
previously cited jurisprudence, PHIC would not enjoy immunity from
suit even in the performance of its functions connected with SHINE,
however, (sic) governmental in nature as (sic) they may be.
Is GTZ an incorporated agency of the German government?
There is some mystery surrounding that question. Neither GTZ
nor the OSG go beyond the claim that petitioner is "the
implementing agency of the Government of the Federal
Republic of Germany." On the other hand, private respondents
asserted before the Labor Arbiter that GTZ was "a private
corporation engaged in the implementation of development projects."
The Labor Arbiter accepted that claim in his Order denying the
Motion to Dismiss, though he was silent on that point in his Decision.
Nevertheless, private respondents argue in their Comment that the
finding that GTZ was a private corporation "was never controverted,
and is therefore deemed admitted." In its Reply, GTZ controverts that
finding, saying that it is a matter of public knowledge that the status
of petitioner GTZ is that of the "implementing agency," and not that
of a private corporation.
In truth, private respondents were unable to adduce any evidence to
substantiate their claim that GTZ was a "private corporation," and the
Labor Arbiter acted rashly in accepting such claim without
explanation. But neither has GTZ supplied any evidence defining
its legal nature beyond that of the bare descriptive
"implementing agency." There is no doubt that the 1991
Agreement designated GTZ as the "implementing agency" in
behalf of the German government. Yet the catch is that such
term has no precise definition that is responsive to our
concerns. Inherently, an agent acts in behalf of a principal, and
the GTZ can be said to act in behalf of the German state. But
that is as far as "implementing agency" could take us. The term
by itself does not supply whether GTZ is incorporated or
unincorporated, whether it is owned by the German state or by
private interests, whether it has juridical personality
independent of the German government or none at all.
xxx xxx xxx
Again, we are uncertain of the corresponding legal implications
under German law surrounding "a private company owned by
the Federal Republic of Germany." Yet taking the description on
face value, the apparent equivalent under Philippine law is that
of a corporation organized under the Corporation Code but
owned by the Philippine government, or a government-owned
or controlled corporation without original charter. And it bears
notice that Section 36 of the Corporate Code states that "[e]very
corporation incorporated under this Code has the power and
capacity x x x to sue and be sued in its corporate name."
It is entirely possible that under German law, an entity such as GTZ
or particularly GTZ itself has not been vested or has been specifically
deprived the power and capacity to sue and/or be sued. Yet in the
proceedings below and before this Court, GTZ has failed to
establish that under German law, it has not consented to be
sued despite it being owned by the Federal Republic of
Germany. We adhere to the rule that in the absence of evidence
to the contrary, foreign laws on a particular subject are
presumed to be the same as those of the Philippines, and
following the most intelligent assumption we can gather, GTZ is
akin to a governmental owned or controlled corporation without
original charter which, by virtue of the Corporation Code, has
expressly consented to be sued. At the very least, like the Labor
Arbiter and the Court of Appeals, this Court has no basis in fact to
conclude or presume that GTZ enjoys immunity from
suit.41 (Emphasis supplied.)
Applying the foregoing ruling to the case at bar, it is readily apparent
that CNMEG cannot claim immunity from suit, even if it contends that
it performs governmental functions. Its designation as the Primary
Contractor does not automatically grant it immunity, just as the term
"implementing agency" has no precise definition for purposes of
ascertaining whether GTZ was immune from suit. Although CNMEG
claims to be a government-owned corporation, it failed to adduce
evidence that it has not consented to be sued under Chinese law.
Thus, following this Court’s ruling in Deutsche Gesellschaft, in the
absence of evidence to the contrary, CNMEG is to be presumed to
be a government-owned and -controlled corporation without an
original charter. As a result, it has the capacity to sue and be sued
under Section 36 of the Corporation Code.
C. CNMEG failed to present a certification from the Department of
Foreign Affairs.
In Holy See,42 this Court reiterated the oft-cited doctrine that the
determination by the Executive that an entity is entitled to sovereign
or diplomatic immunity is a political question conclusive upon the
courts, to wit:
In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court, it
requests the Foreign Office of the state where it is sued to convey to
the court that said defendant is entitled to immunity.
xxx xxx xxx
In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of
its claim of sovereign or diplomatic immunity. But how the Philippine
Foreign Office conveys its endorsement to the courts varies.
In International Catholic Migration Commission v. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly
to the Secretary of Labor and Employment, informing the latter that
the respondent-employer could not be sued because it enjoyed
diplomatic immunity. In World Health Organization v. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court
a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the
U.S. Embassy asked the Secretary of Foreign Affairs to request the
Solicitor General to make, in behalf of the Commander of the United
States Naval Base at Olongapo City, Zambales, a "suggestion" to
respondent Judge. The Solicitor General embodied the "suggestion"
in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the
Office of Legal Affairs moved with this Court to be allowed to
intervene on the side of petitioner. The Court allowed the said
Department to file its memorandum in support of petitioner’s claim of
sovereign immunity.
In some cases, the defense of sovereign immunity was submitted
directly to the local courts by the respondents through their private
counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America v. Guinto, 182 SCRA 644 [1990] and companion cases). In
cases where the foreign states bypass the Foreign Office, the courts
can inquire into the facts and make their own determination as to the
nature of the acts and transactions involved.43 (Emphasis supplied.)
The question now is whether any agency of the Executive Branch
can make a determination of immunity from suit, which may be
considered as conclusive upon the courts. This Court, in Department
of Foreign Affairs (DFA) v. National Labor Relations Commission
(NLRC),44 emphasized the DFA’s competence and authority to
provide such necessary determination, to wit:
The DFA’s function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic
immunities, a determination which, when challenge, (sic) entitles it to
seek relief from the court so as not to seriously impair the conduct of
the country's foreign relations. The DFA must be allowed to plead its
case whenever necessary or advisable to enable it to help keep the
credibility of the Philippine government before the international
community. When international agreements are concluded, the
parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly regarded.
In our country, this task falls principally of (sic) the DFA as being the
highest executive department with the competence and authority to
so act in this aspect of the international arena. 45 (Emphasis
supplied.)
Further, the fact that this authority is exclusive to the DFA was also
emphasized in this Court’s ruling in Deutsche Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings, noted
that it was imperative for petitioners to secure from the Department
of Foreign Affairs "a certification of respondents’ diplomatic status
and entitlement to diplomatic privileges including immunity from
suits." The requirement might not necessarily be imperative.
However, had GTZ obtained such certification from the DFA, it would
have provided factual basis for its claim of immunity that would, at
the very least, establish a disputable evidentiary presumption that
the foreign party is indeed immune which the opposing party will
have to overcome with its own factual evidence. We do not see why
GTZ could not have secured such certification or endorsement from
the DFA for purposes of this case. Certainly, it would have been
highly prudential for GTZ to obtain the same after the Labor Arbiter
had denied the motion to dismiss. Still, even at this juncture, we do
not see any evidence that the DFA, the office of the executive branch
in charge of our diplomatic relations, has indeed endorsed GTZ’s
claim of immunity. It may be possible that GTZ tried, but failed to
secure such certification, due to the same concerns that we have
discussed herein.
Would the fact that the Solicitor General has endorsed GTZ’s claim
of State’s immunity from suit before this Court sufficiently substitute
for the DFA certification? Note that the rule in public international law
quoted in Holy See referred to endorsement by the Foreign Office of
the State where the suit is filed, such foreign office in the Philippines
being the Department of Foreign Affairs. Nowhere in the Comment of
the OSG is it manifested that the DFA has endorsed GTZ’s claim, or
that the OSG had solicited the DFA’s views on the issue. The
arguments raised by the OSG are virtually the same as the
arguments raised by GTZ without any indication of any special and
distinct perspective maintained by the Philippine government on the
issue. The Comment filed by the OSG does not inspire the same
degree of confidence as a certification from the DFA would have
elicited.46 (Emphasis supplied.)
In the case at bar, CNMEG offers the Certification executed by the
Economic and Commercial Office of the Embassy of the People’s
Republic of China, stating that the Northrail Project is in pursuit of a
sovereign activity.47 Surely, this is not the kind of certification that can
establish CNMEG’s entitlement to immunity from suit, as Holy See
unequivocally refers to the determination of the "Foreign Office of the
state where it is sued."
Further, CNMEG also claims that its immunity from suit has the
executive endorsement of both the OSG and the Office of the
Government Corporate Counsel (OGCC), which must be respected
by the courts. However, as expressly enunciated in Deutsche
Gesellschaft, this determination by the OSG, or by the OGCC for that
matter, does not inspire the same degree of confidence as a DFA
certification. Even with a DFA certification, however, it must be
remembered that this Court is not precluded from making an inquiry
into the intrinsic correctness of such certification.
D. An agreement to submit any dispute to arbitration may be
construed as an implicit waiver of immunity from suit.
In the United States, the Foreign Sovereign Immunities Act of 1976
provides for a waiver by implication of state immunity. In the said
law, the agreement to submit disputes to arbitration in a foreign
country is construed as an implicit waiver of immunity from suit.
Although there is no similar law in the Philippines, there is reason to
apply the legal reasoning behind the waiver in this case.
The Conditions of Contract,48 which is an integral part of the Contract
Agreement,49 states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION
33.1. Amicable Settlement
Both parties shall attempt to amicably settle all disputes or
controversies arising from this Contract before the commencement
of arbitration.
33.2. Arbitration
All disputes or controversies arising from this Contract which cannot
be settled between the Employer and the Contractor shall be
submitted to arbitration in accordance with the UNCITRAL Arbitration
Rules at present in force and as may be amended by the rest of this
Clause. The appointing authority shall be Hong Kong International
Arbitration Center. The place of arbitration shall be in Hong Kong at
Hong Kong International Arbitration Center (HKIAC).
Under the above provisions, if any dispute arises between Northrail
and CNMEG, both parties are bound to submit the matter to the
HKIAC for arbitration. In case the HKIAC makes an arbitral award in
favor of Northrail, its enforcement in the Philippines would be subject
to the Special Rules on Alternative Dispute Resolution (Special
Rules). Rule 13 thereof provides for the Recognition and
Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3
of the Special Rules, the party to arbitration wishing to have an
arbitral award recognized and enforced in the Philippines must
petition the proper regional trial court (a) where the assets to be
attached or levied upon is located; (b) where the acts to be enjoined
are being performed; (c) in the principal place of business in the
Philippines of any of the parties; (d) if any of the parties is an
individual, where any of those individuals resides; or (e) in the
National Capital Judicial Region.
From all the foregoing, it is clear that CNMEG has agreed that it will
not be afforded immunity from suit. Thus, the courts have the
competence and jurisdiction to ascertain the validity of the Contract
Agreement.
Second issue: Whether the Contract Agreement is an executive
agreement
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna
Convention) defines a treaty as follows:
[A]n international agreement concluded between States in written
form and governed by international law, whether embodied in a
single instrument or in two or more related instruments and whatever
its particular designation.
In Bayan Muna v. Romulo, this Court held that an executive
agreement is similar to a treaty, except that the former (a) does not
require legislative concurrence; (b) is usually less formal; and (c)
deals with a narrower range of subject matters.50
Despite these differences, to be considered an executive agreement,
the following three requisites provided under the Vienna Convention
must nevertheless concur: (a) the agreement must be between
states; (b) it must be written; and (c) it must governed by
international law. The first and the third requisites do not obtain in the
case at bar.
A. CNMEG is neither a government nor a government agency.
The Contract Agreement was not concluded between the Philippines
and China, but between Northrail and CNMEG.51 By the terms of the
Contract Agreement, Northrail is a government-owned or -controlled
corporation, while CNMEG is a corporation duly organized and
created under the laws of the People’s Republic of China.52 Thus,
both Northrail and CNMEG entered into the Contract Agreement as
entities with personalities distinct and separate from the Philippine
and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese
government. As previously discussed, the fact that Amb. Wang, in
his letter dated 1 October 2003,53 described CNMEG as a "state
corporation" and declared its designation as the Primary Contractor
in the Northrail Project did not mean it was to perform sovereign
functions on behalf of China. That label was only descriptive of its
nature as a state-owned corporation, and did not preclude it from
engaging in purely commercial or proprietary ventures.
B. The Contract Agreement is to be governed by Philippine law. MARIA LOURDES P. A. SERENO
Associate Justice
Article 2 of the Conditions of Contract, 54 which under Article 1.1 of
the Contract Agreement is an integral part of the latter, states:

APPLICABLE LAW AND GOVERNING LANGUAGE

The contract shall in all respects be read and construed in

accordance with the laws of the Philippines.

The contract shall be written in English language. All

correspondence and other documents pertaining to the Contract
which are exchanged by the parties shall be written in English
language.

Since the Contract Agreement explicitly provides that Philippine law

shall be applicable, the parties have effectively conceded that their
rights and obligations thereunder are not governed by international
law.

It is therefore clear from the foregoing reasons that the Contract

Agreement does not partake of the nature of an executive
agreement. It is merely an ordinary commercial contract that can be
questioned before the local courts.

WHEREFORE, the instant Petition is DENIED. Petitioner China

National Machinery & Equipment Corp. (Group) is not entitled to
immunity from suit, and the Contract Agreement is not an executive
agreement. CNMEG’s prayer for the issuance of a TRO and/or Writ
of Preliminary Injunction is DENIED for being moot and academic.
This case is REMANDED to the Regional Trial Court of Makati,
Branch 145, for further proceedings as regards the validity of the
contracts subject of Civil Case No. 06-203.

No pronouncement on costs of suit.

SO ORDERED.
G.R. No. 166508 October 2, 2009
NATIONAL HOME MORTGAGE FINANCE
CORPORATION, Petitioner,
vs.
MARIO ABAYARI, MAY ALMINE, MA. VICTORIA ALPAJARO,
FLORANTE AMORES, ANGELINA ANCHETA, ANGELINE
ODIEM-ARANETA, CECILIA PACIBLE, MIRIAM BAJADO,
EDUARDO BALAURO, EVANGELINA BALIAO, LUISA BANUA,
RIZALINA BENLAYO, MARJORIE BINAG, CRESENCIA BISNAR,
CARMELITA BREBONERIA, JOSELYN BUNYI, EMILIO
CABAMONGAN, JR., PAZ DIVINA CABANERO, RAUL
CABANILLA, LEONILA WYNDA CADA, CELSTINA CASAO,
ELIZABETH CASAS, ARNULFO CATALAN, FRANCIS DE LA
CHICA, JAIME CORTES, JAIME DE LA CRUZ, JHONNY
CUSTODIO, MA. BELINDA DAPULA, REMEDIOS DEBUQUE,
REBECCA DECARA, JOCELYN DIEGO, JAIME DUQUE, LUCIA
ENRIQUEZ, MA. LUCIA ESPEROS, HELEN EVANGELISTA,
CELSO FERNANDEZ, EDILBERTO SAN GABRIEL, REYNALDO
SAN GABRIEL, EDMUNDO GARAIS, JENNILYN GOZADO,
EVELYN GUEVARRA, MA. MAGDALENA HIDONA, VICTORINO
INDEFONSO, JR., GRACE CECILLE JAVIER, MARIETA JOSE,
MA. CECILIA KAPAW-AN, EVANGELINE LABAY, SENORA
LUCUNSAY, MILAGROSO ALLAN LAMBAN, VIOLETA DE LEON,
CHARITO LONTAYAO, REMEDIOS LOYOLA, NORA MALALUAN,
ALBERTO MALIFICIADO, DENNIS MANZANO, MA.
CONCEPCION MARQUEZ, REYNALDO MASILANG,
MAGDALENA MENDOZA, MELCHOR NANUD, MILAGROS
NEPOMUCENO, ROSEMARIE NEPOMUCENO, APOLO
NISPEROS, ANNALIZA NOBRERA, EVANGELINE NUESCA,
YUMINA PABLO, GLORIA PANGANIBAN, ROGELIO PAQUIZ,
ROLANDO PAREDES, NORA PEDROSO, MARIA HILNA DELA
PEÑA VICTORIA, PEÑARADA, MELVIN PERALTA, DOROTHY
PEREZ, FREDERICK MICHAEL PORTACION, ROMMEL
RABACA, RODERICK REALUBIT, GWENDOLYN REMORIN,
ANTONIO DE LOS REYES, NERISSA REYES, NENITA
ROBRIGADO, ALLAN ROMERO, MA. ROSARIO ROMULO, LUIS
DEL ROSARIO, CRISTINA ROSAS, DEXTER SALAZAR,
MAGDALENA SALOMON, OLIVIA SALOMON, ELENITA
SANCHEZ, ANGELINA SANTELICES, ANABELLE SANTOS,
SHARLENE SANTOS, JAIME SINGH DELMASINGUN, EVELYN
SO, MILAGROS SOLMIRANO, CHRISTINE TALUSIK, CYRIL
ROMUADO TEJA EFREN TESORERO, PENNYLANE TIONGSON,
CYPRIANO TOMINES, RONILO UMALI, MA. LOURSES
VALDUAZA, MA. ANTONIA VALENZUELA, EDWIN
VANGUARDIA, CARLO VEGA, ANNAMOR VELASCO,
ESTEFANIA VILLANUEVA, CANDELARIA YODICO, Respondents.
DECISION
DEL CASTILLO, J.:
In this petition for review1 under Rule 45 of the Rules of Court, the
National Home Mortgage Finance Corporation assails the August 20,
2004 Decision2 of the Court of Appeals in CA-G.R. SP No. 82637,
which dismissed its petition for certiorari from the October 14,
20033 and December 15, 20034 Orders issued by the Regional Trial
Court (RTC) of Makati City, Branch 138.5 The said Orders, in turn,
respectively granted the issuance of a writ of execution and denied
petitioner’s motion for reconsideration in Civil Case No. 99-1209 – a
case for mandamus.
The antecedents follow.
Petitioner, the National Home Mortgage Finance Corporation
(NHMFC), is a government-owned and controlled corporation
created under the authority of Presidential Decree No. 1267 for the
primary purpose of developing and providing a secondary market for
home mortgages granted by public and/or private home-financing
institutions. 6 In its employ were respondents,7 mostly rank-and-file
employees, who all profess as having been hired after June 30,
1989.8
On July 1, 1989, Republic Act No. 6758, otherwise known as The
Compensation and Position Classification Act of 1989, was enacted
and was subsequently approved on August 21, 1989. Section 12
thereof directed that all allowances – namely representation and
transportation allowance, clothing and laundry allowance,
subsistence allowance, hazard pay and other allowances as may be
determined by the budget department – enjoyed by covered
employees should be deemed included in the standardized salary
rates prescribed therein, and that the other additional compensation
being received by incumbents only as of July 1, 1989 not integrated
into the standardized salary rates should continue to be authorized.
To implement the law, the Department of Budget and Management
(DBM) issued Corporate Compensation Circular No. 10.9 Section
5.510 thereof excluded certain allowances and benefits from
integration into the standardized basic salary but continued their
grant to those who were incumbents as of June 30, 1989 and who
were actually receiving the benefits as of said date. These are the
allowances involved in this case.
Respondents filed a petition for mandamus with the RTC of Makati
City, Branch 13811 to compel petitioner to pay them meal, rice,
medical, dental, optical and children’s allowances, as well as
longevity pay, which allegedly were already being enjoyed by other
NHMFC employees as early as July 1, 1989. In its April 27, 2001
Decision, the trial court ruled favorably and ordered petitioner to pay
respondents the allowances prayed for, retroactive to the respective
dates of appointment.12 The dispositive portion of the Decision
reads:
WHEREFORE, judgment is hereby rendered in favor of the
petitioners and respondent is ordered to pay petitioners their meal
allowance, rice allowance, medical allowance, longevity pay and
children’s allowance retroactive to the dates of their respective
appointments up to the present or for the time that they were
employed by the respondent.
SO ORDERED.13
In arriving at the conclusion that respondents were entitled to the
prayed-for benefits, the trial court explained, thus,
The use of the word "only" before the words July 1, 1989 in section
12 of Republic Act No. 6758 appears to be the source of the dispute.
Section 12 is clear that other additional compensation being received
by incumbents only as of July 1, 1989 that are not integrated into the
standardized salary rates shall continue to be authorized. The law is
prospective in effect and it does not say that such additional
compensation shall not continue to be authorized for employees
appointed after June 30, 1989. The use of the word "only" before the
words "as of July 1, 1989" qualifies the additional compensation
which can be continued. The foregoing applies to all employees
whether permanent or casual.
DBM Circular No. 10, the Implementing Rules and Regulations
particularly section 5.5 thereof…use the word "only" for incumbents
as of June 30, 1989 and by implication the same shall not apply to
employees appointed after June 30, 1989. This is in effect another
qualification limiting the grant of benefits to those who are
incumbents as of June 30, 1989, a condition not imposed by Section
12 of Republic Act No. 6758 for which reason it has to be strike (sic)
down.14
Petitioner timely filed an appeal with the Court of Appeals. 15 In its
November 21, 2001 Decision, the appellate court affirmed the trial
court’s ruling.16 No appeal was taken from the decision and upon its
finality,17 respondents moved for execution.18
However, the motion for execution was withdrawn when on May 12,
2002, petitioner and respondents executed a Compromise
Agreement in which petitioner bound itself to comply with the
decision rendered in the case, except that the payment of the
allowances adjudicated in favor of respondents would be made in
four installments instead. It was, likewise stipulated therein that the
parties waive all claims against each other. The trial court did not
take any positive action on the compromise except to note the same
since the parties did not intend to novate the April 27, 2001
Decision.19 On that basis, petitioner had started paying respondents
the arrears in benefits.
Conflict arose when the DBM sent a letter20 dated July 15, 2003 to
NHMFC President Angelico Salud disallowing the payment of certain
allowances, including those awarded by the trial court to
respondents. A reading of the letter reveals that the disallowance
was made in accordance with the 2002 NHMFC Corporate Operating
Budget previously issued by the DBM.
To abide by the DBM’s directive, petitioner then issued a
memorandum stating that effective August 2003, the grant of
benefits to its covered employees, including those awarded to
respondents, would be curtailed pursuant to the DBM letter. 21 This
eventuality compelled respondents to file for the second time a
motion for a writ of execution of the trial court’s April 27, 2001
decision. 22
In its October 14, 2003 Order,23 the trial court found merit in
respondents’ motion; hence, it directed the execution of the
judgment. Petitioner moved for reconsideration24 but it was
denied.25 On February 16, 2004, the trial court issued a Writ of
Execution/Garnishment with a directive to the sheriff to tender to
respondents the amount of their collective claim equivalent to
₱4,806,530.00 to be satisfied out of petitioners goods and chattels
and if the same be not sufficient, out of its existing real
property.26 Respondents then sought the garnishment of its funds
under the custody of the Land Bank of the Philippines. 27
Bent on preventing execution, petitioner filed a petition for certiorari
with the Court of Appeals, docketed as CA-G.R. SP No. 82637.28 In
it, petitioner ascribed grave abuse of discretion to the trial court in
ordering the execution of the judgment. It pointed out that the trial
court disregarded the fact that the DBM’s issuance amounted to a
supervening event, or an occurrence that changed the situation of
the parties that would make the continued payment of allowances to
respondents impossible and illegal, and disregarded the DBM’s
exclusive authority to allow or disallow the payment of the benefits in
question.29 It likewise faulted the trial court in ordering the
garnishment of its funds despite the settled rule that government
funds may not be garnished in the absence of an appropriation made
by law.301avvphi1
The Court of Appeals, however, found no grave abuse of discretion
on the part of the trial court; hence, in its August 20, 2004 Decision, it
dismissed the petition for lack of merit.31
In its present recourse, petitioner, on the one hand, insists that it is
difficult not to consider the issuance of the DBM in this case as a
supervening event that would make the execution of the trial court’s
decision inequitable and/or impossible, since the determination of
entitlement to benefits and allowances among government
employees is within the agency’s exclusive authority. It argues that,
hence, both the trial court and the Court of Appeals were in error to
order the execution of the decision as the same totally disregards the
rule that issuances of administrative agencies are valid and
enforceable.32 Again, it asserts that the garnishment of its funds was
not in order as there was no existing appropriation therefor. 33
Respondents, on the other hand, argue in the main that inasmuch as
the core issue of whether they were entitled to the schedule of
benefits under Section 12 of R.A. No. 6758 had already been settled
by both the trial court in Civil Case No. 99-1209 and the Court of
Appeals in CA-G.R. SP No. 66303, the DBM letter should not be
allowed to interfere with the decision and render the same
ineffective. Since the said decision had already attained finality, they
posit that execution appeared to be the only just and equitable
measure under the premises34 and that garnishment lies against
petitioner’s funds inasmuch as it has a personality separate and
distinct from the government.35
There is partial merit in the petition.
To begin with, a writ of mandamus is a command issuing from a
court of law of competent jurisdiction, in the name of the state or
sovereign, directed to an inferior court, tribunal, or board, or to some
corporation or person, requiring the performance of a particular duty
therein specified, which duty results from the official station of the
party to whom the writ is directed, or from operation of law.36 It is
employed to compel the performance, when refused, of a ministerial
duty37 which, as opposed to a discretionary one, is that which an
officer or tribunal performs in a given state of facts, in a prescribed
manner, in obedience to the mandate of legal authority, without
regard to or the exercise of his or its own judgment upon the
propriety or impropriety of the act done.38
A favorable judgment rendered in a special civil action for mandamus
is in the nature of a special judgment. As such, it requires the
performance of any other act than the payment of money or the sale
or delivery of real or personal property the execution of which is
governed by Section 11, Rule 39 of the Rules of Court 39 which
states:
SECTION 11. Execution of Special Judgment.—When the judgment
requires the performance of any act other than those mentioned in
the two preceding sections, a certified copy of the judgment shall be
attached to the writ of execution and shall be served by the officer
upon the party against whom the same is rendered, or upon any
other person required thereby, or by law, to obey the same, and such
party or person may be punished for contempt if he disobeys such
judgment.
While the April 17, 2001 Decision of the trial court ordered petitioner
to pay the benefits claimed by respondents, it by no means ordered
the payment of a specific sum of money and instead merely directed
petitioner to extend to respondents the benefits under R.A. No. 6758
and its implementing rules. Being a special judgment, the decision
may not be executed in the same way as a judgment for money
handed down in an ordinary civil case governed by Section 9, Rule
39 of the Rules Court which sanctions garnishment of debts and
credits to satisfy a monetary award. Garnishment is proper only
when the judgment to be enforced is one for payment of a sum of
money. It cannot be employed to implement a special judgment such
as that rendered in a special civil action for mandamus. 40
On this score, not only did the trial court exceed the scope of its
judgment when it awarded the benefits claimed by respondents. It
also committed a blatant error when it issued the February 16, 2004
Order directing the garnishment of petitioner’s funds with the Land
Bank of the Philippines equivalent to ₱4,806,530.00, even though
the said amount was not specified in the decision it sought to
implement.
Be that as it may, assuming for the sake of argument that execution
by garnishment could proceed in this case against the funds of
petitioner, it must bear stress that the latter is a government-owned
or controlled corporation with a charter of its own. Its juridical
personality is separate and distinct from the government and it can
sue and be sued in its name.41 As such, while indeed it cannot evade
the effects of the execution of an adverse judgment and may not
ordinarily place its funds beyond an order of garnishment issued in
ordinary cases,42 it is imperative in order for execution to ensue that
a claim for the payment of the judgment award be first filed with the
Commission on Audit (COA).43
Under Commonwealth Act No. 327,44 as amended by P.D. No.
1445,45 the COA, as one of the three independent constitutional
commissions, is specifically vested with the power, authority and
duty to examine, audit and settle all accounts pertaining to the
revenue and receipts of, and expenditures or uses of funds and
property owned or held in trust by the government, or any of its
subdivisions, agencies or instrumentalities, including government-
owned and controlled corporations.46 To ensure the effective
discharge of its functions, it is vested with ample powers, subject to
constitutional limitations, to define the scope of its audit and
examination and establish the techniques and methods required
therefor, to promulgate accounting and auditing rules and
regulations, including those for the prevention and disallowance of
irregular, unnecessary, excessive, extravagant or unconscionable
expenditures or uses of government funds and properties. 47 Section
1,48 Rule II of the COA Rules of Procedure materially provides:
Section 1. General Jurisdiction.—The Commission on Audit shall
have the power, authority and duty to examine, audit and settle all
accounts pertaining to the revenue and receipts of, and expenditures
or uses of funds and property, owned or held in trust by, or pertaining
to the Government, or any of its subdivisions, agencies or
instrumentalities, including government owned and controlled
corporations with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and offices that have been
granted fiscal autonomy under the Constitution; (b) autonomous
state colleges and universities; (c) other government-owned or
controlled corporations and their subsidiaries; and (d) such non-
governmental entities receiving subsidy or equity directly or
indirectly, from or through the government, which are required by law
or the granting institution to submit to such audit as a condition of
subsidy or equity. However, where the internal control system of the
audited agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are
necessary or appropriate to correct the deficiencies. It shall keep the
general accounts of the Government, and for such period as may be
provided by law, preserve the vouchers and other supporting papers
pertaining thereto.
xxxx
Specifically, such jurisdiction shall extend over but not limited to the
following: x x x Money claims due from or owing to any government
agency x x x.49
Clearly, the matter of allowing or disallowing a money claim against
petitioner is within the primary power of the COA to decide. This no
doubt includes money claims arising from the implementation of R.A.
No. 6758.50 Respondents’ claim against petitioner, although it has
already been validated by the trial court’s final decision, likewise
belongs to that class of claims; hence, it must first be filed with the
COA before execution could proceed. And from the decision therein,
the aggrieved party is afforded a remedy by elevating the matter to
this Court via a petition for certiorari51 in accordance with Section 1
Rule XI, of the COA Rules of Procedure. It states:
Section 1. Petition for Certiorari. - Any decision, order or resolution
of the Commission may be brought to the Supreme Court on
certiorari by the aggrieved party within thirty (30) days from receipt of
a copy thereof in the manner provided by law, the Rules of Court and
these Rules.
When the decision, order or resolution adversely affects the interest
of any government agency, the appeal may be taken by the proper
head of the agency.1avvphi1
At this juncture, it is unmistakable that the recourse of respondents in
CA-G.R. SP No. 82637 as well as in the petition before us is at best
premature. Thus, the Court cannot possibly rule on the merits of the
petition lest we would only be preempting the action of the COA on
the matter. Suffice it to say that the propriety or regularity of
respondents’ claim under the judgment of the trial court may properly
be addressed by the COA in an appropriate action. And even if we
endeavor to take great lengths in deciding the merits of the case and
determine the propriety of the DBM’s issuance, its sufficiency to
prevent the execution of the final judgment rendered in this case,
and the entitlement or non-entitlement of each one of the
respondents to the benefits under R.A. No. 6758, the same would
nevertheless be a futile exercise. This, because after having pored
over the records of the case, we found nothing sufficient to support
respondents’ uniform claim that they were incumbents as of July 1,
1989 – the date provided in Section 12 of R.A. 6758 – except
perhaps their bare contention that they were all hired after June 30,
1989.
With this disquisition, we find no compelling reason to unnecessarily
lengthen the discussion by undeservingly proceeding further with the
other issues propounded by the parties.

WHEREFORE, the petition is GRANTED IN PART. The Writ of

Execution dated February 16, 2004 issued in Civil Case No. 99-1209
is hereby SET ASIDE. The Regional Trial Court of Makati, Branch
138 is DIRECTED to issue a writ of execution in accordance with this
Decision and execute the judgment pursuant to Section 11, Rule 39,
of the Rules of Court.
G.R. No. 175299 September 14, 2011
SO ORDERED.
REPUBLIC OF THE PHILIPPINES, represented by the
DIOSDADO M. PERALTA Department of Public Works and Highways, through the Hon.
Associate Justice Secretary, HERMOGENES EBDANE, Petitioner,
vs.
ALBERTO A. DOMINGO, Respondent.

DECISION

LEONARDO – DE CASTRO, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the Rules

of Court, the Court is called upon to reverse and set aside the
Decision2 dated May 19, 2006 and the Resolution3 dated October
25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813, as well
as to declare null and void the Decision4 dated February 18, 2003 of
the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 18, in
Civil Case No. 333-M-2002.

As culled from the records, the factual antecedents of the case are
as follows:

On April 26, 2002, herein respondent Alberto A. Domingo filed a

Complaint for Specific Performance with Damages 5 against the
Department of Public Works and Highways (DPWH), Region III,
which was docketed as Civil Case No. 333-M-2002 in the RTC of
Malolos, Bulacan, Branch 18. Domingo averred that from April to
September 1992, he entered into seven contracts with the DPWH
Region III for the lease of his construction equipment to said
government agency.6 The lease contracts were allegedly executed in
order to implement the emergency projects of the DPWH Region III,
which aimed to control the flow of lahar from Mt. Pinatubo in the
adjacent towns in the provinces of Tarlac and Pampanga. After the
completion of the projects, Domingo claimed that the unpaid rentals
of the DPWH Region III amounted to ₱6,320,163.05. Despite
repeated demands, Domingo asserted that the DPWH Region III
failed to pay its obligations. Domingo was, thus, compelled to file the
above case for the payment of the ₱6,320,163.05 balance, plus
₱200,000.00 as moral and compensatory damages, ₱100,000.00 as
exemplary damages, and ₱200,000.00 as attorney’s fees. 7
Thereafter, summons was issued by the RTC. The Proof of
Service8 of the Sheriff dated May 9, 2002 stated, thus:
PROOF OF SERVICE
The undersigned personally served the copy of the Summons
together with the complaint issued in the above-entitled case upon
defendant The Department of Public Works and Highways, Region
III, San Fernando Pampanga on May 6, 2002 through Nora Cortez,
Clerk III of said office as shown by her signature and stamped mark
received by said office appearing on the original Summons.
WHEREFORE, the original Summons respectfully returned to the
Court "DULY SERVED", for its record and information.
Malolos, Bulacan, May 9, 2002.
Subsequently, on July 30, 2002, Domingo filed a Motion to Declare
Defendant in Default9 in view of the failure of the DPWH Region III to
file a responsive pleading within the reglementary period as required
under the Rules of Court. During the hearing of the motion on August
8, 2002, the RTC directed the counsel of Domingo to submit proof of
service of said motion on the DPWH Region III. Thereafter, the
motion was deemed submitted for resolution.10 Counsel for Domingo
timely filed a Manifestation,11 showing compliance with the order of
the trial court.
In an Order12 dated September 2, 2002, the RTC declared the
DPWH Region III in default and thereafter set the date for the
reception of Domingo’s evidence ex parte.
After the ex parte presentation of Domingo’s evidence, the RTC
rendered judgment on February 18, 2003, finding that:
From the evidence presented by [Domingo], testimonial and
documentary, it was convincingly proven that [Domingo] is entitled to
the relief prayed for.
In his seven causes of actions, [Domingo] has religiously undertaken
what is incumbent upon him in the contracts of lease signed by both
[Domingo] and [the DPWH Region III]. As a matter of course, the
[DPWH Region III] has the duty to pay [Domingo] the amount
equivalent to the services performed by [Domingo] which [in] this
case now amount to ₱6,320,163.05 excluding interest.
Considering that there was a long delay in the payment of the
obligation on the part of the [DPWH Region III], Article 2209 of the
New Civil Code finds application as to imputation of legal interest at
six (6%) percent per annum, in the absence of stipulation of interest
on the amount due.
With respect to the claim for attorney’s fees, although as a general
rule, attorney’s fees cannot be rewarded because of the policy that
no premium should be placed on the right to litigate, this rule does
not apply in the case at bar in the face of the stubborn refusal of [the
DPWH Region III] to respect the valid claim of [Domingo] x x x.
Award of attorney’s fees in the amount of ₱30,000.00 appears
proper. Moreover, as to [the] demand for moral and exemplary
damages, the same are hereby denied for lack of persuasive and
sufficient evidence.13
Thus, the RTC disposed:
Wherefore, premises considered, judgment is hereby rendered in
favor of plaintiff Alberto Domingo and against defendant DPWH
Region III, ordering defendant to pay plaintiff:
1. the sum of Six Million Three Hundred Twenty Thousand
One Hundred Sixty[-]Three and 05/100 Pesos
(₱6,320,163.05) representing the principal obligation of the
defendant plus interest at six percent (6%) per annum from
1993 until the obligation is fully paid;
2. to pay attorney’s fees in the total amount of Thirty
Thousand Pesos (₱30,000.00) and
3. to pay the costs of suit.14
On March 12, 2003, Domingo filed a Motion for Issuance of Writ of
Execution,15 asserting that the DPWH Region III failed to file an
appeal or a motion for new trial and/or reconsideration despite its
receipt of a copy of the RTC decision on February 19, 2003. On
March 20, 2003, the RTC granted the aforesaid motion of
Domingo.16 A Writ of Execution17 was then issued on March 24,
2003, commanding the sheriff to enforce the RTC Decision dated
February 18, 2003.
On August 27, 2003, the Republic of the Philippines, represented by
the Office of the Solicitor General (OSG), filed with the Court of
Appeals a Petition for Annulment of Judgment with Prayer for the
Issuance of a Temporary Restraining Order and/or a Writ of
Preliminary Injunction.18 The petition was docketed as CA-G.R. SP
No. 78813. The Republic argued that it was not impleaded as an
indispensable party in Civil Case No. 333-M-2002. The seven
contracts sued upon in the trial court stated that they were entered
into by the Regional Director, Assistant Regional Director and/or
Project Manager of the DPWH Region III for and in behalf of the
Republic of the Philippines, which purportedly was the real party to
the contract. Moreover, the Republic averred that, under the law, the
statutory representatives of the government for purposes of litigation
are either the Solicitor General or the Legal Service Branch of the
Executive Department concerned. Since no summons was issued to
either of said representatives, the trial court never acquired
jurisdiction over the Republic. The absence of indispensable parties
allegedly rendered null and void the subsequent acts of the trial court
because of its lack of authority to act, not only as to the absent
parties, but even as to those present. The Republic prayed for the
annulment of the RTC Decision dated February 18, 2003 and the
dismissal of the said case, without prejudice to the original action
being refiled in the proper court.
On May 19, 2006, the Court of Appeals promulgated its decision,
dismissing the Petition for Annulment of Judgment filed by the
Republic. The appellate court elaborated that:
The hair-splitting distinction being made by [the Republic] between
the DPWH as a department under the Republic, and the Regional
Office of the DPWH fails to persuade Us. Instead, We uphold
[Domingo’s] position that the regional office is an extension of the
department itself and service of summons upon the former is service
upon the latter. x x x.
xxxx
x x x [A] regional office of the DPWH is part of the composition of the
department itself and is therefore, not an entity that is altogether
separate from the department. This conclusion lends credence to
[Domingo’s] position that service of summons upon the regional
office is service upon the department itself because the former is
essentially part of the latter. Indeed, what militates heavily against
[the Republic’s] theory is the simple fact that the regional office is not
a different entity at all, but, as can be gleaned from the manner of its
creation, a part of the department itself, so much so that it does not
even have a juridical personality of its own. x x x.
Anent the claim that the procedure for service of summons upon the
Republic was not followed because service should have been made
on the OSG or the Legal Service Department of the DPWH, We are
likewise not persuaded. A perusal of the Revised Administrative
Code of the Philippines suggests nothing of this import. x x x.
xxxx
Clearly, nothing [in the functions of the OSG] remotely suggests that
service of summons upon the Republic should be made exclusively
on the OSG. What the [provisions] merely state is that the OSG will
represent the government in all proceedings involving it. It cannot be
deduced nor implied from this, however, that summons should be
served upon it alone.
The same conclusion applies to the legal service branch of the
DPWH, as there is also nothing in the law that suggests that service
of summons on the DPWH should be made upon it alone. x x x.
xxxx
Obviously, petitioner’s conclusion that the proper procedure for
service of summons was not observed is a mere conjecture because
We find nothing in the provisions invoked by it that such indeed is the
procedure sanctioned by law. We are thus inclined to give more
credence to [the Republic’s] argument that it was the regional office’s
fault if it failed to bring the subject case to the attention of the OSG
for proper representation. To allow it to benefit from its own omission
in order to evade its just and valid obligation would be the height of
injustice.
Finally, anent the argument that the Republic is estopped from
questioning the jurisdiction of the trial court, We rule in the negative.
The existence of another case against the regional office of the
DPWH where the OSG appeared is of no moment as it concerns a
totally different transaction. Thus, it would be erroneous for Us to rule
on that basis alone, that the OSG is already acknowledging the
service of summons upon the regional office, especially considering
the categorical stand taken by the OSG on the matter in the case
now before Us. Be that as it may, however, We still rule, as We have
discussed above, that [Domingo’s] position is more impressed with
merit.
WHEREFORE, in view of the foregoing, the instant Petition for
Annulment of Judgment is hereby DISMISSED.19
The Republic filed a Motion for Reconsideration20 of the above
decision, but the Court of Appeals denied the same in the assailed
Resolution dated October 25, 2006.
Consequently, the Republic filed the instant petition before this
Court. In a Resolution21 dated February 19, 2007, we denied the
Republic’s petition for failure to properly verify the petition and that
the jurat in the verification and certification against forum shopping
did not contain any competent evidence of the affiant’s identity. In
addition, the Integrated Bar of the Philippines (IBP) dues payment
(under IBP O.R. No. 663485) of one of the counsels who signed the
petition was not updated. The Republic filed a Motion for
Reconsideration22 of the above resolution.23 On July 2, 2007, the
Court resolved24 to grant the Republic’s motion, thereby reinstating
its petition.
In assailing the judgment of the Court of Appeals, the Republic
brings to fore the following arguments:
I.
If in the act by which the Republic consents to be sued, no
designation is made as to the officer to be served with
summons, then the process can only be served upon the
Solicitor General.
 [II.]
The State is not bound by the errors or mistakes of its agents.
III.
Respondent can recover on the government contracts sued
upon in Civil Case No. [3]33-M-2002 only on a quantum
meruit basis.25
In essence, the primary issue that must be resolved in the instant
petition is whether the Court of Appeals correctly dismissed the
Petition for Annulment of Judgment filed by the Republic.
Section 1, Rule 4726 of the Rules of Court provides for the remedy of
annulment by the Court of Appeals of judgments or final orders and
resolutions of Regional Trial Courts for which the ordinary remedies
of new trial, appeal, petition for relief or other appropriate remedies
are no longer available through no fault of the petitioner.
Under the first paragraph of Section 2, Rule 47 27 of the Rules of
Court, the annulment may be based only on the grounds of extrinsic
fraud and lack of jurisdiction. As a ground for annulment of judgment,
lack of jurisdiction refers to either lack of jurisdiction over the person
of the defending party or over the subject matter of the claim. 28
In the petition at bar, the Republic argues that the RTC failed to
acquire jurisdiction over the former. The Republic reiterates that the
service of summons upon the DPWH Region III alone was
insufficient. According to the Republic, the applicable rule of
procedure in this case is Section 13, Rule 14 of the Rules of Court,
which mandates that when the defendant is the Republic of the
Philippines, the service of summons may be effected on the Office of
the Solicitor General (OSG). The DPWH and its regional office are
simply agents of the Republic, which is the real party in interest in
Civil Case No. 333-M-2002. The Republic posits that, since it was
not impleaded in the case below and the RTC did not acquire
jurisdiction over it, the proceedings in Civil Case No. 333-M-2002 are
null and void.
On the other hand, Domingo argues that the DPWH Region III is part
of the DPWH itself; hence, a suit against the regional office is a suit
against the said department and the Republic as well. Domingo
stresses that the case he filed was against the Republic, that is,
against the DPWH Region III, and it was clear that the summons and
a copy of the complaint was duly served on the said regional office.
Likewise, Domingo submits that the Republic is estopped from
raising the issue of jurisdiction in the instant case given that he has
filed two other civil actions for specific performance and damages
against the DPWH Region III and, in the said cases, the OSG
formally entered its appearance for and in behalf of the Republic.
Domingo alleges that the foregoing action of the OSG proved that it
recognized the validity of the service of summons upon the DPWH
Region III and the jurisdiction of the trial court over the said regional
office.
The Court finds merit in the Republic’s petition.
Summons is a writ by which the defendant is notified of the action
brought against him. Service of such writ is the means by which the
court acquires jurisdiction over his person. Jurisdiction over the
person of the defendant is acquired through coercive process,
generally by the service of summons issued by the court, or through
the defendant's voluntary appearance or submission to the court. 29
Section 13, Rule 14 of the Rules of Court states that:
SEC. 13. Service upon public corporations. – When the defendant is
the Republic of the Philippines, service may be effected on the
Solicitor General; in case of a province, city or municipality, or like
public corporations, service may be effected on its executive head,
or on such other officer or officers as the law or the court may direct.
(Emphasis ours.)
Jurisprudence further instructs that when a suit is directed against an
unincorporated government agency, which, because it is
unincorporated, possesses no juridical personality of its own, the suit
is against the agency's principal, i.e., the State. 30 In the similar case
of Heirs of Mamerto Manguiat v. Court of Appeals,31 where
summons was served on the Bureau of Telecommunications which
was an agency attached to the Department of Transportation and
Communications, we held that:
Rule 14, Section 13 of the 1997 Rules of Procedure provides:
SEC. 13. Service upon public corporations. — When the defendant
is the Republic of the Philippines, service may be effected on the
Solicitor General; in case of a province, city or municipality, or like
public corporations, service may be effected on its executive head,
or on such other officer or officers as the law or the court may direct.
It is clear under the Rules that where the defendant is the Republic
of the Philippines, service of summons must be made on the Solicitor
General. The BUTEL is an agency attached to the Department of
Transportation and Communications created under E.O. No. 546 on
July 23, 1979, and is in charge of providing telecommunication
facilities, including telephone systems to government offices. It also
provides its services to augment limited or inadequate existing
similar private communication facilities. It extends its services to
areas where no communication facilities exist yet; and assists the
private sector engaged in telecommunication services by providing
and maintaining backbone telecommunication network. It is
indisputably part of the Republic, and summons should have been
served on the Solicitor General.
We now turn to the question of whether summons was properly
served according to the Rules of Court. Petitioners rely solely on the
sheriff's return to prove that summons was properly served. We
quote its contents, viz:
"THIS IS TO CERTIFY that on the 19th day of May 1999, the
undersigned caused the service of Summons and Complaint upon
defendant J.A. Development Corporation at the address indicated in
the summons, the same having been received by a certain
Jacqueline delos Santos, a person employed thereat, of sufficient
age and discretion to receive such process, who signed on the lower
portion of the Summons to acknowledge receipt thereof.
Likewise, copy of the Summons and Complaint was served upon
defendant Bureau of Telecommunications at the address indicated in
the Summons, a copy of the same was received by a certain Cholito
Anitola, a person employed thereat, who signed on the lower portion
of the Summons to acknowledge receipt thereof."
It is incumbent upon the party alleging that summons was validly
served to prove that all requirements were met in the service thereof.
We find that this burden was not discharged by the petitioners. The
records show that the sheriff served summons on an ordinary
employee and not on the Solicitor General. Consequently, the trial
court acquired no jurisdiction over BUTEL, and all proceedings
therein are null and void.32 (Emphases supplied.)
In the instant case, the Complaint for Specific Performance with
Damages filed by Domingo specifically named as defendant the
DPWH Region III. As correctly argued by the Republic, the DPWH
and its regional office are merely the agents of the former (the
Republic), which is the real party in interest in Civil Case No. 333-M-
2002. Thus, as mandated by Section 13, Rule 14 of the Rules of
Court, the summons in this case should have been served on the
OSG.
Quite inexplicably, the Court of Appeals failed to apply, nay, to even
consider, the provisions of Section 13, Rule 14 of the Rules of Court
in rendering its assailed Decision. A perusal of the Decision dated
May 19, 2006 shows that the appellate court mainly dissertated
regarding the functions and organizational structures of the DPWH
and the OSG, as provided for in the Revised Administrative Code of
1987, in an attempt to demonstrate the relationship between the
DPWH and its regional offices, as well as to refute the claim that the
service of summons upon the Republic should be made exclusively
upon the OSG. Such an oversight on the part of the Court of Appeals
is most unfortunate given the relevance and materiality of Section
13, Rule 14 of the Rules of Court to the instant case, in addition to
the fact that the Republic itself quoted the aforesaid provision in its
petition before the appellate court.33
The Court, nonetheless, subscribes to the ruling of the Court of
Appeals that the Republic is not estopped from raising the issue of
jurisdiction in the case at bar in view of the alleged entry of
appearance of the OSG, in behalf of the Republic, in the other civil
cases supposedly filed by Domingo against the DPWH Region III. As
held by the appellate court, the other civil cases presumably
pertained to transactions involving Domingo and the DPWH Region
III, which were totally different from the contracts involved in the
instant case. The fact that the OSG entered its appearance in the
other civil cases, notwithstanding that the summons therein were
only served upon the DPWH Region III, has no bearing in the case
now before us. All this indicates is that, despite the improper service
of summons in these other civil cases, there appeared to be notice to
the OSG and voluntary appearance on the latter’s part.
Here, there was no indication, and Domingo did not insist otherwise,
that the OSG had any notice of the filing of Civil Case No. 333-M-
2002. Domingo speculates that, in the subsequent civil actions
against the DPWH Region III, the latter most likely brought the said
cases to the attention of the OSG. On the other hand, Domingo
opines that the DPWH Region III apparently neglected to inform the
OSG of the pendency of Civil Case No. 333-M-2002. Accordingly,
Domingo asserted that he should not be faulted therefor. The Court
disagrees. Domingo ought to bear in mind that it is the duty of the
plaintiff to implead all the necessary or indispensable parties for the
complete determination of the action.34 It was, thus, incumbent upon
him to name and implead the proper defendant in this case, i.e., the
Republic, and cause the service of summons to be made upon the
officer mandated by law, that is, the OSG. As Domingo failed to
discharge this burden, he cannot now be allowed to shift the blame
on the DPWH Region III or hold in estoppel the OSG.1âwphi1
In sum, the Court holds that the Republic was not validly served with
summons in Civil Case No. 333-M-2002. Hence, the RTC failed to
acquire jurisdiction over the person of the Republic. Consequently,
the proceedings had before the trial court and its Decision dated
February 18, 2003 are hereby declared void.
In accordance with Section 7, Rule 4735 of the Rules of Court, a
judgment of annulment shall set aside the questioned judgment or
final order or resolution and render the same null and void, without
prejudice to the original action being refiled in the proper court.
In view of the above ruling of the Court declaring the nullity of the
proceedings in the RTC, the Court shall no longer pass upon the
other issues raised by the parties in the instant petition.
WHEREFORE, the petition is GRANTED. The Decision dated May
19, 2006 and the Resolution dated October 25, 2006 of the Court of
Appeals in CA-G.R. SP No. 78813 are REVERSED. The Decision
dated February 18, 2003 of the Regional Trial Court of Malolos,
Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby
ANNULLED and SET ASIDE, without prejudice to the filing of the
original action in the proper Regional Trial Court.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
G.R. No. 171673 May 30, 2011
BANAHAW BROADCASTING CORPORATION, Petitioner,
vs.
CAYETANO PACANA III, NOE U. DACER, JOHNNY B. RACAZA,
LEONARDO S. OREVILLO, ARACELI T. LIBRE, GENOVEVO E.
ROMITMAN, PORFERIA M. VALMORES, MENELEO G.
LACTUAN, DIONISIO G. BANGGA, FRANCISCO D. MANGA,
NESTOR A. AMPLAYO, LEILANI B. GASATAYA, LORETA G.
LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA and
ANACLETO C. REMEDIO, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure assailing the Decision1 dated April 15, 2005
of the Court of Appeals in CA-G.R. SP No. 57847, and its
Resolution2 dated January 27, 2006 denying petitioner’s Motion for
Reconsideration.
The factual and procedural antecedents of this case are as follows:
Respondents in the case at bar, Cayetano Pacana III, Noe U. Dacer,
Johnny B. Racaza, Leonardo S. Orevillo, Araceli T. Libre, Genovevo
E. Romitman, Porferia M. Valmores, Meneleo G. Lactuan, Dionisio
G. Bangga, Francisco D. Manga, Nestor A. Amplayo, Leilani B.
Gasataya, Loreta G. Lactuan, Ricardo B. Pido, Resigolo M. Nacua
and Anacleto C. Remedio (collectively, the DXWG personnel), are
supervisory and rank and file employees of the DXWG-Iligan City
radio station which is owned by petitioner Banahaw Broadcasting
Corporation (BBC), a corporation managed by Intercontinental
Broadcasting Corporation (IBC).
On August 29, 1995, the DXWG personnel filed with the Sub-
regional Arbitration Branch No. XI, Iligan City a complaint for illegal
dismissal, unfair labor practice, reimbursement of unpaid Collective
Bargaining Agreement (CBA) benefits, and attorney’s fees against
IBC and BBC.
On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his
Decision3 awarding the DXWG personnel a total of ₱12,002,157.28
as unpaid CBA benefits consisting of unpaid wages and increases,
13th month pay, longevity pay, sick leave cash conversion, rice and
sugar subsidy, retirement pay, loyalty reward and separation
pay.4 The Labor Arbiter denied the other claims of the DXWG
personnel for Christmas bonus, educational assistance, medical
check-up and optical expenses. Both sets of parties appealed to the
National Labor Relations Commission (NLRC).
On May 15, 1997, a Motion to Dismiss, Release, Waiver and
Quitclaim,5 was jointly filed by IBC and the DXWG personnel based
on the latter’s admission that IBC is not their employer as it does not
own DXWG-Iligan City. On April 21, 1997, the NLRC granted the
Motion and dismissed the case with respect to IBC.6
BBC filed a Motion for Reconsideration alleging that (1) neither BBC
nor its duly authorized representatives or officers were served with
summons and/or a copy of the complaint when the case was
pending before the Labor Arbiter or a copy of the Decision therein;
(2) since the liability of IBC and BBC is solidary, the release and
quitclaim issued by the DXWG personnel in favor of IBC totally
extinguished BBC’s liability; (3) it was IBC that effected the
termination of the DXWG personnel’s employment; (4) the DXWG
personnel are members of the IBC union and are not employees of
BBC; and (5) the sequestered properties of BBC cannot be levied
upon.
On December 12, 1997, the NLRC issued a Resolution vacating the
Decision of Labor Arbiter Alug and remanding the case to the
arbitration branch of origin on the ground that while the complaint
was filed against both IBC and BBC, only IBC was served with
summons, ordered to submit a position paper, and furnished a copy 12. Leilani B. 42,669.75
of the assailed decision.7 Gasataya

On October 15, 1998, Labor Arbiter Nicodemus G. Palangan 13. Loreta G. 757,252.52
rendered a Decision adjudging BBC to be liable for the same amount Lactuan
discussed in the vacated Decision of Labor Arbiter Alug: 14. Ricardo B. 756,835.64
Pido
WHEREFORE, premises considered, judgment is hereby rendered
ordering the respondent Banahaw Broadcasting Corporation to pay 15. Resigolo M. 887,344.75
complainants the following: Nacua
16. Anacleto C. 887,345.39
1. Cayetano ₱ 1,730,535.75 Remedio
Pacana III GRAND TOTAL ₱
2. Noe U. Dacer 886,776.43 12,002,157.28
3. Johnny B. 1,271,739.34
Racaza Respondent is likewise ordered to pay 10% of the total award as
attorney’s fee.8
4. Leonardo S. 1,097,752.70
Orevillo Both BBC and respondents appealed to the NLRC anew. The appeal
5. Araceli T. Libre 543,467.22 was docketed as NLRC CA No. M-004419-98. In their appeal, the
DXWG personnel reasserted their claim for the remaining CBA
6. Genovevo E. 716,455.72 benefits not awarded to them, and alleged error in the reckoning date
Romitman of the computation of the monetary award. BBC, in its own
7. Porferia M. 562,564.78 Memorandum of Appeal, challenged the monetary award itself,
Valmores claiming that such benefits were only due to IBC, not BBC,
employees.9 In the same Memorandum of Appeal, BBC incorporated
8. Meneleo G. 678,995.91 a Motion for the Recomputation of the Monetary Award (of the Labor
Lactuan Arbiter),10 in order that the appeal bond may be reduced.
9. Dionisio G. 580,873.78
Bangga On September 16, 1999, the NLRC issued an Order11 denying the
Motion for the Recomputation of the Monetary Award. According to
10. Francisco D. 29,286.65 the NLRC, such recomputation would result in the premature
Manga resolution of the issue raised on appeal. The NLRC ordered BBC to
11. Nestor A. 583,798.51 post the required bond within 10 days from receipt of said Order, with
Amplayo a warning that noncompliance will cause the dismissal of the appeal
for non-perfection.12 Instead of complying with the Order to post the
required bond, BBC filed a Motion for Reconsideration, 13 alleging this
time that since it is wholly owned by the Republic of the Philippines,
it need not post an appeal bond.
On November 22, 1999, the NLRC rendered its Decision 14 in NLRC
CA No. M-004419-98. In said Decision, the NLRC denied the Motion
for Reconsideration of BBC on its September 16, 1999 Order and
accordingly dismissed the appeal of BBC for non-perfection. The
NLRC likewise dismissed the appeal of the DXWG personnel for lack
of merit in the same Decision.
BBC filed a Motion for Reconsideration of the above Decision. On
January 13, 2000, the NLRC issued a Resolution15 denying the
Motion.
BBC filed with the Court of Appeals a Petition for Certiorari under
Rule 65 of the Rules of Court assailing the above dispositions by the
NLRC. The Petition was docketed as CA-G.R. SP No. 57847.
On April 15, 2005, the Court of Appeals rendered the assailed
Decision denying BBC’s Petition for Certiorari. The Court of Appeals
held that BBC, though owned by the government, is a corporation
with a personality distinct from the Republic or any of its agencies or
instrumentalities, and therefore do not partake in the latter’s
exemption from the posting of appeal bonds. The dispositive portion
of the Decision states:
WHEREFORE, finding no grave abuse of discretion on the part of
public respondents, We DENY the petition. The challenged decision
of public respondent dated November 22, 1999, as well as its
subsequent resolution dated January 13, 2000, in NLRC Case No.
M-004419-98 are hereby AFFIRMED. The decision of the Labor
Arbiter dated October 15, 1998 in RAB Case No. 12-09-00309-95 is
hereby declared FINAL AND EXECUTORY.16
On January 27, 2006, the Court of Appeals rendered the assailed
Resolution denying the Motion for Reconsideration. Hence, this
Petition for Review.
As stated above, both the NLRC and the Court of Appeals dealt with
only one issue – whether BBC is exempt from posting an appeal
bond. To recall, the NLRC issued an Order denying BBC’s Motion for
the Recomputation of the Monetary Award and ordered BBC to post
the required bond within 10 days from receipt of said Order, with a
warning that noncompliance will cause the dismissal of the appeal
for non-perfection.17 However, instead of heeding the warning, BBC
filed a Motion for Reconsideration, alleging that it need not post an
appeal bond since it is wholly owned by the Republic of the
Philippines.
There is no dispute as regards the history of the ownership of BBC
and IBC. Both BBC and IBC, together with Radio Philippines
Network (RPN-9), were formerly owned by Roberto S. Benedicto
(Benedicto). In the aftermath of the 1986 people power revolution,
the three companies, collectively denominated as Broadcast City,
were sequestered and placed under the control and management of
the Board of Administrators (BOA).18 The BOA was tasked to
operate and manage its business and affairs subject to the control
and supervision of the Presidential Commission on Good
Government (PCGG).19 In December 1986, Benedicto and PCGG
allegedly executed a Management Agreement whereby the Boards
of Directors of BBC, IBC and RPN-9 were agreed to be
reconstituted. Under the agreement, 2/3 of the membership of the
Boards of Directors will be PCGG nominees, and 1/3 will be
Benedicto nominees. A reorganized Board of Directors was thus
elected for each of the three corporations. The BOA, however,
refused to relinquish its function, paving for the filing by Benedicto of
a Petition for Prohibition with this Court in 1989, which was docketed
as G.R. No. 87710.
In the meantime, it was in 1987 when the Republic, represented by
the PCGG, filed the case for recovery/reconveyance/reversion and
damages against Benedicto. Following our ruling in Bataan Shipyard a. DZMZ-FM Manila
& Engineering Co., Inc. (BASECO) v. Presidential Commission on
Good Government,20 the institution of this suit necessarily placed b. DYBQ Iloilo
BBC, IBC and RPN-9 under custodia legis of the Sandiganbayan.
c. DYOO Roxas
On November 3, 1990, Benedicto and the Republic executed a
Compromise Agreement whereby Benedicto, in exchange for d. DYRG Kalibo
immunity from civil and criminal actions, "ceded to the government
certain pieces of property listed in Annex A of the agreement and e. DWLW Laoag
assigned or transferred whatever rights he may have, if any, to the
government over all corporate assets listed in Annex B of the f. DWGW Legaspi
agreement."21 BBC is one of the properties listed in Annex
B.22 Annex A, on the other hand, includes the following entry: g. DWDW Dagupan

CESSION TO THE GOVERNMENT: h. DWNW Naga

I. PHILIPPINE ASSETS: i. DXWG Iligan . . . . . . . . . .

₱352,455,286.0023 (Emphasis supplied.)
xxxx
Then Senator Teofisto T. Guingona, Jr. filed a Petition for Certiorari
7. Inter-Continental Broadcasting Corporation (IBC), 100% of total and Prohibition seeking to invalidate the Compromise Agreement,
assets estimated at P450 million, consisting of 41,000 sq.mtrs. of which was docketed as G.R. No. 96087. The Petition was
land, more or less, located at Broadcast City Quezon City, other land consolidated with G.R. No. 87710.
and buildings in various Provinces, and operates the following TV
stations: On March 31, 1992, this Court, in Benedicto v. Board of
Administrators of Television Stations RPN, BBC and
a. TV 13 (Manila) IBC,24 promulgated its Decision on the consolidated petitions in G.R.
No. 87710 and G.R. No. 96087. Holding that the authority of the
b. DY/TV 13 (Cebu) BOA had become functus oficio, we granted the Petition in G.R. No.
87710, ordering the BOA to "cease and desist from further exercising
c. DX/TV 13 (Davao) management, operation and control of Broadcast City and is hereby
directed to surrender the management, operation and control of
d. DYOB/TV 12 (Iloilo) Broadcast City to the reorganized Board of Directors of each of the
Broadcast City television stations."25 We denied the Petition in G.R.
e. DWLW/TV 13 (Laoag) No. 96087 for being premature, since the approval of the
Compromise Agreement was still pending in the Sandiganbayan.26
as well as the following Radio Stations
The Sandiganbayan subsequently approved the Compromise
Agreement on October 31, 1992, and the approval was affirmed by
this Court on September 10, 1993 in Republic v.
Sandiganbayan.27 Thus, both BBC and IBC were government-owned
and controlled during the time the DXWG personnel filed their
original complaint on August 29, 1995.
In the present Petition, BBC reiterates its argument that since it is
now wholly and solely owned by the government, the posting of the
appeal bond was unnecessary on account of the fact that it is
presumed that the government is always solvent.28 Citing the 1975
case of Republic (Bureau of Forestry) v. Court of Appeals, 29 BBC
adds before us that it is not even necessary for BBC to raise its
exempt status as the NLRC should have taken cognizance of the
same.30
When the Court of Appeals affirmed the dismissal by the NLRC of
BBC’s appeal for failure of the latter to post an appeal bond, it relied
to the ruling of this Court in Republic v. Presiding Judge, Branch XV,
Court of First Instance of Rizal.31 The appellate court, noting that
BBC’s primary purpose as stated in its Articles of Incorporation is to
engage in commercial radio and television broadcasting, held that
BBC did not meet the criteria enunciated in Republic v. Presiding
Judge for exemption from the appeal bond.32
We pertinently held in Republic v. Presiding Judge:
The sole issue implicit in this petition is whether or not the RCA is
exempt from paying the legal fees and from posting an appeal bond.
We find merit in the petition.
To begin with, We have to determine whether the RCA is a
governmental agency of the Republic of the Philippines without a
separate, distinct and independent legal personality from the latter.
We maintain the affirmative. The legal character of the RCA as a
governmental agency had already been passed upon in the case
of Ramos vs. Court of Industrial Relations wherein this Court held:
"Congress, by said Republic Act 3452 approved on June 14, 1962,
created RCA, in pursuance of its declared policy, viz:
‘SECTION 1. It is hereby declared to be the policy of the
Government that in order to stabilize the price of palay, rice and
corn, it shall engage in the 'purchase of these basic foods directly
from those tenants, farmers, growers, producers and landowners in
the Philippines who wish to dispose of their produce at a price that
will afford them a fair and just return for their labor and capital
investment and whenever circumstances brought about by any
cause, natural or artificial, should so require, shall sell and dispose of
these commodities to the consumers at areas of consumption at a
price that is within their reach.’
"RCA is, therefore, a government machinery to carry out a declared
government policy just noted, and not for profit.
"And more. By law, RCA depends for its continuous operation on
appropriations yearly set aside by the General Appropriations Act.
So says Section 14 of Republic Act 3452:
‘SECTION 14. The sum of one hundred million pesos is hereby
appropriated, out of any funds in the National Treasury not otherwise
appropriated, for the capitalization of the
Administration: Provided, That the annual operational expenses of
the Administration shall not exceed three million pesos of the said
amount: Provided further, That the budget of the Rice and Corn
Administration for the fiscal year nineteen hundred and sixty-three to
nineteen hundred and sixty-four and the years thereafter shall be
included in the General appropriations submitted to Congress.’
"RCA is not possessed of a separate and distinct corporate
existence. On the contrary, by the law of its creation, it is an office
directly under the Office of the President of the Philippines."
Respondent, however, contends that the RCA has been created to
succeed to the corporate assets, liabilities, functions and powers of
the abolished National Rice & Corn Corporation which is a
government-owned and controlled corporation separate and distinct
from the Government of the Republic of the Philippines. He further
contends that the RCA, being a duly capitalized entity doing
mercantile activity engaged in the buying and selling of palay, rice,
and corn cannot be the same as the Republic of the Philippines;
rather, it is an entity separate and distinct from the Republic of the
Philippines. These contentions are patently erroneous.
xxxx
The mercantile activity of RCA in the buying and selling of palay,
rice, and corn is only incident to its primary governmental function
which is to carry out its declared policy of subsidizing and stabilizing
the price of palay, rice, and corn in order to make it well within the
reach of average consumers, an object obviously identified with the
primary function of government to serve the well-being of the people.
As a governmental agency under the Office of the President the RCA
is thus exempt from the payment of legal fees as well as the posting
of an appeal bond. Under the decisional laws which form part of the
legal system of the Philippines the Republic of the Philippines is
exempt from the requirement of filing an appeal bond on taking an
appeal from an adverse judgment, since there could be no doubt, as
to the solvency of the Government. This well-settled doctrine of the
Government's exemption from the requirement of posting an appeal
bond was first enunciated as early as March 7, 1916 in Government
of the Philippine Island vs. Judge of the Court of First Instance of
Iloilo and has since been so consistently enforced that it has become
practically a matter of public knowledge and certainly a matter of
judicial notice on the part of the courts of the land. 33
In the subsequent case of Badillo v. Tayag,34 we further discussed
that:
Created by virtue of PD No. 757, the NHA is a government-owned
and controlled corporation with an original charter. As a general rule,
however, such corporations -- with or without independent charters --
are required to pay legal fees under Section 21 of Rule 141 of the
1997 Rules of Civil Procedure:
"SEC. 21. Government Exempt. - The Republic of the Philippines, its
agencies and instrumentalities, are exempt from paying the legal
fees provided in this rule. Local governments and government-
owned or controlled corporations with or without independent
charters are not exempt from paying such fees."
On the other hand, the NHA contends that it is exempt from paying
all kinds of fees and charges, because it performs governmental
functions. It cites Public Estates Authority v. Yujuico, which holds
that the Public Estates Authority (PEA), a government-owned and
controlled corporation, is exempt from paying docket fees whenever
it files a suit in relation to its governmental functions.
We agree. x x x.35
We can infer from the foregoing jurisprudential precedents that, as a
general rule, the government and all the attached agencies with no
legal personality distinct from the former are exempt from posting
appeal bonds, whereas government-owned and controlled
corporations (GOCCs) are not similarly exempted. This distinction is
brought about by the very reason of the appeal bond itself: to protect
the presumptive judgment creditor against the insolvency of the
presumptive judgment debtor. When the State litigates, it is not
required to put up an appeal bond because it is presumed to be
always solvent.36 This exemption, however, does not, as a general
rule, apply to GOCCs for the reason that the latter has a personality
distinct from its shareholders. Thus, while a GOCC’s majority
stockholder, the State, will always be presumed solvent, the
presumption does not necessarily extend to the GOCC itself.
However, when a GOCC becomes a "government machinery to
carry out a declared government policy,"37 it becomes similarly
situated as its majority stockholder as there is the assurance that the
government will necessarily fund its primary functions. Thus, a
GOCC that is sued in relation to its governmental functions may be,
under appropriate circumstances, exempted from the payment of
appeal fees.
In the case at bar, BBC was organized as a private corporation,
sequestered in the 1980’s and the ownership of which was
subsequently transferred to the government in a compromise
agreement. Further, it is stated in its Amended Articles of
Incorporation that BBC has the following primary function:
To engage in commercial radio and television broadcasting, and for
this purpose, to establish, operate and maintain such stations, both
terrestrial and satellite or interplanetary, as may be necessary for
broadcasting on a network wide or international basis.38
It is therefore crystal clear that BBC’s function is purely commercial
or proprietary and not governmental. As such, BBC cannot be
deemed entitled to an exemption from the posting of an appeal bond.
Consequently, the NLRC did not commit an error, and much less
grave abuse of discretion, in dismissing the appeal of BBC on
account of non-perfection of the same. In doing so, the NLRC was
merely applying Article 223 of the Labor Code, which provides:
ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any
or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only
on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud
or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised which
would cause grave or irreparable damage or injury to the
appellant.
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Italization supplied.)
The posting of the appeal bond within the period provided by law is
not merely mandatory but jurisdictional. The failure on the part of
BBC to perfect the appeal thus had the effect of rendering the
judgment final and executory.39
Neither was there an interruption of the period to perfect the appeal
when BBC filed (1) its Motion for the Recomputation of the Monetary
Award in order to reduce the appeal bond, and (2) its Motion for
Reconsideration of the denial of the same. In Lamzon v. National
Labor Relations Commission,40 where the petitioner argued that the
NLRC gravely abused its discretion in dismissing her appeal on the
ground of non-perfection despite the fact that she filed a Motion for
Extension of Time to File an Appeal Bond, we held:
The pertinent provision of Rule VI, NLRC Rules of Procedure, as
amended, provides as follows:
xxxx
Section 6. Bond. - In case the decision of a Labor Arbiter, POEA
Administrator and Regional Director or his duly authorized hearing
officer involves a monetary award, an appeal by the employer shall
be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Commission
or the Supreme Court in an amount equivalent to the monetary
award, exclusive of moral and exemplary damages and attorney's
fees.
The employer as well as counsel shall submit a joint declaration
under oath attesting that the surety bond posted is genuine and that
it shall be in effect until final disposition of the case.
The Commission may, in meritorious cases and upon Motion of the
Appellant, reduce the amount of the bond. The filing, however, of the
motion to reduce bond shall not stop the running of the period to
perfect appeal.1awphil
Section 7. No Extension of Period. - No motion or request for
extension of the period within which to perfect an appeal shall be
allowed."
As correctly observed by the NLRC, petitioner is presumptuous in
assuming that the 10-day period for perfecting an appeal, during
which she was to post her appeal bond, could be easily extended by
the mere filing of an appropriate motion for extension to file the bond
and even without the said motion being granted. It bears
emphasizing that an appeal is only a statutory privilege and it may
only be exercised in the manner provided by law. Nevertheless, in
certain cases, we had occasion to declare that while the rule treats
the filing of a cash or surety bond in the amount equivalent to the
monetary award in the judgment appealed from, as a jurisdictional
requirement to perfect an appeal, the bond requirement on appeals
involving monetary awards is sometimes given a liberal interpretation
in line with the desired objective of resolving controversies on the
merits. However, we find no cogent reason to apply this same liberal
interpretation in this case. Considering that the motion for extension
to file appeal bond remained unacted upon, petitioner, pursuant to
the NLRC rules, should have seasonably filed the appeal bond within
the ten (10) day reglementary period following receipt of the order,
resolution or decision of the NLRC to forestall the finality of such
order, resolution or decision. Besides, the rule mandates that no
motion or request for extension of the period within which to perfect
an appeal shall be allowed. The motion filed by petitioner in this case
is tantamount to an extension of the period for perfecting an
appeal. As payment of the appeal bond is an indispensable and
jurisdictional requisite and not a mere technicality of law or
procedure, we find the challenged NLRC Resolution of October 26,
1993 and Order dated January 11, 1994 in accordance with law. The
appeal filed by petitioner was not perfected within the reglementary
period because the appeal bond was filed out of time. Consequently,
the decision sought to be reconsidered became final and executory.
Unless there is a clear and patent grave abuse of discretion
amounting to lack or excess of jurisdiction, the NLRC's denial of the
appeal and the motion for reconsideration may not be
disturbed.41 (Underscoring supplied.)
In the case at bar, BBC already took a risk when it filed its Motion for
the Recomputation of the Monetary Award without posting the bond
itself. The Motion for the Recomputation of the Monetary Award filed
by BBC, like the Motion for Extension to File the Appeal Bond in
Lamzon, was itself tantamount to a motion for extension to perfect
the appeal, which is prohibited by the rules. The NLRC already
exhibited leniency when, instead of dismissing the appeal outright, it
merely ordered BBC to post the required bond within 10 days from
receipt of said Order, with a warning that noncompliance will cause
the dismissal of the appeal for non-perfection. When BBC further
demonstrated its unwillingness by completely ignoring this warning
and by filing a Motion for Reconsideration on an entirely new ground,
the NLRC cannot be said to have committed grave abuse of
discretion by making good its warning to dismiss the appeal.
Therefore, the Court of Appeals committed no error when it upheld
the NLRC’s dismissal of petitioner’s appeal.
WHEREFORE, the instant Petition for Review on Certiorari is
DENIED. The Decision of the Court of Appeals dated April 15, 2005
in CA-G.R. SP No. 57847, and its Resolution dated January 27,
2006 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
G.R. No. 182431 February 27, 2013
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
ESTHER ANSON RIVERA, ANTONIO G. ANSON AND CESAR G.
ANSON, Respondents.
RESOLUTION
PEREZ, J.:
The Case
Before the Court is a Motion for Reconsideration1 filed by the Land
Bank of the Philippines (LBP) alleging error on the part of this Court
in affirming the award of 12% interest on just compensation due to
the landowner.
The Facts
We reiterate the facts from the assailed 17 November 2010 Decision:
The respondents are the co-owners of a parcel of agricultural land
embraced by Original Certificate of Title No. P-082, and later
transferred in their names under Transfer Certificate of Title No. T-
95690 that was placed under the Operation Land Transfer pursuant
to Presidential Decree No. 27 in 1972. Only 18.8704 hectares of the
total area of 20.5254 hectares were subject of the coverage.
After the Department of Agrarian Reform (DAR) directed payment,
LBP approved the payment of ₱265,494.20, exclusive of the
advance payments made in the form of lease rental amounting to
₱75,415.88 but inclusive of 6% increment of ₱191,876.99 pursuant
to DAR Administrative Order No. 13, series of 1994.
On 1 December 1994, the respondents instituted Civil Case No. 94-
03 for determination and payment of just compensation before the
Regional Trial Court (RTC), Branch 3 of Legaspi City, claiming that
the landholding involved was irrigated with two cropping seasons a
year with an average gross production per season of 100 cavans of
50 kilos/hectare, equivalent of 200 cavans/year/hectare; and that the
fair market value of the property was not less than
₱130,000.00/hectare, or ₱2,668,302.00 for the entire landholding of
20.5254 hectares.
LBP filed its Answer, stating that rice and corn lands placed under
the coverage of Presidential Decree No. 27 [PD 27]2 were governed
and valued in accordance with the provisions of Executive Order No.
228 [EO 228]3 as implemented by DAR Administrative Order No. 2,
Series of 1987 and other statutes and administrative issuances; that
the administrative valuation of lands covered by [PD 27] and [EO
228] rested solely in DAR and LBP was the only financing arm; that
the funds that LBP would use to pay compensation were public funds
to be disbursed only in accordance with existing laws and
regulations; that the supporting documents were not yet received by
LBP; and that the constitutionality of [PD 27] and [EO 228] was
already settled.4
The Trial Court’s Ruling
On 6 October 2004, the trial court rendered its decision which reads:
ACCORDINGLY, the just compensation of the land partly covered by
TCT No. T-95690 is fixed at Php1,297,710. 63. Land Bank of the
Philippines is hereby ordered to pay Esther Anson, Cesar Anson and
Antonio Anson the aforesaid value of the land, plus interest of 12%
per annum or Php194.36 per day effective October 7, 2004, until the
value is fully paid, in cash or in bond or in any other mode of
payment at the option of the landowners in accordance with Sec. 18,
R.A. 6657.5
Discontented, LBP filed an appeal before the Court of Appeals (CA).
It argued that the trial court erred in disregarding the lease rentals
already paid by the farmer beneficiaries as part of the just
compensation as well as the imposition of 12% interest despite the
increment of 6% interest allowed under the EO 228 and DAR
Administrative Order (A.O.) No. 13 Series of 1994 (A.O. 13-94).
The Court of Appeals’ Ruling
The appellate court partly granted the petition of the LBP, the fallo of
the decision reading:
WHEREFORE, the DECISION DATED OCTOBER 6, 2004 is
MODIFIED, ordering petitioner LAND BANK OF THE
PHILIPPINES to pay to the respondents just compensation (inclusive
of interests as of October 6, 2004) in the amount of ₱823, 957.23,
plus interest of 12% per annum in the amount of ₱515, 777.57 or
₱61, 893.30 per annum, beginning October 7, 2004 until just
compensation is fully paid in accordance with this decision.
Costs of suit to be paid by the petitioner.6
In its petition7 before this Court, LBP alleged error in the imposition
of 12% interest per annum beginning from 7 October 2004 until full
payment of just compensation for subject property and the liability of
the bank for costs of suit.
17 November 2010 Decision
In its argument, LBP cited the applicability of the DAR A.O. No. 2,
Series of 2004 (A.O. 02-04) which provides for the 6% interest
imposition to the just compensation until actual payment. Further, it
added that the 12% interest finds application in cases of undue
delay, which is not present in the case. As to the payment of costs,
the bank argued that it was performing a governmental function
when it disbursed the Agrarian Reform Fund (ARF) as the financial
intermediary of the agrarian program of the government.
In our 17 November 2010 Decision, this Court partly granted the
prayers of LBP and deleted the costs adjudged. We agreed that the
bank was indeed performing a governmental function in agrarian
reform proceeding pursuant to Section 1, Rule 1428 of the Rules of
Court.9 However, we upheld the imposition of 12% interest on the
just compensation beginning 7 October 2004 until full payment. We
anchored our decision following the ruling in Republic of the
Philippines v. Court of Appeals.10
As a conclusion, the Court rendered the assailed decision which
reads:
WHEREFORE, premises considered, the petition is GRANTED. The
decision of the Court of Appeals in C.A. G.R. SP No. 87463 dated 9
October 2007 is AFFIRMED with the MODIFICATION that LBP is
hereby held exempted from the payment of costs of suit. In all other
respects, the Decision of the Court of Appeals is AFFIRMED. No
costs.11
Aggrieved, LBP filed this present Motion for Reconsideration and
argued once again the erroneous imposition of 12% interest. The
bank reiterated its previous argument that the imposition is justifiable
only in case of undue delay in the payment of just compensation. 12 It
argued13 against the application of the A.O. No. 6, Series of 2008
(A.O. 06-08)14 to the instant case because it claims that the 6%
interest does not apply to agricultural lands valued under R.A. 6657,
such as the subject properties, following the Court’s ruling in Land
Bank of the Philippines v. Chico.15
We deny the prayers of LBP.
In many cases16 decided by this Court, it has been repeated time
and again that the award of 12% interest is imposed in the nature of
damages for delay in payment which in effect makes the obligation
on the part of the government one of forbearance. This is to ensure
prompt payment of the value of the land and limit the opportunity loss
of the owner that can drag from days to decades.
In this case, LBP is adamant in contending that the landowners were
promptly paid of their just compensation. It argues that, "there is no
factual finding whatsoever indicating undue delay on the part of
LBP."17
We disagree.
It is true that LBP approved the amount of ₱265,494.20 in favor of
the landowners on 23 August 2004.18 However, that amount is way
below the amount that should have been received by the landowners
based on the valuations adjudged by the agrarian court, CA and this
Court. To be considered as just compensation, it must be fair and
equitable and the landowners must have received it without any
delay.19
The contention that there can be no delay when there is a deposit of
the amount of the government valuation in favor of the landowners
was also the same argument raised in the second Motion for
Reconsideration addressing the 12 October 2010 and 23 November
2010 Resolutions in Apo Fruits20 case. LBP contended then that
landowners APO Fruits and Hijo Plantation did not suffer from any
delay in payment since the LBP made partial payments prior to the
taking of the parcels of land. The Court there ruled that twelve years
passed after the Government took the properties, before full payment
was settled. The Court took into account that the partial payment
made by LBP only amounted to 5% of the actual value of property. 21
Similar to Apo Fruits, the delay in this case is traceable to the
undervaluation of the property of the government. Had the
landholdings been properly valued, the landowners would have
accepted the payment and there would have been no need for a
judicial determination of just compensation.22 The landowners could
not possibly accept ₱265,494.20 as full payment for their entire 18
hectare-property. It must be noted that the landowners, since the
deprivation of their property, have been waiting for four decades to
get the just compensation due to them.
As in several other just compensation cases, respondents faced the
difficult problem whether to accept a low valuation or file a case for
determination of just compensation before the court. Before the
choice is made, and for a longer period if the judicial course is taken,
the landowners already are deprived of the income that could have
been yielded by their lands.
The Imperial case23 is an applicable precedent.
Juan H. Imperial (Imperial) was the owner of five parcels of land with
a total land area of 151.7168 hectares. Upon the effectivity of P.D.
No. 27 and EO 228, the parcels of land were placed under the Land
Reform Program and distributed to the farmer-beneficiaries on 21
October 1972. On 20 July 1994, Imperial filed a complaint for
determination and payment of just compensation before the Agrarian
Court of Legazpi City, Albay. As the amount fixed by the agrarian
court was found to be inacceptable by the parties, the case went up
all the way to the Supreme Court. Before this Court, LBP claimed
that a 6% annual interest in the concept of damages should not be
imposed because (1) the delay in the payment of the just
compensation was not its fault, and (2) DAR A.O. No. 13 already
provides for the payment of a 6% annual interest, compounded
annually, provided that the just compensation is computed in
accordance with its prescribed formula.24 The Court partly granted
the claim of LBP and directed the trial court to re-compute the just
compensation by using the formula prescribed by DAR A.O. No. 13,
as amended, which imposed a 6% interest compounded annually
from the date of the compensable taking on 21 October 1972 until 31
December 2006; and thereafter, at the rate of 12% per annum, until
full payment is made.25 This is to mean that from 1 January 2007
onwards, there shall be an imposition of 12% interest per annum
until full payment in the nature of damages for the delay. The reason
given was that it would be inequitable to determine the just
compensation based solely on the formula provided by DAR A.O.
No. 13, as amended. Just compensation does not only pertain to the
amount to be paid to the owners of the land, but also its payment
within a reasonable time from the taking of the land; hence the
imposition of interest in the nature of damages for the delay. 26
In this case, LBP pointed out the error made by this Court
in Imperial in determining the extent of the period of applicability of
the 6% compounded interest.27 It asserts that:
"Based on the foregoing, this Court deemed the day after the
expiration of DAR A.O. No. 13, meaning 1 January 2007, as the date
of finality, constraining it to impose the 12% interest per annum.
However, beyond the knowledge of the Supreme Court, a
subsequent DAR A.O. extended the applicability of the imposition of
6% interest compounded annually from 1 January 2007 until 31
December 2009.
Following the new DAR A.O., only 6% interest compounded annually
would have been the correct interest to be imposed. This was not
imposed, however, simply because the day after 31 December 2006
or 01 January 2007 was deemed by the Supreme Court as the date
of finality, leading to the imposition of 12% interest."28
Contrary to the position of LBP, this Court did not commit a mistake
in not applying the extension thru A.O. 06-08 of the 6% interest until
31 December 2009. It must be understood that at the time of the
promulgation of the Imperial Decision on 12 February 2007, A.O. 06-
08 was not yet effective, as it was signed only on 30 July 2008.
Likewise, it is erroneous for LBP to anchor its motion on the
contention that the 6% interest compounded annually does not apply
to agricultural lands valued under R.A. 6657 such as the subject
properties.29 The fact is that the valuation in the instant case was
under P.D. 27 and E.O. 228, as adjudged by the trial court, because
even if at the time of valuation R.A. 6657 was already effective, the
respondents failed to present any evidence on the valuation factors
under Section 17 of R.A. 6657.
The Computation
The purpose of A.O. No. 13 is to compensate the landowners for
unearned interests.1âwphi1 Had they been paid in 1972 when the
Government Support Price (GSP) for rice and corn was valued at
₱35.00 and ₱31.00, respectively, and such amounts were deposited
in a bank, they would have earned a compounded interest of 6% per
annum. Thus, if the [Provincial Agrarian Reform Adjudicator]
[(]PARAD[)] used the 1972 GSP, then the product of (2.5 x Average
Gross Production (AGP) x ₱35.00 or ₱31.00) could be multiplied by
(1.06) to determine the value of the land plus the additional 6%
compounded interest it would have earned from 1972.30
Following A.O. 13-94, the 6% yearly interest compounded annually
shall be reckoned from 21 October 1972 up to the effectivity date of
this Order which was on 21 October 1994. However, A.O. 02-
0431 extended the period of application of 6% interest from 21
October 1972 up to the time of actual payment but not later than
December 2006. Then, under A.O. 06-08,32 the application of 6%
interest was further until 31 December 2009. It must be noted that
the term "actual payment" in the administrative orders is to be
interpreted as "full payment" pursuant to the ruling in Land Bank of
the Philippines v. Obias33 and Land Bank of the Philippines v.
Soriano.34
The amount of land value of ₱164,059.26 was already settled before
the lower courts.35 There is no need for a new computation.
Applying the rules under A.O. 13-94, A.O. 02-04 and A.O. 06-08 the
formula to determine the increment of 6% interest per annum
compounded annually beginning 21 October 1972 up to 31
December 2009 is:
 CI = P (1+R) n We add a simple interest of 12% to the compounded amount from 31
December 2009 until the promulgation of this decision due to the
(CI as compounded interest; P as the Principal; R is the Rate of 6% delay incurred by LBP in not paying the full just compensation to the
and Spouses:

n = number of years from date of tenancy starting I=PxRxT

from.)
(I = Interest, R = Rate, T = Time)
Where:
Where:
P = ₱164,059. 26
P = Compounded Amount
R = 6%
R = 12%
n = 37 years
T = 31 December 2009 to 31 December 2012
COMPUTATION:
1. COMPUTATION: 31 December 2009 to 31 December 2012
CI = P (1+R) n
= ₱164,059.26 (1+ 6%) 37 years I=PxRxT
= ₱164,059. 26 (1.06) 37 years
= ₱1,252,770.80 I = (Compounded Amount) (.12) (3 years)

I = ₱1,341,414.18 (.12) (3years)

Then we add the compounded interest to the land value
₱164,059.26: I = ₱482,909.1048

Compounded Amount = Land Value + Compounded Interest 2. COMPUTATION: 31 December 2012 to 20 February 2013
= ₱164,059.26 + ₱1,252,770.80
= ₱1,416,830.06
I = PxRxT

To compute the compounded amount to be paid, we subtract the (Compounded Amount) (12% interest)
amount of lease rental of ₱75,415.88 as adjudged by the appellate = x No. of Days
court to the compounded amount:36 365 days
(Compounded Amount) (.12)
Compounded Amount = ₱1,416,830.06 less ₱75,415.88 = x 50 days
= ₱1,341,414.18 365 days
 (₱1,341,414.18) (.12) THE COURT OF FIRST INSTANCE OF CEBU, Fourth Branch,
= x 50 days Presided by the Honorable, Judge JOSE C. BORROMEO, THE
365 days PUBLIC HIGHWAY COMMISSIONER, and THE AUDITOR
GENERAL, respondents.
₱160,969.69
= x 50 days Eriberto Seno for petitioners.
365
= ₱441.01 x 50 days Office of the Solicitor General Felix Q. Antonio, Acting First Assistant
Solicitor General Antonio A. Torres and Solicitor Norberto P.
= ₱22,050.50 Eduardo for respondents.

Final Just = Compounded Amount + Interest

Compensation = ₱1,341,414.18 + ₱482,909.1048+
₱22,050.50
= ₱1,846,373.70
WHEREFORE, premises considered, we PARTIALLY GRANT the
petitioner's Motion for Reconsideration. The Decision dated 17
November 2010 of the Court's First Division is hereby MODIFIED.
The petitioner Land Bank of the Philippines is hereby ORDERED to
pay Esther Anson Rivera, Antonio G. Anson and Cesar G. Anson
₱1,846,373.70 as final just compensation plus interest at the rate of
12% per annum from the finality of this decision until full payment.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
FERNANDO, J.:
What is before this Court for determination in this appeal
by certiorari to review a decision of the Court of First Instance of
Cebu is the question of whether or not plaintiffs, now petitioners,
seeking the just compensation to which they are entitled under the
Constitution for the expropriation of their property necessary for the
widening of a street, no condemnation proceeding having been filed,
could sue defendants Public Highway Commissioner and the Auditor
General, in their capacity as public officials without thereby violating
the principle of government immunity from suit without its consent.
The lower court, relying on what it considered to be authoritative
precedents, held that they could not and dismissed the suit. The
matter was then elevated to us. After a careful consideration and
with a view to avoiding the grave inconvenience, not to say possible
injustice contrary to the constitutional mandate, that would be the
result if no such suit were permitted, this Court arrives at a different
conclusion, and sustains the right of the plaintiff to file a suit of this
character. Accordingly, we reverse.

G.R. No. L-31635 August 31, 1971 Petitioners as plaintiffs in a complaint filed with the Court of First
Instance of Cebu, dated April 13, 1966, sought the payment of just
ANGEL MINISTERIO and ASUNCION SADAYA, petitioners, compensation for a registered lot, containing an area of 1045 square
vs. meters, alleging that in 1927 the National Government through its
authorized representatives took physical and material possession of
it and used it for the widening of the Gorordo Avenue, a national
road, Cebu City, without paying just compensation and without any
agreement, either written or verbal. There was an allegation of
repeated demands for the payment of its price or return of its
possession, but defendants Public Highway Commissioner and the
Auditor General refused to restore its possession. It was further
alleged that on August 25, 1965, the appraisal committee of the City
of Cebu approved Resolution No. 90, appraising the reasonable and
just price of Lot No. 647-B at P50.00 per square meter or a total
price of P52,250.00. Thereafter, the complaint was amended on
June 30, 1966 in the sense that the remedy prayed for was in the
alternative, either the restoration of possession or the payment of the
just compensation.
In the answer filed by defendants, now respondents, through the
then Solicitor General, now Associate Justice, Antonio P. Barredo,
the principal defense relied upon was that the suit in reality was one
against the government and therefore should be dismissed, no
consent having been shown. Then on July 11, 1969, the parties
submitted a stipulation of facts to this effect: "That the plaintiffs are
the registered owners of Lot 647-B of the Banilad estate described in
the Survey plan RS-600 GLRO Record No. 5988 and more
particularly described in Transfer Certificate of Title No. RT-5963
containing an area of 1,045 square meters; That the National
Government in 1927 took possession of Lot 647-B Banilad estate,
and used the same for the widening of Gorordo Avenue; That the
Appraisal Committee of Cebu City approved Resolution No. 90,
Series of 1965 fixing the price of Lot No. 647-B at P50.00 per square
meter; That Lot No. 647-B is still in the possession of the National
Government the same being utilized as part of the Gorordo Avenue,
Cebu City, and that the National Government has not as yet paid the
value of the land which is being utilized for public use."1
The lower court decision now under review was promulgated on
January 30, 1969. As is evident from the excerpt to be cited, the plea
that the suit was against the government without its consent having
been manifested met with a favorable response. Thus: "It is
uncontroverted that the land in question is used by the National
Government for road purposes. No evidence was presented whether
or not there was an agreement or contract between the government
and the original owner and whether payment was paid or not to the
original owner of the land. It may be presumed that when the land
was taken by the government the payment of its value was made
thereafter and no satisfactory explanation was given why this case
was filed only in 1966. But granting that no compensation was given
to the owner of the land, the case is undoubtedly against the
National Government and there is no showing that the government
has consented to be sued in this case. It may be contended that the
present case is brought against the Public Highway Commissioner
and the Auditor General and not against the National Government.
Considering that the herein defendants are sued in their official
capacity the action is one against the National Government who
should have been made a party in this case, but, as stated before,
with its consent."2
Then came this petition for certiorari to review the above decision.
The principal error assigned would impugn the holding that the case
being against the national government which was sued without its
consent should be dismissed, as it was in fact dismissed. As was
indicated in the opening paragraph of this opinion, this assignment of
error is justified. The decision of the lower court cannot stand. We
shall proceed to explain why.
1. The government is immune from suit without its consent. 3 Nor is it
indispensable that it be the party proceeded against. If it appears
that the action, would in fact hold it liable, the doctrine calls for
application. It follows then that even if the defendants named were
public officials, such a principle could still be an effective bar. This is
clearly so where a litigation would result in a financial responsibility
for the government, whether in the disbursements of funds or loss of
property. Under such circumstances, the liability of the official sued is
not personal. The party that could be adversely affected is
government. Hence the defense of non-suability may be interposed.4
So it has been categorically set forth in Syquia v. Almeda
Lopez:5 "However, and this is important, where the judgment in such
a case would result not only in the recovery of possession of the
property in favor of said citizen but also in a charge against or
financial liability to the Government, then the suit should be regarded
as one against the government itself, and, consequently, it cannot
prosper or be validly entertained by the courts except with the
consent of said Government."6
2. It is a different matter where the public official is made to account
in his capacity as such for acts contrary to law and injurious to the
rights of plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications v.
Aligean:7 "Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or officers are not
acts of the State, and an action against the officials or officers by one
whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule
of immunity of the State from suit. In the same tenor, it has been said
that an action at law or suit in equity against a State officer or the
director of a State department on the ground that, while claiming to
act for the State, he violates or invades the personal and property
rights of the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against
the State within the constitutional provision that the State may not be
sued without its consent."8
3. It would follow then that the prayer in the amended complaint of
petitioners being in the alternative, the lower court, instead of
dismissing the same, could have passed upon the claim of plaintiffs
there, now petitioners, for the recovery of the possession of the
disputed lot, since no proceeding for eminent domain, as required by
the then Code of Civil Procedure, was instituted. 9 However, as noted
in Alfonso v. Pasay City, 10 this Court speaking through Justice
Montemayor, restoration would be "neither convenient nor feasible
because it is now and has been used for road purposes." 11 The only
relief, in the opinion of this Court, would be for the government "to
make due compensation, ..." 12 It was made clear in such decision
that compensation should have been made "as far back as the date
of the taking." Does it result, therefore, that petitioners would be
absolutely remediless since recovery of possession is in effect
barred by the above decision? If the constitutional mandate that the
owner be compensated for property taken for public use 13 were to
be respected, as it should, then a suit of this character should not be
summarily dismissed. The doctrine of governmental immunity from
suit cannot serve as an instrument for perpetrating an injustice on a
citizen. Had the government followed the procedure indicated by the
governing law at the time, a complaint would have been filed by it,
and only upon payment of the compensation fixed by the judgment,
or after tender to the party entitled to such payment of the amount
fixed, may it "have the right to enter in and upon the land so
condemned" to appropriate the same to the public use defined in the
judgment." 14 If there were an observance of procedural regularity,
petitioners would not be in the sad plaint they are now. It is
unthinkable then that precisely because there was a failure to abide
by what the law requires, the government would stand to benefit. It is
just as important, if not more so, that there be fidelity to legal norms
on the part of officialdom if the rule of law were to be maintained. It is
not too much to say that when the government takes any property for
public use, which is conditioned upon the payment of just
compensation, to be judicially ascertained, it makes manifest that it
submits to the jurisdiction of a court. There is no thought then that
the doctrine of immunity from suit could still be appropriately
invoked. 15
Accordingly, the lower court decision is reversed so that the court
may proceed with the complaint and determine the compensation to
which petitioners are entitled, taking into account the ruling in the
above Alfonso case: "As to the value of the property, although the
plaintiff claims the present market value thereof, the rule is that to
determine due compensation for lands appropriated by the
Government, the basis should be the price or value at the time that it
was taken from the owner and appropriated by the Government." 16
WHEREFORE, the lower court decision of January 30, 1969
dismissing the complaint is reversed and the case remanded to the
lower court for proceedings in accordance with law.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Teehankee,
Villamor and Makasiar, JJ., concur.
Concepcion, C.J., and Barredo, J., took no part.
G.R. No. 138570 October 10, 2000
BAYAN (Bagong Alyansang Makabayan), a JUNK VFA MOVEMENT,
BISHOP TOMAS MILLAMENA (Iglesia Filipina Independiente), BISHOP
ELMER BOLOCAN (United Church of Christ of the Phil.), DR. REYNALDO
LEGASCA, MD, KILUSANG MAMBUBUKID NG PILIPINAS, KILUSANG
MAYO UNO, GABRIELA, PROLABOR, and the PUBLIC INTEREST LAW
CENTER, petitioners,
vs.
EXECUTIVE SECRETARY RONALDO ZAMORA, FOREIGN AFFAIRS
SECRETARY DOMINGO SIAZON, DEFENSE SECRETARY ORLANDO
MERCADO, BRIG. GEN. ALEXANDER AGUIRRE, SENATE PRESIDENT
MARCELO FERNAN, SENATOR FRANKLIN DRILON, SENATOR BLAS
OPLE, SENATOR RODOLFO BIAZON, and SENATOR FRANCISCO
TATAD, respondents.
x-----------------------x
G.R. No. 138572 October 10, 2000
PHILIPPINE CONSTITUTION ASSOCIATION, INC.(PHILCONSA),
EXEQUIEL B. GARCIA, AMADOGAT INCIONG, CAMILO L. SABIO, AND
RAMON A. GONZALES, petitioners,
vs.
HON. RONALDO B. ZAMORA, as Executive Secretary, HON. ORLANDO
MERCADO, as Secretary of National Defense, and HON. DOMINGO L.
SIAZON, JR., as Secretary of Foreign Affairs, respondents.
x-----------------------x
G.R. No. 138587 October 10, 2000
TEOFISTO T. GUINGONA, JR., RAUL S. ROCO, and SERGIO R. OSMEÑA
III, petitioners,
vs.
JOSEPH E. ESTRADA, RONALDO B. ZAMORA, DOMINGO L. SIAZON,
JR., ORLANDO B. MERCADO, MARCELO B. FERNAN, FRANKLIN M.
DRILON, BLAS F. OPLE and RODOLFO G. BIAZON, respondents.
x-----------------------x
G.R. No. 138680 October 10, 2000
INTEGRATED BAR OF THE PHILIPPINES, Represented by its National
President, Jose Aguila Grapilon, petitioners,
vs.
JOSEPH EJERCITO ESTRADA, in his capacity as President, Republic of
the Philippines, and HON. DOMINGO SIAZON, in his capacity as
Secretary of Foreign Affairs, respondents.
x-----------------------x
G.R. No. 138698 October 10, 2000
JOVITO R. SALONGA, WIGBERTO TAÑADA, ZENAIDA QUEZON-
AVENCEÑA, ROLANDO SIMBULAN, PABLITO V. SANIDAD, MA.
SOCORRO I. DIOKNO, AGAPITO A. AQUINO, JOKER P. ARROYO,
FRANCISCO C. RIVERA JR., RENE A.V. SAGUISAG, KILOSBAYAN,
MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND
NATIONALISM, INC. (MABINI), petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FOREIGN AFFAIRS,
THE SECRETARY OF NATIONAL DEFENSE, SENATE PRESIDENT
MARCELO B. FERNAN, SENATOR BLAS F. OPLE, SENATOR RODOLFO
G. BIAZON, AND ALL OTHER PERSONS ACTING THEIR CONTROL,
SUPERVISION, DIRECTION, AND INSTRUCTION IN RELATION TO THE
VISITING FORCES AGREEMENT (VFA), respondents.
DECISION
BUENA, J.:
Confronting the Court for resolution in the instant consolidated petitions for
certiorari and prohibition are issues relating to, and borne by, an agreement
forged in the turn of the last century between the Republic of the Philippines
and the United States of America -the Visiting Forces Agreement.
The antecedents unfold.
On March 14, 1947, the Philippines and the United States of America forged a
Military Bases Agreement which formalized, among others, the use of
installations in the Philippine territory by United States military personnel. To
further strengthen their defense and security relationship, the Philippines and
the United States entered into a Mutual Defense Treaty on August 30, 1951.
Under the treaty, the parties agreed to respond to any external armed attack
on their territory, armed forces, public vessels, and aircraft.1
In view of the impending expiration of the RP-US Military Bases Agreement in
1991, the Philippines and the United States negotiated for a possible extension
of the military bases agreement. On September 16, 1991, the Philippine
Senate rejected the proposed RP-US Treaty of Friendship, Cooperation and
Security which, in effect, would have extended the presence of US military
bases in the Philippines.2 With the expiration of the RP-US Military Bases
Agreement, the periodic military exercises conducted between the two
countries were held in abeyance. Notwithstanding, the defense and security
relationship between the Philippines and the United States of America
continued pursuant to the Mutual Defense Treaty.
On July 18, 1997, the United States panel, headed by US Defense Deputy
Assistant Secretary for Asia Pacific Kurt Campbell, met with the Philippine
panel, headed by Foreign Affairs Undersecretary Rodolfo Severino Jr., to
exchange notes on "the complementing strategic interests of the United States
and the Philippines in the Asia-Pacific region." Both sides discussed, among
other things, the possible elements of the Visiting Forces Agreement (VFA for
brevity). Negotiations by both panels on the VFA led to a consolidated draft
text, which in turn resulted to a final series of conferences and
negotiations3 that culminated in Manila on January 12 and 13, 1998.
Thereafter, then President Fidel V. Ramos approved the VFA, which was
respectively signed by public respondent Secretary Siazon and Unites States
Ambassador Thomas Hubbard on February 10, 1998.
On October 5, 1998, President Joseph E. Estrada, through respondent
Secretary of Foreign Affairs, ratified the VFA. 4
On October 6, 1998, the President, acting through respondent Executive
Secretary Ronaldo Zamora, officially transmitted to the Senate of the
Philippines,5 the Instrument of Ratification, the letter of the President 6 and the
VFA, for concurrence pursuant to Section 21, Article VII of the 1987
Constitution. The Senate, in turn, referred the VFA to its Committee on Foreign
Relations, chaired by Senator Blas F. Ople, and its Committee on National
Defense and Security, chaired by Senator Rodolfo G. Biazon, for their joint
consideration and recommendation. Thereafter, joint public hearings were held
by the two Committees.7
On May 3, 1999, the Committees submitted Proposed Senate Resolution No.
4438 recommending the concurrence of the Senate to the VFA and the creation
of a Legislative Oversight Committee to oversee its implementation. Debates
then ensued.
On May 27, 1999, Proposed Senate Resolution No. 443 was approved by the
Senate, by a two-thirds (2/3) vote9 of its members. Senate Resolution No. 443
was then re-numbered as Senate Resolution No. 18.10
On June 1, 1999, the VFA officially entered into force after an Exchange of
Notes between respondent Secretary Siazon and United States Ambassador
Hubbard.
The VFA, which consists of a Preamble and nine (9) Articles, provides for the
mechanism for regulating the circumstances and conditions under which US
Armed Forces and defense personnel may be present in the Philippines, and
is quoted in its full text, hereunder:
"Article I
Definitions
"As used in this Agreement, ‘United States personnel’ means United States
military and civilian personnel temporarily in the Philippines in connection with
activities approved by the Philippine Government.
"Within this definition:
"1. The term ‘military personnel’ refers to military members of the
United States Army, Navy, Marine Corps, Air Force, and Coast Guard.
"2. The term ‘civilian personnel’ refers to individuals who are neither
nationals of, nor ordinary residents in the Philippines and who are
employed by the United States armed forces or who are accompanying
the United States armed forces, such as employees of the American
Red Cross and the United Services Organization.
"Article II
Respect for Law
"It is the duty of the United States personnel to respect the laws of the
Republic of the Philippines and to abstain from any activity inconsistent with
the spirit of this agreement, and, in particular, from any political activity in the
Philippines. The Government of the United States shall take all measures
within its authority to ensure that this is done.
"Article III
Entry and Departure
"1. The Government of the Philippines shall facilitate the admission of
United States personnel and their departure from the Philippines in
connection with activities covered by this agreement.
"2. United States military personnel shall be exempt from passport and
visa regulations upon entering and departing the Philippines.
"3. The following documents only, which shall be presented on
demand, shall be required in respect of United States military
personnel who enter the Philippines:
"(a) personal identity card issued by the appropriate United
States authority showing full name, date of birth, rank or grade
and service number (if any), branch of service and photograph;
"(b) individual or collective document issued by the appropriate
United States authority, authorizing the travel or visit and
identifying the individual or group as United States military
personnel; and
"(c) the commanding officer of a military aircraft or vessel shall
present a declaration of health, and when required by the
cognizant representative of the Government of the Philippines,
shall conduct a quarantine inspection and will certify that the
aircraft or vessel is free from quarantinable diseases. Any
quarantine inspection of United States aircraft or United States
vessels or cargoes thereon shall be conducted by the United
States commanding officer in accordance with the international
health regulations as promulgated by the World Health
Organization, and mutually agreed procedures.
"4. United States civilian personnel shall be exempt from visa
requirements but shall present, upon demand, valid passports upon
entry and departure of the Philippines.
 "5. If the Government of the Philippines has requested the removal of
any United States personnel from its territory, the United States
authorities shall be responsible for receiving the person concerned
within its own territory or otherwise disposing of said person outside of
the Philippines.
"Article IV
Driving and Vehicle Registration
"1. Philippine authorities shall accept as valid, without test or fee, a
driving permit or license issued by the appropriate United States
authority to United States personnel for the operation of military or
official vehicles.
"2. Vehicles owned by the Government of the United States need not
be registered, but shall have appropriate markings.
"Article V
Criminal Jurisdiction
"1. Subject to the provisions of this article:
(a) Philippine authorities shall have jurisdiction over United States
personnel with respect to offenses committed within the Philippines
and punishable under the law of the Philippines.
(b) United States military authorities shall have the right to exercise
within the Philippines all criminal and disciplinary jurisdiction conferred
on them by the military law of the United States over United States
personnel in the Philippines.
"2. (a) Philippine authorities exercise exclusive jurisdiction over United States
personnel with respect to offenses, including offenses relating to the security of
the Philippines, punishable under the laws of the Philippines, but not under the
laws of the United States.
(b) United States authorities exercise exclusive jurisdiction over United
States personnel with respect to offenses, including offenses relating to
the security of the United States, punishable under the laws of the
United States, but not under the laws of the Philippines.
(c) For the purposes of this paragraph and paragraph 3 of this article,
an offense relating to security means:
(1) treason;
(2) sabotage, espionage or violation of any law relating to
national defense.
"3. In cases where the right to exercise jurisdiction is concurrent, the following
rules shall apply:
(a) Philippine authorities shall have the primary right to exercise
jurisdiction over all offenses committed by United States personnel,
except in cases provided for in paragraphs 1(b), 2 (b), and 3 (b) of this
Article.
(b) United States military authorities shall have the primary right to
exercise jurisdiction over United States personnel subject to the
military law of the United States in relation to.
(1) offenses solely against the property or security of the United
States or offenses solely against the property or person of
United States personnel; and
(2) offenses arising out of any act or omission done in
performance of official duty.
(c) The authorities of either government may request the
authorities of the other government to waive their primary right
to exercise jurisdiction in a particular case.
(d) Recognizing the responsibility of the United States military
authorities to maintain good order and discipline among their
forces, Philippine authorities will, upon request by the United
States, waive their primary right to exercise jurisdiction except
in cases of particular importance to the Philippines. If the
Government of the Philippines determines that the case is of
particular importance, it shall communicate such determination
to the United States authorities within twenty (20) days after the
Philippine authorities receive the United States request.
 (e) When the United States military commander determines
that an offense charged by authorities of the Philippines
against United states personnel arises out of an act or
omission done in the performance of official duty, the
commander will issue a certificate setting forth such
determination. This certificate will be transmitted to the
appropriate authorities of the Philippines and will constitute
sufficient proof of performance of official duty for the purposes
of paragraph 3(b)(2) of this Article. In those cases where the
Government of the Philippines believes the circumstances of
the case require a review of the duty certificate, United States
military authorities and Philippine authorities shall consult
immediately. Philippine authorities at the highest levels may
also present any information bearing on its validity. United
States military authorities shall take full account of the
Philippine position. Where appropriate, United States military
authorities will take disciplinary or other action against
offenders in official duty cases, and notify the Government of
the Philippines of the actions taken.
(f) If the government having the primary right does not exercise
jurisdiction, it shall notify the authorities of the other
government as soon as possible.
(g) The authorities of the Philippines and the United States
shall notify each other of the disposition of all cases in which
both the authorities of the Philippines and the United States
have the right to exercise jurisdiction.
"4. Within the scope of their legal competence, the authorities of the
Philippines and United States shall assist each other in the arrest of United
States personnel in the Philippines and in handling them over to authorities
who are to exercise jurisdiction in accordance with the provisions of this article.
"5. United States military authorities shall promptly notify Philippine authorities
of the arrest or detention of United States personnel who are subject of
Philippine primary or exclusive jurisdiction. Philippine authorities shall promptly
notify United States military authorities of the arrest or detention of any United
States personnel.
"6. The custody of any United States personnel over whom the Philippines is to
exercise jurisdiction shall immediately reside with United States military
authorities, if they so request, from the commission of the offense until
completion of all judicial proceedings. United States military authorities shall,
upon formal notification by the Philippine authorities and without delay, make
such personnel available to those authorities in time for any investigative or
judicial proceedings relating to the offense with which the person has been
charged in extraordinary cases, the Philippine Government shall present its
position to the United States Government regarding custody, which the United
States Government shall take into full account. In the event Philippine judicial
proceedings are not completed within one year, the United States shall be
relieved of any obligations under this paragraph. The one-year period will not
include the time necessary to appeal. Also, the one-year period will not include
any time during which scheduled trial procedures are delayed because United
States authorities, after timely notification by Philippine authorities to arrange
for the presence of the accused, fail to do so.
"7. Within the scope of their legal authority, United States and Philippine
authorities shall assist each other in the carrying out of all necessary
investigation into offenses and shall cooperate in providing for the attendance
of witnesses and in the collection and production of evidence, including seizure
and, in proper cases, the delivery of objects connected with an offense.
"8. When United States personnel have been tried in accordance with the
provisions of this Article and have been acquitted or have been convicted and
are serving, or have served their sentence, or have had their sentence
remitted or suspended, or have been pardoned, they may not be tried again for
the same offense in the Philippines. Nothing in this paragraph, however, shall
prevent United States military authorities from trying United States personnel
for any violation of rules of discipline arising from the act or omission which
constituted an offense for which they were tried by Philippine authorities.
"9. When United States personnel are detained, taken into custody, or
prosecuted by Philippine authorities, they shall be accorded all procedural
safeguards established by the law of the Philippines. At the minimum, United
States personnel shall be entitled:
(a) To a prompt and speedy trial;
(b) To be informed in advance of trial of the specific charge or charges
made against them and to have reasonable time to prepare a defense;
(c) To be confronted with witnesses against them and to cross examine
such witnesses;
 (d) To present evidence in their defense and to have compulsory
process for obtaining witnesses;
(e) To have free and assisted legal representation of their own choice
on the same basis as nationals of the Philippines;
(f) To have the service of a competent interpreter; and
(g) To communicate promptly with and to be visited regularly by United
States authorities, and to have such authorities present at all judicial
proceedings. These proceedings shall be public unless the court, in
accordance with Philippine laws, excludes persons who have no role in
the proceedings.
"10. The confinement or detention by Philippine authorities of United States
personnel shall be carried out in facilities agreed on by appropriate Philippine
and United States authorities. United States Personnel serving sentences in
the Philippines shall have the right to visits and material assistance.
"11. United States personnel shall be subject to trial only in Philippine courts of
ordinary jurisdiction, and shall not be subject to the jurisdiction of Philippine
military or religious courts.
"Article VI
Claims
"1. Except for contractual arrangements, including United States
foreign military sales letters of offer and acceptance and leases of
military equipment, both governments waive any and all claims against
each other for damage, loss or destruction to property of each other’s
armed forces or for death or injury to their military and civilian
personnel arising from activities to which this agreement applies.
"2. For claims against the United States, other than contractual claims
and those to which paragraph 1 applies, the United States
Government, in accordance with United States law regarding foreign
claims, will pay just and reasonable compensation in settlement of
meritorious claims for damage, loss, personal injury or death, caused
by acts or omissions of United States personnel, or otherwise incident
to the non-combat activities of the United States forces.
"Article VII
Importation and Exportation
"1. United States Government equipment, materials, supplies, and
other property imported into or acquired in the Philippines by or on
behalf of the United States armed forces in connection with activities to
which this agreement applies, shall be free of all Philippine duties,
taxes and other similar charges. Title to such property shall remain with
the United States, which may remove such property from the
Philippines at any time, free from export duties, taxes, and other similar
charges. The exemptions provided in this paragraph shall also extend
to any duty, tax, or other similar charges which would otherwise be
assessed upon such property after importation into, or acquisition
within, the Philippines. Such property may be removed from the
Philippines, or disposed of therein, provided that disposition of such
property in the Philippines to persons or entities not entitled to
exemption from applicable taxes and duties shall be subject to
payment of such taxes, and duties and prior approval of the Philippine
Government.
"2. Reasonable quantities of personal baggage, personal effects, and
other property for the personal use of United States personnel may be
imported into and used in the Philippines free of all duties, taxes and
other similar charges during the period of their temporary stay in the
Philippines. Transfers to persons or entities in the Philippines not
entitled to import privileges may only be made upon prior approval of
the appropriate Philippine authorities including payment by the
recipient of applicable duties and taxes imposed in accordance with the
laws of the Philippines. The exportation of such property and of
property acquired in the Philippines by United States personnel shall
be free of all Philippine duties, taxes, and other similar charges.
"Article VIII
Movement of Vessels and Aircraft
"1. Aircraft operated by or for the United States armed forces may
enter the Philippines upon approval of the Government of the
Philippines in accordance with procedures stipulated in implementing
arrangements.
"2. Vessels operated by or for the United States armed forces may
enter the Philippines upon approval of the Government of the
 Philippines. The movement of vessels shall be in accordance with
international custom and practice governing such vessels, and such
agreed implementing arrangements as necessary.
"3. Vehicles, vessels, and aircraft operated by or for the United States
armed forces shall not be subject to the payment of landing or port
fees, navigation or over flight charges, or tolls or other use charges,
including light and harbor dues, while in the Philippines. Aircraft
operated by or for the United States armed forces shall observe local
air traffic control regulations while in the Philippines. Vessels owned or
operated by the United States solely on United States Government
non-commercial service shall not be subject to compulsory pilotage at
Philippine ports.
"Article IX
Duration and Termination
"This agreement shall enter into force on the date on which the parties have
notified each other in writing through the diplomatic channel that they have
completed their constitutional requirements for entry into force. This agreement
shall remain in force until the expiration of 180 days from the date on which
either party gives the other party notice in writing that it desires to terminate
the agreement."
Via these consolidated11 petitions for certiorari and prohibition, petitioners - as
legislators, non-governmental organizations, citizens and taxpayers - assail the
constitutionality of the VFA and impute to herein respondents grave abuse of
discretion in ratifying the agreement.
We have simplified the issues raised by the petitioners into the following:
I counter that the validity or invalidity of the VFA is a matter of transcendental
Do petitioners have legal standing as concerned citizens, taxpayers, or
legislators to question the constitutionality of the VFA?
II
Is the VFA governed by the provisions of Section 21, Article VII or of Section
25, Article XVIII of the Constitution?
III
Does the VFA constitute an abdication of Philippine sovereignty?
a. Are Philippine courts deprived of their jurisdiction to hear and try
offenses committed by US military personnel?
b. Is the Supreme Court deprived of its jurisdiction over offenses
punishable by reclusion perpetua or higher?
IV
Does the VFA violate:
a. the equal protection clause under Section 1, Article III of the
Constitution?
b. the Prohibition against nuclear weapons under Article II, Section 8?
c. Section 28 (4), Article VI of the Constitution granting the exemption
from taxes and duties for the equipment, materials supplies and other
properties imported into or acquired in the Philippines by, or on behalf,
of the US Armed Forces?
LOCUS STANDI
At the outset, respondents challenge petitioner’s standing to sue, on the
ground that the latter have not shown any interest in the case, and that
petitioners failed to substantiate that they have sustained, or will sustain direct
injury as a result of the operation of the VFA. 12 Petitioners, on the other hand,
importance which justifies their standing. 13
A party bringing a suit challenging the constitutionality of a law, act, or statute
must show "not only that the law is invalid, but also that he has sustained or in
is in immediate, or imminent danger of sustaining some direct injury as a result
of its enforcement, and not merely that he suffers thereby in some indefinite
way." He must show that he has been, or is about to be, denied some right or
privilege to which he is lawfully entitled, or that he is about to be subjected to
some burdens or penalties by reason of the statute complained of. 14
In the case before us, petitioners failed to show, to the satisfaction of this
Court, that they have sustained, or are in danger of sustaining any direct injury
as a result of the enforcement of the VFA. As taxpayers, petitioners have not
established that the VFA involves the exercise by Congress of its taxing or
spending powers.15 On this point, it bears stressing that a taxpayer’s suit refers
to a case where the act complained of directly involves the illegal
disbursement of public funds derived from taxation. 16 Thus, in Bugnay Const.
& Development Corp. vs. Laron17 , we held:
"x x x it is exigent that the taxpayer-plaintiff sufficiently show that he would be
benefited or injured by the judgment or entitled to the avails of the suit as a
real party in interest. Before he can invoke the power of judicial review, he
must specifically prove that he has sufficient interest in preventing the illegal
expenditure of money raised by taxation and that he will sustain a direct injury
as a result of the enforcement of the questioned statute or contract. It is not
sufficient that he has merely a general interest common to all members of the
public."
Clearly, inasmuch as no public funds raised by taxation are involved in this
case, and in the absence of any allegation by petitioners that public funds are
being misspent or illegally expended, petitioners, as taxpayers, have no legal
standing to assail the legality of the VFA.
Similarly, Representatives Wigberto Tañada, Agapito Aquino and Joker
Arroyo, as petitioners-legislators, do not possess the requisite locus standi to
maintain the present suit. While this Court, in Phil. Constitution Association
vs. Hon. Salvador Enriquez,18 sustained the legal standing of a member of the
Senate and the House of Representatives to question the validity of a
presidential veto or a condition imposed on an item in an appropriation bull, we
cannot, at this instance, similarly uphold petitioners’ standing as members of
Congress, in the absence of a clear showing of any direct injury to their person
or to the institution to which they belong.
Beyond this, the allegations of impairment of legislative power, such as the
delegation of the power of Congress to grant tax exemptions, are more
apparent than real. While it may be true that petitioners pointed to provisions of
the VFA which allegedly impair their legislative powers, petitioners failed
however to sufficiently show that they have in fact suffered direct injury.
In the same vein, petitioner Integrated Bar of the Philippines (IBP) is stripped
of standing in these cases. As aptly observed by the Solicitor General, the IBP
lacks the legal capacity to bring this suit in the absence of a board resolution
from its Board of Governors authorizing its National President to commence
the present action.19
Notwithstanding, in view of the paramount importance and the constitutional
significance of the issues raised in the petitions, this Court, in the exercise of
its sound discretion, brushes aside the procedural barrier and takes
cognizance of the petitions, as we have done in the early Emergency Powers
Cases,20 where we had occasion to rule:
"x x x ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino
although they were involving only an indirect and general interest shared in
common with the public. The Court dismissed the objection that they were not
proper parties and ruled that ‘transcendental importance to the public of
these cases demands that they be settled promptly and definitely,
brushing aside, if we must, technicalities of procedure.’ We have since
then applied the exception in many other cases. (Association of Small
Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA
343)." (Underscoring Supplied)
This principle was reiterated in the subsequent cases of Gonzales vs.
COMELEC,21 Daza vs. Singson,22 and Basco vs. Phil. Amusement and
Gaming Corporation,23 where we emphatically held:
"Considering however the importance to the public of the case at bar, and in
keeping with the Court’s duty, under the 1987 Constitution, to determine
whether or not the other branches of the government have kept themselves
within the limits of the Constitution and the laws and that they have not abused
the discretion given to them, the Court has brushed aside technicalities of
procedure and has taken cognizance of this petition. x x x"
Again, in the more recent case of Kilosbayan vs. Guingona, Jr.,24 thisCourt
ruled that in cases of transcendental importance, the Court may relax the
standing requirements and allow a suit to prosper even where there is no
direct injury to the party claiming the right of judicial review.
Although courts generally avoid having to decide a constitutional question
based on the doctrine of separation of powers, which enjoins upon the
departments of the government a becoming respect for each others’ acts,25 this
Court nevertheless resolves to take cognizance of the instant petitions.
APPLICABLE CONSTITUTIONAL PROVISION
One focal point of inquiry in this controversy is the determination of which
provision of the Constitution applies, with regard to the exercise by the senate
of its constitutional power to concur with the VFA. Petitioners argue that
Section 25, Article XVIII is applicable considering that the VFA has for its
subject the presence of foreign military troops in the Philippines. Respondents,
on the contrary, maintain that Section 21, Article VII should apply inasmuch as
the VFA is not a basing arrangement but an agreement which involves merely
the temporary visits of United States personnel engaged in joint military
exercises.
The 1987 Philippine Constitution contains two provisions requiring the
concurrence of the Senate on treaties or international agreements. Section 21,
Article VII, which herein respondents invoke, reads:
"No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate."
Section 25, Article XVIII, provides:
"After the expiration in 1991 of the Agreement between the Republic of the
Philippines and the United States of America concerning Military Bases,
foreign military bases, troops, or facilities shall not be allowed in the
Philippines except under a treaty duly concurred in by the senate and, when
the Congress so requires, ratified by a majority of the votes cast by the people
in a national referendum held for that purpose, and recognized as a treaty by
the other contracting State."
Section 21, Article VII deals with treatise or international agreements in
general, in which case, the concurrence of at least two-thirds (2/3) of all the
Members of the Senate is required to make the subject treaty, or international
agreement, valid and binding on the part of the Philippines. This provision lays
down the general rule on treatise or international agreements and applies to
any form of treaty with a wide variety of subject matter, such as, but not limited
to, extradition or tax treatise or those economic in nature. All treaties or
international agreements entered into by the Philippines, regardless of subject
matter, coverage, or particular designation or appellation, requires the
concurrence of the Senate to be valid and effective.
In contrast, Section 25, Article XVIII is a special provision that applies to
treaties which involve the presence of foreign military bases, troops or facilities
in the Philippines. Under this provision, the concurrence of the Senate is only
one of the requisites to render compliance with the constitutional requirements
and to consider the agreement binding on the Philippines. Section 25, Article
XVIII further requires that "foreign military bases, troops, or facilities" may be
allowed in the Philippines only by virtue of a treaty duly concurred in by the
Senate, ratified by a majority of the votes cast in a national referendum held for
that purpose if so required by Congress, and recognized as such by the other
contracting state.
It is our considered view that both constitutional provisions, far from
contradicting each other, actually share some common ground. These
constitutional provisions both embody phrases in the negative and thus, are
deemed prohibitory in mandate and character. In particular, Section 21 opens
with the clause "No treaty x x x," and Section 25 contains the phrase "shall not
be allowed." Additionally, in both instances, the concurrence of the Senate is
indispensable to render the treaty or international agreement valid and
effective.
To our mind, the fact that the President referred the VFA to the Senate under
Section 21, Article VII, and that the Senate extended its concurrence under the
same provision, is immaterial. For in either case, whether under Section 21,
Article VII or Section 25, Article XVIII, the fundamental law is crystalline that
the concurrence of the Senate is mandatory to comply with the strict
constitutional requirements.
On the whole, the VFA is an agreement which defines the treatment of United
States troops and personnel visiting the Philippines. It provides for the
guidelines to govern such visits of military personnel, and further defines the
rights of the United States and the Philippine government in the matter of
criminal jurisdiction, movement of vessel and aircraft, importation and
exportation of equipment, materials and supplies.
Undoubtedly, Section 25, Article XVIII, which specifically deals with treaties
involving foreign military bases, troops, or facilities, should apply in the instant
case. To a certain extent and in a limited sense, however, the provisions of
section 21, Article VII will find applicability with regard to the issue and for the
sole purpose of determining the number of votes required to obtain the valid
concurrence of the Senate, as will be further discussed hereunder.
It is a finely-imbedded principle in statutory construction that a special
provision or law prevails over a general one. Lex specialis derogat
generali. Thus, where there is in the same statute a particular enactment and
also a general one which, in its most comprehensive sense, would include
what is embraced in the former, the particular enactment must be operative,
and the general enactment must be taken to affect only such cases within its
general language which are not within the provision of the particular
enactment.26
In Leveriza vs. Intermediate Appellate Court,27 we enunciated:
"x x x that another basic principle of statutory construction mandates that
general legislation must give way to a special legislation on the same subject,
and generally be so interpreted as to embrace only cases in which the special
provisions are not applicable (Sto. Domingo vs. de los Angeles, 96 SCRA
139), that a specific statute prevails over a general statute (De Jesus vs.
People, 120 SCRA 760) and that where two statutes are of equal theoretical
application to a particular case, the one designed therefor specially should
prevail (Wil Wilhensen Inc. vs. Baluyot, 83 SCRA 38)."
Moreover, it is specious to argue that Section 25, Article XVIII is inapplicable to
mere transient agreements for the reason that there is no permanent placing of
structure for the establishment of a military base. On this score, the
Constitution makes no distinction between "transient’ and "permanent".
Certainly, we find nothing in Section 25, Article XVIII that requires foreign
troops or facilities to be stationed or placed permanently in the Philippines.
It is a rudiment in legal hermenuetics that when no distinction is made by law,
the Court should not distinguish- Ubi lex non distinguit nec nos distinguire
debemos.
In like manner, we do not subscribe to the argument that Section 25, Article
XVIII is not controlling since no foreign military bases, but merely foreign
troops and facilities, are involved in the VFA. Notably, a perusal of said
constitutional provision reveals that the proscription covers "foreign military
bases, troops, or facilities." Stated differently, this prohibition is not limited to
the entry of troops and facilities without any foreign bases being established.
The clause does not refer to "foreign military bases, troops, or facilities"
collectively but treats them as separate and independent subjects. The use of
comma and the disjunctive word "or" clearly signifies disassociation and
independence of one thing from the others included in the enumeration, 28 such
that, the provision contemplates three different situations - a military treaty the
subject of which could be either (a) foreign bases, (b) foreign troops, or (c)
foreign facilities - any of the three standing alone places it under the coverage
of Section 25, Article XVIII.
To this end, the intention of the framers of the Charter, as manifested during
the deliberations of the 1986 Constitutional Commission, is consistent with this
interpretation:
"MR. MAAMBONG. I just want to address a question or two to Commissioner
Bernas.
This formulation speaks of three things: foreign military bases, troops or
facilities. My first question is: If the country does enter into such kind of a
treaty, must it cover the three-bases, troops or facilities-or could the
treaty entered into cover only one or two?
FR. BERNAS. Definitely, it can cover only one. Whether it covers only one
or it covers three, the requirement will be the same.
MR. MAAMBONG. In other words, the Philippine government can enter
into a treaty covering not bases but merely troops?
FR. BERNAS. Yes.
MR. MAAMBONG. I cannot find any reason why the government can enter into
a treaty covering only troops.
FR. BERNAS. Why not? Probably if we stretch our imagination a little bit more,
we will find some. We just want to cover everything." 29 (Underscoring Supplied)
Moreover, military bases established within the territory of another state is no
longer viable because of the alternatives offered by new means and weapons
of warfare such as nuclear weapons, guided missiles as well as huge sea
vessels that can stay afloat in the sea even for months and years without
returning to their home country. These military warships are actually used as
substitutes for a land-home base not only of military aircraft but also of military
personnel and facilities. Besides, vessels are mobile as compared to a land-
based military headquarters.
At this juncture, we shall then resolve the issue of whether or not the
requirements of Section 25 were complied with when the Senate gave its
concurrence to the VFA.
Section 25, Article XVIII disallows foreign military bases, troops, or facilities in
the country, unless the following conditions are sufficiently met, viz: (a) it must
be under a treaty; (b) the treaty must be duly concurred in by the
Senate and, when so required by congress, ratified by a majority of the votes
cast by the people in a national referendum; and (c) recognized as a
treaty by the other contracting state.
There is no dispute as to the presence of the first two requisites in the case of
the VFA. The concurrence handed by the Senate through Resolution No. 18 is
in accordance with the provisions of the Constitution, whether under the
general requirement in Section 21, Article VII, or the specific mandate
mentioned in Section 25, Article XVIII, the provision in the latter article
requiring ratification by a majority of the votes cast in a national referendum
being unnecessary since Congress has not required it.
As to the matter of voting, Section 21, Article VII particularly requires that a
treaty or international agreement, to be valid and effective, must be concurred
in by at least two-thirds of all the members of the Senate. On the other
hand, Section 25, Article XVIII simply provides that the treaty be "duly
concurred in by the Senate."
Applying the foregoing constitutional provisions, a two-thirds vote of all the
members of the Senate is clearly required so that the concurrence
contemplated by law may be validly obtained and deemed present. While it is
true that Section 25, Article XVIII requires, among other things, that the treaty-
the VFA, in the instant case-be "duly concurred in by the Senate," it is very
true however that said provision must be related and viewed in light of the
clear mandate embodied in Section 21, Article VII, which in more specific
terms, requires that the concurrence of a treaty, or international agreement, be
made by a two -thirds vote of all the members of the Senate. Indeed, Section
25, Article XVIII must not be treated in isolation to section 21, Article, VII.
As noted, the "concurrence requirement" under Section 25, Article XVIII must
be construed in relation to the provisions of Section 21, Article VII. In a more
particular language, the concurrence of the Senate contemplated under
Section 25, Article XVIII means that at least two-thirds of all the members of
the Senate favorably vote to concur with the treaty-the VFA in the instant case.
Under these circumstances, the charter provides that the Senate shall be
composed of twenty-four (24) Senators.30 Without a tinge of doubt, two-thirds
(2/3) of this figure, or not less than sixteen (16) members, favorably acting on
the proposal is an unquestionable compliance with the requisite number of
votes mentioned in Section 21 of Article VII. The fact that there were actually
twenty-three (23) incumbent Senators at the time the voting was made, 31 will
not alter in any significant way the circumstance that more than two-thirds of
the members of the Senate concurred with the proposed VFA, even if the two-
thirds vote requirement is based on this figure of actual members (23). In this
regard, the fundamental law is clear that two-thirds of the 24 Senators, or at
least 16 favorable votes, suffice so as to render compliance with the strict
constitutional mandate of giving concurrence to the subject treaty.
Having resolved that the first two requisites prescribed in Section 25, Article
XVIII are present, we shall now pass upon and delve on the requirement that
the VFA should be recognized as a treaty by the United States of America.
Petitioners content that the phrase "recognized as a treaty," embodied in
section 25, Article XVIII, means that the VFA should have the advice and
consent of the United States Senate pursuant to its own constitutional process,
and that it should not be considered merely an executive agreement by the
United States.
In opposition, respondents argue that the letter of United States Ambassador
Hubbard stating that the VFA is binding on the United States Government is
conclusive, on the point that the VFA is recognized as a treaty by the United
States of America. According to respondents, the VFA, to be binding, must
only be accepted as a treaty by the United States.
This Court is of the firm view that the phrase "recognized as a treaty" means
that the other contracting party accepts or acknowledges the agreement as a
treaty.32 To require the other contracting state, the United States of America in
this case, to submit the VFA to the United States Senate for concurrence
pursuant to its Constitution,33 is to accord strict meaning to the phrase.
Well-entrenched is the principle that the words used in the Constitution are to
be given their ordinary meaning except where technical terms are employed, in
which case the significance thus attached to them prevails. Its language
should be understood in the sense they have in common use. 34
Moreover, it is inconsequential whether the United States treats the VFA only
as an executive agreement because, under international law, an executive
agreement is as binding as a treaty.35 To be sure, as long as the VFA
possesses the elements of an agreement under international law, the said
agreement is to be taken equally as a treaty.
A treaty, as defined by the Vienna Convention on the Law of Treaties, is "an
international instrument concluded between States in written form and
governed by international law, whether embodied in a single instrument or in
two or more related instruments, and whatever its particular
designation."36 There are many other terms used for a treaty or international
agreement, some of which are: act, protocol, agreement, compromis d’
arbitrage, concordat, convention, declaration, exchange of notes, pact, statute,
charter and modus vivendi. All writers, from Hugo Grotius onward, have
pointed out that the names or titles of international agreements included under
the general term treaty have little or no legal significance. Certain terms are
useful, but they furnish little more than mere description. 37
Article 2(2) of the Vienna Convention provides that "the provisions of
paragraph 1 regarding the use of terms in the present Convention are without
prejudice to the use of those terms, or to the meanings which may be given to
them in the internal law of the State."
Thus, in international law, there is no difference between treaties and
executive agreements in their binding effect upon states concerned, as long as
the negotiating functionaries have remained within their powers.38 International
law continues to make no distinction between treaties and executive
agreements: they are equally binding obligations upon nations. 39
In our jurisdiction, we have recognized the binding effect of executive
agreements even without the concurrence of the Senate or Congress.
In Commissioner of Customs vs. Eastern Sea Trading,40 we had occasion to
pronounce:
"x x x the right of the Executive to enter into binding agreements without the
necessity of subsequent congressional approval has been confirmed by long
usage. From the earliest days of our history we have entered into executive
agreements covering such subjects as commercial and consular relations,
most-favored-nation rights, patent rights, trademark and copyright protection,
postal and navigation arrangements and the settlement of claims. The validity
of these has never been seriously questioned by our courts.
"x x x x x x x x x
"Furthermore, the United States Supreme Court has expressly recognized the
validity and constitutionality of executive agreements entered into without
Senate approval. (39 Columbia Law Review, pp. 753-754) (See, also,
U.S. vs. Curtis Wright Export Corporation, 299 U.S. 304, 81 L. ed. 255;
U.S. vs. Belmont, 301 U.S. 324, 81 L. ed. 1134; U.S. vs. Pink, 315 U.S. 203,
86 L. ed. 796; Ozanic vs. U.S. 188 F. 2d. 288; Yale Law Journal, Vol. 15 pp.
1905-1906; California Law Review, Vol. 25, pp. 670-675; Hyde on
International Law [revised Edition], Vol. 2, pp. 1405, 1416-1418;
willoughby on the U.S. Constitution Law, Vol. I [2d ed.], pp. 537-540;
Moore, International Law Digest, Vol. V, pp. 210-218; Hackworth,
International Law Digest, Vol. V, pp. 390-407). (Italics
Supplied)" (Emphasis Ours)
The deliberations of the Constitutional Commission which drafted the 1987
Constitution is enlightening and highly-instructive:
"MR. MAAMBONG. Of course it goes without saying that as far as ratification
of the other state is concerned, that is entirely their concern under their own
laws.
FR. BERNAS. Yes, but we will accept whatever they say. If they say that we
have done everything to make it a treaty, then as far as we are concerned, we
will accept it as a treaty."41
The records reveal that the United States Government, through Ambassador
Thomas C. Hubbard, has stated that the United States government has fully
committed to living up to the terms of the VFA. 42 For as long as the united
States of America accepts or acknowledges the VFA as a treaty, and binds
itself further to comply with its obligations under the treaty, there is indeed
marked compliance with the mandate of the Constitution.
Worth stressing too, is that the ratification, by the President, of the VFA and
the concurrence of the Senate should be taken as a clear an unequivocal
expression of our nation’s consent to be bound by said treaty, with the
concomitant duty to uphold the obligations and responsibilities embodied
thereunder.
Ratification is generally held to be an executive act, undertaken by the head of
the state or of the government, as the case may be, through which the formal
acceptance of the treaty is proclaimed.43 A State may provide in its domestic
legislation the process of ratification of a treaty. The consent of the State to be
bound by a treaty is expressed by ratification when: (a) the treaty provides for
such ratification, (b) it is otherwise established that the negotiating States
agreed that ratification should be required, (c) the representative of the State
has signed the treaty subject to ratification, or (d) the intention of the State to
sign the treaty subject to ratification appears from the full powers of its
representative, or was expressed during the negotiation. 44
In our jurisdiction, the power to ratify is vested in the President and not, as
commonly believed, in the legislature. The role of the Senate is limited only to
giving or withholding its consent, or concurrence, to the ratification. 45
With the ratification of the VFA, which is equivalent to final acceptance, and
with the exchange of notes between the Philippines and the United States of
America, it now becomes obligatory and incumbent on our part, under the
principles of international law, to be bound by the terms of the agreement.
Thus, no less than Section 2, Article II of the Constitution, 46 declares that the
Philippines adopts the generally accepted principles of international law as part
of the law of the land and adheres to the policy of peace, equality, justice,
freedom, cooperation and amity with all nations.
As a member of the family of nations, the Philippines agrees to be bound by
generally accepted rules for the conduct of its international relations. While the
international obligation devolves upon the state and not upon any particular
branch, institution, or individual member of its government, the Philippines is
nonetheless responsible for violations committed by any branch or subdivision
of its government or any official thereof. As an integral part of the community of
nations, we are responsible to assure that our government, Constitution and
laws will carry out our international obligation. 47 Hence, we cannot readily plead
the Constitution as a convenient excuse for non-compliance with our
obligations, duties and responsibilities under international law.
Beyond this, Article 13 of the Declaration of Rights and Duties of States
adopted by the International Law Commission in 1949 provides: "Every State
has the duty to carry out in good faith its obligations arising from treaties and
other sources of international law, and it may not invoke provisions in its
constitution or its laws as an excuse for failure to perform this duty." 48
Equally important is Article 26 of the convention which provides that "Every
treaty in force is binding upon the parties to it and must be performed by them
in good faith." This is known as the principle of pacta sunt servanda which
preserves the sanctity of treaties and have been one of the most fundamental
principles of positive international law, supported by the jurisprudence of
international tribunals.49
NO GRAVE ABUSE OF DISCRETION
In the instant controversy, the President, in effect, is heavily faulted for
exercising a power and performing a task conferred upon him by the
Constitution-the power to enter into and ratify treaties. Through the expediency
of Rule 65 of the Rules of Court, petitioners in these consolidated cases
impute grave abuse of discretion on the part of the chief Executive in
ratifying the VFA, and referring the same to the Senate pursuant to the
provisions of Section 21, Article VII of the Constitution.
On this particular matter, grave abuse of discretion implies such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, when
the power is exercised in an arbitrary or despotic manner by reason of passion
or personal hostility, and it must be so patent and gross as to amount to an
evasion of positive duty enjoined or to act at all in contemplation of law. 50
By constitutional fiat and by the intrinsic nature of his office, the President, as
head of State, is the sole organ and authority in the external affairs of the
country. In many ways, the President is the chief architect of the nation’s
foreign policy; his "dominance in the field of foreign relations is (then)
conceded."51 Wielding vast powers an influence, his conduct in the external
affairs of the nation, as Jefferson describes, is "executive altogether."52
As regards the power to enter into treaties or international agreements, the
Constitution vests the same in the President, subject only to the concurrence
of at least two-thirds vote of all the members of the Senate. In this light, the
negotiation of the VFA and the subsequent ratification of the agreement are
exclusive acts which pertain solely to the President, in the lawful exercise of
his vast executive and diplomatic powers granted him no less than by the
fundamental law itself. Into the field of negotiation the Senate cannot intrude,
and Congress itself is powerless to invade it.53 Consequently, the acts or
judgment calls of the President involving the VFA-specifically the acts of
ratification and entering into a treaty and those necessary or incidental to the
exercise of such principal acts - squarely fall within the sphere of his
constitutional powers and thus, may not be validly struck down, much less
calibrated by this Court, in the absence of clear showing of grave abuse of
power or discretion.
It is the Court’s considered view that the President, in ratifying the VFA and in
submitting the same to the Senate for concurrence, acted within the confines
and limits of the powers vested in him by the Constitution. It is of no moment
that the President, in the exercise of his wide latitude of discretion and in the
honest belief that the VFA falls within the ambit of Section 21, Article VII of the
Constitution, referred the VFA to the Senate for concurrence under the
aforementioned provision. Certainly, no abuse of discretion, much less a
grave, patent and whimsical abuse of judgment, may be imputed to the
President in his act of ratifying the VFA and referring the same to the Senate
for the purpose of complying with the concurrence requirement embodied in
the fundamental law. In doing so, the President merely performed a
constitutional task and exercised a prerogative that chiefly pertains to the
functions of his office. Even if he erred in submitting the VFA to the Senate for
concurrence under the provisions of Section 21 of Article VII, instead of
Section 25 of Article XVIII of the Constitution, still, the President may not be
faulted or scarred, much less be adjudged guilty of committing an abuse of
discretion in some patent, gross, and capricious manner.
For while it is conceded that Article VIII, Section 1, of the Constitution has
broadened the scope of judicial inquiry into areas normally left to the political
departments to decide, such as those relating to national security, it has not
altogether done away with political questions such as those which arise in the
field of foreign relations.54 The High Tribunal’s function, as sanctioned by Article
VIII, Section 1, "is merely (to) check whether or not the governmental branch
or agency has gone beyond the constitutional limits of its jurisdiction, not that it
erred or has a different view. In the absence of a showing… (of) grave abuse
of discretion amounting to lack of jurisdiction, there is no occasion for the Court
to exercise its corrective power…It has no power to look into what it thinks is
apparent error."55
As to the power to concur with treaties, the constitution lodges the same with
the Senate alone. Thus, once the Senate56 performs that power, or exercises
1âwphi1
wisdom of a legislative act are beyond the ambit and province of the courts to
inquire.
In fine, absent any clear showing of grave abuse of discretion on the part of
respondents, this Court- as the final arbiter of legal controversies and staunch
sentinel of the rights of the people - is then without power to conduct an
incursion and meddle with such affairs purely executive and legislative in
character and nature. For the Constitution no less, maps out the distinct
boundaries and limits the metes and bounds within which each of the three
political branches of government may exercise the powers exclusively and
essentially conferred to it by law.
WHEREFORE, in light of the foregoing disquisitions, the instant petitions are
hereby DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Kapunan, Quisumbing, Purisima, Pardo, Gonzaga-
Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.
Melo, and Vitug, JJ., join the dissent of J. Puno.
Puno , J., see dissenting opinion.
Mendoza, J., in the result.

Panganiban, J., no part due to close personal and former professional

its prerogative within the boundaries prescribed by the Constitution, the relations with a petitioner, Sen. J.R. Salonga.
concurrence cannot, in like manner, be viewed to constitute an abuse of
power, much less grave abuse thereof. Corollarily, the Senate, in the exercise
of its discretion and acting within the limits of such power, may not be similarly
faulted for having simply performed a task conferred and sanctioned by no less
than the fundamental law.

For the role of the Senate in relation to treaties is essentially legislative in

character;57 the Senate, as an independent body possessed of its own erudite
mind, has the prerogative to either accept or reject the proposed agreement,
and whatever action it takes in the exercise of its wide latitude of discretion,
pertains to the wisdom rather than the legality of the act. In this sense, the
Senate partakes a principal, yet delicate, role in keeping the principles
of separation of powers and of checks and balances alive and vigilantly
ensures that these cherished rudiments remain true to their form in a
democratic government such as ours. The Constitution thus animates, through
this treaty-concurring power of the Senate, a healthy system of checks and
balances indispensable toward our nation’s pursuit of political maturity and
growth. True enough, rudimentary is the principle that matters pertaining to the
G.R. No. 151445 April 11, 2002
ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY as alter ego of HER
EXCELLENCEY GLORIA MACAPAGAL-ARROYO, and HONORABLE
ANGELO REYES in his capacity as Secretary of National
Defense, respondents.
----------------------------------------
SANLAKAS and PARTIDO NG MANGGAGAWA, petitioners-intervenors,
vs.
GLORIA MACAPAGA-ARROYO, ALBERTO ROMULO, ANGELO
REYES, respondents.
DISSENTING OPINION
SEPARATE OPINION
DE LEON, JR., J.:
This case involves a petition for certiorari and prohibition as well as a petition-
in-intervention, praying that respondents be restrained from proceeding with
the so-called "Balikatan 02-1" and that after due notice and hearing, that
judgment be rendered issuing a permanent writ of injunction and/or prohibition
against the deployment of U.S. troops in Basilan and Mindanao for being
illegal and in violation of the Constitution.
The facts are as follows:
Beginning January of this year 2002, personnel from the armed forces of the
United States of America started arriving in Mindanao to take part, in
conjunction with the Philippine military, in "Balikatan 02-1." These so-called
"Balikatan" exercises are the largest combined training operations involving
Filipino and American troops. In theory, they are a simulation of joint military
maneuvers pursuant to the Mutual Defense Treaty, 1 a bilateral defense
agreement entered into by the Philippines and the United States in 1951.
Prior to the year 2002, the last "Balikatan" was held in 1995. This was due to
the paucity of any formal agreement relative to the treatment of United States
personnel visiting the Philippines. In the meantime, the respective
governments of the two countries agreed to hold joint exercises on a reduced
scale. The lack of consensus was eventually cured when the two nations
concluded the Visiting Forces Agreement (V FA) in 1999.
The entry of American troops into Philippine soil is proximately rooted in the
international anti-terrorism campaign declared by President George W. Bush in
reaction to the tragic events that occurred on September 11, 2001. On that
day, three (3) commercial aircrafts were hijacked, flown and smashed into the
twin towers of the World Trade Center in New York City and the Pentagon
building in Washington, D.C. by terrorists with alleged links to the al-Qaeda
("the Base"), a Muslim extremist organization headed by the infamous Osama
bin Laden. Of no comparable historical parallels, these acts caused billions of
dollars worth of destruction of property and incalculable loss of hundreds of
lives.
On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed
this petition for certiorari and prohibition, attacking the constitutionality of the
joint exercise.2 They were joined subsequently by SANLAKAS and PARTIDO
NG MANGGAGAWA, both party-Iist organizations, who filed a petition-in-
intervention on February 11, 2002.
Lim and Ersando filed suit in their capacities as citizens, lawyers and
taxpayers. SANLAKAS and PARTIDO, on the other hand, aver that certain
members of their organization are residents of Zamboanga and Sulu, and
hence will be directly affected by the operations being conducted in Mindanao.
They likewise pray for a relaxation on the rules relative to locus standi citing
the unprecedented importance of the issue involved.
On February 71 2002 the Senate conducted a hearing on the "Balikatan"
exercise wherein Vice-President Teofisto T. Guingona, Jr., who is concurrently
Secretary of Foreign. Affairs, presented the Draft Terms of Reference
(TOR).3 Five days later, he approved the TOR, which we quote hereunder:
I. POLICY LEVEL
1. The Exercise shall be consistent with the Philippine Constitution and
all its activities shall be in consonance with the laws of the land and the
provisions of the RP-US Visiting Forces Agreement (VFA).
2. The conduct of this training Exercise is in accordance with pertinent II. EXERCISE LEVEL
United Nations resolutions against global terrorism as understood by
the respective parties. 1. TRAINING

3. No permanent US basing and support facilities shall be established. a. The Exercise shall involve the conduct of mutual military
Temporary structures such as those for troop billeting, classroom assisting, advising and training of RP and US Forces with the
instruction and messing may be set up for use by RP and US Forces primary objective of enhancing the operational capabilities of
during the Exercise. both forces to combat terrorism.

4. The Exercise shall be implemented jointly by RP and US Exercise b. At no time shall US Forces operate independently within RP
Co-Directors under the authority of the Chief of Staff, AFP. In no territory.
instance will US Forces operate independently during field training
exercises (FTX). AFP and US Unit Commanders will retain command c. Flight plans of all aircraft involved in the exercise will comply
over their respective forces under the overall authority of the Exercise with the local air traffic regulations.
Co-Directors. RP and US participants shall comply with operational
instructions of the AFP during the FTX.
2. ADMINISTRATION & LOGISTICS
5. The exercise shall be conducted and completed within a period of
a. RP and US participants shall be given a country and area
not more than six months, with the projected participation of 660 US
briefing at the start of the Exercise. This briefing shall acquaint
personnel and 3,800 RP Forces. The Chief of Staff, AFP shall direct
US Forces on the culture and sensitivities of the Filipinos and
the Exercise Co-Directors to wind up and terminate the Exercise and
the provisions of the VF A. The briefing shall also promote the
other activities within the six month Exercise period.
full cooperation on the part of the RP and US participants for
the successful conduct of the Exercise.
6. The Exercise is a mutual counter-terrorism advising, assisting and
training Exercise relative to Philippine efforts against the ASG, and will
b. RP and US participating forces may share, in accordance
be conducted on the Island of Basilan. Further advising, assisting and
with their respective laws and regulations, in the use of their
training exercises shall be conducted in Malagutay and the
resources, equipment and other assets. They will use their
Zamboanga area. Related activities in Cebu will be for support of the
respective logistics channels.
Exercise.
c. Medical evaluation shall be jointly planned and executed
7. Only 160 US Forces organized in 12-man Special Forces Teams
utilizing RP and US assets and resources.
shall be deployed with AFP field, commanders. The US teams shall
remain at the Battalion Headquarters and, when approved, Company
Tactical headquarters where they can observe and assess the d. Legal liaison officers from each respective party shall be
performance of the AFP Forces. appointed by the Exercise Directors.

8. US exercise participants shall not engage in combat, without 3. PUBLIC AFFAIRS

prejudice to their right of self-defense.
9. These terms of Reference are for purposes of this Exercise only and
do not create additional legal obligations between the US Government
and the Republic of the Philippines.
a. Combined RP-US Information Bureaus shall be established
at the Exercise Directorate in Zamboanga City and at GHQ,
AFP in Camp Aguinaldo, Quezon City.
 b. Local media relations will be the concern of the AFP and all
public affairs guidelines shall be jointly developed by RP and
US Forces.
c. Socio-Economic Assistance Projects shall be planned and
executed jointly by RP and US Forces in accordance with their
respective laws and regulations, and in consultation with
community and local government officials.
Contemporaneously, Assistant Secretary for American Affairs Minerva Jean A.
Falcon and United States Charge d' Affaires Robert Fitts signed the Agreed
Minutes of the discussion between the Vice-President and Assistant Secretary
Kelly.4
Petitioners Lim and Ersando present the following arguments:
I
THE PHILIPPINES AND THE UNITED STATES SIGNED THE
MUTUAL DEFENSE TREATY (MDT) in 1951 TO PROVIDE MUTUAL
MILITARY ASSIST ANCE IN ACCORDANCE WITH THE
'CONSTITUTIONAL PROCESSE-S' OF EACH COUNTRY ONLY IN
THE CASE OF AN ARMED ATTACK BY AN EXTERNAL
AGGRESSOR, MEANING A THIRD COUNTRY AGAINST ONE OF
THEM.
BY NO STRETCH OF THE IMAGINA TION CAN IT BE SAID THAT
THE ABU SAYYAF BANDITS IN BASILAN CONSTITUTE AN
EXTERNAL ARMED FORCE THAT HAS SUBJECT THE
PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO WARRANT
U.S. MILITARY ASSISTANCE UNDER THE MDT OF 1951.
II
NEITHER DOES THE VFA OF 1999 AUTHORIZE AMERICAN
SOLDIERS TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE
TERRITORY, NOT EVEN TO FIRE BACK "IF FIRED UPON".
Substantially the same points are advanced by petitioners SANLAKAS and
PARTIDO.
In his Comment, the Solicitor General points to infirmities in the petitions
regarding, inter alia, Lim and Ersando's standing to file suit, the prematurity of
the action, as well as the impropriety of availing of certiorari to ascertain a
question of fact. Anent their locus standi, the Solicitor General argues
that first, they may not file suit in their capacities as, taxpayers inasmuch as it
has not been shown that "Balikatan 02-1 " involves the exercise of Congress'
taxing or spending powers. Second, their being lawyers does not invest them
with sufficient personality to initiate the case, citing our ruling in Integrated Bar
of the Philippines v. Zamora.5 Third, Lim and Ersando have failed to
demonstrate the requisite showing of direct personal injury. We agree.
It is also contended that the petitioners are indulging in speculation. The
Solicitor General is of the view that since the Terms of Reference are clear as
to the extent and duration of "Balikatan 02-1," the issues raised by petitioners
are premature, as they are based only on a fear of future violation of the Terms
of Reference. Even petitioners' resort to a special civil action for certiorari is
assailed on the ground that the writ may only issue on the basis of established
facts.
Apart from these threshold issues, the Solicitor General claims that there is
actually no question of constitutionality involved. The true object of the instant
suit, it is said, is to obtain an interpretation of the V FA. The Solicitor General
asks that we accord due deference to the executive determination that
"Balikatan 02-1" is covered by the VFA, considering the President's monopoly
in the field of foreign relations and her role as commander-in-chief of the
Philippine armed forces.
Given the primordial importance of the issue involved, it will suffice to reiterate
our view on this point in a related case:
Notwithstanding, in view of the paramount importance and the
constitutional significance of the issues raised in the petitions,
this Court, in the exercise of its sound discretion, brushes aside
the procedural barrier and takes cognizance of the petitions, as
we have done in the early Emergency Powers Cases, where
we had occasion to rule:
'x x x ordinary citizens and taxpayers were allowed to question
the constitutionality of several executive orders issued by
President Quirino although they were involving only an indirect
and general interest shared in common with the public. The
Court dismissed the objection that they were not proper parties
 and ruled that 'transcendental importance to the public of
these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of
procedure.' We have since then applied the exception in many
other cases. [citation omitted]
This principle was reiterated in the subsequent cases of Gonzales vs.
COMELEC, Daza vs. Singson, and Basco vs. Phil, Amusement and
Gaming Corporation, where we emphatically held:
Considering however the importance to the public of the case
at bar, and in keeping with the Court's duty, under the 1987
Constitution, to determine whether or not the other branches of
the government have kept themselves within the limits of the
Constitution and the laws that they have not abused the
discretion given to them, the Court has brushed aside
technicalities of procedure and has taken cognizance of this
petition. xxx'
Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this
Court ruled that in cases of transcendental importance, the Court may
relax the standing requirements and allow a suit to prosper even
where there is no direct injury to the party claiming the right of
judicial review.
Although courts generally avoid having to decide a constitutional
question based on the doctrine of separation of powers, which enjoins
upon the department of the government a becoming respect for each
other's act, this Court nevertheless resolves to take cognizance of the
instant petition.6
Hence, we treat with similar dispatch the general objection to the supposed
prematurity of the action. At any rate, petitioners' concerns on the lack of any
specific regulation on the latitude of activity US personnel may undertake and
the duration of their stay has been addressed in the Terms of Reference.
The holding of "Balikatan 02-1" must be studied in the framework of the treaty
antecedents to which the Philippines bound itself. The first of these is the
Mutual Defense Treaty (MDT, for brevity). The MDT has been described as the
"core" of the defense relationship between the Philippines and its traditional
ally, the United States. Its aim is to enhance the strategic and technological
capabilities of our armed forces through joint training with its American
counterparts; the "Balikatan" is the largest such training exercise directly
supporting the MDT's objectives. It is this treaty to which the V FA adverts and
the obligations thereunder which it seeks to reaffirm.
The lapse of the US-Philippine Bases Agreement in 1992 and the decision not
to renew it created a vacuum in US-Philippine defense relations, that is, until it
was replaced by the Visiting Forces Agreement. It should be recalled that on
October 10, 2000, by a vote of eleven to three, this Court upheld the validity of
the VFA.7 The V FA provides the "regulatory mechanism" by which "United
States military and civilian personnel [may visit] temporarily in the Philippines
in connection with activities approved by the Philippine Government." It
contains provisions relative to entry and departure of American personnel,
driving and vehicle registration, criminal jurisdiction, claims, importation and
exportation, movement of vessels and aircraft, as well as the duration of the
agreement and its termination. It is the VFA which gives continued relevance
to the MDT despite the passage of years. Its primary goal is to facilitate the
promotion of optimal cooperation between American and Philippine military
forces in the event of an attack by a common foe.
The first question that should be addressed is whether "Balikatan 02-1" is
covered by the Visiting Forces Agreement. To resolve this, it is necessary to
refer to the V FA itself: Not much help can be had therefrom, unfortunately,
since the terminology employed is itself the source of the problem. The VFA
permits United States personnel to engage, on an impermanent basis, in
"activities," the exact meaning of which was left undefined. The expression is
ambiguous, permitting a wide scope of undertakings subject only to the
approval of the Philippine government.8 The sole encumbrance placed on its
definition is couched in the negative, in that United States personnel must
"abstain from any activity inconsistent with the spirit of this agreement, and in
particular, from any political activity."9 All other activities, in other words, are fair
game.
We are not left completely unaided, however. The Vienna Convention on the
Law of Treaties, which contains provisos governing interpretations of
international agreements, state:
SECTION 3. INTERPRETATION OF TREATIES
Article 31
General rule of interpretation
1. A treaty shall be interpreted in good faith ill accordance with the
ordinary meaning to be given to the tenus of the treaty in their context
and in the light of its object and purpose.
2. The context for the purpose of the interpretation of a treaty shall
comprise, in addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made
between all the parties in connexion with the conclusion of the
treaty;
(b) any instrument which was made by one or more parties in
connexion with the conclusion of the treaty and accepted by
the other parties as an instrument related to the party .
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding
the interpretation of the treaty or the application of its
provisions;
(b) any subsequent practice in the application of the treaty
which establishes the agreement of the parties regarding its
interpretation;
(c) any relevant rules of international law applicable in the
relations between the parties.
4. A special meaning shall be given to a term if it is established that the
parties so intended.
Article 32
Supplementary means of interpretation
Recourse may be had to supplementary means of interpretation,
including the preparatory work of the treaty and the circumstances of
its conclusion, in order to confirm the meaning resulting from the
application of article 31, or to determine the meaning when the
interpretation according to article 31 :
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd unreasonable.
It is clear from the foregoing that the cardinal rule of interpretation must involve
an examination of the text, which is presumed to verbalize the parties'
intentions. The Convention likewise dictates what may be used as aids to
deduce the meaning of terms, which it refers to as the context of the treaty, as
well as other elements may be taken into account alongside the aforesaid
context. As explained by a writer on the Convention ,
[t]he Commission's proposals (which were adopted virtually without
change by the conference and are now reflected in Articles 31 and 32
of the Convention) were clearly based on the view that the text of a
treaty must be presumed to be the authentic expression of the
intentions of the parties; the Commission accordingly came down firmly
in favour of the view that 'the starting point of interpretation is the
elucidation of the meaning of the text, not an investigation ab initio into
the intentions of the parties'. This is not to say that
the travauxpreparatoires of a treaty , or the circumstances of its
conclusion, are relegated to a subordinate, and wholly ineffective, role.
As Professor Briggs points out, no rigid temporal prohibition on resort
to travaux preparatoires of a treaty was intended by the use of the
phrase 'supplementary means of interpretation' in what is now Article
32 of the Vienna Convention. The distinction between the general rule
of interpretation and the supplementary means of interpretation is
intended rather to ensure that the supplementary means do not
constitute an alternative, autonomous method of interpretation divorced
from the general rule.10
The Terms of Reference rightly fall within the context of the VFA.
After studied reflection, it appeared farfetched that the ambiguity surrounding
the meaning of the word .'activities" arose from accident. In our view, it was
deliberately made that way to give both parties a certain leeway in negotiation.
In this manner, visiting US forces may sojourn in Philippine territory for
purposes other than military. As conceived, the joint exercises may include
training on new techniques of patrol and surveillance to protect the nation's
marine resources, sea search-and-rescue operations to assist vessels in
distress, disaster relief operations, civic action projects such as the building of
school houses, medical and humanitarian missions, and the like.
Under these auspices, the VFA gives legitimacy to the current Balikatan
exercises. It is only logical to assume that .'Balikatan 02-1," a "mutual anti-
terrorism advising, assisting and training exercise," falls under the umbrella of
sanctioned or allowable activities in the context of the agreement. Both the
history and intent of the Mutual Defense Treaty and the V FA support the
conclusion that combat-related activities -as opposed to combat itself -such as
the one subject of the instant petition, are indeed authorized.
That is not the end of the matter, though. Granted that "Balikatan 02-1" is
permitted under the terms of the VFA, what may US forces legitimately do in
furtherance of their aim to provide advice, assistance and training in the global
effort against terrorism? Differently phrased, may American troops actually
engage in combat in Philippine territory? The Terms of Reference are explicit
enough. Paragraph 8 of section I stipulates that US exercise participants
may not engage in combat "except in self-defense." We wryly note that this
sentiment is admirable in the abstract but difficult in implementation. The target
of "Balikatan 02-1 I" the Abu Sayyaf, cannot reasonably be expected to sit idly
while the battle is brought to their very doorstep. They cannot be expected to
pick and choose their targets for they will not have the luxury of doing so. We
state this point if only to signify our awareness that the parties straddle a fine
line, observing the honored legal maxim "Nemo potest facere per alium quod
non potest facere per directum."11 The indirect violation is actually petitioners'
worry, that in reality, "Balikatan 02-1 " is actually a war principally conducted
by the United States government, and that the provision on self-defense
serves only as camouflage to conceal the true nature of the exercise. A clear
pronouncement on this matter thereby becomes crucial.
In our considered opinion, neither the MDT nor the V FA allow foreign troops to
engage in an offensive war on Philippine territory. We bear in mind the salutary
proscription stated in the Charter of the United Nations, to wit:
Article 2
The Organization and its Members, in pursuit of the Purposes stated in
Article 1, shall act in accordance with the following Principles.
xxx xxx xxx xxx
4. All Members shall refrain in their international relations from the
threat or use of force against the territorial integrity or political
independence of any state, or in any other manner inconsistent with
the Purposes of the United Nations.
xxx xxx xxx xxx
In the same manner, both the Mutual Defense Treaty and the Visiting Forces
Agreement, as in all other treaties and international agreements to which the
Philippines is a party, must be read in the context of the 1987 Constitution. In
particular, the Mutual Defense Treaty was concluded way before the present
Charter, though it nevertheless remains in effect as a valid source of
international obligation. The present Constitution contains key provisions
useful in determining the extent to which foreign military troops are allowed in
Philippine territory. Thus, in the Declaration of Principles and State Policies, it
is provided that:
xxx xxx xxx xxx
SEC. 2. The Philippines renounces war as an instrument of national
policy, adopts the generally accepted principles of international law as
part of the law of the land and adheres to the policy of peace, equality,
justice, freedom, cooperation, and amity with all nations.
xxx xxx xxx xxx
SEC. 7. The State shall pursue an independent foreign policy. In its
relations with other states the paramount consideration shall be
national sovereignty, territorial integrity, national interest, and the right
to self- determination.
SEC. 8. The Philippines, consistent with the national interest, adopts
and pursues a policy of freedom from nuclear weapons in the country.
xxx xxx xxx xxx
The Constitution also regulates the foreign relations powers of the Chief
Executive when it provides that "[n]o treaty or international agreement shall be
valid and effective unless concurred in by at least two-thirds of all the members
of the Senate."12 Even more pointedly, the Transitory Provisions state:
Sec. 25. After the expiration in 1991 of the Agreement between the
Republic of the Philippines and the United States of America
concerning Military Bases, foreign military bases, troops or facilities
shall not be allowed in the Philippines except under a treaty duly
concurred in by the Senate and, when the Congress so requires,
 ratified by a majority of the votes cast by the people in a national
referendum held for that purpose, and recognized as a treaty by the
other contracting state.
The aforequoted provisions betray a marked antipathy towards foreign military
presence in the country, or of foreign influence in general. Hence, foreign
troops are allowed entry into the Philippines only by way of direct exception.
Conflict arises then between the fundamental law and our obligations arising
from international agreements.
A rather recent formulation of the relation of international law vis-a-
vis municipal law was expressed in Philip Morris, Inc. v.
Court of Appeals,13 to wit:
xxx Withal, the fact that international law has been made part of the
law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislation.
This is not exactly helpful in solving the problem at hand since in trying to find
a middle ground, it favors neither one law nor the other, which only leaves the
hapless seeker with an unsolved dilemma. Other more traditional approaches
may offer valuable insights.
From the perspective of public international law, a treaty is favored over
municipal law pursuant to the principle of pacta sunt servanda. Hence, "[e]very
treaty in force is binding upon the parties to it and must be performed by them
in good faith."14 Further, a party to a treaty is not allowed to "invoke the
provisions of its internal law as justification for its failure to perform a treaty." 15
Our Constitution espouses the opposing view. Witness our jurisdiction as I
stated in section 5 of Article VIII:
The Supreme Court shall have the following powers:
xxx xxx xxx xxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as
the law or the Rules of Court may provide, final judgments and order of
lower courts in:
(A) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question.
xxx xxx xxx xxx
In Ichong v. Hernandez,16 we ruled that the provisions of a treaty are always
subject to qualification or amendment by a subsequent law, or that it is subject
to the police power of the State. In Gonzales v. Hechanova,17
xxx As regards the question whether an international agreement may
be invalidated by our courts, suffice it to say that the Constitution of the
Philippines has clearly settled it in the affirmative, by providing, in
Section 2 of Article VIII thereof, that the Supreme Court may not be
deprived "of its jurisdiction to review, revise, reverse, modify, or affirm
on appeal, certiorari, or writ of error as the law or the rules of court may
provide, final judgments and decrees of inferior courts in -( I) All cases
in which the constitutionality or validity of any treaty, law, ordinance, or
executive order or regulation is in question." In other words, our
Constitution authorizes the nullification of a treaty, not only when it
conflicts with the fundamental law, but, also, when it runs counter to an
act of Congress.
The foregoing premises leave us no doubt that US forces are prohibited / from
engaging in an offensive war on Philippine territory.
Yet a nagging question remains: are American troops actively engaged in
combat alongside Filipino soldiers under the guise of an alleged training and
assistance exercise? Contrary to what petitioners would have us do, we
cannot take judicial notice of the events transpiring down south,18 as reported
from the saturation coverage of the media. As a rule, we do not take
cognizance of newspaper or electronic reports per se, not because of any
issue as to their truth, accuracy, or impartiality, but for the simple reason that
facts must be established in accordance with the rules of evidence. As a result,
we cannot accept, in the absence of concrete proof, petitioners' allegation that
the Arroyo government is engaged in "doublespeak" in trying to pass off as a
mere training exercise an offensive effort by foreign troops on native soil. The
petitions invite us to speculate on what is really happening in Mindanao, to
issue I make factual findings on matters well beyond our immediate
perception, and this we are understandably loath to do.
It is all too apparent that the determination thereof involves basically
a question of fact. On this point, we must concur with the Solicitor General that
the present subject matter is not a fit topic for a special civil action
for certiorari. We have held in too many instances that questions of fact are not
entertained in such a remedy. The sole object of the writ is to correct errors of
jurisdiction or grave abuse of discretion: The phrase "grave abuse of
discretion" has a precise meaning in law, denoting abuse of discretion "too
patent and gross as to amount to an evasion of a positive duty, or a virtual
refusal to perform the duty enjoined or act in contemplation of law, or where
the power is exercised in an arbitrary and despotic manner by reason of
passion and personal hostility."19
In this connection, it will not be amiss to add that the Supreme Court is not a
trier of facts.20
Under the expanded concept of judicial power under the Constitution, courts
are charged with 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."21 From the facts obtaining,
we find that the holding of "Balikatan 02-1" joint military exercise has not
intruded into that penumbra of error that would otherwise call for correction on
our part. In other words, respondents in the case at bar have not committed
grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, the petition and the petition-in-intervention are
hereby DISMISSED without prejudice to the filing of a new petition sufficient in
form and substance in the proper Regional Trial Court.
SO ORDERED.
Bellosillo, Melo, Mendoza, Quisumbing, Carpio, JJ., concur.
Kapunan, dissenting opinion.
Ynares-Santiago, join the dissenting opinion.
Panganiban, separate opinion.
Davide., Jr., C.J., Puno, Sandoval-Gutierrez, join the main and separate
opinion of J. Panganiban.
Footnotes
1
For ready reference, the text of the treaty is reproduced herein:
"MUTUAL DEFENSE TREATY
BETWEEN THE REPUBLIC OF THE PHILIPPINES
AND THE UNITED STATES OF AMERICA
30 August 1951
"The parties to this Treaty,
'"Reaffirming their faith in the purposes and principles of the Charter of
the United Nations and their desire to live in peace with all peoples and
all Governments, and desiring to strengthen the fabric of peace in the
Pacific Area,
"Recalling with mutual pride the historic relationship which brought
their two peoples together in a common bond of sympathy and mutual
ideals to fight side-by-side against imperialist aggression during the
last war,
"Desiring to declare publicly and formally their sense of unity and their
common determination to defend themselves against external armed
attack, so that no potential aggressor could be under the illusion that
either of them stands alone in the Pacific Area,
"Desiring further to strengthen their present efforts for collective
defense for the preservation of peace and security pending the
development of a more comprehensive system of regional security in
the Pacific Area,
"Agreeing that nothing in this present instrument shall be considered or
interpreted as in any way , or sense altering or diminishing any existing
agreements or understandings between the United States of America
and the Republic of the Philippines,
"Have agreed as follows:
"ARTICLE I.
"The Parties undertake, as set forth in the Charter of the United
Nations, to settle any international disputes in which they may be
involved by peaceful means in such a manner that international peace
and security and justice are not endangered and to refrain in their
international relations from the threat or use of force in any manner
inconsistent with the purpose of the United Nations.
"ARTICLE II.
"In order more effectively to achieve the objective of this Treaty, the
Parties separately and jointly by self-help and mutual aid will maintain
and develop their individual and collective capacity to resist armed
attack.
"ARTICLE III.
"The Parties, through their Foreign Ministers or their deputies, will
consult together from time to time regarding the implementation of this
Treaty and whenever in the opinion of either of them the territorial
integrity, political independence or security of either of the Parties is
threatened by external.'
I armed attack in the Pacific.
"ARTICLE IV.
"Each Party recognizes that an armed attack in the Pacific Area on
either of the Parties would be dangerous to its own peace and safety
and declares that it would act to meet the common dangers in
accordance with its constitutional processes.
" Any such armed attack and all measures taken as a result thereof
shall be immediately reported to the Security Council of the United
Nations. Such measures shall be terminated when the Security Council
has taken the measures necessary to restore and maintain
international peace and security.
"ARTICLE V.
"For the purpose of Article IV, an armed attack on either of the Parties
is deemed to include an attack on the metropolitan territory of either of
the Parties, or on the island territories under its jurisdiction in the
Pacific or on its armed forces, public vessels or aircraft used in the
Pacific.
"ARTICLE VI.
"This Treaty does not affect and shall not be interpreted as affecting in
any way the rights and obligations of the Parties under the Charter of
the United Nations or the responsibility of the United Nations for the
maintenance of international peace and security.
"ARTICLE VII.
"This Treaty shall be ratified by the United States of America and the
Republic of the Philippines in accordance with their respective
constitutional processes and will come into force when instruments of
ratification thereof have been exchanged by them at Manila.
"ARTICLE VIII.
"This Treaty shall remain in force indefinitely. Either Party may
terminate it one year after notice has been given to the other party.
"IN WITNESS WHEREOF the undersigned Plenipotentiaries have
signed this Treaty.
"DONE in duplicate at Washington this thirtieth day of August, 1951."
xxx xxx xxx xxx
2
The day before, the first petition in connection with the joint military
enterprise was filed --G.R. No.151433, entitled "In the Matter of
Declaration as Constitutional and Legal the 'Balikatan' RP- US Military
Exercises." Petitioner therein Atty. Eduardo B. Inlayo manifested that
he would be perfectly "comfortable" should the Court merely "note" his
petition. We did not oblige him; in a Resolution dated February 12,
2002, we dismissed his petition on the grounds of insufficiency in form
and substance and lack of jurisdiction. After extending a hearty
Valentine's greeting to the Court en banc, Atty. Inlayo promised to
laminate the aforesaid resolution as a testimonial of his "once upon a
time" participation in an issue of national consequence.
3
Annex 1 of the Comment.
4
Annex 2 of the Comment. The Minutes state:
"Secretary Guingona and Assistant Secretary Kelly welcomed the
holding of Balikatan 02-1 exercise ('the Exercise") and the conclusion
of the Terms of Reference for the Exercise. Assistant Secretary Kelly
thanked Secretary Guingona for Secretary Guingona's personal
approval of the Terms of Reference.
"Both Secretary Guingona and Assistant Secretary Kelly emphasized
the importance of cooperating, within the bounds provided for by their
respective constitutions and laws, in the fight against international
terrorism.
"Both Secretary Guingona and Assistant Secretary Kelly expressed the
belief that the Exercise shall not in any way contribute to any
escalation of other conflicts in Mindanao, shall not adversely affect the
progress of ongoing peace negotiations between the Government of
the Philippines and other parties, and shall not put at risk the friendly
relations between the Philippines and its neighbors as well as with
other states. Secretary Guingona stated that he had in mind the
ongoing peace negotiations with the NDF and the MILF and he
emphasized that it is important to make sure that the Exercsie shall not
in any way hinder those negotiations.
"Both Secretary Guingona and Assistant Secretary Kelly stated that
they look forward to the realization of the nearly US$100 million in
security assistance for fiscal years 2001-2002 agreed upon between
H.E. President Gloria Macapagal-Arroyo and H.E. President George
W. Bush last November 2001.
"Secretary Guingona stated that the Philippines welcomes the
assistance that the U.S. will be providing, saying that while Filipino
soldier does not lack experience, courage and determination, they
could benefit from additional knowledge and updated military
technologies.
"Assistant Secretary Kelly said that he is glad the U.S. is able to
provide advice, assistance and training and reiterated the policy
position expressed by H.E. President George W. Bush during his State
of the Nation Address that U.S. forces are in the Philippines to advise,
assist and train Philippine military forces.
"Both Secretary Guingona and Assistant Secretary Kelly reiterated
that, as provided in the Terms of Reference, U.S. Forces shall not
engage in combat during the Exercise, except in accordance with their
right to act in self-defense.
Both Secretary Guingona and Assistant Secretary Kelly reiterated that,
pursuant to Article II of the Visiting Forces Agreement, U.S. forces are
bound to respect the laws of the Philippines during the Exercise.
"Both Secretary Guingona and Assistant Secretary Kelly recognized
that, pursuant to Article VI of the Visiting Forces Agreement, both the
U.S. and Philippine Governments waive any and all claims against the
other for any deaths or injuries to their military and civilian personnel
from the Exercise.
"Secretary Guingona and Assistant Secretary Kelly designated
Ambassador Minerva Falcon and Charge d' Affaires, a.i. Robert Fitts to
initial these minutes.
"Both Secretary Guingona and Assistant Secretary Kelly agreed to
consult from time to time on matters relating to the Exercise as well as
on other matters."
Notwithstanding, in view of the paramount importance and the
constitutional significance of the issues raised in the petitions,
this Court, in the exercise of its sound discretion, brushes aside
the procedural barrier and takes cognizance of the petitions, as
 we have done in the early Emergency Powers Cases, where
we had occasion to rule:
5
338 SCRA 81, 100-101 (2000).
'x x x ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive
orders issued by President Quirino although they were
involving only an indirect and general interest shared in
common with the public. The Court dismissed the
objection that they were not proper parties and ruled
that 'transcendental importance to the public of these
cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of
procedure. ' We have since then applied the exception
in many other cases. [ citation omitted]
This principle was reiterated in the subsequent cases of
Gonzales vs. COMELEC, Daza vs. Singson, and Basco vs.
Phil. Amusement and Gaming Corporation, where we
emphatically held:
'Considering however the importance to the public of
the case at bar, and in keeping with the Court's duty,
under the 1987 Constitution, to detemine whether or
not the other branches of the governrnent have kept
themselves within the limits of the Constitution and the
laws that that they have not abused the discretion given
to them, the Court has brushed aside technicalities of
procedure and has taken cognizance of this petition.xxx
Again, in the more recent case of Kilosbayan vs. Guingona, Jr.,
this Court ruled that in cases of i transcendental importance,
the Court may relax the standing requirements and allow a suit
to prosper even , where there is no direct injury to the party
claiming the right of judicial review.
Although courts generally avoid having to decide a
constitutional question based on the doctrine of separation, of
powers, which enjoins upon the departments of the
government a becoming respect for each others' acts, this
Court nevertheless resolves to take cognizance of the instant
petitions.6
6 BAYAN, et. al. Y. Zamora, 342 SCRA 449 (2000).
7
BAYAN, et. al. v. Zamora, et. al., 342 SCRA 449 (2000).
8
Article I [Definitions], VFA.
9
Article II [Respect for Law], VFA.
l.M. SINCLA1R, THE VIENNA CONVENTION ON THE LAW OF
10
TREATIES 71-72 (1973).
"No one is allowed to do indirectly what he is prohibited to do
II
directly." 12 Sec. . 12 SEC.21, Art. VII.
13
224 SCRA 576, 593 (1993).
14
Vienna Convention on the Law of Treaties, art. 26.
Id, art. 27. However, this is without prejudice to the provisions of art.
15
46 of the Convention, which provides:
"1. A State may not invoke the fact that its consent to be bound by a
treaty has been expressed in violation of a provision of its internal law
regarding competence to conclude treaties as invalidating its consent
unless that violation was manifest and concerned a rule of its internal
law of fundamental importance.
"2. A violation is manifest if it would be objectively evident to any State
conducting itself in the manner in accordance with normal practice and
in good faith."
16 101 Phil. 1155, 1191 (1957).
17
9 SCRA 230,242 (1963).
18
Pertinent sections of Rule 129 provide: "SECTION I. Judicial notice,
when mandatory.-A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of
 states, their political history , forms of government and symbols of
nationality, the law of nations, the admiralty and maritime courts of the
world and their seals, the political constitution and history of the
Philippines, the official acts of the legislative, executive and judicial
departments of the Philippines, the laws of nature, the measure of
time, and the geographical divisions." Likewise, it is also provided in
the next succeeding section: "SEC. 2. Judicial notice, when
discretionary.-A court may take judicial notice of matters which are of
public knowledge, or are capable of unquestionable demonstration, or
ought to be known to judges because of their judicial functions."
Sanchez v. National Labor Relations Commission, 312 SCRA 727 (
19
1999).
Hervas v. Court of Appeals, 319 SCRA 776 (1999); Valmonte v. Court
20
of Appeals, 303 SCRA 278 ( 1999).
1âwphi1.nêt
21
Article VIII, section 1.
The Lawphil Project - Arellano Law Foundation
EN BANC
G.R. No. 151445 April 11, 2002
ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY as alter ego of HER
EXCELLENCY PRESIDENT GLORIA MACAPAGAL-ARROYO and
HONORABLE ANGELO REYES in his official capacity as Secretary of
National Defense, respondents.
SANLAKAS and PARTIDO NG MANGGAGAWA, intervenors.
DISSENTING OPINION
KAPUNAN, J.:
On September 11, 2001, terrorists, with the use of hijacked commercial
airplanes, attacked the World Trade Center Building in New York City and the
Pentagon Building in Washington D.C., U.S.A., killing thousands of people.
Following the attacks, the United States declared a "global war" against
terrorism and started to bomb and attack Afghanistan to topple the Taliban
regime and capture Osama bin Laden, the suspected mastermind of the
September 11, 2001 attacks. With the Northern Alliance mainly providing the
ground forces, the Taliban regime fell in a few months, without Osama bin
Laden having been captured. He is believed either to be still in Afghanistan or
has crossed the border into Pakistan.
In line with President Gloria Macapagal-Arroyo's pledge to render all-out aid to
the US in its campaign against "global terrorism," an arrangement for a. joint
military exercises known as "RP-US Balikatan 02-1 Exercises" was entered
into between the US and Philippine authorities, allegedly within the ambit of
the Visiting Forces Agreement (V FA) with the main objective of enhancing the
operational capabilities of the countries in combating terrorism. The US
government has identified the Abu Sayyaf Group (ASG) in the Philippines as a
terrorist group forming part of a "terrorist underground" linked to the al-Qaeda
network of Osama bin Laden.
Beginning January 21, 2002, American troops started arriving in Mindanao as
part of the total contingent force of 660 soldiers, 160 to be stationed in Basilan,
200 to 250 in Zamboanga, and 250 in the Air Force base in Mactan, Cebu.
The salient features of the joint military exercises as embodied in the Terms of
Reference (TOR) are summarized as follows:
(a) The exercise shall be consistent with the Constitution and other
Philippine laws, particularly the RP-US Visiting Forces Agreement;
(b) No permanent US bases and support facilities will be established;
 (c) The exercise shall be implemented jointly by RP and US Exercise
Co-Directors under the direction of the Chief of Staff of the AFP and in
no instance will US Forces operate independently during field training
exercises;
(d) It shall be conducted and completed within a period of not more
than six months, with the projected participation of 660 US personnel
and 3,800 RP forces, and the Chief of Staff of the AFP shall direct the
Exercise Co-Directors to wind up the Exercise and other activities and
the withdrawal of US forces within the six-month period;
(e) The exercise "is a mutual counter-terrorism advising, assisting and
training exercise" relative to Philippine efforts against the Abu Sayyaf
Group and will be conducted on the Island of Basilan. Further advising,
assisting and training exercises shall be conducted in Malagutay and
the Zamboanga area. Related activities in Cebu will also be conducted
in support of the Exercise;
(f) Only 160 US troops organized in 12-man Special Forces Teams
shall be deployed in Basilan, with the US Team remaining at the
Company Tactical Headquarters where they can observe and assess
the performance of the troops; and
(g) US exercise participants shall not engage in combat, without
prejudice to their right to self-defense.
Petitioners now seek the issuance of a writ of prohibition/injunction to prevent
US troops from participating in areas of armed conflict on the ground that such
is in gross violation of the Constitution. They argue that:
I
THE PHILIPPINES AND THE UNITED STATES SIGNED THE
MUTUAL DEFENSE TREATY (MDT) IN 1951 TO PROVIDE MUTUAL
MILITARY ASSISTANCE IN ACCORDANCE WITH THE
CONSTITUTIONAL PROCESSES" OF EACH COUNTRY ONLY IN
THE CASE OF AN ARMED ATTACK BY AN EXTERNAL
AGGRESSOR, MEANING A THIRD COUNTRY AGAINST ONE OF
THEM.
BY NO STRETCH OF THE IMAGINATION CAN IT BE SAID THAT
THE ABU SAYYAF BANDITS IN BASILAN CONSTITUTE AN
EXTERNAL ARMED FORCE THAT HAS SUBJECTED THE
PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO WARRANT
US MILITARY ASSISTANCE UNDER THE MDT OF 1951.
II
NEITHER DOES THE VFA OF 1999 AUTHORIZED AMERICAN
SOLDIERS TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE
TERRITORY, NOT EVEN TO FIRE BACK "IF FIRED UPON."
Sanlakas and Partido ng Manggagawa as intervenors seek the same relief as
petitioners, stressing that the Constitution prohibits the presence of foreign
military troops or facilities in the country, except under a treaty duly concurred
in by the Senate and recognized as a treaty by the other state.
The petition is impressed with merit.
There is no treaty allowing
US troops to engage in combat.
The Constitution prohibits foreign military bases, troops or facilities unless a
treaty permits the same. Section 25, Article XVIII of the Constitution provides:
After the expiration in 1991 of the Agreement between the Republic of
the Philippines and the United States of America concerning Military
Bases, foreign military bases, troops, or facilities shall not be allowed in
the Philippines except under a treaty duly concurred in by the Senate
and, when the Congress so requires, ratified by a majority of the votes
cast by the people in a national referendum held for that purpose, and
recognized as a treaty by the other contracting State.
There is no treaty allowing foreign military troops to engage in combat with
internal elements.
The Mutual Defense Treaty (MDT) between the Republic of the Philippines
and the United States of America does not authorize US military troops to
engage the ASG in combat. The MDT contemplates only an "external armed
attack." Article III of the treaty cannot be more explicit:
The Parties, through their Foreign Ministers or their deputies, will
consult together from time to time regarding the implementation of this
 treaty and whenever in the opinion of either of them the territorial
integrity, political independence or security of either of the Parties is
threatened by external armed attack in the Pacific. [Emphasis
supplied.]
Supporting this conclusion is the third paragraph of the MDT preamble where
the parties express their desire
to declare publicly and formally their sense of unity and their common
determination to defend themselves against external armed attack, so
that no potential aggressor could be under the illusion that either of
them stands alone in the Pacific area. [Emphasis supplied.]
There is no evidence that
the ASG is connected with
"global terrorism."
There is no empirical basis for the allegation that the "terrorism" which the
ASG is accused of constitutes an "external armed attack." The ASG has
committed mostly crimes of kidnapping for ransom and murder - common
crimes that are punishable under the penal code but which, by themselves,
hardly constitute "terrorism."
Parenthetically, there is lack of agreement as to the precise definition of
terrorism. Indeed, one man's terrorist may be another man's freedom fighter.
The divergent interests of States have caused contradicting definitions and
conflicting perceptions of what constitutes "terrorist acts" that make it difficult
for the United Nations to reach a decision on the definition of terrorism.
Because of this "definitional predicament," the power of definition is easily
exercised by a superpower which, by reason of its unchallenged hegemony,
could draw lists of what it considers terrorist organizations or states sponsoring
terrorism based on criteria determined by the hegemon's own strategic
interests.1
In any case, ties between the ASG and so-called international "terrorist"
organizations have not been established.2 Even assuming that such ties do
exist, it does not necessarily make the "attacks" by the ASG "external" as to
fall within the ambit of the MDT.
Balikatan exercises are
not covered by VFA as
US troops are not
allowed to engage in combat.
Neither is the present situation covered by the so-called Visiting Forces
Agreement (VFA). The V FA was concluded after the removal of the US
military bases, troops and facilities in the aftermath of the termination of the
treaty allowing the presence of American military bases in the Philippines. The
VF A is nothing more than what its formal name suggests: an "Agreement
between the Government of the Republic of the Philippines and the
Government of the United States of America regarding the Treatment of
United States Armed Forces Visiting the Philippines. "The last paragraph of the
V FA preamble also "recogniz[es] the desirability of defining the treatment of
United States personnel visiting the Republic of the Philippines."
The VFA was entered into to enable American troops to enter the country
again after the removal of the American military bases so they can participate
in military exercises under the auspices of the Mutual Defense Treaty. It
provided the legal framework under which American soldiers will be treated
while they remain in the country.
The military exercises contemplated in the VFA are those in accordance with
the National Defense Plan (NDP) of the Philippines. The NDP was previously
approved and adopted by the Mutual Defense Board, jointly chaired by the
Chief of Staff of the Armed Forces of the Philippines and the Commander in
the Pacific of the United States Armed Forces.
The NDP is directed against potential foreign aggressors, not designed to deal
with internal disorders. This was what the Senate understood when it ratified
the VFA in Senate Resolution No. 18, which reads:
The VFA shall serve as the legal mechanism to promote defense
cooperation between the two countries, enhancing the preparedness of
the Armed Forces of the Philippines against external threats; and
enabling the Philippines to bolster the stability of the Pacific Area in a
shared effort with its neighbor states.
The VFA's ambiguous reference to "activities"3 is not a loophole that legitimizes
the presence of US troops in Basilan. In the treaty's preamble, the parties
"reaffirm their obligations under the Mutual Defense Treaty of August 30,
1951." As the preamble comprises part of a treaty's context for the purpose of
interpretation, the VFA must be read in light of the provisions of the MDT. As
stated earlier, the MDT contemplates only an external armed attack;
consequently, the "activities" referred to in the V FA cannot thus be interpreted
to include armed confrontation with or suppression of the ASG members who
appear to be mere local bandits, mainly engaged in kidnapping for ransom and
murder -even arson, extortion and illegal possession of firearms, all of which
are common offenses under our criminal laws. These activities involve purely
police matters and domestic law and order problems; they are hardly "external"
attacks within the contemplation of the MDT and the V FA. To construe the
vagueness of the term "activities" in the V FA as authorizing American troops
to confront the ASG in armed conflict would, therefore, contravene both spirit
and letter of the MDT.
Respondents maintain that the American troops are not here to fight the ASG
but merely to engage in "training exercises." To allay fears that the American
troops are here to engage the ASG in combat, the TOR professes that the
present exercise "is a mutual counter-terrorism advising, assisting and training
Exercise relative to Philippine efforts against the ASG, and will be conducted
on the Island of Basilan." The TOR further provides that the "exercise" shall
involve the conduct of "mutual military assisting, advising and training of RP
and US Forces with the primary objective of enhancing the operational
capabilities of both forces to combat terrorism."
These avowals of assistance, advice, and training, however, fly in the face of
the presence of US troops in the heart of the ASG's stronghold. Such presence
is an act of provocation that makes an armed confrontation between US
soldiers and ASG members inevitable.
The US troops in Basilan have been described as being "on a slippery slope
between training and fighting." Their very presence makes them a target for
terrorist and for the local Moslem populace, which has been bitterly anti-
American since colonial times. Though they are called advisers, the Americans
win be going on risky missions deep into the jungle. A former Green Beret who
is an analyst of Washington's Center for Strategies and Budgetary
Assessments notes that "when troops go out on patrol, they come as close as
they can to direct combat."4
"Advising" or "training" Filipino soldiers hardly describes the involvement of US
troops (unaccompanied by Filipino counterparts) on board combat helicopters
which land on the battlegrounds to evacuate Filipino soldiers wounded while
fighting the ASG. For example, on April 5,2002, US troops on board a Pave
Hawk helicopter flew to the scene of a night battle on Basilan Island to
evacuate a wounded Filipino soldier. This was reportedly the third time in
recent weeks that chopper-borne US forces had evacuated Filipino soldiers
fighting the ASG.5
Whatever euphemisms may be conjured to characterize American
involvement, the RP-US Balikatan 02-1 Exercises are aimed at seeking
out the ASG and exterminating it.
The prohibition contained in the TOR against US exercise participants from
engaging in combat but "without prejudice to their right to self- defense"
provides little consolation. Combat muddles the distinction between aggression
and self-defense. US troops can always say they did not fire first and no one
would dare say otherwise. The ASG has been so demonized that no one cares
how it is exorcised. Significantly, the TOR does not define the parameters of
"self-defense." Militarily, a pre-emptive strike could be interpreted as an act of
self -defense.
What I fear most is that the country would be dragged into a more devastating
and protracted conflict as a result of the continued presence of US military
troops in Basilan. A single ASG sniper's bullet felling an American soldier could
be used as an excuse for massive retaliation by US ground and air forces to
attack and bomb out every suspected ASG lair, all in the name of "self -
defense.
Apprehensions over possible catastrophic consequence of US military
involvement in our country are not without historical basis.
The US experience in Vietnam, for example, began as an expression of
support for the establishment of South Vietnam under Bao Dai's leadership in
1949 to. counteract the support given by communist China and the Soviet
Union to North Vietnam. In 1950, the US began providing military assistance in
fighting North Vietnam by sending military advisors as well as US tanks,
planes, artillery and other supplies. The US became more involved in the
Vietnam conflict when in 1961, it sent the first 400 Green Beret "Special
Advisors" to South Vietnam to train the latter's soldiers in methods of counter-
insurgency against the Viet Cong guerillas. It clarified that the American
soldiers were not in Vietnam to engage in combat.6
However, due to the increased success of the Viet Cong guerillas, assisted by
the Northern Vietnamese Army, the US eventually began to run covert
operations using South Vietnamese commandos in speed boats to harass
radar sites along the coastline of North Vietnam. In 1964, after an alleged
torpedo attack by North Vietnam of the American destroyers USS. Maddox
and USS. C. Turner Joy in the Gulf of Tonkin, the US decided to retaliate by
conducting bombing raids in North Vietnam.7
The Vietnam War resulted in the death of two million Vietnamese and injuries
to three million others. Twelve million Vietnamese became refugees and
thousands of children became orphaned. 8 Millions of acres of Vietnam's forests
were defoliated by a herbicide called Agent Orange, dropped from the air.
Millions of mines and unexploded bombs and artillery shells are still scattered
in the countryside, posing constant danger to life and limb.
US militarv presence is
essentially indefinite
and open-ended.
Already, there are indications that the US intends to reestablish a more
enduring presence in the country. Defense Secretary Angelo Reyes was
quoted to have declared on March 20, 2002 that 2,665 US soldiers will take
part in the RP-US Balikatan 02-2 starting next month in Central Luzon and that
10 more military exercises will be held this year.9 How many more war
exercises are needed for "training and advising" Filipino soldiers? What
conditions must be satisfied for the United States to consider the "war against
terrorism" in Mindanao terminated? The endless frequency and successive
repetition of the war exercises covering the two largest islands of the country
amount, in a real sense, to the permanent presence of foreign military troops
here sans a treaty in blatant violation of the constitutional proscription.
US President George w. Bush in his January 30, 2002 speech declared:
The men and women of our armed-forces have delivered a message to
every enemy of the United States. You shall not escape the justice of
this nation. x x x.
Should any country be timid in the face of terror, if they do not act,
America will.
President Arroyo, in a speech at the Regis Hotel in New York City on February
1, 2002, pledged her "full support" to US President George W. Bush in the fight
against international terrorism. She declared that "the Philippines will continue
to be a partner of the United States in the war to end terrorism" and that "(t)he
anti-terrorism partnership will continue after the whole world is secure against
the terrorist."10
In his speech on the White House Laws on March 11, 2002, President Bush
exhorted:
America encourages and expects governments everywhere to help
remove the terrorist parasites that threaten their own countries and the
peace of the world. x x x. We are helping right now in the Philippines,
where terrorist with links to Al Qaeda are trying to seize the southern
part of the country to establish a military regime.
They are oppressing local peoples, and have kidnapped both
American and Filipino citizens."11
The Philippine Daily Inquirer in its March 17, 2002 issue carried the
following report:
The United States wants to bring in more troops for the controversial
Balikatan 02-1 training exercise aimed at wiping out the Abu Sayyaf
bandits in Basilan.
The US military last week began calling the war-games "Operation
Enduring Freedom-Philippines," giving credence to claims that the
country has become, after Afghanistan, the second front of the US-led
global war on terrorism.
Today's issue of April 1, 2002 reporting as its source New York News Service,
quoted a senior Bush administration official as saying:
We are looking at prolonged training. x x x. It takes more to build up
capabilities than saying here are some night vision goggles.
The declarations of the two Presidents on the war against terrorism and their
avowal to secure the world against the terrorists would ineluctably suggest a
long-drawn conflict without a foreseeable end. Worse, it is not unlikely that
this war could expand and escalate to include as protagonists the Moro
Islamic Liberation Front and the Moro National Liberation Front and -not
improbably -the National People's Army, all lumped-up as "terrorists" in
a unilateral characterization.
No less than US Deputy Defense Secretary Paul Wolfowitz declared that the
proposed $48-billion increase to the US defense budget for 2003 is intended to
sustain the war on terrorism,12 including that fought in this country, thus: .
 Deputy Defense Secretary Paul Wolfowitz on Wednesday said the
Pentagon needs a big budget increase next year on terrorism, which
has expanded from Afghanistan to the Philippines and now appears to
be moving to Georgia.13
The Court can take judicial notice of the foregoing pronouncements as they
are of public knowledge,14 having been widely circulated in all channels of the
media. Neither have they been denied.
US military intervention
is not the solution to the
Mindanao problem.
Assuming that the ASG is a terrorist organization, U.S. military intervention is
not the solution to achieve peace. The annihilation of the rebel bandits would
be a futile quest so long at the root causes of their criminality are not
addressed. A study15 by the United Nations Secretariat, however,
acknowledges that international terrorism springs from "misery, frustration,
grievance and 'despair," elements which, many believe, are present in Basilan.
Two veteran Philippine journalists have described the province as Mindanao's
"war laboratory," where lawlessness, government neglect, religious strife,
poverty, and power struggle are rampant.16
If indeed acts of terrorism are cries of desperation, if terrorism is but a
symptom of the greater maladies of "misery, frustration, grievance and
despair," then it cannot be remedied alone by ASG's physical extermination,
which appears to be the object of President Bush and President Macapagal-
Arroyo's joint campaign against global terrorism." Admittedly, the State has the
right to use force as a means of self-preservation. But perhaps we should all
consider that a military solution is but a first-aid measure, not the prescription
to these diseases. It has been opined that:
The issue of terrorism in the Philippines should be dealt with not from
the perspective of Manila-Washington ties but from a serious study of
how terrorism figures in the minds of leaders and armed men
belonging to the large but deeply factionalized guerrilla movements in
the country. Terrorism can never be dissociated from guerrilla warfare
and the separatist movement in Mindanao. From these movements
would arise religious extremists or millennarian groups. With the right
resources and the right agenda, these movements will continue to
attract men-skilled, intelligent, and experienced-who will come to grasp
the practical realities of waging a war with the minimum of resources
but maximum public impact.
The government does not have to look for foreign connections-and be
motivated by the desire to help foreign friends to address a problem
that has been and will be the making of its own home grown armies. 17
The presence of US troops in Basilan, whether from the legal, philosophical-or
even from the practical perspective cannot be justified, On the contrary, it is
counterproductive. It serves to fuel an already volatile situation. US troops are
likely less able, if not less willing, to distinguish between the innocent and the
enemy. The inevitable "collateral damage," the killing of women and children,
Muslims and Christians, the destruction of homes, schools and hospitals would
fan the flames of fanaticism and transform mere rogues into martyrs.
The Filipino soldier has proven himself brave, courageous, fearless and
tenacious in the field of battle as shown in Bataan and Corregidor, in the four
long years of guerilla warfare thereafter against the Japanese, and in the
struggle for independence against Spain and the United States at the turn of
the last century. The local army and police have successfully battled in the
past against Communist and other insurgents which were more organized and
numerous, operating in larger parts of the country and fighting for their political
beliefs. If our troops need training by us advisers or have to conduct joint
exercises with US troops to improve their fighting capability, these could be
more effectively achieved if done outside Basilan or away from the danger
zones. Instead of bringing troops to the combat zones, the US can do more by
supplying our soldiers with modern and high tech weaponry.
Prescinding from the foregoing disquisitions, it is totally erroneous to argue
that petitioners do not have legal standing or that the issues raised by them
are premature and not based on sufficient facts. The issues raised are of
transcendental importance.18 The Balikatan exercises pose direct injury to
some of the petitioners (intervenors) who live in the affected areas. The
presence of us troops in the combat zones "assisting" and "advising" our
troops in combat against the ASG is a blatant violation of the Constitutional
proscription against the stationing of foreign troops to fight a local insurgency
and puts the country in peril of becoming a veritable killing field. If the time is
not ripe to challenge the continuing affront against the Constitution and the
safety of the people, when is the right time? When the countryside has been
devastated and numerous lives lost?
I therefore vote to give due course to the petition.
 [G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET
AL., Respondents.
Maximo Calalang in his own behalf.
Solicitor General Ozaeta and Assistant Solicitor General
Amparo for respondents Williams, Fragante and Bayan
City Fiscal Mabanag for the other respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF
COMMONWEALTH ACT No. 648; DELEGATION OF LEGISLATIVE
POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO
PROMULGATE RULES AND REGULATIONS. — The provisions of
section 1 of Commonwealth Act No. 648 do not confer legislative
power upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred upon
them and under which they promulgated the rules and regulations
now complained of is not to determine what public policy demands
but merely to carry out the legislative policy laid down by the
National Assembly in said Act, to wit, "to promote safe transit upon,
and avoid obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders of the
President of the Philippines" and to close them temporarily to any or
all classes of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all, therefore,
is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and
regulations on the use of national roads and to determine when and
how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of
public convenience and interest, is an administrative function which
cannot be directly discharged by the National Assembly. It must
depend on the discretion of some other government official to whom
is confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the exercise
of such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL
AUTHORITY. — Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of
the state. Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit upon
and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the
National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve
congestion of traffic, which is, to say the least, a menace to public
safety. Public welfare, then, lies at the bottom of the enactment of
said law, and the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of
restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil.,
218). To this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which life is
a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority
be made to prevail over liberty because then the individual will fall
into slavery. The citizen should achieve the required balance of
liberty and authority in his mind through education and, personal
discipline, so that there may be established the resultant
equilibrium, which means peace and order and happiness for all. The
moment greater authority is conferred upon the government,
logically so much is withdrawn from the residuum of liberty which
resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its
preservation.
3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively
secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption
 by the Government of measures calculated to insure economic
stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus
populi est suprema lex. Social justice, therefore, must be founded on
the recognition of the necessity of interdependence among divers
and diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort,
and quiet of all persons, and of bringing about "the greatest good to
the greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a
taxpayer of Manila, brought before this court this petition for a writ
of prohibition against the respondents, A. D. Williams, as Chairman
of the National Traffic Commission; Vicente Fragante, as Director of
Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila;
and Juan Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic Commission, in
its resolution of July 17, 1940, resolved to recommend to the
Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from
passing along Rosario Street extending from Plaza Calderon de la
Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from
1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the
railroad crossing at Antipolo Street to Echague Street, from 7 a.m.
to 11 p.m., from a period of one year from the date of the opening
of the Colgante Bridge to traffic; that the Chairman of the National
Traffic Commission, on July 18, 1940 recommended to the Director
of Public Works the adoption of the measure proposed in the
resolution aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548 which authorizes said Director of Public
Works, with the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations to regulate
and control the use of and traffic on national roads; that on August
2, 1940, the Director of Public Works, in his first indorsement to the
Secretary of Public Works and Communications, recommended to
the latter the approval of the recommendation made by the
Chairman of the National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to animal-
drawn vehicles be limited to the portion thereof extending from the
railroad crossing at Antipolo Street to Azcarraga Street; that on
August 10, 1940, the Secretary of Public Works and
Communications, in his second indorsement addressed to the
Director of Public Works, approved the recommendation of the latter
that Rosario Street and Rizal Avenue be closed to traffic of animal-
drawn vehicles, between the points and during the hours as above
indicated, for a period of one year from the date of the opening of
the Colgante Bridge to traffic; that the Mayor of Manila and the
Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles are not
allowed to pass and pick up passengers in the places above-
mentioned to the detriment not only of their owners but of the riding
public as well.
It is contended by the petitioner that Commonwealth Act No. 548 by
which the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, is authorized to
promulgate rules and regulations for the regulation and control of
the use of and traffic on national roads and streets is
unconstitutional because it constitutes an undue delegation of
legislative power. This contention is untenable. As was observed by
this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700),
"The rule has nowhere been better stated than in the early Ohio case
decided by Judge Ranney, and since followed in a multitude of cases,
namely: ’The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion as to
what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The
first cannot be done; to the latter no valid objection can be made.’
(Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St.,
88.) Discretion, as held by Chief Justice Marshall in Wayman v.
Southard (10 Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make
decisions of executive departments or subordinate officials thereof,
to whom it has committed the execution of certain acts, final on
questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing
tendency in the decisions is to give prominence to the ’necessity’ of
the case."cralaw virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as follows:
"SECTION 1. To promote safe transit upon, and avoid obstructions
on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the
Philippines, the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, shall promulgate the
necessary rules and regulations to regulate and control the use of
and traffic on such roads and streets. Such rules and regulations,
with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other
structures within a reasonable distance from along the national
roads. Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public
convenience and interest, or for a specified period, with the approval
of the Secretary of Public Works and Communications." cralaw virtua1aw library
The above provisions of law do not confer legislative power upon the
Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and
under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but
merely to carry out the legislative policy laid down by the National
Assembly in said Act, to wit, "to promote safe transit upon and avoid
obstructions on, roads and streets designated as national roads by
acts of the National Assembly or by executive orders of the President
of the Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic makes
such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the
determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and
regulations on the use of national roads and to determine when and
how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of
public convenience and interest, is an administrative function which
cannot be directly discharged by the National Assembly. It must
depend on the discretion of some other government official to whom
jgc:chanrobles.com.ph is confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the exercise
of such discretion is the making of the law. As was said in Locke’s
Appeal (72 Pa. 491): "To assert that a law is less than a law,
because it is made to depend on a future event or act, is to rob the
Legislature of the power to act wisely for the public welfare
whenever a law is passed relating to a state of affairs not yet
developed, or to things future and impossible to fully know." The
proper distinction the court said was this: "The Legislature cannot
delegate its power to make the law; but it can make a law to
delegate a power to determine some fact or state of things upon
which the law makes, or intends to make, its own action depend. To
deny this would be to stop the wheels of government. There are
many things upon which wise and useful legislation must depend
which cannot be known to the law-making power, and, must,
therefore, be a subject of inquiry and determination outside of the
halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed.
294.)
In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076
and 46077, promulgated June 12, 1939, and in Pangasinan
Transportation v. The Public Service Commission, G.R. No. 47065,
promulgated June 26, 1940, this Court had occasion to observe that
the principle of separation of powers has been made to adapt itself
to the complexities of modern governments, giving rise to the
adoption, within certain limits, of the principle of "subordinate
legislation," not only in the United States and England but in
practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of
governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of
governmental powers has, to a large extent, been relaxed by
permitting the delegation of greater powers by the legislative and
vesting a larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations calculated to promote
public interest.
The petitioner further contends that the rules and regulations
promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful interference with
legitimate business or trade and abridge the right to personal liberty
and freedom of locomotion. Commonwealth Act No. 548 was passed
by the National Assembly in the exercise of the paramount police
power of the state.
Said Act, by virtue of which the rules and regulations complained of
were promulgated, aims to promote safe transit upon and avoid
obstructions on national roads, in the interest and convenience of
the public. In enacting said law, therefore, the National Assembly
was prompted by considerations of public convenience and welfare.
It was inspired by a desire to relieve congestion of traffic. which is,
to say the least, a menace to public safety. Public welfare, then, lies
at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty,
with property, and with business and occupations. Persons and
property may be subjected to all kinds of restraints and burdens, in
order to secure the general comfort, health, and prosperity of the
state (U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim
of our Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should
not be made to prevail over authority because then society will fall
into anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The citizen
should achieve the required balance of liberty and authority in his
mind through education and personal discipline, so that there may
be established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is
conferred upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The paradox lies
in the fact that the apparent curtailment of liberty is precisely the
very means of insuring its preservation.
The scope of police power keeps expanding as civilization advances.
As was said in the case of Dobbins v. Los Angeles (195 U.S. 223,
238; 49 L. ed. 169), "the right to exercise the police power is a
continuing one, and a business lawful today may in the future,
because of the changed situation, the growth of population or other
causes, become a menace to the public health and welfare, and be
required to yield to the public good." And in People v. Pomar (46
Phil., 440), it was observed that "advancing civilization is bringing
within the police power of the state today things which were not
thought of as being within such power yesterday. The development
of civilization, the rapidly increasing population, the growth of public
opinion, with an increasing desire on the part of the masses and of
the government to look after and care for the interests of the
individuals of the state, have brought within the police power many
questions for regulation which formerly were not so considered." cralaw virtua1aw library
The petitioner finally avers that the rules and regulations complained
of infringe upon the constitutional precept regarding the promotion
of social justice to insure the well-being and economic security of all
the people. The promotion of social justice, however, is to be
achieved not through a mistaken sympathy towards any given
group. Social justice is "neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization of laws and the
equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least
be approximated. Social justice means the promotion of the welfare
of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements
of society, through the maintenance of a proper economic and social
equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable,
or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principle of
salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the
necessity of interdependence among divers and diverse units of a
society and of the protection that should be equally and evenly G.R. No. 167614 March 24, 2009
extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount ANTONIO M. SERRANO, Petitioner,
objective of the state of promoting the health, comfort, and quiet of vs.
all persons, and of bringing about "the greatest good to the greatest Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO.,
number." cralaw virtua1aw library
INC., Respondents.

In view of the foregoing, the writ of prohibition prayed for is hereby DECISION
denied, with costs against the petitioner. So ordered.
AUSTRIA-MARTINEZ, J.:
Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided health
care, equipped schools and planted the seeds of businesses. They have
woven together the world by transmitting ideas and knowledge from country to
country. They have provided the dynamic human link between cultures,
societies and economies. Yet, only recently have we begun to understand not
only how much international migration impacts development, but how smart
public policies can magnify this effect.

United Nations Secretary-General Ban Ki-Moon

Global Forum on Migration and Development
Brussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042, 2 to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas employment

without just, valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to

national development, but exacerbates the hardships borne by them by unduly
limiting their entitlement in case of illegal dismissal to their lump-sum salary
either for the unexpired portion of their employment contract "or for three
months for every year of the unexpired term, whichever is less" (subject
clause). Petitioner claims that the last clause violates the OFWs' constitutional May 27/31, 1998 (5 days) incl. US$ 413.90
rights in that it impairs the terms of their contract, deprives them of equal Leave pay
protection and denies them due process.
June 01/30, 1998 2,590.00
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner July 01/31, 1998 2,590.00
assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the August 01/31, 1998 2,590.00
Court of Appeals (CA), which applied the subject clause, entreating this Court
to declare the subject clause unconstitutional. Sept. 01/30, 1998 2,590.00
Oct. 01/31, 1998 2,590.00
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Nov. 01/30, 1998 2,590.00
Co., Ltd. (respondents) under a Philippine Overseas Employment
Administration (POEA)-approved Contract of Employment with the following Dec. 01/31, 1998 2,590.00
terms and conditions: Jan. 01/31, 1999 2,590.00
Feb. 01/28, 1999 2,590.00
Duration of contract 12 months
Mar. 1/19, 1999 (19 days) incl. 1,640.00
Position Chief Officer leave pay
Basic monthly salary US$1,400.00 -----------------
-----------------
Hours of work 48.0 hours per week -----------------
Overtime US$700.00 per month -----------------
------------
Vacation leave with pay 7.00 days per month5
25,382.23

On March 19, 1998, the date of his departure, petitioner was constrained to Amount adjusted to chief mate's
accept a downgraded employment contract for the position of Second Officer salary
with a monthly salary of US$1,000.00, upon the assurance and representation (March 19/31, 1998 to April 1,060.5010
of respondents that he would be made Chief Officer by the end of April 1998. 6 1/30, 1998) +
-----------------
Respondents did not deliver on their promise to make petitioner Chief -----------------
Officer.7 Hence, petitioner refused to stay on as Second Officer and was -----------------
repatriated to the Philippines on May 26, 1998. 8 -----------------
-----------------
Petitioner's employment contract was for a period of 12 months or from March ---------
19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26,
TOTAL CLAIM US$
1998, he had served only two (2) months and seven (7) days of his contract,
26,442.7311
leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for as well as moral and exemplary damages and attorney's fees.
constructive dismissal and for payment of his money claims in the total amount
of US$26,442.73, broken down as follows:
The LA rendered a Decision dated July 15, 1999, declaring the
dismissal of petitioner illegal and awarding him monetary benefits, to
wit:
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the dismissal of the complainant (petitioner) by the
respondents in the above-entitled case was illegal and the respondents
are hereby ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange
prevailing at the time of payment, the amount of EIGHT THOUSAND
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
representing the complainant’s salary for three (3) months of the
unexpired portion of the aforesaid contract of employment. 1avvphi1
The respondents are likewise ordered to pay the complainant
[petitioner], jointly and severally, in Philippine Currency, based on the
rate of exchange prevailing at the time of payment, the amount of
FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the
complainant’s claim for a salary differential. In addition, the
respondents are hereby ordered to pay the complainant, jointly and
severally, in Philippine Currency, at the exchange rate prevailing at the
time of payment, the complainant’s (petitioner's) claim for attorney’s
fees equivalent to ten percent (10%) of the total amount awarded to
the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are
hereby DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA
based his computation on the salary period of three months only --
rather than the entire unexpired portion of nine months and 23 days of
petitioner's employment contract - applying the subject clause.
However, the LA applied the salary rate of US$2,590.00, consisting of
petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission
(NLRC) to question the finding of the LA that petitioner was illegally
dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA
erred in not applying the ruling of the Court in Triple Integrated
Services, Inc. v. National Labor Relations Commission17 that in case of
illegal dismissal, OFWs are entitled to their salaries for the unexpired
portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA
Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED.
Respondents are hereby ordered to pay complainant, jointly and
severally, in Philippine currency, at the prevailing rate of exchange at
the time of payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney’s fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to
US$1,400.00 because R.A. No. 8042 "does not provide for the award of
overtime pay, which should be proven to have been actually performed, and
for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he
questioned the constitutionality of the subject clause. 21 The NLRC denied the
motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the
constitutional challenge against the subject clause. 24 After initially dismissing
the petition on a technicality, the CA eventually gave due course to it, as
directed by this Court in its Resolution dated August 7, 2003 which granted the
petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on
the reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner
brings his cause to this Court on the following grounds:
I the computation of the lump-sum salary to be awarded to petitioner by reason
The Court of Appeals and the labor tribunals have decided the case in a way
not in accord with applicable decision of the Supreme Court involving similar
issue of granting unto the migrant worker back wages equal to the unexpired
portion of his contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were
merely applying their interpretation of Section 10 of Republic Act No. 8042, it is
submitted that the Court of Appeals gravely erred in law when it failed to
discharge its judicial duty to decide questions of substance not theretofore
determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back
wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic
Act No. 8042, the Court of Appeals gravely erred in law in excluding from
petitioner’s award the overtime pay and vacation pay provided in his contract
since under the contract they form part of his salary. 28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he
is already old and sickly, and he intends to make use of the monetary award
for his medical treatment and medication.29 Required to comment, counsel for
petitioner filed a motion, urging the court to allow partial execution of the
undisputed monetary award and, at the same time, praying that the
constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court
now takes up the full merit of the petition mindful of the extreme importance of
the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner
was illegal is not disputed. Likewise not disputed is the salary differential of
US$45.00 awarded to petitioner in all three fora. What remains disputed is only
of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum
salary of petitioner at the monthly rate of US$1,400.00 covering the period of
three months out of the unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that,
in addition to the US$4,200.00 awarded by the NLRC and the CA, he is
entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his
salaries for the entire nine months and 23 days left of his employment contract,
computed at the monthly rate of US$2,590.00. 31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it
unduly impairs the freedom of OFWs to negotiate for and stipulate in their
overseas employment contracts a determinate employment period and a fixed
salary package.32 It also impinges on the equal protection clause, for it treats
OFWs differently from local Filipino workers (local workers) by putting a cap on
the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers
when their dismissal is declared illegal; that the disparate treatment is not
reasonable as there is no substantial distinction between the two groups; 33 and
that it defeats Section 18,34 Article II of the Constitution which guarantees the
protection of the rights and welfare of all Filipino workers, whether deployed
locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals
are not in line with existing jurisprudence on the issue of money claims of
illegally dismissed OFWs. Though there are conflicting rulings on this,
petitioner urges the Court to sort them out for the guidance of affected OFWs. 36
Petitioner further underscores that the insertion of the subject clause into R.A.
No. 8042 serves no other purpose but to benefit local placement agencies. He
marks the statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment
of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation.
Hence, placement agencies that are in good faith and which fulfill their
obligations are unnecessarily penalized for the acts of the foreign employer. To
protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section
10 of R.A. No. 8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies,
the subject clause sacrifices the well-being of OFWs. Not only that, the
provision makes foreign employers better off than local employers because in
cases involving the illegal dismissal of employees, foreign employers are liable
for salaries covering a maximum of only three months of the unexpired
employment contract while local employers are liable for the full lump-sum
salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the
amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving the
illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more
than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process
clause, for it deprives him of the salaries and other emoluments he is entitled
to under his fixed-period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the
constitutional issue should not be entertained, for this was belatedly interposed
by petitioner in his appeal before the CA, and not at the earliest opportunity,
which was when he filed an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on
July 15, 1995, its provisions could not have impaired petitioner's 1998
employment contract. Rather, R.A. No. 8042 having preceded petitioner's
contract, the provisions thereof are deemed part of the minimum terms of
petitioner's employment, especially on the matter of money claims, as this was
not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of
the nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential
elements that distinguish OFWs from local workers: first, while local workers
perform their jobs within Philippine territory, OFWs perform their jobs for
foreign employers, over whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce judgment; and second, as
held in Coyoca v. National Labor Relations Commission43 and Millares v.
National Labor Relations Commission,44 OFWs are contractual employees who
can never acquire regular employment status, unlike local workers who are or
can become regular employees. Hence, the OSG posits that there are rights
and privileges exclusive to local workers, but not available to OFWs; that these
peculiarities make for a reasonable and valid basis for the differentiated
treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection
clause nor Section 18, Article II of the Constitution. 45
Lastly, the OSG defends the rationale behind the subject clause as a police
power measure adopted to mitigate the solidary liability of placement agencies
for this "redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies
helps [assure] the government that migrant workers are properly deployed and
are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the
acts of its co-equals, such as the Congress, it does so only when these
conditions obtain: (1) that there is an actual case or controversy involving a
conflict of rights susceptible of judicial determination; 47 (2) that the
constitutional question is raised by a proper party48 and at the earliest
opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50 otherwise the Court will dismiss the case or decide the same on some
other ground.51
Without a doubt, there exists in this case an actual controversy directly
involving petitioner who is personally aggrieved that the labor tribunals and the
CA computed his monetary award based on the salary period of three months
only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity
entails the interposition of the issue in the pleadings before a competent
court, such that, if the issue is not raised in the pleadings before that
competent court, it cannot be considered at the trial and, if not considered in
the trial, it cannot be considered on appeal. 52 Records disclose that the issue
on the constitutionality of the subject clause was first raised, not in petitioner's
appeal with the NLRC, but in his Motion for Partial Reconsideration with said
labor tribunal,53 and reiterated in his Petition for Certiorari before the
CA.54 Nonetheless, the issue is deemed seasonably raised because it is not
the NLRC but the CA which has the competence to resolve the constitutional
issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function – its function in the present case is limited to determining questions of
fact to which the legislative policy of R.A. No. 8042 is to be applied and to
resolving such questions in accordance with the standards laid down by the
law itself;55 thus, its foremost function is to administer and enforce R.A. No.
8042, and not to inquire into the validity of its provisions. The CA, on the other
hand, is vested with the power of judicial review or the power to declare
unconstitutional a law or a provision thereof, such as the subject
clause.56 Petitioner's interposition of the constitutional issue before the CA was
undoubtedly seasonable. The CA was therefore remiss in failing to take up the
issue in its decision.
The third condition that the constitutional issue be critical to the resolution of
the case likewise obtains because the monetary claim of petitioner to his lump-
sum salary for the entire unexpired portion of his 12-month employment
contract, and not just for a period of three months, strikes at the very core of
the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the
subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations
in his contract on the term of his employment and the fixed salary package he
will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation,58 and cannot affect acts or contracts
already perfected;59 however, as to laws already in existence, their provisions
are read into contracts and deemed a part thereof.60 Thus, the non-impairment
clause under Section 10, Article II is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties
thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the provisions of R.A. No.
8042.
But even if the Court were to disregard the timeline, the subject clause may not
be declared unconstitutional on the ground that it impinges on the impairment
clause, for the law was enacted in the exercise of the police power of the State
to regulate a business, profession or calling, particularly the recruitment and
deployment of OFWs, with the noble end in view of ensuring respect for the
dignity and well-being of OFWs wherever they may be employed.61 Police
power legislations adopted by the State to promote the health, morals, peace,
education, good order, safety, and general welfare of the people are generally
applicable not only to future contracts but even to those already in existence,
for all private contracts must yield to the superior and legitimate measures
taken by the State to promote public welfare. 62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of
law nor shall any person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the
labor sector, without distinction as to place of deployment, full protection of
their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional
provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary
obligations should be borne by them in equal degree; none should be denied
the protection of the laws which is enjoyed by, or spared the burden imposed
on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation;
however, to be valid, the classification must comply with these requirements:
1) it is based on substantial distinctions; 2) it is germane to the purposes of the
law; 3) it is not limited to existing conditions only; and 4) it applies equally to all
members of the class.66
There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the deferential or
rational basis scrutiny in which the challenged classification needs only be
shown to be rationally related to serving a legitimate state interest;67 b) the
middle-tier or intermediate scrutiny in which the government must show that
the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; 68 and c)
strict judicial scrutiny69 in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right 70 or operates to the peculiar
disadvantage of a suspect class71 is presumed unconstitutional, and the
burden is upon the government to prove that the classification is necessary to
achieve a compelling state interest and that it is the least restrictive
means to protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is
drawn along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the
constitutionality of a provision in the charter of the Bangko Sentral ng
Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization Law
(SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed
provision contained a suspect classification based on salary grade, the Court
deliberately employed the standard of strict judicial scrutiny in its review of the
constitutionality of said provision. More significantly, it was in this case that the
Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and
its policies should be accorded recognition and respect by the courts of justice
except when they run afoul of the Constitution. The deference stops where the
classification violates a fundamental right, or prejudices persons accorded
special protection by the Constitution. When these violations arise, this
Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by
the Constitution requires a stricter judicial scrutiny finds no support in
American or English jurisprudence. Nevertheless, these foreign decisions and
authorities are not per se controlling in this jurisdiction. At best, they are
persuasive and have been used to support many of our decisions. We should
not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people,
and always with our own concept of law and justice. Our laws must be
construed in accordance with the intention of our own lawmakers and such
intent may be deduced from the language of each law and the context of other
local legislation related thereto. More importantly, they must be construed to
serve our own public interest which is the be-all and the end-all of all our laws.
And it need not be stressed that our public interest is distinct and different from
others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims "equality" as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote
social justice in Article II, Section 10, in "all phases of national development,"
further explicitated in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x x x [T]here is thus in the
Philippine Constitution no lack of doctrinal support for a more vigorous state
effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor. Under the
policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less
privilege in life should have more in law. And the obligation to afford protection
to labor is incumbent not only on the legislative and executive branches but
also on the judiciary to translate this pledge into a living reality. Social justice
calls for the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to
Congress in exercising its legislative power. Judicial scrutiny would be based
on the "rational basis" test, and the legislative discretion would be given
deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental
right, or the perpetuation of prejudice against persons favored by the
Constitution with special protection, judicial scrutiny ought to be more
strict. A weak and watered down view would call for the abdication of this
Court’s solemn duty to strike down any law repugnant to the Constitution and
the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the
character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary
grade or officer-employee status. It is akin to a distinction based on economic
class and status, with the higher grades as recipients of a benefit specifically
withheld from the lower grades. Officers of the BSP now receive higher
compensation packages that are competitive with the industry, while the
poorer, low-salaried employees are limited to the rates prescribed by the SSL.
The implications are quite disturbing: BSP rank-and-file employees are paid
the strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file employees consist of
people whose status and rank in life are less and limited, especially in terms of
job marketability, it is they - and not the officers - who have the real economic
and financial need for the adjustment . This is in accord with the policy of the
Constitution "to free the people from poverty, provide adequate social services,
extend to them a decent standard of living, and improve the quality of life for
all." Any act of Congress that runs counter to this constitutional desideratum
deserves strict scrutiny by this Court before it can pass muster. (Emphasis
supplied)
Imbued with the same sense of "obligation to afford protection to labor," the
Court in the present case also employs the standard of strict judicial scrutiny,
for it perceives in the subject clause a suspect classification prejudicial to
OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies
to all OFWs. However, a closer examination reveals that the subject clause
has a discriminatory intent against, and an invidious impact on, OFWs at two
levels:
First, OFWs with employment contracts of less than one year vis-à-vis
OFWs with employment contracts of one year or more;
 Second, among OFWs with employment contracts of more than one SR3,600.00 equivalent to his three months’ salary, this being the lesser value,
year; and to wit:

Third, OFWs vis-à-vis local workers with fixed-period employment; Under Section 10 of R.A. No. 8042, a worker dismissed from overseas
employment without just, valid or authorized cause is entitled to his salary for
OFWs with employment contracts of less than one year vis-à-vis OFWs the unexpired portion of his employment contract or for three (3) months for
with employment contracts of one year or more every year of the unexpired term, whichever is less.

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. In the case at bar, the unexpired portion of private respondent’s employment
National Labor Relations Commission79 (Second Division, 1999) that the Court contract is eight (8) months. Private respondent should therefore be paid his
laid down the following rules on the application of the periods prescribed under basic salary corresponding to three (3) months or a total of SR3,600.82
Section 10(5) of R.A. No. 804, to wit:
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
A plain reading of Sec. 10 clearly reveals that the choice of which amount Commission (Third Division, December 1998),83 which involved an OFW
to award an illegally dismissed overseas contract worker, i.e., whether (therein respondent Erlinda Osdana) who was originally granted a 12-month
his salaries for the unexpired portion of his employment contract or contract, which was deemed renewed for another 12 months. After serving for
three (3) months’ salary for every year of the unexpired term, whichever one year and seven-and-a-half months, respondent Osdana was illegally
is less, comes into play only when the employment contract concerned dismissed, and the Court awarded her salaries for the entire unexpired portion
has a term of at least one (1) year or more. This is evident from the words of four and one-half months of her contract.
"for every year of the unexpired term" which follows the words "salaries
x x x for three months." To follow petitioners’ thinking that private respondent The Marsaman interpretation of Section 10(5) has since been adopted in the
is entitled to three (3) months salary only simply because it is the lesser following cases:
amount is to completely disregard and overlook some words used in the
statute while giving effect to some. This is contrary to the well-established rule
Case Title Contract Period Unexpired Period
in legal hermeneutics that in interpreting a statute, care should be taken that
Period of Period Applied in
every part or word thereof be given effect since the law-making body is
Service the
presumed to know the meaning of the words employed in the statue and to
Computation
have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis
of the
supplied)
Monetary
Award
In Marsaman, the OFW involved was illegally dismissed two months into his
10-month contract, but was awarded his salaries for the remaining 8 months Skippers v. 6 months 2 4 months 4 months
and 6 days of his contract. Maguad84 months
Bahia 9 months 8 4 months 4 months
Prior to Marsaman, however, there were two cases in which the Court made Shipping v. months
conflicting rulings on Section 10(5). One was Asian Center for Career and Reynaldo
Employment System and Services v. National Labor Relations Chua 85
Commission (Second Division, October 1998),81 which involved an OFW who
was awarded a two-year employment contract, but was dismissed after Centennial 9 months 4 5 months 5 months
working for one year and two months. The LA declared his dismissal illegal Transmarine months
and awarded him SR13,600.00 as lump-sum salary covering eight months, the v. dela Cruz
unexpired portion of his contract. On appeal, the Court reduced the award to l86
 Talidano v. 12 3 9 months 3 months The second category consists of OFWs with fixed-period employment
Falcon87 months months contracts of one year or more; in case of illegal dismissal, they are entitled to
monetary award equivalent to only 3 months of the unexpired portion of their
Univan v. 12 3 9 months 3 months contracts.
CA 88 months months
Oriental v. 12 more 10 months 3 months The disparity in the treatment of these two groups cannot be discounted.
CA 89 months than 2 In Skippers, the respondent OFW worked for only 2 months out of his 6-month
months contract, but was awarded his salaries for the remaining 4 months. In contrast,
the respondent OFWs in Oriental and PCL who had also worked for about 2
PCL v. 12 more more or 3 months months out of their 12-month contracts were awarded their salaries for only 3
NLRC90 months than 2 less 9 months of the unexpired portion of their contracts. Even the OFWs involved
months months in Talidano and Univan who had worked for a longer period of 3 months out of
Olarte v. 12 21 days 11 months 3 months their 12-month contracts before being illegally dismissed were awarded their
Nayona91 months and 9 salaries for only 3 months.
days
To illustrate the disparity even more vividly, the Court assumes a hypothetical
JSS 12 16 days 11 months 3 months OFW-A with an employment contract of 10 months at a monthly salary rate of
v.Ferrer92 months and 24 US$1,000.00 and a hypothetical OFW-B with an employment contract of 15
days months with the same monthly salary rate of US$1,000.00. Both commenced
Pentagon v. 12 9 2 months 2 months and work on the same day and under the same employer, and were illegally
Adelantar93 months months and 23 23 days dismissed after one month of work. Under the subject clause, OFW-A will be
and 7 days entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months
days of his contract, whereas OFW-B will be entitled to only US$3,000.00,
equivalent to his salaries for 3 months of the unexpired portion of his contract,
Phil. Employ 12 10 2 months Unexpired instead of US$14,000.00 for the unexpired portion of 14 months of his
v. Paramio, months months portion contract, as the US$3,000.00 is the lesser amount.
et al.94
Flourish 2 years 26 days 23 months 6 months or 3 The disparity becomes more aggravating when the Court takes into account
Maritime v. and 4 months for jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
Almanzor 95 days each year of 1995,97 illegally dismissed OFWs, no matter how long the period of their
contract employment contracts, were entitled to their salaries for the entire unexpired
portions of their contracts. The matrix below speaks for itself:
Athenna 1 year, 1 1 year, 9 6 months or 3
Manpower 10 month months months for
v. Villanos 96 months and 28 each year of Case Title Contract Period Unexpired Period
and 28 days contract Period of Period Applied in
days Service the
Computation
of the
As the foregoing matrix readily shows, the subject clause classifies OFWs into Monetary
two categories. The first category includes OFWs with fixed-period Award
employment contracts of less than one year; in case of illegal dismissal, they
are entitled to their salaries for the entire unexpired portion of their contract.
 ATCI v. CA, 2 years 2 22 months 22 months Upon closer examination of the terminology employed in the subject clause,
et al.98 months the Court now has misgivings on the accuracy of the Marsaman interpretation.

Phil. 2 years 7 days 23 months 23 months The Court notes that the subject clause "or for three (3) months for every year
Integrated v. and 23 and 23 days of the unexpired term, whichever is less" contains the qualifying phrases
NLRC99 days "every year" and "unexpired term." By its ordinary meaning, the word "term"
JGB v. 2 years 9 15 months 15 months means a limited or definite extent of time. 105 Corollarily, that "every year" is but
NLC100 months part of an "unexpired term" is significant in many ways: first, the unexpired
term must be at least one year, for if it were any shorter, there would be no
Agoy v. 2 years 2 22 months 22 months occasion for such unexpired term to be measured by every year; and second,
NLRC101 months the original term must be more than one year, for otherwise, whatever would
EDI v. 2 years 5 19 months 19 months be the unexpired term thereof will not reach even a year. Consequently, the
NLRC, et months more decisive factor in the determination of when the subject clause "for three
al.102 (3) months for every year of the unexpired term, whichever is less" shall apply
is not the length of the original contract period as held in Marsaman,106 but the
Barros v. 12 4 8 months 8 months length of the unexpired portion of the contract period -- the subject clause
NLRC, et months months applies in cases when the unexpired portion of the contract period is at least
al.103 one year, which arithmetically requires that the original contract period be
Philippine 12 6 5 months 5 months and more than one year.
Transmarine months months and 18 18 days
v. Carilla104 and 22 days Viewed in that light, the subject clause creates a sub-layer of discrimination
days among OFWs whose contract periods are for more than one year: those who
are illegally dismissed with less than one year left in their contracts shall be
entitled to their salaries for the entire unexpired portion thereof, while those
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods who are illegally dismissed with one year or more remaining in their contracts
or the unexpired portions thereof, were treated alike in terms of the shall be covered by the subject clause, and their monetary benefits limited to
computation of their monetary benefits in case of illegal dismissal. Their claims their salaries for three months only.
were subjected to a uniform rule of computation: their basic salaries multiplied
by the entire unexpired portion of their employment contracts. To concretely illustrate the application of the foregoing interpretation of the
subject clause, the Court assumes hypothetical OFW-C and OFW-D, who
The enactment of the subject clause in R.A. No. 8042 introduced a each have a 24-month contract at a salary rate of US$1,000.00 per month.
differentiated rule of computation of the money claims of illegally dismissed OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th
OFWs based on their employment periods, in the process singling out one month. Considering that there is at least 12 months remaining in the contract
category whose contracts have an unexpired portion of one year or more and period of OFW-C, the subject clause applies to the computation of the latter's
subjecting them to the peculiar disadvantage of having their monetary awards monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the
limited to their salaries for 3 months or for the unexpired portion thereof, latter's total salaries for the 12 months unexpired portion of the contract, but to
whichever is less, but all the while sparing the other category from such the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of
prejudice, simply because the latter's unexpired contracts fall short of one the 12-month unexpired term of the contract. On the other hand, OFW-D is
year. spared from the effects of the subject clause, for there are only 11 months left
in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00,
Among OFWs With Employment Contracts of More Than One Year which is equivalent to his/her total salaries for the entire 11-month unexpired
portion.
OFWs vis-à-vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation
of the monetary awards of illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually
Article 299 of the Code of Commerce (1888), 108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and
employees should have been made of a fixed period, none of the contracting
parties, without the consent of the other, may withdraw from the fulfillment of
said contract until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and
damage suffered, with the exception of the provisions contained in the
following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing
provision to determine the liability of a shipping company for the illegal
discharge of its managers prior to the expiration of their fixed-term
employment. The Court therein held the shipping company liable for the
salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of
the Code of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the
agent should be for a definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for reasons of insubordination in
serious matters, robbery, theft, habitual drunkenness, and damage caused to
the vessel or to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and
subsistence allowance of its illegally dismissed employees for
the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the
Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a
certain time and for a certain work cannot leave or be dismissed without
sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in
Article 1586 as a conjunctive "and" so as to apply the provision to local
workers who are employed for a time certain although for no particular skill.
This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de
France Company.113 And in both Lemoine and Palomar, the Court adopted the
general principle that in actions for wrongful discharge founded on Article
1586, local workers are entitled to recover damages to the extent of the
amount stipulated to be paid to them by the terms of their contract. On the
computation of the amount of such damages, the Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has
been brought to our attention to the contrary under Spanish jurisprudence, that
when an employee is wrongfully discharged it is his duty to seek other
employment of the same kind in the same community, for the purpose of
reducing the damages resulting from such wrongful discharge. However, while
this is the general rule, the burden of showing that he failed to make an effort
to secure other employment of a like nature, and that other employment of a
like nature was obtainable, is upon the defendant. When an employee is
wrongfully discharged under a contract of employment his prima facie damage
is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y.,
362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98
Mich., 43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on
fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title
I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work),
Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of
1889, the new provisions of the Civil Code do not expressly provide for the
remedies available to a fixed-term worker who is illegally discharged. However,
it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court
carried over the principles on the payment of damages underlying Article 1586
of the Civil Code of 1889 and applied the same to a case involving the illegal
discharge of a local worker whose fixed-period employment contract was
entered into in 1952, when the new Civil Code was already in effect. 118
More significantly, the same principles were applied to cases involving
overseas Filipino workers whose fixed-term employment contracts were
illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v.
Ople,119 involving seafarers who were illegally discharged. In Teknika Skills
and Trade Services, Inc. v. National Labor Relations Commission, 120 an OFW
who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to
the unexpired portion of her contract. The Court arrived at the same ruling in
Anderson v. National Labor Relations Commission, 121 which involved a
foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who
was illegally dismissed after only nine months on the job -- the Court awarded
him salaries corresponding to 15 months, the unexpired portion of his contract.
In Asia World Recruitment, Inc. v. National Labor Relations Commission, 122 a
Filipino working as a security officer in 1989 in Angola was awarded his
salaries for the remaining period of his 12-month contract after he was
wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor
Relations Commission,123 an OFW whose 12-month contract was illegally cut
short in the second month was declared entitled to his salaries for the
remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their
salaries for the entire unexpired portions of their contracts. But with the
enactment of R.A. No. 8042, specifically the adoption of the subject clause,
illegally dismissed OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that their money
claims are subject to a 3-month cap, whereas no such limitation is imposed on
local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-month
cap on the claim of OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other OFWs or local workers
with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by
the Constitution, the Court now subjects the classification to a strict judicial
scrutiny, and determines whether it serves a compelling state interest through
the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights
and powers arrayed in the Constitution and calibrated by history. 124 It is akin to
the paramount interest of the state125 for which some individual liberties must
give way, such as the public interest in safeguarding health or maintaining
medical standards,126 or in maintaining access to information on matters of
public concern.127
In the present case, the Court dug deep into the records but found no
compelling state interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to
protect the employment of Filipino seafarers overseas x x x. By limiting the
liability to three months [sic], Filipino seafarers have better chance of getting
hired by foreign employers." The limitation also protects the interest of local
placement agencies, which otherwise may be made to shoulder millions of
pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment
of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation.
Hence, placement agencies that are in good faith and which fulfill their
obligations are unnecessarily penalized for the acts of the foreign employer. To
protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of
RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare
the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly
deployed and are employed under decent and humane
conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the
source of its perception of the state interest sought to be served by the subject
clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep.
Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from
which the law originated;130 but the speech makes no reference to the
underlying reason for the adoption of the subject clause. That is only natural
for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on
money claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of the complaint, the claim arising
out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and
all claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money
claims exclusive of damages under this Section shall not be less than fifty
percent (50%) of such money claims: Provided, That any installment
payments, if applicable, to satisfy any such compromise or voluntary
settlement shall not be more than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided
under this Section shall subject the responsible officials to any or all of the
following penalties:
(1) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incurred under other
existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was
inserted and eventually adopted as the 5th paragraph of Section 10 of R.A.
No. 8042. The Court examined the rationale of the subject clause in the
transcripts of the "Bicameral Conference Committee (Conference Committee)
Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill
No. 2077 and House Bill No. 14314)." However, the Court finds no discernible
state interest, let alone a compelling one, that is sought to be protected or
advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of
the discrimination against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is
to protect the employment of OFWs by mitigating the solidary liability of
placement agencies, such callous and cavalier rationale will have to be
rejected. There can never be a justification for any form of government action
that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution
commands. The idea that private business interest can be elevated to the level
of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary
liability of placement agencies vis-a-vis their foreign principals, there are
mechanisms already in place that can be employed to achieve that purpose
without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Workers, dated February 4, 2002,
imposes administrative disciplinary measures on erring foreign employers who
default on their contractual obligations to migrant workers and/or their
Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers, dated May 23,
2003, contains similar administrative disciplinary measures against erring
foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive
means of aiding local placement agencies in enforcing the solidary liability of
their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection. 1avvphi1
Further, there would be certain misgivings if one is to approach the declaration
of the unconstitutionality of the subject clause from the lone perspective that
the clause directly violates state policy on labor under Section 3, 131 Article XIII
of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-
executing,132 there are some which this Court has declared not judicially
enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature
of which, this Court, in Agabon v. National Labor Relations Commission,134 has
described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure
may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation.
However, to declare that the constitutional provisions are enough to guarantee
the full exercise of the rights embodied therein, and the realization of ideals
therein expressed, would be impractical, if not unrealistic. The espousal of
such view presents the dangerous tendency of being overbroad and
exaggerated. The guarantees of "full protection to labor" and "security of
tenure", when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor against any
form of removal regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment-a utopian notion, doubtless-but
still hardly within the contemplation of the framers. Subsequent legislation is
still needed to define the parameters of these guaranteed rights to ensure the
protection and promotion, not only the rights of the labor sector, but of the
employers' as well. Without specific and pertinent legislation, judicial bodies
will be at a loss, formulating their own conclusion to approximate at least the
aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a
source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing.
As manifested by several framers of the 1987 Constitution, the provisions on
social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be
declared unconstitutional. It may unwittingly risk opening the floodgates of
litigation to every worker or union over every conceivable violation of so broad
a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the
working class any actual enforceable right, but merely clothes it with the status
of a sector for whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being an
impetus not just for the executive and legislative departments, but for the
judiciary as well, to protect the welfare of the working class. And it was in fact
consistent with that constitutional agenda that the Court in Central Bank (now
Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S.
Puno, formulated the judicial precept that when the challenge to a statute is
premised on the perpetuation of prejudice against persons favored by the
Constitution with special protection -- such as the working class or a section
thereof -- the Court may recognize the existence of a suspect classification
and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance
of Section 3, Article XIII is a groundless apprehension. Central Bank applied
Article XIII in conjunction with the equal protection clause. Article XIII, by itself,
without the application of the equal protection clause, has no life or force of its
own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject
clause violates petitioner's right to substantive due process, for it deprives him
of property, consisting of monetary benefits, without any existing valid
governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject
clause of limiting the entitlement of OFWs to their three-month salary in case
of illegal dismissal, is to give them a better chance of getting hired by foreign
employers. This is plain speculation. As earlier discussed, there is nothing in
the text of the law or the records of the deliberations leading to its enactment
or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental
purpose; and it is for that precise reason that the clause violates not just
petitioner's right to equal protection, but also her right to substantive due
process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries
for the entire unexpired period of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the enactment of R.A. No.
8042.
On the Third Issue
the basic monthly salary. In short, the contract provision guarantees the right
to overtime pay but the entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of
the contract is unwarranted since the same is given during the actual service
of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for
three months for every year of the unexpired term, whichever is less" in the 5th
paragraph of Section 10 of Republic Act No. 8042
is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision
and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the
effect that petitioner is AWARDED his salaries for the entire unexpired portion
of his employment contract consisting of nine months and 23 days computed
at the rate of US$1,400.00 per month.

Petitioner contends that his overtime and leave pay should form part of the No costs.
salary basis in the computation of his monetary award, because these are
fixed benefits that have been stipulated into his contract. SO ORDERED.

Petitioner is mistaken. MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
The word salaries in Section 10(5) does not include overtime and leave pay.
For seafarers like petitioner, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work "performed" in
excess of the regular eight hours, and holiday pay is compensation for any
work "performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion
of overtime and holiday pay in the computation of petitioner's monetary award,
unless there is evidence that he performed work during those periods. As the
Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay should be disallowed in
light of our ruling in Cagampan v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said
was actually performed are conditions to be satisfied before a seaman could
be entitled to overtime pay which should be computed on the basis of 30% of
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC.,
JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR.,
BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA
C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO,
CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS
JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and
PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN
REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY
OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND
BANK OF THE PHILIPPINES, respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and
challenged Hercules for his life on his way to Mycenae after performing his
eleventh labor. The two wrestled mightily and Hercules flung his adversary to
the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement.
Finally, as they continued grappling, it dawned on Hercules that Antaeus was
the son of Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in
the air, beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating
touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell
of the elemental forces of life and death, of men and women who, like Antaeus
need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in
the distribution of this precious resource among our people. But it is more than
a slogan. Through the brooding centuries, it has become a battle-cry
dramatizing the increasingly urgent demand of the dispossessed among us for
a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social
justice to "insure the well-being and economic security of all the
people," 1 especially the less privileged. In 1973, the new Constitution affirmed
this goal adding specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property and equitably
diffuse property ownership and profits." 2 Significantly, there was also the
specific injunction to "formulate and implement an agrarian reform program
aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these
sentiments, it also adopted one whole and separate Article XIII on Social
Justice and Human Rights, containing grandiose but undoubtedly sincere
provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular
 farmworkers, who are landless, to own directly or collectively common discussion and resolution, The different antecedents of each case will
the lands they till or, in the case of other farmworkers, to require separate treatment, however, and will first be explained hereunder.
receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all G.R. No. 79777
agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos.
account ecological, developmental, or equity considerations 228 and 229, and R.A. No. 6657.
and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of
The subjects of this petition are a 9-hectare riceland worked by four tenants
small landowners. The State shall further provide incentives for
and owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland
voluntary land-sharing.
worked by four tenants and owned by petitioner Augustin Hermano, Jr. The
tenants were declared full owners of these lands by E.O. No. 228 as qualified
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land farmers under P.D. No. 27.
Reform Code, had already been enacted by the Congress of the Philippines on
August 8, 1963, in line with the above-stated principles. This was substantially
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on
superseded almost a decade later by P.D. No. 27, which was promulgated on
grounds inter alia of separation of powers, due process, equal protection and
October 21, 1972, along with martial law, to provide for the compulsory
the constitutional limitation that no private property shall be taken for public
acquisition of private lands for distribution among tenant-farmers and to specify
use without just compensation.
maximum retention limits for landowners.
They contend that President Aquino usurped legislative power when she
The people power revolution of 1986 did not change and indeed even
promulgated E.O. No. 228. The said measure is invalid also for violation of
energized the thrust for agrarian reform. Thus, on July 17, 1987, President
Article XIII, Section 4, of the Constitution, for failure to provide for retention
Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor
limits for small landowners. Moreover, it does not conform to Article VI, Section
of the beneficiaries of P.D. No. 27 and providing for the valuation of still
25(4) and the other requisites of a valid appropriation.
unvalued lands covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential Proclamation No. 131,
instituting a comprehensive agrarian reform program (CARP), and E.O. No. In connection with the determination of just compensation, the petitioners
229, providing the mechanics for its implementation. argue that the same may be made only by a court of justice and not by the
President of the Philippines. They invoke the recent cases of EPZA v.
Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the just
Subsequently, with its formal organization, the revived Congress of the
compensation contemplated by the Bill of Rights is payable in money or in
Philippines took over legislative power from the President and started its own
cash and not in the form of bonds or other things of value.
deliberations, including extensive public hearings, on the improvement of the
interests of farmers. The result, after almost a year of spirited debate, was the
enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian In considering the rentals as advance payment on the land, the executive
Reform Law of 1988, which President Aquino signed on June 10, 1988. This order also deprives the petitioners of their property rights as protected by due
law, while considerably changing the earlier mentioned enactments, process. The equal protection clause is also violated because the order places
nevertheless gives them suppletory effect insofar as they are not inconsistent the burden of solving the agrarian problems on the owners only of agricultural
with its provisions. 4 lands. No similar obligation is imposed on the owners of other properties.

The above-captioned cases have been consolidated because they involve The petitioners also maintain that in declaring the beneficiaries under P.D. No.
common legal questions, including serious challenges to the constitutionality of 27 to be the owners of the lands occupied by them, E.O. No. 228 ignored
the several measures mentioned above. They will be the subject of one judicial prerogatives and so violated due process. Worse, the measure would
not solve the agrarian problem because even the small farmers are deprived of
their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already
been upheld in the earlier cases of Chavez v. Zobel, 7 Gonzales v.
Estrella, 8 and Association of Rice and Corn Producers of the Philippines, Inc.
v. The National Land Reform Council. 9 The determination of just
compensation by the executive authorities conformably to the formula
prescribed under the questioned order is at best initial or preliminary only. It
does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their
property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do
not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27
does not provide for retention limits on tenanted lands and that in any event
their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just compensation
by the administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D. No. 27 was
merely assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D.
No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been
impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself
also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by
Vicente Cruz, owner of a 1. 83- hectare land, who complained that the DAR
was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is
an organization composed of 1,400 planter-members. This petition seeks to
prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian
Reform Program as decreed by the Constitution belongs to Congress and not
the President. Although they agree that the President could exercise legislative
power until the Congress was convened, she could do so only to enact
emergency measures during the transition period. At that, even assuming that
the interim legislative power of the President was properly exercised, Proc. No.
131 and E.O. No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process, and equal
protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as
the Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts
of sale of ill-gotten wealth received through the Presidential Commission on
Good Government and such other sources as government may deem
appropriate. The amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this
Proclamation the amount appropriated is in futuro, not in esse. The money
needed to cover the cost of the contemplated expropriation has yet to be
raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full,
but no such payment is contemplated in Section 5 of the E.O. No. 229. On the
contrary, Section 6, thereof provides that the Land Bank of the Philippines
"shall compensate the landowner in an amount to be established by the
government, which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain controls to
be defined and promulgated by the Presidential Agrarian Reform Council."
This compensation may not be paid fully in money but in any of several modes
that may consist of part cash and part bond, with interest, maturing
periodically, or direct payment in cash or bond as may be mutually agreed
upon by the beneficiary and the landowner or as may be prescribed or
approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort
was made to make a careful study of the sugar planters' situation. There is no
tenancy problem in the sugar areas that can justify the application of the CARP
to them. To the extent that the sugar planters have been lumped in the same
legislation with other farmers, although they are a separate group with
problems exclusively their own, their right to equal protection has been
violated.
A motion for intervention was filed on August 27,1987 by the National
Federation of Sugarcane Planters (NASP) which claims a membership of at
least 20,000 individual sugar planters all over the country. On September 10,
1987, another motion for intervention was filed, this time by Manuel Barcelona,
et al., representing coconut and riceland owners. Both motions were granted
by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian
Reform Program and that, in any event, the appropriation is invalid because of
uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and
Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum
authorized amount. This is not allowed. Furthermore, the stated initial amount
has not been certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to
establish by clear and convincing evidence the necessity for the exercise of
the powers of eminent domain, and the violation of the fundamental right to
own property.
The petitioners also decry the penalty for non-registration of the lands, which is
the expropriation of the said land for an amount equal to the government
assessor's valuation of the land for tax purposes. On the other hand, if the
landowner declares his own valuation he is unjustly required to immediately
pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O. No. 229. He
also justifies the necessity for the expropriation as explained in the "whereas"
clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general
survey on the people's opinion thereon are not indispensable prerequisites to
its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have
failed to show that they belong to a different class and should be differently
treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private
agricultural lands later. From this viewpoint, the petition for prohibition would
be premature.
The public respondent also points out that the constitutional prohibition is
against the payment of public money without the corresponding appropriation.
There is no rule that only money already in existence can be the subject of an
appropriation law. Finally, the earmarking of fifty billion pesos as Agrarian
Reform Fund, although denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his
own behalf, assailing the constitutionality of E.O. No. 229. In addition to the
arguments already raised, Serrano contends that the measure is
unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on
July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the
National Treasury did not originate from the House of
Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian
Reform, in violation of due process and the requirement for just compensation,
placed his landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his
small landholding under Operation Land transfer and asked for the recall and
cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied
without hearing. On February 17, 1987, he filed a motion for reconsideration,
which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the
President of the Philippines.
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due
process or just compensation.
(3) The petitioner is denied the right of maximum retention
provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly
before Congress convened is anomalous and arbitrary, besides violating the
doctrine of separation of powers. The legislative power granted to the
President under the Transitory Provisions refers only to emergency measures
that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without
due process of law and to the retention of his small parcels of riceholding as
guaranteed under Article XIII, Section 4 of the Constitution. He likewise argues
that, besides denying him just compensation for his land, the provisions of
E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary
after October 21, 1972 shall be considered as advance
payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention
that the inclusion of even small landowners in the program along with other
landowners with lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature
because the motion for reconsideration filed with the Minister of Agrarian
Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228
and 229, he argues that they were enacted pursuant to Section 6, Article XVIII
of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the
first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was
deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion
he filed was resolved on December 14, 1987. An appeal to the Office of the
President would be useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27
to owners of rice and corn lands not exceeding seven hectares as long as they
are cultivating or intend to cultivate the same. Their respective lands do not
exceed the statutory limit but are occupied by tenants who are actually
cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D.
No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice
and corn shall be ejected or removed from his farmholding until
such time as the respective rights of the tenant- farmers and
the landowner shall have been determined in accordance with
the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy
their right of retention because the Department of Agrarian Reform has so far
not issued the implementing rules required under the above-quoted decree.
They therefore ask the Court for a writ of mandamus to compel the respondent
to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been
amended by LOI 474 removing any right of retention from persons who own
other agricultural lands of more than 7 hectares in aggregate area or lands
used for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No. 27
have already been issued, to wit, the Memorandum dated July 10, 1975
(Interim Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81
dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27
and Retention by Small Landowners), and DAR Administrative Order No. 1,
series of 1985 (Providing for a Cut-off Date for Landowners to Apply for
Retention and/or to Protest the Coverage of their Landholdings under
Operation Land Transfer pursuant to P.D. No. 27). For failure to file the
corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely
initiated this case notwithstanding the pendency of their appeal to the
President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which
cannot be controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department of the
government.
In their Reply, the petitioners insist that the above-cited measures are not
applicable to them because they do not own more than seven hectares of
agricultural land. Moreover, assuming arguendo that the rules were intended to
cover them also, the said measures are nevertheless not in force because they
have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the presidential
decree.
I to the public of these cases demands that they be settled promptly and
Although holding neither purse nor sword and so regarded as the weakest of
the three departments of the government, the judiciary is nonetheless vested
with the power to annul the acts of either the legislative or the executive or of
both when not conformable to the fundamental law. This is the reason for what
some quarters call the doctrine of judicial supremacy. Even so, this power is
not lightly assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of their functions
and of their respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy, indeed, is a blend
of courtesy and caution. To doubt is to sustain. The theory is that before the
act was done or the law was enacted, earnest studies were made by Congress
or the President, or both, to insure that the Constitution would not be
breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of a
majority of the members of the Supreme Court who took part in the
deliberations and voted on the issue during their session en banc. 11 And as
established by judge made doctrine, the Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely
raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the
cases before us, we hold that the same is satisfied by the petitioners and
intervenors because each of them has sustained or is in danger of sustaining
an immediate injury as a result of the acts or measures complained of. 13 And
even if, strictly speaking, they are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were
allowed to question the constitutionality of several executive orders issued by
President Quirino although they were invoking only an indirect and general
interest shared in common with the public. The Court dismissed the objection
that they were not proper parties and ruled that "the transcendental importance
definitely, brushing aside, if we must, technicalities of procedure." We have
since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present
petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not
hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as
God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will
not hesitate to "make the hammer fall, and heavily," to use Justice Laurel's
pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; 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. 16
The cases before us categorically raise constitutional questions that this Court
must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving
the more serious challenges to the constitutionality of the several measures
involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his
powers under martial law has already been sustained in Gonzales v.
Estrella and we find no reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228
and 229, the same was authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987,
when the Congress of the Philippines was formally convened and took over
legislative power from her. They are not "midnight" enactments intended to
pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987,
and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like any statute,
they continue to be in force unless modified or repealed by subsequent law or
declared invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that enacted it.
By the same token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when and as long as
she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected
but in fact substantially affirmed the challenged measures and has specifically
provided that they shall be suppletory to R.A. No. 6657 whenever not
inconsistent with its provisions. 17 Indeed, some portions of the said measures,
like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and
Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in
the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does
not conform to the requirements of a valid appropriation as specified in the
Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure
even if it does provide for the creation of said fund, for that is not its principal
purpose. An appropriation law is one the primary and specific purpose of which
is to authorize the release of public funds from the treasury. 19 The creation of
the fund is only incidental to the main objective of the proclamation, which is
agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit,
Section 24 and Section 25(4) of Article VI, are not applicable. With particular
reference to Section 24, this obviously could not have been complied with for
the simple reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet been convened
when the proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it were, both
houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229
should be invalidated because they do not provide for retention limits as
required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A.
No. 6657 does provide for such limits now in Section 6 of the law, which in fact
is one of its most controversial provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act,
no person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according
to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by
the landowner exceed five (5) hectares. Three (3) hectares
may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years
of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands
have been covered by Presidential Decree No. 27 shall be
allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the
time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a
bill shall have only one subject, to be expressed in its title, deserves only short
attention. It is settled that the title of the bill does not have to be a catalogue of
its contents and will suffice if the matters embodied in the text are relevant to
each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law
because it came from President Marcos. Such are the ways of despots.
Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI
474 could not have repealed P.D. No. 27 because the former was only a letter
of instruction. The important thing is that it was issued by President Marcos,
whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos
still had to comply with the requirement for publication as this Court held
in Tanada v. Tuvera. 21 Hence, unless published in the Official Gazette in
accordance with Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully challenged in that
case. LOI 474 was published, though, in the Official Gazette dated November
29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that
the writ of mandamus cannot issue to compel the performance of a
discretionary act, especially by a specific department of the government. That
is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel
the discharge of the discretionary duty itself but not to control the discretion to
be exercised. In other words, mandamus can issue to require action only but
not specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such
duty occurs, if it is a clear duty imposed by law, the courts will
intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the
courts by mandamus will require action only. For example, if an
inferior court, public official, or board should, for an
unreasonable length of time, fail to decide a particular question
to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the first case
to require a decision, and in the second to require that
jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is
still a plain, speedy and adequate remedy available from the administrative
authorities, resort to the courts may still be permitted if the issue raised is a
question of law. 23
III
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the
same time on the same subject. In the case of City of Baguio v.
NAWASA, 24 for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent
value, the Court held that the power being exercised was eminent domain
because the property involved was wholesome and intended for a public use.
Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be
demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property is
not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down
the limits of the police power in a famous aphorism: "The general rule at least
is that while property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking." The regulation that went "too far" was
a law prohibiting mining which might cause the subsidence of structures for
human habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in
which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the
exercise of the police power deprives the owner of some right
theretofore enjoyed, and is, in that sense, an abridgment by the
State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals
from dangers threatened is not a taking. The restriction here in
question is merely the prohibition of a noxious use. The
property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The
state merely prevents the owner from making a use which
interferes with paramount rights of the public. Whenever the
use prohibited ceases to be noxious — as it may because of
further changes in local or social conditions — the restriction
will have to be removed and the owner will again be free to
enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the
police power and the power of eminent domain, with the latter being used as
an implement of the former like the power of taxation. The employment of the
taxing power to achieve a police purpose has long been accepted. 26 As for the
power of expropriation, Prof. John J. Costonis of the University of Illinois
College of Law (referring to the earlier case of Euclid v. Ambler Realty Co.,
272 US 365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located
the Police and eminent domain powers on different planets.
Generally speaking, they viewed eminent domain as
encompassing public acquisition of private property for
improvements that would be available for public use," literally
construed. To the police power, on the other hand, they
assigned the less intrusive task of preventing harmful
externalities a point reflected in the Euclid opinion's reliance on
an analogy to nuisance law to bolster its support of zoning. So
long as suppression of a privately authored harm bore a
plausible relation to some legitimate "public purpose," the
pertinent measure need have afforded no compensation
whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers
has contracted considerably. Today government often employs
eminent domain interchangeably with or as a useful
complement to the police power-- a trend expressly approved
in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use"
test to match that of the police power's standard of "public
purpose." 27
The Berman case sustained a redevelopment project and the improvement of
blighted areas in the District of Columbia as a proper exercise of the police
power. On the role of eminent domain in the attainment of this purpose, Justice
Douglas declared:
If those who govern the District of Columbia decide that the
Nation's Capital should be beautiful as well as sanitary, there is
nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the
end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote
in 1978, the U.S Supreme Court sustained the respondent's Landmarks
Preservation Law under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark
was held to be a valid objective of the police power. The problem, however,
was that the owners of the Terminal would be deprived of the right to use the
airspace above it although other landowners in the area could do so over their
respective properties. While insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights accruing to Grand Central
Terminal which it said would "undoubtedly mitigate" the loss caused by the
regulation. This "fair compensation," as he called it, was explained by Prof.
Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn
Central was authorized to transfer to neighboring properties the authorized but
unused rights accruing to the site prior to the Terminal's designation as a
landmark — the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing
or selling to others the right to construct larger, hence more profitable buildings
on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under
challenge merely prescribe retention limits for landowners, there is an exercise
of the police power for the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the
maximum area allowed, there is definitely a taking under the power of eminent
domain for which payment of just compensation is imperative. The taking
contemplated is not a mere limitation of the use of the land. What is required is
the surrender of the title to and the physical possession of the said excess and
all beneficial rights accruing to the owner in favor of the farmer-beneficiary.
This is definitely an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the power of eminent domain,
the several measures before us are challenged as violative of the due process
and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that
no retention limits are prescribed has already been discussed and dismissed.
It is noted that although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention limits finally agreed
upon are, curiously enough, not being questioned in these petitions. We
therefore do not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the adequacy
of just compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal
protection because of the absence of retention limits has also become
academic under Section 6 of R.A. No. 6657. Significantly, they too have not
questioned the area of such limits. There is also the complaint that they should
not be made to share the burden of agrarian reform, an objection also made by
the sugar planters on the ground that they belong to a particular class with
particular interests of their own. However, no evidence has been submitted to
the Court that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to
each other in certain particulars and different from each other in these same
particulars. 31 To be valid, it must conform to the following requirements: (1) it
must be based on substantial distinctions; (2) it must be germane to the
purposes of the law; (3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class. 32 The Court finds that
all these requisites have been met by the measures here challenged as
arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must
be treated alike both as to the rights conferred and the liabilities
imposed. 33 The petitioners have not shown that they belong to a different class
and entitled to a different treatment. The argument that not only landowners
but also owners of other properties must be made to share the burden of
implementing land reform must be rejected. There is a substantial distinction
between these two classes of owners that is clearly visible except to those who
will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its
decision is accorded recognition and respect by the courts of justice except
only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the
police power only if there is a concurrence of the lawful subject and the lawful
method. Put otherwise, the interests of the public generally as distinguished
from those of a particular class require the interference of the State and, no
less important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly oppressive
upon individuals. 34 As the subject and purpose of agrarian reform have been
laid down by the Constitution itself, we may say that the first requirement has
been satisfied. What remains to be examined is the validity of the method
employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of
the individual are concerned, the end does not justify the means. It is not
enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency will
not excuse constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is
no exaggeration to say that a, person invoking a right guaranteed under Article
III of the Constitution is a majority of one even as against the rest of the nation
who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1
of Article III of the Constitution. With regard to his property, the owner enjoys
the added protection of Section 9, which reaffirms the familiar rule that private
property shall not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables
it to forcibly acquire private lands intended for public use upon
payment of just compensation to the owner. Obviously, there is
no need to expropriate where the owner is willing to sell under
terms also acceptable to the purchaser, in which case an
ordinary deed of sale may be agreed upon by the parties. 35 It is
only where the owner is unwilling to sell, or cannot accept the
price or other conditions offered by the vendee, that the power
of eminent domain will come into play to assert the paramount
authority of the State over the interests of the property owner.
Private rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the case
of the police power, that the welfare of the people is the
supreme law.
But for all its primacy and urgency, the power of expropriation is by no means
absolute (as indeed no power is absolute). The limitation is found in the
constitutional injunction that "private property shall not be taken for public use
without just compensation" and in the abundant jurisprudence that has evolved
from the interpretation of this principle. Basically, the requirements for a proper
exercise of the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310
that the State should first distribute public agricultural lands in the pursuit of
agrarian reform instead of immediately disturbing property rights by forcibly
acquiring private agricultural lands. Parenthetically, it is not correct to say that
only public agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event, the decision
to redistribute private agricultural lands in the manner prescribed by the CARP
was made by the legislative and executive departments in the exercise of their
discretion. We are not justified in reviewing that discretion in the absence of a
clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As
explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in
ordinary parlance, namely, a question of policy. 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
legislative or executive branch of the government." It is
concerned with issues dependent upon the wisdom, not
legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts
"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." 37 Even so, this should not be construed as
a license for us to reverse the other departments simply because their views
may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to
include in the CARP the redistribution of private landholdings (even as the
distribution of public agricultural lands is first provided for, while also continuing
apace under the Public Land Act and other cognate laws). The Court sees no
justification to interpose its authority, which we may assert only if we believe
that the political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
Congress having determined, as it did by the Act of March
3,1909 that the entire St. Mary's river between the American
bank and the international line, as well as all of the upland
north of the present ship canal, throughout its entire length,
was "necessary for the purpose of navigation of said waters,
and the waters connected therewith," that determination is
conclusive in condemnation proceedings instituted by the
United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled
for us by the Constitution itself No less than the 1987 Charter calls for agrarian
reform, which is the reason why private agricultural lands are to be taken from
their owners, subject to the prescribed maximum retention limits. The purposes
specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the
lands they till." That public use, as pronounced by the fundamental law itself,
must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a
longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. 39 It has been repeatedly stressed by
this Court that the measure is not the taker's gain but the owner's loss. 40 The
word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate
more than a mere regulation of the use of private lands under the police
power. We deal here with an actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them of all its
beneficial use and enjoyment, to entitle them to the just compensation
mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, there is compensable
42
taking when the following conditions concur: (1) the expropriator must enter a
private property; (2) the entry must be for more than a momentary period; (3)
the entry must be under warrant or color of legal authority; (4) the property
must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be
in such a way as to oust the owner and deprive him of beneficial enjoyment of
the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a
deposit upon its taking possession of the condemned property, as "the
compensation is a public charge, the good faith of the public is pledged for its
payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment
or, in case of rejection or no response from the landowner,
upon the deposit with an accessible bank designated by the
DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of
Deeds to issue a Transfer Certificate of Title (TCT) in the name
of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation,
which it is claimed is entrusted to the administrative authorities in violation of
judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of
the government to buy his land-
... the DAR shall conduct summary administrative proceedings
to determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit
evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of
the above period, the matter is deemed submitted for decision.
The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a function addressed to
the courts of justice and may not be usurped by any other branch or official of
the government. EPZA v. Dulay 44 resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property
by the government or the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court held through Mr.
Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the
aforecited decrees constitutes impermissible encroachment on
judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court
technically would still have the power to determine the just
compensation for the property, following the applicable
decrees, its task would be relegated to simply stating the lower
value of the property as declared either by the owner or the
assessor. As a necessary consequence, it would be useless for
the court to appoint commissioners under Rule 67 of the Rules
of Court. Moreover, the need to satisfy the due process clause
in the taking of private property is seemingly fulfilled since it
cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees
during the proceedings would be nothing short of a mere
formality or charade as the court has only to choose between
the valuation of the owner and that of the assessor, and its
choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining
what is just or fair. Even a grade school pupil could substitute
for the judge insofar as the determination of constitutional just
compensation is concerned.
xxx
In the present petition, we are once again confronted with the
same question of whether the courts under P.D. No. 1533,
which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by
the decree and to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity
to prove that the valuation in the tax documents is unfair or
wrong. And it is repulsive to the basic concepts of justice and
fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually
viewed the property, after evidence and arguments pro and con
have been presented, and after all factors and considerations
essential to a fair and just determination have been judiciously
evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not
suffer from the arbitrariness that rendered the challenged decrees
constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless allowed
an opportunity to submit evidence on the real value of the property. But more
importantly, the determination of the just compensation by the DAR is not by
any means final and conclusive upon the landowner or any other interested
party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless accepted by all
parties concerned. Otherwise, the courts of justice will still have the right to
review with finality the said determination in the exercise of what is admittedly
a judicial function.
The second and more serious objection to the provisions on just compensation
is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP
shall compensate the landowner in such amount as may be
agreed upon by the landowner and the DAR and the LBP, in
accordance with the criteria provided for in Sections 16 and 17,
and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes,
at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50)
hectares, insofar as the excess
hectarage is concerned —
Twenty-five percent (25%) cash,
the balance to be paid in
government financial
instruments negotiable at any
time.
(b) For lands above twenty-four
(24) hectares and up to fifty (50)
hectares — Thirty percent
(30%) cash, the balance to be
paid in government financial
instruments negotiable at any
time.
(c) For lands twenty-four (24)
hectares and below — Thirty-
five percent (35%) cash, the
balance to be paid in
government financial
instruments negotiable at any
time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or other
qualified investments in accordance with guidelines set by the
PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned
with 91-day treasury bill rates.
Ten percent (10%) of the face
value of the bonds shall mature
every year from the date of
issuance until the tenth (10th)
year: Provided, That should the
landowner choose to forego the
cash portion, whether in full or
in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and
negotiability. Such LBP bonds
may be used by the landowner,
his successors-in- interest or his
assigns, up to the amount of
their face value, for any of the
following:
(i) Acquisition of land or other
real properties of the
government, including assets
under the Asset Privatization
Program and other assets
foreclosed by government
financial institutions in the same
province or region where the
lands for which the bonds were
paid are situated;
(ii) Acquisition of shares of stock
of government-owned or
controlled corporations or
shares of stock owned by the
government in private
corporations;
(iii) Substitution for surety or bail
bonds for the provisional
release of accused persons, or
for performance bonds;
 (iv) Security for loans with any
government financial institution,
provided the proceeds of the
loans shall be invested in an
economic enterprise, preferably
in a small and medium- scale
industry, in the same province
or region as the land for which
the bonds are paid;
(v) Payment for various taxes
and fees to government:
Provided, That the use of these
bonds for these purposes will be
limited to a certain percentage
of the outstanding balance of
the financial instruments;
Provided, further, That the
PARC shall determine the
percentages mentioned above;
(vi) Payment for tuition fees of
the immediate family of the
original bondholder in
government universities,
colleges, trade schools, and
other institutions;
(vii) Payment for fees of the
immediate family of the original
bondholder in government
hospitals; and
(viii) Such other uses as the
PARC may from time to time
allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision
is unconstitutional insofar as it requires the owners of the expropriated
properties to accept just compensation therefor in less than money, which is
the only medium of payment allowed. In support of this contention, they cite
jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner
of the property expropriated is entitled to a just compensation,
which should be neither more nor less, whenever it is possible
to make the assessment, than the money equivalent of said
property. Just compensation has always been understood to be
the just and complete equivalent of the loss which the owner of
the thing expropriated has to suffer by reason of the
expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46
this Court held:
It is well-settled that just compensation means the equivalent
for the value of the property at the time of its taking. Anything
beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever
gain would accrue to the expropriating entity. The market value
of the land taken is the just compensation to which the owner
of condemned property is entitled, the market value being that
sum of money which a person desirous, but not compelled to
buy, and an owner, willing, but not compelled to sell, would
agree on as a price to be given and received for such property.
(Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for
property expropriated is payable only in money and not otherwise. Thus —
The medium of payment of compensation is ready money or
cash. The condemnor cannot compel the owner to accept
anything but money, nor can the owner compel or require the
condemnor to pay him on any other basis than the value of the
property in money at the time and in the manner prescribed by
the Constitution and the statutes. When the power of eminent
domain is resorted to, there must be a standard medium of
payment, binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the
nature of things, be regarded as a reliable and constant
standard of compensation. 48
 "Just compensation" for property taken by condemnation
means a fair equivalent in money, which must be paid at least
within a reasonable time after the taking, and it is not within the
power of the Legislature to substitute for such payment future
obligations, bonds, or other valuable advantage. 49 (Emphasis
supplied.)
It cannot be denied from these cases that the traditional medium for the
payment of just compensation is money and no other. And so, conformably,
has just compensation been paid in the past solely in that medium. However,
we do not deal here with the traditional excercise of the power of eminent
domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a
specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever
found and of whatever kind as long as they are in excess of the maximum
retention limits allowed their owners. This kind of expropriation is intended for
the benefit not only of a particular community or of a small segment of the
population but of the entire Filipino nation, from all levels of our society, from
the impoverished farmer to the land-glutted owner. Its purpose does not cover
only the whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision and the
sacrifice of the present generation of Filipinos. Generations yet to come are as
involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them
tomorrow through our thoughtfulness today. And, finally, let it not be forgotten
that it is no less than the Constitution itself that has ordained this revolution in
the farms, calling for "a just distribution" among the farmers of lands that have
heretofore been the prison of their dreams but can now become the key at
least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be
tremendous. Considering the vast areas of land subject to expropriation under
the laws before us, we estimate that hundreds of billions of pesos will be
needed, far more indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards. Such amount is
in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty
when they called for agrarian reform as a top priority project of the
government. It is a part of this assumption that when they envisioned the
expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less
conventional if more practical method. There can be no doubt that they were
aware of the financial limitations of the government and had no illusions that
there would be enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may therefore assume that
their intention was to allow such manner of payment as is now provided for by
the CARP Law, particularly the payment of the balance (if the owner cannot be
paid fully with money), or indeed of the entire amount of the just compensation,
with other things of value. We may also suppose that what they had in mind
was a similar scheme of payment as that prescribed in P.D. No. 27, which was
the law in force at the time they deliberated on the new Charter and with which
they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be given
the concept of just compensation as applied to the comprehensive agrarian
reform program being contemplated. There was the suggestion to "fine tune"
the requirement to suit the demands of the project even as it was also felt that
they should "leave it to Congress" to determine how payment should be made
to the landowner and reimbursement required from the farmer-beneficiaries.
Such innovations as "progressive compensation" and "State-subsidized
compensation" were also proposed. In the end, however, no special definition
of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against
the assumptions we are making of the general sentiments and intention of the
members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations of
the expropriator.
With these assumptions, the Court hereby declares that the content and
manner of the just compensation provided for in the afore- quoted Section 18
of the CARP Law is not violative of the Constitution. We do not mind admitting
that a certain degree of pragmatism has influenced our decision on this issue,
but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The
Court is as acutely anxious as the rest of our people to see the goal of agrarian
reform achieved at last after the frustrations and deprivations of our peasant
masses during all these disappointing decades. We are aware that invalidation
of the said section will result in the nullification of the entire program, killing the
farmer's hopes even as they approach realization and resurrecting the spectre
of discontent and dissent in the restless countryside. That is not in our view the
intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger
the payment in money, primarily because the small landowner will be needing
it more than the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any
time." The other modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in shares of
stock, LBP bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already remarked,
this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable
share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit
of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No.
229 does not seem to be viable any more as it appears that Section 4 of the
said Order has been superseded by Section 14 of the CARP Law. This repeats
the requisites of registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to register the land,
the valuation thereof shall be that given by the provincial or city assessor for
tax purposes. On the contrary, the CARP Law says that the just compensation
shall be ascertained on the basis of the factors mentioned in its Section 17 and
in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not
vest the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete
at the time of entry, title to the property taken remains in the owner until
payment is actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases
holding that title to property does not pass to the condemnor until just
compensation had actually been made. In fact, the decisions appear to be
uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held
that "actual payment to the owner of the condemned property was a condition
precedent to the investment of the title to the property in the State" albeit "not
to the appropriation of it to public use." In Rexford v. Knight, 55 the Court of
Appeals of New York said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was complete prior to the
payment. Kennedy further said that "both on principle and authority the rule is
... that the right to enter on and use the property is complete, as soon as the
property is actually appropriated under the authority of law for a public use, but
that the title does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as
to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until
compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer
as October 21, 1972 and declared that he shall "be deemed the owner" of a
portion of land consisting of a family-sized farm except that "no title to the land
owned by him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers' cooperative." It
was understood, however, that full payment of the just compensation also had
to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners
as of October 21, 1972 of the land they acquired by virtue of
Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers' cooperatives and
full payment of just compensation. Hence, it was also perfectly proper for the
Order to also provide in its Section 2 that the "lease rentals paid to the
landowner by the farmer- beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as
advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be
rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer
under P.D. No. 27, as recognized under E.O. No. 228, are retained by him
even now under R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the
time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742
that the appeal filed by the petitioners with the Office of the President has
already been resolved. Although we have said that the doctrine of exhaustion
of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are not covered by
LOI 474 because they do not own other agricultural lands than the subjects of
their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that
the petitioners have not yet exercised their retention rights, if any, under P.D.
No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal than
those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have
been the subject of bitter attack from those who point to the shortcomings of
these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-
examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit
of agrarian reform, we do not tread on familiar ground but grope on terrain
fraught with pitfalls and expected difficulties. This is inevitable. The CARP Law
is not a tried and tested project. On the contrary, to use Justice Holmes's
words, "it is an experiment, as all life is an experiment," and so we learn as we
venture forward, and, if necessary, by our own mistakes. We cannot expect
perfection although we should strive for it by all means. Meantime, we struggle
as best we can in freeing the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive
agrarian reform program are removed, to clear the way for the true freedom of
the farmer. We may now glimpse the day he will be released not only from
want but also from the exploitation and disdain of the past and from his own
feelings of inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It will be his portion
of the Mother Earth that will give him not only the staff of life but also the joy of
living. And where once it bred for him only deep despair, now can he see in it
the fruition of his hopes for a more fulfilling future. Now at last can he banish
from his small plot of earth his insecurities and dark resentments and "rebuild
in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos.
228 and 229 are SUSTAINED against all the constitutional
objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the
State only upon full payment of compensation to their
respective owners.
3. All rights previously acquired by the tenant- farmers under
P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of
retention under P.D. No. 27 shall enjoy the retention rights
granted by R.A. No. 6657 under the conditions therein
prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and
Regalado, JJ., concur.
G.R. No. 171101 July 5, 2011
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL
BANKING CORPORATION, Petitioners-in-Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER
PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM;
ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA,
RENE GALANG, NOEL MALLARI, and JULIO SUNIGA1 and his
SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR
ANDAYA, Respondents.
DECISION
VELASCO, JR., J.:
"Land for the landless," a shibboleth the landed gentry doubtless has received
with much misgiving, if not resistance, even if only the number of agrarian suits
filed serves to be the norm. Through the years, this battle cry and root of
discord continues to reflect the seemingly ceaseless discourse on, and great
disparity in, the distribution of land among the people, "dramatizing the
increasingly urgent demand of the dispossessed x x x for a plot of earth as
their place in the sun."2 As administrations and political alignments change,
policies advanced, and agrarian reform laws enacted, the latest being what is
considered a comprehensive piece, the face of land reform varies and is
masked in myriads of ways. The stated goal, however, remains the same:
clear the way for the true freedom of the farmer. 3
Land reform, or the broader term "agrarian reform," has been a government
policy even before the Commonwealth era. In fact, at the onset of the
American regime, initial steps toward land reform were already taken to
address social unrest.4 Then, under the 1935 Constitution, specific provisions
on social justice and expropriation of landed estates for distribution to tenants
as a solution to land ownership and tenancy issues were incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed,
setting in motion the expropriation of all tenanted estates. 5
On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was
enacted,6 abolishing share tenancy and converting all instances of share
tenancy into leasehold tenancy.7 RA 3844 created the Land Bank of the
Philippines (LBP) to provide support in all phases of agrarian reform.
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship
in rice and corn, supposedly to be accomplished by expropriating lands in
excess of 75 hectares for their eventual resale to tenants. The law, however,
had this restricting feature: its operations were confined mainly to areas in
Central Luzon, and its implementation at any level of intensity limited to the
pilot project in Nueva Ecija.8
Subsequently, Congress passed the Code of Agrarian Reform (RA 6389)
declaring the entire country a land reform area, and providing for the automatic
conversion of tenancy to leasehold tenancy in all areas. From 75 hectares, the
retention limit was cut down to seven hectares. 9
Barely a month after declaring martial law in September 1972, then President
Ferdinand Marcos issued Presidential Decree No. 27 (PD 27) for the
"emancipation of the tiller from the bondage of the soil." 10 Based on this
issuance, tenant-farmers, depending on the size of the landholding worked on,
can either purchase the land they tilled or shift from share to fixed-rent
leasehold tenancy.11 While touted as "revolutionary," the scope of the agrarian
reform program PD 27 enunciated covered only tenanted, privately-owned rice
and corn lands.12
Then came the revolutionary government of then President Corazon C. Aquino
and the drafting and eventual ratification of the 1987 Constitution. Its
provisions foreshadowed the establishment of a legal framework for the
formulation of an expansive approach to land reform, affecting all agricultural
lands and covering both tenant-farmers and regular farmworkers.13
So it was that Proclamation No. 131, Series of 1987, was issued instituting a
comprehensive agrarian reform program (CARP) to cover all agricultural lands,
regardless of tenurial arrangement and commodity produced, as provided in
the Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as
its title14 indicates, the mechanisms for CARP implementation. It created the
Presidential Agrarian Reform Council (PARC) as the highest policy-making
body that formulates all policies, rules, and regulations necessary for the
implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of
1988, also known as CARL or the CARP Law, took effect, ushering in a new
process of land classification, acquisition, and distribution. As to be expected,
RA 6657 met stiff opposition, its validity or some of its provisions challenged at
every possible turn. Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform 15 stated the observation that the assault was
inevitable, the CARP being an untried and untested project, "an experiment
[even], as all life is an experiment," the Court said, borrowing from Justice
Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65 with prayer for
preliminary injunctive relief, petitioner Hacienda Luisita, Inc. (HLI) assails and
seeks to set aside PARC Resolution No. 2005-32-0116 and Resolution No.
2006-34-0117 issued on December 22, 2005 and May 3, 2006, respectively, as
well as the implementing Notice of Coverage dated January 2, 2006 (Notice of
Coverage).18
The Facts
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once
a 6,443-hectare mixed agricultural-industrial-residential expanse straddling
several municipalities of Tarlac and owned by Compañia General de Tabacos
de Filipinas (Tabacalera). In 1957, the Spanish owners of Tabacalera offered
to sell Hacienda Luisita as well as their controlling interest in the sugar mill
within the hacienda, the Central Azucarera de Tarlac (CAT), as an indivisible
transaction. The Tarlac Development Corporation (Tadeco), then owned
and/or controlled by the Jose Cojuangco, Sr. Group, was willing to buy. As
agreed upon, Tadeco undertook to pay the purchase price for Hacienda Luisita
in pesos, while that for the controlling interest in CAT, in US dollars. 19
To facilitate the adverted sale-and-purchase package, the Philippine
government, through the then Central Bank of the Philippines, assisted the
buyer to obtain a dollar loan from a US bank.20 Also, the Government Service
Insurance System (GSIS) Board of Trustees extended on November 27, 1957
a PhP 5.911 million loan in favor of Tadeco to pay the peso price component
of the sale. One of the conditions contained in the approving GSIS Resolution
No. 3203, as later amended by Resolution No. 356, Series of 1958, reads as
follows:
That the lots comprising the Hacienda Luisita shall be subdivided by the
applicant-corporation and sold at cost to the tenants, should there be any, and
whenever conditions should exist warranting such action under the provisions
of the Land Tenure Act;21
As of March 31, 1958, Tadeco had fully paid the purchase price for the
acquisition of Hacienda Luisita and Tabacalera’s interest in CAT. 22
The details of the events that happened next involving the hacienda and the
political color some of the parties embossed are of minimal significance to this
narration and need no belaboring. Suffice it to state that on May 7, 1980, the
martial law administration filed a suit before the Manila Regional Trial Court
(RTC) against Tadeco, et al., for them to surrender Hacienda Luisita to the
then Ministry of Agrarian Reform (MAR, now the Department of Agrarian
Reform [DAR]) so that the land can be distributed to farmers at cost.
Responding, Tadeco or its owners alleged that Hacienda Luisita does not have
tenants, besides which sugar lands––of which the hacienda consisted––are
not covered by existing agrarian reform legislations. As perceived then, the
government commenced the case against Tadeco as a political message to
the family of the late Benigno Aquino, Jr.23
Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender
Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the Court of
Appeals (CA).
On March 17, 1988, the Office of the Solicitor General (OSG) moved to
withdraw the government’s case against Tadeco, et al. By Resolution of May
18, 1988, the CA dismissed the case the Marcos government initially instituted
and won against Tadeco, et al. The dismissal action was, however, made
subject to the obtention by Tadeco of the PARC’s approval of a stock
distribution plan (SDP) that must initially be implemented after such approval
shall have been secured.24 The appellate court wrote:
The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x
x governmental agencies concerned in moving for the dismissal of the case
subject, however, to the following conditions embodied in the letter dated April
8, 1988 (Annex 2) of the Secretary of the [DAR] quoted, as follows:
1. Should TADECO fail to obtain approval of the stock distribution plan
for failure to comply with all the requirements for corporate landowners
set forth in the guidelines issued by the [PARC]: or
2. If such stock distribution plan is approved by PARC, but TADECO
fails to initially implement it.
xxxx
WHEREFORE, the present case on appeal is hereby dismissed without
prejudice, and should be revived if any of the conditions as above set forth is
not duly complied with by the TADECO.25
Markedly, Section 10 of EO 22926 allows corporate landowners, as an
alternative to the actual land transfer scheme of CARP, to give qualified
beneficiaries the right to purchase shares of stocks of the corporation under a
stock ownership arrangement and/or land-to-share ratio.
Like EO 229, RA 6657, under the latter’s Sec. 31, also provides two (2)
alternative modalities, i.e., land or stock transfer, pursuant to either of which
the corporate landowner can comply with CARP, but subject to well-defined
conditions and timeline requirements. Sec. 31 of RA 6657 provides:
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily
transfer ownership over their agricultural landholdings to the Republic of the
Philippines pursuant to Section 20 hereof or to qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning agricultural lands may
give their qualified beneficiaries the right to purchase such proportion of
the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total
assets, under such terms and conditions as may be agreed upon by them. In
no case shall the compensation received by the workers at the time the shares
of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their
capital stock, equity or participation in favor of their workers or other qualified
beneficiaries under this section shall be deemed to have complied with the
provisions of this Act: Provided, That the following conditions are complied
with:
(a) In order to safeguard the right of beneficiaries who own shares of
stocks to dividends and other financial benefits, the books of the
corporation or association shall be subject to periodic audit by certified
public accountants chosen by the beneficiaries;
 (b) Irrespective of the value of their equity in the corporation or
association, the beneficiaries shall be assured of at least one (1)
representative in the board of directors, or in a management or
executive committee, if one exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have
the same rights and features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall
be void ab initio unless said transaction is in favor of a qualified and
registered beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the [voluntary] land or
stock transfer envisioned above is not made or realized or the plan for such
stock distribution approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. (Emphasis added.)
Vis-à-vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued
Administrative Order No. 10, Series of 1988 (DAO 10), 27 entitled Guidelines
and Procedures for Corporate Landowners Desiring to Avail Themselves of the
Stock Distribution Plan under Section 31 of RA 6657.
From the start, the stock distribution scheme appeared to be Tadeco’s
preferred option, for, on August 23, 1988, 28 it organized a spin-off corporation,
HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this
purpose, Tadeco assigned and conveyed to HLI the agricultural land portion
(4,915.75 hectares) and other farm-related properties of Hacienda Luisita in
exchange for HLI shares of stock.29
Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr.,
and Paz C. Teopaco were the incorporators of HLI. 30
To accommodate the assets transfer from Tadeco to HLI, the latter, with the
Securities and Exchange Commission’s (SEC’s) approval, increased its capital
stock on May 10, 1989 from PhP 1,500,000 divided into 1,500,000 shares with
a par value of PhP 1/share to PhP 400,000,000 divided into 400,000,000
shares also with par value of PhP 1/share, 150,000,000 of which were to be
issued only to qualified and registered beneficiaries of the CARP, and the
remaining 250,000,000 to any stockholder of the corporation. 31
As appearing in its proposed SDP, the properties and assets of Tadeco
contributed to the capital stock of HLI, as appraised and approved by the SEC,
have an aggregate value of PhP 590,554,220, or after deducting the total
liabilities of the farm amounting to PhP 235,422,758, a net value of PhP
355,531,462. This translated to 355,531,462 shares with a par value of PhP
1/share.32
On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs)
complement of Hacienda Luisita signified in a referendum their acceptance of
the proposed HLI’s Stock Distribution Option Plan. On May 11, 1989, the Stock
Distribution Option Agreement (SDOA), styled as a Memorandum of
Agreement (MOA),33 was entered into by Tadeco, HLI, and the 5,848 qualified
FWBs34 and attested to by then DAR Secretary Philip Juico. The SDOA
embodied the basis and mechanics of the SDP, which would eventually be
submitted to the PARC for approval. In the SDOA, the parties agreed to the
following:
1. The percentage of the value of the agricultural land of Hacienda
Luisita (P196,630,000.00) in relation to the total assets
(P590,554,220.00) transferred and conveyed to the SECOND PARTY
[HLI] is 33.296% that, under the law, is the proportion of the
outstanding capital stock of the SECOND PARTY, which is
P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per
share, that has to be distributed to the THIRD PARTY [FWBs] under
the stock distribution plan, the said 33.296% thereof being
P118,391,976.85 or 118,391,976.85 shares.
2. The qualified beneficiaries of the stock distribution plan shall be the
farmworkers who appear in the annual payroll, inclusive of the
permanent and seasonal employees, who are regularly or periodically
employed by the SECOND PARTY.
3. At the end of each fiscal year, for a period of 30 years, the
SECOND PARTY shall arrange with the FIRST PARTY [Tadeco]
the acquisition and distribution to the THIRD PARTY on the basis of
number of days worked and at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the SECOND PARTY
that are presently owned and held by the FIRST PARTY, until such
time as the entire block of 118,391,976.85 shares shall have been
completely acquired and distributed to the THIRD PARTY.
 4.The SECOND PARTY shall guarantee to the qualified beneficiaries
of the [SDP] that every year they will receive on top of their regular
compensation, an amount that approximates the equivalent of three
(3%) of the total gross sales from the production of the agricultural
land, whether it be in the form of cash dividends or incentive bonuses
or both.
5. Even if only a part or fraction of the shares earmarked for distribution
will have been acquired from the FIRST PARTY and distributed to the
THIRD PARTY, FIRST PARTY shall execute at the beginning of each
fiscal year an irrevocable proxy, valid and effective for one (1) year, in
favor of the farmworkers appearing as shareholders of the SECOND
PARTY at the start of said year which will empower the THIRD PARTY
or their representative to vote in stockholders’ and board of directors’
meetings of the SECOND PARTY convened during the year the entire
33.296% of the outstanding capital stock of the SECOND PARTY
earmarked for distribution and thus be able to gain such number of
seats in the board of directors of the SECOND PARTY that the whole
33.296% of the shares subject to distribution will be entitled to.
6. In addition, the SECOND PARTY shall within a reasonable time
subdivide and allocate for free and without charge among the qualified
family-beneficiaries residing in the place where the agricultural land is
situated, residential or homelots of not more than 240 sq.m. each, with
each family-beneficiary being assured of receiving and owning a
homelot in the barangay where it actually resides on the date of the
execution of this Agreement.
7. This Agreement is entered into by the parties in the spirit of the
(C.A.R.P.) of the government and with the supervision of the [DAR],
with the end in view of improving the lot of the qualified beneficiaries of
the [SDP] and obtaining for them greater benefits. (Emphasis added.)
As may be gleaned from the SDOA, included as part of the distribution plan
are: (a) production-sharing equivalent to three percent (3%) of gross sales
from the production of the agricultural land payable to the FWBs in cash
dividends or incentive bonus; and (b) distribution of free homelots of not more
than 240 square meters each to family-beneficiaries. The production-sharing,
as the SDP indicated, is payable "irrespective of whether [HLI] makes money
or not," implying that the benefits do not partake the nature of dividends, as the
term is ordinarily understood under corporation law.
While a little bit hard to follow, given that, during the period material, the
assigned value of the agricultural land in the hacienda was PhP 196.63 million,
while the total assets of HLI was PhP 590.55 million with net assets of PhP
355.53 million, Tadeco/HLI would admit that the ratio of the land-to-shares of
stock corresponds to 33.3% of the outstanding capital stock of the HLI
equivalent to 118,391,976.85 shares of stock with a par value of PhP 1/share.
Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for
Stock Distribution under C.A.R.P.,"35 which was substantially based on the
SDOA.
Notably, in a follow-up referendum the DAR conducted on October 14, 1989,
5,117 FWBs, out of 5,315 who participated, opted to receive shares in
HLI.36 One hundred thirty-two (132) chose actual land distribution. 37
After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago
(Sec. Defensor-Santiago) addressed a letter dated November 6, 198938 to
Pedro S. Cojuangco (Cojuangco), then Tadeco president, proposing that the
SDP be revised, along the following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI shall
ensure that there will be no dilution in the shares of stocks of individual
[FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against the
dilution of the percentage shareholdings of the [FWBs], i.e., that the
33% shareholdings of the [FWBs] will be maintained at any given time;
3. That the mechanics for distributing the stocks be explicitly stated in
the [MOA] signed between the [Tadeco], HLI and its [FWBs] prior to
the implementation of the stock plan;
4. That the stock distribution plan provide for clear and definite terms
for determining the actual number of seats to be allocated for the
[FWBs] in the HLI Board;
5. That HLI provide guidelines and a timetable for the distribution of
homelots to qualified [FWBs]; and
6. That the 3% cash dividends mentioned in the [SDP] be expressly
provided for [in] the MOA.
In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI
explained that the proposed revisions of the SDP are already embodied in both
the SDP and MOA.39 Following that exchange, the PARC, under then Sec.
Defensor-Santiago, by Resolution No. 89-12-240 dated November 21, 1989,
approved the SDP of Tadeco/HLI.41
At the time of the SDP approval, HLI had a pool of farmworkers, numbering
6,296, more or less, composed of permanent, seasonal and casual master
list/payroll and non-master list members.
From 1989 to 2005, HLI claimed to have extended the following benefits to the
FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and
fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the gross
produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of
500 hectares of converted agricultural land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80
hectares at 80 million pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death benefits and
no interest bearing salary/educational loans and rice sugar accounts. 42
Two separate groups subsequently contested this claim of HLI.
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of
the hacienda from agricultural to industrial use, 43 pursuant to Sec. 65 of RA
6657, providing:
SEC. 65. Conversion of Lands.¾After the lapse of five (5) years from its
award, when the land ceases to be economically feasible and sound for
agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with
due notice to the affected parties, and subject to existing laws, may authorize
the reclassification, or conversion of the land and its disposition: Provided,
That the beneficiary shall have fully paid its obligation.
The application, according to HLI, had the backing of 5,000 or so FWBs,
including respondent Rene Galang, and Jose Julio Suniga, as evidenced by
the Manifesto of Support they signed and which was submitted to the
DAR.44 After the usual processing, the DAR, thru then Sec. Ernesto Garilao,
approved the application on August 14, 1996, per DAR Conversion Order No.
030601074-764-(95), Series of 1996,45 subject to payment of three percent
(3%) of the gross selling price to the FWBs and to HLI’s continued compliance
with its undertakings under the SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription of 12,000,000
shares of stocks of Centennary Holdings, Inc. (Centennary), ceded 300
hectares of the converted area to the latter. 46 Consequently, HLI’s Transfer
Certificate of Title (TCT) No. 28791047 was canceled and TCT No.
29209148 was issued in the name of Centennary. HLI transferred the remaining
200 hectares covered by TCT No. 287909 to Luisita Realty Corporation
(LRC)49 in two separate transactions in 1997 and 1998, both uniformly
involving 100 hectares for PhP 250 million each. 50
Centennary, a corporation with an authorized capital stock of PhP 12,100,000
divided into 12,100,000 shares and wholly-owned by HLI, had the following
incorporators: Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa,
Ernesto G. Teopaco, and Bernardo R. Lahoz.
Subsequently, Centennary sold51 the entire 300 hectares to Luisita Industrial
Park Corporation (LIPCO) for PhP 750 million. The latter acquired it for the
purpose of developing an industrial complex. 52 As a result, Centennary’s TCT
No. 292091 was canceled to be replaced by TCT No. 31098653 in the name of
LIPCO.
From the area covered by TCT No. 310986 was carved out two (2) parcels, for
which two (2) separate titles were issued in the name of LIPCO, specifically:
(a) TCT No. 36580054 and (b) TCT No. 365801,55 covering 180 and four
hectares, respectively. TCT No. 310986 was, accordingly, partially canceled.
Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO
transferred the parcels covered by its TCT Nos. 365800 and 365801 to the
Rizal Commercial Banking Corporation (RCBC) by way of dacion en pago in
payment of LIPCO’s PhP 431,695,732.10 loan obligations. LIPCO’s titles were
canceled and new ones, TCT Nos. 391051 and 391052, were issued to RCBC.
Apart from the 500 hectares alluded to, another 80.51 hectares were later
detached from the area coverage of Hacienda Luisita which had been acquired
by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX)
complex. In absolute terms, 4,335.75 hectares remained of the original 4,915
hectares Tadeco ceded to HLI.56
Such, in short, was the state of things when two separate petitions, both
undated, reached the DAR in the latter part of 2003. In the first, denominated
as Petition/Protest,57 respondents Jose Julio Suniga and Windsor Andaya,
identifying themselves as head of the Supervisory Group of HLI (Supervisory
Group), and 60 other supervisors sought to revoke the SDOA, alleging that HLI
had failed to give them their dividends and the one percent (1%) share in gross
sales, as well as the thirty-three percent (33%) share in the proceeds of the
sale of the converted 500 hectares of land. They further claimed that their lives
have not improved contrary to the promise and rationale for the adoption of the
SDOA. They also cited violations by HLI of the SDOA’s terms. 58 They prayed
for a renegotiation of the SDOA, or, in the alternative, its revocation.
Revocation and nullification of the SDOA and the distribution of the lands in
the hacienda were the call in the second petition, styled
as Petisyon (Petition).59 The Petisyon was ostensibly filed on December 4,
2003 by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita
(AMBALA), where the handwritten name of respondents Rene Galang as
"Pangulo AMBALA" and Noel Mallari as "Sec-Gen. AMBALA"60 appeared. As
alleged, the petition was filed on behalf of AMBALA’s members purportedly
composing about 80% of the 5,339 FWBs of Hacienda Luisita.
HLI would eventually answer61 the petition/protest of the Supervisory Group.
On the other hand, HLI’s answer62 to the AMBALA petition was contained in its
letter dated January 21, 2005 also filed with DAR.
Meanwhile, the DAR constituted a Special Task Force to attend to issues
relating to the SDP of HLI. Among other duties, the Special Task Force was
mandated to review the terms and conditions of the SDOA and PARC
Resolution No. 89-12-2 relative to HLI’s SDP; evaluate HLI’s compliance
reports; evaluate the merits of the petitions for the revocation of the SDP;
conduct ocular inspections or field investigations; and recommend appropriate
remedial measures for approval of the Secretary. 63
After investigation and evaluation, the Special Task Force submitted its
"Terminal Report: Hacienda Luisita, Incorporated (HLI) Stock Distribution Plan
(SDP) Conflict"64 dated September 22, 2005 (Terminal Report), finding that HLI
has not complied with its obligations under RA 6657 despite the
implementation of the SDP.65 The Terminal Report and the Special Task
Force’s recommendations were adopted by then DAR Sec. Nasser
Pangandaman (Sec. Pangandaman).66
Subsequently, Sec. Pangandaman recommended to the PARC Executive
Committee (Excom) (a) the recall/revocation of PARC Resolution No. 89-12-2
dated November 21, 1989 approving HLI’s SDP; and (b) the acquisition of
Hacienda Luisita through the compulsory acquisition scheme. Following
review, the PARC Validation Committee favorably endorsed the DAR
Secretary’s recommendation afore-stated.67
On December 22, 2005, the PARC issued the assailed Resolution No. 2005-
32-01, disposing as follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY
RESOLVED, to approve and confirm the recommendation of the PARC
Executive Committee adopting in toto the report of the PARC ExCom
Validation Committee affirming the recommendation of the DAR to
recall/revoke the SDO plan of Tarlac Development Corporation/Hacienda
Luisita Incorporated.
RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI
SDO plan be forthwith placed under the compulsory coverage or mandated
land acquisition scheme of the [CARP].
APPROVED.68
A copy of Resolution No. 2005-32-01 was served on HLI the following day,
December 23, without any copy of the documents adverted to in the resolution
attached. A letter-request dated December 28, 200569 for certified copies of
said documents was sent to, but was not acted upon by, the PARC secretariat.
Therefrom, HLI, on January 2, 2006, sought reconsideration. 70 On the same
day, the DAR Tarlac provincial office issued the Notice of Coverage 71 which
HLI received on January 4, 2006.
Its motion notwithstanding, HLI has filed the instant recourse in light of what it
considers as the DAR’s hasty placing of Hacienda Luisita under CARP even
before PARC could rule or even read the motion for reconsideration. 72 As HLI
later rued, it "can not know from the above-quoted resolution the facts and the
law upon which it is based."73
PARC would eventually deny HLI’s motion for reconsideration via Resolution
No. 2006-34-01 dated May 3, 2006.
By Resolution of June 14, 2006,74 the Court, acting on HLI’s motion, issued a
temporary restraining order,75 enjoining the implementation of Resolution No.
2005-32-01 and the notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed
its Comment76 on the petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his
capacity as "Sec-Gen. AMBALA," filed his Manifestation and Motion with
Comment Attached dated December 4, 2006 (Manifestation and Motion). 77 In
it, Mallari stated that he has broken away from AMBALA with other AMBALA
ex-members and formed Farmworkers Agrarian Reform Movement, Inc.
(FARM).78 Should this shift in alliance deny him standing, Mallari also prayed
that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of ways with other FARM
members, particularly would-be intervenors Renato Lalic, et al. As things
stand, Mallari returned to the AMBALA fold, creating the AMBALA-Noel Mallari
faction and leaving Renato Lalic, et al. as the remaining members of FARM
who sought to intervene.
On January 10, 2007, the Supervisory Group79 and the AMBALA-Rene Galang
faction submitted their Comment/Opposition dated December 17, 2006. 80
On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File
and Admit Attached Petition-In-Intervention dated October 18, 2007.81 LIPCO
later followed with a similar motion.82 In both motions, RCBC and LIPCO
contended that the assailed resolution effectively nullified the TCTs under their
respective names as the properties covered in the TCTs were veritably
included in the January 2, 2006 notice of coverage. In the main, they claimed
that the revocation of the SDP cannot legally affect their rights as innocent
purchasers for value. Both motions for leave to intervene were granted and the
corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and intervening petitioners on
oral arguments. On the other hand, the Court, on August 24, 2010, heard
public respondents as well as the respective counsels of the AMBALA-Mallari-
Supervisory Group, the AMBALA-Galang faction, and the FARM and its 27
members83 argue their case.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari;
the Supervisory Group, represented by Suniga and Andaya; and the United
Luisita Workers Union, represented by Eldifonso Pingol, filed with the Court a
joint submission and motion for approval of a Compromise Agreement (English
and Tagalog versions) dated August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the dispute through an
amicable settlement, issued a Resolution84 creating a Mediation Panel
composed of then Associate Justice Ma. Alicia Austria-Martinez, as
chairperson, and former CA Justices Hector Hofileña and Teresita Dy-Liacco
Flores, as members. Meetings on five (5) separate dates, i.e., September 8, 9,
14, 20, and 27, 2010, were conducted. Despite persevering and painstaking
efforts on the part of the panel, mediation had to be discontinued when no
acceptable agreement could be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND
SECRETARY PANGANDAMAN HAVE JURISDICTION, POWER
AND/OR AUTHORITY TO NULLIFY, RECALL, REVOKE OR
RESCIND THE SDOA.
II.
[IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION,
POWER AND/OR AUTHORITY AT THIS TIME, I.E., AFTER SIXTEEN
(16) YEARS FROM THE EXECUTION OF THE SDOA AND ITS
IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10 OF
ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION AGAINST
DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW
AND THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND
OBLIGATIONS? MOREOVER, ARE THERE LEGAL GROUNDS
UNDER THE CIVIL CODE, viz, ARTICLE 1191 x x x, ARTICLES 1380,
1381 AND 1382 x x x ARTICLE 1390 x x x AND ARTICLE 1409 x x x
THAT CAN BE INVOKED TO NULLIFY, RECALL, REVOKE, OR
RESCIND THE SDOA?
III.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR
RESCIND THE SDOA HAVE ANY LEGAL BASIS OR GROUNDS AND
WHETHER THE PETITIONERS THEREIN ARE THE REAL PARTIES-
IN-INTEREST TO FILE SAID PETITIONS.
IV.
WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE
PARTIES TO THE SDOA ARE NOW GOVERNED BY THE
CORPORATION CODE (BATAS PAMBANSA BLG. 68) AND NOT
BY THE x x x [CARL] x x x.
On the other hand, RCBC submits the following issues:
I.
RESPONDENT PARC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT
PROPERTY FROM THE COVERAGE OF THE CARP DESPITE THE
FACT THAT PETITIONER-INTERVENOR RCBC HAS ACQUIRED
VESTED RIGHTS AND INDEFEASIBLE TITLE OVER THE SUBJECT
PROPERTY AS AN INNOCENT PURCHASER FOR VALUE.
A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE
NOTICE OF COVERAGE DATED 02 JANUARY 2006 HAVE
THE EFFECT OF NULLIFYING TCT NOS. 391051 AND
391052 IN THE NAME OF PETITIONER-INTERVENOR
RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE,
PETITIONER-INTERVENOR RCBC CANNOT BE
PREJUDICED BY A SUBSEQUENT REVOCATION OR
RESCISSION OF THE SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE
OF COVERAGE DATED 02 JANUARY 2006 WERE ISSUED
WITHOUT AFFORDING PETITIONER-INTERVENOR RCBC ITS
RIGHT TO DUE PROCESS AS AN INNOCENT PURCHASER FOR
VALUE.
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights
over certain portions of the converted property, and, hence, would ascribe on
PARC the commission of grave abuse of discretion when it included those
portions in the notice of coverage. And apart from raising issues identical with
those of HLI, such as but not limited to the absence of valid grounds to warrant
the rescission and/or revocation of the SDP, LIPCO would allege that the
assailed resolution and the notice of coverage were issued without affording it
the right to due process as an innocent purchaser for value. The government,
LIPCO also argues, is estopped from recovering properties which have since
passed to innocent parties.
Simply formulated, the principal determinative issues tendered in the main
petition and to which all other related questions must yield boil down to the
following: (1) matters of standing; (2) the constitutionality of Sec. 31 of RA
6657; (3) the jurisdiction of PARC to recall or revoke HLI’s SDP; (4) the validity
or propriety of such recall or revocatory action; and (5) corollary to (4), the
validity of the terms and conditions of the SDP, as embodied in the SDOA.
Our Ruling
I.
We first proceed to the examination of the preliminary issues before delving on
the more serious challenges bearing on the validity of PARC’s assailed
issuance and the grounds for it.
Supervisory Group, AMBALA and their
respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the purported leaders of the
Supervisory Group and AMBALA, i.e., Julio Suniga, Windsor Andaya, and
Rene Galang, who filed the revocatory petitions before the DAR. As HLI would
have it, Galang, the self-styled head of AMBALA, gained HLI employment in
June 1990 and, thus, could not have been a party to the SDOA executed a
year earlier.85 As regards the Supervisory Group, HLI alleges that supervisors
are not regular farmworkers, but the company nonetheless considered them
FWBs under the SDOA as a mere concession to enable them to enjoy the
same benefits given qualified regular farmworkers. However, if the SDOA
would be canceled and land distribution effected, so HLI claims, citing Fortich
v. Corona,86 the supervisors would be excluded from receiving lands as
farmworkers other than the regular farmworkers who are merely entitled to the
"fruits of the land."87
The SDOA no less identifies "the SDP qualified beneficiaries" as "the
farmworkers who appear in the annual payroll, inclusive of the permanent and
seasonal employees, who are regularly or periodically employed by
[HLI]."88 Galang, per HLI’s own admission, is employed by HLI, and is, thus, a
qualified beneficiary of the SDP; he comes within the definition of a real party-
in-interest under Sec. 2, Rule 3 of the Rules of Court, meaning, one who
stands to be benefited or injured by the judgment in the suit or is the party
entitled to the avails of the suit.
The same holds true with respect to the Supervisory Group whose members
were admittedly employed by HLI and whose names and signatures even
appeared in the annex of the SDOA. Being qualified beneficiaries of the SDP,
Suniga and the other 61 supervisors are certainly parties who would benefit or
be prejudiced by the judgment recalling the SDP or replacing it with some
other modality to comply with RA 6657.
Even assuming that members of the Supervisory Group are not regular
farmworkers, but are in the category of "other farmworkers" mentioned in Sec.
4, Article XIII of the Constitution,89 thus only entitled to a share of the fruits of
the land, as indeed Fortich teaches, this does not detract from the fact that
they are still identified as being among the "SDP qualified beneficiaries." As
such, they are, thus, entitled to bring an action upon the SDP. 90 At any rate, the
following admission made by Atty. Gener Asuncion, counsel of HLI, during the
oral arguments should put to rest any lingering doubt as to the status of
protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you were conceding the
qualified farmer beneficiaries of Hacienda Luisita were real parties in interest?
Atty. Asuncion: Yes, Your Honor please, real party in interest which that
question refers to the complaints of protest initiated before the DAR and the
real party in interest there be considered as possessed by the farmer
beneficiaries who initiated the protest.91
Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly
allowed to represent themselves, their fellow farmers or their organizations in
any proceedings before the DAR. Specifically:
SEC. 50. Quasi-Judicial Powers of the DAR.¾x x x
xxxx
Responsible farmer leaders shall be allowed to represent themselves,
their fellow farmers or their organizations in any proceedings before the
DAR: Provided, however, that when there are two or more representatives for
any individual or group, the representatives should choose only one among
themselves to represent such party or group before any DAR proceedings.
(Emphasis supplied.)
Clearly, the respective leaders of the Supervisory Group and AMBALA are
contextually real parties-in-interest allowed by law to file a petition before the
DAR or PARC.
This is not necessarily to say, however, that Galang represents AMBALA, for
as records show and as HLI aptly noted, 92 his "petisyon" filed with DAR did not
carry the usual authorization of the individuals in whose behalf it was
supposed to have been instituted. To date, such authorization document,
which would logically include a list of the names of the authorizing FWBs, has
yet to be submitted to be part of the records.
PARC’s Authority to Revoke a Stock Distribution Plan
On the postulate that the subject jurisdiction is conferred by law, HLI maintains
that PARC is without authority to revoke an SDP, for neither RA 6657 nor EO
229 expressly vests PARC with such authority. While, as HLI argued, EO 229
empowers PARC to approve the plan for stock distribution in appropriate
cases, the empowerment only includes the power to disapprove, but not to
recall its previous approval of the SDP after it has been implemented by the
parties.93 To HLI, it is the court which has jurisdiction and authority to order the
revocation or rescission of the PARC-approved SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to
approve the plan for stock distribution of the corporate landowner belongs to
PARC. However, contrary to petitioner HLI’s posture, PARC also has the
power to revoke the SDP which it previously approved. It may be, as urged,
that RA 6657 or other executive issuances on agrarian reform do not explicitly
vest the PARC with the power to revoke/recall an approved SDP. Such power
or authority, however, is deemed possessed by PARC under the principle of
necessary implication, a basic postulate that what is implied in a statute is as
much a part of it as that which is expressed.94
We have explained that "every statute is understood, by implication, to contain
all such provisions as may be necessary to effectuate its object and purpose,
or to make effective rights, powers, privileges or jurisdiction which it grants,
including all such collateral and subsidiary consequences as may be fairly and
logically inferred from its terms."95 Further, "every statutory grant of power,
right or privilege is deemed to include all incidental power, right or privilege.96
Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication, even if not expressly
granted, the power to revoke it. By extension, the power to revoke is limited by
the authority to grant the license, from which it is derived in the first place.
Thus, if the FDA grants a license upon its finding that the applicant drug store
has complied with the requirements of the general laws and the implementing
administrative rules and regulations, it is only for their violation that the FDA
may revoke the said license. By the same token, having granted the permit
upon his ascertainment that the conditions thereof as applied x x x have been
complied with, it is only for the violation of such conditions that the mayor may
revoke the said permit.97 (Emphasis supplied.)
Following the doctrine of necessary implication, it may be stated that the
conferment of express power to approve a plan for stock distribution of the
agricultural land of corporate owners necessarily includes the power to revoke
or recall the approval of the plan.
As public respondents aptly observe, to deny PARC such revocatory power
would reduce it into a toothless agency of CARP, because the very same
agency tasked to ensure compliance by the corporate landowner with the
approved SDP would be without authority to impose sanctions for non-
compliance with it.98 With the view We take of the case, only PARC can effect
such revocation. The DAR Secretary, by his own authority as such, cannot
plausibly do so, as the acceptance and/or approval of the SDP sought to be
taken back or undone is the act of PARC whose official composition includes,
no less, the President as chair, the DAR Secretary as vice-chair, and at least
eleven (11) other department heads.99
On another but related issue, the HLI foists on the Court the argument that
subjecting its landholdings to compulsory distribution after its approved SDP
has been implemented would impair the contractual obligations created under
the SDOA.
The broad sweep of HLI’s argument ignores certain established legal precepts
and must, therefore, be rejected.
A law authorizing interference, when appropriate, in the contractual relations
between or among parties is deemed read into the contract and its
implementation cannot successfully be resisted by force of the non-impairment
guarantee. There is, in that instance, no impingement of the impairment
clause, the non-impairment protection being applicable only to laws that
derogate prior acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties. Impairment, in fine, obtains if a
subsequent law changes the terms of a contract between the parties, imposes
new conditions, dispenses with those agreed upon or withdraws existing
remedies for the enforcement of the rights of the parties. 100 Necessarily, the
constitutional proscription would not apply to laws already in effect at the time
of contract execution, as in the case of RA 6657, in relation to DAO 10, vis-à-
vis HLI’s SDOA. As held in Serrano v. Gallant Maritime Services, Inc.:
The prohibition [against impairment of the obligation of contracts] is aligned
with the general principle that laws newly enacted have only a prospective
operation, and cannot affect acts or contracts already perfected; however, as
to laws already in existence, their provisions are read into contracts and
deemed a part thereof. Thus, the non-impairment clause under Section 10,
Article II [of the Constitution] is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties
thereto.101 (Emphasis supplied.)
Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of
issuance within the ambit of Sec. 10, Art. III of the Constitution providing that
"[n]o law impairing the obligation of contracts shall be passed."
Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as
such, a breach of its terms and conditions is not a PARC administrative matter,
but one that gives rise to a cause of action cognizable by regular courts. 102 This
contention has little to commend itself. The SDOA is a special contract imbued
with public interest, entered into and crafted pursuant to the provisions of RA
6657. It embodies the SDP, which requires for its validity, or at least its
enforceability, PARC’s approval. And the fact that the certificate of
compliance103––to be issued by agrarian authorities upon completion of the
distribution of stocks––is revocable by the same issuing authority supports the
idea that everything about the implementation of the SDP is, at the first
instance, subject to administrative adjudication.
HLI also parlays the notion that the parties to the SDOA should now look to the
Corporation Code, instead of to RA 6657, in determining their rights,
obligations and remedies. The Code, it adds, should be the applicable law on
the disposition of the agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and remedies of the parties
to the SDOA embodying the SDP are primarily governed by RA 6657. It should
abundantly be made clear that HLI was precisely created in order to comply
with RA 6657, which the OSG aptly described as the "mother law" of the
SDOA and the SDP.104 It is, thus, paradoxical for HLI to shield itself from the
coverage of CARP by invoking exclusive applicability of the Corporation Code
under the guise of being a corporate entity.
Without in any way minimizing the relevance of the Corporation Code since the
FWBs of HLI are also stockholders, its applicability is limited as the rights of
the parties arising from the SDP should not be made to supplant or circumvent
the agrarian reform program.
Without doubt, the Corporation Code is the general law providing for the
formation, organization and regulation of private corporations. On the other
hand, RA 6657 is the special law on agrarian reform. As between a general
and special law, the latter shall prevail—generalia specialibus non
derogant.105 Besides, the present impasse between HLI and the private
respondents is not an intra-corporate dispute which necessitates the
application of the Corporation Code. What private respondents questioned
before the DAR is the proper implementation of the SDP and HLI’s compliance
with RA 6657. Evidently, RA 6657 should be the applicable law to the instant
case.
HLI further contends that the inclusion of the agricultural land of Hacienda
Luisita under the coverage of CARP and the eventual distribution of the land to
the FWBs would amount to a disposition of all or practically all of the corporate
assets of HLI. HLI would add that this contingency, if ever it comes to pass,
requires the applicability of the Corporation Code provisions on corporate
dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on corporate dissolution would
apply insofar as the winding up of HLI’s affairs or liquidation of the assets is
concerned. However, the mere inclusion of the agricultural land of Hacienda
Luisita under the coverage of CARP and the land’s eventual distribution to the
FWBs will not, without more, automatically trigger the dissolution of HLI. As
stated in the SDOA itself, the percentage of the value of the agricultural land of
Hacienda Luisita in relation to the total assets transferred and conveyed by
Tadeco to HLI comprises only 33.296%, following this equation: value of the
agricultural lands divided by total corporate assets. By no stretch of
imagination would said percentage amount to a disposition of all or practically
all of HLI’s corporate assets should compulsory land acquisition and
distribution ensue.
This brings us to the validity of the revocation of the approval of the SDP
sixteen (16) years after its execution pursuant to Sec. 31 of RA 6657 for the
reasons set forth in the Terminal Report of the Special Task Force, as
endorsed by PARC Excom. But first, the matter of the constitutionality of said
section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the
corporation, as a mode of CARP compliance, to resort to stock distribution, an
arrangement which, to FARM, impairs the fundamental right of farmers and
farmworkers under Sec. 4, Art. XIII of the Constitution. 106
To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657
permits stock transfer in lieu of outright agricultural land transfer; in fine, there
is stock certificate ownership of the farmers or farmworkers instead of them
owning the land, as envisaged in the Constitution. For FARM, this modality of
distribution is an anomaly to be annulled for being inconsistent with the basic
concept of agrarian reform ingrained in Sec. 4, Art. XIII of the Constitution. 107
Reacting, HLI insists that agrarian reform is not only about transfer of land
ownership to farmers and other qualified beneficiaries. It draws attention in this
regard to Sec. 3(a) of RA 6657 on the concept and scope of the term
"agrarian reform." The constitutionality of a law, HLI added, cannot, as here,
be attacked collaterally.
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and
necessarily its counterpart provision in EO 229 must fail as explained below.
When the Court is called upon to exercise its power of judicial review over, and
pass upon the constitutionality of, acts of the executive or legislative
departments, it does so only when the following essential requirements are
first met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the earliest possible
opportunity by a proper party or one with locus standi; and
(3) the issue of constitutionality must be the very lis mota of the
case.108
Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM,
composed of a small minority of 27 farmers, has yet to explain its failure to
challenge the constitutionality of Sec. 3l of RA 6657, since as early as
November 21, l989 when PARC approved the SDP of Hacienda Luisita or at
least within a reasonable time thereafter and why its members received
benefits from the SDP without so much of a protest. It was only on December
4, 2003 or 14 years after approval of the SDP via PARC Resolution No. 89-12-
2 dated November 21, 1989 that said plan and approving resolution were
sought to be revoked, but not, to stress, by FARM or any of its members, but
by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question
the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported
flaws and gaps in the subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not question the
constitutionality of the provision. On the other hand, FARM, whose 27
members formerly belonged to AMBALA, raised the constitutionality of Sec. 31
only on May 3, 2007 when it filed its Supplemental Comment with the Court.
Thus, it took FARM some eighteen (18) years from November 21, 1989 before
it challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late
in the day. The FARM members slept on their rights and even accepted
benefits from the SDP with nary a complaint on the alleged unconstitutionality
of Sec. 31 upon which the benefits were derived. The Court cannot now be
goaded into resolving a constitutional issue that FARM failed to assail after the
lapse of a long period of time and the occurrence of numerous events and
activities which resulted from the application of an alleged unconstitutional
legal provision.
It has been emphasized in a number of cases that the question of
constitutionality will not be passed upon by the Court unless it is properly
raised and presented in an appropriate case at the first opportunity. 109 FARM
is, therefore, remiss in belatedly questioning the constitutionality of Sec. 31 of
RA 6657. The second requirement that the constitutional question should be
raised at the earliest possible opportunity is clearly wanting.
The last but the most important requisite that the constitutional issue must be
the very lis mota of the case does not likewise obtain. The lis mota aspect is
not present, the constitutional issue tendered not being critical to the resolution
of the case. The unyielding rule has been to avoid, whenever plausible, an
issue assailing the constitutionality of a statute or governmental act. 110 If some
other grounds exist by which judgment can be made without touching the
constitutionality of a law, such recourse is favored. 111 Garcia v. Executive
Secretary explains why:
Lis Mota — the fourth requirement to satisfy before this Court will undertake
judicial review — means that the Court will not pass upon a question of
unconstitutionality, although properly presented, if the case can be disposed of
on some other ground, such as the application of the statute or the general
law. The petitioner must be able to show that the case cannot be legally
resolved unless the constitutional question raised is determined. This
requirement is based on the rule that every law has in its favor the
presumption of constitutionality; to justify its nullification, there must be a clear
and unequivocal breach of the Constitution, and not one that is doubtful,
speculative, or argumentative.112 (Italics in the original.)
The lis mota in this case, proceeding from the basic positions originally taken
by AMBALA (to which the FARM members previously belonged) and the
Supervisory Group, is the alleged non-compliance by HLI with the conditions of
the SDP to support a plea for its revocation. And before the Court, the lis
mota is whether or not PARC acted in grave abuse of discretion when it
ordered the recall of the SDP for such non-compliance and the fact that the
SDP, as couched and implemented, offends certain constitutional and
statutory provisions. To be sure, any of these key issues may be resolved
without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover,
looking deeply into the underlying petitions of AMBALA, et al., it is not the said
section per se that is invalid, but rather it is the alleged application of the said
provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700, 113 amending Sec.
7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock
distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700
provides: "[T]hat after June 30, 2009, the modes of acquisition shall
be limited to voluntary offer to sell and compulsory acquisition." Thus, for all
intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657
is no longer an available option under existing law. The question of whether or
not it is unconstitutional should be a moot issue.
It is true that the Court, in some cases, has proceeded to resolve constitutional
issues otherwise already moot and academic 114 provided the following
requisites are present:
x x x first, there is a grave violation of the Constitution; second, the exceptional
character of the situation and the paramount public interest is involved; third,
when the constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; fourth, the case is
capable of repetition yet evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the fundamental law. Sec. 4, Article
XIII of the Constitution reads:
The State shall, by law, undertake an agrarian reform program founded on the
right of the farmers and regular farmworkers, who are landless, to OWN
directly or COLLECTIVELY THE LANDS THEY TILL or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-
sharing. (Emphasis supplied.)
The wording of the provision is unequivocal––the farmers and regular
farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY THE
LANDS THEY TILL. The basic law allows two (2) modes of land distribution—
direct and indirect ownership. Direct transfer to individual farmers is the most
commonly used method by DAR and widely accepted. Indirect transfer through
collective ownership of the agricultural land is the alternative to direct
ownership of agricultural land by individual farmers. The aforequoted Sec. 4
EXPRESSLY authorizes collective ownership by farmers. No language can be
found in the 1987 Constitution that disqualifies or prohibits corporations or
cooperatives of farmers from being the legal entity through which collective
ownership can be exercised. The word "collective" is defined as "indicating a
number of persons or things considered as constituting one group or
aggregate,"115 while "collectively" is defined as "in a collective sense or
manner; in a mass or body."116 By using the word "collectively," the
Constitution allows for indirect ownership of land and not just outright
agricultural land transfer. This is in recognition of the fact that land reform may
become successful even if it is done through the medium of juridical entities
composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29
allows workers’ cooperatives or associations to collectively own the land, while
the second paragraph of Sec. 31 allows corporations or associations to own
agricultural land with the farmers becoming stockholders or members. Said
provisions read:
SEC. 29. Farms owned or operated by corporations or other business
associations.—In the case of farms owned or operated by corporations or
other business associations, the following rules shall be observed by the
PARC.
In general, lands shall be distributed directly to the individual worker-
beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall
be owned collectively by the worker beneficiaries who shall form a workers’
cooperative or association which will deal with the corporation or business
association. x x x (Emphasis supplied.)
SEC. 31. Corporate Landowners.— x x x
xxxx
Upon certification by the DAR, corporations owning agricultural lands may give
their qualified beneficiaries the right to purchase such proportion of the capital
stock of the corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the company’s total assets, under
such terms and conditions as may be agreed upon by them. In no case shall
the compensation received by the workers at the time the shares of stocks are
distributed be reduced. The same principle shall be applied to associations,
with respect to their equity or participation. x x x (Emphasis supplied.)
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and
corporations or associations under the succeeding Sec. 31, as differentiated
from individual farmers, are authorized vehicles for the collective ownership of
agricultural land. Cooperatives can be registered with the Cooperative
Development Authority and acquire legal personality of their own, while
corporations are juridical persons under the Corporation Code. Thus, Sec. 31
is constitutional as it simply implements Sec. 4 of Art. XIII of the Constitution
that land can be owned COLLECTIVELY by farmers. Even the framers of the
l987 Constitution are in unison with respect to the two (2) modes of ownership
of agricultural lands tilled by farmers––DIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean
the principle of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we mean communal
ownership, stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’
cooperatives owning the land, not the State.
MR. NOLLEDO. And when we talk of "collectively," referring to farmers’
cooperatives, do the farmers own specific areas of land where they only unite
in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems
involved: the "moshave" type of agriculture and the "kibbutz." So are both
contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na
reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari – directly – at ang tinatawag na sama-samang gagawin ng mga
magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila
itong "cooperative or collective farm." Ang ibig sabihin ay sama-sama nilang
sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own directly or collectively
the lands they till," is this land for the tillers rather than land for the landless?
Before, we used to hear "land for the landless," but now the slogan is "land for
the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig
sabihin ng "directly" ay tulad sa implementasyon sa rice and corn lands kung
saan inaari na ng mga magsasaka ang lupang binubungkal nila. Ang ibig
sabihin naman ng "collectively" ay sama-samang paggawa sa isang lupain o
isang bukid, katulad ng sitwasyon sa Negros. 117 (Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work on the agricultural
land "sama-sama" or collectively. Thus, the main requisite for collective
ownership of land is collective or group work by farmers of the agricultural
land. Irrespective of whether the landowner is a cooperative, association or
corporation composed of farmers, as long as concerted group work by the
farmers on the land is present, then it falls within the ambit of collective
ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment
on the part of the State to pursue, by law, an agrarian reform program founded
on the policy of land for the landless, but subject to such priorities as Congress
may prescribe, taking into account such abstract variable as "equity
considerations." The textual reference to a law and Congress necessarily
implies that the above constitutional provision is not self-executory and that
legislation is needed to implement the urgently needed program of agrarian
reform. And RA 6657 has been enacted precisely pursuant to and as a
mechanism to carry out the constitutional directives. This piece of legislation,
in fact, restates118 the agrarian reform policy established in the aforementioned
provision of the Constitution of promoting the welfare of landless farmers and
farmworkers. RA 6657 thus defines "agrarian reform" as "the redistribution of
lands … to farmers and regular farmworkers who are landless … to lift the
economic status of the beneficiaries and all other arrangements alternative
to the physical redistribution of lands, such as production or profit sharing,
labor administration and the distribution of shares of stock which will allow
beneficiaries to receive a just share of the fruits of the lands they work."
With the view We take of this case, the stock distribution option devised under
Sec. 31 of RA 6657 hews with the agrarian reform policy, as instrument of
social justice under Sec. 4 of Article XIII of the Constitution. Albeit land
ownership for the landless appears to be the dominant theme of that policy,
We emphasize that Sec. 4, Article XIII of the Constitution, as couched, does
not constrict Congress to passing an agrarian reform law planted on direct land
transfer to and ownership by farmers and no other, or else the enactment
suffers from the vice of unconstitutionality. If the intention were otherwise, the
framers of the Constitution would have worded said section in a manner
mandatory in character.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features,
is not inconsistent with the State’s commitment to farmers and farmworkers to
advance their interests under the policy of social justice. The legislature, thru
Sec. 31 of RA 6657, has chosen a modality for collective ownership by which
the imperatives of social justice may, in its estimation, be approximated, if not
achieved. The Court should be bound by such policy choice.
FARM contends that the farmers in the stock distribution scheme under Sec.
31 do not own the agricultural land but are merely given stock certificates.
Thus, the farmers lose control over the land to the board of directors and
executive officials of the corporation who actually manage the land. They
conclude that such arrangement runs counter to the mandate of the
Constitution that any agrarian reform must preserve the control over the land in
the hands of the tiller.
This contention has no merit.
While it is true that the farmer is issued stock certificates and does not directly
own the land, still, the Corporation Code is clear that the FWB becomes a
stockholder who acquires an equitable interest in the assets of the corporation,
which include the agricultural lands. It was explained that the "equitable
interest of the shareholder in the property of the corporation is represented by
the term stock, and the extent of his interest is described by the term shares.
The expression shares of stock when qualified by words indicating number and
ownership expresses the extent of the owner’s interest in the corporate
property."119 A share of stock typifies an aliquot part of the corporation’s
property, or the right to share in its proceeds to that extent when distributed
according to law and equity and that its holder is not the owner of any part of
the capital of the corporation.120 However, the FWBs will ultimately own the
agricultural lands owned by the corporation when the corporation is eventually
dissolved and liquidated.
Anent the alleged loss of control of the farmers over the agricultural land
operated and managed by the corporation, a reading of the second paragraph
of Sec. 31 shows otherwise. Said provision provides that qualified beneficiaries
have "the right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets." The wording of the formula in
the computation of the number of shares that can be bought by the farmers
does not mean loss of control on the part of the farmers. It must be
remembered that the determination of the percentage of the capital stock that
can be bought by the farmers depends on the value of the agricultural land and
the value of the total assets of the corporation.
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657.
The policy on agrarian reform is that control over the agricultural land must
always be in the hands of the farmers. Then it falls on the shoulders of DAR
and PARC to see to it the farmers should always own majority of the common
shares entitled to elect the members of the board of directors to ensure that
the farmers will have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must always be undertaken by
the DAR and PARC, such that the value of the agricultural land contributed to
the corporation must always be more than 50% of the total assets of the
corporation to ensure that the majority of the members of the board of directors
are composed of the farmers. The PARC composed of the President of the
Philippines and cabinet secretaries must see to it that control over the board of
directors rests with the farmers by rejecting the inclusion of non-agricultural
assets which will yield the majority in the board of directors to non-farmers.
Any deviation, however, by PARC or DAR from the correct application of the
formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not
make said provision constitutionally infirm. Rather, it is the application of said
provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on
the constitutional policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian reform unless there
is land distribution and that actual land distribution is the essential
characteristic of a constitutional agrarian reform program. On the contrary,
there have been so many instances where, despite actual land distribution, the
implementation of agrarian reform was still unsuccessful. As a matter of fact,
this Court may take judicial notice of cases where FWBs sold the awarded
land even to non-qualified persons and in violation of the prohibition period
provided under the law. This only proves to show that the mere fact that there
is land distribution does not guarantee a successful implementation of agrarian
reform.
As it were, the principle of "land to the tiller" and the old pastoral model of land
ownership where non-human juridical persons, such as corporations, were
prohibited from owning agricultural lands are no longer realistic under existing
conditions. Practically, an individual farmer will often face greater
disadvantages and difficulties than those who exercise ownership in a
collective manner through a cooperative or corporation. The former is too often
left to his own devices when faced with failing crops and bad weather, or
compelled to obtain usurious loans in order to purchase costly fertilizers or
farming equipment. The experiences learned from failed land reform activities
in various parts of the country are lack of financing, lack of farm equipment,
lack of fertilizers, lack of guaranteed buyers of produce, lack of farm-to-market
roads, among others. Thus, at the end of the day, there is still no successful
implementation of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a corporation stands in a
better position to secure funding and competently maintain the agri-business
than the individual farmer. While direct singular ownership over farmland does
offer advantages, such as the ability to make quick decisions unhampered by
interference from others, yet at best, these advantages only but offset the
disadvantages that are often associated with such ownership arrangement.
Thus, government must be flexible and creative in its mode of implementation
to better its chances of success. One such option is collective ownership
through juridical persons composed of farmers.
Aside from the fact that there appears to be no violation of the Constitution, the
requirement that the instant case be capable of repetition yet evading review is
also wanting. It would be speculative for this Court to assume that the
legislature will enact another law providing for a similar stock option.
As a matter of sound practice, the Court will not interfere inordinately with the
exercise by Congress of its official functions, the heavy presumption being that
a law is the product of earnest studies by Congress to ensure that no
constitutional prescription or concept is infringed. 121 Corollarily, courts will not
pass upon questions of wisdom, expediency and justice of legislation or its
provisions. Towards this end, all reasonable doubts should be resolved in
favor of the constitutionality of a law and the validity of the acts and processes
taken pursuant thereof.122
Consequently, before a statute or its provisions duly challenged are voided, an
unequivocal breach of, or a clear conflict with the Constitution, not merely a
doubtful or argumentative one, must be demonstrated in such a manner as to
leave no doubt in the mind of the Court. In other words, the grounds for nullity
must be beyond reasonable doubt.123 FARM has not presented compelling
arguments to overcome the presumption of constitutionality of Sec. 31 of RA
6657.
The wisdom of Congress in allowing an SDP through a corporation as an
alternative mode of implementing agrarian reform is not for judicial
determination. Established jurisprudence tells us that it is not within the
province of the Court to inquire into the wisdom of the law, for, indeed, We are
bound by words of the statute.124
II.
The stage is now set for the determination of the propriety under the premises
of the revocation or recall of HLI’s SDP. Or to be more precise, the inquiry
should be: whether or not PARC gravely abused its discretion in revoking or
recalling the subject SDP and placing the hacienda under CARP’s compulsory
acquisition and distribution scheme.
The findings, analysis and recommendation of the DAR’s Special Task Force
contained and summarized in its Terminal Report provided the bases for the
assailed PARC revocatory/recalling Resolution. The findings may be grouped
into two: (1) the SDP is contrary to either the policy on agrarian reform, Sec.
31 of RA 6657, or DAO 10; and (2) the alleged violation by HLI of the
conditions/terms of the SDP. In more particular terms, the following are
essentially the reasons underpinning PARC’s revocatory or recall action:
(1) Despite the lapse of 16 years from the approval of HLI’s SDP, the
lives of the FWBs have hardly improved and the promised increased
income has not materialized;
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented;
(3) The issuance of HLI shares of stock on the basis of number of
hours worked––or the so-called "man days"––is grossly onerous to the
FWBs, as HLI, in the guise of rotation, can unilaterally deny work to
anyone. In elaboration of this ground, PARC’s Resolution No. 2006-34-
01, denying HLI’s motion for reconsideration of Resolution No. 2005-
32-01, stated that the man days criterion worked to dilute the
entitlement of the original share beneficiaries;125
(4) The distribution/transfer of shares was not in accordance with the
timelines fixed by law;
 (5) HLI has failed to comply with its obligations to grant 3% of the gross
sales every year as production-sharing benefit on top of the workers’
salary; and
(6) Several homelot awardees have yet to receive their individual titles.
Petitioner HLI claims having complied with, at least substantially, all its
obligations under the SDP, as approved by PARC itself, and tags the reasons
given for the revocation of the SDP as unfounded.
Public respondents, on the other hand, aver that the assailed resolution rests
on solid grounds set forth in the Terminal Report, a position shared by
AMBALA, which, in some pleadings, is represented by the same counsel as
that appearing for the Supervisory Group.
FARM, for its part, posits the view that legal bases obtain for the revocation of
the SDP, because it does not conform to Sec. 31 of RA 6657 and DAO 10.
And training its sight on the resulting dilution of the equity of the FWBs
appearing in HLI’s masterlist, FARM would state that the SDP, as couched and
implemented, spawned disparity when there should be none; parity when there
should have been differentiation.126
The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that the SDP violates the
agrarian reform policy under Sec. 2 of RA 6657, as the said plan failed to
enhance the dignity and improve the quality of lives of the FWBs through
greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.¾It is the policy of the State
to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of
the landless farmers and farm workers will receive the highest consideration to
promote social justice and to move the nation towards sound rural
development and industrialization, and the establishment of owner
cultivatorship of economic-sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due
regard to the rights of landowners to just compensation and to the ecological
needs of the nation, shall be undertaken to provide farmers and farm workers
with the opportunity to enhance their dignity and improve the quality of their
lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular
farm workers, who are landless, to own directly or collectively the lands they till
or, in the case of other farm workers, to receive a share of the fruits thereof. To
this end, the State shall encourage the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in this Act, having taken
into account ecological, developmental, and equity considerations, and subject
to the payment of just compensation. The State shall respect the right of small
landowners and shall provide incentives for voluntary land-sharing. (Emphasis
supplied.)
Paragraph 2 of the above-quoted provision specifically mentions that "a more
equitable distribution and ownership of land x x x shall be undertaken to
provide farmers and farm workers with the opportunity to enhance their dignity
and improve the quality of their lives through greater productivity of agricultural
lands." Of note is the term "opportunity" which is defined as a favorable chance
or opening offered by circumstances.127 Considering this, by no stretch of
imagination can said provision be construed as a guarantee in improving the
lives of the FWBs. At best, it merely provides for a possibility or favorable
chance of uplifting the economic status of the FWBs, which may or may not be
attained.
Pertinently, improving the economic status of the FWBs is neither among the
legal obligations of HLI under the SDP nor an imperative imposition by RA
6657 and DAO 10, a violation of which would justify discarding the stock
distribution option. Nothing in that option agreement, law or department order
indicates otherwise.
Significantly, HLI draws particular attention to its having paid its FWBs, during
the regime of the SDP (1989-2005), some PhP 3 billion by way of
salaries/wages and higher benefits exclusive of free hospital and medical
benefits to their immediate family. And attached as Annex "G" to HLI’s
Memorandum is the certified true report of the finance manager of Jose
Cojuangco & Sons Organizations-Tarlac Operations, captioned as
"HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges (in
Thousand Pesos) Since the Stock Option was Approved by PARC/CARP,"
detailing what HLI gave their workers from 1989 to 2005. The sum total, as
added up by the Court, yields the following numbers: Total Direct Cash Out
(Salaries/Wages & Cash Benefits) = PhP 2,927,848; Total Non-Direct Cash
Out (Hospital/Medical Benefits) = PhP 303,040. The cash out figures, as stated
in the report, include the cost of homelots; the PhP 150 million or so
representing 3% of the gross produce of the hacienda; and the PhP 37.5
million representing 3% from the proceeds of the sale of the 500-hectare
converted lands. While not included in the report, HLI manifests having given
the FWBs 3% of the PhP 80 million paid for the 80 hectares of land traversed
by the SCTEX.128 On top of these, it is worth remembering that the shares of
stocks were given by HLI to the FWBs for free. Verily, the FWBs have
benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as
HLI has not anyway earned profits through the years, it cannot be over-
emphasized that, as a matter of common business sense, no corporation could
guarantee a profitable run all the time. As has been suggested, one of the key
features of an SDP of a corporate landowner is the likelihood of the corporate
vehicle not earning, or, worse still, losing money. 129
The Court is fully aware that one of the criteria under DAO 10 for the PARC to
consider the advisability of approving a stock distribution plan is the likelihood
that the plan "would result in increased income and greater benefits to
[qualified beneficiaries] than if the lands were divided and distributed to them
individually."130 But as aptly noted during the oral arguments, DAO 10 ought to
have not, as it cannot, actually exact assurance of success on something that
is subject to the will of man, the forces of nature or the inherent risky nature of
business.131 Just like in actual land distribution, an SDP cannot guarantee, as
indeed the SDOA does not guarantee, a comfortable life for the FWBs. The
Court can take judicial notice of the fact that there were many instances
wherein after a farmworker beneficiary has been awarded with an agricultural
land, he just subsequently sells it and is eventually left with nothing in the end.
In all then, the onerous condition of the FWBs’ economic status, their life of
hardship, if that really be the case, can hardly be attributed to HLI and its SDP
and provide a valid ground for the plan’s revocation.
Neither does HLI’s SDP, whence the DAR-attested SDOA/MOA is based,
infringe Sec. 31 of RA 6657, albeit public respondents erroneously submit
otherwise.
The provisions of the first paragraph of the adverted Sec. 31 are without
relevance to the issue on the propriety of the assailed order revoking HLI’s
SDP, for the paragraph deals with the transfer of agricultural lands to the
government, as a mode of CARP compliance, thus:
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily
transfer ownership over their agricultural landholdings to the Republic of the
Philippines pursuant to Section 20 hereof or to qualified beneficiaries under
such terms and conditions, consistent with this Act, as they may agree, subject
to confirmation by the DAR.
The second and third paragraphs, with their sub-paragraphs, of Sec. 31
provide as follows:
Upon certification by the DAR, corporations owning agricultural lands may
give their qualified beneficiaries the right to purchase such proportion of
the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total
assets, under such terms and conditions as may be agreed upon by them. In
no case shall the compensation received by the workers at the time the shares
of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their
capital stock, equity or participation in favor of their workers or other qualified
beneficiaries under this section shall be deemed to have complied with the
provisions of this Act: Provided, That the following conditions are complied
with:
(a) In order to safeguard the right of beneficiaries who own shares of
stocks to dividends and other financial benefits, the books of the
corporation or association shall be subject to periodic audit by certified
public accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or
association, the beneficiaries shall be assured of at least one (1)
representative in the board of directors, or in a management or
executive committee, if one exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have
the same rights and features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall
be void ab initio unless said transaction is in favor of a qualified and
registered beneficiary within the same corporation.
The mandatory minimum ratio of land-to-shares of stock supposed to be
distributed or allocated to qualified beneficiaries, adverting to what Sec. 31 of
RA 6657 refers to as that "proportion of the capital stock of the corporation that
the agricultural land, actually devoted to agricultural activities, bears in relation
to the company’s total assets" had been observed.
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to
Sec. 31 of RA 6657. The stipulation reads:
1. The percentage of the value of the agricultural land of Hacienda Luisita
(P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred
and conveyed to the SECOND PARTY is 33.296% that, under the law, is the
proportion of the outstanding capital stock of the SECOND PARTY, which is
P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share,
that has to be distributed to the THIRD PARTY under the stock distribution
plan, the said 33.296% thereof being P118,391,976.85 or 118,391,976.85
shares.
The appraised value of the agricultural land is PhP 196,630,000 and of HLI’s
other assets is PhP 393,924,220. The total value of HLI’s assets is, therefore,
PhP 590,554,220.132 The percentage of the value of the agricultural lands (PhP
196,630,000) in relation to the total assets (PhP 590,554,220) is 33.296%,
which represents the stockholdings of the 6,296 original qualified farmworker-
beneficiaries (FWBs) in HLI. The total number of shares to be distributed to
said qualified FWBs is 118,391,976.85 HLI shares. This was arrived at by
getting 33.296% of the 355,531,462 shares which is the outstanding capital
stock of HLI with a value of PhP 355,531,462. Thus, if we divide the
118,391,976.85 HLI shares by 6,296 FWBs, then each FWB is entitled to
18,804.32 HLI shares. These shares under the SDP are to be given to FWBs
for free.
The Court finds that the determination of the shares to be distributed to the
6,296 FWBs strictly adheres to the formula prescribed by Sec. 31(b) of RA
6657.
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs
shall be assured of at least one (1) representative in the board of directors or
in a management or executive committee irrespective of the value of the equity
of the FWBs in HLI, the Court finds that the SDOA contained provisions
making certain the FWBs’ representation in HLI’s governing board, thus:
5. Even if only a part or fraction of the shares earmarked for distribution will
have been acquired from the FIRST PARTY and distributed to the THIRD
PARTY, FIRST PARTY shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in favor of the
farmworkers appearing as shareholders of the SECOND PARTY at the start of
said year which will empower the THIRD PARTY or their representative to vote
in stockholders’ and board of directors’ meetings of the SECOND PARTY
convened during the year the entire 33.296% of the outstanding capital stock
of the SECOND PARTY earmarked for distribution and thus be able to gain
such number of seats in the board of directors of the SECOND PARTY that the
whole 33.296% of the shares subject to distribution will be entitled to.
Also, no allegations have been made against HLI restricting the inspection of
its books by accountants chosen by the FWBs; hence, the assumption may be
made that there has been no violation of the statutory prescription under sub-
paragraph (a) on the auditing of HLI’s accounts.
Public respondents, however, submit that the distribution of the mandatory
minimum ratio of land-to-shares of stock, referring to the 118,391,976.85
shares with par value of PhP 1 each, should have been made in full within two
(2) years from the approval of RA 6657, in line with the last paragraph of Sec.
31 of said law.133
Public respondents’ submission is palpably erroneous. We have closely
examined the last paragraph alluded to, with particular focus on the two-year
period mentioned, and nothing in it remotely supports the public respondents’
posture. In its pertinent part, said Sec. 31 provides:
SEC. 31. Corporate Landowners x x x
If within two (2) years from the approval of this Act, the [voluntary] land or
stock transfer envisioned above is not made or realized or the plan for such
stock distribution approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. (Word in bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to the period within
which the corporate landowner, to avoid land transfer as a mode of CARP
coverage under RA 6657, is to avail of the stock distribution option or to have
the SDP approved. The HLI secured approval of its SDP in November 1989,
well within the two-year period reckoned from June 1988 when RA 6657 took
effect.
Having hurdled the alleged breach of the agrarian reform policy under Sec. 2
of RA 6657 as well as the statutory issues, We shall now delve into what
PARC and respondents deem to be other instances of violation of DAO 10 and
the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents, keeping Hacienda
Luisita unfragmented is also not among the imperative impositions by the SDP,
RA 6657, and DAO 10.
The Terminal Report states that the proposed distribution plan submitted in
1989 to the PARC effectively assured the intended stock beneficiaries that the
physical integrity of the farm shall remain inviolate. Accordingly, the Terminal
Report and the PARC-assailed resolution would take HLI to task for securing
approval of the conversion to non-agricultural uses of 500 hectares of the
hacienda. In not too many words, the Report and the resolution view the
conversion as an infringement of Sec. 5(a) of DAO 10 which reads: "a. that the
continued operation of the corporation with its agricultural land intact and
unfragmented is viable with potential for growth and increased profitability."
The PARC is wrong.
In the first place, Sec. 5(a)––just like the succeeding Sec. 5(b) of DAO 10 on
increased income and greater benefits to qualified beneficiaries––is but one of
the stated criteria to guide PARC in deciding on whether or not to accept an
SDP. Said Sec. 5(a) does not exact from the corporate landowner-applicant
the undertaking to keep the farm intact and unfragmented ad infinitum. And
there is logic to HLI’s stated observation that the key phrase in the provision of
Sec. 5(a) is "viability of corporate operations": "[w]hat is thus required is not the
agricultural land remaining intact x x x but the viability of the corporate
operations with its agricultural land being intact and unfragmented. Corporate
operation may be viable even if the corporate agricultural land does not remain
intact or [un]fragmented."134
It is, of course, anti-climactic to mention that DAR viewed the conversion as
not violative of any issuance, let alone undermining the viability of Hacienda
Luisita’s operation, as the DAR Secretary approved the land conversion
applied for and its disposition via his Conversion Order dated August 14, 1996
pursuant to Sec. 65 of RA 6657 which reads:
Sec. 65. Conversion of Lands.¾After the lapse of five years from its award
when the land ceases to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a
greater economic value for residential, commercial or industrial purposes, the
DAR upon application of the beneficiary or landowner with due notice to the
affected parties, and subject to existing laws, may authorize the x x x
conversion of the land and its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with sharing the 3% of the
gross production sales of the hacienda and pay dividends from profit, the
entries in its financial books tend to indicate compliance by HLI of the profit-
sharing equivalent to 3% of the gross sales from the production of the
agricultural land on top of (a) the salaries and wages due FWBs as employees
of the company and (b) the 3% of the gross selling price of the converted land
and that portion used for the SCTEX. A plausible evidence of compliance or
non-compliance, as the case may be, could be the books of account of HLI.
Evidently, the cry of some groups of not having received their share from the
gross production sales has not adequately been validated on the ground by
the Special Task Force.
Indeed, factual findings of administrative agencies are conclusive when
supported by substantial evidence and are accorded due respect and weight,
especially when they are affirmed by the CA. 135 However, such rule is not
absolute. One such exception is when the findings of an administrative agency
are conclusions without citation of specific evidence on which they are
based,136 such as in this particular instance. As culled from its Terminal Report,
it would appear that the Special Task Force rejected HLI’s claim of compliance
on the basis of this ratiocination:
 The Task Force position: Though, allegedly, the Supervisory Group
receives the 3% gross production share and that others alleged that
they received 30 million pesos still others maintain that they have not
received anything yet. Item No. 4 of the MOA is clear and must be
followed. There is a distinction between the total gross sales from the
production of the land and the proceeds from the sale of the land. The
former refers to the fruits/yield of the agricultural land while the latter is
the land itself. The phrase "the beneficiaries are entitled every year to
an amount approximately equivalent to 3% would only be feasible if the
subject is the produce since there is at least one harvest per year,
while such is not the case in the sale of the agricultural land. This
negates then the claim of HLI that, all that the FWBs can be entitled to,
if any, is only 3% of the purchase price of the converted land.
  Besides, the Conversion Order dated 14 August 1996 provides that
"the benefits, wages and the like, presently received by the FWBs shall
not in any way be reduced or adversely affected. Three percent of the
gross selling price of the sale of the converted land shall be awarded to
the beneficiaries of the SDO." The 3% gross production share then is
different from the 3% proceeds of the sale of the converted land and,
with more reason, the 33% share being claimed by the FWBs as part
owners of the Hacienda, should have been given the FWBs, as
stockholders, and to which they could have been entitled if only the
land were acquired and redistributed to them under the CARP.
xxxx
 The FWBs do not receive any other benefits under the MOA except the
aforementioned [(viz: shares of stocks (partial), 3% gross production
sale (not all) and homelots (not all)].
Judging from the above statements, the Special Task Force is at best silent on
whether HLI has failed to comply with the 3% production-sharing obligation or
the 3% of the gross selling price of the converted land and the SCTEX lot. In
fact, it admits that the FWBs, though not all, have received their share of the
gross production sales and in the sale of the lot to SCTEX. At most, then, HLI
had complied substantially with this SDP undertaking and the conversion
order. To be sure, this slight breach would not justify the setting to naught by
PARC of the approval action of the earlier PARC. Even in contract law,
rescission, predicated on violation of reciprocity, will not be permitted for a
slight or casual breach of contract; rescission may be had only for such
breaches that are substantial and fundamental as to defeat the object of the
parties in making the agreement.137
Despite the foregoing findings, the revocation of the approval of the SDP is not
without basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or
business associations owning or operating farms which opted for land
distribution. Sec. 30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.¾The
individual members of the cooperatives or corporations mentioned in the
preceding section shall be provided with homelots and small farmlots for their
family use, to be taken from the land owned by the cooperative or corporation.
The "preceding section" referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business
Associations.¾In the case of farms owned or operated by corporations or
other business associations, the following rules shall be observed by the
PARC.
In general, lands shall be distributed directly to the individual worker-
beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall
be owned collectively by the worker-beneficiaries who shall form a workers’
cooperative or association which will deal with the corporation or business
association. Until a new agreement is entered into by and between the
workers’ cooperative or association and the corporation or business
association, any agreement existing at the time this Act takes effect between
the former and the previous landowner shall be respected by both the workers’
cooperative or association and the corporation or business association.
Noticeably, the foregoing provisions do not make reference to corporations
which opted for stock distribution under Sec. 31 of RA 6657. Concomitantly,
said corporations are not obliged to provide for it except by stipulation, as in
this case.
Under the SDP, HLI undertook to "subdivide and allocate for free and without
charge among the qualified family-beneficiaries x x x residential or homelots of
not more than 240 sq. m. each, with each family beneficiary being assured of
receiving and owning a homelot in the barrio or barangay where it actually
resides," "within a reasonable time."
More than sixteen (16) years have elapsed from the time the SDP was
approved by PARC, and yet, it is still the contention of the FWBs that not all
was given the 240-square meter homelots and, of those who were already
given, some still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance to refute the foregoing
allegation by submitting proof that the FWBs were already given the said
homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries,
the qualified family beneficiaries were not given the 240 square meters each.
So, can you also [prove] that the qualified family beneficiaries were already
provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please. 138
Other than the financial report, however, no other substantial proof showing
that all the qualified beneficiaries have received homelots was submitted by
HLI. Hence, this Court is constrained to rule that HLI has not yet fully complied
with its undertaking to distribute homelots to the FWBs under the SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the mechanics and
timelines of stock distribution, We find that it violates two (2) provisions of
DAO 10. Par. 3 of the SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND
PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and
distribution to the THIRD PARTY [FWBs] on the basis of number of days
worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares
of the capital stock of the SECOND PARTY that are presently owned and held
by the FIRST PARTY, until such time as the entire block of 118,391,976.85
shares shall have been completely acquired and distributed to the THIRD
PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to
the FWBs, albeit not entailing a cash out from them, is contingent on the
number of "man days," that is, the number of days that the FWBs have worked
during the year. This formula deviates from Sec. 1 of DAO 10, which decrees
the distribution of equal number of shares to the FWBs as the minimum ratio of
shares of stock for purposes of compliance with Sec. 31 of RA 6657. As stated
in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.¾The [SDP] submitted by the corporate
landowner-applicant shall provide for the distribution of an equal number of
shares of the same class and value, with the same rights and features as all
other shares, to each of the qualified beneficiaries. This distribution plan in all
cases, shall be at least the minimum ratio for purposes of compliance with
Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of this Implementing
Guideline, the corporate landowner-applicant may adopt additional stock
distribution schemes taking into account factors such as rank, seniority, salary,
position and other circumstances which may be deemed desirable as a matter
of sound company policy. (Emphasis supplied.)
The above proviso gives two (2) sets or categories of shares of stock which a
qualified beneficiary can acquire from the corporation under the SDP. The first
pertains, as earlier explained, to the mandatory minimum ratio of shares of
stock to be distributed to the FWBs in compliance with Sec. 31 of RA 6657.
This minimum ratio contemplates of that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets." 139 It is this set of shares of
stock which, in line with Sec. 4 of DAO 10, is supposed to be allocated "for the
distribution of an equal number of shares of stock of the same class and value,
with the same rights and features as all other shares, to each of the qualified
beneficiaries."
On the other hand, the second set or category of shares partakes of a
gratuitous extra grant, meaning that this set or category constitutes an
augmentation share/s that the corporate landowner may give under an
additional stock distribution scheme, taking into account such variables as
rank, seniority, salary, position and like factors which the management, in the
exercise of its sound discretion, may deem desirable. 140
Before anything else, it should be stressed that, at the time PARC approved
HLI’s SDP, HLI recognized 6,296 individuals as qualified FWBs. And under the
30-year stock distribution program envisaged under the plan, FWBs who came
in after 1989, new FWBs in fine, may be accommodated, as they appear to
have in fact been accommodated as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs
shall depend on the number of "man days," HLI violated the afore-quoted rule
on stock distribution and effectively deprived the FWBs of equal shares of
stock in the corporation, for, in net effect, these 6,296 qualified FWBs, who
theoretically had given up their rights to the land that could have been
distributed to them, suffered a dilution of their due share entitlement. As has
been observed during the oral arguments, HLI has chosen to use the shares
earmarked for farmworkers as reward system chips to water down the shares
of the original 6,296 FWBs.141 Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have
happened is that there would be CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: That’s the only point I want to know x x x. Now, but they chose
to enter SDOA instead of placing the land under CARP. And for that reason
those who would have gotten their shares of the land actually gave up their
rights to this land in place of the shares of the stock, is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way, gave up its right to
own the land because that way the government takes own [sic] the land and
distribute it to the farmers and pay for the land, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent (33%) of the shares of
HLI to the farmers at that time that numbered x x x those who signed five
thousand four hundred ninety eight (5,498) beneficiaries, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their shares, some workers
came in from 1989, 1990, 1991, 1992 and the rest of the years that you gave
additional shares who were not in the original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right that would have belong
to them in 1989 when the land was supposed to have been placed under
CARP?
Atty. Dela Merced: If you are talking or referring… (interrupted)
Justice Abad: None! You tell me. None. They gave up no rights to land?
Atty. Dela Merced: They did not do the same thing as we did in 1989, Your
Honor.
Justice Abad: No, if they were not workers in 1989 what land did they give up?
None, if they become workers later on.
Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the
original… (interrupted)
Justice Abad: So why is it that the rights of those who gave up their lands
would be diluted, because the company has chosen to use the shares as
reward system for new workers who come in? It is not that the new workers, in
effect, become just workers of the corporation whose stockholders were
already fixed. The TADECO who has shares there about sixty six percent
(66%) and the five thousand four hundred ninety eight (5,498) farmers at the
time of the SDOA? Explain to me. Why, why will you x x x what right or where
did you get that right to use this shares, to water down the shares of those who
should have been benefited, and to use it as a reward system decided by the
company?142
From the above discourse, it is clear as day that the original 6,296 FWBs, who
were qualified beneficiaries at the time of the approval of the SDP, suffered
from watering down of shares. As determined earlier, each original FWB is
entitled to 18,804.32 HLI shares. The original FWBs got less than the
guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on "man days" or "number of days
worked" by the FWB in a year’s time. As explained by HLI, a beneficiary needs
to work for at least 37 days in a fiscal year before he or she becomes entitled
to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get
any share at year end. The number of HLI shares distributed varies depending
on the number of days the FWBs were allowed to work in one year. Worse,
HLI hired farmworkers in addition to the original 6,296 FWBs, such that, as
indicated in the Compliance dated August 2, 2010 submitted by HLI to the
Court, the total number of farmworkers of HLI as of said date stood at 10,502.
All these farmworkers, which include the original 6,296 FWBs, were given
shares out of the 118,931,976.85 HLI shares representing the 33.296% of the
total outstanding capital stock of HLI. Clearly, the minimum individual
allocation of each original FWB of 18,804.32 shares was diluted as a result of
the use of "man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing
for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement
contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the
implementation of the approved stock distribution plan within three (3) months
from receipt by the corporate landowner of the approval of the plan by PARC.
In fact, based on the said provision, the transfer of the shares of stock in the
names of the qualified FWBs should be recorded in the stock and transfer
books and must be submitted to the SEC within sixty (60) days from
implementation. As stated:
Section 11. Implementation/Monitoring of Plan.¾The approved stock
distribution plan shall be implemented within three (3) months from receipt by
the corporate landowner-applicant of the approval thereof by the PARC, and
the transfer of the shares of stocks in the names of the qualified beneficiaries
shall be recorded in stock and transfer books and submitted to the Securities
and Exchange Commission (SEC) within sixty (60) days from the said
implementation of the stock distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the implementation, that is, the
distribution of the shares of stock to the FWBs, must be made within three (3)
months from receipt by HLI of the approval of the stock distribution plan by
PARC. While neither of the clashing parties has made a compelling case of the
thrust of this provision, the Court is of the view and so holds that the intent is to
compel the corporate landowner to complete, not merely initiate, the transfer
process of shares within that three-month timeframe. Reinforcing this
conclusion is the 60-day stock transfer recording (with the SEC) requirement
reckoned from the implementation of the SDP.
To the Court, there is a purpose, which is at once discernible as it is practical,
for the three-month threshold. Remove this timeline and the corporate
landowner can veritably evade compliance with agrarian reform by simply
deferring to absurd limits the implementation of the stock distribution scheme.
The argument is urged that the thirty (30)-year distribution program is justified
by the fact that, under Sec. 26 of RA 6657, payment by beneficiaries of land
distribution under CARP shall be made in thirty (30) annual amortizations. To
HLI, said section provides a justifying dimension to its 30-year stock
distribution program.
HLI’s reliance on Sec. 26 of RA 6657, quoted in part below, is obviously
misplaced as the said provision clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.¾Lands awarded pursuant to this Act shall
be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x
x x.
Then, too, the ones obliged to pay the LBP under the said provision are the
beneficiaries. On the other hand, in the instant case, aside from the fact that
what is involved is stock distribution, it is the corporate landowner who has the
obligation to distribute the shares of stock among the FWBs.
Evidently, the land transfer beneficiaries are given thirty (30) years within
which to pay the cost of the land thus awarded them to make it less
cumbersome for them to pay the government. To be sure, the reason
underpinning the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified beneficiaries, as the
shares may be issued in a much shorter period of time.
Taking into account the above discussion, the revocation of the SDP by PARC
should be upheld for violating DAO 10. It bears stressing that under Sec. 49 of
RA 6657, the PARC and the DAR have the power to issue rules and
regulations, substantive or procedural. Being a product of such rule-making
power, DAO 10 has the force and effect of law and must be duly complied
with.143 The PARC is, therefore, correct in revoking the SDP. Consequently,
the PARC Resolution No. 89-12-2 dated November 21, l989 approving the
HLI’s SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at bottom, uniformly pray
for the exclusion from the coverage of the assailed PARC resolution those
portions of the converted land within Hacienda Luisita which RCBC and LIPCO
acquired by purchase.
Both contend that they are innocent purchasers for value of portions of the
converted farm land. Thus, their plea for the exclusion of that portion from
PARC Resolution 2005-32-01, as implemented by a DAR-issued Notice of
Coverage dated January 2, 2006, which called for mandatory CARP
acquisition coverage of lands subject of the SDP.
To restate the antecedents, after the conversion of the 500 hectares of land in
Hacienda Luisita, HLI transferred the 300 hectares to Centennary, while
ceding the remaining 200-hectare portion to LRC. Subsequently, LIPCO
purchased the entire three hundred (300) hectares of land from Centennary for
the purpose of developing the land into an industrial complex. 144 Accordingly,
the TCT in Centennary’s name was canceled and a new one issued in
LIPCO’s name. Thereafter, said land was subdivided into two (2) more parcels
of land. Later on, LIPCO transferred about 184 hectares to RCBC by way
of dacion en pago, by virtue of which TCTs in the name of RCBC were
subsequently issued.
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every
registered owner receiving a certificate of title in pursuance of a decree of
registration and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith shall hold the same free from all
encumbrances except those noted on the certificate and enumerated
therein."145
It is settled doctrine that one who deals with property registered under the
Torrens system need not go beyond the four corners of, but can rely on what
appears on, the title. He is charged with notice only of such burdens and
claims as are annotated on the title. This principle admits of certain exceptions,
such as when the party has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry, or when the
purchaser has knowledge of a defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent man to inquire into the status of
the title of the property in litigation. 146 A higher level of care and diligence is of
course expected from banks, their business being impressed with public
interest.147
Millena v. Court of Appeals describes a purchaser in good faith in this wise:
x x x A purchaser in good faith is one who buys property of another, without
notice that some other person has a right to, or interest in, such property at the
time of such purchase, or before he has notice of the claim or interest of some
other persons in the property. Good faith, or the lack of it, is in the final
analysis a question of intention; but in ascertaining the intention by which one
is actuated on a given occasion, we are necessarily controlled by the evidence
as to the conduct and outward acts by which alone the inward motive may,
with safety, be determined. Truly, good faith is not a visible, tangible fact that
can be seen or touched, but rather a state or condition of mind which can only
be judged by actual or fancied tokens or signs. Otherwise stated, good faith x x
x refers to the state of mind which is manifested by the acts of the individual
concerned.148 (Emphasis supplied.)
In fine, there are two (2) requirements before one may be considered a
purchaser in good faith, namely: (1) that the purchaser buys the property of
another without notice that some other person has a right to or interest in such
property; and (2) that the purchaser pays a full and fair price for the property at
the time of such purchase or before he or she has notice of the claim of
another.
It can rightfully be said that both LIPCO and RCBC are––based on the above
requirements and with respect to the adverted transactions of the converted
land in question––purchasers in good faith for value entitled to the benefits
arising from such status.
First, at the time LIPCO purchased the entire three hundred (300) hectares of
industrial land, there was no notice of any supposed defect in the title of its
transferor, Centennary, or that any other person has a right to or interest in
such property. In fact, at the time LIPCO acquired said parcels of land, only the
following annotations appeared on the TCT in the name of Centennary: the
Secretary’s Certificate in favor of Teresita Lopa, the Secretary’s Certificate in
favor of Shintaro Murai, and the conversion of the property from agricultural to
industrial and residential use.149
The same is true with respect to RCBC. At the time it acquired portions of
Hacienda Luisita, only the following general annotations appeared on the
TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an industrial
estate; the Secretary’s Certificate in favor of Koji Komai and Kyosuke Hori; and
the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP
300 million.
It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the
lots that were previously covered by the SDP. Good faith "consists in the
possessor’s belief that the person from whom he received it was the owner of
the same and could convey his title. Good faith requires a well-founded belief
that the person from whom title was received was himself the owner of the
land, with the right to convey it. There is good faith where there is an honest
intention to abstain from taking any unconscientious advantage from
another."150 It is the opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were
subjected to CARP coverage by means of a stock distribution plan, as the
DAR conversion order was annotated at the back of the titles of the lots they
acquired. However, they are of the honest belief that the subject lots were
validly converted to commercial or industrial purposes and for which said lots
were taken out of the CARP coverage subject of PARC Resolution No. 89-12-
2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of
RA 6657 explicitly allows conversion and disposition of agricultural lands
previously covered by CARP land acquisition "after the lapse of five (5) years
from its award when the land ceases to be economically feasible and sound for
agricultural purposes or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial
purposes." Moreover, DAR notified all the affected parties, more particularly
the FWBs, and gave them the opportunity to comment or oppose the proposed
conversion. DAR, after going through the necessary processes, granted the
conversion of 500 hectares of Hacienda Luisita pursuant to its primary
jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian
reform matters and its original exclusive jurisdiction over all matters involving
the implementation of agrarian reform. The DAR conversion order became
final and executory after none of the FWBs interposed an appeal to the CA. In
this factual setting, RCBC and LIPCO purchased the lots in question on their
honest and well-founded belief that the previous registered owners could
legally sell and convey the lots though these were previously subject of CARP
coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject
lots.
And second, both LIPCO and RCBC purchased portions of Hacienda Luisita
for value. Undeniably, LIPCO acquired 300 hectares of land from Centennary
for the amount of PhP 750 million pursuant to a Deed of Sale dated July 30,
1998.151 On the other hand, in a Deed of Absolute Assignment dated
November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of
RCBC by way of dacion en pago to pay for a loan of PhP 431,695,732.10.
As bona fide purchasers for value, both LIPCO and RCBC have acquired
rights which cannot just be disregarded by DAR, PARC or even by this Court.
As held in Spouses Chua v. Soriano:
With the property in question having already passed to the hands of
purchasers in good faith, it is now of no moment that some irregularity
attended the issuance of the SPA, consistent with our pronouncement in Heirs
of Spouses Benito Gavino and Juana Euste v. Court of Appeals, to wit:
x x x the general rule that the direct result of a previous void contract cannot
be valid, is inapplicable in this case as it will directly contravene the Torrens
system of registration. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the
property, the court cannot disregard such rights and order the
cancellation of the certificate. The effect of such outright cancellation will be
to impair public confidence in the certificate of title. The sanctity of the Torrens
system must be preserved; otherwise, everyone dealing with the property
registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to the
evident purpose of the law.
Being purchasers in good faith, the Chuas already acquired valid title to
the property. A purchaser in good faith holds an indefeasible title to the
property and he is entitled to the protection of the law.152 x x x (Emphasis
supplied.)
To be sure, the practicalities of the situation have to a point influenced Our
disposition on the fate of RCBC and LIPCO. After all, the Court, to borrow
from Association of Small Landowners in the Philippines, Inc.,153 is not a
"cloistered institution removed" from the realities on the ground. To note, the
approval and issuances of both the national and local governments showing
that certain portions of Hacienda Luisita have effectively ceased, legally and
physically, to be agricultural and, therefore, no longer CARPable are a matter
of fact which cannot just be ignored by the Court and the DAR. Among the
approving/endorsing issuances:154
(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang
Bayan of Tarlac favorably endorsing the 300-hectare industrial estate
project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20 December 1996
issued in accordance with the Omnibus Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June
1997, approving LIPCO’s application for a mixed ecozone and
proclaiming the three hundred (300) hectares of the industrial land as a
Special Economic Zone;
(d) Resolution No. 234 dated 08 August 1997 of the Sangguniang
Bayan of Tarlac, approving the Final Development Permit for the
Luisita Industrial Park II Project;
(e) Development Permit dated 13 August 1997 for the proposed Luisita
Industrial Park II Project issued by the Office of the Sangguniang
Bayan of Tarlac;155
(f) DENR Environmental Compliance Certificate dated 01 October
1997 issued for the proposed project of building an industrial complex
on three hundred (300) hectares of industrial land; 156
 (g) Certificate of Registration No. 00794 dated 26 December 1997
issued by the HLURB on the project of Luisita Industrial Park II with an
area of three million (3,000,000) square meters;157
(h) License to Sell No. 0076 dated 26 December 1997 issued by the
HLURB authorizing the sale of lots in the Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring
Certain Parcels of Private Land in Barangay San Miguel, Municipality
of Tarlac, Province of Tarlac, as a Special Economic Zone pursuant to
Republic Act No. 7916," designating the Luisita Industrial Park II
consisting of three hundred hectares (300 has.) of industrial land as a
Special Economic Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued
by the PEZA, stating that pursuant to Presidential Proclamation No.
1207 dated 22 April 1998 and Republic Act No. 7916, LIPCO has been
registered as an Ecozone Developer/Operator of Luisita Industrial Park
II located in San Miguel, Tarlac, Tarlac.
While a mere reclassification of a covered agricultural land or its inclusion in an
economic zone does not automatically allow the corporate or individual
landowner to change its use,158 the reclassification process is a prima facie
indicium that the land has ceased to be economically feasible and sound for
agricultural uses. And if only to stress, DAR Conversion Order No. 030601074-
764-(95) issued in 1996 by then DAR Secretary Garilao had effectively
converted 500 hectares of hacienda land from agricultural to
industrial/commercial use and authorized their disposition.
In relying upon the above-mentioned approvals, proclamation and conversion
order, both RCBC and LIPCO cannot be considered at fault for believing that
certain portions of Hacienda Luisita are industrial/commercial lands and are,
thus, outside the ambit of CARP. The PARC, and consequently DAR, gravely
abused its discretion when it placed LIPCO’s and RCBC’s property which once
formed part of Hacienda Luisita under the CARP compulsory acquisition
scheme via the assailed Notice of Coverage.
As regards the 80.51-hectare land transferred to the government for use as
part of the SCTEX, this should also be excluded from the compulsory agrarian
reform coverage considering that the transfer was consistent with the
government’s exercise of the power of eminent domain159 and none of the
parties actually questioned the transfer.
While We affirm the revocation of the SDP on Hacienda Luisita subject of
PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its
eyes to certain "operative facts" that had occurred in the interim. Pertinently,
the "operative fact" doctrine realizes that, in declaring a law or executive
action null and void, or, by extension, no longer without force and effect,
undue harshness and resulting unfairness must be avoided. This is as it
should realistically be, since rights might have accrued in favor of natural or
juridical persons and obligations justly incurred in the meantime.160 The actual
existence of a statute or executive act is, prior to such a determination, an
operative fact and may have consequences which cannot justly be ignored; the
past cannot always be erased by a new judicial declaration. 161
The oft-cited De Agbayani v. Philippine National Bank162 discussed the effect to
be given to a legislative or executive act subsequently declared invalid:
x x x 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 government 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." x x x
Given the above perspective and considering that more than two decades had
passed since the PARC’s approval of the HLI’s SDP, in conjunction with
numerous activities performed in good faith by HLI, and the reliance by the
FWBs on the legality and validity of the PARC-approved SDP, perforce, certain no longer be disturbed or simply ignored, citing Rieta v. People of the
rights of the parties, more particularly the FWBs, have to be respected Philippines.
pursuant to the application in a general way of the operative fact doctrine.
The argument of the Solicitor General is meritorious.
A view, however, has been advanced that the operative fact doctrine is of
minimal or altogether without relevance to the instant case as it applies only in The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals,
considering the effects of a declaration of unconstitutionality of a statute, and wherein it is stated that a legislative or executive act, prior to its being declared
not of a declaration of nullity of a contract. This is incorrect, for this view failed as unconstitutional by the courts, is valid and must be complied with, thus:
to consider is that it is NOT the SDOA dated May 11, 1989 which was revoked
in the instant case. Rather, it is PARC’s approval of the HLI’s Proposal for xxx xxx xxx
Stock Distribution under CARP which embodied the SDP that was nullified.
This doctrine was reiterated in the more recent case of City of Makati v. Civil
A recall of the antecedent events would show that on May 11, 1989, Tadeco, Service Commission, wherein we ruled that:
HLI, and the qualified FWBs executed the SDOA. This agreement provided the
basis and mechanics of the SDP that was subsequently proposed and
Moreover, we certainly cannot nullify the City Government's order of
submitted to DAR for approval. It was only after its review that the PARC,
suspension, as we have no reason to do so, much less retroactively apply
through then Sec. Defensor-Santiago, issued the assailed Resolution No. 89-
such nullification to deprive private respondent of a compelling and valid
12-2 approving the SDP. Considerably, it is not the SDOA which gave legal
reason for not filing the leave application. For as we have held, a void act
force and effect to the stock distribution scheme but instead, it is the approval
though in law a mere scrap of paper nonetheless confers legitimacy upon past
of the SDP under the PARC Resolution No. 89-12-2 that gave it its validity.
acts or omissions done in reliance thereof. Consequently, the existence of a
statute or executive order prior to its being adjudged void is an operative fact
The above conclusion is bolstered by the fact that in Sec. Pangandaman’s to which legal consequences are attached. It would indeed be ghastly unfair to
recommendation to the PARC Excom, what he proposed is the prevent private respondent from relying upon the order of suspension in lieu of
recall/revocation of PARC Resolution No. 89-12-2 approving HLI’s SDP, and a formal leave application. (Citations omitted; Emphasis supplied.)
not the revocation of the SDOA. Sec. Pangandaman’s recommendation was
favorably endorsed by the PARC Validation Committee to the PARC Excom,
The applicability of the operative fact doctrine to executive acts was further
and these recommendations were referred to in the assailed Resolution No.
explicated by this Court in Rieta v. People,164 thus:
2005-32-01. Clearly, it is not the SDOA which was made the basis for the
implementation of the stock distribution scheme.
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order
(ASSO) No. 4754 was invalid, as the law upon which it was predicated —
That the operative fact doctrine squarely applies to executive acts––in this
General Order No. 60, issued by then President Ferdinand E. Marcos — was
case, the approval by PARC of the HLI proposal for stock distribution––is well-
subsequently declared by the Court, in Tañada v. Tuvera, 33 to have no force
settled in our jurisprudence. In Chavez v. National Housing Authority, 163 We
and effect. Thus, he asserts, any evidence obtained pursuant thereto is
held:
inadmissible in evidence.
Petitioner postulates that the "operative fact" doctrine is inapplicable to the
We do not agree. In Tañada, the Court addressed the possible effects of its
present case because it is an equitable doctrine which could not be used to
declaration of the invalidity of various presidential issuances. Discussing
countenance an inequitable result that is contrary to its proper office.
therein how such a declaration might affect acts done on a presumption of
their validity, the Court said:
On the other hand, the petitioner Solicitor General argues that the existence of
the various agreements implementing the SMDRP is an operative fact that can
". . .. In similar situations in the past this Court had taken the pragmatic and
realistic course set forth in Chicot County Drainage District vs. Baxter Bank to
wit:
‘The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. . . . 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 [the
determination of its invalidity], 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 conduct, private and official. Questions of rights claimed to have
become vested, of status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the
statute and of its previous application, demand examination. These questions
are among the most difficult of those which have engaged the attention of
courts, state and federal, and it is manifest from numerous decisions that an
all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.’
xxx xxx xxx
"Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is ‘an operative fact which may have
consequences which cannot be justly ignored. The past cannot always be
erased by a new judicial declaration . . . that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.’"
The Chicot doctrine cited in Tañada advocates that, prior to the nullification of
a statute, there is an imperative necessity of taking into account its actual
existence as an operative fact negating the acceptance of "a principle of
absolute retroactive invalidity." Whatever was done while the legislative or the
executive act was in operation should be duly recognized and presumed to be
valid in all respects. The ASSO that was issued in 1979 under General Order
No. 60 — long before our Decision in Tañada and the arrest of petitioner — is
an operative fact that can no longer be disturbed or simply ignored. (Citations
omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 2005-32-01 states that it
revokes or recalls the SDP, what it actually revoked or recalled was the
PARC’s approval of the SDP embodied in Resolution No. 89-12-2.
Consequently, what was actually declared null and void was an executive act,
PARC Resolution No. 89-12-2,165 and not a contract (SDOA). It is, therefore,
wrong to say that it was the SDOA which was annulled in the instant case.
Evidently, the operative fact doctrine is applicable.
IV.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita
SDP are upheld, the revocation must, by application of the operative fact
principle, give way to the right of the original 6,296 qualified FWBs to choose
whether they want to remain as HLI stockholders or not. The Court cannot turn
a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or
the MOA), which became the basis of the SDP approved by PARC per its
Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the
FWBs were said to have received from HLI salaries and cash benefits, hospital
and medical benefits, 240-square meter homelots, 3% of the gross produce
from agricultural lands, and 3% of the proceeds of the sale of the 500-hectare
converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling
118,391,976.85 were distributed as of April 22, 2005. 166 On August 6, 20l0, HLI
and private respondents submitted a Compromise Agreement, in which HLI
gave the FWBs the option of acquiring a piece of agricultural land or remain as
HLI stockholders, and as a matter of fact, most FWBs indicated their choice of
remaining as stockholders. These facts and circumstances tend to indicate
that some, if not all, of the FWBs may actually desire to continue as HLI
shareholders. A matter best left to their own discretion.
With respect to the other FWBs who were not listed as qualified beneficiaries
as of November 21, 1989 when the SDP was approved, they are not accorded
the right to acquire land but shall, however, continue as HLI stockholders. All
the benefits and homelots167 received by the 10,502 FWBs (6,296 original
FWBs and 4,206 non-qualified FWBs) listed as HLI stockholders as of August
2, 2010 shall be respected with no obligation to refund or return them since the
benefits (except the homelots) were received by the FWBs as farmhands in
the agricultural enterprise of HLI and other fringe benefits were granted to
them pursuant to the existing collective bargaining agreement with Tadeco. If
the number of HLI shares in the names of the original FWBs who opt to remain
as HLI stockholders falls below the guaranteed allocation of 18,804.32 HLI
shares per FWB, the HLI shall assign additional shares to said FWBs to
complete said minimum number of shares at no cost to said FWBs.
With regard to the homelots already awarded or earmarked, the FWBs are not
obliged to return the same to HLI or pay for its value since this is a benefit
granted under the SDP. The homelots do not form part of the 4,915.75
hectares covered by the SDP but were taken from the 120.9234 hectare
residential lot owned by Tadeco. Those who did not receive the homelots as of
the revocation of the SDP on December 22, 2005 when PARC Resolution No.
2005-32-01 was issued, will no longer be entitled to homelots. Thus, in the
determination of the ultimate agricultural land that will be subjected to land
distribution, the aggregate area of the homelots will no longer be deducted.
There is a claim that, since the sale and transfer of the 500 hectares of land
subject of the August 14, 1996 Conversion Order and the 80.51-hectare
SCTEX lot came after compulsory coverage has taken place, the FWBs should
have their corresponding share of the land’s value. There is merit in the claim.
Since the SDP approved by PARC Resolution No. 89-12-2 has been nullified,
then all the lands subject of the SDP will automatically be subject of
compulsory coverage under Sec. 31 of RA 6657. Since the Court excluded the
500-hectare lot subject of the August 14, 1996 Conversion Order and the
80.51-hectare SCTEX lot acquired by the government from the area covered
by SDP, then HLI and its subsidiary, Centennary, shall be liable to the FWBs
for the price received for said lots. HLI shall be liable for the value received for
the sale of the 200-hectare land to LRC in the amount of PhP 500,000,000 and
the equivalent value of the 12,000,000 shares of its subsidiary, Centennary, for
the 300-hectare lot sold to LIPCO for the consideration of PhP 750,000,000.
Likewise, HLI shall be liable for PhP 80,511,500 as consideration for the sale
of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds of the sale
of the 500-hectare land and 80.51-hectare SCTEX lot to the FWBs. We also
take into account the payment of taxes and expenses relating to the transfer of
the land and HLI’s statement that most, if not all, of the proceeds were used for
legitimate corporate purposes. In order to determine once and for all whether
or not all the proceeds were properly utilized by HLI and its subsidiary,
Centennary, DAR will engage the services of a reputable accounting firm to be
approved by the parties to audit the books of HLI to determine if the proceeds
of the sale of the 500-hectare land and the 80.51-hectare SCTEX lot were
actually used for legitimate corporate purposes, titling expenses and in
compliance with the August 14, 1996 Conversion Order. The cost of the audit
will be shouldered by HLI. If after such audit, it is determined that there
remains a balance from the proceeds of the sale, then the balance shall be
distributed to the qualified FWBs.
A view has been advanced that HLI must pay the FWBs yearly rent for use of
the land from 1989. We disagree. It should not be forgotten that the FWBs are
also stockholders of HLI, and the benefits acquired by the corporation from its
possession and use of the land ultimately redounded to the FWBs’ benefit
based on its business operations in the form of salaries, and other fringe
benefits under the CBA. To still require HLI to pay rent to the FWBs will result
in double compensation.
For sure, HLI will still exist as a corporation even after the revocation of the
SDP although it will no longer be operating under the SDP, but pursuant to the
Corporation Code as a private stock corporation. The non-agricultural assets
amounting to PhP 393,924,220 shall remain with HLI, while the agricultural
lands valued at PhP 196,630,000 with an original area of 4,915.75 hectares
shall be turned over to DAR for distribution to the FWBs. To be deducted from
said area are the 500-hectare lot subject of the August 14, 1996 Conversion
Order, the 80.51-hectare SCTEX lot, and the total area of 6,886.5 square
meters of individual lots that should have been distributed to FWBs by DAR
had they not opted to stay in HLI.
HLI shall be paid just compensation for the remaining agricultural land that will
be transferred to DAR for land distribution to the FWBs. We find that the date
of the "taking" is November 21, 1989, when PARC approved HLI’s SDP per
PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for the
determination of just compensation. We cannot use May 11, 1989 when the
SDOA was executed, since it was the SDP, not the SDOA, that was approved
by PARC.
The instant petition is treated pro hac vice in view of the peculiar facts and
circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-
01 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3,
2006, placing the lands subject of HLI’s SDP under compulsory coverage on
mandated land acquisition scheme of the CARP, are hereby AFFIRMED with
the MODIFICATION that the original 6,296 qualified FWBs shall have the
option to remain as stockholders of HLI. DAR shall immediately schedule
meetings with the said 6,296 FWBs and explain to them the effects,
consequences and legal or practical implications of their choice, after which
the FWBs will be asked to manifest, in secret voting, their choices in the ballot,
signing their signatures or placing their thumbmarks, as the case may be, over
their printed names.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is
entitled to 18,804.32 HLI shares, and, in case the HLI shares already given to
him or her is less than 18,804.32 shares, the HLI is ordered to issue or
distribute additional shares to complete said prescribed number of shares at
no cost to the FWB within thirty (30) days from finality of this Decision. Other
FWBs who do not belong to the original 6,296 qualified beneficiaries are not
entitled to land distribution and shall remain as HLI shareholders. All salaries,
benefits, 3% production share and 3% share in the proceeds of the sale of the
500-hectare converted land and the 80.51-hectare SCTEX lot and homelots
already received by the 10,502 FWBs, composed of 6,296 original FWBs and
4,206 non-qualified FWBs, shall be respected with no obligation to refund or
return them.
Holdings, Inc. for legitimate corporate purposes. For this purpose, DAR is
ordered to engage the services of a reputable accounting firm approved by the
parties to audit the books of HLI and Centennary Holdings, Inc. to determine if
the PhP 1,330,511,500 proceeds of the sale of the three (3) aforementioned
lots were used or spent for legitimate corporate purposes. Any unspent or
unused balance as determined by the audit shall be distributed to the 6,296
original FWBs.
HLI is entitled to just compensation for the agricultural land that will be
transferred to DAR to be reckoned from November 21, 1989 per PARC
Resolution No. 89-12-2. DAR and LBP are ordered to determine the
compensation due to HLI.

Within thirty (30) days after determining who from among the original FWBs DAR shall submit a compliance report after six (6) months from finality of this
will stay as stockholders, DAR shall segregate from the HLI agricultural land judgment. It shall also submit, after submission of the compliance report,
with an area of 4,915.75 hectares subject of PARC’s SDP-approving quarterly reports on the execution of this judgment to be submitted within the
Resolution No. 89-12-2 the following: (a) the 500-hectare lot subject of the first 15 days at the end of each quarter, until fully implemented.
August 14, l996 Conversion Order; (b) the 80.51-hectare lot sold to, or
acquired by, the government as part of the SCTEX complex; and (c) the The temporary restraining order is lifted.
aggregate area of 6,886.5 square meters of individual lots that each FWB is
entitled to under the CARP had he or she not opted to stay in HLI as a
SO ORDERED.
stockholder. After the segregation process, as indicated, is done, the
remaining area shall be turned over to DAR for immediate land distribution to
the original qualified FWBs who opted not to remain as HLI stockholders. PRESBITERO J. VELASCO, JR.
Associate Justice
The aforementioned area composed of 6,886.5-square meter lots allotted to
the FWBs who stayed with the corporation shall form part of the HLI assets.

HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000
received by it from Luisita Realty, Inc. for the sale to the latter of 200 hectares
out of the 500 hectares covered by the August 14, 1996 Conversion Order, the
consideration of PhP 750,000,000 received by its owned subsidiary,
Centennary Holdings, Inc. for the sale of the remaining 300 hectares of the
aforementioned 500-hectare lot to Luisita Industrial Park Corporation, and the
price of PhP 80,511,500 paid by the government through the Bases
Conversion Development Authority for the sale of the 80.51-hectare lot used
for the construction of the SCTEX road network. From the total amount of PhP
1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP
1,330,511,500) shall be deducted the 3% of the total gross sales from the
production of the agricultural land and the 3% of the proceeds of said transfers
that were paid to the FWBs, the taxes and expenses relating to the transfer of
titles to the transferees, and the expenditures incurred by HLI and Centennary
A.M. No. P-02-1651 August 4, 2003
ALEJANDRO ESTRADA, complainant,
vs.
SOLEDAD S. ESCRITOR, respondent.
PUNO, J.:
The case at bar takes us to a most difficult area of constitutional law where
man stands accountable to an authority higher than the state. To be held on
balance are the state's interest and the respondent's religious freedom. In this
highly sensitive area of law, the task of balancing between authority and liberty
is most delicate because to the person invoking religious freedom, the
consequences of the case are not only temporal. The task is not made easier
by the American origin of our religion clauses and the wealth of U.S.
jurisprudence on these clauses for in the United States, there is probably no
more intensely controverted area of constitutional interpretation than the
religion clauses.1 The U.S. Supreme Court itself has acknowledged that in this
constitutional area, there is "considerable internal inconsistency in the opinions
of the Court."2 As stated by a professor of law, "(i)t is by now notorious that
legal doctrines and judicial decisions in the area of religious freedom are in
serious disarray. In perhaps no other area of constitutional law have confusion
and inconsistency achieved such undisputed sovereignty." 3 Nevertheless, this
thicket is the only path to take to conquer the mountain of a legal problem the
case at bar presents. Both the penetrating and panoramic view this climb
would provide will largely chart the course of religious freedom in Philippine
jurisdiction. That the religious freedom question arose in an administrative
case involving only one person does not alter the paramount importance of the
question for the "constitution commands the positive protection by government
of religious freedom -not only for a minority, however small- not only for a
majority, however large- but for each of us."4
I. Facts
The facts of the case will determine whether respondent will prevail in her plea
of religious freedom. It is necessary therefore to lay down the facts in detail,
careful not to omit the essentials.
In a sworn letter-complaint dated July 27, 2000, complainant Alejandro Estrada
wrote to Judge Jose F. Caoibes, Jr., presiding judge of Branch 253, Regional
Trial Court of Las Piñas City, requesting for an investigation of rumors that
respondent Soledad Escritor, court interpreter in said court, is living with a man
not her husband. They allegedly have a child of eighteen to twenty years old.
Estrada is not personally related either to Escritor or her partner and is a
resident not of Las Piñas City but of Bacoor, Cavite. Nevertheless, he filed the
charge against Escritor as he believes that she is committing an immoral act
that tarnishes the image of the court, thus she should not be allowed to remain
employed therein as it might appear that the court condones her act. 5
Judge Caoibes referred the letter to Escritor who stated that "there is no truth
as to the veracity of the allegation" and challenged Estrada to "appear in the
open and prove his allegation in the proper forum." 6 Judge Caoibes set a
preliminary conference on October 12, 2000. Escritor moved for the inhibition
of Judge Caoibes from hearing her case to avoid suspicion and bias as she
previously filed an administrative complaint against him and said case was still
pending in the Office of the Court Administrator (OCA). Escritor's motion was
denied. The preliminary conference proceeded with both Estrada and Escritor
in attendance. Estrada confirmed that he filed the letter-complaint for
immorality against Escritor because in his frequent visits to the Hall of Justice
of Las Piñas City, he learned from conversations therein that Escritor was
living with a man not her husband and that she had an eighteen to twenty-year
old son by this man. This prompted him to write to Judge Caoibes as he
believed that employees of the judiciary should be respectable and Escritor's
live-in arrangement did not command respect. 7
Respondent Escritor testified that when she entered the judiciary in 1999, 8 she
was already a widow, her husband having died in 1998. 9 She admitted that she
has been living with Luciano Quilapio, Jr. without the benefit of marriage for
twenty years and that they have a son. But as a member of the religious sect
known as the Jehovah's Witnesses and the Watch Tower and Bible Tract
Society, their conjugal arrangement is in conformity with their religious beliefs.
In fact, after ten years of living together, she executed on July 28, 1991 a
"Declaration of Pledging Faithfulness," viz:
DECLARATION OF PLEDGING FAITHFULNESS
I, Soledad S. Escritor, do hereby declare that I have accepted Luciano
D. Quilapio, Jr., as my mate in marital relationship; that I have done all
within my ability to obtain legal recognition of this relationship by the
proper public authorities and that it is because of having been unable
to do so that I therefore make this public declaration pledging
faithfulness in this marital relationship.
 I recognize this relationship as a binding tie before 'Jehovah' God and
before all persons to be held to and honored in full accord with the
principles of God's Word. I will continue to seek the means to obtain
legal recognition of this relationship by the civil authorities and if at any
future time a change in circumstances make this possible, I promise to
legalize this union.
Signed this 28th day of July 1991.10
Escritor's partner, Quilapio, executed a similar pledge on the same day.11 Both
pledges were executed in Atimonan, Quezon and signed by three witnesses.
At the time Escritor executed her pledge, her husband was still alive but living
with another woman. Quilapio was likewise married at that time, but had been
separated in fact from his wife. During her testimony, Escritor volunteered to
present members of her congregation to confirm the truthfulness of their
"Declarations of Pledging Faithfulness," but Judge Caoibes deemed it
unnecessary and considered her identification of her signature and the
signature of Quilapio sufficient authentication of the documents. 12
Judge Caoibes endorsed the complaint to Executive Judge Manuel B.
Fernandez, Jr., who, in turn, endorsed the same to Court Administrator Alfredo
L. Benipayo. On July 17, 2001, the Court, upon recommendation of Acting
Court Administrator Zenaida N. Elepaño, directed Escritor to comment on the
charge against her. In her comment, Escritor reiterated her religious
congregation's approval of her conjugal arrangement with Quilapio, viz:
Herein respondent does not ignore alleged accusation but she
reiterates to state with candor that there is no truth as to the veracity of
same allegation. Included herewith are documents denominated as
Declaration of Pledging Faithfulness (Exhibit 1 and Exhibit 2) duly
signed by both respondent and her mate in marital relationship with the
witnesses concurring their acceptance to the arrangement as approved
by the WATCH TOWER BIBLE and TRACT SOCIETY, Philippine
Branch.
Same marital arrangement is recognized as a binding tie before
"JEHOVAH" God and before all persons to be held to and honored in
full accord with the principles of God's Word.
xxx xxx xxx
Undersigned submits to the just, humane and fair discretion of the
Court with verification from the WATCH TOWER BIBLE and TRACT
SOCIETY, Philippine Branch . . . to which undersigned believes to be a
high authority in relation to her case. 13
Deputy Court Administrator Christopher O. Lock recommended that the case
be referred to Executive Judge Bonifacio Sanz Maceda, RTC Branch 255, Las
Piñas City for investigation, report and recommendation. In the course of
Judge Maceda's investigation, Escritor again testified that her congregation
allows her conjugal arrangement with Quilapio and it does not consider it
immoral. She offered to supply the investigating judge some clippings which
explain the basis of her congregation's belief and practice regarding her
conjugal arrangement. Escritor started living with Quilapio twenty years ago
when her husband was still alive but living with another woman. She met this
woman who confirmed to her that she was living with her (Escritor's)
husband.14
Gregorio Salazar, a member of the Jehovah's Witnesses since 1985, also
testified. He had been a presiding minister since 1991 and in such capacity is
aware of the rules and regulations of their congregation. He explained the
import of and procedure for executing a "Declaration of Pledging Faithfulness",
viz:
Q: Now, insofar as the pre-marital relationship is concern (sic),
can you cite some particular rules and regulations in your
congregation?
A: Well, we of course, talk to the persons with regards (sic) to all
the parties involved and then we request them to execute a Public
Declaration of Pledge of faithfulness.
Q: What is that document?
A: Declaration of Pledge of faithfulness.
Q: What are the relations of the document Declaration of Pledge
of faithfulness, who are suppose (sic) to execute this document?
A: This must be signed, the document must be signed by the
elders of the congregation; the couple, who is a member (sic) of the
congregation, baptized member and true member of the congregation.
Q: What standard rules and regulations do you have in relation
with this document?
A: Actually, sir, the signing of that document, ah, with the couple
has consent to marital relationship (sic) gives the Christian
Congregation view that the couple has put themselves on record
before God and man that they are faithful to each other. As if that
relation is validated by God.
Q: From your explanation, Minister, do you consider it a pledge or
a document between the parties, who are members of the
congregation?
A: It is a pledge and a document. It is a declaration, pledge of a
(sic) pledge of faithfulness.
Q: And what does pledge mean to you?
A: It means to me that they have contracted, let us say, I am the
one who contracted with the opposite member of my congregation,
opposite sex, and that this document will give us the right to a marital
relationship.
Q: So, in short, when you execute a declaration of pledge of
faithfulness, it is a preparation for you to enter a marriage?
A: Yes, Sir.
Q: But it does not necessarily mean that the parties, cohabiting or
living under the same roof?
A: Well, the Pledge of faithfulness document is (sic) already
approved as to the marital relationship.
Q: Do you mean to say, Minister, by executing this document the
contracting parties have the right to cohabit?
A: Can I sir, cite, what the Bible says, the basis of that Pledge of
Faithfulness as we Christians follow. The basis is herein stated in the
Book of Matthew, Chapter Five, Verse Twenty-two. So, in that verse of
the Bible, Jesus said "that everyone divorcing his wife, except on
account of fornication, makes her a subject for adultery, and whoever
marries a divorced woman commits adultery.15
Escritor and Quilapio transferred to Salazar's Congregation, the Almanza
Congregation in Las Piñas, in May 2001. The declarations having been
executed in Atimonan, Quezon in 1991, Salazar had no personal knowledge of
the personal circumstances of Escritor and Quilapio when they executed their
declarations. However, when the two transferred to Almanza, Salazar inquired
about their status from the Atimonan Congregation, gathered comments of the
elders therein, and requested a copy of their declarations. The Almanza
Congregation assumed that the personal circumstances of the couple had
been considered by the Atimonan Congregation when they executed their
declarations.
Escritor and Quilapio's declarations are recorded in the Watch Tower Central
office. They were executed in the usual and approved form prescribed by the
Watch Tower Bible and Tract Society which was lifted from the article,
"Maintaining Marriage in Honor Before God and Men," 16 in the March 15, 1977
issue of the Watch Tower magazine, entitled The Watchtower.
The declaration requires the approval of the elders of the Jehovah's Witnesses
congregation and is binding within the congregation all over the world except in
countries where divorce is allowed. The Jehovah's congregation requires that
at the time the declarations are executed, the couple cannot secure the civil
authorities' approval of the marital relationship because of legal impediments.
It is thus standard practice of the congregation to check the couple's marital
status before giving imprimatur to the conjugal arrangement. The execution of
the declaration finds scriptural basis in Matthew 5:32 that when the spouse
commits adultery, the offended spouse can remarry. The marital status of the
declarants and their respective spouses' commission of adultery are
investigated before the declarations are executed. Thus, in the case of
Escritor, it is presumed that the Atimonan Congregation conducted an
investigation on her marital status before the declaration was approved and
the declaration is valid everywhere, including the Almanza Congregation. That
Escritor's and Quilapio's declarations were approved are shown by the
signatures of three witnesses, the elders in the Atimonan Congregation.
Salazar confirmed from the congregation's branch office that these three
witnesses are elders in the Atimonan Congregation. Although in 1998 Escritor
was widowed, thereby lifting the legal impediment to marry on her part, her
mate is still not capacitated to remarry. Thus, their declarations remain valid.
Once all legal impediments for both are lifted, the couple can already register
their marriage with the civil authorities and the validity of the declarations
ceases. The elders in the congregations can then solemnize their marriage as
authorized by Philippine law. In sum, therefore, insofar as the congregation is
concerned, there is nothing immoral about the conjugal arrangement between
Escritor and Quilapio and they remain members in good standing in the
congregation.17
Salvador Reyes, a minister at the General de Leon, Valenzuela City
Congregation of the Jehovah's Witnesses since 1974 and member of the
headquarters of the Watch Tower Bible and Tract Society of the Philippines,
Inc., presented the original copy of the magazine article entitled, "Maintaining
Marriage Before God and Men" to which Escritor and Minister Salazar referred
in their testimonies. The article appeared in the March 15, 1977 issue of the
Watchtower magazine published in Pennsylvania, U.S.A. Felix S. Fajardo,
President of the Watch Tower Bible and Tract Society of the Philippines, Inc.,
authorized Reyes to represent him in authenticating the article. The article is
distributed to the Jehovah's Witnesses congregations which also distribute
them to the public.18
The parties submitted their respective memoranda to the investigating judge.
Both stated that the issue for resolution is whether or not the relationship
between respondent Escritor and Quilapio is valid and binding in their own
religious congregation, the Jehovah's Witnesses. Complainant Estrada adds
however, that the effect of the relationship to Escritor's administrative liability
must likewise be determined. Estrada argued, through counsel, that the
Declaration of Pledging Faithfulness recognizes the supremacy of the "proper
public authorities" such that she bound herself "to seek means to . . . legalize
their union." Thus, even assuming arguendo that the declaration is valid and
binding in her congregation, it is binding only to her co-members in the
congregation and serves only the internal purpose of displaying to the rest of
the congregation that she and her mate are a respectable and morally upright
couple. Their religious belief and practice, however, cannot override the norms
of conduct required by law for government employees. To rule otherwise would
create a dangerous precedent as those who cannot legalize their live-in
relationship can simply join the Jehovah's Witnesses congregation and use
their religion as a defense against legal liability. 19
On the other hand, respondent Escritor reiterates the validity of her conjugal
arrangement with Quilapio based on the belief and practice of her religion, the
Jehovah's Witnesses. She quoted portions of the magazine article entitled,
"Maintaining Marriage Before God and Men," in her memorandum signed by
herself, viz:
The Declaration of Pledging of Faithfulness (Exhibits "1" and "2")
executed by the respondent and her mate greatly affect the
administrative liability of respondent. Jehovah's Witnesses admit and
recognize (sic) the supremacy of the proper public authorities in the
marriage arrangement. However, it is helpful to understand the relative
nature of Caesar's authority regarding marriage. From country to
country, marriage and divorce legislation presents a multitude of
different angles and aspects. Rather than becoming entangled in a
confusion of technicalities, the Christian, or the one desiring to become
a disciple of God's Son, can be guided by basic Scriptural principles
that hold true in all cases.
God's view is of first concern. So, first of all the person must consider
whether that one's present relationship, or the relationship into which
he or she contemplates entering, is one that could meet with God's
approval, or whether in itself, it violates the standards of God's Word.
Take, for example, the situation where a man lives with a wife but also
spends time living with another woman as a concubine. As long as
such a state of concubinage prevails, the relationship of the second
woman can never be harmonized with Christian principles, nor could
any declaration on the part of the woman or the man make it so. The
only right course is cessation of the relationship. Similarly with an
incestuous relationship with a member of one's immediate family, or a
homosexual relationship or other such situation condemned by God's
Word. It is not the lack of any legal validation that makes such
relationships unacceptable; they are in themselves unscriptural and
hence, immoral. Hence, a person involved in such a situation could not
make any kind of "Declaration of Faithfulness," since it would have no
merit in God's eyes.
If the relationship is such that it can have God's approval, then, a
second principle to consider is that one should do all one can to
establish the honorableness of one's marital union in the eyes of all.
(Heb. 13:4). If divorce is possible, then such step should now be taken
so that, having obtained the divorce (on whatever legal grounds may
be available), the present union can receive civil validation as a
recognized marriage.
Finally, if the marital relationship is not one out of harmony with the
principles of God's Word, and if one has done all that can reasonably
be done to have it recognized by civil authorities and has been blocked
in doing so, then, a Declaration Pledging Faithfulness can be signed.
 In some cases, as has been noted, the extreme slowness of official
action may make accomplishing of legal steps a matter of many, many
years of effort. Or it may be that the costs represent a crushingly heavy
burden that the individual would need years to be able to meet. In such
cases, the declaration pledging faithfulness will provide the
congregation with the basis for viewing the existing union as honorable
while the individual continues conscientiously to work out the legal
aspects to the best of his ability.
Keeping in mind the basic principles presented, the respondent as a
Minister of Jehovah God, should be able to approach the matter in a
balanced way, neither underestimating nor overestimating the
validation offered by the political state. She always gives primary
concern to God's view of the union. Along with this, every effort should
be made to set a fine example of faithfulness and devotion to one's
mate, thus, keeping the marriage "honorable among all." Such course
will bring God's blessing and result to the honor and praise of the
author of marriage, Jehovah God. (1 Cor. 10:31-33)20
Respondent also brought to the attention of the investigating judge that
complainant's Memorandum came from Judge Caoibes' chambers21 whom she
claims was merely using petitioner to malign her.
In his Report and Recommendation, investigating judge Maceda found
Escritor's factual allegations credible as they were supported by testimonial
and documentary evidence. He also noted that "(b)y strict Catholic standards,
the live-in relationship of respondent with her mate should fall within the
definition of immoral conduct, to wit: 'that which is willful, flagrant, or
shameless, and which shows a moral indifference to the opinion of the good
and respectable members of the community' (7 C.J.S. 959)' (Delos Reyes vs.
Aznar, 179 SCRA, at p. 666)." He pointed out, however, that "the more
relevant question is whether or not to exact from respondent Escritor, a
member of 'Jehovah's Witnesses,' the strict moral standards of the Catholic
faith in determining her administrative responsibility in the case at bar."22 The
investigating judge acknowledged that "religious freedom is a fundamental
right which is entitled to the highest priority and the amplest protection among
human rights, for it involves the relationship of man to his Creator (at p. 270,
EBRALINAG supra, citing Chief Justice Enrique M. Fernando's separate
opinion in German vs. Barangan, 135 SCRA 514, 530-531)" and thereby
recommended the dismissal of the complaint against Escritor.23
After considering the Report and Recommendation of Executive Judge
Maceda, the Office of the Court Administrator, through Deputy Court
Administrator (DCA) Lock and with the approval of Court Administrator
Presbitero Velasco, concurred with the factual findings of Judge Maceda but
departed from his recommendation to dismiss the complaint. DCA Lock
stressed that although Escritor had become capacitated to marry by the time
she joined the judiciary as her husband had died a year before, "it is due to her
relationship with a married man, voluntarily carried on, that respondent may
still be subject to disciplinary action."24 Considering the ruling of the Court in
Dicdican v. Fernan, et al.25 that "court personnel have been enjoined to adhere
to the exacting standards of morality and decency in their professional and
private conduct in order to preserve the good name and integrity of the court of
justice," DCA Lock found Escritor's defense of freedom of religion unavailing to
warrant dismissal of the charge of immorality. Accordingly, he recommended
that respondent be found guilty of immorality and that she be penalized with
suspension of six months and one day without pay with a warning that a
repetition of a similar act will be dealt with more severely in accordance with
the Civil Service Rules.26
II. Issue
Whether or not respondent should be found guilty of the administrative charge
of "gross and immoral conduct." To resolve this issue, it is necessary to
determine the sub-issue of whether or not respondent's right to religious
freedom should carve out an exception from the prevailing jurisprudence on
illicit relations for which government employees are held administratively liable.
III. Applicable Laws
Respondent is charged with committing "gross and immoral conduct" under
Book V, Title I, Chapter VI, Sec. 46(b)(5) of the Revised Administrative Code
which provides, viz:
Sec. 46. Discipline: General Provisions. - (a) No officer or employee in
the Civil Service shall be suspended or dismissed except for cause as
provided by law and after due process.
(b) The following shall be grounds for disciplinary action:
xxx xxx xxx
(5) Disgraceful and immoral conduct; xxx.
Not represented by counsel, respondent, in layman's terms, invokes the
religious beliefs and practices and moral standards of her religion, the
Jehovah's Witnesses, in asserting that her conjugal arrangement with a man
not her legal husband does not constitute disgraceful and immoral conduct for
which she should be held administratively liable. While not articulated by
respondent, she invokes religious freedom under Article III, Section 5 of the
Constitution, which provides, viz:
Sec. 5. No law shall be made respecting an establishment of religion,
or prohibiting the free exercise thereof. The free exercise and
enjoyment of religious profession and worship, without discrimination
or preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
IV. Old World Antecedents of the American Religion Clauses
To understand the life that the religion clauses have taken, it would be well to
understand not only its birth in the United States, but its conception in the Old
World. One cannot understand, much less intelligently criticize the approaches
of the courts and the political branches to religious freedom in the recent past
in the United States without a deep appreciation of the roots of these
controversies in the ancient and medieval world and in the American
experience.27 This fresh look at the religion clauses is proper in deciding this
case of first impression.
In primitive times, all of life may be said to have been religious. Every
significant event in the primitive man's life, from birth to death, was marked by
religious ceremonies. Tribal society survived because religious sanctions
effectively elicited adherence to social customs. A person who broke a custom
violated a taboo which would then bring upon him "the wrathful vengeance of a
superhuman mysterious power."28 Distinction between the religious and non-
religious would thus have been meaningless to him. He sought protection from
all kinds of evil - whether a wild beast or tribe enemy and lightning or wind -
from the same person. The head of the clan or the Old Man of the tribe or the
king protected his wards against both human and superhuman enemies. In
time, the king not only interceded for his people with the divine powers, but he
himself was looked upon as a divine being and his laws as divine decrees. 29
Time came, however, when the function of acting as intermediary between
human and spiritual powers became sufficiently differentiated from the
responsibility of leading the tribe in war and policing it in peace as to require
the full-time services of a special priest class. This saw the birth of the social
and communal problem of the competing claims of the king and priest.
Nevertheless, from the beginning, the king and not the priest was superior.
The head of the tribe was the warrior, and although he also performed priestly
functions, he carried out these functions because he was the head and
representative of the community.30
There being no distinction between the religious and the secular, the same
authority that promulgated laws regulating relations between man and man
promulgated laws concerning man's obligations to the supernatural. This
authority was the king who was the head of the state and the source of all law
and who only delegated performance of rituals and sacrifice to the priests. The
Code of Hammurabi, king of Babylonia, imposed penalties for homicide,
larceny, perjury, and other crimes; regulated the fees of surgeons and the
wages of masons and tailors and prescribed rules for inheritance of
property;31 and also catalogued the gods and assigned them their places in the
divine hierarchy so as to put Hammurabi's own god to a position of equality
with existing gods.32 In sum, the relationship of religion to the state (king) in
pre-Hebreic times may be characterized as a union of the two forces, with the
state almost universally the dominant partner.33
With the rise of the Hebrew state, a new term had to be coined to describe the
relation of the Hebrew state with the Mosaic religion: theocracy. The authority
and power of the state was ascribed to God. 34 The Mosaic creed was not
merely regarded as the religion of the state, it was (at least until Saul) the state
itself. Among the Hebrews, patriarch, prophet, and priest preceded king and
prince. As man of God, Moses decided when the people should travel and
when to pitch camp, when they should make war and when peace. Saul and
David were made kings by the prophet Samuel, disciple of Eli the priest. Like
the Code of Hammurabi, the Mosaic code combined civil laws with religious
mandates, but unlike the Hammurabi Code, religious laws were not of
secondary importance. On the contrary, religious motivation was primary and
all-embracing: sacrifices were made and Israel was prohibited from exacting
usury, mistreating aliens or using false weights, all because God commanded
these.
Moses of the Bible led not like the ancient kings. The latter used religion as an
engine to advance the purposes of the state. Hammurabi unified Mesopotamia
and established Babylon as its capital by elevating its city-god to a primary
position over the previous reigning gods.35 Moses, on the other hand,
capitalized on the natural yearnings of the Hebrew slaves for freedom and
independence to further God's purposes. Liberation and Exodus were preludes
to Sinai and the receipt of the Divine Law. The conquest of Canaan was a
preparation for the building of the temple and the full worship of God. 36
Upon the monotheism of Moses was the theocracy of Israel founded. This
monotheism, more than anything else, charted not only the future of religion in
western civilization, but equally, the future of the relationship between religion
and state in the west. This fact is acknowledged by many writers, among
whom is Northcott who pointed out, viz:
Historically it was the Hebrew and Christian conception of a single and
universal God that introduced a religious exclusivism leading to
compulsion and persecution in the realm of religion. Ancient religions
were regarded as confined to each separate people believing in them,
and the question of change from one religious belief to another did not
arise. It was not until an exclusive fellowship, that the questions of
proselytism, change of belief and liberty of religion arose. 37 (emphasis
supplied)
The Hebrew theocracy existed in its pure form from Moses to Samuel. In this
period, religion was not only superior to the state, but it was all of the state.
The Law of God as transmitted through Moses and his successors was the
whole of government.
With Saul, however, the state rose to be the rival and ultimately, the master, of
religion. Saul and David each received their kingdom from Samuel the prophet
and disciple of Eli the priest, but soon the king dominated prophet and priest.
Saul disobeyed and even sought to slay Samuel the prophet of God. 38 Under
Solomon, the subordination of religion to state became complete; he used
religion as an engine to further the state's purposes. He reformed the order of
priesthood established by Moses because the high priest under that order
endorsed the claim of his rival to the throne. 39
The subordination of religion to the state was also true in pre-Christian Rome
which engaged in emperor-worship. When Augustus became head of the
Roman state and the priestly hierarchy, he placed religion at a high esteem as
part of a political plan to establish the real religion of pre-Christian Rome - the
worship of the head of the state. He set his great uncle Julius Caesar among
the gods, and commanded that worship of Divine Julius should not be less
than worship of Apollo, Jupiter and other gods. When Augustus died, he also
joined the ranks of the gods, as other emperors before him. 40
The onset of Christianity, however, posed a difficulty to the emperor as the
Christians' dogmatic exclusiveness prevented them from paying homage to
publicly accepted gods. In the first two centuries after the death of Jesus,
Christians were subjected to persecution. By the time of the emperor Trajan,
Christians were considered outlaws. Their crime was "hatred of the human
race", placing them in the same category as pirates and brigands and other
"enemies of mankind" who were subject to summary punishments. 41
In 284, Diocletian became emperor and sought to reorganize the empire and
make its administration more efficient. But the closely-knit hierarchically
controlled church presented a serious problem, being a state within a state
over which he had no control. He had two options: either to force it into
submission and break its power or enter into an alliance with it and procure
political control over it. He opted for force and revived the persecution,
destroyed the churches, confiscated sacred books, imprisoned the clergy and
by torture forced them to sacrifice.42 But his efforts proved futile.
The later emperor, Constantine, took the second option of alliance.
Constantine joined with Galerius and Licinius, his two co-rulers of the empire,
in issuing an edict of toleration to Christians "on condition that nothing is done
by them contrary to discipline."43 A year later, after Galerius died, Constantine
and Licius jointly issued the epochal Edict of Milan (312 or 313), a document of
monumental importance in the history of religious liberty. It provided "that
liberty of worship shall not be denied to any, but that the mind and will of every
individual shall be free to manage divine affairs according to his own choice."
(emphasis supplied) Thus, all restrictive statutes were abrogated and it was
enacted "that every person who cherishes the desire to observe the Christian
religion shall freely and unconditionally proceed to observe the same without
let or hindrance." Furthermore, it was provided that the "same free and open
power to follow their own religion or worship is granted also to others, in
accordance with the tranquillity of our times, in order that every person may
have free opportunity to worship the object of his choice."(emphasis supplied) 44
Before long, not only did Christianity achieve equal status, but acquired
privilege, then prestige, and eventually, exclusive power. Religion became an
engine of state policy as Constantine considered Christianity a means of
unifying his complex empire. Within seven years after the Edict of Milan, under
the emperor's command, great Christian edifices were erected, the clergy were
freed from public burdens others had to bear, and private heathen sacrifices
were forbidden.
The favors granted to Christianity came at a price: state interference in
religious affairs. Constantine and his successors called and dismissed church
councils, and enforced unity of belief and practice. Until recently the church
had been the victim of persecution and repression, but this time it welcomed
the state's persecution and repression of the nonconformist and the orthodox
on the belief that it was better for heretics to be purged of their error than to die
unsaved.
Both in theory as in practice, the partnership between church and state was
not easy. It was a constant struggle of one claiming dominance over the other.
In time, however, after the collapse and disintegration of the Roman Empire,
and while monarchical states were gradually being consolidated among the
numerous feudal holdings, the church stood as the one permanent, stable and
universal power. Not surprisingly, therefore, it claimed not merely equality but
superiority over the secular states. This claim, symbolized by Pope Leo's
crowning of Charlemagne, became the church's accepted principle of its
relationship to the state in the Middle Ages. As viewed by the church, the union
of church and state was now a union of the state in the church. The rulers of
the states did not concede to this claim of supremacy. Thus, while
Charlemagne received his crown from the Pope, he himself crowned his own
son as successor to nullify the inference of supremacy. 45 The whole history of
medieval Europe was a struggle for supremacy between prince and Pope and
the resulting religious wars and persecution of heretics and nonconformists. At
about the second quarter of the 13th century, the Inquisition was established,
the purpose of which was the discovery and extermination of heresy. Accused
heretics were tortured with the approval of the church in the bull Ad extirpanda
issued by Pope Innocent IV in 1252.
The corruption and abuses of the Catholic Church spurred the Reformation
aimed at reforming the Catholic Church and resulting in the establishment of
Protestant churches. While Protestants are accustomed to ascribe to the
Reformation the rise of religious liberty and its acceptance as the principle
governing the relations between a democratic state and its citizens, history
shows that it is more accurate to say that the "same causes that gave rise to
the Protestant revolution also resulted in the widespread acceptance of the
principle of religious liberty, and ultimately of the principle of separation of
church and state."46 Pleas for tolerance and freedom of conscience can without
doubt be found in the writings of leaders of the Reformation. But just as
Protestants living in the countries of papists pleaded for toleration of religion,
so did the papists that lived where Protestants were dominant. 47 Papist and
Protestant governments alike accepted the idea of cooperation between
church and state and regarded as essential to national unity the uniformity of
at least the outward manifestations of religion. 48 Certainly, Luther, leader of the
Reformation, stated that "neither pope, nor bishop, nor any man whatever has
the right of making one syllable binding on a Christian man, unless it be done
with his own consent."49 But when the tables had turned and he was no longer
the hunted heretic, he likewise stated when he made an alliance with the
secular powers that "(h)eretics are not to be disputed with, but to be
condemned unheard, and whilst they perish by fire, the faithful ought to pursue
the evil to its source, and bathe their hands in the blood of the Catholic
bishops, and of the Pope, who is a devil in disguise." 50 To Luther, unity among
the peoples in the interests of the state was an important consideration. Other
personalities in the Reformation such as Melanchton, Zwingli and Calvin
strongly espoused theocracy or the use of the state as an engine to further
religion. In establishing theocracy in Geneva, Calvin made absence from the
sermon a crime, he included criticism of the clergy in the crime of blasphemy
punishable by death, and to eliminate heresy, he cooperated in the
Inquisition.51
There were, however, those who truly advocated religious liberty. Erasmus,
who belonged to the Renaissance than the Reformation, wrote that "(t)he
terrible papal edict, the more terrible imperial edict, the imprisonments, the
confiscations, the recantations, the fagots and burnings, all these things I can
see accomplish nothing except to make the evil more widespread." 52 The
minority or dissident sects also ardently advocated religious liberty. The
Anabaptists, persecuted and despised, along with the Socinians (Unitarians)
and the Friends of the Quakers founded by George Fox in the 17th century,
endorsed the supremacy and freedom of the individual conscience. They
regarded religion as outside the realm of political governments.53 The English
Baptists proclaimed that the "magistrate is not to meddle with religion or
matters of conscience, nor compel men to this or that form of religion." 54
Thus, out of the Reformation, three rationalizations of church-state relations
may be distinguished: the Erastian (after the German doctor Erastus), the
theocratic, and the separatist. The first assumed state superiority in
ecclesiastical affairs and the use of religion as an engine of state policy as
demonstrated by Luther's belief that civic cohesion could not exist without
religious unity so that coercion to achieve religious unity was justified. The
second was founded on ecclesiastical supremacy and the use of state
machinery to further religious interests as promoted by Calvin. The third, which
was yet to achieve ultimate and complete expression in the New World, was
discernibly in its incipient form in the arguments of some dissident minorities
that the magistrate should not intermeddle in religious affairs. 55 After the
Reformation, Erastianism pervaded all Europe except for Calvin's theocratic
Geneva. In England, perhaps more than in any other country, Erastianism was
at its height. To illustrate, a statute was enacted by Parliament in 1678, which,
to encourage woolen trade, imposed on all clergymen the duty of seeing to it
that no person was buried in a shroud made of any substance other than
wool.56 Under Elizabeth, supremacy of the crown over the church was
complete: ecclesiastical offices were regulated by her proclamations,
recusants were fined and imprisoned, Jesuits and proselytizing priests were
put to death for high treason, the thirty-nine Articles of the Church of England
were adopted and English Protestantism attained its present doctrinal
status.57 Elizabeth was to be recognized as "the only Supreme Governor of this
realm . . . as well in all spiritual or ecclesiastical things or causes as temporal."
She and her successors were vested, in their dominions, with "all manner of
jurisdictions, privileges, and preeminences, in any wise touching or concerning
any spiritual or ecclesiastical jurisdiction."58 Later, however, Cromwell
established the constitution in 1647 which granted full liberty to all Protestant
sects, but denied toleration to Catholics.59 In 1689, William III issued the Act of
Toleration which established a de facto toleration for all except Catholics. The
Catholics achieved religious liberty in the 19th century when the Roman
Catholic Relief Act of 1829 was adopted. The Jews followed suit in 1858 when
they were finally permitted to sit in Parliament.60
When the representatives of the American states met in Philadelphia in 1787
to draft the constitutional foundation of the new republic, the theocratic state
which had flourished intermittently in Israel, Judea, the Holy Roman Empire
and Geneva was completely gone. The prevailing church-state relationship in
Europe was Erastianism embodied in the system of jurisdictionalism whereby
one faith was favored as the official state-supported religion, but other faiths
were permitted to exist with freedom in various degrees. No nation had yet
adopted as the basis of its church-state relations the principle of the mutual
independence of religion and government and the concomitant principle that
neither might be used as an engine to further the policies of the other, although
the principle was in its seminal form in the arguments of some dissident
minorities and intellectual leaders of the Renaissance. The religious wars of
16th and 17th century Europe were a thing of the past by the time America
declared its independence from the Old World, but their memory was still vivid
in the minds of the Constitutional Fathers as expressed by the United States
Supreme Court, viz:
The centuries immediately before and contemporaneous with the
colonization of America had been filled with turmoil, civil strife, and
persecution generated in large part by established sects determined to
maintain their absolute political and religious supremacy. With the
power of government supporting them, at various times and places,
Catholics had persecuted Protestants, Protestants had persecuted
Catholics, Protestant sects had persecuted other protestant sects,
Catholics of one shade of belief had persecuted Catholics of another
shade of belief, and all of these had from time to time persecuted
Jews. In efforts to force loyalty to whatever religious group happened
to be on top and in league with the government of a particular time and
place, men and women had been fined, cast in jail, cruelly tortured,
and killed. Among the offenses for which these punishments had been
inflicted were such things as speaking disrespectfully of the views of
ministers of government-established churches, non-attendance at
those churches, expressions of non-belief in their doctrines, and failure
to pay taxes and tithes to support them.61
In 1784, James Madison captured in this statement the entire history of
church-state relations in Europe up to the time the United States Constitution
was adopted, viz:
Torrents of blood have been spilt in the world in vain attempts of the
secular arm to extinguish religious discord, by proscribing all
differences in religious opinions.62
In sum, this history shows two salient features: First, with minor exceptions,
the history of church-state relationships was characterized by persecution,
oppression, hatred, bloodshed, and war, all in the name of the God of Love
and of the Prince of Peace. Second, likewise with minor exceptions, this
history witnessed the unscrupulous use of religion by secular powers to
promote secular purposes and policies, and the willing acceptance of that role
by the vanguards of religion in exchange for the favors and mundane benefits
conferred by ambitious princes and emperors in exchange for religion's
invaluable service. This was the context in which the unique experiment of the
principle of religious freedom and separation of church and state saw its birth
in American constitutional democracy and in human history. 63
V. Factors Contributing to the Adoption of the American Religion Clauses
Settlers fleeing from religious persecution in Europe, primarily in Anglican-
dominated England, established many of the American colonies. British
thought pervaded these colonies as the immigrants brought with them their
religious and political ideas from England and English books and pamphlets
largely provided their cultural fare.64 But although these settlers escaped from
Europe to be freed from bondage of laws which compelled them to support
and attend government favored churches, some of these settlers themselves
transplanted into American soil the oppressive practices they escaped from.
The charters granted by the English Crown to the individuals and companies
designated to make the laws which would control the destinies of the colonials
authorized them to erect religious establishments, which all, whether believers
or not, were required to support or attend. 65 At one time, six of the colonies
established a state religion. Other colonies, however, such as Rhode Island
and Delaware tolerated a high degree of religious diversity. Still others, which
originally tolerated only a single religion, eventually extended support to
several different faiths.66
This was the state of the American colonies when the unique American
experiment of separation of church and state came about. The birth of the
experiment cannot be attributed to a single cause or event. Rather, a number
of interdependent practical and ideological factors contributed in bringing it
forth. Among these were the "English Act of Toleration of 1689, the multiplicity
of sects, the lack of church affiliation on the part of most Americans, the rise of
commercial intercourse, the exigencies of the Revolutionary War, the Williams-
Penn tradition and the success of their experiments, the writings of Locke, the
social contract theory, the Great Awakening, and the influence of European
rationalism and deism."67 Each of these factors shall be briefly discussed.
First, the practical factors. England's policy of opening the gates of the
American colonies to different faiths resulted in the multiplicity of sects in the
colonies. With an Erastian justification, English lords chose to forego protecting
what was considered to be the true and eternal church of a particular time in
order to encourage trade and commerce. The colonies were large financial
investments which would be profitable only if people would settle there. It
would be difficult to engage in trade with persons one seeks to destroy for
religious belief, thus tolerance was a necessity. This tended to distract the
colonies from their preoccupations over their religion and its exclusiveness,
encouraging them "to think less of the Church and more of the State and of
commerce."68 The diversity brought about by the colonies' open gates
encouraged religious freedom and non-establishment in several ways. First, as
there were too many dissenting sects to abolish, there was no alternative but
to learn to live together. Secondly, because of the daily exposure to different
religions, the passionate conviction in the exclusive rightness of one's religion,
which impels persecution for the sake of one's religion, waned. Finally,
because of the great diversity of the sects, religious uniformity was not
possible, and without such uniformity, establishment could not survive.69
But while there was a multiplicity of denomination, paradoxically, there was a
scarcity of adherents. Only about four percent of the entire population of the
country had a church affiliation at the time the republic was founded. 70 This
might be attributed to the drifting to the American colonies of the skepticism
that characterized European Enlightenment. 71 Economic considerations might
have also been a factor. The individualism of the American colonist,
manifested in the multiplicity of sects, also resulted in much unaffiliated religion
which treated religion as a personal non-institutional matter. The prevalence of
lack of church affiliation contributed to religious liberty and disestablishment as
persons who were not connected with any church were not likely to persecute
others for similar independence nor accede to compulsory taxation to support
a church to which they did not belong.72
However, for those who were affiliated to churches, the colonial policy
regarding their worship generally followed the tenor of the English Act of
Toleration of 1689. In England, this Act conferred on Protestant dissenters the
right to hold public services subject to registration of their ministers and places
of worship.73 Although the toleration accorded to Protestant dissenters who
qualified under its terms was only a modest advance in religious freedom, it
nevertheless was of some influence to the American experiment. 74 Even then,
for practical considerations, concessions had to be made to other dissenting
churches to ensure their cooperation in the War of Independence which thus
had a unifying effect on the colonies.
Next, the ideological factors. First, the Great Awakening in mid-18th century,
an evangelical religious revival originating in New England, caused a break
with formal church religion and a resistance to coercion by established
churches. This movement emphasized an emotional, personal religion that
appealed directly to the individual, putting emphasis on the rights and duties of
the individual conscience and its answerability exclusively to God. Thus,
although they had no quarrel with orthodox Christian theology as in fact they
were fundamentalists, this group became staunch advocates of separation of
church and state.75
Then there was the Williams-Penn tradition. Roger Williams was the founder of
the colony of Rhode Island where he established a community of Baptists,
Quakers and other nonconformists. In this colony, religious freedom was not
based on practical considerations but on the concept of mutual independence
of religion and government. In 1663, Rhode Island obtained a charter from the
British crown which declared that settlers have it "much on their heart to hold
forth a livelie experiment that a most flourishing civil state may best be
maintained . . . with full libertie in religious concernments."76 In Williams'
pamphlet, The Bloudy Tenent of Persecution for cause of Conscience,
discussed in a Conference between Truth and Peace, 77 he articulated the
philosophical basis for his argument of religious liberty. To him, religious
freedom and separation of church and state did not constitute two but only one
principle. Religious persecution is wrong because it "confounds the Civil and
Religious" and because "States . . . are proved essentially Civil. The "power of
true discerning the true fear of God" is not one of the powers that the people
have transferred to Civil Authority.78 Williams' Bloudy Tenet is considered an
epochal milestone in the history of religious freedom and the separation of
church and state.79
William Penn, proprietor of the land that became Pennsylvania, was also an
ardent advocate of toleration, having been imprisoned for his religious
convictions as a member of the despised Quakers. He opposed coercion in
matters of conscience because "imposition, restraint and persecution for
conscience sake, highly invade the Divine prerogative." Aside from his
idealism, proprietary interests made toleration in Pennsylvania necessary. He
attracted large numbers of settlers by promising religious toleration, thus
bringing in immigrants both from the Continent and Britain. At the end of the
colonial period, Pennsylvania had the greatest variety of religious groups.
Penn was responsible in large part for the "Concessions and agreements of
the Proprietors, Freeholders, and inhabitants of West Jersey, in America", a
monumental document in the history of civil liberty which provided among
others, for liberty of conscience.80 The Baptist followers of Williams and the
Quakers who came after Penn continued the tradition started by the leaders of
their denominations. Aside from the Baptists and the Quakers, the
Presbyterians likewise greatly contributed to the evolution of separation and
freedom.81 The Constitutional fathers who convened in Philadelphia in 1787,
and Congress and the states that adopted the First Amendment in 1791 were
very familiar with and strongly influenced by the successful examples of Rhode
Island and Pennsylvania.82
Undeniably, John Locke and the social contract theory also contributed to the
American experiment. The social contract theory popularized by Locke was so
widely accepted as to be deemed self-evident truth in America's Declaration of
Independence. With the doctrine of natural rights and equality set forth in the
Declaration of Independence, there was no room for religious discrimination. It
was difficult to justify inequality in religious treatment by a new nation that
severed its political bonds with the English crown which violated the self-
evident truth that all men are created equal. 83
The social contract theory was applied by many religious groups in arguing
against establishment, putting emphasis on religion as a natural right that is
entirely personal and not within the scope of the powers of a political body.
That Locke and the social contract theory were influential in the development
of religious freedom and separation is evident from the memorial presented by
the Baptists to the Continental Congress in 1774, viz:
Men unite in society, according to the great Mr. Locke, with an intention
in every one the better to preserve himself, his liberty and property.
The power of the society, or Legislature constituted by them, can never
be supposed to extend any further than the common good, but is
obliged to secure every one's property. To give laws, to receive
obedience, to compel with the sword, belong to none but the civil
magistrate; and on this ground we affirm that the magistrate's power
extends not to establishing any articles of faith or forms of worship, by
force of laws; for laws are of no force without penalties. The care of
souls cannot belong to the civil magistrate, because his power consists
only in outward force; but pure and saving religion consists in the
inward persuasion of the mind, without which nothing can be
acceptable to God.84 (emphasis supplied)
The idea that religion was outside the jurisdiction of civil government was
acceptable to both the religionist and rationalist. To the religionist, God or
Christ did not desire that government have that jurisdiction ("render unto
Caesar that which is Caesar's"; "my kingdom is not of this world") and to the
rationalist, the power to act in the realm of religion was not one of the powers
conferred on government as part of the social contract.85
Not only the social contract theory drifted to the colonies from Europe. Many of
the leaders of the Revolutionary and post-revolutionary period were also
influenced by European deism and rationalism,86 in general, and some were
apathetic if not antagonistic to formal religious worship and institutionalized
religion. Jefferson, Paine, John Adams, Washington, Franklin, Madison,
among others were reckoned to be among the Unitarians or Deists.
Unitarianism and Deism contributed to the emphasis on secular interests and
the relegation of historic theology to the background. 87 For these men of the
enlightenment, religion should be allowed to rise and fall on its own, and the
state must be protected from the clutches of the church whose entanglements
has caused intolerance and corruption as witnessed throughout history.88 Not
only the leaders but also the masses embraced rationalism at the end of the
eighteenth century, accounting for the popularity of Paine's Age of Reason. 89
Finally, the events leading to religious freedom and separation in Virginia
contributed significantly to the American experiment of the First Amendment.
Virginia was the "first state in the history of the world to proclaim the decree of
absolute divorce between church and state." 90 Many factors contributed to this,
among which were that half to two-thirds of the population were organized
dissenting sects, the Great Awakening had won many converts, the
established Anglican Church of Virginia found themselves on the losing side of
the Revolution and had alienated many influential laymen with its identification
with the Crown's tyranny, and above all, present in Virginia was a group of
political leaders who were devoted to liberty generally, 91 who had accepted the
social contract as self-evident, and who had been greatly influenced by Deism
and Unitarianism. Among these leaders were Washington, Patrick Henry,
George Mason, James Madison and above the rest, Thomas Jefferson.
The first major step towards separation in Virginia was the adoption of the
following provision in the Bill of Rights of the state's first constitution:
That religion, or the duty which we owe to our Creator, and the manner
of discharging it, can be directed only by reason and conviction, not by
force or violence; and therefore, all men are equally entitled to the free
exercise of religion according to the dictates of conscience; and that it
is the mutual duty of all to practice Christian forbearance, love, and
charity towards each other.92 (emphasis supplied)
The adoption of the Bill of Rights signified the beginning of the end of
establishment. Baptists, Presbyterians and Lutherans flooded the first
legislative assembly with petitions for abolition of establishment. While the
majority of the population were dissenters, a majority of the legislature were
churchmen. The legislature compromised and enacted a bill in 1776 abolishing
the more oppressive features of establishment and granting exemptions to the
dissenters, but not guaranteeing separation. It repealed the laws punishing
heresy and absence from worship and requiring the dissenters to contribute to
the support of the establishment.93 But the dissenters were not satisfied; they
not only wanted abolition of support for the establishment, they opposed the
compulsory support of their own religion as others. As members of the
established church would not allow that only they would pay taxes while the
rest did not, the legislature enacted in 1779 a bill making permanent the
establishment's loss of its exclusive status and its power to tax its members;
but those who voted for it did so in the hope that a general assessment bill
would be passed. Without the latter, the establishment would not survive.
Thus, a bill was introduced in 1779 requiring every person to enroll his name
with the county clerk and indicate which "society for the purpose of Religious
Worship" he wished to support. On the basis of this list, collections were to be
made by the sheriff and turned over to the clergymen and teachers designated
by the religious congregation. The assessment of any person who failed to
enroll in any society was to be divided proportionately among the
societies.94 The bill evoked strong opposition.
In 1784, another bill, entitled "Bill Establishing a Provision for Teachers of the
Christian Religion" was introduced requiring all persons "to pay a moderate tax
or contribution annually for the support of the Christian religion, or of some
Christian church, denomination or communion of Christians, or for some form
of Christian worship."95 This likewise aroused the same opposition to the 1779
bill. The most telling blow against the 1784 bill was the monumental "Memorial
and Remonstrance against Religious Assessments" written by Madison and
widely distributed before the reconvening of legislature in the fall of 1785. 96 It
stressed natural rights, the government's lack of jurisdiction over the domain of
religion, and the social contract as the ideological basis of separation while
also citing practical considerations such as loss of population through
migration. He wrote, viz:
Because we hold it for a 'fundamental and undeniable truth,' that
religion, or the duty which we owe to our creator, and the manner of
discharging it, can be directed only by reason and conviction, not by
force or violence. The religion, then, of every man, must be left to the
conviction and conscience of every man; and it is the right of every
man to exercise it as these may dictate. This right is, in its nature, an
unalienable right. It is unalienable, because the opinions of men,
depending only on the evidence contemplated in their own minds,
cannot follow the dictates of other men; it is unalienable, also, because
what is here a right towards men, is a duty towards the creator. It is the
duty of every man to render the creator such homage, and such only
as he believes to be acceptable to him; this duty is precedent, both in
order of time and degree of obligation, to the claims of civil society.
Before any man can be considered as a member of civil society, he
must be considered as a subject of the governor of the universe; and if
a member of civil society, who enters into any subordinate association,
must always do it with a reservation of his duty to the general authority,
much more must every man who becomes a member of any particular
civil society do it with the saving his allegiance to the universal
sovereign.97 (emphases supplied)
Madison articulated in the Memorial the widely held beliefs in 1785 as
indicated by the great number of signatures appended to the Memorial. The
assessment bill was speedily defeated.
Taking advantage of the situation, Madison called up a much earlier 1779 bill
of Jefferson which had not been voted on, the "Bill for Establishing Religious
Freedom", and it was finally passed in January 1786. It provided, viz:
Well aware that Almighty God hath created the mind free; that all
attempts to influence it by temporal punishments or burdens, or by civil
incapacitations, tend not only to beget habits of hypocrisy and
meanness, and are a departure from the plan of the Holy Author of our
religion, who being Lord both of body and mind, yet chose not to
propagate it by coercions on either, as was in his Almighty power to do;
xxx xxx xxx
Be it therefore enacted by the General Assembly. That no man shall be
compelled to frequent or support any religious worship, place or
ministry whatsoever, nor shall be enforced, restrained, molested or
burdened in his body or goods, nor shall otherwise suffer on account of
his religious opinions or beliefs, but that all men shall be free to
profess, and by argument to maintain, their opinions in matters of
religion, and that the same shall in no wise diminish, enlarge or affect
their civil capacities.98 (emphases supplied)
This statute forbade any kind of taxation in support of religion and effectually
ended any thought of a general or particular establishment in Virginia. 99 But the
passage of this law was obtained not only because of the influence of the great
leaders in Virginia but also because of substantial popular support coming
mainly from the two great dissenting sects, namely the Presbyterians and the
Baptists. The former were never established in Virginia and an underprivileged
minority of the population. This made them anxious to pull down the existing
state church as they realized that it was impossible for them to be elevated to
that privileged position. Apart from these expediential considerations, however,
many of the Presbyterians were sincere advocates of separation100 grounded
on rational, secular arguments and to the language of natural
religion.101 Influenced by Roger Williams, the Baptists, on the other hand,
assumed that religion was essentially a matter of concern of the individual and
his God, i.e., subjective, spiritual and supernatural, having no relation with the
social order.102 To them, the Holy Ghost was sufficient to maintain and direct
the Church without governmental assistance and state-supported religion was
contrary ti the spirit of the Gospel.103 Thus, separation was
necessary.104 Jefferson's religious freedom statute was a milestone in the
history of religious freedom. The United States Supreme Court has not just
once acknowledged that the provisions of the First Amendment of the U.S.
Constitution had the same objectives and intended to afford the same
protection against government interference with religious liberty as the Virginia
Statute of Religious Liberty.
Even in the absence of the religion clauses, the principle that government had
no power to legislate in the area of religion by restricting its free exercise or
establishing it was implicit in the Constitution of 1787. This could be deduced
from the prohibition of any religious test for federal office in Article VI of the
Constitution and the assumed lack of power of Congress to act on any subject
not expressly mentioned in the Constitution. 105 However, omission of an
express guaranty of religious freedom and other natural rights nearly
prevented the ratification of the Constitution. 106 In the ratifying conventions of
almost every state, some objection was expressed to the absence of a
restriction on the Federal Government as regards legislation on
religion.107 Thus, in 1791, this restriction was made explicit with the adoption of
the religion clauses in the First Amendment as they are worded to this day,
with the first part usually referred to as the Establishment Clause and the
second part, the Free Exercise Clause, viz:
Congress shall make no law respecting an establishment of religion or
prohibiting the free exercise thereof.
VI. Religion Clauses in the United States:
Concept, Jurisprudence, Standards
With the widespread agreement regarding the value of the First Amendment
religion clauses comes an equally broad disagreement as to what these
clauses specifically require, permit and forbid. No agreement has been
reached by those who have studied the religion clauses as regards its exact
meaning and the paucity of records in Congress renders it difficult to ascertain
its meaning.108 Consequently, the jurisprudence in this area is volatile and
fraught with inconsistencies whether within a Court decision or across
decisions.
One source of difficulty is the difference in the context in which the First
Amendment was adopted and in which it is applied today. In the 1780s,
religion played a primary role in social life - i.e., family responsibilities,
education, health care, poor relief, and other aspects of social life with
significant moral dimension - while government played a supportive and
indirect role by maintaining conditions in which these activities may be carried
out by religious or religiously-motivated associations. Today, government plays
this primary role and religion plays the supportive role. 109 Government runs
even family planning, sex education, adoption and foster care
programs.110 Stated otherwise and with some exaggeration, "(w)hereas two
centuries ago, in matters of social life which have a significant moral
dimension, government was the handmaid of religion, today religion, in its
social responsibilities, as contrasted with personal faith and collective worship,
is the handmaid of government."111 With government regulation of individual
conduct having become more pervasive, inevitably some of those regulations
would reach conduct that for some individuals are religious. As a result,
increasingly, there may be inadvertent collisions between purely secular
government actions and religion clause values. 112
Parallel to this expansion of government has been the expansion of religious
organizations in population, physical institutions, types of activities undertaken,
and sheer variety of denominations, sects and cults. Churches run day-care
centers, retirement homes, hospitals, schools at all levels, research centers,
settlement houses, halfway houses for prisoners, sports facilities, theme parks,
publishing houses and mass media programs. In these activities, religious
organizations complement and compete with commercial enterprises, thus
blurring the line between many types of activities undertaken by religious
groups and secular activities. Churches have also concerned themselves with
social and political issues as a necessary outgrowth of religious faith as
witnessed in pastoral letters on war and peace, economic justice, and human
life, or in ringing affirmations for racial equality on religious foundations.
Inevitably, these developments have brought about substantial entanglement
of religion and government. Likewise, the growth in population density, mobility
and diversity has significantly changed the environment in which religious
organizations and activities exist and the laws affecting them are made. It is no
longer easy for individuals to live solely among their own kind or to shelter their
children from exposure to competing values. The result is disagreement over
what laws should require, permit or prohibit;113 and agreement that if the rights
of believers as well as non-believers are all to be respected and given their just
due, a rigid, wooden interpretation of the religion clauses that is blind to
societal and political realities must be avoided.114
Religion cases arise from different circumstances. The more obvious ones
arise from a government action which purposely aids or inhibits religion. These
cases are easier to resolve as, in general, these actions are plainly
unconstitutional. Still, this kind of cases poses difficulty in ascertaining proof of
intent to aid or inhibit religion.115 The more difficult religion clause cases involve
government action with a secular purpose and general applicability which
incidentally or inadvertently aids or burdens religious exercise. In Free
Exercise Clause cases, these government actions are referred to as those with
"burdensome effect" on religious exercise even if the government action is not
religiously motivated.116 Ideally, the legislature would recognize the religions
and their practices and would consider them, when practical, in enacting laws
of general application. But when the legislature fails to do so, religions that are
threatened and burdened turn to the courts for protection. 117 Most of these free
exercise claims brought to the Court are for exemption, not invalidation of the
facially neutral law that has a "burdensome" effect.118
With the change in political and social context and the increasing inadvertent
collisions between law and religious exercise, the definition of religion for
purposes of interpreting the religion clauses has also been modified to suit
current realities. Defining religion is a difficult task for even theologians,
philosophers and moralists cannot agree on a comprehensive definition.
Nevertheless, courts must define religion for constitutional and other legal
purposes.119 It was in the 1890 case of Davis v. Beason120 that the United
States Supreme Court first had occasion to define religion, viz:
The term 'religion' has reference to one's views of his relations to his
Creator, and to the obligations they impose of reverence for his being
and character, and of obedience to his will. It is often confounded with
the cultus or form of worship of a particular sect, but is distinguishable
from the latter. The First Amendment to the Constitution, in declaring
that Congress shall make no law respecting the establishment of
religion, or forbidding the free exercise thereof, was intended to allow
everyone under the jurisdiction of the United States to entertain such
notions respecting his relations to his Maker and the duties they
impose as may be approved by his judgment and conscience, and to
exhibit his sentiments in such form of worship as he may think proper,
not injurious to the equal rights of others, and to prohibit legislation for
the support of any religious tenets, or the modes of worship of any
sect.121
The definition was clearly theistic which was reflective of the popular attitudes
in 1890.
In 1944, the Court stated in United States v. Ballard122 that the free exercise of
religion "embraces the right to maintain theories of life and of death and of the
hereafter which are rank heresy to followers of the orthodox faiths." 123 By the
1960s, American pluralism in religion had flourished to include non-theistic
creeds from Asia such as Buddhism and Taoism. 124 In 1961, the Court,
in Torcaso v. Watkins,125 expanded the term "religion" to non-theistic beliefs
such as Buddhism, Taoism, Ethical Culture, and Secular Humanism. Four
years later, the Court faced a definitional problem in United States v.
Seeger126 which involved four men who claimed "conscientious objector" status
in refusing to serve in the Vietnam War. One of the four, Seeger, was not a
member of any organized religion opposed to war, but when specifically asked
about his belief in a Supreme Being, Seeger stated that "you could call (it) a
belief in a Supreme Being or God. These just do not happen to be the words
that I use." Forest Peter, another one of the four claimed that after
considerable meditation and reflection "on values derived from the Western
religious and philosophical tradition," he determined that it would be "a
violation of his moral code to take human life and that he considered this belief
superior to any obligation to the state." The Court avoided a constitutional
question by broadly interpreting not the Free Exercise Clause, but the statutory
definition of religion in the Universal Military Training and Service Act of 1940
which exempt from combat anyone "who, by reason of religious training and
belief, is conscientiously opposed to participation in war in any form." Speaking
for the Court, Justice Clark ruled, viz:
Congress, in using the expression 'Supreme Being' rather than the
designation 'God,' was merely clarifying the meaning of religious
tradition and belief so as to embrace all religions and to exclude
essentially political, sociological, or philosophical views (and) the test
of belief 'in relation to a Supreme Being' is whether a given belief that
is sincere and meaningful occupies a place in the life of its possessor
parallel to the orthodox belief in God. (emphasis supplied)
The Court was convinced that Seeger, Peter and the others were
conscientious objectors possessed of such religious belief and training.
Federal and state courts have expanded the definition of religion in Seeger to
include even non-theistic beliefs such as Taoism or Zen Buddhism. It has been
proposed that basically, a creed must meet four criteria to qualify as religion
under the First Amendment. First, there must be belief in God or some parallel
belief that occupies a central place in the believer's life. Second, the religion
must involve a moral code transcending individual belief, i.e., it cannot be
purely subjective. Third, a demonstrable sincerity in belief is necessary, but the
court must not inquire into the truth or reasonableness of the belief. 127 Fourth,
there must be some associational ties,128 although there is also a view that
religious beliefs held by a single person rather than being part of the teachings
of any kind of group or sect are entitled to the protection of the Free Exercise
Clause.129
Defining religion is only the beginning of the difficult task of deciding religion
clause cases. Having hurdled the issue of definition, the court then has to draw
lines to determine what is or is not permissible under the religion clauses. In
this task, the purpose of the clauses is the yardstick. Their purpose is singular;
they are two sides of the same coin.130 In devoting two clauses to religion, the
Founders were stating not two opposing thoughts that would cancel each other
out, but two complementary thoughts that apply in different ways in different
circumstances.131 The purpose of the religion clauses - both in the restriction it
imposes on the power of the government to interfere with the free exercise of
religion and the limitation on the power of government to establish, aid, and
support religion - is the protection and promotion of religious liberty. 132 The
end, the goal, and the rationale of the religion clauses is this liberty. 133 Both
clauses were adopted to prevent government imposition of religious orthodoxy;
the great evil against which they are directed is government-induced
homogeneity.134 The Free Exercise Clause directly articulates the common
objective of the two clauses and the Establishment Clause specifically
addresses a form of interference with religious liberty with which the Framers
were most familiar and for which government historically had demonstrated a
propensity.135 In other words, free exercise is the end, proscribing
establishment is a necessary means to this end to protect the rights of those
who might dissent from whatever religion is established. 136 It has even been
suggested that the sense of the First Amendment is captured if it were to read
as "Congress shall make no law respecting an establishment of religion or
otherwise prohibiting the free exercise thereof" because the fundamental and
single purpose of the two religious clauses is to "avoid any infringement on the
free exercise of religions"137 Thus, the Establishment Clause mandates
separation of church and state to protect each from the other, in service of the
larger goal of preserving religious liberty. The effect of the separation is to limit
the opportunities for any religious group to capture the state apparatus to the
disadvantage of those of other faiths, or of no faith at all138 because history has
shown that religious fervor conjoined with state power is likely to tolerate far
less religious disagreement and disobedience from those who hold different
beliefs than an enlightened secular state. 139 In the words of the U.S. Supreme
Court, the two clauses are interrelated, viz: "(t)he structure of our government
has, for the preservation of civil liberty, rescued the temporal institutions from
religious interference. On the other hand, it has secured religious liberty from
the invasion of the civil authority."140
In upholding religious liberty as the end goal in religious clause cases, the line
the court draws to ensure that government does not establish and instead
remains neutral toward religion is not absolutely straight. Chief Justice Burger
explains, viz:
The course of constitutional neutrality in this area cannot be an
absolutely straight line; rigidity could well defeat the basic purpose of
 these provisions, which is to insure that no religion be sponsored or
favored, none commanded and none inhibited. 141 (emphasis supplied)
Consequently, U.S. jurisprudence has produced two identifiably
different,142 even opposing, strains of jurisprudence on the religion clauses:
separation (in the form of strict separation or the tamer version of strict
neutrality or separation) and benevolent neutrality or accommodation. A view
of the landscape of U.S. religion clause cases would be useful in
understanding these two strains, the scope of protection of each clause, and
the tests used in religious clause cases. Most of these cases are cited as
authorities in Philippine religion clause cases.
A. Free Exercise Clause
The Court first interpreted the Free Exercise Clause in the 1878 case of
Reynolds v. United States.143 This landmark case involved Reynolds, a
Mormon who proved that it was his religious duty to have several wives and
that the failure to practice polygamy by male members of his religion when
circumstances would permit would be punished with damnation in the life to
come. Reynolds' act of contracting a second marriage violated Section 5352,
Revised Statutes prohibiting and penalizing bigamy, for which he was
convicted. The Court affirmed Reynolds' conviction, using what in
jurisprudence would be called the belief-action test which allows absolute
protection to belief but not to action. It cited Jefferson's Bill Establishing
Religious Freedom which, according to the Court, declares "the true distinction
between what properly belongs to the Church and what to the State." 144 The
bill, making a distinction between belief and action, states in relevant part, viz:
That to suffer the civil magistrate to intrude his powers into the field of
opinion, and to restrain the profession or propagation of principles on
supposition of their ill tendency, is a dangerous fallacy which at once
destroys all religious liberty;
that it is time enough for the rightful purposes of civil government for its
officers to interfere when principles break out into overt acts against
peace and good order.145 (emphasis supplied)
The Court then held, viz:
Congress was deprived of all legislative power over mere opinion, but
was left free to reach actions which were in violation of social duties or
subversive of good order. . .
Laws are made for the government of actions, and while they cannot
interfere with mere religious belief and opinions, they may with
practices. Suppose one believed that human sacrifice were a
necessary part of religious worship, would it be seriously contended
that the civil government under which he lived could not interfere to
prevent a sacrifice? Or if a wife religiously believed it was her duty to
burn herself upon the funeral pile of her dead husband, would it be
beyond the power of the civil government to prevent her carrying her
belief into practice?
So here, as a law of the organization of society under the exclusive
dominion of the United States, it is provided that plural marriages shall
not be allowed. Can a man excuse his practices to the contrary
because of his religious belief? To permit this would be to make the
professed doctrines of religious belief superior to the law of the land,
and in effect to permit every citizen to become a law unto himself.
Government could exist only in name under such circumstances. 146
The construct was thus simple: the state was absolutely prohibited by the Free
Exercise Clause from regulating individual religious beliefs, but placed no
restriction on the ability of the state to regulate religiously motivated conduct. It
was logical for belief to be accorded absolute protection because any statute
designed to prohibit a particular religious belief unaccompanied by any
conduct would most certainly be motivated only by the legislature's preference
of a competing religious belief. Thus, all cases of regulation of belief would
amount to regulation of religion for religious reasons violative of the Free
Exercise Clause. On the other hand, most state regulations of conduct are for
public welfare purposes and have nothing to do with the legislature's religious
preferences. Any burden on religion that results from state regulation of
conduct arises only when particular individuals are engaging in the generally
regulated conduct because of their particular religious beliefs. These burdens
are thus usually inadvertent and did not figure in the belief-action test. As long
as the Court found that regulation address action rather than belief, the Free
Exercise Clause did not pose any problem.147 The Free Exercise Clause thus
gave no protection against the proscription of actions even if considered
central to a religion unless the legislature formally outlawed the belief itself.148
This belief-action distinction was held by the Court for some years as shown
by cases where the Court upheld other laws which burdened the practice of
the Mormon religion by imposing various penalties on polygamy such as the
Davis case and Church of Latter Day Saints v. United States.149 However,
more than a century since Reynolds was decided, the Court has expanded the
scope of protection from belief to speech and conduct. But while the belief-
action test has been abandoned, the rulings in the earlier Free Exercise cases
have gone unchallenged. The belief-action distinction is still of some
importance though as there remains an absolute prohibition of governmental
proscription of beliefs.150
The Free Exercise Clause accords absolute protection to individual religious
convictions and beliefs151 and proscribes government from questioning a
person's beliefs or imposing penalties or disabilities based solely on those
beliefs. The Clause extends protection to both beliefs and unbelief. Thus,
in Torcaso v. Watkins,152 a unanimous Court struck down a state law
requiring as a qualification for public office an oath declaring belief in the
existence of God. The protection also allows courts to look into the good faith
of a person in his belief, but prohibits inquiry into the truth of a person's
religious beliefs. As held in United States v. Ballard,153 "(h)eresy trials are
foreign to the Constitution. Men may believe what they cannot prove. They
may not be put to the proof of their religious doctrines or beliefs."
Next to belief which enjoys virtually absolute protection, religious speech and
expressive religious conduct are accorded the highest degree of protection.
Thus, in the 1940 case of Cantwell v. Connecticut,154 the Court struck down a
state law prohibiting door-to-door solicitation for any religious or charitable
cause without prior approval of a state agency. The law was challenged by
Cantwell, a member of the Jehovah's Witnesses which is committed to active
proselytizing. The Court invalidated the state statute as the prior approval
necessary was held to be a censorship of religion prohibited by the Free
Exercise Clause. The Court held, viz:
In the realm of religious faith, and in that of political belief, sharp
differences arise. In both fields the tenets of one may seem the rankest
error to his neighbor. To persuade others to his point of view, the
pleader, as we know, resorts to exaggeration, to vilification of men who
have been, or are, prominent in church or state, and even to false
statement. But the people of this nation have ordained in the light of
history, that, in spite of the probability of excesses and abuses, these
liberties are, in the long view, essential to enlightened opinion and right
conduct on the part of citizens of a democracy. 155
Cantwell took a step forward from the protection afforded by the Reynolds
case in that it not only affirmed protection of belief but also freedom to act for
the propagation of that belief, viz:
Thus the Amendment embraces two concepts - freedom to believe and
freedom to act. The first is absolute but, in the nature of things, the
second cannot be. Conduct remains subject to regulation for the
protection of society. . . In every case, the power to regulate must be
so exercised as not, in attaining a permissible end, unduly to infringe
the protected freedom. (emphasis supplied) 156
The Court stated, however, that government had the power to regulate the
times, places, and manner of solicitation on the streets and assure the peace
and safety of the community.
Three years after Cantwell, the Court in Douglas v. City of Jeanette,157 ruled
that police could not prohibit members of the Jehovah's Witnesses from
peaceably and orderly proselytizing on Sundays merely because other citizens
complained. In another case likewise involving the Jehovah's
Witnesses, Niemotko v. Maryland,158 the Court unanimously held
unconstitutional a city council's denial of a permit to the Jehovah's Witnesses
to use the city park for a public meeting. The city council's refusal was because
of the "unsatisfactory" answers of the Jehovah's Witnesses to questions about
Catholicism, military service, and other issues. The denial of the public forum
was considered blatant censorship. While protected, religious speech in the
public forum is still subject to reasonable time, place and manner regulations
similar to non-religious speech. Religious proselytizing in congested areas, for
example, may be limited to certain areas to maintain the safe and orderly flow
of pedestrians and vehicular traffic as held in the case of Heffron v.
International Society for Krishna Consciousness.159
The least protected under the Free Exercise Clause is religious conduct,
usually in the form of unconventional religious practices. Protection in this
realm depends on the character of the action and the government rationale for
regulating the action.160 The Mormons' religious conduct of polygamy is an
example of unconventional religious practice. As discussed in the Reynolds
case above, the Court did not afford protection to the practice. Reynolds was
reiterated in the 1890 case of Davis again involving Mormons, where the Court
held, viz: "(c)rime is not the less odious because sanctioned by what any
particular sect may designate as religion."161
The belief-action test in Reynolds and Davis proved unsatisfactory. Under this
test, regulation of religiously dictated conduct would be upheld no matter how
central the conduct was to the exercise of religion and no matter how
insignificant was the government's non-religious regulatory interest so long as
the government is proscribing action and not belief. Thus, the Court
abandoned the simplistic belief-action distinction and instead recognized the
deliberate-inadvertent distinction, i.e., the distinction between deliberate state
interference of religious exercise for religious reasons which was plainly
unconstitutional and government's inadvertent interference with religion in
pursuing some secular objective.162 In the 1940 case of Minersville School
District v. Gobitis,163 the Court upheld a local school board requirement that
all public school students participate in a daily flag salute program, including
the Jehovah's Witnesses who were forced to salute the American flag in
violation of their religious training, which considered flag salute to be worship
of a "graven image." The Court recognized that the general requirement of
compulsory flag salute inadvertently burdened the Jehovah Witnesses'
practice of their religion, but justified the government regulation as an
appropriate means of attaining national unity, which was the "basis of national
security." Thus, although the Court was already aware of the deliberate-
inadvertent distinction in government interference with religion, it continued to
hold that the Free Exercise Clause presented no problem to interference with
religion that was inadvertent no matter how serious the interference, no matter
how trivial the state's non-religious objectives, and no matter how many
alternative approaches were available to the state to pursue its objectives with
less impact on religion, so long as government was acting in pursuit of a
secular objective.
Three years later, the Gobitis decision was overturned in West Virginia v.
Barnette164 which involved a similar set of facts and issue. The Court
recognized that saluting the flag, in connection with the pledges, was a form of
utterance and the flag salute program was a compulsion of students to declare
a belief. The Court ruled that "compulsory unification of opinions leads only to
the unanimity of the graveyard" and exempt the students who were members
of the Jehovah's Witnesses from saluting the flag. A close scrutiny of the case,
however, would show that it was decided not on the issue of religious conduct
as the Court said, "(n)or does the issue as we see it turn on one's possession
of particular religious views or the sincerity with which they are held. While
religion supplies appellees' motive for enduring the discomforts of making the
issue in this case, many citizens who do not share these religious views hold
such a compulsory rite to infringe constitutional liberty of the individual."
(emphasis supplied)165 The Court pronounced, however, that, "freedoms of
speech and of press, of assembly, and of worship . . . are susceptible only of
restriction only to prevent grave and immediate danger to interests which the
state may lawfully protect."166 The Court seemed to recognize the extent to
which its approach in Gobitis subordinated the religious liberty of political
minorities - a specially protected constitutional value - to the common everyday
economic and public welfare objectives of the majority in the legislature. This
time, even inadvertent interference with religion must pass judicial scrutiny
under the Free Exercise Clause with only grave and immediate danger
sufficing to override religious liberty. But the seeds of this heightened scrutiny
would only grow to a full flower in the 1960s. 167
Nearly a century after Reynolds employed the belief-action test, the Warren
Court began the modern free exercise jurisprudence.168 A two-part balancing
test was established in Braunfeld v. Brown169 where the Court considered the
constitutionality of applying Sunday closing laws to Orthodox Jews whose
beliefs required them to observe another day as the Sabbath and abstain from
commercial activity on Saturday. Chief Justice Warren, writing for the Court,
found that the law placed a severe burden on Sabattarian retailers. He noted,
however, that since the burden was the indirect effect of a law with a secular
purpose, it would violate the Free Exercise Clause only if there were
alternative ways of achieving the state's interest. He employed a two-part
balancing test of validity where the first step was for plaintiff to show that the
regulation placed a real burden on his religious exercise. Next, the burden
would be upheld only if the state showed that it was pursuing an overriding
secular goal by the means which imposed the least burden on religious
practices.170 The Court found that the state had an overriding secular interest in
setting aside a single day for rest, recreation and tranquility and there was no
alternative means of pursuing this interest but to require Sunday as a uniform
rest day.
Two years after came the stricter compelling state interest test in the 1963
case of Sherbert v. Verner.171 This test was similar to the two-part balancing
test in Braunfeld,172 but this latter test stressed that the state interest was not
merely any colorable state interest, but must be paramount and compelling to
override the free exercise claim. In this case, Sherbert, a Seventh Day
Adventist, claimed unemployment compensation under the law as her
employment was terminated for refusal to work on Saturdays on religious
grounds. Her claim was denied. She sought recourse in the Supreme Court. In
laying down the standard for determining whether the denial of benefits could
withstand constitutional scrutiny, the Court ruled, viz:
Plainly enough, appellee's conscientious objection to Saturday work
constitutes no conduct prompted by religious principles of a kind within
the reach of state legislation. If, therefore, the decision of the South
Carolina Supreme Court is to withstand appellant's constitutional
challenge, it must be either because her disqualification as a
beneficiary represents no infringement by the State of her
constitutional rights of free exercise, or because any incidental burden
on the free exercise of appellant's religion may be justified by a
 'compelling state interest in the regulation of a subject within the
State's constitutional power to regulate. . .' NAACP v. Button, 371 US
415, 438 9 L ed 2d 405, 421, 83 S Ct 328.173 (emphasis supplied)
The Court stressed that in the area of religious liberty, it is basic that it is not
sufficient to merely show a rational relationship of the substantial infringement
to the religious right and a colorable state interest. "(I)n this highly sensitive
constitutional area, '[o]nly the gravest abuses, endangering paramount
interests, give occasion for permissible limitation.' Thomas v. Collins, 323 US
516, 530, 89 L ed 430, 440, 65 S Ct 315."174 The Court found that there was no
such compelling state interest to override Sherbert's religious liberty. It added
that even if the state could show that Sherbert's exemption would pose serious
detrimental effects to the unemployment compensation fund and scheduling of
work, it was incumbent upon the state to show that no alternative means of
regulations would address such detrimental effects without infringing religious
liberty. The state, however, did not discharge this burden. The Court thus
carved out for Sherbert an exemption from the Saturday work requirement that
caused her disqualification from claiming the unemployment benefits. The
Court reasoned that upholding the denial of Sherbert's benefits would force her
to choose between receiving benefits and following her religion. This choice
placed "the same kind of burden upon the free exercise of religion as would a
fine imposed against (her) for her Saturday worship." This germinal case of
Sherbert firmly established the exemption doctrine, 175 viz:
It is certain that not every conscience can be accommodated by all the
laws of the land; but when general laws conflict with scruples of
conscience, exemptions ought to be granted unless some 'compelling
state interest' intervenes.
Thus, in a short period of twenty-three years from Gobitis to Sherbert (or even
as early as Braunfeld), the Court moved from the doctrine that inadvertent or
incidental interferences with religion raise no problem under the Free Exercise
Clause to the doctrine that such interferences violate the Free Exercise Clause
in the absence of a compelling state interest - the highest level of constitutional
scrutiny short of a holding of a per se violation. Thus, the problem posed by
the belief-action test and the deliberate-inadvertent distinction was
addressed.176
Throughout the 1970s and 1980s under the Warren, and afterwards, the
Burger Court, the rationale in Sherbert continued to be applied. In Thomas v.
Review Board177 and Hobbie v. Unemployment Appeals Division,178 for
example, the Court reiterated the exemption doctrine and held that in the
absence of a compelling justification, a state could not withhold unemployment
compensation from an employee who resigned or was discharged due to
unwillingness to depart from religious practices and beliefs that conflicted with
job requirements. But not every governmental refusal to allow an exemption
from a regulation which burdens a sincerely held religious belief has been
invalidated, even though strict or heightened scrutiny is applied. In United
States v. Lee,179 for instance, the Court using strict scrutiny and referring to
Thomas, upheld the federal government's refusal to exempt Amish employers
who requested for exemption from paying social security taxes on wages on
the ground of religious beliefs. The Court held that "(b)ecause the broad public
interest in maintaining a sound tax system is of such a high order, religious
belief in conflict with the payment of taxes affords no basis for resisting the
tax."180 It reasoned that unlike in Sherbert, an exemption would significantly
impair government's achievement of its objective - "the fiscal vitality of the
social security system;" mandatory participation is indispensable to attain this
objective. The Court noted that if an exemption were made, it would be hard to
justify not allowing a similar exemption from general federal taxes where the
taxpayer argues that his religious beliefs require him to reduce or eliminate his
payments so that he will not contribute to the government's war-related
activities, for example.
The strict scrutiny and compelling state interest test significantly increased the
degree of protection afforded to religiously motivated conduct. While not
affording absolute immunity to religious activity, a compelling secular
justification was necessary to uphold public policies that collided with religious
practices. Although the members of the Court often disagreed over which
governmental interests should be considered compelling, thereby producing
dissenting and separate opinions in religious conduct cases, this general test
established a strong presumption in favor of the free exercise of religion. 181
Heightened scrutiny was also used in the 1972 case of Wisconsin v.
Yoder182 where the Court upheld the religious practice of the Old Order Amish
faith over the state's compulsory high school attendance law. The Amish
parents in this case did not permit secular education of their children beyond
the eighth grade. Chief Justice Burger, writing for the majority, held, viz:
It follows that in order for Wisconsin to compel school attendance
beyond the eighth grade against a claim that such attendance
interferes with the practice of a legitimate religious belief, it must
appear either that the State does not deny the free exercise of religious
belief by its requirement, or that there is a state interest of sufficient
magnitude to override the interest claiming protection under the Free
 Exercise Clause. Long before there was general acknowledgement of
the need for universal education, the Religion Clauses had specially
and firmly fixed the right of free exercise of religious beliefs, and
buttressing this fundamental right was an equally firm, even if less
explicit, prohibition against the establishment of any religion. The
values underlying these two provisions relating to religion have been
zealously protected, sometimes even at the expense of other interests
of admittedly high social importance. . .
The essence of all that has been said and written on the subject is that
only those interests of the highest order and those not otherwise
served can overbalance legitimate claims to the free exercise of
religion. . .
. . . our decisions have rejected the idea that that religiously grounded
conduct is always outside the protection of the Free Exercise Clause. It
is true that activities of individuals, even when religiously based, are
often subject to regulation by the States in the exercise of their
undoubted power to promote the health, safety, and general welfare, or
the Federal government in the exercise of its delegated powers . . . But
to agree that religiously grounded conduct must often be subject to the
broad police power of the State is not to deny that there are areas of
conduct protected by the Free Exercise Clause of the First Amendment
and thus beyond the power of the State to control, even under
regulations of general applicability. . . .This case, therefore, does not
become easier because respondents were convicted for their "actions"
in refusing to send their children to the public high school; in this
context belief and action cannot be neatly confined in logic-tight
compartments. . .183
The onset of the 1990s, however, saw a major setback in the protection
afforded by the Free Exercise Clause. In Employment Division, Oregon
Department of Human Resources v. Smith,184 the sharply divided Rehnquist
Court dramatically departed from the heightened scrutiny and compelling
justification approach and imposed serious limits on the scope of protection of
religious freedom afforded by the First Amendment. In this case, the well-
established practice of the Native American Church, a sect outside the Judeo-
Christian mainstream of American religion, came in conflict with the state's
interest in prohibiting the use of illicit drugs. Oregon's controlled substances
statute made the possession of peyote a criminal offense. Two members of the
church, Smith and Black, worked as drug rehabilitation counselors for a private
social service agency in Oregon. Along with other church members, Smith and
Black ingested peyote, a hallucinogenic drug, at a sacramental ceremony
practiced by Native Americans for hundreds of years. The social service
agency fired Smith and Black citing their use of peyote as "job-related
misconduct". They applied for unemployment compensation, but the Oregon
Employment Appeals Board denied their application as they were discharged
for job-related misconduct. Justice Scalia, writing for the majority, ruled that "if
prohibiting the exercise of religion . . . is . . . merely the incidental effect of a
generally applicable and otherwise valid law, the First Amendment has not
been offended." In other words, the Free Exercise Clause would be offended
only if a particular religious practice were singled out for proscription. The
majority opinion relied heavily on the Reynolds case and in effect, equated
Oregon's drug prohibition law with the anti-polygamy statute in Reynolds. The
relevant portion of the majority opinion held, viz:
We have never invalidated any governmental action on the basis of the
Sherbert test except the denial of unemployment compensation.
Even if we were inclined to breathe into Sherbert some life beyond the
unemployment compensation field, we would not apply it to require
exemptions from a generally applicable criminal law. . .
We conclude today that the sounder approach, and the approach in accord
with the vast majority of our precedents, is to hold the test inapplicable to such
challenges. The government's ability to enforce generally applicable
prohibitions of socially harmful conduct, like its ability to carry out other aspects
of public policy, "cannot depend on measuring the effects of a governmental
action on a religious objector's spiritual development." . . .To make an
individual's obligation to obey such a law contingent upon the law's
coincidence with his religious beliefs except where the State's interest is
"compelling" - permitting him, by virtue of his beliefs, "to become a law unto
himself," . . . - contradicts both constitutional tradition and common sense.
Justice O'Connor wrote a concurring opinion pointing out that the majority's
rejection of the compelling governmental interest test was the most
controversial part of the decision. Although she concurred in the result that the
Free Exercise Clause had not been offended, she sharply criticized the
majority opinion as a dramatic departure "from well-settled First Amendment
jurisprudence. . . and . . . (as) incompatible with our Nation's fundamental
commitment to religious liberty." This portion of her concurring opinion was
supported by Justices Brennan, Marshall and Blackmun who dissented from
the Court's decision. Justice O'Connor asserted that "(t)he compelling state
interest test effectuates the First Amendment's command that religious liberty
is an independent liberty, that it occupies a preferred position, and that the
Court will not permit encroachments upon this liberty, whether direct or
indirect, unless required by clear and compelling government interest 'of the
highest order'." Justice Blackmun registered a separate dissenting opinion,
joined by Justices Brennan and Marshall. He charged the majority with
"mischaracterizing" precedents and "overturning. . . settled law concerning the
Religion Clauses of our Constitution." He pointed out that the Native American
Church restricted and supervised the sacramental use of peyote. Thus, the
state had no significant health or safety justification for regulating the
sacramental drug use. He also observed that Oregon had not attempted to
prosecute Smith or Black, or any Native Americans, for that matter, for the
sacramental use of peyote. In conclusion, he said that "Oregon's interest in
enforcing its drug laws against religious use of peyote (was) not sufficiently
compelling to outweigh respondents' right to the free exercise of their religion."
The Court went back to the Reynolds and Gobitis doctrine in Smith. The
Court's standard in Smith virtually eliminated the requirement that the
government justify with a compelling state interest the burdens on religious
exercise imposed by laws neutral toward religion. The Smith doctrine is highly
unsatisfactory in several respects and has been criticized as exhibiting a
shallow understanding of free exercise jurisprudence.185 First, the First
amendment was intended to protect minority religions from the tyranny of the
religious and political majority. A deliberate regulatory interference with
minority religious freedom is the worst form of this tyranny. But regulatory
interference with a minority religion as a result of ignorance or sensitivity of the
religious and political majority is no less an interference with the minority's
religious freedom. If the regulation had instead restricted the majority's
religious practice, the majoritarian legislative process would in all probability
have modified or rejected the regulation. Thus, the imposition of the political
majority's non-religious objectives at the expense of the minority's religious
interests implements the majority's religious viewpoint at the expense of the
minority's. Second, government impairment of religious liberty would most
often be of the inadvertent kind as in Smith considering the political culture
where direct and deliberate regulatory imposition of religious orthodoxy is
nearly inconceivable. If the Free Exercise Clause could not afford protection to
inadvertent interference, it would be left almost meaningless. Third, the
Reynolds-Gobitis-Smith doctrine simply defies common sense. The state
should not be allowed to interfere with the most deeply held fundamental
religious convictions of an individual in order to pursue some trivial state
economic or bureaucratic objective. This is especially true when there are
alternative approaches for the state to effectively pursue its objective without
serious inadvertent impact on religion.186
Thus, the Smith decision has been criticized not only for increasing the power
of the state over religion but as discriminating in favor of mainstream religious
groups against smaller, more peripheral groups who lack legislative
clout,187 contrary to the original theory of the First Amendment. 188 Undeniably,
claims for judicial exemption emanate almost invariably from relatively
politically powerless minority religions and Smith virtually wiped out their
judicial recourse for exemption.189 Thus, the Smith decision elicited much
negative public reaction especially from the religious community, and
commentaries insisted that the Court was allowing the Free Exercise Clause to
disappear.190 So much was the uproar that a majority in Congress was
convinced to enact the Religious Freedom Restoration Act (RFRA) of 1993.
The RFRA prohibited government at all levels from substantially burdening a
person's free exercise of religion, even if such burden resulted from a generally
applicable rule, unless the government could demonstrate a compelling state
interest and the rule constituted the least restrictive means of furthering that
interest.191 RFRA, in effect, sought to overturn the substance of the Smith
ruling and restore the status quo prior to Smith. Three years after the RFRA
was enacted, however, the Court, dividing 6 to 3, declared the RFRA
unconstitutional in City of Boerne v. Flores.192 The Court ruled that "RFRA
contradicts vital principles necessary to maintain separation of powers and the
federal balance." It emphasized the primacy of its role as interpreter of the
Constitution and unequivocally rejected, on broad institutional grounds, a direct
congressional challenge of final judicial authority on a question of constitutional
interpretation.
After Smith came Church of the Lukumi Babalu Aye, Inc. v. City of
Hialeah193 which was ruled consistent with the Smith doctrine. This case
involved animal sacrifice of the Santeria, a blend of Roman Catholicism and
West African religions brought to the Carribean by East African slaves. An
ordinance made it a crime to "unnecessarily kill, torment, torture, or mutilate an
animal in public or private ritual or ceremony not for the primary purpose of
food consumption." The ordinance came as a response to the local concern
over the sacrificial practices of the Santeria. Justice Kennedy, writing for the
majority, carefully pointed out that the questioned ordinance was not a
generally applicable criminal prohibition, but instead singled out practitioners of
the Santeria in that it forbade animal slaughter only insofar as it took place
within the context of religious rituals.
It may be seen from the foregoing cases that under the Free Exercise Clause,
religious belief is absolutely protected, religious speech and proselytizing are
highly protected but subject to restraints applicable to non-religious speech,
and unconventional religious practice receives less protection; nevertheless
conduct, even if its violates a law, could be accorded protection as shown in
Wisconsin.194
B. Establishment Clause
The Court's first encounter with the Establishment Clause was in the 1947
case of Everson v. Board of Education.195 Prior cases had made passing
reference to the Establishment Clause196 and raised establishment questions
but were decided on other grounds.197 It was in the Everson case that the U.S.
Supreme Court adopted Jefferson's metaphor of "a wall of separation between
church and state" as encapsulating the meaning of the Establishment Clause.
The often and loosely used phrase "separation of church and state" does not
appear in the U.S. Constitution. It became part of U.S. jurisprudence when the
Court in the 1878 case of Reynolds v. United States198 quoted Jefferson's
famous letter of 1802 to the Danbury Baptist Association in narrating the
history of the religion clauses, viz:
Believing with you that religion is a matter which lies solely between
man and his God; that he owes account to none other for his faith or
his worship; that the legislative powers of the Government reach
actions only, and not opinions, I contemplate with sovereign reverence
that act of the whole American people which declared that their
Legislature should 'make no law respecting an establishment of
religion or prohibiting the free exercise thereof,' thus building a wall of
separation between Church and State.199 (emphasis supplied)
Chief Justice Waite, speaking for the majority, then added, "(c)oming as this
does from an acknowledged leader of the advocates of the measure, it may be
accepted almost as an authoritative declaration of the scope and effect of the
amendment thus secured."200
The interpretation of the Establishment Clause has in large part been in cases
involving education, notably state aid to private religious schools and prayer in
public schools.201 In Everson v. Board of Education, for example, the issue was
whether a New Jersey local school board could reimburse parents for
expenses incurred in transporting their children to and from Catholic schools.
The reimbursement was part of a general program under which all parents of
children in public schools and nonprofit private schools, regardless of religion,
were entitled to reimbursement for transportation costs. Justice Hugo Black,
writing for a sharply divided Court, justified the reimbursements on the child
benefit theory, i.e., that the school board was merely furthering the state's
legitimate interest in getting children "regardless of their religion, safely and
expeditiously to and from accredited schools." The Court, after narrating the
history of the First Amendment in Virginia, interpreted the Establishment
Clause, viz:
The 'establishment of religion' clause of the First Amendment means at
least this: Neither a state nor the Federal Government can set up a
church. Neither can pass laws which aid one religion, aid all religions,
or prefer one religion over another. Neither can force nor influence a
person to go to or remain away from church against his will or force
him to profess a belief or disbelief in any religion. No person can be
punished for entertaining or professing religious beliefs or disbeliefs,
for church attendance or non-attendance. No tax in any amount, large
or small, can be levied to support any religious activities or institutions,
whatever they may be called, or whatever form they may adopt to
teach or practice religion. Neither a state nor the Federal Government
can, openly or secretly participate in the affairs of any religious
organizations or groups and vice versa. In the words of Jefferson, the
clause against establishment of religion by law was intended to erect
"a wall of separation between Church and State."202
The Court then ended the opinion, viz:
The First Amendment has erected a wall between church and state.
That wall must be kept high and impregnable. We could not approve
the slightest breach. New Jersey has not breached it here. 203
By 1971, the Court integrated the different elements of the Court's
Establishment Clause jurisprudence that evolved in the 1950s and 1960s and
laid down a three-pronged test in Lemon v. Kurtzman204 in determining the
constitutionality of policies challenged under the Establishment Clause. This
case involved a Pennsylvania statutory program providing publicly funded
reimbursement for the cost of teachers' salaries, textbooks, and instructional
materials in secular subjects and a Rhode Island statute providing salary
supplements to teachers in parochial schools. The Lemon test requires a
challenged policy to meet the following criteria to pass scrutiny under the
Establishment Clause. "First, the statute must have a secular legislative
purpose; second, its primary or principal effect must be one that neither
advances nor inhibits religion (Board of Education v. Allen, 392 US 236, 243,
20 L Ed 2d 1060, 1065, 88 S Ct 1923 [1968]); finally, the statute must not
foster 'an excessive entanglement with religion.' (Walz v.Tax Commission, 397
US 664, 668, 25 L Ed 2d 697, 701, 90 S Ct 1409 [1970])" (emphasis
supplied)205 Using this test, the Court held that the Pennsylvania statutory
program and Rhode Island statute were unconstitutional as fostering excessive
entanglement between government and religion.
The most controversial of the education cases involving the Establishment
Clause are the school prayer decisions. "Few decisions of the modern
Supreme Court have been criticized more intensely than the school prayer
decisions of the early 1960s."206 In the 1962 case of Engel v. Vitale,207 the
Court invalidated a New York Board of Regents policy that established the
voluntary recitation of a brief generic prayer by children in the public schools at
the start of each school day. The majority opinion written by Justice Black
stated that "in this country it is no part of the business of government to
compose official prayers for any group of the American people to recite as part
of a religious program carried on by government." In fact, history shows that
this very practice of establishing governmentally composed prayers for
religious services was one of the reasons that caused many of the early
colonists to leave England and seek religious freedom in America. The Court
called to mind that the first and most immediate purpose of the Establishment
Clause rested on the belief that a union of government and religion tends to
destroy government and to degrade religion. The following year, the Engel
decision was reinforced in Abington School District v.
Schempp208 and Murray v. Curlett209 where the Court struck down the
practice of Bible reading and the recitation of the Lord's prayer in the
Pennsylvania and Maryland schools. The Court held that to withstand the
strictures of the Establishment Clause, a statute must have a secular
legislative purpose and a primary effect that neither advances nor inhibits
religion. It reiterated, viz:
The wholesome 'neutrality' of which this Court's cases speak thus
stems from a recognition of the teachings of history that powerful sects
or groups might bring about a fusion of governmental and religious
functions or a concert or dependency of one upon the other to the end
that official support of the State of Federal Government would be
placed behind the tenets of one or of all orthodoxies. This the
Establishment Clause prohibits. And a further reason for neutrality is
found in the Free Exercise Clause, which recognizes the value of
religious training, teaching and observance and, more particularly, the
right of every person to freely choose his own course with reference
thereto, free of any compulsion from the state.210
The school prayer decisions drew furious reactions. Religious leaders and
conservative members of Congress and resolutions passed by several state
legislatures condemned these decisions.211 On several occasions,
constitutional amendments have been introduced in Congress to overturn the
school prayer decisions. Still, the Court has maintained its position and has in
fact reinforced it in the 1985 case of Wallace v. Jaffree212 where the Court
struck down an Alabama law that required public school students to observe a
moment of silence "for the purpose of meditation or voluntary prayer" at the
start of each school day.
Religious instruction in public schools has also pressed the Court to interpret
the Establishment Clause. Optional religious instruction within public school
premises and instructional time were declared offensive of the Establishment
Clause in the 1948 case of McCollum v. Board of Education,213 decided just
a year after the seminal Everson case. In this case, interested members of the
Jewish, Roman Catholic and a few Protestant faiths obtained permission from
the Board of Education to offer classes in religious instruction to public school
students in grades four to nine. Religion classes were attended by pupils
whose parents signed printed cards requesting that their children be permitted
to attend. The classes were taught in three separate groups by Protestant
teachers, Catholic priests and a Jewish rabbi and were held weekly from thirty
to forty minutes during regular class hours in the regular classrooms of the
school building. The religious teachers were employed at no expense to the
school authorities but they were subject to the approval and supervision of the
superintendent of schools. Students who did not choose to take religious
instruction were required to leave their classrooms and go to some other place
in the school building for their secular studies while those who were released
from their secular study for religious instruction were required to attend the
religious classes. The Court held that the use of tax-supported property for
religious instruction and the close cooperation between the school authorities
and the religious council in promoting religious education amounted to a
prohibited use of tax-established and tax-supported public school system to
aid religious groups spread their faith. The Court rejected the claim that the
Establishment Clause only prohibited government preference of one religion
over another and not an impartial governmental assistance of all religions.
In Zorach v. Clauson,214 however, the Court upheld released time programs
allowing students in public schools to leave campus upon parental permission
to attend religious services while other students attended study hall. Justice
Douglas, the writer of the opinion, stressed that "(t)he First Amendment does
not require that in every and all respects there shall be a separation of Church
and State." The Court distinguished Zorach from McCollum, viz:
In the McCollum case the classrooms were used for religious
instruction and the force of the public school was used to promote that
instruction. . . We follow the McCollum case. But we cannot expand it
to cover the present released time program unless separation of
 Church and State means that public institutions can make no
adjustments of their schedules to accommodate the religious needs of
the people. We cannot read into the Bill of Rights such a philosophy of
hostility to religion.215
In the area of government displays or affirmations of belief, the Court has
given leeway to religious beliefs and practices which have acquired a secular
meaning and have become deeply entrenched in history. For instance,
in McGowan v. Maryland,216 the Court upheld laws that prohibited certain
businesses from operating on Sunday despite the obvious religious
underpinnings of the restrictions. Citing the secular purpose of the Sunday
closing laws and treating as incidental the fact that this day of rest happened to
be the day of worship for most Christians, the Court held, viz:
It is common knowledge that the first day of the week has come to
have special significance as a rest day in this country. People of all
religions and people with no religion regard Sunday as a time for family
activity, for visiting friends and relatives, for later sleeping, for passive
and active entertainments, for dining out, and the like. 217
In the 1983 case of Marsh v. Chambers,218 the Court refused to invalidate
Nebraska's policy of beginning legislative sessions with prayers offered by a
Protestant chaplain retained at the taxpayers' expense. The majority opinion
did not rely on the Lemon test and instead drew heavily from history and the
need for accommodation of popular religious beliefs, viz:
In light of the unambiguous and unbroken history of more than 200
years, there can be no doubt that the practice of opening legislative
sessions with prayer has become the fabric of our society. To invoke
Divine guidance on a public body entrusted with making the laws is
not, in these circumstances, an "establishment" of religion or a step
toward establishment; it is simply a tolerable acknowledgement of
beliefs widely held among the people of this country. As Justice
Douglas observed, "(w)e are a religious people whose institutions
presuppose a Supreme Being." (Zorach c. Clauson, 343 US 306, 313
[1952])219 (emphasis supplied)
Some view the Marsh ruling as a mere aberration as the Court would
"inevitably be embarrassed if it were to attempt to strike down a practice that
occurs in nearly every legislature in the United States, including the U.S.
Congress."220 That Marsh was not an aberration is suggested by subsequent
cases. In the 1984 case of Lynch v. Donnelly,221 the Court upheld a city-
sponsored nativity scene in Rhode Island. By a 5-4 decision, the majority
opinion hardly employed the Lemon test and again relied on history and the
fact that the creche had become a "neutral harbinger of the holiday season" for
many, rather than a symbol of Christianity.
The Establishment Clause has also been interpreted in the area of tax
exemption. By tradition, church and charitable institutions have been exempt
from local property taxes and their income exempt from federal and state
income taxes. In the 1970 case of Walz v. Tax Commission,222 the New York
City Tax Commission's grant of property tax exemptions to churches as
allowed by state law was challenged by Walz on the theory that this required
him to subsidize those churches indirectly. The Court upheld the law stressing
its neutrality, viz:
It has not singled out one particular church or religious group or even
churches as such; rather, it has granted exemptions to all houses of
religious worship within a broad class of property owned by non-profit,
quasi-public corporations . . . The State has an affirmative policy that
considers these groups as beneficial and stabilizing influences in
community life and finds this classification useful, desirable, and in the
public interest.223
The Court added that the exemption was not establishing religion but "sparing
the exercise of religion from the burden of property taxation levied on private
profit institutions"224 and preventing excessive entanglement between state and
religion. At the same time, the Court acknowledged the long-standing practice
of religious tax exemption and the Court's traditional deference to legislative
bodies with respect to the taxing power, viz:
(f)ew concepts are more deeply embedded in the fabric of our national
life, beginning with pre-Revolutionary colonial times, than for the
government to exercise . . . this kind of benevolent neutrality toward
churches and religious exercise generally so long as none was favored
over others and none suffered interference. 225 (emphasis supplied)
C. Strict Neutrality v. Benevolent Neutrality
To be sure, the cases discussed above, while citing many landmark decisions
in the religious clauses area, are but a small fraction of the hundreds of religion
clauses cases that the U.S. Supreme Court has passed upon. Court rulings
contrary to or making nuances of the above cases may be cited. Professor
McConnell poignantly recognizes this, viz:
 Thus, as of today, it is constitutional for a state to hire a Presbyterian
minister to lead the legislature in daily prayers (Marsh v. Chambers,
463 US783, 792-93[1983]), but unconstitutional for a state to set aside
a moment of silence in the schools for children to pray if they want to
(Wallace v. Jaffree, 472 US 38, 56 [1985]). It is unconstitutional for a
state to require employers to accommodate their employees' work
schedules to their sabbath observances (Estate of Thornton v. Caldor,
Inc., 472 US 703, 709-10 [1985]) but constitutionally mandatory for a
state to require employers to pay workers compensation when the
resulting inconsistency between work and sabbath leads to discharge
(. . .Sherbert v. Verner, 374 US 398, 403-4 [1963]). It is constitutional
for the government to give money to religiously-affiliated organizations
to teach adolescents about proper sexual behavior (Bowen v.
Kendrick, 487 US 589, 611 [1988]), but not to teach them science or
history (Lemon v. Kurtzman, 403 US 602, 618-619 [1971]). It is
constitutional for the government to provide religious school pupils with
books (Board of Education v. Allen, 392 US 236, 238 [1968]), but not
with maps (Wolman v. Walter, 433 US 229, 249-51 [1977]); with bus
rides to religious schools (Everson v. Board of Education, 330 US 1, 17
[1947]), but not from school to a museum on a field trip (Wolman v.
Walter, 433 US 229, 252-55 [1977]); with cash to pay for state-
mandated standardized tests (Committee for Pub. Educ. and Religious
Liberty v. Regan, 444 US 646, 653-54 [1980]), but not to pay for safety-
related maintenance (Committee for Pub. Educ v. Nyquist, 413 US
756, 774-80 [1973]). It is a mess.226
But the purpose of the overview is not to review the entirety of the U.S. religion
clause jurisprudence nor to extract the prevailing case law regarding particular
religious beliefs or conduct colliding with particular government regulations.
Rather, the cases discussed above suffice to show that, as legal scholars
observe, this area of jurisprudence has demonstrated two main standards
used by the Court in deciding religion clause cases: separation (in the form of
strict separation or the tamer version of strict neutrality or separation) and
benevolent neutrality or accommodation. The weight of current authority,
judicial and in terms of sheer volume, appears to lie with the separationists,
strict or tame.227 But the accommodationists have also attracted a number of
influential scholars and jurists.228 The two standards producing two streams of
jurisprudence branch out respectively from the history of the First Amendment
in England and the American colonies and climaxing in Virginia as narrated in
this opinion and officially acknowledged by the Court in Everson, and from
American societal life which reveres religion and practices age-old religious
traditions. Stated otherwise, separation - strict or tame - protects the principle
of church-state separation with a rigid reading of the principle while benevolent
neutrality protects religious realities, tradition and established practice with a
flexible reading of the principle.229 The latter also appeals to history in support
of its position, viz:
The opposing school of thought argues that the First Congress
intended to allow government support of religion, at least as long as
that support did not discriminate in favor of one particular religion. . .
the Supreme Court has overlooked many important pieces of history.
Madison, for example, was on the congressional committee that
appointed a chaplain, he declared several national days of prayer and
fasting during his presidency, and he sponsored Jefferson's bill for
punishing Sabbath breakers; moreover, while president, Jefferson
allowed federal support of religious missions to the Indians. . . And so,
concludes one recent book, 'there is no support in the Congressional
records that either the First Congress, which framed the First
Amendment, or its principal author and sponsor, James Madison,
intended that Amendment to create a state of complete independence
between religion and government. In fact, the evidence in the public
documents goes the other way.230 (emphasis supplied)
To succinctly and poignantly illustrate the historical basis of benevolent
neutrality that gives room for accommodation, less than twenty-four hours after
Congress adopted the First Amendment's prohibition on laws respecting an
establishment of religion, Congress decided to express its thanks to God
Almighty for the many blessings enjoyed by the nation with a resolution in
favor of a presidential proclamation declaring a national day of Thanksgiving
and Prayer. Only two members of Congress opposed the resolution, one on
the ground that the move was a "mimicking of European customs, where they
made a mere mockery of thanksgivings", the other on establishment clause
concerns. Nevertheless, the salutary effect of thanksgivings throughout
Western history was acknowledged and the motion was passed without further
recorded discussion.231 Thus, accommodationists also go back to the framers
to ascertain the meaning of the First Amendment, but prefer to focus on acts
rather than words. Contrary to the claim of separationists that rationalism
pervaded America in the late 19th century and that America was less
specifically Christian during those years than at any other time before or
since,232 accommodationaists claim that American citizens at the time of the
Constitution's origins were a remarkably religious people in particularly
Christian terms.233
The two streams of jurisprudence - separationist or accommodationist - are
anchored on a different reading of the "wall of separation." The strict
separtionist view holds that Jefferson meant the "wall of separation" to protect
the state from the church. Jefferson was a man of the Enlightenment Era of the
eighteenth century, characterized by the rationalism and anticlericalism of that
philosophic bent.234 He has often been regarded as espousing Deism or the
rationalistic belief in a natural religion and natural law divorced from its
medieval connection with divine law, and instead adhering to a secular belief in
a universal harmony.235 Thus, according to this Jeffersonian view, the
Establishment Clause being meant to protect the state from the church, the
state's hostility towards religion allows no interaction between the two. 236 In
fact, when Jefferson became President, he refused to proclaim fast or
thanksgiving days on the ground that these are religious exercises and the
Constitution prohibited the government from intermeddling with religion. 237 This
approach erects an absolute barrier to formal interdependence of religion and
state. Religious institutions could not receive aid, whether direct or indirect,
from the state. Nor could the state adjust its secular programs to alleviate
burdens the programs placed on believers. 238 Only the complete separation of
religion from politics would eliminate the formal influence of religious
institutions and provide for a free choice among political views thus a strict
"wall of separation" is necessary.239 Strict separation faces difficulties,
however, as it is deeply embedded in history and contemporary practice that
enormous amounts of aid, both direct and indirect, flow to religion from
government in return for huge amounts of mostly indirect aid from religion.
Thus, strict separationists are caught in an awkward position of claiming a
constitutional principle that has never existed and is never likely to. 240
A tamer version of the strict separationist view, the strict neutrality or
separationist view is largely used by the Court, showing the Court's tendency
to press relentlessly towards a more secular society. 241 It finds basis in the
Everson case where the Court declared that Jefferson's "wall of separation"
encapsulated the meaning of the First Amendment but at the same time held
that the First Amendment "requires the state to be neutral in its relations with
groups of religious believers and non-believers; it does not require the state to
be their adversary. State power is no more to be used so as to handicap
religions than it is to favor them." (emphasis supplied) 242 While the strict
neutrality approach is not hostile to religion, it is strict in holding that religion
may not be used as a basis for classification for purposes of governmental
action, whether the action confers rights or privileges or imposes duties or
obligations. Only secular criteria may be the basis of government action. It
does not permit, much less require, accommodation of secular programs to
religious belief.243 Professor Kurland wrote, viz:
The thesis proposed here as the proper construction of the religion
clauses of the first amendment is that the freedom and separation
clauses should be read as a single precept that government cannot
utilize religion as a standard for action or inaction because these
clauses prohibit classification in terms of religion either to confer a
benefit or to impose a burden.244
The Court has repeatedly declared that religious freedom means government
neutrality in religious matters and the Court has also repeatedly interpreted this
policy of neutrality to prohibit government from acting except for secular
purposes and in ways that have primarily secular effects.245
Prayer in public schools is an area where the Court has applied strict neutrality
and refused to allow any form of prayer, spoken or silent, in the public schools
as in Engel and Schempp.246 The McCollum case prohibiting optional religious
instruction within public school premises during regular class hours also
demonstrates strict neutrality. In these education cases, the Court refused to
uphold the government action as they were based not on a secular but on a
religious purpose. Strict neutrality was also used in Reynolds and Smith which
both held that if government acts in pursuit of a generally applicable law with a
secular purpose that merely incidentally burdens religious exercise, the First
Amendment has not been offended. However, if the strict neutrality standard is
applied in interpreting the Establishment Clause, it could de facto void religious
expression in the Free Exercise Clause. As pointed out by Justice Goldberg in
his concurring opinion in Schempp, strict neutrality could lead to "a brooding
and pervasive devotion to the secular and a passive, or even active, hostility to
the religious" which is prohibited by the Constitution. 247 Professor Laurence
Tribe commented in his authoritative treatise, viz:
To most observers. . . strict neutrality has seemed incompatible with
the very idea of a free exercise clause. The Framers, whatever specific
applications they may have intended, clearly envisioned religion as
something special; they enacted that vision into law by guaranteeing
the free exercise of religion but not, say, of philosophy or science. The
strict neutrality approach all but erases this distinction. Thus it is not
surprising that the Supreme Court has rejected strict neutrality,
permitting and sometimes mandating religious classifications. 248
The separationist approach, whether strict or tame, is caught in a dilemma
because while the Jeffersonian wall of separation "captures the spirit of the
American ideal of church-state separation", in real life church and state are not
and cannot be totally separate.249 This is all the more true in contemporary
times when both the government and religion are growing and expanding their
spheres of involvement and activity, resulting in the intersection of government
and religion at many points.250
Consequently, the Court has also decided cases employing benevolent
neutrality. Benevolent neutrality which gives room for accommodation is
buttressed by a different view of the "wall of separation" associated with
Williams, founder of the Rhode Island colony. In Mark DeWolfe Howe's classic,
The Garden and the Wilderness, he asserts that to the extent the Founders
had a wall of separation in mind, it was unlike the Jeffersonian wall that is
meant to protect the state from the church; instead, the wall is meant to protect
the church from the state,251 i.e., the "garden" of the church must be walled in
for its own protection from the "wilderness" of the world 252 with its potential for
corrupting those values so necessary to religious commitment. 253 Howe called
this the "theological" or "evangelical" rationale for church-state separation
while the wall espoused by "enlightened" statesmen such as Jefferson and
Madison, was a "political" rationale seeking to protect politics from intrusions
by the church.254 But it has been asserted that this contrast between the
Williams and Jeffersonian positions is more accurately described as a
difference in kinds or styles of religious thinking, not as a conflict between
"religious" and "secular (political)"; the religious style was biblical and
evangelical in character while the secular style was grounded in natural
religion, more generic and philosophical in its religious orientation. 255
The Williams wall is, however, breached for the church is in the state and so
the remaining purpose of the wall is to safeguard religious liberty. Williams'
view would therefore allow for interaction between church and state, but is
strict with regard to state action which would threaten the integrity of religious
commitment.256 His conception of separation is not total such that it provides
basis for certain interactions between church and state dictated by apparent
necessity or practicality.257 This "theological" view of separation is found in
Williams' writings, viz:
. . . when they have opened a gap in the hedge or wall of separation
between the garden of the church and the wilderness of the world, God
hath ever broke down the wall itself, removed the candlestick, and
made his garden a wilderness, as this day. And that therefore if He will
eer please to restore His garden and paradise again, it must of
necessity be walled in peculiarly unto Himself from the world. . .258
Chief Justice Burger spoke of benevolent neutrality in Walz, viz:
The general principle deducible from the First Amendment and all that
has been said by the Court is this: that we will not tolerate either
governmentally established religion or governmental interference with
religion. Short of those expressly proscribed governmental acts there is
room for play in the joints productive of a benevolent neutrality which
will permit religious exercise to exist without sponsorship and without
interference.259 (emphasis supplied)
The Zorach case expressed the doctrine of accommodation, 260 viz:
The First Amendment, however, does not say that in every and all
respects there shall be a separation of Church and State. Rather, it
studiously defines the manner, the specific ways, in which there shall
be no concert or union or dependency one or the other. That is the
common sense of the matter. Otherwise, the state and religion would
be aliens to each other - hostile, suspicious, and even unfriendly.
Churches could not be required to pay even property taxes.
Municipalities would not be permitted to render police or fire protection
to religious groups. Policemen who helped parishioners into their
places of worship would violate the Constitution. Prayers in our
legislative halls; the appeals to the Almighty in the messages of the
Chief Executive; the proclamations making Thanksgiving Day a
holiday; "so help me God" in our courtroom oaths- these and all other
references to the Almighty that run through our laws, our public rituals,
our ceremonies would be flouting the First Amendment. A fastidious
atheist or agnostic could even object to the supplication with which the
Court opens each session: 'God save the United States and this
Honorable Court.
xxx xxx xxx
We are a religious people whose institutions presuppose a Supreme
Being. We guarantee the freedom to worship as one chooses. . . When
the state encourages religious instruction or cooperates with religious
authorities by adjusting the schedule of public events, it follows the
best of our traditions. For it then respects the religious nature of our
people and accommodates the public service to their spiritual needs.
To hold that it may not would be to find in the Constitution a
requirement that the government show a callous indifference to
religious groups. . . But we find no constitutional requirement which
makes it necessary for government to be hostile to religion and to
 throw its weight against efforts to widen their effective scope of
religious influence.261 (emphases supplied)
Benevolent neutrality is congruent with the sociological proposition that religion
serves a function essential to the survival of society itself, thus there is no
human society without one or more ways of performing the essential function
of religion. Although for some individuals there may be no felt need for religion
and thus it is optional or even dispensable, for society it is not, which is why
there is no human society without one or more ways of performing the
essential function of religion. Even in ostensibly atheistic societies, there are
vigorous underground religion(s) and surrogate religion(s) in their
ideology.262 As one sociologist wrote:
It is widely held by students of society that there are certain functional
prerequisites without which society would not continue to exist. At first
glance, this seems to be obvious - scarcely more than to say that an
automobile could not exist, as a going system, without a carburetor. . .
Most writers list religion among the functional prerequisites. 263
Another noted sociologist, Talcott Parsons, wrote: "There is no known human
society without something which modern social scientists would classify as a
religion…Religion is as much a human universal as language." 264
Benevolent neutrality thus recognizes that religion plays an important role in
the public life of the United States as shown by many traditional government
practices which, to strict neutrality, pose Establishment Clause questions.
Among these are the inscription of "In God We Trust" on American currency,
the recognition of America as "one nation under God" in the official pledge of
allegiance to the flag, the Supreme Court's time-honored practice of opening
oral argument with the invocation "God save the United States and this
honorable Court," and the practice of Congress and every state legislature of
paying a chaplain, usually of a particular Protestant denomination to lead
representatives in prayer.265 These practices clearly show the preference for
one theological viewpoint -the existence of and potential for intervention by a
god - over the contrary theological viewpoint of atheism. Church and
government agencies also cooperate in the building of low-cost housing and in
other forms of poor relief, in the treatment of alcoholism and drug addiction, in
foreign aid and other government activities with strong moral dimension. 266 The
persistence of these de facto establishments are in large part explained by the
fact that throughout history, the evangelical theory of separation, i.e., Williams'
wall, has demanded respect for these de facto establishments. 267 But the
separationists have a different explanation. To characterize these as de
jure establishments according to the principle of the Jeffersonian wall, the U.S.
Supreme Court, the many dissenting and concurring opinions explain some of
these practices as "'de minimis' instances of government endorsement or as
historic governmental practices that have largely lost their religious
significance or at least have proven not to lead the government into further
involvement with religion.268
With religion looked upon with benevolence and not hostility, benevolent
neutrality allows accommodation of religion under certain circumstances.
Accommodations are government policies that take religion specifically into
account not to promote the government's favored form of religion, but to allow
individuals and groups to exercise their religion without hindrance. Their
purpose or effect therefore is to remove a burden on, or facilitate the exercise
of, a person's or institution's religion. As Justice Brennan explained, the
"government [may] take religion into account…to exempt, when possible, from
generally applicable governmental regulation individuals whose religious
beliefs and practices would otherwise thereby be infringed, or to create without
state involvement an atmosphere in which voluntary religious exercise may
flourish."269 (emphasis supplied) Accommodation is forbearance and not
alliance. it does not reflect agreement with the minority, but respect for the
conflict between the temporal and spiritual authority in which the minority finds
itself.270
Accommodation is distinguished from strict neutrality in that the latter holds
that government should base public policy solely on secular considerations,
without regard to the religious consequences of its actions. The debate
between accommodation and strict neutrality is at base a question of means:
"Is the freedom of religion best achieved when the government is conscious of
the effects of its action on the various religious practices of its people, and
seeks to minimize interferences with those practices? Or is it best advanced
through a policy of 'religious blindness' - keeping government aloof from
religious practices and issues?" An accommodationist holds that it is good
public policy, and sometimes constitutionally required, for the state to make
conscious and deliberate efforts to avoid interference with religious freedom.
On the other hand, the strict neutrality adherent believes that it is good public
policy, and also constitutionally required, for the government to avoid religion-
specific policy even at the cost of inhibiting religious exercise.271
There are strong and compelling reasons, however, to take the
accommodationist position rather than the strict neutrality position. First, the
accommodationist interpretation is most consistent with the language of the
First Amendment. The religion clauses contain two parallel provisions, both
specifically directed at "religion." The government may not "establish" religion
and neither may government "prohibit" it. Taken together, the religion clauses
can be read most plausibly as warding off two equal and opposite threats to
religious freedom - government action that promotes the (political) majority's
favored brand of religion and government action that impedes religious
practices not favored by the majority. The substantive end in view is the
preservation of the autonomy of religious life and not just the formal process
value of ensuring that government does not act on the basis of religious bias.
On the other hand, strict neutrality interprets the religion clauses as allowing
government to do whatever it desires to or for religion, as long as it does the
same to or for comparable secular entities. Thus, for example, if government
prohibits all alcoholic consumption by minors, it can prohibit minors from taking
part in communion. Paradoxically, this view would make the religion clauses
violate the religion clauses, so to speak, since the religion clauses single out
religion by name for special protection. Second, the accommodationist position
best achieves the purposes of the First Amendment. The principle underlying
the First Amendment is that freedom to carry out one's duties to a Supreme
Being is an inalienable right, not one dependent on the grace of legislature.
Although inalienable, it is necessarily limited by the rights of others, including
the public right of peace and good order. Nevertheless it is a substantive right
and not merely a privilege against discriminatory legislation. The
accomplishment of the purpose of the First Amendment requires more than the
"religion blindness" of strict neutrality. With the pervasiveness of government
regulation, conflicts with religious practices become frequent and intense.
Laws that are suitable for secular entities are sometimes inappropriate for
religious entities, thus the government must make special provisions to
preserve a degree of independence for religious entities for them to carry out
their religious missions according to their religious beliefs. Otherwise, religion
will become just like other secular entities subject to pervasive regulation by
majoritarian institutions. Third, the accommodationist interpretation is
particularly necessary to protect adherents of minority religions from the
inevitable effects of majoritarianism, which include ignorance and indifference
and overt hostility to the minority. In a democratic republic, laws are inevitably
based on the presuppositions of the majority, thus not infrequently, they come
into conflict with the religious scruples of those holding different world views,
even in the absence of a deliberate intent to interfere with religious practice. At
times, this effect is unavoidable as a practical matter because some laws are
so necessary to the common good that exceptions are intolerable. But in other
instances, the injury to religious conscience is so great and the advancement
of public purposes so small or incomparable that only indifference or hostility
could explain a refusal to make exemptions. Because of plural traditions,
legislators and executive officials are frequently willing to make such
exemptions when the need is brought to their attention, but this may not
always be the case when the religious practice is either unknown at the time of
enactment or is for some reason unpopular. In these cases, a constitutional
interpretation that allows accommodations prevents needless injury to the
religious consciences of those who can have an influence in the legislature;
while a constitutional interpretation that requires accommodations extends this
treatment to religious faiths that are less able to protect themselves in the
political arena. Fourth, the accommodationist position is practical as it is a
commonsensical way to deal with the various needs and beliefs of different
faiths in a pluralistic nation. Without accommodation, many otherwise
beneficial laws would interfere severely with religious freedom. Aside from
laws against serving alcoholic beverages to minors conflicting with celebration
of communion, regulations requiring hard hats in construction areas can
effectively exclude Amish and Sikhs from the workplace, or employment anti-
discrimination laws can conflict with the Roman Catholic male priesthood,
among others. Exemptions from such laws are easy to craft and administer
and contribute much to promoting religious freedom at little cost to public
policy. Without exemptions, legislature would be frequently forced to choose
between violating religious conscience of a segment of the population or
dispensing with legislation it considers beneficial to society as a whole.
Exemption seems manifestly more reasonable than either of the alternative: no
exemption or no law.272
Benevolent neutrality gives room for different kinds of accommodation: those
which are constitutionally compelled, i.e., required by the Free Exercise
Clause; and those which are discretionary or legislative, i.e., and those not
required by the Free Exercise Clause but nonetheless permitted by the
Establishment Clause.273 Some Justices of the Supreme Court have also used
the term accommodation to describe government actions that acknowledge or
express prevailing religious sentiments of the community such as display of a
religious symbol on public property or the delivery of a prayer at public
ceremonial events.274 Stated otherwise, using benevolent neutrality as a
standard could result to three situations of accommodation: those where
accommodation is required, those where it is permissible, and those where it is
prohibited. In the first situation, accommodation is required to preserve free
exercise protections and not unconstitutionally infringe on religious liberty or
create penalties for religious freedom. Contrary to the Smith declaration that
free exercise exemptions are "intentional government advancement", these
exemptions merely relieve the prohibition on the free exercise thus allowing
the burdened religious adherent to be left alone. The state must create
exceptions to laws of general applicability when these laws threaten religious
convictions or practices in the absence of a compelling state interest. 275 By
allowing such exemptions, the Free Exercise Clause does not give believers
the right or privilege to choose for themselves to override socially-prescribed
decision; it allows them to obey spiritual rather than temporal authority276 for
those who seriously invoke the Free Exercise Clause claim to be fulfilling a
solemn duty. Religious freedom is a matter less of rights than duties; more
precisely, it is a matter of rights derived from duties. To deny a person or a
community the right to act upon such a duty can be justified only by appeal to
a yet more compelling duty. Of course, those denied will usually not find the
reason for the denial compelling. "Because they may turn out to be right about
the duty in question, and because, even if they are wrong, religion bears
witness to that which transcends the political order, such denials should be
rare and painfully reluctant."277
The Yoder case is an example where the Court held that the state must
accommodate the religious beliefs of the Amish who objected to enrolling their
children in high school as required by law. The Sherbert case is another
example where the Court held that the state unemployment compensation plan
must accommodate the religious convictions of Sherbert. 278 In these cases of
"burdensome effect", the modern approach of the Court has been to apply
strict scrutiny, i.e., to declare the burden as permissible, the Court requires the
state to demonstrate that the regulation which burdens the religious exercise
pursues a particularly important or compelling government goal through the
least restrictive means. If the state's objective could be served as well or
almost as well by granting an exemption to those whose religious beliefs are
burdened by the regulation, such an exemption must be given. 279 This
approach of the Court on "burdensome effect" was only applied since the
1960s. Prior to this time, the Court took the separationist view that as long as
the state was acting in pursuit of non-religious ends and regulating conduct
rather than pure religious beliefs, the Free Exercise Clause did not pose a
hindrance such as in Reynolds.280 In the second situation where
accommodation is permissible, the state may, but is not required to,
accommodate religious interests. The Walz case illustrates this situation where
the Court upheld the constitutionality of tax exemption given by New York to
church properties, but did not rule that the state was required to provide tax
exemptions. The Court declared that "(t)he limits of permissible state
accommodation to religion are by no means co-extensive with the
noninterference mandated by the Free Exercise Clause." 281 The Court held that
New York could have an interest in encouraging religious values and avoiding
threats to those values through the burden of property taxes. Other examples
are the Zorach case allowing released time in public schools and Marsh
allowing payment of legislative chaplains from public funds. Finally, in the
situation where accommodation is prohibited, establishment concerns prevail
over potential accommodation interests. To say that there are valid exemptions
buttressed by the Free Exercise Clause does not mean that all claims for free
exercise exemptions are valid.282 An example where accommodation was
prohibited is McCollum where the Court ruled against optional religious
instruction in the public school premises.283 In effect, the last situation would
arrive at a strict neutrality conclusion.
In the first situation where accommodation is required, the approach follows
this basic framework:
If the plaintiff can show that a law or government practice inhibits the
free exercise of his religious beliefs, the burden shifts to the
government to demonstrate that the law or practice is necessary to the
accomplishment of some important (or 'compelling') secular objective
and that it is the least restrictive means of achieving that objective. If
the plaintiff meets this burden and the government does not, the
plaintiff is entitled to exemption from the law or practice at issue. In
order to be protected, the claimant's beliefs must be 'sincere', but they
need not necessarily be consistent, coherent, clearly articulated, or
congruent with those of the claimant's religious denomination. 'Only
beliefs rooted in religion are protected by the Free Exercise Clause';
secular beliefs, however sincere and conscientious, do not suffice. 284
In other words, a three-step process (also referred to as the "two-step
balancing process" supra when the second and third steps are combined) as in
Sherbert is followed in weighing the state's interest and religious freedom
when these collide. Three questions are answered in this process. First, "(h)as
the statute or government action created a burden on the free exercise of
religion?" The courts often look into the sincerity of the religious belief, but
without inquiring into the truth of the belief because the Free Exercise Clause
prohibits inquiring about its truth as held in Ballard and Cantwell. The sincerity
of the claimant's belief is ascertained to avoid the mere claim of religious
beliefs to escape a mandatory regulation. As evidence of sincerity, the U.S.
Supreme Court has considered historical evidence as in Wisconsin where the
Amish people had held a long-standing objection to enrolling their children in
ninth and tenth grades in public high schools. In another case, Dobkin v.
District of Columbia,285 the Court denied the claim of a party who refused to
appear in court on Saturday alleging he was a Sabbatarian, but the Court
noted that he regularly conducted business on Saturday. Although it is true
that the Court might erroneously deny some claims because of a misjudgment
of sincerity, this is not as argument to reject all claims by not allowing
accommodation as a rule. There might be injury to the particular claimant or to
his religious community, but for the most part, the injustice is done only in the
particular case.286 Aside from the sincerity, the court may look into the
centrality of those beliefs, assessing them not on an objective basis but in
terms of the opinion and belief of the person seeking exemption. In Wisconsin,
for example, the Court noted that the Amish people's convictions against
becoming involved in public high schools were central to their way of life and
faith. Similarly, in Sherbert, the Court concluded that the prohibition against
Saturday work was a "cardinal principle." 287 Professor Lupu puts to task the
person claiming exemption, viz:
On the claimant's side, the meaning and significance of the relevant
religious practice must be demonstrated. Religious command should
outweigh custom, individual conscience should count for more than
personal convenience, and theological principle should be of greater
significance than institutional ease. Sincerity matters, (footnote
omitted) and longevity of practice - both by the individual and within the
individual's religious tradition - reinforces sincerity. Most importantly,
the law of free exercise must be inclusive and expansive, recognizing
non-Christian religions - eastern, Western, aboriginal and otherwise -
as constitutionally equal to their Christian counterparts, and accepting
of the intensity and scope of fundamentalist creed. 288
Second, the court asks: "(i)s there a sufficiently compelling state interest to
justify this infringement of religious liberty?" In this step, the government has to
establish that its purposes are legitimate for the state and that they are
compelling. Government must do more than assert the objectives at risk if
exemption is given; it must precisely show how and to what extent those
objectives will be undermined if exemptions are granted.289 The person
claiming religious freedom, on the other hand, will endeavor to show that the
interest is not legitimate or that the purpose, although legitimate, is not
compelling compared to infringement of religious liberty. This step involves
balancing, i.e., weighing the interest of the state against religious liberty to
determine which is more compelling under the particular set of facts. The
greater the state's interests, the more central the religious belief would have to
be to overcome it. In assessing the state interest, the court will have to
determine the importance of the secular interest and the extent to which that
interest will be impaired by an exemption for the religious practice. Should the
court find the interest truly compelling, there will be no requirement that the
state diminish the effectiveness of its regulation by granting the exemption. 290
Third, the court asks: "(h)as the state in achieving its legitimate purposes used
the least intrusive means possible so that the free exercise is not infringed any
more than necessary to achieve the legitimate goal of the state?" 291 The
analysis requires the state to show that the means in which it is achieving its
legitimate state objective is the least intrusive means, i.e., it has chosen a way
to achieve its legitimate state end that imposes as little as possible on religious
liberties. In Cantwell, for example, the Court invalidated the license
requirement for the door-to-door solicitation as it was a forbidden burden on
religious liberty, noting that less drastic means of insuring peace and tranquility
existed. As a whole, in carrying out the compelling state interest test, the Court
should give careful attention to context, both religious and regulatory, to
achieve refined judgment.292
In sum, as shown by U.S. jurisprudence on religion clause cases, the
competing values of secular government and religious freedom create tensions
that make constitutional law on the subject of religious liberty unsettled,
mirroring the evolving views of a dynamic society. 293
VII. Religion Clauses in the Philippines
A. History
Before our country fell under American rule, the blanket of Catholicism covered
the archipelago. There was a union of church and state and Catholicism was
the state religion under the Spanish Constitution of 1876. Civil authorities
exercised religious functions and the friars exercised civil powers. 294 Catholics
alone enjoyed the right of engaging in public ceremonies of
worship.295 Although the Spanish Constitution itself was not extended to the
Philippines, Catholicism was also the established church in our country under
the Spanish rule. Catholicism was in fact protected by the Spanish Penal Code
of 1884 which was in effect in the Philippines. Some of the offenses in chapter
six of the Penal Code entitled "Crimes against Religion and Worship" referred
to crimes against the state religion.296 The coming of the Americans to our
country, however, changed this state-church scheme for with the advent of this
regime, the unique American experiment of "separation of church and state"
was transported to Philippine soil.
Even as early as the conclusion of the Treaty of Paris between the United
States and Spain on December 10, 1898, the American guarantee of religious
freedom had been extended to the Philippines. The Treaty provided that "the
inhabitants of the territories over which Spain relinquishes or cedes her
sovereignty shall be secured in the free exercise of religion." 297 Even the
Filipinos themselves guaranteed religious freedom a month later or on January
22, 1899 upon the adoption of the Malolos Constitution of the Philippine
Republic under General Emilio Aguinaldo. It provided that "the State
recognizes the liberty and equality of all religion (de todos los cultos) in the
same manner as the separation of the Church and State." But the Malolos
Constitution and government was short-lived as the Americans took over the
reigns of government.298
With the Philippines under the American regime, President McKinley issued
Instructions to the Second Philippine Commission, the body created to take
over the civil government in the Philippines in 1900. The Instructions
guaranteed religious freedom, viz:
That no law shall be made respecting the establishment of religion or
prohibiting the free exercise thereof, and that the free exercise and
enjoyment of religious profession and worship without discrimination or
preference shall forever be allowed ... that no form of religion and no
minister of religion shall be forced upon the community or upon any
citizen of the Islands, that, on the other hand, no minister of religion
shall be interfered with or molested in following his calling. 299
This provision was based on the First Amendment of the United States
Constitution. Likewise, the Instructions declared that "(t)he separation between
State and Church shall be real, entire and absolute." 300
Thereafter, every organic act of the Philippines contained a provision on
freedom of religion. Similar to the religious freedom clause in the Instructions,
the Philippine Bill of 1902 provided that:
No law shall be made respecting an establishment of religion or prohibiting the
free exercise thereof, and that free exercise and enjoyment of religious
worship, without discrimination or preference, shall forever be allowed.
In U.S. v. Balcorta,301 the Court stated that the Philippine Bill of 1902 "caused
the complete separation of church and state, and the abolition of all special
privileges and all restrictions theretofor conferred or imposed upon any
particular religious sect."302
The Jones Law of 1916 carried the same provision, but expanded it with a
restriction against using public money or property for religious purposes, viz:
That no law shall be made respecting an establishment of religion or
prohibiting the free exercise thereof, and that the free exercise and
enjoyment of religious profession and worship without discrimination or
preference, shall forever be allowed; and no religious test shall be
required for the exercise of civil or political rights. No public money or
property shall ever be appropriated, applied, donated, or used, directly
or indirectly, for the use, benefit, or support of any sect, church,
denomination, sectarian institution, or system of religion, or for the use,
benefit or support of any priest, preacher, minister, or other religious
teachers or dignitary as such.
This was followed by the Philippine Independence Law or Tydings-
McDuffie Law of 1934 which guaranteed independence to the
Philippines and authorized the drafting of a Philippine constitution. It
enjoined Filipinos to include freedom of religion in drafting their
constitution preparatory to the grant of independence. The law
prescribed that "(a)bsolute toleration of religious sentiment shall be
secured and no inhabitant or religious organization shall be molested
in person or property on account of religious belief or mode of
worship."303
The Constitutional Convention then began working on the 1935 Constitution. In
their proceedings, Delegate Jose P. Laurel as Chairman of the Committee on
Bill of Rights acknowledged that "(i)t was the Treaty of Paris of December 10,
1898, which first introduced religious toleration in our country. President
McKinley's Instructions to the Second Philippine Commission reasserted this
right which later was incorporated into the Philippine Bill of 1902 and in the
Jones Law."304 In accordance with the Tydings-McDuffie Law, the 1935
Constitution provided in the Bill of Rights, Article IV, Section 7, viz:
Sec. 7. No law shall be made respecting an establishment of religion,
or prohibiting the free exercise thereof, and the free exercise and
enjoyment of religious profession and worship, without discrimination
or preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
This provision, borrowed from the Jones Law, was readily approved by
the Convention.305 In his speech as Chairman of the Committee on Bill
of Rights, Delegate Laurel said that modifications in phraseology of the
Bill of Rights in the Jones Law were avoided whenever possible
because "the principles must remain couched in a language expressive
of their historical background, nature, extent and limitations as
construed and interpreted by the great statesmen and jurists that
vitalized them."306
The 1973 Constitution which superseded the 1935 Constitution contained an
almost identical provision on religious freedom in the Bill of Rights in Article IV,
Section 8, viz:
 Sec. 8. No law shall be made respecting an establishment of religion,
or prohibiting the free exercise thereof. The free exercise and
enjoyment of religious profession and worship, without discrimination
or preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
This time, however, the General Provisions in Article XV added in Section 15
that "(t)he separation of church and state shall be inviolable."
Without discussion by the 1986 Constitutional Commission, the 1973 religious
clauses were reproduced in the 1987 Constitution under the Bill of Rights in
Article III, Section 5.307 Likewise, the provision on separation of church and
state was included verbatim in the 1987 Constitution, but this time as a
principle in Section 6, Article II entitled Declaration of Principles and State
Policies.
Considering the American origin of the Philippine religion clauses and the
intent to adopt the historical background, nature, extent and limitations of the
First Amendment of the U.S. Constitution when it was included in the 1935 Bill
of Rights, it is not surprising that nearly all the major Philippine cases involving
the religion clauses turn to U.S. jurisprudence in explaining the nature, extent
and limitations of these clauses. However, a close scrutiny of these cases
would also reveal that while U.S. jurisprudence on religion clauses flows into
two main streams of interpretation - separation and benevolent neutrality - the
well-spring of Philippine jurisprudence on this subject is for the most part,
benevolent neutrality which gives room for accommodation.
B. Jurisprudence
In revisiting the landscape of Philippine jurisprudence on the religion clauses,
we begin with the definition of "religion". "Religion" is derived from the Middle
English religioun, from Old French religion, from Latin religio, vaguely referring
to a "bond between man and the gods."308 This pre-Christian term for the cult
and rituals of pagan Rome was first Christianized in the Latin translation of the
Bible.309 While the U.S. Supreme Court has had to take up the challenge of
defining the parameters and contours of "religion" to determine whether a non-
theistic belief or act is covered by the religion clauses, this Court has not been
confronted with the same issue. In Philippine jurisprudence, religion, for
purposes of the religion clauses, has thus far been interpreted as theistic. In
1937, the Philippine case of Aglipay v. Ruiz310 involving the Establishment
Clause, defined "religion" as a "profession of faith to an active power that binds
and elevates man to his Creator." Twenty years later, the Court cited the
Aglipay definition in American Bible Society v. City of Manila,311 a case
involving the Free Exercise clause. The latter also cited the American case of
Davis in defining religion, viz: "(i)t has reference to one's views of his relations
to His Creator and to the obligations they impose of reverence to His being
and character and obedience to His Will." The Beason definition, however, has
been expanded in U.S. jurisprudence to include non-theistic beliefs.
1. Free Exercise Clause
Freedom of choice guarantees the liberty of the religious conscience and
prohibits any degree of compulsion or burden, whether direct or indirect, in the
practice of one's religion. The Free Exercise Clause principally guarantees
voluntarism, although the Establishment Clause also assures voluntarism by
placing the burden of the advancement of religious groups on their intrinsic
merits and not on the support of the state. 312
In interpreting the Free Exercise Clause, the realm of belief poses no difficulty.
The early case of Gerona v. Secretary of Education313 is instructive on the
matter, viz:
The realm of belief and creed is infinite and limitless bounded only by
one's imagination and thought. So is the freedom of belief, including
religious belief, limitless and without bounds. One may believe in most
anything, however strange, bizarre and unreasonable the same may
appear to others, even heretical when weighed in the scales of
orthodoxy or doctrinal standards. But between the freedom of belief
and the exercise of said belief, there is quite a stretch of road to
travel.314
The difficulty in interpretation sets in when belief is externalized into speech
and action.
Religious speech comes within the pale of the Free Exercise Clause as
illustrated in the American Bible Society case. In that case, plaintiff American
Bible Society was a foreign, non-stock, non-profit, religious missionary
corporation which sold bibles and gospel portions of the bible in the course of
its ministry. The defendant City of Manila required plaintiff to secure a mayor's
permit and a municipal license as ordinarily required of those engaged in the
business of general merchandise under the city's ordinances. Plaintiff argued
that this amounted to "religious censorship and restrained the free exercise
and enjoyment of religious profession, to wit: the distribution and sale of bibles
and other religious literature to the people of the Philippines."
After defining religion, the Court, citing Tanada and Fernando, made this
statement, viz:
The constitutional guaranty of the free exercise and enjoyment of
religious profession and worship carries with it the right to disseminate
religious information. Any restraint of such right can only be justified
like other restraints of freedom of expression on the grounds that there
is a clear and present danger of any substantive evil which the State
has the right to prevent. (Tanada and Fernando on the Constitution of
the Philippines, vol. 1, 4th ed., p. 297) (emphasis supplied)
This was the Court's maiden unequivocal affirmation of the "clear and present
danger" rule in the religious freedom area, and in Philippine jurisprudence, for
that matter.315 The case did not clearly show, however, whether the Court
proceeded to apply the test to the facts and issues of the case, i.e., it did not
identify the secular value the government regulation sought to protect, whether
the religious speech posed a clear and present danger to this or other secular
value protected by government, or whether there was danger but it could not
be characterized as clear and present. It is one thing to apply the test and find
that there is no clear and present danger, and quite another not to apply the
test altogether.
Instead, the Court categorically held that the questioned ordinances were not
applicable to plaintiff as it was not engaged in the business or occupation of
selling said "merchandise" for profit. To add, the Court, citing Murdock v.
Pennsylvania,316 ruled that applying the ordinance requiring it to secure a
license and pay a license fee or tax would impair its free exercise of religious
profession and worship and its right of dissemination of religious beliefs "as the
power to tax the exercise of a privilege is the power to control or suppress its
enjoyment." Thus, in American Bible Society, the "clear and present danger"
rule was laid down but it was not clearly applied.
In the much later case of Tolentino v. Secretary of Finance,317 also involving
the sale of religious books, the Court distinguished the American Bible Society
case from the facts and issues in Tolentino and did not apply the American
Bible Society ruling. In Tolentino, the Philippine Bible Society challenged the
validity of the registration provisions of the Value Added Tax (VAT) Law as a
prior restraint. The Court held, however, that the fixed amount of registration
fee was not imposed for the exercise of a privilege like a license tax which
American Bible Society ruled was violative of religious freedom. Rather, the
registration fee was merely an administrative fee to defray part of the cost of
registration which was a central feature of the VAT system. Citing Jimmy
Swaggart Ministries v. Board of Equalization,318 the Court also declared
prefatorily that "the Free Exercise of Religion Clause does not prohibit
imposing a generally applicable sales and use tax on the sale of religious
materials by a religious organization." In the Court's resolution of the motion for
reconsideration of the Tolentino decision, the Court noted that the burden on
religious freedom caused by the tax was just similar to any other economic
imposition that might make the right to disseminate religious doctrines costly.
Two years after American Bible Society came the 1959 case of Gerona v.
Secretary of Education,319 this time involving conduct expressive of religious
belief colliding with a rule prescribed in accordance with law. In this case,
petitioners were members of the Jehovah's Witnesses. They challenged a
Department Order issued by the Secretary of Education implementing
Republic Act No. 1265 which prescribed compulsory flag ceremonies in all
public schools. In violation of the Order, petitioner's children refused to salute
the Philippine flag, sing the national anthem, or recite the patriotic pledge,
hence they were expelled from school. Seeking protection under the Free
Exercise Clause, petitioners claimed that their refusal was on account of their
religious belief that the Philippine flag is an image and saluting the same is
contrary to their religious belief. The Court stated, viz:
. . . If the exercise of religious belief clashes with the established
institutions of society and with the law, then the former must yield to
the latter. The Government steps in and either restrains said exercise
or even prosecutes the one exercising it. (emphasis supplied) 320
The Court then proceeded to determine if the acts involved constituted a
religious ceremony in conflict with the beliefs of the petitioners with the
following justification:
After all, the determination of whether a certain ritual is or is not a religious
ceremony must rest with the courts. It cannot be left to a religious group or
sect, much less to a follower of said group or sect; otherwise, there would be
confusion and misunderstanding for there might be as many interpretations
and meaning to be given to a certain ritual or ceremony as there are religious
groups or sects or followers, all depending upon the meaning which they,
though in all sincerity and good faith, may want to give to such ritual or
ceremony.321
It was held that the flag was not an image, the flag salute was not a religious
ceremony, and there was nothing objectionable about the singing of the
national anthem as it speaks only of love of country, patriotism, liberty and the
glory of suffering and dying for it. The Court upheld the questioned Order and
the expulsion of petitioner's children, stressing that:
Men may differ and do differ on religious beliefs and creeds,
government policies, the wisdom and legality of laws, even the
correctness of judicial decisions and decrees; but in the field of love of
country, reverence for the flag, national unity and patriotism, they can
hardly afford to differ, for these are matters in which they are mutually
and vitally interested, for to them, they mean national existence and
survival as a nation or national extinction. 322
In support of its ruling, the Court cited Justice Frankfurter's dissent in the
Barnette case, viz:
The constitutional protection of religious freedom x x x gave religious
equality, not civil immunity. Its essence is freedom from conformity to
religious dogma, not freedom from conformity to law because of
religious dogma.323
It stated in categorical terms, viz:
The freedom of religious belief guaranteed by the Constitution does not and
cannot mean exemption from or non-compliance with reasonable and non-
discriminatory laws, rules and regulations promulgated by competent
authority.324
Thus, the religious freedom doctrines one can derive from Gerona are: (1) it is
incumbent upon the Court to determine whether a certain ritual is religious or
not; (2) religious freedom will not be upheld if it clashes with the established
institutions of society and with the law such that when a law of general
applicability (in this case the Department Order) incidentally burdens the
exercise of one's religion, one's right to religious freedom cannot justify
exemption from compliance with the law. The Gerona ruling was reiterated
in Balbuna, et al. v. Secretary of Education, et al.325
Fifteen years after Gerona came the 1974 case of Victoriano v. Elizalde Rope
Workers Union.[326] In this unanimously decided en banc case, Victoriano
was a member of the Iglesia ni Cristo which prohibits the affiliation of its
members with any labor organization. He worked in the Elizalde Rope Factory,
Inc. and was a member of the Elizalde Rope Workers Union which had with
the company a closed shop provision pursuant to Republic Act No. 875
allowing closed shop arrangements. Subsequently, Republic Act No. 3350 was
enacted exempting from the application and coverage of a closed shop
agreement employees belonging to any religious sect which prohibits affiliation
of their members with any labor organization. Victoriano resigned from the
union after Republic Act No. 3350 took effect. The union notified the company
of Victoriano's resignation, which in turn notified Victoriano that unless he
could make a satisfactory arrangement with the union, the company would be
constrained to dismiss him from the service. Victoriano sought to enjoin the
company and the union from dismissing him. The court having granted the
injunction, the union came to this Court on questions of law, among which was
whether Republic Act No. 3350 was unconstitutional for impairing the
obligation of contracts and for granting an exemption offensive of the
Establishment Clause. With respect to the first issue, the Court ruled, viz:
Religious freedom, although not unlimited, is a fundamental personal
right and liberty (Schneider v. Irgington, 308 U.S. 147, 161, 84
L.ed.155, 164, 60 S.Ct. 146) and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom
of religion. It is only where unavoidably necessary to prevent an
immediate and grave danger to the security and welfare of the
community that infringement of religious freedom may be justified, and
only to the smallest extent necessary. 327 (emphasis supplied)
As regards the Establishment Clause issue, the Court after citing the
constitutional provision on establishment and free exercise of religion,
declared, viz:
The constitutional provisions not only prohibits legislation for the
support of any religious tenets or the modes of worship of any sect,
thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship (U.S. Ballard, 322 U.S. 78, 88 L. ed.
1148, 1153), but also assures the free exercise of one's chosen form of
religion within limits of utmost amplitude. It has been said that the
religion clauses of the Constitution are all designed to protect the
broadest possible liberty of conscience, to allow each man to believe
as his conscience directs, to profess his beliefs, and to live as he
believes he ought to live, consistent with the liberty of others and with
the common good. (footnote omitted). Any legislation whose effect or
purpose is to impede the observance of one or all religions, or to
discriminate invidiously between the religions, is invalid, even though
the burden may be characterized as being only indirect. (Sherbert v.
Verner, 374 U.S. 398, 10 L.ed.2d 965, 83 S. Ct. 1970) But if the state
regulates conduct by enacting, within its power, a general law which
 has for its purpose and effect to advance the state's secular goals, the
statute is valid despite its indirect burden on religious observance,
unless the state can accomplish its purpose without imposing such
burden. (Braunfeld v. Brown, 366 U.S. 599, 6 L ed. 2d. 563, 81 S. Ct.
144; McGowan v. Maryland, 366 U.S. 420, 444-5 and
449)328 (emphasis supplied)
Quoting Aglipay v. Ruiz,329 the Court held that "government is not precluded
from pursuing valid objectives secular in character even if the incidental result
would be favorable to a religion or sect." It also cited Board of Education v.
Allen,330 which held that in order to withstand the strictures of constitutional
prohibition, a statute must have a secular legislative purpose and a primary
effect that neither advances nor inhibits religion. Using these criteria in
upholding Republic Act No. 3350, the Court pointed out, viz:
(Republic Act No. 3350) was intended to serve the secular purpose of
advancing the constitutional right to the free exercise of religion, by
averting that certain persons be refused work, or be dismissed from
work, or be dispossessed of their right to work and of being impeded to
pursue a modest means of livelihood, by reason of union security
agreements. . . . The primary effects of the exemption from closed
shop agreements in favor of members of religious sects that prohibit
their members from affiliating with a labor organization, is the
protection of said employees against the aggregate force of the
collective bargaining agreement, and relieving certain citizens of a
burden on their religious beliefs, and . . . eliminating to a certain extent
economic insecurity due to unemployment.331
The Court stressed that "(a)lthough the exemption may benefit those who are
members of religious sects that prohibit their members from joining labor
unions, the benefit upon the religious sects is merely incidental and
indirect."332 In enacting Republic Act No. 3350, Congress merely relieved the
exercise of religion by certain persons of a burden imposed by union security
agreements which Congress itself also imposed through the Industrial Peace
Act. The Court concluded the issue of exemption by citing Sherbert which laid
down the rule that when general laws conflict with scruples of conscience,
exemptions ought to be granted unless some "compelling state interest"
intervenes. The Court then abruptly added that "(i)n the instant case, We see
no compelling state interest to withhold exemption." 333
A close look at Victoriano would show that the Court mentioned several tests
in determining when religious freedom may be validly limited. First, the Court
mentioned the test of "immediate and grave danger to the security and welfare
of the community" and "infringement of religious freedom only to the smallest
extent necessary" to justify limitation of religious freedom. Second, religious
exercise may be indirectly burdened by a general law which has for its purpose
and effect the advancement of the state's secular goals, provided that there is
no other means by which the state can accomplish this purpose without
imposing such burden. Third, the Court referred to the "compelling state
interest" test which grants exemptions when general laws conflict with religious
exercise, unless a compelling state interest intervenes.
It is worth noting, however, that the first two tests were mentioned only for the
purpose of highlighting the importance of the protection of religious freedom as
the secular purpose of Republic Act No. 3350. Upholding religious freedom
was a secular purpose insofar as it relieved the burden on religious freedom
caused by another law, i.e, the Industrial Peace Act providing for union shop
agreements. The first two tests were only mentioned in Victoriano but were not
applied by the Court to the facts and issues of the case. The third, the
"compelling state interest" test was employed by the Court to determine
whether the exemption provided by Republic Act No. 3350 was not
unconstitutional. It upheld the exemption, stating that there was no "compelling
state interest" to strike it down. However, after careful consideration of the
Sherbert case from which Victoriano borrowed this test, the inevitable
conclusion is that the "compelling state interest" test was not appropriate and
could not find application in the Victoriano case. In Sherbert, appellant
Sherbert invoked religious freedom in seeking exemption from the provisions
of the South Carolina Unemployment Compensation Act which disqualified her
from claiming unemployment benefits. It was the appellees, members of the
South Carolina Employment Commission, a government agency, who
propounded the state interest to justify overriding Sherbert's claim of religious
freedom. The U.S. Supreme Court, considering Sherbert's and the
Commission's arguments, found that the state interest was not sufficiently
compelling to prevail over Sherbert's free exercise claim. This situation did not
obtain in the Victoriano case where it was the government itself, through
Congress, which provided the exemption in Republic Act No. 3350 to allow
Victoriano's exercise of religion. Thus, the government could not argue against
the exemption on the basis of a compelling state interest as it would be
arguing against itself; while Victoriano would not seek exemption from the
questioned law to allow the free exercose of religion as the law in fact provides
such an exemption. In sum, although Victoriano involved a religious belief and
conduct, it did not involve a free exercise issue where the Free Exercise
Clause is invoked to exempt him from the burden imposed by a law on his
religious freedom.
Victoriano was reiterated in several cases involving the Iglesia ni Cristo,
namely Basa, et al. v. Federacion Obrera de la Industria Tabaquera y
Otros Trabajadores de Filipinas,334 Anucension v. National Labor Union,
et al.,335 and Gonzales, et al. v. Central Azucarera de Tarlac Labor
Union.336
Then came German v. Barangan in 1985 at the height of the anti-
administration rallies. Petitioners were walking to St. Jude Church within the
Malacanang security area to pray for "an end to violence" when they were
barred by the police. Invoking their constitutional freedom of religious worship
and locomotion, they came to the Court on a petition for mandamus to allow
them to enter and pray inside the St. Jude Chapel. The Court was divided on
the issue. The slim majority of six recognized their freedom of religion but
noted their absence of good faith and concluded that they were using their
religious liberty to express their opposition to the government. Citing Cantwell,
the Court distinguished between freedom to believe and freedom to act on
matters of religion, viz:
. . . Thus the (First) amendment embraces two concepts - freedom to
believe and freedom to act. The first is absolute, but in the nature of
things, the second cannot be.337
The Court reiterated the Gerona ruling, viz:
In the case at bar, petitioners are not denied or restrained of their
freedom of belief or choice of their religion, but only in the manner by
which they had attempted to translate the same to action. This
curtailment is in accord with the pronouncement of this Court in Gerona
v. Secretary of Education (106 Phil. 2), thus:
. . . But between the freedom of belief and the exercise of said belief,
there is quite a stretch of road to travel. If the exercise of said religious
belief clashes with the established institutions of society and with the
law, then the former must yield and give way to the latter. The
government steps in and either restrains said exercise or even
prosecutes the one exercising it. (italics supplied)
The majority found that the restriction imposed upon petitioners was
"necessary to maintain the smooth functioning of the executive branch of the
government, which petitioners' mass action would certainly disrupt" 338 and
denied the petition. Thus, without considering the tests mentioned in
Victoriano, German went back to the Gerona rule that religious freedom will
not be upheld if it clashes with the established institutions of society and the
law.
Then Associate Justice Teehankee registered a dissent which in subsequent
jurisprudence would be cited as a test in religious freedom cases. His dissent
stated in relevant part, viz:
A brief restatement of the applicable constitutional principles as set
forth in the landmark case of J.B.L. Reyes v. Bagatsing (125 SCRA
553[1983]) should guide us in resolving the issues.
1. The right to freely exercise one's religion is guaranteed in Section 8
of our Bill of Rights. (footnote omitted) Freedom of worship, alongside
with freedom of expression and speech and peaceable assembly
"along with the other intellectual freedoms, are highly ranked in our
scheme of constitutional values. It cannot be too strongly stressed that
on the judiciary - even more so than on the other departments - rests
the grave and delicate responsibility of assuring respect for and
deference to such preferred rights. No verbal formula, no sanctifying
phrase can, of course, dispense with what has been so felicitously
termed by Justice Holmes 'as the sovereign prerogative of judgment.'
Nonetheless, the presumption must be to incline the weight of the
scales of justice on the side of such rights, enjoying as they do
precedence and primacy.' (J.B.L. Reyes, 125 SCRA at pp. 569-570)
2. In the free exercise of such preferred rights, there is to be no prior
restraint although there may be subsequent punishment of any illegal
acts committed during the exercise of such basic rights. The sole
justification for a prior restraint or limitation on the exercise of these
basic rights is the existence of a grave and present danger of a
character both grave and imminent, of a serious evil to public safety,
public morals, public health or any other legitimate public interest, that
the State has a right (and duty) to prevent (Idem, at pp. 560-
561).339 (emphasis supplied)
The J.B.L. Reyes v. Bagatsing case from which this portion of Justice
Teehankee's dissent was taken involved the rights to free speech and
assembly, and not the exercise of religious freedom. At issue in that case was
a permit sought by retired Justice J.B.L. Reyes, on behalf of the Anti-Bases
Coalition, from the City of Manila to hold a peaceful march and rally from the
Luneta to the gates of the U.S. Embassy. Nevertheless Bagatsing was used by
Justice Teehankee in his dissent which had overtones of petitioner German
and his companions' right to assemble and petition the government for redress
of grievances.340
In 1993, the issue on the Jehovah's Witnesses' participation in the flag
ceremony again came before the Court in Ebralinag v. The Division
Superintendent of Schools.341 A unanimous Court overturned the Gerona
ruling after three decades. Similar to Gerona, this case involved several
Jehovah's Witnesses who were expelled from school for refusing to salute the
flag, sing the national anthem and recite the patriotic pledge, in violation of the
Administrative Code of 1987. In resolving the same religious freedom issue as
in Gerona, the Court this time transported the "grave and imminent danger"
test laid down in Justice Teehankee's dissent in German, viz:
The sole justification for a prior restraint or limitation on the exercise of
religious freedom (according to the late Chief Justice Claudio
Teehankee in his dissenting opinion in German v. Barangan, 135
SCRA 514, 517) is the existence of a grave and present danger of a
character both grave and imminent, of a serious evil to public safety,
public morals, public health or any other legitimate public interest, that
the State has a right (and duty) to prevent. Absent such a threat to
public safety, the expulsion of the petitioners from the schools is not
justified.342 (emphasis supplied)
The Court added, viz:
We are not persuaded that by exempting the Jehovah's Witnesses
from saluting the flag, singing the national anthem and reciting the
patriotic pledge, this religious group which admittedly comprises a
'small portion of the school population' will shake up our part of the
globe and suddenly produce a nation 'untaught and uninculcated in
and unimbued with reverence for the flag, patriotism, love of country
and admiration for national heroes' (Gerona v. Secretary of Education,
106 Phil. 224). After all, what the petitioners seek only is exemption
from the flag ceremony, not exclusion from the public schools where
they may study the Constitution, the democratic way of life and form of
government, and learn not only the arts, sciences, Philippine history
and culture but also receive training for a vocation or profession and be
taught the virtues of 'patriotism, respect for human rights, appreciation
of national heroes, the rights and duties of citizenship, and moral and
spiritual values' (Sec. 3[2], Art. XIV, 1987 Constitution) as part of the
curricula. Expelling or banning the petitioners from Philippine schools
will bring about the very situation that this Court has feared in Gerona.
Forcing a small religious group, through the iron hand of the law, to
participate in a ceremony that violates their religious beliefs, will hardly
be conducive to love of country or respect for duly constituted
authorities.343
Barnette also found its way to the opinion, viz:
Furthermore, let it be noted that coerced unity and loyalty even to the
country, x x x- assuming that such unity and loyalty can be attained
through coercion- is not a goal that is constitutionally obtainable at the
expense of religious liberty. A desirable end cannot be promoted by
prohibited means. (Meyer vs. Nebraska, 262 U.S. 390, 67 L. ed. 1042,
1046).344
Towards the end of the decision, the Court also cited the Victoriano case and
its use of the "compelling state interest" test in according exemption to the
Jehovah's Witnesses, viz:
In Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, 72-75,
we upheld the exemption of members of the Iglesia ni Cristo, from the
coverage of a closed shop agreement between their employer and a
union because it would violate the teaching of their church not to join
any group:
'x x x It is certain that not every conscience can be
accommodated by all the laws of the land; but when general
laws conflict with scruples of conscience, exemptions ought to
be granted unless some 'compelling state interest' intervenes.'
(Sherbert vs. Verner, 374 U.S. 398, 10 L. Ed. 2d 965, 970, 83
S.Ct. 1790)'
We hold that a similar exemption may be accorded to the Jehovah's
Witnesses with regard to the observance of the flag ceremony out of
respect for their religious beliefs, however 'bizarre' those beliefs may
seem to others.345
The Court annulled the orders expelling petitioners from school.
Thus, the "grave and imminent danger" test laid down in a dissenting opinion
in German which involved prior restraint of religious worship with overtones of
the right to free speech and assembly, was transported to Ebralinag which did
not involve prior restraint of religious worship, speech or assembly. Although, it
might be observed that the Court faintly implied that Ebralinag also involved
the right to free speech when in its preliminary remarks, the Court stated that
compelling petitioners to participate in the flag ceremony "is alien to the
conscience of the present generation of Filipinos who cut their teeth on the Bill
of Rights which guarantees their rights to free speech and the free exercise of
religious profession and worship;" the Court then stated in a footnote that the
"flag salute, singing the national anthem and reciting the patriotic pledge are all
forms of utterances."346
The "compelling state interest" test was not fully applied by the Court in
Ebralinag. In the Solicitor General's consolidated comment, one of the grounds
cited to defend the expulsion orders issued by the public respondents was that
"(t)he State's compelling interests being pursued by the DEC's lawful
regulations in question do not warrant exemption of the school children of the
Jehovah's Witnesses from the flag salute ceremonies on the basis of their own
self-perceived religious convictions."347 The Court, however, referred to the test
only towards the end of the decision and did not even mention what the
Solicitor General argued as the compelling state interest, much less did the
Court explain why the interest was not sufficiently compelling to override
petitioners' religious freedom.
Three years after Ebralinag, the Court decided the 1996 case of Iglesia ni
Cristo v. Court of Appeals, et al.348 Although there was a dissent with respect
to the applicability of the "clear and present danger" test in this case, the
majority opinion in unequivocal terms applied the "clear and present danger"
test to religious speech. This case involved the television program, "Ang
Iglesia ni Cristo," regularly aired over the television. Upon petitioner Iglesia ni
Cristo's submission of the VTR tapes of some of its episodes, respondent
Board of Review for Motion Pictures and Television classified these as "X" or
not for public viewing on the ground that they "offend and constitute an attack
against other religions which is expressly prohibited by law." Invoking religious
freedom, petitioner alleged that the Board acted without jurisdiction or with
grave abuse of discretion in requiring it to submit the VTR tapes of its
television program and x-rating them. While upholding the Board's power to
review the Iglesia television show, the Court was emphatic about the preferred
status of religious freedom. Quoting Justice Cruz' commentary on the
constitution, the Court held that freedom to believe is absolute but freedom to
act on one's belief, where it affects the public, is subject to the authority of the
state. The commentary quoted Justice Frankfurter's dissent in Barnette which
was quoted in Gerona, viz: "(t)he constitutional provision on religious freedom
terminated disabilities, it did not create new privileges. It gave religious liberty,
not civil immunity. Its essence is freedom from conformity to religious dogma,
not freedom from conformity to law because of religious
dogma."349 Nevertheless, the Court was quick to add the criteria by which the
state can regulate the exercise of religious freedom, that is, when the exercise
will bring about the "clear and present danger of some substantive evil which
the State is duty bound to prevent, i.e., serious detriment to the more
overriding interest of public health, public morals, or public welfare." 350
In annulling the x-rating of the shows, the Court stressed that the Constitution
is hostile to all prior restraints on speech, including religious speech and the x-
rating was a suppression of petitioner's freedom of speech as much as it was
an interference with its right to free exercise of religion. Citing Cantwell, the
Court recognized that the different religions may criticize one another and their
tenets may collide, but the Establishment Clause prohibits the state from
protecting any religion from this kind of attack.
The Court then called to mind the "clear and present danger" test first laid
down in the American Bible Society case and the test of "immediate and grave
danger" with "infringement only to the smallest extent necessary to avoid
danger" in Victoriano and pointed out that the reviewing board failed to apply
the "clear and present danger" test. Applying the test, the Court noted, viz:
The records show that the decision of the respondent Board, affirmed
by the respondent appellate court, is completely bereft of findings of
facts to justify the conclusion that the subject video tapes constitute
impermissible attacks against another religion. There is no showing
whatsoever of the type of harm the tapes will bring about especially the
gravity and imminence of the threatened harm. Prior restraint on
speech, including religious speech, cannot be justified by hypothetical
fears but only by the showing of a substantive and imminent evil which
has taken the life of a reality already on ground.
Replying to the challenge on the applicability of the "clear and present danger"
test to the case, the Court acknowledged the permutations that the test has
undergone, but stressed that the test is still applied to four types of speech:
"speech that advocates dangerous ideas, speech that provokes a hostile
audience reaction, out of court contempt and release of information that
endangers a fair trial"351 and ruled, viz:
. . . even allowing the drift of American jurisprudence, there is reason to
apply the clear and present danger test to the case at bar which
concerns speech that attacks other religions and could readily provoke
hostile audience reaction. It cannot be doubted that religious truths
disturb and disturb terribly.352
In Iglesia therefore, the Court went back to Gerona insofar as holding that
religious freedom cannot be invoked to seek exemption from compliance with
a law that burdens one's religious exercise. It also reiterated the "clear and
present danger" test in American Bible Society and the "grave and imminent
danger" in Victoriano, but this time clearly justifying its applicability and
showing how the test was applied to the case.
In sum, the Philippine Supreme Court has adopted a posture of not invalidating
a law offensive to religious freedom, but carving out an exception or upholding
an exception to accommodate religious exercise where it is justified. 353
2. Establishment Clause
In Philippine jurisdiction, there is substantial agreement on the values sought
to be protected by the Establishment Clause, namely, voluntarism and
insulation of the political process from interfaith dissension. The first,
voluntarism, has both a personal and a social dimension. As a personal value,
it refers to the inviolability of the human conscience which, as discussed
above, is also protected by the free exercise clause. From the religious
perspective, religion requires voluntarism because compulsory faith lacks
religious efficacy. Compelled religion is a contradiction in terms.354 As a social
value, it means that the "growth of a religious sect as a social force must come
from the voluntary support of its members because of the belief that both
spiritual and secular society will benefit if religions are allowed to compete on
their own intrinsic merit without benefit of official patronage. Such voluntarism
cannot be achieved unless the political process is insulated from religion and
unless religion is insulated from politics."355 Non-establishment thus calls for
government neutrality in religious matters to uphold voluntarism and avoid
breeding interfaith dissension.356
The neutrality principle was applied in the first significant non-establishment
case under the 1935 Constitution. In the 1937 case of Aglipay v. Ruiz,357 the
Philippine Independent Church challenged the issuance and sale of postage
stamps commemorating the Thirty-Third International Eucharistic Congress of
the Catholic Church on the ground that the constitutional prohibition against
the use of public money for religious purposes has been violated. It appears
that the Director of Posts issued the questioned stamps under the provisions of
Act No. 4052358 which appropriated a sum for the cost of plates and printing of
postage stamps with new designs and authorized the Director of Posts to
dispose of the sum in a manner and frequency "advantageous to the
Government." The printing and issuance of the postage stamps in question
appears to have been approved by authority of the President. Justice Laurel,
speaking for the Court, took pains explaining religious freedom and the role of
religion in society, and in conclusion, found no constitutional infirmity in the
issuance and sale of the stamps, viz:
The prohibition herein expressed is a direct corollary of the principle of
separation of church and state. Without the necessity of adverting to
the historical background of this principle in our country, it is sufficient
to say that our history, not to speak of the history of mankind, has
taught us that the union of church and state is prejudicial to both, for
occasions might arise when the state will use the church, and the
church the state, as a weapon in the furtherance of their respective
ends and aims . . . It is almost trite to say now that in this country we
enjoy both religious and civil freedom. All the officers of the
Government, from the highest to the lowest, in taking their oath to
support and defend the Constitution, bind themselves to recognize and
respect the constitutional guarantee of religious freedom, with its
inherent limitations and recognized implications. It should be stated
that what is guaranteed by our Constitution is religious liberty, not mere
toleration.
Religious freedom, however, as a constitutional mandate is not an inhibition of
profound reverence for religion and is not a denial of its influence in human
affairs. Religion as a profession of faith to an active power that binds and
elevates man to his Creator is recognized. And, in so far as it instills into the
minds the purest principles of morality, its influence is deeply felt and highly
appreciated. When the Filipino people, in the preamble of their Constitution,
implored "the aid of Divine Providence, in order to establish a government that
shall embody their ideals, conserve and develop the patrimony of the nation,
promote the general welfare, and secure to themselves and their posterity the
blessings of independence under a regime of justice, liberty and democracy,"
they thereby manifested their intense religious nature and placed unfaltering
reliance upon Him who guides the destinies of men and nations. The elevating
influence of religion in human society is recognized here as elsewhere. In fact,
certain general concessions are indiscriminately accorded to religious sects
and denominations. . .359
xxx xxx xxx
It is obvious that while the issuance and sale of the stamps in question
may be said to be inseparably linked with an event of a religious
character, the resulting propaganda, if any, received by the Roman
Catholic Church, was not the aim and purpose of the Government. We
 are of the opinion that the Government should not be embarrassed in
its activities simply because of incidental results, more or less religious
in character, if the purpose had in view is one which could legitimately
be undertaken by appropriate legislation. The main purpose should not
be frustrated by its subordination to mere incidental results not
contemplated. (Vide Bradfield vs. Roberts, 175 U.S. 295; 20 Sup. Ct.
Rep., 121; 44 Law. ed., 168)360 (emphases supplied)
In so deciding the case, the Court, citing U.S. jurisprudence, laid down the
doctrine that a law or government action with a legitimate secular purpose
does not offend the Establishment Clause even if it incidentally aids a
particular religion.
Almost forty-five years after Aglipay came Garces v. Estenzo.361 Although the
Court found that the separation of church and state was not at issue as the
controversy was over who should have custody of a saint's image, it
nevertheless made pronouncements on the separation of church and state
along the same line as the Aglipay ruling. The Court held that there was
nothing unconstitutional or illegal in holding a fiesta and having a patron saint
for the barrio. It adhered to the barrio resolutions of the barangay involved in
the case stating that the barrio fiesta is a socio-religious affair, the celebration
of which is an "ingrained tradition in rural communities" that "relieves the
monotony and drudgery of the lives of the masses." Corollarily, the Court found
nothing illegal about any activity intended to facilitate the worship of the patron
saint such as the acquisition and display of his image bought with funds
obtained through solicitation from the barrio residents. The Court pointed out
that the image of the patron saint was "purchased in connection with the
celebration of the barrio fiesta honoring the patron saint, San Vicente Ferrer,
and not for the purpose of favoring any religion nor interfering with religious
matters or the religious beliefs of the barrio residents." Citing the Aglipay
ruling, the Court declared, viz:
Not every governmental activity which involves the expenditure of
public funds and which has some religious tint is violative of the
constitutional provisions regarding separation of church and state,
freedom of worship and banning the use of public money or property.
Then came the 1978 case of Pamil v. Teleron, et al.362 which presented a
novel issue involving the religion clauses. In this case, Section 2175 of the
Revised Administrative Code of 1917 disqualifying ecclesiastics from
appointment or election as municipal officer was challenged. After protracted
deliberation, the Court was sharply divided on the issue. Seven members of
the Court, one short of the number necessary to declare a law unconstitutional,
approached the problem from a free exercise perspective and considered the
law a religious test offensive of the constitution. They were Justices Fernando,
Teehankee, Muñoz-Palma, Concepcion, Jr., Santos, Fernandez, and
Guerrero. Then Associate Justice Fernando, the ponente, stated, viz: "The
challenged Administrative Code provision, certainly insofar as it declares
ineligible ecclesiastics to any elective or appointive office, is, on its face,
inconsistent with the religious freedom guaranteed by the Constitution."
Citing Torcaso v. Watkins,363 the ponencia held, viz:
Torcaso v. Watkins, an American Supreme Court decision, has
persuasive weight. What was there involved was the validity of a
provision in the Maryland Constitution prescribing that 'no religious test
ought ever to be required as a disqualification for any office or profit or
trust in this State, other than a declaration of belief in the existence of
God ***.' Such a constitutional requirement was assailed as contrary to
the First Amendment of the United States Constitution by an appointee
to the office of notary public in Maryland, who was refused a
commission as he would not declare a belief in God. He failed in the
Maryland Court of Appeals but prevailed in the United States Supreme
Court, which reversed the state court decision. It could not have been
otherwise. As emphatically declared by Justice Black: 'this Maryland
religious test for public office unconstitutionally invades the appellant's
freedom of belief and religion and therefore cannot be enforced against
him.
The analogy appears to be obvious. In that case, it was lack of belief in
God that was a disqualification. Here being an ecclesiastic and
therefore professing a religious faith suffices to disqualify for a public
office. There is thus an incompatibility between the Administrative
Code provision relied upon by petitioner and an express constitutional
mandate.364
On the other hand, the prevailing five other members of the Court - Chief
Justice Castro, Justices Barredo, Makasiar, Antonio and Aquino - approached
the case from a non-establishment perspective and upheld the law as a
safeguard against the constant threat of union of church and state that has
marked Philippine history. Justice Makasiar stated: "To allow an ecclesiastic to
head the executive department of a municipality is to permit the erosion of the
principle of separation of Church and State and thus open the floodgates for
the violation of the cherished liberty of religion which the constitutional
provision seeks to enforce and protect." Consequently, the Court upheld the
validity of Section 2175 of the Revised Administrative Code and declared
respondent priest ineligible for the office of municipal mayor.
Another type of cases interpreting the establishment clause deals with
intramural religious disputes. Fonacier v. Court of Appeals365 is the leading
case. The issue therein was the right of control over certain properties of the
Philippine Independent Church, the resolution of which necessitated the
determination of who was the legitimate bishop of the church. The Court cited
American Jurisprudence,366 viz:
Where, however, a decision of an ecclesiastical court plainly violates
the law it professes to administer, or is in conflict with the law of the
land, it will not be followed by the civil courts. . . In some instances, not
only have the civil courts the right to inquire into the jurisdiction of the
religious tribunals and the regularity of their procedure, but they have
subjected their decisions to the test of fairness or to the test furnished
by the constitution and the law of the church. . . 367
The Court then ruled that petitioner Fonacier was legitimately ousted and
respondent de los Reyes was the duly elected head of the Church, based on
their internal laws. To finally dispose of the property issue, the Court,
citing Watson v. Jones,368 declared that the rule in property controversies
within religious congregations strictly independent of any other superior
ecclesiastical association (such as the Philippine Independent Church) is that
the rules for resolving such controversies should be those of any voluntary
association. If the congregation adopts the majority rule then the majority
should prevail; if it adopts adherence to duly constituted authorities within the
congregation, then that should be followed. Applying these rules, Fonacier lost
the case. While the Court exercised jurisdiction over the case, it nevertheless
refused to touch doctrinal and disciplinary differences raised, viz:
The amendments of the constitution, restatement of articles of religion
and abandonment of faith or abjuration alleged by appellant, having to
do with faith, practice, doctrine, form of worship, ecclesiastical law,
custom and rule of a church and having reference to the power of
excluding from the church those allegedly unworthy of membership,
are unquestionably ecclesiastical matters which are outside the
province of the civil courts.369
VIII. Free Exercise Clause vis-à-vis Establishment Clause
In both Philippine and U.S. jurisdiction, it is recognized that there is a tension
between the Free Exercise Clause and the Establishment Clause in their
application. There is a natural antagonism between a command not to
establish religion and a command not to inhibit its practice; this tension
between the religion clauses often leaves the courts with a choice between
competing values in religion cases.370
One set of facts, for instance, can be differently viewed from the Establishment
Clause perspective and the Free Exercise Clause point of view, and decided in
opposite directions. In Pamil, the majority gave more weight to the religious
liberty of the priest in holding that the prohibition of ecclesiastics to assume
elective or appointive government positions was violative of the Free Exercise
Clause. On the other hand, the prevailing five justices gave importance to the
Establishment Clause in stating that the principle of separation of church and
state justified the prohibition.
Tension is also apparent when a case is decided to uphold the Free Exercise
Clause and consequently exemptions from a law of general applicability are
afforded by the Court to the person claiming religious freedom; the question
arises whether the exemption does not amount to support of the religion in
violation of the Establishment Clause. This was the case in the Free Exercise
Clause case of Sherbert where the U.S. Supreme Court ruled, viz:
In holding as we do, plainly we are not fostering the "establishment" of
the Seventh-day Adventist religion in South Carolina, for the extension
of unemployment benefits to Sabbatarians in common with Sunday
worshippers reflects nothing more than the governmental obligation of
neutrality in the face of religious differences, and does not represent
that involvement of religious with secular institutions which it is the
object of the Establishment Clause to forestall. 371 (emphasis supplied)
Tension also exists when a law of general application provides exemption in
order to uphold free exercise as in the Walz case where the appellant argued
that the exemption granted to religious organizations, in effect, required him to
contribute to religious bodies in violation of the Establishment Clause. But the
Court held that the exemption was not a case of establishing religion but
merely upholding the Free Exercise Clause by "sparing the exercise of religion
from the burden of property taxation levied on private profit institutions."
Justice Burger wrote, viz:
(t)he Court has struggled to find a neutral course between the two
religion clauses, both of which are cast in absolute terms, and either of
 which, if expanded to a logical extreme, would tend to clash with the
other.372
Similarly, the Philippine Supreme Court in the Victoriano case held that the
exemption afforded by law to religious sects who prohibit their members from
joining unions did not offend the Establishment Clause. We ruled, viz:
We believe that in enacting Republic Act No. 3350, Congress acted
consistently with the spirit of the constitutional provision. It acted
merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. 373 (emphasis
supplied)
Finally, in some cases, a practice is obviously violative of the Establishment
Clause but the Court nevertheless upholds it. In Schempp, Justice Brennan
stated: "(t)here are certain practices, conceivably violative of the Establishment
Clause, the striking down of which might seriously interfere with certain
religious liberties also protected by the First Amendment."
How the tension between the Establishment Clause and the Free Exercise
Clause will be resolved is a question for determination in the actual cases that
come to the Court. In cases involving both the Establishment Clause and the
Free Exercise Clause, the two clauses should be balanced against each other.
The courts must review all the relevant facts and determine whether there is a
sufficiently strong free exercise right that should prevail over the Establishment
Clause problem. In the United States, it has been proposed that in balancing,
the free exercise claim must be given an edge not only because of abundant
historical evidence in the colonial and early national period of the United States
that the free exercise principle long antedated any broad-based support of
disestablishment, but also because an Establishment Clause concern raised
by merely accommodating a citizen's free exercise of religion seems far less
dangerous to the republic than pure establishment cases. Each time the courts
side with the Establishment Clause in cases involving tension between the two
religion clauses, the courts convey a message of hostility to the religion that in
that case cannot be freely exercised.374 American professor of constitutional
law, Laurence Tribe, similarly suggests that the free exercise principle "should
be dominant in any conflict with the anti-establishment principle." This
dominance would be the result of commitment to religious tolerance instead of
"thwarting at all costs even the faintest appearance of establishment." 375 In our
jurisdiction, Fr. Joaquin Bernas, S.J. asserts that a literal interpretation of the
religion clauses does not suffice. Modern society is characterized by the
expanding regulatory arm of government that reaches a variety of areas of
human conduct and an expanding concept of religion. To adequately meet the
demands of this modern society, the societal values the religion clauses are
intended to protect must be considered in their interpretation and resolution of
the tension. This, in fact, has been the approach followed by the Philippine
Court.376
IX. Philippine Religion Clauses: Nature, Purpose, Tests Based on
Philippine and American Religion Clause History, Law and Jurisprudence
The history of the religion clauses in the 1987 Constitution shows that these
clauses were largely adopted from the First Amendment of the U.S.
Constitution. The religion clauses in the First Amendment were contained in
every organic Act of the Philippines under the American regime. When the
delegates of the 1934 Constitutional Convention adopted a Bill of Rights in the
1935 Constitution, they purposely retained the phraseology of the religion
clauses in the First Amendment as contained in the Jones Law in order to
adopt its historical background, nature, extent and limitations. At that time,
there were not too many religion clause cases in the United States as the U.S.
Supreme Court decided an Establishment Clause issue only in the 1947
Everson case. The Free Exercise Clause cases were also scarce then. Over
the years, however, with the expanding reach of government regulation to a
whole gamut of human actions and the growing plurality and activities of
religions, the number of religion clause cases in the U.S. exponentially
increased. With this increase came an expansion of the interpretation of the
religion clauses, at times reinforcing prevailing case law, at other times
modifying it, and still at other times creating contradictions so that two main
streams of jurisprudence had become identifiable. The first stream employs
separation while the second employs benevolent neutrality in interpreting the
religious clauses. Alongside this change in the landscape of U.S. religion
clause jurisprudence, the Philippines continued to adopt the 1935 Constitution
religion clauses in the 1973 Constitution and later, the 1987 Constitution.
Philippine jurisprudence and commentaries on the religious clauses also
continued to borrow authorities from U.S. jurisprudence without articulating the
stark distinction between the two streams of U.S. jurisprudence. One might
simply conclude that the Philippine Constitutions and jurisprudence also
inherited the disarray of U.S. religion clause jurisprudence and the two
identifiable streams; thus, when a religion clause case comes before the Court,
a separationist approach or a benevolent neutrality approach might be adopted
and each will have U.S. authorities to support it. Or, one might conclude that
as the history of the First Amendment as narrated by the Court in Everson
supports the separationist approach, Philippine jurisprudence should also
follow this approach in light of the Philippine religion clauses' history. As a
result, in a case where the party claims religious liberty in the face of a general
law that inadvertently burdens his religious exercise, he faces an almost
insurmountable wall in convincing the Court that the wall of separation would
not be breached if the Court grants him an exemption. These conclusions,
however, are not and were never warranted by the 1987, 1973 and 1935
Constitutions as shown by other provisions on religion in all three constitutions.
It is a cardinal rule in constitutional construction that the constitution must be
interpreted as a whole and apparently conflicting provisions should be
reconciled and harmonized in a manner that will give to all of them full force
and effect.377 From this construction, it will be ascertained that the intent of the
framers was to adopt a benevolent neutrality approach in interpreting the
religious clauses in the Philippine constitutions, and the enforcement of this
intent is the goal of construing the constitution. 378
We first apply the hermeneutical scalpel to dissect the 1935 Constitution. At
the same time that the 1935 Constitution provided for an Establishment
Clause, it also provided for tax exemption of church property in Article VI,
Section 22, par. 3(b), viz:
(3) Cemeteries, churches, and parsonages or convents, appurtenant
thereto, and all lands, buildings, and improvements used exclusively
for religious, charitable, or educational purposes shall be exempt from
taxation.
Before the advent of the 1935 Constitution, Section 344 of the Administrative
Code provided for a similar exemption. To the same effect, the Tydings-
McDuffie Law contained a limitation on the taxing power of the Philippine
government during the Commonwealth period. 379 The original draft of the
Constitution placed this provision in an ordinance to be appended to the
Constitution because this was among the provisions prescribed by the
Tydings-McDuffie Law. However, in order to have a constitutional guarantee
for such an exemption even beyond the Commonwealth period, the provision
was introduced in the body of the Constitution on the rationale that "if
churches, convents [rectories or parsonages] and their accessories are always
necessary for facilitating the exercise of such [religious] freedom, it would also
be natural that their existence be also guaranteed by exempting them from
taxation."380 The amendment was readily approved with 83 affirmative votes
against 15 negative votes.381
The Philippine constitutional provision on tax exemption is not found in the
U.S. Constitution. In the U.S. case of Walz, the Court struggled to justify this
kind of exemption to withstand Establishment Clause scrutiny by stating that
church property was not singled out but was exempt along with property
owned by non-profit, quasi-public corporations because the state upheld the
secular policy "that considers these groups as beneficial and stabilizing
influences in community life and finds this classification useful, desirable, and
in the public interest." The Court also stated that the exemption was meant to
relieve the burden on free exercise imposed by property taxation. At the same
time, however, the Court acknowledged that the exemption was an exercise of
benevolent neutrality to accommodate a long-standing tradition of exemption.
With the inclusion of the church property tax exemption in the body of the 1935
Constitution and not merely as an ordinance appended to the Constitution, the
benevolent neutrality referred to in the Walz case was given constitutional
imprimatur under the regime of the 1935 Constitution. The provision, as stated
in the deliberations, was an acknowledgment of the necessity of the exempt
institutions to the exercise of religious liberty, thereby evincing benevolence
towards religious exercise.
Similarly, the 1935 Constitution provides in Article VI, Section 23(3), viz:
(3) No public money, or property shall ever be appropriated, applied, or
used, directly or indirectly, for the use, benefit, or support of any sect,
church, denomination, sectarian institution or system of religion, for the
use, benefit or support of any priest, preacher, ministers or other
religious teacher or dignitary as such, except when such priest,
preacher, minister, or dignitary is assigned to the armed forces or to
any penal institution, orphanage, or leprosarium. (emphasis supplied)
The original draft of this provision was a reproduction of a portion of section 3
of the Jones Law which did not contain the above exception, viz:
No public money or property shall ever be appropriated, applied, or
used, directly or indirectly, for the use, benefit, or support of any sect,
church denomination, sectarian institution, or system of religion, or for
the use, benefit or support of any priest, preacher, minister, or dignitary
as such…382
In the deliberations of this draft provision, an amendment was proposed to
strike down everything after "church denomination."383 The proposal intended
to imitate the silence of the U.S. Constitution on the subject of support for
priests and ministers. It was also an imitation of the silence of the Malolos
Constitution to restore the situation under the Malolos Constitution and prior to
the Jones Law, when chaplains of the revolutionary army received pay from
public funds with no doubt about its legality. It was pointed out, however, that
even with the prohibition under the Jones Law, appropriations were made to
chaplains of the national penitentiary and the Auditor General upheld its
validity on the basis of a similar United States practice. But it was also pointed
out that the U.S. Constitution did not contain a prohibition on appropriations
similar to the Jones Law.384 To settle the question on the constitutionality of
payment of salaries of religious officers in certain government institutions and
to avoid the feared situation where the enumerated government institutions
could not employ religious officials with compensation, the exception in the
1935 provision was introduced and approved. The provision garnered 74
affirmative votes against 34 negative votes.385 As pointed out in the
deliberations, the U.S. Constitution does not provide for this exemption.
However, the U.S. Supreme Court in Cruz v. Beto, apparently taking a
benevolent neutrality approach, implicitly approved the state of Texas'
payment of prison chaplains' salaries as reasonably necessary to permit
inmates to practice their religion. Also, in the Marsh case, the U.S. Supreme
Court upheld the long-standing tradition of beginning legislative sessions with
prayers offered by legislative chaplains retained at taxpayers' expense. The
constitutional provision exempting religious officers in government institutions
affirms the departure of the Philippine Constitution from the U.S. Constitution
in its adoption of benevolent neutrality in Philippine jurisdiction. While the
provision prohibiting aid to religion protects the wall of separation between
church and state, the provision at the same time gives constitutional sanction
to a breach in the wall.
To further buttress the thesis that benevolent neutrality is contemplated in the
Philippine Establishment Clause, the 1935 Constitution provides for optional
religious instruction in public schools in Article XIII, Section 5, viz:
. . . Optional religious instruction shall be maintained in the public
schools as now authorized by law. . .
The law then applicable was Section 928 of the Administrative Code, viz:
It shall be lawful, however, for the priest or minister of any church
established in the town where a public school is situated, either in
person or by a designated teacher of religion, to teach religion for one-
half hour three times a week, in the school building, to those public-
school pupils whose parents or guardians desire it and express their
desire therefor in writing filed with the principal of the school . . .
During the debates of the Constitutional Convention, there were three
positions on the issue of religious instruction in public schools. The first held
that the teaching of religion in public schools should be prohibited as this was
a violation of the principle of separation of church and state and the prohibition
against the use of public funds for religious purposes. The second favored the
proposed optional religious instruction as authorized by the Administrative
Code and recognized that the actual practice of allowing religious instruction in
the public schools was sufficient proof that religious instruction was not and
would not be a source of religious discord in the schools. 386 The third wanted
religion to be included as a course in the curriculum of the public schools but
would only be taken by pupils at the option of their parents or guardians. After
several rounds of debate, the second camp prevailed, thus raising to
constitutional stature the optional teaching of religion in public schools, despite
the opposition to the provision on the ground of separation of church and
state.387 As in the provisions on church property tax exemption and
compensation of religious officers in government institutions, the U.S.
Constitution does not provide for optional religious instruction in public schools.
In fact, in the McCollum case, the Court, using strict neutrality, prohibited this
kind of religious instruction where the religion teachers would conduct class
within the school premises. The constitutional provision on optional religious
instruction shows that Philippine jurisdiction rejects the strict neutrality
approach which does not allow such accommodation of religion.
Finally, to make certain the Constitution's benevolence to religion, the Filipino
people "implored (ing) the aid of Divine Providence (,) in order to establish a
government that shall embody their ideals, conserve and develop the
patrimony of the nation, promote the general welfare, and secure to
themselves and their posterity the blessings of independence under a regime
of justice, liberty, and democracy, (in) ordain(ing) and promulgat(ing) this
Constitution." A preamble is a "key to open the mind of the authors of the
constitution as to the evil sought to be prevented and the objects sought to be
accomplished by the provisions thereof."388 There was no debate on the
inclusion of a "Divine Providence" in the preamble. In Aglipay, Justice Laurel
noted that when the Filipino people implored the aid of Divine Providence,
"(t)hey thereby manifested their intense religious nature and placed unfaltering
reliance upon Him who guides the destinies of men and nations."389 The 1935
Constitution's religion clauses, understood alongside the other provisions on
religion in the Constitution, indubitably shows not hostility, but benevolence, to
religion.390
The 1973 Constitution contained in Article VI, Section 22(3) a provision similar
to Article VI, Section 22, par. 3(b) of the 1935 Constitution on exemption of
church property from taxation, with the modification that the property should
not only be used directly, but also actually and exclusively for religious or
charitable purposes. Parallel to Article VI, Section 23(3) of the 1935
Constitution, the 1973 Constitution also contained a similar provision on
salaries of religious officials employed in the enumerated government
institutions. Article XIII, Section 5 of the 1935 Constitution on optional religious
instruction was also carried to the 1973 Constitution in Article XV, Section 8(8)
with the modification that optional religious instruction shall be conducted "as
may be provided by law" and not "as now authorized by law" as stated in the
1935 Constitution. The 1973 counterpart, however, made explicit in the
constitution that the religious instruction in public elementary and high schools
shall be done "(a)t the option expressed in writing by the parents or guardians,
and without cost to them and the government." With the adoption of these
provisions in the 1973 Constitution, the benevolent neutrality approach
continued to enjoy constitutional sanction. In Article XV, Section 15 of the
General Provisions of the 1973 Constitution this provision made its maiden
appearance: "(t)he separation of church and state shall be inviolable." The
1973 Constitution retained the portion of the preamble "imploring the aid of
Divine Providence."
In the Report of the Ad Hoc Sub-Committee on Goals, Principles and
Problems of the Committee on Church and State of the 1971 Constitutional
Convention, the question arose as to whether the "absolute" separation of
Church and State as enunciated in the Everson case and reiterated in
Schempp - i.e., neutrality not only as between one religion and another but
even as between religion and non-religion - is embodied in the Philippine
Constitution. The sub-committee's answer was that it did not seem so. Citing
the Aglipay case where Justice Laurel recognized the "elevating influence of
religion in human society" and the Filipinos' imploring of Divine Providence in
the 1935 Constitution, the sub-committee asserted that the state may not
prefer or aid one religion over another, but may aid all religions equally or the
cause of religion in general.391 Among the position papers submitted to the
Committee on Church on State was a background paper for reconsideration of
the religion provisions of the constitution by Fr. Bernas, S.J. He stated therein
that the Philippine Constitution is not hostile to religion and in fact recognizes
the value of religion and accommodates religious values. 392 Stated otherwise,
the Establishment Clause contemplates not a strict neutrality but benevolent
neutrality. While the Committee introduced the provision on separation of
church and state in the General Provisions of the 1973 Constitution, this was
nothing new as according to it, this principle was implied in the 1935
Constitution even in the absence of a similar provision.393
Then came the 1987 Constitution. The 1973 Constitutional provision on tax
exemption of church property was retained with minor modification in Article
VI, Section 28(3) of the 1987 Constitution. The same is true with respect to the
prohibition on the use of public money and property for religious purposes and
the salaries of religious officers serving in the enumerated government
institutions, now contained in Article VI, Section 29(2). Commissioner Bacani,
however, probed into the possibility of allowing the government to spend public
money for purposes which might have religious connections but which would
benefit the public generally. Citing the Aglipay case, Commissioner Rodrigo
explained that if a public expenditure would benefit the government directly,
such expense would be constitutional even if it results to an incidental benefit
to religion. With that explanation, Commissioner Bacani no longer pursued his
proposal.394
The provision on optional religious instruction was also adopted in the 1987
Constitution in Article XIV, Section 3(3) with the modification that it was
expressly provided that optional instruction shall be conducted "within the
regular class hours" and "without additional cost to the government". There
were protracted debates on what additional cost meant, i.e., cost over and
above what is needed for normal operations such as wear and tear, electricity,
janitorial services,395 and when during the day instruction would be
conducted.396 In deliberating on the phrase "within the regular class hours,"
Commissioner Aquino expressed her reservations to this proposal as this
would violate the time-honored principle of separation of church and state. She
cited the McCullom case where religious instruction during regular school
hours was stricken down as unconstitutional and also cited what she
considered the most liberal interpretation of separation of church and state in
Surach v. Clauson where the U.S. Supreme Court allowed only release time
for religious instruction. Fr. Bernas replied, viz:
. . . the whole purpose of the provision was to provide for an exception
to the rule on non-establishment of religion, because if it were not
necessary to make this exception for purposes of allowing religious
instruction, then we could just drop the amendment. But, as a matter of
fact, this is necessary because we are trying to introduce something
here which is contrary to American practices. 397 (emphasis supplied)
"(W)ithin regular class hours" was approved.
he provision on the separation of church and state was retained but placed
under the Principles in the Declaration of Principles and State Policies in
Article II, Section 6. In opting to retain the wording of the provision, Fr. Bernas
stated, viz:
. . . It is true, I maintain, that as a legal statement the sentence 'The
separation of Church and State is inviolable,' is almost a useless
statement; but at the same time it is a harmless statement. Hence, I
 am willing to tolerate it there, because, in the end, if we look at the
jurisprudence on Church and State, arguments are based not on the
statement of separation of church and state but on the non-
establishment clause in the Bill of Rights. 398
The preamble changed "Divine Providence" in the 1935 and 1973
Constitutions to "Almighty God." There was considerable debate on whether to
use "Almighty God" which Commissioner Bacani said was more reflective of
Filipino religiosity, but Commissioner Rodrigo recalled that a number of
atheistic delegates in the 1971 Constitutional Convention objected to reference
to a personal God.399 "God of History", "Lord of History" and "God" were also
proposed, but the phrase "Almighty God" prevailed. Similar to the 1935 and
1971 Constitutions, it is obvious that the 1987 Constitution is not hostile nor
indifferent to religion;400 its wall of separation is not a wall of hostility or
indifference.401
The provisions of the 1935, 1973 and 1987 constitutions on tax exemption of
church property, salary of religious officers in government institutions, optional
religious instruction and the preamble all reveal without doubt that the Filipino
people, in adopting these constitutions, did not intend to erect a high and
impregnable wall of separation between the church and state. 402 The strict
neutrality approach which examines only whether government action is for a
secular purpose and does not consider inadvertent burden on religious
exercise protects such a rigid barrier. By adopting the above constitutional
provisions on religion, the Filipinos manifested their adherence to the
benevolent neutrality approach in interpreting the religion clauses, an
approach that looks further than the secular purposes of government action
and examines the effect of these actions on religious exercise. Benevolent
neutrality recognizes the religious nature of the Filipino people and the
elevating influence of religion in society; at the same time, it acknowledges that
government must pursue its secular goals. In pursuing these goals, however,
government might adopt laws or actions of general applicability which
inadvertently burden religious exercise. Benevolent neutrality gives room for
accommodation of these religious exercises as required by the Free Exercise
Clause. It allows these breaches in the wall of separation to uphold religious
liberty, which after all is the integral purpose of the religion clauses. The case
at bar involves this first type of accommodation where an exemption is sought
from a law of general applicability that inadvertently burdens religious exercise.
Although our constitutional history and interpretation mandate benevolent
neutrality, benevolent neutrality does not mean that the Court ought to grant
exemptions every time a free exercise claim comes before it. But it does mean
that the Court will not look with hostility or act indifferently towards religious
beliefs and practices and that it will strive to accommodate them when it can
within flexible constitutional limits; it does mean that the Court will not simply
dismiss a claim under the Free Exercise Clause because the conduct in
question offends a law or the orthodox view for this precisely is the protection
afforded by the religion clauses of the Constitution, i.e., that in the absence of
legislation granting exemption from a law of general applicability, the Court can
carve out an exception when the religion clauses justify it. While the Court
cannot adopt a doctrinal formulation that can eliminate the difficult questions of
judgment in determining the degree of burden on religious practice or
importance of the state interest or the sufficiency of the means adopted by the
state to pursue its interest, the Court can set a doctrine on the ideal towards
which religious clause jurisprudence should be directed. 403 We here lay down
the doctrine that in Philippine jurisdiction, we adopt the benevolent neutrality
approach not only because of its merits as discussed above, but more
importantly, because our constitutional history and interpretation indubitably
show that benevolent neutrality is the launching pad from which the Court
should take off in interpreting religion clause cases. The ideal towards which
this approach is directed is the protection of religious liberty "not only for a
minority, however small- not only for a majority, however large- but for each of
us" to the greatest extent possible within flexible constitutional limits.
Benevolent neutrality is manifest not only in the Constitution but has also been
recognized in Philippine jurisprudence, albeit not expressly called "benevolent
neutrality" or "accommodation". In Aglipay, the Court not only stressed the
"elevating influence of religion in human society" but acknowledged the
Constitutional provisions on exemption from tax of church property, salary of
religious officers in government institutions, and optional religious instruction
as well as the provisions of the Administrative Code making Thursday and
Friday of the Holy Week, Christmas Day and Sundays legal holidays. In
Garces, the Court not only recognized the Constitutional provisions
indiscriminately granting concessions to religious sects and denominations, but
also acknowledged that government participation in long-standing traditions
which have acquired a social character - "the barrio fiesta is a socio-religious
affair" - does not offend the Establishment Clause. In Victoriano, the Court
upheld the exemption from closed shop provisions of members of religious
sects who prohibited their members from joining unions upon the justification
that the exemption was not a violation of the Establishment Clause but was
only meant to relieve the burden on free exercise of religion. In Ebralinag,
members of the Jehovah's Witnesses were exempt from saluting the flag as
required by law, on the basis not of a statute granting exemption but of the
Free Exercise Clause without offending the Establishment Clause.
While the U.S. and Philippine religion clauses are similar in form and origin,
Philippine constitutional law has departed from the U.S. jurisprudence of
employing a separationist or strict neutrality approach. The Philippine religion
clauses have taken a life of their own, breathing the air of benevolent neutrality
and accommodation. Thus, the wall of separation in Philippine jurisdiction is
not as high and impregnable as the wall created by the U.S. Supreme Court in
Everson.404 While the religion clauses are a unique American experiment which
understandably came about as a result of America's English background and
colonization, the life that these clauses have taken in this jurisdiction is the
Philippines' own experiment, reflective of the Filipinos' own national soul,
history and tradition. After all, "the life of the law. . . has been experience."
But while history, constitutional construction, and earlier jurisprudence
unmistakably show that benevolent neutrality is the lens with which the Court
ought to view religion clause cases, it must be stressed that the interest of the
state should also be afforded utmost protection. To do this, a test must be
applied to draw the line between permissible and forbidden religious exercise.
It is quite paradoxical that in order for the members of a society to exercise
their freedoms, including their religious liberty, the law must set a limit when
their exercise offends the higher interest of the state. To do otherwise is self-
defeating for unlimited freedom would erode order in the state and foment
anarchy, eventually destroying the very state its members established to
protect their freedoms. The very purpose of the social contract by which
people establish the state is for the state to protect their liberties; for this
purpose, they give up a portion of these freedoms - including the natural right
to free exercise - to the state. It was certainly not the intention of the authors of
the constitution that free exercise could be used to countenance actions that
would undo the constitutional order that guarantees free exercise. 405
The all important question then is the test that should be used in ascertaining
the limits of the exercise of religious freedom. Philippine jurisprudence
articulates several tests to determine these limits. Beginning with the first case
on the Free Exercise Clause, American Bible Society, the Court mentioned the
"clear and present danger" test but did not employ it. Nevertheless, this test
continued to be cited in subsequent cases on religious liberty. The Gerona
case then pronounced that the test of permissibility of religious freedom is
whether it violates the established institutions of society and law. The
Victoriano case mentioned the "immediate and grave danger" test as well as
the doctrine that a law of general applicability may burden religious exercise
provided the law is the least restrictive means to accomplish the goal of the
law. The case also used, albeit inappropriately, the "compelling state interest"
test. After Victoriano, German went back to the Gerona rule. Ebralinag then
employed the "grave and immediate danger" test and overruled the Gerona
test. The fairly recent case of Iglesia ni Cristo went back to the "clear and
present danger" test in the maiden case of American Bible Society. Not
surprisingly, all the cases which employed the "clear and present danger" or
"grave and immediate danger" test involved, in one form or another, religious
speech as this test is often used in cases on freedom of expression. On the
other hand, the Gerona and German cases set the rule that religious freedom
will not prevail over established institutions of society and law. Gerona,
however, which was the authority cited by German has been overruled by
Ebralinag which employed the "grave and immediate danger" test. Victoriano
was the only case that employed the "compelling state interest" test, but as
explained previously, the use of the test was inappropriate to the facts of the
case.
The case at bar does not involve speech as in American Bible Society,
Ebralinag and Iglesia ni Cristo where the "clear and present danger" and
"grave and immediate danger" tests were appropriate as speech has easily
discernible or immediate effects. The Gerona and German doctrine, aside from
having been overruled, is not congruent with the benevolent neutrality
approach, thus not appropriate in this jurisdiction. Similar to Victoriano, the
present case involves purely conduct arising from religious belief. The
"compelling state interest" test is proper where conduct is involved for the
whole gamut of human conduct has different effects on the state's interests:
some effects may be immediate and short-term while others delayed and far-
reaching. A test that would protect the interests of the state in preventing a
substantive evil, whether immediate or delayed, is therefore necessary.
However, not any interest of the state would suffice to prevail over the right to
religious freedom as this is a fundamental right that enjoys a preferred position
in the hierarchy of rights - "the most inalienable and sacred of all human
rights", in the words of Jefferson.406 This right is sacred for an invocation of the
Free Exercise Clause is an appeal to a higher sovereignty. The entire
constitutional order of limited government is premised upon an
acknowledgment of such higher sovereignty, 407 thus the Filipinos implore the
"aid of Almighty God in order to build a just and humane society and establish
a government." As held in Sherbert, only the gravest abuses, endangering
paramount interests can limit this fundamental right. A mere balancing of
interests which balances a right with just a colorable state interest is therefore
not appropriate. Instead, only a compelling interest of the state can prevail
over the fundamental right to religious liberty. The test requires the state to
carry a heavy burden, a compelling one, for to do otherwise would allow the
state to batter religion, especially the less powerful ones until they are
destroyed.408 In determining which shall prevail between the state's interest
and religious liberty, reasonableness shall be the guide. 409 The "compelling
state interest" serves the purpose of revering religious liberty while at the same
time affording protection to the paramount interests of the state. This was the
test used in Sherbert which involved conduct, i.e. refusal to work on Saturdays.
In the end, the "compelling state interest" test, by upholding the paramount
interests of the state, seeks to protect the very state, without which, religious
liberty will not be preserved.
X. Application of the Religion Clauses to the Case at Bar
A. The Religion Clauses and Morality
In a catena of cases, the Court has ruled that government employees engaged
in illicit relations are guilty of "disgraceful and immoral conduct" for which
he/she may be held administratively liable. 410 In these cases, there was not
one dissent to the majority's ruling that their conduct was immoral. The
respondents themselves did not foist the defense that their conduct was not
immoral, but instead sought to prove that they did not commit the alleged act
or have abated from committing the act. The facts of the 1975 case of De Dios
v. Alejo411 and the 1999 case of Maguad v. De Guzman,412 are similar to the
case at bar - i.e., the complainant is a mere stranger and the legal wife has not
registered any objection to the illicit relation, there is no proof of scandal or
offense to the moral sensibilities of the community in which the respondent and
the partner live and work, and the government employee is capacitated to
marry while the partner is not capacitated but has long been separated in fact.
Still, the Court found the government employees administratively liable for
"disgraceful and immoral conduct" and only considered the foregoing
circumstances to mitigate the penalty. Respondent Escritor does not claim that
there is error in the settled jurisprudence that an illicit relation constitutes
disgraceful and immoral conduct for which a government employee is held
liable. Nor is there an allegation that the norms of morality with respect to illicit
relations have shifted towards leniency from the time these precedent cases
were decided. The Court finds that there is no such error or shift, thus we find
no reason to deviate from these rulings that such illicit relationship constitutes
"disgraceful and immoral conduct" punishable under the Civil Service Law.
Respondent having admitted the alleged immoral conduct, she, like the
respondents in the above-cited cases, could be held administratively liable.
However, there is a distinguishing factor that sets the case at bar apart from
the cited precedents, i.e., as a defense, respondent invokes religious freedom
since her religion, the Jehovah's Witnesses, has, after thorough investigation,
allowed her conjugal arrangement with Quilapio based on the church's
religious beliefs and practices. This distinguishing factor compels the Court to
apply the religious clauses to the case at bar.
Without holding that religious freedom is not in issue in the case at bar, both
the dissenting opinion of Mme. Justice Ynares-Santiago and the separate
opinion of Mr. Justice Vitug dwell more on the standards of morality than on
the religion clauses in deciding the instant case. A discussion on morality is in
order.
At base, morality refers to, in Socrates' words, "how we ought to live" and why.
Any definition of morality beyond Socrates' simple formulation is bound to
offend one or another of the many rival theories regarding what it means to live
morally.413 The answer to the question of how we ought to live necessarily
considers that man does not live in isolation, but in society. Devlin posits that a
society is held together by a community of ideas, made up not only of political
ideas but also of ideas about the manner its members should behave and
govern their lives. The latter are their morals; they constitute the public
morality. Each member of society has ideas about what is good and what is
evil. If people try to create a society wherein there is no fundamental
agreement about good and evil, they will fail; if having established the society
on common agreement, the agreement collapses, the society will disintegrate.
Society is kept together by the invisible bonds of common thought so that if the
bonds are too loose, the members would drift apart. A common morality is part
of the bondage and the bondage is part of the price of society; and mankind,
which needs society, must pay its price. 414 This design is parallel with the
social contract in the realm of politics: people give up a portion of their liberties
to the state to allow the state to protect their liberties. In a constitutional order,
people make a fundamental agreement about the powers of government and
their liberties and embody this agreement in a constitution, hence referred to
as the fundamental law of the land. A complete break of this fundamental
agreement such as by revolution destroys the old order and creates a new
one.415 Similarly, in the realm of morality, the breakdown of the fundamental
agreement about the manner a society's members should behave and govern
their lives would disintegrate society. Thus, society is justified in taking steps to
preserve its moral code by law as it does to preserve its government and other
essential institutions.416 From these propositions of Devlin, one cannot
conclude that Devlin negates diversity in society for he is merely saying that in
the midst of this diversity, there should nevertheless be a "fundamental
agreement about good and evil" that will govern how people in a society ought
to live. His propositions, in fact, presuppose diversity hence the need to come
to an agreement; his position also allows for change of morality from time to
time which may be brought about by this diversity. In the same vein, a
pluralistic society lays down fundamental rights and principles in their
constitution in establishing and maintaining their society, and these
fundamental values and principles are translated into legislation that governs
the order of society, laws that may be amended from time to time. Hart's
argument propounded in Mr. Justice Vitug's separate opinion that, "Devlin's
view of people living in a single society as having common moral foundation
(is) overly simplistic" because "societies have always been diverse" fails to
recognize the necessity of Devlin's proposition in a democracy. Without
fundamental agreement on political and moral ideas, society will fall into
anarchy; the agreement is necessary to the existence and progress of society.
In a democracy, this common agreement on political and moral ideas is
distilled in the public square. Where citizens are free, every opinion, every
prejudice, every aspiration, and every moral discernment has access to the
public square where people deliberate the order of their life together. Citizens
are the bearers of opinion, including opinion shaped by, or espousing religious
belief, and these citizens have equal access to the public square. In this
representative democracy, the state is prohibited from determining which
convictions and moral judgments may be proposed for public deliberation.
Through a constitutionally designed process, the people deliberate and decide.
Majority rule is a necessary principle in this democratic governance. 417 Thus,
when public deliberation on moral judgments is finally crystallized into law, the
laws will largely reflect the beliefs and preferences of the majority, i.e., the
mainstream or median groups.418 Nevertheless, in the very act of adopting and
accepting a constitution and the limits it specifies -- including protection of
religious freedom "not only for a minority, however small- not only for a
majority, however large- but for each of us" -- the majority imposes upon itself
a self-denying ordinance. It promises not to do what it otherwise could do: to
ride roughshod over the dissenting minorities. 419 In the realm of religious
exercise, benevolent neutrality that gives room for accommodation carries out
this promise, provided the compelling interests of the state are not eroded for
the preservation of the state is necessary to the preservation of religious
liberty. That is why benevolent neutrality is necessary in a pluralistic society
such as the United States and the Philippines to accommodate those minority
religions which are politically powerless. It is not surprising that Smith is much
criticized for it blocks the judicial recourse of the minority for religious
accommodations.
The laws enacted become expressions of public morality. As Justice Holmes
put it, "(t)he law is the witness and deposit of our moral life." 420 "In a liberal
democracy, the law reflects social morality over a period of
time."421 Occasionally though, a disproportionate political influence might cause
a law to be enacted at odds with public morality or legislature might fail to
repeal laws embodying outdated traditional moral views. 422 Law has also been
defined as "something men create in their best moments to protect themselves
in their worst moments."423 Even then, laws are subject to amendment or
repeal just as judicial pronouncements are subject to modification and reversal
to better reflect the public morals of a society at a given time. After all, "the life
of the law...has been experience," in the words of Justice Holmes. This is not
to say though that law is all of morality. Law deals with the minimum standards
of human conduct while morality is concerned with the maximum. A person
who regulates his conduct with the sole object of avoiding punishment under
the law does not meet the higher moral standards set by society for him to be
called a morally upright person.424 Law also serves as "a helpful starting point
for thinking about a proper or ideal public morality for a society" 425 in pursuit of
moral progress.
In Magno v. Court of Appeals, et al.,426 we articulated the relationship
between law and public morality. We held that under the utilitarian theory, the
"protective theory" in criminal law, "criminal law is founded upon the moral
disapprobation x x x of actions which are immoral, i.e., which are detrimental
(or dangerous) to those conditions upon which depend the existence and
progress of human society. This disapprobation is inevitable to the extent that
morality is generally founded and built upon a certain concurrence in the moral
opinions of all. x x x That which we call punishment is only an external means
of emphasizing moral disapprobation: the method of punishment is in reality
the amount of punishment."427 Stated otherwise, there are certain standards of
behavior or moral principles which society requires to be observed and these
form the bases of criminal law. Their breach is an offense not only against the
person injured but against society as a whole. 428 Thus, even if all involved in
the misdeed are consenting parties, such as in the case at bar, the injury done
is to the public morals and the public interest in the moral order. 429 Mr. Justice
Vitug expresses concern on this point in his separate opinion. He observes
that certain immoral acts which appear private and not harmful to society such
as sexual congress "between a man and a prostitute, though consensual and
private, and with no injured third party, remains illegal in this country." His
opinion asks whether these laws on private morality are justified or they
constitute impingement on one's freedom of belief. Discussion on private
morality, however, is not material to the case at bar for whether respondent's
conduct, which constitutes concubinage, 430 is private in the sense that there is
no injured party or the offended spouse consents to the concubinage, the
inescapable fact is that the legislature has taken concubinage out of the
sphere of private morals. The legislature included concubinage as a crime
under the Revised Penal Code and the constitutionality of this law is not being
raised in the case at bar. In the definition of the crime of concubinage, consent
of the injured party, i.e., the legal spouse, does not alter or negate the crime
unlike in rape431 where consent of the supposed victim negates the crime. If at
all, the consent or pardon of the offended spouse in concubinage negates the
prosecution of the action,432 but does not alter the legislature's characterization
of the act as a moral disapprobation punishable by law. The separate opinion
states that, "(t)he ponencia has taken pains to distinguish between secular and
private morality, and reached the conclusion that the law, as an instrument of
the secular State should only concern itself with secular morality." The Court
does not draw this distinction in the case at bar. The distinction relevant to the
case is not, as averred and discussed by the separate opinion, "between
secular and private morality," but between public and secular morality on the
one hand, and religious morality on the other, which will be subsequently
discussed.
Not every moral wrong is foreseen and punished by law, criminal or otherwise.
We recognized this reality in Velayo, et al. v. Shell Co. of the Philippine
Islands, et al., where we explained that for those wrongs which are not
punishable by law, Articles 19 and 21 in Chapter 2 of the Preliminary Title of
the New Civil Code, dealing with Human Relations, provide for the recognition
of the wrong and the concomitant punishment in the form of damages. Articles
19 and 21 provide, viz:
Art. 19. Any person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due and
observe honesty and good faith.
xxx xxx xxx
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage. (emphasis supplied)
We then cited in Velayo the Code Commission's comment on Article 21:
Thus at one stroke, the legislator, if the foregoing rule is approved (as it
was approved), would vouchsafe adequate legal remedy for that untold
numbers of moral wrongs which is impossible for human foresight to
provide for specifically in the statutes.
But, it may be asked, would this proposed article obliterate the
boundary line between morality and law? The answer is that, in the last
analysis, every good law draws its breath of life from morals, from
those principles which are written with words of fire in the conscience
of man. If this premise is admitted, then the proposed rule is a prudent
earnest of justice in the face of the impossibility of enumerating, one by
one, all wrongs which cause damages. When it is reflected that while
codes of law and statutes have changed from age to age, the
conscience of man has remained fixed to its ancient moorings, one can
not but feel that it is safe and salutary to transmute, as far as may be,
moral norms into legal rules, thus imparting to every legal system that
enduring quality which ought to be one of its superlative attributes.
Furthermore, there is no belief of more baneful consequence upon the
social order than that a person may with impunity cause damage to his
fellow-men so long as he does not break any law of the State, though
he may be defying the most sacred postulates of morality. What is
more, the victim loses faith in the ability of the government to afford
him protection or relief.
A provision similar to the one under consideration is embodied in
article 826 of the German Civil Code.433 (emphases supplied)
The public morality expressed in the law is necessarily secular for in our
constitutional order, the religion clauses prohibit the state from establishing a
religion, including the morality it sanctions. Religious morality proceeds from a
person's "views of his relations to His Creator and to the obligations they
impose of reverence to His being and character and obedience to His Will," in
accordance with this Court's definition of religion in American Bible Society
citing Davis. Religion also dictates "how we ought to live" for the nature of
religion is not just to know, but often, to act in accordance with man's "views of
his relations to His Creator."434 But the Establishment Clause puts a negative
bar against establishment of this morality arising from one religion or the other,
and implies the affirmative "establishment" of a civil order for the resolution of
public moral disputes. This agreement on a secular mechanism is the price of
ending the "war of all sects against all"; the establishment of a secular public
moral order is the social contract produced by religious truce. 435
Thus, when the law speaks of "immorality" in the Civil Service Law or
"immoral" in the Code of Professional Responsibility for lawyers 436, or "public
morals" in the Revised Penal Code,437 or "morals" in the New Civil Code,438 or
"moral character" in the Constitution,439 the distinction between public and
secular morality on the one hand, and religious morality, on the other, should
be kept in mind.440 The morality referred to in the law is public and necessarily
secular, not religious as the dissent of Mr. Justice Carpio holds. "Religious
teachings as expressed in public debate may influence the civil public order
but public moral disputes may be resolved only on grounds articulable in
secular terms."441 Otherwise, if government relies upon religious beliefs in
formulating public policies and morals, the resulting policies and morals would
require conformity to what some might regard as religious programs or
agenda. The non-believers would therefore be compelled to conform to a
standard of conduct buttressed by a religious belief, i.e., to a "compelled
religion," anathema to religious freedom. Likewise, if government based its
actions upon religious beliefs, it would tacitly approve or endorse that belief
and thereby also tacitly disapprove contrary religious or non-religious views
that would not support the policy. As a result, government will not provide full
religious freedom for all its citizens, or even make it appear that those whose
beliefs are disapproved are second-class citizens. Expansive religious freedom
therefore requires that government be neutral in matters of religion;
governmental reliance upon religious justification is inconsistent with this policy
of neutrality.442
In other words, government action, including its proscription of immorality as
expressed in criminal law like concubinage, must have a secular purpose. That
is, the government proscribes this conduct because it is "detrimental (or
dangerous) to those conditions upon which depend the existence and progress
of human society" and not because the conduct is proscribed by the beliefs of
one religion or the other. Although admittedly, moral judgments based on
religion might have a compelling influence on those engaged in public
deliberations over what actions would be considered a moral disapprobation
punishable by law. After all, they might also be adherents of a religion and thus
have religious opinions and moral codes with a compelling influence on them;
the human mind endeavors to regulate the temporal and spiritual institutions of
society in a uniform manner, harmonizing earth with heaven. 443 Succinctly put,
a law could be religious or Kantian or Aquinian or utilitarian in its deepest
roots, but it must have an articulable and discernible secular purpose and
justification to pass scrutiny of the religion clauses. Otherwise, if a law has an
apparent secular purpose but upon closer examination shows a discriminatory
and prohibitory religious purpose, the law will be struck down for being
offensive of the religion clauses as in Church of the Lukumi Babalu Aye, Inc.
where the U.S. Supreme Court invalidated an ordinance prohibiting animal
sacrifice of the Santeria. Recognizing the religious nature of the Filipinos and
the elevating influence of religion in society, however, the Philippine
constitution's religion clauses prescribe not a strict but a benevolent neutrality.
Benevolent neutrality recognizes that government must pursue its secular
goals and interests but at the same time strives to uphold religious liberty to
the greatest extent possible within flexible constitutional limits. Thus, although
the morality contemplated by laws is secular, benevolent neutrality could allow
for accommodation of morality based on religion, provided it does not offend
compelling state interests.
Mr. Justice Vitug's separate opinion embraces the benevolent neutrality
approach when it states that in deciding the case at bar, the approach should
consider that, "(a)s a rule . . . moral laws are justified only to the extent that
they directly or indirectly serve to protect the interests of the larger society. It is
only where their rigid application would serve to obliterate the value which
society seeks to uphold, or defeat the purpose for which they are enacted
would, a departure be justified." In religion clause parlance, the separate
opinion holds that laws of general applicability governing morals should have a
secular purpose of directly or indirectly protecting the interests of the state. If
the strict application of these laws (which are the Civil Service Law and the
laws on marriage) would erode the secular purposes of the law (which the
separate opinion identifies as upholding the sanctity of marriage and the
family), then in a benevolent neutrality framework, an accommodation of the
unconventional religious belief and practice (which the separate opinion holds
should be respected on the ground of freedom of belief) that would promote
the very same secular purpose of upholding the sanctity of marriage and family
through the Declaration Pledging Faithfulness that makes the union binding
and honorable before God and men, is required by the Free Exercise Clause.
The separate opinion then makes a preliminary discussion of the values
society seeks to protect in adhering to monogamous marriage, but concludes
that these values and the purposes of the applicable laws should be
thoroughly examined and evidence in relation thereto presented in the OCA.
The accommodation approach in the case at bar would also require a similar
discussion of these values and presentation of evidence before the OCA by
the state that seeks to protect its interest on marriage and opposes the
accommodation of the unconventional religious belief and practice regarding
marriage.
The distinction between public and secular morality as expressed - albeit not
exclusively - in the law, on the one hand, and religious morality, on the other, is
important because the jurisdiction of the Court extends only to public and
secular morality. Whatever pronouncement the Court makes in the case at bar
should be understood only in this realm where it has authority. More
concretely, should the Court declare respondent's conduct as immoral and
hold her administratively liable, the Court will be holding that in the realm of
public morality, her conduct is reprehensible or there are state interests
overriding her religious freedom. For as long as her conduct is being judged
within this realm, she will be accountable to the state. But in so ruling, the
Court does not and cannot say that her conduct should be made reprehensible
in the realm of her church where it is presently sanctioned and that she is
answerable for her immorality to her Jehovah God nor that other religions
prohibiting her conduct are correct. On the other hand, should the Court
declare her conduct permissible, the Court will be holding that under her
unique circumstances, public morality is not offended or that upholding her
religious freedom is an interest higher than upholding public morality thus her
conduct should not be penalized. But the Court is not ruling that the tenets and
practice of her religion are correct nor that other churches which do not allow
respondent's conjugal arrangement should likewise allow such conjugal
arrangement or should not find anything immoral about it and therefore
members of these churches are not answerable for immorality to their
Supreme Being. The Court cannot speak more than what it has authority to
say. In Ballard, the U.S. Supreme Court held that courts cannot inquire about
the truth of religious beliefs. Similarly, in Fonacier, this Court declared that
matters dealing with "faith, practice, doctrine, form of worship, ecclesiastical
law, custom and rule of a church…are unquestionably ecclesiastical matters
which are outside the province of the civil courts." 444 But while the state,
including the Court, accords such deference to religious belief and exercise
which enjoy protection under the religious clauses, the social contract and the
constitutional order are designed in such a way that when religious belief flows
into speech and conduct that step out of the religious sphere and overlap with
the secular and public realm, the state has the power to regulate, prohibit and
penalize these expressions and embodiments of belief insofar as they affect
the interests of the state. The state's inroad on religion exercise in excess of
this constitutional design is prohibited by the religion clauses; the Old World,
European and American history narrated above bears out the wisdom of this
proscription.
Having distinguished between public and secular morality and religious
morality, the more difficult task is determining which immoral acts under this
public and secular morality fall under the phrase "disgraceful and immoral
conduct" for which a government employee may be held administratively liable.
The line is not easy to draw for it is like "a line that divides land and sea, a
coastline of irregularities and indentations." 445 But the case at bar does not
require us to comprehensively delineate between those immoral acts for which
one may be held administratively liable and those to which administrative
liability does not attach. We need not concern ourselves in this case therefore
whether "laziness, gluttony, vanity, selfishness, avarice and cowardice" are
immoral acts which constitute grounds for administrative liability. Nor need we
expend too much energy grappling with the propositions that not all immoral
acts are illegal or not all illegal acts are immoral, or different jurisdictions have
different standards of morality as discussed by the dissents and separate
opinions, although these observations and propositions are true and correct. It
is certainly a fallacious argument that because there are exceptions to the
general rule that the "law is the witness and deposit of our moral life," then the
rule is not true; in fact, that there are exceptions only affirms the truth of the
rule. Likewise, the observation that morality is relative in different jurisdictions
only affirms the truth that there is morality in a particular jurisdiction; without,
however, discounting the truth that underneath the moral relativism are certain
moral absolutes such as respect for life and truth-telling, without which no
society will survive. Only one conduct is in question before this Court, i.e., the
conjugal arrangement of a government employee whose partner is legally
married to another which Philippine law and jurisprudence consider both
immoral and illegal. Lest the Court inappropriately engage in the impossible
task of prescribing comprehensively how one ought to live, the Court must
focus its attention upon the sole conduct in question before us.
In interpreting "disgraceful and immoral conduct," the dissenting opinion of
Mme. Justice Ynares-Santiago groped for standards of morality and stated that
the "ascertainment of what is moral or immoral calls for the discovery of
contemporary community standards" but did not articulate how these
standards are to be ascertained. Instead, it held that, "(f)or those in the service
of the Government, provisions of law and court precedents . . . have to be
considered." It identified the Civil Service Law and the laws on adultery and
concubinage as laws which respondent's conduct has offended and cited a
string of precedents where a government employee was found guilty of
committing a "disgraceful and immoral conduct" for maintaining illicit relations
and was thereby penalized. As stated above, there is no dispute that under
settled jurisprudence, respondent's conduct constitutes "disgraceful and
immoral conduct." However, the cases cited by the dissent do not involve the
defense of religious freedom which respondent in the case at bar invokes.
Those cited cases cannot therefore serve as precedents in settling the issue in
the case at bar.
Mme. Justice Ynares-Santiago's dissent also cites Cleveland v. United
States446 in laying down the standard of morality, viz: "(w)hether an act is
immoral within the meaning of the statute is not to be determined by
respondent's concept of morality. The law provides the standard; the offense is
complete if respondent intended to perform, and did in fact perform, the act
which it condemns." The Mann Act under consideration in the Cleveland case
declares as an offense the transportation in interstate commerce of "any
woman or girl for the purpose of prostitution or debauchery, or for any other
immoral purpose."447 The resolution of that case hinged on the interpretation of
the phrase "immoral purpose." The U.S. Supreme Court held that the petitioner
Mormons' act of transporting at least one plural wife whether for the purpose of
cohabiting with her, or for the purpose of aiding another member of their
Mormon church in such a project, was covered by the phrase "immoral
purpose." In so ruling, the Court relied on Reynolds which held that the
Mormons' practice of polygamy, in spite of their defense of religious freedom,
was "odious among the northern and western nations of Europe," 448 "a return
to barbarism,"449 "contrary to the spirit of Christianity and of the civilization
which Christianity has produced in the Western world," 450 and thus punishable
by law.
The Cleveland standard, however, does not throw light to the issue in the case
at bar. The pronouncements of the U.S. Supreme Court that polygamy is
intrinsically "odious" or "barbaric" do not apply in the Philippines where
Muslims, by law, are allowed to practice polygamy. Unlike in Cleveland, there
is no jurisprudence in Philippine jurisdiction holding that the defense of
religious freedom of a member of the Jehovah's Witnesses under the same
circumstances as respondent will not prevail over the laws on adultery,
concubinage or some other law. We cannot summarily conclude therefore that
her conduct is likewise so "odious" and "barbaric" as to be immoral and
punishable by law.
While positing the view that the resolution of the case at bar lies more on
determining the applicable moral standards and less on religious freedom,
Mme. Justice Ynares-Santiago's dissent nevertheless discussed respondent's
plea of religious freedom and disposed of this defense by stating that "(a) clear
and present danger of a substantive evil, destructive to public morals, is a
ground for the reasonable regulation of the free exercise and enjoyment of
religious profession. (American Bible Society v. City of Manila, 101 Phil. 386
[1957]). In addition to the destruction of public morals, the substantive evil in
this case is the tearing down of morality, good order, and discipline in the
judiciary." However, the foregoing discussion has shown that the "clear and
present danger" test that is usually employed in cases involving freedom of
expression is not appropriate to the case at bar which involves purely religious
conduct. The dissent also cites Reynolds in supporting its conclusion that
respondent is guilty of "disgraceful and immoral conduct." The Reynolds ruling,
however, was reached with a strict neutrality approach, which is not the
approach contemplated by the Philippine constitution. As discussed above,
Philippine jurisdiction adopts benevolent neutrality in interpreting the religion
clauses.
In the same vein, Mr. Justice Carpio's dissent which employs strict neutrality
does not reflect the constitutional intent of employing benevolent neutrality in
interpreting the Philippine religion clauses. His dissent avers that respondent
should be held administratively liable not for "disgraceful and immoral conduct"
but "conduct prejudicial to the best interest of the service" as she is a
necessary co-accused of her partner in concubinage. The dissent stresses that
being a court employee, her open violation of the law is prejudicial to the
administration of justice. Firstly, the dissent offends due process as
respondent was not given an opportunity to defend herself against the charge
of "conduct prejudicial to the best interest of the service." In addition, there is
no evidence of the alleged prejudice to the best interest of the service. Most
importantly, the dissent concludes that respondent's plea of religious freedom
cannot prevail without so much as employing a test that would balance
respondent's religious freedom and the state's interest at stake in the case at
bar. The foregoing discussion on the doctrine of religious freedom, however,
shows that with benevolent neutrality as a framework, the Court cannot simply
reject respondent's plea of religious freedom without even subjecting it to the
"compelling state interest" test that would balance her freedom with the
paramount interests of the state. The strict neutrality employed in the cases
the dissent cites -Reynolds, Smith and People v. Bitdu decided before the
1935 Constitution which unmistakably shows adherence to benevolent
neutrality - is not contemplated by our constitution.
Neither is Sulu Islamic Association of Masjid Lambayong v. Judge Nabdar J.
Malik451 cited in Mr. Justice Carpio's dissent decisive of the immorality issue in
the case at bar. In that case, the Court dismissed the charge of immorality
against a Tausug judge for engaging in an adulterous relationship with another
woman with whom he had three children because "it (was) not 'immoral' by
Muslim standards for Judge Malik to marry a second time while his first
marriage (existed)." Putting the quoted portion in its proper context would
readily show that the Sulu Islamic case does not provide a precedent to the
case at bar. Immediately prior to the portion quoted by the dissent, the Court
stressed, viz: "(s)ince Art. 180 of P.D. No. 1083, otherwise known as the Code
of Muslim Personal Laws of the Philippines, provides that the penal laws
relative to the crime of bigamy 'shall not apply to a person married x x x under
Muslim Law,' it is not 'immoral' by Muslim standards for Judge Malik to marry a
second time while his first marriage exists."452 It was by law, therefore, that the
Muslim conduct in question was classified as an exception to the crime of
bigamy and thus an exception to the general standards of morality. The
constitutionality of P.D. No. 1083 when measured against the Establishment
Clause was not raised as an issue in the Sulu Islamic case. Thus, the Court
did not determine whether P.D. No. 1083 suffered from a constitutional
infirmity and instead relied on the provision excepting the challenged Muslim
conduct from the crime of bigamy in holding that the challenged act is not
immoral by Muslim standards. In contradistinction, in the case at bar, there is
no similar law which the Court can apply as basis for treating respondent's
conduct as an exception to the prevailing jurisprudence on illicit relations of
civil servants. Instead, the Free Exercise Clause is being invoked to justify
exemption.
B. Application of Benevolent Neutrality and the Compelling State Interest
Test to the Case at Bar
The case at bar being one of first impression, we now subject the respondent's
claim of religious freedom to the "compelling state interest" test from a
benevolent neutrality stance - i.e. entertaining the possibility that respondent's
claim to religious freedom would warrant carving out an exception from the
Civil Service Law; necessarily, her defense of religious freedom will be
unavailing should the government succeed in demonstrating a more
compelling state interest.
In applying the test, the first inquiry is whether respondent's right to religious
freedom has been burdened. There is no doubt that choosing between
keeping her employment and abandoning her religious belief and practice and
family on the one hand, and giving up her employment and keeping her
religious practice and family on the other hand, puts a burden on her free
exercise of religion. In Sherbert, the Court found that Sherbert's religious
exercise was burdened as the denial of unemployment benefits "forces her to
choose between following the precepts of her religion and forfeiting benefits,
on the one hand, and abandoning one of the precepts of her religion in order to
accept work, on the other hand." The burden on respondent in the case at bar
is even greater as the price she has to pay for her employment is not only her
religious precept but also her family which, by the Declaration Pledging
Faithfulness, stands "honorable before God and men."
The second step is to ascertain respondent's sincerity in her religious belief.
Respondent appears to be sincere in her religious belief and practice and is
not merely using the "Declaration of Pledging Faithfulness" to avoid
punishment for immorality. She did not secure the Declaration only after
entering the judiciary where the moral standards are strict and defined, much
less only after an administrative case for immorality was filed against her. The
Declaration was issued to her by her congregation after ten years of living
together with her partner, Quilapio, and ten years before she entered the
judiciary. Ministers from her congregation testified on the authenticity of the
Jehovah's Witnesses' practice of securing a Declaration and their doctrinal or
scriptural basis for such a practice. As the ministers testified, the Declaration is
not whimsically issued to avoid legal punishment for illicit conduct but to make
the "union" of their members under respondent's circumstances "honorable
before God and men." It is also worthy of notice that the Report and
Recommendation of the investigating judge annexed letters 453 of the OCA to
the respondent regarding her request to be exempt from attending the flag
ceremony after Circular No. 62-2001 was issued requiring attendance in the
flag ceremony. The OCA's letters were not submitted by respondent as
evidence but annexed by the investigating judge in explaining that he was
caught in a dilemma whether to find respondent guilty of immorality because
the Court Administrator and Deputy Court Administrator had different positions
regarding respondent's request for exemption from the flag ceremony on the
ground of the Jehovah's Witnesses' contrary belief and practice. Respondent's
request for exemption from the flag ceremony shows her sincerity in practicing
the Jehovah's Witnesses' beliefs and not using them merely to escape
punishment. She is a practicing member of the Jehovah's Witnesses and the
Jehovah ministers testified that she is a member in good standing.
Nevertheless, should the government, thru the Solicitor General, want to
further question the respondent's sincerity and the centrality of her practice in
her faith, it should be given the opportunity to do so. The government has not
been represented in the case at bar from its incipience until this point.
In any event, even if the Court deems sufficient respondent's evidence on the
sincerity of her religious belief and its centrality in her faith, the case at bar
cannot still be decided using the "compelling state interest" test. The case at
bar is one of first impression, thus the parties were not aware of the burdens of
proof they should discharge in the Court's use of the "compelling state interest"
test. We note that the OCA found respondent's defense of religious freedom
unavailing in the face of the Court's ruling in Dicdican v. Fernan, et al., viz:
It bears emphasis that the image of a court of justice is mirrored in the
conduct, official and otherwise, of the personnel who work thereat,
from the judge to the lowest of its personnel. Court personnel have
been enjoined to adhere to the exacting standards of morality and
decency in their professional and private conduct in order to preserve
the good name and integrity of the courts of justice.
It is apparent from the OCA's reliance upon this ruling that the state interest it
upholds is the preservation of the integrity of the judiciary by maintaining
among its ranks a high standard of morality and decency. However, there is
nothing in the OCA's memorandum to the Court that demonstrates how this
interest is so compelling that it should override respondent's plea of religious
freedom nor is it shown that the means employed by the government in
pursuing its interest is the least restrictive to respondent's religious exercise.
Indeed, it is inappropriate for the complainant, a private person, to present
evidence on the compelling interest of the state. The burden of evidence
should be discharged by the proper agency of the government which is the
Office of the Solicitor General. To properly settle the issue in the case at bar,
the government should be given the opportunity to demonstrate the compelling
state interest it seeks to uphold in opposing the respondent's stance that her
conjugal arrangement is not immoral and punishable as it comes within the
scope of free exercise protection. Should the Court prohibit and punish her
conduct where it is protected by the Free Exercise Clause, the Court's action
would be an unconstitutional encroachment of her right to religious
freedom.454 We cannot therefore simply take a passing look at respondent's
claim of religious freedom, but must instead apply the "compelling state
interest" test. The government must be heard on the issue as it has not been
given an opportunity to discharge its burden of demonstrating the state's
compelling interest which can override respondent's religious belief and
practice. To repeat, this is a case of first impression where we are applying the
"compelling state interest" test in a case involving purely religious conduct. The
careful application of the test is indispensable as how we will decide the case
will make a decisive difference in the life of the respondent who stands not
only before the Court but before her Jehovah God.
IN VIEW WHEREOF, the case is REMANDED to the Office of the Court
Administrator. The Solicitor General is ordered to intervene in the case where
it will be given the opportunity (a) to examine the sincerity and centrality of
respondent's claimed religious belief and practice; (b) to present evidence on
the state's "compelling interest" to override respondent's religious belief and
practice; and (c) to show that the means the state adopts in pursuing its
interest is the least restrictive to respondent's religious freedom. The rehearing
should be concluded thirty (30) days from the Office of the Court
Administrator's receipt of this Decision.
SO ORDERED.
Davide, Jr., C.J., Austria-Martinez, Corona, Azcuna, and Tinga, JJ., concur.
Bellosillo and Vitug, JJ., please see separate opinion.
Ynares-Santiago, and Carpio, JJ., see dissenting opinion.
Panganiban, Carpio-Morales, and Callejo, Sr., JJ., joins the dissenting opinion
of J. Carpio.
Quisumbing, and Sandoval-Gutierrez, JJ., on official leave.
G.R. No. 190582 April 8, 2010
ANG LADLAD LGBT PARTY represented herein by its Chair, DANTON
REMOTO, Petitioner,
vs.
COMMISSION ON ELECTIONS Respondent.
DECISION
DEL CASTILLO, J.:
... [F]reedom to differ is not limited to things that do not matter much. That
would be a mere shadow of freedom. The test of its substance is the right to
differ as to things that touch the heart of the existing order.
Justice Robert A. Jackson
West Virginia State Board of Education v. Barnette1
One unavoidable consequence of everyone having the freedom to choose is
that others may make different choices – choices we would not make for
ourselves, choices we may disapprove of, even choices that may shock or
offend or anger us. However, choices are not to be legally prohibited merely
because they are different, and the right to disagree and debate about
important questions of public policy is a core value protected by our Bill of
Rights. Indeed, our democracy is built on genuine recognition of, and respect
for, diversity and difference in opinion.
Since ancient times, society has grappled with deep disagreements about the
definitions and demands of morality. In many cases, where moral convictions
are concerned, harmony among those theoretically opposed is an
insurmountable goal. Yet herein lies the paradox – philosophical justifications
about what is moral are indispensable and yet at the same time powerless to
create agreement. This Court recognizes, however, that practical solutions are
preferable to ideological stalemates; accommodation is better than
intransigence; reason more worthy than rhetoric. This will allow persons of
diverse viewpoints to live together, if not harmoniously, then, at least, civilly.
Factual Background
This is a Petition for Certiorari under Rule 65 of the Rules of Court, with an
application for a writ of preliminary mandatory injunction, filed by Ang
Ladlad LGBT Party (Ang Ladlad) against the Resolutions of the Commission
on Elections (COMELEC) dated November 11, 20092 (the First Assailed
Resolution) and December 16, 20093 (the Second Assailed Resolution) in SPP
No. 09-228 (PL) (collectively, the Assailed Resolutions). The case has its roots
in the COMELEC’s refusal to accredit Ang Ladlad as a party-list organization
under Republic Act (RA) No. 7941, otherwise known as the Party-List System
Act.4
Ang Ladlad is an organization composed of men and women who identify
themselves as lesbians, gays, bisexuals, or trans-gendered individuals
(LGBTs). Incorporated in 2003, Ang Ladlad first applied for registration with the
COMELEC in 2006. The application for accreditation was denied on the
ground that the organization had no substantial membership base. On August
17, 2009, Ang Ladlad again filed a Petition5 for registration with the
COMELEC.
Before the COMELEC, petitioner argued that the LGBT community is a
marginalized and under-represented sector that is particularly disadvantaged
because of their sexual orientation and gender identity; that LGBTs are victims
of exclusion, discrimination, and violence; that because of negative societal
attitudes, LGBTs are constrained to hide their sexual orientation; and that Ang
Ladlad complied with the 8-point guidelines enunciated by this Court in Ang
Bagong Bayani-OFW Labor Party v. Commission on Elections. 6 Ang
Ladlad laid out its national membership base consisting of individual members
and organizational supporters, and outlined its platform of governance.7
On November 11, 2009, after admitting the petitioner’s evidence, the
COMELEC (Second Division) dismissed the Petition on moral grounds, stating
that:
x x x This Petition is dismissible on moral grounds. Petitioner defines the
Filipino Lesbian, Gay, Bisexual and Transgender (LGBT) Community, thus:
x x x a marginalized and under-represented sector that is particularly
disadvantaged because of their sexual orientation and gender identity.
and proceeded to define sexual orientation as that which:
x x x refers to a person’s capacity for profound emotional, affectional and
sexual attraction to, and intimate and sexual relations with, individuals of a
different gender, of the same gender, or more than one gender."
This definition of the LGBT sector makes it crystal clear that petitioner tolerates
immorality which offends religious beliefs. In Romans 1:26, 27, Paul wrote:
For this cause God gave them up into vile affections, for even their women did
change the natural use into that which is against nature: And likewise also the
men, leaving the natural use of the woman, burned in their lust one toward
another; men with men working that which is unseemly, and receiving in
themselves that recompense of their error which was meet.
In the Koran, the hereunder verses are pertinent:
For ye practice your lusts on men in preference to women "ye are indeed a
people transgressing beyond bounds." (7.81) "And we rained down on them a
shower (of brimstone): Then see what was the end of those who indulged in
sin and crime!" (7:84) "He said: "O my Lord! Help Thou me against people who
do mischief" (29:30).
As correctly pointed out by the Law Department in its Comment dated October
2, 2008:
The ANG LADLAD apparently advocates sexual immorality as indicated in the
Petition’s par. 6F: ‘Consensual partnerships or relationships by gays and
lesbians who are already of age’. It is further indicated in par. 24 of the Petition
which waves for the record: ‘In 2007, Men Having Sex with Men or MSMs in
the Philippines were estimated as 670,000 (Genesis 19 is the history of Sodom
and Gomorrah).
Laws are deemed incorporated in every contract, permit, license, relationship,
or accreditation. Hence, pertinent provisions of the Civil Code and the Revised
Penal Code are deemed part of the requirement to be complied with for
accreditation.
ANG LADLAD collides with Article 695 of the Civil Code which defines
nuisance as ‘Any act, omission, establishment, business, condition of property,
or anything else which x x x (3) shocks, defies; or disregards decency or
morality x x x
It also collides with Article 1306 of the Civil Code: ‘The contracting parties may
establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs,
public order or public policy. Art 1409 of the Civil Code provides that ‘Contracts
whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy’ are inexistent and void from the beginning.
Finally to safeguard the morality of the Filipino community, the Revised Penal
Code, as amended, penalizes ‘Immoral doctrines, obscene publications and
exhibitions and indecent shows’ as follows:
Art. 201. Immoral doctrines, obscene publications and exhibitions, and
indecent shows. — The penalty of prision mayor or a fine ranging from six
thousand to twelve thousand pesos, or both such imprisonment and fine, shall
be imposed upon:
1. Those who shall publicly expound or proclaim doctrines
openly contrary to public morals;
2. (a) The authors of obscene literature, published with their knowledge
in any form; the editors publishing such literature; and the
owners/operators of the establishment selling the same;
(b) Those who, in theaters, fairs, cinematographs or any other
place, exhibit indecent or immoral plays, scenes, acts or
shows, it being understood that the obscene literature or
indecent or immoral plays, scenes, acts or shows, whether live
or in film, which are prescribed by virtue hereof, shall include
those which: (1) glorify criminals or condone crimes; (2) serve
no other purpose but to satisfy the market for violence, lust or
pornography; (3) offend any race or religion; (4) tend to abet
traffic in and use of prohibited drugs; and (5) are contrary to
law, public order, morals, good customs, established policies,
lawful orders, decrees and edicts.
3. Those who shall sell, give away or exhibit films, prints, engravings,
sculpture or literature which are offensive to morals.
Petitioner should likewise be denied accreditation not only for advocating
immoral doctrines but likewise for not being truthful when it said that it "or any
of its nominees/party-list representatives have not violated or failed to comply
with laws, rules, or regulations relating to the elections."
Furthermore, should this Commission grant the petition, we will be exposing
our youth to an environment that does not conform to the teachings of our
faith. Lehman Strauss, a famous bible teacher and writer in the U.S.A. said in
one article that "older practicing homosexuals are a threat to the youth." As an
agency of the government, ours too is the State’s avowed duty under Section
13, Article II of the Constitution to protect our youth from moral and spiritual
degradation.8
When Ang Ladlad sought reconsideration,9 three commissioners voted to
overturn the First Assailed Resolution (Commissioners Gregorio Y. Larrazabal,
Rene V. Sarmiento, and Armando Velasco), while three commissioners voted
to deny Ang Ladlad’s Motion for Reconsideration (Commissioners Nicodemo
T. Ferrer, Lucenito N. Tagle, and Elias R. Yusoph). The COMELEC Chairman,
breaking the tie and speaking for the majority in his Separate Opinion, upheld
the First Assailed Resolution, stating that:
I. The Spirit of Republic Act No. 7941
Ladlad is applying for accreditation as a sectoral party in the party-list system.
Even assuming that it has properly proven its under-representation and
marginalization, it cannot be said that Ladlad’s expressed sexual orientations
per se would benefit the nation as a whole.
Section 2 of the party-list law unequivocally states that the purpose of the
party-list system of electing congressional representatives is to enable Filipino
citizens belonging to marginalized and under-represented sectors,
organizations and parties, and who lack well-defined political constituencies
but who could contribute to the formulation and enactment of appropriate
legislation that will benefit the nation as a whole, to become members of the
House of Representatives.
If entry into the party-list system would depend only on the ability of an
organization to represent its constituencies, then all representative
organizations would have found themselves into the party-list race. But that is
not the intention of the framers of the law. The party-list system is not a tool to
advocate tolerance and acceptance of misunderstood persons or groups of
persons. Rather, the party-list system is a tool for the realization of aspirations
of marginalized individuals whose interests are also the nation’s – only that
their interests have not been brought to the attention of the nation because of
their under representation. Until the time comes when Ladlad is able to justify
that having mixed sexual orientations and transgender identities is beneficial to
the nation, its application for accreditation under the party-list system will
remain just that.
II. No substantial differentiation
In the United States, whose equal protection doctrine pervades Philippine
jurisprudence, courts do not recognize lesbians, gays, homosexuals, and
bisexuals (LGBT) as a "special class" of individuals. x x x Significantly, it has
also been held that homosexuality is not a constitutionally protected
fundamental right, and that "nothing in the U.S. Constitution discloses a
comparable intent to protect or promote the social or legal equality of
homosexual relations," as in the case of race or religion or belief.
xxxx
Thus, even if society’s understanding, tolerance, and acceptance of LGBT’s is
elevated, there can be no denying that Ladlad constituencies are still males
and females, and they will remain either male or female protected by the same
Bill of Rights that applies to all citizens alike.
xxxx
IV. Public Morals
x x x There is no question about not imposing on Ladlad Christian or Muslim
religious practices. Neither is there any attempt to any particular religious
group’s moral rules on Ladlad. Rather, what are being adopted as moral
parameters and precepts are generally accepted public morals. They are
possibly religious-based, but as a society, the Philippines cannot ignore its
more than 500 years of Muslim and Christian upbringing, such that some
moral precepts espoused by said religions have sipped [sic] into society and
these are not publicly accepted moral norms.
V. Legal Provisions
But above morality and social norms, they have become part of the law of the
land. Article 201 of the Revised Penal Code imposes the penalty of prision
mayor upon "Those who shall publicly expound or proclaim doctrines openly
contrary to public morals." It penalizes "immoral doctrines, obscene
publications and exhibition and indecent shows." "Ang Ladlad" apparently falls
under these legal provisions. This is clear from its Petition’s paragraph 6F:
"Consensual partnerships or relationships by gays and lesbians who are
already of age’ It is further indicated in par. 24 of the Petition which waves for
the record: ‘In 2007, Men Having Sex with Men or MSMs in the Philippines
were estimated as 670,000. Moreoever, Article 694 of the Civil Code defines
"nuisance" as any act, omission x x x or anything else x x x which shocks,
defies or disregards decency or morality x x x." These are all unlawful. 10
On January 4, 2010, Ang Ladlad filed this Petition, praying that the Court annul
the Assailed Resolutions and direct the COMELEC to grant Ang
Ladlad’s application for accreditation. Ang Ladlad also sought the issuance ex
parte of a preliminary mandatory injunction against the COMELEC, which had
previously announced that it would begin printing the final ballots for the May
2010 elections by January 25, 2010.
On January 6, 2010, we ordered the Office of the Solicitor General (OSG) to
file its Comment on behalf of COMELEC not later than 12:00 noon of January
11, 2010.11 Instead of filing a Comment, however, the OSG filed a Motion for
Extension, requesting that it be given until January 16, 2010 to
Comment.12 Somewhat surprisingly, the OSG later filed a Comment in support
of petitioner’s application.13 Thus, in order to give COMELEC the opportunity to
fully ventilate its position, we required it to file its own comment. 14 The
COMELEC, through its Law Department, filed its Comment on February 2,
2010.15
In the meantime, due to the urgency of the petition, we issued a temporary
restraining order on January 12, 2010, effective immediately and continuing
until further orders from this Court, directing the COMELEC to cease and
desist from implementing the Assailed Resolutions. 16
Also, on January 13, 2010, the Commission on Human Rights (CHR) filed a
Motion to Intervene or to Appear as Amicus Curiae, attaching thereto its
Comment-in-Intervention.17 The CHR opined that the denial of Ang
Ladlad’s petition on moral grounds violated the standards and principles of the
Constitution, the Universal Declaration of Human Rights (UDHR), and the
International Covenant on Civil and Political Rights (ICCPR). On January 19,
2010, we granted the CHR’s motion to intervene.
On January 26, 2010, Epifanio D. Salonga, Jr. filed his Motion to
Intervene18 which motion was granted on February 2, 2010. 19
The Parties’ Arguments
Ang Ladlad argued that the denial of accreditation, insofar as it justified the
exclusion by using religious dogma, violated the constitutional guarantees
against the establishment of religion. Petitioner also claimed that the Assailed
Resolutions contravened its constitutional rights to privacy, freedom of speech
and assembly, and equal protection of laws, as well as constituted violations of
the Philippines’ international obligations against discrimination based on
sexual orientation.
The OSG concurred with Ang Ladlad’s petition and argued that the COMELEC
erred in denying petitioner’s application for registration since there was no
basis for COMELEC’s allegations of immorality. It also opined that LGBTs
have their own special interests and concerns which should have been
recognized by the COMELEC as a separate classification. However, insofar as
the purported violations of petitioner’s freedom of speech, expression, and
assembly were concerned, the OSG maintained that there had been no
restrictions on these rights.
In its Comment, the COMELEC reiterated that petitioner does not have a
concrete and genuine national political agenda to benefit the nation and that
the petition was validly dismissed on moral grounds. It also argued for the first
time that the LGBT sector is not among the sectors enumerated by the
Constitution and RA 7941, and that petitioner made untruthful statements in its
petition when it alleged its national existence contrary to actual verification
reports by COMELEC’s field personnel.
Our Ruling
We grant the petition.
Compliance with the Requirements of the Constitution and Republic Act No.
7941
The COMELEC denied Ang Ladlad’s application for registration on the ground
that the LGBT sector is neither enumerated in the Constitution and RA 7941,
nor is it associated with or related to any of the sectors in the enumeration.
Respondent mistakenly opines that our ruling in Ang Bagong Bayani stands for
the proposition that only those sectors specifically enumerated in the law or
related to said sectors (labor, peasant, fisherfolk, urban poor, indigenous
cultural communities, elderly, handicapped, women, youth, veterans, overseas
workers, and professionals) may be registered under the party-list system. As
we explicitly ruled in Ang Bagong Bayani-OFW Labor Party v. Commission on
Elections,20 "the enumeration of marginalized and under-represented sectors is
not exclusive". The crucial element is not whether a sector is specifically
enumerated, but whether a particular organization complies with the
requirements of the Constitution and RA 7941.
Respondent also argues that Ang Ladlad made untruthful statements in its
petition when it alleged that it had nationwide existence through its members
and affiliate organizations. The COMELEC claims that upon verification by its
field personnel, it was shown that "save for a few isolated places in the
country, petitioner does not exist in almost all provinces in the country." 21
This argument that "petitioner made untruthful statements in its petition when it
alleged its national existence" is a new one; previously, the COMELEC
claimed that petitioner was "not being truthful when it said that it or any of its
nominees/party-list representatives have not violated or failed to comply with
laws, rules, or regulations relating to the elections." Nowhere was this ground
for denial of petitioner’s accreditation mentioned or even alluded to in the
Assailed Resolutions. This, in itself, is quite curious, considering that the
reports of petitioner’s alleged non-existence were already available to the
COMELEC prior to the issuance of the First Assailed Resolution. At best, this
is irregular procedure; at worst, a belated afterthought, a change in
respondent’s theory, and a serious violation of petitioner’s right to procedural
due process.
Nonetheless, we find that there has been no misrepresentation. A cursory
perusal of Ang Ladlad’s initial petition shows that it never claimed to exist in
each province of the Philippines. Rather, petitioner alleged that the LGBT
community in the Philippines was estimated to constitute at least 670,000
persons; that it had 16,100 affiliates and members around the country, and
4,044 members in its electronic discussion group. 22 Ang Ladlad also
represented itself to be "a national LGBT umbrella organization with affiliates
around the Philippines composed of the following LGBT networks:"
§ Abra Gay Association
§ Aklan Butterfly Brigade (ABB) – Aklan
§ Albay Gay Association
§ Arts Center of Cabanatuan City – Nueva Ecija
§ Boys Legion – Metro Manila
§ Cagayan de Oro People Like Us (CDO PLUS)
§ Can’t Live in the Closet, Inc. (CLIC) – Metro Manila
§ Cebu Pride – Cebu City
§ Circle of Friends
§ Dipolog Gay Association – Zamboanga del Norte
§ Gay, Bisexual, & Transgender Youth Association (GABAY)
§ Gay and Lesbian Activists Network for Gender Equality (GALANG) –
Metro Manila
§ Gay Men’s Support Group (GMSG) – Metro Manila
§ Gay United for Peace and Solidarity (GUPS) – Lanao del Norte
§ Iloilo City Gay Association – Iloilo City
§ Kabulig Writer’s Group – Camarines Sur
§ Lesbian Advocates Philippines, Inc. (LEAP)
§ LUMINA – Baguio City
§ Marikina Gay Association – Metro Manila
§ Metropolitan Community Church (MCC) – Metro Manila
§ Naga City Gay Association – Naga City
§ ONE BACARDI
§ Order of St. Aelred (OSAe) – Metro Manila
§ PUP LAKAN
§ RADAR PRIDEWEAR
§ Rainbow Rights Project (R-Rights), Inc. – Metro Manila
§ San Jose del Monte Gay Association – Bulacan
§ Sining Kayumanggi Royal Family – Rizal
§ Society of Transexual Women of the Philippines (STRAP) – Metro
Manila
§ Soul Jive – Antipolo, Rizal
§ The Link – Davao City
§ Tayabas Gay Association – Quezon
§ Women’s Bisexual Network – Metro Manila
§ Zamboanga Gay Association – Zamboanga City23
Since the COMELEC only searched for the names ANG LADLAD LGBT
or LADLAD LGBT, it is no surprise that they found that petitioner had no
presence in any of these regions. In fact, if COMELEC’s findings are to be
believed, petitioner does not even exist in Quezon City, which is registered
as Ang Ladlad’s principal place of business.
Against this backdrop, we find that Ang Ladlad has sufficiently demonstrated
its compliance with the legal requirements for accreditation. Indeed, aside from
COMELEC’s moral objection and the belated allegation of non-existence,
nowhere in the records has the respondent ever found/ruled that Ang Ladlad is
not qualified to register as a party-list organization under any of the requisites
under RA 7941 or the guidelines in Ang Bagong Bayani. The difference,
COMELEC claims, lies in Ang Ladlad’s morality, or lack thereof.
Religion as the Basis for Refusal to Accept Ang Ladlad’s Petition for
Registration
Our Constitution provides in Article III, Section 5 that "[n]o law shall be made
respecting an establishment of religion, or prohibiting the free exercise
thereof." At bottom, what our non-establishment clause calls for is
"government neutrality in religious matters."24 Clearly, "governmental reliance
on religious justification is inconsistent with this policy of neutrality." 25 We thus
find that it was grave violation of the non-establishment clause for the
COMELEC to utilize the Bible and the Koran to justify the exclusion of Ang
Ladlad.
Rather than relying on religious belief, the legitimacy of the Assailed
Resolutions should depend, instead, on whether the COMELEC is able to
advance some justification for its rulings beyond mere conformity to religious
doctrine. Otherwise stated, government must act for secular purposes and in
ways that have primarily secular effects. As we held in Estrada v. Escritor:26
x x x The morality referred to in the law is public and necessarily secular, not
religious as the dissent of Mr. Justice Carpio holds. "Religious teachings as
expressed in public debate may influence the civil public order but public moral
disputes may be resolved only on grounds articulable in secular terms."
Otherwise, if government relies upon religious beliefs in formulating public
policies and morals, the resulting policies and morals would require conformity
to what some might regard as religious programs or agenda. The non-
believers would therefore be compelled to conform to a standard of conduct
buttressed by a religious belief, i.e., to a "compelled religion," anathema to
religious freedom. Likewise, if government based its actions upon religious
beliefs, it would tacitly approve or endorse that belief and thereby also tacitly
disapprove contrary religious or non-religious views that would not support the
policy. As a result, government will not provide full religious freedom for all its
citizens, or even make it appear that those whose beliefs are disapproved are
second-class citizens. 1avvphi1
In other words, government action, including its proscription of immorality as
expressed in criminal law like concubinage, must have a secular purpose. That
is, the government proscribes this conduct because it is "detrimental (or
dangerous) to those conditions upon which depend the existence and progress
of human society" and not because the conduct is proscribed by the beliefs of
one religion or the other. Although admittedly, moral judgments based on
religion might have a compelling influence on those engaged in public
deliberations over what actions would be considered a moral disapprobation
punishable by law. After all, they might also be adherents of a religion and thus
have religious opinions and moral codes with a compelling influence on them;
the human mind endeavors to regulate the temporal and spiritual institutions of
society in a uniform manner, harmonizing earth with heaven. Succinctly put, a
law could be religious or Kantian or Aquinian or utilitarian in its deepest roots,
but it must have an articulable and discernible secular purpose and justification
to pass scrutiny of the religion clauses. x x x Recognizing the religious nature
of the Filipinos and the elevating influence of religion in society, however, the
Philippine constitution's religion clauses prescribe not a strict but a benevolent
neutrality. Benevolent neutrality recognizes that government must pursue its
secular goals and interests but at the same time strive to uphold religious
liberty to the greatest extent possible within flexible constitutional limits. Thus,
although the morality contemplated by laws is secular, benevolent neutrality
could allow for accommodation of morality based on religion, provided it does
not offend compelling state interests. 27
Public Morals as a Ground to Deny Ang Ladlad’s Petition for Registration
Respondent suggests that although the moral condemnation of homosexuality
and homosexual conduct may be religion-based, it has long been transplanted
into generally accepted public morals. The COMELEC argues:
Petitioner’s accreditation was denied not necessarily because their group
consists of LGBTs but because of the danger it poses to the people especially
the youth. Once it is recognized by the government, a sector which believes
that there is nothing wrong in having sexual relations with individuals of the
same gender is a bad example. It will bring down the standard of morals we
cherish in our civilized society. Any society without a set of moral precepts is in
danger of losing its own existence.28
We are not blind to the fact that, through the years, homosexual conduct, and
perhaps homosexuals themselves, have borne the brunt of societal
disapproval. It is not difficult to imagine the reasons behind this censure –
religious beliefs, convictions about the preservation of marriage, family, and
procreation, even dislike or distrust of homosexuals themselves and their
perceived lifestyle. Nonetheless, we recall that the Philippines has not seen fit
to criminalize homosexual conduct. Evidently, therefore, these "generally
accepted public morals" have not been convincingly transplanted into the
realm of law.29
The Assailed Resolutions have not identified any specific overt immoral act
performed by Ang Ladlad. Even the OSG agrees that "there should have been
a finding by the COMELEC that the group’s members have committed or are
committing immoral acts."30 The OSG argues:
x x x A person may be sexually attracted to a person of the same gender, of a
different gender, or more than one gender, but mere attraction does not
translate to immoral acts. There is a great divide between thought and action.
Reduction ad absurdum. If immoral thoughts could be penalized, COMELEC
would have its hands full of disqualification cases against both the "straights"
and the gays." Certainly this is not the intendment of the law. 31
Respondent has failed to explain what societal ills are sought to be prevented,
or why special protection is required for the youth. Neither has the COMELEC
condescended to justify its position that petitioner’s admission into the party-list
system would be so harmful as to irreparably damage the moral fabric of
society. We, of course, do not suggest that the state is wholly without authority
to regulate matters concerning morality, sexuality, and sexual relations, and
we recognize that the government will and should continue to restrict behavior
considered detrimental to society. Nonetheless, we cannot countenance
advocates who, undoubtedly with the loftiest of intentions, situate morality on
one end of an argument or another, without bothering to go through the rigors
of legal reasoning and explanation. In this, the notion of morality is robbed of
all value. Clearly then, the bare invocation of morality will not remove an issue
from our scrutiny.
We also find the COMELEC’s reference to purported violations of our penal
and civil laws flimsy, at best; disingenuous, at worst. Article 694 of the Civil
Code defines a nuisance as "any act, omission, establishment, condition of
property, or anything else which shocks, defies, or disregards decency or
morality," the remedies for which are a prosecution under the Revised Penal
Code or any local ordinance, a civil action, or abatement without judicial
proceedings.32 A violation of Article 201 of the Revised Penal Code, on the
other hand, requires proof beyond reasonable doubt to support a criminal
conviction. It hardly needs to be emphasized that mere allegation of violation
of laws is not proof, and a mere blanket invocation of public morals cannot
replace the institution of civil or criminal proceedings and a judicial
determination of liability or culpability.
As such, we hold that moral disapproval, without more, is not a sufficient
governmental interest to justify exclusion of homosexuals from participation in
the party-list system. The denial of Ang Ladlad’s registration on purely moral
grounds amounts more to a statement of dislike and disapproval of
homosexuals, rather than a tool to further any substantial public interest.
Respondent’s blanket justifications give rise to the inevitable conclusion that
the COMELEC targets homosexuals themselves as a class, not because of
any particular morally reprehensible act. It is this selective targeting that
implicates our equal protection clause.
Equal Protection
Despite the absolutism of Article III, Section 1 of our Constitution, which
provides "nor shall any person be denied equal protection of the laws," courts
have never interpreted the provision as an absolute prohibition on
classification. "Equality," said Aristotle, "consists in the same treatment of
similar persons."33 The equal protection clause guarantees that no person or
class of persons shall be deprived of the same protection of laws which is
enjoyed by other persons or other classes in the same place and in like
circumstances.34
Recent jurisprudence has affirmed that if a law neither burdens a fundamental
right nor targets a suspect class, we will uphold the classification as long as it
bears a rational relationship to some legitimate government end. 35 In Central
Bank Employees Association, Inc. v. Banko Sentral ng Pilipinas, 36 we declared
that "[i]n our jurisdiction, the standard of analysis of equal protection
challenges x x x have followed the ‘rational basis’ test, coupled with a
deferential attitude to legislative classifications and a reluctance to invalidate a
law unless there is a showing of a clear and unequivocal breach of the
Constitution."37
The COMELEC posits that the majority of the Philippine population considers
homosexual conduct as immoral and unacceptable, and this constitutes
sufficient reason to disqualify the petitioner. Unfortunately for the respondent,
the Philippine electorate has expressed no such belief. No law exists to
criminalize homosexual behavior or expressions or parties about homosexual
behavior. Indeed, even if we were to assume that public opinion is as the
COMELEC describes it, the asserted state interest here – that is, moral
disapproval of an unpopular minority – is not a legitimate state interest that is
sufficient to satisfy rational basis review under the equal protection clause. The
COMELEC’s differentiation, and its unsubstantiated claim that Ang
Ladlad cannot contribute to the formulation of legislation that would benefit the
nation, furthers no legitimate state interest other than disapproval of or dislike
for a disfavored group.
From the standpoint of the political process, the lesbian, gay, bisexual, and
transgender have the same interest in participating in the party-list system on
the same basis as other political parties similarly situated. State intrusion in
this case is equally burdensome. Hence, laws of general application should
apply with equal force to LGBTs, and they deserve to participate in the party-
list system on the same basis as other marginalized and under-represented
sectors.
It bears stressing that our finding that COMELEC’s act of differentiating LGBTs
from heterosexuals insofar as the party-list system is concerned does not
imply that any other law distinguishing between heterosexuals and
homosexuals under different circumstances would similarly fail. We disagree
with the OSG’s position that homosexuals are a class in themselves for the
purposes of the equal protection clause. 38 We are not prepared to single out
homosexuals as a separate class meriting special or differentiated treatment.
We have not received sufficient evidence to this effect, and it is simply
unnecessary to make such a ruling today. Petitioner itself has merely
demanded that it be recognized under the same basis as all other groups
similarly situated, and that the COMELEC made "an unwarranted and
impermissible classification not justified by the circumstances of the case."
Freedom of Expression and Association
Under our system of laws, every group has the right to promote its agenda and
attempt to persuade society of the validity of its position through normal
democratic means.39 It is in the public square that deeply held convictions and
differing opinions should be distilled and deliberated upon. As we held in
Estrada v. Escritor:40
In a democracy, this common agreement on political and moral ideas is
distilled in the public square. Where citizens are free, every opinion, every
prejudice, every aspiration, and every moral discernment has access to the
public square where people deliberate the order of their life together. Citizens
are the bearers of opinion, including opinion shaped by, or espousing religious
belief, and these citizens have equal access to the public square. In this
representative democracy, the state is prohibited from determining which
convictions and moral judgments may be proposed for public deliberation.
Through a constitutionally designed process, the people deliberate and decide.
Majority rule is a necessary principle in this democratic governance. Thus,
when public deliberation on moral judgments is finally crystallized into law, the
laws will largely reflect the beliefs and preferences of the majority, i.e., the
mainstream or median groups. Nevertheless, in the very act of adopting and
accepting a constitution and the limits it specifies – including protection of
religious freedom "not only for a minority, however small – not only for a
majority, however large – but for each of us" – the majority imposes upon itself
a self-denying ordinance. It promises not to do what it otherwise could do: to
ride roughshod over the dissenting minorities.
Freedom of expression constitutes one of the essential foundations of a
democratic society, and this freedom applies not only to those that are
favorably received but also to those that offend, shock, or disturb. Any
restriction imposed in this sphere must be proportionate to the legitimate aim
pursued. Absent any compelling state interest, it is not for the COMELEC or
this Court to impose its views on the populace. Otherwise stated, the
COMELEC is certainly not free to interfere with speech for no better reason
than promoting an approved message or discouraging a disfavored one.
This position gains even more force if one considers that homosexual conduct
is not illegal in this country. It follows that both expressions concerning one’s
homosexuality and the activity of forming a political association that supports
LGBT individuals are protected as well.
Other jurisdictions have gone so far as to categorically rule that even
overwhelming public perception that homosexual conduct violates public
morality does not justify criminalizing same-sex conduct.41 European and
United Nations judicial decisions have ruled in favor of gay rights claimants on
both privacy and equality grounds, citing general privacy and equal protection
provisions in foreign and international texts.42 To the extent that there is much
to learn from other jurisdictions that have reflected on the issues we face here,
such jurisprudence is certainly illuminating. These foreign authorities, while not
formally binding on Philippine courts, may nevertheless have persuasive
influence on the Court’s analysis.
In the area of freedom of expression, for instance, United States courts have
ruled that existing free speech doctrines protect gay and lesbian rights to
expressive conduct. In order to justify the prohibition of a particular expression
of opinion, public institutions must show that their actions were caused by
"something more than a mere desire to avoid the discomfort and
unpleasantness that always accompany an unpopular viewpoint." 43
With respect to freedom of association for the advancement of ideas and
beliefs, in Europe, with its vibrant human rights tradition, the European Court of
Human Rights (ECHR) has repeatedly stated that a political party may
campaign for a change in the law or the constitutional structures of a state if it
uses legal and democratic means and the changes it proposes are consistent
with democratic principles. The ECHR has emphasized that political ideas that
challenge the existing order and whose realization is advocated by peaceful
means must be afforded a proper opportunity of expression through the
exercise of the right of association, even if such ideas may seem shocking or
unacceptable to the authorities or the majority of the population.44 A political
group should not be hindered solely because it seeks to publicly debate
controversial political issues in order to find solutions capable of satisfying
everyone concerned.45 Only if a political party incites violence or puts forward
policies that are incompatible with democracy does it fall outside the protection
of the freedom of association guarantee.46
We do not doubt that a number of our citizens may believe that homosexual
conduct is distasteful, offensive, or even defiant. They are entitled to hold and
express that view. On the other hand, LGBTs and their supporters, in all
likelihood, believe with equal fervor that relationships between individuals of
the same sex are morally equivalent to heterosexual relationships. They, too,
are entitled to hold and express that view. However, as far as this Court is
concerned, our democracy precludes using the religious or moral views of one
part of the community to exclude from consideration the values of other
members of the community.
Of course, none of this suggests the impending arrival of a golden age for gay
rights litigants. It well may be that this Decision will only serve to highlight the
discrepancy between the rigid constitutional analysis of this Court and the
more complex moral sentiments of Filipinos. We do not suggest that public
opinion, even at its most liberal, reflect a clear-cut strong consensus favorable
to gay rights claims and we neither attempt nor expect to affect individual
perceptions of homosexuality through this Decision.
The OSG argues that since there has been neither prior restraint nor
subsequent punishment imposed on Ang Ladlad, and its members have not
been deprived of their right to voluntarily associate, then there has been no
restriction on their freedom of expression or association. The OSG argues that:
There was no utterance restricted, no publication censored, or any assembly
denied. [COMELEC] simply exercised its authority to review and verify the
qualifications of petitioner as a sectoral party applying to participate in the
party-list system. This lawful exercise of duty cannot be said to be a
transgression of Section 4, Article III of the Constitution.
xxxx
A denial of the petition for registration x x x does not deprive the members of
the petitioner to freely take part in the conduct of elections. Their right to vote
will not be hampered by said denial. In fact, the right to vote is a
constitutionally-guaranteed right which cannot be limited.
As to its right to be elected in a genuine periodic election, petitioner contends
that the denial of Ang Ladlad’s petition has the clear and immediate effect of
limiting, if not outrightly nullifying the capacity of its members to fully and
equally participate in public life through engagement in the party list elections.
This argument is puerile. The holding of a public office is not a right but a
privilege subject to limitations imposed by law. x x x47
The OSG fails to recall that petitioner has, in fact, established its qualifications
to participate in the party-list system, and – as advanced by the OSG itself –
the moral objection offered by the COMELEC was not a limitation imposed by
law. To the extent, therefore, that the petitioner has been precluded, because
of COMELEC’s action, from publicly expressing its views as a political party
and participating on an equal basis in the political process with other equally-
qualified party-list candidates, we find that there has, indeed, been a
transgression of petitioner’s fundamental rights.
Non-Discrimination and International Law
In an age that has seen international law evolve geometrically in scope and
promise, international human rights law, in particular, has grown dynamically in
its attempt to bring about a more just and humane world order. For individuals
and groups struggling with inadequate structural and governmental support,
international human rights norms are particularly significant, and should be
effectively enforced in domestic legal systems so that such norms may
become actual, rather than ideal, standards of conduct.
Our Decision today is fully in accord with our international obligations to protect
and promote human rights. In particular, we explicitly recognize the principle of
non-discrimination as it relates to the right to electoral participation, enunciated
in the UDHR and the ICCPR.
The principle of non-discrimination is laid out in Article 26 of the ICCPR, as
follows:
Article 26
All persons are equal before the law and are entitled without any discrimination
to the equal protection of the law. In this respect, the law shall prohibit any
discrimination and guarantee to all persons equal and effective protection
against discrimination on any ground such as race, colour, sex, language,
religion, political or other opinion, national or social origin, property, birth or
other status.
In this context, the principle of non-discrimination requires that laws of general
application relating to elections be applied equally to all persons, regardless of
sexual orientation. Although sexual orientation is not specifically enumerated
as a status or ratio for discrimination in Article 26 of the ICCPR, the ICCPR
Human Rights Committee has opined that the reference to "sex" in Article 26
should be construed to include "sexual orientation." 48 Additionally, a variety of
United Nations bodies have declared discrimination on the basis of sexual
orientation to be prohibited under various international agreements.49
The UDHR provides:
Article 21.
(1) Everyone has the right to take part in the government of his country,
directly or through freely chosen representatives.
Likewise, the ICCPR states:
Article 25
Every citizen shall have the right and the opportunity, without any of the
distinctions mentioned in article 2 and without unreasonable restrictions:
(a) To take part in the conduct of public affairs, directly or through
freely chosen representatives;
(b) To vote and to be elected at genuine periodic elections which shall
be by universal and equal suffrage and shall be held by secret ballot,
guaranteeing the free expression of the will of the electors;
(c) To have access, on general terms of equality, to public service in
his country.
As stated by the CHR in its Comment-in-Intervention, the scope of the right to
electoral participation is elaborated by the Human Rights Committee in its
General Comment No. 25 (Participation in Public Affairs and the Right to Vote)
as follows:
1. Article 25 of the Covenant recognizes and protects the right of every citizen
to take part in the conduct of public affairs, the right to vote and to be elected
and the right to have access to public service. Whatever form of constitution or
government is in force, the Covenant requires States to adopt such legislative
and other measures as may be necessary to ensure that citizens have an
effective opportunity to enjoy the rights it protects. Article 25 lies at the core of
democratic government based on the consent of the people and in conformity
with the principles of the Covenant.
xxxx
15. The effective implementation of the right and the opportunity to stand for
elective office ensures that persons entitled to vote have a free choice of
candidates. Any restrictions on the right to stand for election, such as minimum
age, must be justifiable on objective and reasonable criteria. Persons who are
otherwise eligible to stand for election should not be excluded by unreasonable
or discriminatory requirements such as education, residence or descent, or by
reason of political affiliation. No person should suffer discrimination or
disadvantage of any kind because of that person's candidacy. States parties
should indicate and explain the legislative provisions which exclude any group
or category of persons from elective office. 50
We stress, however, that although this Court stands willing to assume the
responsibility of giving effect to the Philippines’ international law obligations,
the blanket invocation of international law is not the panacea for all social ills.
We refer now to the petitioner’s invocation of the Yogyakarta Principles (the
Application of International Human Rights Law In Relation to Sexual
Orientation and Gender Identity),51 which petitioner declares to reflect binding
principles of international law.
At this time, we are not prepared to declare that these Yogyakarta
Principles contain norms that are obligatory on the Philippines. There are
declarations and obligations outlined in said Principles which are not reflective
of the current state of international law, and do not find basis in any of the
sources of international law enumerated under Article 38(1) of the Statute of
the International Court of Justice.52 Petitioner has not undertaken any objective
and rigorous analysis of these alleged principles of international law to
ascertain their true status.
We also hasten to add that not everything that society – or a certain segment
of society – wants or demands is automatically a human right. This is not an
arbitrary human intervention that may be added to or subtracted from at will. It
is unfortunate that much of what passes for human rights today is a much
broader context of needs that identifies many social desires as rights in order
to further claims that international law obliges states to sanction these
innovations. This has the effect of diluting real human rights, and is a result of
the notion that if "wants" are couched in "rights" language, then they are no
longer controversial.1avvphi1
Using even the most liberal of lenses, these Yogyakarta Principles, consisting
of a declaration formulated by various international law professors, are – at
best – de lege ferenda – and do not constitute binding obligations on the
Philippines. Indeed, so much of contemporary international law is
characterized by the "soft law" nomenclature, i.e., international law is full of
principles that promote international cooperation, harmony, and respect for
human rights, most of which amount to no more than well-meaning desires,
without the support of either State practice or opinio juris.53
As a final note, we cannot help but observe that the social issues presented by
this case are emotionally charged, societal attitudes are in flux, even the
psychiatric and religious communities are divided in opinion. This Court’s role
is not to impose its own view of acceptable behavior. Rather, it is to apply the
Constitution and laws as best as it can, uninfluenced by public opinion, and
confident in the knowledge that our democracy is resilient enough to withstand
vigorous debate.
WHEREFORE, the Petition is hereby GRANTED. The Resolutions of the
Commission on Elections dated November 11, 2009 and December 16, 2009
in SPP No. 09-228 (PL) are hereby SET ASIDE. The Commission on Elections
is directed to GRANT petitioner’s application for party-list accreditation.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
G.R. No. 204819 April 8, 2014
JAMES M. IMBONG and LOVELY-ANN C. IMBONG, for themselves and in
behalf of their minor children, LUCIA CARLOS IMBONG and
BERNADETTE CARLOS IMBONG and MAGNIFICAT CHILD
DEVELOPMENT CENTER, INC., Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO
B. ABAD, Secretary, Department of Budget and Management, HON.
ENRIQUE T. ONA, Secretary, Department of Health, HON. ARMIN A.
LUISTRO, Secretary, Department of Education, Culture and Sports and
HON. MANUELA. ROXAS II, Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 204934
ALLIANCE FOR THE FAMILY FOUNDATION PHILIPPINES, INC. [ALFI],
represented by its President, Maria Concepcion S. Noche, Spouses
Reynaldo S. Luistro & Rosie B . Luistro, Jose S. Sandejas & Elenita S.A.
Sandejas, Arturo M. Gorrez & Marietta C. Gorrez, Salvador S. Mante, Jr. &
Hazeleen L. Mante, Rolando M. Bautista & Maria Felisa S. Bautista,
Desiderio Racho & Traquilina Racho, F emand Antonio A. Tansingco &
Carol Anne C. Tansingco for themselves and on behalf of their minor
children, Therese Antonette C. Tansingco, Lorenzo Jose C. Tansingco,
Miguel F emando C. Tangsingco, Carlo Josemaria C. Tansingco & Juan
Paolo C. Tansingco, Spouses Mariano V. Araneta & Eileen Z. Araneta for
themselves and on behalf of their minor children, Ramon Carlos Z.
Araneta & Maya Angelica Z. Araneta, Spouses Renato C. Castor &
Mildred C. Castor for themselves and on behalf of their minor children,
Renz Jeffrey C. Castor, Joseph Ramil C. Castor, John Paul C. Castor &
Raphael C. Castor, Spouses Alexander R. Racho & Zara Z. Racho for
themselves and on behalf of their minor children Margarita Racho,
Mikaela Racho, Martin Racho, Mari Racho & Manolo Racho, Spouses
Alfred R. Racho & Francine V. Racho for themselves and on behalf of
their minor children Michael Racho, Mariana Racho, Rafael Racho, Maxi
Racho, Chessie Racho & Laura Racho, Spouses David R. Racho &
Armilyn A. Racho for themselves and on behalf of their minor child
Gabriel Racho, Mindy M. Juatas and on behalf of her minor children
Elijah Gerald Juatas and Elian Gabriel Juatas, Salvacion M. Monteiro,
Emily R. Laws, Joseph R . Laws & Katrina R. Laws, Petitioners,
vs. vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE T. OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
ONA, Secretary, Department of Health, HON. ARMIN A. LUISTRO, REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive
Secretary, Department of Education, Culture and Sports, HON. Secretary, HON. FLORENCIO B. ABAD, Secretary, Department of Budget
CORAZON SOLIMAN, Secretary, Department of Social Welfare and and Management; HON. ENRIQUE T. ONA, Secretary, Department of
Development, HON. MANUELA. ROXAS II, Secretary, Department of Health; HON. ARMIN A. LUISTRO, Secretary, Department of Education
Interior and Local Government, HON. FLORENCIO B. ABAD, Secretary, and HON. MANUELA. ROXAS II, Secretary, Department of Interior and
Department of Budget and Management, HON. ARSENIO M. BALISACAN, Local Government, Respondents.
Socio-Economic Planning Secretary and NEDA Director-General, THE
PHILIPPINE COMMISSION ON WOMEN, represented by its Chairperson, x---------------------------------x
Remedios lgnacio-Rikken, THE PHILIPPINE HEALTH INSURANCE
CORPORATION, represented by its President Eduardo Banzon, THE G.R. No. 205003
LEAGUE OF PROVINCES OF THE PHILIPPINES, represented by its
President Alfonso Umali, THE LEAGUE OF CITIES OF THE PHILIPPINES,
EXPEDITO A. BUGARIN, JR., Petitioner,
represented by its President Oscar Rodriguez, and THE LEAGUE OF
vs.
MUNICIPALITIES OF THE PHILIPPINES, represented by its President
OFFICE OF THE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES,
Donato Marcos, Respondents.
HON. SENATE PRESIDENT, HON. SPEAKER OF THE HOUSE OF
REPRESENTATIVES and HON. SOLICITOR GENERAL, Respondents.
x---------------------------------x
x---------------------------------x
G.R. No. 204957
G.R. No. 205043
TASK FORCE FOR FAMILY AND LIFE VISAYAS, INC. and VALERIANO S.
AVILA, Petitioners,
EDUARDO B. OLAGUER and THE CATHOLIC XYBRSPACE
vs.
APOSTOLATE OF THE PHILIPPINES, Petitioners,
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON. FLORENCIO
vs.
B. ABAD, Secretary, Department of Budget and Management; HON.
DOH SECRETARY ENRIQUE T. ONA, FDA DIRECTOR SUZETTE H. LAZO,
ENRIQUE T. ONA, Secretary, Department of Education; and HON.
DBM SECRETARY FLORENCIO B. ABAD, DILG SECRETARY MANUELA.
MANUELA. ROXAS II, Secretary, Department of Interior and Local
ROXAS II, DECS SECRETARY ARMIN A. LUISTRO, Respondents.
Government, Respondents.
x---------------------------------x
x---------------------------------x
G.R. No. 205138
G.R. No. 204988
PHILIPPINE ALLIANCE OF XSEMINARIANS, INC. (PAX), herein
SERVE LIFE CAGAYAN DE ORO CITY, INC., represented by Dr. Nestor B.
represented by its National President, Atty. Ricardo M . Ribo, and in his
Lumicao, M.D., as President and in his personal capacity, ROSEVALE
own behalf, Atty. Lino E.A. Dumas, Romeo B. Almonte, Osmundo C.
FOUNDATION INC., represented by Dr. Rodrigo M. Alenton, M.D., as
Orlanes, Arsenio Z. Menor, Samuel J. Yap, Jaime F. Mateo, Rolly Siguan,
member of the school board and in his personal capacity, ROSEMARIE
Dante E. Magdangal, Michael Eugenio O. Plana, Bienvenido C. Miguel,
R. ALENTON, IMELDA G. IBARRA, CPA, LOVENIAP. NACES, Phd.,
Jr., Landrito M. Diokno and Baldomero Falcone, Petitioners,
ANTHONY G. NAGAC, EARL ANTHONY C. GAMBE and MARLON I.
vs.
YAP, Petitioners,
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO
B. ABAD, Secretary, Department of Budget and Management, HON.
ENRIQUE T. ONA, Secretary, Department of Health, HON. ARMIN A.
LUISTRO, Secretary, Department of Education, HON. MANUELA. ROXAS
II, Secretary, Department of Interior and Local Government, HON.
CORAZON J. SOLIMAN, Secretary, Department of Social Welfare and
Development, HON. ARSENIO BALISACAN, Director-General, National
Economic and Development Authority, HON. SUZETTE H. LAZO,
Director-General, Food and Drugs Administration, THE BOARD OF
DIRECTORS, Philippine Health Insurance Corporation, and THE BOARD
OF COMMISSIONERS, Philippine Commission on Women, Respondents.
x---------------------------------x
G.R. No. 205478
REYNALDO J. ECHAVEZ, M.D., JACQUELINE H. KING, M.D., CYNTHIA T.
DOMINGO, M.D., AND JOSEPHINE MILLADO-LUMITAO, M.D., collectively
known as Doctors For Life, and ANTHONY PEREZ, MICHAEL ANTHONY
G. MAPA, CARLOS ANTONIO PALAD, WILFREDO JOSE, CLAIRE
NAVARRO, ANNA COSIO, and GABRIEL DY LIACCO collectively known
as Filipinos For Life, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON. FLORENCIO
B. ABAD, Secretary of the Department of Budget and Management; HON.
ENRIQUE T. ONA, Secretary of the Department of Health; HON. ARMIN A.
LUISTRO, Secretary of the Department of Education; and HON.
MANUELA. ROXAS II, Secretary of the Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 205491
SPOUSES FRANCISCO S. TATAD AND MARIA FENNY C. TATAD & ALA
F. PAGUIA, for themselves, their Posterity, and the rest of Filipino
posterity, Petitioners,
vs.
OFFICE OF THE PRESIDENT of the Republic of the
Philippines, Respondent.
x---------------------------------x
G.R. No. 205720
PRO-LIFE PHILIPPINES FOUNDATION, Inc., represented by Loma
Melegrito, as Executive Director, and in her personal capacity, JOSELYN
B. BASILIO, ROBERT Z. CORTES, ARIEL A. CRISOSTOMO, JEREMY I.
GATDULA, CRISTINA A. MONTES, RAUL ANTONIO A. NIDOY, WINSTON
CONRAD B. PADOJINOG, RUFINO L. POLICARPIO III, Petitioners,
vs.
OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive
Secretary, HON. FLORENCIO B. ABAD, Secretary, Department of Budget
and Management, HON. ENRIQUE T. ONA, Secretary, Department of
Health, HON. ARMIN A. LUISTRO, Secretary, Department of Education
and HON. MANUEL A. ROXAS II, Secretary, Department of Interior and
Local Government, Respondents.
x---------------------------------x
G.R. No. 206355
MILLENNIUM SAINT FOUNDATION, INC., ATTY. RAMON PEDROSA,
ATTY. CITA BORROMEO-GARCIA, STELLAACEDERA, ATTY. BERTENI
CATALUNA CAUSING, Petitioners,
vs.
OFFICE OF THE PRESIDENT, OFFICE OF THE EXECUTIVE SECRETARY,
DEPARTMENT OF HEALTH, DEPARTMENT OF
EDUCATION, Respondents.
x---------------------------------x
G.R. No. 207111
JOHN WALTER B. JUAT, MARY M. IMBONG, ANTHONY VICTORIO B.
LUMICAO, JOSEPH MARTIN Q. VERDEJO, ANTONIA EMMA R. ROXAS
and LOTA LAT-GUERRERO, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO
ABAD, Secretary, Department of Budget and Management, HON.
ENRIQUE T. ONA, Secretary, Department of Health, HON. ARMIN A.
LUISTRO, Secretary, Department of Education, Culture and Sports and
HON. MANUEL A. ROXAS II, Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 207172
COUPLES FOR CHRIST FOUNDATION, INC., SPOUSES JUAN CARLOS
ARTADI SARMIENTO AND FRANCESCA ISABELLE BESINGA-
SARMIENTO, AND SPOUSES LUIS FRANCIS A. RODRIGO, JR. and
DEBORAH MARIE VERONICA N. RODRIGO, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. FLORENCIO
B. ABAD, Secretary, Department of Budget and Management, HON.
ENRIQUE T. ONA, Secretary, Department of Health, HON. ARMIN A.
LUISTRO, Secretary, Department of Education, Culture and Sports and
HON. MANUELA. ROXAS II, Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 207563
ALMARIM CENTI TILLAH and ABDULHUSSEIN M. KASHIM, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE T.
ONA, Secretary of the Department of Health, and HON. ARMIN A.
LUISTRO,Secretary of the Department of Budget and
Management, Respondents.
DECISION
MENDOZA, J.:
Freedom of religion was accorded preferred status by the framers of our
fundamental law. And this Court has consistently affirmed this preferred status,
well aware that it is "designed to protect the broadest possible liberty of
conscience, to allow each man to believe as his conscience directs, to profess
his beliefs , and to live as he believes he ought to live, consistent with the
liberty of others and with the common good."1
To this day, poverty is still a major stumbling block to the nation's emergence
as a developed country, leaving our people beleaguered in a state of hunger,
illiteracy and unemployment. While governmental policies have been geared
towards the revitalization of the economy, the bludgeoning dearth in social
services remains to be a problem that concerns not only the poor, but every
member of society. The government continues to tread on a trying path to the
realization of its very purpose, that is, the general welfare of the Filipino people
and the development of the country as a whole. The legislative branch, as the
main facet of a representative government, endeavors to enact laws and
policies that aim to remedy looming societal woes, while the executive is
closed set to fully implement these measures and bring concrete and
substantial solutions within the reach of Juan dela Cruz. Seemingly distant is
the judicial branch, oftentimes regarded as an inert governmental body that
merely casts its watchful eyes on clashing stakeholders until it is called upon to
adjudicate. Passive, yet reflexive when called into action, the Judiciary then
willingly embarks on its solemn duty to interpret legislation vis-a-vis the most
vital and enduring principle that holds Philippine society together - the
supremacy of the Philippine Constitution.
Nothing has polarized the nation more in recent years than the issues of
population growth control, abortion and contraception. As in every democratic
society, diametrically opposed views on the subjects and their perceived
consequences freely circulate in various media. From television debates 2 to
sticker campaigns,3 from rallies by socio-political activists to mass gatherings
organized by members of the clergy4 - the clash between the seemingly
antithetical ideologies of the religious conservatives and progressive liberals
has caused a deep division in every level of the society. Despite calls to
withhold support thereto, however, Republic Act (R.A.) No. 10354, otherwise
known as the Responsible Parenthood and Reproductive Health Act of 2012
(RH Law), was enacted by Congress on December 21, 2012.
Shortly after the President placed his imprimatur on the said law, challengers
from various sectors of society came knocking on the doors of the Court,
beckoning it to wield the sword that strikes down constitutional disobedience.
Aware of the profound and lasting impact that its decision may produce, the
Court now faces the iuris controversy, as presented in fourteen (14) petitions
and two (2) petitions- in-intervention, to wit:
(1) Petition for Certiorari and Prohibition,5 filed by spouses Attys.
James M. Imbong and Lovely Ann C. Imbong, in their personal
capacities as citizens, lawyers and taxpayers and on behalf of their
minor children; and the Magnificat Child Leaming Center, Inc., a
domestic, privately-owned educational institution (Jmbong);
(2) Petition for Prohibition,6 filed by the Alliance for the Family
Foundation Philippines, Inc., through its president, Atty. Maria
Concepcion S. Noche7 and several others8 in their personal capacities
as citizens and on behalf of the generations unborn (ALFI);
(3) Petition for Certiorari,9 filed by the Task Force for Family and Life
Visayas, Inc., and Valeriano S. Avila, in their capacities as citizens and
taxpayers (Task Force Family);
(4) Petition for Certiorari and Prohibition,10 filed by Serve Life Cagayan
De Oro City, Inc.,11 Rosevale Foundation, Inc.,12 a domestic, privately-
owned educational institution, and several others, 13 in their capacities
as citizens (Serve Life);
(5) Petition,14 filed by Expedito A. Bugarin, Jr. in his capacity as a
citizen (Bugarin);
(6) Petition for Certiorari and Prohibition,15 filed by Eduardo Olaguer
and the Catholic Xybrspace Apostolate of the Philippines, 16 in their
capacities as a citizens and taxpayers (Olaguer);
(7) Petition for Certiorari and Prohibition,17 filed by the Philippine
Alliance of Xseminarians Inc.,18 and several others19 in their capacities
as citizens and taxpayers (PAX);
(8) Petition,20 filed by Reynaldo J. Echavez, M.D. and several
others,21 in their capacities as citizens and taxpayers (Echavez);
(9) Petition for Certiorari and Prohibition,22 filed by spouses Francisco
and Maria Fenny C. Tatad and Atty. Alan F. Paguia, in their capacities
as citizens, taxpayers and on behalf of those yet unborn. Atty. Alan F.
Paguia is also proceeding in his capacity as a member of the Bar
(Tatad);
(10) Petition for Certiorari and Prohibition,23 filed by Pro-Life Philippines
Foundation Inc.24 and several others,25 in their capacities as citizens
and taxpayers and on behalf of its associates who are members of the
Bar (Pro-Life);
(11) Petition for Prohibition,26 filed by Millennium Saint Foundation,
Inc.,27 Attys. Ramon Pedrosa, Cita Borromeo-Garcia, Stella Acedera,
and Berteni Catalufia Causing, in their capacities as citizens, taxpayers
and members of the Bar (MSF);
(12) Petition for Certiorari and Prohibition,28 filed by John Walter B. Juat
and several others,29 in their capacities as citizens (Juat) ;
(13) Petition for Certiorari and Prohibition,30 filed by Couples for Christ
Foundation, Inc. and several others,31 in their capacities as citizens
(CFC);
(14) Petition for Prohibition32 filed by Almarim Centi Tillah and
Abdulhussein M. Kashim in their capacities as citizens and taxpayers
(Tillah); and
(15) Petition-In-Intervention,33 filed by Atty. Samson S. Alcantara in his
capacity as a citizen and a taxpayer (Alcantara); and
(16) Petition-In-Intervention,34 filed by Buhay Hayaang Yumabong (B
UHAY) , an accredited political party.
A perusal of the foregoing petitions shows that the petitioners are assailing the
constitutionality of RH Law on the following GROUNDS:
• The RH Law violates the right to life of the unborn. According to the
petitioners, notwithstanding its declared policy against abortion, the
implementation of the RH Law would authorize the purchase of
hormonal contraceptives, intra-uterine devices and injectables which
are abortives, in violation of Section 12, Article II of the Constitution
which guarantees protection of both the life of the mother and the life
of the unborn from conception.35
• The RH Law violates the right to health and the right to protection
against hazardous products. The petitioners posit that the RH Law
provides universal access to contraceptives which are hazardous to
one's health, as it causes cancer and other health problems.36
• The RH Law violates the right to religious freedom. The petitioners
contend that the RH Law violates the constitutional guarantee
respecting religion as it authorizes the use of public funds for the
procurement of contraceptives. For the petitioners, the use of public
 funds for purposes that are believed to be contrary to their beliefs is
included in the constitutional mandate ensuring religious freedom.37
It is also contended that the RH Law threatens conscientious objectors of
criminal prosecution, imprisonment and other forms of punishment, as it
compels medical practitioners 1] to refer patients who seek advice on
reproductive health programs to other doctors; and 2] to provide full and
correct information on reproductive health programs and service, although it is
against their religious beliefs and convictions.38
In this connection, Section 5 .23 of the Implementing Rules and Regulations of
the RH Law (RH-IRR),39 provides that skilled health professionals who are
public officers such as, but not limited to, Provincial, City, or Municipal Health
Officers, medical officers, medical specialists, rural health physicians, hospital
staff nurses, public health nurses, or rural health midwives, who are
specifically charged with the duty to implement these Rules, cannot be
considered as conscientious objectors.40
It is also argued that the RH Law providing for the formulation of mandatory
sex education in schools should not be allowed as it is an affront to their
religious beliefs.41
While the petit10ners recognize that the guarantee of religious freedom is not
absolute, they argue that the RH Law fails to satisfy the "clear and present
danger test" and the "compelling state interest test" to justify the regulation of
the right to free exercise of religion and the right to free speech. 42
• The RH Law violates the constitutional provision on involuntary
servitude. According to the petitioners, the RH Law subjects medical
practitioners to involuntary servitude because, to be accredited under
the PhilHealth program, they are compelled to provide forty-eight (48)
hours of pro bona services for indigent women, under threat of criminal
prosecution, imprisonment and other forms of punishment. 43
The petitioners explain that since a majority of patients are covered by
PhilHealth, a medical practitioner would effectively be forced to render
reproductive health services since the lack of PhilHealth accreditation would
mean that the majority of the public would no longer be able to avail of the
practitioners services.44
• The RH Law violates the right to equal protection of the law. It is
claimed that the RH Law discriminates against the poor as it makes
them the primary target of the government program that promotes
contraceptive use. The petitioners argue that, rather than promoting
reproductive health among the poor, the RH Law seeks to introduce
contraceptives that would effectively reduce the number of the poor. 45
• The RH Law is "void-for-vagueness" in violation of the due process
clause of the Constitution. In imposing the penalty of imprisonment
and/or fine for "any violation," it is vague because it does not define the
type of conduct to be treated as "violation" of the RH Law. 46
In this connection, it is claimed that "Section 7 of the RH Law violates the right
to due process by removing from them (the people) the right to manage their
own affairs and to decide what kind of health facility they shall be and what
kind of services they shall offer."47 It ignores the management prerogative
inherent in corporations for employers to conduct their affairs in accordance
with their own discretion and judgment.
• The RH Law violates the right to free speech. To compel a person to
explain a full range of family planning methods is plainly to curtail his
right to expound only his own preferred way of family planning. The
petitioners note that although exemption is granted to institutions
owned and operated by religious groups, they are still forced to refer
their patients to another healthcare facility willing to perform the service
or procedure.48
• The RH Law intrudes into the zone of privacy of one's family
protected by the Constitution. It is contended that the RH Law
providing for mandatory reproductive health education intrudes upon
their constitutional right to raise their children in accordance with their
beliefs.49
It is claimed that, by giving absolute authority to the person who will undergo
reproductive health procedure, the RH Law forsakes any real dialogue
between the spouses and impedes the right of spouses to mutually decide on
matters pertaining to the overall well-being of their family. In the same breath,
it is also claimed that the parents of a child who has suffered a miscarriage are
deprived of parental authority to determine whether their child should use
contraceptives.50
• The RH Law violates the constitutional principle of non-delegation of
legislative authority. The petitioners question the delegation by
Congress to the FDA of the power to determine whether a product is
 non-abortifacient and to be included in the Emergency Drugs List
(EDL).51
• The RH Law violates the one subject/one bill rule provision under
Section 26( 1 ), Article VI of the Constitution. 52
• The RH Law violates Natural Law.53
• The RH Law violates the principle of Autonomy of Local Government
Units (LGUs) and the Autonomous Region of Muslim Mindanao
{ARMM). It is contended that the RH Law, providing for reproductive
health measures at the local government level and the ARMM,
infringes upon the powers devolved to LGUs and the ARMM under the
Local Government Code and R.A . No. 9054.54
Various parties also sought and were granted leave to file their respective
comments-in-intervention in defense of the constitutionality of the RH Law.
Aside from the Office of the Solicitor General (OSG) which commented on the
petitions in behalf of the respondents, 55 Congressman Edcel C.
Lagman,56 former officials of the Department of Health Dr. Esperanza I. Cabral,
Jamie Galvez-Tan, and Dr. Alberto G. Romualdez,57 the Filipino Catholic
Voices for Reproductive Health (C4RH),58 Ana Theresa "Risa"
Hontiveros,59 and Atty. Joan De Venecia60 also filed their respective Comments-
in-Intervention in conjunction with several others. On June 4, 2013, Senator
Pia Juliana S. Cayetano was also granted leave to intervene.61
The respondents, aside from traversing the substantive arguments of the
petitioners, pray for the dismissal of the petitions for the principal reasons that
1] there is no actual case or controversy and, therefore, the issues are not yet
ripe for judicial determination.; 2] some petitioners lack standing to question
the RH Law; and 3] the petitions are essentially petitions for declaratory relief
over which the Court has no original jurisdiction.
Meanwhile, on March 15, 2013, the RH-IRR for the enforcement of the
assailed legislation took effect.
On March 19, 2013, after considering the issues and arguments raised, the
Court issued the Status Quo Ante Order (SQAO), enjoining the effects and
implementation of the assailed legislation for a period of one hundred and
twenty (120) days, or until July 17, 2013. 62
On May 30, 2013, the Court held a preliminary conference with the counsels of
the parties to determine and/or identify the pertinent issues raised by the
parties and the sequence by which these issues were to be discussed in the
oral arguments. On July 9 and 23, 2013, and on August 6, 13, and 27, 2013,
the cases were heard on oral argument. On July 16, 2013, the SQAO was
ordered extended until further orders of the Court. 63
Thereafter, the Court directed the parties to submit their respective
memoranda within sixty (60) days and, at the same time posed several
questions for their clarification on some contentions of the parties. 64
The Status Quo Ante
(Population, Contraceptive and Reproductive Health Laws
Prior to the RH Law
Long before the incipience of the RH Law, the country has allowed the sale,
dispensation and distribution of contraceptive drugs and devices. As far back
as June 18, 1966, the country enacted R.A. No. 4729 entitled "An Act to
Regu,late the Sale, Dispensation, and/or Distribution of Contraceptive Drugs
and Devices." Although contraceptive drugs and devices were allowed, they
could not be sold, dispensed or distributed "unless such sale, dispensation and
distribution is by a duly licensed drug store or pharmaceutical company and
with the prescription of a qualified medical practitioner." 65
In addition, R.A. No. 5921,66 approved on June 21, 1969, contained provisions
relative to "dispensing of abortifacients or anti-conceptional substances and
devices." Under Section 37 thereof, it was provided that "no drug or chemical
product or device capable of provoking abortion or preventing conception as
classified by the Food and Drug Administration shall be delivered or sold to
any person without a proper prescription by a duly licensed physician."
On December 11, 1967, the Philippines, adhering to the UN Declaration on
Population, which recognized that the population problem should be
considered as the principal element for long-term economic development,
enacted measures that promoted male vasectomy and tubal ligation to mitigate
population growth.67 Among these measures included R.A. No. 6365, approved
on August 16, 1971, entitled "An Act Establishing a National Policy on
Population, Creating the Commission on Population and for Other Purposes. "
The law envisioned that "family planning will be made part of a broad
educational program; safe and effective means will be provided to couples
desiring to space or limit family size; mortality and morbidity rates will be
further reduced."
To further strengthen R.A. No. 6365, then President Ferdinand E . Marcos
issued Presidential Decree. (P.D.) No. 79,68 dated December 8, 1972, which,
among others, made "family planning a part of a broad educational program,"
provided "family planning services as a part of over-all health care," and made
"available all acceptable methods of contraception, except abortion, to all
Filipino citizens desirous of spacing, limiting or preventing pregnancies."
Through the years, however, the use of contraceptives and family planning
methods evolved from being a component of demographic management, to
one centered on the promotion of public health, particularly, reproductive
health.69 Under that policy, the country gave priority to one's right to freely
choose the method of family planning to be adopted, in conformity with its
adherence to the commitments made in the International Conference on
Population and Development.70 Thus, on August 14, 2009, the country enacted
R.A. No. 9710 or "The Magna Carta for Women, " which, among others,
mandated the State to provide for comprehensive health services and
programs for women, including family planning and sex education. 71
The RH Law
Despite the foregoing legislative measures, the population of the country kept
on galloping at an uncontrollable pace. From a paltry number of just over 27
million Filipinos in 1960, the population of the country reached over 76 million
in the year 2000 and over 92 million in 2010.72 The executive and the
legislative, thus, felt that the measures were still not adequate. To rein in the
problem, the RH Law was enacted to provide Filipinos, especially the poor and
the marginalized, access and information to the full range of modem family
planning methods, and to ensure that its objective to provide for the peoples'
right to reproductive health be achieved. To make it more effective, the RH
Law made it mandatory for health providers to provide information on the full
range of modem family planning methods, supplies and services, and for
schools to provide reproductive health education. To put teeth to it, the RH
Law criminalizes certain acts of refusals to carry out its mandates.
Stated differently, the RH Law is an enhancement measure to fortify and make
effective the current laws on contraception, women's health and population
control.
Prayer of the Petitioners - Maintain the Status Quo
The petitioners are one in praying that the entire RH Law be declared
unconstitutional. Petitioner ALFI, in particular, argues that the government
sponsored contraception program, the very essence of the RH Law, violates
the right to health of women and the sanctity of life, which the State is
mandated to protect and promote. Thus, ALFI prays that "the status quo ante -
the situation prior to the passage of the RH Law - must be maintained."73 It
explains:
x x x. The instant Petition does not question contraception and contraceptives
per se. As provided under Republic Act No. 5921 and Republic Act No. 4729,
the sale and distribution of contraceptives are prohibited unless dispensed by
a prescription duly licensed by a physician. What the Petitioners find
deplorable and repugnant under the RH Law is the role that the State and its
agencies - the entire bureaucracy, from the cabinet secretaries down to the
barangay officials in the remotest areas of the country - is made to play in the
implementation of the contraception program to the fullest extent possible
using taxpayers' money. The State then will be the funder and provider of all
forms of family planning methods and the implementer of the program by
ensuring the widespread dissemination of, and universal access to, a full range
of family planning methods, devices and supplies. 74
ISSUES
After a scrutiny of the various arguments and contentions of the parties, the
Court has synthesized and refined them to the following principal issues:
I. PROCEDURAL: Whether the Court may exercise its power of judicial review
over the controversy.
1] Power of Judicial Review
2] Actual Case or Controversy
3] Facial Challenge
4] Locus Standi
5] Declaratory Relief
6] One Subject/One Title Rule
II. SUBSTANTIVE: Whether the RH law is unconstitutional:
1] Right to Life
2] Right to Health
3] Freedom of Religion and the Right to Free Speech
4] The Family
5] Freedom of Expression and Academic Freedom
6] Due Process
7] Equal Protection
8] Involuntary Servitude
9] Delegation of Authority to the FDA
10] Autonomy of Local Govemments/ARMM
DISCUSSION
Before delving into the constitutionality of the RH Law and its implementing
rules, it behooves the Court to resolve some procedural impediments.
I. PROCEDURAL ISSUE: Whether the Court can exercise its power of judicial
review over the controversy.
The Power of Judicial Review
In its attempt to persuade the Court to stay its judicial hand, the OSG asserts
that it should submit to the legislative and political wisdom of Congress and
respect the compromises made in the crafting of the RH Law, it being "a
product of a majoritarian democratic process"75 and "characterized by an
inordinate amount of transparency."76 The OSG posits that the authority of the
Court to review social legislation like the RH Law by certiorari is "weak," since
the Constitution vests the discretion to implement the constitutional policies
and positive norms with the political departments, in particular, with
Congress.77 It further asserts that in view of the Court's ruling in Southern
Hemisphere v. Anti-Terrorism Council,78 the remedies of certiorari and
prohibition utilized by the petitioners are improper to assail the validity of the
acts of the legislature.79
Moreover, the OSG submits that as an "as applied challenge," it cannot
prosper considering that the assailed law has yet to be enforced and applied to
the petitioners, and that the government has yet to distribute reproductive
health devices that are abortive. It claims that the RH Law cannot be
challenged "on its face" as it is not a speech-regulating measure.80
In many cases involving the determination of the constitutionality of the actions
of the Executive and the Legislature, it is often sought that the Court temper its
exercise of judicial power and accord due respect to the wisdom of its co-equal
branch on the basis of the principle of separation of powers. To be clear, the
separation of powers is a fundamental principle in our system of government,
which obtains not through express provision but by actual division in our
Constitution. Each department of the government has exclusive cognizance of
matters within its jurisdiction and is supreme within its own sphere. 81
Thus, the 1987 Constitution provides that: (a) the legislative power shall be
vested in the Congress of the Philippines; 82 (b) the executive power shall be
vested in the President of the Philippines; 83 and (c) the judicial power shall be
vested in one Supreme Court and in such lower courts as may be established
by law.84 The Constitution has truly blocked out with deft strokes and in bold
lines, the allotment of powers among the three branches of government. 85
In its relationship with its co-equals, the Judiciary recognizes the doctrine of
separation of powers which imposes upon the courts proper restraint, born of
the nature of their functions and of their respect for the other branches of
government, in striking down the acts of the Executive or the Legislature as
unconstitutional. Verily, the policy is a harmonious blend of courtesy and
caution.86
It has also long been observed, however, that in times of social disquietude or
political instability, the great landmarks of the Constitution are apt to be
forgotten or marred, if not entirely obliterated. 87 In order to address this, the
Constitution impresses upon the Court to respect the acts performed by a co-
equal branch done within its sphere of competence and authority, but at the
same time, allows it to cross the line of separation - but only at a very limited
and specific point - to determine whether the acts of the executive and the
legislative branches are null because they were undertaken with grave abuse
of discretion.88 Thus, while the Court may not pass upon questions of wisdom,
justice or expediency of the RH Law, it may do so where an attendant
unconstitutionality or grave abuse of discretion results. 89 The Court must
demonstrate its unflinching commitment to protect those cherished rights and
principles embodied in the Constitution.
In this connection, it bears adding that while the scope of judicial power of
review may be limited, the Constitution makes no distinction as to the kind of
legislation that may be subject to judicial scrutiny, be it in the form of social
legislation or otherwise. The reason is simple and goes back to the earlier
point. The Court may pass upon the constitutionality of acts of the legislative
and the executive branches, since its duty is not to review their collective
wisdom but, rather, to make sure that they have acted in consonance with their
respective authorities and rights as mandated of them by the Constitution. If
after said review, the Court finds no constitutional violations of any sort, then, it
has no more authority of proscribing the actions under review. 90 This is in line
with Article VIII, Section 1 of the Constitution which 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. [Emphases supplied]
As far back as Tanada v. Angara,91 the Court has unequivocally declared that
certiorari, prohibition and mandamus are appropriate remedies to raise
constitutional issues and to review and/or prohibit/nullify, when proper, acts of
legislative and executive officials, as there is no other plain, speedy or
adequate remedy in the ordinary course of law. This ruling was later on applied
in Macalintal v. COMELEC,92 Aldaba v. COMELEC,93 Magallona v. Ermita,94 and
countless others. In Tanada, the Court wrote:
In seeking to nullify an act of the Philippine Senate on the ground that it
contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to
have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. "The question thus posed is judicial
rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld. " Once a "controversy as to the
application or interpretation of constitutional provision is raised before this
Court (as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide. [Emphasis supplied]
In the scholarly estimation of former Supreme Court Justice Florentino
Feliciano, "judicial review is essential for the maintenance and enforcement of
the separation of powers and the balancing of powers among the three great
departments of government through the definition and maintenance of the
boundaries of authority and control between them. To him, judicial review is
the chief, indeed the only, medium of participation - or instrument of
intervention - of the judiciary in that balancing operation. 95
Lest it be misunderstood, it bears emphasizing that the Court does not have
the unbridled authority to rule on just any and every claim of constitutional
violation. Jurisprudence is replete with the rule that the power of judicial review
is limited by four exacting requisites, viz : (a) there must be an actual case or
controversy; (b) the 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. 96
Actual Case or Controversy
Proponents of the RH Law submit that the subj ect petitions do not present any
actual case or controversy because the RH Law has yet to be
implemented.97 They claim that the questions raised by the petitions are not yet
concrete and ripe for adjudication since no one has been charged with
violating any of its provisions and that there is no showing that any of the
petitioners' rights has been adversely affected by its operation. 98 In short, it is
contended that judicial review of the RH Law is premature.
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. 99 The rule is that
courts 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; that is, it must concern a real, tangible 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.100
Corollary to the requirement of an actual case or controversy is the
requirement of ripeness.101 A question is ripe for adjudication when the act
being challenged has had a direct adverse effect on the individual challenging
it. For a case to be considered ripe for adjudication, it is a prerequisite that
something has 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 himself as a result of the challenged
action. He must show that he has sustained or is immediately in danger of
sustaining some direct injury as a result of the act complained of102
In The Province of North Cotabato v. The Government of the Republic of the
Philippines,103 where the constitutionality of an unimplemented Memorandum of
Agreement on the Ancestral Domain (MOA-AD) was put in question, it was
argued that the Court has no authority to pass upon the issues raised as there
was yet no concrete act performed that could possibly violate the petitioners'
and the intervenors' rights. Citing precedents, the Court ruled that the fact of
the law or act in question being not yet effective does not negate ripeness.
Concrete acts under a law are not necessary to render the controversy ripe.
Even a singular violation of the Constitution and/or the law is enough to
awaken judicial duty.
In this case, the Court is of the view that an actual case or controversy exists
and that the same is ripe for judicial determination. Considering that the RH
Law and its implementing rules have already taken effect and that budgetary
measures to carry out the law have already been passed, it is evident that the
subject petitions present a justiciable controversy. As stated earlier, when an
action of the legislative branch is seriously alleged to have infringed the
Constitution, it not only becomes a right, but also a duty of the Judiciary to
settle the dispute.104
Moreover, the petitioners have shown that the case is so because medical
practitioners or medical providers are in danger of being criminally prosecuted
under the RH Law for vague violations thereof, particularly public health
officers who are threatened to be dismissed from the service with forfeiture of
retirement and other benefits. They must, at least, be heard on the matter
NOW.
Facial Challenge
The OSG also assails the propriety of the facial challenge lodged by the
subject petitions, contending that the RH Law cannot be challenged "on its
face" as it is not a speech regulating measure. 105
The Court is not persuaded.
In United States (US) constitutional law, a facial challenge, also known as a
First Amendment Challenge, is one that is launched to assail the validity of
statutes concerning not only protected speech, but also all other rights in the
First Amendment.106 These include religious freedom, freedom of the press,
and the right of the people to peaceably assemble, and to petition the
Government for a redress of grievances.107 After all, the fundamental right to
religious freedom, freedom of the press and peaceful assembly are but
component rights of the right to one's freedom of expression, as they are
modes which one's thoughts are externalized.
In this jurisdiction, the application of doctrines originating from the U.S. has
been generally maintained, albeit with some modifications. While this Court
has withheld the application of facial challenges to strictly penal statues,108 it
has expanded its scope to cover statutes not only regulating free speech, but
also those involving religious freedom, and other fundamental rights.109 The
underlying reason for this modification is simple. For unlike its counterpart in
the U.S., this Court, under its expanded jurisdiction, is mandated by the
Fundamental Law 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.110 Verily, the framers of Our Constitution envisioned a proactive
Judiciary, ever vigilant with its duty to maintain the supremacy of the
Constitution.
Consequently, considering that the foregoing petitions have seriously alleged
that the constitutional human rights to life, speech and religion and other
fundamental rights mentioned above have been violated by the assailed
legislation, the Court has authority to take cognizance of these kindred
petitions and to determine if the RH Law can indeed pass constitutional
scrutiny. To dismiss these petitions on the simple expedient that there exist no
actual case or controversy, would diminish this Court as a reactive branch of
government, acting only when the Fundamental Law has been transgressed,
to the detriment of the Filipino people.
Locus Standi
The OSG also attacks the legal personality of the petitioners to file their
respective petitions. It contends that the "as applied challenge" lodged by the
petitioners cannot prosper as the assailed law has yet to be enforced and
applied against them,111 and the government has yet to distribute reproductive
health devices that are abortive.112
The petitioners, for their part, invariably invoke the "transcendental
importance" doctrine and their status as citizens and taxpayers in establishing
the requisite locus standi.
Locus standi or legal standing is 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 challenged governmental act.113 It requires a personal stake in the
outcome of the controversy as to assure the concrete adverseness which
sharpens the presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions. 114
In relation to locus standi, the "as applied challenge" embodies the rule that
one can challenge the constitutionality of a statute only if he asserts a violation
of his own rights. The rule prohibits one from challenging the constitutionality
of the statute grounded on a violation of the rights of third persons not before
the court. This rule is also known as the prohibition against third-party
standing.115
Transcendental Importance
Notwithstanding, the Court leans on the doctrine that "the rule on standing is a
matter of procedure, hence, can be relaxed for non-traditional plaintiffs like
ordinary citizens, taxpayers, and legislators when the public interest so
requires, such as when the matter is of transcendental importance, of
overreaching significance to society, or of paramount public interest." 116
In Coconut Oil Refiners Association, Inc. v. Torres, 117 the Court held that in
cases of paramount importance where serious constitutional questions are
involved, the standing requirement may be relaxed and a suit may be allowed
to prosper even where there is no direct injury to the party claiming the right of
judicial review. In the first Emergency Powers Cases,118 ordinary citizens and
taxpayers were allowed to question the constitutionality of several executive
orders although they had only an indirect and general interest shared in
common with the public.
With these said, even if the constitutionality of the RH Law may not be assailed
through an "as-applied challenge, still, the Court has time and again acted
liberally on the locus s tandi requirement. It has accorded certain individuals
standing to sue, not otherwise directly injured or with material interest affected
by a Government act, provided a constitutional issue of transcendental
importance is invoked. The rule on locus standi is, after all, a procedural
technicality which the Court has, on more than one occasion, waived or
relaxed, thus allowing non-traditional plaintiffs, such as concerned citizens,
taxpayers, voters or legislators, to sue in the public interest, albeit they may
not have been directly injured by the operation of a law or any other
government act. As held in Jaworski v. PAGCOR: 119
Granting arguendo that the present action cannot be properly treated as a
petition for prohibition, the transcendental importance of the issues involved in
this case warrants that we set aside the technical defects and take primary
jurisdiction over the petition at bar. One cannot deny that the issues raised
herein have potentially pervasive influence on the social and moral well being
of this nation, specially the youth; hence, their proper and just determination is
an imperative need. This is in accordance with the well-entrenched principle
that rules of procedure are not inflexible tools designed to hinder or delay, but
to facilitate and promote the administration of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate, rather
than promote substantial justice, must always be eschewed. (Emphasis
supplied)
In view of the seriousness, novelty and weight as precedents, not only to the
public, but also to the bench and bar, the issues raised must be resolved for
the guidance of all. After all, the RH Law drastically affects the constitutional
provisions on the right to life and health, the freedom of religion and
expression and other constitutional rights. Mindful of all these and the fact that
the issues of contraception and reproductive health have already caused deep
division among a broad spectrum of society, the Court entertains no doubt that
the petitions raise issues of transcendental importance warranting immediate
court adjudication. More importantly, considering that it is the right to life of the
mother and the unborn which is primarily at issue, the Court need not wait for a
life to be taken away before taking action.
The Court cannot, and should not, exercise judicial restraint at this time when
rights enshrined in the Constitution are being imperilled to be violated. To do
so, when the life of either the mother or her child is at stake, would lead to
irreparable consequences.
Declaratory Relief
The respondents also assail the petitions because they are essentially
petitions for declaratory relief over which the Court has no original
jurisdiction.120 Suffice it to state that most of the petitions are praying for
injunctive reliefs and so the Court would just consider them as petitions for
prohibition under Rule 65, over which it has original jurisdiction. Where the
case has far-reaching implications and prays for injunctive reliefs, the Court
may consider them as petitions for prohibition under Rule 65. 121
One Subject-One Title
The petitioners also question the constitutionality of the RH Law, claiming that
it violates Section 26(1 ), Article VI of the Constitution, 122 prescribing the one
subject-one title rule. According to them, being one for reproductive health with
responsible parenthood, the assailed legislation violates the constitutional
standards of due process by concealing its true intent - to act as a population
control measure.123
To belittle the challenge, the respondents insist that the RH Law is not a birth
or population control measure,124 and that the concepts of "responsible
parenthood" and "reproductive health" are both interrelated as they are
inseparable.125
Despite efforts to push the RH Law as a reproductive health law, the Court
sees it as principally a population control measure. The corpus of the RH Law
is geared towards the reduction of the country's population. While it claims to
save lives and keep our women and children healthy, it also promotes
pregnancy-preventing products. As stated earlier, the RH Law emphasizes the
need to provide Filipinos, especially the poor and the marginalized, with
access to information on the full range of modem family planning products and
methods. These family planning methods, natural or modem, however, are
clearly geared towards the prevention of pregnancy.
For said reason, the manifest underlying objective of the RH Law is to reduce
the number of births in the country.
It cannot be denied that the measure also seeks to provide pre-natal and post-
natal care as well. A large portion of the law, however, covers the
dissemination of information and provisions on access to medically-safe, non-
abortifacient, effective, legal, affordable, and quality reproductive health care
services, methods, devices, and supplies, which are all intended to prevent
pregnancy.
The Court, thus, agrees with the petitioners' contention that the whole idea of
contraception pervades the entire RH Law. It is, in fact, the central idea of the
RH Law.126 Indeed, remove the provisions that refer to contraception or are
related to it and the RH Law loses its very foundation. 127 As earlier explained,
"the other positive provisions such as skilled birth attendance, maternal care
including pre-and post-natal services, prevention and management of
reproductive tract infections including HIV/AIDS are already provided for in the
Magna Carta for Women."128
Be that as it may, the RH Law does not violate the one subject/one bill rule. In
Benjamin E. Cawaling, Jr. v. The Commission on Elections and Rep. Francis
Joseph G Escudero, it was written:
It is well-settled that the "one title-one subject" rule does not require the
Congress to employ in the title of the enactment language of such precision as
to mirror, fully index or catalogue all the contents and the minute details
therein. The rule is sufficiently complied with if the title is comprehensive
enough as to include the general object which the statute seeks to effect, and
where, as here, the persons interested are informed of the nature, scope and
consequences of the proposed law and its operation. Moreover, this Court has
invariably adopted a liberal rather than technical construction of the rule "so as
not to cripple or impede legislation." [Emphases supplied]
In this case, a textual analysis of the various provisions of the law shows that
both "reproductive health" and "responsible parenthood" are interrelated and
germane to the overriding objective to control the population growth. As
expressed in the first paragraph of Section 2 of the RH Law:
SEC. 2. Declaration of Policy. - The State recognizes and guarantees the
human rights of all persons including their right to equality and
nondiscrimination of these rights, the right to sustainable human development,
the right to health which includes reproductive health, the right to education
and information, and the right to choose and make decisions for themselves in
accordance with their religious convictions, ethics, cultural beliefs, and the
demands of responsible parenthood.
The one subject/one title rule expresses the principle that the title of a law
must not be "so uncertain that the average person reading it would not be
informed of the purpose of the enactment or put on inquiry as to its contents,
or which is misleading, either in referring to or indicating one subject where
another or different one is really embraced in the act, or in omitting any
expression or indication of the real subject or scope of the act." 129
Considering the close intimacy between "reproductive health" and "responsible
parenthood" which bears to the attainment of the goal of achieving
"sustainable human development" as stated under its terms, the Court finds no
reason to believe that Congress intentionally sought to deceive the public as to
the contents of the assailed legislation.
II - SUBSTANTIVE ISSUES:
1-The Right to Life
Position of the Petitioners
The petitioners assail the RH Law because it violates the right to life and
health of the unborn child under Section 12, Article II of the Constitution. The
assailed legislation allowing access to abortifacients/abortives effectively
sanctions abortion.130
According to the petitioners, despite its express terms prohibiting abortion,
Section 4(a) of the RH Law considers contraceptives that prevent the fertilized
ovum to reach and be implanted in the mother's womb as an abortifacient;
thus, sanctioning contraceptives that take effect after fertilization and prior to
implantation, contrary to the intent of the Framers of the Constitution to afford
protection to the fertilized ovum which already has life.
They argue that even if Section 9 of the RH Law allows only "non-abortifacient"
hormonal contraceptives, intrauterine devices, injectables and other safe,
legal, non-abortifacient and effective family planning products and supplies,
medical research shows that contraceptives use results in abortion as they
operate to kill the fertilized ovum which already has life. 131
As it opposes the initiation of life, which is a fundamental human good, the
petitioners assert that the State sanction of contraceptive use contravenes
natural law and is an affront to the dignity of man.132
Finally, it is contended that since Section 9 of the RH Law requires the Food
and Drug Administration (FDA) to certify that the product or supply is not to be
used as an abortifacient, the assailed legislation effectively confirms that
abortifacients are not prohibited. Also considering that the FDA is not the
agency that will actually supervise or administer the use of these products and
supplies to prospective patients, there is no way it can truthfully make a
certification that it shall not be used for abortifacient purposes. 133
Position of the Respondents
For their part, the defenders of the RH Law point out that the intent of the
Framers of the Constitution was simply the prohibition of abortion. They
contend that the RH Law does not violate the Constitution since the said law
emphasizes that only "non-abortifacient" reproductive health care services,
methods, devices products and supplies shall be made accessible to the
public.134
According to the OSG, Congress has made a legislative determination that
contraceptives are not abortifacients by enacting the RH Law. As the RH Law
was enacted with due consideration to various studies and consultations with
the World Health Organization (WHO) and other experts in the medical field, it
is asserted that the Court afford deference and respect to such a determination
and pass judgment only when a particular drug or device is later on
determined as an abortive.135
For his part, respondent Lagman argues that the constitutional protection of
one's right to life is not violated considering that various studies of the WHO
show that life begins from the implantation of the fertilized ovum.
Consequently, he argues that the RH Law is constitutional since the law
specifically provides that only contraceptives that do not prevent the
implantation of the fertilized ovum are allowed. 136
The Court's Position
It is a universally accepted principle that every human being enjoys the right to
life.137
Even if not formally established, the right to life, being grounded on natural
law, is inherent and, therefore, not a creation of, or dependent upon a
particular law, custom, or belief. It precedes and transcends any authority or
the laws of men.
In this jurisdiction, the right to life is given more than ample protection. Section
1, Article III of the Constitution provides:
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.
As expounded earlier, the use of contraceptives and family planning methods
in the Philippines is not of recent vintage. From the enactment of R.A. No.
4729, entitled "An Act To Regulate The Sale, Dispensation, and/or Distribution
of Contraceptive Drugs and Devices "on June 18, 1966, prescribing rules on
contraceptive drugs and devices which prevent fertilization, 138 to the promotion
of male vasectomy and tubal ligation,139 and the ratification of numerous
international agreements, the country has long recognized the need to
promote population control through the use of contraceptives in order to
achieve long-term economic development. Through the years, however, the
use of contraceptives and other family planning methods evolved from being a
component of demographic management, to one centered on the promotion of
public health, particularly, reproductive health. 140
This has resulted in the enactment of various measures promoting women's
rights and health and the overall promotion of the family's well-being. Thus,
aside from R.A. No. 4729, R.A. No. 6365 or "The Population Act of the
Philippines" and R.A. No. 9710, otherwise known as the "The Magna Carta of
Women" were legislated. Notwithstanding this paradigm shift, the Philippine
national population program has always been grounded two cornerstone
principles: "principle of no-abortion" and the "principle of non-coercion."141 As
will be discussed later, these principles are not merely grounded on
administrative policy, but rather, originates from the constitutional protection
expressly provided to afford protection to life and guarantee religious freedom.
When Life Begins*
Majority of the Members of the Court are of the position that the question of
when life begins is a scientific and medical issue that should not be decided, at
this stage, without proper hearing and evidence. During the deliberation,
however, it was agreed upon that the individual members of the Court could
express their own views on this matter.
In this regard, the ponente, is of the strong view that life begins at fertilization.
In answering the question of when life begins, focus should be made on the
particular phrase of Section 12 which reads:
Section 12. The State recognizes the sanctity of family life and shall protect
and strengthen the family as a basic autonomous social institution. It shall
equally protect the life of the mother and the life of the unborn from conception.
The natural and primary right and duty of parents in the rearing of the youth for
civic efficiency and the development of moral character shall receive the
support of the Government.
Textually, the Constitution affords protection to the unborn from conception.
This is undisputable because before conception, there is no unborn to speak
of. For said reason, it is no surprise that the Constitution is mute as to any
proscription prior to conception or when life begins. The problem has arisen
because, amazingly, there are quarters who have conveniently disregarded
the scientific fact that conception is reckoned from fertilization. They are
waving the view that life begins at implantation. Hence, the issue of when life
begins.
In a nutshell, those opposing the RH Law contend that conception is
synonymous with "fertilization" of the female ovum by the male sperm. 142 On
the other side of the spectrum are those who assert that conception refers to
the "implantation" of the fertilized ovum in the uterus. 143
Plain and Legal Meaning
It is a canon in statutory construction that the words of the Constitution should
be interpreted in their plain and ordinary meaning. As held in the recent case
of Chavez v. Judicial Bar Council:144
One of the primary and basic rules in statutory construction is that where the
words of a statute are clear, plain, and free from ambiguity, it must be given its
literal meaning and applied without attempted interpretation. It is a well-settled
principle of constitutional construction that the language employed in the
Constitution must be given their ordinary meaning except where technical
terms are employed. As much as possible, the words of the Constitution
should be understood in the sense they have in common use. What it says
according to the text of the provision to be construed compels acceptance and
negates the power of the courts to alter it, based on the postulate that the
framers and the people mean what they say. Verba legis non est recedendum
- from the words of a statute there should be no departure.
The raison d' etre for the rule is essentially two-fold: First, because it is
assumed that the words in which constitutional provisions are couched
express the objective sought to be attained; and second, because the
Constitution is not primarily a lawyer's document but essentially that of the
people, in whose consciousness it should ever be present as an important
condition for the rule of law to prevail.
In conformity with the above principle, the traditional meaning of the word
"conception" which, as described and defined by all reliable and reputable
sources, means that life begins at fertilization.
Webster's Third New International Dictionary describes it as the act of
becoming pregnant, formation of a viable zygote; the fertilization that results in
a new entity capable of developing into a being like its parents. 145
Black's Law Dictionary gives legal meaning to the term "conception" as the
fecundation of the female ovum by the male spermatozoon resulting in human
life capable of survival and maturation under normal conditions. 146
Even in jurisprudence, an unborn child has already a legal personality. In
Continental Steel Manufacturing Corporation v. Hon. Accredited Voluntary
Arbitrator Allan S. Montano,147 it was written:
Life is not synonymous with civil personality. One need not acquire civil
personality first before he/she could die. Even a child inside the womb already
has life. No less than the Constitution recognizes the life of the unborn from
conception, that the State must protect equally with the life of the mother. If the
unborn already has life, then the cessation thereof even prior to the child being
delivered, qualifies as death. [Emphases in the original]
In Gonzales v. Carhart,148 Justice Anthony Kennedy, writing for the US
Supreme Court, said that the State "has respect for human life at all stages in
the pregnancy" and "a legitimate and substantial interest in preserving and
promoting fetal life." Invariably, in the decision, the fetus was referred to, or
cited, as a baby or a child.149
Intent of the Framers
Records of the Constitutional Convention also shed light on the intention of the
Framers regarding the term "conception" used in Section 12, Article II of the
Constitution. From their deliberations, it clearly refers to the moment of
"fertilization." The records reflect the following:
Rev. Rigos: In Section 9, page 3, there is a sentence which reads:
"The State shall equally protect the life of the mother and the life of the unborn
from the moment of conception."
When is the moment of conception?
xxx
Mr. Villegas: As I explained in the sponsorship speech, it is when the ovum is
fertilized by the sperm that there is human life. x x x. 150
xxx
As to why conception is reckoned from fertilization and, as such, the beginning
of human life, it was explained:
Mr. Villegas: I propose to review this issue in a biological manner. The first
question that needs to be answered is: Is the fertilized ovum alive? Biologically
categorically says yes, the fertilized ovum is alive. First of all, like all living
organisms, it takes in nutrients which it processes by itself. It begins doing this
upon fertilization. Secondly, as it takes in these nutrients, it grows from within.
Thirdly, it multiplies itself at a geometric rate in the continuous process of cell
division. All these processes are vital signs of life. Therefore, there is no
question that biologically the fertilized ovum has life.
The second question: Is it human? Genetics gives an equally categorical "yes."
At the moment of conception, the nuclei of the ovum and the sperm rupture. As
this happens 23 chromosomes from the ovum combine with 23 chromosomes
of the sperm to form a total of 46 chromosomes. A chromosome count of 46 is
found only - and I repeat, only in human cells. Therefore, the fertilized ovum is
human.
Since these questions have been answered affirmatively, we must conclude
that if the fertilized ovum is both alive and human, then, as night follows day, it
must be human life. Its nature is human. 151
Why the Constitution used the phrase "from the moment of conception" and
not "from the moment of fertilization" was not because of doubt when human
life begins, but rather, because:
Mr. Tingson: x x x x the phrase from the moment of conception" was described
by us here before with the scientific phrase "fertilized ovum" may be beyond
the comprehension of some people; we want to use the simpler phrase "from
the moment of conception."152
Thus, in order to ensure that the fertilized ovum is given ample protection
under the Constitution, it was discussed:
Rev. Rigos: Yes, we think that the word "unborn" is sufficient for the purpose of
writing a Constitution, without specifying "from the moment of conception."
Mr. Davide: I would not subscribe to that particular view because according to
the Commissioner's own admission, he would leave it to Congress to define
when life begins. So, Congress can define life to begin from six months after
fertilization; and that would really be very, very, dangerous. It is now
determined by science that life begins from the moment of conception. There
can be no doubt about it. So we should not give any doubt to Congress, too. 153
Upon further inquiry, it was asked:
Mr. Gascon: Mr. Presiding Officer, I would like to ask a question on that point.
Actually, that is one of the questions I was going to raise during the period of
interpellations but it has been expressed already. The provision, as proposed
right now states:
The State shall equally protect the life of the mother and the life of the unborn
from the moment of conception.
When it speaks of "from the moment of conception," does this mean when the
egg meets the sperm?
Mr. Villegas: Yes, the ovum is fertilized by the sperm.
Mr. Gascon: Therefore that does not leave to Congress the right to determine
whether certain contraceptives that we know today are abortifacient or not
because it is a fact that some of the so-called contraceptives deter the rooting
of the ovum in the uterus. If fertilization has already occurred, the next process
is for the fertilized ovum to travel towards the uterus and to take root. What
happens with some contraceptives is that they stop the opportunity for the
fertilized ovum to reach the uterus. Therefore, if we take the provision as it is
proposed, these so called contraceptives should be banned.
Mr. Villegas: Yes, if that physical fact is established, then that is what is called
abortifacient and, therefore, would be unconstitutional and should be banned
under this provision.
Mr. Gascon: Yes. So my point is that I do not think it is up to Congress to state
whether or not these certain contraceptives are abortifacient. Scientifically and
based on the provision as it is now proposed, they are already considered
abortifacient.154
From the deliberations above-quoted, it is apparent that the Framers of the
Constitution emphasized that the State shall provide equal protection to both
the mother and the unborn child from the earliest opportunity of life, that is,
upon fertilization or upon the union of the male sperm and the female ovum. It
is also apparent is that the Framers of the Constitution intended that to prohibit
Congress from enacting measures that would allow it determine when life
begins.
Equally apparent, however, is that the Framers of the Constitution did not
intend to ban all contraceptives for being unconstitutional. In fact,
Commissioner Bernardo Villegas, spearheading the need to have a
constitutional provision on the right to life, recognized that the determination of
whether a contraceptive device is an abortifacient is a question of fact which
should be left to the courts to decide on based on established evidence. 155
From the discussions above, contraceptives that kill or destroy the fertilized
ovum should be deemed an abortive and thus prohibited. Conversely,
contraceptives that actually prevent the union of the male sperm and the
female ovum, and those that similarly take action prior to fertilization should be
deemed non-abortive, and thus, constitutionally permissible.
As emphasized by the Framers of the Constitution:
xxx xxx xxx
Mr. Gascon: xx xx. As I mentioned in my speech on the US bases, I am pro-
life, to the point that I would like not only to protect the life of the unborn, but
also the lives of the millions of people in the world by fighting for a nuclear-free
world. I would just like to be assured of the legal and pragmatic implications of
the term "protection of the life of the unborn from the moment of conception." I
raised some of these implications this afternoon when I interjected in the
interpellation of Commissioner Regalado. I would like to ask that question
again for a categorical answer.
I mentioned that if we institutionalize the term "the life of the unborn from the Under Section 12, yes.
moment of conception" we are also actually saying "no," not "maybe," to
certain contraceptives which are already being encouraged at this point in Justice Bersamin:
time. Is that the sense of the committee or does it disagree with me?
So you have no objection to condoms?
Mr. Azcuna: No, Mr. Presiding Officer, because contraceptives would be
preventive. There is no unborn yet. That is yet unshaped. Atty. Noche:

Mr. Gascon: Yes, Mr. Presiding Officer, but I was speaking more about some Not under Section 12, Article II.
contraceptives, such as the intra-uterine device which actually stops the egg
which has already been fertilized from taking route to the uterus. So if we say
Justice Bersamin:
"from the moment of conception," what really occurs is that some of these
contraceptives will have to be unconstitutionalized.
Even if there is already information that condoms sometimes have porosity?
Mr. Azcuna: Yes, to the extent that it is after the fertilization.
Atty. Noche:
Mr. Gascon: Thank you, Mr. Presiding Officer. 156

Well, yes, Your Honor, there are scientific findings to that effect, Your Honor,
but I am discussing here Section 12, Article II, Your Honor, yes.
The fact that not all contraceptives are prohibited by the 1987 Constitution is
even admitted by petitioners during the oral arguments. There it was conceded
that tubal ligation, vasectomy, even condoms are not classified as Justice Bersamin:
abortifacients.157
Alright.
Atty. Noche:
Atty. Noche:
Before the union of the eggs, egg and the sperm, there is no life yet.
And it's not, I have to admit it's not an abortifacient, Your Honor. 158
Justice Bersamin:
Medical Meaning
There is no life.
That conception begins at fertilization is not bereft of medical foundation.
Atty. Noche: Mosby s Medical, Nursing, and Allied Health Dictionary defines conception as
"the beginning of pregnancy usually taken to be the instant a spermatozoon
enters an ovum and forms a viable zygote."159
So, there is no life to be protected.
It describes fertilization as "the union of male and female gametes to form a
Justice Bersamin:
zygote from which the embryo develops."160
To be protected.
The Textbook of Obstetrics (Physiological & Pathological Obstetrics),161 used
by medical schools in the Philippines, also concludes that human life (human
Atty. Noche: person) begins at the moment of fertilization with the union of the egg and the
sperm resulting in the formation of a new individual, with a unique genetic
composition that dictates all developmental stages that ensue.
Similarly, recent medical research on the matter also reveals that: "Human
development begins after the union of male and female gametes or germ cells
during a process known as fertilization (conception). Fertilization is a sequence
of events that begins with the contact of a sperm (spermatozoon) with a
secondary oocyte (ovum) and ends with the fusion of their pronuclei (the
haploid nuclei of the sperm and ovum) and the mingling of their chromosomes
to form a new cell. This fertilized ovum, known as a zygote, is a large diploid
cell that is the beginning, or primordium, of a human being." 162
The authors of Human Embryology & Teratology163 mirror the same position.
They wrote: "Although life is a continuous process, fertilization is a critical
landmark because, under ordinary circumstances, a new, genetically distinct
human organism is thereby formed.... The combination of 23 chromosomes
present in each pronucleus results in 46 chromosomes in the zygote. Thus the
diploid number is restored and the embryonic genome is formed. The embryo
now exists as a genetic unity."
In support of the RH Bill, The Philippine Medical Association came out with a
"Paper on the Reproductive Health Bill (Responsible Parenthood Bill)" and
therein concluded that:
CONCLUSION
The PMA throws its full weight in supporting the RH Bill at the same time that
PMA maintains its strong position that fertilization is sacred because it is at this
stage that conception, and thus human life, begins. Human lives are sacred
from the moment of conception, and that destroying those new lives is never
licit, no matter what the purported good outcome would be. In terms of biology
and human embryology, a human being begins immediately at fertilization and
after that, there is no point along the continuous line of human embryogenesis
where only a "potential" human being can be posited. Any philosophical, legal,
or political conclusion cannot escape this objective scientific fact.
The scientific evidence supports the conclusion that a zygote is a human
organism and that the life of a new human being commences at a scientifically
well defined "moment of conception." This conclusion is objective, consistent
with the factual evidence, and independent of any specific ethical, moral,
political, or religious view of human life or of human embryos.164
Conclusion: The Moment of Conception is Reckoned from
Fertilization
In all, whether it be taken from a plain meaning, or understood under medical
parlance, and more importantly, following the intention of the Framers of the
Constitution, the undeniable conclusion is that a zygote is a human organism
and that the life of a new human being commences at a scientifically well-
defined moment of conception, that is, upon fertilization.
For the above reasons, the Court cannot subscribe to the theory advocated by
Hon. Lagman that life begins at implantation. 165 According to him, "fertilization
and conception are two distinct and successive stages in the reproductive
process. They are not identical and synonymous."166 Citing a letter of the WHO,
he wrote that "medical authorities confirm that the implantation of the fertilized
ovum is the commencement of conception and it is only after implantation that
pregnancy can be medically detected."167
This theory of implantation as the beginning of life is devoid of any legal or
scientific mooring. It does not pertain to the beginning of life but to the viability
of the fetus. The fertilized ovum/zygote is not an inanimate object - it is a living
human being complete with DNA and 46 chromosomes.168 Implantation has
been conceptualized only for convenience by those who had population control
in mind. To adopt it would constitute textual infidelity not only to the RH Law
but also to the Constitution.
Not surprisingly, even the OSG does not support this position.
If such theory would be accepted, it would unnervingly legitimize the utilization
of any drug or device that would prevent the implantation of the fetus at the
uterine wall. It would be provocative and further aggravate religious-based
divisiveness.
It would legally permit what the Constitution proscribes - abortion and
abortifacients.
The RH Law and Abortion
The clear and unequivocal intent of the Framers of the 1987 Constitution in
protecting the life of the unborn from conception was to prevent the Legislature
from enacting a measure legalizing abortion. It was so clear that even the
Court cannot interpret it otherwise. This intent of the Framers was captured in
the record of the proceedings of the 1986 Constitutional Commission.
Commissioner Bernardo Villegas, the principal proponent of the protection of
the unborn from conception, explained:
The intention .. .is to make sure that there would be no pro-abortion laws ever
passed by Congress or any pro-abortion decision passed by the Supreme
Court.169
A reading of the RH Law would show that it is in line with this intent and
actually proscribes abortion. While the Court has opted not to make any
determination, at this stage, when life begins, it finds that the RH Law itself
clearly mandates that protection be afforded from the moment of fertilization.
As pointed out by Justice Carpio, the RH Law is replete with provisions that
embody the policy of the law to protect to the fertilized ovum and that it should
be afforded safe travel to the uterus for implantation. 170
Moreover, the RH Law recognizes that abortion is a crime under Article 256 of
the Revised Penal Code, which penalizes the destruction or expulsion of the
fertilized ovum. Thus:
1] xx x.
Section 4. Definition of Terms. - For the purpose of this Act, the following terms
shall be defined as follows:
xxx.
(q) Reproductive health care refers to the access to a full range of methods,
facilities, services and supplies that contribute to reproductive health and well-
being by addressing reproductive health-related problems. It also includes
sexual health, the purpose of which is the enhancement of life and personal
relations. The elements of reproductive health care include the following:
xxx.
(3) Proscription of abortion and management of abortion complications;
xxx.
2] xx x.
Section 4. x x x.
(s) Reproductive health rights refers to the rights of individuals and couples, to
decide freely and responsibly whether or not to have children; the number,
spacing and timing of their children; to make other decisions concerning
reproduction, free of discrimination, coercion and violence; to have the
information and means to do so; and to attain the highest standard of sexual
health and reproductive health: Provided, however, That reproductive health
rights do not include abortion, and access to abortifacients.
3] xx x.
SEC. 29. Repealing Clause. - Except for prevailing laws against abortion, any
law, presidential decree or issuance, executive order, letter of instruction,
administrative order, rule or regulation contrary to or is inconsistent with the
provisions of this Act including Republic Act No. 7392, otherwise known as the
Midwifery Act, is hereby repealed, modified or amended accordingly.
The RH Law and Abortifacients
In carrying out its declared policy, the RH Law is consistent in prohibiting
abortifacients. To be clear, Section 4(a) of the RH Law defines an abortifacient
as:
Section 4. Definition of Terms - x x x x
(a) Abortifacient refers to any drug or device that induces abortion or the
destruction of a fetus inside the mother's womb or the prevention of the
fertilized ovum to reach and be implanted in the mother's womb upon
determination of the FDA.
As stated above, the RH Law mandates that protection must be afforded from
the moment of fertilization. By using the word " or," the RH Law prohibits not
only drugs or devices that prevent implantation, but also those that induce
abortion and those that induce the destruction of a fetus inside the mother's
womb. Thus, an abortifacient is any drug or device that either:
(a) Induces abortion; or
(b) Induces the destruction of a fetus inside the mother's womb; or
(c) Prevents the fertilized ovum to reach and be implanted in the
mother's womb, upon determination of the FDA.
Contrary to the assertions made by the petitioners, the Court finds that the RH
Law, consistent with the Constitution, recognizes that the fertilized ovum
already has life and that the State has a bounden duty to protect it. The
conclusion becomes clear because the RH Law, first, prohibits any drug or
device that induces abortion (first kind), which, as discussed exhaustively
above, refers to that which induces the killing or the destruction of the fertilized
ovum, and, second, prohibits any drug or device the fertilized ovum to reach
and be implanted in the mother's womb (third kind).
By expressly declaring that any drug or device that prevents the fertilized ovum
to reach and be implanted in the mother's womb is an abortifacient (third kind),
the RH Law does not intend to mean at all that life only begins only at
implantation, as Hon. Lagman suggests. It also does not declare either that
protection will only be given upon implantation, as the petitioners likewise
suggest. Rather, it recognizes that: one, there is a need to protect the fertilized
ovum which already has life, and two, the fertilized ovum must be protected
the moment it becomes existent - all the way until it reaches and implants in
the mother's womb. After all, if life is only recognized and afforded protection
from the moment the fertilized ovum implants - there is nothing to prevent any
drug or device from killing or destroying the fertilized ovum prior to
implantation.
From the foregoing, the Court finds that inasmuch as it affords protection to the
fertilized ovum, the RH Law does not sanction abortion. To repeat, it is the
Court's position that life begins at fertilization, not at implantation. When a
fertilized ovum is implanted in the uterine wall , its viability is sustained but that
instance of implantation is not the point of beginning of life. It started earlier.
And as defined by the RH Law, any drug or device that induces abortion, that
is, which kills or destroys the fertilized ovum or prevents the fertilized ovum to
reach and be implanted in the mother's womb, is an abortifacient.
Proviso Under Section 9 of the RH Law
This notwithstanding, the Court finds that the proviso under Section 9 of the
law that "any product or supply included or to be included in the EDL must
have a certification from the FDA that said product and supply is made
available on the condition that it is not to be used as an abortifacient" as empty
as it is absurd. The FDA, with all its expertise, cannot fully attest that a drug or
device will not all be used as an abortifacient, since the agency cannot be
present in every instance when the contraceptive product or supply will be
used.171
Pursuant to its declared policy of providing access only to safe, legal and non-
abortifacient contraceptives, however, the Court finds that the proviso of
Section 9, as worded, should bend to the legislative intent and mean that "any
product or supply included or to be included in the EDL must have a
certification from the FDA that said product and supply is made available on
the condition that it cannot be used as abortifacient." Such a construction is
consistent with the proviso under the second paragraph of the same section
that provides:
Provided, further, That the foregoing offices shall not purchase or acquire by
any means emergency contraceptive pills, postcoital pills, abortifacients that
will be used for such purpose and their other forms or equivalent.
Abortifacients under the RH-IRR
At this juncture, the Court agrees with ALFI that the authors of the RH-IRR
gravely abused their office when they redefined the meaning of abortifacient.
The RH Law defines "abortifacient" as follows:
SEC. 4. Definition of Terms. - For the purpose of this Act, the following terms
shall be defined as follows:
(a) Abortifacient refers to any drug or device that induces abortion or the
destruction of a fetus inside the mother's womb or the prevention of the
fertilized ovum to reach and be implanted in the mother's womb upon
determination of the FDA.
Section 3.0l (a) of the IRR, however, redefines "abortifacient" as:
Section 3.01 For purposes of these Rules, the terms shall be defined as
follows:
a) Abortifacient refers to any drug or device that primarily induces abortion or
the destruction of a fetus inside the mother's womb or the prevention of the
fertilized ovum to reach and be implanted in the mother's womb upon
determination of the Food and Drug Administration (FDA). [Emphasis supplied]
Again in Section 3.0lG) of the RH-IRR, "contraceptive," is redefined, viz:
j) Contraceptive refers to any safe, legal, effective and scientifically proven
modern family planning method, device, or health product, whether natural or
artificial, that prevents pregnancy but does not primarily destroy a fertilized
ovum or prevent a fertilized ovum from being implanted in the mother's womb
in doses of its approved indication as determined by the Food and Drug
Administration (FDA).
The above-mentioned section of the RH-IRR allows "contraceptives" and
recognizes as "abortifacient" only those that primarily induce abortion or the
destruction of a fetus inside the mother's womb or the prevention of the
fertilized ovum to reach and be implanted in the mother's womb. 172
This cannot be done.
In this regard, the observations of Justice Brion and Justice Del Castillo are
well taken. As they pointed out, with the insertion of the word "primarily,"
Section 3.0l(a) and G) of the RH-IRR173 must be struck down for being ultra
vires.
Evidently, with the addition of the word "primarily," in Section 3.0l(a) and G) of
the RH-IRR is indeed ultra vires. It contravenes Section 4(a) of the RH Law
and should, therefore, be declared invalid. There is danger that the insertion of
the qualifier "primarily" will pave the way for the approval of contraceptives
which may harm or destroy the life of the unborn from conception/fertilization in
violation of Article II, Section 12 of the Constitution. With such qualification in
the RH-IRR, it appears to insinuate that a contraceptive will only be considered
as an "abortifacient" if its sole known effect is abortion or, as pertinent here,
the prevention of the implantation of the fertilized ovum.
For the same reason, this definition of "contraceptive" would permit the
approval of contraceptives which are actually abortifacients because of their
fail-safe mechanism.174
Also, as discussed earlier, Section 9 calls for the certification by the FDA that
these contraceptives cannot act as abortive. With this, together with the
definition of an abortifacient under Section 4 (a) of the RH Law and its
declared policy against abortion, the undeniable conclusion is that
contraceptives to be included in the PNDFS and the EDL will not only be those
contraceptives that do not have the primary action of causing abortion or the
destruction of a fetus inside the mother's womb or the prevention of the
fertilized ovum to reach and be implanted in the mother's womb, but also those
that do not have the secondary action of acting the same way.
Indeed, consistent with the constitutional policy prohibiting abortion, and in line
with the principle that laws should be construed in a manner that its
constitutionality is sustained, the RH Law and its implementing rules must be
consistent with each other in prohibiting abortion. Thus, the word " primarily" in
Section 3.0l(a) and G) of the RH-IRR should be declared void. To uphold the
validity of Section 3.0l(a) and G) of the RH-IRR and prohibit only those
contraceptives that have the primary effect of being an abortive would
effectively "open the floodgates to the approval of contraceptives which may
harm or destroy the life of the unborn from conception/fertilization in violation
of Article II, Section 12 of the Constitution." 175
To repeat and emphasize, in all cases, the "principle of no abortion" embodied
in the constitutional protection of life must be upheld.
2-The Right to Health
The petitioners claim that the RH Law violates the right to health because it
requires the inclusion of hormonal contraceptives, intrauterine devices,
injectables and family products and supplies in the National Drug Formulary
and the inclusion of the same in the regular purchase of essential medicines
and supplies of all national hospitals.176 Citing various studies on the matter, the
petitioners posit that the risk of developing breast and cervical cancer is greatly
increased in women who use oral contraceptives as compared to women who
never use them. They point out that the risk is decreased when the use of
contraceptives is discontinued. Further, it is contended that the use of
combined oral contraceptive pills is associated with a threefold increased risk
of venous thromboembolism, a twofold increased risk of ischematic stroke, and
an indeterminate effect on risk of myocardial infarction. 177 Given the definition of
"reproductive health" and "sexual health" under Sections 4(p)178 and (w)179 of the
RH Law, the petitioners assert that the assailed legislation only seeks to
ensure that women have pleasurable and satisfying sex lives. 180
The OSG, however, points out that Section 15, Article II of the Constitution is
not self-executory, it being a mere statement of the administration's principle
and policy. Even if it were self-executory, the OSG posits that medical
authorities refute the claim that contraceptive pose a danger to the health of
women.181
The Court's Position
A component to the right to life is the constitutional right to health. In this
regard, the Constitution is replete with provisions protecting and promoting the
right to health. Section 15, Article II of the Constitution provides:
Section 15. The State shall protect and promote the right to health of the
people and instill health consciousness among them.
A portion of Article XIII also specifically provides for the States' duty to provide
for the health of the people, viz:
HEALTH
Section 11. The State shall adopt an integrated and comprehensive approach
to health development which shall endeavor to make essential goods, health
and other social services available to all the people at affordable cost. There
shall be priority for the needs of the underprivileged, sick, elderly, disabled,
women, and children. The State shall endeavor to provide free medical care to
paupers.
Section 12. The State shall establish and maintain an effective food and drug
regulatory system and undertake appropriate health, manpower development,
and research, responsive to the country's health needs and problems.
Section 13. The State shall establish a special agency for disabled person for
their rehabilitation, self-development, and self-reliance, and their integration
into the mainstream of society.
Finally, Section 9, Article XVI provides:
Section 9. The State shall protect consumers from trade malpractices and from
substandard or hazardous products.
Contrary to the respondent's notion, however, these provisions are self-
executing. Unless the provisions clearly express the contrary, the provisions of
the Constitution should be considered self-executory. There is no need for
legislation to implement these self-executing provisions.182 In Manila Prince
Hotel v. GSIS,183 it was stated:
x x x Hence, unless it is expressly provided that a legislative act is necessary
to enforce a constitutional mandate, the presumption now is that all provisions
of the constitution are self-executing. If the constitutional provisions are treated
as requiring legislation instead of self-executing, the legislature would have the
power to ignore and practically nullify the mandate of the fundamental law.
This can be cataclysmic. That is why the prevailing view is, as it has always
been, that –
... in case of doubt, the Constitution should be considered self-executing rather
than non-self-executing. . . . Unless the contrary is clearly intended, the
provisions of the Constitution should be considered self-executing, as a
contrary rule would give the legislature discretion to determine when, or
whether, they shall be effective. These provisions would be subordinated to
the will of the lawmaking body, which could make them entirely meaningless
by simply refusing to pass the needed implementing statute. (Emphases
supplied)
This notwithstanding, it bears mentioning that the petitioners, particularly ALFI,
do not question contraception and contraceptives per se. 184 In fact, ALFI prays
that the status quo - under R.A. No. 5921 and R.A. No. 4729, the sale and
distribution of contraceptives are not prohibited when they are dispensed by a
prescription of a duly licensed by a physician - be maintained.185
The legislative intent in the enactment of the RH Law in this regard is to leave
intact the provisions of R.A. No. 4729. There is no intention at all to do away
with it. It is still a good law and its requirements are still in to be complied with.
Thus, the Court agrees with the observation of respondent Lagman that the
effectivity of the RH Law will not lead to the unmitigated proliferation of
contraceptives since the sale, distribution and dispensation of contraceptive
drugs and devices will still require the prescription of a licensed physician. With
R.A. No. 4729 in place, there exists adequate safeguards to ensure the public
that only contraceptives that are safe are made available to the public. As aptly
explained by respondent Lagman:
D. Contraceptives cannot be
dispensed and used without
prescription
108. As an added protection to voluntary users of contraceptives, the same
cannot be dispensed and used without prescription.
109. Republic Act No. 4729 or "An Act to Regulate the Sale, Dispensation,
and/ or Distribution of Contraceptive Drugs and Devices" and Republic Act No.
5921 or "An Act Regulating the Practice of Pharmacy and Setting Standards of
Pharmaceutical Education in the Philippines and for Other Purposes" are not
repealed by the RH Law and the provisions of said Acts are not inconsistent
with the RH Law.
110. Consequently, the sale, distribution and dispensation of contraceptive
drugs and devices are particularly governed by RA No. 4729 which provides in
full:
"Section 1. It shall be unlawful for any person, partnership, or corporation, to
sell, dispense or otherwise distribute whether for or without consideration, any
contraceptive drug or device, unless such sale, dispensation or distribution is
by a duly licensed drug store or pharmaceutical company and with the
prescription of a qualified medical practitioner.
"Sec. 2 . For the purpose of this Act:
"(a) "Contraceptive drug" is any medicine, drug, chemical, or portion
which is used exclusively for the purpose of preventing fertilization of
the female ovum: and
"(b) "Contraceptive device" is any instrument, device, material, or
agent introduced into the female reproductive system for the primary
purpose of preventing conception.
"Sec. 3 Any person, partnership, or corporation, violating the provisions of this
Act shall be punished with a fine of not more than five hundred pesos or an
imprisonment of not less than six months or more than one year or both in the
discretion of the Court.
"This Act shall take effect upon its approval.
"Approved: June 18, 1966"
111. Of the same import, but in a general manner, Section 25 of RA No. 5921
provides:
"Section 25. Sale of medicine, pharmaceuticals, drugs and devices. No
medicine, pharmaceutical, or drug of whatever nature and kind or device shall
be compounded, dispensed, sold or resold, or otherwise be made available to
the consuming public except through a prescription drugstore or hospital
pharmacy, duly established in accordance with the provisions of this Act.
112. With all of the foregoing safeguards, as provided for in the RH Law and
other relevant statutes, the pretension of the petitioners that the RH Law will
lead to the unmitigated proliferation of contraceptives, whether harmful or not,
is completely unwarranted and baseless.186 [Emphases in the Original.
Underlining supplied.]
In Re: Section 10 of the RH Law:
The foregoing safeguards should be read in connection with Section 10 of the
RH Law which provides:
SEC. 10. Procurement and Distribution of Family Planning Supplies. - The
DOH shall procure, distribute to LGUs and monitor the usage of family
planning supplies for the whole country. The DOH shall coordinate with all
appropriate local government bodies to plan and implement this procurement
and distribution program. The supply and budget allotments shall be based on,
among others, the current levels and projections of the following:
(a) Number of women of reproductive age and couples who want to
space or limit their children;
(b) Contraceptive prevalence rate, by type of method used; and
(c) Cost of family planning supplies.
Provided, That LGUs may implement its own procurement, distribution and
monitoring program consistent with the overall provisions of this Act and the
guidelines of the DOH.
Thus, in the distribution by the DOH of contraceptive drugs and devices, it
must consider the provisions of R.A. No. 4729, which is still in effect, and
ensure that the contraceptives that it will procure shall be from a duly licensed
drug store or pharmaceutical company and that the actual dispensation of
these contraceptive drugs and devices will done following a prescription of a
qualified medical practitioner. The distribution of contraceptive drugs and
devices must not be indiscriminately done. The public health must be
protected by all possible means. As pointed out by Justice De Castro, a heavy
responsibility and burden are assumed by the government in supplying
contraceptive drugs and devices, for it may be held accountable for any injury,
illness or loss of life resulting from or incidental to their use. 187
At any rate, it bears pointing out that not a single contraceptive has yet been
submitted to the FDA pursuant to the RH Law. It behooves the Court to await
its determination which drugs or devices are declared by the FDA as safe, it
being the agency tasked to ensure that food and medicines available to the
public are safe for public consumption. Consequently, the Court finds that, at
this point, the attack on the RH Law on this ground is premature. Indeed, the
various kinds of contraceptives must first be measured up to the constitutional
yardstick as expounded herein, to be determined as the case presents itself.
At this point, the Court is of the strong view that Congress cannot legislate that
hormonal contraceptives and intra-uterine devices are safe and non-
abortifacient. The first sentence of Section 9 that ordains their inclusion by the
National Drug Formulary in the EDL by using the mandatory "shall" is to be
construed as operative only after they have been tested, evaluated, and
approved by the FDA. The FDA, not Congress, has the expertise to determine
whether a particular hormonal contraceptive or intrauterine device is safe and
non-abortifacient. The provision of the third sentence concerning the
requirements for the inclusion or removal of a particular family planning supply
from the EDL supports this construction.
Stated differently, the provision in Section 9 covering the inclusion of hormonal
contraceptives, intra-uterine devices, injectables, and other safe, legal, non-
abortifacient and effective family planning products and supplies by the
National Drug Formulary in the EDL is not mandatory. There must first be a
determination by the FDA that they are in fact safe, legal, non-abortifacient and
effective family planning products and supplies. There can be no
predetermination by Congress that the gamut of contraceptives are "safe,
legal, non-abortifacient and effective" without the proper scientific examination.
3 -Freedom of Religion
and the Right to Free Speech
Position of the Petitioners:
1. On Contraception
While contraceptives and procedures like vasectomy and tubal ligation are not
covered by the constitutional proscription, there are those who, because of
their religious education and background, sincerely believe that contraceptives,
whether abortifacient or not, are evil. Some of these are medical practitioners
who essentially claim that their beliefs prohibit not only the use of
contraceptives but also the willing participation and cooperation in all things
dealing with contraceptive use. Petitioner PAX explained that "contraception is
gravely opposed to marital chastity, it is contrary to the good of the
transmission of life, and to the reciprocal self-giving of the spouses; it harms
true love and denies the sovereign rule of God in the transmission of Human
life."188
The petitioners question the State-sponsored procurement of contraceptives,
arguing that the expenditure of their taxes on contraceptives violates the
guarantee of religious freedom since contraceptives contravene their religious
beliefs.189
2. On Religious Accommodation and
The Duty to Refer
Petitioners Imbong and Luat note that while the RH Law attempts to address
religious sentiments by making provisions for a conscientious objector, the
constitutional guarantee is nonetheless violated because the law also imposes
upon the conscientious objector the duty to refer the patient seeking
reproductive health services to another medical practitioner who would be able
to provide for the patient's needs. For the petitioners, this amounts to requiring
the conscientious objector to cooperate with the very thing he refuses to do
without violating his/her religious beliefs. 190
They further argue that even if the conscientious objector's duty to refer is
recognized, the recognition is unduly limited, because although it allows a
conscientious objector in Section 23 (a)(3) the option to refer a patient seeking
reproductive health services and information - no escape is afforded the
conscientious objector in Section 23 (a)(l) and (2), i.e. against a patient
seeking reproductive health procedures. They claim that the right of other
individuals to conscientiously object, such as: a) those working in public health
facilities referred to in Section 7; b) public officers involved in the
implementation of the law referred to in Section 23(b ); and c) teachers in
public schools referred to in Section 14 of the RH Law, are also not
recognize.191
Petitioner Echavez and the other medical practitioners meanwhile, contend
that the requirement to refer the matter to another health care service provider
is still considered a compulsion on those objecting healthcare service
providers. They add that compelling them to do the act against their will
violates the Doctrine of Benevolent Neutrality. Sections 9, 14 and 1 7 of the
law are too secular that they tend to disregard the religion of Filipinos.
Authorizing the use of contraceptives with abortive effects, mandatory sex
education, mandatory pro-bono reproductive health services to indigents
encroach upon the religious freedom of those upon whom they are required. 192
Petitioner CFC also argues that the requirement for a conscientious objector to
refer the person seeking reproductive health care services to another provider
infringes on one's freedom of religion as it forces the objector to become an
unwilling participant in the commission of a serious sin under Catholic
teachings. While the right to act on one's belief may be regulated by the State,
the acts prohibited by the RH Law are passive acts which produce neither
harm nor injury to the public.193
Petitioner CFC adds that the RH Law does not show compelling state interest
to justify regulation of religious freedom because it mentions no emergency,
risk or threat that endangers state interests. It does not explain how the rights
of the people (to equality, non-discrimination of rights, sustainable human
development, health, education, information, choice and to make decisions
according to religious convictions, ethics, cultural beliefs and the demands of
responsible parenthood) are being threatened or are not being met as to justify
the impairment of religious freedom.194
Finally, the petitioners also question Section 15 of the RH Law requiring would-
be couples to attend family planning and responsible parenthood seminars and
to obtain a certificate of compliance. They claim that the provision forces
individuals to participate in the implementation of the RH Law even if it
contravenes their religious beliefs.195 As the assailed law dangles the threat of
penalty of fine and/or imprisonment in case of non-compliance with its
provisions, the petitioners claim that the RH Law forcing them to provide,
support and facilitate access and information to contraception against their
beliefs must be struck down as it runs afoul to the constitutional guarantee of
religious freedom.
The Respondents' Positions
The respondents, on the other hand, contend that the RH Law does not
provide that a specific mode or type of contraceptives be used, be it natural or
artificial. It neither imposes nor sanctions any religion or belief. 196 They point out
that the RH Law only seeks to serve the public interest by providing
accessible, effective and quality reproductive health services to ensure
maternal and child health, in line with the State's duty to bring to reality the
social justice health guarantees of the Constitution, 197 and that what the law
only prohibits are those acts or practices, which deprive others of their right to
reproductive health.198 They assert that the assailed law only seeks to
guarantee informed choice, which is an assurance that no one will be
compelled to violate his religion against his free will. 199
The respondents add that by asserting that only natural family planning should
be allowed, the petitioners are effectively going against the constitutional right
to religious freedom, the same right they invoked to assail the constitutionality
of the RH Law.200 In other words, by seeking the declaration that the RH Law is
unconstitutional, the petitioners are asking that the Court recognize only the
Catholic Church's sanctioned natural family planning methods and impose this
on the entire citizenry.201
With respect to the duty to refer, the respondents insist that the same does not
violate the constitutional guarantee of religious freedom, it being a carefully
balanced compromise between the interests of the religious objector, on one
hand, who is allowed to keep silent but is required to refer -and that of the
citizen who needs access to information and who has the right to expect that
the health care professional in front of her will act professionally. For the
respondents, the concession given by the State under Section 7 and 23(a)(3)
is sufficient accommodation to the right to freely exercise one's religion without
unnecessarily infringing on the rights of others.202
Whatever burden is placed on the petitioner's religious freedom is minimal as
the duty to refer is limited in duration, location and impact. 203
Regarding mandatory family planning seminars under Section 15 , the
respondents claim that it is a reasonable regulation providing an opportunity
for would-be couples to have access to information regarding parenthood,
family planning, breastfeeding and infant nutrition. It is argued that those who
object to any information received on account of their attendance in the
required seminars are not compelled to accept information given to them. They
are completely free to reject any information they do not agree with and retain
the freedom to decide on matters of family life without intervention of the
State.204
For their part, respondents De Venecia et al., dispute the notion that natural
family planning is the only method acceptable to Catholics and the Catholic
hierarchy. Citing various studies and surveys on the matter, they highlight the
changing stand of the Catholic Church on contraception throughout the years
and note the general acceptance of the benefits of contraceptives by its
followers in planning their families.
The Church and The State
At the outset, it cannot be denied that we all live in a heterogeneous society. It
is made up of people of diverse ethnic, cultural and religious beliefs and
backgrounds. History has shown us that our government, in law and in
practice, has allowed these various religious, cultural, social and racial groups
to thrive in a single society together. It has embraced minority groups and is
tolerant towards all - the religious people of different sects and the non-
believers. The undisputed fact is that our people generally believe in a deity,
whatever they conceived Him to be, and to whom they call for guidance and
enlightenment in crafting our fundamental law. Thus, the preamble of the
present Constitution reads:
We, the sovereign Filipino people, imploring the aid of Almighty God, in order
to build a just and humane society, and establish a Government that shall
embody our ideals and aspirations, promote the common good, conserve and
develop our patrimony, and secure to ourselves and our posterity, the
blessings of independence and democracy under the rule of law and a regime
of truth, justice, freedom, love, equality, and peace, do ordain and promulgate
this Constitution.
The Filipino people in "imploring the aid of Almighty God " manifested their
spirituality innate in our nature and consciousness as a people, shaped by
tradition and historical experience. As this is embodied in the preamble, it
means that the State recognizes with respect the influence of religion in so far
as it instills into the mind the purest principles of morality. 205 Moreover, in
recognition of the contributions of religion to society, the 1935, 1973 and 1987
constitutions contain benevolent and accommodating provisions towards
religions such as tax exemption of church property, salary of religious officers
in government institutions, and optional religious instructions in public schools.
The Framers, however, felt the need to put up a strong barrier so that the State
would not encroach into the affairs of the church, and vice-versa. The principle
of separation of Church and State was, thus, enshrined in Article II, Section 6
of the 1987 Constitution, viz:
Section 6. The separation of Church and State shall be inviolable.
Verily, the principle of separation of Church and State is based on mutual
respect. Generally, the State cannot meddle in the internal affairs of the
1âwphi1
church, much less question its faith and dogmas or dictate upon it. It cannot
favor one religion and discriminate against another. On the other hand, the
church cannot impose its beliefs and convictions on the State and the rest of
the citizenry. It cannot demand that the nation follow its beliefs, even if it
sincerely believes that they are good for the country.
Consistent with the principle that not any one religion should ever be preferred
over another, the Constitution in the above-cited provision utilizes the term
"church" in its generic sense, which refers to a temple, a mosque, an iglesia, or
any other house of God which metaphorically symbolizes a religious
organization. Thus, the "Church" means the religious congregations
collectively.
Balancing the benefits that religion affords and the need to provide an ample
barrier to protect the State from the pursuit of its secular objectives, the
Constitution lays down the following mandate in Article III, Section 5 and
Article VI, Section 29 (2), of the 1987 Constitution:
Section. 5. No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof. The free exercise and enjoyment of
religious profession and worship, without discrimination or preference, shall
forever be allowed. No religious test shall be required for the exercise of civil or
political rights.
Section 29.
xxx.
No public money or property shall be appropriated, applied, paid, or employed,
directly or indirectly, for the use, benefit, or support of any sect, church,
denomination, sectarian institution, or system of religion, or of any priest,
preacher, minister, other religious teacher, or dignitary as such, except when
such priest, preacher, minister, or dignitary is assigned to the armed forces, or
to any penal institution, or government orphanage or leprosarium.
In short, the constitutional assurance of religious freedom provides two
guarantees: the Establishment Clause and the Free Exercise Clause.
The establishment clause "principally prohibits the State from sponsoring any
religion or favoring any religion as against other religions. It mandates a strict
neutrality in affairs among religious groups."206 Essentially, it prohibits the
establishment of a state religion and the use of public resources for the
support or prohibition of a religion.
On the other hand, the basis of the free exercise clause is the respect for the
inviolability of the human conscience.207 Under this part of religious freedom
guarantee, the State is prohibited from unduly interfering with the outside
manifestations of one's belief and faith.208 Explaining the concept of religious
freedom, the Court, in Victoriano v. Elizalde Rope Workers Union209 wrote:
The constitutional provisions not only prohibits legislation for the support of any
religious tenets or the modes of worship of any sect, thus forestalling
compulsion by law of the acceptance of any creed or the practice of any form
of worship (U.S. Ballard, 322 U.S. 78, 88 L. ed. 1148, 1153), but also assures
the free exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the Constitution are all
designed to protect the broadest possible liberty of conscience, to allow each
man to believe as his conscience directs, to profess his beliefs, and to live as
he believes he ought to live, consistent with the liberty of others and with the
common good. Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between the
religions, is invalid, even though the burden may be characterized as being
only indirect. (Sherbert v. Verner, 374 U.S. 398, 10 L.ed.2d 965, 83 S. Ct.
1970) But if the state regulates conduct by enacting, within its power, a general
law which has for its purpose and effect to advance the state's secular goals,
the statute is valid despite its indirect burden on religious observance, unless
the state can accomplish its purpose without imposing such burden. (Braunfeld
v. Brown, 366 U.S. 599, 6 Led. 2d. 563, 81 S. Ct. 144; McGowan v. Maryland,
366 U.S. 420, 444-5 and 449).
As expounded in Escritor,
The establishment and free exercise clauses were not designed to serve
contradictory purposes. They have a single goal-to promote freedom of
individual religious beliefs and practices. In simplest terms, the free exercise
clause prohibits government from inhibiting religious beliefs with penalties for
religious beliefs and practice, while the establishment clause prohibits
government from inhibiting religious belief with rewards for religious beliefs and
practices. In other words, the two religion clauses were intended to deny
government the power to use either the carrot or the stick to influence
individual religious beliefs and practices.210
Corollary to the guarantee of free exercise of one's religion is the principle that
the guarantee of religious freedom is comprised of two parts: the freedom to
believe, and the freedom to act on one's belief. The first part is absolute. As
explained in Gerona v. Secretary of Education:211
The realm of belief and creed is infinite and limitless bounded only by one's
imagination and thought. So is the freedom of belief, including religious belief,
limitless and without bounds. One may believe in most anything, however
strange, bizarre and unreasonable the same may appear to others, even
heretical when weighed in the scales of orthodoxy or doctrinal standards. But
between the freedom of belief and the exercise of said belief, there is quite a
stretch of road to travel.212
The second part however, is limited and subject to the awesome power of the
State and can be enjoyed only with proper regard to the rights of others. It is
"subject to regulation where the belief is translated into external acts that affect
the public welfare."213
Legislative Acts and the
Free Exercise Clause
Thus, in case of conflict between the free exercise clause and the State, the
Court adheres to the doctrine of benevolent neutrality. This has been clearly
decided by the Court in Estrada v. Escritor, (Escritor)214 where it was stated
"that benevolent neutrality-accommodation, whether mandatory or permissive,
is the spirit, intent and framework underlying the Philippine Constitution." 215 In
the same case, it was further explained that"
The benevolent neutrality theory believes that with respect to these
governmental actions, accommodation of religion may be allowed, not to
promote the government's favored form of religion, but to allow individuals and
groups to exercise their religion without hindrance. "The purpose of
accommodation is to remove a burden on, or facilitate the exercise of, a
person's or institution's religion."216 "What is sought under the theory of
accommodation is not a declaration of unconstitutionality of a facially neutral
law, but an exemption from its application or its 'burdensome effect,' whether
by the legislature or the courts."217
In ascertaining the limits of the exercise of religious freedom, the compelling
state interest test is proper.218 Underlying the compelling state interest test is
the notion that free exercise is a fundamental right and that laws burdening it
should be subject to strict scrutiny.219 In Escritor, it was written:
Philippine jurisprudence articulates several tests to determine these limits.
Beginning with the first case on the Free Exercise Clause, American Bible
Society, the Court mentioned the "clear and present danger" test but did not
employ it. Nevertheless, this test continued to be cited in subsequent cases on
religious liberty. The Gerona case then pronounced that the test of
permissibility of religious freedom is whether it violates the established
institutions of society and law. The Victoriano case mentioned the "immediate
and grave danger" test as well as the doctrine that a law of general
applicability may burden religious exercise provided the law is the least
restrictive means to accomplish the goal of the law. The case also used, albeit
inappropriately, the "compelling state interest" test. After Victoriano , German
went back to the Gerona rule. Ebralinag then employed the "grave and
immediate danger" test and overruled the Gerona test. The fairly recent case
of Iglesia ni Cristo went back to the " clear and present danger" test in the
maiden case of A merican Bible Society. Not surprisingly, all the cases which
employed the "clear and present danger" or "grave and immediate danger" test
involved, in one form or another, religious speech as this test is often used in
cases on freedom of expression. On the other hand, the Gerona and German
cases set the rule that religious freedom will not prevail over established
institutions of society and law. Gerona, however, which was the authority cited
by German has been overruled by Ebralinag which employed the "grave and
immediate danger" test . Victoriano was the only case that employed the
"compelling state interest" test, but as explained previously, the use of the test
was inappropriate to the facts of the case.
The case at bar does not involve speech as in A merican Bible Society,
Ebralinag and Iglesia ni Cristo where the "clear and present danger" and
"grave and immediate danger" tests were appropriate as speech has easily
discernible or immediate effects. The Gerona and German doctrine, aside from
having been overruled, is not congruent with the benevolent neutrality
approach, thus not appropriate in this jurisdiction. Similar to Victoriano, the
present case involves purely conduct arising from religious belief. The
"compelling state interest" test is proper where conduct is involved for the
whole gamut of human conduct has different effects on the state's interests:
some effects may be immediate and short-term while others delayed and far-
reaching. A test that would protect the interests of the state in preventing a
substantive evil, whether immediate or delayed, is therefore necessary.
However, not any interest of the state would suffice to prevail over the right to
religious freedom as this is a fundamental right that enjoys a preferred position
in the hierarchy of rights - "the most inalienable and sacred of all human
rights", in the words of Jefferson. This right is sacred for an invocation of the
Free Exercise Clause is an appeal to a higher sovereignty. The entire
constitutional order of limited government is premised upon an
acknowledgment of such higher sovereignty, thus the Filipinos implore the "aid
of Almighty God in order to build a just and humane society and establish a
government." As held in Sherbert, only the gravest abuses, endangering
paramount interests can limit this fundamental right. A mere balancing of
interests which balances a right with just a colorable state interest is therefore
not appropriate. Instead, only a compelling interest of the state can prevail
over the fundamental right to religious liberty. The test requires the state to
carry a heavy burden, a compelling one, for to do otherwise would allow the
state to batter religion, especially the less powerful ones until they are
destroyed. In determining which shall prevail between the state's interest and
religious liberty, reasonableness shall be the guide. The "compelling state
interest" serves the purpose of revering religious liberty while at the same time
affording protection to the paramount interests of the state. This was the test
used in Sherbert which involved conduct, i.e. refusal to work on Saturdays. In
the end, the "compelling state interest" test, by upholding the paramount
interests of the state, seeks to protect the very state, without which, religious
liberty will not be preserved. [Emphases in the original. Underlining supplied.]
The Court's Position
In the case at bench, it is not within the province of the Court to determine
whether the use of contraceptives or one's participation in the support of
modem reproductive health measures is moral from a religious standpoint or
whether the same is right or wrong according to one's dogma or belief. For the
Court has declared that matters dealing with "faith, practice, doctrine, form of
worship, ecclesiastical law, custom and rule of a church ... are unquestionably
ecclesiastical matters which are outside the province of the civil courts." 220 The
jurisdiction of the Court extends only to public and secular morality. Whatever
pronouncement the Court makes in the case at bench should be understood
only in this realm where it has authority. Stated otherwise, while the Court
stands without authority to rule on ecclesiastical matters, as vanguard of the
Constitution, it does have authority to determine whether the RH Law
contravenes the guarantee of religious freedom.
At first blush, it appears that the RH Law recognizes and respects religion and
religious beliefs and convictions. It is replete with assurances the no one can
be compelled to violate the tenets of his religion or defy his religious
convictions against his free will. Provisions in the RH Law respecting religious
freedom are the following:
1. The State recognizes and guarantees the human rights of all persons
including their right to equality and nondiscrimination of these rights, the right
to sustainable human development, the right to health which includes
reproductive health, the right to education and information, and the right to
choose and make decisions for themselves in accordance with their religious
convictions, ethics, cultural beliefs, and the demands of responsible
parenthood. [Section 2, Declaration of Policy]
2 . The State recognizes marriage as an inviolable social institution and the
foundation of the family which in turn is the foundation of the nation. Pursuant
thereto, the State shall defend:
(a) The right of spouses to found a family in accordance with their religious
convictions and the demands of responsible parenthood." [Section 2,
Declaration of Policy]
3. The State shall promote and provide information and access, without bias,
to all methods of family planning, including effective natural and modern
methods which have been proven medically safe, legal, non-abortifacient, and
effective in accordance with scientific and evidence-based medical research
standards such as those registered and approved by the FDA for the poor and
marginalized as identified through the NHTS-PR and other government
measures of identifying marginalization: Provided, That the State shall also
provide funding support to promote modern natural methods of family
planning, especially the Billings Ovulation Method, consistent with the needs of
acceptors and their religious convictions. [Section 3(e), Declaration of Policy]
4. The State shall promote programs that: (1) enable individuals and couples
to have the number of children they desire with due consideration to the
health, particularly of women, and the resources available and affordable to
them and in accordance with existing laws, public morals and their religious
convictions. [Section 3CDJ
5. The State shall respect individuals' preferences and choice of family
planning methods that are in accordance with their religious convictions and
cultural beliefs, taking into consideration the State's obligations under various
human rights instruments. [Section 3(h)]
6. Active participation by nongovernment organizations (NGOs) , women's and
people's organizations, civil society, faith-based organizations, the religious
sector and communities is crucial to ensure that reproductive health and
population and development policies, plans, and programs will address the
priority needs of women, the poor, and the marginalized. [Section 3(i)]
7. Responsible parenthood refers to the will and ability of a parent to respond
to the needs and aspirations of the family and children. It is likewise a shared
responsibility between parents to determine and achieve the desired number
of children, spacing and timing of their children according to their own family
life aspirations, taking into account psychological preparedness, health status,
sociocultural and economic concerns consistent with their religious
convictions. [Section 4(v)] (Emphases supplied)
While the Constitution prohibits abortion, laws were enacted allowing the use
of contraceptives. To some medical practitioners, however, the whole idea of
using contraceptives is an anathema. Consistent with the principle of
benevolent neutrality, their beliefs should be respected.
The Establishment Clause
and Contraceptives
In the same breath that the establishment clause restricts what the
government can do with religion, it also limits what religious sects can or
cannot do with the government. They can neither cause the government to
adopt their particular doctrines as policy for everyone, nor can they not cause
the government to restrict other groups. To do so, in simple terms, would
cause the State to adhere to a particular religion and, thus, establishing a state
religion.
Consequently, the petitioners are misguided in their supposition that the State
cannot enhance its population control program through the RH Law simply
because the promotion of contraceptive use is contrary to their religious
beliefs. Indeed, the State is not precluded to pursue its legitimate secular
objectives without being dictated upon by the policies of any one religion. One
cannot refuse to pay his taxes simply because it will cloud his conscience. The
demarcation line between Church and State demands that one render unto
Caesar the things that are Caesar's and unto God the things that are God's. 221
The Free Exercise Clause and the Duty to Refer
While the RH Law, in espousing state policy to promote reproductive health
manifestly respects diverse religious beliefs in line with the Non-Establishment
Clause, the same conclusion cannot be reached with respect to Sections 7, 23
and 24 thereof. The said provisions commonly mandate that a hospital or a
medical practitioner to immediately refer a person seeking health care and
services under the law to another accessible healthcare provider despite their
conscientious objections based on religious or ethical beliefs.
In a situation where the free exercise of religion is allegedly burdened by
government legislation or practice, the compelling state interest test in line with
the Court's espousal of the Doctrine of Benevolent Neutrality in Escritor, finds
application. In this case, the conscientious objector's claim to religious freedom
would warrant an exemption from obligations under the RH Law, unless the
government succeeds in demonstrating a more compelling state interest in the
accomplishment of an important secular objective. Necessarily so, the plea of
conscientious objectors for exemption from the RH Law deserves no less than
strict scrutiny.
In applying the test, the first inquiry is whether a conscientious objector's right
to religious freedom has been burdened. As in Escritor, there is no doubt that
an intense tug-of-war plagues a conscientious objector. One side coaxes him
into obedience to the law and the abandonment of his religious beliefs, while
the other entices him to a clean conscience yet under the pain of penalty. The
scenario is an illustration of the predicament of medical practitioners whose
religious beliefs are incongruent with what the RH Law promotes.
The Court is of the view that the obligation to refer imposed by the RH Law
violates the religious belief and conviction of a conscientious objector. Once
the medical practitioner, against his will, refers a patient seeking information on
modem reproductive health products, services, procedures and methods, his
conscience is immediately burdened as he has been compelled to perform an
act against his beliefs. As Commissioner Joaquin A. Bernas (Commissioner
Bernas) has written, "at the basis of the free exercise clause is the respect for
the inviolability of the human conscience.222
Though it has been said that the act of referral is an opt-out clause, it is,
however, a false compromise because it makes pro-life health providers
complicit in the performance of an act that they find morally repugnant or
offensive. They cannot, in conscience, do indirectly what they cannot do
directly. One may not be the principal, but he is equally guilty if he abets the
offensive act by indirect participation.
Moreover, the guarantee of religious freedom is necessarily intertwined with
the right to free speech, it being an externalization of one's thought and
conscience. This in turn includes the right to be silent. With the constitutional
guarantee of religious freedom follows the protection that should be afforded to
individuals in communicating their beliefs to others as well as the protection for
simply being silent. The Bill of Rights guarantees the liberty of the individual to
utter what is in his mind and the liberty not to utter what is not in his
mind.223 While the RH Law seeks to provide freedom of choice through
informed consent, freedom of choice guarantees the liberty of the religious
conscience and prohibits any degree of compulsion or burden, whether direct
or indirect, in the practice of one's religion. 224
In case of conflict between the religious beliefs and moral convictions of
individuals, on one hand, and the interest of the State, on the other, to provide
access and information on reproductive health products, services, procedures
and methods to enable the people to determine the timing, number and
spacing of the birth of their children, the Court is of the strong view that the
religious freedom of health providers, whether public or private, should be
accorded primacy. Accordingly, a conscientious objector should be exempt
from compliance with the mandates of the RH Law. If he would be compelled
to act contrary to his religious belief and conviction, it would be violative of "the
principle of non-coercion" enshrined in the constitutional right to free exercise
of religion.
Interestingly, on April 24, 2013, Scotland's Inner House of the Court of
Session, found in the case of Doogan and Wood v. NHS Greater Glasgow and
Clyde Health Board,225 that the midwives claiming to be conscientious objectors
under the provisions of Scotland's Abortion Act of 1967, could not be required
to delegate, supervise or support staff on their labor ward who were involved in
abortions.226 The Inner House stated "that if 'participation' were defined
according to whether the person was taking part 'directly' or ' indirectly' this
would actually mean more complexity and uncertainty." 227
While the said case did not cover the act of referral, the applicable principle
was the same - they could not be forced to assist abortions if it would be
against their conscience or will.
Institutional Health Providers
The same holds true with respect to non-maternity specialty hospitals and
hospitals owned and operated by a religious group and health care service
providers. Considering that Section 24 of the RH Law penalizes such
institutions should they fail or refuse to comply with their duty to refer under
Section 7 and Section 23(a)(3), the Court deems that it must be struck down
for being violative of the freedom of religion. The same applies to Section
23(a)(l) and (a)(2) in relation to Section 24, considering that in the
dissemination of information regarding programs and services and in the
performance of reproductive health procedures, the religious freedom of health
care service providers should be respected.
In the case of Islamic Da'wah Council of the Philippines, Inc. v. Office of the
Executive Secretary228 it was stressed:
Freedom of religion was accorded preferred status by the framers of our
fundamental law. And this Court has consistently affirmed this preferred status,
well aware that it is "designed to protect the broadest possible liberty of
conscience, to allow each man to believe as his conscience directs, to profess
his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good." 10
The Court is not oblivious to the view that penalties provided by law endeavour
to ensure compliance. Without set consequences for either an active violation
or mere inaction, a law tends to be toothless and ineffectual. Nonetheless,
when what is bartered for an effective implementation of a law is a
constitutionally-protected right the Court firmly chooses to stamp its
disapproval. The punishment of a healthcare service provider, who fails and/or
refuses to refer a patient to another, or who declines to perform reproductive
health procedure on a patient because incompatible religious beliefs, is a clear
inhibition of a constitutional guarantee which the Court cannot allow.
The Implementing Rules and Regulation (RH-IRR)
The last paragraph of Section 5.24 of the RH-IRR reads:
Provided, That skilled health professional such as provincial, city or municipal
health officers, chiefs of hospital, head nurses, supervising midwives, among
others, who by virtue of their office are specifically charged with the duty to
implement the provisions of the RPRH Act and these Rules, cannot be
considered as conscientious objectors.
This is discriminatory and violative of the equal protection clause. The
conscientious objection clause should be equally protective of the religious
belief of public health officers. There is no perceptible distinction why they
should not be considered exempt from the mandates of the law. The protection
accorded to other conscientious objectors should equally apply to all medical
practitioners without distinction whether they belong to the public or private
sector. After all, the freedom to believe is intrinsic in every individual and the
protective robe that guarantees its free exercise is not taken off even if one
acquires employment in the government.
It should be stressed that intellectual liberty occupies a place inferior to none in
the hierarchy of human values. The mind must be free to think what it wills,
whether in the secular or religious sphere, to give expression to its beliefs by
oral discourse or through the media and, thus, seek other candid views in
occasions or gatherings or in more permanent aggrupation. Embraced in such
concept then are freedom of religion, freedom of speech, of the press,
assembly and petition, and freedom of association.229
The discriminatory provision is void not only because no such exception is
stated in the RH Law itself but also because it is violative of the equal
protection clause in the Constitution. Quoting respondent Lagman, if there is
any conflict between the RH-IRR and the RH Law, the law must prevail.
Justice Mendoza:
I'll go to another point. The RH law .. .in your Comment- in-Intervention on
page 52, you mentioned RH Law is replete with provisions in upholding the
freedom of religion and respecting religious convictions. Earlier, you affirmed
this with qualifications. Now, you have read, I presumed you have read the
IRR-Implementing Rules and Regulations of the RH Bill?
Congressman Lagman:
Yes, Your Honor, I have read but I have to admit, it's a long IRR and I have not
thoroughly dissected the nuances of the provisions.
Justice Mendoza:
I will read to you one provision. It's Section 5.24. This I cannot find in the RH
Law. But in the IRR it says: " .... skilled health professionals such as provincial,
city or municipal health officers, chief of hospitals, head nurses, supervising
midwives, among others, who by virtue of their office are specifically charged
with the duty to implement the provisions of the RPRH Act and these Rules,
cannot be considered as conscientious objectors." Do you agree with this?
Congressman Lagman:
I will have to go over again the provisions, Your Honor.
Justice Mendoza:
In other words, public health officers in contrast to the private practitioners who
can be conscientious objectors, skilled health professionals cannot be
considered conscientious objectors. Do you agree with this? Is this not against
the constitutional right to the religious belief?
Congressman Lagman:
Your Honor, if there is any conflict between the IRR and the law, the law must
prevail.230
Compelling State Interest
The foregoing discussion then begets the question on whether the
respondents, in defense of the subject provisions, were able to: 1] demonstrate
a more compelling state interest to restrain conscientious objectors in their
choice of services to render; and 2] discharge the burden of proof that the
obligatory character of the law is the least intrusive means to achieve the
objectives of the law.
Unfortunately, a deep scrutiny of the respondents' submissions proved to be in
vain. The OSG was curiously silent in the establishment of a more compelling
state interest that would rationalize the curbing of a conscientious objector's
right not to adhere to an action contrary to his religious convictions. During the
oral arguments, the OSG maintained the same silence and evasion. The
Transcripts of the Stenographic Notes disclose the following:
Justice De Castro:
Let's go back to the duty of the conscientious objector to refer. ..
Senior State Solicitor Hilbay:
Yes, Justice.
Justice De Castro:
... which you are discussing awhile ago with Justice Abad. What is the
compelling State interest in imposing this duty to refer to a conscientious
objector which refuses to do so because of his religious belief?
Senior State Solicitor Hilbay:
Ahh, Your Honor, ..
Justice De Castro:
What is the compelling State interest to impose this burden?
Senior State Solicitor Hilbay:
In the first place, Your Honor, I don't believe that the standard is a compelling
State interest, this is an ordinary health legislation involving professionals. This
is not a free speech matter or a pure free exercise matter. This is a regulation
by the State of the relationship between medical doctors and their patients. 231
Resultantly, the Court finds no compelling state interest which would limit the
free exercise clause of the conscientious objectors, however few in number.
Only the prevention of an immediate and grave danger to the security and
welfare of the community can justify the infringement of religious freedom. If
the government fails to show the seriousness and immediacy of the threat,
State intrusion is constitutionally unacceptable. 232
Freedom of religion means more than just the freedom to believe. It also
means the freedom to act or not to act according to what one believes. And
this freedom is violated when one is compelled to act against one's belief or is
prevented from acting according to one's belief. 233
Apparently, in these cases, there is no immediate danger to the life or health of
an individual in the perceived scenario of the subject provisions. After all, a
couple who plans the timing, number and spacing of the birth of their children
refers to a future event that is contingent on whether or not the mother decides
to adopt or use the information, product, method or supply given to her or
whether she even decides to become pregnant at all. On the other hand, the
burden placed upon those who object to contraceptive use is immediate and
occurs the moment a patient seeks consultation on reproductive health
matters.
Moreover, granting that a compelling interest exists to justify the infringement
of the conscientious objector's religious freedom, the respondents have failed
to demonstrate "the gravest abuses, endangering paramount interests" which
could limit or override a person's fundamental right to religious freedom. Also,
the respondents have not presented any government effort exerted to show
that the means it takes to achieve its legitimate state objective is the least
intrusive means.234 Other than the assertion that the act of referring would only
be momentary, considering that the act of referral by a conscientious objector
is the very action being contested as violative of religious freedom, it behooves
the respondents to demonstrate that no other means can be undertaken by the
State to achieve its objective without violating the rights of the conscientious
objector. The health concerns of women may still be addressed by other
practitioners who may perform reproductive health-related procedures with
open willingness and motivation. Suffice it to say, a person who is forced to
perform an act in utter reluctance deserves the protection of the Court as the
last vanguard of constitutional freedoms.
At any rate, there are other secular steps already taken by the Legislature to
ensure that the right to health is protected. Considering other legislations as
they stand now, R.A . No. 4 729 or the Contraceptive Act, R.A. No. 6365 or
"The Population Act of the Philippines" and R.A. No. 9710, otherwise known as
"The Magna Carta of Women," amply cater to the needs of women in relation
to health services and programs. The pertinent provision of Magna Carta on
comprehensive health services and programs for women, in fact, reads:
Section 17. Women's Right to Health. - (a) Comprehensive Health Services. -
The State shall, at all times, provide for a comprehensive, culture-sensitive,
and gender-responsive health services and programs covering all stages of a
woman's life cycle and which addresses the major causes of women's
mortality and morbidity: Provided, That in the provision for comprehensive
health services, due respect shall be accorded to women's religious
convictions, the rights of the spouses to found a family in accordance with their
religious convictions, and the demands of responsible parenthood, and the
right of women to protection from hazardous drugs, devices, interventions, and
substances.
Access to the following services shall be ensured:
(1) Maternal care to include pre- and post-natal services to
address pregnancy and infant health and nutrition;
(2) Promotion of breastfeeding;
(3) Responsible, ethical, legal, safe, and effective methods of
family planning;
(4) Family and State collaboration in youth sexuality education
and health services without prejudice to the primary right and
duty of parents to educate their children;
(5) Prevention and management of reproductive tract
infections, including sexually transmitted diseases, HIV, and
AIDS;
(6) Prevention and management of reproductive tract cancers
like breast and cervical cancers, and other gynecological
conditions and disorders;
(7) Prevention of abortion and management of pregnancy-
related complications;
(8) In cases of violence against women and children, women
and children victims and survivors shall be provided with
comprehensive health services that include psychosocial,
therapeutic, medical, and legal interventions and assistance
towards healing, recovery, and empowerment;
(9) Prevention and management of infertility and sexual
dysfunction pursuant to ethical norms and medical standards;
(10) Care of the elderly women beyond their child-bearing
years; and
(11) Management, treatment, and intervention of mental health
problems of women and girls. In addition, healthy lifestyle
activities are encouraged and promoted through programs and
projects as strategies in the prevention of diseases.
(b) Comprehensive Health Information and Education. - The State shall
provide women in all sectors with appropriate, timely, complete, and accurate
information and education on all the above-stated aspects of women's health
in government education and training programs, with due regard to the
following:
(1) The natural and primary right and duty of parents in the
rearing of the youth and the development of moral character
and the right of children to be brought up in an atmosphere of
morality and rectitude for the enrichment and strengthening of
character;
 (2) The formation of a person's sexuality that affirms human
dignity; and
(3) Ethical, legal, safe, and effective family planning methods
including fertility awareness.
As an afterthought, Asst. Solicitor General Hilbay eventually replied that the
compelling state interest was "Fifteen maternal deaths per day, hundreds of
thousands of unintended pregnancies, lives changed, x x x." 235 He, however,
failed to substantiate this point by concrete facts and figures from reputable
sources.
The undisputed fact, however, is that the World Health Organization reported
that the Filipino maternal mortality rate dropped to 48 percent from 1990 to
2008, 236 although there was still no RH Law at that time. Despite such
revelation, the proponents still insist that such number of maternal deaths
constitute a compelling state interest.
Granting that there are still deficiencies and flaws in the delivery of social
healthcare programs for Filipino women, they could not be solved by a
measure that puts an unwarrantable stranglehold on religious beliefs in
exchange for blind conformity.
Exception: Life Threatening Cases
All this notwithstanding, the Court properly recognizes a valid exception set
forth in the law. While generally healthcare service providers cannot be forced
to render reproductive health care procedures if doing it would contravene their
religious beliefs, an exception must be made in life-threatening cases that
require the performance of emergency procedures. In these situations, the
right to life of the mother should be given preference, considering that a
referral by a medical practitioner would amount to a denial of service, resulting
to unnecessarily placing the life of a mother in grave danger. Thus, during the
oral arguments, Atty. Liban, representing CFC, manifested: "the forced referral
clause that we are objecting on grounds of violation of freedom of religion does
not contemplate an emergency."237
In a conflict situation between the life of the mother and the life of a child, the
doctor is morally obliged always to try to save both lives. If, however, it is
impossible, the resulting death to one should not be deliberate. Atty. Noche
explained:
Principle of Double-Effect. - May we please remind the principal author of the
RH Bill in the House of Representatives of the principle of double-effect
wherein intentional harm on the life of either the mother of the child is never
justified to bring about a "good" effect. In a conflict situation between the life of
the child and the life of the mother, the doctor is morally obliged always to try
to save both lives. However, he can act in favor of one (not necessarily the
mother) when it is medically impossible to save both, provided that no direct
harm is intended to the other. If the above principles are observed, the loss of
the child's life or the mother's life is not intentional and, therefore, unavoidable.
Hence, the doctor would not be guilty of abortion or murder. The mother is
never pitted against the child because both their lives are equally valuable. 238
Accordingly, if it is necessary to save the life of a mother, procedures
endangering the life of the child may be resorted to even if is against the
religious sentiments of the medical practitioner. As quoted above, whatever
burden imposed upon a medical practitioner in this case would have been
more than justified considering the life he would be able to save.
Family Planning Seminars
Anent the requirement imposed under Section 15239 as a condition for the
issuance of a marriage license, the Court finds the same to be a reasonable
exercise of police power by the government. A cursory reading of the assailed
provision bares that the religious freedom of the petitioners is not at all
violated. All the law requires is for would-be spouses to attend a seminar on
parenthood, family planning breastfeeding and infant nutrition. It does not even
mandate the type of family planning methods to be included in the seminar,
whether they be natural or artificial. As correctly noted by the OSG, those who
receive any information during their attendance in the required seminars are
not compelled to accept the information given to them, are completely free to
reject the information they find unacceptable, and retain the freedom to decide
on matters of family life without the intervention of the State.
4-The Family and the Right to Privacy
Petitioner CFC assails the RH Law because Section 23(a) (2) (i) thereof
violates the provisions of the Constitution by intruding into marital privacy and
autonomy. It argues that it cultivates disunity and fosters animosity in the
family rather than promote its solidarity and total development.240
The Court cannot but agree.
The 1987 Constitution is replete with provisions strengthening the family as it
is the basic social institution. In fact, one article, Article XV, is devoted entirely
to the family.
ARTICLE XV
THE FAMILY
Section 1. The State recognizes the Filipino family as the foundation of the
nation. Accordingly, it shall strengthen its solidarity and actively promote its
total development.
Section 2. Marriage, as an inviolable social institution, is the foundation of the
family and shall be protected by the State.
Section 3. The State shall defend:
The right of spouses to found a family in accordance with their religious
convictions and the demands of responsible parenthood;
The right of children to assistance, including proper care and nutrition, and
special protection from all forms of neglect, abuse, cruelty, exploitation and
other conditions prejudicial to their development;
The right of the family to a family living wage and income; and
The right of families or family assoc1at1ons to participate in the planning and
implementation of policies and programs that affect them.
In this case, the RH Law, in its not-so-hidden desire to control population
growth, contains provisions which tend to wreck the family as a solid social
institution. It bars the husband and/or the father from participating in the
decision making process regarding their common future progeny. It likewise
deprives the parents of their authority over their minor daughter simply
because she is already a parent or had suffered a miscarriage.
The Family and Spousal Consent
Section 23(a) (2) (i) of the RH Law states:
The following acts are prohibited:
(a) Any health care service provider, whether public or private, who shall: ...
(2) refuse to perform legal and medically-safe reproductive health procedures
on any person of legal age on the ground of lack of consent or authorization of
the following persons in the following instances:
(i) Spousal consent in case of married persons: provided, That in case of
disagreement, the decision of the one undergoing the procedures shall prevail.
[Emphasis supplied]
The above provision refers to reproductive health procedures like tubal
litigation and vasectomy which, by their very nature, should require mutual
consent and decision between the husband and the wife as they affect issues
intimately related to the founding of a family. Section 3, Art. XV of the
Constitution espouses that the State shall defend the "right of the spouses to
found a family." One person cannot found a family. The right, therefore, is
shared by both spouses. In the same Section 3, their right "to participate in the
planning and implementation of policies and programs that affect them " is
equally recognized.
The RH Law cannot be allowed to infringe upon this mutual decision-making.
By giving absolute authority to the spouse who would undergo a procedure,
and barring the other spouse from participating in the decision would drive a
wedge between the husband and wife, possibly result in bitter animosity, and
endanger the marriage and the family, all for the sake of reducing the
population. This would be a marked departure from the policy of the State to
protect marriage as an inviolable social institution. 241
Decision-making involving a reproductive health procedure is a private matter
which belongs to the couple, not just one of them. Any decision they would
reach would affect their future as a family because the size of the family or the
number of their children significantly matters. The decision whether or not to
undergo the procedure belongs exclusively to, and shared by, both spouses as
one cohesive unit as they chart their own destiny. It is a constitutionally
guaranteed private right. Unless it prejudices the State, which has not shown
any compelling interest, the State should see to it that they chart their destiny
together as one family.
As highlighted by Justice Leonardo-De Castro, Section 19( c) of R.A. No.
9710, otherwise known as the "Magna Carta for Women," provides that
women shall have equal rights in all matters relating to marriage and family
relations, including the joint decision on the number and spacing of their
children. Indeed, responsible parenthood, as Section 3(v) of the RH Law
states, is a shared responsibility between parents. Section 23(a)(2)(i) of the
RH Law should not be allowed to betray the constitutional mandate to protect
and strengthen the family by giving to only one spouse the absolute authority
to decide whether to undergo reproductive health procedure. 242
The right to chart their own destiny together falls within the protected zone of
marital privacy and such state intervention would encroach into the zones of
spousal privacy guaranteed by the Constitution. In our jurisdiction, the right to
privacy was first recognized in Marje v. Mutuc, 243 where the Court, speaking
through Chief Justice Fernando, held that "the right to privacy as such is
accorded recognition independently of its identification with liberty; in itself, it is
fully deserving of constitutional protection." 244 Marje adopted the ruling of the
US Supreme Court in Griswold v. Connecticut, 245 where Justice William O.
Douglas wrote:
We deal with a right of privacy older than the Bill of Rights -older than our
political parties, older than our school system. Marriage is a coming together
for better or for worse, hopefully enduring, and intimate to the degree of being
sacred. It is an association that promotes a way of life, not causes; a harmony
in living, not political faiths; a bilateral loyalty, not commercial or social
projects. Yet it is an association for as noble a purpose as any involved in our
prior decisions.
Ironically, Griswold invalidated a Connecticut statute which made the use of
contraceptives a criminal offense on the ground of its amounting to an
unconstitutional invasion of the right to privacy of married persons.
Nevertheless, it recognized the zone of privacy rightfully enjoyed by couples.
Justice Douglas in Grisworld wrote that "specific guarantees in the Bill of
Rights have penumbras, formed by emanations from those guarantees that
help give them life and substance. Various guarantees create zones of
privacy."246
At any rate, in case of conflict between the couple, the courts will decide.
The Family and Parental Consent
Equally deplorable is the debarment of parental consent in cases where the
minor, who will be undergoing a procedure, is already a parent or has had a
miscarriage. Section 7 of the RH law provides:
SEC. 7. Access to Family Planning. – x x x.
No person shall be denied information and access to family planning services,
whether natural or artificial: Provided, That minors will not be allowed access
to modern methods of family planning without written consent from their
parents or guardian/s except when the minor is already a parent or has had a
miscarriage.
There can be no other interpretation of this provision except that when a minor
is already a parent or has had a miscarriage, the parents are excluded from
the decision making process of the minor with regard to family planning. Even
if she is not yet emancipated, the parental authority is already cut off just
because there is a need to tame population growth.
It is precisely in such situations when a minor parent needs the comfort, care,
advice, and guidance of her own parents. The State cannot replace her natural
mother and father when it comes to providing her needs and comfort. To say
that their consent is no longer relevant is clearly anti-family. It does not
promote unity in the family. It is an affront to the constitutional mandate to
protect and strengthen the family as an inviolable social institution.
More alarmingly, it disregards and disobeys the constitutional mandate that
"the natural and primary right and duty of parents in the rearing of the youth for
civic efficiency and the development of moral character shall receive the
support of the Government."247 In this regard, Commissioner Bernas wrote:
The 1987 provision has added the adjective "primary" to modify the right of
parents. It imports the assertion that the right of parents is superior to that of
the State.248 [Emphases supplied]
To insist on a rule that interferes with the right of parents to exercise parental
control over their minor-child or the right of the spouses to mutually decide on
matters which very well affect the very purpose of marriage, that is, the
establishment of conjugal and family life, would result in the violation of one's
privacy with respect to his family. It would be dismissive of the unique and
strongly-held Filipino tradition of maintaining close family ties and violative of
the recognition that the State affords couples entering into the special contract
of marriage to as one unit in forming the foundation of the family and society.
The State cannot, without a compelling state interest, take over the role of
parents in the care and custody of a minor child, whether or not the latter is
already a parent or has had a miscarriage. Only a compelling state interest can
justify a state substitution of their parental authority.
First Exception: Access to Information
Whether with respect to the minor referred to under the exception provided in
the second paragraph of Section 7 or with respect to the consenting spouse
under Section 23(a)(2)(i), a distinction must be made. There must be a
differentiation between access to information about family planning services,
on one hand, and access to the reproductive health procedures and modern
family planning methods themselves, on the other. Insofar as access to
information is concerned, the Court finds no constitutional objection to the
acquisition of information by the minor referred to under the exception in the
second paragraph of Section 7 that would enable her to take proper care of
her own body and that of her unborn child. After all, Section 12, Article II of the
Constitution mandates the State to protect both the life of the mother as that of
the unborn child. Considering that information to enable a person to make
informed decisions is essential in the protection and maintenance of ones'
health, access to such information with respect to reproductive health must be
allowed. In this situation, the fear that parents might be deprived of their
parental control is unfounded because they are not prohibited to exercise
parental guidance and control over their minor child and assist her in deciding
whether to accept or reject the information received.
Second Exception: Life Threatening Cases
As in the case of the conscientious objector, an exception must be made in
life-threatening cases that require the performance of emergency procedures.
In such cases, the life of the minor who has already suffered a miscarriage and
that of the spouse should not be put at grave risk simply for lack of consent. It
should be emphasized that no person should be denied the appropriate
medical care urgently needed to preserve the primordial right, that is, the right
to life.
In this connection, the second sentence of Section 23(a)(2)(ii)249 should be
struck down. By effectively limiting the requirement of parental consent to "only
in elective surgical procedures," it denies the parents their right of parental
authority in cases where what is involved are "non-surgical procedures." Save
for the two exceptions discussed above, and in the case of an abused child as
provided in the first sentence of Section 23(a)(2)(ii), the parents should not be
deprived of their constitutional right of parental authority. To deny them of this
right would be an affront to the constitutional mandate to protect and
strengthen the family.
5 - Academic Freedom
It is asserted that Section 14 of the RH Law, in relation to Section 24 thereof,
mandating the teaching of Age-and Development-Appropriate Reproductive
Health Education under threat of fine and/or imprisonment violates the
principle of academic freedom . According to the petitioners, these provisions
effectively force educational institutions to teach reproductive health education
even if they believe that the same is not suitable to be taught to their
students.250 Citing various studies conducted in the United States and statistical
data gathered in the country, the petitioners aver that the prevalence of
contraceptives has led to an increase of out-of-wedlock births; divorce and
breakdown of families; the acceptance of abortion and euthanasia; the
"feminization of poverty"; the aging of society; and promotion of promiscuity
among the youth.251
At this point, suffice it to state that any attack on the validity of Section 14 of
the RH Law is premature because the Department of Education, Culture and
Sports has yet to formulate a curriculum on age-appropriate reproductive
health education. One can only speculate on the content, manner and medium
of instruction that will be used to educate the adolescents and whether they
will contradict the religious beliefs of the petitioners and validate their
apprehensions. Thus, considering the premature nature of this particular issue,
the Court declines to rule on its constitutionality or validity.
At any rate, Section 12, Article II of the 1987 Constitution provides that the
natural and primary right and duty of parents in the rearing of the youth for
civic efficiency and development of moral character shall receive the support of
the Government. Like the 1973 Constitution and the 1935 Constitution, the
1987 Constitution affirms the State recognition of the invaluable role of parents
in preparing the youth to become productive members of society. Notably, it
places more importance on the role of parents in the development of their
children by recognizing that said role shall be "primary," that is, that the right of
parents in upbringing the youth is superior to that of the State. 252
It is also the inherent right of the State to act as parens patriae to aid parents
in the moral development of the youth. Indeed, the Constitution makes mention
of the importance of developing the youth and their important role in nation
building.253 Considering that Section 14 provides not only for the age-
appropriate-reproductive health education, but also for values formation; the
development of knowledge and skills in self-protection against discrimination;
sexual abuse and violence against women and children and other forms of
gender based violence and teen pregnancy; physical, social and emotional
changes in adolescents; women's rights and children's rights; responsible
teenage behavior; gender and development; and responsible parenthood, and
that Rule 10, Section 11.01 of the RH-IRR and Section 4(t) of the RH Law itself
provides for the teaching of responsible teenage behavior, gender sensitivity
and physical and emotional changes among adolescents - the Court finds that
the legal mandate provided under the assailed provision supplements, rather
than supplants, the rights and duties of the parents in the moral development
of their children.
Furthermore, as Section 14 also mandates that the mandatory reproductive
health education program shall be developed in conjunction with parent-
teacher-community associations, school officials and other interest groups, it
could very well be said that it will be in line with the religious beliefs of the
petitioners. By imposing such a condition, it becomes apparent that the
petitioners' contention that Section 14 violates Article XV, Section 3(1) of the
Constitution is without merit.254
While the Court notes the possibility that educators might raise their objection
to their participation in the reproductive health education program provided
under Section 14 of the RH Law on the ground that the same violates their
religious beliefs, the Court reserves its judgment should an actual case be filed
before it.
6 - Due Process
The petitioners contend that the RH Law suffers from vagueness and, thus
violates the due process clause of the Constitution. According to them, Section
23 (a)(l) mentions a "private health service provider" among those who may be
held punishable but does not define who is a "private health care service
provider." They argue that confusion further results since Section 7 only makes
reference to a "private health care institution."
The petitioners also point out that Section 7 of the assailed legislation exempts
hospitals operated by religious groups from rendering reproductive health
service and modern family planning methods. It is unclear, however, if these
institutions are also exempt from giving reproductive health information under
Section 23(a)(l), or from rendering reproductive health procedures under
Section 23(a)(2).
Finally, it is averred that the RH Law punishes the withholding, restricting and
providing of incorrect information, but at the same time fails to define "incorrect
information."
The arguments fail to persuade.
A statute or act suffers from the defect of vagueness when it lacks
comprehensible standards that men of common intelligence must necessarily
guess 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.255 Moreover, in determining whether the words used in a statute are
vague, words must not only be taken in accordance with their plain meaning
alone, but also in relation to other parts of the statute. It is a rule that every part
of the statute must be interpreted with reference to the context, that is, every
part of it must be construed together with the other parts and kept subservient
to the general intent of the whole enactment.256
As correctly noted by the OSG, in determining the definition of "private health
care service provider," reference must be made to Section 4(n) of the RH Law
which defines a "public health service provider," viz:
(n) Public health care service provider refers to: (1) public health care
institution, which is duly licensed and accredited and devoted primarily to the
maintenance and operation of facilities for health promotion, disease
prevention, diagnosis, treatment and care of individuals suffering from illness,
disease, injury, disability or deformity, or in need of obstetrical or other medical
and nursing care; (2) public health care professional, who is a doctor of
medicine, a nurse or a midvvife; (3) public health worker engaged in the
delivery of health care services; or (4) barangay health worker who has
undergone training programs under any accredited government and NGO and
who voluntarily renders primarily health care services in the community after
having been accredited to function as such by the local health board in
accordance with the guidelines promulgated by the Department of Health
(DOH) .
Further, the use of the term "private health care institution" in Section 7 of the
law, instead of "private health care service provider," should not be a cause of
confusion for the obvious reason that they are used synonymously.
The Court need not belabor the issue of whether the right to be exempt from
being obligated to render reproductive health service and modem family
planning methods, includes exemption from being obligated to give
reproductive health information and to render reproductive health procedures.
Clearly, subject to the qualifications and exemptions earlier discussed, the
right to be exempt from being obligated to render reproductive health service
and modem family planning methods, necessarily includes exemption from
being obligated to give reproductive health information and to render
reproductive health procedures. The terms "service" and "methods" are broad
enough to include the providing of information and the rendering of medical
procedures.
The same can be said with respect to the contention that the RH Law punishes
health care service providers who intentionally withhold, restrict and provide
incorrect information regarding reproductive health programs and services. For
ready reference, the assailed provision is hereby quoted as follows:
SEC. 23. Prohibited Acts. - The following acts are prohibited:
(a) Any health care service provider, whether public or private, who shall:
(1) Knowingly withhold information or restrict the dissemination thereof, and/ or
intentionally provide incorrect information regarding programs and services on
reproductive health including the right to informed choice and access to a full
range of legal, medically-safe, non-abortifacient and effective family planning
methods;
From its plain meaning, the word "incorrect" here denotes failing to agree with
a copy or model or with established rules; inaccurate, faulty; failing to agree
with the requirements of duty, morality or propriety; and failing to coincide with
the truth. 257 On the other hand, the word "knowingly" means with awareness or
deliberateness that is intentional.258 Used together in relation to Section
23(a)(l), they connote a sense of malice and ill motive to mislead or
misrepresent the public as to the nature and effect of programs and services
on reproductive health. Public health and safety demand that health care
service providers give their honest and correct medical information in
accordance with what is acceptable in medical practice. While health care
service providers are not barred from expressing their own personal opinions
regarding the programs and services on reproductive health, their right must
be tempered with the need to provide public health and safety. The public
deserves no less.
7-Egual Protection
The petitioners also claim that the RH Law violates the equal protection clause
under the Constitution as it discriminates against the poor because it makes
them the primary target of the government program that promotes
contraceptive use . They argue that, rather than promoting reproductive health
among the poor, the RH Law introduces contraceptives that would effectively
reduce the number of the poor. Their bases are the various provisions in the
RH Law dealing with the poor, especially those mentioned in the guiding
principles259 and definition of terms260 of the law.
They add that the exclusion of private educational institutions from the
mandatory reproductive health education program imposed by the RH Law
renders it unconstitutional.
In Biraogo v. Philippine Truth Commission, 261 the Court had the occasion to
expound on the concept of equal protection. Thus:
One of the basic principles on which this government was founded is that of
the equality of right which is embodied in Section 1, Article III of the 1987
Constitution. The equal protection of the laws is embraced in the concept of
due process, as every unfair discrimination offends the requirements of justice
and fair play. It has been embodied in a separate clause, however, to provide
for a more specific guaranty against any form of undue favoritism or hostility
from the government. Arbitrariness in general may be challenged on the basis
of the due process clause. But if the particular act assailed partakes of an
unwarranted partiality or prejudice, the sharper weapon to cut it down is the
equal protection clause.
"According to a long line of decisions, equal protection simply requires that all
persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed." It "requires public bodies and inst
itutions to treat similarly situated individuals in a similar manner." "The purpose
of the equal protection clause is to secure every person within a state's
jurisdiction against intentional and arbitrary discrimination, whether occasioned
by the express terms of a statue or by its improper execution through the
state's duly constituted authorities." "In other words, the concept of equal
justice under the law requires the state to govern impartially, and it may not
draw distinctions between individuals solely on differences that are irrelevant
to a legitimate governmental objective."
The equal protection clause is aimed at all official state actions, not just those
of the legislature. Its inhibitions cover all the departments of the government
including the political and executive departments, and extend to all actions of a
state denying equal protection of the laws, through whatever agency or
whatever guise is taken.
It, however, does not require the universal application of the laws to all
persons or things without distinction. What it simply requires is equality among
equals as determined according to a valid classification. Indeed, the equal
protection clause permits classification. Such classification, however, to be
valid must pass the test of reasonableness. The test has four requisites: (1)
The classification 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. "Superficial differences do
not make for a valid classification."
For a classification to meet the requirements of constitutionality, it must include
or embrace all persons who naturally belong to the class. "The classification
will be regarded as invalid if all the members of the class are not similarly
treated, both as to rights conferred and obligations imposed. It is not
necessary that the classification be made with absolute symmetry, in the
sense that the members of the class should possess the same characteristics
in equal degree. Substantial similarity will suffice; and as long as this is
achieved, all those covered by the classification are to be treated equally. The
mere fact that an individual belonging to a class differs from the other
members, as long as that class is substantially distinguishable from all others,
does not justify the non-application of the law to him."
The classification must not be based on existing circumstances only, or so
constituted as to preclude addition to the number included in the class. It must
be of such a nature as to embrace all those who may thereafter be in similar
circumstances and conditions. It must not leave out or "underinclude" those
that should otherwise fall into a certain classification. [Emphases supplied;
citations excluded]
To provide that the poor are to be given priority in the government's
reproductive health care program is not a violation of the equal protection
clause. In fact, it is pursuant to Section 11, Article XIII of the Constitution which
recognizes the distinct necessity to address the needs of the underprivileged
by providing that they be given priority in addressing the health development of
the people. Thus:
Section 11. The State shall adopt an integrated and comprehensive approach
to health development which shall endeavor to make essential goods, health
and other social services available to all the people at affordable cost. There
shall be priority for the needs of the underprivileged, sick, elderly, disabled,
women, and children. The State shall endeavor to provide free medical care to
paupers.
It should be noted that Section 7 of the RH Law prioritizes poor and
marginalized couples who are suffering from fertility issues and desire to have
children. There is, therefore, no merit to the contention that the RH Law only
seeks to target the poor to reduce their number. While the RH Law admits the
use of contraceptives, it does not, as elucidated above, sanction abortion. As
Section 3(1) explains, the "promotion and/or stabilization of the population
growth rate is incidental to the advancement of reproductive health."
Moreover, the RH Law does not prescribe the number of children a couple
may have and does not impose conditions upon couples who intend to have
children. While the petitioners surmise that the assailed law seeks to charge
couples with the duty to have children only if they would raise them in a truly
humane way, a deeper look into its provisions shows that what the law seeks
to do is to simply provide priority to the poor in the implementation of
government programs to promote basic reproductive health care.
With respect to the exclusion of private educational institutions from the
mandatory reproductive health education program under Section 14, suffice it
to state that the mere fact that the children of those who are less fortunate
attend public educational institutions does not amount to substantial distinction
sufficient to annul the assailed provision. On the other hand, substantial
distinction rests between public educational institutions and private educational
institutions, particularly because there is a need to recognize the academic
freedom of private educational institutions especially with respect to religious
instruction and to consider their sensitivity towards the teaching of reproductive
health education.
8-Involuntary Servitude
The petitioners also aver that the RH Law is constitutionally infirm as it violates
the constitutional prohibition against involuntary servitude. They posit that
Section 17 of the assailed legislation requiring private and non-government
health care service providers to render forty-eight (48) hours of pro bono
reproductive health services, actually amounts to involuntary servitude
because it requires medical practitioners to perform acts against their will. 262
The OSG counters that the rendition of pro bono services envisioned in
Section 17 can hardly be considered as forced labor analogous to slavery, as
reproductive health care service providers have the discretion as to the
manner and time of giving pro bono services. Moreover, the OSG points out
that the imposition is within the powers of the government, the accreditation of
medical practitioners with PhilHealth being a privilege and not a right.
The point of the OSG is well-taken.
It should first be mentioned that the practice of medicine is undeniably imbued
with public interest that it is both a power and a duty of the State to control and
regulate it in order to protect and promote the public welfare. Like the legal
profession, the practice of medicine is not a right but a privileged burdened
with conditions as it directly involves the very lives of the people. A fortiori, this
power includes the power of Congress 263 to prescribe the qualifications for the
practice of professions or trades which affect the public welfare, the public
health, the public morals, and the public safety; and to regulate or control such
professions or trades, even to the point of revoking such right altogether. 264
Moreover, as some petitioners put it, the notion of involuntary servitude
connotes the presence of force, threats, intimidation or other similar means of
coercion and compulsion.265 A reading of the assailed provision, however,
reveals that it only encourages private and non- government reproductive
healthcare service providers to render pro bono service. Other than non-
accreditation with PhilHealth, no penalty is imposed should they choose to do
otherwise. Private and non-government reproductive healthcare service
providers also enjoy the liberty to choose which kind of health service they
wish to provide, when, where and how to provide it or whether to provide it all.
Clearly, therefore, no compulsion, force or threat is made upon them to render
pro bono service against their will. While the rendering of such service was
made a prerequisite to accreditation with PhilHealth, the Court does not
consider the same to be an unreasonable burden, but rather, a necessary
incentive imposed by Congress in the furtherance of a perceived legitimate
state interest.
Consistent with what the Court had earlier discussed, however, it should be
emphasized that conscientious objectors are exempt from this provision as
long as their religious beliefs and convictions do not allow them to render
reproductive health service, pro bona or otherwise.
9-Delegation of Authority to the FDA
The petitioners likewise question the delegation by Congress to the FDA of the
power to determine whether or not a supply or product is to be included in the
Essential Drugs List (EDL).266
The Court finds nothing wrong with the delegation. The FDA does not only
have the power but also the competency to evaluate, register and cover health
services and methods. It is the only government entity empowered to render
such services and highly proficient to do so. It should be understood that
health services and methods fall under the gamut of terms that are associated
with what is ordinarily understood as "health products."
In this connection, Section 4 of R.A. No. 3 720, as amended by R.A. No. 9711
reads:
SEC. 4. To carry out the provisions of this Act, there is hereby created an
office to be called the Food and Drug Administration (FDA) in the Department
of Health (DOH). Said Administration shall be under the Office of the Secretary
and shall have the following functions, powers and duties:
"(a) To administer the effective implementation of this Act and of the
rules and regulations issued pursuant to the same;
"(b) To assume primary jurisdiction in the collection of samples of
health products;
"(c) To analyze and inspect health products in connection with the
implementation of this Act;
"(d) To establish analytical data to serve as basis for the preparation of
health products standards, and to recommend standards of identity,
purity, safety, efficacy, quality and fill of container;
"(e) To issue certificates of compliance with technical requirements to
serve as basis for the issuance of appropriate authorization and spot-
check for compliance with regulations regarding operation of
manufacturers, importers, exporters, distributors, wholesalers, drug
outlets, and other establishments and facilities of health products, as
determined by the FDA;
"x x x
"(h) To conduct appropriate tests on all applicable health products prior
to the issuance of appropriate authorizations to ensure safety, efficacy,
purity, and quality;
"(i) To require all manufacturers, traders, distributors, importers,
exporters, wholesalers, retailers, consumers, and non-consumer users
of health products to report to the FDA any incident that reasonably
 indicates that said product has caused or contributed to the death,
serious illness or serious injury to a consumer, a patient, or any
person;
"(j) To issue cease and desist orders motu propio or upon verified
complaint for health products, whether or not registered with the FDA
Provided, That for registered health products, the cease and desist
order is valid for thirty (30) days and may be extended for sixty ( 60)
days only after due process has been observed;
"(k) After due process, to order the ban, recall, and/or withdrawal of
any health product found to have caused death, serious illness or
serious injury to a consumer or patient, or is found to be imminently
injurious, unsafe, dangerous, or grossly deceptive, and to require all
concerned to implement the risk management plan which is a
requirement for the issuance of the appropriate authorization;
x x x.
As can be gleaned from the above, the functions, powers and duties of the
FDA are specific to enable the agency to carry out the mandates of the law.
Being the country's premiere and sole agency that ensures the safety of food
and medicines available to the public, the FDA was equipped with the
necessary powers and functions to make it effective. Pursuant to the principle
of necessary implication, the mandate by Congress to the FDA to ensure
public health and safety by permitting only food and medicines that are safe
includes "service" and "methods." From the declared policy of the RH Law, it is
clear that Congress intended that the public be given only those medicines that
are proven medically safe, legal, non-abortifacient, and effective in accordance
with scientific and evidence-based medical research standards. The
philosophy behind the permitted delegation was explained in Echagaray v.
Secretary of Justice,267 as follows:
The reason is the increasing complexity of the task of the government and the
growing inability of the legislature to cope directly with the many problems
demanding its attention. The growth of society has ramified its activities and
created peculiar and sophisticated problems that the legislature cannot be
expected reasonably to comprehend. Specialization even in legislation has
become necessary. To many of the problems attendant upon present day
undertakings, the legislature may not have the competence, let alone the
interest and the time, to provide the required direct and efficacious, not to say
specific solutions.
10- Autonomy of Local Governments and the Autonomous Region
of Muslim Mindanao (ARMM)
As for the autonomy of local governments, the petitioners claim that the RH
Law infringes upon the powers devolved to local government units (LGUs)
under Section 17 of the Local Government Code. Said Section 17 vested upon
the LGUs the duties and functions pertaining to the delivery of basic services
and facilities, as follows:
SECTION 17. Basic Services and Facilities. –
(a) Local government units shall endeavor to be self-reliant and shall
continue exercising the powers and discharging the duties and
functions currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices devolved
to them pursuant to this Code. Local government units shall likewise
exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient
and effective provision of the basic services and facilities enumerated
herein.
(b) Such basic services and facilities include, but are not limited to, x x
x.
While the aforementioned provision charges the LGUs to take on the
functions and responsibilities that have already been devolved upon
them from the national agencies on the aspect of providing for basic
services and facilities in their respective jurisdictions, paragraph (c) of
the same provision provides a categorical exception of cases involving
nationally-funded projects, facilities, programs and services.268 Thus:
(c) Notwithstanding the provisions of subsection (b) hereof, public
works and infrastructure projects and other facilities, programs and
services funded by the National Government under the annual General
Appropriations Act, other special laws, pertinent executive orders, and
those wholly or partially funded from foreign sources, are not covered
under this Section, except in those cases where the local government
unit concerned is duly designated as the implementing agency for such
projects, facilities, programs and services. [Emphases supplied]
The essence of this express reservation of power by the national government
is that, unless an LGU is particularly designated as the implementing agency, it
has no power over a program for which funding has been provided by the
national government under the annual general appropriations act, even if the
program involves the delivery of basic services within the jurisdiction of the
LGU.269 A complete relinquishment of central government powers on the matter
of providing basic facilities and services cannot be implied as the Local
Government Code itself weighs against it.270
In this case, a reading of the RH Law clearly shows that whether it pertains to
the establishment of health care facilities, 271 the hiring of skilled health
professionals,272 or the training of barangay health workers, 273 it will be the
national government that will provide for the funding of its implementation.
Local autonomy is not absolute. The national government still has the say
when it comes to national priority programs which the local government is
called upon to implement like the RH Law.
Moreover, from the use of the word "endeavor," the LG Us are merely
encouraged to provide these services. There is nothing in the wording of the
law which can be construed as making the availability of these services
mandatory for the LGUs. For said reason, it cannot be said that the RH Law
amounts to an undue encroachment by the national government upon the
autonomy enjoyed by the local governments.
The ARMM
The fact that the RH Law does not intrude in the autonomy of local
governments can be equally applied to the ARMM. The RH Law does not
infringe upon its autonomy. Moreover, Article III, Sections 6, 10 and 11 of R.A.
No. 9054, or the organic act of the ARMM, alluded to by petitioner Tillah to
justify the exemption of the operation of the RH Law in the autonomous region,
refer to the policy statements for the guidance of the regional government.
These provisions relied upon by the petitioners simply delineate the powers
that may be exercised by the regional government, which can, in no manner,
be characterized as an abdication by the State of its power to enact legislation
that would benefit the general welfare. After all, despite the veritable autonomy
granted the ARMM, the Constitution and the supporting jurisprudence, as they
now stand, reject the notion of imperium et imperio in the relationship between
the national and the regional governments. 274 Except for the express and
implied limitations imposed on it by the Constitution, Congress cannot be
restricted to exercise its inherent and plenary power to legislate on all subjects
which extends to all matters of general concern or common interest. 275
11 - Natural Law
With respect to the argument that the RH Law violates natural law, 276 suffice it
to say that the Court does not duly recognize it as a legal basis for upholding
or invalidating a law. Our only guidepost is the Constitution. While every law
enacted by man emanated from what is perceived as natural law, the Court is
not obliged to see if a statute, executive issuance or ordinance is in conformity
to it. To begin with, it is not enacted by an acceptable legitimate body.
Moreover, natural laws are mere thoughts and notions on inherent rights
espoused by theorists, philosophers and theologists. The jurists of the
philosophical school are interested in the law as an abstraction, rather than in
the actual law of the past or present. 277 Unless, a natural right has been
transformed into a written law, it cannot serve as a basis to strike down a law.
In Republic v. Sandiganbayan,278 the very case cited by the petitioners, it was
explained that the Court is not duty-bound to examine every law or action and
whether it conforms with both the Constitution and natural law. Rather, natural
law is to be used sparingly only in the most peculiar of circumstances involving
rights inherent to man where no law is applicable.279
At any rate, as earlier expounded, the RH Law does not sanction the taking
away of life. It does not allow abortion in any shape or form. It only seeks to
enhance the population control program of the government by providing
information and making non-abortifacient contraceptives more readily available
to the public, especially to the poor.
Facts and Fallacies
and the Wisdom of the Law
In general, the Court does not find the RH Law as unconstitutional insofar as it
seeks to provide access to medically-safe, non-abortifacient, effective, legal,
affordable, and quality reproductive healthcare services, methods, devices,
and supplies. As earlier pointed out, however, the religious freedom of some
sectors of society cannot be trampled upon in pursuit of what the law hopes to
achieve. After all, the Constitutional safeguard to religious freedom is a
recognition that man stands accountable to an authority higher than the State.
In conformity with the principle of separation of Church and State, one religious
group cannot be allowed to impose its beliefs on the rest of the society.
Philippine modem society leaves enough room for diversity and pluralism. As
such, everyone should be tolerant and open-minded so that peace and
harmony may continue to reign as we exist alongside each other.
As healthful as the intention of the RH Law may be, the idea does not escape
the Court that what it seeks to address is the problem of rising poverty and
unemployment in the country. Let it be said that the cause of these perennial
issues is not the large population but the unequal distribution of wealth. Even if
population growth is controlled, poverty will remain as long as the country's
wealth remains in the hands of the very few.
At any rate, population control may not be beneficial for the country in the long
run. The European and Asian countries, which embarked on such a program
generations ago , are now burdened with ageing populations. The number of
their young workers is dwindling with adverse effects on their economy. These
young workers represent a significant human capital which could have helped
them invigorate, innovate and fuel their economy. These countries are now
trying to reverse their programs, but they are still struggling. For one,
Singapore, even with incentives, is failing.
And in this country, the economy is being propped up by remittances from our
Overseas Filipino Workers. This is because we have an ample supply of young
able-bodied workers. What would happen if the country would be weighed
down by an ageing population and the fewer younger generation would not be
able to support them? This would be the situation when our total fertility rate
would go down below the replacement level of two (2) children per woman. 280
Indeed, at the present, the country has a population problem, but the State
should not use coercive measures (like the penal provisions of the RH Law
against conscientious objectors) to solve it. Nonetheless, the policy of the
Court is non-interference in the wisdom of a law.
x x x. But this Court cannot go beyond what the legislature has laid down. Its
duty is to say what the law is as enacted by the lawmaking body. That is not
the same as saying what the law should be or what is the correct rule in a
given set of circumstances. It is not the province of the judiciary to look into the
wisdom of the law nor to question the policies adopted by the legislative
branch. Nor is it the business of this Tribunal to remedy every unjust situation
that may arise from the application of a particular law. It is for the legislature to
enact remedial legislation if that would be necessary in the premises. But as
always, with apt judicial caution and cold neutrality, the Court must carry out
the delicate function of interpreting the law, guided by the Constitution and
existing legislation and mindful of settled jurisprudence. The Court's function is
therefore limited, and accordingly, must confine itself to the judicial task of
saying what the law is, as enacted by the lawmaking body. 281
Be that as it may, it bears reiterating that the RH Law is a mere compilation
and enhancement of the prior existing contraceptive and reproductive health
laws, but with coercive measures. Even if the Court decrees the RH Law as
entirely unconstitutional, there will still be the Population Act (R.A. No. 6365),
the Contraceptive Act (R.A. No. 4729) and the reproductive health for women
or The Magna Carta of Women (R.A. No. 9710), sans the coercive provisions
of the assailed legislation. All the same, the principle of "no-abortion" and "non-
coercion" in the adoption of any family planning method should be maintained.
WHEREFORE, the petitions are PARTIALLY GRANTED. Accordingly, the
Court declares R.A. No. 10354 as NOT UNCONSTITUTIONAL except with
respect to the following provisions which are declared UNCONSTITUTIONAL:
1) Section 7 and the corresponding provision in the RH-IRR insofar as
they: a) require private health facilities and non-maternity specialty
hospitals and hospitals owned and operated by a religious group to
refer patients, not in an emergency or life-threatening case, as defined
under Republic Act No. 8344, to another health facility which is
conveniently accessible; and b) allow minor-parents or minors who
have suffered a miscarriage access to modem methods of family
planning without written consent from their parents or guardian/s;
2) Section 23(a)(l) and the corresponding provision in the RH-IRR,
particularly Section 5 .24 thereof, insofar as they punish any healthcare
service provider who fails and or refuses to disseminate information
regarding programs and services on reproductive health regardless of
his or her religious beliefs.
3) Section 23(a)(2)(i) and the corresponding provision in the RH-IRR
insofar as they allow a married individual, not in an emergency or life-
threatening case, as defined under Republic Act No. 8344, to undergo
reproductive health procedures without the consent of the spouse;
4) Section 23(a)(2)(ii) and the corresponding provision in the RH-IRR
insofar as they limit the requirement of parental consent only to elective
surgical procedures.
5) Section 23(a)(3) and the corresponding provision in the RH-IRR,
particularly Section 5.24 thereof, insofar as they punish any healthcare
service provider who fails and/or refuses to refer a patient not in an
emergency or life-threatening case, as defined under Republic Act No.
8344, to another health care service provider within the same facility or
 one which is conveniently accessible regardless of his or her religious
beliefs;
6) Section 23(b) and the corresponding provision in the RH-IRR,
particularly Section 5 .24 thereof, insofar as they punish any public
officer who refuses to support reproductive health programs or shall do
any act that hinders the full implementation of a reproductive health
program, regardless of his or her religious beliefs;
7) Section 17 and the corresponding prov1s10n in the RH-IRR
regarding the rendering of pro bona reproductive health service in so
far as they affect the conscientious objector in securing PhilHealth
accreditation; and
8) Section 3.0l(a) and Section 3.01 G) of the RH-IRR, which added the
qualifier "primarily" in defining abortifacients and contraceptives, as
they are ultra vires and, therefore, null and void for contravening
Section 4(a) of the RH Law and violating Section 12, Article II of the
Constitution.
The Status Quo Ante Order issued by the Court on March 19, 2013 as
extended by its Order, dated July 16, 2013 , is hereby LIFTED, insofar as the
provisions of R.A. No. 10354 which have been herein declared as
constitutional.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
G.R. No. 76353 May 2, 1988
SOPHIA ALCUAZ, MA. CECILIA ALINDAYU BERNADETTE ANG, IRNA
ANONAS, MA, REMEDIOS BALTAZAR, CORAZON BUNDOC JOHN
CARMONA, ANNA SHIELA DIÑOSO, RAFAEL ENCARNACION, ET
AL., petitioners,
vs.
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, Quezon City
Branch (PSBA), DR. JUAN D. LIM, in his capacity as President and
Chairman of Board of Trustees of PSBA, ATTY. P. PAULINO, etc., et
al., respondents.
Rosalinda L. Santos for petitioners.
Balgos & Perez Law Office for respondents.
Merly Basco-Olano for Intervenor Union.
Camilo Flores for Intervenor
PARAS, J.:
This is a petition for review on certiorari and prohibition with motion for preliminary mandatory injunction
seeking to nullify the action taken by herein respondent Philippine School of Business Administration, Quezon
City Branch, in violation of petitioners' constitutional rights.
The factual background of this case is as follows:
Petitioners are all bonafide students of the Philippine School of Business
Administration, Quezon City, while respondents, are the Philippine School of
Business Administration (hereinafter referred to as PSBA) Quezon City
Branch, a 'non-stock institution of higher learning organized and existing under
the laws of the Philippines, Juan D. Lim, President and Chairman of the Board
of PSBA; Benjamin P. Paulino, Vice President for Admission and Registration
of PSBA, Q.C.; Ruben Estrella, Officer-in-Charge; and Ramon Agapay,
Director of the Office of Student Affairs of PSBA, Q.C. and Romeo Rafer, Chief
Security of PSBA, Q.C.
As early as March 22, 1986, the students of the respondent school and the
respondent PSBA, Q.C. had already agreed on certain matters which would
govern their activities within the school (Rollo, p. 75). Among the agreements
reached at that time were:
On The exercise of student's democratic rights, it has been
agreed that protest actions can be conducted any day as long
as they meet the following requirements:
a) that they be held at the PSBA quadrangle from 12:30 p.m. to
1:00 p.m. only;
b) that the protest action be removed to the PSBA parking lot if
it will exceed the 1:00 time limit;
c) that if the protest move exceeds 1:00 it will be limited only up
to 2:30 p.m.
d) However, before any action is taken the organizers of the
protest action should secure a permit 6 days before, or if on the
same day, it still be under the "first-come-first-serve served"
basis in the use of facilities, volume of sound system shall be
adjusted so as not to disturb classes.
It is the firm stand of the administration of PSBA that it will not
allow the students to directly participate in the policy-making
body of the school, as this is provided by law. However, the
administration will be open to suggestions and questions,
especially those regarding tuition fee increases and other
policies that directly affect us.
In spite of the above-stated agreement, petitioners felt the need to hold
dialogues. Among others they demanded the negotiation of a new agreement,
which demand was turned down by the school, resulting in mass assemblies
and barricades of school entrances (Rollo. p. 20; 347-348). "Subsequently
dialogues proved futile." Finally, petitioners received uniform letters from
respondents dated October 8, 1986 (Rollo, p. 23) giving them 3 days to explain
why the school should not take / mete out any administrative sanction on their
direct participation and/or conspiring with others in the commission of
tumultuous and anarchic acts on Thursday (Oct. 2), Friday (Oct. 3) and
Tuesday (Oct. 7). The aforestated letter was answered by the counsel for the
<äre||anº•1àw>
students in a reply letter dated October 22, 1982 Annex "E" (Rollo, P. 26).
During the regular enrollment period, petitioners and other students similarly
situated were allegedly blacklisted and denied admission for the second
semester of school year 1986-1987. On October 28,1986 the President of the
Student Council filed a complaint with the Director of the MECS against the
PSBA for barring the enrollment of the Student Council Officers and student
leaders. (Annex "F" Rollo, p. 30). Simultaneously on the same date, the
student council wrote the President, Board of Trustees, requesting for a written
statement of the school's decision regarding their enrollment (Rollo, p. 31).
Another demand letter was made by Counsel for the students Atty. Alan
Romulo Yap, also to the President, Board of Trustees, to enroll his clients
within forty-eight (48) hours (Rollo. p. 33). All these notwithstanding, no relief
appeared to be forthcoming, hence this petition.
In the resolution of November 7,1986, the Second Division of this Court
without giving due course to the petition required respondents to comment
thereon and set the hearing for preliminary mandatory injunction on November
10, 1986 (Rollo, p. 35). In compliance therewith on November 9, 1986,
respondents filed their comment and opposition to the application for the
issuance of a writ of preliminary mandatory injunction praying that the petition
for the issuance of a writ be denied not only for lack of merit but also for being
barred by res judicata (Rollo, p. 67).
Meanwhile, a motion for intervention was filed on November 10, 1986, by the
Philippine School of Business Administration, Quezon City Faculty Union,
(PSBA, QC-FU for brevity) representing the faculty members hereinafter
referred to as intervenors, on the ground of commonality of issues and cause
of action with that of the petitioners (Rollo, p. 36).
At the hearing on the petition for preliminary mandatory injunction, where
counsel for all the parties appeared and argued their causes, the Court
Resolved to grant the motion for intervention and to require the intervenors to
comment on the petition and the petitioners to file a reply thereto (Rollo, p. 66,
copy corrected, p. 167). On the same day respondents filed their comment and
opposition to the application for the issuance of a writ of preliminary mandatory
injunction (Rollo, pp. 67-74).
On November 12, 1986, this Court resolved to issue a temporary mandatory
order directing the respondents herein (a) to re-enroll the petitioners herein
and (b) to re-admit the intervenors to their former positions without prejudice to
the investigation to be conducted by the school authorities (Rollo, p. 141). Said
Order was issued on November 14, 1986 (Rollo, pp. 142-143).
A supplemental comment and opposition to application for a writ of preliminary
mandatory injunction dated November 11, 1986 was filed by herein
respondents (Rollo, p. 150), while an urgent motion to reiterate prayer for
issuance of preliminary mandatory injunction dated November 13, 1986 was
filed by herein petitioners (Rollo, pp. 162-163).
Instead of complying with tile resolution of November 12, 1986 an urgent
motion for reconsideration was filed by herein respondents on November 15,
1987 (Rollo, p. 194) praying that this Court reconsider the aforesaid resolution.
On November 18, 1986 petitioners and intervenors filed a joint urgent motin to
cite respondents in contempt (Rollo, p. 199), while respondents filed a
supplemental motion for reconsideration, also on the same date (Rollo, p.
205).
In the resolution of November 19,1986, respondents' motion for
reconsideration and sumplemental motion for reconsideration were denied for
lack of merit, and the denial was dedlared FINAL. The urgent motion of
counsel for petitioners and intervanorts to cite respondents in contempt of
court was NOTED (Rollo, p. 225).
An urgent motion for intervention and answer in intervention was filed by Nelia
M. Lat, Annalisa T. Geronimo, Leonora Q. Bueniraje, Maria L. Arañas,
Eduerijes Llanto, Charita, R. Chong, Marilou Garcia, Amelita R. Sia, Loida O.
Ladines, Dominic P. Santos, Noly R. Chong, and Arthur R. Cacdac for
themselves and on behalf of other students of the PSBA, Quezon City, who
are similarly situated, to allolw them to intervene as respondents dated
November 11, 1986 (Rollo, p. 227) which was granted by this Court in a
resoulution dated December 3, 1986 (Rollo, p. 240)
On November 20, 1986, the respondents filed their compliance with the
temporary mandatory order; Issued by this Court pursuant to its resolution
dated November 12, 1987 (Rollo, p. 237).
On November 29, 1986, respondents filed their comment on the motion for
intervention of the PSBA Quezon City Faculty Union (Rollo, p. 252).
A consolidated reply to respondents' supplemental comment and opposition to
application for a writ of preliminary mandatory injunction, urgent motion for
reconsideration and supplemental motion for reconsideration was filed by
herein in intervenors on December 2,1986 (Rollo. p. 242).
In the resolution of January 21, 1987, the petition was given due course and
parties parties were required to file their respective memoranda (Rollo, p. 266).
Accordingly, respondents filed their memorandum on February 23, 1987,
(Rollo, p. 269) while the intervenor Union filed its memorandum on March 13,
1987 (Rollo, p. 296). Respondents filed their reply memorandum on April 13,
1987 praying that the intervention of the intervening teachers be dismissed
(Rollo, p. 328).
Respondents filed their manifestation and motion dated April 27, 1987 stating
that pursuant to this court's order dated November 12, 1986, the school
authorities created a special investigating committee to conduct an
investigation, which submitted a report with recommendations (Rollo, p. 335),
the report reading as follows:
After due deliberation, the Committee hereby submits the
following recommendation:
STUDENT-RESPONDENTS
A. RENATO PALMA, BERNADETTE ANG, ROGELIO
TAGANAS are hereby recommended to be EXONERATED of
all charges.
B. SOPHIA ALCUAZ (up to No. 19) are hereby recommended
to be HONORABLY DISMISSED from PSBA Q.C. roll of
students without prejudice to reenrollment on a case to case
basis if found suitable and justified.
FACULTY-RESPONDENTS
A. To be EXONERATED of all charges JOSE C. ANTONIO,
DONALLY BRINGAS, DANTE CAJUCOM, LEO
LOQUELLANO SOLITA A. CRUZ, and N TOLENTINO.
B. To be reprimanded with a WARNING that a repetition of
similar acts in the future will be dealt with more severely
FLORANTE BAGSIC and ATENOGENES BONDOC.
C. MR. SEVERINO CORTES, JR. is hereby recommended for
non-renewal of his semester to semester appointment.
 D. MESSRS. ASSER (BONG) TAMAYO and RENE Q.
ENCARNACION are hereby recommended for termination of
their services as faculty members.
Respondents adopted the aforestated recommendations of the Committee and
prayed that the case be dismissed for having become moot (Rollo, p. 341). On
April 30, a second urgent manifestation and motion was filed by respondent
praying that the recommendation of special Committee as implemented by its
President be made effective by the discontinuance of the summer enrollment
of petitioners Anna Shiela A. Dinoso, Zeny Gudito and Ma. Shalina Pitoy upon
the refund to them of all the fees they have paid to the school (Rollo, p. 397).
An urgent motion to cite for contempt herein respondents was filed on May 5,
1987 for violating this court's temporary mandatory order on November 12,
1986, by discharging and striking off from the roll of students petitioners
Dinoso, Gudito and Pitoy (Rollo, p. 400) while an opposition to urgent motion
to cite for contempt was filed by herein respoddents on May 20, 1987 (Rollo, p.
413).
On May 20, 1987, Intervenor Union filed their Intervenor's Comment on
Respondents' reply memorandum and manifestation and motion with motion to
cite respondent in contempt (Rollo, p. 417).
On June 8, 1987, petitioners filed their very urgent motion for an order to re-
enroll (Rollo, p. 620) followed by an urgent supplemental motion and Reply to
opposition dated June 9, 1987 (Rollo, p. 623).
Later on, an Opposition to "very urgent motion for order to re-enroll was filed
by herein respondents on June 11, 1987 (Rollo, p. 625) while on June
15,1987, herein intervenor Union filed its manifestation and motion with urgent
motion reiterating intervenor's motion to cite respondents in contempt (Rollo, p.
629).
On June 16,1987 respondents filed their opposition to urgent motion to oppose
petitioners' urgent motion dated June 9, 1987 (Rollo, p. 795)'. Petitioners filed
their memorandum on June 17, 1987 (Rollo, p. 799).
On June 18, 1987, respondents filed their counter-comment and opposition to
motion to cite respondents in contempt (Rollo, p. 815). Subsequently, on June
25,1987, respondents filed their Reply Memorandum on the petitioners'
memorandum (Rollo, p. 820.).
In the resolution of June 29, 1 987 the motion of petitioners to compel
respondents to readmit or re-enroll herein petitioners was denied except in the
case of three (3) student petitioners cleared by the investigating committee
and who had been recommended to be readmitted or re-enrolled. This court
further stated that the reason for the non-enrollment of the others is that the
results of the investigation conducted indicate prima facie the violation by the
majority of the petitioners of the rules and regulations of respondent school
(Rollo, p. 793). The Court further resolved to require respondent school to
show cause why it should not be adjudged in contempt for refusing to reinstate
the intervenors-faculty members in the interim.
Respondents filed the manifestation on July 3, 1987 informing this Court that
they did not refuse to reinstate the intervenors/faculty members; that they were
in fact actually reinstated in compliance with the Court's temporary mandatory
order (Rollo, p. 829). Hence, the motion for contempt should be dismissed.
The pivotal issue of this case is whether or not there has been deprivation of
due process for petitioners-students who have been barred from re-enrollment
and for intervenors teachers whose services have been terminated as faculty
members, on account of their participation in the demonstration or protest
charged by respondents as "anarchic" rallies, and a violation of their
constitutional rights of expression and assembly.
Petitioners allege that they have been deprived of procedural due process
which requires that there be due notice and hear hearing and of substantive
due process which requires that the person or body to conduct the
investigation be competent to act and decide free from bias or prejudice. They
claim that barring them from enrollment for the second semester is equivalent
to expulsion which cannot be valid and effective without the required MEC's
approval (Rollo, pp. 12-13).
Furthermore, petitioners point out that the acts of respondents constitute a
wanton and deliberate disregard of petitioners' freedom of expression (ibid).
In the same manner, intervenors-teachers claim that their constitutional right to
due process has been violated when they were summarily dismissed without
affording them the opportunity to be heard (Rollo, p. 301).
It is beyond dispute that a student once admitted by the school is considered
enrolled for one semester. It is provided in Paragraph 137 Manual of
Regulations for Private Schools, that when a college student registers in a
school, it is understood that he is enrolling for the entire semester. Likewise, it
is provided in the Manual, that the "written contracts" required for college
teachers are for 'one semester." It is thus evident that after the close of the first
semester, the PSBA-QC no longer has any existing contract either with the
students or with the intervening teachers. Such being the case, the charge of
denial of due process is untenable. It is a time-honored principle that contracts
are respected as the law between the contracting parties (Henson vs.
Intermediate Appellate Court, et al., G.R. No. 72456, February 19, 1987, citing:
Castro vs. Court of Appeals, 99 SCRA 722; Escano vs. Court of Appeals, 1 00
SCRA 197). The contract having been terminated, there is no more contract
<äre||anº•1àw>
to speak of. The school cannot be compelled to enter into another contract
with said students and teachers. "The courts, be they the original trial court or
the appellate court, have no power to make contracts for the parties." (Henson
vs. Intermediate Appellate Court, et al., supra).
Under similar circumstances where students have been refused re-enrollment
but without allegation of termination of contracts as in the instant case, this
Court has stressed, that due process in disciplinary cases involving students
does not entail proceedings and hearings similar to those prescribed for
actions and proceedings in courts of justice. Such proceedings may be
summary and cross-examination is not even an essential part thereof.
Accordingly, the minimum standards laid down by the Court to meet the
demands of procedural due process are: (1) the students must be informed in
writing of the nature and cause of any accusation against them; (2) they shall
have the right to answer the charges against them, with the assistance of
counsel, if desired: (3) they shall be informed of the evidence against them; (4)
they shall have the right to adduce evidence in their own behalf and (5) the
evidence must be duly considered by the investigating committee or official
designated by the school authorities to hear and decide the case (Guzman vs.
National University, 142 SCRA 706-707 [1986]).
Tested under said standards, the records show that the proceedings in the
case at bar, at the outset satisfied conditions No. 1 and 2, but, without a
hearing, conditions No. 3, 4 and 5 had evidently not been completed with.
It is not disputed that printed Rules and Regulations of the PSBA-Q.C. are
distributed at the beginning of each school year to the students including
petitioners. The Rules, among other things, provide:
Enrollment in the PSBA is contractual in nature and upon
admission to the School, the Student is deemed to have
agreed to bind himself to all rules/regulations promulgated by t
he Ministry of Education, Culture and Sports. Furthermore, he
agrees that he may be required to withdraw from the School at
any time for reasons deemed sufficiently serious by the School
Administration.
As previously stated, in violation of aforesaid Rules and Regulations, sore
students staged noisy demonstrations in the premises of the school. For the
settlement thereof, an agreement was reached providing among otliers the
regulations for the conduct of protest actions. Despite said agreement, it was
alleged that petitioners, acting as the core group of a noisy minoritv, committed
tumultuous and anarchic acts within the premises of the school, fanned by the
cooperation of the intervening teachers, causing disruption of classes to the
prejudice of the majority of the students including the intervening ones; which
acts now constitute the subject of this controversy (Rollo, p. 217 ).
Accordingly, both students and teachers were given three (3) days from
receipts of letter to explain in writing why the school should not take / mete out
any administrative sanction on them in view of their participation in the
commission of tumultuous and anarchic acts on the dates stated.
Respondents alleged that none of the students ever filed a reply thereto. The
records show however that a letter was sent by Atty. Alan Rollo Yap, in behalf
of all PSBA students to the President of the School Mr. Juan D. Lim, explaining
why said students are not guilty of the charges filed against them (Rollo, pp-
26-28). Similarly, a faculty member of the PSBA filed as answer in a letter to
the same President of the school, where he denied the charges against him
(Rollo, p. 52). It therefore becomes readily apparent that while the students
and the teachers have been informed in writing of the charges filed against
them and they in turn filed their answers thereto, no investigating committee or
official was designated by the school authorities to hear and decide the case
upon the presentation of evidence of both parties. Presumably, the schools
banking on the theory that the contracts have already expired, said procedural
steps are no longer necessary.
At any rate, this Court obviously to insure that full justice is done both to the
students and teachers on the one hand and the school on the other, ordered
an investigation to be conducted by the school authorities, in the resolution of
November 12, 1986.
The investigating committee found among others that: there were concerted
mass assemblies conducted on October 2, 3, 7 and 8 at PSBA Quezon City,
which were participated in by said students and teachers, and which disrupted
classes. The disruption of classes and the barricades in the school entrances
constitute violations of existing MECS and PSBA rules and regulations (Rollo,
pp. 348-349). It is ironic that many of those who claim that their human rights
have been violated are the very ones who emasculate the human rights of the
innocent majority.
Moreover, petitioners named in the report were found to be academically
deficient (Rollo, p. 273) while the intervening teachers apart from participating
in acts of illegality against the school were found to have committed various
acts of misconduct (Rollo. p. 275). Accordingly, three students were
recommended for exoneration from all charges, and some to be honorably
dismissed. Of the faculty members eight were recommended to be exonerated
of all charges, two to be reprimanded, one for non-renewal of his semester to
semester appointment and two to be terminated (Rollo, pp. 359-360).
The right of the school to refuse re-enrollment of students for academic
delinquency and violation of disciplinary regulations has always been
recognized by this Court (Tangonan vs. Paflo, 137 SCRA 246 [1985]; Ateneo
de Manila University vs. CA, 145 SCRA 100 [1986]). Thus, the Court has ruled
that the school's refusal is sanctioned by law. Sec. 107 of the Manual of
Regulations for Private Schools considers academic delinquency and violation
of disciplinary regulations vs as valid grounds for refusing re-enrollment of
students. The opposite view would do violence to the academic freedom
enjoyed by the school and enshrined under the Constitution. More specifically,
academic freedom is defined by the Court as follows:
This institutional academic freedom includes not only the
freedom of professionally qualified persons to inquire, discover,
publish and teach the truth as they see it in the field of their
competence subject to no control or authority except of rational
methods by which truths and conclusions are sought and
established in their disciplines, but also the right of the school
or college to decide for itself, its ms and objectives, and how
best to attain them the grant being to institutions of higher
learning-free from outside coercion or interference save
possibly when the overriding public welfare calls for some
restraint. (Tangonan vs. Paño, supra).
It is well settled that by reason of their special knowledge and expertise gained
from the handling of specific matters falling under their respective jurisdictions,
the Court ordinarily accords respect if not finality to factual findings of
administrative tribunals, unless the factual findings are not supported by
evidence; where the findings are vitiated by fraud, imposition or collusion;
where the procedure which led to the factual findings is irregular; when
palpable errors are committed; or when a grave abuse of discretion,
arbitrariness, or capriciousness is manifest. (Ateneo de Manila University vs.
Court of Appeals, 145 SCRA 106 (1986); citing: International Hardwood and
Veneer Co. of the Philippines vs. Leonardo, 11 7 SCRA 967; Baguio Country
Club Corporation vs. National Labor Relations Commission, 118 SCRA 557;
Sichangco vs. Commissioner of Immigration, 94 SCRA 61 and Eusebio vs.
Sociedad Agricola de Balarin, 16 SCRA 569).
A careful scrutiny of the Report and Recommendation of the Special
Investigating Committee shows it does not fall under any of the above
exceptions. On the contrary, it is readily apparent that the investigation
conducted was fair, open, exhaustive and adequate.
Accordingly, there appears to be no cogent reason to disturb the finding of said
committee and as manifested by the respondents, the report of said committee
has virtually rendered this petition moot and academic.
The urgent motion of petitioners and intervenors to cite respondents in
contempt of court is likewise untenable.
Contempt of court has been defined as a defiance of the authority, justice or
dignity of the court; such conduct as tends to bring the authority and
administration of the law into disrespect or to interfere with or prejudice parties
litigant or their witnesses during litigation. (Hahn vs. Court of Industrial
Relations, 136 SCRA 57 [1985]).
In the case at bar, there appears to be no defiance of authority by the mere
filing by respondents of a motion for reconsideration of the resolution of
November 12, 1986. In fact respondent school explained that the intervenors
were actually reinstated as such faculty members after the issuance of the
temporary mandatory injunction. Thus, in the compliance submitted by said
school on November 20, 1 986, it ma manifested that 'without prejudice to the
investigation to be conducted by the school authorities, ... and in order that
dislocations may not result with respect to the academic activities of the
students and the distribution of teaching loads among the teachers, the
respondent school has created new classes for the petitioners and the
intervening teachers" beginning November 20, 1986.
The school manifested that while the investigation was going on, the
intervenors-faculty members were teaching and it was only after the
investigation, that the recommendations of the Committee were adopted by the
school and the latter moved for the dismissal of the case for having become
moot and academic. Otherwise stated, respondent school has fully complied
with its duties under the temporary mandatory injunction (Rollo, pp. 830- 832).
PREMISES CONSIDERED, the petition is hereby DISMISSED, but in the light
of compassionate equity, students Who were, in view of the absence of
academic deficiencies, scheduled to graduate during the school year when this
petition was filed, should be allowed to re-enroll and to graduate in due time.
No pronouncement as to costs.
SO ORDERED.
Yap, C.J., Melencio-Herrera and Padilla, JJ., concur. Sarmiento, J., dissents
an a separate opinion.
Separate Opinions
SARMIENTO, J., Dissenting:
I find distressing the manner in which the majority would so cavalierly dismiss
this petition as a simple case of contractual relations and extinguishment of
contract. The petitioners have come to this court on serious Constitutional
questions, in the main, due process of law, and inferentially, academic
freedom and the rights to free speech and assembly. An examination of the
records, and a scrutiny of the majority's recital of the case as well, will show
that the controversy is indeed ripe for such issues, and accordingly, for
Constitutional adjudication.
Education is a concern impressed with a public interest, It is a matter of State
policy, a policy enshrined in the Constitution, to "protect and promote the right
of all citizens to qualify education at all levels and shall take appropriate steps
to make such education accessible to all." 1 As part of this guaranty, the
Constitution wills it that '[e]very citizen have a right to select a profession or
course of study, subject to fair, reasonable, and equitable admission and
academic requirements ." 2 While academic freedom, the Charter decrees,
"shall be enjoyed in all institutions of higher learning," 3 it calls upon,
nonetheless, the Government to 'exercise reasonable supervision and
regulation over-all educational institutions. 4
It is plain that education is more than a contract.
With all due respect to my brethren. I find their reliance upon paragraph 137 of
the Manual of Regulations for Private Schools forced and oversimplified. As
we have noted, registration in an institution of learning is subject to reasonable
admission, and conversely, dismissal standards, It is my view that the Manual
should be read alongside the Constitutional ban against unreasonable
entrance requirements. To say that a student faces automatic disqualification
following one semester for the simple reason that his contract has expired is
not only to impose an unreasonable academic requirement on the right to
education but to defeat the right itself Furthermore, such a view would grant
schools unbridled authority over the academe when the Charter itself states
that the academe enjoys academic freedom. It will, in effect, furnish them
dubious grounds to dismiss a student when he is in fact being dismissed, say,
because the school does not like his face. And this is precisely the scenario,
however exaggerated, the Constitution guards against. But for student leaders,
recurring 'headaches" to many schools, its chilling implications are very real
and certain.
It would furthermore allow school heads to shirk charges of denial of due
process — as in ts case — by a simple invocation of the terms and conditions
of the students' contracts. it would enable schools to defy reinstatement
orders, whether by local school committees, agencies of the Department of
Education, or by the courts of law, by postponing compliance, one way or the
other, until the end of the semester and upon the consequent expiration of the
contract. There is nothing that would stop them under the doctrine the majority
would advance.
There is further no denying, the fact that agreements of this character are
contracts of adhesion that leave the other party but a twofold option: to take
them or leave them. It is not much of a choice in the ultimate analysis, with the
cards stacked in the proponent's table, and in such cases, we have not
hesitated to come to the aid of such other party. 5
While there is an existing contractual relation between school and students,
the agreement should not be the final basis settling school student disputes.
To that extent, paragraph 137 of the Manual for Regulations of Private Schools
would be open to Constitutional questions. It is important to determine, at the
same time, whether the school itself, in meeting out expulsion against its
students, had acted within the permissible limits implied in the Constitution. In
any event, the contract should yield to the Constitution.
I do not agree that "[t]he school cannot be compelled to enter into another
contract" 6 with its students. To begin with, reinstatement of students,
whenever warranted, is not strictly speaking, compulsion upon schools to enter
into a contract with them. It is merely to undo a wrong previously done. But if
indeed, contract in this case were a valid yardstick, why allow reenrollment to
the petitioners-students (who have not sustained academic
deficiencies) 7 whose contracts have expired? If the contract is the 'law
between the parties," 8 and that "[t]he courts ... have no power to make
contracts for the parties 9 by what authority may the majority order
reinstatement? Surely, the majority speaks of 'compassionate equity" 10 to
justify reinstatement, but that gives rise to yet another problem: Where does
one draw the line? As I have noted, it is too easy to invoke "contract if it would
suit one's purpose, but it seems even easier to cite "equity" if it would better
serve that purpose.
Following the contract theory further, why was it necessary for the Court to
order the investigation of the case, pursuant to our resolution of November 12,
1986, when there seemed nothing more to investigate, the petitioners'
supposed contracts having expired? The majority would rely on "full
justice" 11 — that elusive judicial standard — to justify its action, but since, as
the majority would so clearly stress, the contract is the law between the
parties, had not "justice" been done upon the alleged expiration of the parties'
covenants? After all, is not 'justice" presumed from the law? 12
I do not see as a matter of fact how "full justice" would be served by ordering
an inquiry. There is no debate that the petitioners had been denied due
process, in the absence of any "investigating committee or official designated
by the school authorities to hear and decide the case" 13 In Guzman vs.
National University," 14 we held:
Under the Education Act of 1982, the petitioners, as students,
have the right among others "to freely choose their field of
study subject to existing curricula and to continue their course
therein up to graduation, except in case of academic
deficiency, or violation of disciplinary regulations." Petitioners
were being denied this right, or being disciplined, without due
process, in violation of the admonition in the Manual of
Regulations for Private Schools that "(n)o penalty shall be
imposed upon any student except for cause as defined in ...
(the) Manual and/or in the school rules and regulations are duly
promulgated and only after due investigation shall have been
conducted." This Court is therefore constrained, as in Berina v.
Philippine Maritime Institute, to declare illegal this act of
respondents of imposing sanctions on students without due
investigation. 15
To order an investigation is to accord moreover then the respondents a chance
to correct their errors — indeed, violations — when they should have been
forthwith held liable therefor. And fortunately for them, the investigation
allowed there a fresh chance to fish for lapses the petitioners might have
committed, and as it would indeed turn out, certain petitioners were supposed
to be suffering from alleged scholastic deficiencies. It is my thinking that by
directing the respondents to conduct an "investigation," we did not thereby
condone the acts the petitioners now impugn (denial of due process), but
simply prepared the parties a forum to thresh out anew whatever differences
there were dividing them. We did not equip the respondents with ammunition
to launch a final offensive oil the petitioners. If that were the case, the
respondents' existing expulsion order without due notice and hearing to the
petitioners students) would have been an anti-climatic prejudgment of
whatever findings the investigation might yield. For certainly, we did rot then
expect the respondents to reverse themselves, except perhaps to polish their
existing dismissal ruling.
Notwithstanding the majority's postures — with due respect — of leniency
toward the petitioners, the majority has been in fact unduly soft on the
respondents.
With respect to the alleged failing grades incurred by certain petitioners, I find
the same to be an eleventh-hour effort by the respondents to justify dismissal.
Students' academic performance is a matter of record that requires no
investigation. If it is true that these students had incurred failing grades, why
did they surface only in mid-semester and in the investigation? Estoppel is an
impediment against the respondents' arguments, they having admitted these
students in spite of such delinquencies.
It is true that in Villar vs. Technological Institute of the Philippines," 16 this Court
recognized as part and parcel of academic freedom the schools' "right to set
academic standards to determine under what circumstances failing grades
suffice for the expulsion" 17 but the Court likewise warned that "[i]t cannot be
utilized to discriminate against those students who exercise their Constitutional
rights to peaceable assembly and free speech." 18 In Guzman furthermore, we
said that expulsion arising from academic delinquency depends on proof of
existing rules providing therefor.19
There is no doubt that in the case at bar, a controversy had been raging on
campus, a controversy serious enough to force a school student dialogue.
Obviously, it was not a case of a few hotheads on a rampage on the school
grounds, but apparently, student leaders seeking redress for some 'tegitlinate
grievance. I think that the respondent College was overreacting when, rather
than confront the petitioners, it threatened them which disciplinary action.
I am likewise perturbed by the blanket condemnation my brethren would level
against the petitioners for holding the concerted actions ill question. It is not
disputed that the same turned out to be "noisy" 20 and resulted in the disruption
of ongoing classes, but my question is: Does this warrant a sweeping rebuke ?
And I think it would be protesting too much to highlight as well the petitioners'
alleged disregard of "the human rights of the innocent majority." 21 This case
was precipitated by alleged violations against due process committed by the
respondent College, and not on a complaint by the "innocent majority." There
is therefore no need for sarcasm.
Freedom of expression and assembly are nights held sacred b the
Constitution, 22 and made available to all the citizenry without distinction or
discrimination. This was our holding in Malabanan Mulabatan vs. Ramento. 23 It
was likewise our holding in that case that some disruption is normal in such
gatherings. I quote:
...If in the course of such demonstration, with an enthusiastic
audience goading them on, utterances, extremely critical, at
times even vitriolic, were let loose, that is quite understandable.
Student leaders are hardly the timid, diffident types. They
would be ineffective if during a rally they speak in the guarded
and judicious language of the academe. At any rate, even a
sympathetic audience is not disposed to accord full credence to
their Malabanan fiey exhortations. They take into account the
excitement of the occasion, the prospensity of speakers to
exaggerate, the exhuberance of youth. They give the speakers
the benefit of their applause, but with the activity taking place in
the scholl premises and during the daytimem, no clear and
present danger of public disorder is discernible. 24
Malabanan finds its origin in another decision, more than seven decades
antedating it, U.S. vs. Apurado. 25 I quote:
It is rather expected that more or less disorder will mark the
public assembly of the people to protest against greivances
whether real or imaginary, becase on such occasions feeling is
alwas wrought to a high pitch of excitemnet, and the greater
the grievance and the more intense the feeling, the less
perfect, as a rule, will be the disciplinary control of the leaders
over theis irresponsible followers. But if the prosecution be
permitted to seize upon every instance of such disorderly
conduct by individual members of a crowd as an excuse to
characterized the assembly as seditious and tumultous rising
against the authorities , the the dright to assemble and to
petition for redness of grevances would become a delusion and
a snare and the attempt to exercise it on the moset righteous
occasion and in the most peaceable manner would expose all
those who took part therein to the severest and most unmerited
punishment, if the purposes which they sought to attain did not
happen to pleasing to the prosecuting authorities. If instances
of disorderly conduct occur on such occasions, the guilty
individuals should be sought out and punished therefo, but the
utmost discretion must be exercised in drawing th line between
disorderly and seditious conduct and between an essentially
peaceable assembly and a tumultous uprising. 26
Notwithstanding such disturbances, and in the absence of threats of a clear
and present danger, we sustained the exercise of the right on the strength
primarily of the Contitutional guaranties. I do not see why this Court shoud
reverse itself now, in view furthermore of a new Constitution that bares a
stronger bias toward human rigths and civil liberties.
While I do not rule out entirely, punishment for disorderly conduct by genuine
troublemakers — and we did not rule out such a recourse in
either Malabanan or Apurado — I do not see how, in the case, any
punishment, more so that of expulsion, should be due. There is nothing in the
records that would show that the petitioners, other than for holding "noisy"
demonstrations, were guilty of unruly behavior. The fact that the same were
marked with tension and excitement, as we held in Malabanan and Apurado,
does not make them "unruly" To impose penalties upon the petitioners is
indeed to put a price on the exercise of a right, a right the fundamental law
holds out for free.
To be sure, there is mention of alleged "barricades" being set up "in the school
entrances" 27 supposedly in breach of "existing MECS and PSBA rules and
regulations." 28 Significantly, there is no allegation that the petitioners resorted
to violence, or threatened one, that would admittedly present a clear and
present dandger for which the schoo may respond with remedial measures.
Mere allegations taht barricades were put up, in my belief, would not suffice to
warrant a disciplinary action by the schools authorities in the absence of
allegations that violence or threats thereof attended tha same.
At any rate, the query that arises, assuming that some penal measure were in
order, is: Does the punishment (expulsion) fit the crime(disrupting classes)?
In Malabanan, we referred to penalties being disproportionate with the
offense 29 in connection with the one-year suspension prescribed by the school
for similar activities. We struck down the suspension order and imposed, in its
stead, a suspension of one week. I submit that the same principle applies
here.
I agree that it is within schools' right "to refuse reenrollment of students for
academic delinquency and violation of disciplinary regualations," 30 but the
presumes htat the acts complained of indeed constitute violations. If the
respondents' regulations, or the rules of the Department of Education, Culture,
and Sports for the matter, enjoin the exercise of Constitutional rights, they are
null and void since they are indubitably, inferior to the Charter.
Neither Tangonan vs. Paño31 nor Ateneo de Manila University vs. Court
of Appeals 32 is in point. Neither case involved the exercise of fundamental civil
liberties. Tangonan referred to pure question of academic deficiency,
while Ateneo. dealt with charges of unbecoming conduct levelled against a
student for fighting. 33 The instant case carries, however, a political color, a
consideration that differentiates it from either case.
It is true that academic freedom pertains to houses of education, as we defined
the term in Tangonan, but "academic freedom does not mean untramelled
liberty for schools and schools authorities. Educational institutions, under the
Constitution, and as an exception to academic freedom, are subject to State
regulation. Moreover, the privilage applies to students as well. Why recognize
the schools right to it and deny that of students? In any case, it is my
considered opinion that the respondent College had abused that freedom that
comples some drastic action from this Court.
The majority would write finis to the case by a non-chalant acceptance of the
respondents' inverstigative committee's findings base on the usual escape
valve of finality of findings of administrative bodies. My point is that the
petitioners had been underdogs from the very beginning, and under the
circumtances, they deserved a fairer tribunal to take up their case. it is not that
I have doubts about the capacity of such an investigating committee to
dispense justice, but as an agent of administration, it was obviously acting for
the interest of the school. And not surprisingly, in tis recommendation, it would
proposed the expulsion of students on account of failing grades-a ground that
has nothing to do with the subject of the investigation. As I have observed, I
read our resolution of November 12, 1986 as an appeal upon the parties to sit
down anew and to find mutual solutions to the ills of their academic
community. It was not ment to be a call for an adversarial confrontation
between them that would have — and had — allowed the shool to unravel the
petitioners' deliquencies as to grades and other dirty linen.
We came to the charges of contempt of which the petitioners urge that we find
the respondents guilty. The majority would absolve the respondent on the
ground that the intervenors faculty members were in fact given teaching loads
pending this petition. What the majority is silent about however, is the fact that
in the same resolution of November 12, 1986, we directed the respondents "to
re-enroll the petitioners" (students). 34 The petitioners-students shortly filed an
urgent motion to cite for contempt directed against the respondent College
arising from its discharge of three petitioners from the students
roll.35 Subsequently, the petitioners filed yet another motion "to re-enroll. 36 It is
not controverted that despite our reinstatement directive, the respondent failed
and refused to comply there with as far as the students are concerned. For
such an act of defiance, it is my opinion that they are liable for contempt.
I would then have disposed of the case as follows:
1. Exonerate the petitioners, students and faculty members alike, from any
leability, and effect their reinstatement, exept those on whom I would
recommend the penalty of suspension, subject to the provision of the
succeding paragraph regarding service of suspension.
2. Impose the penalty of one-week suspension upon those petitioners actually
guilty of disruption of classes, that is disruption resulting in actual stoppage of
classes as a direct consquence of the mas actions in question and through no
voluntary vacating of the classromms by student or instructiors, but consider
the suspension to have been served in view of the respondents' refusal to
reinstate them pending the resolution of the petition; and
3. Find the respondents guilty contempt.

Separate Opinions
SARMIENTO, J., Dissenting:
I find distressing the manner in which the majority would so cavalierly dismiss
this petition as a simple case of contractual relations and extinguishment of
contract. The petitioners have come to this court on serious Constitutional
questions, in the main, due process of law, and inferentially, academic
freedom and the rights to free speech and assembly. An examination of the
records, and a scrutiny of the majority's recital of the case as well, will show
that the controversy is indeed ripe for such issues, and accordingly, for
Constitutional adjudication.
Education is a concern impressed with a public interest, It is a matter of State
policy, a policy enshrined in the Constitution, to "protect and promote the right
of all citizens to qualify education at all levels and shall take appropriate steps
to make such education accessible to all." 1 As part of this guaranty, the
Constitution wills it that '[e]very citizen have a right to select a profession or
course of study, subject to fair, reasonable, and equitable admission and
academic requirements ." 2 While academic freedom, the Charter decrees,
"shall be enjoyed in all institutions of higher learning," 3 it calls upon,
nonetheless, the Government to 'exercise reasonable supervision and
regulation over-all educational institutions. 4
It is plain that education is more than a contract.
With all due respect to my brethren. I find their reliance upon paragraph 137 of
the Manual of Regulations for Private Schools forced and oversimplified. As
we have noted, registration in an institution of learning is subject to reasonable
admission, and conversely, dismissal standards, It is my view that the Manual
should be read alongside the Constitutional ban against unreasonable
entrance requirements. To say that a student faces automatic disqualification
following one semester for the simple reason that his contract has expired is
not only to impose an unreasonable academic requirement on the right to
education but to defeat the right itself Furthermore, such a view would grant
schools unbridled authority over the academe when the Charter itself states
that the academe enjoys academic freedom. It will, in effect, furnish them
dubious grounds to dismiss a student when he is in fact being dismissed, say,
because the school does not like his face. And this is precisely the scenario,
however exaggerated, the Constitution guards against. But for student leaders,
recurring 'headaches" to many schools, its chilling implications are very real
and certain.
It would furthermore allow school heads to shirk charges of denial of due
process — as in ts case — by a simple invocation of the terms and conditions
of the students' contracts. it would enable schools to defy reinstatement
orders, whether by local school committees, agencies of the Department of
Education, or by the courts of law, by postponing compliance, one way or the
other, until the end of the semester and upon the consequent expiration of the
contract. There is nothing that would stop them under the doctrine the majority
would advance.
There is further no denying, the fact that agreements of this character are
contracts of adhesion that leave the other party but a twofold option: to take
them or leave them. It is not much of a choice in the ultimate analysis, with the
cards stacked in the proponent's table, and in such cases, we have not
hesitated to come to the aid of such other party. 5
While there is an existing contractual relation between school and students,
the agreement should not be the final basis settling school student disputes.
To that extent, paragraph 137 of the Manual for Regulations of Private Schools
would be open to Constitutional questions. It is important to determine, at the
same time, whether the school itself, in meeting out expulsion against its
students, had acted within the permissible limits implied in the Constitution. In
any event, the contract should yield to the Constitution.
I do not agree that "[t]he school cannot be compelled to enter into another
contract" 6 with its students. To begin with, reinstatement of students,
whenever warranted, is not strictly speaking, compulsion upon schools to enter
into a contract with them. It is merely to undo a wrong previously done. But if
indeed, contract in this case were a valid yardstick, why allow reenrollment to
the petitioners-students (who have not sustained academic
deficiencies) 7 whose contracts have expired? If the contract is the 'law
between the parties," 8 and that "[t]he courts ... have no power to make
contracts for the parties 9 by what authority may the majority order
reinstatement? Surely, the majority speaks of 'compassionate equity" 10 to
justify reinstatement, but that gives rise to yet another problem: Where does
one draw the line? As I have noted, it is too easy to invoke "contract if it would
suit one's purpose, but it seems even easier to cite "equity" if it would better
serve that purpose.
Following the contract theory further, why was it necessary for the Court to
order the investigation of the case, pursuant to our resolution of November 12,
1986, when there seemed nothing more to investigate, the petitioners'
supposed contracts having expired? The majority would rely on "full
justice" 11 — that elusive judicial standard — to justify its action, but since, as
the majority would so clearly stress, the contract is the law between the
parties, had not "justice" been done upon the alleged expiration of the parties'
covenants? After all, is not 'justice" presumed from the law? 12
I do not see as a matter of fact how "full justice" would be served by ordering
an inquiry. There is no debate that the petitioners had been denied due
process, in the absence of any "investigating committee or official designated
by the school authorities to hear and decide the case" 13 In Guzman vs.
National University," 14 we held:
Under the Education Act of 1982, the petitioners, as students,
have the right among others "to freely choose their field of
study subject to existing curricula and to continue their course
therein up to graduation, except in case of academic
deficiency, or violation of disciplinary regulations." Petitioners
were being denied this right, or being disciplined, without due
process, in violation of the admonition in the Manual of
Regulations for Private Schools that "(n)o penalty shall be
imposed upon any student except for cause as defined in ...
(the) Manual and/or in the school rules and regulations are duly
promulgated and only after due investigation shall have been
conducted." This Court is therefore constrained, as in Berina v.
Philippine Maritime Institute, to declare illegal this act of
respondents of imposing sanctions on students without due
investigation. 15
To order an investigation is to accord moreover then the respondents a chance
to correct their errors — indeed, violations — when they should have been
forthwith held liable therefor. And fortunately for them, the investigation
allowed there a fresh chance to fish for lapses the petitioners might have
committed, and as it would indeed turn out, certain petitioners were supposed
to be suffering from alleged scholastic deficiencies. It is my thinking that by
directing the respondents to conduct an "investigation," we did not thereby
condone the acts the petitioners now impugn (denial of due process), but
simply prepared the parties a forum to thresh out anew whatever differences
there were dividing them. We did not equip the respondents with ammunition
to launch a final offensive oil the petitioners. If that were the case, the
respondents' existing expulsion order without due notice and hearing to the
petitioners students) would have been an anti-climatic prejudgment of
whatever findings the investigation might yield. For certainly, we did rot then
expect the respondents to reverse themselves, except perhaps to polish their
existing dismissal ruling.
Notwithstanding the majority's postures — with due respect — of leniency
toward the petitioners, the majority has been in fact unduly soft on the
respondents.
With respect to the alleged failing grades incurred by certain petitioners, I find
the same to be an eleventh-hour effort by the respondents to justify dismissal.
Students' academic performance is a matter of record that requires no
investigation. If it is true that these students had incurred failing grades, why
did they surface only in mid-semester and in the investigation? Estoppel is an
impediment against the respondents' arguments, they having admitted these
students in spite of such delinquencies.
It is true that in Villar vs. Technological Institute of the Philippines," 16 this Court
recognized as part and parcel of academic freedom the schools' "right to set
academic standards to determine under what circumstances failing grades
suffice for the expulsion" 17 but the Court likewise warned that "[i]t cannot be
utilized to discriminate against those students who exercise their Constitutional
rights to peaceable assembly and free speech." 18 In Guzman furthermore, we
said that expulsion arising from academic delinquency depends on proof of
existing rules providing therefor.19
There is no doubt that in the case at bar, a controversy had been raging on
campus, a controversy serious enough to force a school student dialogue.
Obviously, it was not a case of a few hotheads on a rampage on the school
grounds, but apparently, student leaders seeking redress for some 'tegitlinate
grievance. I think that the respondent College was overreacting when, rather
than confront the petitioners, it threatened them which disciplinary action.
I am likewise perturbed by the blanket condemnation my brethren would level
against the petitioners for holding the concerted actions ill question. It is not
disputed that the same turned out to be "noisy" 20 and resulted in the disruption
of ongoing classes, but my question is: Does this warrant a sweeping rebuke ?
And I think it would be protesting too much to highlight as well the petitioners'
alleged disregard of "the human rights of the innocent majority." 21 This case
was precipitated by alleged violations against due process committed by the
respondent College, and not on a complaint by the "innocent majority." There
is therefore no need for sarcasm.
Freedom of expression and assembly are nights held sacred b the
Constitution, 22 and made available to all the citizenry without distinction or
discrimination. This was our holding in Malabanan Mulabatan vs. Ramento. 23 It
was likewise our holding in that case that some disruption is normal in such
gatherings. I quote:
...If in the course of such demonstration, with an enthusiastic
audience goading them on, utterances, extremely critical, at
times even vitriolic, were let loose, that is quite understandable.
Student leaders are hardly the timid, diffident types. They
would be ineffective if during a rally they speak in the guarded
and judicious language of the academe. At any rate, even a
sympathetic audience is not disposed to accord full credence to
their Malabanan fiey exhortations. They take into account the
excitement of the occasion, the prospensity of speakers to
exaggerate, the exhuberance of youth. They give the speakers
the benefit of their applause, but with the activity taking place in
the scholl premises and during the daytimem, no clear and
present danger of public disorder is discernible. 24
Malabanan finds its origin in another decision, more than seven decades
antedating it, U.S. vs. Apurado. 25 I quote:
It is rather expected that more or less disorder will mark the
public assembly of the people to protest against greivances
whether real or imaginary, becase on such occasions feeling is
alwas wrought to a high pitch of excitemnet, and the greater
the grievance and the more intense the feeling, the less
perfect, as a rule, will be the disciplinary control of the leaders
over theis irresponsible followers. But if the prosecution be
permitted to seize upon every instance of such disorderly
conduct by individual members of a crowd as an excuse to
characterized the assembly as seditious and tumultous rising
against the authorities , the the dright to assemble and to
petition for redness of grevances would become a delusion and
a snare and the attempt to exercise it on the moset righteous
occasion and in the most peaceable manner would expose all
those who took part therein to the severest and most unmerited
punishment, if the purposes which they sought to attain did not
happen to pleasing to the prosecuting authorities. If instances
of disorderly conduct occur on such occasions, the guilty
individuals should be sought out and punished therefo, but the
utmost discretion must be exercised in drawing th line between
disorderly and seditious conduct and between an essentially
peaceable assembly and a tumultous uprising. 26
Notwithstanding such disturbances, and in the absence of threats of a clear
and present danger, we sustained the exercise of the right on the strength
primarily of the Contitutional guaranties. I do not see why this Court shoud
reverse itself now, in view furthermore of a new Constitution that bares a
stronger bias toward human rigths and civil liberties.
While I do not rule out entirely, punishment for disorderly conduct by genuine
troublemakers — and we did not rule out such a recourse in
either Malabanan or Apurado — I do not see how, in the case, any
punishment, more so that of expulsion, should be due. There is nothing in the
records that would show that the petitioners, other than for holding "noisy"
demonstrations, were guilty of unruly behavior. The fact that the same were
marked with tension and excitement, as we held in Malabanan and Apurado,
does not make them "unruly" To impose penalties upon the petitioners is
indeed to put a price on the exercise of a right, a right the fundamental law
holds out for free.
To be sure, there is mention of alleged "barricades" being set up "in the school
entrances" 27 supposedly in breach of "existing MECS and PSBA rules and
regulations." 28 Significantly, there is no allegation that the petitioners resorted
to violence, or threatened one, that would admittedly present a clear and
present dandger for which the schoo may respond with remedial measures.
Mere allegations taht barricades were put up, in my belief, would not suffice to
warrant a disciplinary action by the schools authorities in the absence of
allegations that violence or threats thereof attended tha same.
At any rate, the query that arises, assuming that some penal measure were in
order, is: Does the punishment (expulsion) fit the crime(disrupting classes)?
In Malabanan, we referred to penalties being disproportionate with the
offense 29 in connection with the one-year suspension prescribed by the school
for similar activities. We struck down the suspension order and imposed, in its
stead, a suspension of one week. I submit that the same principle applies
here.
I agree that it is within schools' right "to refuse reenrollment of students for pending this petition. What the majority is silent about however, is the fact that
academic delinquency and violation of disciplinary regualations," 30 but the in the same resolution of November 12, 1986, we directed the respondents "to
presumes htat the acts complained of indeed constitute violations. If the re-enroll the petitioners" (students). 34 The petitioners-students shortly filed an
respondents' regulations, or the rules of the Department of Education, Culture, urgent motion to cite for contempt directed against the respondent College
and Sports for the matter, enjoin the exercise of Constitutional rights, they are arising from its discharge of three petitioners from the students
null and void since they are indubitably, inferior to the Charter. roll.35 Subsequently, the petitioners filed yet another motion "to re-enroll. 36 It is
not controverted that despite our reinstatement directive, the respondent failed
Neither Tangonan vs. Paño31 nor Ateneo de Manila University vs. Court and refused to comply there with as far as the students are concerned. For
of Appeals 32 is in point. Neither case involved the exercise of fundamental civil such an act of defiance, it is my opinion that they are liable for contempt.
liberties. Tangonan referred to pure question of academic deficiency,
while Ateneo. dealt with charges of unbecoming conduct levelled against a I would then have disposed of the case as follows:
student for fighting. 33 The instant case carries, however, a political color, a
consideration that differentiates it from either case. 1. Exonerate the petitioners, students and faculty members alike, from any
leability, and effect their reinstatement, exept those on whom I would
It is true that academic freedom pertains to houses of education, as we defined recommend the penalty of suspension, subject to the provision of the
the term in Tangonan, but "academic freedom does not mean untramelled succeding paragraph regarding service of suspension.
liberty for schools and schools authorities. Educational institutions, under the
Constitution, and as an exception to academic freedom, are subject to State 2. Impose the penalty of one-week suspension upon those petitioners actually
regulation. Moreover, the privilage applies to students as well. Why recognize guilty of disruption of classes, that is disruption resulting in actual stoppage of
the schools right to it and deny that of students? In any case, it is my classes as a direct consquence of the mas actions in question and through no
considered opinion that the respondent College had abused that freedom that voluntary vacating of the classromms by student or instructiors, but consider
comples some drastic action from this Court. the suspension to have been served in view of the respondents' refusal to
reinstate them pending the resolution of the petition; and
The majority would write finis to the case by a non-chalant acceptance of the
respondents' inverstigative committee's findings base on the usual escape 3. Find the respondents guilty contempt.
valve of finality of findings of administrative bodies. My point is that the
petitioners had been underdogs from the very beginning, and under the
circumtances, they deserved a fairer tribunal to take up their case. it is not that
I have doubts about the capacity of such an investigating committee to
dispense justice, but as an agent of administration, it was obviously acting for
the interest of the school. And not surprisingly, in tis recommendation, it would
proposed the expulsion of students on account of failing grades-a ground that
has nothing to do with the subject of the investigation. As I have observed, I
read our resolution of November 12, 1986 as an appeal upon the parties to sit
down anew and to find mutual solutions to the ills of their academic
community. It was not ment to be a call for an adversarial confrontation
between them that would have — and had — allowed the shool to unravel the
petitioners' deliquencies as to grades and other dirty linen.

We came to the charges of contempt of which the petitioners urge that we find
the respondents guilty. The majority would absolve the respondent on the
ground that the intervenors faculty members were in fact given teaching loads

G.R. No. 88386 August 17, 1989
THE UNIVERSITY OF THE PHILIPPINES, THE UP BOARD OF REGENTS
AND DEAN PATRICIO LAZARO, petitioners,
vs.
HON. JUDGE RUBEN AYSON, Br. VI, RTC-BAGUIO CITY, AND UP
COLLEGE BAGUIO HIGH SCHOOL FOUNDATION, INC., REPRESENTED
HEREIN BY ITS PRESIDENT AND CHAIRMAN OF THE BOARD,
SALVADOR VALDEZ, JR., respondents.
BIDIN, J.:
This is a petition for certiorari, with urgent prayer for the issuance of a
temporary restraining order, seeking to annul the Orders of respondent Judge
dated May 25, 1989 and June 14, 1989 in Civil Case No. 1748-R entitled, "UP
College Baguio High School Foundation, Inc., et al,, v. The University of the
Philippines, et al.," restraining petitioners from implementing the decision of the
Board of Regents to phase out the UP College Baguio High School (UPCBHS)
and the Memorandum of petitioner Dean Patricio Lazaro directing the principal
of UPCBHS not to accept new incoming freshmen for the school year 1989-
1990.
Sometime in 1972, the UP Board of Regents approved the establishment of
UPCBHS as an integral part of the graduate program in education to serve,
among others, as a laboratory and demonstration school for prospective
teachers. Provided, however, that UPCBHS must be self-supporting and
should not entail any subsidy from the budget of the UP.
In 1978, the Board of Regents provided for the establishment of a Division of
Education in UP College Baguio (UPCB) which shall be composed of a
Department of Professional Education and a High School Department.
However, the Department of Professional Education was never organized,
although the High School Department has been in continuous operation.
In 1981, the Committee to Review Academic Program recommended the
abolition of the UPCBHS. In 1985, the Program Review Committee likewise
asked the UPCB to look into the viability of its secondary education program
on account of limited financial resources plus the fact that UPCBHS failed to
serve as a laboratory school for teacher training program as UPCB does not
offer programs in Education. Subsequently, various discussions were held on
the proposed phase-out of the UPCBHS.
On January 30,1989, the UP Board of Regents approved the proposed phase-
out of UPCBHS on the grounds, inter alia, that only an insignificant number of
UPCBHS graduates qualified for admission and actually enrolled in UPCB and
that UPCBHS is not serving as a laboratory or demonstration school for
prospective teachers much less a self-supporting unit. Subsequently, petitioner
Dean Patricio Lazaro issued a memorandum directing the UPCBHS Principal
not to accept new incoming high school freshmen for the school year 1989-
1990.
On May 25,1989, respondent UP College Baguio High School Foundation Inc.,
represented by its president, filed a petition with the Regional Trial Court of
Baguio, Br. VI, presided by respondent Judge against herein petitioners, for
Injunction with preliminary preventive and mandatory injunction with prayer for
the issuance of a temporary restraining order, docketed as Civil Case No.
1748-R, alleging among others, that the decision of the UP Board of Regents
to phase out the UPCBHS is without legal basis and unconstitutional.
Thereafter, respondent Judge issued the assailed Orders restraining
petitioners from implementing the Board's decision to phase out UPCBHS and
the memorandum of Dean Patricio Lazaro. Petitioners' motion to dismiss Civil
Case No. 1748-R was denied by respondent Judge.
Hence, this petition.
On June 27,1989, the Court issued a Temporary Restraining Order enjoining
the implementation of the assailed orders of respondent Judge.
Petitioners contend, among other things, that the decision of the UP Board of
Regents to phase out the UPCBHS is an exercise of academic freedom
guaranteed by the Constitution (Art. XIV, Sec. 5, par. 2).
lâwphî1.ñèt
Respondents, on the other hand, take issue not with the exercise of academic
freedom but rather on the right to quality education (Art. XIV, Sec. 1) and free
public secondary education (Art. XIV, Sec. 2, par. 2) mandated by the
Constitution and Rep. Act No. 6655, otherwise known as "Free Public
Secondary Education Act of 1988." Respondents ' contend that the abolition of
the UPCBHS would be violative of said rights.
The conflict of the present petition pits the concept of academic freedom as
against the right to free public secondary education. Art. XIV, Section 2, [2] of
the Constitution, provides: "The State shall establish and maintain a system of
free public education in the elementary and high school levels. Without limiting
the right of natural parents to rear their children, elementary education is
compulsory for all children of school age." On the other hand, Art. XIV, Section
5 [2], provides: "Academic freedom shall be enjoyed in all institutions of higher
learning."
Is secondary public education demandable in an institution of higher learning
such as the University of the Philippines?
We rule in the negative.
It is beyond cavil that the UP, as an institution of higher learning, enjoys
academic freedom—the institutional kind.
In Garcia v. The Faculty Admission Committee, Loyola School of Theology (68
SCRA 277 [1975]), the Court had occasion to note the scope of academic
freedom recognized by the Constitution as follows:
(I)t is to be noted that the reference is to the 'institutions of
higher learning' as the recipients of this boon. It would follow
then that the school or college itself is possessed of such a
right. It decides for itself its aims and objectives and how best
to attain them. It is free from outside coercion or interference
save possibly when the overriding public welfare calls for some
restraint. It has a wide sphere of autonomy certainly extending
to the choice of students. This constitutional provision is not to
be construed in a niggardly manner or in a grudging fashion.
That would be to frustrate its purpose, nullify its intent.
xxx xxx xxx
It is the business of a university to provide that atmosphere
which is most conducive to speculation, experiment and
creation. It is an atmosphere in which there prevail the four
essential freedom of a university—to determine for itself on
academic grounds who may teach, what may be taught, how it
shall be taught, and who may be admitted to study"' (Emphasis
supplied; citing Sinco, Philippine Political Law, 491, (1962) and
the concurring opinion of Justice Frankfurter in Sweezy v. New
Hampshire (354 US 234 [1957]).
Rep. Act No. 6655, otherwise known as the "Free Public Secondary Education
Act of 1988," includes in its coverage state colleges and universities (SCUs)
offering secondary courses. Respondents cointend that since a secondary
course is being offered in UPCB, petitioners cannot unilaterally withdraw
therefrom, otherwise, the said Act would be nothing but a mere nullity for all
other SCUs. Besides, respondents contend, petitioners already recognized the
applicability of Rep. Act No. 6655 when they implemented the same at the
UPCBHS for School Year 1988-89 and petitioners' assertion that UPCBHS
was established only if it would be "self-supporting and should not entail any
subsidy from the budget of UP" is but a lame excuse.
At this juncture, it must be pointed out that UPCBHS was established subject
to a number of conditionalities, e.g., it must be self-supporting, it can serve as
a feeder for the UP at Baguio, it can serve as a laboratory and demonstration
school for prospective teachers, failing in which the University can order its
abolition on academic grounds, specially where the purposes for which it was
established was not satisfied.
Specifically, the University of the Philippines was created under its Charter
(Act No. 1870 [1908], as amended) to provide advanced tertiary education and
not secondary education. Section 2 of said Act states that "the purpose of said
University shall be to provide advanced instruction in literature, philosophy, the
sciences, and arts, and to give professional and technical training."
It is apparent that secondary education is not the mandated function of the
University of the Philippines; consequently, the latter can validly phase out
and/or abolish the UPCBHS especially so when the requirements for its
continuance have not been met, Rep. Act No. 6655 to the contrary
notwithstanding. The findings of facts by the Board of Regents which led to its
decision to phase out the UPCBHS must be accorded respect, if not finality.
Acts of an administrative agency within their areas of competence must be
casually overturned by the courts. It must be emphasized that UPCBHS was
established as a component of the tertiary level, i.e., the teacher/training
program. As it turned out however, the latter program was not viable in UPCB
thereby necessitating the phasing out of UPCBHS, the rationale being its
reasons for existence no longer exists. On this score, UPCBHS differs from the
other UP high schools in Iloilo, Diliman, Cebu and Los Bañ;os. The latter
schools serve as laboratory schools for the College of Education in said areas,
whereas, in Baguio, there is no College of Education.
A careful perusal of Rep. Act No. 6655 could not lend respondents a helping
hand either. Said Act implements the policy of the State to provide free public
secondary education (Sec. 4) and vests the formulation of a secondary public
education curriculum (Sec. 5), the nationalization of public secondary schools
(Sec. 7) and the implementation of the rules and regulations thereof (Sec. 9)
upon the Secretary of the Department of Education, Culture and Sports
(DECS). Rep. Act No. 6655 complements Sec. 2 (2), Article XIV of the
lâwphî1.ñèt
Constitution which mandates that the State shall establish and maintain a
system of free public secondary education. However, this mandate is not
directed to institutions of higher learning like UP but to the government through
the Department of Education, Culture and Sports (DECS). As an institution of
higher learning enjoying academic freedom, the UP cannot be compelled to
provide for secondary education. However, should UP operate a high school in
the exercise of its academic freedom, Rep. Act No. 6655 requires that the
students enrolled therein "shall be free from payment of tuition and other
school fees.
In view of the foregoing, respondents do not have a clear legal right to UP
secondary education.
ACCORDINGLY, the Court Resolved to Grant the petition. The assailed
Orders of respondent Judge dated May 25, 1989 and June 14, 1989 are
hereby Set Aside and respondent Judge is ordered to Dismiss Civil Case No.
1748-R. Secretary Lourdes Quisumbing of the Department of Education,
Culture and Sports is requested to make arrangements with the other high
schools in Baguio City for purposes of accommodating the students herein
affected. The temporary restraining order issued is made permanent.
SO ORDERED.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla,
Gancayco, Griñ;o-Aquino, Medialdea and Regalado, JJ., concur.
Fernan, C.J., is on leave.
Sarmiento and Cortes, JJ., took no part,
G.R. No. 101083 July 30, 1993
JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed
OPOSA, minors, and represented by their parents ANTONIO and
RIZALINA OPOSA, ROBERTA NICOLE SADIUA, minor, represented by
her parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD
and PATRISHA, all surnamed FLORES, minors and represented by their
parents ENRICO and NIDA FLORES, GIANINA DITA R. FORTUN, minor,
represented by her parents SIGRID and DOLORES FORTUN, GEORGE II
and MA. CONCEPCION, all surnamed MISA, minors and represented by
their parents GEORGE and MYRA MISA, BENJAMIN ALAN V. PESIGAN,
minor, represented by his parents ANTONIO and ALICE PESIGAN, JOVIE
MARIE ALFARO, minor, represented by her parents JOSE and MARIA
VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, minor, represented
by her parents FREDENIL and JANE CASTRO, JOHANNA
DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO,
CARLO JOAQUIN T. NARVASA, minor, represented by his parents
GREGORIO II and CRISTINE CHARITY NARVASA, MA. MARGARITA,
JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all surnamed
SAENZ, minors, represented by their parents ROBERTO and AURORA
SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and DAVID IAN,
all surnamed KING, minors, represented by their parents MARIO and
HAYDEE KING, DAVID, FRANCISCO and THERESE VICTORIA, all
surnamed ENDRIGA, minors, represented by their parents BALTAZAR
and TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed
ABAYA, minors, represented by their parents ANTONIO and MARICA
ABAYA, MARILIN, MARIO, JR. and MARIETTE, all surnamed CARDAMA,
minors, represented by their parents MARIO and LINA CARDAMA,
CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA,
minors and represented by their parents RICARDO and MARISSA
OPOSA, PHILIP JOSEPH, STEPHEN JOHN and ISAIAH JAMES, all
surnamed QUIPIT, minors, represented by their parents JOSE MAX and
VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and
FRANCISCO, all surnamed BIBAL, minors, represented by their parents
FRANCISCO, JR. and MILAGROS BIBAL, and THE PHILIPPINE
ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the
Secretary of the Department of Environment and Natural Resources, and
THE HONORABLE ERIBERTO U. ROSARIO, Presiding Judge of the RTC,
Makati, Branch 66, respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.
DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced
and healthful ecology which the petitioners dramatically associate with the twin
concepts of "inter-generational responsibility" and "inter-generational justice."
Specifically, it touches on the issue of whether the said petitioners have a
cause of action to "prevent the misappropriation or impairment" of Philippine
rainforests and "arrest the unabated hemorrhage of the country's vital life
support systems and continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before
Branch 66 (Makati, Metro Manila) of the Regional Trial Court (RTC), National
Capital Judicial Region. The principal plaintiffs therein, now the principal
petitioners, are all minors duly represented and joined by their respective
parents. Impleaded as an additional plaintiff is the Philippine Ecological
Network, Inc. (PENI), a domestic, non-stock and non-profit corporation
organized for the purpose of, inter alia, engaging in concerted action geared
for the protection of our environment and natural resources. The original
defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources (DENR). His substitution in
this petition by the new Secretary, the Honorable Angel C. Alcala, was
subsequently ordered upon proper motion by the petitioners. 1 The
complaint2 was instituted as a taxpayers' class suit3 and alleges that the
plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and
entitled to the full benefit, use and enjoyment of the natural resource treasure
that is the country's virgin tropical forests." The same was filed for themselves
and others who are equally concerned about the preservation of said resource
but are "so numerous that it is impracticable to bring them all before the
Court." The minors further asseverate that they "represent their generation as
well as generations yet unborn."4 Consequently, it is prayed for that judgment
be rendered:
. . . ordering defendant, his agents, representatives and other
persons acting in his behalf to —
(1) Cancel all existing timber license agreements in the
country;
(2) Cease and desist from receiving, accepting, processing,
renewing or approving new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the
premises."5
The complaint starts off with the general averments that the Philippine
archipelago of 7,100 islands has a land area of thirty million (30,000,000)
hectares and is endowed with rich, lush and verdant rainforests in which
varied, rare and unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool which is
irreplaceable; they are also the habitat of indigenous Philippine cultures which
have existed, endured and flourished since time immemorial; scientific
evidence reveals that in order to maintain a balanced and healthful ecology,
the country's land area should be utilized on the basis of a ratio of fifty-four per
cent (54%) for forest cover and forty-six per cent (46%) for agricultural,
residential, industrial, commercial and other uses; the distortion and
disturbance of this balance as a consequence of deforestation have resulted in
a host of environmental tragedies, such as (a) water shortages resulting from
drying up of the water table, otherwise known as the "aquifer," as well as of
rivers, brooks and streams, (b) salinization of the water table as a result of the
intrusion therein of salt water, incontrovertible examples of which may be
found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive
erosion and the consequential loss of soil fertility and agricultural productivity,
with the volume of soil eroded estimated at one billion (1,000,000,000) cubic
meters per annum — approximately the size of the entire island of
Catanduanes, (d) the endangering and extinction of the country's unique, rare
and varied flora and fauna, (e) the disturbance and dislocation of cultural
communities, including the disappearance of the Filipino's indigenous cultures,
(f) the siltation of rivers and seabeds and consequential destruction of corals
and other aquatic life leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently experienced by the
entire country, (h) increasing velocity of typhoon winds which result from the
absence of windbreakers, (i) the floodings of lowlands and agricultural plains
arising from the absence of the absorbent mechanism of forests, (j) the
siltation and shortening of the lifespan of multi-billion peso dams constructed
and operated for the purpose of supplying water for domestic uses, irrigation
and the generation of electric power, and (k) the reduction of the earth's
capacity to process carbon dioxide gases which has led to perplexing and
catastrophic climatic changes such as the phenomenon of global warming,
otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of
continued and deforestation are so capable of unquestionable demonstration
that the same may be submitted as a matter of judicial notice. This
notwithstanding, they expressed their intention to present expert witnesses as
well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some
sixteen (16) million hectares of rainforests constituting roughly
53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no
more than 1.2 million hectares of said rainforests or four per
cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares
of virgin old-growth rainforests are left, barely 2.8% of the
entire land mass of the Philippine archipelago and about 3.0
million hectares of immature and uneconomical secondary
growth forests.
11. Public records reveal that the defendant's, predecessors
have granted timber license agreements ('TLA's') to various
corporations to cut the aggregate area of 3.89 million hectares
for commercial logging purposes.
A copy of the TLA holders and the corresponding areas
covered is hereto attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000
hectares per annum or 25 hectares per hour — nighttime,
Saturdays, Sundays and holidays included — the Philippines
will be bereft of forest resources after the end of this ensuing
decade, if not earlier.
13. The adverse effects, disastrous consequences, serious
injury and irreparable damage of this continued trend of
deforestation to the plaintiff minor's generation and to
generations yet unborn are evident and incontrovertible. As a
matter of fact, the environmental damages enumerated in
paragraph 6 hereof are already being felt, experienced and
suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to
cut and deforest the remaining forest stands will work great
damage and irreparable injury to plaintiffs — especially plaintiff
minors and their successors — who may never see, use,
benefit from and enjoy this rare and unique natural resource
treasure.
This act of defendant constitutes a misappropriation and/or
impairment of the natural resource property he holds in trust for
the benefit of plaintiff minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced
and healthful ecology and are entitled to protection by the State
in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with
the defendant's office. On March 2, 1990, plaintiffs served upon
defendant a final demand to cancel all logging permits in the
country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto
attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing
TLA's to the continuing serious damage and extreme prejudice
of plaintiffs.
18. The continued failure and refusal by defendant to cancel
the TLA's is an act violative of the rights of plaintiffs, especially
plaintiff minors who may be left with a country that is desertified
(sic), bare, barren and devoid of the wonderful flora, fauna and
indigenous cultures which the Philippines had been abundantly
blessed with.
19. Defendant's refusal to cancel the aforementioned TLA's is
manifestly contrary to the public policy enunciated in the
Philippine Environmental Policy which, in pertinent part, states
that it is the policy of the State —
(a) to create, develop, maintain and improve conditions under
which man and nature can thrive in productive and enjoyable
harmony with each other;
(b) to fulfill the social, economic and other requirements of
present and future generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that is
conductive to a life of dignity and well-being. (P.D. 1151, 6
June 1977)
20. Furthermore, defendant's continued refusal to cancel the
aforementioned TLA's is contradictory to the Constitutional
policy of the State to —
a. effect "a more equitable distribution of opportunities, income
and wealth" and "make full and efficient use of natural
resources (sic)." (Section 1, Article XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and
resources (sic)" (Section 14, Article XIV, id.);
d. "protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of
nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of
humankind — the natural law — and violative of plaintiffs' right
to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in
law other than the instant action to arrest the unabated
hemorrhage of the country's vital life support systems and
continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a
Motion to Dismiss the complaint based on two (2) grounds, namely: (1) the
plaintiffs have no cause of action against him and (2) the issue raised by the
plaintiffs is a political question which properly pertains to the legislative or
executive branches of Government. In their 12 July 1990 Opposition to the
Motion, the petitioners maintain that (1) the complaint shows a clear and
unmistakable cause of action, (2) the motion is dilatory and (3) the action
presents a justiciable question as it involves the defendant's abuse of
discretion.
On 18 July 1991, respondent Judge issued an order granting the
aforementioned motion to dismiss.7 In the said order, not only was the
defendant's claim — that the complaint states no cause of action against him
and that it raises a political question — sustained, the respondent Judge
further ruled that the granting of the relief prayed for would result in the
impairment of contracts which is prohibited by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of
the Revised Rules of Court and ask this Court to rescind and set aside the
dismissal order on the ground that the respondent Judge gravely abused his
discretion in dismissing the action. Again, the parents of the plaintiffs-minors
not only represent their children, but have also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the petition and required
the parties to submit their respective Memoranda after the Office of the
Solicitor General (OSG) filed a Comment in behalf of the respondents and the
petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause
of action as it contains sufficient allegations concerning their right to a sound
environment based on Articles 19, 20 and 21 of the Civil Code (Human
Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR,
Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental
Policy), Section 16, Article II of the 1987 Constitution recognizing the right of
the people to a balanced and healthful ecology, the concept of generational
genocide in Criminal Law and the concept of man's inalienable right to self-
preservation and self-perpetuation embodied in natural law. Petitioners
likewise rely on the respondent's correlative obligation per Section 4 of E.O.
No. 192, to safeguard the people's right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave
abuse of discretion in granting Timber License Agreements (TLAs) to cover
more areas for logging than what is available involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-
impairment clause, petitioners maintain that the same does not apply in this
case because TLAs are not contracts. They likewise submit that even if TLAs
may be considered protected by the said clause, it is well settled that they may
still be revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in
their complaint a specific legal right violated by the respondent Secretary for
which any relief is provided by law. They see nothing in the complaint but
vague and nebulous allegations concerning an "environmental right" which
supposedly entitles the petitioners to the "protection by the state in its capacity
as parens patriae." Such allegations, according to them, do not reveal a valid
cause of action. They then reiterate the theory that the question of whether
logging should be permitted in the country is a political question which should
be properly addressed to the executive or legislative branches of Government.
They therefore assert that the petitioners' resources is not to file an action to
court, but to lobby before Congress for the passage of a bill that would ban
logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the
same cannot be done by the State without due process of law. Once issued, a
TLA remains effective for a certain period of time — usually for twenty-five (25)
years. During its effectivity, the same can neither be revised nor cancelled
unless the holder has been found, after due notice and hearing, to have
violated the terms of the agreement or other forestry laws and regulations.
Petitioners' proposition to have all the TLAs indiscriminately cancelled without
the requisite hearing would be violative of the requirements of due process.
Before going any further, We must first focus on some procedural matters.
Petitioners instituted Civil Case No. 90-777 as a class suit. The original
defendant and the present respondents did not take issue with this matter.
Nevertheless, We hereby rule that the said civil case is indeed a class suit.
The subject matter of the complaint is of common and general interest not just
to several, but to all citizens of the Philippines. Consequently, since the parties
are so numerous, it, becomes impracticable, if not totally impossible, to bring
all of them before the court. We likewise declare that the plaintiffs therein are
numerous and representative enough to ensure the full protection of all
concerned interests. Hence, all the requisites for the filing of a valid class suit
under Section 12, Rule 3 of the Revised Rules of Court are present both in the
said civil case and in the instant petition, the latter being but an incident to the
former.
This case, however, has a special and novel element. Petitioners minors
assert that they represent their generation as well as generations yet unborn.
We find no difficulty in ruling that they can, for themselves, for others of their
generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based
on the concept of intergenerational responsibility insofar as the right to a
balanced and healthful ecology is concerned. Such a right, as hereinafter
expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its
entirety.9 Such rhythm and harmony indispensably include, inter alia, the
judicious disposition, utilization, management, renewal and conservation of the
country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and
other natural resources to the end that their exploration, development and
utilization be equitably accessible to the present as well as future
generations. 10 Needless to say, every generation has a responsibility to the
next to preserve that rhythm and harmony for the full enjoyment of a balanced
and healthful ecology. Put a little differently, the minors' assertion of their right
to a sound environment constitutes, at the same time, the performance of their
obligation to ensure the protection of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now
proceed to the merits of the petition.
After a careful perusal of the complaint in question and a meticulous
consideration and evaluation of the issues raised and arguments adduced by
the parties, We do not hesitate to find for the petitioners and rule against the
respondent Judge's challenged order for having been issued with grave abuse
of discretion amounting to lack of jurisdiction. The pertinent portions of the said
order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint,
the Court cannot help but agree with the defendant. For
although we believe that plaintiffs have but the noblest of all
 intentions, it (sic) fell short of alleging, with sufficient
definiteness, a specific legal right they are seeking to enforce
and protect, or a specific legal wrong they are seeking to
prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the
Court notes that the Complaint is replete with vague
assumptions and vague conclusions based on unverified data.
In fine, plaintiffs fail to state a cause of action in its Complaint
against the herein defendant.
Furthermore, the Court firmly believes that the matter before it,
being impressed with political color and involving a matter of
public policy, may not be taken cognizance of by this Court
without doing violence to the sacred principle of "Separation of
Powers" of the three (3) co-equal branches of the Government.
The Court is likewise of the impression that it cannot, no matter
how we stretch our jurisdiction, grant the reliefs prayed for by
the plaintiffs, i.e., to cancel all existing timber license
agreements in the country and to cease and desist from
receiving, accepting, processing, renewing or approving new
timber license agreements. For to do otherwise would amount
to "impairment of contracts" abhored (sic) by the fundamental
law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to
allege with sufficient definiteness a specific legal right involved or a specific
legal wrong committed, and that the complaint is replete with vague
assumptions and conclusions based on unverified data. A reading of the
complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right — the right to a
balanced and healthful ecology which, for the first time in our nation's
constitutional history, is solemnly incorporated in the fundamental law. Section
16, Article II of the 1987 Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.
This right unites with the right to health which is provided for in
the preceding section of the same article:
Sec. 15. The State shall protect and promote the right to health
of the people and instill health consciousness among them.
While the right to a balanced and healthful ecology is to be found under the
Declaration of Principles and State Policies and not under the Bill of Rights, it
does not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-
perpetuation — aptly and fittingly stressed by the petitioners — the
advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written in
the Constitution for they are assumed to exist from the inception of humankind.
If they are now explicitly mentioned in the fundamental charter, it is because of
the well-founded fear of its framers that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies by the
Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect
and advance the second, the day would not be too far when all else would be
lost not only for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth incapable of
sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty
to refrain from impairing the environment. During the debates on this right in
one of the plenary sessions of the 1986 Constitutional Commission, the
following exchange transpired between Commissioner Wilfrido Villacorta and
Commissioner Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide
sanctions against all forms of pollution — air,
water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful
(sic) environment necessarily carries with it the
correlative duty of not impairing the same and,
therefore, sanctions may be provided for
impairment of environmental balance. 12
The said right implies, among many other things, the judicious management
and conservation of the country's forests.
Without such forests, the ecological or environmental balance would be
irreversiby disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and
the right to health, as well as the other related provisions of the Constitution
concerning the conservation, development and utilization of the country's
natural resources, 13 then President Corazon C. Aquino promulgated on 10
June 1987 E.O. No. 192, 14 Section 4 of which expressly mandates that the
Department of Environment and Natural Resources "shall be the primary
government agency responsible for the conservation, management,
development and proper use of the country's environment and natural
resources, specifically forest and grazing lands, mineral, resources, including
those in reservation and watershed areas, and lands of the public domain, as
well as the licensing and regulation of all natural resources as may be provided
for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos."
Section 3 thereof makes the following statement of policy:
Sec. 3. Declaration of Policy. — It is hereby declared the policy
of the State to ensure the sustainable use, development,
management, renewal, and conservation of the country's
forest, mineral, land, off-shore areas and other natural
resources, including the protection and enhancement of the
quality of the environment, and equitable access of the different
segments of the population to the development and the use of
the country's natural resources, not only for the present
generation but for future generations as well. It is also the
policy of the state to recognize and apply a true value system
including social and environmental cost implications relative to
their utilization, development and conservation of our natural
resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the
Administrative Code of 1987,15 specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. — (1) The State shall ensure, for
the benefit of the Filipino people, the full exploration and
development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's forest,
mineral, land, waters, fisheries, wildlife, off-shore areas and
other natural resources, consistent with the necessity of
maintaining a sound ecological balance and protecting and
enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such
natural resources equitably accessible to the different
segments of the present as well as future generations.
(2) The State shall likewise recognize and apply a true value
system that takes into account social and environmental cost
implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological
balance and protecting and enhancing the quality of the environment." Section
2 of the same Title, on the other hand, specifically speaks of the mandate of
the DENR; however, it makes particular reference to the fact of the agency's
being subject to law and higher authority. Said section provides:
Sec. 2. Mandate. — (1) The Department of Environment and
Natural Resources shall be primarily responsible for the
implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of
carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization, and
conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the
objectives which will serve as the bases for policy formulation, and have
defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987
Constitution, specific statutes already paid special attention to the
"environmental right" of the present and future generations. On 6 June 1977,
P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152 (Philippine
Environment Code) were issued. The former "declared a continuing policy of
the State (a) to create, develop, maintain and improve conditions under which
man and nature can thrive in productive and enjoyable harmony with each
other, (b) to fulfill the social, economic and other requirements of present and
future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16 As
its goal, it speaks of the "responsibilities of each generation as trustee and
guardian of the environment for succeeding generations." 17 The latter statute,
on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced
and healthful ecology is as clear as the DENR's duty — under its mandate and
by virtue of its powers and functions under E.O. No. 192 and the
Administrative Code of 1987 — to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or
obligation to respect or protect the same gives rise to a cause of action.
Petitioners maintain that the granting of the TLAs, which they claim was done
with grave abuse of discretion, violated their right to a balanced and healthful
ecology; hence, the full protection thereof requires that no further TLAs should
be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right
or rights of the other; and its essential elements are legal right
of the plaintiff, correlative obligation of the defendant, and act
or omission of the defendant in violation of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground
that the complaint fails to state a cause of action, 19 the question submitted to
the court for resolution involves the sufficiency of the facts alleged in the
complaint itself. No other matter should be considered; furthermore, the truth
of falsity of the said allegations is beside the point for the truth thereof is
deemed hypothetically admitted. The only issue to be resolved in such a case
is: admitting such alleged facts to be true, may the court render a valid
judgment in accordance with the prayer in the complaint? 20 In Militante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise
the utmost care and circumspection in passing upon a motion to dismiss on
the ground of the absence thereof [cause of action] lest, by its failure to
manifest a correct appreciation of the facts alleged and deemed hypothetically
admitted, what the law grants or recognizes is effectively nullified. If that
happens, there is a blot on the legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements
under the introductory affirmative allegations, as well as the specific averments
under the sub-heading CAUSE OF ACTION, to be adequate enough to
show, prima facie, the claimed violation of their rights. On the basis thereof,
they may thus be granted, wholly or partly, the reliefs prayed for. It bears
stressing, however, that insofar as the cancellation of the TLAs is concerned,
there is the need to implead, as party defendants, the grantees thereof for they
are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political
question. Policy formulation or determination by the executive or legislative
branches of Government is not squarely put in issue. What is principally
involved is the enforcement of a right vis-a-vis policies already formulated and
expressed in legislation. It must, nonetheless, be emphasized that the political
question doctrine is no longer, the insurmountable obstacle to the exercise of
judicial power or the impenetrable shield that protects executive and legislative
actions from judicial inquiry or review. The second paragraph of section 1,
Article VIII of the Constitution states that:
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law, 22 Mr.
Justice Isagani A. Cruz, a distinguished member of this Court, says:
The first part of the authority represents the traditional concept
of judicial power, involving the settlement of conflicting rights as
conferred as law. The second part of the authority represents a
broadening of judicial power to enable the courts of justice to
review what was before forbidden territory, to wit, the discretion
of the political departments of the government.
As worded, the new provision vests in the judiciary, and
particularly the Supreme Court, the power to rule upon even
the wisdom of the decisions of the executive and the legislature
and to declare their acts invalid for lack or excess of jurisdiction
because tainted with grave abuse of discretion. The catch, of
course, is the meaning of "grave abuse of discretion," which is
a very elastic phrase that can expand or contract according to
the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:
 In the case now before us, the jurisdictional objection becomes
even less tenable and decisive. The reason is that, even if we
were to assume that the issue presented before us was
political in nature, we would still not be precluded from
revolving it under the expanded jurisdiction conferred upon us
that now covers, in proper cases, even the political question.
Article VII, Section 1, of the Constitution clearly provides: . . .
The last ground invoked by the trial court in dismissing the complaint is the
non-impairment of contracts clause found in the Constitution. The court a
quo declared that:
The Court is likewise of the impression that it cannot, no matter
how we stretch our jurisdiction, grant the reliefs prayed for by
the plaintiffs, i.e., to cancel all existing timber license
agreements in the country and to cease and desist from
receiving, accepting, processing, renewing or approving new
timber license agreements. For to do otherwise would amount
to "impairment of contracts" abhored (sic) by the fundamental
law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked,
by such a sweeping pronouncement. In the first place, the respondent
Secretary did not, for obvious reasons, even invoke in his motion to dismiss
the non-impairment clause. If he had done so, he would have acted with
utmost infidelity to the Government by providing undue and unwarranted
benefits and advantages to the timber license holders because he would have
forever bound the Government to strictly respect the said licenses according to
their terms and conditions regardless of changes in policy and the demands of
public interest and welfare. He was aware that as correctly pointed out by the
petitioners, into every timber license must be read Section 20 of the Forestry
Reform Code (P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the
President may amend, modify, replace or rescind any contract,
concession, permit, licenses or any other form of privilege
granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by
executive action. It is not a contract, property or a property right
protested by the due process clause of the Constitution. In Tan vs.
Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to
the end that public welfare is promoted. A timber license is not
a contract within the purview of the due process clause; it is
only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this
case.
A license is merely a permit or privilege to do what otherwise
would be unlawful, and is not a contract between the authority,
federal, state, or municipal, granting it and the person to whom
it is granted; neither is it property or a property right, nor does it
create a vested right; nor is it taxation (37 C.J. 168). Thus, this
Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights
(People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy
Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the
utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid that
they merely evidence a privilege granted by the State to
qualified entities, and do not vest in the latter a permanent or
irrevocable right to the particular concession area and the
forest products therein. They may be validly amended,
modified, replaced or rescinded by the Chief Executive when
national interests so require. Thus, they are not deemed
contracts within the purview of the due process of law clause
[See Sections 3(ee) and 20 of Pres. Decree No. 705, as
amended. Also, Tan v. Director of Forestry, G.R. No. L-24548,
October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which
reads:
Sec. 10. No law impairing, the obligation of contracts shall be
passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, existed in the other instances. Moreover, with respect to renewal, the holder is
the instant case does not involve a law or even an executive issuance not entitled to it as a matter of right.
declaring the cancellation or modification of existing timber licenses. Hence,
the non-impairment clause cannot as yet be invoked. Nevertheless, granting WHEREFORE, being impressed with merit, the instant Petition is hereby
further that a law has actually been passed mandating cancellations or GRANTED, and the challenged Order of respondent Judge of 18 July 1991
modifications, the same cannot still be stigmatized as a violation of the non- dismissing Civil Case No. 90-777 is hereby set aside. The petitioners may
impairment clause. This is because by its very nature and purpose, such as therefore amend their complaint to implead as defendants the holders or
law could have only been passed in the exercise of the police power of the grantees of the questioned timber license agreements.
state for the purpose of advancing the right of the people to a balanced and
healthful ecology, promoting their health and enhancing the general welfare. No pronouncement as to costs.
In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
SO ORDERED.
The freedom of contract, under our system of government, is
Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo
not meant to be absolute. The same is understood to be
and Quiason, JJ., concur.
subject to reasonable legislative regulation aimed at the
promotion of public health, moral, safety and welfare. In other
words, the constitutional guaranty of non-impairment of Narvasa, C.J., Puno and Vitug, JJ., took no part.
obligations of contract is limited by the exercise of the police
power of the State, in the interest of public health, safety, moral
and general welfare.

The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted
in Philippine American Life Insurance Co. vs. Auditor General,30 to wit:

Under our form of government the use of property and the
making of contracts are normally matters of private and not of
public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor
contract rights are absolute; for government cannot exist if the
citizen may at will use his property to the detriment of his
fellows, or exercise his freedom of contract to work them harm.
Equally fundamental with the private right is that of the public to
regulate it in the common interest.
In short, the non-impairment clause must yield to the police power of the
state. 31
Finally, it is difficult to imagine, as the trial court did, how the non-impairment
clause could apply with respect to the prayer to enjoin the respondent
Secretary from receiving, accepting, processing, renewing or approving new
timber licenses for, save in cases of renewal, no contract would have as of yet
Separate Opinions
FELICIANO, J., concurring
I join in the result reached by my distinguished brother in the Court, Davide,
Jr., J., in this case which, to my mind, is one of the most important cases
decided by this Court in the last few years. The seminal principles laid down in
this decision are likely to influence profoundly the direction and course of the
protection and management of the environment, which of course embraces the
utilization of all the natural resources in the territorial base of our polity. I have
therefore sought to clarify, basically to myself, what the Court appears to be
saying.
The Court explicitly states that petitioners have the locus standi necessary to
sustain the bringing and, maintenance of this suit (Decision, pp. 11-12). Locus
standi is not a function of petitioners' claim that their suit is properly regarded
as a class suit. I understand locus standi to refer to the legal interest which a
plaintiff must have in the subject matter of the suit. Because of the very
broadness of the concept of "class" here involved — membership in this
"class" appears to embrace everyone living in the country whether now or in
the
future — it appears to me that everyone who may be expected to benefit from
the course of action petitioners seek to require public respondents to take, is
vested with the necessary locus standi. The Court may be seen therefore to be
recognizing a beneficiaries' right of action in the field of environmental
protection, as against both the public administrative agency directly concerned
and the private persons or entities operating in the field or sector of activity
involved. Whether such beneficiaries' right of action may be found under any
and all circumstances, or whether some failure to act, in the first instance, on
the part of the governmental agency concerned must be shown ("prior
exhaustion of administrative remedies"), is not discussed in the decision and
presumably is left for future determination in an appropriate case.
The Court has also declared that the complaint has alleged and focused upon
"one specific fundamental legal right — the right to a balanced and healthful
ecology" (Decision, p. 14). There is no question that "the right to a balanced
and healthful ecology" is "fundamental" and that, accordingly, it has been
"constitutionalized." But although it is fundamental in character, I suggest, with
very great respect, that it cannot be characterized as "specific," without doing
excessive violence to language. It is in fact very difficult to fashion language
more comprehensive in scope and generalized in character than a right to "a
balanced and healthful ecology." The list of particular claims which can be
subsumed under this rubic appears to be entirely open-ended: prevention and
control of emission of toxic fumes and smoke from factories and motor
vehicles; of discharge of oil, chemical effluents, garbage and raw sewage into
rivers, inland and coastal waters by vessels, oil rigs, factories, mines and
whole communities; of dumping of organic and inorganic wastes on open land,
streets and thoroughfares; failure to rehabilitate land after strip-mining or open-
pit mining; kaingin or slash-and-burn farming; destruction of fisheries, coral
reefs and other living sea resources through the use of dynamite or cyanide
and other chemicals; contamination of ground water resources; loss of certain
species of fauna and flora; and so on. The other statements pointed out by the
Court: Section 3, Executive Order No. 192 dated 10 June 1987; Section 1,
Title XIV, Book IV of the 1987 Administrative Code; and P.D. No. 1151, dated
6 June 1977 — all appear to be formulations of policy, as general and abstract
as the constitutional statements of basic policy in Article II, Section 16 ("the
right — to a balanced and healthful ecology") and 15 ("the right to health").
P.D. No. 1152, also dated 6 June 1977, entitled "The Philippine Environment
Code," is, upon the other hand, a compendious collection of more "specific
environment management policies" and "environment quality standards"
(fourth "Whereas" clause, Preamble) relating to an extremely wide range of
topics:
(a) air quality management;
(b) water quality management;
(c) land use management;
(d) natural resources management and conservation
embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;
(v) energy development;
(vi) conservation and utilization of surface and ground water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly, neither petitioners
nor the Court has identified the particular provision or provisions (if any) of the
Philippine Environment Code which give rise to a specific legal right which
petitioners are seeking to enforce. Secondly, the Philippine Environment Code
identifies with notable care the particular government agency charged with the
formulation and implementation of guidelines and programs dealing with each
of the headings and sub-headings mentioned above. The Philippine
Environment Code does not, in other words, appear to contemplate action on
the part of private persons who are beneficiaries of implementation of that
Code.
As a matter of logic, by finding petitioners' cause of action as anchored on a
legal right comprised in the constitutional statements above noted, the Court is
in effect saying that Section 15 (and Section 16) of Article II of the Constitution
are self-executing and judicially enforceable even in their present form. The
implications of this doctrine will have to be explored in future cases; those
implications are too large and far-reaching in nature even to be hinted at here.
My suggestion is simply that petitioners must, before the trial court, show a
more specific legal right — a right cast in language of a significantly lower
order of generality than Article II (15) of the Constitution — that is or may be
violated by the actions, or failures to act, imputed to the public respondent by
petitioners so that the trial court can validly render judgment granting all or part
of the relief prayed for. To my mind, the Court should be understood as simply
saying that such a more specific legal right or rights may well exist in
our corpus of law, considering the general policy principles found in the
Constitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component
of a cause of action be a specific, operable legal right, rather than a
constitutional or statutory policy, for at least two (2) reasons. One is that unless
the legal right claimed to have been violated or disregarded is given
specification in operational terms, defendants may well be unable to defend
themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration — where a specific violation of
law or applicable regulation is not alleged or proved, petitioners can be
expected to fall back on the expanded conception of judicial power in the
second paragraph of Section 1 of Article VIII of the Constitution which reads:
Section 1. . . .
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
When substantive standards as general as "the right to a balanced and
healthy ecology" and "the right to health" are combined with remedial
standards as broad ranging as "a grave abuse of discretion amounting
to lack or excess of jurisdiction," the result will be, it is respectfully
submitted, to propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim
to special technical competence and experience and professional
qualification. Where no specific, operable norms and standards are
shown to exist, then the policy making departments — the legislative
and executive departments — must be given a real and effective
opportunity to fashion and promulgate those norms and standards, and
to implement them before the courts should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies,
whose concession agreements or TLA's petitioners demand public
respondents should cancel, must be impleaded in the proceedings below. It
might be asked that, if petitioners' entitlement to the relief demanded
is not dependent upon proof of breach by the timber companies of one or more
of the specific terms and conditions of their concession agreements (and this,
petitioners implicitly assume), what will those companies litigate about? The
answer I suggest is that they may seek to dispute the existence of the specific
legal right petitioners should allege, as well as the reality of the claimed factual
nexus between petitioners' specific legal rights and the claimed wrongful acts
or failures to act of public respondent administrative agency. They may also
controvert the appropriateness of the remedy or remedies demanded by
petitioners, under all the circumstances which exist.
I vote to grant the Petition for Certiorari because the protection of the
environment, including the forest cover of our territory, is of extreme
importance for the country. The doctrines set out in the Court's decision issued
today should, however, be subjected to closer examination.
# Separate Opinions
FELICIANO, J., concurring
I join in the result reached by my distinguished brother in the Court, Davide,
Jr., J., in this case which, to my mind, is one of the most important cases
decided by this Court in the last few years. The seminal principles laid down in
this decision are likely to influence profoundly the direction and course of the
protection and management of the environment, which of course embraces the
utilization of all the natural resources in the territorial base of our polity. I have
therefore sought to clarify, basically to myself, what the Court appears to be
saying.
The Court explicitly states that petitioners have the locus standi necessary to
sustain the bringing and, maintenance of this suit (Decision, pp. 11-12). Locus
standi is not a function of petitioners' claim that their suit is properly regarded
as a class suit. I understand locus standi to refer to the legal interest which a
plaintiff must have in the subject matter of the suit. Because of the very
broadness of the concept of "class" here involved — membership in this
"class" appears to embrace everyone living in the country whether now or in
the
future — it appears to me that everyone who may be expected to benefit from
the course of action petitioners seek to require public respondents to take, is
vested with the necessary locus standi. The Court may be seen therefore to be
recognizing a beneficiaries' right of action in the field of environmental
protection, as against both the public administrative agency directly concerned
and the private persons or entities operating in the field or sector of activity
involved. Whether such beneficiaries' right of action may be found under any
and all circumstances, or whether some failure to act, in the first instance, on
the part of the governmental agency concerned must be shown ("prior
exhaustion of administrative remedies"), is not discussed in the decision and
presumably is left for future determination in an appropriate case.
The Court has also declared that the complaint has alleged and focused upon
"one specific fundamental legal right — the right to a balanced and healthful
ecology" (Decision, p. 14). There is no question that "the right to a balanced
and healthful ecology" is "fundamental" and that, accordingly, it has been
"constitutionalized." But although it is fundamental in character, I suggest, with
very great respect, that it cannot be characterized as "specific," without doing
excessive violence to language. It is in fact very difficult to fashion language
more comprehensive in scope and generalized in character than a right to "a
balanced and healthful ecology." The list of particular claims which can be
subsumed under this rubic appears to be entirely open-ended: prevention and
control of emission of toxic fumes and smoke from factories and motor
vehicles; of discharge of oil, chemical effluents, garbage and raw sewage into
rivers, inland and coastal waters by vessels, oil rigs, factories, mines and
whole communities; of dumping of organic and inorganic wastes on open land,
streets and thoroughfares; failure to rehabilitate land after strip-mining or open-
pit mining; kaingin or slash-and-burn farming; destruction of fisheries, coral
reefs and other living sea resources through the use of dynamite or cyanide
and other chemicals; contamination of ground water resources; loss of certain
species of fauna and flora; and so on. The other statements pointed out by the
Court: Section 3, Executive Order No. 192 dated 10 June 1987; Section 1,
Title XIV, Book IV of the 1987 Administrative Code; and P.D. No. 1151, dated
6 June 1977 — all appear to be formulations of policy, as general and abstract
as the constitutional statements of basic policy in Article II, Section 16 ("the
right — to a balanced and healthful ecology") and 15 ("the right to health").
P.D. No. 1152, also dated 6 June 1977, entitled "The Philippine Environment
Code," is, upon the other hand, a compendious collection of more "specific
environment management policies" and "environment quality standards"
(fourth "Whereas" clause, Preamble) relating to an extremely wide range of
topics:
(a) air quality management;
(b) water quality management;
(c) land use management;
(d) natural resources management and conservation
embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;
(v) energy development;
(vi) conservation and utilization of surface and ground water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly, neither petitioners
nor the Court has identified the particular provision or provisions (if any) of the
Philippine Environment Code which give rise to a specific legal right which
petitioners are seeking to enforce. Secondly, the Philippine Environment Code
identifies with notable care the particular government agency charged with the
formulation and implementation of guidelines and programs dealing with each
of the headings and sub-headings mentioned above. The Philippine
Environment Code does not, in other words, appear to contemplate action on
the part of private persons who are beneficiaries of implementation of that
Code.
As a matter of logic, by finding petitioners' cause of action as anchored on a
legal right comprised in the constitutional statements above noted, the Court is
in effect saying that Section 15 (and Section 16) of Article II of the Constitution
are self-executing and judicially enforceable even in their present form. The
implications of this doctrine will have to be explored in future cases; those
implications are too large and far-reaching in nature even to be hinted at here.
My suggestion is simply that petitioners must, before the trial court, show a
more specific legal right — a right cast in language of a significantly lower
order of generality than Article II (15) of the Constitution — that is or may be
violated by the actions, or failures to act, imputed to the public respondent by
petitioners so that the trial court can validly render judgment granting all or part
of the relief prayed for. To my mind, the Court should be understood as simply
saying that such a more specific legal right or rights may well exist in
our corpus of law, considering the general policy principles found in the
Constitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component
of a cause of action be a specific, operable legal right, rather than a
constitutional or statutory policy, for at least two (2) reasons. One is that unless
the legal right claimed to have been violated or disregarded is given
specification in operational terms, defendants may well be unable to defend
themselves intelligently and effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration — where a specific violation of
law or applicable regulation is not alleged or proved, petitioners can be
expected to fall back on the expanded conception of judicial power in the
second paragraph of Section 1 of Article VIII of the Constitution which reads:
Section 1. . . .
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
When substantive standards as general as "the right to a balanced and
healthy ecology" and "the right to health" are combined with remedial
standards as broad ranging as "a grave abuse of discretion amounting
to lack or excess of jurisdiction," the result will be, it is respectfully
submitted, to propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim
to special technical competence and experience and professional
qualification. Where no specific, operable norms and standards are
shown to exist, then the policy making departments — the legislative
and executive departments — must be given a real and effective
opportunity to fashion and promulgate those norms and standards, and
to implement them before the courts should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies,
whose concession agreements or TLA's petitioners demand public
respondents should cancel, must be impleaded in the proceedings below. It
might be asked that, if petitioners' entitlement to the relief demanded
is not dependent upon proof of breach by the timber companies of one or more
of the specific terms and conditions of their concession agreements (and this,
petitioners implicitly assume), what will those companies litigate about? The
answer I suggest is that they may seek to dispute the existence of the specific
legal right petitioners should allege, as well as the reality of the claimed factual
nexus between petitioners' specific legal rights and the claimed wrongful acts
or failures to act of public respondent administrative agency. They may also
controvert the appropriateness of the remedy or remedies demanded by
petitioners, under all the circumstances which exist.
I vote to grant the Petition for Certiorari because the protection of the
environment, including the forest cover of our territory, is of extreme
importance for the country. The doctrines set out in the Court's decision issued
today should, however, be subjected to closer examination.
G.R. Nos. 171947-48 December 18, 2008
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES, DEPARTMENT OF
EDUCATION, CULTURE AND SPORTS,1 DEPARTMENT OF HEALTH,
DEPARTMENT OF AGRICULTURE, DEPARTMENT OF PUBLIC WORKS
AND HIGHWAYS, DEPARTMENT OF BUDGET AND MANAGEMENT,
PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL POLICE MARITIME
GROUP, and DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, petitioners,
vs.
CONCERNED RESIDENTS OF MANILA BAY, represented and joined by
DIVINA V. ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR.,
DINAH DELA PEÑA, PAUL DENNIS QUINTERO, MA. VICTORIA LLENOS,
DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE
TANGKIA, SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS BOBIS,
FELIMON SANTIAGUEL, and JAIME AGUSTIN R. OPOSA, respondents.
DECISION
VELASCO, JR., J.:
The need to address environmental pollution, as a cause of climate change,
has of late gained the attention of the international community. Media have
finally trained their sights on the ill effects of pollution, the destruction of forests
and other critical habitats, oil spills, and the unabated improper disposal of
garbage. And rightly so, for the magnitude of environmental destruction is now
on a scale few ever foresaw and the wound no longer simply heals by
itself.2 But amidst hard evidence and clear signs of a climate crisis that need
bold action, the voice of cynicism, naysayers, and procrastinators can still be
heard.
This case turns on government agencies and their officers who, by the nature
of their respective offices or by direct statutory command, are tasked to protect
and preserve, at the first instance, our internal waters, rivers, shores, and seas
polluted by human activities. To most of these agencies and their official
complement, the pollution menace does not seem to carry the high national
priority it deserves, if their track records are to be the norm. Their cavalier
attitude towards solving, if not mitigating, the environmental pollution problem,
is a sad commentary on bureaucratic efficiency and commitment.
At the core of the case is the Manila Bay, a place with a proud historic past,
once brimming with marine life and, for so many decades in the past, a spot for
different contact recreation activities, but now a dirty and slowly dying expanse
mainly because of the abject official indifference of people and institutions that
could have otherwise made a difference.
This case started when, on January 29, 1999, respondents Concerned
Residents of Manila Bay filed a complaint before the Regional Trial Court
(RTC) in Imus, Cavite against several government agencies, among them the
petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay.
Raffled to Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the
complaint alleged that the water quality of the Manila Bay had fallen way below
the allowable standards set by law, specifically Presidential Decree No. (PD)
1152 or the Philippine Environment Code. This environmental aberration, the
complaint stated, stemmed from:
x x x [The] reckless, wholesale, accumulated and ongoing acts of
omission or commission [of the defendants] resulting in the clear and
present danger to public health and in the depletion and contamination
of the marine life of Manila Bay, [for which reason] ALL defendants
must be held jointly and/or solidarily liable and be collectively ordered
to clean up Manila Bay and to restore its water quality to class B
waters fit for swimming, skin-diving, and other forms of contact
recreation.3
In their individual causes of action, respondents alleged that the continued
neglect of petitioners in abating the pollution of the Manila Bay constitutes a
violation of, among others:
(1) Respondents’ constitutional right to life, health, and a balanced
ecology;
(2) The Environment Code (PD 1152);
(3) The Pollution Control Law (PD 984);
(4) The Water Code (PD 1067);
(5) The Sanitation Code (PD 856);
(6) The Illegal Disposal of Wastes Decree (PD 825);
 (7) The Marine Pollution Law (PD 979);
(8) Executive Order No. 192;
(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);
(10) Civil Code provisions on nuisance and human relations;
(11) The Trust Doctrine and the Principle of Guardianship; and
(12) International Law
Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to
clean the Manila Bay and submit to the RTC a concerted concrete plan of
action for the purpose.
The trial of the case started off with a hearing at the Manila Yacht Club
followed by an ocular inspection of the Manila Bay. Renato T. Cruz, the Chief
of the Water Quality Management Section, Environmental Management
Bureau, Department of Environment and Natural Resources (DENR), testifying
for petitioners, stated that water samples collected from different beaches
around the Manila Bay showed that the amount of fecal coliform content
ranged from 50,000 to 80,000 most probable number (MPN)/ml when what
DENR Administrative Order No. 34-90 prescribed as a safe level for bathing
and other forms of contact recreational activities, or the "SB" level, is one not
exceeding 200 MPN/100 ml.4
Rebecca de Vera, for Metropolitan Waterworks and Sewerage System
(MWSS) and in behalf of other petitioners, testified about the MWSS’ efforts to
reduce pollution along the Manila Bay through the Manila Second Sewerage
Project. For its part, the Philippine Ports Authority (PPA) presented, as part of
its evidence, its memorandum circulars on the study being conducted on ship-
generated waste treatment and disposal, and its Linis Dagat (Clean the
Ocean) project for the cleaning of wastes accumulated or washed to shore.
The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay
On September 13, 2002, the RTC rendered a Decision5 in favor of
respondents. The dispositive portion reads:
WHEREFORE, finding merit in the complaint, judgment is hereby
rendered ordering the abovenamed defendant-government agencies,
jointly and solidarily, to clean up and rehabilitate Manila Bay and
restore its waters to SB classification to make it fit for swimming, skin-
diving and other forms of contact recreation. To attain this, defendant-
agencies, with defendant DENR as the lead agency, are directed,
within six (6) months from receipt hereof, to act and perform their
respective duties by devising a consolidated, coordinated and
concerted scheme of action for the rehabilitation and restoration of the
bay.
In particular:
Defendant MWSS is directed to install, operate and maintain adequate
[sewerage] treatment facilities in strategic places under its jurisdiction
and increase their capacities.
Defendant LWUA, to see to it that the water districts under its wings,
provide, construct and operate sewage facilities for the proper disposal
of waste.
Defendant DENR, which is the lead agency in cleaning up Manila Bay,
to install, operate and maintain waste facilities to rid the bay of toxic
and hazardous substances.
Defendant PPA, to prevent and also to treat the discharge not only of
ship-generated wastes but also of other solid and liquid wastes from
docking vessels that contribute to the pollution of the bay.
Defendant MMDA, to establish, operate and maintain an adequate and
appropriate sanitary landfill and/or adequate solid waste and liquid
disposal as well as other alternative garbage disposal system such as
re-use or recycling of wastes.
Defendant DA, through the Bureau of Fisheries and Aquatic
Resources, to revitalize the marine life in Manila Bay and restock its
waters with indigenous fish and other aquatic animals.
Defendant DBM, to provide and set aside an adequate budget solely
for the purpose of cleaning up and rehabilitation of Manila Bay.
 Defendant DPWH, to remove and demolish structures and other
nuisances that obstruct the free flow of waters to the bay. These
nuisances discharge solid and liquid wastes which eventually end up in
Manila Bay. As the construction and engineering arm of the
government, DPWH is ordered to actively participate in removing
debris, such as carcass of sunken vessels, and other non-
biodegradable garbage in the bay.
Defendant DOH, to closely supervise and monitor the operations of
septic and sludge companies and require them to have proper facilities
for the treatment and disposal of fecal sludge and sewage coming from
septic tanks.
Defendant DECS, to inculcate in the minds and hearts of the people
through education the importance of preserving and protecting the
environment.
Defendant Philippine Coast Guard and the PNP Maritime Group, to
protect at all costs the Manila Bay from all forms of illegal fishing.
No pronouncement as to damages and costs.
SO ORDERED.
The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before
the Court of Appeals (CA) individual Notices of Appeal which were eventually
consolidated and docketed as CA-G.R. CV No. 76528.
On the other hand, the DENR, Department of Public Works and Highways
(DPWH), Metropolitan Manila Development Authority (MMDA), Philippine
Coast Guard (PCG), Philippine National Police (PNP) Maritime Group, and five
other executive departments and agencies filed directly with this Court a
petition for review under Rule 45. The Court, in a Resolution of December 9,
2002, sent the said petition to the CA for consolidation with the consolidated
appeals of MWSS, LWUA, and PPA, docketed as CA-G.R. SP No. 74944.
Petitioners, before the CA, were one in arguing in the main that the pertinent
provisions of the Environment Code (PD 1152) relate only to the cleaning of
specific pollution incidents and do not cover cleaning in general. And apart
from raising concerns about the lack of funds appropriated for cleaning
purposes, petitioners also asserted that the cleaning of the Manila Bay is not a
ministerial act which can be compelled by mandamus.
The CA Sustained the RTC
By a Decision6 of September 28, 2005, the CA denied petitioners’ appeal and
affirmed the Decision of the RTC in toto, stressing that the trial court’s decision
did not require petitioners to do tasks outside of their usual basic functions
under existing laws.7
Petitioners are now before this Court praying for the allowance of their Rule 45
petition on the following ground and supporting arguments:
THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT
HERETOFORE PASSED UPON BY THE HONORABLE COURT, I.E.,
IT AFFIRMED THE TRIAL COURT’S DECISION DECLARING THAT
SECTION 20 OF [PD] 1152 REQUIRES CONCERNED
GOVERNMENT AGENCIES TO REMOVE ALL POLLUTANTS
SPILLED AND DISCHARGED IN THE WATER SUCH AS FECAL
COLIFORMS.
ARGUMENTS
I
[SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE
CLEANING OF SPECIFIC POLLUTION INCIDENTS AND [DO] NOT
COVER CLEANING IN GENERAL
II
THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT
A MINISTERIAL ACT OF PETITIONERS THAT CAN BE COMPELLED
BY MANDAMUS.
The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152
under the headings, Upgrading of Water Quality and Clean-up Operations,
envisage a cleanup in general or are they limited only to the cleanup of specific
pollution incidents? And second, can petitioners be compelled by mandamus
to clean up and rehabilitate the Manila Bay?
On August 12, 2008, the Court conducted and heard the parties on oral
arguments.
 Our Ruling
We shall first dwell on the propriety of the issuance of mandamus under the
premises.
The Cleaning or Rehabilitation of Manila Bay
Can be Compelled by Mandamus
Generally, the writ of mandamus lies to require the execution of a ministerial
duty.8 A ministerial duty is one that "requires neither the exercise of official
discretion nor judgment."9 It connotes an act in which nothing is left to the
discretion of the person executing it. It is a "simple, definite duty arising under
conditions admitted or proved to exist and imposed by law." 10 Mandamus is
available to compel action, when refused, on matters involving discretion, but
not to direct the exercise of judgment or discretion one way or the other.
Petitioners maintain that the MMDA’s duty to take measures and maintain
adequate solid waste and liquid disposal systems necessarily involves policy
evaluation and the exercise of judgment on the part of the agency concerned.
They argue that the MMDA, in carrying out its mandate, has to make
decisions, including choosing where a landfill should be located by undertaking
feasibility studies and cost estimates, all of which entail the exercise of
discretion.
Respondents, on the other hand, counter that the statutory command is clear
and that petitioners’ duty to comply with and act according to the clear
mandate of the law does not require the exercise of discretion. According to
respondents, petitioners, the MMDA in particular, are without discretion, for
example, to choose which bodies of water they are to clean up, or which
discharge or spill they are to contain. By the same token, respondents
maintain that petitioners are bereft of discretion on whether or not to alleviate
the problem of solid and liquid waste disposal; in other words, it is the MMDA’s
ministerial duty to attend to such services.
We agree with respondents.
First off, we wish to state that petitioners’ obligation to perform their duties as
defined by law, on one hand, and how they are to carry out such duties, on the
other, are two different concepts. While the implementation of the MMDA’s
mandated tasks may entail a decision-making process, the enforcement of the
law or the very act of doing what the law exacts to be done is ministerial in
nature and may be compelled by mandamus. We said so in Social Justice
Society v. Atienza11 in which the Court directed the City of Manila to enforce,
as a matter of ministerial duty, its Ordinance No. 8027 directing the three big
local oil players to cease and desist from operating their business in the so-
called "Pandacan Terminals" within six months from the effectivity of the
ordinance. But to illustrate with respect to the instant case, the MMDA’s duty to
put up an adequate and appropriate sanitary landfill and solid waste and liquid
disposal as well as other alternative garbage disposal systems is ministerial,
its duty being a statutory imposition. The MMDA’s duty in this regard is spelled
out in Sec. 3(c) of Republic Act No. (RA) 7924 creating the MMDA. This
section defines and delineates the scope of the MMDA’s waste disposal
services to include:
Solid waste disposal and management which include formulation and
implementation of policies, standards, programs and projects for
proper and sanitary waste disposal. It shall likewise include
the establishment and operation of sanitary land fill and related
facilities and the implementation of other alternative programs
intended to reduce, reuse and recycle solid waste. (Emphasis added.)
The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste
Management Act (RA 9003) which prescribes the minimum criteria for the
establishment of sanitary landfills and Sec. 42 which provides the minimum
operating requirements that each site operator shall maintain in the operation
of a sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA
9003,12 enjoining the MMDA and local government units, among others, after
the effectivity of the law on February 15, 2001, from using and operating open
dumps for solid waste and disallowing, five years after such effectivity, the use
of controlled dumps.
The MMDA’s duty in the area of solid waste disposal, as may be noted, is set
forth not only in the Environment Code (PD 1152) and RA 9003, but in its
charter as well. This duty of putting up a proper waste disposal system cannot
be characterized as discretionary, for, as earlier stated, discretion presupposes
the power or right given by law to public functionaries to act officially according
to their judgment or conscience.13 A discretionary duty is one that "allows a
person to exercise judgment and choose to perform or not to perform."14 Any
suggestion that the MMDA has the option whether or not to perform its solid
waste disposal-related duties ought to be dismissed for want of legal basis.
A perusal of other petitioners’ respective charters or like enabling statutes and
pertinent laws would yield this conclusion: these government agencies are
enjoined, as a matter of statutory obligation, to perform certain functions
relating directly or indirectly to the cleanup, rehabilitation, protection, and
preservation of the Manila Bay. They are precluded from choosing not to
perform these duties. Consider:
(1) The DENR, under Executive Order No. (EO) 192, 15 is the primary agency
responsible for the conservation, management, development, and proper use
of the country’s environment and natural resources. Sec. 19 of the Philippine
Clean Water Act of 2004 (RA 9275), on the other hand, designates the DENR
as the primary government agency responsible for its enforcement and
implementation, more particularly over all aspects of water quality
management. On water pollution, the DENR, under the Act’s Sec. 19(k),
exercises jurisdiction "over all aspects of water pollution, determine[s] its
location, magnitude, extent, severity, causes and effects and other pertinent
information on pollution, and [takes] measures, using available methods and
technologies, to prevent and abate such pollution."
The DENR, under RA 9275, is also tasked to prepare a National Water Quality
Status Report, an Integrated Water Quality Management Framework, and a
10-year Water Quality Management Area Action Plan which is nationwide in
scope covering the Manila Bay and adjoining areas. Sec. 19 of RA 9275
provides:
Sec. 19 Lead Agency.––The [DENR] shall be the primary government
agency responsible for the implementation and enforcement of this Act
x x x unless otherwise provided herein. As such, it shall have the
following functions, powers and responsibilities:
a) Prepare a National Water Quality Status report within twenty-four
(24) months from the effectivity of this Act: Provided, That the
Department shall thereafter review or revise and publish annually, or
as the need arises, said report;
b) Prepare an Integrated Water Quality Management Framework within
twelve (12) months following the completion of the status report;
c) Prepare a ten (10) year Water Quality Management Area Action
Plan within 12 months following the completion of the framework for
each designated water management area. Such action plan shall be
reviewed by the water quality management area governing board every
five (5) years or as need arises.
The DENR has prepared the status report for the period 2001 to 2005 and is in
the process of completing the preparation of the Integrated Water Quality
Management Framework.16 Within twelve (12) months thereafter, it has to
submit a final Water Quality Management Area Action Plan. 17 Again, like the
MMDA, the DENR should be made to accomplish the tasks assigned to it
under RA 9275.
Parenthetically, during the oral arguments, the DENR Secretary manifested
that the DENR, with the assistance of and in partnership with various
government agencies and non-government organizations, has completed, as
of December 2005, the final draft of a comprehensive action plan with
estimated budget and time frame, denominated as Operation Plan for the
Manila Bay Coastal Strategy, for the rehabilitation, restoration, and
rehabilitation of the Manila Bay.
The completion of the said action plan and even the implementation of some of
its phases should more than ever prod the concerned agencies to fast track
what are assigned them under existing laws.
(2) The MWSS, under Sec. 3 of RA 6234,18 is vested with jurisdiction,
supervision, and control over all waterworks and sewerage systems in the
territory comprising what is now the cities of Metro Manila and several towns of
the provinces of Rizal and Cavite, and charged with the duty:
(g) To construct, maintain, and operate such sanitary sewerages as
may be necessary for the proper sanitation and other uses of the cities
and towns comprising the System; x x x
(3) The LWUA under PD 198 has the power of supervision and control over
local water districts. It can prescribe the minimum standards and regulations
for the operations of these districts and shall monitor and evaluate local water
standards. The LWUA can direct these districts to construct, operate, and
furnish facilities and services for the collection, treatment, and disposal of
sewerage, waste, and storm water. Additionally, under RA 9275, the LWUA, as
attached agency of the DPWH, is tasked with providing sewerage and
sanitation facilities, inclusive of the setting up of efficient and safe collection,
treatment, and sewage disposal system in the different parts of the
country.19 In relation to the instant petition, the LWUA is mandated to provide
sewerage and sanitation facilities in Laguna, Cavite, Bulacan, Pampanga, and
Bataan to prevent pollution in the Manila Bay.
(4) The Department of Agriculture (DA), pursuant to the Administrative Code of
1987 (EO 292),20 is designated as the agency tasked to promulgate and
enforce all laws and issuances respecting the conservation and proper
utilization of agricultural and fishery resources. Furthermore, the DA, under the
Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local
government units (LGUs) and other concerned sectors, in charge of
establishing a monitoring, control, and surveillance system to ensure that
fisheries and aquatic resources in Philippine waters are judiciously utilized and
managed on a sustainable basis.21 Likewise under RA 9275, the DA is charged
with coordinating with the PCG and DENR for the enforcement of water quality
standards in marine waters.22 More specifically, its Bureau of Fisheries and
Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall primarily be
responsible for the prevention and control of water pollution for the
development, management, and conservation of the fisheries and aquatic
resources.
(5) The DPWH, as the engineering and construction arm of the national
government, is tasked under EO 29223 to provide integrated planning, design,
and construction services for, among others, flood control and water resource
development systems in accordance with national development objectives and
approved government plans and specifications.
In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to
perform metro-wide services relating to "flood control and sewerage
management which include the formulation and implementation of policies,
standards, programs and projects for an integrated flood control, drainage and
sewerage system."
On July 9, 2002, a Memorandum of Agreement was entered into between the
DPWH and MMDA, whereby MMDA was made the agency primarily
responsible for flood control in Metro Manila. For the rest of the country,
DPWH shall remain as the implementing agency for flood control services. The
mandate of the MMDA and DPWH on flood control and drainage services shall
include the removal of structures, constructions, and encroachments built
along rivers, waterways, and esteros (drainages) in violation of RA 7279, PD
1067, and other pertinent laws.
(6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast
Guard Law of 1974, and Sec. 6 of PD 979,24 or the Marine Pollution Decree of
1976, shall have the primary responsibility of enforcing laws, rules, and
regulations governing marine pollution within the territorial waters of the
Philippines. It shall promulgate its own rules and regulations in accordance
with the national rules and policies set by the National Pollution Control
Commission upon consultation with the latter for the effective implementation
and enforcement of PD 979. It shall, under Sec. 4 of the law, apprehend
violators who:
a. discharge, dump x x x harmful substances from or out of any ship,
vessel, barge, or any other floating craft, or other man-made structures
at sea, by any method, means or manner, into or upon the territorial
and inland navigable waters of the Philippines;
b. throw, discharge or deposit, dump, or cause, suffer or procure to be
thrown, discharged, or deposited either from or out of any ship, barge,
or other floating craft or vessel of any kind, or from the shore, wharf,
manufacturing establishment, or mill of any kind, any refuse matter of
any kind or description whatever other than that flowing from streets
and sewers and passing therefrom in a liquid state into tributary of any
navigable water from which the same shall float or be washed into
such navigable water; and
c. deposit x x x material of any kind in any place on the bank of any
navigable water or on the bank of any tributary of any navigable water,
where the same shall be liable to be washed into such navigable water,
either by ordinary or high tides, or by storms or floods, or otherwise,
whereby navigation shall or may be impeded or obstructed or increase
the level of pollution of such water.
(7) When RA 6975 or the Department of the Interior and Local Government
(DILG) Act of 1990 was signed into law on December 13, 1990, the PNP
Maritime Group was tasked to "perform all police functions over the Philippine
territorial waters and rivers." Under Sec. 86, RA 6975, the police functions of
the PCG shall be taken over by the PNP when the latter acquires the capability
to perform such functions. Since the PNP Maritime Group has not yet attained
the capability to assume and perform the police functions of PCG over marine
pollution, the PCG and PNP Maritime Group shall coordinate with regard to the
enforcement of laws, rules, and regulations governing marine pollution within
the territorial waters of the Philippines. This was made clear in Sec. 124, RA
8550 or the Philippine Fisheries Code of 1998, in which both the PCG and
PNP Maritime Group were authorized to enforce said law and other fishery
laws, rules, and regulations.25
(8) In accordance with Sec. 2 of EO 513, the PPA is mandated "to establish,
develop, regulate, manage and operate a rationalized national port system in
support of trade and national development."26 Moreover, Sec. 6-c of EO 513
states that the PPA has police authority within the ports administered by it as
may be necessary to carry out its powers and functions and attain its purposes
and objectives, without prejudice to the exercise of the functions of the Bureau
of Customs and other law enforcement bodies within the area. Such police
authority shall include the following:
xxxx
b) To regulate the entry to, exit from, and movement within the port, of
persons and vehicles, as well as movement within the port of
watercraft.27
Lastly, as a member of the International Marine Organization and a signatory
to the International Convention for the Prevention of Pollution from Ships, as
amended by MARPOL 73/78,28 the Philippines, through the PPA, must ensure
the provision of adequate reception facilities at ports and terminals for the
reception of sewage from the ships docking in Philippine ports. Thus, the PPA
is tasked to adopt such measures as are necessary to prevent the discharge
and dumping of solid and liquid wastes and other ship-generated wastes into
the Manila Bay waters from vessels docked at ports and apprehend the
violators. When the vessels are not docked at ports but within Philippine
territorial waters, it is the PCG and PNP Maritime Group that have jurisdiction
over said vessels.
(9) The MMDA, as earlier indicated, is duty-bound to put up and maintain
adequate sanitary landfill and solid waste and liquid disposal system as well as
other alternative garbage disposal systems. It is primarily responsible for the
implementation and enforcement of the provisions of RA 9003, which would
necessary include its penal provisions, within its area of jurisdiction. 29
Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are
frequently violated are dumping of waste matters in public places, such as
roads, canals or esteros, open burning of solid waste, squatting in open dumps
and landfills, open dumping, burying of biodegradable or non- biodegradable
materials in flood-prone areas, establishment or operation of open dumps as
enjoined in RA 9003, and operation of waste management facilities without an
environmental compliance certificate.
Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279),
eviction or demolition may be allowed "when persons or entities occupy danger
areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines,
waterways, and other public places such as sidewalks, roads, parks and
playgrounds." The MMDA, as lead agency, in coordination with the DPWH,
LGUs, and concerned agencies, can dismantle and remove all structures,
constructions, and other encroachments built in breach of RA 7279 and other
pertinent laws along the rivers, waterways, and esteros in Metro Manila. With
respect to rivers, waterways, and esteros in Bulacan, Bataan, Pampanga,
Cavite, and Laguna that discharge wastewater directly or eventually into the
Manila Bay, the DILG shall direct the concerned LGUs to implement the
demolition and removal of such structures, constructions, and other
encroachments built in violation of RA 7279 and other applicable laws in
coordination with the DPWH and concerned agencies.
(10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water
Code), is tasked to promulgate rules and regulations for the establishment of
waste disposal areas that affect the source of a water supply or a reservoir for
domestic or municipal use. And under Sec. 8 of RA 9275, the DOH, in
coordination with the DENR, DPWH, and other concerned agencies, shall
formulate guidelines and standards for the collection, treatment, and disposal
of sewage and the establishment and operation of a centralized sewage
treatment system. In areas not considered as highly urbanized cities, septage
or a mix sewerage-septage management system shall be employed.
In accordance with Sec. 7230 of PD 856, the Code of Sanitation of the
Philippines, and Sec. 5.1.131 of Chapter XVII of its implementing rules, the
DOH is also ordered to ensure the regulation and monitoring of the proper
disposal of wastes by private sludge companies through the strict enforcement
of the requirement to obtain an environmental sanitation clearance of sludge
collection treatment and disposal before these companies are issued their
environmental sanitation permit.
(11) The Department of Education (DepEd), under the Philippine Environment
Code (PD 1152), is mandated to integrate subjects on environmental
education in its school curricula at all levels.32 Under Sec. 118 of RA 8550, the
DepEd, in collaboration with the DA, Commission on Higher Education, and
Philippine Information Agency, shall launch and pursue a nationwide
educational campaign to promote the development, management,
conservation, and proper use of the environment. Under the Ecological Solid
Waste Management Act (RA 9003), on the other hand, it is directed to
strengthen the integration of environmental concerns in school curricula at all
levels, with an emphasis on waste management principles. 33
(12) The Department of Budget and Management (DBM) is tasked under Sec.
2, Title XVII of the Administrative Code of 1987 to ensure the efficient and
sound utilization of government funds and revenues so as to effectively
achieve the country’s development objectives. 34
One of the country’s development objectives is enshrined in RA 9275 or the
Philippine Clean Water Act of 2004. This law stresses that the State shall
pursue a policy of economic growth in a manner consistent with the protection,
preservation, and revival of the quality of our fresh, brackish, and marine
waters. It also provides that it is the policy of the government, among others, to
streamline processes and procedures in the prevention, control, and
abatement of pollution mechanisms for the protection of water resources; to
promote environmental strategies and use of appropriate economic
instruments and of control mechanisms for the protection of water resources;
to formulate a holistic national program of water quality management that
recognizes that issues related to this management cannot be separated from
concerns about water sources and ecological protection, water supply, public
health, and quality of life; and to provide a comprehensive management
program for water pollution focusing on pollution prevention.
Thus, the DBM shall then endeavor to provide an adequate budget to attain
the noble objectives of RA 9275 in line with the country’s development
objectives.
All told, the aforementioned enabling laws and issuances are in themselves
clear, categorical, and complete as to what are the obligations and mandate of
each agency/petitioner under the law. We need not belabor the issue that their
tasks include the cleanup of the Manila Bay.
Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment
Code encompass the cleanup of water pollution in general, not just specific
pollution incidents?
Secs. 17 and 20 of the Environment Code
Include Cleaning in General
The disputed sections are quoted as follows:
Section 17. Upgrading of Water Quality.––Where the quality of water
has deteriorated to a degree where its state will adversely affect its
best usage, the government agencies concerned shall take such
measures as may be necessary to upgrade the quality of such water to
meet the prescribed water quality standards.
Section 20. Clean-up Operations.––It shall be the responsibility of the
polluter to contain, remove and clean-up water pollution incidents at his
own expense. In case of his failure to do so, the government agencies
concerned shall undertake containment, removal and clean-up
operations and expenses incurred in said operations shall be charged
against the persons and/or entities responsible for such pollution.
When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, o,
amended the counterpart provision (Sec. 20) of the Environment Code (PD
1152). Sec. 17 of PD 1152 continues, however, to be operational.
The amendatory Sec. 16 of RA 9275 reads:
SEC. 16. Cleanup Operations.––Notwithstanding the provisions of
Sections 15 and 26 hereof, any person who causes pollution in or
pollutes water bodies in excess of the applicable and prevailing
standards shall be responsible to contain, remove and clean up any
pollution incident at his own expense to the extent that the same water
bodies have been rendered unfit for utilization and beneficial use:
Provided, That in the event emergency cleanup operations are
necessary and the polluter fails to immediately undertake the same,
the [DENR] in coordination with other government agencies concerned,
shall undertake containment, removal and cleanup operations.
Expenses incurred in said operations shall be reimbursed by the
persons found to have caused such pollution under proper
administrative determination x x x. Reimbursements of the cost
incurred shall be made to the Water Quality Management Fund or to
such other funds where said disbursements were sourced.
As may be noted, the amendment to Sec. 20 of the Environment Code is more
apparent than real since the amendment, insofar as it is relevant to this case,
merely consists in the designation of the DENR as lead agency in the cleanup
operations.
Petitioners contend at every turn that Secs. 17 and 20 of the Environment
Code concern themselves only with the matter of cleaning up in specific
pollution incidents, as opposed to cleanup in general. They aver that the twin
provisions would have to be read alongside the succeeding Sec. 62(g) and (h),
which defines the terms "cleanup operations" and "accidental spills," as
follows:
g. Clean-up Operations [refer] to activities conducted in removing the
pollutants discharged or spilled in water to restore it to pre-spill
condition.
h. Accidental Spills [refer] to spills of oil or other hazardous substances
in water that result from accidents such as collisions and groundings.
Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct
the government agencies concerned to undertake containment, removal, and
cleaning operations of a specific polluted portion or portions of the body of
water concerned. They maintain that the application of said Sec. 20 is limited
only to "water pollution incidents," which are situations that presuppose the
occurrence of specific, isolated pollution events requiring the corresponding
containment, removal, and cleaning operations. Pushing the point further, they
argue that the aforequoted Sec. 62(g) requires "cleanup operations" to restore
the body of water to pre-spill condition, which means that there must have
been a specific incident of either intentional or accidental spillage of oil or other
hazardous substances, as mentioned in Sec. 62(h).
As a counterpoint, respondents argue that petitioners erroneously read Sec.
62(g) as delimiting the application of Sec. 20 to the containment, removal, and
cleanup operations for accidental spills only. Contrary to petitioners’ posture,
respondents assert that Sec. 62(g), in fact, even expanded the coverage of
Sec. 20. Respondents explain that without its Sec. 62(g), PD 1152 may have
indeed covered only pollution accumulating from the day-to-day operations of
businesses around the Manila Bay and other sources of pollution that slowly
accumulated in the bay. Respondents, however, emphasize that Sec. 62(g),
far from being a delimiting provision, in fact even enlarged the operational
scope of Sec. 20, by including accidental spills as among the water pollution
incidents contemplated in Sec. 17 in relation to Sec. 20 of PD 1152.
To respondents, petitioners’ parochial view on environmental issues, coupled
with their narrow reading of their respective mandated roles, has contributed to
the worsening water quality of the Manila Bay. Assuming, respondents assert,
that petitioners are correct in saying that the cleanup coverage of Sec. 20 of
PD 1152 is constricted by the definition of the phrase "cleanup operations"
embodied in Sec. 62(g), Sec. 17 is not hobbled by such limiting definition. As
pointed out, the phrases "cleanup operations" and "accidental spills" do not
appear in said Sec. 17, not even in the chapter where said section is found.
Respondents are correct. For one thing, said Sec. 17 does not in any way
state that the government agencies concerned ought to confine themselves to
the containment, removal, and cleaning operations when a specific pollution
incident occurs. On the contrary, Sec. 17 requires them to act even in the
absence of a specific pollution incident, as long as water quality "has
deteriorated to a degree where its state will adversely affect its best usage."
This section, to stress, commands concerned government agencies, when
appropriate, "to take such measures as may be necessary to meet the
prescribed water quality standards." In fine, the underlying duty to upgrade the
quality of water is not conditional on the occurrence of any pollution incident.
For another, a perusal of Sec. 20 of the Environment Code, as couched,
indicates that it is properly applicable to a specific situation in which the
pollution is caused by polluters who fail to clean up the mess they left behind.
In such instance, the concerned government agencies shall undertake the
cleanup work for the polluters’ account. Petitioners’ assertion, that they have to
perform cleanup operations in the Manila Bay only when there is a water
pollution incident and the erring polluters do not undertake the containment,
removal, and cleanup operations, is quite off mark. As earlier discussed, the
complementary Sec. 17 of the Environment Code comes into play and the
specific duties of the agencies to clean up come in even if there are no
pollution incidents staring at them. Petitioners, thus, cannot plausibly invoke
and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that
their cleanup mandate depends on the happening of a specific pollution
incident. In this regard, what the CA said with respect to the impasse over
Secs. 17 and 20 of PD 1152 is at once valid as it is practical. The appellate
court wrote: "PD 1152 aims to introduce a comprehensive program of
environmental protection and management. This is better served by making
Secs. 17 & 20 of general application rather than limiting them to specific
pollution incidents."35
Granting arguendo that petitioners’ position thus described vis-à-vis the
implementation of Sec. 20 is correct, they seem to have overlooked the fact
that the pollution of the Manila Bay is of such magnitude and scope that it is
well-nigh impossible to draw the line between a specific and a general pollution
incident. And such impossibility extends to pinpointing with reasonable
certainty who the polluters are. We note that Sec. 20 of PD 1152 mentions
"water pollution incidents" which may be caused by polluters in the waters of
the Manila Bay itself or by polluters in adjoining lands and in water bodies or
waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand,
specifically adverts to "any person who causes pollution in or pollutes water
bodies," which may refer to an individual or an establishment that pollutes the
land mass near the Manila Bay or the waterways, such that the contaminants
eventually end up in the bay. In this situation, the water pollution incidents are
so numerous and involve nameless and faceless polluters that they can validly
be categorized as beyond the specific pollution incident level.
Not to be ignored of course is the reality that the government agencies
concerned are so undermanned that it would be almost impossible to
apprehend the numerous polluters of the Manila Bay. It may perhaps not be
amiss to say that the apprehension, if any, of the Manila Bay polluters has
been few and far between. Hence, practically nobody has been required to
contain, remove, or clean up a given water pollution incident. In this kind of
setting, it behooves the Government to step in and undertake cleanup
operations. Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers
for all intents and purposes a general cleanup situation.
The cleanup and/or restoration of the Manila Bay is only an aspect and the
initial stage of the long-term solution. The preservation of the water quality of
the bay after the rehabilitation process is as important as the cleaning phase. It
is imperative then that the wastes and contaminants found in the rivers, inland
bays, and other bodies of water be stopped from reaching the Manila Bay.
Otherwise, any cleanup effort would just be a futile, cosmetic exercise, for, in
no time at all, the Manila Bay water quality would again deteriorate below the
ideal minimum standards set by PD 1152, RA 9275, and other relevant laws. It
thus behooves the Court to put the heads of the petitioner-department-
agencies and the bureaus and offices under them on continuing notice about,
and to enjoin them to perform, their mandates and duties towards cleaning up
the Manila Bay and preserving the quality of its water to the ideal level. Under
what other judicial discipline describes as "continuing mandamus," 36 the Court
may, under extraordinary circumstances, issue directives with the end in view
of ensuring that its decision would not be set to naught by administrative
inaction or indifference. In India, the doctrine of continuing mandamus was
used to enforce directives of the court to clean up the length of the Ganges
River from industrial and municipal pollution. 37
The Court can take judicial notice of the presence of shanties and other
unauthorized structures which do not have septic tanks along the Pasig-
Marikina-San Juan Rivers, the National Capital Region (NCR) (Parañaque-
Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers,
the Meycuayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River,
the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and
connecting waterways, river banks, and esteros which discharge their waters,
with all the accompanying filth, dirt, and garbage, into the major rivers and
eventually the Manila Bay. If there is one factor responsible for the pollution of
the major river systems and the Manila Bay, these unauthorized structures
would be on top of the list. And if the issue of illegal or unauthorized structures
is not seriously addressed with sustained resolve, then practically all efforts to
cleanse these important bodies of water would be for naught. The DENR
Secretary said as much.38
Giving urgent dimension to the necessity of removing these illegal structures is
Art. 51 of PD 1067 or the Water Code,39 which prohibits the building of
structures within a given length along banks of rivers and other waterways. Art.
51 reads:
The banks of rivers and streams and the shores of the seas and
lakes throughout their entire length and within a zone of three (3)
meters in urban areas, twenty (20) meters in agricultural areas and
forty (40) meters in forest areas, along their margins, are subject to
the easement of public use in the interest of recreation,
navigation, floatage, fishing and salvage. No person shall be
allowed to stay in this zone longer than what is necessary for
recreation, navigation, floatage, fishing or salvage or to build
structures of any kind. (Emphasis added.)
Judicial notice may likewise be taken of factories and other industrial
establishments standing along or near the banks of the Pasig River, other
major rivers, and connecting waterways. But while they may not be treated as
unauthorized constructions, some of these establishments undoubtedly
contribute to the pollution of the Pasig River and waterways. The DILG and the
concerned LGUs, have, accordingly, the duty to see to it that non-complying
industrial establishments set up, within a reasonable period, the necessary
waste water treatment facilities and infrastructure to prevent their industrial
discharge, including their sewage waters, from flowing into the Pasig River,
other major rivers, and connecting waterways. After such period, non-
complying establishments shall be shut down or asked to transfer their
operations.
At this juncture, and if only to dramatize the urgency of the need for
petitioners-agencies to comply with their statutory tasks, we cite the Asian
Development Bank-commissioned study on the garbage problem in Metro
Manila, the results of which are embodied in the The Garbage Book. As there
reported, the garbage crisis in the metropolitan area is as alarming as it is
shocking. Some highlights of the report:
 1. As early as 2003, three land-filled dumpsites in Metro Manila - the
Payatas, Catmon and Rodriquez dumpsites - generate an alarming
quantity of lead and leachate or liquid run-off. Leachate are toxic
liquids that flow along the surface and seep into the earth and poison
the surface and groundwater that are used for drinking, aquatic life,
and the environment.
2. The high level of fecal coliform confirms the presence of a large
amount of human waste in the dump sites and surrounding areas,
which is presumably generated by households that lack alternatives to
sanitation. To say that Manila Bay needs rehabilitation is an
understatement.
3. Most of the deadly leachate, lead and other dangerous
contaminants and possibly strains of pathogens seeps untreated into
ground water and runs into the Marikina and Pasig River systems and
Manila Bay.40
Given the above perspective, sufficient sanitary landfills should now more than
ever be established as prescribed by the Ecological Solid Waste Management
Act (RA 9003). Particular note should be taken of the blatant violations by
some LGUs and possibly the MMDA of Sec. 37, reproduced below:
Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste.–
–No open dumps shall be established and operated, nor any practice
or disposal of solid waste by any person, including LGUs which
[constitute] the use of open dumps for solid waste, be allowed after the
effectivity of this Act: Provided, further that no controlled dumps shall
be allowed (5) years following the effectivity of this Act. (Emphasis
added.)
RA 9003 took effect on February 15, 2001 and the adverted grace period of
five (5) years which ended on February 21, 2006 has come and gone, but no
single sanitary landfill which strictly complies with the prescribed standards
under RA 9003 has yet been set up.
In addition, there are rampant and repeated violations of Sec. 48 of RA 9003,
like littering, dumping of waste matters in roads, canals, esteros, and other
public places, operation of open dumps, open burning of solid waste, and the
like. Some sludge companies which do not have proper disposal facilities
simply discharge sludge into the Metro Manila sewerage system that ends up
in the Manila Bay. Equally unabated are violations of Sec. 27 of RA 9275,
which enjoins the pollution of water bodies, groundwater pollution, disposal of
infectious wastes from vessels, and unauthorized transport or dumping into
sea waters of sewage or solid waste and of Secs. 4 and 102 of RA 8550 which
proscribes the introduction by human or machine of substances to the aquatic
environment including "dumping/disposal of waste and other marine litters,
discharge of petroleum or residual products of petroleum of carbonaceous
materials/substances [and other] radioactive, noxious or harmful liquid,
gaseous or solid substances, from any water, land or air transport or other
human-made structure."
In the light of the ongoing environmental degradation, the Court wishes to
emphasize the extreme necessity for all concerned executive departments and
agencies to immediately act and discharge their respective official duties and
obligations. Indeed, time is of the essence; hence, there is a need to set
timetables for the performance and completion of the tasks, some of them as
defined for them by law and the nature of their respective offices and
mandates.
The importance of the Manila Bay as a sea resource, playground, and as a
historical landmark cannot be over-emphasized. It is not yet too late in the day
to restore the Manila Bay to its former splendor and bring back the plants and
sea life that once thrived in its blue waters. But the tasks ahead, daunting as
they may be, could only be accomplished if those mandated, with the help and
cooperation of all civic-minded individuals, would put their minds to these tasks
and take responsibility. This means that the State, through petitioners, has to
take the lead in the preservation and protection of the Manila Bay.
The era of delays, procrastination, and ad hoc measures is over. Petitioners
must transcend their limitations, real or imaginary, and buckle down to work
before the problem at hand becomes unmanageable. Thus, we must reiterate
that different government agencies and instrumentalities cannot shirk from
their mandates; they must perform their basic functions in cleaning up and
rehabilitating the Manila Bay. We are disturbed by petitioners’ hiding behind
two untenable claims: (1) that there ought to be a specific pollution incident
before they are required to act; and (2) that the cleanup of the bay is a
discretionary duty.
RA 9003 is a sweeping piece of legislation enacted to radically transform and
improve waste management. It implements Sec. 16, Art. II of the 1987
Constitution, which explicitly provides that the State shall protect and advance
the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.
So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a
balanced and healthful ecology need not even be written in the Constitution for
it is assumed, like other civil and political rights guaranteed in the Bill of Rights,
to exist from the inception of mankind and it is an issue of transcendental
importance with intergenerational implications. 41 Even assuming the absence
of a categorical legal provision specifically prodding petitioners to clean up the
bay, they and the men and women representing them cannot escape their
obligation to future generations of Filipinos to keep the waters of the Manila
Bay clean and clear as humanly as possible. Anything less would be a betrayal
of the trust reposed in them.
WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of
the CA in CA-G.R. CV No. 76528 and SP No. 74944 and the September 13,
2002 Decision of the RTC in Civil Case No. 1851-99 are AFFIRMED but
with MODIFICATIONS in view of subsequent developments or supervening
events in the case. The fallo of the RTC Decision shall now read:
WHEREFORE, judgment is hereby rendered ordering the abovenamed
defendant-government agencies to clean up, rehabilitate, and preserve
Manila Bay, and restore and maintain its waters to SB level (Class B
sea waters per Water Classification Tables under DENR Administrative
Order No. 34 [1990]) to make them fit for swimming, skin-diving, and
other forms of contact recreation.
In particular:
(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency
responsible for the conservation, management, development, and proper use
of the country’s environment and natural resources, and Sec. 19 of RA 9275,
designating the DENR as the primary government agency responsible for its
enforcement and implementation, the DENR is directed to fully implement
its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation,
restoration, and conservation of the Manila Bay at the earliest possible time. It
is ordered to call regular coordination meetings with concerned government
departments and agencies to ensure the successful implementation of the
aforesaid plan of action in accordance with its indicated completion schedules.
(2) Pursuant to Title XII (Local Government) of the Administrative Code of
1987 and Sec. 25 of the Local Government Code of 1991, 42 the DILG, in
exercising the President’s power of general supervision and its duty to
promulgate guidelines in establishing waste management programs under
Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs in
Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan to
inspect all factories, commercial establishments, and private homes along the
banks of the major river systems in their respective areas of jurisdiction, such
as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR
(Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-
Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the
Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other
minor rivers and waterways that eventually discharge water into the Manila
Bay; and the lands abutting the bay, to determine whether they have
wastewater treatment facilities or hygienic septic tanks as prescribed by
existing laws, ordinances, and rules and regulations. If none be found, these
LGUs shall be ordered to require non-complying establishments and homes to
set up said facilities or septic tanks within a reasonable time to prevent
industrial wastes, sewage water, and human wastes from flowing into these
rivers, waterways, esteros, and the Manila Bay, under pain of closure or
imposition of fines and other sanctions.
(3) As mandated by Sec. 8 of RA 9275,43 the MWSS is directed to provide,
install, operate, and maintain the necessary adequate waste water treatment
facilities in Metro Manila, Rizal, and Cavite where needed at the earliest
possible time.
(4) Pursuant to RA 9275,44 the LWUA, through the local water districts and in
coordination with the DENR, is ordered to provide, install, operate, and
maintain sewerage and sanitation facilities and the efficient and safe collection,
treatment, and disposal of sewage in the provinces of Laguna, Cavite,
Bulacan, Pampanga, and Bataan where needed at the earliest possible time.
(5) Pursuant to Sec. 65 of RA 8550,45 the DA, through the BFAR, is ordered to
improve and restore the marine life of the Manila Bay. It is also directed to
assist the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga,
and Bataan in developing, using recognized methods, the fisheries and aquatic
resources in the Manila Bay.
(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime
Group, in accordance with Sec. 124 of RA 8550, in coordination with each
other, shall apprehend violators of PD 979, RA 8550, and other existing laws
and regulations designed to prevent marine pollution in the Manila Bay.
(7) Pursuant to Secs. 2 and 6-c of EO 51346 and the International Convention
for the Prevention of Pollution from Ships, the PPA is ordered to immediately
adopt such measures to prevent the discharge and dumping of solid and liquid
wastes and other ship-generated wastes into the Manila Bay waters from curricula of all levels to inculcate in the minds and hearts of students and,
vessels docked at ports and apprehend the violators. through them, their parents and friends, the importance of their duty toward
achieving and maintaining a balanced and healthful ecosystem in the Manila
(8) The MMDA, as the lead agency and implementor of programs and projects Bay and the entire Philippine archipelago.
for flood control projects and drainage services in Metro Manila, in coordination
with the DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and (11) The DBM shall consider incorporating an adequate budget in the General
Urban Development Coordinating Council (HUDCC), and other agencies, shall Appropriations Act of 2010 and succeeding years to cover the expenses
dismantle and remove all structures, constructions, and other encroachments relating to the cleanup, restoration, and preservation of the water quality of the
established or built in violation of RA 7279, and other applicable laws along the Manila Bay, in line with the country’s development objective to attain economic
Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) growth in a manner consistent with the protection, preservation, and revival of
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting our marine waters.
waterways and esteros in Metro Manila. The DPWH, as the principal
implementor of programs and projects for flood control services in the rest of (12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA,
the country more particularly in Bulacan, Bataan, Pampanga, Cavite, and DPWH, DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA,
Laguna, in coordination with the DILG, affected LGUs, PNP Maritime Group, and PPA, in line with the principle of "continuing mandamus," shall, from
HUDCC, and other concerned government agencies, shall remove and finality of this Decision, each submit to the Court a quarterly progressive report
demolish all structures, constructions, and other encroachments built in breach of the activities undertaken in accordance with this Decision.
of RA 7279 and other applicable laws along the Meycauayan-Marilao-Obando
(Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the No costs.
Laguna De Bay, and other rivers, connecting waterways, and esteros that
discharge wastewater into the Manila Bay.
SO ORDERED.
In addition, the MMDA is ordered to establish, operate, and maintain a sanitary
landfill, as prescribed by RA 9003, within a period of one (1) year from finality
of this Decision. On matters within its territorial jurisdiction and in connection
with the discharge of its duties on the maintenance of sanitary landfills and like
undertakings, it is also ordered to cause the apprehension and filing of the
appropriate criminal cases against violators of the respective penal provisions
of RA 9003,47 Sec. 27 of RA 9275 (the Clean Water Act), and other existing
laws on pollution.

(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275,
within one (1) year from finality of this Decision, determine if all licensed septic
and sludge companies have the proper facilities for the treatment and disposal
of fecal sludge and sewage coming from septic tanks. The DOH shall give the
companies, if found to be non-complying, a reasonable time within which to set
up the necessary facilities under pain of cancellation of its environmental
sanitation clearance.

(10) Pursuant to Sec. 53 of PD 1152,48 Sec. 118 of RA 8550, and Sec. 56 of

RA 9003,49 the DepEd shall integrate lessons on pollution prevention, waste
management, environmental protection, and like subjects in the school
G.R. No. 118295 May 2, 1997
WIGBERTO E. TAÑADA and ANNA DOMINIQUE COSETENG, as members
of the Philippine Senate and as taxpayers; GREGORIO ANDOLANA and
JOKER ARROYO as members of the House of Representatives and as
taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both as
taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE
DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN
FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION
MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG
PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation
of various taxpayers and as non-governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI,
HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI
GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA. MACAPAGAL-
ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEÑA,
SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO
TATAD and FREDDIE WEBB, in their respective capacities as members
of the Philippine Senate who concurred in the ratification by the
President of the Philippines of the Agreement Establishing the World
Trade Organization; SALVADOR ENRIQUEZ, in his capacity as Secretary
of Budget and Management; CARIDAD VALDEHUESA, in her capacity as
National Treasurer; RIZALINO NAVARRO, in his capacity as Secretary of
Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary
of Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary of
Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign
Affairs; and TEOFISTO T. GUINGONA, in his capacity as Executive
Secretary, respondents.
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization, abetted
by the membership thereto of the vast majority of countries has revolutionized
international business and economic relations amongst states. It has
irreversibly propelled the world towards trade liberalization and economic
globalization. Liberalization, globalization, deregulation and privatization, the
third-millennium buzz words, are ushering in a new borderless world of
business by sweeping away as mere historical relics the heretofore traditional
modes of promoting and protecting national economies like tariffs, export
subsidies, import quotas, quantitative restrictions, tax exemptions and currency
controls. Finding market niches and becoming the best in specific industries in
a market-driven and export-oriented global scenario are replacing age-old
"beggar-thy-neighbor" policies that unilaterally protect weak and inefficient
domestic producers of goods and services. In the words of Peter Drucker, the
well-known management guru, "Increased participation in the world economy
has become the key to domestic economic growth and prosperity."
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the Second
World War, plans for the establishment of three multilateral institutions —
inspired by that grand political body, the United Nations — were discussed at
Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB)
which was to address the rehabilitation and reconstruction of war-ravaged and
later developing countries; the second, the International Monetary Fund (IMF)
which was to deal with currency problems; and the third, the International
Trade Organization (ITO), which was to foster order and predictability in world
trade and to minimize unilateral protectionist policies that invite challenge,
even retaliation, from other states. However, for a variety of reasons, including
its non-ratification by the United States, the ITO, unlike the IMF and WB, never
took off. What remained was only GATT — the General Agreement on Tariffs
and Trade. GATT was a collection of treaties governing access to the
economies of treaty adherents with no institutionalized body administering the
agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the
Kennedy Round, the Tokyo Round and the Uruguay Round, the world finally
gave birth to that administering body — the World Trade Organization — with
the signing of the "Final Act" in Marrakesh, Morocco and the ratification of the
WTO Agreement by its members.1
Like many other developing countries, the Philippines joined WTO as a
founding member with the goal, as articulated by President Fidel V. Ramos in
two letters to the Senate (infra), of improving "Philippine access to foreign
markets, especially its major trading partners, through the reduction of tariffs
on its exports, particularly agricultural and industrial products." The President
also saw in the WTO the opening of "new opportunities for the services sector .
. . , (the reduction of) costs and uncertainty associated with exporting . . . , and
(the attraction of) more investments into the country." Although the Chief
Executive did not expressly mention it in his letter, the Philippines — and this
is of special interest to the legal profession — will benefit from the WTO
system of dispute settlement by judicial adjudication through the independent
WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate
Tribunal. Heretofore, trade disputes were settled mainly through negotiations
where solutions were arrived at frequently on the basis of relative bargaining
strengths, and where naturally, weak and underdeveloped countries were at a
disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines "to place nationals
and products of member-countries on the same footing as Filipinos and local
products" and (2) that the WTO "intrudes, limits and/or impairs" the
constitutional powers of both Congress and the Supreme Court, the instant
petition before this Court assails the WTO Agreement for violating the mandate
of the 1987 Constitution to "develop a self-reliant and independent national
economy effectively controlled by Filipinos . . . (to) give preference to qualified
Filipinos (and to) promote the preferential use of Filipino labor, domestic
materials and locally produced goods."
Simply stated, does the Philippine Constitution prohibit Philippine participation
in worldwide trade liberalization and economic globalization? Does it proscribe
Philippine integration into a global economy that is liberalized, deregulated and
privatized? These are the main questions raised in this petition for certiorari,
prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for
the nullification, on constitutional grounds, of the concurrence of the Philippine
Senate in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization (WTO Agreement, for brevity) and
(2) for the prohibition of its implementation and enforcement through the
release and utilization of public funds, the assignment of public officials and
employees, as well as the use of government properties and resources by
respondent-heads of various executive offices concerned therewith. This
concurrence is embodied in Senate Resolution No. 97, dated December 14,
1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The
Department of Trade and Industry (Secretary Navarro, for brevity),
representing the Government of the Republic of the Philippines, signed in
Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay
Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act,2 Secretary Navarro on behalf of the Republic of the
Philippines, agreed:
(a) to submit, as appropriate, the WTO Agreement for the
consideration of their respective competent authorities, with a
view to seeking approval of the Agreement in accordance with
their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
On August 12, 1994, the members of the Philippine Senate received a letter
dated August 11, 1994 from the President of the Philippines, 3 stating among
others that "the Uruguay Round Final Act is hereby submitted to the Senate for
its concurrence pursuant to Section 21, Article VII of the Constitution."
On August 13, 1994, the members of the Philippine Senate received another
letter from the President of the Philippines 4 likewise dated August 11, 1994,
which stated among others that "the Uruguay Round Final Act, the Agreement
Establishing the World Trade Organization, the Ministerial Declarations and
Decisions, and the Understanding on Commitments in Financial Services are
hereby submitted to the Senate for its concurrence pursuant to Section 21,
Article VII of the Constitution."
On December 9, 1994, the President of the Philippines certified the necessity
of the immediate adoption of P.S. 1083, a resolution entitled "Concurring in the
Ratification of the Agreement Establishing the World Trade Organization."5
On December 14, 1994, the Philippine Senate adopted Resolution No. 97
which "Resolved, as it is hereby resolved, that the Senate concur, as it hereby
concurs, in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization." 6 The text of the WTO Agreement
is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round
of Multilateral Trade Negotiations and includes various agreements and
associated legal instruments (identified in the said Agreement as Annexes 1, 2
and 3 thereto and collectively referred to as Multilateral Trade Agreements, for
brevity) as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
 Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of he
General Agreement on Tariffs and Trade
1994
Agreement on Implementation of Article VII of the
General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating
Measures
Agreement on Safeguards
Annex 1B: General Agreement on Trade in Services and
Annexes
Annex 1C: Agreement on Trade-Related Aspects of Intellectual
Property Rights
ANNEX 2
Understanding on Rules and Procedures
Governing
the Settlement of Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed7 the Instrument
of Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS,
President of the Republic of the Philippines, after having seen
and considered the aforementioned Agreement Establishing
the World Trade Organization and the agreements and
associated legal instruments included in Annexes one (1), two
(2) and three (3) of that Agreement which are integral parts
thereof, signed at Marrakesh, Morocco on 15 April 1994, do
hereby ratify and confirm the same and every Article and
Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the Philippines
is composed of the Agreement Proper and "the associated legal instruments
included in Annexes one (1), two (2) and three (3) of that Agreement which are
integral parts thereof."
On the other hand, the Final Act signed by Secretary Navarro embodies not
only the WTO Agreement (and its integral annexes aforementioned) but also
(1) the Ministerial Declarations and Decisions and (2) the Understanding on
Commitments in Financial Services. In his Memorandum dated May 13,
1996,8 the Solicitor General describes these two latter documents as follows:
The Ministerial Decisions and Declarations are twenty-five
declarations and decisions on a wide range of matters, such as
measures in favor of least developed countries, notification
procedures, relationship of WTO with the International
Monetary Fund (IMF), and agreements on technical barriers to
trade and on dispute settlement.
The Understanding on Commitments in Financial Services
dwell on, among other things, standstill or limitations and
qualifications of commitments to existing non-conforming
measures, market access, national treatment, and definitions of
non-resident supplier of financial services, commercial
presence and new financial service.
On December 29, 1994, the present petition was filed. After careful
deliberation on respondents' comment and petitioners' reply thereto, the Court
resolved on December 12, 1995, to give due course to the petition, and the
parties thereafter filed their respective memoranda. The court also requested
the Honorable Lilia R. Bautista, the Philippine Ambassador to the United
Nations stationed in Geneva, Switzerland, to submit a paper, hereafter referred
to as "Bautista Paper,"9 for brevity, (1) providing a historical background of and
(2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
 (a) the petitioners to submit the (1) Senate Committee Report
on the matter in controversy and (2) the transcript of
proceedings/hearings in the Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1)
a list of Philippine treaties signed prior to the Philippine
adherence to the WTO Agreement, which derogate from
Philippine sovereignty and (2) copies of the multi-volume WTO
Agreement and other documents mentioned in the Final Act, as
soon as possible.
After receipt of the foregoing documents, the Court said it would consider the
case submitted for resolution. In a Compliance dated September 16, 1996, the
Solicitor General submitted a printed copy of the 36-volume Uruguay Round of
Multilateral Trade Negotiations, and in another Compliance dated October 24,
1996, he listed the various "bilateral or multilateral treaties or international
instruments involving derogation of Philippine sovereignty." Petitioners, on the
other hand, submitted their Compliance dated January 28, 1997, on January
30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the
issues as follows:
A. Whether the petition presents a political question or is
otherwise not justiciable.
B. Whether the petitioner members of the Senate who
participated in the deliberations and voting leading to the
concurrence are estopped from impugning the validity of the
Agreement Establishing the World Trade Organization or of the
validity of the concurrence.
C. Whether the provisions of the Agreement Establishing the
World Trade Organization contravene the provisions of Sec.
19, Article II, and Secs. 10 and 12, Article XII, all of the 1987
Philippine Constitution.
D. Whether provisions of the Agreement Establishing the World
Trade Organization unduly limit, restrict and impair Philippine
sovereignty specifically the legislative power which, under Sec.
2, Article VI, 1987 Philippine Constitution is "vested in the
Congress of the Philippines";
E. Whether provisions of the Agreement Establishing the World
Trade Organization interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate acted in
grave abuse of discretion amounting to lack or excess of
jurisdiction when they voted for concurrence in the ratification
of the constitutionally-infirm Agreement Establishing the World
Trade Organization.
G. Whether the respondent members of the Senate acted in
grave abuse of discretion amounting to lack or excess of
jurisdiction when they concurred only in the ratification of the
Agreement Establishing the World Trade Organization, and not
with the Presidential submission which included the Final Act,
Ministerial Declaration and Decisions, and the Understanding
on Commitments in Financial Services.
On the other hand, the Solicitor General as counsel for respondents
"synthesized the several issues raised by petitioners into the following": 10
1. Whether or not the provisions of the "Agreement
Establishing the World Trade Organization and the Agreements
and Associated Legal Instruments included in Annexes one (1),
two (2) and three (3) of that agreement" cited by petitioners
directly contravene or undermine the letter, spirit and intent of
Section 19, Article II and Sections 10 and 12, Article XII of the
1987 Constitution.
2. Whether or not certain provisions of the Agreement unduly
limit, restrict or impair the exercise of legislative power by
Congress.
3. Whether or not certain provisions of the Agreement impair
the exercise of judicial power by this Honorable Court in
promulgating the rules of evidence.
4. Whether or not the concurrence of the Senate "in the
ratification by the President of the Philippines of the Agreement
 establishing the World Trade Organization" implied rejection of
the treaty embodied in the Final Act.
By raising and arguing only four issues against the seven presented by
petitioners, the Solicitor General has effectively ignored three, namely: (1)
whether the petition presents a political question or is otherwise not justiciable;
(2) whether petitioner-members of the Senate (Wigberto E. Tañada and Anna
Dominique Coseteng) are estopped from joining this suit; and (3) whether the
respondent-members of the Senate acted in grave abuse of discretion when
they voted for concurrence in the ratification of the WTO Agreement. The
foregoing notwithstanding, this Court resolved to deal with these three issues
thus:
(1) The "political question" issue — being very fundamental and vital, and
being a matter that probes into the very jurisdiction of this Court to hear and
decide this case — was deliberated upon by the Court and will thus be ruled
upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense is
waivable and the respondents have effectively waived it by not pursuing it in
any of their pleadings; in any event, this issue, even if ruled in respondents'
favor, will not cause the petition's dismissal as there are petitioners other than
the two senators, who are not vulnerable to the defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the
respondent senators will be taken up as an integral part of the disposition of
the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents did
not question the locus standi of petitioners. Hence, they are also deemed to
have waived the benefit of such issue. They probably realized that grave
constitutional issues, expenditures of public funds and serious international
commitments of the nation are involved here, and that transcendental public
interest requires that the substantive issues be met head on and decided on
the merits, rather than skirted or deflected by procedural matters. 11
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE
CONTROVERSY? OTHERWISE STATED, DOES THE
PETITION INVOLVE A POLITICAL QUESTION OVER WHICH
THIS COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND
ITS THREE ANNEXES CONTRAVENE SEC. 19, ARTICLE II,
AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE
CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS
ANNEXES LIMIT, RESTRICT, OR IMPAIR THE EXERCISE
OF LEGISLATIVE POWER BY CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE
WITH THE EXERCISE OF JUDICIAL POWER BY THIS
COURT IN PROMULGATING RULES ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE
WTO AGREEMENT AND ITS ANNEXES SUFFICIENT
AND/OR VALID, CONSIDERING THAT IT DID NOT INCLUDE
THE FINAL ACT, MINISTERIAL DECLARATIONS AND
DECISIONS, AND THE UNDERSTANDING ON
COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court
Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it
contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to
have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. "The question thus posed is judicial
rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld." 12 Once a "controversy as to the
application or interpretation of a constitutional provision is raised before this
Court (as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide." 13
The jurisdiction of this Court to adjudicate the matters 14
raised in the petition is
clearly set out in the 1987 Constitution, 15 as follows:
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack
 or excess of jurisdiction on the part of any branch or
instrumentality of the government.
The foregoing text emphasizes the judicial department's duty and power to
strike down grave abuse of discretion on the part of any branch or
instrumentality of government including Congress. It is an innovation in our
political law. 16 As explained by former Chief Justice Roberto
Concepcion, 17 "the judiciary is the final arbiter on the question of whether or
not a branch of government or any of its officials has acted without jurisdiction
or in excess of jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only a judicial power
but a duty to pass judgment on matters of this nature."
Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution
mandating "economic nationalism" are violated by the so-called "parity
provisions" and "national treatment" clauses scattered in various parts not only
of the WTO Agreement and its annexes but also in the Ministerial Decisions
and Declarations and in the Understanding on Commitments in Financial
Services.
Specifically, the "flagship" constitutional provisions referred to are Sec 19,
Article II, and Secs. 10 and 12, Article XII, of the Constitution, which are
worded as follows:
Article II

As this Court has repeatedly and firmly emphasized in many cases, 18 it will not DECLARATION OF PRINCIPLES
shirk, digress from or abandon its sacred duty and authority to uphold the AND STATE POLICIES
Constitution in matters that involve grave abuse of discretion brought before it
in appropriate cases, committed by any officer, agency, instrumentality or xxx xxx xxx
department of the government.
Sec. 19. The State shall develop a self-reliant and independent
As the petition alleges grave abuse of discretion and as there is no other plain, national economy effectively controlled by Filipinos.
speedy or adequate remedy in the ordinary course of law, we have no
hesitation at all in holding that this petition should be given due course and the
xxx xxx xxx
vital questions raised therein ruled upon under Rule 65 of the Rules of Court.
Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise
constitutional issues and to review and/or prohibit/nullify, when proper, acts of Article XII
legislative and executive officials. On this, we have no equivocation.
NATIONAL ECONOMY AND PATRIMONY
We should stress that, in deciding to take jurisdiction over this petition, this
Court will not review the wisdom of the decision of the President and the xxx xxx xxx
Senate in enlisting the country into the WTO, or pass upon the merits of trade
liberalization as a policy espoused by said international body. Neither will it Sec. 10. . . . The Congress shall enact measures that will
rule on the propriety of the government's economic policy of reducing/removing encourage the formation and operation of enterprises whose
tariffs, taxes, subsidies, quantitative restrictions, and other import/trade capital is wholly owned by Filipinos.
barriers. Rather, it will only exercise its constitutional duty "to determine
whether or not there had been a grave abuse of discretion amounting to lack In the grant of rights, privileges, and concessions covering the
or excess of jurisdiction" on the part of the Senate in ratifying the WTO national economy and patrimony, the State shall give
Agreement and its three annexes. preference to qualified Filipinos.

Second Issue: The WTO Agreement xxx xxx xxx

and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.
 Sec. 12. The State shall promote the preferential use of Filipino
labor, domestic materials and locally produced goods, and
adopt measures that help make them competitive.
Petitioners aver that these sacred constitutional principles are desecrated by
the following WTO provisions quoted in their memorandum: 19
a) In the area of investment measures related to trade in goods
(TRIMS, for brevity):
Article 2
National Treatment and Quantitative Restrictions.
1. Without prejudice to other rights and
obligations under GATT 1994, no Member shall
apply any TRIM that is inconsistent with the
provisions of Article II or Article XI of GATT
1994.
2. An illustrative list of TRIMS that are
inconsistent with the obligations of general
elimination of quantitative restrictions provided
for in paragraph I of Article XI of GATT 1994 is
contained in the Annex to this Agreement."
(Agreement on Trade-Related Investment
Measures, Vol. 27, Uruguay Round, Legal
Instruments, p. 22121, emphasis supplied).
The Annex referred to reads as follows:
ANNEX
Illustrative List
1. TRIMS that are inconsistent with the obligation of national
treatment provided for in paragraph 4 of Article III of GATT
1994 include those which are mandatory or enforceable under
domestic law or under administrative rulings, or compliance
with which is necessary to obtain an advantage, and which
require:
(a) the purchase or use by an enterprise of
products of domestic origin or from any
domestic source, whether specified in terms of
particular products, in terms of volume or value
of products, or in terms of proportion of volume
or value of its local production; or
(b) that an enterprise's purchases or use of
imported products be limited to an amount
related to the volume or value of local products
that it exports.
2. TRIMS that are inconsistent with the obligations of general
elimination of quantitative restrictions provided for in paragraph
1 of Article XI of GATT 1994 include those which are
mandatory or enforceable under domestic laws or under
administrative rulings, or compliance with which is necessary to
obtain an advantage, and which restrict:
(a) the importation by an enterprise of products
used in or related to the local production that it
exports;
(b) the importation by an enterprise of products
used in or related to its local production by
restricting its access to foreign exchange
inflows attributable to the enterprise; or
(c) the exportation or sale for export specified in
terms of particular products, in terms of volume
or value of products, or in terms of a
preparation of volume or value of its local
production. (Annex to the Agreement on Trade-
Related Investment Measures, Vol. 27,
Uruguay Round Legal Documents, p. 22125,
emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is
quoted as follows:
The products of the territory of any contracting
party imported into the territory of any other
 contracting party shall be accorded treatment
no less favorable than that accorded to like
products of national origin in respect of laws,
regulations and requirements affecting their
internal sale, offering for sale, purchase,
transportation, distribution or use, the
provisions of this paragraph shall not prevent
the application of differential internal
transportation charges which are based
exclusively on the economic operation of the
means of transport and not on the nationality of
the product." (Article III, GATT 1947, as
amended by the Protocol Modifying Part II, and
Article XXVI of GATT, 14 September 1948, 62
UMTS 82-84 in relation to paragraph 1(a) of the
General Agreement on Tariffs and Trade 1994,
Vol. 1, Uruguay Round, Legal Instruments p.
177, emphasis supplied).
(b) In the area of trade related aspects of intellectual property
rights (TRIPS, for brevity):
Each Member shall accord to the nationals of
other Members treatment no less favourable
than that it accords to its own nationals with
regard to the protection of intellectual property.
. . (par. 1 Article 3, Agreement on Trade-
Related Aspect of Intellectual Property rights,
Vol. 31, Uruguay Round, Legal Instruments, p.
25432 (emphasis supplied)
(c) In the area of the General Agreement on Trade in Services:
National Treatment
1. In the sectors inscribed in its schedule, and
subject to any conditions and qualifications set
out therein, each Member shall accord to
services and service suppliers of any other
Member, in respect of all measures affecting
the supply of services, treatment no less
favourable than it accords to its own like
services and service suppliers.
2. A Member may meet the requirement of
paragraph I by according to services and
service suppliers of any other Member, either
formally suppliers of any other Member, either
formally identical treatment or formally different
treatment to that it accords to its own like
services and service suppliers.
3. Formally identical or formally different
treatment shall be considered to be less
favourable if it modifies the conditions of
completion in favour of services or service
suppliers of the Member compared to like
services or service suppliers of any other
Member. (Article XVII, General Agreement on
Trade in Services, Vol. 28, Uruguay Round
Legal Instruments, p. 22610 emphasis
supplied).
It is petitioners' position that the foregoing "national treatment" and "parity
provisions" of the WTO Agreement "place nationals and products of member
countries on the same footing as Filipinos and local products," in contravention
of the "Filipino First" policy of the Constitution. They allegedly render
meaningless the phrase "effectively controlled by Filipinos." The constitutional
conflict becomes more manifest when viewed in the context of the clear duty
imposed on the Philippines as a WTO member to ensure the conformity of its
laws, regulations and administrative procedures with its obligations as
provided in the annexed agreements. 20 Petitioners further argue that these
provisions contravene constitutional limitations on the role exports play in
national development and negate the preferential treatment accorded to
Filipino labor, domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that
such Charter provisions are not self-executing and merely set out general
policies; (2) that these nationalistic portions of the Constitution invoked by
petitioners should not be read in isolation but should be related to other
relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read
properly, the cited WTO clauses do not conflict with Constitution; and (4) that
the WTO Agreement contains sufficient provisions to protect developing
countries like the Philippines from the harshness of sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles
Not Self-Executing
By its very title, Article II of the Constitution is a "declaration of principles and
state policies." The counterpart of this article in the 1935 Constitution 21 is
called the "basic political creed of the nation" by Dean Vicente Sinco. 22 These
principles in Article II are not intended to be self-executing principles ready for
enforcement through the courts. 23 They are used by the judiciary as aids or as
guides in the exercise of its power of judicial review, and by the legislature in
its enactment of laws. As held in the leading case of Kilosbayan, Incorporated
vs. Morato, 24 the principles and state policies enumerated in Article II and
some sections of Article XII are not "self-executing provisions, the disregard of
which can give rise to a cause of action in the courts. They do not embody
judicially enforceable constitutional rights but guidelines for legislation."
In the same light, we held in Basco vs. Pagcor 25 that broad constitutional
principles need legislative enactments to implement the, thus:
On petitioners' allegation that P.D. 1869 violates Sections 11
(Personal Dignity) 12 (Family) and 13 (Role of Youth) of Article
II; Section 13 (Social Justice) of Article XIII and Section 2
(Educational Values) of Article XIV of the 1987 Constitution,
suffice it to state also that these are merely statements of
principles and policies. As such, they are basically not self-
executing, meaning a law should be passed by Congress to
clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were
not intended to be self-executing principles
ready for enforcement through the courts. They
were rather directives addressed to the
executive and to the legislature. If the executive
and the legislature failed to heed the directives
of the article, the available remedy was not
judicial but political. The electorate could
express their displeasure with the failure of the
executive and the legislature through the
language of the ballot. (Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement of board
constitutional principles are sourced from basic considerations of due process
and the lack of judicial authority to wade "into the uncharted ocean of social
and economic policy making." Mr. Justice Florentino P. Feliciano in his
concurring opinion in Oposa vs. Factoran, Jr., 26 explained these reasons as
follows:
My suggestion is simply that petitioners must, before the trial
court, show a more specific legal right — a right cast in
language of a significantly lower order of generality than Article
II (15) of the Constitution — that is or may be violated by the
actions, or failures to act, imputed to the public respondent by
petitioners so that the trial court can validly render judgment
grating all or part of the relief prayed for. To my mind, the court
should be understood as simply saying that such a more
specific legal right or rights may well exist in our corpus of law,
considering the general policy principles found in the
Constitution and the existence of the Philippine Environment
Code, and that the trial court should have given petitioners an
effective opportunity so to demonstrate, instead of aborting the
proceedings on a motion to dismiss.
It seems to me important that the legal right which is an
essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory
policy, for at least two (2) reasons. One is that unless the legal
right claimed to have been violated or disregarded is given
specification in operational terms, defendants may well be
unable to defend themselves intelligently and effectively; in
other words, there are due process dimensions to this matter.
The second is a broader-gauge consideration — where a
specific violation of law or applicable regulation is not alleged
or proved, petitioners can be expected to fall back on the
expanded conception of judicial power in the second paragraph
of Section 1 of Article VIII of the Constitution which reads:
Sec. 1. . . .
 Judicial power includes the duty of the courts of
justice to settle actual controversies involving
rights which are legally demandable and
enforceable, and to determine whether or not
there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the
Government. (Emphasis supplied)
When substantive standards as general as "the right to a
balanced and healthy ecology" and "the right to health" are
combined with remedial standards as broad ranging as "a
grave abuse of discretion amounting to lack or excess of
jurisdiction," the result will be, it is respectfully submitted, to
propel courts into the uncharted ocean of social and economic
policy making. At least in respect of the vast area of
environmental protection and management, our courts have no
claim to special technical competence and experience and
professional qualification. Where no specific, operable norms
and standards are shown to exist, then the policy making
departments — the legislative and executive departments —
must be given a real and effective opportunity to fashion and
promulgate those norms and standards, and to implement
them before the courts should intervene.
Economic Nationalism Should Be Read with
Other Constitutional Mandates to Attain
Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying
down general principles relating to the national economy and patrimony,
should be read and understood in relation to the other sections in said article,
especially Secs. 1 and 13 thereof which read:
Sec. 1. The goals of the national economy are a more
equitable distribution of opportunities, income, and wealth; a
sustained increase in the amount of goods and services
produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of life for
all especially the underprivileged.
The State shall promote industrialization and full employment
based on sound agricultural development and agrarian reform,
through industries that make full and efficient use of human
and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect
Filipino enterprises against unfair foreign competition and trade
practices.
In the pursuit of these goals, all sectors of the economy and all
regions of the country shall be given optimum opportunity to
develop. . . .
xxx xxx xxx
Sec. 13. The State shall pursue a trade policy that serves the
general welfare and utilizes all forms and arrangements of
exchange on the basis of equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of
national economic development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the
nation for the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all
especially the underprivileged.
With these goals in context, the Constitution then ordains the ideals of
economic nationalism (1) by expressing preference in favor of qualified
Filipinos "in the grant of rights, privileges and concessions covering the
national economy and patrimony" 27 and in the use of "Filipino labor, domestic
materials and locally-produced goods"; (2) by mandating the State to "adopt
measures that help make them competitive; 28 and (3) by requiring the State to
"develop a self-reliant and independent national economy effectively controlled
by Filipinos." 29 In similar language, the Constitution takes into account the
realities of the outside world as it requires the pursuit of "a trade policy that
serves the general welfare and utilizes all forms and arrangements of
exchange on the basis of equality ad reciprocity"; 30 and speaks of industries
"which are competitive in both domestic and foreign markets" as well as of the
protection of "Filipino enterprises against unfair foreign competition and trade
practices."
It is true that in the recent case of Manila Prince Hotel vs. Government Service
Insurance System, et al., 31 this Court held that "Sec. 10, second par., Art. XII
of the 1987 Constitution is a mandatory, positive command which is complete
in itself and which needs no further guidelines or implementing laws or rule for
its enforcement. From its very words the provision does not require any
legislation to put it in operation. It is per se judicially enforceable." However, as
the constitutional provision itself states, it is enforceable only in regard to "the
grants of rights, privileges and concessions covering national economy and
patrimony" and not to every aspect of trade and commerce. It refers to
exceptions rather than the rule. The issue here is not whether this paragraph
of Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a
rule, there are enough balancing provisions in the Constitution to allow the
Senate to ratify the Philippine concurrence in the WTO Agreement. And we
hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino
goods, services, labor and enterprises, at the same time, it recognizes the
need for business exchange with the rest of the world on the bases of equality
and reciprocity and limits protection of Filipino enterprises only against foreign
competition and trade practices that are unfair. 32 In other words, the
Constitution did not intend to pursue an isolationist policy. It did not shut out
foreign investments, goods and services in the development of the Philippine
economy. While the Constitution does not encourage the unlimited entry of
foreign goods, services and investments into the country, it does not prohibit
them either. In fact, it allows an exchange on the basis of equality and
reciprocity, frowning only on foreign competition that is unfair.
WTO Recognizes Need to
Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some built-
in advantages to protect weak and developing economies, which comprise the
vast majority of its members. Unlike in the UN where major states have
permanent seats and veto powers in the Security Council, in the WTO,
decisions are made on the basis of sovereign equality, with each member's
vote equal in weight to that of any other. There is no WTO equivalent of the
UN Security Council.
WTO decides by consensus whenever possible, otherwise,
decisions of the Ministerial Conference and the General
Council shall be taken by the majority of the votes cast, except
in cases of interpretation of the Agreement or waiver of the
obligation of a member which would require three fourths vote.
Amendments would require two thirds vote in general.
Amendments to MFN provisions and the Amendments
provision will require assent of all members. Any member may
withdraw from the Agreement upon the expiration of six months
from the date of notice of withdrawals. 33
Hence, poor countries can protect their common interests more effectively
through the WTO than through one-on-one negotiations with developed
countries. Within the WTO, developing countries can form powerful blocs to
push their economic agenda more decisively than outside the Organization.
This is not merely a matter of practical alliances but a negotiating strategy
rooted in law. Thus, the basic principles underlying the WTO Agreement
recognize the need of developing countries like the Philippines to "share in the
growth in international trade commensurate with the needs of their economic
development." These basic principles are found in the preamble 34 of the WTO
Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade and
economic endeavour should be conducted with a view to
raising standards of living, ensuring full employment and a
large and steadily growing volume of real income and effective
demand, and expanding the production of and trade in goods
and services, while allowing for the optimal use of the world's
resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the
environment and to enhance the means for doing so in a
manner consistent with their respective needs and concerns at
different levels of economic development,
Recognizing further that there is need for positive efforts
designed to ensure that developing countries, and especially
the least developed among them, secure a share in the growth
in international trade commensurate with the needs of their
economic development,
 Being desirous of contributing to these objectives by entering
into reciprocal and mutually advantageous arrangements
directed to the substantial reduction of tariffs and other barriers
to trade and to the elimination of discriminatory treatment in
international trade relations,
Resolved, therefore, to develop an integrated, more viable and
durable multilateral trading system encompassing the General
Agreement on Tariffs and Trade, the results of past trade
liberalization efforts, and all of the results of the Uruguay
Round of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the
objectives underlying this multilateral trading system, . . .
(emphasis supplied.)
Specific WTO Provisos
Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent with the
foregoing basic principles, the WTO Agreement grants developing countries a
more lenient treatment, giving their domestic industries some protection from
the rush of foreign competition. Thus, with respect to tariffs in general,
preferential treatment is given to developing countries in terms of the amount
of tariff reduction and the period within which the reduction is to be spread out.
Specifically, GATT requires an average tariff reduction rate of 36% for
developed countries to be effected within a period of six (6) years while
developing countries — including the Philippines — are required to effect an
average tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce
domestic support to agricultural products by 20% over six (6) years, as
compared to only 13% for developing countries to be effected within ten (10)
years.
In regard to export subsidy for agricultural products, GATT requires developed
countries to reduce their budgetary outlays for export subsidy by 36% and
export volumes receiving export subsidy by 21% within a period of six (6)
years. For developing countries, however, the reduction rate is only two-
thirds of that prescribed for developed countries and a longer period of ten (10)
years within which to effect such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign
competition and trade practices including anti-dumping measures,
countervailing measures and safeguards against import surges. Where local
businesses are jeopardized by unfair foreign competition, the Philippines can
avail of these measures. There is hardly therefore any basis for the statement
that under the WTO, local industries and enterprises will all be wiped out and
that Filipinos will be deprived of control of the economy. Quite the contrary, the
weaker situations of developing nations like the Philippines have been taken
into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a
bold decision to steer the ship of state into the yet uncharted sea of economic
liberalization. But such decision cannot be set aside on the ground of grave
abuse of discretion, simply because we disagree with it or simply because we
believe only in other economic policies. As earlier stated, the Court in taking
jurisdiction of this case will not pass upon the advantages and disadvantages
of trade liberalization as an economic policy. It will only perform its
constitutional duty of determining whether the Senate committed grave abuse
of discretion.
Constitution Does Not
Rule Out Foreign Competition
Furthermore, the constitutional policy of a "self-reliant and independent
national economy" 35 does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither "economic seclusion"
nor "mendicancy in the international community." As explained by
Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional
policy:
Economic self-reliance is a primary objective of a developing
country that is keenly aware of overdependence on external
assistance for even its most basic needs. It does not mean
autarky or economic seclusion; rather, it means avoiding
mendicancy in the international community. Independence
refers to the freedom from undue foreign control of the national
economy, especially in such strategic industries as in the
development of natural resources and public utilities. 36
The WTO reliance on "most favored nation," "national treatment," and "trade
without discrimination" cannot be struck down as unconstitutional as in fact
they are rules of equality and reciprocity that apply to all WTO members. Aside
from envisioning a trade policy based on "equality and reciprocity," 37 the
fundamental law encourages industries that are "competitive in both domestic
and foreign markets," thereby demonstrating a clear policy against a sheltered
domestic trade environment, but one in favor of the gradual development of
robust industries that can compete with the best in the foreign markets.
Indeed, Filipino managers and Filipino enterprises have shown capability and
tenacity to compete internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong have demonstrated the
Filipino capacity to grow and to prosper against the best offered under a policy
of laissez faire.
Constitution Favors Consumers,
Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any
business or enterprise, nor does it contain any specific pronouncement that
Filipino companies should be pampered with a total proscription of foreign
competition. On the other hand, respondents claim that WTO/GATT aims to
make available to the Filipino consumer the best goods and services
obtainable anywhere in the world at the most reasonable prices.
Consequently, the question boils down to whether WTO/GATT will favor the
general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general
welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos' general welfare because it
will — as promised by its promoters — expand the country's exports and
generate more employment?
Will it bring more prosperity, employment, purchasing power and quality
products at the most reasonable rates to the Filipino public?
The responses to these questions involve "judgment calls" by our policy
makers, for which they are answerable to our people during appropriate
electoral exercises. Such questions and the answers thereto are not subject to
judicial pronouncements based on grave abuse of discretion.
Constitution Designed to Meet
Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution
was drafted and ratified in 1987. That does not mean however that the Charter
is necessarily flawed in the sense that its framers might not have anticipated
the advent of a borderless world of business. By the same token, the United
Nations was not yet in existence when the 1935 Constitution became effective.
Did that necessarily mean that the then Constitution might not have
contemplated a diminution of the absoluteness of sovereignty when the
Philippines signed the UN Charter, thereby effectively surrendering part of its
control over its foreign relations to the decisions of various UN organs like the
Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not
only the vagaries of contemporary events. They should be interpreted to cover
even future and unknown circumstances. It is to the credit of its drafters that a
Constitution can withstand the assaults of bigots and infidels but at the same
time bend with the refreshing winds of change necessitated by unfolding
events. As one eminent political law writer and respected jurist 38 explains:
The Constitution must be quintessential rather than superficial,
the root and not the blossom, the base and frame-work only of
the edifice that is yet to rise. It is but the core of the dream that
must take shape, not in a twinkling by mandate of our
delegates, but slowly "in the crucible of Filipino minds and
hearts," where it will in time develop its sinews and gradually
gather its strength and finally achieve its substance. In fine, the
Constitution cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention, nor can it
conjure by mere fiat an instant Utopia. It must grow with the
society it seeks to re-structure and march apace with the
progress of the race, drawing from the vicissitudes of history
the dynamism and vitality that will keep it, far from becoming a
petrified rule, a pulsing, living law attuned to the heartbeat of
the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that "(e)ach Member shall ensure the
conformity of its laws, regulations and administrative procedures with its
obligations as provided in the annexed Agreements." 39 Petitioners maintain
that this undertaking "unduly limits, restricts and impairs Philippine sovereignty,
specifically the legislative power which under Sec. 2, Article VI of the 1987
Philippine Constitution is vested in the Congress of the Philippines. It is an
assault on the sovereign powers of the Philippines because this means that
Congress could not pass legislation that will be good for our national interest
and general welfare if such legislation will not conform with the WTO
Agreement, which not only relates to the trade in goods . . . but also to the flow
of investments and money . . . as well as to a whole slew of agreements on
socio-cultural matters . . . 40
More specifically, petitioners claim that said WTO proviso derogates from the
power to tax, which is lodged in the Congress. 41 And while the Constitution
allows Congress to authorize the President to fix tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts, such
authority is subject to "specified limits and . . . such limitations and restrictions"
as Congress may provide, 42 as in fact it did under Sec. 401 of the Tariff and
Customs Code.
Sovereignty Limited by
International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners
stressed their arguments on this issue. However, while sovereignty has
traditionally been deemed absolute and all-encompassing on the domestic
level, it is however subject to restrictions and limitations voluntarily agreed to
by the Philippines, expressly or impliedly, as a member of the family of nations.
Unquestionably, the Constitution did not envision a hermit-type isolation of the
country from the rest of the world. In its Declaration of Principles and State
Policies, the Constitution "adopts the generally accepted principles of
international law as part of the law of the land, and adheres to the policy of
peace, equality, justice, freedom, cooperation and amity, with all nations." 43 By
the doctrine of incorporation, the country is bound by generally accepted
principles of international law, which are considered to be automatically part of
our own laws. 44 One of the oldest and most fundamental rules in international
law is pacta sunt servanda — international agreements must be performed in
good faith. "A treaty engagement is not a mere moral obligation but creates a
legally binding obligation on the parties . . . A state which has contracted valid
international obligations is bound to make in its legislations such modifications
as may be necessary to ensure the fulfillment of the obligations undertaken." 45
By their inherent nature, treaties really limit or restrict the absoluteness of
sovereignty. By their voluntary act, nations may surrender some aspects of
their state power in exchange for greater benefits granted by or derived from a
convention or pact. After all, states, like individuals, live with coequals, and in
pursuit of mutually covenanted objectives and benefits, they also commonly
agree to limit the exercise of their otherwise absolute rights. Thus, treaties
have been used to record agreements between States concerning such widely
diverse matters as, for example, the lease of naval bases, the sale or cession
of territory, the termination of war, the regulation of conduct of hostilities, the
formation of alliances, the regulation of commercial relations, the settling of
claims, the laying down of rules governing conduct in peace and the
establishment of international organizations. 46 The sovereignty of a state
therefore cannot in fact and in reality be considered absolute. Certain
restrictions enter into the picture: (1) limitations imposed by the very nature of
membership in the family of nations and (2) limitations imposed by treaty
stipulations. As aptly put by John F. Kennedy, "Today, no nation can build its
destiny alone. The age of self-sufficient nationalism is over. The age of
interdependence is here." 47
UN Charter and Other Treaties
Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter
members, it consented to restrict its sovereign rights under the "concept of
sovereignty as auto-limitation."47-A Under Article 2 of the UN Charter, "(a)ll
members shall give the United Nations every assistance in any action it takes
in accordance with the present Charter, and shall refrain from giving
assistance to any state against which the United Nations is taking preventive
or enforcement action." Such assistance includes payment of its corresponding
share not merely in administrative expenses but also in expenditures for the
peace-keeping operations of the organization. In its advisory opinion of July
20, 1961, the International Court of Justice held that money used by the United
Nations Emergency Force in the Middle East and in the Congo were
"expenses of the United Nations" under Article 17, paragraph 2, of the UN
Charter. Hence, all its members must bear their corresponding share in such
expenses. In this sense, the Philippine Congress is restricted in its power to
appropriate. It is compelled to appropriate funds whether it agrees with such
peace-keeping expenses or not. So too, under Article 105 of the said Charter,
the UN and its representatives enjoy diplomatic privileges and immunities,
thereby limiting again the exercise of sovereignty of members within their own
territory. Another example: although "sovereign equality" and "domestic
jurisdiction" of all members are set forth as underlying principles in the UN
Charter, such provisos are however subject to enforcement measures decided
by the Security Council for the maintenance of international peace and security
under Chapter VII of the Charter. A final example: under Article 103, "(i)n the
event of a conflict between the obligations of the Members of the United
Nations under the present Charter and their obligations under any other
international agreement, their obligation under the present charter shall
prevail," thus unquestionably denying the Philippines — as a member — the
sovereign power to make a choice as to which of conflicting obligations, if any,
to honor.
Apart from the UN Treaty, the Philippines has entered into many other
international pacts — both bilateral and multilateral — that involve limitations
on Philippine sovereignty. These are enumerated by the Solicitor General in
his Compliance dated October 24, 1996, as follows:
(a) Bilateral convention with the United States regarding taxes
on income, where the Philippines agreed, among others, to
exempt from tax, income received in the Philippines by, among
others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private
Investment Corporation of the United States. Likewise, in said
convention, wages, salaries and similar remunerations paid by
the United States to its citizens for labor and personal services
performed by them as employees or officials of the United
States are exempt from income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among others,
for the avoidance of double taxation with respect to taxes on
income.
(c) Bilateral convention with the Kingdom of Sweden for the
avoidance of double taxation.
(d) Bilateral convention with the French Republic for the
avoidance of double taxation.
(e) Bilateral air transport agreement with Korea where the
Philippines agreed to exempt from all customs duties,
inspection fees and other duties or taxes aircrafts of South
Korea and the regular equipment, spare parts and supplies
arriving with said aircrafts.
(f) Bilateral air service agreement with Japan, where the
Philippines agreed to exempt from customs duties, excise
taxes, inspection fees and other similar duties, taxes or
charges fuel, lubricating oils, spare parts, regular equipment,
stores on board Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the
Philippines granted Belgian air carriers the same privileges as
those granted to Japanese and Korean air carriers under
separate air service agreements.
(h) Bilateral notes with Israel for the abolition of transit and
visitor visas where the Philippines exempted Israeli nationals
from the requirement of obtaining transit or visitor visas for a
sojourn in the Philippines not exceeding 59 days.
(i) Bilateral agreement with France exempting French nationals
from the requirement of obtaining transit and visitor visa for a
sojourn not exceeding 59 days.
(j) Multilateral Convention on Special Missions, where the
Philippines agreed that premises of Special Missions in the
Philippines are inviolable and its agents can not enter said
premises without consent of the Head of Mission concerned.
Special Missions are also exempted from customs duties,
taxes and related charges.
(k) Multilateral convention on the Law of Treaties. In this
convention, the Philippines agreed to be governed by the
Vienna Convention on the Law of Treaties.
(l) Declaration of the President of the Philippines accepting
compulsory jurisdiction of the International Court of Justice.
The International Court of Justice has jurisdiction in all legal
disputes concerning the interpretation of a treaty, any question
of international law, the existence of any fact which, if
established, would constitute a breach "of international
obligation."
In the foregoing treaties, the Philippines has effectively agreed to limit the
exercise of its sovereign powers of taxation, eminent domain and police power.
The underlying consideration in this partial surrender of sovereignty is the
reciprocal commitment of the other contracting states in granting the same
privilege and immunities to the Philippines, its officials and its citizens. The
same reciprocity characterizes the Philippine commitments under WTO-GATT.
International treaties, whether relating to nuclear disarmament,
human rights, the environment, the law of the sea, or trade,
 constrain domestic political sovereignty through the assumption
of external obligations. But unless anarchy in international
relations is preferred as an alternative, in most cases we
accept that the benefits of the reciprocal obligations involved
outweigh the costs associated with any loss of political
sovereignty. (T)rade treaties that structure relations by
reference to durable, well-defined substantive norms and
objective dispute resolution procedures reduce the risks of
larger countries exploiting raw economic power to bully smaller
countries, by subjecting power relations to some form of legal
ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the
simple fact that liberalization will provide access to a larger set
of potential new trading relationship than in case of the larger
country gaining enhanced success to the smaller country's
market. 48
The point is that, as shown by the foregoing treaties, a portion of sovereignty
may be waived without violating the Constitution, based on the rationale that
the Philippines "adopts the generally accepted principles of international law as
part of the law of the land and adheres to the policy of . . . cooperation and
amity with all nations."
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and
Basic Principles of the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) 49 intrudes on the power of the Supreme Court to
promulgate rules concerning pleading, practice and procedures. 50
To understand the scope and meaning of Article 34, TRIPS, 51
it will be fruitful
to restate its full text as follows:
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the
infringement of the rights of the owner referred to in paragraph
1 (b) of Article 28, if the subject matter of a patent is a process
for obtaining a product, the judicial authorities shall have the
authority to order the defendant to prove that the process to
obtain an identical product is different from the patented
process. Therefore, Members shall provide, in at least one of
the following circumstances, that any identical product when
produced without the consent of the patent owner shall, in the
absence of proof to the contrary, be deemed to have been
obtained by the patented process:
(a) if the product obtained by the patented
process is new;
(b) if there is a substantial likelihood that the
identical product was made by the process and
the owner of the patent has been unable
through reasonable efforts to determine the
process actually used.
2. Any Member shall be free to provide that the burden of proof
indicated in paragraph 1 shall be on the alleged infringer only if
the condition referred to in subparagraph (a) is fulfilled or only if
the condition referred to in subparagraph (b) is fulfilled.
3. In the adduction of proof to the contrary, the legitimate
interests of defendants in protecting their manufacturing and
business secrets shall be taken into account.
From the above, a WTO Member is required to provide a rule of disputable
(not the words "in the absence of proof to the contrary") presumption that a
product shown to be identical to one produced with the use of a patented
process shall be deemed to have been obtained by the (illegal) use of the said
patented process, (1) where such product obtained by the patented product is
new, or (2) where there is "substantial likelihood" that the identical product was
made with the use of the said patented process but the owner of the patent
could not determine the exact process used in obtaining such identical
product. Hence, the "burden of proof" contemplated by Article 34 should
actually be understood as the duty of the alleged patent infringer to overthrow
such presumption. Such burden, properly understood, actually refers to the
"burden of evidence" (burden of going forward) placed on the producer of the
identical (or fake) product to show that his product was produced without the
use of the patented process.
The foregoing notwithstanding, the patent owner still has the "burden of proof"
since, regardless of the presumption provided under paragraph 1 of Article 34,
such owner still has to introduce evidence of the existence of the alleged
identical product, the fact that it is "identical" to the genuine one produced by
the patented process and the fact of "newness" of the genuine product or the
fact of "substantial likelihood" that the identical product was made by the
patented process.
The foregoing should really present no problem in changing the rules of
evidence as the present law on the subject, Republic Act No. 165, as
amended, otherwise known as the Patent Law, provides a similar presumption
in cases of infringement of patented design or utility model, thus:
Sec. 60. Infringement. — Infringement of a design patent or of
a patent for utility model shall consist in unauthorized copying
of the patented design or utility model for the purpose of trade
or industry in the article or product and in the making, using or
selling of the article or product copying the patented design or
utility model. Identity or substantial identity with the patented
design or utility model shall constitute evidence of copying.
(emphasis supplied)
Moreover, it should be noted that the requirement of Article 34 to provide a
disputable presumption applies only if (1) the product obtained by the patented
process in NEW or (2) there is a substantial likelihood that the identical product
was made by the process and the process owner has not been able through
reasonable effort to determine the process used. Where either of these two
provisos does not obtain, members shall be free to determine the appropriate
method of implementing the provisions of TRIPS within their own internal
systems and processes.
By and large, the arguments adduced in connection with our disposition of the
third issue — derogation of legislative power — will apply to this fourth issue
also. Suffice it to say that the reciprocity clause more than justifies such
intrusion, if any actually exists. Besides, Article 34 does not contain an
unreasonable burden, consistent as it is with due process and the concept of
adversarial dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on
patents, trademarks and copyrights, the adjustment in legislation and rules of
procedure will not be substantial. 52
Fifth Issue: Concurrence Only in the WTO Agreement and
Not in Other Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and its
annexes — but not in the other documents referred to in the Final Act, namely
the Ministerial Declaration and Decisions and the Understanding on
Commitments in Financial Services — is defective and insufficient and thus
constitutes abuse of discretion. They submit that such concurrence in the WTO
Agreement alone is flawed because it is in effect a rejection of the Final Act,
which in turn was the document signed by Secretary Navarro, in
representation of the Republic upon authority of the President. They contend
that the second letter of the President to the Senate 53 which enumerated what
constitutes the Final Act should have been the subject of concurrence of the
Senate.
"A final act, sometimes called protocol de cloture, is an instrument which
records the winding up of the proceedings of a diplomatic conference and
usually includes a reproduction of the texts of treaties, conventions,
recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference." 54 It is not the treaty itself. It is
rather a summary of the proceedings of a protracted conference which may
have taken place over several years. The text of the "Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations" is contained
in just one page 55 in Vol. I of the 36-volume Uruguay Round of Multilateral
Trade Negotiations. By signing said Final Act, Secretary Navarro as
representative of the Republic of the Philippines undertook:
(a) to submit, as appropriate, the WTO Agreement for the
consideration of their respective competent authorities with a
view to seeking approval of the Agreement in accordance with
their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
The assailed Senate Resolution No. 97 expressed concurrence in exactly what
the Final Act required from its signatories, namely, concurrence of the Senate
in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without
need for ratification. They were approved by the ministers by virtue of Article
XXV: 1 of GATT which provides that representatives of the members can meet
"to give effect to those provisions of this Agreement which invoke joint action,
and generally with a view to facilitating the operation and furthering the
objectives of this Agreement." 56
The Understanding on Commitments in Financial Services also approved in
Marrakesh does not apply to the Philippines. It applies only to those 27
Members which "have indicated in their respective schedules of commitments
on standstill, elimination of monopoly, expansion of operation of existing
financial service suppliers, temporary entry of personnel, free transfer and
processing of information, and national treatment with respect to access to
payment, clearing systems and refinancing available in the normal course of
business."57
On the other hand, the WTO Agreement itself expresses what multilateral
agreements are deemed included as its integral parts, 58 as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional frame-work
for the conduct of trade relations among its Members in matters
to the agreements and associated legal instruments included in
the Annexes to this Agreement.
2. The Agreements and associated legal instruments included
in Annexes 1, 2, and 3, (hereinafter referred to as "Multilateral
Agreements") are integral parts of this Agreement, binding on
all Members.
3. The Agreements and associated legal instruments included
in Annex 4 (hereinafter referred to as "Plurilateral Trade
Agreements") are also part of this Agreement for those
Members that have accepted them, and are binding on those
Members. The Plurilateral Trade Agreements do not create
either obligation or rights for Members that have not accepted
them.
4. The General Agreement on Tariffs and Trade 1994 as
specified in annex 1A (hereinafter referred to as "GATT 1994")
is legally distinct from the General Agreement on Tariffs and
Trade, dated 30 October 1947, annexed to the Final Act
adopted at the conclusion of the Second Session of the
Preparatory Committee of the United Nations Conference on
Trade and Employment, as subsequently rectified, amended or
modified (hereinafter referred to as "GATT 1947").
It should be added that the Senate was well-aware of what it was concurring in
as shown by the members' deliberation on August 25, 1994. After reading the
letter of President Ramos dated August 11, 1994, 59 the senators
of the Republic minutely dissected what the Senate was concurring in, as
follows: 60
THE CHAIRMAN: Yes. Now, the question of the validity of the
submission came up in the first day hearing of this Committee
yesterday. Was the observation made by Senator Tañada that
what was submitted to the Senate was not the agreement on
establishing the World Trade Organization by the final act of
the Uruguay Round which is not the same as the agreement
establishing the World Trade Organization? And on that basis,
Senator Tolentino raised a point of order which, however, he
agreed to withdraw upon understanding that his suggestion for
an alternative solution at that time was acceptable. That
suggestion was to treat the proceedings of the Committee as
being in the nature of briefings for Senators until the question
of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting
a new . . . is he making a new submission which improves on
the clarity of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut
and there should be no misunderstanding, it was his intention
to clarify all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Tañada and later on
Senator Tolentino since they were the ones that raised this
question yesterday?
Senator Tañada, please.
SEN. TAÑADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now
clearly appear that what is being submitted to the Senate for
ratification is not the Final Act of the Uruguay Round, but rather
the Agreement on the World Trade Organization as well as the
Ministerial Declarations and Decisions, and the Understanding
and Commitments in Financial Services.
I am now satisfied with the wording of the new submission of
President Ramos.
SEN. TAÑADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tañada. Can we hear
from Senator Tolentino? And after him Senator Neptali
Gonzales and Senator Lina.
SEN. TOLENTINO, Mr. Chairman, I have not seen the new
submission actually transmitted to us but I saw the draft of his
earlier, and I think it now complies with the provisions of the
Constitution, and with the Final Act itself . The Constitution
does not require us to ratify the Final Act. It requires us to ratify
the Agreement which is now being submitted. The Final Act
itself specifies what is going to be submitted to with the
governments of the participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a)
to submit as appropriate the WTO Agreement for the
consideration of the respective competent authorities with a
view to seeking approval of the Agreement in accordance with
their procedures.
In other words, it is not the Final Act that was agreed to be
submitted to the governments for ratification or acceptance as
whatever their constitutional procedures may provide but it is
the World Trade Organization Agreement. And if that is the one
that is being submitted now, I think it satisfies both the
Constitution and the Final Act itself .
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on
Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are
already a matter of record. And they had been adequately
reflected in the journal of yesterday's session and I don't see
any need for repeating the same.
Now, I would consider the new submission as an act ex
abudante cautela.
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina,
do you want to make any comment on this?
SEN. LINA. Mr. President, I agree with the observation just
made by Senator Gonzales out of the abundance of
question. Then the new submission is, I believe, stating the
obvious and therefore I have no further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO
Agreement, petitioners are invoking this Court's constitutionally imposed duty
"to determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the Senate in giving
its concurrence therein via Senate Resolution No. 97. Procedurally, a writ
of certiorari grounded on grave abuse of discretion may be issued by the Court
under Rule 65 of the Rules of Court when it is amply shown that petitioners
have no other plain, speedy and adequate remedy in the ordinary course of
law.
By grave abuse of discretion is meant such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction. 61 Mere abuse of discretion is
not enough. It must be grave abuse of discretion as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, and must be so patent and so gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law. 62 Failure on the part of the petitioner to show grave
abuse of discretion will result in the dismissal of the petition. 63
In rendering this Decision, this Court never forgets that the Senate, whose act
is under review, is one of two sovereign houses of Congress and is thus
entitled to great respect in its actions. It is itself a constitutional body
independent and coordinate, and thus its actions are presumed regular and
done in good faith. Unless convincing proof and persuasive arguments are
presented to overthrow such presumptions, this Court will resolve every doubt
in its favor. Using the foregoing well-accepted definition of grave abuse of
discretion and the presumption of regularity in the Senate's processes, this
Court cannot find any cogent reason to impute grave abuse of discretion to the
Senate's exercise of its power of concurrence in the WTO Agreement granted
it by Sec. 21 of Article VII of the Constitution. 64
It is true, as alleged by petitioners, that broad constitutional principles require
the State to develop an independent national economy effectively controlled by
Filipinos; and to protect and/or prefer Filipino labor, products, domestic
materials and locally produced goods. But it is equally true that such principles
— while serving as judicial and legislative guides — are not in themselves
sources of causes of action. Moreover, there are other equally fundamental
constitutional principles relied upon by the Senate which mandate the pursuit
of a "trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign
markets," thereby justifying its acceptance of said treaty. So too, the alleged
impairment of sovereignty in the exercise of legislative and judicial powers is
balanced by the adoption of the generally accepted principles of international
law as part of the law of the land and the adherence of the Constitution to the
policy of cooperation and amity with all nations.
The eminent futurist John Naisbitt, author of the best seller Megatrends,
predicts an Asian Renaissance 65 where "the East will become the dominant
region of the world economically, politically and culturally in the next century."
He refers to the "free market" espoused by WTO as the "catalyst" in this
coming Asian ascendancy. There are at present about 31 countries including
China, Russia and Saudi Arabia negotiating for membership in the WTO.
Notwithstanding objections against possible limitations on national sovereignty,
the WTO remains as the only viable structure for multilateral trading and the
veritable forum for the development of international trade law. The alternative
to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched
with original membership, keenly aware of the advantages and disadvantages
of globalization with its on-line experience, and endowed with a vision of the
future, the Philippines now straddles the crossroads of an international
strategy for economic prosperity and stability in the new millennium. Let the
people, through their duly authorized elected officers, make their free choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno,
Kapunan, Mendoza, Francisco, Hermosisima, Jr. and Torres, Jr., JJ., concur.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly Padilla and Vitug, JJ., concur in the result.
gave its consent to the WTO Agreement thereby making it "a part of the law of
the land" is a legitimate exercise of its sovereign duty and power. We find no
"patent and gross" arbitrariness or despotism "by reason of passion or
personal hostility" in such exercise. It is not impossible to surmise that this
Court, or at least some of its members, may even agree with petitioners that it
is more advantageous to the national interest to strike down Senate Resolution
No. 97. But that is not a legal reason to attribute grave abuse of discretion to
the Senate and to nullify its decision. To do so would constitute grave abuse in
the exercise of our own judicial power and duty. Ineludably, what the Senate
did was a valid exercise of its authority. As to whether such exercise was wise,
beneficial or viable is outside the realm of judicial inquiry and review. That is a
matter between the elected policy makers and the people. As to whether the
nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing
their policy makers. After all, the WTO Agreement allows withdrawal of
membership, should this be the political desire of a member.

G.R. No. 122156 February 3, 1997
MANILA PRINCE HOTEL petitioner,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL
CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, respondents.
BELLOSILLO, J.:
The FiIipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of
rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos,1 is in oked by
petitioner in its bid to acquire 51% of the shares of the Manila Hotel
Corporation (MHC) which owns the historic Manila Hotel. Opposing,
respondents maintain that the provision is not self-executing but requires an
implementing legislation for its enforcement. Corollarily, they ask whether the
51% shares form part of the national economy and patrimony covered by the
protective mantle of the Constitution.
The controversy arose when respondent Government Service Insurance
System (GSIS), pursuant to the privatization program of the Philippine
Government under Proclamation No. 50 dated 8 December 1986, decided to
sell through public bidding 30% to 51% of the issued and outstanding shares
of respondent MHC. The winning bidder, or the eventual "strategic partner," is
to provide management expertise and/or an international
marketing/reservation system, and financial support to strengthen the
profitability and performance of the Manila Hotel.2 In a close bidding held on 18
September 1995 only two (2) bidders participated: petitioner Manila Prince
Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC
or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian
firm, with ITT-Sheraton as its hotel operator, which bid for the same number of
shares at P44.00 per share, or P2.42 more than the bid of petitioner.
Pertinent provisions of the bidding rules prepared by respondent GSIS state —
I. EXECUTION OF THE NECESSARY
CONTRACTS WITH GSIS/MHC —
1. The Highest Bidder must comply with the conditions set forth
below by October 23, 1995 (reset to November 3, 1995) or the
Highest Bidder will lose the right to purchase the Block of
Shares and GSIS will instead offer the Block of Shares to the
other Qualified Bidders:
a. The Highest Bidder must negotiate and
execute with the GSIS/MHC the Management
Contract, International Marketing/Reservation
System Contract or other type of contract
specified by the Highest Bidder in its strategic
plan for the Manila Hotel. . . .
b. The Highest Bidder must execute the Stock
Purchase and Sale Agreement with GSIS . . . .
K. DECLARATION OF THE WINNING
BIDDER/STRATEGIC PARTNER —
The Highest Bidder will be declared the Winning
Bidder/Strategic Partner after the following conditions are met:
a. Execution of the necessary contracts with
GSIS/MHC not later than October 23, 1995
(reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and
COP (Committee on Privatization)/OGCC
(Office of the Government Corporate Counsel)
are obtained.3
Pending the declaration of Renong Berhad as the winning bidder/strategic
partner and the execution of the necessary contracts, petitioner in a letter to
respondent GSIS dated 28 September 1995 matched the bid price of P44.00
per share tendered by Renong Berhad.4 In a subsequent letter dated 10
October 1995 petitioner sent a manager's check issued by Philtrust Bank for
Thirty-three Million Pesos (P33.000.000.00) as Bid Security to match the bid of
the Malaysian Group, Messrs. Renong Berhad . . .5 which respondent GSIS
refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has
disregarded the tender of the matching bid and that the sale of 51% of the
MHC may be hastened by respondent GSIS and consummated with Renong
Berhad, petitioner came to this Court on prohibition and mandamus. On 18
October 1995 the Court issued a temporary restraining order enjoining
respondents from perfecting and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En
Banc after it was referred to it by the First Division. The case was then set for
oral arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin
G. Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987
Constitution and submits that the Manila Hotel has been identified with the
Filipino nation and has practically become a historical monument which
reflects the vibrancy of Philippine heritage and culture. It is a proud legacy of
an earlier generation of Filipinos who believed in the nobility and sacredness of
independence and its power and capacity to release the full potential of the
Filipino people. To all intents and purposes, it has become a part of the
national patrimony.6 Petitioner also argues that since 51% of the shares of the
MHC carries with it the ownership of the business of the hotel which is owned
by respondent GSIS, a government-owned and controlled corporation, the
hotel business of respondent GSIS being a part of the tourism industry is
unquestionably a part of the national economy. Thus, any transaction involving
51% of the shares of stock of the MHC is clearly covered by the term national
economy, to which Sec. 10, second par., Art. XII, 1987 Constitution, applies.7
It is also the thesis of petitioner that since Manila Hotel is part of the national
patrimony and its business also unquestionably part of the national economy
petitioner should be preferred after it has matched the bid offer of the
Malaysian firm. For the bidding rules mandate that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to
the other Qualified Bidders that have validly submitted bids provided that these
Qualified Bidders are willing to match the highest bid in terms of price per
share.8
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII,
of the 1987 Constitution is merely a statement of principle and policy since it is
not a self-executing provision and requires implementing legislation(s) . . .
Thus, for the said provision to Operate, there must be existing laws "to lay
down conditions under which business may be done."9
Second, granting that this provision is self-executing, Manila Hotel does not fall
under the term national patrimony which only refers to lands of the public
domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna and all
marine wealth in its territorial sea, and exclusive marine zone as cited in the
first and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to
respondents, while petitioner speaks of the guests who have slept in the hotel
and the events that have transpired therein which make the hotel historic,
these alone do not make the hotel fall under the patrimony of the nation. What
is more, the mandate of the Constitution is addressed to the State, not to
respondent GSIS which possesses a personality of its own separate and
distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of the national patrimony, the
constitutional provision invoked is still inapplicable since what is being sold is
only 51% of the outstanding shares of the corporation, not the hotel building
nor the land upon which the building stands. Certainly, 51% of the equity of the
MHC cannot be considered part of the national patrimony. Moreover, if the
disposition of the shares of the MHC is really contrary to the Constitution,
petitioner should have questioned it right from the beginning and not after it
had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules
which provides that if for any reason, the Highest Bidder cannot be awarded
the Block of Shares, GSIS may offer this to the other Qualified Bidders that
have validly submitted bids provided that these Qualified Bidders are willing to
match the highest bid in terms of price per share, is misplaced. Respondents
postulate that the privilege of submitting a matching bid has not yet arisen
since it only takes place if for any reason, the Highest Bidder cannot be
awarded the Block of Shares. Thus the submission by petitioner of a matching
bid is premature since Renong Berhad could still very well be awarded the
block of shares and the condition giving rise to the exercise of the privilege to
submit a matching bid had not yet taken place.
Finally, the prayer for prohibition grounded on grave abuse of discretion should
fail since respondent GSIS did not exercise its discretion in a capricious,
whimsical manner, and if ever it did abuse its discretion it was not so patent
and gross as to amount to an evasion of a positive duty or a virtual refusal to
perform a duty enjoined by law. Similarly, the petition for mandamus should fail
as petitioner has no clear legal right to what it demands and respondents do
not have an imperative duty to perform the act required of them by petitioner.
We now resolve. A constitution is a system of fundamental laws for the
governance and administration of a nation. It is supreme, imperious, absolute
and unalterable except by the authority from which it emanates. It has been
defined as the fundamental and paramount law of the nation. 10 It prescribes
the permanent framework of a system of government, assigns to the different
departments their respective powers and duties, and establishes certain fixed
principles on which government is founded. The fundamental conception in
other words is that it is a supreme law to which all other laws must conform
and in accordance with which all private rights must be determined and all
public authority administered. 11 Under the doctrine of constitutional supremacy,
if a law or contract violates any norm of the constitution that law or contract
whether promulgated by the legislative or by the executive branch or entered
into by private persons for private purposes is null and void and without any
force and effect. Thus, since the Constitution is the fundamental, paramount
and supreme law of the nation, it is deemed written in every statute and
contract.
Admittedly, some constitutions are merely declarations of policies and
principles. Their provisions command the legislature to enact laws and carry
out the purposes of the framers who merely establish an outline of government
providing for the different departments of the governmental machinery and
securing certain fundamental and inalienable rights of citizens. 12 A provision
which lays down a general principle, such as those found in Art. II of the 1987
Constitution, is usually not self-executing. But a provision which is complete in
itself and becomes operative without the aid of supplementary or enabling
legislation, or that which supplies sufficient rule by means of which the right it
grants may be enjoyed or protected, is self-executing. Thus a constitutional
provision is self-executing if the nature and extent of the right conferred and
the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no
language indicating that the subject is referred to the legislature for action. 13
As against constitutions of the past, modern constitutions have been generally
drafted upon a different principle and have often become in effect extensive
codes of laws intended to operate directly upon the people in a manner similar
to that of statutory enactments, and the function of constitutional conventions
has evolved into one more like that of a legislative body. Hence, unless it is
expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-
executing If the constitutional provisions are treated as requiring legislation
instead of self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law. 14 This can be
cataclysmic. That is why the prevailing view is, as it has always been, that —
. . . in case of doubt, the Constitution should be considered
self-executing rather than non-self-executing . . . . Unless the
contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would
give the legislature discretion to determine when, or whether,
they shall be effective. These provisions would be subordinated
to the will of the lawmaking body, which could make them
entirely meaningless by simply refusing to pass the needed
implementing statute. 15
Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution
is clearly not self-executing, as they quote from discussions on the floor of the
1986 Constitutional Commission —
MR. RODRIGO. Madam President, I am asking
this question as the Chairman of the Committee
on Style. If the wording of "PREFERENCE" is
given to QUALIFIED FILIPINOS," can it be
understood as a preference to qualified
Filipinos vis-a-vis Filipinos who are not
qualified. So, why do we not make it clear? To
qualified Filipinos as against aliens?
THE PRESIDENT. What is the question of
Commissioner Rodrigo? Is it to remove the
word "QUALIFIED?".
MR. RODRIGO. No, no, but say definitely "TO
QUALIFIED FILIPINOS" as against whom? As
against aliens or over aliens?
MR. NOLLEDO. Madam President, I think that
is understood. We use the word "QUALIFIED"
because the existing laws or prospective laws
will always lay down conditions under which
business may be done. For example,
qualifications on the setting up of other financial
structures, et cetera (emphasis supplied by
respondents)
MR. RODRIGO. It is just a matter of style.
 MR. NOLLEDO Yes, 16
Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as
not to make it appear that it is non-self-executing but simply for purposes of
style. But, certainly, the legislature is not precluded from enacting other further
laws to enforce the constitutional provision so long as the contemplated statute
squares with the Constitution. Minor details may be left to the legislature
without impairing the self-executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact
legislation to facilitate the exercise of powers directly granted by the
constitution, further the operation of such a provision, prescribe a practice to
be used for its enforcement, provide a convenient remedy for the protection of
the rights secured or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere fact that legislation may
supplement and add to or prescribe a penalty for the violation of a self-
executing constitutional provision does not render such a provision ineffective
in the absence of such legislation. The omission from a constitution of any
express provision for a remedy for enforcing a right or liability is not
necessarily an indication that it was not intended to be self-executing. The rule
is that a self-executing provision of the constitution does not necessarily
exhaust legislative power on the subject, but any legislation must be in
harmony with the constitution, further the exercise of constitutional right and
make it more available. 17 Subsequent legislation however does not necessarily
mean that the subject constitutional provision is not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second
par., of Art. XII is implied from the tenor of the first and third paragraphs of the
same section which undoubtedly are not self-executing. 18 The argument is
flawed. If the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation and operation
of enterprises fully owned by Filipinos, as in the first paragraph, and the State
still needs legislation to regulate and exercise authority over foreign
investments within its national jurisdiction, as in the third paragraph, then
a fortiori, by the same logic, the second paragraph can only be self-executing
as it does not by its language require any legislation in order to give preference
to qualified Filipinos in the grant of rights, privileges and concessions covering
the national economy and patrimony. A constitutional provision may be self-
executing in one part and non-self-executing in another. 19
Even the cases cited by respondents holding that certain constitutional
provisions are merely statements of principles and policies, which are basically
not self-executing and only placed in the Constitution as moral incentives to
legislation, not as judicially enforceable rights — are simply not in point. Basco
v. Philippine Amusements and Gaming Corporation 20 speaks of constitutional
provisions on personal dignity, 21 the sanctity of family life, 22 the vital role of the
youth in nation-building 23 the promotion of social justice, 24 and the values of
education. 25 Tolentino v. Secretary of Finance 26 refers to the constitutional
provisions on social justice and human rights 27 and on
education. 28 Lastly, Kilosbayan, Inc. v. Morato 29 cites provisions on the
promotion of general welfare, 30 the sanctity of family life, 31 the vital role of the
youth in nation-building 32 and the promotion of total human liberation and
development. 33 A reading of these provisions indeed clearly shows that they
are not judicially enforceable constitutional rights but merely guidelines for
legislation. The very terms of the provisions manifest that they are only
principles upon which the legislations must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the of the 1987
Constitution is a mandatory, positive command which is complete in itself and
which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any legislation
to put it in operation. It is per se judicially enforceable When our Constitution
mandates that [i]n the grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that — qualified Filipinos shall be preferred. And when
our Constitution declares that a right exists in certain specified circumstances
an action may be maintained to enforce such right notwithstanding the
absence of any legislation on the subject; consequently, if there is no statute
especially enacted to enforce such constitutional right, such right enforces
itself by its own inherent potency and puissance, and from which all
legislations must take their bearings. Where there is a right there is a
remedy. Ubi jus ibi remedium.
As regards our national patrimony, a member of the 1986 Constitutional
Commission 34 explains —
The patrimony of the Nation that should be conserved and
developed refers not only to out rich natural resources but also
to the cultural heritage of out race. It also refers to our
intelligence in arts, sciences and letters. Therefore, we should
develop not only our lands, forests, mines and other natural
resources but also the mental ability or faculty of our people.
We agree. In its plain and ordinary meaning, the term patrimony pertains to The argument is pure sophistry. The term qualified Filipinos as used in Our
heritage. 35 When the Constitution speaks of national patrimony, it refers not Constitution also includes corporations at least 60% of which is owned by
only to the natural resources of the Philippines, as the Constitution could have Filipinos. This is very clear from the proceedings of the 1986 Constitutional
very well used the term natural resources, but also to the cultural heritage of Commission
the Filipinos.
THE PRESIDENT. Commissioner Davide is
Manila Hotel has become a landmark — a living testimonial of Philippine recognized.
heritage. While it was restrictively an American hotel when it first opened in
1912, it immediately evolved to be truly Filipino, Formerly a concourse for the MR. DAVIDE. I would like to introduce an
elite, it has since then become the venue of various significant events which amendment to the Nolledo amendment. And
have shaped Philippine history. It was called the Cultural Center of the 1930's. the amendment would consist in substituting
It was the site of the festivities during the inauguration of the Philippine the words "QUALIFIED FILIPINOS" with the
Commonwealth. Dubbed as the Official Guest House of the Philippine following: "CITIZENS OF THE PHILIPPINES
Government. it plays host to dignitaries and official visitors who are accorded OR CORPORATIONS OR ASSOCIATIONS
the traditional Philippine hospitality. 36 WHOSE CAPITAL OR CONTROLLING STOCK
IS WHOLLY OWNED BY SUCH CITIZENS.
The history of the hotel has been chronicled in the book The Manila Hotel: The
Heart and Memory of a City. 37 During World War II the hotel was converted by xxx xxx xxx
the Japanese Military Administration into a military headquarters. When the
American forces returned to recapture Manila the hotel was selected by the MR. MONSOD. Madam President, apparently
Japanese together with Intramuros as the two (2) places fro their final stand. the proponent is agreeable, but we have to
Thereafter, in the 1950's and 1960's, the hotel became the center of political raise a question. Suppose it is a corporation
activities, playing host to almost every political convention. In 1970 the hotel that is 80-percent Filipino, do we not give it
reopened after a renovation and reaped numerous international recognitions, preference?
an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was
the site of a failed coup d' etat where an aspirant for vice-president was
MR. DAVIDE. The Nolledo amendment would
"proclaimed" President of the Philippine Republic.
refer to an individual Filipino. What about a
corporation wholly owned by Filipino citizens?
For more than eight (8) decades Manila Hotel has bore mute witness to the
triumphs and failures, loves and frustrations of the Filipinos; its existence is
MR. MONSOD. At least 60 percent, Madam
impressed with public interest; its own historicity associated with our struggle
President.
for sovereignty, independence and nationhood. Verily, Manila Hotel has
become part of our national economy and patrimony. For sure, 51% of the
equity of the MHC comes within the purview of the constitutional shelter for it MR. DAVIDE. Is that the intention?
comprises the majority and controlling stock, so that anyone who acquires or
owns the 51% will have actual control and management of the hotel. In this MR. MONSOD. Yes, because, in fact, we would
instance, 51% of the MHC cannot be disassociated from the hotel and the land be limiting it if we say that the preference
on which the hotel edifice stands. Consequently, we cannot sustain should only be 100-percent Filipino.
respondents' claim that the Filipino First Policy provision is not applicable since
what is being sold is only 51% of the outstanding shares of the corporation, not MR: DAVIDE. I want to get that meaning clear
the Hotel building nor the land upon which the building stands. 38 because "QUALIFIED FILIPINOS" may refer
 only to individuals and not to juridical
personalities or entities.
MR. MONSOD. We agree, Madam President.
xxx xxx xxx
MR. RODRIGO. Before we vote, may I request
that the amendment be read again.
MR. NOLLEDO. The amendment will read: "IN
THE GRANT OF RIGHTS, PRIVILEGES AND
CONCESSIONS COVERING THE NATIONAL
ECONOMY AND PATRIMONY, THE STATE
SHALL GIVE PREFERENCE TO QUALIFIED
FILIPINOS." And the word "Filipinos" here, as
intended by the proponents, will include not
only individual Filipinos but also Filipino-
controlled entities or entities fully-controlled by
Filipinos. 40
The phrase preference to qualified Filipinos was explained thus —
MR. FOZ. Madam President, I would like to
request Commissioner Nolledo to please
restate his amendment so that I can ask a
question.
MR. NOLLEDO. "IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS
COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE
PREFERENCE TO QUALIFIED FILIPINOS."
MR FOZ. In connection with that amendment, if
a foreign enterprise is qualified and a Filipino
enterprise is also qualified, will the Filipino
enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in
some aspects than the Filipino enterprise, will
the Filipino still be preferred?
39
MR. NOLLEDO. The answer is "yes."
MR. FOZ. Thank you, 41
Expounding further on the Filipino First Policy provision Commissioner Nolledo
continues —
MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it
will be "SHALL — THE STATE SHALL GlVE PREFERENCE
TO QUALIFIED FILIPINOS. This embodies the so-called
"Filipino First" policy. That means that Filipinos should be given
preference in the grant of concessions, privileges and rights
covering the national patrimony. 42
The exchange of views in the sessions of the Constitutional Commission
regarding the subject provision was still further clarified by Commissioner
Nolledo 43 —
Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino"
bias in all economic concerns. It is better known as the
FILIPINO FIRST Policy . . . This provision was never found in
previous Constitutions . . . .
The term "qualified Filipinos" simply means that preference
shall be given to those citizens who can make a viable
contribution to the common good, because of credible
competence and efficiency. It certainly does NOT mandate the
pampering and preferential treatment to Filipino citizens or
organizations that are incompetent or inefficient, since such an
indiscriminate preference would be counter productive and
inimical to the common good.
In the granting of economic rights, privileges, and concessions,
when a choice has to be made between a "qualified foreigner"
end a "qualified Filipino," the latter shall be chosen over the
former."
Lastly, the word qualified is also determinable. Petitioner was so considered by
respondent GSIS and selected as one of the qualified bidders. It was pre-
qualified by respondent GSIS in accordance with its own guidelines so that the
sole inference here is that petitioner has been found to be possessed of
proven management expertise in the hotel industry, or it has significant equity
ownership in another hotel company, or it has an overall management and
marketing proficiency to successfully operate the Manila Hotel. 44
The penchant to try to whittle away the mandate of the Constitution by arguing
that the subject provision is not self-executory and requires implementing
legislation is quite disturbing. The attempt to violate a clear constitutional
provision — by the government itself — is only too distressing. To adopt such
a line of reasoning is to renounce the duty to ensure faithfulness to the
Constitution. For, even some of the provisions of the Constitution which
evidently need implementing legislation have juridical life of their own and can
be the source of a judicial remedy. We cannot simply afford the government a
defense that arises out of the failure to enact further enabling, implementing or
guiding legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on
constitutional government is apt —
The executive department has a constitutional duty to
implement laws, including the Constitution, even before
Congress acts — provided that there are discoverable legal
standards for executive action. When the executive acts, it
must be guided by its own understanding of the constitutional
command and of applicable laws. The responsibility for reading
and understanding the Constitution and the laws is not the sole
prerogative of Congress. If it were, the executive would have to
ask Congress, or perhaps the Court, for an interpretation every
time the executive is confronted by a constitutional command.
That is not how constitutional government operates. 45
Respondents further argue that the constitutional provision is addressed to the
State, not to respondent GSIS which by itself possesses a separate and
distinct personality. This argument again is at best specious. It is undisputed
that the sale of 51% of the MHC could only be carried out with the prior
approval of the State acting through respondent Committee on Privatization.
As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes
the sale of the assets of respondents GSIS and MHC a "state action." In
constitutional jurisprudence, the acts of persons distinct from the government
are considered "state action" covered by the Constitution (1) when the activity
it engages in is a "public function;" (2) when the government is so significantly
involved with the private actor as to make the government responsible for his
action; and, (3) when the government has approved or authorized the action. It
is evident that the act of respondent GSIS in selling 51% of its share in
respondent MHC comes under the second and third categories of "state
action." Without doubt therefore the transaction. although entered into by
respondent GSIS, is in fact a transaction of the State and therefore subject to
the constitutional command. 46
When the Constitution addresses the State it refers not only to the people but
also to the government as elements of the State. After all, government is
composed of three (3) divisions of power — legislative, executive and judicial.
Accordingly, a constitutional mandate directed to the State is correspondingly
directed to the three(3) branches of government. It is undeniable that in this
case the subject constitutional injunction is addressed among others to the
Executive Department and respondent GSIS, a government instrumentality
deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the higher bid it is
not yet the winning bidder. The bidding rules expressly provide that the highest
bidder shall only be declared the winning bidder after it has negotiated and
executed the necessary contracts, and secured the requisite approvals. Since
the "Filipino First Policy provision of the Constitution bestows preference on
qualified Filipinos the mere tending of the highest bid is not an assurance that
the highest bidder will be declared the winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are they under
obligation to enter into one with the highest bidder. For in choosing the
awardee respondents are mandated to abide by the dictates of the 1987
Constitution the provisions of which are presumed to be known to all the
bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject constitutional
provision is, as it should be, impliedly written in the bidding rules issued by
respondent GSIS, lest the bidding rules be nullified for being violative of the
Constitution. It is a basic principle in constitutional law that all laws and
contracts must conform with the fundamental law of the land. Those which
violate the Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [if] for any reason the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to
other Qualified Bidders that have validly submitted bids provided that these
Qualified Bidders are willing to match the highest bid in terms of price per
share. 47 Certainly, the constitutional mandate itself is reason enough not to
award the block of shares immediately to the foreign bidder notwithstanding its
submission of a higher, or even the highest, bid. In fact, we cannot conceive of
a stronger reason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest bid in a public
bidding concerning the grant of rights, privileges and concessions covering the
national economy and patrimony, thereby exceeding the bid of a Filipino, there
is no question that the Filipino will have to be allowed to match the bid of the
foreign entity. And if the Filipino matches the bid of a foreign firm the award
should go to the Filipino. It must be so if we are to give life and meaning to
the Filipino First Policy provision of the 1987 Constitution. For, while this may
neither be expressly stated nor contemplated in the bidding rules, the
constitutional fiat is, omnipresent to be simply disregarded. To ignore it would
be to sanction a perilous skirting of the basic law.
This Court does not discount the apprehension that this policy may discourage
foreign investors. But the Constitution and laws of the Philippines are
understood to be always open to public scrutiny. These are given factors which
investors must consider when venturing into business in a foreign jurisdiction.
Any person therefore desiring to do business in the Philippines or with any of
its agencies or instrumentalities is presumed to know his rights and obligations
under the Constitution and the laws of the forum.
The argument of respondents that petitioner is now estopped from questioning
the sale to Renong Berhad since petitioner was well aware from the beginning
that a foreigner could participate in the bidding is meritless. Undoubtedly,
Filipinos and foreigners alike were invited to the bidding. But foreigners may be
awarded the sale only if no Filipino qualifies, or if the qualified Filipino fails to
match the highest bid tendered by the foreign entity. In the case before us,
while petitioner was already preferred at the inception of the bidding because
of the constitutional mandate, petitioner had not yet matched the bid offered by
Renong Berhad. Thus it did not have the right or personality then to compel
respondent GSIS to accept its earlier bid. Rightly, only after it had matched the
bid of the foreign firm and the apparent disregard by respondent GSIS of
petitioner's matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional safeguard unless
perhaps the award has been finally made. To insist on selling the Manila Hotel
to foreigners when there is a Filipino group willing to match the bid of the
foreign group is to insist that government be treated as any other ordinary
market player, and bound by its mistakes or gross errors of judgment,
regardless of the consequences to the Filipino people. The miscomprehension
of the Constitution is regrettable. Thus we would rather remedy the indiscretion
while there is still an opportunity to do so than let the government develop the
habit of forgetting that the Constitution lays down the basic conditions and
parameters for its actions.
Since petitioner has already matched the bid price tendered by Renong
Berhad pursuant to the bidding rules, respondent GSIS is left with no
alternative but to award to petitioner the block of shares of MHC and to
execute the necessary agreements and documents to effect the sale in
accordance not only with the bidding guidelines and procedures but with the
Constitution as well. The refusal of respondent GSIS to execute the
corresponding documents with petitioner as provided in the bidding rules after
the latter has matched the bid of the Malaysian firm clearly constitutes grave
abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in
the 1987 Constitution not merely to be used as a guideline for future legislation
but primarily to be enforced; so must it be enforced. This Court as the ultimate
guardian of the Constitution will never shun, under any reasonable
circumstance, the duty of upholding the majesty of the Constitution which it is
tasked to defend. It is worth emphasizing that it is not the intention of this Court
to impede and diminish, much less undermine, the influx of foreign
investments. Far from it, the Court encourages and welcomes more business
opportunities but avowedly sanctions the preference for Filipinos whenever
such preference is ordained by the Constitution. The position of the Court on
this matter could have not been more appropriately articulated by Chief Justice
Narvasa —
As scrupulously as it has tried to observe that it is not its
function to substitute its judgment for that of the legislature or
the executive about the wisdom and feasibility of legislation
economic in nature, the Supreme Court has not been spared
criticism for decisions perceived as obstacles to economic
progress and development . . . in connection with a temporary
injunction issued by the Court's First Division against the sale
of the Manila Hotel to a Malaysian Firm and its partner, certain
statements were published in a major daily to the effect that
injunction "again demonstrates that the Philippine legal system
can be a major obstacle to doing business here.
Let it be stated for the record once again that while it is no
business of the Court to intervene in contracts of the kind
 referred to or set itself up as the judge of whether they are
viable or attainable, it is its bounden duty to make sure that
they do not violate the Constitution or the laws, or are not
adopted or implemented with grave abuse of discretion
amounting to lack or excess of jurisdiction. It will never shirk
that duty, no matter how buffeted by winds of unfair and ill-
informed criticism. 48
Privatization of a business asset for purposes of enhancing its business
viability and preventing further losses, regardless of the character of the asset,
should not take precedence over non-material values. A commercial, nay even
a budgetary, objective should not be pursued at the expense of national pride
and dignity. For the Constitution enshrines higher and nobler non-material
values. Indeed, the Court will always defer to the Constitution in the proper
governance of a free society; after all, there is nothing so sacrosanct in any
economic policy as to draw itself beyond judicial review when the Constitution
is involved. 49
Nationalism is inherent, in the very concept of the Philippines being a
democratic and republican state, with sovereignty residing in the Filipino
people and from whom all government authority emanates. In nationalism, the
happiness and welfare of the people must be the goal. The nation-state can
have no higher purpose. Any interpretation of any constitutional provision must
adhere to such basic concept. Protection of foreign investments, while
laudible, is merely a policy. It cannot override the demands of nationalism. 50
The Manila Hotel or, for that matter, 51% of the MHC, is not just any
commodity to be sold to the highest bidder solely for the sake of privatization.
We are not talking about an ordinary piece of property in a commercial district.
We are talking about a historic relic that has hosted many of the most
important events in the short history of the Philippines as a nation. We are
talking about a hotel where heads of states would prefer to be housed as a
strong manifestation of their desire to cloak the dignity of the highest state
function to their official visits to the Philippines. Thus the Manila Hotel has
played and continues to play a significant role as an authentic repository of
twentieth century Philippine history and culture. In this sense, it has become
truly a reflection of the Filipino soul — a place with a history of grandeur; a
most historical setting that has played a part in the shaping of a country. 51
This Court cannot extract rhyme nor reason from the determined efforts of
respondents to sell the historical landmark — this Grand Old Dame of hotels in
Asia — to a total stranger. For, indeed, the conveyance of this epic exponent
of the Filipino psyche to alien hands cannot be less than mephistophelian for it
is, in whatever manner viewed, a veritable alienation of a nation's soul for
some pieces of foreign silver. And so we ask: What advantage, which cannot
be equally drawn from a qualified Filipino, can be gained by the Filipinos
Manila Hotel — and all that it stands for — is sold to a non-Filipino? How much
of national pride will vanish if the nation's cultural heritage is entrusted to a
foreign entity? On the other hand, how much dignity will be preserved and
realized if the national patrimony is safekept in the hands of a qualified,
zealous and well-meaning Filipino? This is the plain and simple meaning of
the Filipino First Policy provision of the Philippine Constitution. And this Court,
heeding the clarion call of the Constitution and accepting the duty of being the
elderly watchman of the nation, will continue to respect and protect the sanctity
of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE
SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE
COUNSEL are directed to CEASE and DESIST from selling 51% of the shares
of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the
matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to
purchase the subject 51% of the shares of the Manila Hotel Corporation at
P44.00 per share and thereafter to execute the necessary clearances and to
do such other acts and deeds as may be necessary for purpose.
SO ORDERED.
Regalado, Davide, Jr., Romero, Kapunan, Francisco and Hermosisima, Jr.,
JJ., concur.
Separate Opinions
PADILLA, J., concurring:
I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would
like to expound a bit more on the concept of national patrimony as including
within its scope and meaning institutions such as the Manila Hotel.
It is argued by petitioner that the Manila Hotel comes under "national
patrimony" over which qualified Filipinos have the preference, in ownership
and operation. The Constitutional provision on point states:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall Give
preference to qualified Filipinos.1
Petitioner's argument, I believe, is well taken. Under the 1987 Constitution,
"national patrimony" consists of the natural resources provided by Almighty
God (Preamble) in our territory (Article I) consisting of land, sea, and air. 2 study
of the 1935 Constitution, where the concept of "national patrimony" originated,
would show that its framers decided to adopt the even more comprehensive
expression "Patrimony of the Nation" in the belief that the phrase encircles a
concept embracing not only their natural resources of the country but
practically everything that belongs to the Filipino people, the tangible and the
material as well as the intangible and the spiritual assets and possessions of
the people. It is to be noted that the framers did not stop with conservation.
They knew that conservation alone does not spell progress; and that this may
be achieved only through development as a correlative factor to assure to the
people not only the exclusive ownership, but also the exclusive benefits of their
national patrimony).3
Moreover, the concept of national patrimony has been viewed as referring not
only to our rich natural resources but also to the cultural heritage of our
race.4
There is no doubt in my mind that the Manila Hotel is very much a part of our
national patrimony and, as such, deserves constitutional protection as to who
shall own it and benefit from its operation. This institution has played an
important role in our nation's history, having been the venue of many a
historical event, and serving as it did, and as it does, as the Philippine Guest
House for visiting foreign heads of state, dignitaries, celebrities, and others.5
It is therefore our duty to protect and preserve it for future generations of
Filipinos. As President Manuel L. Quezon once said, we must exploit the
natural resources of our country, but we should do so with. an eye to the
welfare of the future generations. In other words, the leaders of today are the
trustees of the patrimony of our race. To preserve our national patrimony and
reserve it for Filipinos was the intent of the distinguished gentlemen who first
framed our Constitution. Thus, in debating the need for nationalization of our
lands and natural resources, one expounded that we should "put more teeth
into our laws, and; not make the nationalization of our lands and natural
resources a subject of ordinary legislation but of constitutional enactment" 6 To
quote further: "Let not our children be mere tenants and trespassers in their
own country. Let us preserve and bequeath to them what is rightfully theirs,
free from all foreign liens and encumbrances". 7
Now, a word on preference. In my view "preference to qualified Filipinos", to be
meaningful, must refer not only to things that are peripheral, collateral, or
tangential. It must touch and affect the very "heart of the existing order." In the
field of public bidding in the acquisition of things that pertain to the national
patrimony, preference to qualified Filipinos must allow a qualified Filipino to
match or equal the higher bid of a non-Filipino; the preference shall not
operate only when the bids of the qualified Filipino and the non-Filipino are
equal in which case, the award should undisputedly be made to the qualified
Filipino. The Constitutional preference should give the qualified Filipino an
opportunity to match or equal the higher bid of the non-Filipino bidder if the
preference of the qualified Filipino bidder is to be significant at all.
It is true that in this present age of globalization of attitude towards foreign
investments in our country, stress is on the elimination of barriers to foreign
trade and investment in the country. While government agencies, including the
courts should re-condition their thinking to such a trend, and make it easy and
even attractive for foreign investors to come to our shores, yet we should not
preclude ourselves from reserving to us Filipinos certain areas where our
national identity, culture and heritage are involved. In the hotel industry, for
instance, foreign investors have established themselves creditably, such as in
the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should
not stop us from retaining 51% of the capital stock of the Manila Hotel
Corporation in the hands of Filipinos. This would be in keeping with the intent
of the Filipino people to preserve our national patrimony, including our
historical and cultural heritage in the hands of Filipinos.
VITUG, J., concurring:
I agree with Mr. Justice Josue N. Bellosillo on his clear-cut statements, shared
by Mr. Justice Reynato S. Puno in a well written separate (dissenting) opinion,
that:
First, the provision in our fundamental law which provides that "(I)n the grant of
rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos" 1 is self-
executory. The provision verily does not need, although it can obviously be
amplified or regulated by, an enabling law or a set of rules.
Second, the term "patrimony" does not merely refer to the country's natural
resources but also to its cultural heritage. A "historical landmark," to use the
words of Mr. Justice Justo P. Torres, Jr., Manila Hotel has now indeed become
part of Philippine heritage.
Third, the act of the Government Service Insurance System ("GSIS"), a
government entity which derives its authority from the State, in selling 51% of
its share in MHC should be considered an act of the State subject to the
Constitutional mandate.
On the pivotal issue of the degree of "preference to qualified Filipinos," I find it
somewhat difficult to take the same path traversed by the forceful reasoning of
Justice Puno. In the particular case before us, the only meaningful preference,
it seems, would really be to allow the qualified Filipino to match the foreign bid
for, as a particular matter, I cannot see any bid that literally calls for millions of
dollars to be at par (to the last cent) with another. The magnitude of the
magnitude of the bids is such that it becomes hardly possible for the
competing bids to stand exactly "equal" which alone, under the dissenting
view, could trigger the right of preference.
It is most unfortunate that Renong Berhad has not been spared this great
disappointment, a letdown that it did not deserve, by a simple and timely
advise of the proper rules of bidding along with the peculiar constitutional
implications of the proposed transaction. It is also regrettable that the Court at
time is seen, to instead, be the refuge for bureaucratic inadequate which
create the perception that it even takes on non-justiciable controversies.
All told, I am constrained to vote for granting the petition.
MENDOZA, J., concurring in the judgment:
I take the view that in the context of the present controversy the only way to
enforce the constitutional mandate that "[i]n the grant of rights, privileges and
concessions covering the national patrimony the State shall give preference to
qualified Filipinos"1 is to allow petitioner Philippine corporation to equal the bid
of the Malaysian firm Renong Berhad for the purchase of the controlling shares
of stocks in the Manila Hotel Corporation. Indeed, it is the only way a qualified
Filipino of Philippine corporation can be given preference in the enjoyment of a
right, privilege or concession given by the State, by favoring it over a foreign
national corporation.
Under the rules on public bidding of the Government Service and Insurance
System, if petitioner and the Malaysian firm had offered the same price per
share, "priority [would be given] to the bidder seeking the larger ownership
interest in MHC,"2 so that petitioner bid for more shares, it would be preferred
to the Malaysian corporation for that reason and not because it is a Philippine
corporation. Consequently, it is only in cases like the present one, where an
alien corporation is the highest bidder, that preferential treatment of the
Philippine corporation is mandated not by declaring it winner but by allowing it
"to match the highest bid in terms of price per share" before it is awarded the
shares of stocks.3 That, to me, is what "preference to qualified Filipinos" means
in the context of this case — by favoring Filipinos whenever they are at a
disadvantage vis-a-vis foreigners.
This was the meaning given in Co Chiong v. Cuaderno4 to a 1947 statute
giving "preference to Filipino citizens in the lease of public market stalls." 5 This
Court upheld the cancellation of existing leases covering market stalls
occupied by persons who were not Filipinos and the award thereafter of the
stalls to qualified Filipino vendors as ordered by the Department of Finance.
Similarly, in Vda. de Salgado v. De la Fuente,6 this Court sustained the validity
of a municipal ordinance passed pursuant to the statute (R.A. No. 37),
terminating existing leases of public market stalls and granting preference to
Filipino citizens in the issuance of new licenses for the occupancy of the stalls.
In Chua Lao v. Raymundo,7 the preference granted under the statute was held
to apply to cases in which Filipino vendors sought the same stalls occupied by
alien vendors in the public markets even if there were available other stalls as
good as those occupied by aliens. "The law, apparently, is applicable
whenever there is a conflict of interest between Filipino applicants and aliens
for lease of stalls in public markets, in which situation the right to preference
immediately arises."8
Our legislation on the matter thus antedated by a quarter of a century efforts
began only in the 1970s in America to realize the promise of equality, through
affirmative action and reverse discrimination programs designed to remedy
past discrimination against colored people in such areas as employment,
contracting and licensing.9 Indeed, in vital areas of our national economy, there
are situations in which the only way to place Filipinos in control of the national
economy as contemplated in the Constitution 10 is to give them preferential
treatment where they can at least stand on equal footing with aliens.
There need be no fear that thus preferring Filipinos would either invite foreign I will, however, attempt to share my thoughts on whether the Manila Hotel has
retaliation or deprive the country of the benefit of foreign capital or know-how. a historical and cultural aspect within the meaning of the constitution and thus,
We are dealing here not with common trades of common means of livelihood forming part of the "patrimony of the nation".
which are open to aliens in our midst, 11 but with the sale of government
property, which is like the grant of government largess of benefits and Section 10, Article XII of the 1987 Constitution provides:
concessions covering the national economy" and therefore no one should
begrudge us if we give preferential treatment to our citizens. That at any rate is xxx xxx xxx
the command of the Constitution. For the Manila Hotel is a business owned by
the Government. It is being privatized. Privatization should result in the
In the grant of rights, privileges, and concessions covering the
relinquishment of the business in favor of private individuals and groups who
national economy and patrimony, the State shall give
are Filipino citizens, not in favor of aliens.
preference to qualified Filipinos.
Nor should there be any doubt that by awarding the shares of stocks to
The State shall regulate and exercise authority over foreign
petitioner we would be trading competence and capability for nationalism. Both
investments within its national goals and priorities.
petitioner and the Malaysian firm are qualified, having hurdled the
prequalification process. 12 It is only the result of the public bidding that is
sought to be modified by enabling petitioner to up its bid to equal the highest The foregoing provisions should be read in conjunction with Article II of the
bid. same Constitution pertaining to "Declaration of Principles and State Policies"
which ordain —
Nor, finally, is there any basis for the suggestion that to allow a Filipino bidder
to match the highest bid of an alien could encourage speculation, since all that The State shall develop a self-reliant and independent national
a Filipino entity would then do would be not to make a bid or make only a economy effectively by Filipinos. (Sec. 19).
token one and, after it is known that a foreign bidder has submitted the highest
bid, make an offer matching that of the foreign firm. This is not possible under Interestingly, the matter of giving preference to "qualified Filipinos" was one of
the rules on public bidding of the GSIS. Under these rules there is a minimum the highlights in the 1987 Constitution Commission proceedings thus:
bid required (P36.87 per share for a range of 9 to 15 million shares). 13 Bids
below the minimum will not be considered. On the other hand, if the Filipino xxx xxx xxx
entity, after passing the prequalification process, does not submit a bid, he will
not be allowed to match the highest bid of the foreign firm because this is a MR. NOLLEDO. The
privilege allowed only to those who have "validly submitted bids." 14 The Amendment will read: "IN THE
suggestion is, to say the least, fanciful and has no basis in fact. GRANT OF RIGHTS,
PRIVILEGES AND
For the foregoing reasons, I vote to grant the petition. CONCESSIONS COVERING
THE NATIONAL ECONOMY
TORRES, JR., J., separate opinion: AND PATRIMONY, THE
STATE SHALL GIVE
Constancy in law is not an attribute of a judicious mind. I say this as we are not PREFERENCE TO QUALIFIED
confronted in the case at bar with legal and constitutional issues — and yet I FILIPINOS". And the word
am driven so to speak on the side of history. The reason perhaps is due to the "Filipinos" here, as intended by
belief that in the words of Justice Oliver Wendell Holmes, Jr., a "page of history the proponents, will include not
is worth a volume of logic." only individual Filipinos but also
Filipino-Controlled entities fully
 controlled by Filipinos (Vol. III,
Records of the Constitutional
Commission, p. 608).
MR. MONSOD. We also wanted
to add, as Commissioner
Villegas said, this committee
and this body already approved
what is known as the Filipino
First policy which was
suggested by Commissioner de
Castro. So that it is now in our
Constitution (Vol. IV, Records of
the Constitutional Commission,
p. 225).
Commissioner Jose Nolledo explaining the provision adverted
to above, said:
MR. NOLLEDO. In the grant of
rights, privileges and
concessions covering the
national economy and
patrimony, the State shall give
preference to qualified Filipinos.
MR. FOZ. In connection with
that amendment, if a foreign
enterprise is qualified and the
Filipinos enterprise is also
qualified, will the Filipino
enterprise still be given a
preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is
more qualified in some aspects
than the Filipino enterprise, will
the Filipino still be preferred:?
MR. NOLLEDO. The answer is
"yes". (Vol. III, p. 616, Records
of the Constitutional
Commission).
The nationalistic provisions of the 1987 Constitution reflect the history and
spirit of the Malolos Constitution of 1898, the 1935 Constitution and the 1973
Constitutions. That we have no reneged on this nationalist policy is articulated
in one of the earliest case, this Court said —
The nationalistic tendency is manifested in various provisions
of the Constitution. . . . It cannot therefore be said that a law
imbued with the same purpose and spirit underlying many of
the provisions of the Constitution is unreasonable, invalid or
unconstitutional (Ichong, et al. vs. Hernandez, et al., 101 Phil.
1155).
I subscribe to the view that history, culture, heritage, and traditions are not
legislated and is the product of events, customs, usages and practices. It is
actually a product of growth and acceptance by the collective mores of a race.
It is the spirit and soul of a people.
The Manila Hotel is part of our history, culture and heritage. Every inch of the
Manila Hotel is witness to historic events (too numerous to mention) which
shaped our history for almost 84 years.
As I intimated earlier, it is not my position in this opinion, to examine the single
instances of the legal largese which have given rise to this controversy. As I
believe that has been exhaustively discussed in the ponencia. Suffice it to say
at this point that the history of the Manila Hotel should not be placed in the
auction block of a purely business transaction, where profits subverts the
cherished historical values of our people.
As a historical landmark in this "Pearl of the Orient Seas", it has its enviable
tradition which, in the words of the philosopher Salvador de Madarriaga
tradition is "more of a river than a stone, it keeps flowing, and one must view
the flowing , and one must view the flow of both directions. If you look towards
the hill from which the river flows, you see tradition in the form of forceful
currents that push the river or people towards the future, and if you look the
other way, you progress."
Indeed, tradition and progress are the same, for progress depends on the kind
of tradition. Let us not jettison the tradition of the Manila Hotel and thereby
repeat our colonial history.
I grant, of course the men of the law can see the same subject in different
lights.
I remember, however, a Spanish proverb which says — "He is always right
who suspects that he makes mistakes". On this note, I say that if I have to
make a mistake, I would rather err upholding the belief that the Filipino be first
under his Constitution and in his own land.
The bidding rules and procedures entitled "Guidelines and Procedures:
Second Prequalification and Public Bidding of the MHC Privatization" provide:
I INTRODUCTION AND HIGHLIGHTS
DETERMINING THE WINNING BIDDER/STRATEGIC
PARTNER
The party that accomplishes the steps set forth below will be
declared the Winning Bidder/Strategic Partner and will be
awarded the Block of Shares:

I vote GRANT the petition. First — Pass the prequalification process;

Second — Submit the highest bid on a price per share basis for
the Block of Shares;
PUNO, J., dissenting:
Third — Negotiate and execute the necessary contracts with
This is a. petition for prohibition and mandamus filed by the Manila Prince GSIS/MHC not later than October 23, 1995;
Hotel Corporation, a domestic corporation, to stop the Government Service
Insurance System (GSIS) from selling the controlling shares of the Manila xxx xxx xxx
Hotel Corporation to a foreign corporation. Allegedly, the sale violates the
second paragraph of section 10, Article XII of the Constitution. IV GUIDELINES FOR PREQUALIFICATION

Respondent GSIS is a government-owned and controlled corporation. It is the A. PARTIES WHO MAP APPLY FOR
sole owner of the Manila Hotel which it operates through its subsidiary, the PREQUALIFICATION
Manila Hotel Corporation. Manila Hotel was included in the privatization
program of the government. In 1995, GSIS proposed to sell to interested
The Winning Bidder/Strategic Partner will be
buyers 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000
expected to provide management expertise
shares, in the Manila Hotel Corporation. After the absence of bids at the first
and/or an international marketing reservation
public bidding, the block of shares offered for sale was increased from a
system, and financial support to strengthen the
maximum of 30% to 51%. Also, the winning bidder, or the eventual "strategic
profitability and performance of The Manila
partner" of the GSIS was required to "provide management expertise and/or
Hotel. In this context, the GSIS is inviting to the
an international marketing/reservation system, and financial support to
prequalification process any local and/or foreign
strengthen the profitability and performance of the Manila Hotel" 1 The proposal
corporation, consortium/joint venture or juridical
was approved by respondent Committee on Privatization.
entity with at least one of the following
qualifications:
In July 1995, a conference was held where prequalification documents and the
bidding rules were furnished interested parties. Petitioner Manila Prince Hotel,
a. Proven management
a domestic corporation, and Renong Berhad, Malaysian firm with ITT Sheraton
.expertise in the hotel industry;
as operator, prequalified.2
or
 b. Significant equity ownership
(i.e. board representation) in
another hotel company; or
c. Overall management and
marketing expertise to
successfully operate the Manila
Hotel.
Parties interested in bidding for MHC should be
able to provide access to the requisite
management expertise and/or international
marketing/reservation system for The Manila
Hotel.
xxx xxx xxx
D. PREQUALIFICATION DOCUMENTS
xxx xxx xxx
E. APPLICATION PROCEDURE
1. DOCUMENTS AVAILABLE AT THE
REGISTRATION OFFICE
The prequalification documents can be secured
at the Registration Office between 9:00 AM to
4:00 PM during working days within the period
specified in Section III. Each set of documents
consists of the following:
a. Guidelines and Procedures:
Second Prequalification and
Public Bidding of the MHC
Privatization
b. Confidential Information
Memorandum: The Manila Hotel
Corporation
c. Letter of Invitation. to the
Prequalification and Bidding
Conference
xxx xxx xxx
4. PREQUALIFICATION AND BIDDING CONFERENCE
A prequalification and bidding conference will
be held at The Manila Hotel on the date
specified in Section III to allow the Applicant to
seek clarifications and further information
regarding the guidelines and procedures. Only
those who purchased the prequalification
documents will be allowed in this conference.
Attendance to this conference is strongly
advised, although the Applicant will not be
penalized if it does not attend.
5. SUBMISSION OF PREQUALIFICATION DOCUMENTS
The applicant should submit 5 sets of the
prequalification documents (1 original set plus 4
copies) at the Registration Office between 9:00
AM to 4:00 PM during working days within the
period specified in Section III.
F. PREQUALIFICATION PROCESS
1. The Applicant will be
evaluated by the PBAC with the
assistance of the TEC based on
the Information Package and
other information available to
the PBAC.
2. If the Applicant is a
Consortium/Joint Venture, the
evaluation will consider the
overall qualifications of the
group, taking into account the
 contribution of each member to
the venture.
3. The decision of the PBAC
with respect to the results of the
PBAC evaluation will be final.
4. The Applicant shall be
evaluated according to the
criteria set forth below:
a. Business
management
expertise, track
record, and
experience
b. Financial
capability.
c. Feasibility and
acceptability of
the proposed
strategic plan for
the Manila Hotel
5. The PBAC will shortlist such number of
Applicants as it may deem appropriate.
6. The parties that prequalified in the first MHC
public bidding — ITT Sheraton, Marriot
International Inc., Renaissance Hotels
International Inc., consortium of RCBC
Capital/Ritz Carlton — may participate in the
Public Bidding without having to undergo the
prequalification process again.
G. SHORTLIST OF QUALIFIED BIDDERS
1. A notice of prequalification results containing
the shortlist of Qualified Bidders will be posted
at the Registration Office at the date specified
in Section III.
2. In the case of a Consortium/Joint Venture,
the withdrawal by member whose qualification
was a material consideration for being included
in the shortlist is ground for disqualification of
the Applicant.
V. GUIDELINES FOR THE PUBLIC BIDDING
A. PARTIES WHO MAY PARTICIPATE IN THE
PUBLIC BIDDING
All parties in the shortlist of Qualified Bidders
will be eligible to participate in the Public
Bidding.
B. BLOCK OF SHARES
A range of Nine Million (9,000,000) to Fifteen
Million Three Hundred Thousand (15,300,000)
shares of stock representing Thirty Percent to
Fifty-One Percent (30%-51%) of the issued and
outstanding shares of MHC, will be offered in
the Public Bidding by the GSIS. The Qualified
Bidders will have the Option of determining the
number of shares within the range to bid for.
The range is intended to attract bidders with
different preferences and objectives for the
operation and management of The Manila
Hotel.
C. MINIMUM BID REQUIRED ON A PRICE
PER SHARE BASIS
1. Bids will be evaluated on a price per share
basis. The minimum bid required on a price per
share basis for the Block of Shares is Thirty-Six
Pesos and Sixty-Seven Centavos (P36.67).
2. Bids should be in the Philippine currency perform such acts necessary or requisite to
payable to the GSIS. bind the Qualified Bidder.

3. Bids submitted with an equivalent price per If the Qualified Bidder is a Consortium/Joint
share below the minimum required will not Venture, each member of the Consortium/Joint
considered. venture should submit a Board resolution
authorizing one of its members and such
D. TRANSFER COSTS member's representative to make the bid on
behalf of the group with full authority to perform
xxx xxx xxx such acts necessary or requisite to bind the
Qualified Bidder.
E. OFFICIAL BID FORM
2. BID SECURITY
1. Bids must be contained in the prescribed
Official Bid Form, a copy of which is attached a. The Qualified Bidder should deposit Thirty-
as Annex IV. The Official Bid Form must be Three Million Pesos (P33,000,00), in Philippine
properly accomplished in all details; improper currency as Bid Security in the form of:
accomplishment may be a sufficient basis for
disqualification. i. Manager's check or
unconditional demand draft
2. During the Public Bidding, the Qualified payable to the "Government
Bidder will submit the Official Bid Form, which Service Insurance System" and
will indicate the offered purchase price, in a issued by a reputable banking
sealed envelope marked "OFFICIAL BID." institution duly licensed to do
business in the Philippines and
acceptable to GSIS; or
F. SUPPORTING DOCUMENTS
ii. Standby-by letter of credit
During the Public Bidding, the following
issued by a reputable banking
documents should be submitted along with the
institution acceptable to the
bid in a separate envelop marked
GSIS.
"SUPPORTING DOCUMENTS":
b. The GSIS will reject a bid if:
1. WRITTEN AUTHORITY TO BID (UNDER
OATH).
i. The bid does not have Bid
Security; or
If the Qualified Bidder is a corporation, the
representative of the Qualified Bidder should
submit a Board resolution which adequately ii. The Bid Security
authorizes such representative to bid for and in accompanying the bid is for less
behalf of the corporation with full authority to than the required amount.
c. If the Bid Security is in the form of a
manager's check or unconditional demand
draft, the interest earned on the Bid Security
will be for the account of GSIS.
d. If the Qualified Bidder becomes the winning
Bidder/Strategic Partner, the Bid Security will
be applied as the downpayment on the
Qualified Bidder's offered purchase price.
e. The Bid Security of the Qualified Bidder will
be returned immediately after the Public
Bidding if the Qualified Bidder is not declared
the Highest Bidder.
f. The Bid Security will be returned by October
23, 1995 if the Highest Bidder is unable to
negotiate and execute with GSIS/MHC the
Management Contract, International
Marketing/Reservation System Contract or
other types of contract specified by the Highest
Bidder in its strategic plan for The Manila Hotel.
g. The Bid Security of the Highest Bidder will be
forfeited in favor of GSIS if the Highest Bidder,
after negotiating and executing the
Management Contract, International
Marketing/Reservation System Contract
specified by the Highest Bidder or other types
of contract in its strategic plan for The Manila
Hotel, fails or refuses to:
i. Execute the Stock Purchase
and Sale Agreement with GSIS
not later than October 23, 1995;
or
ii. Pay the full amount of the
offered purchase price not later
than October 23, 1995; or
iii. Consummate the sale of the
Block of Shares for any other
reason.
G. SUBMISSION OF BIDS
1. The Public Bidding will be held on
September 7, 1995 at the following location:
New GSIS Headquarters Building
Financial Center, Reclamation Area
Roxas Boulevard, Pasay City, Metro Manila.
2. The Secretariat of the PBAC will be stationed
at the Public Bidding to accept any and all bids
and supporting requirements. Representatives
from the Commission on Audit and COP will be
invited to witness the proceedings.
3. The Qualified Bidder should submit its bid
using the Official Bid Form. The accomplished
Official Bid Form should be submitted in a
sealed envelope marked "OFFICIAL BID."
4. The Qualified Bidder should submit the
following documents in another sealed
envelope marked "SUPPORTING BID
DOCUMENTS"
a. Written Authority Bid
b. Bid Security
5. The two sealed envelopes marked
"OFFICIAL BID" and "SUPPORTING BID
DOCUMENTS" must be submitted
simultaneously to the Secretariat between 9:00
AM and 2:00 PM, Philippine Standard Time, on
the date of the Public Bidding. No bid shall be
accepted after the closing time. Opened or
tampered bids shall not be accepted.
6. The Secretariat will log and record the actual
time of submission of the two sealed
envelopes. The actual time of submission will
also be indicated by the Secretariat on the face
of the two envelopes.
7. After Step No. 6, the two sealed envelopes
will be dropped in the corresponding bid boxes
provided for the purpose. These boxes will be
in full view of the invited public.
H. OPENING AND READING OF BIDS
1. After the closing time of 2:00 PM on the date
of the Public Bidding, the PBAC will open all
sealed envelopes marked "SUPPORTING BID
DOCUMENTS" for screening, evaluation and
acceptance. Those who submitted
incomplete/insufficient documents or
document/s which is/are not substantially in the
form required by PBAC will be disqualified. The
envelope containing their Official Bid Form will
be immediately returned to the disqualified
bidders.
2. The sealed envelopes marked "OFFICIAL
BID" will be opened at 3:00 PM. The name of
the bidder and the amount of its bid price will be
read publicly as the envelopes are opened.
3. Immediately following the reading of the bids,
the PBAC will formally announce the highest
bid and the Highest Bidder.
4. The highest bid will be, determined on
a price per share basis. In the event of a tie
wherein two or more bids have the same
equivalent price per share, priority will be given
to the bidder seeking the larger ownership
interest in MHC.
5. The Public Bidding will be declared a failed
bidding in case:
a. No single bid is submitted
within the prescribed period; or
b. There is only one (1) bid that
is submitted and acceptable to
the PBAC.
I. EXECUTION OF THE NECESSARY
CONTRACTS WITH GSIS/MHC
1. The Highest Bidder must comply with the
conditions set forth below by October 23, 1995
or the Highest Bidder will lose the right to
purchase the Block of Shares and GSIS will
instead offer the Block of Shares to the other
Qualified Bidders:
a. The Highest Bidder must
negotiate and execute with
GSIS/MHC the Management
Contract, International
Marketing Reservation System
Contract or other type of
contract specified by the
Highest Bidder in its strategic
plan for The Manila Hotel. If the
Highest Bidder is intending to
provide only financial support to
The Manila Hotel, a separate
institution may enter into the
aforementioned contract/s with
GSIS/MHC.
b. The Highest Bidder must
execute the Stock Purchase
and Sale Agreement with GSIS,
a copy of which will be
distributed to each of the
Qualified Bidder after the
 prequalification process is
completed.
2. In the event that the Highest Bidder chooses
a Management Contract for The Manila Hotel,
the maximum levels for the management fee
structure that GSIS/MHC are prepared to
accept in the Management Contract are as
follows:
a. Basic management fee:
Maximum of 2.5% of gross
revenues.(1)
b. Incentive fee: Maximum of
8.0% of gross operating profit(1)
after deducting undistributed
overhead expenses and the
basic management fee.
c. Fixed component of the
international
marketing/reservation system
fee: Maximum of 2.0% of gross
room revenues.(1) The
Applicant should indicate in its
Information Package if it is
wishes to charge this fee.
Note (1): As defined in the uniform system of
account for hotels.
The GSIS/MHC have indicated above the
acceptable parameters for the hotel
management fees to facilitate the negotiations
with the Highest Bidder for the Management
Contract after the Public Bidding.
A Qualified Bidder envisioning a Management
Contract for The Manila Hotel should determine
whether or not the management fee structure
above is acceptable before submitting their
prequalification documents to GSIS.
J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS
1. If for any reason, the Highest Bidder cannot
be awarded the Block of Shares, GSIS may
offer this to the other Qualified Bidders that
have validly submitted bids provided that these
Qualified are willing to match the highest bid in
terms of price per share.
2. The order of priority among the interested
Qualified Bidders will be in accordance wit the
equivalent price per share of their respective
bids in their public Bidding, i.e., first and second
priority will be given to the Qualified Bidders
that submitted the second and third highest
bids on the price per share basis, respectively,
and so on.
K. DECLARATION OF THE WINNING
BIDDER/STRATEGIC PARTNER
The Highest Bidder will be declared the
Winning Bidder/Strategic Partner after the
following conditions are met:
a. Execution of the necessary
contract with GSIS/MHC not
later than October 23, 1995;
and
b. Requisite approvals from the
GSIS/MHC and COP/OGCC are
obtained.
I. FULL PAYMENT FOR THE BLOCK OF
SHARES
1. Upon execution of the necessary contracts
with GSIS/MHC, the Winning Bidder/Strategic
Partner must fully pay, not later than October
23, 1995, the offered purchase price for the
Block of Shares after deducting the Bid Security
applied as downpayment.
2. All payments should be made in the form of a
Manager's Check or unconditional Demand
Draft, payable to the "Government Service
Insurance System," issued by a reputable
banking institution licensed to do business in
the Philippines and acceptable to GSIS.
M. GENERAL CONDITIONS
1. The GSIS unconditionally reserves the right
to reject any or all applications, waive any
formality therein, or accept such application as
maybe considered most advantageous to the
GSIS. The GSIS similarly reserves the right to
require the submission of any additional
information from the Applicant as the PBAC
may deem necessary.
2. The GSIS further reserves the right to call off
the Public Bidding prior to acceptance of the
bids and call for a new public bidding under
amended rules, and without any liability
whatsoever to any or all the Qualified Bidders,
except the obligation to return the Bid Security.
3. The GSIS reserves the right to reset the date
of the prequalification/bidding conference, the
deadline for the submission of the
prequalification documents, the date of the
Public Bidding or other pertinent activities at
least three (3) calendar days prior to the
respective deadlines/target dates.
4. The GSIS sells only whatever rights, interest
and participation it has on the Block of Shares.
5. All documents and materials submitted by
the Qualified Bidders, except the Bid Security,
may be returned upon request.
6. The decision of the PBAC/GSIS on the
results of the Public Bidding is final. The
Qualified Bidders, by participating in the Public
Bidding, are deemed to have agreed to accept
and abide by these results.
7. The GSIS will be held free and harmless
form any liability, suit or allegation arising out of
the Public Bidding by the Qualified Bidders who
have participated in the Public Bidding. 3
The second public bidding was held on September 18, 1995. Petitioner bidded
P41.00 per share for 15,300,000 shares and Renong Berhad bidded P44.00
per share also for 15,300,000 shares. The GSIS declared Renong Berhad the
highest bidder and immediately returned petitioner's bid security.
On September 28, 1995, ten days after the bidding, petitioner wrote to GSIS
offering to match the bid price of Renong Berhad. It requested that the award
be made to itself citing the second paragraph of Section 10, Article XII of the
Constitution. It sent a manager's check for thirty-three million pesos
(P33,000,000.00) as bid security.
Respondent GSIS, then in the process of negotiating with Renong Berhad the
terms and conditions of the contract and technical agreements in the operation
of the hotel, refused to entertain petitioner's request.
Hence, petitioner filed the present petition. We issued a temporary restraining
order on October 18, 1995.
Petitioner anchors its plea on the second paragraph of Article XII, Section 10
of the Constitution4 on the "National Economy and Patrimony" which provides:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
 xxx xxx xxx
The vital issues can be summed up as follows:
(1) Whether section 10, paragraph 2 of Article XII of the
Constitution is a self-executing provision and does not need
implementing legislation to carry it into effect;
(2) Assuming section 10 paragraph 2 of Article XII is self-
executing whether the controlling shares of the Manila Hotel
Corporation form part of our patrimony as a nation;
(3) Whether GSIS is included in the term "State," hence,
mandated to implement section 10, paragraph 2 of Article XII of
the Constitution;
(4) Assuming GSIS is part of the State, whether it failed to give
preference to petitioner, a qualified Filipino corporation, over
and above Renong Berhad, a foreign corporation, in the sale of
the controlling shares of the Manila Hotel Corporation;
(5) Whether petitioner is estopped from questioning the sale of
the shares to Renong Berhad, a foreign corporation.
Anent the first issue, it is now familiar learning that a Constitution provides the
guiding policies and principles upon which is built the substantial foundation
and general framework of the law and government. 5 As a rule, its provisions
are deemed self-executing and can be enforced without further legislative
action.6 Some of its provisions, however, can be implemented only through
appropriate laws enacted by the Legislature, hence not self-executing.
To determine whether a particular provision of a Constitution is self-executing
is a hard row to hoe. The key lies on the intent of the framers of the
fundamental law oftentimes submerged in its language. A searching inquiry
should be made to find out if the provision is intended as a present enactment,
complete in itself as a definitive law, or if it needs future legislation for
completion and enforcement.7 The inquiry demands a micro-analysis of the text
and the context of the provision in question. 8
Courts as a rule consider the provisions of the Constitution as self-
executing,9 rather than as requiring future legislation for their
enforcement. 10 The reason is not difficult to discern. For if they are not treated
as self-executing, the mandate of the fundamental law ratified by the sovereign
people can be easily ignored and nullified by Congress. 11 Suffused with
wisdom of the ages is the unyielding rule that legislative actions may give
breath to constitutional rights but congressional in action should not suffocate
them. 12
Thus, we have treated as self-executing the provisions in the Bill of Rights on
arrests, searches and seizures, 13 the rights of a person under custodial
investigation, 14 the rights of an accused, 15 and the privilege against self-
incrimination, 16 It is recognize a that legislation is unnecessary to enable courts
to effectuate constitutional provisions guaranteeing the fundamental rights of
life, liberty and the protection of property. 17 The same treatment is accorded to
constitutional provisions forbidding the taking or damaging of property for
public use without just compensation.18
Contrariwise, case law lays down the rule that a constitutional provision is not
self-executing where it merely announces a policy and its language empowers
the Legislature to prescribe the means by which the policy shall be carried into
effect. 19 Accordingly, we have held that the provisions in Article II of our
Constitution entitled "Declaration of Principles and State Policies" should
generally be construed as mere statements of principles of the State. 20 We
have also ruled that some provisions of Article XIII on "Social Justice and
Human Rights," 21 and Article XIV on "Education Science and Technology, Arts,
Culture end Sports" 22 cannot be the basis of judicially enforceable rights. Their
enforcement is addressed to the discretion of Congress though they provide
the framework for legislation 23 to effectuate their policy content. 24
Guided by this map of settled jurisprudence, we now consider whether Section
10, Article XII of the 1987 Constitution is self-executing or not. It reads:
Sec. 10. The Congress shall, upon recommendation of the
economic and planning agency, when the national interest
dictates, reserve to citizens of the Philippines or to corporations
or associations at least sixty per centum of whose capital is
owned by such citizens, or such higher percentage as
Congress may prescribe, certain areas of investments. The
Congress shall enact measures that will encourage the
formation and operation of enterprises whose capital is wholly
owned by Filipinos.
 In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign
investments within its national jurisdiction and in accordance
with its national goals and priorities.
The first paragraph directs Congress to reserve certain areas of
investments in the country 25 to Filipino citizens or to corporations sixty
per
cent 26 of whose capital stock is owned by Filipinos. It further
commands Congress to enact laws that will encourage the formation
and operation of one hundred percent Filipino-owned enterprises. In
checkered contrast, the second paragraph orders the entire State to
give preference to qualified Filipinos in the grant of rights and privileges
covering the national economy and patrimony. The third paragraph
also directs the State to regulate foreign investments in line with our
national goals and well-set priorities.
The first paragraph of Section 10 is not self-executing. By its express
text, there is a categorical command for Congress to enact laws
restricting foreign ownership in certain areas of investments in the
country and to encourage the formation and operation of wholly-owned
Filipino enterprises. The right granted by the provision is clearly still in
esse. Congress has to breathe life to the right by means of legislation.
Parenthetically, this paragraph was plucked from section 3, Article XIV
of the 1973 Constitution. 27 The provision in the 1973 Constitution
affirmed our ruling in the landmark case of Lao Ichong
v. Hernandez, 28 where we upheld the discretionary authority of
Congress to Filipinize certain areas of investments. 29 By reenacting the
1973 provision, the first paragraph of section 10 affirmed the power of
Congress to nationalize certain areas of investments in favor of
Filipinos.
The second and third paragraphs of Section 10 are different. They are directed
to the State and not to Congress alone which is but one of the three great
branches of our government. Their coverage is also broader for they cover "the
national economy and patrimony" and "foreign investments within [the] national
jurisdiction" and not merely "certain areas of investments." Beyond debate,
they cannot be read as granting Congress the exclusive power to implement
by law the policy of giving preference to qualified Filipinos in the conferral of
rights and privileges covering our national economy and patrimony. Their
language does not suggest that any of the State agency or instrumentality has
the privilege to hedge or to refuse its implementation for any reason
whatsoever. Their duty to implement is unconditional and it is now. The second
and the third paragraphs of Section 10, Article XII are thus self-executing.
This submission is strengthened by Article II of the Constitution entitled
"Declaration of Principles and State Policies." Its Section 19 provides that
"[T]he State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos." It engrafts the all-important Filipino First
policy in our fundamental law and by the use of the mandatory word "shall,"
directs its enforcement by the whole State without any pause or a half- pause
in time.
The second issue is whether the sale of a majority of the stocks of the Manila
Hotel Corporation involves the disposition of part of our national patrimony.
The records of the Constitutional Commission show that the Commissioners
entertained the same view as to its meaning. According to Commissioner
Nolledo, "patrimony" refers not only to our rich natural resources but also to
the cultural heritage of our race. 30 By this yardstick, the sale of Manila Hotel
falls within the coverage of the constitutional provision giving preferential
treatment to qualified Filipinos in the grant of rights involving our national
patrimony. The unique value of the Manila Hotel to our history and culture
cannot be viewed with a myopic eye. The value of the hotel goes beyond
pesos and centavos. As chronicled by Beth Day Romulo, 31 the hotel first
opened on July 4, 1912 as a first-class hotel built by the American Insular
Government for Americans living in, or passing through, Manila while traveling
to the Orient. Indigenous materials and Filipino craftsmanship were utilized in
its construction, For sometime, it was exclusively used by American and
Caucasian travelers and served as the "official guesthouse" of the American
Insular Government for visiting foreign dignitaries. Filipinos began coming to
the Hotel as guests during the Commonwealth period. When the Japanese
occupied Manila, it served as military headquarters and lodging for the highest-
ranking officers from Tokyo. It was at the Hotel and the Intramuros that the
Japanese made their last stand during the Liberation of Manila. After the war,
the Hotel again served foreign guests and Filipinos alike. Presidents and kings,
premiers and potentates, as well as glamorous international film and sports
celebrities were housed in the Hotel. It was also the situs of international
conventions and conferences. In the local scene, it was the venue of historic
meetings, parties and conventions of political parties. The Hotel has reaped
and continues reaping numerous recognitions and awards from international
hotel and travel award-giving bodies, a fitting acknowledgment of Filipino talent
and ingenuity. These are judicially cognizable facts which cannot be bent by a Thus, during the deliberations in the Constitutional Commission,
biased mind. Commissioner Nolledo to define the phrase brushed aside a suggestion to
define the phrase "qualified Filipinos." He explained that present and
The Hotel may not, as yet, have been declared a national cultural treasure prospective "laws" will take care of the problem of its interpretation, viz:
pursuant to Republic Act No. 4846 but that does not exclude it from our
national patrimony. Republic Act No. 4846, "The Cultural Properties xxx xxx xxx
Preservation and Protection Act," merely provides a procedure whereby a
particular cultural property may be classified a "national cultural treasure" or an THE PRESIDENT. What is the
"important cultural property. 32 Approved on June 18, 1966 and amended by suggestion of Commissioner
P.D. 374 in 1974, the law is limited in its reach and cannot be read as the Rodrigo? Is it to remove the
exclusive law implementing section 10, Article XII of the 1987 Constitution. To word "QUALIFIED?"
be sure, the law does not equate cultural treasure and cultural property as
synonymous to the phrase "patrimony of the nation." MR. RODRIGO. No, no, but say
definitely "TO QUALIFIED
The third issue is whether the constitutional command to the State includes the FILIPINOS" as against whom?
respondent GSIS. A look at its charter will reveal that GSIS is a government- As against aliens over aliens?
owned and controlled corporation that administers funds that come from the
monthly contributions of government employees and the government. 33 The MR. NOLLEDO. Madam
funds are held in trust for a distinct purpose which cannot be disposed of President, I think that is
indifferently. 34 They are to be used to finance the retirement, disability and life understood. We use the word
insurance benefits of the employees and the administrative and operational "QUALIFIED" because the
expenses of the GSIS, 35 Excess funds, however, are allowed to be invested in existing laws or the prospective
business and other ventures for the benefit of the employees.36 It is thus laws will always lay down
contended that the GSIS investment in the Manila Hotel Corporation is a conditions under which
simple business venture, hence, an act beyond the contemplation of section business map be done, for
10, paragraph 2 of Article XII of the Constitution. example, qualifications on
capital, qualifications on the
The submission is unimpressive. The GSIS is not a pure private corporation. It setting up of other financial
is essentially a public corporation created by Congress and granted an original structures, et cetera.
charter to serve a public purpose. It is subject to the jurisdictions of the Civil
Service Commission 37 and the Commission on Audit. 38 As state-owned and MR. RODRIGO. It is just a
controlled corporation, it is skin-bound to adhere to the policies spelled out in matter of style.
the general welfare of the people. One of these policies is the Filipino First
policy which the people elevated as a constitutional command.
MR. NOLLEDO Yes.
The fourth issue demands that we look at the content of phrase "qualified
MR. RODRIGO. If we say,
Filipinos" and their "preferential right." The Constitution desisted from defining
"PREFERENCE TO
their contents. This is as it ought to be for a Constitution only lays down flexible
QUALIFIED FILIPINOS," it can
policies and principles which can bent to meet today's manifest needs and
be understood as giving
tomorrow's unmanifested demands. Only a constitution strung with elasticity
preference to qualified Filipinos
can grow as a living constitution.
as against Filipinos who are not
qualified.
 MR. NOLLEDO. Madam
President, that was the intention
of the proponents. The
committee has accepted the
amendment.
xxx xxx xxx
As previously discussed, the constitutional command to enforce the
Filipino First policy is addressed to the State and not to Congress
alone. Hence, the word "laws" should not be understood as limited to
legislations but all state actions which include applicable rules and
regulations adopted by agencies and instrumentalities of the State in
the exercise of their rule-making power. In the case at bar, the bidding
rules and regulations set forth the standards to measure the
qualifications of bidders Filipinos and foreigners alike. It is not seriously
disputed that petitioner qualified to bid as did Renong Berhad. 39
Thus, we come to the critical issue of the degree of preference which GSIS
should have accorded petitioner, a qualified Filipino, over Renong Berhad, a
foreigner, in the purchase of the controlling shares of the Manila Hotel.
Petitioner claims that after losing the bid, this right of preference gives it a
second chance to match the highest bid of Renong Berhad.
With due respect, I cannot sustain petitioner's submission. I prescind from the
premise that the second paragraph of section 10, Article XII of the Constitution
is pro-Pilipino but not anti-alien. It is pro-Filipino for it gives preference to
Filipinos. It is not, however, anti-alien per se for it does not absolutely bar
aliens in the grant of rights, privileges and concessions covering the national
economy and patrimony. Indeed, in the absence of qualified Filipinos, the
State is not prohibited from granting these rights, privileges and concessions to
foreigners if the act will promote the weal of the nation.
In implementing the policy articulated in section 10, Article XII of the
Constitution, the stellar task of our State policy-makers is to maintain a
creative tension between two desiderata — first, the need to develop our
economy and patrimony with the help of foreigners if necessary, and, second,
the need to keep our economy controlled by Filipinos. Rightfully, the framers of
the Constitution did not define the degree of the right of preference to be given
to qualified Filipinos. They knew that for the right to serve the general welfare,
it must have a malleable content that can be adjusted by our policy-makers to
meet the changing needs of our people. In fine, the right of preference of
qualified Filipinos is to be determined by degree as time dictates and
circumstances warrant. The lesser the need for alien assistance, the greater
the degree of the right of preference can be given to Filipinos and vice verse.
Again, it should be stressed that the right and the duty to determine the degree
of this privilege at any given time is addressed to the entire State. While under
our constitutional scheme, the right primarily belongs to Congress as the
lawmaking department of our government, other branches of government, and
all their agencies and instrumentalities, share the power to enforce this state
policy. Within the limits of their authority, they can act or promulgate rules and
regulations defining the degree of this right of preference in cases where they
have to make grants involving the national economy and judicial duty. On the
other hand, our duty is to strike down acts of the state that violate the policy.
To date, Congress has not enacted a law defining the degree of the
preferential right. Consequently, we must turn to the rules and regulations of
on respondents Committee Privatization and GSIS to determine the degree of
preference that petitioner is entitled to as a qualified Filipino in the subject sale.
A tearless look at the rules and regulations will show that they are silent on the
degree of preferential right to be accorded qualified Filipino bidder. Despite
their silence, however, they cannot be read to mean that they do not grant any
degree of preference to petitioner for paragraph 2, section 10, Article XII of the
Constitution is deemed part of said rules and regulations. Pursuant to legal
hermeneutics which demand that we interpret rules to save them from
unconstitutionality, I submit that the right of preference of petitioner arises only
if it tied the bid of Benong Berhad. In that instance, all things stand equal, and
bidder, as a qualified Pilipino bidder, should be preferred.
It is with deep regret that I cannot subscribe to the view that petitioner has a
right to match the bid of Renong Berhad. Petitioner's submission must be
supported by the rules but even if we examine the rules inside-out .thousand
times, they can not justify the claimed right. Under the rules, the right to match
the highest bid arises only "if for any reason, the highest bidder cannot be
awarded block of shares . . ." No reason has arisen that will prevent the award
to Renong Berhad. It qualified as bidder. It complied with the procedure of
bidding. It tendered the highest bid. It was declared as the highest bidder by
the GSIS and the rules say this decision is final. It deserves the award as a
matter of right for the rules clearly did not give to the petitioner as a qualified
Filipino privilege to match the higher bid of a foreigner. What the rules did not
grant, petitioner cannot demand. Our symphaties may be with petitioner but
the court has no power to extend the latitude and longtitude of the right of
preference as defined by the rules. The parameters of the right of preference
depend on galaxy of facts and factors whose determination belongs to the
province of the policy-making branches and agencies of the State. We are
duty-bound to respect that determination even if we differ with the wisdom of
their judgment. The right they grant may be little but we must uphold the grant
for as long as the right of preference is not denied. It is only when a State
action amounts to a denial of the right that the Court can come in and strike
down the denial as unconstitutional.
Finally, I submit that petitioner is estopped from assailing the winning bid of
Renong Berhad. Petitioner was aware of the rules and regulations of the
bidding. It knew that the rules and regulations do not provide that a qualified
Filipino bidder can match the winning bid submitting an inferior bid. It knew that
the bid was open to foreigners and that foreigners qualified even during the
first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed
to respect. It cannot be allowed to obey the rules when it wins and disregard
them when it loses. If sustained, petitioners' stance will wreak havoc on he
essence of bidding. Our laws, rules and regulations require highest bidding to
raise as much funds as possible for the government to maximize its capacity to
deliver essential services to our people. This is a duty that must be discharged
by Filipinos and foreigners participating in a bidding contest and the rules are
carefully written to attain this objective. Among others, bidders are prequalified
to insure their financial capability. The bidding is secret and the bids are sealed
to prevent collusion among the parties. This objective will be undermined if we
grant petitioner that privilege to know the winning bid and a chance to match it.
For plainly, a second chance to bid will encourage a bidder not to strive to give
the highest bid in the first bidding.
We support the Filipino First policy without any reservation. The visionary
nationalist Don Claro M. Recto has warned us that the greatest tragedy that
can befall a Filipino is to be an alien in his own land. The Constitution has
embodied Recto's counsel as a state policy. But while the Filipino First policy
requires that we incline to a Filipino, it does not demand that we wrong an
alien. Our policy makers can write laws and rules giving favored treatment to
the Filipino but we are not free to be unfair to a foreigner after writing the laws
and the rules. After the laws are written, they must be obeyed as written, by
Filipinos and foreigners alike. The equal protection clause of the Constitution
protects all against unfairness. We can be pro-Filipino without unfairness to
foreigner.
I vote to dismiss the petition.
Narvasa, C.J., and Melo, J., concur.
PANGANIBAN, J., dissenting:
I regret I cannot join the majority. To the incisive Dissenting Opinion of Mr.
Justice Reynato S. Puno, may I just add
1. The majority contends the Constitution should be interpreted to mean that,
after a bidding process is concluded, the losing Filipino bidder should be given
the right to equal the highest foreign bid, and thus to win. However, the
Constitution [Sec. 10 (2), Art. XII] simply states that "in the grant of rights . . .
covering the national economy and patrimony, the State shall give preference
to qualified Filipinos." The majority concedes that there is no law defining the
extent or degree of such preference. Specifically, no statute empowers a
losing Filipino bidder to increase his bid and equal that of the winning
foreigner. In the absence of such empowering law, the majority's strained
interpretation, I respectfully submit constitutes unadulterated judicial
legislation, which makes bidding a ridiculous sham where no Filipino can lose
and where no foreigner can win. Only in the Philippines!.
2. Aside from being prohibited by the Constitution, such judicial is short-sighted
and, viewed properly, gravely prejudicial to long-term Filipino interest. It
encourages other countries — in the guise of reverse comity or worse,
unabashed retaliation — to discriminate against us in their own jurisdictions by
authorizing their own nationals to similarly equal and defeat the higher bids of
Filipino enterprises solely, while on the other hand, allowing similar bids of
other foreigners to remain unchallenged by their nationals. The majority's
thesis will thus marginalize Filipinos as pariahs in the global marketplace with
absolute no chance of winning any bidding outside our country. Even
authoritarian regimes and hermit kingdoms have long ago found out
unfairness, greed and isolation are self-defeating and in the long-term, self-
destructing.
The moral lesson here is simple: Do not do unto other what you dont want
other to do unto you.
3. In the absence of a law specifying the degree or extent of the "Filipino First"
policy of the Constitution, the constitutional preference for the "qualified
Filipinos" may be allowed only where all the bids are equal. In this manner, we
put the Filipino ahead without self-destructing him and without being unfair to
the foreigner.
In short, the Constitution mandates a victory for the qualified Filipino only when
the scores are tied. But not when the ballgame is over and the foreigner clearly
posted the highest score.
Separate Opinions
PADILLA, J., concurring:
I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would
like to expound a bit more on the concept of national patrimony as including
within its scope and meaning institutions such as the Manila Hotel.
It is argued by petitioner that the Manila Hotel comes under "national
patrimony" over which qualified Filipinos have the preference, in ownership
and operation. The Constitutional provision on point states:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall Give
preference to qualified Filipinos.1
Petitioner's argument, I believe, is well taken. Under the 1987 Constitution,
"national patrimony" consists of the natural resources provided by Almighty
God (Preamble) in our territory (Article I) consisting of land, sea, and air. 2 study
of the 1935 Constitution, where the concept of "national patrimony" originated,
would show that its framers decided to adopt the even more comprehensive
expression "Patrimony of the Nation" in the belief that the phrase encircles a
concept embracing not only their natural resources of the country but
practically everything that belongs to the Filipino people, the tangible and the
material as well as the intangible and the spiritual assets and possessions of
the people. It is to be noted that the framers did not stop with conservation.
They knew that conservation alone does not spell progress; and that this may
be achieved only through development as a correlative factor to assure to the
people not only the exclusive ownership, but also the exclusive benefits of their
national patrimony).3
Moreover, the concept of national patrimony has been viewed as referring not
only to our rich natural resources but also to the cultural heritage of our
race.4
There is no doubt in my mind that the Manila Hotel is very much a part of our
national patrimony and, as such, deserves constitutional protection as to who
shall own it and benefit from its operation. This institution has played an
important role in our nation's history, having been the venue of many a
historical event, and serving as it did, and as it does, as the Philippine Guest
House for visiting foreign heads of state, dignitaries, celebrities, and others. 5
It is therefore our duty to protect and preserve it for future generations of
Filipinos. As President Manuel L. Quezon once said, we must exploit the
natural resources of our country, but we should do so with. an eye to the
welfare of the future generations. In other words, the leaders of today are the
trustees of the patrimony of our race. To preserve our national patrimony and
reserve it for Filipinos was the intent of the distinguished gentlemen who first
framed our Constitution. Thus, in debating the need for nationalization of our
lands and natural resources, one expounded that we should "put more teeth
into our laws, and; not make the nationalization of our lands and natural
resources a subject of ordinary legislation but of constitutional enactment" 6 To
quote further: "Let not our children be mere tenants and trespassers in their
own country. Let us preserve and bequeath to them what is rightfully theirs,
free from all foreign liens and encumbrances". 7
Now, a word on preference. In my view "preference to qualified Filipinos", to be
meaningful, must refer not only to things that are peripheral, collateral, or
tangential. It must touch and affect the very "heart of the existing order." In the
field of public bidding in the acquisition of things that pertain to the national
patrimony, preference to qualified Filipinos must allow a qualified Filipino to
match or equal the higher bid of a non-Filipino; the preference shall not
operate only when the bids of the qualified Filipino and the non-Filipino are
equal in which case, the award should undisputedly be made to the qualified
Filipino. The Constitutional preference should give the qualified Filipino an
opportunity to match or equal the higher bid of the non-Filipino bidder if the
preference of the qualified Filipino bidder is to be significant at all.
It is true that in this present age of globalization of attitude towards foreign
investments in our country, stress is on the elimination of barriers to foreign
trade and investment in the country. While government agencies, including the
courts should re-condition their thinking to such a trend, and make it easy and
even attractive for foreign investors to come to our shores, yet we should not
preclude ourselves from reserving to us Filipinos certain areas where our
national identity, culture and heritage are involved. In the hotel industry, for
instance, foreign investors have established themselves creditably, such as in
the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should
not stop us from retaining 51% of the capital stock of the Manila Hotel
Corporation in the hands of Filipinos. This would be in keeping with the intent
of the Filipino people to preserve our national patrimony, including our
historical and cultural heritage in the hands of Filipinos.
VITUG, J., concurring:
I agree with Mr. Justice Josue N. Bellosillo on his clear-cut statements, shared
by Mr. Justice Reynato S. Puno in a well written separate (dissenting) opinion,
that:
First, the provision in our fundamental law which provides that "(I)n the grant of
rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos" 1 is self-
executory. The provision verily does not need, although it can obviously be
amplified or regulated by, an enabling law or a set of rules.
Second, the term "patrimony" does not merely refer to the country's natural
resources but also to its cultural heritage. A "historical landmark," to use the
words of Mr. Justice Justo P. Torres, Jr., Manila Hotel has now indeed become
part of Philippine heritage.
Third, the act of the Government Service Insurance System ("GSIS"), a
government entity which derives its authority from the State, in selling 51% of
its share in MHC should be considered an act of the State subject to the
Constitutional mandate.
On the pivotal issue of the degree of "preference to qualified Filipinos," I find it
somewhat difficult to take the same path traversed by the forceful reasoning of
Justice Puno. In the particular case before us, the only meaningful preference,
it seems, would really be to allow the qualified Filipino to match the foreign bid
for, as a particular matter, I cannot see any bid that literally calls for millions of
dollars to be at par (to the last cent) with another. The magnitude of the
magnitude of the bids is such that it becomes hardly possible for the
competing bids to stand exactly "equal" which alone, under the dissenting
view, could trigger the right of preference.
It is most unfortunate that Renong Berhad has not been spared this great
disappointment, a letdown that it did not deserve, by a simple and timely
advise of the proper rules of bidding along with the peculiar constitutional
implications of the proposed transaction. It is also regrettable that the Court at
time is seen, to instead, be the refuge for bureaucratic inadequate which
create the perception that it even takes on non-justiciable controversies.
All told, I am constrained to vote for granting the petition.
MENDOZA, J., concurring in the judgment:
I take the view that in the context of the present controversy the only way to
enforce the constitutional mandate that "[i]n the grant of rights, privileges and
concessions covering the national patrimony the State shall give preference to
qualified Filipinos"1 is to allow petitioner Philippine corporation to equal the bid
of the Malaysian firm Renong Berhad for the purchase of the controlling shares
of stocks in the Manila Hotel Corporation. Indeed, it is the only way a qualified
Filipino of Philippine corporation can be given preference in the enjoyment of a
right, privilege or concession given by the State, by favoring it over a foreign
national corporation.
Under the rules on public bidding of the Government Service and Insurance
System, if petitioner and the Malaysian firm had offered the same price per
share, "priority [would be given] to the bidder seeking the larger ownership
interest in MHC,"2 so that petitioner bid for more shares, it would be preferred
to the Malaysian corporation for that reason and not because it is a Philippine
corporation. Consequently, it is only in cases like the present one, where an
alien corporation is the highest bidder, that preferential treatment of the
Philippine corporation is mandated not by declaring it winner but by allowing it
"to match the highest bid in terms of price per share" before it is awarded the
shares of stocks.3 That, to me, is what "preference to qualified Filipinos" means
in the context of this case — by favoring Filipinos whenever they are at a
disadvantage vis-a-vis foreigners.
This was the meaning given in Co Chiong v. Cuaderno4 to a 1947 statute
giving "preference to Filipino citizens in the lease of public market stalls." 5 This
Court upheld the cancellation of existing leases covering market stalls
occupied by persons who were not Filipinos and the award thereafter of the
stalls to qualified Filipino vendors as ordered by the Department of Finance.
Similarly, in Vda. de Salgado v. De la Fuente,6 this Court sustained the validity
of a municipal ordinance passed pursuant to the statute (R.A. No. 37),
terminating existing leases of public market stalls and granting preference to
Filipino citizens in the issuance of new licenses for the occupancy of the stalls.
In Chua Lao v. Raymundo,7 the preference granted under the statute was held
to apply to cases in which Filipino vendors sought the same stalls occupied by
alien vendors in the public markets even if there were available other stalls as
good as those occupied by aliens. "The law, apparently, is applicable
whenever there is a conflict of interest between Filipino applicants and aliens
for lease of stalls in public markets, in which situation the right to preference
immediately arises."8
Our legislation on the matter thus antedated by a quarter of a century efforts
began only in the 1970s in America to realize the promise of equality, through
affirmative action and reverse discrimination programs designed to remedy
past discrimination against colored people in such areas as employment,
contracting and licensing.9 Indeed, in vital areas of our national economy, there
are situations in which the only way to place Filipinos in control of the national
economy as contemplated in the Constitution 10 is to give them preferential
treatment where they can at least stand on equal footing with aliens.
There need be no fear that thus preferring Filipinos would either invite foreign
retaliation or deprive the country of the benefit of foreign capital or know-how.
We are dealing here not with common trades of common means of livelihood
which are open to aliens in our midst, 11 but with the sale of government
property, which is like the grant of government largess of benefits and
concessions covering the national economy" and therefore no one should
begrudge us if we give preferential treatment to our citizens. That at any rate is
the command of the Constitution. For the Manila Hotel is a business owned by
the Government. It is being privatized. Privatization should result in the
relinquishment of the business in favor of private individuals and groups who
are Filipino citizens, not in favor of aliens.
Nor should there be any doubt that by awarding the shares of stocks to
petitioner we would be trading competence and capability for nationalism. Both
petitioner and the Malaysian firm are qualified, having hurdled the
prequalification process. 12 It is only the result of the public bidding that is
sought to be modified by enabling petitioner to up its bid to equal the highest
bid.
Nor, finally, is there any basis for the suggestion that to allow a Filipino bidder
to match the highest bid of an alien could encourage speculation, since all that
a Filipino entity would then do would be not to make a bid or make only a
token one and, after it is known that a foreign bidder has submitted the highest
bid, make an offer matching that of the foreign firm. This is not possible under
the rules on public bidding of the GSIS. Under these rules there is a minimum
bid required (P36.87 per share for a range of 9 to 15 million shares). 13 Bids
below the minimum will not be considered. On the other hand, if the Filipino
entity, after passing the prequalification process, does not submit a bid, he will
not be allowed to match the highest bid of the foreign firm because this is a
privilege allowed only to those who have "validly submitted bids." 14 The
suggestion is, to say the least, fanciful and has no basis in fact.
For the foregoing reasons, I vote to grant the petition.
TORRES, JR., J., separate opinion:
Constancy in law is not an attribute of a judicious mind. I say this as we are not
confronted in the case at bar with legal and constitutional issues — and yet I
am driven so to speak on the side of history. The reason perhaps is due to the
belief that in the words of Justice Oliver Wendell Holmes, Jr., a "page of history
is worth a volume of logic."
I will, however, attempt to share my thoughts on whether the Manila Hotel has
a historical and cultural aspect within the meaning of the constitution and thus,
forming part of the "patrimony of the nation".
Section 10, Article XII of the 1987 Constitution provides:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign
investments within its national goals and priorities.
The foregoing provisions should be read in conjunction with Article II of the
same Constitution pertaining to "Declaration of Principles and State Policies"
which ordain —
The State shall develop a self-reliant and independent national
economy effectively by Filipinos. (Sec. 19).
Interestingly, the matter of giving preference to "qualified Filipinos" was one of patrimony, the State shall give
the highlights in the 1987 Constitution Commission proceedings thus: preference to qualified Filipinos.

xxx xxx xxx MR. FOZ. In connection with

that amendment, if a foreign
MR. NOLLEDO. The enterprise is qualified and the
Amendment will read: "IN THE Filipinos enterprise is also
GRANT OF RIGHTS, qualified, will the Filipino
PRIVILEGES AND enterprise still be given a
CONCESSIONS COVERING preference?
THE NATIONAL ECONOMY
AND PATRIMONY, THE MR. NOLLEDO. Obviously.
STATE SHALL GIVE
PREFERENCE TO QUALIFIED MR. FOZ. If the foreigner is
FILIPINOS". And the word more qualified in some aspects
"Filipinos" here, as intended by than the Filipino enterprise, will
the proponents, will include not the Filipino still be preferred:?
only individual Filipinos but also
Filipino-Controlled entities fully MR. NOLLEDO. The answer is
controlled by Filipinos (Vol. III, "yes". (Vol. III, p. 616, Records
Records of the Constitutional of the Constitutional
Commission, p. 608). Commission).

MR. MONSOD. We also wanted The nationalistic provisions of the 1987 Constitution reflect the history and
to add, as Commissioner spirit of the Malolos Constitution of 1898, the 1935 Constitution and the 1973
Villegas said, this committee Constitutions. That we have no reneged on this nationalist policy is articulated
and this body already approved in one of the earliest case, this Court said —
what is known as the Filipino
First policy which was
The nationalistic tendency is manifested in various provisions
suggested by Commissioner de
of the Constitution. . . . It cannot therefore be said that a law
Castro. So that it is now in our
imbued with the same purpose and spirit underlying many of
Constitution (Vol. IV, Records of
the provisions of the Constitution is unreasonable, invalid or
the Constitutional Commission,
unconstitutional (Ichong, et al. vs. Hernandez, et al., 101 Phil.
p. 225).
1155).
Commissioner Jose Nolledo explaining the provision adverted
I subscribe to the view that history, culture, heritage, and traditions are not
to above, said:
legislated and is the product of events, customs, usages and practices. It is
actually a product of growth and acceptance by the collective mores of a race.
MR. NOLLEDO. In the grant of It is the spirit and soul of a people.
rights, privileges and
concessions covering the
national economy and
The Manila Hotel is part of our history, culture and heritage. Every inch of the
Manila Hotel is witness to historic events (too numerous to mention) which
shaped our history for almost 84 years.
As I intimated earlier, it is not my position in this opinion, to examine the single
instances of the legal largese which have given rise to this controversy. As I
believe that has been exhaustively discussed in the ponencia. Suffice it to say
at this point that the history of the Manila Hotel should not be placed in the
auction block of a purely business transaction, where profits subverts the
cherished historical values of our people.
As a historical landmark in this "Pearl of the Orient Seas", it has its enviable
tradition which, in the words of the philosopher Salvador de Madarriaga
tradition is "more of a river than a stone, it keeps flowing, and one must view
the flowing , and one must view the flow of both directions. If you look towards
the hill from which the river flows, you see tradition in the form of forceful
currents that push the river or people towards the future, and if you look the
other way, you progress."
Indeed, tradition and progress are the same, for progress depends on the kind
of tradition. Let us not jettison the tradition of the Manila Hotel and thereby
repeat our colonial history.
I grant, of course the men of the law can see the same subject in different
lights.
I remember, however, a Spanish proverb which says — "He is always right
who suspects that he makes mistakes". On this note, I say that if I have to
make a mistake, I would rather err upholding the belief that the Filipino be first
under his Constitution and in his own land.
I vote GRANT the petition.
PUNO, J., dissenting:
This is a. petition for prohibition and mandamus filed by the Manila Prince
Hotel Corporation, a domestic corporation, to stop the Government Service
Insurance System (GSIS) from selling the controlling shares of the Manila
Hotel Corporation to a foreign corporation. Allegedly, the sale violates the
second paragraph of section 10, Article XII of the Constitution.
Respondent GSIS is a government-owned and controlled corporation. It is the
sole owner of the Manila Hotel which it operates through its subsidiary, the
Manila Hotel Corporation. Manila Hotel was included in the privatization
program of the government. In 1995, GSIS proposed to sell to interested
buyers 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000
shares, in the Manila Hotel Corporation. After the absence of bids at the first
public bidding, the block of shares offered for sale was increased from a
maximum of 30% to 51%. Also, the winning bidder, or the eventual "strategic
partner" of the GSIS was required to "provide management expertise and/or
an international marketing/reservation system, and financial support to
strengthen the profitability and performance of the Manila Hotel" 1 The proposal
was approved by respondent Committee on Privatization.
In July 1995, a conference was held where prequalification documents and the
bidding rules were furnished interested parties. Petitioner Manila Prince Hotel,
a domestic corporation, and Renong Berhad, Malaysian firm with ITT Sheraton
as operator, prequalified.2
The bidding rules and procedures entitled "Guidelines and Procedures:
Second Prequalification and Public Bidding of the MHC Privatization" provide:
I INTRODUCTION AND HIGHLIGHTS
DETERMINING THE WINNING BIDDER/STRATEGIC
PARTNER
The party that accomplishes the steps set forth below will be
declared the Winning Bidder/Strategic Partner and will be
awarded the Block of Shares:
First — Pass the prequalification process;
Second — Submit the highest bid on a price per share basis for
the Block of Shares;
Third — Negotiate and execute the necessary contracts with
GSIS/MHC not later than October 23, 1995;
 xxx xxx xxx
IV GUIDELINES FOR PREQUALIFICATION
A. PARTIES WHO MAP APPLY FOR
PREQUALIFICATION
The Winning Bidder/Strategic Partner will be
expected to provide management expertise
and/or an international marketing reservation
system, and financial support to strengthen the
profitability and performance of The Manila
Hotel. In this context, the GSIS is inviting to the
prequalification process any local and/or foreign
corporation, consortium/joint venture or juridical
entity with at least one of the following
qualifications:
a. Proven management
.expertise in the hotel industry;
or
b. Significant equity ownership
(i.e. board representation) in
another hotel company; or
c. Overall management and
marketing expertise to
successfully operate the Manila
Hotel.
Parties interested in bidding for MHC should be
able to provide access to the requisite
management expertise and/or international
marketing/reservation system for The Manila
Hotel.
xxx xxx xxx
D. PREQUALIFICATION DOCUMENTS
xxx xxx xxx
E. APPLICATION PROCEDURE
1. DOCUMENTS AVAILABLE AT THE
REGISTRATION OFFICE
The prequalification documents can be secured
at the Registration Office between 9:00 AM to
4:00 PM during working days within the period
specified in Section III. Each set of documents
consists of the following:
a. Guidelines and Procedures:
Second Prequalification and
Public Bidding of the MHC
Privatization
b. Confidential Information
Memorandum: The Manila Hotel
Corporation
c. Letter of Invitation. to the
Prequalification and Bidding
Conference
xxx xxx xxx
4. PREQUALIFICATION AND BIDDING CONFERENCE
A prequalification and bidding conference will
be held at The Manila Hotel on the date
specified in Section III to allow the Applicant to
seek clarifications and further information
regarding the guidelines and procedures. Only
those who purchased the prequalification
documents will be allowed in this conference.
Attendance to this conference is strongly
advised, although the Applicant will not be
penalized if it does not attend.
5. SUBMISSION OF PREQUALIFICATION DOCUMENTS
The applicant should submit 5 sets of the
prequalification documents (1 original set plus 4
copies) at the Registration Office between 9:00
AM to 4:00 PM during working days within the
period specified in Section III.
F. PREQUALIFICATION PROCESS
1. The Applicant will be
evaluated by the PBAC with the
assistance of the TEC based on
the Information Package and
other information available to
the PBAC.
2. If the Applicant is a
Consortium/Joint Venture, the
evaluation will consider the
overall qualifications of the
group, taking into account the
contribution of each member to
the venture.
3. The decision of the PBAC
with respect to the results of the
PBAC evaluation will be final.
4. The Applicant shall be
evaluated according to the
criteria set forth below:
a. Business
management
expertise, track
record, and
experience
b. Financial
capability.
c. Feasibility and
acceptability of
the proposed
strategic plan for
the Manila Hotel
5. The PBAC will shortlist such number of
Applicants as it may deem appropriate.
6. The parties that prequalified in the first MHC
public bidding — ITT Sheraton, Marriot
International Inc., Renaissance Hotels
International Inc., consortium of RCBC
Capital/Ritz Carlton — may participate in the
Public Bidding without having to undergo the
prequalification process again.
G. SHORTLIST OF QUALIFIED BIDDERS
1. A notice of prequalification results containing
the shortlist of Qualified Bidders will be posted
at the Registration Office at the date specified
in Section III.
2. In the case of a Consortium/Joint Venture,
the withdrawal by member whose qualification
was a material consideration for being included
in the shortlist is ground for disqualification of
the Applicant.
V. GUIDELINES FOR THE PUBLIC BIDDING
A. PARTIES WHO MAY PARTICIPATE IN THE
PUBLIC BIDDING
All parties in the shortlist of Qualified Bidders
will be eligible to participate in the Public
Bidding.
B. BLOCK OF SHARES
A range of Nine Million (9,000,000) to Fifteen
Million Three Hundred Thousand (15,300,000)
shares of stock representing Thirty Percent to
Fifty-One Percent (30%-51%) of the issued and
outstanding shares of MHC, will be offered in
the Public Bidding by the GSIS. The Qualified
Bidders will have the Option of determining the
number of shares within the range to bid for.
The range is intended to attract bidders with
different preferences and objectives for the
operation and management of The Manila
Hotel.
C. MINIMUM BID REQUIRED ON A PRICE
PER SHARE BASIS
1. Bids will be evaluated on a price per share
basis. The minimum bid required on a price per
share basis for the Block of Shares is Thirty-Six
Pesos and Sixty-Seven Centavos (P36.67).
2. Bids should be in the Philippine currency
payable to the GSIS.
3. Bids submitted with an equivalent price per
share below the minimum required will not
considered.
D. TRANSFER COSTS
xxx xxx xxx
E. OFFICIAL BID FORM
1. Bids must be contained in the prescribed
Official Bid Form, a copy of which is attached
as Annex IV. The Official Bid Form must be
properly accomplished in all details; improper
accomplishment may be a sufficient basis for
disqualification.
2. During the Public Bidding, the Qualified
Bidder will submit the Official Bid Form, which
will indicate the offered purchase price, in a
sealed envelope marked "OFFICIAL BID."
F. SUPPORTING DOCUMENTS
During the Public Bidding, the following
documents should be submitted along with the
bid in a separate envelop marked
"SUPPORTING DOCUMENTS":
1. WRITTEN AUTHORITY TO BID (UNDER
OATH).
If the Qualified Bidder is a corporation, the
representative of the Qualified Bidder should
submit a Board resolution which adequately
authorizes such representative to bid for and in
behalf of the corporation with full authority to
perform such acts necessary or requisite to
bind the Qualified Bidder.
If the Qualified Bidder is a Consortium/Joint
Venture, each member of the Consortium/Joint
venture should submit a Board resolution
authorizing one of its members and such
member's representative to make the bid on
behalf of the group with full authority to perform
such acts necessary or requisite to bind the
Qualified Bidder.
2. BID SECURITY
a. The Qualified Bidder should deposit Thirty-
Three Million Pesos (P33,000,00), in Philippine
currency as Bid Security in the form of:
i. Manager's check or
unconditional demand draft
payable to the "Government
Service Insurance System" and
 issued by a reputable banking
institution duly licensed to do
business in the Philippines and
acceptable to GSIS; or
ii. Standby-by letter of credit
issued by a reputable banking
institution acceptable to the
GSIS.
b. The GSIS will reject a bid if:
i. The bid does not have Bid
Security; or
ii. The Bid Security
accompanying the bid is for less
than the required amount.
c. If the Bid Security is in the form of a
manager's check or unconditional demand
draft, the interest earned on the Bid Security
will be for the account of GSIS.
d. If the Qualified Bidder becomes the winning
Bidder/Strategic Partner, the Bid Security will
be applied as the downpayment on the
Qualified Bidder's offered purchase price.
e. The Bid Security of the Qualified Bidder will
be returned immediately after the Public
Bidding if the Qualified Bidder is not declared
the Highest Bidder.
f. The Bid Security will be returned by October
23, 1995 if the Highest Bidder is unable to
negotiate and execute with GSIS/MHC the
Management Contract, International
Marketing/Reservation System Contract or
other types of contract specified by the Highest
Bidder in its strategic plan for The Manila Hotel.
g. The Bid Security of the Highest Bidder will be
forfeited in favor of GSIS if the Highest Bidder,
after negotiating and executing the
Management Contract, International
Marketing/Reservation System Contract
specified by the Highest Bidder or other types
of contract in its strategic plan for The Manila
Hotel, fails or refuses to:
i. Execute the Stock Purchase
and Sale Agreement with GSIS
not later than October 23, 1995;
or
ii. Pay the full amount of the
offered purchase price not later
than October 23, 1995; or
iii. Consummate the sale of the
Block of Shares for any other
reason.
G. SUBMISSION OF BIDS
1. The Public Bidding will be held on
September 7, 1995 at the following location:
New GSIS Headquarters Building
Financial Center, Reclamation Area
Roxas Boulevard, Pasay City, Metro Manila.
2. The Secretariat of the PBAC will be stationed
at the Public Bidding to accept any and all bids
and supporting requirements. Representatives
from the Commission on Audit and COP will be
invited to witness the proceedings.
3. The Qualified Bidder should submit its bid
using the Official Bid Form. The accomplished
Official Bid Form should be submitted in a
sealed envelope marked "OFFICIAL BID."
4. The Qualified Bidder should submit the
following documents in another sealed
envelope marked "SUPPORTING BID
DOCUMENTS"
a. Written Authority Bid
b. Bid Security
5. The two sealed envelopes marked
"OFFICIAL BID" and "SUPPORTING BID
DOCUMENTS" must be submitted
simultaneously to the Secretariat between 9:00
AM and 2:00 PM, Philippine Standard Time, on
the date of the Public Bidding. No bid shall be
accepted after the closing time. Opened or
tampered bids shall not be accepted.
6. The Secretariat will log and record the actual
time of submission of the two sealed
envelopes. The actual time of submission will
also be indicated by the Secretariat on the face
of the two envelopes.
7. After Step No. 6, the two sealed envelopes
will be dropped in the corresponding bid boxes
provided for the purpose. These boxes will be
in full view of the invited public.
H. OPENING AND READING OF BIDS
1. After the closing time of 2:00 PM on the date
of the Public Bidding, the PBAC will open all
sealed envelopes marked "SUPPORTING BID
DOCUMENTS" for screening, evaluation and
acceptance. Those who submitted
incomplete/insufficient documents or
document/s which is/are not substantially in the
form required by PBAC will be disqualified. The
envelope containing their Official Bid Form will
be immediately returned to the disqualified
bidders.
2. The sealed envelopes marked "OFFICIAL
BID" will be opened at 3:00 PM. The name of
the bidder and the amount of its bid price will be
read publicly as the envelopes are opened.
3. Immediately following the reading of the bids,
the PBAC will formally announce the highest
bid and the Highest Bidder.
4. The highest bid will be, determined on
a price per share basis. In the event of a tie
wherein two or more bids have the same
equivalent price per share, priority will be given
to the bidder seeking the larger ownership
interest in MHC.
5. The Public Bidding will be declared a failed
bidding in case:
a. No single bid is submitted
within the prescribed period; or
b. There is only one (1) bid that
is submitted and acceptable to
the PBAC.
I. EXECUTION OF THE NECESSARY
CONTRACTS WITH GSIS/MHC
1. The Highest Bidder must comply with the
conditions set forth below by October 23, 1995
or the Highest Bidder will lose the right to
purchase the Block of Shares and GSIS will
instead offer the Block of Shares to the other
Qualified Bidders:
a. The Highest Bidder must
negotiate and execute with
GSIS/MHC the Management
Contract, International
Marketing Reservation System
Contract or other type of
 contract specified by the
Highest Bidder in its strategic
plan for The Manila Hotel. If the
Highest Bidder is intending to
provide only financial support to
The Manila Hotel, a separate
institution may enter into the
aforementioned contract/s with
GSIS/MHC.
b. The Highest Bidder must
execute the Stock Purchase
and Sale Agreement with GSIS,
a copy of which will be
distributed to each of the
Qualified Bidder after the
prequalification process is
completed.
J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS
2. In the event that the Highest Bidder chooses
a Management Contract for The Manila Hotel,
the maximum levels for the management fee
structure that GSIS/MHC are prepared to
accept in the Management Contract are as
follows:
a. Basic management fee:
Maximum of 2.5% of gross
revenues.(1)
b. Incentive fee: Maximum of
8.0% of gross operating profit(1)
after deducting undistributed
overhead expenses and the
basic management fee.
c. Fixed component of the
international
marketing/reservation system
fee: Maximum of 2.0% of gross
room revenues.(1) The
Applicant should indicate in its
Information Package if it is
wishes to charge this fee.
Note (1): As defined in the uniform system of
account for hotels.
The GSIS/MHC have indicated above the
acceptable parameters for the hotel
management fees to facilitate the negotiations
with the Highest Bidder for the Management
Contract after the Public Bidding.
A Qualified Bidder envisioning a Management
Contract for The Manila Hotel should determine
whether or not the management fee structure
above is acceptable before submitting their
prequalification documents to GSIS.
1. If for any reason, the Highest Bidder cannot
be awarded the Block of Shares, GSIS may
offer this to the other Qualified Bidders that
have validly submitted bids provided that these
Qualified are willing to match the highest bid in
terms of price per share.
2. The order of priority among the interested
Qualified Bidders will be in accordance wit the
equivalent price per share of their respective
bids in their public Bidding, i.e., first and second
priority will be given to the Qualified Bidders
that submitted the second and third highest
bids on the price per share basis, respectively,
and so on.
K. DECLARATION OF THE WINNING
BIDDER/STRATEGIC PARTNER
The Highest Bidder will be declared the
Winning Bidder/Strategic Partner after the
following conditions are met:
 a. Execution of the necessary
contract with GSIS/MHC not
later than October 23, 1995;
and
b. Requisite approvals from the
GSIS/MHC and COP/OGCC are
obtained.
I. FULL PAYMENT FOR THE BLOCK OF
SHARES
1. Upon execution of the necessary contracts
with GSIS/MHC, the Winning Bidder/Strategic
Partner must fully pay, not later than October
23, 1995, the offered purchase price for the
Block of Shares after deducting the Bid Security
applied as downpayment.
2. All payments should be made in the form of a
Manager's Check or unconditional Demand
Draft, payable to the "Government Service
Insurance System," issued by a reputable
banking institution licensed to do business in
the Philippines and acceptable to GSIS.
M. GENERAL CONDITIONS
1. The GSIS unconditionally reserves the right
to reject any or all applications, waive any
formality therein, or accept such application as
maybe considered most advantageous to the
GSIS. The GSIS similarly reserves the right to
require the submission of any additional
information from the Applicant as the PBAC
may deem necessary.
2. The GSIS further reserves the right to call off
the Public Bidding prior to acceptance of the
bids and call for a new public bidding under
amended rules, and without any liability
whatsoever to any or all the Qualified Bidders,
except the obligation to return the Bid Security.
3. The GSIS reserves the right to reset the date
of the prequalification/bidding conference, the
deadline for the submission of the
prequalification documents, the date of the
Public Bidding or other pertinent activities at
least three (3) calendar days prior to the
respective deadlines/target dates.
4. The GSIS sells only whatever rights, interest
and participation it has on the Block of Shares.
5. All documents and materials submitted by
the Qualified Bidders, except the Bid Security,
may be returned upon request.
6. The decision of the PBAC/GSIS on the
results of the Public Bidding is final. The
Qualified Bidders, by participating in the Public
Bidding, are deemed to have agreed to accept
and abide by these results.
7. The GSIS will be held free and harmless
form any liability, suit or allegation arising out of
the Public Bidding by the Qualified Bidders who
have participated in the Public Bidding.3
The second public bidding was held on September 18, 1995. Petitioner bidded
P41.00 per share for 15,300,000 shares and Renong Berhad bidded P44.00
per share also for 15,300,000 shares. The GSIS declared Renong Berhad the
highest bidder and immediately returned petitioner's bid security.
On September 28, 1995, ten days after the bidding, petitioner wrote to GSIS
offering to match the bid price of Renong Berhad. It requested that the award
be made to itself citing the second paragraph of Section 10, Article XII of the
Constitution. It sent a manager's check for thirty-three million pesos
(P33,000,000.00) as bid security.
Respondent GSIS, then in the process of negotiating with Renong Berhad the
terms and conditions of the contract and technical agreements in the operation
of the hotel, refused to entertain petitioner's request.
Hence, petitioner filed the present petition. We issued a temporary restraining
order on October 18, 1995.
Petitioner anchors its plea on the second paragraph of Article XII, Section 10
of the Constitution4 on the "National Economy and Patrimony" which provides:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
xxx xxx xxx
The vital issues can be summed up as follows:
(1) Whether section 10, paragraph 2 of Article XII of the
Constitution is a self-executing provision and does not need
implementing legislation to carry it into effect;
(2) Assuming section 10 paragraph 2 of Article XII is self-
executing whether the controlling shares of the Manila Hotel
Corporation form part of our patrimony as a nation;
(3) Whether GSIS is included in the term "State," hence,
mandated to implement section 10, paragraph 2 of Article XII of
the Constitution;
(4) Assuming GSIS is part of the State, whether it failed to give
preference to petitioner, a qualified Filipino corporation, over
and above Renong Berhad, a foreign corporation, in the sale of
the controlling shares of the Manila Hotel Corporation;
(5) Whether petitioner is estopped from questioning the sale of
the shares to Renong Berhad, a foreign corporation.
Anent the first issue, it is now familiar learning that a Constitution provides the
guiding policies and principles upon which is built the substantial foundation
and general framework of the law and government.5 As a rule, its provisions
are deemed self-executing and can be enforced without further legislative
action.6 Some of its provisions, however, can be implemented only through
appropriate laws enacted by the Legislature, hence not self-executing.
To determine whether a particular provision of a Constitution is self-executing
is a hard row to hoe. The key lies on the intent of the framers of the
fundamental law oftentimes submerged in its language. A searching inquiry
should be made to find out if the provision is intended as a present enactment,
complete in itself as a definitive law, or if it needs future legislation for
completion and enforcement.7 The inquiry demands a micro-analysis of the text
and the context of the provision in question. 8
Courts as a rule consider the provisions of the Constitution as self-
executing,9 rather than as requiring future legislation for their
enforcement. 10 The reason is not difficult to discern. For if they are not treated
as self-executing, the mandate of the fundamental law ratified by the sovereign
people can be easily ignored and nullified by Congress. 11 Suffused with
wisdom of the ages is the unyielding rule that legislative actions may give
breath to constitutional rights but congressional in action should not suffocate
them. 12
Thus, we have treated as self-executing the provisions in the Bill of Rights on
arrests, searches and seizures, 13 the rights of a person under custodial
investigation, 14 the rights of an accused, 15 and the privilege against self-
incrimination, 16 It is recognize a that legislation is unnecessary to enable courts
to effectuate constitutional provisions guaranteeing the fundamental rights of
life, liberty and the protection of property. 17 The same treatment is accorded to
constitutional provisions forbidding the taking or damaging of property for
public use without just compensation.18
Contrariwise, case law lays down the rule that a constitutional provision is not
self-executing where it merely announces a policy and its language empowers
the Legislature to prescribe the means by which the policy shall be carried into
effect. 19 Accordingly, we have held that the provisions in Article II of our
Constitution entitled "Declaration of Principles and State Policies" should
generally be construed as mere statements of principles of the State. 20 We
have also ruled that some provisions of Article XIII on "Social Justice and
Human Rights," 21 and Article XIV on "Education Science and Technology, Arts,
Culture end Sports" 22 cannot be the basis of judicially enforceable rights. Their
enforcement is addressed to the discretion of Congress though they provide
the framework for legislation 23 to effectuate their policy content. 24
Guided by this map of settled jurisprudence, we now consider whether Section
10, Article XII of the 1987 Constitution is self-executing or not. It reads:
Sec. 10. The Congress shall, upon recommendation of the
economic and planning agency, when the national interest
dictates, reserve to citizens of the Philippines or to corporations
or associations at least sixty per centum of whose capital is
owned by such citizens, or such higher percentage as
Congress may prescribe, certain areas of investments. The
Congress shall enact measures that will encourage the
formation and operation of enterprises whose capital is wholly
owned by Filipinos.
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign
investments within its national jurisdiction and in accordance
with its national goals and priorities.
The first paragraph directs Congress to reserve certain areas of
investments in the country 25 to Filipino citizens or to corporations sixty
per
cent 26 of whose capital stock is owned by Filipinos. It further
commands Congress to enact laws that will encourage the formation
and operation of one hundred percent Filipino-owned enterprises. In
checkered contrast, the second paragraph orders the entire State to
give preference to qualified Filipinos in the grant of rights and privileges
covering the national economy and patrimony. The third paragraph
also directs the State to regulate foreign investments in line with our
national goals and well-set priorities.
The first paragraph of Section 10 is not self-executing. By its express
text, there is a categorical command for Congress to enact laws
restricting foreign ownership in certain areas of investments in the
country and to encourage the formation and operation of wholly-owned
Filipino enterprises. The right granted by the provision is clearly still in
esse. Congress has to breathe life to the right by means of legislation.
Parenthetically, this paragraph was plucked from section 3, Article XIV
of the 1973 Constitution. 27 The provision in the 1973 Constitution
affirmed our ruling in the landmark case of Lao Ichong
v. Hernandez, 28 where we upheld the discretionary authority of
Congress to Filipinize certain areas of investments. 29 By reenacting the
1973 provision, the first paragraph of section 10 affirmed the power of
Congress to nationalize certain areas of investments in favor of
Filipinos.
The second and third paragraphs of Section 10 are different. They are directed
to the State and not to Congress alone which is but one of the three great
branches of our government. Their coverage is also broader for they cover "the
national economy and patrimony" and "foreign investments within [the] national
jurisdiction" and not merely "certain areas of investments." Beyond debate,
they cannot be read as granting Congress the exclusive power to implement
by law the policy of giving preference to qualified Filipinos in the conferral of
rights and privileges covering our national economy and patrimony. Their
language does not suggest that any of the State agency or instrumentality has
the privilege to hedge or to refuse its implementation for any reason
whatsoever. Their duty to implement is unconditional and it is now. The second
and the third paragraphs of Section 10, Article XII are thus self-executing.
This submission is strengthened by Article II of the Constitution entitled
"Declaration of Principles and State Policies." Its Section 19 provides that
"[T]he State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos." It engrafts the all-important Filipino First
policy in our fundamental law and by the use of the mandatory word "shall,"
directs its enforcement by the whole State without any pause or a half- pause
in time.
The second issue is whether the sale of a majority of the stocks of the Manila
Hotel Corporation involves the disposition of part of our national patrimony.
The records of the Constitutional Commission show that the Commissioners
entertained the same view as to its meaning. According to Commissioner
Nolledo, "patrimony" refers not only to our rich natural resources but also to
the cultural heritage of our race. 30 By this yardstick, the sale of Manila Hotel
falls within the coverage of the constitutional provision giving preferential
treatment to qualified Filipinos in the grant of rights involving our national
patrimony. The unique value of the Manila Hotel to our history and culture
cannot be viewed with a myopic eye. The value of the hotel goes beyond
pesos and centavos. As chronicled by Beth Day Romulo, 31 the hotel first
opened on July 4, 1912 as a first-class hotel built by the American Insular
Government for Americans living in, or passing through, Manila while traveling The submission is unimpressive. The GSIS is not a pure private corporation. It
to the Orient. Indigenous materials and Filipino craftsmanship were utilized in is essentially a public corporation created by Congress and granted an original
its construction, For sometime, it was exclusively used by American and charter to serve a public purpose. It is subject to the jurisdictions of the Civil
Caucasian travelers and served as the "official guesthouse" of the American Service Commission 37 and the Commission on Audit. 38 As state-owned and
Insular Government for visiting foreign dignitaries. Filipinos began coming to controlled corporation, it is skin-bound to adhere to the policies spelled out in
the Hotel as guests during the Commonwealth period. When the Japanese the general welfare of the people. One of these policies is the Filipino First
occupied Manila, it served as military headquarters and lodging for the highest- policy which the people elevated as a constitutional command.
ranking officers from Tokyo. It was at the Hotel and the Intramuros that the
Japanese made their last stand during the Liberation of Manila. After the war, The fourth issue demands that we look at the content of phrase "qualified
the Hotel again served foreign guests and Filipinos alike. Presidents and kings, Filipinos" and their "preferential right." The Constitution desisted from defining
premiers and potentates, as well as glamorous international film and sports their contents. This is as it ought to be for a Constitution only lays down flexible
celebrities were housed in the Hotel. It was also the situs of international policies and principles which can bent to meet today's manifest needs and
conventions and conferences. In the local scene, it was the venue of historic tomorrow's unmanifested demands. Only a constitution strung with elasticity
meetings, parties and conventions of political parties. The Hotel has reaped can grow as a living constitution.
and continues reaping numerous recognitions and awards from international
hotel and travel award-giving bodies, a fitting acknowledgment of Filipino talent Thus, during the deliberations in the Constitutional Commission,
and ingenuity. These are judicially cognizable facts which cannot be bent by a Commissioner Nolledo to define the phrase brushed aside a suggestion to
biased mind. define the phrase "qualified Filipinos." He explained that present and
prospective "laws" will take care of the problem of its interpretation, viz:
The Hotel may not, as yet, have been declared a national cultural treasure
pursuant to Republic Act No. 4846 but that does not exclude it from our xxx xxx xxx
national patrimony. Republic Act No. 4846, "The Cultural Properties
Preservation and Protection Act," merely provides a procedure whereby a
THE PRESIDENT. What is the
particular cultural property may be classified a "national cultural treasure" or an
suggestion of Commissioner
"important cultural property. 32 Approved on June 18, 1966 and amended by
Rodrigo? Is it to remove the
P.D. 374 in 1974, the law is limited in its reach and cannot be read as the
word "QUALIFIED?"
exclusive law implementing section 10, Article XII of the 1987 Constitution. To
be sure, the law does not equate cultural treasure and cultural property as
synonymous to the phrase "patrimony of the nation." MR. RODRIGO. No, no, but say
definitely "TO QUALIFIED
FILIPINOS" as against whom?
The third issue is whether the constitutional command to the State includes the
As against aliens over aliens?
respondent GSIS. A look at its charter will reveal that GSIS is a government-
owned and controlled corporation that administers funds that come from the
monthly contributions of government employees and the government. 33 The MR. NOLLEDO. Madam
funds are held in trust for a distinct purpose which cannot be disposed of President, I think that is
indifferently. 34 They are to be used to finance the retirement, disability and life understood. We use the word
insurance benefits of the employees and the administrative and operational "QUALIFIED" because the
expenses of the GSIS, 35 Excess funds, however, are allowed to be invested in existing laws or the prospective
business and other ventures for the benefit of the employees. 36 It is thus laws will always lay down
contended that the GSIS investment in the Manila Hotel Corporation is a conditions under which
simple business venture, hence, an act beyond the contemplation of section business map be done, for
10, paragraph 2 of Article XII of the Constitution. example, qualifications on
capital, qualifications on the
 setting up of other financial
structures, et cetera.
MR. RODRIGO. It is just a
matter of style.
MR. NOLLEDO Yes.
MR. RODRIGO. If we say,
"PREFERENCE TO
QUALIFIED FILIPINOS," it can
be understood as giving
preference to qualified Filipinos
as against Filipinos who are not
qualified.
MR. NOLLEDO. Madam
President, that was the intention
of the proponents. The
committee has accepted the
amendment.
xxx xxx xxx
As previously discussed, the constitutional command to enforce the
Filipino First policy is addressed to the State and not to Congress
alone. Hence, the word "laws" should not be understood as limited to
legislations but all state actions which include applicable rules and
regulations adopted by agencies and instrumentalities of the State in
the exercise of their rule-making power. In the case at bar, the bidding
rules and regulations set forth the standards to measure the
qualifications of bidders Filipinos and foreigners alike. It is not seriously
disputed that petitioner qualified to bid as did Renong Berhad. 39
Thus, we come to the critical issue of the degree of preference which GSIS
should have accorded petitioner, a qualified Filipino, over Renong Berhad, a
foreigner, in the purchase of the controlling shares of the Manila Hotel.
Petitioner claims that after losing the bid, this right of preference gives it a
second chance to match the highest bid of Renong Berhad.
With due respect, I cannot sustain petitioner's submission. I prescind from the
premise that the second paragraph of section 10, Article XII of the Constitution
is pro-Pilipino but not anti-alien. It is pro-Filipino for it gives preference to
Filipinos. It is not, however, anti-alien per se for it does not absolutely bar
aliens in the grant of rights, privileges and concessions covering the national
economy and patrimony. Indeed, in the absence of qualified Filipinos, the
State is not prohibited from granting these rights, privileges and concessions to
foreigners if the act will promote the weal of the nation.
In implementing the policy articulated in section 10, Article XII of the
Constitution, the stellar task of our State policy-makers is to maintain a
creative tension between two desiderata — first, the need to develop our
economy and patrimony with the help of foreigners if necessary, and, second,
the need to keep our economy controlled by Filipinos. Rightfully, the framers of
the Constitution did not define the degree of the right of preference to be given
to qualified Filipinos. They knew that for the right to serve the general welfare,
it must have a malleable content that can be adjusted by our policy-makers to
meet the changing needs of our people. In fine, the right of preference of
qualified Filipinos is to be determined by degree as time dictates and
circumstances warrant. The lesser the need for alien assistance, the greater
the degree of the right of preference can be given to Filipinos and vice verse.
Again, it should be stressed that the right and the duty to determine the degree
of this privilege at any given time is addressed to the entire State. While under
our constitutional scheme, the right primarily belongs to Congress as the
lawmaking department of our government, other branches of government, and
all their agencies and instrumentalities, share the power to enforce this state
policy. Within the limits of their authority, they can act or promulgate rules and
regulations defining the degree of this right of preference in cases where they
have to make grants involving the national economy and judicial duty. On the
other hand, our duty is to strike down acts of the state that violate the policy.
To date, Congress has not enacted a law defining the degree of the
preferential right. Consequently, we must turn to the rules and regulations of
on respondents Committee Privatization and GSIS to determine the degree of
preference that petitioner is entitled to as a qualified Filipino in the subject sale.
A tearless look at the rules and regulations will show that they are silent on the
degree of preferential right to be accorded qualified Filipino bidder. Despite
their silence, however, they cannot be read to mean that they do not grant any
degree of preference to petitioner for paragraph 2, section 10, Article XII of the
Constitution is deemed part of said rules and regulations. Pursuant to legal
hermeneutics which demand that we interpret rules to save them from
unconstitutionality, I submit that the right of preference of petitioner arises only
if it tied the bid of Benong Berhad. In that instance, all things stand equal, and
bidder, as a qualified Pilipino bidder, should be preferred.
It is with deep regret that I cannot subscribe to the view that petitioner has a
right to match the bid of Renong Berhad. Petitioner's submission must be
supported by the rules but even if we examine the rules inside-out .thousand
times, they can not justify the claimed right. Under the rules, the right to match
the highest bid arises only "if for any reason, the highest bidder cannot be
awarded block of shares . . ." No reason has arisen that will prevent the award
to Renong Berhad. It qualified as bidder. It complied with the procedure of
bidding. It tendered the highest bid. It was declared as the highest bidder by
the GSIS and the rules say this decision is final. It deserves the award as a
matter of right for the rules clearly did not give to the petitioner as a qualified
Filipino privilege to match the higher bid of a foreigner. What the rules did not
grant, petitioner cannot demand. Our symphaties may be with petitioner but
the court has no power to extend the latitude and longtitude of the right of
preference as defined by the rules. The parameters of the right of preference
depend on galaxy of facts and factors whose determination belongs to the
province of the policy-making branches and agencies of the State. We are
duty-bound to respect that determination even if we differ with the wisdom of
their judgment. The right they grant may be little but we must uphold the grant
for as long as the right of preference is not denied. It is only when a State
action amounts to a denial of the right that the Court can come in and strike
down the denial as unconstitutional.
Finally, I submit that petitioner is estopped from assailing the winning bid of
Renong Berhad. Petitioner was aware of the rules and regulations of the
bidding. It knew that the rules and regulations do not provide that a qualified
Filipino bidder can match the winning bid submitting an inferior bid. It knew that
the bid was open to foreigners and that foreigners qualified even during the
first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed
to respect. It cannot be allowed to obey the rules when it wins and disregard
them when it loses. If sustained, petitioners' stance will wreak havoc on he
essence of bidding. Our laws, rules and regulations require highest bidding to
raise as much funds as possible for the government to maximize its capacity to
deliver essential services to our people. This is a duty that must be discharged
by Filipinos and foreigners participating in a bidding contest and the rules are
carefully written to attain this objective. Among others, bidders are prequalified
to insure their financial capability. The bidding is secret and the bids are sealed
to prevent collusion among the parties. This objective will be undermined if we
grant petitioner that privilege to know the winning bid and a chance to match it.
For plainly, a second chance to bid will encourage a bidder not to strive to give
the highest bid in the first bidding.
We support the Filipino First policy without any reservation. The visionary
nationalist Don Claro M. Recto has warned us that the greatest tragedy that
can befall a Filipino is to be an alien in his own land. The Constitution has
embodied Recto's counsel as a state policy. But while the Filipino First policy
requires that we incline to a Filipino, it does not demand that we wrong an
alien. Our policy makers can write laws and rules giving favored treatment to
the Filipino but we are not free to be unfair to a foreigner after writing the laws
and the rules. After the laws are written, they must be obeyed as written, by
Filipinos and foreigners alike. The equal protection clause of the Constitution
protects all against unfairness. We can be pro-Filipino without unfairness to
foreigner.
I vote to dismiss the petition.
Narvasa, C.J., and Melo, J., concur.
PANGANIBAN, J., dissenting:
I regret I cannot join the majority. To the incisive Dissenting Opinion of Mr.
Justice Reynato S. Puno, may I just add
1. The majority contends the Constitution should be interpreted to mean that,
after a bidding process is concluded, the losing Filipino bidder should be given
the right to equal the highest foreign bid, and thus to win. However, the
Constitution [Sec. 10 (2), Art. XII] simply states that "in the grant of rights . . .
covering the national economy and patrimony, the State shall give preference
to qualified Filipinos." The majority concedes that there is no law defining the
extent or degree of such preference. Specifically, no statute empowers a
losing Filipino bidder to increase his bid and equal that of the winning
foreigner. In the absence of such empowering law, the majority's strained
interpretation, I respectfully submit constitutes unadulterated judicial
legislation, which makes bidding a ridiculous sham where no Filipino can lose
and where no foreigner can win. Only in the Philippines!.
2. Aside from being prohibited by the Constitution, such judicial is short-sighted
and, viewed properly, gravely prejudicial to long-term Filipino interest. It
encourages other countries — in the guise of reverse comity or worse,
unabashed retaliation — to discriminate against us in their own jurisdictions by
authorizing their own nationals to similarly equal and defeat the higher bids of
Filipino enterprises solely, while on the other hand, allowing similar bids of
other foreigners to remain unchallenged by their nationals. The majority's
thesis will thus marginalize Filipinos as pariahs in the global marketplace with
absolute no chance of winning any bidding outside our country. Even
authoritarian regimes and hermit kingdoms have long ago found out
unfairness, greed and isolation are self-defeating and in the long-term, self-
destructing.
The moral lesson here is simple: Do not do unto other what you dont want
other to do unto you.
3. In the absence of a law specifying the degree or extent of the "Filipino First"
policy of the Constitution, the constitutional preference for the "qualified
Filipinos" may be allowed only where all the bids are equal. In this manner, we
put the Filipino ahead without self-destructing him and without being unfair to
the foreigner.
In short, the Constitution mandates a victory for the qualified Filipino only when
the scores are tied. But not when the ballgame is over and the foreigner clearly
posted the highest score.
G.R. No. 127882 January 27, 2004
LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its
Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAÑADA,
PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR.,
F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE,
SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN,
MARCELO L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D.
LAWAY, BENITA P. TACUAYAN, minors JOLY L. BUGOY, represented by
his father UNDERO D. BUGOY, ROGER M. DADING, represented by his
father ANTONIO L. DADING, ROMY M. LAGARO, represented by his
father TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented
by his father MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by
his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his
father DANNY M. SAL, DAISY RECARSE, represented by her mother
LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L.
MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR,
MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN CARLO CULAR,
VIRGILIO CULAR, JR., represented by their father VIRGILIO CULAR,
PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE
VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA,
represented by her father MARIO JOSE B. TALJA, SHARMAINE R.
CUNANAN, represented by her father ALFREDO M. CUNANAN, ANTONIO
JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN
D. NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR.,
ROSERIO MARALAG LINGATING, represented by her father RIO
OLIMPIO A. LINGATING, MARIO JOSE B. TALJA, DAVID E. DE VERA,
MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO, OND, LOLITA
G. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO,
ROBERTO S. VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A.
PERIA, represented by his father ELPIDIO V. PERIA, 2 GREEN FORUM
PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-WV),
ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE
KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG
PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG
KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),
PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT
SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC.
(PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER FOR
ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND
DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC.,
SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL
RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR,
MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES,
EXECUTIVE SECRETARY, and WMC (PHILIPPINES), INC.4 respondents.
DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality
of Republic Act No. 7942,5 otherwise known as the PHILIPPINE MINING ACT
OF 1995, along with the Implementing Rules and Regulations issued pursuant
thereto, Department of Environment and Natural Resources (DENR)
Administrative Order 96-40, and of the Financial and Technical Assistance
Agreement (FTAA) entered into on March 30, 1995 by the Republic of the
Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized
under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order
(E.O.) No. 2796 authorizing the DENR Secretary to accept, consider and
evaluate proposals from foreign-owned corporations or foreign investors for
contracts or agreements involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals, which, upon
appropriate recommendation of the Secretary, the President may execute with
the foreign proponent. In entering into such proposals, the President shall
consider the real contributions to the economic growth and general welfare of
the country that will be realized, as well as the development and use of local
scientific and technical resources that will be promoted by the proposed
contract or agreement. Until Congress shall determine otherwise, large-scale
mining, for purpose of this Section, shall mean those proposals for contracts or
agreements for mineral resources exploration, development, and utilization
involving a committed capital investment in a single mining unit project of at
least Fifty Million Dollars in United States Currency (US $50,000,000.00). 7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to
"govern the exploration, development, utilization and processing of all mineral
resources."8 R.A. No. 7942 defines the modes of mineral agreements for
mining operations,9 outlines the procedure for their filing and
approval,10 assignment/transfer11 and withdrawal,12 and fixes their
terms.13 Similar provisions govern financial or technical assistance
agreements.14
The law prescribes the qualifications of contractors 15 and grants them certain
rights, including timber,16 water17 and easement18 rights, and the right to
possess explosives.19 Surface owners, occupants, or concessionaires are
forbidden from preventing holders of mining rights from entering private lands
and concession areas.20 A procedure for the settlement of conflicts is likewise
provided for.21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It
regulates the transport, sale and processing of minerals, 25 and promotes the
development of mining communities, science and mining technology, 26 and
safety and environmental protection.27
The government's share in the agreements is spelled out and
allocated,28 taxes and fees are imposed,29 incentives granted.30 Aside from
penalizing certain acts,31 the law likewise specifies grounds for the
cancellation, revocation and termination of agreements and permits.32
On April 9, 1995, 30 days following its publication on March 10, 1995 in
Malaya and Manila Times, two newspapers of general circulation, R.A. No.
7942 took effect.33 Shortly before the effectivity of R.A. No. 7942, however, or
on March 30, 1995, the President entered into an FTAA with WMCP covering
99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and
North Cotabato.34
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later repealed
by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR
Secretary demanding that the DENR stop the implementation of R.A. No. 7942
and DAO No. 96-40,35 giving the DENR fifteen days from receipt 36 to act
thereon. The DENR, however, has yet to respond or act on petitioners' letter. 37
Petitioners thus filed the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They allege that at the time of the
filing of the petition, 100 FTAA applications had already been filed, covering an
area of 8.4 million hectares,38 64 of which applications are by fully foreign-
owned corporations covering a total of 5.8 million hectares, and at least one by
a fully foreign-owned mining company over offshore areas. 39
Petitioners claim that the DENR Secretary acted without or in excess of
jurisdiction:
I implementing Republic Act No. 7942, the latter being unconstitutional in that it
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows fully foreign owned corporations to explore, develop, utilize and exploit
mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of
the Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the taking of private property without the determination of public use
and for just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows enjoyment by foreign citizens as well as fully foreign owned
corporations of the nation's marine wealth contrary to Section 2, paragraph 2
of Article XII of the Constitution;
V Secretary, Victor O. Ramos, the then DENR Secretary, and Horacio Ramos,
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows priority to foreign and fully foreign owned corporations in the
exploration, development and utilization of mineral resources contrary to
Article XII of the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40
allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph
1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and
Technical Assistance Agreement between the President of the Republic of the
Philippines and Western Mining Corporation Philippines Inc. because the
same is illegal and unconstitutional.40
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application
for Financial or Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No.
7942 as unconstitutional and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine
Mining Act contained in DENR Administrative Order No. 96-40 and all
other similar administrative issuances as unconstitutional and null and
void; and
(d) Cancelling the Financial and Technical Assistance Agreement
issued to Western Mining Philippines, Inc. as unconstitutional, illegal
and null and void.41
Impleaded as public respondents are Ruben Torres, the then Executive
Director of the Mines and Geosciences Bureau of the DENR. Also impleaded
is private respondent WMCP, which entered into the assailed FTAA with the
Philippine Government. WMCP is owned by WMC Resources International
Pty., Ltd. (WMC), "a wholly owned subsidiary of Western Mining Corporation
Holdings Limited, a publicly listed major Australian mining and exploration
company."42 By WMCP's information, "it is a 100% owned subsidiary of WMC
LIMITED."43
Respondents, aside from meeting petitioners' contentions, argue that the
requisites for judicial inquiry have not been met and that the petition does not
comply with the criteria for prohibition and mandamus. Additionally, respondent
WMCP argues that there has been a violation of the rule on hierarchy of
courts.
After petitioners filed their reply, this Court granted due course to the petition.
The parties have since filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging
that on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius
Mines, Inc. (Sagittarius), a corporation organized under Philippine
laws.44 WMCP was subsequently renamed "Tampakan Mineral Resources
Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is
owned by Filipinos and/or Filipino-owned corporations while about 40% is
owned by Indophil Resources NL, an Australian company. 46 It further claims
that by such sale and transfer of shares, "WMCP has ceased to be connected
in any way with WMC."47
By virtue of such sale and transfer, the DENR Secretary, by Order of
December 18, 2001,48 approved the transfer and registration of the subject
FTAA from WMCP to Sagittarius. Said Order, however, was appealed by
Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President
which upheld it by Decision of July 23, 2002. 49 Its motion for reconsideration
having been denied by the Office of the President by Resolution of November
12, 2002,50 Lepanto filed a petition for review51 before the Court of Appeals.
Incidentally, two other petitions for review related to the approval of the
transfer and registration of the FTAA to Sagittarius were recently resolved by
this Court.52
It bears stressing that this case has not been rendered moot either by the
transfer and registration of the FTAA to a Filipino-owned corporation or by the
non-issuance of a temporary restraining order or a preliminary injunction to
stay the above-said July 23, 2002 decision of the Office of the President. 53 The
validity of the transfer remains in dispute and awaits final judicial
determination. This assumes, of course, that such transfer cures the FTAA's
alleged unconstitutionality, on which question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized
areas included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining
Corporation, and Southcot Mining Corporation, are all Filipino-owned
corporations,54 each of which was a holder of an approved Mineral Production
Sharing Agreement awarded in 1994, albeit their respective mineral claims
were subsumed in the WMCP FTAA;55 and that these three companies are the
same companies that consolidated their interests in Sagittarius to whom WMC
sold its 100% equity in WMCP.56 WMCP concludes that in the event that the
FTAA is invalidated, the MPSAs of the three corporations would be revived
and the mineral claims would revert to their original claimants. 57
These circumstances, while informative, are hardly significant in the resolution
of this case, it involving the validity of the FTAA, not the possible
consequences of its invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown
later, only the first and the last need be delved into; in the latter, the discussion
shall dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue
of which order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by
respondents shall first be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power
of judicial review only if the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the
constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity;
and
(4) The constitutional question is the lis mota of the case. 58
Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that "(j)udicial power includes
the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable." The power of judicial review,
therefore, is limited to the determination of actual cases and controversies. 59
An actual case or controversy means an existing case or controversy that is
appropriate or ripe for determination, not conjectural or anticipatory,60 lest the
decision of the court would amount to an advisory opinion. 61 The power does
not extend to hypothetical questions 62 since any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities.63
"Legal standing" or locus standi has been defined as a personal and
substantial interest in the case such that the party has sustained or will sustain
direct injury as a result of the governmental act that is being
challenged,64 alleging more than a generalized grievance. 65 The gist of the
question of standing is whether a party alleges "such personal stake in the
outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court depends for
illumination of difficult constitutional questions." 66 Unless a person is injuriously
affected in any of his constitutional rights by the operation of statute or
ordinance, he has no standing.67
Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan
Tribal Association, Inc., a farmers and indigenous people's cooperative
organized under Philippine laws representing a community actually affected by
the mining activities of WMCP, members of said cooperative,68 as well as other
residents of areas also affected by the mining activities of WMCP. 69 These
petitioners have standing to raise the constitutionality of the questioned FTAA
as they allege a personal and substantial injury. They claim that they would
suffer "irremediable displacement"70 as a result of the implementation of the
FTAA allowing WMCP to conduct mining activities in their area of residence.
They thus meet the appropriate case requirement as they assert an interest
adverse to that of respondents who, on the other hand, insist on the FTAA's
validity.
In view of the alleged impending injury, petitioners also have standing to assail
the validity of E.O. No. 279, by authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA,
cannot sue either or both contracting parties to annul it. 71 In other words, they
contend that petitioners are not real parties in interest in an action for the
annulment of contract.
Public respondents' contention fails. The present action is not merely one for
annulment of contract but for prohibition and mandamus. Petitioners allege
that public respondents acted without or in excess of jurisdiction in
implementing the FTAA, which they submit is unconstitutional. As the case
involves constitutional questions, this Court is not concerned with whether
petitioners are real parties in interest, but with whether they have legal
standing. As held in Kilosbayan v. Morato: 72
x x x. "It is important to note . . . that standing because of its constitutional and
public policy underpinnings, is very different from questions relating to whether
a particular plaintiff is the real party in interest or has capacity to sue. Although
all three requirements are directed towards ensuring that only certain parties
can maintain an action, standing restrictions require a partial consideration of
the merits, as well as broader policy concerns relating to the proper role of the
judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL
PROCEDURE 328 [1985])
Standing is a special concern in constitutional law because in some cases
suits are brought not by parties who have been personally injured by the
operation of a law or by official action taken, but by concerned citizens,
taxpayers or voters who actually sue in the public interest. Hence, the question
in 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." (Baker v. Carr, 369 U.S.
186, 7 L.Ed.2d 633 [1962].)
As earlier stated, petitioners meet this requirement.
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-
40 likewise fulfills the requisites of justiciability. Although these laws were not
in force when the subject FTAA was entered into, the question as to their
validity is ripe for adjudication.
The WMCP FTAA provides:
14.3 Future Legislation
Any term and condition more favourable to Financial &Technical Assistance
Agreement contractors resulting from repeal or amendment of any existing law
or regulation or from the enactment of a law, regulation or administrative order
shall be considered a part of this Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that
are more favorable to WMCP, hence, these laws, to the extent that they are
favorable to WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-
existing agreements.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. – x x x That
the provisions of Chapter XIV on government share in mineral production-
sharing agreement and of Chapter XVI on incentives of this Act shall
immediately govern and apply to a mining lessee or contractor unless the
mining lessee or contractor indicates his intention to the secretary, in writing,
not to avail of said provisions x x x Provided, finally, That such leases,
production-sharing agreements, financial or technical assistance agreements
shall comply with the applicable provisions of this Act and its implementing
rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of
the provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that
they apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review – that the
exercise of the review is pleaded at the earliest opportunity – WMCP points out
that the petition was filed only almost two years after the execution of the
FTAA, hence, not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of
constitutionality must be raised immediately after the execution of the state
action complained of. That the question of constitutionality has not been raised
before is not a valid reason for refusing to allow it to be raised later. 73 A
contrary rule would mean that a law, otherwise unconstitutional, would lapse
into constitutionality by the mere failure of the proper party to promptly file a
case to challenge the same.
PROPRIETY OF PROHIBITION AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure,
Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. – When the proceedings of any tribunal,
corporation, board, or person, whether exercising functions judicial or
ministerial, are without or in excess of its or his jurisdiction, or with grave
abuse of discretion, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court alleging the facts with certainty
and praying that judgment be rendered commanding the defendant to desist
from further proceeding in the action or matter specified therein.
Prohibition is a preventive remedy.74 It seeks a judgment ordering the
defendant to desist from continuing with the commission of an act perceived to
be illegal.75
The petition for prohibition at bar is thus an appropriate remedy. While the
execution of the contract itself may be fait accompli, its implementation is not.
Public respondents, in behalf of the Government, have obligations to fulfill
under said contract. Petitioners seek to prevent them from fulfilling such
obligations on the theory that the contract is unconstitutional and, therefore,
void.
The propriety of a petition for prohibition being upheld, discussion of the
propriety of the mandamus aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of
courts does not likewise lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that
should initially pass upon the issues of a case. That way, as a particular case
goes through the hierarchy of courts, it is shorn of all but the important legal
issues or those of first impression, which are the proper subject of attention of
the appellate court. This is a procedural rule borne of experience and adopted
to improve the administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts.
Although this Court has concurrent jurisdiction with the Regional Trial Courts
and the Court of Appeals to issue writs of certiorari, prohibition, mandamus,
quo warranto, habeas corpus and injunction, such concurrence does not give a
party unrestricted freedom of choice of court forum. The resort to this Court's
primary jurisdiction to issue said writs shall be allowed only where the redress
desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify such invocation. We held in People v.
Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those against the latter, with
the Court of Appeals. A direct invocation of the Supreme Court's original
jurisdiction to issue these writs should be allowed only where there are special
and important reasons therefor, clearly and specifically set out in the petition.
This is established policy. It is a policy necessary to prevent inordinate
demands upon the Court's time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further over-
crowding of the Court's docket x x x.76 [Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry,
if not the national economy, as well as the novelty thereof, constitute
exceptional and compelling circumstances to justify resort to this Court in the
first instance.
In all events, this Court has the discretion to take cognizance of a suit which
does not satisfy the requirements of an actual case or legal standing when
paramount public interest is involved. 77 When the issues raised are of
paramount importance to the public, this Court may brush aside technicalities
of procedure.78
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed
date of effectivity came after President Aquino had already lost her legislative
powers under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant
to E.O. No. 279, violates Section 2, Article XII of the Constitution because,
among other reasons:
(1) It allows foreign-owned companies to extend more than mere
financial or technical assistance to the State in the exploitation,
development, and utilization of minerals, petroleum, and other mineral
oils, and even permits foreign owned companies to "operate and
manage mining activities."
(2) It allows foreign-owned companies to extend both technical and
financial assistance, instead of "either technical or financial
assistance."
To appreciate the import of these issues, a visit to the history of the pertinent
constitutional provision, the concepts contained therein, and the laws enacted
pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State may
directly undertake such activities or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is
owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law. In cases of water rights
for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of
the grant.
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In
such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.
THE SPANISH REGIME AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura regalia.
Introduced by Spain into these Islands, this feudal concept is based on the
State's power of dominium, which is the capacity of the State to own or acquire
property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights
which the King has by virtue of his prerogatives. In Spanish law, it refers to a
right which the sovereign has over anything in which a subject has a right of
property or propriedad. These were rights enjoyed during feudal times by the
king as the sovereign.
The theory of the feudal system was that title to all lands was originally held by
the King, and while the use of lands was granted out to others who were
permitted to hold them under certain conditions, the King theoretically retained
the title. By fiction of law, the King was regarded as the original proprietor of all
lands, and the true and only source of title, and from him all lands were held.
The theory of jura regalia was therefore nothing more than a natural fruit of
conquest.80
The Philippines having passed to Spain by virtue of discovery and
conquest,81 earlier Spanish decrees declared that "all lands were held from the
Crown."82
The Regalian doctrine extends not only to land but also to "all natural wealth
that may be found in the bowels of the earth." 83 Spain, in particular, recognized
the unique value of natural resources, viewing them, especially minerals, as an
abundant source of revenue to finance its wars against other nations. 84 Mining
laws during the Spanish regime reflected this perspective. 85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago
known as the Philippine Islands" to the United States. The Philippines was
hence governed by means of organic acts that were in the nature of charters
serving as a Constitution of the occupied territory from 1900 to 1935. 86 Among
the principal organic acts of the Philippines was the Act of Congress of July 1,
1902, more commonly known as the Philippine Bill of 1902, through which the
United States Congress assumed the administration of the Philippine
Islands.87 Section 20 of said Bill reserved the disposition of mineral lands of the
public domain from sale. Section 21 thereof allowed the free and open
exploration, occupation and purchase of mineral deposits not only to citizens of
the Philippine Islands but to those of the United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine
Islands, both surveyed and unsurveyed, are hereby declared to be free and
open to exploration, occupation and purchase, and the land in which they are
found, to occupation and purchase, by citizens of the United States or of said
Islands: Provided, That when on any lands in said Islands entered and
occupied as agricultural lands under the provisions of this Act, but not
patented, mineral deposits have been found, the working of such mineral
deposits is forbidden until the person, association, or corporation who or which
has entered and is occupying such lands shall have paid to the Government of
said Islands such additional sum or sums as will make the total amount paid
for the mineral claim or claims in which said deposits are located equal to the
amount charged by the Government for the same as mineral claims.
Unlike Spain, the United States considered natural resources as a source of
wealth for its nationals and saw fit to allow both Filipino and American citizens
to explore and exploit minerals in public lands, and to grant patents to private
mineral lands.88 A person who acquired ownership over a parcel of private
mineral land pursuant to the laws then prevailing could exclude other persons,
even the State, from exploiting minerals within his property. 89 Thus, earlier
jurisprudence90 held that:
A valid and subsisting location of mineral land, made and kept up in
accordance with the provisions of the statutes of the United States, has the
effect of a grant by the United States of the present and exclusive possession
of the lands located, and this exclusive right of possession and enjoyment
continues during the entire life of the location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral
location perfects his claim and his location not only against third persons, but
also against the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one
essential respect. Under the Regalian theory, mineral rights are not included in
a grant of land by the state; under the American doctrine, mineral rights are
included in a grant of land by the government.91
Section 21 also made possible the concession (frequently styled "permit",
license" or "lease")92 system.93 This was the traditional regime imposed by the
colonial administrators for the exploitation of natural resources in the extractive
sector (petroleum, hard minerals, timber, etc.). 94
Under the concession system, the concessionaire makes a direct equity
investment for the purpose of exploiting a particular natural resource within a
given area.95 Thus, the concession amounts to complete control by the
concessionaire over the country's natural resource, for it is given exclusive and
plenary rights to exploit a particular resource at the point of extraction. 96 In
consideration for the right to exploit a natural resource, the concessionaire
either pays rent or royalty, which is a fixed percentage of the gross proceeds. 97
Later statutory enactments by the legislative bodies set up in the Philippines
adopted the contractual framework of the concession. 98 For instance, Act No.
2932,99 approved on August 31, 1920, which provided for the exploration,
location, and lease of lands containing petroleum and other mineral oils and
gas in the Philippines, and Act No. 2719, 100 approved on May 14, 1917, which
provided for the leasing and development of coal lands in the Philippines, both
utilized the concession system.101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL
RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as
the Tydings-McDuffie Law, the People of the Philippine Islands were
authorized to adopt a constitution.102 On July 30, 1934, the Constitutional
Convention met for the purpose of drafting a constitution, and the Constitution
subsequently drafted was approved by the Convention on February 8,
1935.103 The Constitution was submitted to the President of the United States
on March 18, 1935.104 On March 23, 1935, the President of the United States
certified that the Constitution conformed substantially with the provisions of the
Act of Congress approved on March 24, 1934.105 On May 14, 1935, the
Constitution was ratified by the Filipino people. 106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural
resources of the Philippines, including mineral lands and minerals, to be
property belonging to the State.107 As adopted in a republican system, the
medieval concept of jura regalia is stripped of royal overtones and ownership
of the land is vested in the State.108
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of
the 1935 Constitution provided:
SECTION 1. All agricultural, timber, and mineral lands of the public
domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines,
or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources,
with the exception of public agricultural land, shall not be alienated,
and no license, concession, or lease for the exploitation, development,
or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the
measure and the limit of the grant.
The nationalization and conservation of the natural resources of the country
was one of the fixed and dominating objectives of the 1935 Constitutional
Convention.109 One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the
principle of state ownership of natural resources and the adoption of the
Regalian doctrine. State ownership of natural resources was seen as a
necessary starting point to secure recognition of the state's power to control
their disposition, exploitation, development, or utilization. The delegates of the
Constitutional Convention very well knew that the concept of State ownership
of land and natural resources was introduced by the Spaniards, however, they
were not certain whether it was continued and applied by the Americans. To
remove all doubts, the Convention approved the provision in the Constitution
affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of
the Regalian doctrine was considered to be a necessary starting point for the
plan of nationalizing and conserving the natural resources of the country. For
with the establishment of the principle of state ownership of the natural
resources, it would not be hard to secure the recognition of the power of the
State to control their disposition, exploitation, development or utilization. 110
The nationalization of the natural resources was intended (1) to insure their
conservation for Filipino posterity; (2) to serve as an instrument of national
defense, helping prevent the extension to the country of foreign control through
peaceful economic penetration; and (3) to avoid making the Philippines a
source of international conflicts with the consequent danger to its internal
security and independence.111
The same Section 1, Article XIII also adopted the concession system,
expressly permitting the State to grant licenses, concessions, or leases for the
exploitation, development, or utilization of any of the natural resources. Grants,
however, were limited to Filipinos or entities at least 60% of the capital of
which is owned by Filipinos. lawph!l.ne+
The swell of nationalism that suffused the 1935 Constitution was radically
diluted when on November 1946, the Parity Amendment, which came in the
form of an "Ordinance Appended to the Constitution," was ratified in a
plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the
right to utilize and exploit our natural resources to citizens of the United States
and business enterprises owned or controlled, directly or indirectly, by citizens
of the United States:113
Notwithstanding the provision of section one, Article Thirteen, and section
eight, Article Fourteen, of the foregoing Constitution, during the effectivity of
the Executive Agreement entered into by the President of the Philippines with
the President of the United States on the fourth of July, nineteen hundred and
forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven
hundred and thirty-three, but in no case to extend beyond the third of July,
nineteen hundred and seventy-four, the disposition, exploitation, development,
and utilization of all agricultural, timber, and mineral lands of the public
domain, waters, minerals, coals, petroleum, and other mineral oils, all forces
and sources of potential energy, and other natural resources of the Philippines,
and the operation of public utilities, shall, if open to any person, be open to
citizens of the United States and to all forms of business enterprise owned or
controlled, directly or indirectly, by citizens of the United States in the same
manner as to, and under the same conditions imposed upon, citizens of the
Philippines or corporations or associations owned or controlled by citizens of
the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade
Agreement, also known as the Laurel-Langley Agreement, embodied in
Republic Act No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of
1949, was approved on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the
exploitation of the nation's petroleum resources. Among the kinds of
concessions it sanctioned were exploration and exploitation concessions,
which respectively granted to the concessionaire the exclusive right to explore
for116 or develop117 petroleum within specified areas.
Concessions may be granted only to duly qualified persons 118 who have
sufficient finances, organization, resources, technical competence, and skills
necessary to conduct the operations to be undertaken. 119
Nevertheless, the Government reserved the right to undertake such work
itself.120 This proceeded from the theory that all natural deposits or occurrences
of petroleum or natural gas in public and/or private lands in the Philippines
belong to the State.121 Exploration and exploitation concessions did not confer
upon the concessionaire ownership over the petroleum lands and petroleum
deposits.122 However, they did grant concessionaires the right to explore,
develop, exploit, and utilize them for the period and under the conditions
determined by the law.123
Concessions were granted at the complete risk of the concessionaire; the
Government did not guarantee the existence of petroleum or undertake, in any
case, title warranty.124
Concessionaires were required to submit information as maybe required by the
Secretary of Agriculture and Natural Resources, including reports of geological
and geophysical examinations, as well as production
reports.125 Exploration126 and exploitation127 concessionaires were also required
to submit work programs.
lavvphi1.net
Exploitation concessionaires, in particular, were obliged to pay an annual
exploitation tax,128 the object of which is to induce the concessionaire to
actually produce petroleum, and not simply to sit on the concession without
developing or exploiting it.129 These concessionaires were also bound to pay
the Government royalty, which was not less than 12½% of the petroleum
produced and saved, less that consumed in the operations of the
concessionaire.130 Under Article 66, R.A. No. 387, the exploitation tax may be
credited against the royalties so that if the concessionaire shall be actually
producing enough oil, it would not actually be paying the exploitation tax. 131
Failure to pay the annual exploitation tax for two consecutive years, 132 or the
royalty due to the Government within one year from the date it becomes
due,133 constituted grounds for the cancellation of the concession. In case of
delay in the payment of the taxes or royalty imposed by the law or by the
concession, a surcharge of 1% per month is exacted until the same are paid. 134
As a rule, title rights to all equipment and structures that the concessionaire
placed on the land belong to the exploration or exploitation
concessionaire.135 Upon termination of such concession, the concessionaire
had a right to remove the same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying
out the provisions of the law, through the Director of Mines, who acted under
the Secretary's immediate supervision and control. 137 The Act granted the
Secretary the authority to inspect any operation of the concessionaire and to
examine all the books and accounts pertaining to operations or conditions
related to payment of taxes and royalties.138
The same law authorized the Secretary to create an Administration Unit and a
Technical Board.139 The Administration Unit was charged, inter alia, with the
enforcement of the provisions of the law. 140 The Technical Board had, among
other functions, the duty to check on the performance of concessionaires and
to determine whether the obligations imposed by the Act and its implementing
regulations were being complied with.141
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy
Development, analyzed the benefits and drawbacks of the concession system
insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the
most positive aspect of the concession system is that the State's financial
involvement is virtually risk free and administration is simple and comparatively
low in cost. Furthermore, if there is a competitive allocation of the resource
leading to substantial bonuses and/or greater royalty coupled with a relatively
high level of taxation, revenue accruing to the State under the concession
system may compare favorably with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to
this system. Because the Government's role in the traditional concession is
passive, it is at a distinct disadvantage in managing and developing policy for
the nation's petroleum resource. This is true for several reasons. First, even
though most concession agreements contain covenants requiring diligence in
operations and production, this establishes only an indirect and passive control
of the host country in resource development. Second, and more importantly,
the fact that the host country does not directly participate in resource
management decisions inhibits its ability to train and employ its nationals in
petroleum development. This factor could delay or prevent the country from
effectively engaging in the development of its resources. Lastly, a direct role in
management is usually necessary in order to obtain a knowledge of the
international petroleum industry which is important to an appreciation of the
host country's resources in relation to those of other countries.142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great
economic power arising from its exclusive equity holding. This includes, first,
appropriation of the returns of the undertaking, subject to a modest royalty;
second, exclusive management of the project; third, control of production of
the natural resource, such as volume of production, expansion, research and
development; and fourth, exclusive responsibility for downstream operations,
like processing, marketing, and distribution. In short, even if nominally, the
state is the sovereign and owner of the natural resource being exploited, it has
been shorn of all elements of control over such natural resource because of
the exclusive nature of the contractual regime of the concession. The
concession system, investing as it does ownership of natural resources,
constitutes a consistent inconsistency with the principle embodied in our
Constitution that natural resources belong to the state and shall not be
alienated, not to mention the fact that the concession was the bedrock of the
colonial system in the exploitation of natural resources.143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the
concession system could not have properly spurred sustained oil exploration
activities in the country, since it assumed that such a capital-intensive, high
risk venture could be successfully undertaken by a single individual or a small
company. In effect, concessionaires' funds were easily exhausted. Moreover,
since the concession system practically closed its doors to interested foreign
investors, local capital was stretched to the limits. The old system also failed to
consider the highly sophisticated technology and expertise required, which
would be available only to multinational companies. 144
A shift to a new regime for the development of natural resources thus seemed
imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE
SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No.
87,145 otherwise known as The Oil Exploration and Development Act of 1972
signaled such a transformation. P.D. No. 87 permitted the government to
explore for and produce indigenous petroleum through "service contracts." 146
"Service contracts" is a term that assumes varying meanings to different
people, and it has carried many names in different countries, like "work
contracts" in Indonesia, "concession agreements" in Africa, "production-
sharing agreements" in the Middle East, and "participation agreements" in
Latin America.147 A functional definition of "service contracts" in the Philippines
is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation
and development of petroleum, mineral, energy, land and other natural
resources by which a government or its agency, or a private person granted a
right or privilege by the government authorizes the other party (service
contractor) to engage or participate in the exercise of such right or the
enjoyment of the privilege, in that the latter provides financial or technical
resources, undertakes the exploitation or production of a given resource, or
directly manages the productive enterprise, operations of the exploration and
exploitation of the resources or the disposition of marketing or resources. 148
In a service contract under P.D. No. 87, service and technology are furnished
by the service contractor for which it shall be entitled to the stipulated service
fee.149 The contractor must be technically competent and financially capable to
undertake the operations required in the contract. 150
Financing is supposed to be provided by the Government to which all
petroleum produced belongs.151 In case the Government is unable to finance
petroleum exploration operations, the contractor may furnish services,
technology and financing, and the proceeds of sale of the petroleum produced
under the contract shall be the source of funds for payment of the service fee
and the operating expenses due the contractor. 152 The contractor shall
undertake, manage and execute petroleum operations, subject to the
government overseeing the management of the operations.153 The contractor
provides all necessary services and technology and the requisite financing,
performs the exploration work obligations, and assumes all exploration risks
such that if no petroleum is produced, it will not be entitled to
reimbursement.154 Once petroleum in commercial quantity is discovered, the
contractor shall operate the field on behalf of the government. 155
P.D. No. 87 prescribed minimum terms and conditions for every service
contract.156 It also granted the contractor certain privileges, including
exemption from taxes and payment of tariff duties, 157 and permitted the
repatriation of capital and retention of profits abroad. 158
Ostensibly, the service contract system had certain advantages over the
concession regime.159 It has been opined, though, that, in the Philippines, our
concept of a service contract, at least in the petroleum industry, was basically
a concession regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the
ratification of a new Constitution.161 Article XIV on the National Economy and
Patrimony contained provisions similar to the 1935 Constitution with regard to
Filipino participation in the nation's natural resources. Section 8, Article XIV
thereof provides:
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and
other mineral oils, all forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the State. With the exception of
agricultural, industrial or commercial, residential and resettlement lands of the
public domain, natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development, exploitation, or
utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more than twenty-five years,
except as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which cases beneficial use
may be the measure and the limit of the grant.
While Section 9 of the same Article maintained the Filipino-only policy in the
enjoyment of natural resources, it also allowed Filipinos, upon authority of the
Batasang Pambansa, to enter into service contracts with any person or entity
for the exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of
any of the natural resources of the Philippines shall be limited to citizens, or to
corporations or associations at least sixty per centum of which is owned by
such citizens. The Batasang Pambansa, in the national interest, may allow
such citizens, corporations or associations to enter into service contracts for
financial, technical, management, or other forms of assistance with any person
or entity for the exploration, or utilization of any of the natural resources.
Existing valid and binding service contracts for financial, technical,
management, or other forms of assistance are hereby recognized as such.
[Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed
from the methods followed by India, Pakistan and especially Indonesia in the
exploration of petroleum and mineral oils.162 The provision allowing such
contracts, according to another, was intended to "enhance the proper
development of our natural resources since Filipino citizens lack the needed
capital and technical know-how which are essential in the proper exploration,
development and exploitation of the natural resources of the country." 163
The original idea was to authorize the government, not private entities, to enter
into service contracts with foreign entities. 164 As finally approved, however, a
citizen or private entity could be allowed by the National Assembly to enter into
such service contract.165 The prior approval of the National Assembly was
deemed sufficient to protect the national interest. 166 Notably, none of the laws
allowing service contracts were passed by the Batasang Pambansa. Indeed,
all of them were enacted by presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the
President promulgated Presidential Decree No. 151. 167 The law allowed
Filipino citizens or entities which have acquired lands of the public domain or
which own, hold or control such lands to enter into service contracts for
financial, technical, management or other forms of assistance with any foreign
persons or entity for the exploration, development, exploitation or utilization of
said lands.168
Presidential Decree No. 463,169 also known as The Mineral Resources
Development Decree of 1974, was enacted on May 17, 1974. Section 44 of
the decree, as amended, provided that a lessee of a mining claim may enter
into a service contract with a qualified domestic or foreign contractor for the
exploration, development and exploitation of his claims and the processing and
marketing of the product thereof.
Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on
May 16, 1975, allowed Filipinos engaged in commercial fishing to enter into
contracts for financial, technical or other forms of assistance with any foreign
person, corporation or entity for the production, storage, marketing and
processing of fish and fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines),
approved on May 19, 1975, allowed "forest products licensees, lessees, or
permitees to enter into service contracts for financial, technical, management,
or other forms of assistance . . . with any foreign person or entity for the
exploration, development, exploitation or utilization of the forest resources." 173
Yet another law allowing service contracts, this time for geothermal resources,
was Presidential Decree No. 1442,174 which was signed into law on June 11,
1978. Section 1 thereof authorized the Government to enter into service
contracts for the exploration, exploitation and development of geothermal
resources with a foreign contractor who must be technically and financially
capable of undertaking the operations required in the service contract.
Thus, virtually the entire range of the country's natural resources –from
petroleum and minerals to geothermal energy, from public lands and forest
resources to fishery products – was well covered by apparent legal authority to
engage in the direct participation or involvement of foreign persons or
corporations (otherwise disqualified) in the exploration and utilization of natural
resources through service contracts.175
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE
AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of
power under a revolutionary government. On March 25, 1986, President
Aquino issued Proclamation No. 3,176 promulgating the Provisional
Constitution, more popularly referred to as the Freedom Constitution. By
authority of the same Proclamation, the President created a Constitutional
Commission (CONCOM) to draft a new constitution, which took effect on the
date of its ratification on February 2, 1987. 177
The 1987 Constitution retained the Regalian doctrine. The first sentence of
Section 2, Article XII states: "All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the
second sentence of the same provision, prohibits the alienation of natural
resources, except agricultural lands.
The third sentence of the same paragraph is new: "The exploration,
development and utilization of natural resources shall be under the full control
and supervision of the State." The constitutional policy of the State's "full
control and supervision" over natural resources proceeds from the concept of
jura regalia, as well as the recognition of the importance of the country's
natural resources, not only for national economic development, but also for its
security and national defense.178 Under this provision, the State assumes "a
more dynamic role" in the exploration, development and utilization of natural
resources.179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973
Constitutions authorizing the State to grant licenses, concessions, or leases for
the exploration, exploitation, development, or utilization of natural resources.
By such omission, the utilization of inalienable lands of public domain through
"license, concession or lease" is no longer allowed under the 1987
Constitution.180
Having omitted the provision on the concession system, Section 2 proceeded
to introduce "unfamiliar language":181
The State may directly undertake such activities or it may enter into co-
production, joint venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens.
Consonant with the State's "full supervision and control" over natural
resources, Section 2 offers the State two "options." 182 One, the State may
directly undertake these activities itself; or two, it may enter into co-production,
joint venture, or production-sharing agreements with Filipino citizens, or
entities at least 60% of whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the
case of the former, to corporations or associations at least 60% of the capital
of which is owned by Filipinos, a fourth allows the participation of foreign-
owned corporations. The fourth and fifth paragraphs of Section 2 provide:
The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In
such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in
the exploration, development, and utilization of natural resources, it imposes
certain limitations or conditions to agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State,
may enter into these agreements, and only with corporations. By
contrast, under the 1973 Constitution, a Filipino citizen, corporation or
association may enter into a service contract with a "foreign person or
entity."
Second, the size of the activities: only large-scale exploration,
development, and utilization is allowed. The term "large-scale usually
refers to very capital-intensive activities."183
Third, the natural resources subject of the activities is restricted to
minerals, petroleum and other mineral oils, the intent being to limit
service contracts to those areas where Filipino capital may not be
sufficient.184
Fourth, consistency with the provisions of statute. The agreements
must be in accordance with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such
agreements. The agreements must be based on real contributions to
economic growth and general welfare of the country.
 Sixth, the agreements must contain rudimentary stipulations for the
promotion of the development and use of local scientific and technical
resources.
Seventh, the notification requirement. The President shall notify
Congress of every financial or technical assistance agreement entered
into within thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution
referred to "service contracts for financial, technical, management, or
other forms of assistance" the 1987 Constitution provides for
"agreements. . . involving either financial or technical assistance." It
bears noting that the phrases "service contracts" and "management or
other forms of assistance" in the earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional
Constitution,185 President Aquino, on July 10, 1987, signed into law E.O. No.
211 prescribing the interim procedures in the processing and approval of
applications for the exploration, development and utilization of minerals. The
omission in the 1987 Constitution of the term "service contracts"
notwithstanding, the said E.O. still referred to them in Section 2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral
resources, including renewal applications and applications for approval of
operating agreements and mining service contracts, shall be accepted and
processed and may be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the "processing, evaluation and
approval of all mining applications . . . operating agreements and service
contracts . . . shall be governed by Presidential Decree No. 463, as amended,
other existing mining laws, and their implementing rules and regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No.
279 by authority of which the subject WMCP FTAA was executed on March
30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section
15 thereof declares that the Act "shall govern the exploration, development,
utilization, and processing of all mineral resources." Such declaration
notwithstanding, R.A. No. 7942 does not actually cover all the modes through
which the State may undertake the exploration, development, and utilization of
natural resources.
The State, being the owner of the natural resources, is accorded the primary
power and responsibility in the exploration, development and utilization
thereof. As such, it may undertake these activities through four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-
sharing agreements with Filipino citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural
resources by Filipino citizens.
(4) For the large-scale exploration, development and utilization of
minerals, petroleum and other mineral oils, the President may enter
into agreements with foreign-owned corporations involving technical or
financial assistance.186
Except to charge the Mines and Geosciences Bureau of the DENR with
performing researches and surveys,187 and a passing mention of government-
owned or controlled corporations,188 R.A. No. 7942 does not specify how the
State should go about the first mode. The third mode, on the other hand, is
governed by Republic Act No. 7076189 (the People's Small-Scale Mining Act of
1991) and other pertinent laws.190 R.A. No. 7942 primarily concerns itself with
the second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are
collectively classified by R.A. No. 7942 as "mineral agreements."191 The
Government participates the least in a mineral production sharing agreement
(MPSA). In an MPSA, the Government grants the contractor 192 the exclusive
right to conduct mining operations within a contract area193 and shares in the
gross output.194 The MPSA contractor provides the financing, technology,
management and personnel necessary for the agreement's
implementation.195 The total government share in an MPSA is the excise tax on
mineral products under Republic Act No. 7729,196 amending Section 151(a) of
the National Internal Revenue Code, as amended.197
In a co-production agreement (CA),198 the Government provides inputs to the
mining operations other than the mineral resource, 199 while in a joint venture
agreement (JVA), where the Government enjoys the greatest participation, the
Government and the JVA contractor organize a company with both parties
having equity shares.200 Aside from earnings in equity, the Government in a
JVA is also entitled to a share in the gross output. 201 The Government may
enter into a CA202 or JVA203 with one or more contractors. The Government's
share in a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements
shall be negotiated by the Government and the contractor taking into
consideration the: (a) capital investment of the project, (b) the risks involved,
(c) contribution of the project to the economy, and (d) other factors that will
provide for a fair and equitable sharing between the Government and the
contractor. The Government shall also be entitled to compensations for its
other contributions which shall be agreed upon by the parties, and shall
consist, among other things, the contractor's income tax, excise tax, special
allowance, withholding tax due from the contractor's foreign stockholders
arising from dividend or interest payments to the said foreign stockholders, in
case of a foreign national and all such other taxes, duties and fees as provided
for under existing laws.
All mineral agreements grant the respective contractors the exclusive right to
conduct mining operations and to extract all mineral resources found in the
contract area.204 A "qualified person" may enter into any of the mineral
agreements with the Government.205 A "qualified person" is
any citizen of the Philippines with capacity to contract, or a corporation,
partnership, association, or cooperative organized or authorized for the
purpose of engaging in mining, with technical and financial capability to
undertake mineral resources development and duly registered in accordance
with law at least sixty per centum (60%) of the capital of which is owned by
citizens of the Philippines x x x.206
The fourth mode involves "financial or technical assistance agreements." An
FTAA is defined as "a contract involving financial or technical assistance for
large-scale exploration, development, and utilization of natural
resources."207 Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of natural
resources in the Philippines may enter into such agreement directly with the
Government through the DENR.208 For the purpose of granting an FTAA, a
legally organized foreign-owned corporation (any corporation, partnership,
association, or cooperative duly registered in accordance with law in which
less than 50% of the capital is owned by Filipino citizens) 209 is deemed a
"qualified person."210
Other than the difference in contractors' qualifications, the principal distinction
between mineral agreements and FTAAs is the maximum contract area to
which a qualified person may hold or be granted. 211 "Large-scale" under R.A.
No. 7942 is determined by the size of the contract area, as opposed to the
amount invested (US $50,000,000.00), which was the standard under E.O.
279.
Like a CA or a JVA, an FTAA is subject to negotiation. 212 The Government's
contributions, in the form of taxes, in an FTAA is identical to its contributions in
the two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance
agreement shall commence after the financial or technical assistance
agreement contractor has fully recovered its pre-operating expenses,
exploration, and development expenditures, inclusive. 213
III
Having examined the history of the constitutional provision and statutes
enacted pursuant thereto, a consideration of the substantive issues presented
by the petition is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was
executed, did not come into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987,
two days before the opening of Congress on July 27, 1987.214 Section 8 of the
E.O. states that the same "shall take effect immediately." This provision,
according to petitioners, runs counter to Section 1 of E.O. No. 200, 215 which
provides:
SECTION 1. Laws shall take effect after fifteen days following the completion
of their publication either in the Official Gazette or in a newspaper of general
circulation in the Philippines, unless it is otherwise provided. 216 [Emphasis
supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken
effect fifteen days after its publication at which time Congress had already
convened and the President's power to legislate had ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was
settled in Miners Association of the Philippines v. Factoran, supra. This is of
course incorrect for the issue in Miners Association was not the validity of E.O.
No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from
taking effect on a date other than – even before – the 15-day period after its
publication. Where a law provides for its own date of effectivity, such date
prevails over that prescribed by E.O. No. 200. Indeed, this is the very essence
of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1,
E.O. No. 200, therefore, applies only when a statute does not provide for its
own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this
Court held in Tañada v. Tuvera,217 is the publication of the law for without such
notice and publication, there would be no basis for the application of the
maxim "ignorantia legis n[eminem] 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.
While the effectivity clause of E.O. No. 279 does not require its publication, it is
not a ground for its invalidation since the Constitution, being "the fundamental,
paramount and supreme law of the nation," is deemed written in the
law.218 Hence, the due process clause,219 which, so Tañada held, mandates the
publication of statutes, is read into Section 8 of E.O. No. 279. Additionally,
Section 1 of E.O. No. 200 which provides for publication "either in the Official
Gazette or in a newspaper of general circulation in the Philippines," finds
suppletory application. It is significant to note that E.O. No. 279 was actually
published in the Official Gazette220 on August 3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200,
and Tañada v. Tuvera, this Court holds that E.O. No. 279 became effective
immediately upon its publication in the Official Gazette on August 3, 1987.
That such effectivity took place after the convening of the first Congress is
irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987,
she was still validly exercising legislative powers under the Provisional
Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution
explicitly states:
Sec. 6. The incumbent President shall continue to exercise legislative powers
until the first Congress is convened.
The convening of the first Congress merely precluded the exercise of
legislative powers by President Aquino; it did not prevent the effectivity of laws
she had previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a
validly enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of
the Constitution, FTAAs should be limited to "technical or financial assistance"
only. They observe, however, that, contrary to the language of the
Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining
corporation, to extend more than mere financial or technical assistance to the
State, for it permits WMCP to manage and operate every aspect of the mining
activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of
constitutions that the instrument must be so construed as to give effect to the
intention of the people who adopted it.223 This intention is to be sought in the
constitution itself, and the apparent meaning of the words is to be taken as
expressing it, except in cases where that assumption would lead to absurdity,
ambiguity, or contradiction.224 What the Constitution says according to the text
of the provision, therefore, compels acceptance and negates the power of the
courts to alter it, based on the postulate that the framers and the people mean
what they say.225 Accordingly, following the literal text of the Constitution,
assistance accorded by foreign-owned corporations in the large-scale
exploration, development, and utilization of petroleum, minerals and mineral
oils should be limited to "technical" or "financial" assistance only.
WMCP nevertheless submits that the word "technical" in the fourth paragraph
of Section 2 of E.O. No. 279 encompasses a "broad number of possible
services," perhaps, "scientific and/or technological in basis." 226 It thus posits
that it may also well include "the area of management or operations . . . so
long as such assistance requires specialized knowledge or skills, and are
related to the exploration, development and utilization of mineral resources." 227
This Court is not persuaded. As priorly pointed out, the phrase "management
or other forms of assistance" in the 1973 Constitution was deleted in the 1987
Constitution, which allows only "technical or financial assistance." Casus
omisus pro omisso habendus est. A person, object or thing omitted from an
enumeration must be held to have been omitted intentionally.228 As will be
shown later, the management or operation of mining activities by foreign
contractors, which is the primary feature of service contracts, was precisely the
evil that the drafters of the 1987 Constitution sought to eradicate.
Respondents insist that "agreements involving technical or financial
assistance" is just another term for service contracts. They contend that the
proceedings of the CONCOM indicate "that although the terminology 'service
contract' was avoided [by the Constitution], the concept it represented was
not." They add that "[t]he concept is embodied in the phrase 'agreements
involving financial or technical assistance.'" 229 And point out how members of
the CONCOM referred to these agreements as "service contracts." For
instance:
SR. TAN. Am I correct in thinking that the only difference between
these future service contracts and the past service contracts under Mr.
Marcos is the general law to be enacted by the legislature and the
notification of Congress by the President? That is the only difference, is
it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service
contracts before.
SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon,
Garcia, Nolledo and Tadeo who alluded to service contracts as they
explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of
two reasons: One, the provision on service contracts. I felt that if we
would constitutionalize any provision on service contracts, this should
always be with the concurrence of Congress and not guided only by a
general law to be promulgated by Congress. x x x.231 [Emphasis
supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3,
even when they have been proven to be inimical to the interests of the
nation, providing as they do the legal loophole for the exploitation of
our natural resources for the benefit of foreign interests. They
constitute a serious negation of Filipino control on the use and
disposition of the nation's natural resources, especially with regard to
those which are nonrenewable.232 [Emphasis supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article
on National Economy and Patrimony, going over said provisions
meticulously, setting aside prejudice and personalities will reveal that
the article contains a balanced set of provisions. I hope the forthcoming
Congress will implement such provisions taking into account that
Filipinos should have real control over our economy and patrimony,
and if foreign equity is permitted, the same must be subordinated to the
imperative demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign
corporations or entities are resorted to only when no Filipino enterprise
or Filipino-controlled enterprise could possibly undertake the
exploration or exploitation of our natural resources and that
compensation under such contracts cannot and should not equal what
should pertain to ownership of capital. In other words, the service
contract should not be an instrument to circumvent the basic provision,
that the exploration and exploitation of natural resources should be
truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
x x x.
 MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin,
pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang
sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista
at ang salitang "imperyalismo" ay buhay na buhay sa National
Economy and Patrimony na nating ginawa. Sa pamamagitan ng
salitang "based on," naroroon na ang free trade sapagkat tayo ay
mananatiling tagapagluwas ng hilaw na sangkap at tagaangkat ng
yaring produkto. Pangalawa, naroroon pa rin ang parity rights, ang
service contract, ang 60-40 equity sa natural resources. Habang
naghihirap ang sambayanang Pilipino, ginagalugad naman ng mga
dayuhan ang ating likas na yaman. Kailan man ang Article on National
Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating
ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng
bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa
lupa at ang national industrialization. Ito ang tinatawag naming
pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big
businessmen at ang mga komprador ay nagsasabi na ang free trade
na ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan
na ang araw ay sisikat sa Kanluran. Kailan man hindi puwedeng
sumikat ang araw sa Kanluran. I vote no.234 [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase "service contracts" has been deleted in the 1987
Constitution's Article on National Economy and Patrimony. If the CONCOM
intended to retain the concept of service contracts under the 1973 Constitution,
it could have simply adopted the old terminology ("service contracts") instead
of employing new and unfamiliar terms ("agreements . . . involving either
technical or financial assistance"). Such a difference between the language of
a provision in a revised constitution and that of a similar provision in the
preceding constitution is viewed as indicative of a difference in purpose. 235 If,
as respondents suggest, the concept of "technical or financial assistance"
agreements is identical to that of "service contracts," the CONCOM would not
have bothered to fit the same dog with a new collar. To uphold respondents'
theory would reduce the first to a mere euphemism for the second and render
the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or
financial assistance agreements are not synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought
to be accomplished by its adoption, and the evils, if any, sought to be
prevented or remedied. A doubtful provision will be examined in light of the
history of the times, and the condition and circumstances under which the
Constitution was framed. The object is to ascertain the reason which induced
the framers of the Constitution to enact the particular provision and the
purpose sought to be accomplished thereby, in order to construe the whole as
to make the words consonant to that reason and calculated to effect that
purpose.236
As the following question of Commissioner Quesada and Commissioner
Villegas' answer shows the drafters intended to do away with service contracts
which were used to circumvent the capitalization (60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service
contracts." In this particular Section 3, is there a safeguard against the
possible control of foreign interests if the Filipinos go into coproduction
with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service
contracts" was our first attempt to avoid some of the abuses in the past
regime in the use of service contracts to go around the 60-40
arrangement. The safeguard that has been introduced – and this, of
course can be refined – is found in Section 3, lines 25 to 30, where
Congress will have to concur with the President on any agreement
entered into between a foreign-owned corporation and the government
involving technical or financial assistance for large-scale exploration,
development and utilization of natural resources.237 [Emphasis
supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of
Commissioner Quesada regarding the participation of foreign interests
in Philippine natural resources, which was supposed to be restricted to
Filipinos.
MS. QUESADA. Another point of clarification is the phrase "and
utilization of natural resources shall be under the full control and
supervision of the State." In the 1973 Constitution, this was limited to
citizens of the Philippines; but it was removed and substituted by "shall
be under the full control and supervision of the State." Was the concept
changed so that these particular resources would be limited to citizens
of the Philippines? Or would these resources only be under the full
 control and supervision of the State; meaning, noncitizens would have
access to these natural resources? Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the
next sentence, it states:
Such activities may be directly undertaken by the State, or it may enter into co-
production, joint venture, production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources… may be
directly undertaken by the State, or it may enter into co-production, joint
venture or production-sharing agreement with . . . corporations or associations
at least sixty per cent of whose voting stock or controlling interest is owned by
such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration,
development and utilization of natural resources, the President with the
concurrence of Congress may enter into agreements with foreign-owned
corporations even for technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this
point for fear that foreign investors will use their enormous capital resources to
facilitate the actual exploitation or exploration, development and effective
disposition of our natural resources to the detriment of Filipino investors. I am
not saying that we should not consider borrowing money from foreign sources.
What I refer to is that foreign interest should be allowed to participate only to
the extent that they lend us money and give us technical assistance with the
appropriate government permit. In this way, we can insure the enjoyment of
our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not
permit foreign investors to participate. It is only technical or financial
assistance – they do not own anything – but on conditions that have to be
determined by law with the concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service
contracts which we said yesterday were avenues used in the previous regime
to go around the 60-40 requirement.238 [Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to
this limitation in scope in proposing an amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?
MR. MAAMBONG. Subject to the three-minute rule, Madam President.
MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly
stated that the Filipino people are sovereign and that one of the objectives for
the creation or establishment of a government is to conserve and develop the
national patrimony. The implication is that the national patrimony or our natural
resources are exclusively reserved for the Filipino people. No alien must be
allowed to enjoy, exploit and develop our natural resources. As a matter of
fact, that principle proceeds from the fact that our natural resources are gifts
from God to the Filipino people and it would be a breach of that special
blessing from God if we will allow aliens to exploit our natural resources.
I voted in favor of the Jamir proposal because it is not really exploitation that
we granted to the alien corporations but only for them to render financial or
technical assistance. It is not for them to enjoy our natural resources. Madam
President, our natural resources are depleting; our population is increasing by
leaps and bounds. Fifty years from now, if we will allow these aliens to exploit
our natural resources, there will be no more natural resources for the next
generations of Filipinos. It may last long if we will begin now. Since 1935 the
aliens have been allowed to enjoy to a certain extent the exploitation of our
natural resources, and we became victims of foreign dominance and control.
The aliens are interested in coming to the Philippines because they would like
to enjoy the bounty of nature exclusively intended for Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to
pray in the Preamble "to preserve and develop the national patrimony for the
sovereign Filipino people and for the generations to come," we must at this
time decide once and for all that our natural resources must be reserved only
to Filipino citizens.
Thank you.239 [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive240 and leaves
no doubt as to the intention of the framers to eliminate service contracts coal, petroleum and coal, petroleum and coal, petroleum, and
altogether. He writes: other mineral oils, all other mineral oils, all other mineral oils, all
forces of potential forces of potential forces of potential
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly energy, fisheries, energy, fisheries, energy, fisheries,
technological undertakings for which the President may enter into contracts flora and fauna and forests, flora and forests or timber,
with foreign-owned corporations, and enunciates strict conditions that should other natural fauna, and other wildlife, flora and
govern such contracts. x x x. resources of the natural resources are fauna, and other
Philippines are owned by the State. natural resources are
owned by the State. With the exception of owned by the State.
This provision balances the need for foreign capital and technology with the
With the exception of agricultural lands, all With the exception of
need to maintain the national sovereignty. It recognizes the fact that as long as
agricultural lands, all other natural agricultural lands, all
Filipinos can formulate their own terms in their own territory, there is no danger
other natural resources shall not other natural
of relinquishing sovereignty to foreign interests.
resources shall not be alienated. The resources shall not
be alienated. The exploration, be alienated. The
Are service contracts allowed under the new Constitution? No. Under the new exploration, development, and exploration,
Constitution, foreign investors (fully alien-owned) can NOT participate in development and utilization of natural development, and
Filipino enterprises except to provide: (1) Technical Assistance for highly utilization of natural resources shall be utilization of natural
technical enterprises; and (2) Financial Assistance for large-scale enterprises. resources shall be under the full control resources shall be
under the full control and supervision of under the full control
The intent of this provision, as well as other provisions on foreign investments, and supervision of the State. Such and supervision of
is to prevent the practice (prevalent in the Marcos government) of skirting the the State. Such activities may be the State. The State
60/40 equation using the cover of service contracts. 241 [Emphasis supplied.] activities may be directly undertaken may directly
directly undertaken by the State, or it may undertake such
Furthermore, it appears that Proposed Resolution No. 496,242 which was the by the state, or it may enter into co- activities or it may
draft Article on National Economy and Patrimony, adopted the concept of enter into co- production, joint enter into co-
"agreements . . . involving either technical or financial assistance" contained in production, joint venture, production- production, joint
the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which venture, production sharing agreements venture, or
was taken into consideration during the deliberation of the CONCOM. 243 The sharing agreements with Filipino citizens production-sharing
former, as well as Article XII, as adopted, employed the same terminology, as with Filipino citizens or corporations or agreements with
the comparative table below shows: or corporations or associations at least Filipino citizens, or
associations sixty per sixty per cent of corporations or
cent of whose voting whose voting stock or associations at least
DRAFT OF THE UP PROPOSED ARTICLE XII OF THE stock or controlling controlling interest is sixty per centum of
LAW RESOLUTION NO. 1987 interest is owned by owned by such whose capital is
CONSTITUTION 496 OF THE CONSTITUTION such citizens for a citizens. Such owned by such
PROJECT CONSTITUTIONAL period of not more agreements shall be citizens. Such
COMMISSION than twenty-five for a period of twenty- agreements may be
years, renewable for five years, renewable for a period not
not more than twenty- for not more than exceeding twenty-five
Sec. 1. All lands of Sec. 3. All lands of Sec. 2. All lands of five years and under twenty-five years, and years, renewable for
the public domain, the public domain, the public domain, such terms and under such term and not more than twenty-
waters, minerals, waters, minerals, waters, minerals,
conditions as may be conditions as may be five years, and under corporations
provided by law. In provided by law. In such terms and involving either
case as to water cases of water rights conditions as may be technical or
rights for irrigation, for irrigation, water provided by law. In financial
water supply, supply, fisheries or case of water rights assistance for large-
fisheries, or industrial industrial uses other for irrigation, water scale exploration,
uses other than the than the development supply, fisheries, or development, and
development of water for water power, industrial uses other utilization of minerals,
power, beneficial use beneficial use may be than the development petroleum, and other
may be the measure the measure and limit of water power, mineral oils according
and limit of the grant. of the grant. beneficial use may be to the general terms
the measure and limit and conditions
The National The Congress may of the grant. provided by law,
Assembly may by law by law allow small- based on real
allow small scale scale utilization of The State shall contributions to the
utilization of natural natural resources by protect the nation's economic growth and
resources by Filipino Filipino citizens, as marine wealth in its general welfare of the
citizens. well as cooperative archipelagic waters, country. In such
fish farming in rivers, territorial sea, and agreements, the
The National lakes, bays, and exclusive economic State shall promote
Assembly, may, by lagoons. zone, and reserve its the development and
two-thirds vote of all use and enjoyment use of local scientific
its members by The President with exclusively to Filipino and technical
special law provide the concurrence of citizens. resources. [Emphasis
the terms and Congress, by special supplied.]
conditions under law, shall provide the The Congress may,
which a foreign- terms and conditions by law, allow small- The President shall
owned corporation under which a scale utilization of notify the Congress of
may enter into foreign-owned natural resources by every contract
agreements with the corporation may enter Filipino citizens, as entered into in
government into agreements with well as cooperative accordance with this
involving either the government fish farming, with provision, within thirty
technical or involving either priority to subsistence days from its
financial technical or fishermen and fish- execution.
assistance for large- financial workers in rivers,
scale exploration, assistance for large- lakes, bays, and
development, or scale exploration, lagoons. The insights of the proponents of the U.P. Law draft are, therefore, instructive
utilization of natural development, and in interpreting the phrase "technical or financial assistance."
resources. [Emphasis utilization of natural The President may
supplied.] resources. [Emphasis enter into agreements In his position paper entitled Service Contracts: Old Wine in New Bottles?,
supplied.] with foreign-owned Professor Pacifico A. Agabin, who was a member of the working group that
prepared the U.P. Law draft, criticized service contracts for they "lodge
exclusive management and control of the enterprise to the service contractor,
which is reminiscent of the old concession regime. Thus, notwithstanding the
provision of the Constitution that natural resources belong to the State, and
that these shall not be alienated, the service contract system renders nugatory
the constitutional provisions cited."244 He elaborates:
Looking at the Philippine model, we can discern the following vestiges of the
concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the
interested party and then negotiating the terms and conditions of the
contract; (Sec. 5, P.D. 87)
2. Management of the enterprise vested on the contractor, including
operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and
development; (Sec. 8)
4. Responsibility for downstream operations – marketing, distribution,
and processing may be with the contractor (Sec. 8);
5. Ownership of equipment, machinery, fixed assets, and other
properties remain with contractor (Sec. 12, P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to
the contractor (Sec. 13, P.D. 87); and
7. While title to the petroleum discovered may nominally be in the
name of the government, the contractor has almost unfettered control
over its disposition and sale, and even the domestic requirements of
the country is relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old
concession regime x x x. Some people have pulled an old rabbit out of a
magician's hat, and foisted it upon us as a new and different animal.
The service contract as we know it here is antithetical to the principle of
sovereignty over our natural resources restated in the same article of the
[1973] Constitution containing the provision for service contracts. If the service
contractor happens to be a foreign corporation, the contract would also run
counter to the constitutional provision on nationalization or Filipinization, of the
exploitation of our natural resources.245 [Emphasis supplied. Underscoring in
the original.]
Professor Merlin M. Magallona, also a member of the working group, was
harsher in his reproach of the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by
the [1973] Charter, but the essence of nationalism was reduced to hollow
rhetoric. The 1973 Charter still provided that the exploitation or development of
the country's natural resources be limited to Filipino citizens or corporations
owned or controlled by them. However, the martial-law Constitution allowed
them, once these resources are in their name, to enter into service contracts
with foreign investors for financial, technical, management, or other forms of
assistance. Since foreign investors have the capital resources, the actual
exploitation and development, as well as the effective disposition, of the
country's natural resources, would be under their direction, and control,
relegating the Filipino investors to the role of second-rate partners in joint
ventures.
Through the instrumentality of the service contract, the 1973 Constitution had
legitimized at the highest level of state policy that which was prohibited under
the 1973 Constitution, namely: the exploitation of the country's natural
resources by foreign nationals. The drastic impact of [this] constitutional
change becomes more pronounced when it is considered that the active party
to any service contract may be a corporation wholly owned by foreign
interests. In such a case, the citizenship requirement is completely set aside,
permitting foreign corporations to obtain actual possession, control, and
[enjoyment] of the country's natural resources.246 [Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the
Constitution and reaffirm ownership over our natural resources. That is the
only way we can exercise effective control over our natural resources.
This should not mean complete isolation of the country's natural resources
from foreign investment. Other contract forms which are less derogatory to our
sovereignty and control over natural resources – like technical assistance
agreements, financial assistance [agreements], co-production agreements,
joint ventures, production-sharing – could still be utilized and adopted without
violating constitutional provisions. In other words, we can adopt contract forms
which recognize and assert our sovereignty and ownership over natural
resources, and where the foreign entity is just a pure contractor instead of the
beneficial owner of our economic resources. 247 [Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag,
proposed that:
2. Service contracts as practiced under the 1973 Constitution should be
discouraged, instead the government may be allowed, subject to authorization
by special law passed by an extraordinary majority to enter into either technical
or financial assistance. This is justified by the fact that as presently worded in
the 1973 Constitution, a service contract gives full control over the contract
area to the service contractor, for him to work, manage and dispose of the
proceeds or production. It was a subterfuge to get around the nationality
requirement of the constitution.248 [Emphasis supplied.]
In the annotations on the proposed Article on National Economy and
Patrimony, the U.P. Law draft summarized the rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found
in Section 9, Article XIV of the 1973 Constitution as amended. This 1973
provision shattered the framework of nationalism in our fundamental law (see
Magallona, "Nationalism and its Subversion in the Constitution"). Through the
service contract, the 1973 Constitution had legitimized that which was
prohibited under the 1935 constitution—the exploitation of the country's natural
resources by foreign nationals. Through the service contract, acts prohibited
by the Anti-Dummy Law were recognized as legitimate arrangements. Service
contracts lodge exclusive management and control of the enterprise to the
service contractor, not unlike the old concession regime where the
concessionaire had complete control over the country's natural resources,
having been given exclusive and plenary rights to exploit a particular resource
and, in effect, having been assured of ownership of that resource at the point
of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles").
Service contracts, hence, are antithetical to the principle of sovereignty over
our natural resources, as well as the constitutional provision on nationalization
or Filipinization of the exploitation of our natural resources.
Under the proposed provision, only technical assistance or financial assistance
agreements may be entered into, and only for large-scale activities. These are
contract forms which recognize and assert our sovereignty and ownership over
natural resources since the foreign entity is just a pure contractor and not a
beneficial owner of our economic resources. The proposal recognizes the
need for capital and technology to develop our natural resources without
sacrificing our sovereignty and control over such resources by the safeguard of
a special law which requires two-thirds vote of all the members of the
Legislature. This will ensure that such agreements will be debated upon
exhaustively and thoroughly in the National Assembly to avert prejudice to the
nation.249 [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973
Constitution as grants of beneficial ownership of the country's natural
resources to foreign owned corporations. While, in theory, the State owns
these natural resources – and Filipino citizens, their beneficiaries – service
contracts actually vested foreigners with the right to dispose, explore for,
develop, exploit, and utilize the same. Foreigners, not Filipinos, became the
beneficiaries of Philippine natural resources. This arrangement is clearly
incompatible with the constitutional ideal of nationalization of natural
resources, with the Regalian doctrine, and on a broader perspective, with
Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical
know-how in the large-scale exploitation, development and utilization of natural
resources – the second paragraph of the proposed draft itself being an
admission of such scarcity. Hence, they recommended a compromise to
reconcile the nationalistic provisions dating back to the 1935 Constitution,
which reserved all natural resources exclusively to Filipinos, and the more
liberal 1973 Constitution, which allowed foreigners to participate in these
resources through service contracts. Such a compromise called for the
adoption of a new system in the exploration, development, and utilization of
natural resources in the form of technical agreements or financial agreements
which, necessarily, are distinct concepts from service contracts.
The replacement of "service contracts" with "agreements… involving either
technical or financial assistance," as well as the deletion of the phrase
"management or other forms of assistance," assumes greater significance
when note is taken that the U.P. Law draft proposed other equally crucial
changes that were obviously heeded by the CONCOM. These include the
abrogation of the concession system and the adoption of new "options" for the
State in the exploration, development, and utilization of natural resources. The
proponents deemed these changes to be more consistent with the State's
ownership of, and its "full control and supervision" (a phrase also employed by
the framers) over, such resources. The Project explained:
3. In line with the State ownership of natural resources, the State should take a
more active role in the exploration, development, and utilization of natural
resources, than the present practice of granting licenses, concessions, or
leases – hence the provision that said activities shall be under the full control
and supervision of the State. There are three major schemes by which the
State could undertake these activities: first, directly by itself; second, by virtue
of co-production, joint venture, production sharing agreements with Filipino
citizens or corporations or associations sixty per cent (60%) of the voting stock
or controlling interests of which are owned by such citizens; or third, with a
foreign-owned corporation, in cases of large-scale exploration, development,
or utilization of natural resources through agreements involving either technical
or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government
benefits from such benefits only through fees, charges, ad valorem taxes and
income taxes of the exploiters of our natural resources. Such benefits are very
minimal compared with the enormous profits reaped by theses licensees,
grantees, concessionaires. Moreover, some of them disregard the
conservation of natural resources and do not protect the environment from
degradation. The proposed role of the State will enable it to a greater share in
the profits – it can also actively husband its natural resources and engage in
developmental programs that will be beneficial to them.
4. Aside from the three major schemes for the exploration, development, and
utilization of our natural resources, the State may, by law, allow Filipino
citizens to explore, develop, utilize natural resources in small-scale. This is in
recognition of the plight of marginal fishermen, forest dwellers, gold panners,
and others similarly situated who exploit our natural resources for their daily
sustenance and survival.250
Professor Agabin, in particular, after taking pains to illustrate the similarities
between the two systems, concluded that the service contract regime was but
a "rehash" of the concession system. "Old wine in new bottles," as he put it.
The rejection of the service contract regime, therefore, is in consonance with
the abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and
the adoption of other proposed changes, there is no doubt that the framers
considered and shared the intent of the U.P. Law proponents in employing the
phrase "agreements . . . involving either technical or financial assistance."
While certain commissioners may have mentioned the term "service contracts"
during the CONCOM deliberations, they may not have been necessarily
referring to the concept of service contracts under the 1973 Constitution. As
noted earlier, "service contracts" is a term that assumes different meanings to
different people.251 The commissioners may have been using the term loosely,
and not in its technical and legal sense, to refer, in general, to agreements
concerning natural resources entered into by the Government with foreign
corporations. These loose statements do not necessarily translate to the
adoption of the 1973 Constitution provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in
CONCOM, in response to Sr. Tan's question, Commissioner Villegas
commented that, other than congressional notification, the only difference
between "future" and "past" "service contracts" is the requirement of a general
law as there were no laws previously authorizing the same. 252 However, such
remark is far outweighed by his more categorical statement in his exchange
with Commissioner Quesada that the draft article "does not permit foreign
investors to participate" in the nation's natural resources – which was exactly
what service contracts did – except to provide "technical or financial
assistance."253
In the case of the other commissioners, Commissioner Nolledo himself
clarified in his work that the present charter prohibits service
contracts.254 Commissioner Gascon was not totally averse to foreign
participation, but favored stricter restrictions in the form of majority
congressional concurrence.255 On the other hand, Commissioners Garcia and
Tadeo may have veered to the extreme side of the spectrum and their
objections may be interpreted as votes against any foreign participation in our
natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the
Secretary of Justice, expressing the view that a financial or technical
assistance agreement "is no different in concept" from the service contract
allowed under the 1973 Constitution. This Court is not, however, bound by this
interpretation. 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.258
In any case, the constitutional provision allowing the President to enter into
FTAAs with foreign-owned corporations is an exception to the rule that
participation in the nation's natural resources is reserved exclusively to
Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the
provision is "very restrictive."259 Commissioner Nolledo also remarked that
"entering into service contracts is an exception to the rule on protection of
natural resources for the interest of the nation and, therefore, being an
exception, it should be subject, whenever possible, to stringent
rules."260 Indeed, exceptions should be strictly but reasonably construed; they
extend only so far as their language fairly warrants and all doubts should be
resolved in favor of the general provision rather than the exception. 261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is
invalid insofar as said Act authorizes service contracts. Although the statute
employs the phrase "financial and technical agreements" in accordance with
the 1987 Constitution, it actually treats these agreements as service contracts
that grant beneficial ownership to foreign contractors contrary to the
fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical
Assistance Agreement) of R.A. No. 7942 states:
SEC. 33. Eligibility.—Any qualified person with technical and financial
capability to undertake large-scale exploration, development, and utilization of
mineral resources in the Philippines may enter into a financial or technical
assistance agreement directly with the Government through the Department.
[Emphasis supplied.]
"Exploration," as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological,
geochemical or geophysical surveys, remote sensing, test pitting, trending,
drilling, shaft sinking, tunneling or any other means for the purpose of
determining the existence, extent, quantity and quality thereof and the
feasibility of mining them for profit.262
A legally organized foreign-owned corporation may be granted an exploration
permit,263 which vests it with the right to conduct exploration for all minerals in
specified areas,264 i.e., to enter, occupy and explore the same. 265 Eventually,
the foreign-owned corporation, as such permittee, may apply for a financial
and technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a
mineral deposit for mining, including the construction of necessary
infrastructure and related facilities.267
"Utilization" "means the extraction or disposition of minerals." 268 A stipulation
that the proponent shall dispose of the minerals and byproducts produced at
the highest price and more advantageous terms and conditions as provided for
under the implementing rules and regulations is required to be incorporated in
every FTAA.269
A foreign-owned/-controlled corporation may likewise be granted a mineral
processing permit.270 "Mineral processing" is the milling, beneficiation or
upgrading of ores or minerals and rocks or by similar means to convert the
same into marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be
conducted in accordance with the provisions of R.A. No. 7942 and its
implementing rules272 and for work programs and minimum expenditures and
commitments.273 And it obliges itself to furnish the Government records of
geologic, accounting, and other relevant data for its mining operation.274
"Mining operation," as the law defines it, means mining activities involving
exploration, feasibility, development, utilization, and processing. 275
The underlying assumption in all these provisions is that the foreign contractor
manages the mineral resources, just like the foreign contractor in a service
contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the
same auxiliary mining rights that it grants contractors in mineral agreements
(MPSA, CA and JV).276 Parenthetically, Sections 72 to 75 use the term
"contractor," without distinguishing between FTAA and mineral agreement
contractors. And so does "holders of mining rights" in Section 76. A foreign
contractor may even convert its FTAA into a mineral agreement if the
economic viability of the contract area is found to be inadequate to justify
large-scale mining operations,277 provided that it reduces its equity in the
corporation, partnership, association or cooperative to forty percent (40%). 278
Finally, under the Act, an FTAA contractor warrants that it "has or has access
to all the financing, managerial, and technical expertise. . . ." 279 This suggests
that an FTAA contractor is bound to provide some management assistance – a
form of assistance that has been eliminated and, therefore, proscribed by the
present Charter.
By allowing foreign contractors to manage or operate all the aspects of the
mining operation, the above-cited provisions of R.A. No. 7942 have in effect
conveyed beneficial ownership over the nation's mineral resources to these
contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a
circumvention of the constitutionally ordained 60%-40% capitalization
requirement for corporations or associations engaged in the exploitation,
development and utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative
of Section 2, Article XII of the Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to
wit:
Provided, That a legally organized foreign-owned corporation shall be
deemed a qualified person for purposes of granting an exploration
permit, financial or technical assistance agreement or mineral
processing permit.
(2) Section 23,280 which specifies the rights and obligations of an
exploration permittee, insofar as said section applies to a financial or
technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a
financial or technical assistance agreement;
(4) Section 35,281 which enumerates the terms and conditions for every
financial or technical assistance agreement;
(5) Section 39,282 which allows the contractor in a financial and
technical assistance agreement to convert the same into a mineral
production-sharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral
processing permit to a contractor in a financial and technical
assistance agreement;
The following provisions of the same Act are likewise void as they are
dependent on the foregoing provisions and cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it
applies to a financial or technical assistance agreement.
Section 34,285 which prescribes the maximum contract area in a
financial or technical assistance agreements;
Section 36,286 which allows negotiations for financial or technical
assistance agreements;
Section 37,287 which prescribes the procedure for filing and evaluation
of financial or technical assistance agreement proposals;
Section 38,288 which limits the term of financial or technical assistance
agreements;
Section 40,289 which allows the assignment or transfer of financial or
technical assistance agreements;
Section 41,290 which allows the withdrawal of the contractor in an
FTAA;
The second and third paragraphs of Section 81, 291 which provide for
the Government's share in a financial and technical assistance
agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs
insofar as it applies to said contractors;
When the parts of the statute are so mutually dependent and connected as
conditions, considerations, inducements, or compensations for each other, as
to warrant a belief that the legislature intended them as a whole, and that if all
could not be carried into effect, the legislature would not pass the residue
independently, then, if some parts are unconstitutional, all the provisions which
are thus dependent, conditional, or connected, must fall with them. 293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore,
exploit, utilise[,] process and dispose of all Minerals products and by-products
thereof that may be produced from the Contract Area." 294 The FTAA also
imbues WMCP with the following rights:
(b) to extract and carry away any Mineral samples from the Contract
area for the purpose of conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised
during the Development/Operating Period and the project facilities to
be constructed during the Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of
ingress and egress and the right to occupy the same, subject to the
provisions of Presidential Decree No. 512 (if applicable) and not be
prevented from entry into private ands by surface owners and/or
occupants thereof when prospecting, exploring and exploiting for
minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and
transmission facilities and all other types of works on the Contract
Area;
(g) to erect, install or place any type of improvements, supplies,
machinery and other equipment relating to the Mining Operations and
to use, sell or otherwise dispose of, modify, remove or diminish any
and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights
of third Parties, easement rights and the use of timber, sand, clay,
stone, water and other natural resources in the Contract Area without
cost for the purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its
interest and obligations under this Agreement, the plant, equipment
and infrastructure and the Minerals produced from the Mining
Operations;
x x x. 295
All materials, equipment, plant and other installations erected or placed on the
Contract Area remain the property of WMCP, which has the right to deal with
and remove such items within twelve months from the termination of the
FTAA.296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing,
technology, management and personnel necessary for the Mining Operations."
The mining company binds itself to "perform all Mining Operations . . .
providing all necessary services, technology and financing in connection
therewith,"297 and to "furnish all materials, labour, equipment and other
installations that may be required for carrying on all Mining Operations." 298>
WMCP may make expansions, improvements and replacements of the mining
facilities and may add such new facilities as it considers necessary for the
mining operations.299
These contractual stipulations, taken together, grant WMCP beneficial
ownership over natural resources that properly belong to the State and are
intended for the benefit of its citizens. These stipulations are abhorrent to the
1987 Constitution. They are precisely the vices that the fundamental law seeks
to avoid, the evils that it aims to suppress. Consequently, the contract from
which they spring must be struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement
on the Promotion and Protection of Investments between the Philippine and
Australian Governments, which was signed in Manila on January 25, 1995 and
which entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever
made and thus the fact that [WMCP's] FTAA was entered into prior to the entry
into force of the treaty does not preclude the Philippine Government from
protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the
treaty provides that "Each Party shall encourage and promote investments in
its area by investors of the other Party and shall [admit] such investments in
accordance with its Constitution, Laws, regulations and investment policies"
and in Article 3 (2), it states that "Each Party shall ensure that investments are
accorded fair and equitable treatment." The latter stipulation indicates that it
was intended to impose an obligation upon a Party to afford fair and equitable
treatment to the investments of the other Party and that a failure to provide
such treatment by or under the laws of the Party may constitute a breach of
the treaty. Simply stated, the Philippines could not, under said treaty, rely upon
the inadequacies of its own laws to deprive an Australian investor (like
[WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA
without likewise nullifying the service contracts entered into before the
enactment of RA 7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was
executed not by a mere Filipino citizen, but by the Philippine Government
itself, through its President no less, which, in entering into said treaty is
assumed to be aware of the existing Philippine laws on service contracts over
the exploration, development and utilization of natural resources. The
execution of the FTAA by the Philippine Government assures the Australian
Government that the FTAA is in accordance with existing Philippine
laws.300 [Emphasis and italics by private respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of
said treaty which, in turn, would amount to a violation of Section 3, Article II of
the Constitution adopting the generally accepted principles of international law
as part of the law of the land. One of these generally accepted principles is
pacta sunt servanda, which requires the performance in good faith of treaty
obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the
treaty and its assertion that "the Philippines could not . . . deprive an Australian
investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's]
FTAA without likewise nullifying the service contracts entered into before the
enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a
breach of the treaty invoked. For this decision herein invalidating the subject
FTAA forms part of the legal system of the Philippines.301 The equal protection
clause302 guarantees that such decision shall apply to all contracts belonging to
the same class, hence, upholding rather than violating, the "fair and equitable
treatment" stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with
the provisions of Section 2, Article XII of the Constitution, the President may
enter into agreements involving "either technical or financial assistance" only.
The agreement in question, however, is a technical and financial assistance
agreement.
Petitioners' contention does not lie. To adhere to the literal language of the
Constitution would lead to absurd consequences. 303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the
President) to enter into contract with two (2) foreign-owned corporations, one
for financial assistance agreement and with the other, for technical assistance
over one and the same mining area or land; or to execute two (2) contracts
with only one foreign-owned corporation which has the capability to provide
both financial and technical assistance, one for financial assistance and
another for technical assistance, over the same mining area. Such an absurd
result is definitely not sanctioned under the canons of constitutional
construction.304 [Underscoring in the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd
result from their use of "either/or." A constitution is not to be interpreted as
demanding the impossible or the impracticable; and unreasonable or absurd
consequences, if possible, should be avoided. 305 Courts are not to give words
a meaning that would lead to absurd or unreasonable consequences and a
literal interpretation is to be rejected if it would be unjust or lead to absurd
results.306 That is a strong argument against its adoption. 307 Accordingly,
petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other
issues raised by the petition.
WHEREFORE, the petition is GRANTED. The Court hereby declares
unconstitutional and void:
(1) The following provisions of Republic Act No. 7942:
(a) The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
(f) Section 90.
 (2) All provisions of Department of Environment and Natural Resources
Administrative Order 96-40, s. 1996 which are not in conformity with
this Decision, and
(3) The Financial and Technical Assistance Agreement between the
Government of the Republic of the Philippines and WMC Philippines,
Inc.
SO ORDERED.
Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga.
JJ., concur.
Vitug, J., see Separate Opinion.
Panganiban, J., see Separate Opinion.
Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J.,
Panganiban's separate opinion.
Azcuna, no part, one of the parties was a client.
G.R. No. L-27952 February 15, 1982
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA
PALACIOS, Administratrix, petitioner-appellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and
ROBERTO RAMIREZ, legatees, oppositors- appellants.
ABAD SANTOS, J.:
The main issue in this appeal is the manner of partitioning the testate estate of
Jose Eugenio Ramirez among the principal beneficiaries, namely: his widow
Marcelle Demoron de Ramirez; his two grandnephews Roberto and Jorge
Ramirez; and his companion Wanda de Wrobleski.
The task is not trouble-free because the widow Marcelle is a French who lives
in Paris, while the companion Wanda is an Austrian who lives in Spain.
Moreover, the testator provided for substitutions.
Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11,
1964, with only his widow as compulsory heir. His will was admitted to probate
by the Court of First Instance of Manila, Branch X, on July 27, 1965. Maria
Luisa Palacios was appointed administratrix of the estate. In due time she
submitted an inventory of the estate as follows:
INVENTARIO
Una sexta parte (1/6) proindiviso de un te
rreno, con sus mejoras y edificaciones, situadoen
la Escolta, Manila.............................................................
P500,000.00
Una sexta parte (1/6) proindiviso de dos
parcelas de terreno situadas en Antipolo, Rizal...................
658.34
 Cuatrocientos noventa y uno (491) acciones El precedente legado en nuda propiedad de la participacion
indivisa de la finca Santa Cruz Building, lo ordena el testador a
de la 'Central Azucarera de la Carlota a P17.00 favor de los legatarios nombrados, en atencion a que dicha
propiedad fue creacion del querido padre del otorgante y por
por accion ser aquellos continuadores del apellido Ramirez,
................................................................................8,347.00
B.—Y en usufructo a saber: —
Diez mil ochocientos seize (10,806) acciones
a. En cuanto a una tercera parte, a favor de la esposa del
de la 'Central Luzon Milling Co.', disuelta y en testador, Da. Marcelle Ramirez, domiciliada en IE PECO, calle
del General Gallieni No. 33, Seine Francia, con sustitucion
vulgar u fideicomisaria a favor de Da. Wanda de Wrobleski, de
liquidacion a P0.15 por accion
Palma de Mallorca, Son Rapina Avenida de los Reyes 13,
..............................................1,620.90
b.—Y en cuanto a las dos terceras partes restantes, a favor de
Cuenta de Ahorros en el Philippine Trust
la nombrada Da. Wanda de Nrobleski con sustitucion vulgar v
fideicomisaria a saber:—
Co..............................................................................................
2,350.73
En cuanto a la mitad de dichas dos terceras partes, a favor de
D. Juan Pablo Jankowski, de Son Rapina Palma de Mallorca; y
TOTAL.............................................................. encuanto a la mitad restante, a favor de su sobrino, D. Horace
P512,976.97 V. Ramirez, San Luis Building, Florida St. Ermita, Manila, I.F.

MENOS: A pesar de las sustituciones fideiconiisarias precedentemente

Deuda al Banco de las Islas Filipinas, garan-
tizada con prenda de las acciones de La Carlota ......... P
5,000,00
VALOR LIQUIDO...........................................
P507,976.97
The testamentary dispositions are as follows:
A.—En nuda propiedad, a D. Roberto y D. Jorge Ramirez,
ambas menores de edad, residentes en Manila, I.F., calle
'Alright, No. 1818, Malate, hijos de su sobrino D. Jose Ma.
Ramirez, con sustitucion vulgar a favor de sus respectivos
descendientes, y, en su defecto, con sustitucion vulgar
reciprocal entre ambos.
ordinadas, las usufiructuarias nombradas conjuntamente con
los nudo propietarios, podran en cualquier memento vender a
tercero los bienes objeto delegado, sin intervencion alguna de
los titulares fideicomisaarios.
On June 23, 1966, the administratrix submitted a project of partition as follows:
the property of the deceased is to be divided into two parts. One part shall go
to the widow 'en pleno dominio" in satisfaction of her legitime; the other part or
"free portion" shall go to Jorge and Roberto Ramirez "en nuda propriedad."
Furthermore, one third (1/3) of the free portion is charged with the widow's
usufruct and the remaining two-thirds (2/3) with a usufruct in favor of Wanda.
Jorge and Roberto opposed the project of partition on the grounds: (a) that the
provisions for vulgar substitution in favor of Wanda de Wrobleski with respect
to the widow's usufruct and in favor of Juan Pablo Jankowski and Horacio V.
Ramirez, with respect to Wanda's usufruct are invalid because the first heirs
Marcelle and Wanda) survived the testator; (b) that the provisions for
fideicommissary substitutions are also invalid because the first heirs are not
related to the second heirs or substitutes within the first degree, as provided in
Article 863 of the Civil Code; (c) that the grant of a usufruct over real property
in the Philippines in favor of Wanda Wrobleski, who is an alien, violates
Section 5, Article III of the Philippine Constitution; and that (d) the proposed
partition of the testator's interest in the Santa Cruz (Escolta) Building between
the widow Marcelle and the appellants, violates the testator's express win to
give this property to them Nonetheless, the lower court approved the project of
partition in its order dated May 3, 1967. It is this order which Jorge and
Roberto have appealed to this Court.
1. The widow's legitime.
The appellant's do not question the legality of giving Marcelle one-half of the
estate in full ownership. They admit that the testator's dispositions impaired his
widow's legitime. Indeed, under Art. 900 of the Civil Code "If the only survivor
is the widow or widower, she or he shall be entitled to one-half of the
hereditary estate." And since Marcelle alone survived the deceased, she is
entitled to one-half of his estate over which he could impose no burden,
encumbrance, condition or substitution of any kind whatsoever. (Art. 904, par.
2, Civil Code.)
It is the one-third usufruct over the free portion which the appellants question
and justifiably so. It appears that the court a quo approved the usufruct in favor
of Marcelle because the testament provides for a usufruct in her favor of one-
third of the estate. The court a quo erred for Marcelle who is entitled to one-
half of the estate "en pleno dominio" as her legitime and which is more than
what she is given under the will is not entitled to have any additional share in
the estate. To give Marcelle more than her legitime will run counter to the
testator's intention for as stated above his dispositions even impaired her
legitime and tended to favor Wanda.
2. The substitutions.
It may be useful to recall that "Substitution is the appoint- judgment of another
heir so that he may enter into the inheritance in default of the heir originally
instituted." (Art. 857, Civil Code. And that there are several kinds of
substitutions, namely: simple or common, brief or compendious, reciprocal,
and fideicommissary (Art. 858, Civil Code.) According to Tolentino, "Although
the Code enumerates four classes, there are really only two principal classes
of substitutions: the simple and the fideicommissary. The others are merely
variations of these two." (111 Civil Code, p. 185 [1973].)
The simple or vulgar is that provided in Art. 859 of the Civil Code which reads:
ART. 859. The testator may designate one or more persons to
substitute the heir or heirs instituted in case such heir or heirs
should die before him, or should not wish, or should be
incapacitated to accept the inheritance.
A simple substitution, without a statement of the cases to which
it refers, shall comprise the three mentioned in the preceding
paragraph, unless the testator has otherwise provided.
The fideicommissary substitution is described in the Civil Code as follows:
ART. 863. A fideicommissary substitution by virtue of which the
fiduciary or first heir instituted is entrusted with the obligation to
preserve and to transmit to a second heir the whole or part of
inheritance, shall be valid and shall take effect, provided such
substitution does not go beyond one degree from the heir
originally instituted, and provided further that the fiduciary or
first heir and the second heir are living at time of the death of
the testator.
It will be noted that the testator provided for a vulgar substitution in respect of
the legacies of Roberto and Jorge Ramirez, the appellants, thus: con
sustitucion vulgar a favor de sus respectivos descendientes, y, en su defecto,
con substitution vulgar reciprocal entre ambos.
The appellants do not question the legality of the substitution so provided. The
appellants question the sustitucion vulgar y fideicomisaria a favor de Da.
Wanda de Wrobleski" in connection with the one-third usufruct over the estate
given to the widow Marcelle However, this question has become moot
because as We have ruled above, the widow is not entitled to any usufruct.
The appellants also question the sustitucion vulgar y fideicomisaria in
connection with Wanda's usufruct over two thirds of the estate in favor of Juan
Pablo Jankowski and Horace v. Ramirez.
They allege that the substitution in its vulgar aspect as void because Wanda
survived the testator or stated differently because she did not predecease the
testator. But dying before the testator is not the only case for vulgar
substitution for it also includes refusal or incapacity to accept the inheritance
as provided in Art. 859 of the Civil Code, supra. Hence, the vulgar substitution
is valid.
As regards the substitution in its fideicommissary aspect, the appellants are
correct in their claim that it is void for the following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not
related to Wanda, the heir originally instituted. Art. 863 of the Civil Code
validates a fideicommissary substitution "provided such substitution does not
go beyond one degree from the heir originally instituted."
What is meant by "one degree" from the first heir is explained by Tolentino as
follows:
Scaevola Maura, and Traviesas construe "degree" as
designation, substitution, or transmission. The Supreme Court
of Spain has decidedly adopted this construction. From this
point of view, there can be only one tranmission or substitution,
and the substitute need not be related to the first heir.
Manresa, Morell and Sanchez Roman, however, construe the
word "degree" as generation, and the present Code has
obviously followed this interpretation. by providing that the
substitution shall not go beyond one degree "from the heir
originally instituted." The Code thus clearly indicates that the
second heir must be related to and be one generation from the
first heir.
From this, it follows that the fideicommissary can only be either
a child or a parent of the first heir. These are the only relatives
who are one generation or degree from the fiduciary (Op. cit.,
pp. 193-194.)
(b) There is no absolute duty imposed on Wanda to transmit the usufruct to the
substitutes as required by Arts. 865 and 867 of the Civil Code. In fact, the
appellee admits "that the testator contradicts the establishment of a
fideicommissary substitution when he permits the properties subject of the
usufruct to be sold upon mutual agreement of the usufructuaries and the
naked owners." (Brief, p. 26.)
3. The usufruct of Wanda.
The appellants claim that the usufruct over real properties of the estate in favor
of Wanda is void because it violates the constitutional prohibition against the
acquisition of lands by aliens.
The 1935 Constitution which is controlling provides as follows:
SEC. 5. Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to
individuals, corporations, or associations qualified to acquire or
hold lands of the public domain in the Philippines. (Art. XIII.)
The court a quo upheld the validity of the usufruct given to Wanda on the
ground that the Constitution covers not only succession by operation of law but
also testamentary succession. We are of the opinion that the Constitutional
provision which enables aliens to acquire private lands does not extend to
testamentary succession for otherwise the prohibition will be for naught and
meaningless. Any alien would be able to circumvent the prohibition by paying
money to a Philippine landowner in exchange for a devise of a piece of land.
This opinion notwithstanding, We uphold the usufruct in favor of Wanda
because a usufruct, albeit a real right, does not vest title to the land in the
usufructuary and it is the vesting of title to land in favor of aliens which is
proscribed by the Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby
ordered distributed as follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez
in naked ownership and the usufruct to Wanda de Wrobleski with a simple
substitution in favor of Juan Pablo Jankowski and Horace V. Ramirez.
The distribution herein ordered supersedes that of the court a quo. No special
pronouncement as to costs.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., De Castro, Ericta and Escolin, JJ.,
concur.
G.R. No. 176579 October 9, 2012
HEIRS OF WILSON P. GAMBOA,* Petitioners,
vs.
FINANCE SECRETARYMARGARITO B. TEVES, FINANCE
UNDERSECRETARYJOHN P. SEVILLA, AND COMMISSIONER RICARDO
ABCEDE OF THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT(PCGG) IN THEIR CAPACITIES AS CHAIR AND MEMBERS,
RESPECTIVELY, OF THE PRIVATIZATION COUNCIL, CHAIRMAN
ANTHONI SALIM OF FIRST PACIFIC CO., LTD. IN HIS CAPACITY AS
DIRECTOR OF METRO PACIFIC ASSET HOLDINGS INC., CHAIRMAN
MANUEL V. PANGILINAN OF PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY (PLDT) IN HIS CAPACITY AS MANAGING DIRECTOR OF
FIRST PACIFIC CO., LTD., PRESIDENT NAPOLEON L. NAZARENO OF
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, CHAIR FE BARIN
OF THE SECURITIES AND EXCHANGE COMMISSION, and PRESIDENT
FRANCIS LIM OF THE PHILIPPINE STOCK EXCHANGE, Respondents.
PABLITO V. SANIDAD and ARNO V. SANIDAD, Petitioner-in-Intervention.
RESOLUTION
CARPIO, J.:
This resolves the motions for reconsideration of the 28 June 2011 Decision
filed by (1) the Philippine Stock Exchange's (PSE) President, 1 (2) Manuel V.
Pangilinan (Pangilinan),2 (3) Napoleon L. Nazareno (Nazareno ),3 and ( 4) the
Securities and Exchange Commission (SEC)4 (collectively, movants ).
The Office of the Solicitor General (OSG) initially filed a motion for
reconsideration on behalfofthe SEC,5 assailing the 28 June 2011 Decision.
However, it subsequently filed a Consolidated Comment on behalf of the
State,6 declaring expressly that it agrees with the Court's definition of the term
"capital" in Section 11, Article XII of the Constitution. During the Oral
Arguments on 26 June 2012, the OSG reiterated its position consistent with
the Court's 28 June 2011 Decision.
We deny the motions for reconsideration.
I.
Far-reaching implications of the legal issue justify
treatment of petition for declaratory relief as one for mandamus.
As we emphatically stated in the 28 June 2011 Decision, the interpretation of
the term "capital" in Section 11, Article XII of the Constitution has far-reaching
implications to the national economy. In fact, a resolution of this issue will
determine whether Filipinos are masters, or second-class citizens, in their own
country. What is at stake here is whether Filipinos or foreigners will
have effective control of the Philippine national economy. Indeed, if ever
there is a legal issue that has far-reaching implications to the entire nation, and
to future generations of Filipinos, it is the threshold legal issue presented in
this case.
Contrary to Pangilinan’s narrow view, the serious economic consequences
resulting in the interpretation of the term "capital" in Section 11, Article XII of
the Constitution undoubtedly demand an immediate adjudication of this
issue. Simply put, the far-reaching implications of this issue justify the
treatment of the petition as one for mandamus.7
In Luzon Stevedoring Corp. v. Anti-Dummy Board,8 the Court deemed it wise
and expedient to resolve the case although the petition for declaratory relief
could be outrightly dismissed for being procedurally defective. There, appellant
admittedly had already committed a breach of the Public Service Act in relation
to the Anti-Dummy Law since it had been employing non- American aliens long
before the decision in a prior similar case. However, the main issue in Luzon
Stevedoring was of transcendental importance, involving the exercise or
enjoyment of rights, franchises, privileges, properties and businesses which
only Filipinos and qualified corporations could exercise or enjoy under the
Constitution and the statutes. Moreover, the same issue could be raised by
appellant in an appropriate action. Thus, in Luzon Stevedoring the Court
deemed it necessary to finally dispose of the case for the guidance of all
concerned, despite the apparent procedural flaw in the petition.
The circumstances surrounding the present case, such as the supposed
procedural defect of the petition and the pivotal legal issue involved, resemble
those in Luzon Stevedoring. Consequently, in the interest of substantial justice
and faithful adherence to the Constitution, we opted to resolve this case for the
guidance of the public and all concerned parties.
II.
No change of any long-standing rule;
thus, no redefinition of the term "capital."
Movants contend that the term "capital" in Section 11, Article XII of the
Constitution has long been settled and defined to refer to the total outstanding
shares of stock, whether voting or non-voting. In fact, movants claim that the
SEC, which is the administrative agency tasked to enforce the 60-40
ownership requirement in favor of Filipino citizens in the Constitution and
various statutes, has consistently adopted this particular definition in its
numerous opinions. Movants point out that with the 28 June 2011 Decision,
the Court in effect introduced a "new" definition or "midstream redefinition" 9 of
the term "capital" in Section 11, Article XII of the Constitution.
This is egregious error.
For more than 75 years since the 1935 Constitution, the Court
has not interpreted or defined the term "capital" found in various economic
provisions of the 1935, 1973 and 1987 Constitutions. There has never been a
judicial precedent interpreting the term "capital" in the 1935, 1973 and 1987
Constitutions, until now. Hence, it is patently wrong and utterly baseless to
claim that the Court in defining the term "capital" in its 28 June 2011 Decision
modified, reversed, or set aside the purported long-standing definition of the
term "capital," which supposedly refers to the total outstanding shares of stock,
whether voting or non-voting. To repeat, until the present case there has never
been a Court ruling categorically defining the term "capital" found in the
various economic provisions of the 1935, 1973 and 1987 Philippine
Constitutions.
The opinions of the SEC, as well as of the Department of Justice (DOJ), on the
definition of the term "capital" as referring to both voting and non-voting shares
(combined total of common and preferred shares) are, in the first place,
conflicting and inconsistent. There is no basis whatsoever to the claim that the
SEC and the DOJ have consistently and uniformly adopted a definition of the
term "capital" contrary to the definition that this Court adopted in its 28 June
2011 Decision.
In DOJ Opinion No. 130, s. 1985,10 dated 7 October 1985, the scope of the
term "capital" in Section 9, Article XIV of the 1973 Constitution was raised, that
is, whether the term "capital" includes "both preferred and common stocks."
The issue was raised in relation to a stock-swap transaction between a Filipino
and a Japanese corporation, both stockholders of a domestic corporation that
owned lands in the Philippines. Then Minister of Justice Estelito P. Mendoza
ruled that the resulting ownership structure of the corporation would
be unconstitutional because 60% of the voting stock would be owned by
Japanese while Filipinos would own only 40% of the voting stock, although
when the non-voting stock is added, Filipinos would own 60% of the combined
voting and non-voting stock. This ownership structure is remarkably similar
to the current ownership structure of PLDT. Minister Mendoza ruled:
xxxx
Thus, the Filipino group still owns sixty (60%) of the entire subscribed capital
stock (common and preferred) while the Japanese investors control sixty
percent (60%) of the common (voting) shares.
It is your position that x x x since Section 9, Article XIV of the
Constitution uses the word "capital," which is construed "to include both
preferred and common shares" and "that where the law does not
distinguish, the courts shall not distinguish."
xxxx
In light of the foregoing jurisprudence, it is my opinion that the stock-swap
transaction in question may not be constitutionally upheld. While it may
be ordinary corporate practice to classify corporate shares into common voting
shares and preferred non-voting shares, any arrangement which attempts to
defeat the constitutional purpose should be eschewed. Thus, the resultant
equity arrangement which would place ownership of 60%11 of the common
(voting) shares in the Japanese group, while retaining 60% of the total
percentage of common and preferred shares in Filipino hands would
amount to circumvention of the principle of control by Philippine
stockholders that is implicit in the 60% Philippine nationality requirement
in the Constitution. (Emphasis supplied)
In short, Minister Mendoza categorically rejected the theory that the term
"capital" in Section 9, Article XIV of the 1973 Constitution includes "both
preferred and common stocks" treated as the same class of shares regardless
of differences in voting rights and privileges. Minister Mendoza stressed that
the 60-40 ownership requirement in favor of Filipino citizens in the Constitution
is not complied with unless the corporation "satisfies the criterion of
beneficial ownership" and that in applying the same "the primordial
consideration is situs of control."
On the other hand, in Opinion No. 23-10 dated 18 August 2010, addressed to
Castillo Laman Tan Pantaleon & San Jose, then SEC General Counsel
Vernette G. Umali-Paco applied the Voting Control Test, that is, using only
the voting stock to determine whether a corporation is a Philippine national.
The Opinion states:
Applying the foregoing, particularly the Control Test, MLRC is deemed as a
Philippine national because: (1) sixty percent (60%) of its outstanding capital
stock entitled to vote is owned by a Philippine national, the Trustee; and (2)
at least sixty percent (60%) of the ERF will accrue to the benefit of Philippine
nationals. Still pursuant to the Control Test, MLRC’s investment in 60% of
BFDC’s outstanding capital stock entitled to vote shall be deemed as of
Philippine nationality, thereby qualifying BFDC to own private land.
Further, under, and for purposes of, the FIA, MLRC and BFDC are both
Philippine nationals, considering that: (1) sixty percent (60%) of their
respective outstanding capital stock entitled to vote is owned by a
Philippine national (i.e., by the Trustee, in the case of MLRC; and by MLRC, in
the case of BFDC); and (2) at least 60% of their respective board of directors
are Filipino citizens. (Boldfacing and italicization supplied)
Clearly, these DOJ and SEC opinions are compatible with the Court’s
interpretation of the 60-40 ownership requirement in favor of Filipino citizens
mandated by the Constitution for certain economic activities. At the same time,
these opinions highlight the conflicting, contradictory, and inconsistent
positions taken by the DOJ and the SEC on the definition of the term "capital"
found in the economic provisions of the Constitution.
The opinions issued by SEC legal officers do not have the force and effect of
SEC rules and regulations because only the SEC en banc can adopt rules and
regulations. As expressly provided in Section 4.6 of the Securities Regulation
Code,12 the SEC cannot delegate to any of its individual Commissioner or staff
the power to adopt any rule or regulation. Further, under Section 5.1 of the
same Code, it is the SEC as a collegial body, and not any of its legal
officers, that is empowered to issue opinions and approve rules and
regulations. Thus:
4.6. The Commission may, for purposes of efficiency, delegate any of its
functions to any department or office of the Commission, an individual
Commissioner or staff member of the Commission except its review or
appellate authority and its power to adopt, alter and supplement any rule
or regulation.
The Commission may review upon its own initiative or upon the petition of any
interested party any action of any department or office, individual
Commissioner, or staff member of the Commission.
SEC. 5. Powers and Functions of the Commission.- 5.1. The Commission shall
act with transparency and shall have the powers and functions provided by this
Code, Presidential Decree No. 902-A, the Corporation Code, the Investment
Houses Law, the Financing Company Act and other existing laws. Pursuant
thereto the Commission shall have, among others, the following powers and
functions:
xxxx
(g) Prepare, approve, amend or repeal rules, regulations and orders, and
issue opinions and provide guidance on and supervise compliance with
such rules, regulations and orders;
x x x x (Emphasis supplied)
Thus, the act of the individual Commissioners or legal officers of the SEC in
issuing opinions that have the effect of SEC rules or regulations is ultra vires.
Under Sections 4.6 and 5.1(g) of the Code, only the SEC en banc can "issue
opinions" that have the force and effect of rules or regulations. Section 4.6 of
the Code bars the SEC en banc from delegating to any individual
Commissioner or staff the power to adopt rules or regulations. In short, any
opinion of individual Commissioners or SEC legal officers does not
constitute a rule or regulation of the SEC.
The SEC admits during the Oral Arguments that only the SEC en banc, and
not any of its individual commissioners or legal staff, is empowered to issue
opinions which have the same binding effect as SEC rules and regulations,
thus:
JUSTICE CARPIO:
So, under the law, it is the Commission En Banc that can issue
an
SEC Opinion, correct?
COMMISSIONER GAITE:13
That’s correct, Your Honor.
JUSTICE CARPIO:
 Can the Commission En Banc delegate this function to an SEC COMMISSIONER GAITE:
officer?
They are not rules and regulations.
COMMISSIONER GAITE:
JUSTICE CARPIO:
Yes, Your Honor, we have delegated it to the General Counsel.
If they are not rules and regulations, they apply only to that
JUSTICE CARPIO: particular situation and will not constitute a precedent, correct?

It can be delegated. What cannot be delegated by the COMMISSIONER GAITE:

Commission En Banc to a commissioner or an individual
employee of the Commission? Yes, Your Honor.14 (Emphasis supplied)

COMMISSIONER GAITE:
Novel opinions that [have] to be decided by the En Banc...
JUSTICE CARPIO:
What cannot be delegated, among others, is the power to
adopt or amend rules and regulations, correct?
COMMISSIONER GAITE:
That’s correct, Your Honor.
JUSTICE CARPIO:
So, you combine the two (2), the SEC officer, if delegated
that power, can issue an opinion but that opinion does not
constitute a rule or regulation, correct?
Significantly, the SEC en banc, which is the collegial body statutorily
empowered to issue rules and opinions on behalf of the SEC, has adopted
even the Grandfather Rule in determining compliance with the 60-40
ownership requirement in favor of Filipino citizens mandated by the
Constitution for certain economic activities. This prevailing SEC ruling, which
the SEC correctly adopted to thwart any circumvention of the required Filipino
"ownership and control," is laid down in the 25 March 2010 SEC en
banc ruling in Redmont Consolidated Mines, Corp. v. McArthur Mining, Inc., et
al.,15 to wit:
The avowed purpose of the Constitution is to place in the hands of Filipinos the
exploitation of our natural resources. Necessarily, therefore, the Rule
interpreting the constitutional provision should not diminish that right
through the legal fiction of corporate ownership and control. But the
constitutional provision, as interpreted and practiced via the 1967 SEC Rules,
has favored foreigners contrary to the command of the Constitution. Hence,
the Grandfather Rule must be applied to accurately determine the actual
participation, both direct and indirect, of foreigners in a corporation
engaged in a nationalized activity or business.

COMMISSIONER GAITE: Compliance with the constitutional limitation(s) on engaging in nationalized

activities must be determined by ascertaining if 60% of the investing
Correct, Your Honor. corporation’s outstanding capital stock is owned by "Filipino citizens", or as
interpreted, by natural or individual Filipino citizens. If such investing
JUSTICE CARPIO: corporation is in turn owned to some extent by another investing corporation,
the same process must be observed. One must not stop until the citizenships
So, all of these opinions that you mentioned they are not of the individual or natural stockholders of layer after layer of investing
rules and regulations, correct? corporations have been established, the very essence of the Grandfather Rule.
Lastly, it was the intent of the framers of the 1987 Constitution to adopt
the Grandfather Rule. In one of the discussions on what is now Article XII of
the present Constitution, the framers made the following exchange:
MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated local or Filipino
equity and foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9, and
2/3-1/3 in Section 15.
MR. VILLEGAS. That is right.
MR. NOLLEDO. In teaching law, we are always faced with the question:
‘Where do we base the equity requirement, is it on the authorized capital stock,
on the subscribed capital stock, or on the paid-up capital stock of a
corporation’? Will the Committee please enlighten me on this?
MR. VILLEGAS. We have just had a long discussion with the members of the
team from the UP Law Center who provided us a draft. The phrase that is
contained here which we adopted from the UP draft is ‘60 percent of voting
stock.’
MR. NOLLEDO. That must be based on the subscribed capital stock, because
unless declared delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS. That is right.
MR. NOLLEDO. Thank you. With respect to an investment by one corporation
in another corporation, say, a corporation with 60-40 percent equity invests in
another corporation which is permitted by the Corporation Code, does the
Committee adopt the grandfather rule?
MR. VILLEGAS. Yes, that is the understanding of the Committee.
MR. NOLLEDO. Therefore, we need additional Filipino capital?
MR. VILLEGAS. Yes. (Boldfacing and underscoring supplied; italicization in
the original)
This SEC en banc ruling conforms to our 28 June 2011 Decision that the 60-40
ownership requirement in favor of Filipino citizens in the Constitution to engage
in certain economic activities applies not only to voting control of the
corporation, but also to the beneficial ownership of the corporation. Thus,
in our 28 June 2011 Decision we stated:
Mere legal title is insufficient to meet the 60 percent Filipinoowned "capital"
required in the Constitution. Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is
required. The legal and beneficial ownership of 60 percent of the outstanding
capital stock must rest in the hands of Filipino nationals in accordance with the
constitutional mandate. Otherwise, the corporation is "considered as non-
Philippine national[s]." (Emphasis supplied)
Both the Voting Control Test and the Beneficial Ownership Test must be
applied to determine whether a corporation is a "Philippine national."
The interpretation by legal officers of the SEC of the term "capital," embodied
in various opinions which respondents relied upon, is merely preliminary and
an opinion only of such officers. To repeat, any such opinion does not
constitute an SEC rule or regulation. In fact, many of these opinions contain a
disclaimer which expressly states: "x x x the foregoing opinion is based
solely on facts disclosed in your query and relevant only to the particular issue
raised therein and shall not be used in the nature of a standing rule
binding upon the Commission in other cases whether of similar or
dissimilar circumstances."16 Thus, the opinions clearly make a caveat that
they do not constitute binding precedents on any one, not even on the SEC
itself.
Likewise, the opinions of the SEC en banc, as well as of the DOJ, interpreting
the law are neither conclusive nor controlling and thus, do not bind the Court. It
is hornbook doctrine that any interpretation of the law that administrative or
quasi-judicial agencies make is only preliminary, never conclusive on the
Court. The power to make a final interpretation of the law, in this case the term
"capital" in Section 11, Article XII of the 1987 Constitution, lies with this Court,
not with any other government entity.
In his motion for reconsideration, the PSE President cites the cases of National
Telecommunications Commission v. Court of Appeals 17 and Philippine Long
Distance Telephone Company v. National Telecommunications
Commission18 in arguing that the Court has already defined the term "capital" in
Section 11, Article XII of the 1987 Constitution.19
The PSE President is grossly mistaken. In both cases of National
Telecommunications v. Court of Appeals20 and Philippine Long Distance
Telephone Company v. National Telecommunications Commission, 21 the Court
did not define the term "capital" as found in Section 11, Article XII of the 1987
Constitution. In fact, these two cases never mentioned, discussed or cited
Section 11, Article XII of the Constitution or any of its economic
provisions, and thus cannot serve as precedent in the interpretation of
Section 11, Article XII of the Constitution. These two cases dealt solely with
the determination of the correct regulatory fees under Section 40(e) and (f) of
the Public Service Act, to wit:
(e) For annual reimbursement of the expenses incurred by the Commission in
the supervision of other public services and/or in the regulation or fixing of their
rates, twenty centavos for each one hundred pesos or fraction thereof, of
the capital stock subscribed or paid, or if no shares have been issued, of
the capital invested, or of the property and equipment whichever is higher.
(f) For the issue or increase of capital stock, twenty centavos for each one
hundred pesos or fraction thereof, of the increased capital. (Emphasis
supplied)
The Court’s interpretation in these two cases of the terms "capital stock
subscribed or paid," "capital stock" and "capital" does not pertain to, and
cannot control, the definition of the term "capital" as used in Section 11, Article
XII of the Constitution, or any of the economic provisions of the Constitution
where the term "capital" is found. The definition of the term "capital" found in
the Constitution must not be taken out of context. A careful reading of these
two cases reveals that the terms "capital stock subscribed or paid," "capital
stock" and "capital" were defined solely to determine the basis for computing
the supervision and regulation fees under Section 40(e) and (f) of the Public
Service Act.
III.
Filipinization of Public Utilities
The Preamble of the 1987 Constitution, as the prologue of the supreme law of
the land, embodies the ideals that the Constitution intends to achieve. 22 The
Preamble reads:
We, the sovereign Filipino people, imploring the aid of Almighty God, in order
to build a just and humane society, and establish a Government that shall
embody our ideals and aspirations, promote the common good, conserve and
develop our patrimony, and secure to ourselves and our posterity, the
blessings of independence and democracy under the rule of law and a regime
of truth, justice, freedom, love, equality, and peace, do ordain and promulgate
this Constitution. (Emphasis supplied)
Consistent with these ideals, Section 19, Article II of the 1987 Constitution
declares as State policy the development of a national economy "effectively
controlled" by Filipinos:
Section 19. The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos.
Fortifying the State policy of a Filipino-controlled economy, the Constitution
decrees:
Section 10. The Congress shall, upon recommendation of the economic and
planning agency, when the national interest dictates, reserve to citizens of the
Philippines or to corporations or associations at least sixty per centum of
whose capital is owned by such citizens, or such higher percentage as
Congress may prescribe, certain areas of investments. The Congress shall
enact measures that will encourage the formation and operation of enterprises
whose capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national
economy and patrimony, the State shall give preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign investments within
its national jurisdiction and in accordance with its national goals and priorities. 23
Under Section 10, Article XII of the 1987 Constitution, Congress may "reserve
to citizens of the Philippines or to corporations or associations at least sixty per
centum of whose capital is owned by such citizens, or such higher percentage
as Congress may prescribe, certain areas of investments." Thus, in numerous
laws Congress has reserved certain areas of investments to Filipino citizens or
to corporations at least sixty percent of the "capital" of which is owned by
Filipino citizens. Some of these laws are: (1) Regulation of Award of
Government Contracts or R.A. No. 5183; (2) Philippine Inventors Incentives
Act or R.A. No. 3850; (3) Magna Carta for Micro, Small and Medium
Enterprises or R.A. No. 6977; (4) Philippine Overseas Shipping Development
Act or R.A. No. 7471; (5) Domestic Shipping Development Act of 2004 or R.A.
No. 9295; (6) Philippine Technology Transfer Act of 2009 or R.A. No. 10055;
and (7) Ship Mortgage Decree or P.D. No. 1521.
With respect to public utilities, the 1987 Constitution specifically ordains:
Section 11. No franchise, certificate, or any other form of authorization for
the operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the laws
of the Philippines, at least sixty per centum of whose capital is owned by
such citizens; nor shall such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither shall any
such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in
public utilities by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers
of such corporation or association must be citizens of the Philippines.
(Emphasis supplied)
This provision, which mandates the Filipinization of public utilities, requires that
any form of authorization for the operation of public utilities shall be granted
only to "citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines at least sixty per centum of whose capital is
owned by such citizens." "The provision is [an express] recognition of the
sensitive and vital position of public utilities both in the national
economy and for national security."24
The 1987 Constitution reserves the ownership and operation of public utilities
exclusively to (1) Filipino citizens, or (2) corporations or associations at least
60 percent of whose "capital" is owned by Filipino citizens. Hence, in the case
of individuals, only Filipino citizens can validly own and operate a public utility.
In the case of corporations or associations, at least 60 percent of their "capital"
must be owned by Filipino citizens. In other words, under Section 11, Article
XII of the 1987 Constitution, to own and operate a public utility a
corporation’s capital must at least be 60 percent owned by Philippine
nationals.
IV.
Definition of "Philippine National"
Pursuant to the express mandate of Section 11, Article XII of the 1987
Constitution, Congress enacted Republic Act No. 7042 or the Foreign
Investments Act of 1991 (FIA), as amended, which defined a "Philippine
national" as follows:
SEC. 3. Definitions. - As used in this Act:
a. The term "Philippine national" shall mean a citizen of the Philippines; or a
domestic partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the Philippines
of which at least sixty percent (60%) of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines; or a
corporation organized abroad and registered as doing business in the
Philippines under the Corporation Code of which one hundred percent (100%)
of the capital stock outstanding and entitled to vote is wholly owned by
Filipinos or a trustee of funds for pension or other employee retirement or
separation benefits, where the trustee is a Philippine national and at least sixty
percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non-Filipino stockholders
own stocks in a Securities and Exchange Commission (SEC) registered
enterprise, at least sixty percent (60%) of the capital stock outstanding and
entitled to vote of each of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the members of
the Board of Directors of each of both corporations must be citizens of the
Philippines, in order that the corporation, shall be considered a "Philippine
national." (Boldfacing, italicization and underscoring supplied)
Thus, the FIA clearly and unequivocally defines a "Philippine national" as a
Philippine citizen, or a domestic corporation at least "60% of the capital stock
outstanding and entitled to vote" is owned by Philippine citizens.
The definition of a "Philippine national" in the FIA reiterated the meaning of
such term as provided in its predecessor statute, Executive Order No. 226 or
the Omnibus Investments Code of 1987,25 which was issued by then President
Corazon C. Aquino. Article 15 of this Code states:
Article 15. "Philippine national" shall mean a citizen of the Philippines or a
diplomatic partnership or association wholly-owned by citizens of the
Philippines; or a corporation organized under the laws of the Philippines
of which at least sixty per cent (60%) of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty per cent
(60%) of the fund will accrue to the benefit of Philippine nationals: Provided,
That where a corporation and its non-Filipino stockholders own stock in a
registered enterprise, at least sixty per cent (60%) of the capital stock
outstanding and entitled to vote of both corporations must be owned and held
by the citizens of the Philippines and at least sixty per cent (60%) of the
members of the Board of Directors of both corporations must be citizens of the
Philippines in order that the corporation shall be considered a Philippine
national. (Boldfacing, italicization and underscoring supplied)
Under Article 48(3)26 of the Omnibus Investments Code of 1987, "no
corporation x x x which is not a ‘Philippine national’ x x x shall do business
x x x in the Philippines x x x without first securing from the Board of
Investments a written certificate to the effect that such business or economic
activity x x x would not conflict with the Constitution or laws of the
Philippines."27 Thus, a "non-Philippine national" cannot own and operate a
reserved economic activity like a public utility. This means, of course, that only
a "Philippine national" can own and operate a public utility.
In turn, the definition of a "Philippine national" under Article 15 of the Omnibus
Investments Code of 1987 was a reiteration of the meaning of such term as
provided in Article 14 of the Omnibus Investments Code of 1981,28 to wit:
Article 14. "Philippine national" shall mean a citizen of the Philippines; or a
domestic partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the Philippines
of which at least sixty per cent (60%) of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty per cent
(60%) of the fund will accrue to the benefit of Philippine nationals: Provided,
That where a corporation and its non-Filipino stockholders own stock in a
registered enterprise, at least sixty per cent (60%) of the capital stock
outstanding and entitled to vote of both corporations must be owned and held
by the citizens of the Philippines and at least sixty per cent (60%) of the
members of the Board of Directors of both corporations must be citizens of the
Philippines in order that the corporation shall be considered a Philippine
national. (Boldfacing, italicization and underscoring supplied)
Under Article 69(3) of the Omnibus Investments Code of 1981, "no corporation
x x x which is not a ‘Philippine national’ x x x shall do business x x x in the
Philippines x x x without first securing a written certificate from the Board of
Investments to the effect that such business or economic activity x x x
would not conflict with the Constitution or laws of the Philippines." 29 Thus, a
"non-Philippine national" cannot own and operate a reserved economic activity
like a public utility. Again, this means that only a "Philippine national" can own
and operate a public utility.
Prior to the Omnibus Investments Code of 1981, Republic Act No. 5186 30 or
the Investment Incentives Act, which took effect on 16 September 1967,
contained a similar definition of a "Philippine national," to wit:
(f) "Philippine National" shall mean a citizen of the Philippines; or a partnership
or association wholly owned by citizens of the Philippines; or a corporation
organized under the laws of the Philippines of which at least sixty per
cent of the capital stock outstanding and entitled to vote is owned and
held by citizens of the Philippines; or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a Philippine
National and at least sixty per cent of the fund will accrue to the benefit of
Philippine Nationals: Provided, That where a corporation and its non-Filipino
stockholders own stock in a registered enterprise, at least sixty per cent of the
capital stock outstanding and entitled to vote of both corporations must be
owned and held by the citizens of the Philippines and at least sixty per cent of
the members of the Board of Directors of both corporations must be citizens of
the Philippines in order that the corporation shall be considered a Philippine
National. (Boldfacing, italicization and underscoring supplied)
Under Section 3 of Republic Act No. 5455 or the Foreign Business Regulations
Act, which took effect on 30 September 1968, if the investment in a domestic
enterprise by non-Philippine nationals exceeds 30% of its outstanding capital
stock, such enterprise must obtain prior approval from the Board of
Investments before accepting such investment. Such approval shall not be
granted if the investment "would conflict with existing constitutional provisions
and laws regulating the degree of required ownership by Philippine nationals in
the enterprise."31 A "non-Philippine national" cannot own and operate a
reserved economic activity like a public utility. Again, this means that only a
"Philippine national" can own and operate a public utility.
The FIA, like all its predecessor statutes, clearly defines a "Philippine
national" as a Filipino citizen, or a domestic corporation "at least sixty
percent (60%) of the capital stock outstanding and entitled to vote" is
owned by Filipino citizens. A domestic corporation is a "Philippine national"
only if at least 60% of its voting stock is owned by Filipino citizens. This
definition of a "Philippine national" is crucial in the present case because the
FIA reiterates and clarifies Section 11, Article XII of the 1987 Constitution,
which limits the ownership and operation of public utilities to Filipino citizens or
to corporations or associations at least 60% Filipino-owned.
The FIA is the basic law governing foreign investments in the Philippines,
irrespective of the nature of business and area of investment. The FIA spells
out the procedures by which non-Philippine nationals can invest in the
Philippines. Among the key features of this law is the concept of a negative list
or the Foreign Investments Negative List. 32 Section 8 of the law states:
SEC. 8. List of Investment Areas Reserved to Philippine
Nationals [Foreign Investment Negative List]. - The Foreign Investment
Negative List shall have two 2 component lists: A and B:
a. List A shall enumerate the areas of activities reserved to Philippine
nationals by mandate of the Constitution and specific laws.
b. List B shall contain the areas of activities and enterprises regulated pursuant
to law:
1. which are defense-related activities, requiring prior clearance and
authorization from the Department of National Defense [DND] to engage in
such activity, such as the manufacture, repair, storage and/or distribution of
firearms, ammunition, lethal weapons, military ordinance, explosives,
pyrotechnics and similar materials; unless such manufacturing or repair activity
is specifically authorized, with a substantial export component, to a non-
Philippine national by the Secretary of National Defense; or
2. which have implications on public health and morals, such as the
manufacture and distribution of dangerous drugs; all forms of gambling;
nightclubs, bars, beer houses, dance halls, sauna and steam bathhouses and
massage clinics. (Boldfacing, underscoring and italicization supplied)
Section 8 of the FIA enumerates the investment areas "reserved to Philippine
nationals." Foreign Investment Negative List A consists of "areas of
activities reserved to Philippine nationals by mandate of the Constitution
and specific laws," where foreign equity participation in any enterprise
shall be limited to the maximum percentage expressly prescribed by the
Constitution and other specific laws. In short, to own and operate a
public utility in the Philippines one must be a "Philippine national" as
defined in the FIA. The FIA is abundant notice to foreign investors to
what extent they can invest in public utilities in the Philippines.
To repeat, among the areas of investment covered by the Foreign Investment
Negative List A is the ownership and operation of public utilities, which the
Constitution expressly reserves to Filipino citizens and to corporations at least
60% owned by Filipino citizens. In other words, Negative List A of the FIA
reserves the ownership and operation of public utilities only to
"Philippine nationals," defined in Section 3(a) of the FIA as "(1) a citizen of
the Philippines; x x x or (3) a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital stock
outstanding and entitled to vote is owned and held by citizens of the
Philippines; or (4) a corporation organized abroad and registered as doing
business in the Philippines under the Corporation Code of which one hundred
percent (100%) of the capital stock outstanding and entitled to vote is wholly
owned by Filipinos or a trustee of funds for pension or other employee
retirement or separation benefits, where the trustee is a Philippine national and
at least sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals."
Clearly, from the effectivity of the Investment Incentives Act of 1967 to the
adoption of the Omnibus Investments Code of 1981, to the enactment of the
Omnibus Investments Code of 1987, and to the passage of the present
Foreign Investments Act of 1991, or for more than four decades, the
statutory definition of the term "Philippine national" has been uniform
and consistent: it means a Filipino citizen, or a domestic corporation at
least 60% of the voting stock is owned by Filipinos. Likewise, these same
statutes have uniformly and consistently required that only "Philippine
nationals" could own and operate public utilities in the Philippines. The
following exchange during the Oral Arguments is revealing:
JUSTICE CARPIO:
Counsel, I have some questions. You are aware of the Foreign
Investments Act of 1991, x x x? And the FIA of 1991 took effect
in 1991, correct? That’s over twenty (20) years ago, correct?
COMMISSIONER GAITE:
Correct, Your Honor.
JUSTICE CARPIO:
And Section 8 of the Foreign Investments Act of 1991 states
that []only Philippine nationals can own and operate public
utilities[], correct?
COMMISSIONER GAITE:
 Yes, Your Honor.
JUSTICE CARPIO:
And the same Foreign Investments Act of 1991 defines a
"Philippine national" either as a citizen of the Philippines, or if it
is a corporation at least sixty percent (60%) of the voting stock
is owned by citizens of the Philippines, correct?
COMMISSIONER GAITE:
Correct, Your Honor.
JUSTICE CARPIO:
And, you are also aware that under the predecessor law of the
Foreign Investments Act of 1991, the Omnibus Investments Act
of 1987, the same provisions apply: x x x only Philippine
nationals can own and operate a public utility and the
Philippine national, if it is a corporation, x x x sixty percent
(60%) of the capital stock of that corporation must be owned by
citizens of the Philippines, correct?
COMMISSIONER GAITE:
Correct, Your Honor.
JUSTICE CARPIO:
And even prior to the Omnibus Investments Act of 1987, under
the Omnibus Investments Act of 1981, the same rules apply: x
x x only a Philippine national can own and operate a public
utility and a Philippine national, if it is a corporation, sixty
percent (60%) of its x x x voting stock, must be owned by
citizens of the Philippines, correct?
COMMISSIONER GAITE:
Correct, Your Honor.
JUSTICE CARPIO:
And even prior to that, under [the]1967 Investments Incentives
Act and the Foreign Company Act of 1968, the same rules
applied, correct?
COMMISSIONER GAITE:
Correct, Your Honor.
JUSTICE CARPIO:
So, for the last four (4) decades, x x x, the law has been
very consistent – only a Philippine national can own and
operate a public utility, and a Philippine national, if it is a
corporation, x x x at least sixty percent (60%) of the voting
stock must be owned by citizens of the Philippines,
correct?
COMMISSIONER GAITE:
Correct, Your Honor.33 (Emphasis supplied)
Government agencies like the SEC cannot simply ignore Sections 3(a) and 8
of the FIA which categorically prescribe that certain economic activities, like
the ownership and operation of public utilities, are reserved to corporations "at
least sixty percent (60%) of the capital stock outstanding and entitled to
vote is owned and held by citizens of the Philippines." Foreign Investment
Negative List A refers to "activities reserved to Philippine nationals by mandate
of the Constitution and specific laws." The FIA is the basic statute regulating
foreign investments in the Philippines. Government agencies tasked with
regulating or monitoring foreign investments, as well as counsels of foreign
investors, should start with the FIA in determining to what extent a particular
foreign investment is allowed in the Philippines. Foreign investors and their
counsels who ignore the FIA do so at their own peril. Foreign investors and
their counsels who rely on opinions of SEC legal officers that obviously
contradict the FIA do so also at their own peril.
Occasional opinions of SEC legal officers that obviously contradict the FIA
should immediately raise a red flag. There are already numerous opinions of
SEC legal officers that cite the definition of a "Philippine national" in Section
3(a) of the FIA in determining whether a particular corporation is qualified to
own and operate a nationalized or partially nationalized business in the
Philippines. This shows that SEC legal officers are not only aware of, but also
rely on and invoke, the provisions of the FIA in ascertaining the eligibility of a
corporation to engage in partially nationalized industries. The following are
some of such opinions:
1. Opinion of 23 March 1993, addressed to Mr. Francis F. How;
2. Opinion of 14 April 1993, addressed to Director Angeles T. Wong of
the Philippine Overseas Employment Administration;
3. Opinion of 23 November 1993, addressed to Messrs. Dominador
Almeda and Renato S. Calma;
4. Opinion of 7 December 1993, addressed to Roco Bunag Kapunan
Migallos & Jardeleza;
5. SEC Opinion No. 49-04, addressed to Romulo Mabanta
Buenaventura Sayoc & De Los Angeles;
6. SEC-OGC Opinion No. 17-07, addressed to Mr. Reynaldo G. David;
and
7. SEC-OGC Opinion No. 03-08, addressed to Attys. Ruby Rose J.
Yusi and Rudyard S. Arbolado.
The SEC legal officers’ occasional but blatant disregard of the definition of the
term "Philippine national" in the FIA signifies their lack of integrity and
competence in resolving issues on the 60-40 ownership requirement in favor of
Filipino citizens in Section 11, Article XII of the Constitution.
The PSE President argues that the term "Philippine national" defined in the
FIA should be limited and interpreted to refer to corporations seeking to avail
of tax and fiscal incentives under investment incentives laws and cannot be
equated with the term "capital" in Section 11, Article XII of the 1987
Constitution. Pangilinan similarly contends that the FIA and its predecessor
statutes do not apply to "companies which have not registered and obtained
special incentives under the schemes established by those laws."
Both are desperately grasping at straws. The FIA does not grant tax or fiscal
incentives to any enterprise. Tax and fiscal incentives to investments are
granted separately under the Omnibus Investments Code of 1987, not under
the FIA. In fact, the FIA expressly repealed Articles 44 to 56 of Book II of the
Omnibus Investments Code of 1987, which articles previously regulated
foreign investments in nationalized or partially nationalized industries.
The FIA is the applicable law regulating foreign investments in nationalized or
partially nationalized industries. There is nothing in the FIA, or even in the
Omnibus Investments Code of 1987 or its predecessor statutes, that states,
expressly or impliedly, that the FIA or its predecessor statutes do not apply to
enterprises not availing of tax and fiscal incentives under the Code. The FIA
and its predecessor statutes apply to investments in all domestic enterprises,
whether or not such enterprises enjoy tax and fiscal incentives under the
Omnibus Investments Code of 1987 or its predecessor statutes. The reason
is quite obvious – mere non-availment of tax and fiscal incentives by a
non-Philippine national cannot exempt it from Section 11, Article XII of
the Constitution regulating foreign investments in public utilities. In fact,
the Board of Investments’ Primer on Investment Policies in the
Philippines,34 which is given out to foreign investors, provides:
PART III. FOREIGN INVESTMENTS WITHOUT INCENTIVES
Investors who do not seek incentives and/or whose chosen activities do not
qualify for incentives, (i.e., the activity is not listed in the IPP, and they are not
exporting at least 70% of their production) may go ahead and make the
investments without seeking incentives. They only have to be guided by the
Foreign Investments Negative List (FINL).
The FINL clearly defines investment areas requiring at least 60% Filipino
ownership. All other areas outside of this list are fully open to foreign investors.
(Emphasis supplied)
V.
Right to elect directors, coupled with beneficial ownership,
translates to effective control.
The 28 June 2011 Decision declares that the 60 percent Filipino ownership
required by the Constitution to engage in certain economic activities applies
not only to voting control of the corporation, but also to the beneficial
ownership of the corporation. To repeat, we held:
Mere legal title is insufficient to meet the 60 percent Filipino-owned "capital"
required in the Constitution. Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is
required. The legal and beneficial ownership of 60 percent of the outstanding
capital stock must rest in the hands of Filipino nationals in accordance with the
constitutional mandate. Otherwise, the corporation is "considered as non-
Philippine national[s]." (Emphasis supplied)
This is consistent with Section 3 of the FIA which provides that where 100% of
the capital stock is held by "a trustee of funds for pension or other employee
retirement or separation benefits," the trustee is a Philippine national if "at least
sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals." Likewise, Section 1(b) of the Implementing Rules of the FIA
provides that "for stocks to be deemed owned and held by Philippine citizens
or Philippine nationals, mere legal title is not enough to meet the required
Filipino equity. Full beneficial ownership of the stocks, coupled with
appropriate voting rights, is essential."
Since the constitutional requirement of at least 60 percent Filipino ownership
applies not only to voting control of the corporation but also to the beneficial
ownership of the corporation, it is therefore imperative that such requirement
apply uniformly and across the board to all classes of shares, regardless of
nomenclature and category, comprising the capital of a corporation. Under the
Corporation Code, capital stock35 consists of all classes of shares issued to
stockholders, that is, common shares as well as preferred shares, which may
have different rights, privileges or restrictions as stated in the articles of
incorporation.36
The Corporation Code allows denial of the right to vote to preferred and
redeemable shares, but disallows denial of the right to vote in specific
corporate matters. Thus, common shares have the right to vote in the election
of directors, while preferred shares may be denied such right. Nonetheless,
preferred shares, even if denied the right to vote in the election of directors,
are entitled to vote on the following corporate matters: (1) amendment of
articles of incorporation; (2) increase and decrease of capital stock; (3)
incurring, creating or increasing bonded indebtedness; (4) sale, lease,
mortgage or other disposition of substantially all corporate assets; (5)
investment of funds in another business or corporation or for a purpose other
than the primary purpose for which the corporation was organized; (6)
adoption, amendment and repeal of by-laws; (7) merger and consolidation;
and (8) dissolution of corporation.37
Since a specific class of shares may have rights and privileges or restrictions
different from the rest of the shares in a corporation, the 60-40 ownership
requirement in favor of Filipino citizens in Section 11, Article XII of the
Constitution must apply not only to shares with voting rights but also to shares
without voting rights. Preferred shares, denied the right to vote in the election
of directors, are anyway still entitled to vote on the eight specific corporate
matters mentioned above. Thus, if a corporation, engaged in a partially
nationalized industry, issues a mixture of common and preferred non-
voting shares, at least 60 percent of the common shares and at least 60
percent of the preferred non-voting shares must be owned by
Filipinos. Of course, if a corporation issues only a single class of shares, at
least 60 percent of such shares must necessarily be owned by Filipinos. In
short, the 60-40 ownership requirement in favor of Filipino citizens must
apply separately to each class of shares, whether common, preferred
non-voting, preferred voting or any other class of shares. This uniform
application of the 60-40 ownership requirement in favor of Filipino citizens
clearly breathes life to the constitutional command that the ownership and
operation of public utilities shall be reserved exclusively to corporations at least
60 percent of whose capital is Filipino-owned. Applying uniformly the 60-40
ownership requirement in favor of Filipino citizens to each class of shares,
regardless of differences in voting rights, privileges and restrictions,
guarantees effective Filipino control of public utilities, as mandated by the
Constitution.
Moreover, such uniform application to each class of shares insures that the
"controlling interest" in public utilities always lies in the hands of Filipino
citizens. This addresses and extinguishes Pangilinan’s worry that foreigners,
owning most of the non-voting shares, will exercise greater control over
fundamental corporate matters requiring two-thirds or majority vote of all
shareholders.
VI.
Intent of the framers of the Constitution
While Justice Velasco quoted in his Dissenting Opinion38 a portion of the
deliberations of the Constitutional Commission to support his claim that the
term "capital" refers to the total outstanding shares of stock, whether voting or
non-voting, the following excerpts of the deliberations reveal otherwise. It is
clear from the following exchange that the term "capital" refers to controlling
interest of a corporation, thus:
MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated local or Filipino
equity and foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9 and
2/3-1/3 in Section 15.
MR. VILLEGAS. That is right.
MR. NOLLEDO. In teaching law, we are always faced with this question:
"Where do we base the equity requirement, is it on the authorized capital
stock, on the subscribed capital stock, or on the paid-up capital stock of a
corporation"? Will the Committee please enlighten me on this?
MR. VILLEGAS. We have just had a long discussion with the members of the
team from the UP Law Center who provided us a draft. The phrase that is
contained here which we adopted from the UP draft is "60 percent of
voting stock."
MR. NOLLEDO. That must be based on the subscribed capital stock, because
unless declared delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS. That is right.
MR. NOLLEDO. Thank you.
With respect to an investment by one corporation in another corporation, say,
a corporation with 60-40 percent equity invests in another corporation which is
permitted by the Corporation Code, does the Committee adopt the grandfather
rule?
MR. VILLEGAS. Yes, that is the understanding of the Committee.
MR. NOLLEDO. Therefore, we need additional Filipino capital?
MR. VILLEGAS. Yes.39
xxxx
MR. AZCUNA. May I be clarified as to that portion that was accepted by the
Committee.
MR. VILLEGAS. The portion accepted by the Committee is the deletion of the
phrase "voting stock or controlling interest."
MR. AZCUNA. Hence, without the Davide amendment, the committee report
would read: "corporations or associations at least sixty percent of whose
CAPITAL is owned by such citizens."
MR. VILLEGAS. Yes.
MR. AZCUNA. So if the Davide amendment is lost, we are stuck with 60
percent of the capital to be owned by citizens.
MR. VILLEGAS. That is right.
MR. AZCUNA. But the control can be with the foreigners even if they are
the minority. Let us say 40 percent of the capital is owned by them, but it
is the voting capital, whereas, the Filipinos own the nonvoting shares. So
we can have a situation where the corporation is controlled by foreigners
despite being the minority because they have the voting capital. That is
the anomaly that would result here.
MR. BENGZON. No, the reason we eliminated the word "stock" as stated
in the 1973 and 1935 Constitutions is that according to Commissioner
Rodrigo, there are associations that do not have stocks. That is why we
say "CAPITAL."
MR. AZCUNA. We should not eliminate the phrase "controlling interest."
MR. BENGZON. In the case of stock corporations, it is
assumed.40 (Boldfacing and underscoring supplied)
Thus, 60 percent of the "capital" assumes, or should result in, a "controlling
interest" in the corporation.
The use of the term "capital" was intended to replace the word "stock" because
associations without stocks can operate public utilities as long as they meet
the 60-40 ownership requirement in favor of Filipino citizens prescribed in
Section 11, Article XII of the Constitution. However, this did not change the
intent of the framers of the Constitution to reserve exclusively to Philippine
nationals the "controlling interest" in public utilities.
During the drafting of the 1935 Constitution, economic protectionism was "the
battle-cry of the nationalists in the Convention." 41 The same battle-cry resulted
in the nationalization of the public utilities.42 This is also the same intent of the
framers of the 1987 Constitution who adopted the exact formulation embodied
in the 1935 and 1973 Constitutions on foreign equity limitations in partially
nationalized industries.
The OSG, in its own behalf and as counsel for the State, 43 agrees fully with the
Court’s interpretation of the term "capital." In its Consolidated Comment, the
OSG explains that the deletion of the phrase "controlling interest" and
replacement of the word "stock" with the term "capital" were intended
specifically to extend the scope of the entities qualified to operate public
utilities to include associations without stocks. The framers’ omission of the
phrase "controlling interest" did not mean the inclusion of all shares of stock,
whether voting or non-voting. The OSG reiterated essentially the Court’s
declaration that the Constitution reserved exclusively to Philippine nationals
the ownership and operation of public utilities consistent with the State’s policy
to "develop a self-reliant and independent national economy effectively
controlled by Filipinos."
As we held in our 28 June 2011 Decision, to construe broadly the term
"capital" as the total outstanding capital stock, treated as a single class
regardless of the actual classification of shares, grossly contravenes the intent
and letter of the Constitution that the "State shall develop a self-reliant and
independent national economy effectively controlled by Filipinos." We
illustrated the glaring anomaly which would result in defining the term "capital"
as the total outstanding capital stock of a corporation, treated as a single class
of shares regardless of the actual classification of shares, to wit:
Let us assume that a corporation has 100 common shares owned by
foreigners and 1,000,000 non-voting preferred shares owned by Filipinos, with
both classes of share having a par value of one peso (₱ 1.00) per share.
Under the broad definition of the term "capital," such corporation would be
considered compliant with the 40 percent constitutional limit on foreign equity
of public utilities since the overwhelming majority, or more than 99.999
percent, of the total outstanding capital stock is Filipino owned. This is
obviously absurd.
In the example given, only the foreigners holding the common shares have
voting rights in the election of directors, even if they hold only 100 shares. The
foreigners, with a minuscule equity of less than 0.001 percent, exercise control
over the public utility. On the other hand, the Filipinos, holding more than
99.999 percent of the equity, cannot vote in the election of directors and
hence, have no control over the public utility. This starkly circumvents the
intent of the framers of the Constitution, as well as the clear language of the
Constitution, to place the control of public utilities in the hands of Filipinos. x x
x and instead substitute the words "SIXTY PERCENT OF WHOSE CAPITAL" so
Further, even if foreigners who own more than forty percent of the voting
shares elect an all-Filipino board of directors, this situation does not guarantee
Filipino control and does not in any way cure the violation of the Constitution.
The independence of the Filipino board members so elected by such foreign
shareholders is highly doubtful. As the OSG pointed out, quoting Justice
George Sutherland’s words in Humphrey’s Executor v. US,44 "x x x it is quite
evident that one who holds his office only during the pleasure of another
cannot be depended upon to maintain an attitude of independence against the
latter’s will." Allowing foreign shareholders to elect a controlling majority of the
board, even if all the directors are Filipinos, grossly circumvents the letter and
intent of the Constitution and defeats the very purpose of our nationalization
laws.
VII.
Last sentence of Section 11, Article XII of the Constitution
The last sentence of Section 11, Article XII of the 1987 Constitution reads:
The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the
executive and managing officers of such corporation or association must be
citizens of the Philippines.
During the Oral Arguments, the OSG emphasized that there was never a
question on the intent of the framers of the Constitution to limit foreign
ownership, and assure majority Filipino ownership and control of public
utilities. The OSG argued, "while the delegates disagreed as to the percentage
threshold to adopt, x x x the records show they clearly understood that Filipino
control of the public utility corporation can only be and is obtained only through
the election of a majority of the members of the board."
Indeed, the only point of contention during the deliberations of the
Constitutional Commission on 23 August 1986 was the extent of majority
Filipino control of public utilities. This is evident from the following exchange:
THE PRESIDENT. Commissioner Jamir is recognized.
MR. JAMIR. Madam President, my proposed amendment on lines 20 and 21 is
to delete the phrase "two thirds of whose voting stock or controlling interest,"
that the sentence will read: "No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations organized under
the laws of the Philippines at least SIXTY PERCENT OF WHOSE CAPITAL is
owned by such citizens."
xxxx
THE PRESIDENT: Will Commissioner Jamir first explain?
MR. JAMIR. Yes, in this Article on National Economy and Patrimony, there
were two previous sections in which we fixed the Filipino equity to 60 percent
as against 40 percent for foreigners. It is only in this Section 15 with respect to
public utilities that the committee proposal was increased to two-thirds. I think
it would be better to harmonize this provision by providing that even in the
case of public utilities, the minimum equity for Filipino citizens should be 60
percent.
MR. ROMULO. Madam President.
THE PRESIDENT. Commissioner Romulo is recognized.
MR. ROMULO. My reason for supporting the amendment is based on the
discussions I have had with representatives of the Filipino majority owners of
the international record carriers, and the subsequent memoranda they
submitted to me. x x x
Their second point is that under the Corporation Code, the management and
control of a corporation is vested in the board of directors, not in the officers
but in the board of directors. The officers are only agents of the board. And
they believe that with 60 percent of the equity, the Filipino majority
stockholders undeniably control the board. Only on important corporate acts
can the 40-percent foreign equity exercise a veto, x x x.
x x x x45
MS. ROSARIO BRAID. Madam President.
THE PRESIDENT. Commissioner Rosario Braid is recognized.
MS. ROSARIO BRAID. Yes, in the interest of equal time, may I also read from
a memorandum by the spokesman of the Philippine Chamber of
Communications on why they would like to maintain the present equity, I am
referring to the 66 2/3. They would prefer to have a 75-25 ratio but would settle
for 66 2/3. x x x
xxxx
THE PRESIDENT. Just to clarify, would Commissioner Rosario Braid support
the proposal of two-thirds rather than the 60 percent?
MS. ROSARIO BRAID. I have added a clause that will put management in the
hands of Filipino citizens.
x x x x46
While they had differing views on the percentage of Filipino ownership of
capital, it is clear that the framers of the Constitution intended public utilities to
be majority Filipino-owned and controlled. To ensure that Filipinos control
public utilities, the framers of the Constitution approved, as additional
safeguard, the inclusion of the last sentence of Section 11, Article XII of the
Constitution commanding that "[t]he participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers
of such corporation or association must be citizens of the Philippines." In other
words, the last sentence of Section 11, Article XII of the Constitution mandates
that (1) the participation of foreign investors in the governing body of the
corporation or association shall be limited to their proportionate share in the
capital of such entity; and (2) all officers of the corporation or association must
be Filipino citizens.
Commissioner Rosario Braid proposed the inclusion of the phrase requiring
the managing officers of the corporation or association to be Filipino citizens
specifically to prevent management contracts, which were designed primarily
to circumvent the Filipinization of public utilities, and to assure Filipino control
of public utilities, thus:
MS. ROSARIO BRAID. x x x They also like to suggest that we amend this
provision by adding a phrase which states: "THE MANAGEMENT BODY OF
EVERY CORPORATION OR ASSOCIATION SHALL IN ALL CASES BE
CONTROLLED BY CITIZENS OF THE PHILIPPINES." I have with me their
position paper.
THE PRESIDENT. The Commissioner may proceed.
MS. ROSARIO BRAID. The three major international record carriers in the
Philippines, which Commissioner Romulo mentioned – Philippine Global
Communications, Eastern Telecommunications, Globe Mackay Cable – are
40-percent owned by foreign multinational companies and 60-percent owned
by their respective Filipino partners. All three, however, also have
management contracts with these foreign companies – Philcom with RCA,
ETPI with Cable and Wireless PLC, and GMCR with ITT. Up to the present
time, the general managers of these carriers are foreigners. While the
foreigners in these common carriers are only minority owners, the foreign
multinationals are the ones managing and controlling their operations by virtue
of their management contracts and by virtue of their strength in the governing
bodies of these carriers.47
xxxx
MR. OPLE. I think a number of us have agreed to ask Commissioner Rosario
Braid to propose an amendment with respect to the operating management of
public utilities, and in this amendment, we are associated with Fr. Bernas,
Commissioners Nieva and Rodrigo. Commissioner Rosario Braid will state this
amendment now.
Thank you.
MS. ROSARIO BRAID. Madam President.
THE PRESIDENT. This is still on Section 15.
MS. ROSARIO BRAID. Yes.
MR. VILLEGAS. Yes, Madam President.
xxxx
MS. ROSARIO BRAID. Madam President, I propose a new section to read:
‘THE MANAGEMENT BODY OF EVERY CORPORATION OR ASSOCIATION
SHALL IN ALL CASES BE CONTROLLED BY CITIZENS OF THE
PHILIPPINES."
This will prevent management contracts and assure control by Filipino
citizens. Will the committee assure us that this amendment will insure that
past activities such as management contracts will no longer be possible under
this amendment?
xxxx
FR. BERNAS. Madam President.
THE PRESIDENT. Commissioner Bernas is recognized.
FR. BERNAS. Will the committee accept a reformulation of the first part?
MR. BENGZON. Let us hear it.
FR. BERNAS. The reformulation will be essentially the formula of the 1973
Constitution which reads: "THE PARTICIPATION OF FOREIGN INVESTORS
IN THE GOVERNING BODY OF ANY PUBLIC UTILITY ENTERPRISE SHALL
BE LIMITED TO THEIR PROPORTIONATE SHARE IN THE CAPITAL
THEREOF AND..."
MR. VILLEGAS. "ALL THE EXECUTIVE AND MANAGING OFFICERS OF
SUCH CORPORATIONS AND ASSOCIATIONS MUST BE CITIZENS OF THE
PHILIPPINES."
MR. BENGZON. Will Commissioner Bernas read the whole thing again?
FR. BERNAS. "THE PARTICIPATION OF FOREIGN INVESTORS IN THE
GOVERNING BODY OF ANY PUBLIC UTILITY ENTERPRISE SHALL BE
LIMITED TO THEIR PROPORTIONATE SHARE IN THE CAPITAL
THEREOF..." I do not have the rest of the copy.
MR. BENGZON. "AND ALL THE EXECUTIVE AND MANAGING OFFICERS
OF SUCH CORPORATIONS OR ASSOCIATIONS MUST BE CITIZENS OF
THE PHILIPPINES." Is that correct?
MR. VILLEGAS. Yes.
MR. BENGZON. Madam President, I think that was said in a more elegant
language. We accept the amendment. Is that all right with Commissioner
Rosario Braid?
MS. ROSARIO BRAID. Yes.
xxxx
MR. DE LOS REYES. The governing body refers to the board of directors and
trustees.
MR. VILLEGAS. That is right.
MR. BENGZON. Yes, the governing body refers to the board of directors.
MR. REGALADO. It is accepted.
MR. RAMA. The body is now ready to vote, Madam President.
VOTING
xxxx
The results show 29 votes in favor and none against; so the proposed
amendment is approved.
xxxx
THE PRESIDENT. All right. Can we proceed now to vote on Section 15?
MR. RAMA. Yes, Madam President.
THE PRESIDENT. Will the chairman of the committee please read Section
15?
MR. VILLEGAS. The entire Section 15, as amended, reads: "No franchise,
certificate, or any other form of authorization for the operation of a public utility
shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least 60 PERCENT
OF WHOSE CAPITAL is owned by such citizens." May I request
Commissioner Bengzon to please continue reading.
MR. BENGZON. "THE PARTICIPATION OF FOREIGN INVESTORS IN THE
GOVERNING BODY OF ANY PUBLIC UTILITY ENTERPRISE SHALL BE
LIMITED TO THEIR PROPORTIONATE SHARE IN THE CAPITAL THEREOF
AND ALL THE EXECUTIVE AND MANAGING OFFICERS OF SUCH
CORPORATIONS OR ASSOCIATIONS MUST BE CITIZENS OF THE
PHILIPPINES."
MR. VILLEGAS. "NOR SHALL SUCH FRANCHISE, CERTIFICATE OR
AUTHORIZATION BE EXCLUSIVE IN CHARACTER OR FOR A PERIOD
LONGER THAN TWENTY-FIVE YEARS RENEWABLE FOR NOT MORE
THAN TWENTY-FIVE YEARS. Neither shall any such franchise or right be
granted except under the condition that it shall be subject to amendment,
alteration, or repeal by Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the general
public."
VOTING
xxxx
The results show 29 votes in favor and 4 against; Section 15, as amended, is
approved.48 (Emphasis supplied)
The last sentence of Section 11, Article XII of the 1987 Constitution,
particularly the provision on the limited participation of foreign investors in the
governing body of public utilities, is a reiteration of the last sentence of Section
5, Article XIV of the 1973 Constitution,49 signifying its importance in reserving
ownership and control of public utilities to Filipino citizens.
VIII.
The undisputed facts
There is no dispute, and respondents do not claim the contrary, that (1)
foreigners own 64.27% of the common shares of PLDT, which class of shares
exercises the sole right to vote in the election of directors, and thus foreigners
control PLDT; (2) Filipinos own only 35.73% of PLDT’s common shares,
constituting a minority of the voting stock, and thus Filipinos do not control
PLDT; (3) preferred shares, 99.44% owned by Filipinos, have no voting rights;
(4) preferred shares earn only 1/70 of the dividends that common shares
earn;50 (5) preferred shares have twice the par value of common shares; and
(6) preferred shares constitute 77.85% of the authorized capital stock of PLDT
and common shares only 22.15%.
Despite the foregoing facts, the Court did not decide, and in fact refrained from
ruling on the question of whether PLDT violated the 60-40 ownership
requirement in favor of Filipino citizens in Section 11, Article XII of the 1987
Constitution. Such question indisputably calls for a presentation and
determination of evidence through a hearing, which is generally outside the
province of the Court’s jurisdiction, but well within the SEC’s statutory powers.
Thus, for obvious reasons, the Court limited its decision on the purely legal
and threshold issue on the definition of the term "capital" in Section 11, Article
XII of the Constitution and directed the SEC to apply such definition in
determining the exact percentage of foreign ownership in PLDT.
 IX.
PLDT is not an indispensable party;
SEC is impleaded in this case.
In his petition, Gamboa prays, among others:
xxxx
5. For the Honorable Court to issue a declaratory relief that ownership of
common or voting shares is the sole basis in determining foreign equity in a
public utility and that any other government rulings, opinions, and regulations
inconsistent with this declaratory relief be declared unconstitutional and a
violation of the intent and spirit of the 1987 Constitution;
6. For the Honorable Court to declare null and void all sales of common stocks
to foreigners in excess of 40 percent of the total subscribed common
shareholdings; and
7. For the Honorable Court to direct the Securities and Exchange
Commission and Philippine Stock Exchange to require PLDT to make a
public disclosure of all of its foreign shareholdings and their actual and
real beneficial owners.
Other relief(s) just and equitable are likewise prayed for. (Emphasis supplied)
As can be gleaned from his prayer, Gamboa clearly asks this Court to compel
the SEC to perform its statutory duty to investigate whether "the required
percentage of ownership of the capital stock to be owned by citizens of the
Philippines has been complied with [by PLDT] as required by x x x the
Constitution."51 Such plea clearly negates SEC’s argument that it was not
impleaded.
Granting that only the SEC Chairman was impleaded in this case, the Court
has ample powers to order the SEC’s compliance with its directive contained in
the 28 June 2011 Decision in view of the far-reaching implications of this case.
In Domingo v. Scheer,52 the Court dispensed with the amendment of the
pleadings to implead the Bureau of Customs considering (1) the unique
backdrop of the case; (2) the utmost need to avoid further delays; and (3) the
issue of public interest involved. The Court held:
The Court may be curing the defect in this case by adding the BOC as party-
petitioner. The petition should not be dismissed because the second action
would only be a repetition of the first. In Salvador, et al., v. Court of Appeals, et
al., we held that this Court has full powers, apart from that power and authority
which is inherent, to amend the processes, pleadings, proceedings and
decisions by substituting as party-plaintiff the real party-in-interest. The Court
has the power to avoid delay in the disposition of this case, to order its
amendment as to implead the BOC as party-respondent. Indeed, it may
no longer be necessary to do so taking into account the unique backdrop
in this case, involving as it does an issue of public interest. After all, the
Office of the Solicitor General has represented the petitioner in the instant
proceedings, as well as in the appellate court, and maintained the validity of
the deportation order and of the BOC’s Omnibus Resolution. It cannot, thus,
be claimed by the State that the BOC was not afforded its day in court, simply
because only the petitioner, the Chairperson of the BOC, was the respondent
in the CA, and the petitioner in the instant recourse. In Alonso v. Villamor, we
had the occasion to state:
There is nothing sacred about processes or pleadings, their forms or
contents. Their sole purpose is to facilitate the application of justice to
the rival claims of contending parties. They were created, not to hinder and
delay, but to facilitate and promote, the administration of justice. They do not
constitute the thing itself, which courts are always striving to secure to litigants.
They are designed as the means best adapted to obtain that thing. In other
words, they are a means to an end. When they lose the character of the one
and become the other, the administration of justice is at fault and courts are
correspondingly remiss in the performance of their obvious duty. 53 (Emphasis
supplied)
In any event, the SEC has expressly manifested54 that it will abide by the
Court’s decision and defer to the Court’s definition of the term "capital"
in Section 11, Article XII of the Constitution. Further, the SEC entered its
special appearance in this case and argued during the Oral Arguments,
indicating its submission to the Court’s jurisdiction. It is clear, therefore,
that there exists no legal impediment against the proper and immediate
implementation of the Court’s directive to the SEC.
PLDT is an indispensable party only insofar as the other issues, particularly
the factual questions, are concerned. In other words, PLDT must be impleaded
in order to fully resolve the issues on (1) whether the sale of 111,415 PTIC
shares to First Pacific violates the constitutional limit on foreign ownership of
PLDT; (2) whether the sale of common shares to foreigners exceeded the 40
percent limit on foreign equity in PLDT; and (3) whether the total percentage of
the PLDT common shares with voting rights complies with the 60-40
ownership requirement in favor of Filipino citizens under the Constitution for
the ownership and operation of PLDT. These issues indisputably call for an
examination of the parties’ respective evidence, and thus are clearly within the
jurisdiction of the SEC. In short, PLDT must be impleaded, and must
necessarily be heard, in the proceedings before the SEC where the factual
issues will be thoroughly threshed out and resolved.
Notably, the foregoing issues were left untouched by the Court. The Court
did not rule on the factual issues raised by Gamboa, except the single and
purely legal issue on the definition of the term "capital" in Section 11, Article XII
of the Constitution. The Court confined the resolution of the instant case to this
threshold legal issue in deference to the fact-finding power of the SEC.
Needless to state, the Court can validly, properly, and fully dispose of the
fundamental legal issue in this case even without the participation of PLDT
since defining the term "capital" in Section 11, Article XII of the Constitution
does not, in any way, depend on whether PLDT was impleaded. Simply put,
PLDT is not indispensable for a complete resolution of the purely legal
question in this case.55 In fact, the Court, by treating the petition as one for
mandamus,56 merely directed the SEC to apply the Court’s definition of the term
"capital" in Section 11, Article XII of the Constitution in determining whether
PLDT committed any violation of the said constitutional provision. The
dispositive portion of the Court’s ruling is addressed not to PLDT but
solely to the SEC, which is the administrative agency tasked to enforce
the 60-40 ownership requirement in favor of Filipino citizens in Section
11, Article XII of the Constitution.
Since the Court limited its resolution on the purely legal issue on the definition
of the term "capital" in Section 11, Article XII of the 1987 Constitution, and
directed the SEC to investigate any violation by PLDT of the 60-40 ownership
requirement in favor of Filipino citizens under the Constitution, 57 there is no
deprivation of PLDT’s property or denial of PLDT’s right to due process,
contrary to Pangilinan and Nazareno’s misimpression. Due process will be
afforded to PLDT when it presents proof to the SEC that it complies, as it
claims here, with Section 11, Article XII of the Constitution.
X.
Foreign Investments in the Philippines
Movants fear that the 28 June 2011 Decision would spell disaster to our
economy, as it may result in a sudden flight of existing foreign investors to
"friendlier" countries and simultaneously deterring new foreign investors to our
country. In particular, the PSE claims that the 28 June 2011 Decision may
result in the following: (1) loss of more than ₱ 630 billion in foreign investments
in PSE-listed shares; (2) massive decrease in foreign trading transactions; (3)
lower PSE Composite Index; and (4) local investors not investing in PSE-listed
shares.58
Dr. Bernardo M. Villegas, one of the amici curiae in the Oral Arguments,
shared movants’ apprehension. Without providing specific details, he pointed
out the depressing state of the Philippine economy compared to our
neighboring countries which boast of growing economies. Further, Dr. Villegas
explained that the solution to our economic woes is for the government to
"take-over" strategic industries, such as the public utilities sector, thus:
JUSTICE CARPIO:
I would like also to get from you Dr. Villegas if you have additional information
on whether this high FDI59 countries in East Asia have allowed foreigners x x x
control [of] their public utilities, so that we can compare apples with apples.
DR. VILLEGAS:
Correct, but let me just make a comment. When these neighbors of ours find
an industry strategic, their solution is not to "Filipinize" or "Vietnamize" or
"Singaporize." Their solution is to make sure that those industries are in
the hands of state enterprises. So, in these countries, nationalization
means the government takes over. And because their governments are
competent and honest enough to the public, that is the solution. x x
x 60 (Emphasis supplied)
If government ownership of public utilities is the solution, then foreign
investments in our public utilities serve no purpose. Obviously, there can never
be foreign investments in public utilities if, as Dr. Villegas claims, the "solution
is to make sure that those industries are in the hands of state enterprises." Dr.
Villegas’s argument that foreign investments in telecommunication companies
like PLDT are badly needed to save our ailing economy contradicts his own
theory that the solution is for government to take over these companies. Dr.
Villegas is barking up the wrong tree since State ownership of public utilities
and foreign investments in such industries are diametrically opposed concepts,
which cannot possibly be reconciled.
In any event, the experience of our neighboring countries cannot be used as
argument to decide the present case differently for two reasons. First, the
governments of our neighboring countries have, as claimed by Dr. Villegas,
taken over ownership and control of their strategic public utilities like the
telecommunications industry. Second, our Constitution has specific provisions
limiting foreign ownership in public utilities which the Court is sworn to uphold
regardless of the experience of our neighboring countries.
In our jurisdiction, the Constitution expressly reserves the ownership and
operation of public utilities to Filipino citizens, or corporations or associations
at least 60 percent of whose capital belongs to Filipinos. Following Dr.
Villegas’s claim, the Philippines appears to be more liberal in allowing foreign
investors to own 40 percent of public utilities, unlike in other Asian countries
whose governments own and operate such industries.
XI.
Prospective Application of Sanctions
In its Motion for Partial Reconsideration, the SEC sought to clarify the
reckoning period of the application and imposition of appropriate sanctions
against PLDT if found violating Section 11, Article XII of the Constitution. 1avvphi1
As discussed, the Court has directed the SEC to investigate and determine
whether PLDT violated Section 11, Article XII of the Constitution. Thus, there is
no dispute that it is only after the SEC has determined PLDT’s violation, if any
exists at the time of the commencement of the administrative case or
investigation, that the SEC may impose the statutory sanctions against PLDT.
In other words, once the 28 June 2011 Decision becomes final, the SEC shall
impose the appropriate sanctions only if it finds after due hearing that, at the
start of the administrative case or investigation, there is an existing violation of
Section 11, Article XII of the Constitution. Under prevailing jurisprudence,
public utilities that fail to comply with the nationality requirement under Section
11, Article XII and the FIA can cure their deficiencies prior to the start of the
administrative case or investigation.61
XII.
Final Word
The Constitution expressly declares as State policy the development of an
economy "effectively controlled" by Filipinos. Consistent with such State
policy, the Constitution explicitly reserves the ownership and operation of
public utilities to Philippine nationals, who are defined in the Foreign
Investments Act of 1991 as Filipino citizens, or corporations or associations at
least 60 percent of whose capital with voting rights belongs to Filipinos. The
FIA’s implementing rules explain that "[f]or stocks to be deemed owned and
held by Philippine citizens or Philippine nationals, mere legal title is not enough
to meet the required Filipino equity. Full beneficial ownership of the stocks,
coupled with appropriate voting rights is essential." In effect, the FIA
clarifies, reiterates and confirms the interpretation that the term "capital" in
Section 11, Article XII of the 1987 Constitution refers to shares with voting
rights, as well as with full beneficial ownership. This is precisely because
the right to vote in the election of directors, coupled with full beneficial
ownership of stocks, translates to effective control of a corporation.
Any other construction of the term "capital" in Section 11, Article XII of the
Constitution contravenes the letter and intent of the Constitution. Any other
meaning of the term "capital" openly invites alien domination of economic
activities reserved exclusively to Philippine nationals. Therefore, respondents’
interpretation will ultimately result in handing over effective control of our
national economy to foreigners in patent violation of the Constitution, making
Filipinos second-class citizens in their own country.
Filipinos have only to remind themselves of how this country was exploited
under the Parity Amendment, which gave Americans the same rights as
Filipinos in the exploitation of natural resources, and in the ownership and
control of public utilities, in the Philippines. To do this the 1935 Constitution,
which contained the same 60 percent Filipino ownership and control
requirement as the present 1987 Constitution, had to be amended to give
Americans parity rights with Filipinos. There was bitter opposition to the Parity
Amendment62 and many Filipinos eagerly awaited its expiration. In late 1968,
PLDT was one of the American-controlled public utilities that became Filipino-
controlled when the controlling American stockholders divested in anticipation
of the expiration of the Parity Amendment on 3 July 1974.63 No economic
suicide happened when control of public utilities and mining corporations
passed to Filipinos’ hands upon expiration of the Parity Amendment.
Movants’ interpretation of the term "capital" would bring us back to the same
evils spawned by the Parity Amendment, effectively giving foreigners parity
rights with Filipinos, but this time even without any amendment to the
present Constitution. Worse, movants’ interpretation opens up our national
economy to effective control not only by Americans but also by all
foreigners, be they Indonesians, Malaysians or Chinese, even in the
absence of reciprocal treaty arrangements. At least the Parity Amendment,
as implemented by the Laurel-Langley Agreement, gave the capital-starved
Filipinos theoretical parity – the same rights as Americans to exploit natural
resources, and to own and control public utilities, in the United States of
America. Here, movants’ interpretation would effectively mean
a unilateral opening up of our national economy to all foreigners, without any
reciprocal arrangements. That would mean that Indonesians, Malaysians
and Chinese nationals could effectively control our mining companies and
public utilities while Filipinos, even if they have the capital, could not control
similar corporations in these countries.
The 1935, 1973 and 1987 Constitutions have the same 60 percent Filipino
ownership and control requirement for public utilities like PLOT. Any deviation
from this requirement necessitates an amendment to the Constitution as
exemplified by the Parity Amendment. This Court has no power to amend the
Constitution for its power and duty is only to faithfully apply and interpret the
Constitution.
WHEREFORE, we DENY the motions for reconsideration WITH FINALITY. No
further pleadings shall be entertained.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
G.R. No. 155001 May 5, 2003
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B.
REUNILLA, MANUEL ANTONIO B. BOÑE, MAMERTO S. CLARA, REUEL
E. DIMALANTA, MORY V. DOMALAON, CONRADO G. DIMAANO, LOLITA
R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR
WORKERS UNION - NATIONAL LABOR UNION (MWU-NLU), and
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS and SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS
AVIATION SYSTEMS CORPORATION, MACROASIA-EUREST SERVICES,
INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION,
MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT
MAINTENANCE CORPORATION, and MIASCOR LOGISTICS
CORPORATION, petitioners-in-intervention,
x---------------------------------------------------------x
G.R. No. 155547 May 5, 2003
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G.
JARAULA, petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his
capacity as Head of the Department of Transportation and
Communications, and SECRETARY SIMEON A. DATUMANONG, in his
capacity as Head of the Department of Public Works and
Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA,
WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A.
PICHAY, JR., HARLIN CAST ABAYON, and BENASING O.
MACARANBON, respondents-intervenors,
x---------------------------------------------------------x
G.R. No. 155661 May 5, 2003
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA.
TERESA V. GAERLAN, LEONARDO DE LA ROSA, DINA C. DE LEON,
VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO SANTOS, MA. LUISA
M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG
PILIPINAS (SMPP), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO M.
MENDOZA, in his capacity as Head of the Department of Transportation
and Communications, respondents.
PUNO, J.:
Petitioners and petitioners-in-intervention filed the instant petitions for
prohibition under Rule 65 of the Revised Rules of Court seeking to prohibit the
Manila International Airport Authority (MIAA) and the Department of
Transportation and Communications (DOTC) and its Secretary from
implementing the following agreements executed by the Philippine
Government through the DOTC and the MIAA and the Philippine International
Air Terminals Co., Inc. (PIATCO): (1) the Concession Agreement signed on
July 12, 1997, (2) the Amended and Restated Concession Agreement dated
November 26, 1999, (3) the First Supplement to the Amended and Restated
Concession Agreement dated August 27, 1999, (4) the Second Supplement to
the Amended and Restated Concession Agreement dated September 4, 2000,
and (5) the Third Supplement to the Amended and Restated Concession
Agreement dated June 22, 2001 (collectively, the PIATCO Contracts).
The facts are as follows:
In August 1989, the DOTC engaged the services of Aeroport de Paris
(ADP) to conduct a comprehensive study of the Ninoy Aquino
International Airport (NAIA) and determine whether the present airport
can cope with the traffic development up to the year 2010. The study
consisted of two parts: first, traffic forecasts, capacity of existing
facilities, NAIA future requirements, proposed master plans and
development plans; and second, presentation of the preliminary design
of the passenger terminal building. The ADP submitted a Draft Final
Report to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of John
Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio Tan, George Ty
and Alfonso Yuchengco met with then President Fidel V. Ramos to
explore the possibility of investing in the construction and operation of
a new international airport terminal. To signify their commitment to
pursue the project, they formed the Asia's Emerging Dragon Corp.
(AEDC) which was registered with the Securities and Exchange
Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the
Government through the DOTC/MIAA for the development of NAIA
International Passenger Terminal III (NAIA IPT III) under a build-
operate-and-transfer arrangement pursuant to RA 6957 as amended
by RA 7718 (BOT Law).1
On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting
the Prequalification Bids and Awards Committee (PBAC) for the
implementation of the NAIA IPT III project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal
of AEDC to the National Economic and Development Authority (NEDA). A
revised proposal, however, was forwarded by the DOTC to NEDA on
December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating
Council (NEDA ICC) – Technical Board favorably endorsed the project to the
ICC – Cabinet Committee which approved the same, subject to certain
conditions, on January 19, 1996. On February 13, 1996, the NEDA passed
Board Resolution No. 2 which approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily
newspapers of an invitation for competitive or comparative proposals on
AEDC's unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as
amended. The alternative bidders were required to submit three (3) sealed
envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope
should contain the Prequalification Documents, the second envelope the
Technical Proposal, and the third envelope the Financial Proposal of the
proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment
of the Bid Documents and the submission of the comparative bid proposals.
Interested firms were permitted to obtain the Request for Proposal Documents
beginning June 28, 1996, upon submission of a written application and
payment of a non-refundable fee of P50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among others that the
proponent must have adequate capability to sustain the financing requirement
for the detailed engineering, design, construction, operation, and maintenance
phases of the project. The proponent would be evaluated based on its ability to
provide a minimum amount of equity to the project, and its capacity to secure
external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to
a pre-bid conference on July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid
Documents. The following amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent
shall include in its financial proposal an additional percentage of gross
revenue share of the Government, as follows:
i. First 5 years 5.0%
ii. Next 10 years 7.5%
iii. Next 10 years 10.0%
b. The amount of the fixed Annual Guaranteed Payment shall be
subject of the price challenge. Proponent may offer an Annual
Guaranteed Payment which need not be of equal amount, but payment
of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the
financing requirement for the detailed engineering, design,
construction, and/or operation and maintenance phases of the project
as the case may be. For purposes of pre-qualification, this capability
shall be measured in terms of:
i. Proof of the availability of the project proponent and/or the
consortium to provide the minimum amount of equity for the
project; and
ii. a letter testimonial from reputable banks attesting that the
project proponent and/or the members of the consortium are
banking with them, that the project proponent and/or the
members are of good financial standing, and have adequate
resources.
d. The basis for the prequalification shall be the proponent's
compliance with the minimum technical and financial requirements
provided in the Bid Documents and the IRR of the BOT Law. The
minimum amount of equity shall be 30% of the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued
from time to time. Said amendments shall only cover items that would
not materially affect the preparation of the proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain
clarifications were made. Upon the request of prospective bidder People's Air
Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted that based on
Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT
Law, only the proposed Annual Guaranteed Payment submitted by the
challengers would be revealed to AEDC, and that the challengers' technical
and financial proposals would remain confidential. The PBAC also clarified that
the list of revenue sources contained in Annex 4.2a of the Bid Documents was
merely indicative and that other revenue sources may be included by the
proponent, subject to approval by DOTC/MIAA. Furthermore, the PBAC
clarified that only those fees and charges denominated as Public Utility Fees
would be subject to regulation, and those charges which would be actually
deemed Public Utility Fees could still be revised, depending on the outcome of
PBAC's query on the matter with the Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to
the Queries of PAIRCARGO as Per Letter Dated September 3 and 10, 1996."
Paircargo's queries and the PBAC's responses were as follows:
1. It is difficult for Paircargo and Associates to meet the required
minimum equity requirement as prescribed in Section 8.3.4 of the Bid
Documents considering that the capitalization of each member
company is so structured to meet the requirements and needs of their
current respective business undertaking/activities. In order to comply
with this equity requirement, Paircargo is requesting PBAC to just allow
each member of (sic) corporation of the Joint Venture to just execute
an agreement that embodies a commitment to infuse the required
capital in case the project is awarded to the Joint Venture instead of
increasing each corporation's current authorized capital stock just for
prequalification purposes.
In prequalification, the agency is interested in one's financial capability
at the time of prequalification, not future or potential capability.
 A commitment to put up equity once awarded the project is not enough
to establish that "present" financial capability. However, total financial
capability of all member companies of the Consortium, to be
established by submitting the respective companies' audited financial
statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions
for the extension of a Performance Security to the joint venture in the
event that the Concessions Agreement (sic) is awarded to them.
However, Paircargo is being required to submit a copy of the draft
concession as one of the documentary requirements. Therefore,
Paircargo is requesting that they'd (sic) be furnished copy of the
approved negotiated agreement between the PBAC and the AEDC at
the soonest possible time.
A copy of the draft Concession Agreement is included in the Bid
Documents. Any material changes would be made known to
prospective challengers through bid bulletins. However, a final version
will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the
Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin Project)
and to submit the same with the required Bid Security.
On September 20, 1996, the consortium composed of People's Air Cargo and
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc.
(PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo
Consortium) submitted their competitive proposal to the PBAC. On September
23, 1996, the PBAC opened the first envelope containing the prequalification
documents of the Paircargo Consortium. On the following day, September 24,
1996, the PBAC prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its
reservations as regards the Paircargo Consortium, which include:
a. The lack of corporate approvals and financial capability of
PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General
Banking Act) on the amount that Security Bank could legally invest in
the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint
Venture, for prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the
Philippine requirement in the operation of a public utility.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had
considered the issues raised by the latter, and that based on the documents
submitted by Paircargo and the established prequalification criteria, the PBAC
had found that the challenger, Paircargo, had prequalified to undertake the
project. The Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the
Paircargo Consortium which contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to
Paircargo's financial capability, in view of the restrictions imposed by Section
21-B of the General Banking Act and Sections 1380 and 1381 of the Manual
Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished
with excerpts of the PBAC meeting and the accompanying technical evaluation
report where each of the issues they raised were addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by
AEDC and the Paircargo Consortium containing their respective financial
proposals. Both proponents offered to build the NAIA Passenger Terminal III
for at least $350 million at no cost to the government and to pay the
government: 5% share in gross revenues for the first five years of operation,
7.5% share in gross revenues for the next ten years of operation, and 10%
share in gross revenues for the last ten years of operation, in accordance with
the Bid Documents. However, in addition to the foregoing, AEDC offered to
pay the government a total of P135 million as guaranteed payment for 27
years while Paircargo Consortium offered to pay the government a total of
P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price
proposal submitted by the Paircargo Consortium, and gave AEDC 30 working
days or until November 28, 1996 within which to match the said bid, otherwise,
the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC
Secretary Amado Lagdameo, on December 11, 1996, issued a notice to
Paircargo Consortium regarding AEDC's failure to match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine
International Airport Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO
and reiterated its objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the
second-pass approval of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition
for Declaration of Nullity of the Proceedings, Mandamus and Injunction against
the Secretary of the DOTC, the Chairman of the PBAC, the voting members of
the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the PBAC
Technical Committee.
On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the
approval, on a no-objection basis, of the BOT agreement between the DOTC
and PIATCO. As the ad referendum gathered only four (4) of the required six
(6) signatures, the NEDA merely noted the agreement.
On July 9, 1997, the DOTC issued the notice of award for the project to
PIATCO.
On July 12, 1997, the Government, through then DOTC Secretary Arturo T.
Enrile, and PIATCO, through its President, Henry T. Go, signed the
"Concession Agreement for the Build-Operate-and-Transfer Arrangement of
the Ninoy Aquino International Airport Passenger Terminal III" (1997
Concession Agreement). The Government granted PIATCO the franchise to
operate and maintain the said terminal during the concession period and to
collect the fees, rentals and other charges in accordance with the rates or
schedules stipulated in the 1997 Concession Agreement. The Agreement
provided that the concession period shall be for twenty-five (25) years
commencing from the in-service date, and may be renewed at the option of the
Government for a period not exceeding twenty-five (25) years. At the end of
the concession period, PIATCO shall transfer the development facility to MIAA.
On November 26, 1998, the Government and PIATCO signed an Amended
and Restated Concession Agreement (ARCA). Among the provisions of the
1997 Concession Agreement that were amended by the ARCA were: Sec.
1.11 pertaining to the definition of "certificate of completion"; Sec. 2.05
pertaining to the Special Obligations of GRP; Sec. 3.02 (a) dealing with the
exclusivity of the franchise given to the Concessionaire; Sec. 4.04 concerning
the assignment by Concessionaire of its interest in the Development Facility;
Sec. 5.08 (c) dealing with the proceeds of Concessionaire's insurance; Sec.
5.10 with respect to the temporary take-over of operations by GRP; Sec. 5.16
pertaining to the taxes, duties and other imposts that may be levied on the
Concessionaire; Sec. 6.03 as regards the periodic adjustment of public utility
fees and charges; the entire Article VIII concerning the provisions on the
termination of the contract; and Sec. 10.02 providing for the venue of the
arbitration proceedings in case a dispute or controversy arises between the
parties to the agreement.
Subsequently, the Government and PIATCO signed three Supplements to the
ARCA. The First Supplement was signed on August 27, 1999; the Second
Supplement on September 4, 2000; and the Third Supplement on June 22,
2001 (collectively, Supplements).
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining
"Revenues" or "Gross Revenues"; Sec. 2.05 (d) of the ARCA referring to the
obligation of MIAA to provide sufficient funds for the upkeep, maintenance,
repair and/or replacement of all airport facilities and equipment which are
owned or operated by MIAA; and further providing additional special
obligations on the part of GRP aside from those already enumerated in Sec.
2.05 of the ARCA. The First Supplement also provided a stipulation as regards
the construction of a surface road to connect NAIA Terminal II and Terminal III
in lieu of the proposed access tunnel crossing Runway 13/31; the swapping of
obligations between GRP and PIATCO regarding the improvement of Sales
Road; and the changes in the timetable. It also amended Sec. 6.01 (c) of the
ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the ARCA
by inserting an introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA
referring to the Payments of Percentage Share in Gross Revenues.
The Second Supplement to the ARCA contained provisions concerning the
clearing, removal, demolition or disposal of subterranean structures uncovered
or discovered at the site of the construction of the terminal by the
Concessionaire. It defined the scope of works; it provided for the procedure for
the demolition of the said structures and the consideration for the same which
the GRP shall pay PIATCO; it provided for time extensions, incremental and
consequential costs and losses consequent to the existence of such
structures; and it provided for some additional obligations on the part of
PIATCO as regards the said structures.
Finally, the Third Supplement provided for the obligations of the
Concessionaire as regards the construction of the surface road connecting
Terminals II and III.
Meanwhile, the MIAA which is charged with the maintenance and operation of
the NAIA Terminals I and II, had existing concession contracts with various
service providers to offer international airline airport services, such as in-flight
catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing, and other services, to
several international airlines at the NAIA. Some of these service providers are
the Miascor Group, DNATA-Wings Aviation Systems Corp., and the MacroAsia
Group. Miascor, DNATA and MacroAsia, together with Philippine Airlines
(PAL), are the dominant players in the industry with an aggregate market
share of 70%.
On September 17, 2002, the workers of the international airline service
providers, claiming that they stand to lose their employment upon the
implementation of the questioned agreements, filed before this Court a petition
for prohibition to enjoin the enforcement of said agreements.2
On October 15, 2002, the service providers, joining the cause of the petitioning
workers, filed a motion for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and
Constantino Jaraula filed a similar petition with this Court. 3
On November 6, 2002, several employees of the MIAA likewise filed a petition
assailing the legality of the various agreements. 4
On December 11, 2002. another group of Congressmen, Hon. Jacinto V.
Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C.
Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O.
Macaranbon, moved to intervene in the case as Respondents-Intervenors.
They filed their Comment-In-Intervention defending the validity of the assailed
agreements and praying for the dismissal of the petitions.
During the pendency of the case before this Court, President Gloria
Macapagal Arroyo, on November 29, 2002, in her speech at the 2002 Golden
Shell Export Awards at Malacañang Palace, stated that she will not "honor
(PIATCO) contracts which the Executive Branch's legal offices have concluded
(as) null and void."5
Respondent PIATCO filed its Comments to the present petitions on November
7 and 27, 2002. The Office of the Solicitor General and the Office of the
Government Corporate Counsel filed their respective Comments in behalf of
the public respondents.
On December 10, 2002, the Court heard the case on oral argument. After the
oral argument, the Court then resolved in open court to require the parties to
file simultaneously their respective Memoranda in amplification of the issues
heard in the oral arguments within 30 days and to explore the possibility of
arbitration or mediation as provided in the challenged contracts.
In their consolidated Memorandum, the Office of the Solicitor General and the
Office of the Government Corporate Counsel prayed that the present petitions
be given due course and that judgment be rendered declaring the 1997
Concession Agreement, the ARCA and the Supplements thereto void for being
contrary to the Constitution, the BOT Law and its Implementing Rules and
Regulations.
On March 6, 2003, respondent PIATCO informed the Court that on March 4,
2003 PIATCO commenced arbitration proceedings before the International
Chamber of Commerce, International Court of Arbitration (ICC) by filing a
Request for Arbitration with the Secretariat of the ICC against the Government
of the Republic of the Philippines acting through the DOTC and MIAA.
In the present cases, the Court is again faced with the task of resolving
complicated issues made difficult by their intersecting legal and economic
implications. The Court is aware of the far reaching fall out effects of the ruling
which it makes today. For more than a century and whenever the exigencies of
the times demand it, this Court has never shirked from its solemn duty to
dispense justice and resolve "actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there
has been grave abuse of discretion amounting to lack or excess of
jurisdiction."6 To be sure, this Court will not begin to do otherwise today.
We shall first dispose of the procedural issues raised by respondent PIATCO
which they allege will bar the resolution of the instant controversy.
Petitioners' Legal Standing to File
 the present Petitions
a. G.R. Nos. 155001 and 155661
In G.R. No. 155001 individual petitioners are employees of various service
providers7 having separate concession contracts with MIAA and continuing
service agreements with various international airlines to provide in-flight
catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing and other services. Also
included as petitioners are labor unions MIASCOR Workers Union-National
Labor Union and Philippine Airlines Employees Association. These petitioners
filed the instant action for prohibition as taxpayers and as parties whose rights
and interests stand to be violated by the implementation of the PIATCO
Contracts.
Petitioners-Intervenors in the same case are all corporations organized and
existing under Philippine laws engaged in the business of providing in-flight
catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing and other services to several
international airlines at the Ninoy Aquino International Airport. Petitioners-
Intervenors allege that as tax-paying international airline and airport-related
service operators, each one of them stands to be irreparably injured by the
implementation of the PIATCO Contracts. Each of the petitioners-intervenors
have separate and subsisting concession agreements with MIAA and with
various international airlines which they allege are being interfered with and
violated by respondent PIATCO.
In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang
Manggagawa sa Paliparan ng Pilipinas - a legitimate labor union and
accredited as the sole and exclusive bargaining agent of all the employees in
MIAA. Petitioners anchor their petition for prohibition on the nullity of the
contracts entered into by the Government and PIATCO regarding the build-
operate-and-transfer of the NAIA IPT III. They filed the petition as taxpayers
and persons who have a legitimate interest to protect in the implementation of
the PIATCO Contracts.
Petitioners in both cases raise the argument that the PIATCO Contracts
contain stipulations which directly contravene numerous provisions of the
Constitution, specific provisions of the BOT Law and its Implementing Rules
and Regulations, and public policy. Petitioners contend that the DOTC and the
MIAA, by entering into said contracts, have committed grave abuse of
discretion amounting to lack or excess of jurisdiction which can be remedied
only by a writ of prohibition, there being no plain, speedy or adequate remedy
in the ordinary course of law.
In particular, petitioners assail the provisions in the 1997 Concession
Agreement and the ARCA which grant PIATCO the exclusive right to operate a
commercial international passenger terminal within the Island of Luzon, except
those international airports already existing at the time of the execution of the
agreement. The contracts further provide that upon the commencement of
operations at the NAIA IPT III, the Government shall cause the closure of
Ninoy Aquino International Airport Passenger Terminals I and II as
international passenger terminals. With respect to existing concession
agreements between MIAA and international airport service providers
regarding certain services or operations, the 1997 Concession Agreement and
the ARCA uniformly provide that such services or operations will not be carried
over to the NAIA IPT III and PIATCO is under no obligation to permit such
carry over except through a separate agreement duly entered into with
PIATCO.8
With respect to the petitioning service providers and their employees, upon the
commencement of operations of the NAIA IPT III, they allege that they will be
effectively barred from providing international airline airport services at the
NAIA Terminals I and II as all international airlines and passengers will be
diverted to the NAIA IPT III. The petitioning service providers will thus be
compelled to contract with PIATCO alone for such services, with no assurance
that subsisting contracts with MIAA and other international airlines will be
respected. Petitioning service providers stress that despite the very
competitive market, the substantial capital investments required and the high
rate of fees, they entered into their respective contracts with the MIAA with the
understanding that the said contracts will be in force for the stipulated period,
and thereafter, renewed so as to allow each of the petitioning service providers
to recoup their investments and obtain a reasonable return thereon.
Petitioning employees of various service providers at the NAIA Terminals I and
II and of MIAA on the other hand allege that with the closure of the NAIA
Terminals I and II as international passenger terminals under the PIATCO
Contracts, they stand to lose employment.
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."9 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.10
We hold that petitioners have the requisite standing. In the above-mentioned
cases, petitioners have a direct and substantial interest to protect by reason of
the implementation of the PIATCO Contracts. They stand to lose their source
of livelihood, a property right which is zealously protected by the Constitution.
Moreover, subsisting concession agreements between MIAA and petitioners-
intervenors and service contracts between international airlines and
petitioners-intervenors stand to be nullified or terminated by the operation of
the NAIA IPT III under the PIATCO Contracts. The financial prejudice brought
about by the PIATCO Contracts on petitioners and petitioners-intervenors in
these cases are legitimate interests sufficient to confer on them the requisite
standing to file the instant petitions.
b. G.R. No. 155547
In G.R. No. 155547, petitioners filed the petition for prohibition as members of
the House of Representatives, citizens and taxpayers. They allege that as
members of the House of Representatives, they are especially interested in
the PIATCO Contracts, because the contracts compel the Government and/or
the House of Representatives to appropriate funds necessary to comply with
the provisions therein.11 They cite provisions of the PIATCO Contracts which
require disbursement of unappropriated amounts in compliance with the
contractual obligations of the Government. They allege that the Government
obligations in the PIATCO Contracts which compel government expenditure
without appropriation is a curtailment of their prerogatives as legislators,
contrary to the mandate of the Constitution that "[n]o money shall be paid out
of the treasury except in pursuance of an appropriation made by law." 12
Standing 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. Although we are not
unmindful of the cases of Imus Electric Co. v. Municipality of
Imus13 and Gonzales v. Raquiza14 wherein this Court held that appropriation
must be made only on amounts immediately demandable, public interest
demands that we take a more liberal view in determining whether the
petitioners suing as legislators, taxpayers and citizens have locus standi
to file the instant petition. In Kilosbayan, Inc. v. Guingona,15 this Court held
"[i]n line with the liberal policy of this Court on locus standi, ordinary taxpayers,
members of Congress, and even association of planters, and non-profit civic
organizations were allowed to initiate and prosecute actions before this Court
to question the constitutionality or validity of laws, acts, decisions, rulings, or
orders of various government agencies or instrumentalities." 16 Further, "insofar
as taxpayers' suits are concerned . . . (this Court) is not devoid of
discretion as to whether or not it should be entertained." 17 As such ". . . even
if, strictly speaking, they [the petitioners] are not covered by the definition, it is
still within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious
constitutional questions raised."18 In view of the serious legal questions
involved and their impact on public interest, we resolve to grant standing to the
petitioners.
Other Procedural Matters
Respondent PIATCO further alleges that this Court is without jurisdiction to
review the instant cases as factual issues are involved which this Court is ill-
equipped to resolve. Moreover, PIATCO alleges that submission of this
controversy to this Court at the first instance is a violation of the rule on
hierarchy of courts. They contend that trial courts have concurrent jurisdiction
with this Court with respect to a special civil action for prohibition and hence,
following the rule on hierarchy of courts, resort must first be had before the trial
courts.
After a thorough study and careful evaluation of the issues involved, this Court
is of the view that the crux of the instant controversy involves significant legal
questions. The facts necessary to resolve these legal questions are well
established and, hence, need not be determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming
jurisdiction over the cases at bar. The said rule may be relaxed when the
redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within
and calling for the exercise of this Court's primary jurisdiction. 19
It is easy to discern that exceptional circumstances exist in the cases at bar
that call for the relaxation of the rule. Both petitioners and respondents agree
that these cases are of transcendental importance as they involve the
construction and operation of the country's premier international airport.
Moreover, the crucial issues submitted for resolution are of first impression and
they entail the proper legal interpretation of key provisions of the Constitution,
the BOT Law and its Implementing Rules and Regulations. Thus, considering
the nature of the controversy before the Court, procedural bars may be
lowered to give way for the speedy disposition of the instant cases.
Legal Effect of the Commencement
of Arbitration Proceedings by
PIATCO
There is one more procedural obstacle which must be overcome. The Court is
aware that arbitration proceedings pursuant to Section 10.02 of the ARCA
have been filed at the instance of respondent PIATCO. Again, we hold that the
arbitration step taken by PIATCO will not oust this Court of its jurisdiction over
the cases at bar.
In Del Monte Corporation-USA v. Court of Appeals,20 even after finding that the
arbitration clause in the Distributorship Agreement in question is valid and the
dispute between the parties is arbitrable, this Court affirmed the trial court's
decision denying petitioner's Motion to Suspend Proceedings pursuant to the
arbitration clause under the contract. In so ruling, this Court held that as
contracts produce legal effect between the parties, their assigns and heirs,
only the parties to the Distributorship Agreement are bound by its terms,
including the arbitration clause stipulated therein. This Court ruled that
arbitration proceedings could be called for but only with respect to the parties
to the contract in question. Considering that there are parties to the case who
are neither parties to the Distributorship Agreement nor heirs or assigns of the
parties thereto, this Court, citing its previous ruling in Salas, Jr. v. Laperal
Realty Corporation,21 held that to tolerate the splitting of proceedings by
allowing arbitration as to some of the parties on the one hand and trial for the
others on the other hand would, in effect, result in multiplicity of suits,
duplicitous procedure and unnecessary delay.22 Thus, we ruled that the
interest of justice would best be served if the trial court hears and adjudicates
the case in a single and complete proceeding.
It is established that petitioners in the present cases who have presented
legitimate interests in the resolution of the controversy are not parties to the
PIATCO Contracts. Accordingly, they cannot be bound by the arbitration
clause provided for in the ARCA and hence, cannot be compelled to submit to
arbitration proceedings. A speedy and decisive resolution of all the critical
issues in the present controversy, including those raised by petitioners,
cannot be made before an arbitral tribunal. The object of arbitration is
precisely to allow an expeditious determination of a dispute. This objective
would not be met if this Court were to allow the parties to settle the cases by
arbitration as there are certain issues involving non-parties to the PIATCO
Contracts which the arbitral tribunal will not be equipped to resolve.
Now, to the merits of the instant controversy.
I
Is PIATCO a qualified bidder?
Public respondents argue that the Paircargo Consortium, PIATCO's
predecessor, was not a duly pre-qualified bidder on the unsolicited proposal
submitted by AEDC as the Paircargo Consortium failed to meet the financial
capability required under the BOT Law and the Bid Documents. They allege
that in computing the ability of the Paircargo Consortium to meet the minimum
equity requirements for the project, the entire net worth of Security Bank, a
member of the consortium, should not be considered.
PIATCO relies, on the other hand, on the strength of the Memorandum dated
October 14, 1996 issued by the DOTC Undersecretary Primitivo C. Cal stating
that the Paircargo Consortium is found to have a combined net worth of
P3,900,000,000.00, sufficient to meet the equity requirements of the project.
The said Memorandum was in response to a letter from Mr. Antonio Henson of
AEDC to President Fidel V. Ramos questioning the financial capability of the
Paircargo Consortium on the ground that it does not have the financial
resources to put up the required minimum equity of P2,700,000,000.00. This
contention is based on the restriction under R.A. No. 337, as amended or the
General Banking Act that a commercial bank cannot invest in any single
enterprise in an amount more than 15% of its net worth. In the said
Memorandum, Undersecretary Cal opined:
The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5,
require that financial capability will be evaluated based on total
financial capability of all the member companies of the [Paircargo]
Consortium. In this connection, the Challenger was found to have a
combined net worth of P3,926,421,242.00 that could support a project
costing approximately P13 Billion.
It is not a requirement that the net worth must be "unrestricted." To
impose that as a requirement now will be nothing less than unfair.
The financial statement or the net worth is not the sole basis in
establishing financial capability. As stated in Bid Bulletin No. 3,
financial capability may also be established by testimonial letters
issued by reputable banks. The Challenger has complied with this
requirement.
To recap, net worth reflected in the Financial Statement should not be
taken as the amount of the money to be used to answer the required
thirty percent (30%) equity of the challenger but rather to be used in
establishing if there is enough basis to believe that the challenger can
comply with the required 30% equity. In fact, proof of sufficient equity is
required as one of the conditions for award of contract (Section 12.1
IRR of the BOT Law) but not for pre-qualification (Section 5.4 of the
same document).23
Under the BOT Law, in case of a build-operate-and-transfer
arrangement, the contract shall be awarded to the bidder "who, having
satisfied the minimum financial, technical, organizational and legal
standards" required by the law, has submitted the lowest bid and most
favorable terms of the project.24 Further, the 1994 Implementing Rules
and Regulations of the BOT Law provide:
Section 5.4 Pre-qualification Requirements.
xxx xxx xxx
c. Financial Capability: The project proponent must have adequate
capability to sustain the financing requirements for the detailed
engineering design, construction and/or operation and maintenance
phases of the project, as the case may be. For purposes of pre-
qualification, this capability shall be measured in terms of (i) proof of
the ability of the project proponent and/or the consortium to
provide a minimum amount of equity to the project, and (ii) a letter
testimonial from reputable banks attesting that the project
proponent and/or members of the consortium are banking with
them, that they are in good financial standing, and that they have
adequate resources. The government agency/LGU concerned shall
determine on a project-to-project basis and before pre-qualification, the
minimum amount of equity needed. (emphasis supplied)
Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August
16, 1996 amending the financial capability requirements for pre-qualification of
the project proponent as follows:
6. Basis of Pre-qualification
The basis for the pre-qualification shall be on the compliance of the
proponent to the minimum technical and financial requirements
provided in the Bid Documents and in the IRR of the BOT Law, R.A.
No. 6957, as amended by R.A. 7718.
The minimum amount of equity to which the proponent's financial
capability will be based shall be thirty percent (30%) of the project
cost instead of the twenty percent (20%) specified in Section 3.6.4
of the Bid Documents. This is to correlate with the required debt-to-
equity ratio of 70:30 in Section 2.01a of the draft concession
agreement. The debt portion of the project financing should not exceed
70% of the actual project cost.
Accordingly, based on the above provisions of law, the Paircargo Consortium
or any challenger to the unsolicited proposal of AEDC has to show that it
possesses the requisite financial capability to undertake the project in the
minimum amount of 30% of the project cost through (i) proof of the ability to
provide a minimum amount of equity to the project, and (ii) a letter testimonial
from reputable banks attesting that the project proponent or members of the
consortium are banking with them, that they are in good financial standing, and
that they have adequate resources.
As the minimum project cost was estimated to be US$350,000,000.00 or
roughly P9,183,650,000.00,25 the Paircargo Consortium had to show to the
satisfaction of the PBAC that it had the ability to provide the minimum equity
for the project in the amount of at least P2,755,095,000.00.
Paircargo's Audited Financial Statements as of 1993 and 1994 indicated that it
had a net worth of P2,783,592.00 and P3,123,515.00 respectively. 26 PAGS'
Audited Financial Statements as of 1995 indicate that it has approximately
P26,735,700.00 to invest as its equity for the project. 27 Security Bank's Audited
Financial Statements as of 1995 show that it has a net worth equivalent to its
capital funds in the amount of P3,523,504,377.00. 28
We agree with public respondents that with respect to Security Bank,
the entire amount of its net worth could not be invested in a single
undertaking or enterprise, whether allied or non-allied in accordance with the
provisions of R.A. No. 337, as amended or the General Banking Act:
Sec. 21-B. The provisions in this or in any other Act to the contrary
notwithstanding, the Monetary Board, whenever it shall deem
appropriate and necessary to further national development objectives
or support national priority projects, may authorize a commercial
bank, a bank authorized to provide commercial banking services,
as well as a government-owned and controlled bank, to operate
under an expanded commercial banking authority and by virtue
thereof exercise, in addition to powers authorized for commercial
banks, the powers of an Investment House as provided in
Presidential Decree No. 129, invest in the equity of a non-allied
undertaking, or own a majority or all of the equity in a financial
intermediary other than a commercial bank or a bank authorized to
provide commercial banking services: Provided, That (a) the total
investment in equities shall not exceed fifty percent (50%) of the net
worth of the bank; (b) the equity investment in any one enterprise
whether allied or non-allied shall not exceed fifteen percent (15%)
of the net worth of the bank; (c) the equity investment of the bank, or
of its wholly or majority-owned subsidiary, in a single non-allied
undertaking shall not exceed thirty-five percent (35%) of the total equity
in the enterprise nor shall it exceed thirty-five percent (35%) of the
voting stock in that enterprise; and (d) the equity investment in other
banks shall be deducted from the investing bank's net worth for
purposes of computing the prescribed ratio of net worth to risk assets.
xxx xxx xxx
Further, the 1993 Manual of Regulations for Banks provides:
SECTION X383. Other Limitations and Restrictions. — The following
limitations and restrictions shall also apply regarding equity
investments of banks.
a. In any single enterprise. — The equity investments of banks in any
single enterprise shall not exceed at any time fifteen percent (15%) of
the net worth of the investing bank as defined in Sec. X106 and
Subsec. X121.5.
Thus, the maximum amount that Security Bank could validly invest in the
Paircargo Consortium is only P528,525,656.55, representing 15% of its entire
net worth. The total net worth therefore of the Paircargo Consortium, after
considering the maximum amounts that may be validly invested by each of its
members is P558,384,871.55 or only 6.08% of the project cost,29 an amount
substantially less than the prescribed minimum equity investment required for
the project in the amount of P2,755,095,000.00 or 30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the
earliest opportunity, the ability of the bidder to undertake the project. Thus,
with respect to the bidder's financial capacity at the pre-qualification stage, the
law requires the government agency to examine and determine the ability of
the bidder to fund the entire cost of the project by considering the maximum
amounts that each bidder may invest in the project at the time of pre-
qualification.
The PBAC has determined that any prospective bidder for the construction,
operation and maintenance of the NAIA IPT III project should prove that it has
the ability to provide equity in the minimum amount of 30% of the project cost,
in accordance with the 70:30 debt-to-equity ratio prescribed in the Bid
Documents. Thus, in the case of Paircargo Consortium, the PBAC should
determine the maximum amounts that each member of the consortium may
commit for the construction, operation and maintenance of the NAIA IPT III
project at the time of pre-qualification. With respect to Security Bank,
the maximum amount which may be invested by it would only be 15% of its
net worth in view of the restrictions imposed by the General Banking Act.
Disregarding the investment ceilings provided by applicable law would not
result in a proper evaluation of whether or not a bidder is pre-qualified to
undertake the project as for all intents and purposes, such ceiling or legal
restriction determines the true maximum amount which a bidder may invest
in the project.
Further, the determination of whether or not a bidder is pre-qualified to
undertake the project requires an evaluation of the financial capacity of the
said bidder at the time the bid is submitted based on the required
documents presented by the bidder. The PBAC should not be allowed to
speculate on the future financial ability of the bidder to undertake the project
on the basis of documents submitted. This would open doors to abuse and
defeat the very purpose of a public bidding. This is especially true in the case
at bar which involves the investment of billions of pesos by the project
proponent. The relevant government authority is duty-bound to ensure that the
awardee of the contract possesses the minimum required financial capability to
complete the project. To allow the PBAC to estimate the bidder's future
financial capability would not secure the viability and integrity of the project. A
restrictive and conservative application of the rules and procedures of public
bidding is necessary not only to protect the impartiality and regularity of the
proceedings but also to ensure the financial and technical reliability of the
project. It has been held that:
The basic rule in public bidding is that bids should be evaluated based
on the required documents submitted before and not after the opening
of bids. Otherwise, the foundation of a fair and competitive public
bidding would be defeated. Strict observance of the rules,
regulations, and guidelines of the bidding process is the only
safeguard to a fair, honest and competitive public bidding.30
Thus, if the maximum amount of equity that a bidder may invest in the
project at the time the bids are submitted falls short of the minimum
amounts required to be put up by the bidder, said bidder should be properly
disqualified. Considering that at the pre-qualification stage, the maximum
amounts which the Paircargo Consortium may invest in the project fell short of
the minimum amounts prescribed by the PBAC, we hold that Paircargo
Consortium was not a qualified bidder. Thus the award of the contract by the
PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.
While it would be proper at this juncture to end the resolution of the instant
controversy, as the legal effects of the disqualification of respondent PIATCO's
predecessor would come into play and necessarily result in the nullity of all the
subsequent contracts entered by it in pursuance of the project, the Court feels
that it is necessary to discuss in full the pressing issues of the present
controversy for a complete resolution thereof.
II
Is the 1997 Concession Agreement valid?
Petitioners and public respondents contend that the 1997 Concession
Agreement is invalid as it contains provisions that substantially depart from the
draft Concession Agreement included in the Bid Documents. They maintain
that a substantial departure from the draft Concession Agreement is a violation
of public policy and renders the 1997 Concession Agreement null and void.
PIATCO maintains, however, that the Concession Agreement attached to the
Bid Documents is intended to be a draft, i.e., subject to change, alteration or
modification, and that this intention was clear to all participants, including
AEDC, and DOTC/MIAA. It argued further that said intention is expressed in
Part C (6) of Bid Bulletin No. 3 issued by the PBAC which states:
6. Amendments to the Draft Concessions Agreement
Amendments to the Draft Concessions Agreement shall be issued from
time to time. Said amendments shall only cover items that would not
materially affect the preparation of the proponent's proposal.
By its very nature, public bidding aims to protect the public interest by giving
the public the best possible advantages through open competition. Thus:
Competition must be legitimate, fair and honest. In the field of
government contract law, competition requires, not only `bidding upon
a common standard, a common basis, upon the same thing, the same
subject matter, the same undertaking,' but also that it be legitimate,
fair and honest; and not designed to injure or defraud the
government.31
An essential element of a publicly bidded contract is that all bidders must be
on equal footing. Not simply in terms of application of the procedural rules and
regulations imposed by the relevant government agency, but more importantly,
on the contract bidded upon. Each bidder must be able to bid on the same
thing. The rationale is obvious. If the winning bidder is allowed to later include
or modify certain provisions in the contract awarded such that the contract is
altered in any material respect, then the essence of fair competition in the
public bidding is destroyed. A public bidding would indeed be a farce if after
the contract is awarded, the winning bidder may modify the contract and
include provisions which are favorable to it that were not previously made
available to the other bidders. Thus:
It is inherent in public biddings that there shall be a fair competition
among the bidders. The specifications in such biddings provide the
common ground or basis for the bidders. The specifications should,
accordingly, operate equally or indiscriminately upon all bidders.32
The same rule was restated by Chief Justice Stuart of the Supreme Court of
Minnesota:
The law is well settled that where, as in this case, municipal authorities
can only let a contract for public work to the lowest responsible bidder,
the proposals and specifications therefore must be so framed as to
 permit free and full competition. Nor can they enter into a contract
with the best bidder containing substantial provisions beneficial
to him, not included or contemplated in the terms and
specifications upon which the bids were invited.33
In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument
that the draft concession agreement is subject to amendment, the pertinent
portion of which was quoted above, the PBAC also clarified that "[s]aid
amendments shall only cover items that would not materially affect the
preparation of the proponent's proposal."
While we concede that a winning bidder is not precluded from modifying or
amending certain provisions of the contract bidded upon, such changes must
not constitute substantial or material amendments that would alter the
basic parameters of the contract and would constitute a denial to the
other bidders of the opportunity to bid on the same terms. Hence, the
determination of whether or not a modification or amendment of a contract
bidded out constitutes a substantial amendment rests on whether the contract,
when taken as a whole, would contain substantially different terms and
conditions that would have the effect of altering the technical and/or financial
proposals previously submitted by other bidders. The alterations and
modifications in the contract executed between the government and the
winning bidder must be such as to render such executed contract to be an
entirely different contract from the one that was bidded upon.
In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,34 this
Court quoted with approval the ruling of the trial court that an amendment to a
contract awarded through public bidding, when such subsequent amendment
was made without a new public bidding, is null and void:
The Court agrees with the contention of counsel for the plaintiffs that
the due execution of a contract after public bidding is a limitation upon
the right of the contracting parties to alter or amend it without another
public bidding, for otherwise what would a public bidding be good
for if after the execution of a contract after public bidding, the
contracting parties may alter or amend the contract, or even
cancel it, at their will? Public biddings are held for the protection of
the public, and to give the public the best possible advantages by
means of open competition between the bidders. He who bids or offers
the best terms is awarded the contract subject of the bid, and it is
obvious that such protection and best possible advantages to the
public will disappear if the parties to a contract executed after public
bidding may alter or amend it without another previous public bidding. 35
Hence, the question that comes to fore is this: is the 1997 Concession
Agreement the same agreement that was offered for public bidding, i.e., the
draft Concession Agreement attached to the Bid Documents? A close
comparison of the draft Concession Agreement attached to the Bid Documents
and the 1997 Concession Agreement reveals that the documents differ in at
least two material respects:
a. Modification on the Public
Utility Revenues and Non-Public
Utility Revenues that may be
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft
Concession Agreement and the 1997 Concession Agreement may be
classified into three distinct categories: (1) fees which are subject to periodic
adjustment of once every two years in accordance with a prescribed
parametric formula and adjustments are made effective only upon written
approval by MIAA; (2) fees other than those included in the first category which
maybe adjusted by PIATCO whenever it deems necessary without need for
consent of DOTC/MIAA; and (3) new fees and charges that may be imposed
by PIATCO which have not been previously imposed or collected at the Ninoy
Aquino International Airport Passenger Terminal I, pursuant to Administrative
Order No. 1, Series of 1993, as amended. The glaring distinctions between the
draft Concession Agreement and the 1997 Concession Agreement lie in the
types of fees included in each category and the extent of the supervision and
regulation which MIAA is allowed to exercise in relation thereto.
For fees under the first category, i.e., those which are subject to periodic
adjustment in accordance with a prescribed parametric formula and effective
only upon written approval by MIAA, the draft Concession
Agreement includes the following:36
(1) aircraft parking fees;
(2) aircraft tacking fees;
 (3) groundhandling fees;
(4) rentals and airline offices;
(5) check-in counter rentals; and
(6) porterage fees.
Under the 1997 Concession Agreement, fees which are subject to
adjustment and effective upon MIAA approval are classified as "Public Utility
Revenues" and include:37
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) check-in counter fees; and
(4) Terminal Fees.
The implication of the reduced number of fees that are subject to MIAA
approval is best appreciated in relation to fees included in the second
category identified above. Under the 1997 Concession Agreement, fees
which PIATCO may adjust whenever it deems necessary without need for
consent of DOTC/MIAA are "Non-Public Utility Revenues" and is defined as
"all other income not classified as Public Utility Revenues derived from
operations of the Terminal and the Terminal Complex." 38 Thus, under the 1997
Concession Agreement, ground handling fees, rentals from airline offices and
porterage fees are no longer subject to MIAA regulation.
Further, under Section 6.03 of the draft Concession Agreement, MIAA
reserves the right to regulate (1) lobby and vehicular parking fees and (2) other
new fees and charges that may be imposed by PIATCO. Such regulation may
be made by periodic adjustment and is effective only upon written approval of
MIAA. The full text of said provision is quoted below:
Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments
in the aircraft parking fees, aircraft tacking fees, groundhandling fees,
rentals and airline offices, check-in-counter rentals and porterage fees
shall be allowed only once every two years and in accordance with the
Parametric Formula attached hereto as Annex F. Provided that
adjustments shall be made effective only after the written express
approval of the MIAA. Provided, further, that such approval of the
MIAA, shall be contingent only on the conformity of the adjustments
with the above said parametric formula. The first adjustment shall be
made prior to the In-Service Date of the Terminal.
The MIAA reserves the right to regulate under the foregoing terms
and conditions the lobby and vehicular parking fees and other
new fees and charges as contemplated in paragraph 2 of Section
6.01 if in its judgment the users of the airport shall be deprived of
a free option for the services they cover.39
On the other hand, the equivalent provision under the 1997 Concession
Agreement reads:
Section 6.03 Periodic Adjustment in Fees and Charges.
xxx xxx xxx
(c) Concessionaire shall at all times be judicious in fixing fees and
charges constituting Non-Public Utility Revenues in order to ensure
that End Users are not unreasonably deprived of services. While the
vehicular parking fee, porterage fee and greeter/well wisher fee
constitute Non-Public Utility Revenues of Concessionaire, GRP
may intervene and require Concessionaire to explain and justify
the fee it may set from time to time, if in the reasonable opinion of
GRP the said fees have become exorbitant resulting in the
unreasonable deprivation of End Users of such services. 40
Thus, under the 1997 Concession Agreement, with respect to (1) vehicular
parking fee, (2) porterage fee and (3) greeter/well wisher fee, all that MIAA can
do is to require PIATCO to explain and justify the fees set by PIATCO. In
the draft Concession Agreement, vehicular parking fee is subject to MIAA
regulation and approval under the second paragraph of Section 6.03 thereof
while porterage fee is covered by the first paragraph of the same provision.
There is an obvious relaxation of the extent of control and regulation by MIAA
with respect to the particular fees that may be charged by PIATCO.
Moreover, with respect to the third category of fees that may be imposed and
collected by PIATCO, i.e., new fees and charges that may be imposed by
PIATCO which have not been previously imposed or collected at the Ninoy
Aquino International Airport Passenger Terminal I, under Section 6.03 of
the draft Concession Agreement MIAA has reserved the right to regulate the
same under the same conditions that MIAA may regulate fees under the first
category, i.e., periodic adjustment of once every two years in accordance with
a prescribed parametric formula and effective only upon written approval by
MIAA. However, under the 1997 Concession Agreement, adjustment of fees
under the third category is not subject to MIAA regulation.
With respect to terminal fees that may be charged by PIATCO, 41 as shown
earlier, this was included within the category of "Public Utility Revenues" under
the 1997 Concession Agreement. This classification is significant because
under the 1997 Concession Agreement, "Public Utility Revenues" are subject
to an "Interim Adjustment" of fees upon the occurrence of certain extraordinary
events specified in the agreement. 42 However, under the draft Concession
Agreement, terminal fees are not included in the types of fees that may be
subject to "Interim Adjustment."43
Finally, under the 1997 Concession Agreement, "Public Utility Revenues,"
except terminal fees, are denominated in US Dollars 44 while payments to the
Government are in Philippine Pesos. In the draft Concession Agreement, no
such stipulation was included. By stipulating that "Public Utility Revenues" will
be paid to PIATCO in US Dollars while payments by PIATCO to the
Government are in Philippine currency under the 1997 Concession
Agreement, PIATCO is able to enjoy the benefits of depreciations of the
Philippine Peso, while being effectively insulated from the detrimental effects
of exchange rate fluctuations.
When taken as a whole, the changes under the 1997 Concession Agreement
with respect to reduction in the types of fees that are subject to MIAA
regulation and the relaxation of such regulation with respect to other fees are
significant amendments that substantially distinguish the draft Concession
Agreement from the 1997 Concession Agreement. The 1997 Concession
Agreement, in this respect, clearly gives PIATCO more favorable terms
than what was available to other bidders at the time the contract was
bidded out. It is not very difficult to see that the changes in the 1997
Concession Agreement translate to direct and concrete financial
advantages for PIATCO which were not available at the time the contract was
offered for bidding. It cannot be denied that under the 1997 Concession
Agreement only "Public Utility Revenues" are subject to MIAA regulation.
Adjustments of all other fees imposed and collected by PIATCO are entirely
within its control. Moreover, with respect to terminal fees, under the 1997
Concession Agreement, the same is further subject to "Interim Adjustments"
not previously stipulated in the draft Concession Agreement. Finally, the
change in the currency stipulated for "Public Utility Revenues" under the 1997
Concession Agreement, except terminal fees, gives PIATCO an added benefit
which was not available at the time of bidding.
b. Assumption by the
Government of the liabilities of
PIATCO in the event of the latter's
default thereof
Under the draft Concession Agreement, default by PIATCO of any of its
obligations to creditors who have provided, loaned or advanced funds for the
NAIA IPT III project does not result in the assumption by the Government of
these liabilities. In fact, nowhere in the said contract does default of PIATCO's
loans figure in the agreement. Such default does not directly result in any
concomitant right or obligation in favor of the Government.
However, the 1997 Concession Agreement provides:
Section 4.04 Assignment.
xxx xxx xxx
(b) In the event Concessionaire should default in the payment of an
Attendant Liability, and the default has resulted in the acceleration of
the payment due date of the Attendant Liability prior to its stated date
of maturity, the Unpaid Creditors and Concessionaire shall immediately
inform GRP in writing of such default. GRP shall, within one hundred
eighty (180) Days from receipt of the joint written notice of the Unpaid
Creditors and Concessionaire, either (i) take over the Development
Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid
Creditors, if qualified, to be substituted as concessionaire and operator
of the Development Facility in accordance with the terms and
conditions hereof, or designate a qualified operator acceptable to GRP
to operate the Development Facility, likewise under the terms and
conditions of this Agreement; Provided that if at the end of the 180-day
period GRP shall not have served the Unpaid Creditors and
Concessionaire written notice of its choice, GRP shall be deemed to
 have elected to take over the Development Facility with the
concomitant assumption of Attendant Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be
substituted as concessionaire, the latter shall form and organize a
concession company qualified to take over the operation of the
Development Facility. If the concession company should elect to
designate an operator for the Development Facility, the concession
company shall in good faith identify and designate a qualified operator
acceptable to GRP within one hundred eighty (180) days from receipt
of GRP's written notice. If the concession company, acting in good faith
and with due diligence, is unable to designate a qualified operator
within the aforesaid period, then GRP shall at the end of the 180-day
period take over the Development Facility and assume Attendant
Liabilities.
The term "Attendant Liabilities" under the 1997 Concession Agreement is
defined as:
Attendant Liabilities refer to all amounts recorded and from time to time
outstanding in the books of the Concessionaire as owing to Unpaid
Creditors who have provided, loaned or advanced funds actually
used for the Project, including all interests, penalties, associated
fees, charges, surcharges, indemnities, reimbursements and other
related expenses, and further including amounts owed by
Concessionaire to its suppliers, contractors and sub-contractors.
Under the above quoted portions of Section 4.04 in relation to the definition of
"Attendant Liabilities," default by PIATCO of its loans used to finance the
NAIA IPT III project triggers the occurrence of certain events that leads to
the assumption by the Government of the liability for the loans. Only in
one instance may the Government escape the assumption of PIATCO's
liabilities, i.e., when the Government so elects and allows a qualified operator
to take over as Concessionaire. However, this circumstance is dependent
on the existence and availability of a qualified operator who is willing to
take over the rights and obligations of PIATCO under the contract, a
circumstance that is not entirely within the control of the Government.
Without going into the validity of this provision at this juncture, suffice it to state
that Section 4.04 of the 1997 Concession Agreement may be considered a
form of security for the loans PIATCO has obtained to finance the project, an
option that was not made available in the draft Concession Agreement.
Section 4.04 is an important amendment to the 1997 Concession Agreement
because it grants PIATCO a financial advantage or benefit which was not
previously made available during the bidding process. This financial
advantage is a significant modification that translates to better terms and
conditions for PIATCO.
PIATCO, however, argues that the parties to the bidding procedure
acknowledge that the draft Concession Agreement is subject to amendment
because the Bid Documents permit financing or borrowing. They claim that it
was the lenders who proposed the amendments to the draft Concession
Agreement which resulted in the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT
Law to allow the project proponent or the winning bidder to obtain financing for
the project, especially in this case which involves the construction, operation
and maintenance of the NAIA IPT III. Expectedly, compliance by the project
proponent of its undertakings therein would involve a substantial amount of
investment. It is therefore inevitable for the awardee of the contract to seek
alternate sources of funds to support the project. Be that as it may, this Court
maintains that amendments to the contract bidded upon should always
conform to the general policy on public bidding if such procedure is to be
faithful to its real nature and purpose. By its very nature and characteristic,
competitive public bidding aims to protect the public interest by giving the
public the best possible advantages through open competition. 45 It has been
held that the three principles in public bidding are (1) the offer to the public; (2)
opportunity for competition; and (3) a basis for the exact comparison of bids. A
regulation of the matter which excludes any of these factors destroys the
distinctive character of the system and thwarts the purpose of its
adoption.46 These are the basic parameters which every awardee of a contract
bidded out must conform to, requirements of financing and borrowing
notwithstanding. Thus, upon a concrete showing that, as in this case, the
contract signed by the government and the contract-awardee is an entirely
different contract from the contract bidded, courts should not hesitate to strike
down said contract in its entirety for violation of public policy on public bidding.
A strict adherence on the principles, rules and regulations on public bidding
must be sustained if only to preserve the integrity and the faith of the general
public on the procedure.
Public bidding is a standard practice for procuring government contracts for
public service and for furnishing supplies and other materials. It aims to secure
for the government the lowest possible price under the most favorable terms
and conditions, to curtail favoritism in the award of government contracts and
avoid suspicion of anomalies and it places all bidders in equal footing. 47 Any
government action which permits any substantial variance between the
conditions under which the bids are invited and the contract executed
after the award thereof is a grave abuse of discretion amounting to lack
or excess of jurisdiction which warrants proper judicial action.
In view of the above discussion, the fact that the foregoing substantial
amendments were made on the 1997 Concession Agreement renders the
same null and void for being contrary to public policy. These amendments
convert the 1997 Concession Agreement to an entirely different
agreement from the contract bidded out or the draft Concession Agreement. It
is not difficult to see that the amendments on (1) the types of fees or charges
that are subject to MIAA regulation or control and the extent thereof and (2) the
assumption by the Government, under certain conditions, of the liabilities of
PIATCO directly translates concrete financial advantages to PIATCO that
were previously not available during the bidding process. These
amendments cannot be taken as merely supplements to or implementing
provisions of those already existing in the draft Concession Agreement. The
amendments discussed above present new terms and conditions which
provide financial benefit to PIATCO which may have altered the technical and
financial parameters of other bidders had they known that such terms were
available.
III
Direct Government Guarantee
Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997
Concession Agreement provides:
Section 4.04 Assignment
xxx xxx xxx
(b) In the event Concessionaire should default in the payment of an
Attendant Liability, and the default resulted in the acceleration of the
payment due date of the Attendant Liability prior to its stated date of
maturity, the Unpaid Creditors and Concessionaire shall immediately
inform GRP in writing of such default. GRP shall within one hundred
eighty (180) days from receipt of the joint written notice of the Unpaid
Creditors and Concessionaire, either (i) take over the Development
Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid
Creditors, if qualified to be substituted as concessionaire and operator
of the Development facility in accordance with the terms and conditions
hereof, or designate a qualified operator acceptable to GRP to operate
the Development Facility, likewise under the terms and conditions of
this Agreement; Provided, that if at the end of the 180-day period GRP
shall not have served the Unpaid Creditors and Concessionaire written
notice of its choice, GRP shall be deemed to have elected to take
over the Development Facility with the concomitant assumption
of Attendant Liabilities.
(c) If GRP, by written notice, allow the Unpaid Creditors to be
substituted as concessionaire, the latter shall form and organize a
concession company qualified to takeover the operation of the
Development Facility. If the concession company should elect to
designate an operator for the Development Facility, the concession
company shall in good faith identify and designate a qualified operator
acceptable to GRP within one hundred eighty (180) days from receipt
of GRP's written notice. If the concession company, acting in good faith
and with due diligence, is unable to designate a qualified operator
within the aforesaid period, then GRP shall at the end of the 180-day
period take over the Development Facility and assume Attendant
Liabilities.
….
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to
time outstanding in the books of the Concessionaire as owing to
Unpaid Creditors who have provided, loaned or advanced funds
actually used for the Project, including all interests, penalties,
associated fees, charges, surcharges, indemnities, reimbursements
and other related expenses, and further including amounts owed by
Concessionaire to its suppliers, contractors and sub-contractors.48
It is clear from the above-quoted provisions that Government, in the event
that PIATCO defaults in its loan obligations, is obligated to pay "all
amounts recorded and from time to time outstanding from the books" of
PIATCO which the latter owes to its creditors.49 These amounts include "all
interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses." 50 This obligation of the
Government to pay PIATCO's creditors upon PIATCO's default would arise if
the Government opts to take over NAIA IPT III. It should be noted, however,
that even if the Government chooses the second option, which is to allow
PIATCO's unpaid creditors operate NAIA IPT III, the Government is still at a
risk of being liable to PIATCO's creditors should the latter be unable to
designate a qualified operator within the prescribed period. 51 In
effect, whatever option the Government chooses to take in the event of
PIATCO's failure to fulfill its loan obligations, the Government is still at a
risk of assuming PIATCO's outstanding loans. This is due to the fact that
the Government would only be free from assuming PIATCO's debts if the
unpaid creditors would be able to designate a qualified operator within the
period provided for in the contract. Thus, the Government's assumption of
liability is virtually out of its control. The Government under the
circumstances provided for in the 1997 Concession Agreement is at the mercy
of the existence, availability and willingness of a qualified operator. The above
contractual provisions constitute a direct government guarantee which is
prohibited by law.
One of the main impetus for the enactment of the BOT Law is the lack of
government funds to construct the infrastructure and development projects
necessary for economic growth and development. This is why private sector
resources are being tapped in order to finance these projects. The BOT law
allows the private sector to participate, and is in fact encouraged to do so by
way of incentives, such as minimizing the unstable flow of returns,52 provided
that the government would not have to unnecessarily expend scarcely
available funds for the project itself. As such, direct guarantee, subsidy and
equity by the government in these projects are strictly prohibited. 53 This is but
logical for if the government would in the end still be at a risk of paying
the debts incurred by the private entity in the BOT projects, then the
purpose of the law is subverted.
Section 2(n) of the BOT Law defines direct guarantee as follows:
(n) Direct government guarantee — An agreement whereby the
government or any of its agencies or local government units assume
responsibility for the repayment of debt directly incurred by the
project proponent in implementing the project in case of a loan
default.
Clearly by providing that the Government "assumes" the attendant liabilities,
which consists of PIATCO's unpaid debts, the 1997 Concession Agreement
provided for a direct government guarantee for the debts incurred by PIATCO
in the implementation of the NAIA IPT III project. It is of no moment that the
relevant sections are subsumed under the title of "assignment". The provisions
providing for direct government guarantee which is prohibited by law is clear
from the terms thereof.
The fact that the ARCA superseded the 1997 Concession Agreement did not
cure this fatal defect. Article IV, Section 4.04(c), in relation to Article I, Section
1.06, of the ARCA provides:
Section 4.04 Security
xxx xxx xxx
(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate
in good faith and enter into direct agreement with the Senior
Lenders, or with an agent of such Senior Lenders (which agreement
shall be subject to the approval of the Bangko Sentral ng Pilipinas), in
such form as may be reasonably acceptable to both GRP and Senior
Lenders, with regard, inter alia, to the following parameters:
xxx xxx xxx
(iv) If the Concessionaire [PIATCO] is in default under a
payment obligation owed to the Senior Lenders, and as a
result thereof the Senior Lenders have become entitled to
accelerate the Senior Loans, the Senior Lenders shall have the
right to notify GRP of the same, and without prejudice to any
other rights of the Senior Lenders or any Senior Lenders' agent
may have (including without limitation under security interests
granted in favor of the Senior Lenders), to either in good faith
identify and designate a nominee which is qualified under sub-
clause (viii)(y) below to operate the Development Facility [NAIA
Terminal 3] or transfer the Concessionaire's [PIATCO] rights
and obligations under this Agreement to a transferee which is
qualified under sub-clause (viii) below;
xxx xxx xxx
(vi) if the Senior Lenders, acting in good faith and using
reasonable efforts, are unable to designate a nominee or effect
a transfer in terms and conditions satisfactory to the Senior
Lenders within one hundred eighty (180) days after giving GRP
notice as referred to respectively in (iv) or (v) above, then GRP
 and the Senior Lenders shall endeavor in good faith to enter
into any other arrangement relating to the Development Facility
[NAIA Terminal 3] (other than a turnover of the Development
Facility [NAIA Terminal 3] to GRP) within the following one
hundred eighty (180) days. If no agreement relating to the
Development Facility [NAIA Terminal 3] is arrived at by GRP
and the Senior Lenders within the said 180-day period, then at
the end thereof the Development Facility [NAIA Terminal 3]
shall be transferred by the Concessionaire [PIATCO] to
GRP or its designee and GRP shall make a termination
payment to Concessionaire [PIATCO] equal to the
Appraised Value (as hereinafter defined) of the
Development Facility [NAIA Terminal 3] or the sum of the
Attendant Liabilities, if greater. Notwithstanding Section
8.01(c) hereof, this Agreement shall be deemed terminated
upon the transfer of the Development Facility [NAIA Terminal 3]
to GRP pursuant hereto;
xxx xxx xxx
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts in each case supported by
verifiable evidence from time to time owed or which may become
owing by Concessionaire [PIATCO] to Senior Lenders or any
other persons or entities who have provided, loaned, or advanced
funds or provided financial facilities to Concessionaire
[PIATCO] for the Project [NAIA Terminal 3], including, without
limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees,
charges and expenses of any agents or trustees of such persons or
entities), whether payable at maturity, by acceleration or otherwise,
and further including amounts owed by Concessionaire [PIATCO] to its
professional consultants and advisers, suppliers, contractors and sub-
contractors.54
It is clear from the foregoing contractual provisions that in the event that
PIATCO fails to fulfill its loan obligations to its Senior Lenders, the Government
is obligated to directly negotiate and enter into an agreement relating to NAIA
IPT III with the Senior Lenders, should the latter fail to appoint a qualified
nominee or transferee who will take the place of PIATCO. If the Senior
Lenders and the Government are unable to enter into an agreement after the
prescribed period, the Government must then pay PIATCO, upon transfer of
NAIA IPT III to the Government, termination payment equal to the appraised
value of the project or the value of the attendant liabilities whichever is
greater. Attendant liabilities as defined in the ARCA includes all amounts
owed or thereafter may be owed by PIATCO not only to the Senior Lenders
with whom PIATCO has defaulted in its loan obligations but to all other
persons who may have loaned, advanced funds or provided any other type of
financial facilities to PIATCO for NAIA IPT III. The amount of PIATCO's debt
that the Government would have to pay as a result of PIATCO's default in its
loan obligations -- in case no qualified nominee or transferee is appointed by
the Senior Lenders and no other agreement relating to NAIA IPT III has been
reached between the Government and the Senior Lenders -- includes, but is
not limited to, "all principal, interest, associated fees, charges,
reimbursements, and other related expenses . . . whether payable at maturity,
by acceleration or otherwise."55
It is clear from the foregoing that the ARCA provides for a direct
guarantee by the government to pay PIATCO's loans not only to its
Senior Lenders but all other entities who provided PIATCO funds or
services upon PIATCO's default in its loan obligation with its Senior
Lenders. The fact that the Government's obligation to pay PIATCO's lenders
for the latter's obligation would only arise after the Senior Lenders fail to
appoint a qualified nominee or transferee does not detract from the fact that,
should the conditions as stated in the contract occur, the ARCA still obligates
the Government to pay any and all amounts owed by PIATCO to its lenders in
connection with NAIA IPT III. Worse, the conditions that would make the
Government liable for PIATCO's debts is triggered by PIATCO's own default of
its loan obligations to its Senior Lenders to which loan contracts the
Government was never a party to. The Government was not even given an
option as to what course of action it should take in case PIATCO defaulted in
the payment of its senior loans. The Government, upon PIATCO's default,
would be merely notified by the Senior Lenders of the same and it is the Senior
Lenders who are authorized to appoint a qualified nominee or transferee.
Should the Senior Lenders fail to make such an appointment, the Government
is then automatically obligated to "directly deal and negotiate" with the Senior
Lenders regarding NAIA IPT III. The only way the Government would not be
liable for PIATCO's debt is for a qualified nominee or transferee to be
appointed in place of PIATCO to continue the construction, operation and
maintenance of NAIA IPT III. This "pre-condition", however, will not take the
contract out of the ambit of a direct guarantee by the government as the
existence, availability and willingness of a qualified nominee or transferee is
totally out of the government's control. As such the Government is virtually
at the mercy of PIATCO (that it would not default on its loan obligations to its
Senior Lenders), the Senior Lenders (that they would appoint a qualified
nominee or transferee or agree to some other arrangement with the
Government) and the existence of a qualified nominee or transferee who is
able and willing to take the place of PIATCO in NAIA IPT III.
The proscription against government guarantee in any form is one of the
policy considerations behind the BOT Law. Clearly, in the present case, the
ARCA obligates the Government to pay for all loans, advances and obligations
arising out of financial facilities extended to PIATCO for the implementation of
the NAIA IPT III project should PIATCO default in its loan obligations to its
Senior Lenders and the latter fails to appoint a qualified nominee or transferee.
This in effect would make the Government liable for PIATCO's loans should
the conditions as set forth in the ARCA arise. This is a form of direct
government guarantee.
The BOT Law and its implementing rules provide that in order for an
unsolicited proposal for a BOT project may be accepted, the following
conditions must first be met: (1) the project involves a new concept in
technology and/or is not part of the list of priority projects, (2) no direct
government guarantee, subsidy or equity is required, and (3) the
government agency or local government unit has invited by publication other
interested parties to a public bidding and conducted the same. 56 The failure to
meet any of the above conditions will result in the denial of the proposal. It is
further provided that the presence of direct government guarantee, subsidy or
equity will "necessarily disqualify a proposal from being treated and accepted
as an unsolicited proposal."57 The BOT Law clearly and strictly prohibits direct
government guarantee, subsidy and equity in unsolicited proposals that the
mere inclusion of a provision to that effect is fatal and is sufficient to deny the
proposal. It stands to reason therefore that if a proposal can be denied by
reason of the existence of direct government guarantee, then its inclusion in
the contract executed after the said proposal has been accepted is likewise
sufficient to invalidate the contract itself. A prohibited provision, the inclusion of
which would result in the denial of a proposal cannot, and should not, be
allowed to later on be inserted in the contract resulting from the said proposal.
The basic rules of justice and fair play alone militate against such an
occurrence and must not, therefore, be countenanced particularly in this
instance where the government is exposed to the risk of shouldering hundreds
of million of dollars in debt.
This Court has long and consistently adhered to the legal maxim that those
that cannot be done directly cannot be done indirectly. 58 To declare the
PIATCO contracts valid despite the clear statutory prohibition against a
direct government guarantee would not only make a mockery of what the
BOT Law seeks to prevent -- which is to expose the government to the
risk of incurring a monetary obligation resulting from a contract of loan
between the project proponent and its lenders and to which the
Government is not a party to -- but would also render the BOT Law
useless for what it seeks to achieve –- to make use of the resources of
the private sector in the "financing, operation and maintenance of
infrastructure and development projects"59 which are necessary for
national growth and development but which the government,
unfortunately, could ill-afford to finance at this point in time.
IV
Temporary takeover of business affected with public interest
Article XII, Section 17 of the 1987 Constitution provides:
Section 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.
The above provision pertains to the right of the State in times of national
emergency, and in the exercise of its police power, to temporarily take over the
operation of any business affected with public interest. In the 1986
Constitutional Commission, the term "national emergency" was defined to
include threat from external aggression, calamities or national disasters, but
not strikes "unless it is of such proportion that would paralyze government
service."60 The duration of the emergency itself is the determining factor as to
how long the temporary takeover by the government would last. 61 The
temporary takeover by the government extends only to the operation of the
business and not to the ownership thereof. As such the government is not
required to compensate the private entity-owner of the said business as
there is no transfer of ownership, whether permanent or temporary. The
private entity-owner affected by the temporary takeover cannot, likewise, claim
just compensation for the use of the said business and its properties as the
temporary takeover by the government is in exercise of its police power and
not of its power of eminent domain.
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:
 Section 5.10 Temporary Take-over of operations by GRP. its exercise.65 Thus, requiring the government to pay reasonable compensation
for the reasonable use of the property pursuant to the operation of the
…. business contravenes the Constitution.

(c) In the event the development Facility or any part thereof and/or the V
operations of Concessionaire or any part thereof, become the subject
matter of or be included in any notice, notification, or declaration Regulation of Monopolies
concerning or relating to acquisition, seizure or appropriation by GRP
in times of war or national emergency, GRP shall, by written notice to A monopoly is "a privilege or peculiar advantage vested in one or more
Concessionaire, immediately take over the operations of the Terminal persons or companies, consisting in the exclusive right (or power) to carry on a
and/or the Terminal Complex. During such take over by GRP, the particular business or trade, manufacture a particular article, or control the sale
Concession Period shall be suspended; provided, that upon of a particular commodity."66 The 1987 Constitution strictly regulates
termination of war, hostilities or national emergency, the operations monopolies, whether private or public, and even provides for their prohibition
shall be returned to Concessionaire, at which time, the Concession if public interest so requires. Article XII, Section 19 of the 1987 Constitution
period shall commence to run again. Concessionaire shall be states:
entitled to reasonable compensation for the duration of the
temporary take over by GRP, which compensation shall take into Sec. 19. The state shall regulate or prohibit monopolies when the
account the reasonable cost for the use of the Terminal and/or public interest so requires. No combinations in restraint of trade or
Terminal Complex, (which is in the amount at least equal to the unfair competition shall be allowed.
debt service requirements of Concessionaire, if the temporary take
over should occur at the time when Concessionaire is still servicing
Clearly, monopolies are not per se prohibited by the Constitution but may be
debts owed to project lenders), any loss or damage to the
permitted to exist to aid the government in carrying on an enterprise or to aid in
Development Facility, and other consequential damages. If the parties
the performance of various services and functions in the interest of the
cannot agree on the reasonable compensation of Concessionaire, or
public.67 Nonetheless, a determination must first be made as to whether public
on the liability of GRP as aforesaid, the matter shall be resolved in
interest requires a monopoly. As monopolies are subject to abuses that can
accordance with Section 10.01 [Arbitration]. Any amount determined to
inflict severe prejudice to the public, they are subject to a higher level of State
be payable by GRP to Concessionaire shall be offset from the amount
regulation than an ordinary business undertaking.
next payable by Concessionaire to GRP.62
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the
PIATCO cannot, by mere contractual stipulation, contravene the
ARCA, is granted the "exclusive right to operate a commercial international
Constitutional provision on temporary government takeover and obligate
passenger terminal within the Island of Luzon" at the NAIA IPT III. 68 This is with
the government to pay "reasonable cost for the use of the Terminal
the exception of already existing international airports in Luzon such as those
and/or Terminal Complex."63 Article XII, section 17 of the 1987 Constitution
located in the Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark
envisions a situation wherein the exigencies of the times necessitate the
Special Economic Zone ("CSEZ") and in Laoag City.69 As such, upon
government to "temporarily take over or direct the operation of any privately
commencement of PIATCO's operation of NAIA IPT III, Terminals 1 and 2 of
owned public utility or business affected with public interest." It is the welfare
NAIA would cease to function as international passenger terminals. This,
and interest of the public which is the paramount consideration in determining
however, does not prevent MIAA to use Terminals 1 and 2 as domestic
whether or not to temporarily take over a particular business. Clearly, the State
passenger terminals or in any other manner as it may deem appropriate
in effecting the temporary takeover is exercising its police power. Police power
except those activities that would compete with NAIA IPT III in the latter's
is the "most essential, insistent, and illimitable of powers." 64 Its exercise
operation as an international passenger terminal. 70 The right granted to
therefore must not be unreasonably hampered nor its exercise be a source of
PIATCO to exclusively operate NAIA IPT III would be for a period of twenty-
obligation by the government in the absence of damage due to arbitrariness of
five (25) years from the In-Service Date71 and renewable for another twenty-
five (25) years at the option of the government. 72 Both the 1997 Concession
Agreement and the ARCA further provide that, in view of the exclusive
right granted to PIATCO, the concession contracts of the service
providers currently servicing Terminals 1 and 2 would no longer be
renewed and those concession contracts whose expiration are
subsequent to the In-Service Date would cease to be effective on the said
date.73
The operation of an international passenger airport terminal is no doubt an
undertaking imbued with public interest. In entering into a Build–Operate-and-
Transfer contract for the construction, operation and maintenance of NAIA IPT
III, the government has determined that public interest would be served better
if private sector resources were used in its construction and an exclusive right
to operate be granted to the private entity undertaking the said project, in this
case PIATCO. Nonetheless, the privilege given to PIATCO is subject to
reasonable regulation and supervision by the Government through the MIAA,
which is the government agency authorized to operate the NAIA complex, as
well as DOTC, the department to which MIAA is attached. 74
This is in accord with the Constitutional mandate that a monopoly which is not
prohibited must be regulated.75 While it is the declared policy of the BOT Law
to encourage private sector participation by "providing a climate of minimum
government regulations,"76 the same does not mean that Government must
completely surrender its sovereign power to protect public interest in the
operation of a public utility as a monopoly. The operation of said public utility
can not be done in an arbitrary manner to the detriment of the public which it
seeks to serve. The right granted to the public utility may be exclusive but the
exercise of the right cannot run riot. Thus, while PIATCO may be authorized to
exclusively operate NAIA IPT III as an international passenger terminal, the
Government, through the MIAA, has the right and the duty to ensure that it is
done in accord with public interest. PIATCO's right to operate NAIA IPT III
cannot also violate the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
3.01 Concession Period
xxx xxx xxx
(e) GRP confirms that certain concession agreements relative to
certain services and operations currently being undertaken at the
Ninoy Aquino International Airport passenger Terminal I have a
validity period extending beyond the In-Service Date. GRP through
DOTC/MIAA, confirms that these services and operations shall not
be carried over to the Terminal and the Concessionaire is under no
legal obligation to permit such carry-over except through a
separate agreement duly entered into with Concessionaire. In the
event Concessionaire becomes involved in any litigation initiated by
any such concessionaire or operator, GRP undertakes and hereby
holds Concessionaire free and harmless on full indemnity basis from
and against any loss and/or any liability resulting from any such
litigation, including the cost of litigation and the reasonable fees paid or
payable to Concessionaire's counsel of choice, all such amounts shall
be fully deductible by way of an offset from any amount which the
Concessionaire is bound to pay GRP under this Agreement.
During the oral arguments on December 10, 2002, the counsel for the
petitioners-in-intervention for G.R. No. 155001 stated that there are two
service providers whose contracts are still existing and whose validity
extends beyond the In-Service Date. One contract remains valid until
2008 and the other until 2010.77
We hold that while the service providers presently operating at NAIA Terminal
1 do not have an absolute right for the renewal or the extension of their
respective contracts, those contracts whose duration extends beyond NAIA
IPT III's In-Service-Date should not be unduly prejudiced. These contracts
must be respected not just by the parties thereto but also by third parties.
PIATCO cannot, by law and certainly not by contract, render a valid and
binding contract nugatory. PIATCO, by the mere expedient of claiming an
exclusive right to operate, cannot require the Government to break its
contractual obligations to the service providers. In contrast to the arrastre and
stevedoring service providers in the case of Anglo-Fil Trading Corporation v.
Lazaro78 whose contracts consist of temporary hold-over permits, the affected
service providers in the cases at bar, have a valid and binding contract with the
Government, through MIAA, whose period of effectivity, as well as the other
terms and conditions thereof, cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public interest.
The provisions of the 1997 Concession Agreement and the ARCA did not strip
government, thru the MIAA, of its right to supervise the operation of the whole
NAIA complex, including NAIA IPT III. As the primary government agency
tasked with the job,79 it is MIAA's responsibility to ensure that whoever by
contract is given the right to operate NAIA IPT III will do so within the bounds
of the law and with due regard to the rights of third parties and above all, the
interest of the public.
VI
CONCLUSION
In sum, this Court rules that in view of the absence of the requisite financial
capacity of the Paircargo Consortium, predecessor of respondent PIATCO, the
award by the PBAC of the contract for the construction, operation and
maintenance of the NAIA IPT III is null and void. Further, considering that the
1997 Concession Agreement contains material and substantial amendments,
which amendments had the effect of converting the 1997 Concession
Agreement into an entirely different agreement from the contract bidded upon,
the 1997 Concession Agreement is similarly null and void for being contrary to
public policy. The provisions under Sections 4.04(b) and (c) in relation to
Section 1.06 of the 1997 Concession Agreement and Section 4.04(c) in
relation to Section 1.06 of the ARCA, which constitute a direct government
guarantee expressly prohibited by, among others, the BOT Law and its
Implementing Rules and Regulations are also null and void. The Supplements,
being accessory contracts to the ARCA, are likewise null and void.
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated
Concession Agreement and the Supplements thereto are set aside for being
null and void.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Ynares-Santiago, Sandoval-Gutierrez, Austria-
Martinez, Corona, and Carpio-Morales, JJ., concur.
Vitug, J., see separate (dissenting) opinion.
Panganiban, J., please see separate opinion.
Quisumbing, J., no jurisdiction, please see separate opinion of J. Vitug in
which he concurs.
Carpio, J., no part.
Callejo, Sr., J., also concur in the separate opinion of J. Panganiban.
Azcuna, J., joins the separate opinion of J. Vitug.
SEPARATE OPINIONS
VITUG, J.:
This Court is bereft of jurisdiction to hear the petitions at bar. The Constitution
provides that the Supreme Court shall exercise original jurisdiction over,
among other actual controversies, petitions for certiorari, prohibition,
mandamus, quo warranto, and habeas corpus.1 The cases in question,
although denominated to be petitions for prohibition, actually pray for the
nullification of the PIATCO contracts and to restrain respondents from
implementing said agreements for being illegal and unconstitutional.
Section 2, Rule 65 of the Rules of Court states:
"When the proceedings of any tribunal, corporation, board, officer or
person, whether exercising judicial, quasi-judicial or ministerial
functions, are without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered commanding the respondent to
desist from further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs as law and justice
may require."
The rule is explicit. A petition for prohibition may be filed against a tribunal,
corporation, board, officer or person, exercising judicial, quasi-judicial or
ministerial functions. What the petitions seek from respondents do not involve
judicial, quasi-judicial or ministerial functions. In prohibition, only legal issues
affecting the jurisdiction of the tribunal, board or officer involved may be
resolved on the basis of undisputed facts.2 The parties allege, respectively,
contentious evidentiary facts. It would be difficult, if not anomalous, to decide
the jurisdictional issue on the basis of the contradictory factual submissions
made by the parties.3 As the Court has so often exhorted, it is not a trier of
facts.
The petitions, in effect, are in the nature of actions for declaratory relief under
Rule 63 of the Rules of Court. The Rules provide that any person interested
under a contract 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. 4 The
Supreme Court assumes no jurisdiction over petitions for declaratory relief
which are cognizable by regional trial courts.5
As I have so expressed in Tolentino vs. Secretary of Finance,6 reiterated in
Santiago vs. Guingona, Jr.7 , the Supreme Court should not be thought of as
having been tasked with the awesome responsibility of overseeing the entire
bureaucracy. Pervasive and limitless, such as it may seem to be under the
1987 Constitution, judicial power still succumbs to the paramount doctrine of
separation of powers. The Court may not at good liberty intrude, in the guise of
sovereign imprimatur, into every affair of government. What significance can
still then remain of the time-honored and widely acclaimed principle of
separation of powers if, at every turn, the Court allows itself to pass upon at
will the disposition of a co-equal, independent and coordinate branch in our
system of government. I dread to think of the so varied uncertainties that such
an undue interference can lead to.
Accordingly, I vote for the dismissal of the petition.
Quisumbing, and Azcuna, JJ., concur.
PANGANIBAN, J.:
The five contracts for the construction and the operation of Ninoy Aquino
International Airport (NAIA) Terminal III, the subject of the consolidated
Petitions before the Court, are replete with outright violations of law, public
policy and the Constitution. The only proper thing to do is declare them all null
and void ab initio and let the chips fall where they may. Fiat iustitia ruat
coelum.
The facts leading to this controversy are already well presented in
the ponencia. I shall not burden the readers with a retelling thereof. Instead, I
will cut to the chase and directly address the two sets of gut issues:
1. The first issue is procedural: Does the Supreme Court have original
jurisdiction to hear and decide the Petitions? Corollarily, do petitioners have
locus standi and should this Court decide the cases without any mandatory
referral to arbitration?
2. The second one is substantive in character: Did the subject contracts violate
the Constitution, the laws, and public policy to such an extent as to render all
of them void and inexistent?
My answer to all the above questions is a firm "Yes."
The Procedural Issue:
Jurisdiction, Standing and Arbitration
Definitely and surely, the issues involved in these Petitions are clearly of
transcendental importance and of national interest. The subject contracts
pertain to the construction and the operation of the country's premiere
international airport terminal - an ultramodern world-class public utility that will
play a major role in the country's economic development and serve to project a
positive image of our country abroad. The five build-operate-&-transfer (BOT)
contracts, while entailing the investment of billions of pesos in capital and the
availment of several hundred millions of dollars in loans, contain provisions
that tend to establish a monopoly, require the disbursements of public funds
sans appropriations, and provide government guarantees in violation of
statutory prohibitions, as well as other provisions equally offensive to law,
public policy and the Constitution. Public interest will inevitably be affected
thereby.
Thus, objections to these Petitions, grounded upon (a) the hierarchy of courts,
(b) the need for arbitration prior to court action, and (c) the alleged lack of
sufficient personality, standing or interest, being in the main procedural
matters, must now be set aside, as they have been in past cases. This Court
must be permitted to perform its constitutional duty of determining whether the
other agencies of government have acted within the limits of the Constitution
and the laws, or if they have gravely abused the discretion entrusted to them. 1
Hierarchy of Courts
The Court has, in the past, held that questions relating to gargantuan
government contracts ought to be settled without delay. 2 This holding applies
with greater force to the instant cases. Respondent Piatco is partly correct in
averring that petitioners can obtain relief from the regional trial courts via an
action to annul the contracts.
Nevertheless, the unavoidable consequence of having to await the rendition
and the finality of any such judgment would be a prolonged state of uncertainty
that would be prejudicial to the nation, the parties and the general public. And,
in light of the feared loss of jobs of the petitioning workers, consequent to the
inevitable pretermination of contracts of the petitioning service providers that
will follow upon the heels of the impending opening of NAIA Terminal III, the
need for relief is patently urgent, and therefore, direct resort to this Court
through the special civil action of prohibition is thus justified. 3
Contrary to Piatco's argument that the resolution of the issues raised in the
Petitions will require delving into factual questions, 4 I submit that their
disposition ultimately turns on questions of law. 5 Further, many of the
significant and relevant factual questions can be easily addressed by an
examination of the documents submitted by the parties. In any event, the
Petitions raise some novel questions involving the application of the amended
BOT Law, which this Court has seen fit to tackle.
Arbitration
Should the dispute be referred to arbitration prior to judicial recourse?
Respondent Piatco claims that Section 10.02 of the Amended and Restated
Concession Agreement (ARCA) provides for arbitration under the auspices of
the International Chamber of Commerce to settle any dispute or controversy or
claim arising in connection with the Concession Agreement, its amendments
and supplements. The government disagrees, however, insisting that there
can be no arbitration based on Section 10.02 of the ARCA, since all the Piatco
contracts are void ab initio. Therefore, all contractual provisions, including
Section 10.02 of the ARCA, are likewise void, inexistent and inoperative. To
support its stand, the government cites Chavez v. Presidential Commission on
Good Government:6 "The void agreement will not be rendered operative by the
parties' alleged performance (partial or full) of their respective prestations. A
contract that violates the Constitution and the law is null and void ab initio and
vests no rights and creates no obligations. It produces no legal effect at all."
As will be discussed at length later, the Piatco contracts are indeed void in
their entirety; thus, a resort to the aforesaid provision on arbitration is
unavailing. Besides, petitioners and petitioners-in-intervention have pointed out
that, even granting arguendo that the arbitration clause remained a valid
provision, it still cannot bind them inasmuch as they are not parties to the
Piatco contracts. And in the final analysis, it is unarguable that the arbitration
process provided for under Section 10.02 of the ARCA, to be undertaken by a
panel of three (3) arbitrators appointed in accordance with the Rules of
Arbitration of the International Chamber of Commerce, will not be able to
address, determine and definitively resolve the constitutional and legal
questions that have been raised in the Petitions before us.
Locus Standi
Given this Court's previous decisions in cases of similar import, no one will
seriously doubt that, being taxpayers and members of the House of
Representatives, Petitioners Baterina et al. have locus standi to bring the
Petition in GR No. 155547. In Albano v. Reyes,7 this Court held that the
petitioner therein, suing as a citizen, taxpayer and member of the House of
Representatives, was sufficiently clothed with standing to bring the suit
questioning the validity of the assailed contract. The Court cited the fact that
public interest was involved, in view of the important role of the Manila
International Container Terminal (MICT) in the country's economic
development and the magnitude of the financial consideration. This,
notwithstanding the fact that expenditure of public funds was not required
under the assailed contract.
In the cases presently under consideration, petitioners' personal and
substantial interest in the controversy is shown by the fact that certain
provisions in the Piatco contracts create obligations on the part of government
(through the DOTC and the MIAA) to disburse public funds without prior
congressional appropriations.
Petitioners thus correctly assert that the injury to them has a twofold aspect:
(1) they are adversely affected as taxpayers on account of the illegal
disbursement of public funds; and (2) they are prejudiced qua legislators, since
the contractual provisions requiring the government to incur expenditures
without appropriations also operate as limitations upon the exclusive power
and prerogative of Congress over the public purse. As members of the House
of Representatives, they are actually deprived of discretion insofar as the
inclusion of those items of expenditure in the budget is concerned. To prevent
such encroachment upon the legislative privilege and obviate injury to the
institution of which they are members, petitioners-legislators have locus standi
to bring suit.
Messrs. Agan et al. and Lopez et al., are likewise taxpayers and thus
possessed of standing to challenge the illegal disbursement of public funds.
Messrs. Agan et al., in particular, are employees (or representatives of
employees) of various service providers that have (1) existing concession
agreements with the MIAA to provide airport services necessary to the
operation of the NAIA and (2) service agreements to furnish essential support
services to the international airlines operating at the NAIA.
On the other hand, Messrs. Lopez et al. are employees of the MIAA. These
petitioners (Messrs. Agan et al. and Messrs. Lopez et al.) are confronted with
the prospect of being laid off from their jobs and losing their means of
livelihood when their employer-companies are forced to shut down or
otherwise retrench and cut back on manpower. Such development would
result from the imminent implementation of certain provisions in the contracts
that tend toward the creation of a monopoly in favor of Piatco, its subsidiaries
and related companies.
Petitioners-in-intervention are service providers in the business of furnishing
airport-related services to international airlines and passengers in the NAIA
and are therefore competitors of Piatco as far as that line of business is
concerned. On account of provisions in the Piatco contracts, petitioners-in-
intervention have to enter into a written contract with Piatco so as not to be
shut out of NAIA Terminal III and barred from doing business there. Since
there is no provision to ensure or safeguard free and fair competition, they are
literally at its mercy. They claim injury on account of their deprivation of
property (business) and of the liberty to contract, without due process of law.
And even if petitioners and petitioners-in-intervention were not sufficiently
clothed with legal standing, I have at the outset already established that, given
its impact on the public and on national interest, this controversy is laden with
transcendental importance and constitutional significance. Hence, I do not
hesitate to adopt the same position as was enunciated in Kilosbayan v.
Guingona Jr.8 that "in cases of transcendental importance, the Court may relax
the standing requirements and allow a suit to prosper even when there is no
direct injury to the party claiming the right of judicial review."9
The Substantive Issue:
Violations of the Constitution and the Laws
From the Outset, the Bidding Process Was Flawed and Tainted
After studying the documents submitted and arguments advanced by the
parties, I have no doubt that, right at the outset, Piatco was not qualified to
participate in the bidding process for the Terminal III project, but was
nevertheless permitted to do so. It even won the bidding and was helped along
by what appears to be a series of collusive and corrosive acts.
The build-operate-and-transfer (BOT) project for the NAIA Passenger Terminal
III comes under the category of an "unsolicited proposal," which is the subject
of Section 4-A of the BOT Law.10 The unsolicited proposal was originally
submitted by the Asia's Emerging Dragon Corporation (AEDC) to the
Department of Transportation and Communications (DOTC) and the Manila
International Airport Authority (MIAA), which reviewed and approved the
proposal.
The draft of the concession agreement as negotiated between AEDC and
DOTC/MIAA was endorsed to the National Economic Development Authority
(NEDA-ICC), which in turn reviewed it on the basis of its scope, economic
viability, financial indicators and risks; and thereafter approved it for bidding.
The DOTC/MIAA then prepared the Bid Documents, incorporating therein the
negotiated Draft Concession Agreement, and published invitations for public
bidding, i.e., for the submission of comparative or competitive proposals.
Piatco's predecessor-in-interest, the Paircargo Consortium, was the only
company that submitted a competitive bid or price challenge.
At this point, I must emphasize that the law requires the award of a BOT
project to the bidder that has satisfied the minimum requirements; and met the
technical, financial, organizational and legal standards provided in the BOT
Law. Section 5 of this statute states:
"Sec. 5. Public bidding of projects. - . . .
"In the case of a build-operate-and-transfer arrangement, the contract
shall be awarded to the bidder who, having satisfied the minimum
financial, technical, organizational and legal standards required
by this Act, has submitted the lowest bid and most favorable terms for
the project, based on the present value of its proposed tolls, fees,
rentals and charges over a fixed term for the facility to be constructed,
rehabilitated, operated and maintained according to the prescribed
minimum design and performance standards, plans and specifications.
. . ." (Emphasis supplied.)
The same provision requires that the price challenge via public bidding "must
be conducted under a two-envelope/two-stage system: the first envelope to
contain the technical proposal and the second envelope to contain the financial
proposal." Moreover, the 1994 Implementing Rules and Regulations (IRR)
provide that only those bidders that have passed the prequalification stage are
permitted to have their two envelopes reviewed.
In other words, prospective bidders must prequalify by submitting their
prequalification documents for evaluation; and only the pre-qualified bidders
would be entitled to have their bids opened, evaluated and appreciated. On the
other hand, disqualified bidders are to be informed of the reason for their
disqualification. This procedure was confirmed and reiterated in the Bid
Documents, which I quote thus: "Prequalified proponents will be considered
eligible to move to second stage technical proposal evaluation. The second
and third envelopes of pre-disqualified proponents will be returned."11
Aside from complying with the legal and technical requirements (track record
or experience of the firm and its key personnel), a project proponent desiring to
prequalify must also demonstrate its financial capacity to undertake the
project. To establish such capability, a proponent must prove that it is able to
raise the minimum amount of equity required for the project and to procure the
loans or financing needed for it. Section 5.4(c) of the 1994 IRR provides:
"Sec. 5.4. Prequalification Requirements. - To pre-qualify, a project
proponent must comply with the following requirements:
xxx xxx xxx
"c. Financial Capability. The project proponent must have adequate
capability to sustain the financing requirements for the detailed
engineering design, construction, and/or operation and maintenance
phases of the project, as the case may be. For purposes of
prequalification, this capability shall be measured in terms of: (i) proof
of the ability of the project proponent and/or the consortium to provide
a minimum amount of equity to the project, and (ii) a letter testimonial
from reputable banks attesting that the project proponent and/or
members of the consortium are banking with them, that they are in
good financial standing, and that they have adequate resources. The
government Agency/LGU concerned shall determine on a project-to-
project basis, and before prequalification, the minimum amount of
equity needed. . . . ." (Italics supplied)
Since the minimum amount of equity for the project was set at 30 percent 12 of
the minimum project cost of US$350 million, the minimum amount of equity
required of any proponent stood at US$105 million. Converted to pesos at the
exchange rate then of P26.239 to US$1.00 (as quoted by the Bangko Sentral
ng Pilipinas), the peso equivalent of the minimum equity was P2,755,095,000.
However, the combined equity or net worth of the Paircargo consortium stood
at only P558,384,871.55.13 This amount was only slightly over 6 percent of the
minimum project cost and very much short of the required minimum equity,
which was equivalent to 30 percent of the project cost. Such deficiency should
have immediately caused the disqualification of the Paircargo consortium. This
matter was brought to the attention of the Prequalification and Bidding
Committee (PBAC).
Notwithstanding the glaring deficiency, DOTC Undersecretary Primitivo C. Cal,
concurrent chair of the PBAC, declared in a Memorandum dated 14 October
1996 that "the Challenger (Paircargo consortium) was found to have a
combined net worth of P3,926,421,242.00 that could support a project costing
approximately P13 billion." To justify his conclusion, he asserted: "It is not a
requirement that the networth must be `unrestricted'. To impose this as a
requirement now will be nothing less than unfair."
He further opined, "(T)he networth reflected in the Financial Statement should
not be taken as the amount of money to be used to answer the required thirty
(30%) percent equity of the challenger but rather to be used in establishing if
there is enough basis to believe that the challenger can comply with the
required 30% equity. In fact, proof of sufficient equity is required as one of the
conditions for award of contract (Sec. 12.1 of IRR of the BOT Law) but not for
prequalification (Sec. 5.4 of same document)."
On the basis of the foregoing dubious declaration, the Paircargo consortium
was deemed prequalified and thus permitted to proceed to the other stages of
the bidding process.
By virtue of the prequalified status conferred upon the Paircargo,
Undersecretary Cal's findings in effect relieved the consortium of the need to
comply with the financial capability requirement imposed by the BOT Law and
IRR. This position is unmistakably and squarely at odds with the Supreme
Court's consistent doctrine emphasizing the strict application of pertinent rules,
regulations and guidelines for the public bidding process, in order to place
each bidder - actual or potential - on the same footing. Thus, it is unarguably
irregular and contrary to the very concept of public bidding to permit a variance
between the conditions under which bids are invited and those under which
proposals are submitted and approved.
Republic v. Capulong,14 teaches that if one bidder is relieved from having to
conform to the conditions that impose some duty upon it, that bidder is not
contracting in fair competition with those bidders that propose to be bound by
all conditions. The essence of public bidding is, after all, an opportunity for fair
competition and a basis for the precise comparison of bids.15 Thus, each
bidder must bid under the same conditions; and be subject to the same
guidelines, requirements and limitations. The desired result is to be able to
determine the best offer or lowest bid, all things being equal.
Inasmuch as the Paircargo consortium did not possess the minimum equity
equivalent to 30 percent of the minimum project cost, it should not have been
prequalified or allowed to participate further in the bidding. The Prequalification
and Bidding Committee (PBAC) should therefore not have opened the two
envelopes of the consortium containing its technical and financial proposals;
required AEDC to match the consortium's bid; 16 or awarded the Concession
Agreement to the consortium's successor-in-interest, Piatco.
As there was effectively no public bidding to speak of, the entire bidding
process having been flawed and tainted from the very outset, therefore, the
award of the concession to Paircargo's successor Piatco was void, and the
Concession Agreement executed with the latter was likewise void ab initio. For
this reason, Piatco cannot and should not be allowed to benefit from that
Agreement.17
AEDC Was Deprived of the Right to Match PIATCO's Price Challenge
In DOTC PBAC Bid Bulletin No. 4 (par. 3), Undersecretary Cal declared that,
for purposes of matching the price challenge of Piatco, AEDC as originator of
the unsolicited proposal would be permitted access only to the schedule of
proposed Annual Guaranteed Payments submitted by Piatco, and not to the
latter's financial and technical proposals that constituted the basis for the price
challenge in the first place. This was supposedly in keeping with Section 11.6
of the 1994 IRR, which provides that proprietary information is to be respected,
protected and treated with utmost confidentiality, and is therefore not to form
part of the bidding/tender and related documents.
This pronouncement, I believe, was a grievous misapplication of the
mentioned provision. The "proprietary information" referred to in Section 11.6
of the IRR pertains only to the proprietary information of the originator of an
unsolicited proposal, and not to those belonging to a challenger. The reason
for the protection accorded proprietary information at all is the fact that,
according to Section 4-A of the BOT Law as amended, a proposal qualifies as
an "unsolicited proposal" when it pertains to a project that involves "a new
concept or technology", and/or a project that is not on the government's list of
priority projects.
To be considered as utilizing a new concept or technology, a project must
involve the possession of exclusive rights (worldwide or regional) over a
process; or possession of intellectual property rights over a design,
methodology or engineering concept.18 Patently, the intent of the BOT Law is
to encourage individuals and groups to come up with creative innovations,
fresh ideas and new technology. Hence, the significance and necessity of
protecting proprietary information in connection with unsolicited proposals. And
to make the encouragement real, the law also extends to such individuals and
groups what amounts to a "right of first refusal" to undertake the project they
conceptualized, involving the use of new technology or concepts, through the
mechanism of matching a price challenge.
A competing bid is never just any figure conjured from out of the blue; it is
arrived at after studying economic, financial, technical and other, factors; it is
likewise based on certain assumptions as to the nature of the business, the
market potentials, the probable demand for the product or service, the future
behavior of cost items, political and other risks, and so on. It is thus self-
evident that in order to be able to intelligently match a bid or price challenge, a
bidder must be given access to the assumptions and the calculations that went
into crafting the competing bid.
In this instance, the financial and technical proposals of Piatco would have
provided AEDC with the necessary information to enable it to make a
reasonably informed matching bid. To put it more simply, a bidder unable to
access the competitor's assumptions will never figure out how the competing
bid came about; requiring him to "counter-propose" is like having him shoot at
a target in the dark while blindfolded.
By withholding from AEDC the challenger's financial and technical proposals
containing the critical information it needed, Undersecretary Cal actually and
effectively deprived AEDC of the ability to match the price challenge. One
could say that AEDC did not have the benefit of a "level playing field." It seems
to me, though, that AEDC was actually shut out of the game altogether.
At the end of the day, the bottom line is that the validity and the propriety of the
award to Piatco had been irreparably impaired.
Delayed Issuance of the Notice of Award Violated the BOT Law and the
IRR
Section 9.5 of the IRR requires that the Notice of Award must indicate the time
frame within which the winner of the bidding (and therefore the prospective
awardee) shall submit the prescribed performance security, proof of
commitment of equity contributions, and indications of sources of financing
(loans); and, in the case of joint ventures, an agreement showing that the
members are jointly and severally responsible for the obligations of the project
proponent under the contract.
The purpose of having a definite and firm timetable for the submission of the
aforementioned requirements is not only to prevent delays in the project
implementation, but also to expose and weed out unqualified proponents, who
might have unceremoniously slipped through the earlier prequalification
process, by compelling them to put their money where their mouths are, so to
speak.
Nevertheless, this provision can be easily circumvented by merely postponing
the actual issuance of the Notice of Award, in order to give the favored
proponent sufficient time to comply with the requirements. Hence, to avert or
minimize the manipulation of the post-bidding process, the IRR not only set out
the precise sequence of events occurring between the completion of the
evaluation of the technical bids and the issuance of the Notice of Award, but
also specified the timetables for each such event. Definite allowable
extensions of time were provided for, as were the consequences of a failure to
meet a particular deadline.
In particular, Section 9.1 of the 1994 IRR prescribed that within 30 calendar
days from the time the second-stage evaluation shall have been completed,
the Committee must come to a decision whether or not to award the contract
and, within 7 days therefrom, the Notice of Award must be approved by the
head of agency or local government unit (LGU) concerned, and its issuance
must follow within another 7 days thereafter.
Section 9.2 of the IRR set the procedure applicable to projects involving
substantial government undertakings as follows: Within 7 days after the
decision to award is made, the draft contract shall be submitted to the ICC for
clearance on a no-objection basis. If the draft contract includes government
undertakings already previously approved, then the submission shall be for
information only.
However, should there be additional or new provisions different from the
original government undertakings, the draft shall have to be reviewed and
approved. The ICC has 15 working days to act thereon, and unless otherwise
specified, its failure to act on the contract within the specified time frame
signifies that the agency or LGU may proceed with the award. The head of
agency or LGU shall approve the Notice of Award within seven days of the
clearance by the ICC on a no-objection basis, and the Notice itself has to be
issued within seven days thereafter.
The highly regulated time-frames within which the agents of government were
to act evinced the intent to impose upon them the duty to act expeditiously
throughout the process, to the end that the project be prosecuted and
implemented without delay. This regulated scenario was likewise intended to
discourage collusion and substantially reduce the opportunity for agents of
government to abuse their discretion in the course of the award process.
Despite the clear timetables set out in the IRR, several lengthy and still-
unexplained delays occurred in the award process, as can be observed from
the presentation made by the counsel for public respondents, 19 quoted
hereinbelow:
"11 Dec. 1996 - The Paircargo Joint Venture was informed by the
PBAC that AEDC failed to match and that negotiations preparatory to
Notice of Award should be commenced. This was the decision to
award that should have commenced the running of the 7-day period to
approve the Notice of Award, as per Section 9.1 of the IRR, or to
submit the draft contract to the ICC for approval conformably with
Section 9.2.
"01 April 1997 - The PBAC resolved that a copy of the final draft of the
Concession Agreement be submitted to the NEDA for clearance on a
no-objection basis. This resolution came more than 3 months too late
as it should have been made on the 20th of December 1996 at the
latest.
"16 April 1997 - The PBAC resolved that the period of signing the
Concession Agreement be extended by 15 days.
"18 April 1997 - NEDA approved the Concession Agreement. Again
this is more than 3 months too late as the NEDA's decision should
have been released on the 16th of January 1997 or fifteen days after it
should have been submitted to it for review.
"09 July 1997 - The Notice of Award was issued to PIATCO. Following
the provisions of the IRR, the Notice of Award should have been
issued fourteen days after NEDA's approval, or the 28th of January
1997. In any case, even if it were to be assumed that the release of
NEDA's approval on the 18th of April was timely, the Notice of Award
 should have been issued on the 9th of May 1997. In both cases,
therefore, the release of the Notice of Award occurred in a decidedly
less than timely fashion."
This chronology of events bespeaks an unmistakable disregard, if not disdain,
by the persons in charge of the award process for the time limitations
prescribed by the IRR. Their attitude flies in the face of this Court's solemn
pronouncement in Republic v. Capulong,20 that "strict observance of the rules,
regulations and guidelines of the bidding process is the only safeguard to a
fair, honest and competitive public bidding."
From the foregoing, the only conclusion that can possibly be drawn is that the
BOT law and its IRR were repeatedly violated with unmitigated impunity - and
by agents of government, no less! On account of such violation, the award of
the contract to Piatco, which undoubtedly gained time and benefited from the
delays, must be deemed null and void from the beginning.
Further Amendments Resulted in a Substantially Different Contract,
Awarded Without Public Bidding
But the violations and desecrations did not stop there. After the PBAC made its
decision on December 11, 1996 to award the contract to Piatco, the latter
negotiated changes to the Contract bidded out and ended up with what
amounts to a substantially new contract without any public bidding. This
Contract was subsequently further amended four more times through
negotiation and without any bidding. Thus, the contract actually executed
between Piatco and DOTC/MIAA on July 12, 1997 (the Concession Agreement
or "CA") differed from the contract bidded out (the draft concession agreement
or "DCA") in the following very significant respects:
1. The CA inserted stipulations creating a monopoly in favor of Piatco
in the business of providing airport-related services for international
airlines and passengers.21
2. The CA provided that government is to answer for Piatco's unpaid
loans and debts (lumped under the term Attendant Liabilities) in the
event Piatco fails to pay its senior lenders. 22
3. The CA provided that in case of termination of the contract due to
the fault of government, government shall pay all expenses that Piatco
incurred for the project plus the appraised value of the Terminal. 23
4. The CA imposed new and special obligations on government,
including delivery of clean possession of the site for the terminal;
acquisition of additional land at the government's expense for
construction of road networks required by Piatco's approved plans and
specifications; and assistance to Piatco in securing site utilities, as well
as all necessary permits, licenses and authorizations. 24
5. Where Section 3.02 of the DCA requires government to refrain from
competing with the contractor with respect to the operation of NAIA
Terminal III, Section 3.02(b) of the CA excludes and
prohibits everyone, including government, from directly or indirectly
competing with Piatco, with respect to the operation of, as well
as operations in, NAIA Terminal III. Operations in is sufficiently broad
to encompass all retail and other commercial business enterprises
operating within Terminal III, inclusive of the businesses of providing
various airport-related services to international airlines, within the
scope of the prohibition.
6. Under Section 6.01 of the DCA, the following fees are subject to the
written approval of MIAA: lease/rental charges, concession privilege
fees for passenger services, food services, transportation utility
concessions, groundhandling, catering and miscellaneous concession
fees, porterage fees, greeter/well-wisher fees, carpark fees, advertising
fees, VIP facilities fees and others. Moreover, adjustments to the
groundhandling fees, rentals and porterage fees are permitted only
once every two years and in accordance with a parametric formula, per
DCA Section 6.03. However, the CA as executed with Piatco provides
in Section 6.06 that all the aforesaid fees, rentals and charges may be
adjusted without MIAA's approval or intervention. Neither are the
adjustments to these fees and charges subject to or limited by any
parametric formula.25
7. Section 1.29 of the DCA provides that the terminal fees, aircraft
tacking fees, aircraft parking fees, check-in counter fees and other fees
are to be quoted and paid in Philippine pesos. But per Section 1.33 of
the CA, all the aforesaid fees save the terminal fee are denominated in
US Dollars.
8. Under Section 8.07 of the DCA, the term attendant liabilities refers
to liabilities pertinent to NAIA Terminal III, such as payment of lease
rentals and performance of other obligations under the Land Lease
Agreement; the obligations under the Tenant Agreements; and
 payment of all taxes, fees, charges and assessments of whatever kind
that may be imposed on NAIA Terminal III or parts thereof. But in
Section 1.06 of the CA, Attendant Liabilities refers to unpaid debts of
Piatco: "All amounts recorded and from time to time outstanding in the
books of (Piatco) as owing to Unpaid Creditors who have provided,
loaned or advanced funds actually used for the Project, including all
interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses, and further including
amounts owed by [Piatco] to its suppliers, contractors and
subcontractors."
9. Per Sections 8.04 and 8.06 of the DCA, government may,
on account of the contractors breach, rescind the contract and select
one of four options: (a) take over the terminal and assume all its
attendant liabilities; (b) allow the contractor's creditors to assign the
Project to another entity acceptable to DOTC/MIAA; (c) pay the
contractor rent for the facilities and equipment the DOTC may utilize; or
(d) purchase the terminal at a price established by independent
appraisers. Depending on the option selected, government may take
immediate possession and control of the terminal and its operations.
Government will be obligated to compensate the contractor for the
"equivalent or proportionate contract costs actually disbursed," but only
where government is the one in breach of the contract. But under
Section 8.06(a) of the CA, whether on account of Piatco's breach of
contract or its inability to pay its creditors, government is obliged to
either (a) take over Terminal III and assume all of Piatco's debts or (b)
permit the qualified unpaid creditors to be substituted in place of Piatco
or to designate a new operator. And in the event of government's
breach of contract, Piatco may compel it to purchase the terminal at
fair market value, per Section 8.06(b) of the CA.
10. Under the DCA, any delay by Piatco in the payment of the amounts
due the government constitutes breach of contract. However, under the
CA, such delay does not necessarily constitute breach of contract,
since Piatco is permitted to suspend payments to the government in
order to first satisfy the claims of its secured creditors, per Section
8.04(d) of the CA.
It goes without saying that the amendment of the Contract bidded out (the
DCA or draft concession agreement) - in such substantial manner, without any
public bidding, and after the bidding process had been concluded on
December 11, 1996 - is violative of public policy on public biddings, as well as
the spirit and intent of the BOT Law. The whole point of going through the
public bidding exercise was completely lost. Its very rationale was totally
subverted by permitting Piatco to amend the contract for which public bidding
had already been concluded. Competitive bidding aims to obtain the best deal
possible by fostering transparency and preventing favoritism, collusion and
fraud in the awarding of contracts. That is the reason why procedural rules
pertaining to public bidding demand strict observance. 26
In a relatively early case, Caltex v. Delgado Brothers,27 this Court made it clear
that substantive amendments to a contract for which a public bidding has
already been finished should only be awarded after another public bidding:
"The due execution of a contract after public bidding is a limitation
upon the right of the contracting parties to alter or amend it without
another public bidding, for otherwise what would a public bidding be
good for if after the execution of a contract after public bidding, the
contracting parties may alter or amend the contract, or even cancel it,
at their will? Public biddings are held for the protection of the public,
and to give the public the best possible advantages by means of open
competition between the bidders. He who bids or offers the best terms
is awarded the contract subject of the bid, and it is obvious that such
protection and best possible advantages to the public will disappear if
the parties to a contract executed after public bidding may alter or
amend it without another previous public bidding." 28
The aforementioned case dealt with the unauthorized amendment of a contract
executed after public bidding; in the situation before us, the amendments were
made also after the bidding, but prior to execution. Be that as it may, the same
rationale underlying Caltex applies to the present situation with equal force.
Allowing the winning bidder to renegotiate the contract for which the bidding
process has ended is tantamount to permitting it to put in anything it wants.
Here, the winning bidder (Piatco) did not even bother to wait until after actual
execution of the contract before rushing to amend it. Perhaps it believed that if
the changes were made to a contract already won through bidding (DCA)
instead of waiting until it is executed, the amendments would not be noticed or
discovered by the public.
In a later case, Mata v. San Diego,29 this Court reiterated its ruling as follows:
"It is true that modification of government contracts, after the same had
been awarded after a public bidding, is not allowed because such
modification serves to nullify the effects of the bidding and whatever
 advantages the Government had secured thereby and may also result
in manifest injustice to the other bidders. This prohibition, however,
refers to a change in vital and essential particulars of the agreement
which results in a substantially new contract."
Piatco's counter-argument may be summed up thus: There was nothing in the
1994 IRR that prohibited further negotiations and eventual amendments to the
DCA even after the bidding had been concluded. In fact, PBAC Bid Bulletin
No. 3 states: "[A]mendments to the Draft Concession Agreement shall be
issued from time to time. Said amendments will only cover items that would not
materially affect the preparation of the proponent's proposal."
I submit that accepting such warped argument will result in perverting the
policy underlying public bidding. The BOT Law cannot be said to allow the
negotiation of contractual stipulations resulting in a substantially new contract
after the bidding process and price challenge had been concluded. In fact, the
BOT Law, in recognition of the time, money and effort invested in an
unsolicited proposal, accords its originator the privilege of matching the
challenger's bid.
Section 4-A of the BOT Law specifically refers to a "lower price proposal" by a
competing bidder; and to the right of the original proponent "to match the price"
of the challenger. Thus, only the price proposals are in play. The terms,
conditions and stipulations in the contract for which public bidding has been
concluded are understood to remain intact and not be subject to further
negotiation. Otherwise, the very essence of public bidding will be destroyed -
there will be no basis for an exact comparison between bids.
Moreover, Piatco misinterpreted the meaning behind PBAC Bid Bulletin No. 3.
The phrase amendments . . . from time to time refers only to those
amendments to the draft concession agreement issued by the PBAC prior to
the submission of the price challenge; it certainly does not include or permit
amendments negotiated for and introduced after the bidding process, has
been terminated.
Piatco's Concession Agreement Was Further Amended, (ARCA) Again
Without Public Bidding
Not satisfied with the Concession Agreement, Piatco - once more without
bothering with public bidding - negotiated with government for still more
substantial changes. The result was the Amended and Restated Concession
Agreement (ARCA) executed on November 26, 1998. The following changes
were introduced:
1. The definition of Attendant Liabilities was further amended with the
result that the unpaid loans of Piatco, for which government may be
required to answer, are no longer limited to only those loans recorded
in Piatco's books or loans whose proceeds were actually used in the
Terminal III project.30
2. Although the contract may be terminated due to breach by Piatco, it
will not be liable to pay the government any Liquidated Damages if a
new operator is designated to take over the operation of the terminal. 31
3. The Liquidated Damages which government becomes liable for in
case of its breach of contract were substantially increased. 32
4. Government's right to appoint a comptroller for Piatco in case the
latter encounters liquidity problems was deleted. 33
5. Government is made liable for Incremental and Consequential Costs
and Losses in case it fails to comply or cause any third party under its
direct or indirect control to comply with the special obligations imposed
on government.34
6. The insurance policies obtained by Piatco covering the terminal are
now required to be assigned to the Senior Lenders as security for the
loans; previously, their proceeds were to be used to repair and
rehabilitate the facility in case of damage. 35
7. Government bound itself to set the initial rate of the terminal fee, to
be charged when Terminal III begins operations, at an amount higher
than US$20.36
8. Government waived its defense of the illegality of the contract and
even agreed to be liable to pay damages to Piatco in the event the
contract was declared illegal.37
9. Even though government may be entitled to terminate the ARCA on
account of breach by Piatco, government is still liable to pay Piatco the
appraised value of Terminal III or the Attendant Liabilities, if the
 termination occurs before the In-Service Date.38 This condition
contravenes the BOT Law provision on termination compensation.
10. Government is obligated to take the administrative action required
for Piatco's imposition, collection and application of all Public Utility
Revenues.39 No such obligation existed previously.
11. Government is now also obligated to perform and cause other
persons and entities under its direct or indirect control to perform all
acts necessary to perfect the security interests to be created in favor of
Piatco's Senior Lenders.40 No such obligation existed previously.
12. DOTC/MIAA's right of intervention in instances where Piatco's Non-
Public Utility Revenues become exorbitant or excessive has been
removed.41
13. The illegality and unenforceability of the ARCA or any of its
material provisions was made an event of default on the part of
government only, thus constituting a ground for Piatco to terminate the
ARCA.42
14. Amounts due from and payable by government under the contract
were made payable on demand - net of taxes, levies, imposts, duties,
charges or fees of any kind except as required by law. 43
15. The Parametric Formula in the contract, which is utilized to
compute for adjustments/increases to the public utility revenues (i.e.,
aircraft parking and tacking fees, check-in counter fee and terminal
fee), was revised to permit Piatco to input its more costly short-term
borrowing rates instead of the longer-terms rates in the computations
for adjustments, with the end result that the changes will redound to its
greater financial benefit.
16. The Certificate of Completion simply deleted the successful
performance-testing of the terminal facility in accordance with defined
performance standards as a pre-condition for government's
acceptance of the terminal facility.44
In sum, the foregoing revisions and amendments as embodied in the ARCA
constitute very material alterations of the terms and conditions of the CA, and
give further manifestly undue advantage to Piatco at the expense of
government. Piatco claims that the changes to the CA were necessitated by
the demands of its foreign lenders. However, no proof whatsoever has been
adduced to buttress this claim.
In any event, it is quite patent that the sum total of the aforementioned
changes resulted in drastically weakening the position of government to a
degree that seems quite excessive, even from the standpoint of a
businessperson who regularly transacts with banks and foreign lenders, is
familiar with their mind-set, and understands what motivates them. On the
other hand, whatever it was that impelled government officials concerned to
accede to those grossly disadvantageous changes, I can only hazard a guess.
There is no question in my mind that the ARCA was unauthorized and illegal
for lack of public bidding and for being patently disadvantageous to
government.
The Three Supplements Imposed New Obligations on Government, Also
Without Prior Public Bidding
After Piatco had managed to breach the protective rampart of public bidding, it
recklessly went on a rampage of further assaults on the ARCA.
The First Supplement Is as Void as the ARCA
In the First Supplement ("FS") executed on August 27, 1999, the following
changes were made to the ARCA:
1. The amounts payable by Piatco to government were reduced by
allowing additional exceptions to the Gross Revenues in which
government is supposed to participate.45
2. Made part of the properties which government is obliged to construct
and/or maintain and keep in good repair are (a) the access road
connecting Terminals II and III - the construction of this access road is
the obligation of Piatco, in lieu of its obligation to construct an Access
Tunnel connecting Terminals II and III; and (b) the taxilane and taxiway
- these are likewise part of Piatco's obligations, since they are part and
parcel of the project as described in Clause 1.3 of the Bid Documents
.46
3. The MIAA is obligated to provide funding for the maintenance and
repair of the airports and facilities owned or operated by it and by third
persons under its control. It will also be liable to Piatco for the latter's
losses, expenses and damages as well as liability to third persons, in
case MIAA fails to perform such obligations. In addition, MIAA will also
be liable for the incremental and consequential costs of the remedial
work done by Piatco on account of the former's default. 47
4. The FS also imposed on government ten (10) "Additional Special
Obligations," including the following:
(a) Working for the removal of the general aviation traffic from
the NAIA airport complex48
(b) Providing through MIAA the land required by Piatco for the
taxilane and one taxiway at no cost to Piatco49
(c) Implementing the government's existing storm drainage
master plan50
(d) Coordinating with DPWH the financing, the implementation
and the completion of the following works before the In-Service
Date: three left-turning overpasses (EDSA to Tramo St., Tramo
to Andrews Ave., and Manlunas Road to Sales Ave.); 51 and a
road upgrade and improvement program involving widening,
repair and resurfacing of Sales Road, Andrews Avenue and
Manlunas Road; improvement of Nichols Interchange; and
removal of squatters along Andrews Avenue.52
(e) Dealing directly with BCDA and the Phil. Air Force in
acquiring additional land or right of way for the road upgrade
and improvement program.53
5. Government is required to work for the immediate reversion to MIAA
of the Nayong Pilipino National Park.54
6. Government's share in the terminal fees collected was revised from
a flat rate of P180 to 36 percent thereof; together with government's
percentage share in the gross revenues of Piatco, the amount will be
remitted to government in pesos instead of US dollars. 55 This
amendment enables Piatco to benefit from the further erosion of the
peso-dollar exchange rate, while preventing government from building
up its foreign exchange reserves.
7. All payments from Piatco to government are now to be invoiced to
MIAA, and payments are to accrue to the latter's exclusive
benefit.56 This move appears to be in support of the funds MIAA
advanced to DPWH.
I must emphasize that the First Supplement is void in two respects. First, it is
merely an amendment to the ARCA, upon which it is wholly dependent;
therefore, since the ARCA is void, inexistent and not capable of being ratified
or amended, it follows that the FS too is void, inexistent and
inoperative. Second, even assuming arguendo that the ARCA is somehow
remotely valid, nonetheless the FS, in imposing significant new obligations
upon government, altered the fundamental terms and stipulations of the
ARCA, thus necessitating a public bidding all over again. That the FS was
entered into sans public bidding renders it utterly void and inoperative.
The Second Supplement Is Similarly Void and Inexistent
The Second Supplement ("SS") was executed between the government and
Piatco on September 4, 2000. It calls for Piatco, acting not as concessionaire
of NAIA Terminal III but as a public works contractor, to undertake - in the
government's stead - the clearing, removal, demolition and disposal of
improvements, subterranean obstructions and waste materials at the project
site.57
The scope of the works, the procedures involved, and the obligations of the
contractor are provided for in Parts II and III of the SS. Section 4.1 sets out the
compensation to be paid, listing specific rates per cubic meter of materials for
each phase of the work - excavation, leveling, removal and disposal, backfilling
and dewatering. The amounts collectible by Piatco are to be offset against the
Annual Guaranteed Payments it must pay government.
Though denominated as Second Supplement, it was nothing less than an
entirely new public works contract. Yet it, too, did not undergo any public
bidding, for which reason it is also void and inoperative.
Not surprisingly, Piatco had to subcontract the works to a certain Wintrack
Builders, a firm reputedly owned by a former high-ranking DOTC official. But
that is another story altogether.
The Third Supplement Is Likewise Void and Inexistent
The Third Supplement ("TS"), executed between the government and Piatco
on June 22, 2001, passed on to the government certain obligations of Piatco
as Terminal III concessionaire, with respect to the surface road connecting
Terminals II and III.
By way of background, at the inception of and forming part of the NAIA
Terminal III project was the proposed construction of an access tunnel
crossing Runway 13/31, which. would connect Terminal III to Terminal II. The
Bid Documents in Section 4.1.2.3[B][i] declared that the said access tunnel
was subject to further negotiation; but for purposes of the bidding, the
proponent should submit a bid for it as well. Therefore, the tunnel was
supposed to be part and parcel of the Terminal III project.
However, in Section 5 of the First Supplement, the parties declared that the
access tunnel was not economically viable at that time. In lieu thereof, the
parties agreed that a surface access road (now called the T2-T3 Road) was to
be constructed by Piatco to connect the two terminals. Since it was plainly in
substitution of the tunnel, the surface road construction should likewise be
considered part and parcel of the same project, and therefore part of Piatco's
obligation as well. While the access tunnel was estimated to cost about P800
million, the surface road would have a price tag in the vicinity of about P100
million, thus producing significant savings for Piatco.
Yet, the Third Supplement, while confirming that Piatco would construct the
T2-T3 Road, nevertheless shifted to government some of the obligations
pertaining to the former, as follows:
1. Government is now obliged to remove at its own expense all
tenants, squatters, improvements and/or waste materials on the site
where the T2-T3 road is to be constructed.58 There was no similar
obligation on the part of government insofar as the access tunnel was
concerned.
2. Should government fail to carry out its obligation as above
described, Piatco may undertake it on government's behalf, subject to
the terms and conditions (including compensation payments) contained
in the Second Supplement.59
3. MIAA will answer for the operation, maintenance and repair of the
T2-T3 Road.60
The TS depends upon and is intended to supplement the ARCA as well as the
First Supplement, both of which are void and inexistent and not capable of
being ratified or amended. It follows that the TS is likewise void, inexistent and
inoperative. And even if, hypothetically speaking, both ARCA and FS are valid,
still, the Third Supplement - imposing as it does significant new obligations
upon government - would in effect alter the terms and stipulations of the ARCA
in material respects, thus necessitating another public bidding. Since the TS
was not subjected to public bidding, it is consequently utterly void as well. At
any rate, the TS created new monetary obligations on the part of government,
for which there were no prior appropriations. Hence it follows that the same is
void ab initio.
In patiently tracing the progress of the Piatco contracts from their inception up
to the present, I noted that the whole process was riddled with significant
lapses, if not outright irregularity and wholesale violations of law and public
policy. The rationale of beginning at the beginning, so to speak, will become
evident when the question of what to do with the five Piatco contracts is
discussed later on.
In the meantime, I shall take up specific, provisions or changes in the contracts
and highlight the more prominent objectionable features.
Government Directly Guarantees Piatco Debts
Certainly the most discussed provision in the parties' arguments is the one
creating an unauthorized, direct government guarantee of Piatco's obligations
in favor of the lenders.
Section 4-A of the BOT Law as amended states that unsolicited proposals,
such as the NAIA Terminal III Project, may be accepted by government
provided inter alia that no direct government guarantee, subsidy or equity is
required. In short, such guarantee is prohibited in unsolicited proposals.
Section 2(n) of the same legislation defines direct government guarantee as
"an agreement whereby the government or any of its agencies or local
government units (will) assume responsibility for the repayment of debt directly
incurred by the project proponent in implementing the project in case of a loan
default."
Both the CA and the ARCA have provisions that undeniably create such
prohibited government guarantee. Section 4.04 (c)(iv) to (vi) of the ARCA,
which is similar to Section 4.04 of the CA, provides thus:
 "(iv) that if Concessionaire is in default under a payment obligation
owed to the Senior Lenders, and as a result thereof the Senior Lenders
have become entitled to accelerate the Senior Loans, the Senior
Lenders shall have the right to notify GRP of the same . . .;
(v) . . . the Senior Lenders may after written notification to GRP,
transfer the Concessionaire's rights and obligations to a transferee . . .;
(vi) if the Senior Lenders . . . are unable to . . . effect a transfer . . .,
then GRP and the Senior Lenders shall endeavor . . . to enter into any
other arrangement relating to the Development Facility . . . If no
agreement relating to the Development Facility is arrived at by GRP
and the Senior Lenders within the said 180-day period, then at the end
thereof the Development Facility shall be transferred by the
Concessionaire to GRP or its designee and GRP shall make a
termination payment to Concessionaire equal to the Appraised Value
(as hereinafter defined) of the Development Facility or the sum of the
Attendant Liabilities, if greater. . . ."
In turn, the term Attendant Liabilities is defined in Section 1.06 of the ARCA as
follows:
"Attendant Liabilities refer to all amounts in each case supported by
verifiable evidence from time to time owed or which may become,
owing by Concessionaire to Senior Lenders or any other persons or
entities who have provided, loaned or advanced funds or provided
financial facilities to Concessionaire for the Project, including, without
limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees,
charges and expenses of any agents or trustees of such persons or
entities), whether payable at maturity, by acceleration or otherwise,
and further including amounts owed by Concessionaire to its
professional consultants and advisers, suppliers, contractors and sub-
contractors."
Government's agreement to pay becomes effective in the event of a default by
Piatco on any of its loan obligations to the Senior Lenders, and the amount to
be paid by government is the greater of either the Appraised Value of Terminal
III or the aggregate amount of the moneys owed by Piatco - whether to the
Senior Lenders or to other entities, including its suppliers, contractors and
subcontractors. In effect, therefore, this agreement already constitutes the
prohibited assumption by government of responsibility for repayment of
Piatco's debts in case of a loan default. In fine, a direct government guarantee.
It matters not that there is a roundabout procedure prescribed by Section
4.04(c)(iv), (v) and (vi) that would require, first, an attempt (albeit unsuccessful)
by the Senior Lenders to transfer Piatco's rights to a transferee of their choice;
and, second, an effort (equally unsuccessful) to "enter into any other
arrangement" with the government regarding the Terminal III facility, before
government is required to make good on its guarantee. What is abundantly
clear is the fact that, in the devious labyrinthine process detailed in the
aforesaid section, it is entirely within the Senior Lenders' power, prerogative
and control - exercisable via a mere refusal or inability to agree upon "a
transferee" or "any other arrangement" regarding the terminal facility - to push
the process forward to the ultimate contractual cul-de-sac, wherein
government will be compelled to abjectly surrender and make good on its
guarantee of payment.
Piatco also argues that there is no proviso requiring government to pay the
Senior Lenders in the event of Piatco's default. This is literally true, in the
sense that Section 4.04(c)(vi) of ARCA speaks of government making the
termination payment to Piatco, not to the lenders. However, it is almost a
certainty that the Senior Lenders will already have made Piatco sign over to
them, ahead of time, its right to receive such payments from government;
and/or they may already have had themselves appointed its attorneys-in-fact
for the purpose of collecting and receiving such payments.
Nevertheless, as petitioners-in-intervention pointed out in their
Memorandum,61 the termination payment is to be made to Piatco, not to the
lenders; and there is no provision anywhere in the contract documents to
prevent it from diverting the proceeds to its own benefit and/or to ensure that it
will necessarily use the same to pay off the Senior Lenders and other
creditors, in order to avert the foreclosure of the mortgage and other liens on
the terminal facility. Such deficiency puts the interests of government at great
risk. Indeed, if the unthinkable were to happen, government would be paying
several hundreds of millions of dollars, but the mortgage liens on the facility
may still be foreclosed by the Senior Lenders just the same.
Consequently, the Piatco contracts are also objectionable for grievously failing
to adequately protect government's interests. More accurately, the contracts
would consistently weaken and do away with protection of government
interests. As such, they are therefore grossly lopsided in favor of Piatco and/or
its Senior Lenders.
While on this subject, it is well to recall the earlier discussion regarding a
particularly noticeable alteration of the concept of "Attendant Liabilities." In
Section 1.06 of the CA defining the term, the Piatco debts to be assumed/paid
by government were qualified by the phrases recorded and from time to time
outstanding in the books of the Concessionaire and actually used for the
project. These phrases were eliminated from the ARCA's definition of
Attendant Liabilities.
Since no explanation has been forthcoming from Piatco as to the possible
justification for such a drastic change, the only conclusion, possible is that it
intends to have all of its debts covered by the guarantee, regardless of
whether or not they are disclosed in its books. This has particular reference to
those borrowings which were obtained in violation of the loan covenants
requiring Piatco to maintain a minimum 70:30 debt-to-equity ratio, and even if
the loan proceeds were not actually used for the project itself.
This point brings us back to the guarantee itself. In Section 4.04(c)(vi) of
ARCA, the amount which government has guaranteed to pay as termination
payment is the greater of either (i) the Appraised Value of the terminal facility
or (ii) the aggregate of the Attendant Liabilities. Given that the Attendant
Liabilities may include practically any Piatco debt under the sun, it is highly
conceivable that their sum may greatly exceed the appraised value of the
facility, and government may end up paying very much more than the real
worth of Terminal III. (So why did government have to bother with public
bidding anyway?)
In the final analysis, Section 4.04(c)(iv) to (vi) of the ARCA is diametrically at
odds with the spirit and the intent of the BOT Law. The law meant to mobilize
private resources (the private sector) to take on the burden and the risks of
financing the construction, operation and maintenance of relevant
infrastructure and development projects for the simple reason that government
is not in a position to do so. By the same token, government guarantee was
prohibited, since it would merely defeat the purpose and raison d'être of a
build-operate-and-transfer project to be undertaken by the private sector.
To the extent that the project proponent is able to obtain loans to fund the
project, those risks are shared between the project proponent on the one
hand, and its banks and other lenders on the other. But where the proponent
or its lenders manage to cajol or coerce the government into extending a
guarantee of payment of the loan obligations, the risks assumed by the lenders
are passed right back to government. I cannot understand why, in the instant
case, government cheerfully assented to re-assuming the risks of the project
when it gave the prohibited guarantee and thus simply negated the very
purpose of the BOT Law and the protection it gives the government.
Contract Termination Provisions in the Piatco Contracts Are Void
The BOT Law as amended provides for contract termination as follows:
"Sec. 7. Contract Termination. - In the event that a project is revoked,
cancelled or terminated by the government through no fault of the
project proponent or by mutual agreement, the Government shall
compensate the said project proponent for its actual expenses incurred
in the project plus a reasonable rate of return thereon not exceeding
that stated in the contract as of the date of such revocation,
cancellation or termination: Provided, That the interest of the
Government in this instances [sic] shall be duly insured with the
Government Service Insurance System or any other insurance entity
duly accredited by the Office of the Insurance Commissioner: Provided,
finally, That the cost of the insurance coverage shall be included in the
terms and conditions of the bidding referred to above.
"In the event that the government defaults on certain major obligations
in the contract and such failure is not remediable or if remediable shall
remain unremedied for an unreasonable length of time, the project
proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over
date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract."
The foregoing statutory provision in effect provides for the following limited
instances when termination compensation may be allowed:
1. Termination by the government through no fault of the project
proponent
2. Termination upon the parties' mutual agreement
3. Termination by the proponent due to government's default on certain
major contractual obligations
To emphasize, the law does not permit compensation for the project proponent
when contract termination is due to the proponent's own fault or breach of
contract.
This principle was clearly violated in the Piatco Contracts. The ARCA
stipulates that government is to pay termination compensation to Piatco even
when termination is initiated by government for the following causes:
"(i) Failure of Concessionaire to finish the Works in all material
respects in accordance with the Tender Design and the Timetable;
(ii) Commission by Concessionaire of a material breach of this
Agreement . . .;
(iii) . . . a change in control of Concessionaire arising from the sale,
assignment, transfer or other disposition of capital stock which results
in an ownership structure violative of statutory or constitutional
limitations;
(iv) A pattern of continuing or repeated non-compliance, willful
violation, or non-performance of other terms and conditions hereof
which is hereby deemed a material breach of this Agreement . . ."62
As if that were not bad enough, the ARCA also inserted into Section 8.01 the
phrase "Subject to Section 4.04." The effect of this insertion is that in those
instances where government may terminate the contract on account of Piatco's
breach, and it is nevertheless required under the ARCA to make termination
compensation to Piatco even though unauthorized by law, such compensation
is to be equivalent to the payment amount guaranteed by government - either
a) the Appraised Value of the terminal facility or (b) the aggregate of the
Attendant Liabilities, whichever amount is greater!
Clearly, this condition is not in line with Section 7 of the BOT Law. That
provision permits a project proponent to recover the actual expenses it
incurred in the prosecution of the project plus a reasonable rate of return not in
excess of that provided in the contract; or to be compensated for the
equivalent or proportionate contract cost as defined in the contract, in case the
government is in default on certain major contractual obligations.
Furthermore, in those instances where such termination compensation is
authorized by the BOT Law, it is indispensable that the interest of government
be duly insured. Section 5.08 the ARCA mandates insurance coverage for
the terminal facility; but all insurance policies are to be assigned, and all
proceeds are payable, to the Senior Lenders. In brief, the interest being
secured by such coverage is that of the Senior Lenders, not that of
government. This can hardly be considered compliance with law.
In essence, the ARCA provisions on termination compensation result in
another unauthorized government guarantee, this time in favor of Piatco.
A Prohibited Direct Government Subsidy, Which at the Same Time Is an
Assault on the National Honor
Still another contractual provision offensive to law and public policy is Section
8.01(d) of the ARCA, which is a "bolder and badder" version of Section 8.04(d)
of the CA.
It will be recalled that Section 4-A of the BOT Law as amended prohibits not
only direct government guarantees, but likewise a direct government
subsidy for unsolicited proposals. Section 13.2. b. iii. of the 1999 IRR defines
a direct government subsidy as encompassing "an agreement whereby the
Government . . . will . . . postpone any payments due from the proponent."
Despite the statutory ban, Section 8.01 (d) of the ARCA provides thus:
"(d) The provisions of Section 8.01(a) notwithstanding, and for the
purpose of preventing a disruption of the operations in the Terminal
and/or Terminal Complex, in the event that at any time Concessionaire
is of the reasonable opinion that it shall be unable to meet a payment
obligation owed to the Senior Lenders, Concessionaire shall give
prompt notice to GRP, through DOTC/MIAA and to the Senior Lenders.
In such circumstances, the Senior Lenders (or the Senior Lenders'
Representative) may ensure that after making provision for
administrative expenses and depreciation, the cash resources of
Concessionaire shall first be used and applied to meet all payment
obligations owed to the Senior Lenders. Any excess cash, after
meeting such payment obligations, shall be earmarked for the payment
of all sums payable by Concessionaire to GRP under this Agreement.
If by reason of the foregoing GRP should be unable to collect in full all
payments due to GRP under this Agreement, then the unpaid balance
shall be payable within a 90-day grace period counted from the
relevant due date, with interest per annum at the rate equal to the
average 91-day Treasury Bill Rate as of the auction date immediately
preceding the relevant due date. If payment is not effected by
 Concessionaire within the grace period, then a spread of five (5%)
percent over the applicable 91-day Treasury Bill Rate shall be added
on the unpaid amount commencing on the expiry of the grace period
up to the day of full payment. When the temporary illiquidity of
Concessionaire shall have been corrected and the cash position of
Concessionaire should indicate its ability to meet its maturing
obligations, then the provisions set forth under this Section 8.01(d)
shall cease to apply. The foregoing remedial measures shall be
applicable only while there remains unpaid and outstanding amounts
owed to the Senior Lenders." (Emphasis supplied)
By any manner of interpretation or application, Section 8.01(d) of the ARCA
clearly mandates the indefinite postponement of payment of all of Piatco's
obligations to the government, in order to ensure that Piatco's obligations to
the Senior Lenders are paid in full first. That is nothing more or less than the
direct government subsidy prohibited by the BOT Law and the IRR. The fact
that Piatco will pay interest on the unpaid amounts owed to government does
not change the situation or render the prohibited subsidy any less
unacceptable.
But beyond the clear violations of law, there are larger issues involved in the
ARCA. Earlier, I mentioned that Section 8.01(d) of the ARCA completely
eliminated the proviso in Section 8.04(d) of the CA which gave government the
right to appoint a financial controller to manage the cash position of Piatco
during situations of financial distress. Not only has government been deprived
of any means of monitoring and managing the situation; worse, as can be seen
from Section 8.01(d) above-quoted, the Senior Lenders have effectively locked
in on the right to exercise financial controllership over Piatco and to allocate its
cash resources to the payment of all amounts owed to the Senior Lenders
before allowing any payment to be made to government.
In brief, this particular provision of the ARCA has placed in the hands of
foreign lenders the power and the authority to determine how much (if at all)
and when the Philippine government (as grantor of the franchise) may be
allowed to receive from Piatco. In that situation, government will be at the
mercy of the foreign lenders. This is a situation completely contrary to the
rationale of the BOT Law and to public policy.
The aforesaid provision rouses mixed emotions - shame and disgust at
the parties' (especially the government officials') docile submission and
abject servitude and surrender to the imperious and excessive demands
of the foreign lenders, on the one hand; and vehement outrage at the
affront to the sovereignty of the Republic and to the national honor, on
the other. It is indeed time to put an end to such an unbearable,
dishonorable situation.
The Piatco Contracts Unarguably Violate Constitutional Injunctions
I will now discuss the manner in which the Piatco Contracts offended the
Constitution.
The Exclusive Right Granted to Piatco to Operate a Public Utility Is Prohibited
by the Constitution
While Section 2.02 of the ARCA spoke of granting to Piatco "a franchise to
operate and maintain the Terminal Complex," Section 3.02(a) of the same
ARCA granted to Piatco, for the entire term of the concession agreement,
"the exclusive right to operate a commercial international passenger terminal
within the Island of Luzon" with the exception of those three terminals already
existing63 at the time of execution of the ARCA.
Section 11 of Article XII of the Constitution prohibits the grant of a "franchise,
certificate, or any other form of authorization for the operation of a public utility"
that is "exclusive in character."
In its Opinion No. 078, Series of 1995, the Department of justice held that "the
NAIA Terminal III which . . . is a 'terminal for public use' is a public utility."
Consequently, the constitutional prohibition against the exclusivity of a
franchise applies to the franchise for the operation of NAIA Terminal III as well.
What was granted to Piatco was not merely a franchise, but an "exclusive
right" to operate an international passenger terminal within the "Island of
Luzon." What this grant effectively means is that the government is now
estopped from exercising its inherent power to award any other person another
franchise or a right to operate such a public utility, in the event public interest
in Luzon requires it. This restriction is highly detrimental to government and to
the public interest. Former Secretary of Justice Hernando B. Perez expressed
this point well in his Memorandum for the President dated 21 May 2002:
"Section 3.02 on 'Exclusivity'
"This provision gives to PIATCO (the Concessionaire) the exclusive
right to operate a commercial international airport within the Island of
 Luzon with the exception of those already existing at the time of the
execution of the Agreement, such as the airports at Subic, Clark and
Laoag City. In the case of the Clark International Airport, however, the
provision restricts its operation beyond its design capacity of 850,000
passengers per annum and the operation of new terminal facilities
therein until after the new NAIA Terminal III shall have consistently
reached or exceeded its design capacity of ten (10) million passenger
capacity per year for three (3) consecutive years during the concession
period.
"This is an onerous and disadvantageous provision. It effectively grants
PIATCO a monopoly in Luzon and ties the hands of government in the
matter of developing new airports which may be found expedient and
necessary in carrying out any future plan for an inter-modal
transportation system in Luzon.
"Additionally, it imposes an unreasonable restriction on the operation of
the Clark International Airport which could adversely affect the
operation and development of the Clark Special Economic Zone to the
economic prejudice of the local constituencies that are being benefited
by its operation." (Emphasis supplied)
While it cannot be gainsaid that an enterprise that is a public utility may
happen to constitute a monopoly on account of the very nature of its business
and the absence of competition, such a situation does not however constitute
justification to violate the constitutional prohibition and grant an exclusive
franchise or exclusive right to operate a public utility.
Piatco's contention that the Constitution does not actually prohibit monopolies
is beside the point. As correctly argued, 64 the existence of a monopoly by a
public utility is a situation created by circumstances that do not encourage
competition. This situation is different from the grant of a franchise to operate a
public utility, a privilege granted by government. Of course, the grant of a
franchise may result in a monopoly. But making such franchise exclusive is
what is expressly proscribed by the Constitution.
Actually, the aforementioned Section 3.02 of the ARCA more than just
guaranteed exclusivity; it also guaranteed that the government will not improve
or expand the facilities at Clark - and in fact is required to put a cap on the
latter's operations - until after Terminal III shall have been operated at or
beyond its peak capacity for three consecutive years.65 As counsel for public
respondents pointed out, in the real world where the rate of influx of
international passengers can fluctuate substantially from year to year, it may
take many years before Terminal III sees three consecutive years' operations
at peak capacity. The Diosdado Macapagal International Airport may thus end
up stagnating for a long time. Indeed, in order to ensure greater profits for
Piatco, the economic progress of a region has had to be sacrificed.
The Piatco Contracts Violate the Time Limitation on Franchises
Section 11 of Article XII of the Constitution also provides that "no franchise,
certificate or any other form of authorization for the operation of a public utility
shall be . . . for a longer period than fifty years." After all, a franchise held for
an unreasonably long time would likely give rise to the same evils as a
monopoly.
The Piatco Contracts have come up with an innovative way to circumvent the
prohibition and obtain an extension. This fact can be gleaned from Section
8.03(b) of the ARCA, which I quote thus:
"Sec. 8.03. Termination Procedure and Consequences of Termination.
-
a) x x x xxx xxx
b) In the event the Agreement is terminated pursuant to
Section 8.01 (b) hereof, Concessionaire shall be entitled to
collect the Liquidated Damages specified in Annex 'G'. The full
payment by GRP to Concessionaire of the Liquidated
Damages shall be a condition precedent to the transfer by
Concessionaire to GRP of the Development Facility. Prior to
the full payment of the Liquidated Damages, Concessionaire
shall to the extent practicable continue to operate the Terminal
and the Terminal Complex and shall be entitled to retain and
withhold all payments to GRP for the purpose of offsetting the
same against the Liquidated Damages. Upon full payment of
the Liquidated Damages, Concessionaire shall immediately
transfer the Development Facility to GRP on 'as-is-where-is'
basis."
The aforesaid easy payment scheme is less beneficial than it first appears.
Although it enables government to avoid having to make outright payment of
an obligation that will likely run into billions of pesos, this easy payment plan
will nevertheless cost government considerable loss of income, which it would
earn if it were to operate Terminal III by itself. Inasmuch as payments to the
concessionaire (Piatco) will be on "installment basis," interest charges on the
remaining unpaid balance would undoubtedly cause the total outstanding
balance to swell. Piatco would thus be entitled to remain in the driver's seat
and keep operating the terminal for an indefinite length of time.
The Contracts Create Two Monopolies for Piatco
By way of background, two monopolies were actually created by the Piatco
contracts. The first and more obvious one refers to the business of operating
an international passenger terminal in Luzon, the business end of which
involves providing international airlines with parking space for their aircraft, and
airline passengers with the use of departure and arrival areas, check-in
counters, information systems, conveyor systems, security equipment and
paraphernalia, immigrations and customs processing areas; and amenities
such as comfort rooms, restaurants and shops.
In furtherance of the first monopoly, the Piatco Contracts stipulate that the
NAIA Terminal III will be the only facility to be operated as an international
passenger terminal;66 that NAIA Terminals I and II will no longer be operated
as such;67 and that no one (including the government) will be allowed to
compete with Piatco in the operation of an international passenger terminal in
the NAIA Complex.68 Given that, at this time, the government and Piatco are
the only ones engaged in the business of operating an international passenger
terminal, I am not acutely concerned with this particular monopolistic situation.
There was however another monopoly within the NAIA created by the subject
contracts for Piatco - in the business of providing international airlines with the
following: groundhandling, in-flight catering, cargo handling, and aircraft repair
and maintenance services. These are lines of business activity in which are
engaged many service providers (including the petitioners-in-intervention), who
will be adversely affected upon full implementation of the Piatco Contracts,
particularly Sections 3.01(d)69 and (e)70 of both the ARCA and the CA.
On the one hand, Section 3.02(a) of the ARCA makes Terminal III the only
international passenger terminal at the NAIA, and therefore the only place
within the NAIA Complex where the business of providing airport-related
services to international airlines may be conducted. On the other hand, Section
3.01(d) of the ARCA requires government, through the MIAA, not to allow
service providers with expired MIAA contracts to renew or extend their
contracts to render airport-related services to airlines. Meanwhile, Section
3.01(e) of the ARCA requires government, through the DOTC and MIAA, not to
allow service providers - those with subsisting concession agreements for
services and operations being conducted at Terminal I - to carry over their
concession agreements, services and operations to Terminal III, unless they
first enter into a separate agreement with Piatco.
The aforementioned provisions vest in Piatco effective and exclusive control
over which service provider may and may not operate at Terminal III and
render the airport-related services needed by international airlines. It thereby
possesses the power to exclude competition. By necessary implication, it also
has effective control over the fees and charges that will be imposed and
collected by these service providers.
This intention is exceedingly clear in the declaration by Piatco that it is
"completely within its rights to exclude any party that it has not contracted with
from NAIA Terminal III."71
Worse, there is nothing whatsoever in the Piatco Contracts that can serve to
restrict, control or regulate the concessionaire's discretion and power to reject
any service provider and/or impose any term or condition it may see fit in any
contract it enters into with a service provider. In brief, there is no safeguard
whatsoever to ensure free and fair competition in the service-provider sector.
In the meantime, and not surprisingly, Piatco is first in line, ready to exploit the
unique business opportunity. It announced72 that it has accredited three
groundhandlers for Terminal III. Aside from the Philippine Airlines, the other
accredited entities are the Philippine Airport and Ground Services
Globeground, Inc. ("PAGSGlobeground") and the Orbit Air Systems, Inc.
("Orbit"). PAGSGlobeground is a wholly-owned subsidiary of the Philippine
Airport and Ground Services, Inc. or PAGS,73 while Orbit is a wholly-owned
subsidiary of Friendship Holdings, Inc.,74 which is in turn owned 80 percent by
PAGS.75 PAGS is a service provider owned 60 percent by the Cheng
Family;76 it is a stockholder of 35 percent of Piatco77 and is the latter's
designated contractor-operator for NAIA Terminal III.78
Such entry into and domination of the airport-related services sector appear to
be very much in line with the following provisions contained in the First
Addendum to the Piatco Shareholders Agreement, 79 executed on July 6, 1999,
which appear to constitute a sort of master plan to create a monopoly and
combinations in restraint of trade:
"11. The Shareholders shall ensure:
 a. x x x xxx x x x.;
b. That (Phil. Airport and Ground Services, Inc.) PAGS and/or its
designated Affiliates shall, at all times during the Concession Period,
be exclusively authorized by (PIATCO) to engage in the provision of
ground-handling, catering and fueling services within the Terminal
Complex.
c. That PAIRCARGO and/or its designated Affiliate shall, during the
Concession Period, be the only entities authorized to construct and
operate a warehouse for all cargo handling and related services within
the Site."
Precisely, proscribed by our Constitution are the monopoly and the restraint of
trade being fostered by the Piatco Contracts through the erection of barriers to
the entry of other service providers into Terminal III. In Tatad v. Secretary of
the Department of Energy,80 the Court ruled:
". . . [S]ection 19 of Article XII of the Constitution . . . mandates: 'The
State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition
shall be allowed.'
"A monopoly is a privilege or peculiar advantage vested in one or more
persons or companies, consisting in the exclusive right or power to
carry on a particular business or trade, manufacture a particular article,
or control the sale or the whole supply of a particular commodity. It is a
form of market structure in which one or only a few firms dominate the
total sales of a product or service. On the other hand, a combination in
restraint of trade is an agreement or understanding between two or
more persons, in the form of a contract, trust, pool, holding company,
or other form of association, for the purpose of unduly restricting
competition, monopolizing trade and commerce in a certain
commodity, controlling its production, distribution and price, or
otherwise interfering with freedom of trade without statutory authority.
Combination in restraint of trade refers to the means while monopoly
refers to the end.
"x x x xxx xxx
"Section 19, Article XII of our Constitution is anti-trust in history and in
spirit. It espouses competition. The desirability of competition is the
reason for the prohibition against restraint of trade, the reason for the
interdiction of unfair competition, and the reason for regulation of
unmitigated monopolies. Competition is thus the underlying principle of
[S]ection 19, Article XII of our Constitution, . . ."81
Gokongwei Jr. v. Securities and Exchange Commission82 elucidates the criteria
to be employed: "A 'monopoly' embraces any combination the tendency of
which is to prevent competition in the broad and general sense, or to control
prices to the detriment of the public. In short, it is the concentration of business
in the hands of a few. The material consideration in determining its existence is
not that prices are raised and competition actually excluded, but that power
exists to raise prices or exclude competition when desired."83 (Emphasis
supplied)
The Contracts Encourage Monopolistic Pricing, Too
Aside from creating a monopoly, the Piatco contracts also give the
concessionaire virtually limitless power over the charging of fees, rentals and
so forth. What little "oversight function" the government might be able and
minded to exercise is less than sufficient to protect the public interest, as can
be gleaned from the following provisions:
"Sec. 6.06. Adjustment of Non-Public Utility Fees and Charges
"For fees, rentals and charges constituting Non-Public Utility
Revenues, Concessionaire may make any adjustments it deems
appropriate without need for the consent of GRP or any government
agency subject to Sec. 6.03(c)."
Section 6.03(c) in turn provides:
"(c) Concessionaire shall at all times be judicious in fixing fees and
charges constituting Non-Public Utility Revenues in order to ensure
that End Users are not unreasonably deprived of services. While the
vehicular parking fee, porterage fee and greeter/wellwisher fee
constitute Non-Public Utility Revenues of Concessionaire, GRP may
require Concessionaire to explain and justify the fee it may set from
time to time, if in the reasonable opinion of GRP the said fees have
become exorbitant resulting in the unreasonable deprivation of End
Users of such services."
It will be noted that the above-quoted provision has no teeth, so the
concessionaire can defy the government without fear of any sanction.
Moreover, Section 6.06 - taken together with Section 6.03(c) of the ARCA -
falls short of the standard set by the BOT Law as amended, which expressly
requires in Section 2(b) that the project proponent is "allowed to charge facility
users appropriate tolls, fees, rentals and charges not exceeding those
proposed in its bid or as negotiated and incorporated in the contract x x
x."
The Piatco Contracts Violate Constitutional Prohibitions Against
Impairment of Contracts and Deprivation of Property Without Due
Process
Earlier, I discussed how Section 3.01(e) 84 of both the CA and the ARCA
requires government, through DOTC/MIAA, not to permit the carry-over to
Terminal III of the services and operations of certain service providers
currently operating at Terminal I with subsisting contracts.
By the In-Service Date, Terminal III shall be the only facility to be operated as
an international passenger terminal at the NAIA; 85 thus, Terminals I and II shall
no longer operate as such,86 and no one shall be allowed to compete with
Piatco in the operation of an international passenger terminal in the
NAIA.87 The bottom line is that, as of the In-Service Date, Terminal III will be
the only terminal where the business of providing airport-related services to
international airlines and passengers may be conducted at all.
Consequently, government through the DOTC/MIAA will be compelled to
cease honoring existing contracts with service providers after the In-Service
Date, as they cannot be allowed to operate in Terminal III.
In short, the CA and the ARCA obligate and constrain government to break its
existing contracts with these service providers.
Notably, government is not in a position to require Piatco to accommodate the
displaced service providers, and it would be unrealistic to think that these
service providers can perform their service contracts in some other
international airport outside Luzon. Obviously, then, these displaced service
providers are - to borrow a quaint expression - up the river without a paddle. In
plainer terms, they will have lost their businesses entirely, in the blink of an
eye.
What we have here is a set of contractual provisions that impair the obligation
of contracts and contravene the constitutional prohibition against deprivation of
property without due process of law.88
Moreover, since the displaced service providers, being unable to operate, will
be forced to close shop, their respective employees - among them Messrs.
Agan and Lopez et al. - have very grave cause for concern, as they will find
themselves out of employment and bereft of their means of livelihood. This
situation comprises still another violation of the constitution prohibition against
deprivation of property without due process.
True, doing business at the NAIA may be viewed more as a privilege than as a
right. Nonetheless, where that privilege has been availed of by the petitioners-
in-intervention service providers for years on end, a situation arises, similar to
that in American Inter-fashion v. GTEB.89 We held therein that a privilege
enjoyed for seven years "evolved into some form of property right which should
not be removed x x x arbitrarily and without due process." Said pronouncement
is particularly relevant and applicable to the situation at bar because the
livelihood of the employees of petitioners-intervenors are at stake.
The Piatco Contracts Violate Constitutional Prohibition
Against Deprivation of Liberty Without Due Process
The Piatco Contracts by locking out existing service providers from entry into
Terminal III and restricting entry of future service providers, thereby infringed
upon the freedom - guaranteed to and heretofore enjoyed by international
airlines - to contract with local service providers of their choice, and vice versa.
Both the service providers and their client airlines will be deprived of the right
to liberty, which includes the right to enter into all contracts, 90 and/or the right to
make a contract in relation to one's business. 91
By Creating New Financial Obligations for Government,
Supplements to the ARCA Violate the Constitutional
Ban on Disbursement of Public Funds Without Valid Appropriation
Clearly prohibited by the Constitution is the disbursement of public funds out of
the treasury, except in pursuance of an appropriation made by law. 92 The
immediate effect of this constitutional ban is that all the various agencies of
government are constrained to limit their expenditures to the amounts
appropriated by law for each fiscal year; and to carefully count their cash
before taking on contractual commitments. Giving flesh and form to the
injunction of the fundamental law, Sections 46 and 47 of Executive Order 292,
otherwise known as the Administrative Code of 1987, provide as follows:
"Sec. 46. Appropriation Before Entering into Contract. - (1) No contract
involving the expenditure of public funds shall be entered into unless
there is an appropriation therefor, the unexpended balance of which,
free of other obligations, is sufficient to cover the proposed
expenditure; and . .
"Sec. 47. Certificate Showing Appropriation to Meet Contract. - Except
in the case of a contract for personal service, for supplies for current
consumption or to be carried in stock not exceeding the estimated
consumption for three (3) months, or banking transactions of
government-owned or controlled banks, no contract involving the
expenditure of public funds by any government agency shall be
entered into or authorized unless the proper accounting official of the
agency concerned shall have certified to the officer entering into the
obligation that funds have been duly appropriated for the purpose and
that the amount necessary to cover the proposed contract for the
current calendar year is available for expenditure on account thereof,
subject to verification by the auditor concerned. The certificate signed
by the proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract, and
the sum so certified shall not thereafter be available for expenditure for
any other purpose until the obligation of the government agency
concerned under the contract is fully extinguished."
Referring to the aforequoted provisions, this Court has held that "(I)t is quite
evident from the tenor of the language of the law that the existence of
appropriations and the availability of funds are indispensable pre-requisites to
or conditions sine qua non for the execution of government contracts. The
obvious intent is to impose such conditions as a priori requisites to the validity
of the proposed contract."93
Notwithstanding the constitutional ban, statutory mandates and Jurisprudential
precedents, the three Supplements to the ARCA, which were not approved by
NEDA, imposed on government the additional burden of spending public
moneys without prior appropriation.
In the First Supplement ("FS") dated August 27, 1999, the following
requirements were imposed on the government:
• To construct, maintain and keep in good repair and operating
condition all airport support services, facilities, equipment and
infrastructure owned and/or operated by MIAA, which are not part of
the Project or which are located outside the Site, even though
constructed by Concessionaire - including the access road connecting
Terminals II and III and the taxilane, taxiways and runways
• To obligate the MIAA to provide funding for the upkeep, maintenance
and repair of the airports and facilities owned or operated by it and by
third persons under its control in order to ensure compliance with
international standards; and holding MIAA liable to Piatco for the
latter's losses, expenses and damages as well as for the latter's liability
to third persons, in case MIAA fails to perform such obligations; in
addition, MIAA will also be liable for the incremental and consequential
costs of the remedial work done by Piatco on account of the former's
default.
• Section 4 of the FS imposed on government ten (10) "Additional
Special Obligations," including the following:
o Providing thru MIAA the land required by Piatco for the taxilane
and one taxiway, at no cost to Piatco
o Implementing the government's existing storm drainage master
plan
o Coordinating with DPWH the financing, implementation and
completion of the following works before the In-Service Date:
three left-turning overpasses (Edsa to Tramo St., Tramo to
Andrews Ave., and Manlunas Road to Sales Ave.) and a road
upgrade and improvement program involving widening, repair
and resurfacing of Sales Road, Andrews Avenue and
Manlunas Road; improvement of Nichols Interchange; and
removal of squatters along Andrews Avenue
o Dealing directly with BCDA and the Philippine Air Force in
acquiring additional land or right of way for the road upgrade
and improvement program
o Requiring government to work for the immediate reversion to
MIAA of the Nayong Pilipino National Park, in order to permit
the building of the second west parallel taxiway
• Section 5 of the FS also provides that in lieu of the access tunnel, a
surface access road (T2-T3) will be constructed. This provision
requires government to expend funds to purchase additional land
 from Nayong Pilipino and to clear the same in order to be able to
deliver clean possession of the site to Piatco, as required in Section
5(c) of the FS.
On the other hand, the Third Supplement ("TS") obligates the government to
deliver, within 120 days from date thereof, clean possession of the land on
which the T2-T3 Road is to be constructed.
The foregoing contractual stipulations undeniably impose on government the
expenditures of public funds not included in any congressional appropriation or
authorized by any other statute. Piatco however attempts to take these
stipulations out of the ambit of Sections 46 and 47 of the Administrative Code
by characterizing them as stipulations for compliance on a "best-efforts basis"
only.
To determine whether the additional obligations under the Supplements may
really be undertaken on a best-efforts basis only, the nature of each of these
obligations must be examined in the context of its relevance and significance
to the Terminal III Project, as well as of any adverse impact that may result if
such obligation is not performed or undertaken on time. In short, the criteria for
determining whether the best-efforts basis will apply is whether the obligations
are critical to the success of the Project and, accordingly, whether failure to
perform them (or to perform them on time) could result in a material breach of
the contract.
Viewed in this light, the "Additional Special Obligations" set out in Section 4 of
the FS take on a different aspect. In particular, each of the following may all be
deemed to play a major role in the successful and timely prosecution of the
Terminal III Project: the obtention of land required by PIATCO for the taxilane
and taxiway; the implementation of government's existing storm drainage
master plan; and coordination with DPWH for the completion of the three left-
turning overpasses before the In-Service Date, as well as acquisition and
delivery of additional land for the construction of the T2-T3 access road.
Conversely, failure to deliver on any of these obligations may conceivably
result in substantial prejudice to the concessionaire, to such an extent as to
constitute a material breach of the Piatco Contracts. Whereupon, the
concessionaire may outrightly terminate the Contracts pursuant to Section
8.01(b)(i) and (ii) of the ARCA and seek payment of Liquidated Damages in
accordance with Section 8.02(a) of the ARCA; or the concessionaire may
instead require government to pay the Incremental and Consequential Losses
under Section 1.23 of the ARCA.94 The logical conclusion then is that the
obligations in the Supplements are not to be performed on a best-efforts basis
only, but are unarguably mandatory in character.
Regarding MIAA's obligation to coordinate with the DPWH for the complete
implementation of the road upgrading and improvement program for Sales,
Andrews and Manlunas Roads (which provide access to the Terminal III site)
prior to the In-Service Date, it is essential to take note of the fact that there
was a pressing need to complete the program before the opening of Terminal
III.95 For that reason, the MIAA was compelled to enter into a memorandum of
agreement with the DPWH in order to ensure the timely completion of the road
widening and improvement program. MIAA agreed to advance the total
amount of P410.11 million to DPWH for the works, while the latter was
committed to do the following:
"2.2.8. Reimburse all advance payments to MIAA including but not
limited to interest, fees, plus other costs of money within the periods
CY2004 and CY2006 with payment of no less than One Hundred
Million Pesos (PhP100M) every year.
"2.2.9. Perform all acts necessary to include in its CY2004 to CY2006
budget allocation the repayments for the advances made by MIAA, to
ensure that the advances are fully repaid by CY2006. For this purpose,
DPWH shall include the amounts to be appropriated for reimbursement
to MIAA in the "Not Needing Clearance" column of their Agency
Budget Matrix (ABM) submitted to the Department of Budget and
Management."
It can be easily inferred, then, that DPWH did not set aside enough funds to be
able to complete the upgrading program for the crucially situated access roads
prior to the targeted opening date of Terminal III; and that, had MIAA not
agreed to lend the P410 Million, DPWH would not have been able to complete
the program on time. As a consequence, government would have been in
breach of a material obligation. Hence, this particular undertaking of
government may likewise not be construed as being for best-efforts
compliance only.
They also Infringe on the Legislative Prerogative and Power Over the
Public Purse
But the particularly sad thing about this transaction between MIAA and DPWH
is the fact that both agencies were maneuvered into (or allowed themselves to
be maneuvered into) an agreement that would ensure delivery of upgraded
roads for Piatco's benefit, using funds not allocated for that purpose. The
agreement would then be presented to Congress as a done deal. Congress
would thus be obliged to uphold the agreement and support it with the
necessary allocations and appropriations for three years, in order to enable
DPWH to deliver on its committed repayments to MIAA. The net result is an
infringement on the legislative power over the public purse and a diminution of
Congress' control over expenditures of public funds - a development that
would not have come about, were it not for the Supplements. Very clever but
very illegal!
EPILOGUE
What Do We Do Now?
In the final analysis, there remains but one ultimate question, which I raised
during the Oral Argument on December 10, 2002: What do we do with the
Piatco Contracts and Terminal III?96 (Feeding directly into the resolution of
the decisive question is the other nagging issue: Why should we bother with
determining the legality and validity of these contracts, when the Terminal itself
has already been built and is practically complete?)
Prescinding from all the foregoing disquisition, I find that all the Piatco
contracts, without exception, are void ab initio, and therefore inoperative. Even
the very process by which the contracts came into being - the bidding and the
award - has been riddled with irregularities galore and blatant violations of law
and public policy, far too many to ignore. There is thus no conceivable way, as
proposed by some, of saving one (the original Concession Agreement) while
junking all the rest.
Neither is it possible to argue for the retention of the Draft Concession
Agreement (referred to in the various pleadings as the Contract Bidded Out) as
the contract that should be kept in force and effect to govern the situation,
inasmuch as it was never executed by the parties. What Piatco and the
government executed was the Concession Agreement which is entirely
different from the Draft Concession Agreement.
Ultimately, though, it would be tantamount to an outrageous, grievous and
unforgivable mutilation of public policy and an insult to ourselves if we opt to
keep in place a contract - any contract - for to do so would assume that we
agree to having Piatco continue as the concessionaire for Terminal III.
Despite all the insidious contraventions of the Constitution, law and public
policy Piatco perpetrated, keeping Piatco on as concessionaire and even
rewarding it by allowing it to operate and profit from Terminal III - instead of
imposing upon it the stiffest sanctions permissible under the laws - is
unconscionable.
It is no exaggeration to say that Piatco may not really mind which contract we
decide to keep in place. For all it may care, we can do just as well without
one, if we only let it continue and operate the facility. After all, the real money
will come not from building the Terminal, but from actually operating it for fifty
or more years and charging whatever it feels like, without any competition at
all. This scenario must not be allowed to happen.
If the Piatco contracts are junked altogether as I think they should be, should
not AEDC automatically be considered the winning bidder and therefore
allowed to operate the facility? My answer is a stone-cold 'No'. AEDC never
won the bidding, never signed any contract, and never built any facility. Why
should it be allowed to automatically step in and benefit from the greed of
another?
Should government pay at all for reasonable expenses incurred in the
construction of the Terminal? Indeed it should, otherwise it will be unjustly
enriching itself at the expense of Piatco and, in particular, its funders,
contractors and investors - both local and foreign. After all, there is no question
that the State needs and will make use of Terminal III, it being part and parcel
of the critical infrastructure and transportation-related programs of government.
In Melchor v. Commission on Audit,97 this Court held that even if the contract
therein was void, the principle of payment by quantum meruit was found
applicable, and the contractor was allowed to recover the reasonable value of
the thing or services rendered (regardless of any agreement as to
the supposed value), in order to avoid unjust enrichment on the part of
government. The principle of quantum meruit was likewise applied in Eslao v.
Commission on Audit,98 because to deny payment for a building almost
completed and already occupied would be to permit government to unjustly
enrich itself at the expense of the contractor. The same principle was applied
in Republic v. Court of Appeals.99
One possible practical solution would be for government - in view of the nullity
of the Piatco contracts and of the fact that Terminal III has already been built
and is almost finished - to bid out the operation of the facility under the same
or analogous principles as build-operate-and-transfer projects. To be imposed,
however, is the condition that the winning bidder must pay the builder of the
facility a price fixed by government based on quantum meruit; on the real,
reasonable - not inflated - value of the built facility.
How the payment or series of payments to the builder, funders, investors and
contractors will be staggered and scheduled, will have to be built into the bids,
along with the annual guaranteed payments to government. In this manner,
this whole sordid mess could result in something truly beneficial for all,
especially for the Filipino people.
WHEREFORE, I vote to grant the Petitions and to declare the subject
contracts NULL and VOID.
G.R. No. L-48304 September 11, 1985
PHILIPPINE PORTS AUTHORITY, petitioners,
vs.
HON. RAFAEL L. MENDOZA, in his capacity as Presiding Judge of the
Court of First Instance of Cebu, Branch VI, PERNITO ARRASTRE
SERVICES, INC., APOLONIO BACALLA, doing business under the style
"Bacalla Arrastre Services", ARISTON AGUILAR, doing business under
the style "Aguilar Arrastre Services", ROMEO CABRAS, doing business
under the style "Cabras Arrastre Services", GUERRERO DAJAO, doing
business under the style "Dajao Arrastre Services," NIÑO TAMARRA,
doing business under the style "Tamarra Arrastre Services", JESUS
GARCIA, doing business under the style "Garcia Arrastre Services",
FRANCISCO AGUIRRE, doing business under the style "Sto. Rosario
Arrastre Services", TEOFILO ESTOCE doing business under the style "E
& C Arrastre Services", RAMON P. TECSON, doing business under the
style "Tecson Arrastre Services", MARCELO A. CANSANCIO, doing
business under the style "Tabunoc Arrastre Service", SIMEON M. PACA,
SR., doing business under the style, "A.O. Paca Arrastres Services",
ANDRES ROMARIZ doing business under the style "F. Figueroa Arrastre
Service," NILO SERVILA doing business under the style "Servila Arrastre
Services", RHODA F. BANGOY, doing business under the style "Tan
Arrastre Services", FILOMENO PEPITO, doing business under the style
"F. Pepito & Villacruses Arrastre Service", VICTORINO SY, doing
business under the style "E. V. Sy Arrastre Services", and ROMEO
GADIANO doing business under the style "Cadiano Arrastre
Service", respondents.
ALAMPAY, J.:
This case relates to a petition for certiorari and prohibition filed by Philippine
Ports Authority (PPA) directed principally against the public respondent herein
as presiding judge of the Court of First Instance (now Regional Trial Court) of
Cebu, Branch VI and naming as private respondents eighteen (18) arrastre
groups led by Pernito Arrastre Services, Inc. (hereunder referred to as Pernito,
et al.). Petitioner avers that the respondent judge committed a grave abuse of
discretion amounting to lack of jurisdiction when it issued in Civil Case No. R-
16289, a writ of preliminary injunction prohibiting Philippine Ports Authority,
pendente lite, from enforcing its policy of integration in the port of Cebu City
and directing it to allow respondent Pernito, et al., to operate individually and
independently as arrastre and stevedoring contractors. The dispositive portion
of the questioned order, dated March 31, 1978, reads as follows:
WHEREFORE, in view of the foregoing reasons, this Court
orders the issuance of a writ of preliminary preventive
injunction, prohibiting:
1. The respondent Philippine Ports Authority, through its Cebu
City Manager or his representative(s), from enforcing its policy
of integration of arrastre operations, or the merger in the City of
Cebu, thereby in the meantime allowing petitioners to operate
individually as such and the free flow of cargoes serviced by
them.
2. The respondent United South Dockhandlers, Inc. from
requiring the petitioners to remit to the 100% gross arrastre
earnings or any portion thereof and from collecting each
charges from said petitioners or from consignees of the
cargoes handled by them and from withholding the release of
such cargoes; and
3. The respondent United South Dockhandlers, Inc. from
appropriating or converting to its own use and operations any
equipment belonging to any of the petitioners such as
typewriters, adding machines, office machinery, equipment or
supplies of any kind, upon petitioners' filing of a bond in the
amount of Fifty Thousand (P50,000.00) PESOS executed to
the two respondents enjoined, to the effect that petitioners will
pay to them such damages as they may sustain by reason of
the injunction should this Court finally decide that the
petitioners are not entitled thereto. (Petition, Annex 1).
In the aforestated questioned order of March 11, 1978, the respondent judge
justified his issuance of the writ of preliminary injunction with the statement that
it "preliminary finds that Section 26 of Presidential Decree No. 857 invoked by
respondent PPA does not authorize it to order the compulsory merger of
arrastre operators into one organization as a sine qua non for the grant of
permit" and that "the power of respondent PPA to provide services whether on
its own, by contract or otherwise, within the Port Districts and the approaches
thereof, including but not limited to certain enumerated services is not
exclusionary in character."
Petitioner herein also assails the April 17, 1978 Order of the respondent judge
which allowed, without notice and hearing, a certain Aquino Arrastre Services
and Watergate Arrastre Service to intervene any adopt the petition filed in the
Court below and extended to them the benefit of the injunction order.
At first, only petitioner PPA questioned the subject orders by filing this petition.
United South Dockhandlers, Inc. hereinafter referred to as (USDI) opted to let
the effects of the order stay as far as they are concerned on July 8, 1978.
However, USDI filed a "Motion to Intervene" (rollo, p. 227) which was granted
by this Court on October 24, 1978 (lbid, p. 271). On November 22, 1978, for
reasons therein stated USDI filed a Manifestation that it is withdrawing its
Motion to Intervene (lbid, p. 274) but the same was denied by this Court in a
resolution dated February 1, 1979. USDI filed a Manifestation that it is
adopting in toto the Petition of PPA (lbid, p. 327).
The relevant antecedent facts of this case as may be gleaned from the petition
are not disputed by the respondents herein and these are as follows:
1. Prior to the declaration of martial law in the Philippines, the operation of
arrastre and stevedoring services in the country's various domestic ports was
in great disarray. The pernicious "cabo system" ruled by bosses had
proliferated and caused untold burdens to legitimate labor groups. Violence
and thefts in the ports were rampant and imperilled both human and cargo
traffic between the islands.
2. In November 1972, following the proclamation of martial law an Ad Hoc
Committee on Waterfront Services was created to study the problems of
arrastre and stevedoring operations in these ports. The committee was
composed of representatives of the Department of Labor, the shipping
community the arrastre and stevedoring labor contractors, the Bureau of
Customs, the labor sector and port end-users, under -he chairmanship of the
Deputy Commissioner of Customs.
3. On April 23, 1973 the Committee submitted its report and recommendation.
It recommended the servicing of such shipping company by only one arrastre
and stevedoring contractor in a given port. The objective was the integration of
arrastre-stevedoring operations in each port so that ultimately only one
contractor would be authorized to service the needs of that port.
4. On August l,1973 and September l, 1974 the Bureau of Customs approved
and implemented the recommendation of the Ad Hoc Committee on the initial
integration of arrastre and stevedoring services. Two years later, on May 8,
1975, the Bureau of Customs issued Memorandum Order No. 28-75, providing
for the merger of all existing cargo handling contractors in each port.
5. At that time, there were in the port of the City of Cebu more than fifty
arrastre-stevedoring contractors. The problems, as elsewhere, were the same.
The "cabo system" of exploiting labor and the lack of rationality in the handling
of cargoes prevailed in the port. To effect the gradual integration of arrastre
and stevedoring operations, the Bureau of Customs decided to require the
merger of the several contractors in two stages, first into ten corporations, and
then to one.
Accordingly, the ten corporations were formed, namely: (1)Masayon Arrastre &
Forwarding Corp., (2) Vismin Stevedores & Forwarders, Inc., (3) Cebu
Materials Handling Corp. (4) Solid Arrastre & Forwarding Co., Inc., (5) Sto.
Nino Stevedoring & Arrastre Corp. (6) Integrated Port Services (Cebu), Inc.,
(7) Panama Arrastre & Stevedoring Co., Inc., (8) Cebu Allied Maritime
Services, Inc., (9) Cebu Integrated Arrastre, Inc., and (10) Cenvis Arrastre
Services, Inc.
6. The ten corporations named above were issued separable permits by the
Bureau of Customs. In 1977 Bisaya Land Transportation Co., Inc., the
eleventh cargo handling contractor, was likewise authorized to do business in
the port of the City of Cebu. Apart from these eleven corporations, none other
was authorized to perform arrastre and stevedoring services in the port. All the
other previously existing contractors were assimilated by the eleven
organizations issued credentials and permits by the Bureau of Customs.
Neither respondent Pernito Arrastre Services nor any of the other respondents
in this case were issued permits by the Bureau of Customs to operate arrastre
services. Respondent Pernito operated under the permit of the Vismin
Stevedores & Forwarders, Inc.
7. On July 11, 1974, Presidential Decree No. 505 was promulgated creating
the petitioner Philippine Ports Authority (PPA). The Decree was subsequently
amended by Presidential Decree No. 857 dated December 23, 1975. Under
the Decree, the PPA is entrusted with the function of carrying out an integrated
program for the planning, development, financing and operation of ports and
port districts throughout the country. The powers, duties, and jurisdiction of the
Bureau of Customs concerning arrastre operations were transferred to, and
vested in, the petitioner PPA.
8. Upon assumption of its functions, petitioner PPA made a thorough
investigation and study of port problems. It found that stevedoring services
(on-ship work) in the Philippines were separated from arrastre services (dock
work), each one being provided by separate contractors. Furthermore,
petitioner PPA found that there were too many companies/organizations
supplying stevedoring or arrastre services, or both. This proliferation of
services was wasteful and inefficient. As a consequence of which workers
were underpaid and did not enjoy regularity of work. Overall port efficiency
suffered in the long term and shipping costs unavoidably went up.
Accordingly, on May 4, 1976 the Board of Directors of petitioner PPA passed
Resolution No. 10, approving and adopting a set of Policies on Port
Administration, Management and Operation. By this action, petitioner PPA
adopted as its own the Bureau of Customs policy of placing on only one
organization the responsibility for the operation of arrastre and stevedoring
services in one port.
9. In order to implement its policy of integration, petitioner PPA issued on May
27, 1977, Memorandum Order No. 21 which provides, in its pertinent parts, as
follows:
6. In order to ensure utmost efficiency and economy in cargo
handling operations, to provide better service to port users and
to amply protect the interest of labor and all other port users,
and the government as well, it is the policy of the Authority that
there should be only one arrastre-stevedors operator/contractor
to engage in cargo handling services in a port.
Conformably with this policy, it is necessary that two or more
contractors presently operating within the same port premises
who desire to continue or renew their cargo handling services
must merge into only one organization within a prescribed
period after receipt of due notice from the Authority.
10. Accordingly, the existing eleven arrastre-stevedoring contractors
mentioned in paragraphs 7 and 8 above began discussions of plans for
merger. Thereafter, they submitted to petitioner PPA a Memorandum
Agreement which embodied a plan for total merger.
In October, 1977, the eleven port services contractors in the Cebu City Port
formed the United South Dockhandlers, Inc. (hereinafter referred to as USDI).
The latter corporation was recognized by petitioner PPA and granted a special
permit on November 4, 1977, to handle exclusively the cargo handling
requirements of the entire port in the City of Cebu pending the eventual award
of a management contract.
11. On February 27, 1977, private respondents Pernito, et al. (numbering 18 in
all) instituted an action for declaratory relief and mandamus with preliminary
preventive and mandatory injunction and damages against petitioner PPA and
USDI. The case was filed with the Court of First Instance of Cebu (Branch VI),
presided over by respondent judge. It was docketed as Civil Case No. R-
16829.
12. Pernito, et al., alleged in their pleadings filed in the court below that they
were among the more than fifty independent arrastre/stevedoring contractors
doing business in the Cebu City port prior to the issuance on May 8, 1975 of
Bureau of Customs Memorandum Order No. 28-75; that they joined the
merger of contractors into ten arrastre-stevedoring corporations; that following
the issuance by the PPA of its Memorandum Order No. 21, the matter of total
merger became an issue because the small contractors including respondent
Pernito, et al., refused to be assimilated with the big contractors which were
allegedly controlled by shipping companies; that after assurances that the
interest of small operators would be protected, the eleven licensed
corporations agreed to merge their resources and formed the USDI.
Pernito, et al., further alleged that the controlling interests in USDI reneged on
their commitments to the small stockholders; that as a result, respondent
Pernito, et al., left USDI and applied with PPA for separate permits to operate
their services, but their (Pernito, et al.) applications were denied. Apart from
questioning the denial of their applications, Pernito, et al. likewise questioned
the 10% of gross receipts being collected by PPA from arrastre and
stevedoring contractors.
13. On March 3l, 1978, respondent judge issued an injunction order which,
among other things, enjoined PPA, pendente lite, from implementing its policy
of integration and allowing Pernito, et al, to freely operate arrastre and
stevedoring services in the port of Cebu.
14. On April 17, 1978, respondent judge, without notice and hearing, allowed a
certain Aquino Arrastre Services and a certain Watergate Arrastre Services to
intervene and extended to them the benefits of the injunction. (Petition, pg. 3-
12; Rollo, 4-13).
Hence, this petition.
Pending action on the instant petition, this Court on May 30, 1978, issued a
temporary restraining order enjoining respondents from effecting the
questioned orders of March 31, 1978 and April 17, 1978 (Rollo, pp. 117 and
120). The order was confirmed by this Court in a subsequent order issued on
June 6, 1978, "restraining (1) respondent judge from giving effect to his orders
dated March 31, 1978 where he issued an injunction against the petitioner
Philippine Ports Authority and from hearing Civil Case No. R-16829 until
further orders; and (2) private respondent Pernito Arrastre Services, Inc. from
performing arrastre and stevedoring services in the port of Cebu" Rollo, P.
124). On July 24, 1979, this Court modified its restraining order of May 30,
1978 by lifting the portion thereof restraining respondent judge from
proceeding with the hearing of Civil Case No. R-16829 (Rollo, 329).
Whether or not the respondent judge committed a grave abuse of discretion
amounting to lack of jurisdiction when it issued the March 31, 1978 Order can
be determined only after the resolution of the various issues in the case. As
culled from the petition, the respondents' comments, and the various pleadings
in this case, the principal issues to be resolved in this petition are:
1. Whether or not the Petitioner PPA has the power to require
integration of arrastre-stevedoring services in Philippine ports.
2. Whether or not PPA's policy of integration through
compulsory merger is unconstitutional and void for being
violative of
a) Section 2, Article XIV of the
1973 Constitution on private
monopolies and combinations in
restraint of trade, and
b) Section 20, Act 3518
prohibiting combinations,
mergers, or acquisition in
restraint of trade.
3. Whether or not the questioned orders restored the status
quo before the present controversy.
4. Whether or not the questioned orders constitute a judicial
interference in purely administrative functions.
On the first issue, We hold that petitioner PPA has power to regulate and
require integration of arrastre and stevedoring services in Philippine ports. The
objectives in the creation of PPA is defined in Section 2 of Presidential Decree
No. 857, which reads:
a) To coordinate, streamline, improve and optimize the
planning, development, financing, construction, maintenance
and operation of Ports, port facilities, port physical plants, and
all equipment used in connection with the operation of a Port.
b) To ensure the smooth flow of waterborne commerce passing
through the country's Ports whether public or private, in the
conduct of international and domestic trade.
c) To promote regional development through the dispersal of
industries and commercial activities throughout the different
regions.
d) To foster inter-island seaborne commerce and foreign trade.
e) To redirect and reorganize port administration beyond its
specific and traditional functions of harbor development and
cargo handling operations to the broader function of total port
district development, including encouraging the full and efficient
utilization of the Port's hinterland and tributary areas.
f) To ensure that all income and revenues accruing out of dues,
rates and charges for the use of facilities and services provided
by the Authority are properly collected and accounted for by the
Authority, that all such income and revenues win be adequate
to defray the cost of providing the facilities and services
(inclusive of operating and maintenance cost, administration
and overhead) of the Port Districts, and to ensure that a
reasonable return on the assets employed shall be realized.
In line with these objectives, Section 26 of P.D. No. 857 empowered PPA to
make rules and regulations governing Philippine ports. Said rules and
regulations governing Philippine ports. Said Section 26 provides:
Section 26. Power to Make Regulations—
a) The Authority may, after consultation with relevant
Government agencies, make rules or regulations for the
planning, development, construction, maintenance, control
supervision and management of any port or port District and
the services to be provided therein, and for the maintenance of
good order therein, and generally for carrying out the purposes
of this Decree.
b) The Authority may provide separate regulations for each
category of ports or port districts. (Rollo, p. 16).
With respect to the issue at bar, specific power was granted under Section 6,
Subsection 2, par. V of P.D. 857. Paragraph V reads:
(V) To provide services (whether on its own by contract or
otherwise) within the Port Districts and the approaches thereof,
including but not limited to—
—berthing, towing, mooring, moving, slipping,
or docking any vessel;
—loading or discharging any vessel
—sorting, weighing, measuring, storing,
warehousing, or otherwise handling goods.
Under said paragraph (V), the PPA has been granted a wide discretion in
adopting and implementing the policy which it deems most effective in the
successful attainment of the laws' objectives. It can either provide the
necessary services on its own or engage the services of one or more
contractors.
After a thorough investigation and study of port problems, it adopted the
Bureau of Customs policy of placing in only one organization the responsibility
for the operation of arrastre and stevedoring services. The benefits envisioned
to be derived from the adopting of policy are the achievement of economies of
scale and better supervision and control of ports' operation. As outlined in PPA
Resolution No. 10 dated May 4, 1976, the expected advantages are (1)
Optimum utilization of equipment, facilities, and labor; (2) Improved and
stabilized labor compensation; (3) Larger capital base; (4) Increased borrowing
base; (5) Savings in overhead costs; (6) Flexibility of operations; (7)
Maintenance program improvement; (8) Uniform reporting and accounting
system; and (9) Better dealing with the government.
In the case of Anglo-Fil Trading Corporation vs. Lazaro, G.R. No. 54966,
September 2, 1983, this Court already held and so declared that the
rationalization and effective utilization of port facilities is to the advantage of
the government. We ruled that the discretion in choosing the stevedoring
contractor for the South Harbor, Port of Manila belongs by law to PPA. As long
as standards are set in determining the contractor and such standards are
reasonable and related for the purpose for which they are used, the courts
should not inquire into the wisdom of PPA's choice.
In the case at bar, private respondents contend that USDI to which the
petitioner PPA has awarded the franchise or special privilege to render the
arrastre and stevedoring services has no adequate facilities and equipment.
USDI however, is the result of the merger of the eleven (11) biggest arrastre
and stevedoring contractors operating in the Port of Cebu. Private respondents
themselves admitted that they are "small arrastre-stevedore operators . . while
USDI is controlled by the big arrastre corporations". It cannot, therefore,
correctly be said that USDI has "no equipment" and never operated the
arrastre and stevedoring services in the port of Cebu" (Comment, p. 22). (lbid,
p. 6, Rollo, 158). In the aforecited case of Anglo-Fil Trading Corporation, we
held that:
It is settled rule that unless the case justifies it, the judiciary will
not interfere in purely administrative matters (Monark
International, Inc. vs. Noriel, 83 SCRA 114). Such discretionary
power vested in the proper administrative body, in the absence
of arbitrariness and grave abuse of discretion so as to go
beyond the statutory authority, is not subject to the contrary
judgment or control of others (See Meralco Securities
Corporation vs. Savellano, 117 SCRA 804). In general, courts
have no supervisory power over the proceedings and actions of
the administrative departments of the government. This is
particularly true with respect to acts involving the exercise of
judgment of discretion and to findings of fact. (Pajo vs. Ago,
and Ortiz, 108 Phil. 905.
In opposing this petition, the private respondents assail the policy adopted by
PPA to grant only one permit to only one group as violative of the constitutional
and statutory provision on monopolies and combinations in restraint of trade.
Private respondents herein cite Act No. 3518, specifically Sec. 20 thereof, and
Section 2, Article XIV of the 1973 Constitution. The aforecited constitutional
provision reads:
The state shall regulate or prohibit private monopolies when
the public interest so requires. No combination in restraint of
trade or unfair competition shall be allowed. (Section 2, Article
XIV, 1973 Constitution).
Section 20 of Act No. 3518 provides:
No corporation engaged in commerce may acquire, directly
and indirectly, the whole or any part of the stock or other share
capital of another corporation or corporations engaged in
commerce, where the effect of such acquisition may be to
substantially lessen competition between the corporation or
corporations whose stock is so acquired and the corporations
making the acquisition, or between any of them or to restrain
such commerce in any section or community, or tend to create
a monopoly with any line of commerce.
Private monopolies are not necessarily prohibited. The use of the word
"regulate" in the Constitution indicates that some monopolies, properly
regulated, are allowed. Regulate means includes the power to control, to
govern, and to restrain, but regulate should not be construed as synonymous
with suppress or prohibit (Kwong Sing vs. City of Manila, 41 Phil. 108).
"Competition can best regulate a free economy. Like all basic beliefs, however,
that principle must accommodate hard practical experience. There are areas
where for special reasons the force of competition, when left wholly free, might
operate too destructively to safeguard the public interest. Public utilities are an
instance of that consideration." (Oleck, Modern Corporation Law, Vol. IV, p.
197). By their very nature, certain public services or public utilities such as
those which supply water, electricity, transportation, telegraph, etc. must be
given exclusive franchises if public interest is to be served. Such exclusive
franchises are not violative of the law against monopolies (Anglo-Fil Trading
Corporation vs. Lazaro, supra).
In the case at bar, the area affected is maritime transportation in the port of
Cebu. The operations there, particularly arrastre and stevedoring, affect not
only the City of Cebu, the principal port in the South, but also the economy of
the whole country as well. Any prolonged disjunction of the services being
rendered there will prejudice not only inter-island and international trade and
commerce. Operations in said port are therefore imbued with public interest
and are subject to regulation and control for the public good and welfare.
PPA's policy of integration through compulsory merger may not even be in this
instance considered as promoting a monopoly because the fact of the matter is
that while the sole operator permitted by PPA to engage in the arrastre and
stevedoring operations in the port of Cebu is only USDI, actually USDI is
comprised of the eleven (11) port services contractors that previously used
said ports but decided to merge and ultimately constituted themselves as
USDI.
But over and above the platter of whether the monopoly has been created, the
overriding and more significant consideration is public interest. Accordingly,
We hold that PPA's policy of integration is not violative of any constitutional
and legal provision on monopolies.
In the questioned order, Pernito, et al., were allowed to operate individually
and render arrastre and stevedoring services in the port of Cebu while the
case is pending because according to the respondent judge, this was the last
peaceable uncontested status before the present controversy. His appreciation
of the facts is incorrect. The present controversy arose when Pernito, et al.,
sought, but were denied, permits to operate in the port of Cebu. PPA denied
their applications because of its policy of integration. Before the case was filed,
therefore, the status quo was that Pernito, et al., had no permit to operate
individually. Prior to their application for separate permits, Pernito, et al.,
operated pursuant to the various and respective licenses of the different
arrastre operators, Pernito Arrastre Services, Inc., in particular, operated under
the license issued to Vismin Stevedores & Forwarders, Inc, This scheme is
what is commonly known in the transportation business as the "kabit-system."
Long before the case below was filed, Pernito, et al., was in conformity with the
integration policy of the PPA. They never questioned its validity and legality. In
fact, in the petition for declaratory relief and mandamus they filed below, they
even admitted having pleaded with PPA for the integration of the eleven (11)
arrastre operators into two (2) corporations: one corporation to be composed
of the arrastre corporations controlled by shipping magnates and the other one
to be composed of the bona fide small arrastre operators to service the needs
of small and medium sized vessels or that, in the alternative, the eleven be
integrated into one arrastre corporation, 51% to be owned by the bona fide
arrastre operators and 49% by shipping magnates (See Rollo, p. 60). Although
these alternative proposals were rejected by PPA, Pernito, et al., continued to
accede and conform to the integration policy when they agreed to join USDI
after obtaining some concessions from its big stockholders. It was only when
the controlling interests in USDI allegedly reneged on their alleged
commitments to Pernito, et al., that the latter seceded from USDI and applied
for separate permits. The actual controversy is not really between PPA and
Pernito, et al., but between the latter and the controlling interests of USDI.
What petitioners appear to be actually assailing, therefore, is not the
integration policy of PPA but the management policies of the integrated or
merged corporation, USDI.
The status quo or the last actual peaceable uncontested status preceding the
pending controversy, therefore, indicate a time when Pernito, et al., had no
permits of their own to operate in the port of Cebu. The questioned orders,
therefore, would not return the actual status quo but would resurrect the
burdensome situations that prevailed before, when the services were
performed by numerous individual operators.
Under the challenged orders of the respondent judge, he would allow 19
individual operators to handle cargoes along with USDI. Worse, he even
allowed a certain Aquino Arrastre Services and a certain Watergate Arrastre
Services to intervene and avail of the benefits of the injunction granted to
Pernito, et al., without notice and benefit of a hearing, thus, raising the number
to 20. By so doing, respondent judge had arrogated unto himself PPA's power
to regulate arrastre and stevedoring services at the port of Cebu and to
determine who are qualified to operate the services mentioned. We find no
hesitancy in holding that the respondent judge's actions are tainted with a
grave and manifest abuse of discretion.
The issuance of a preliminary injunction, it is true, rests upon the sound
discretion of the court. Sound judicial discretion, however, is no license to undo
the law by defeating its objectives (Vivo vs. Cloribel, L-23239, November 23,
1966, 15 SCRA 713).
WHEREFORE, petition is hereby granted. The orders of March 31, 1978 and
April 17, 1978 of respondent court enjoining petitioner from enforcing its policy
of integration is hereby reversed and set aside. The May 30, 1978 temporary
restraining order, as clarified in the June 8, 1978 resolution and as modified in
the July 24, 1979 resolution, is hereby made permanent.
No pronouncement as to costs.
SO ORDERED.
Makasiar, C.J., Aquino, Concepcion, Jr., Abad Santos, Melencio-Herrera,
Plana, Escolin, Relova, Gutierrez, Jr., De la Fuente and Cuevas, JJ., concur.
G.R. No. 177597 July 16, 2008
BAI SANDRA S. A. SEMA, Petitioner,
vs.
COMMISSION ON ELECTIONS and DIDAGEN P.
DILANGALEN, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178628
PERFECTO F. MARQUEZ, Petitioner,
vs.
COMMISSION ON ELECTIONS, Respondent.
DECISION
CARPIO, J.:
The Case
These consolidated petitions1 seek to annul Resolution No. 7902, dated 10
May 2007, of the Commission on Elections (COMELEC) treating Cotabato City
as part of the legislative district of the Province of Shariff Kabunsuan. 2
The Facts
The Ordinance appended to the 1987 Constitution apportioned two legislative
districts for the Province of Maguindanao. The first legislative district consists
of Cotabato City and eight municipalities. 3 Maguindanao forms part of the
Autonomous Region in Muslim Mindanao (ARMM), created under its Organic
Act, Republic Act No. 6734 (RA 6734), as amended by Republic Act No. 9054
(RA 9054).4 Although under the Ordinance, Cotabato City forms part of
Maguindanao’s first legislative district, it is not part of the ARMM but of Region
XII, having voted against its inclusion in the ARMM in the plebiscite held in
November 1989.
On 28 August 2006, the ARMM’s legislature, the ARMM Regional Assembly,
exercising its power to create provinces under Section 19, Article VI of RA
9054,5 enacted Muslim Mindanao Autonomy Act No. 201 (MMA Act 201)
creating the Province of Shariff Kabunsuan composed of the eight
municipalities in the first district of Maguindanao. MMA Act 201 provides:
Section 1. The Municipalities of Barira, Buldon, Datu Odin Sinsuat,
Kabuntalan, Matanog, Parang, Sultan Kudarat, Sultan Mastura, and Upi are
hereby separated from the Province of Maguindanao and constituted into a
distinct and independent province, which is hereby created, to be known as the
Province of Shariff Kabunsuan.
xxxx
Sec. 5. The corporate existence of this province shall commence upon the
appointment by the Regional Governor or election of the governor and majority
of the regular members of the Sangguniang Panlalawigan.
The incumbent elective provincial officials of the Province of Maguindanao
shall continue to serve their unexpired terms in the province that they will
choose or where they are residents: Provided, that where an elective position
in both provinces becomes vacant as a consequence of the creation of the
Province of Shariff Kabunsuan, all incumbent elective provincial officials shall
have preference for appointment to a higher elective vacant position and for
the time being be appointed by the Regional Governor, and shall hold office
until their successors shall have been elected and qualified in the next local
elections; Provided, further, that they shall continue to receive the salaries they
are receiving at the time of the approval of this Act until the new readjustment
of salaries in accordance with law. Provided, furthermore, that there shall be
no diminution in the number of the members of the Sangguniang Panlalawigan
of the mother province.
Except as may be provided by national law, the existing legislative district,
which includes Cotabato as a part thereof, shall remain.
Later, three new municipalities6 were carved out of the original nine
municipalities constituting Shariff Kabunsuan, bringing its total number of
municipalities to 11. Thus, what was left of Maguindanao were the
municipalities constituting its second legislative district. Cotabato City,
although part of Maguindanao’s first legislative district, is not part of the
Province of Maguindanao.
The voters of Maguindanao ratified Shariff Kabunsuan’s creation in a plebiscite
held on 29 October 2006.
On 6 February 2007, the Sangguniang Panlungsod of Cotabato City passed
Resolution No. 3999 requesting the COMELEC to "clarify the status of
Cotabato City in view of the conversion of the First District of Maguindanao
into a regular province" under MMA Act 201.
In answer to Cotabato City’s query, the COMELEC issued Resolution No. 07-
0407 on 6 March 2007 "maintaining the status quo with Cotabato City as part
of Shariff Kabunsuan in the First Legislative District of Maguindanao."
Resolution No. 07-0407, which adopted the recommendation of the
COMELEC’s Law Department under a Memorandum dated 27 February
2007,7 provides in pertinent parts:
Considering the foregoing, the Commission RESOLVED, as it hereby resolves,
to adopt the recommendation of the Law Department that pending the
enactment of the appropriate law by Congress, to maintain the status quo
with Cotabato City as part of Shariff Kabunsuan in the First Legislative District
of Maguindanao. (Emphasis supplied)
However, in preparation for the 14 May 2007 elections, the COMELEC
promulgated on 29 March 2007 Resolution No. 7845 stating that
Maguindanao’s first legislative district is composed only of Cotabato City
because of the enactment of MMA Act 201.8
On 10 May 2007, the COMELEC issued Resolution No. 7902, subject of these
petitions, amending Resolution No. 07-0407 by renaming the legislative district
in question as "Shariff Kabunsuan Province with Cotabato City (formerly First
District of Maguindanao with Cotabato City)."9 1avvphi1
In G.R. No. 177597, Sema, who was a candidate in the 14 May 2007 elections
for Representative of "Shariff Kabunsuan with Cotabato City," prayed for the
nullification of COMELEC Resolution No. 7902 and the exclusion from
canvassing of the votes cast in Cotabato City for that office. Sema contended
that Shariff Kabunsuan is entitled to one representative in Congress under
Section 5 (3), Article VI of the Constitution10 and Section 3 of the Ordinance
appended to the Constitution.11 Thus, Sema asserted that the COMELEC
acted without or in excess of its jurisdiction in issuing Resolution No. 7902
which maintained the status quo in Maguindanao’s first legislative district
despite the COMELEC’s earlier directive in Resolution No. 7845 designating
Cotabato City as the lone component of Maguindanao’s reapportioned first
legislative district.12 Sema further claimed that in issuing Resolution No. 7902,
the COMELEC usurped Congress’ power to create or reapportion legislative
districts.
In its Comment, the COMELEC, through the Office of the Solicitor General
(OSG), chose not to reach the merits of the case and merely contended that
(1) Sema wrongly availed of the writ of certiorari to nullify COMELEC
Resolution No. 7902 because the COMELEC issued the same in the exercise
of its administrative, not quasi-judicial, power and (2) Sema’s prayer for the
writ of prohibition in G.R. No. 177597 became moot with the proclamation of
respondent Didagen P. Dilangalen (respondent Dilangalen) on 1 June 2007 as
representative of the legislative district of Shariff Kabunsuan Province with
Cotabato City.
In his Comment, respondent Dilangalen countered that Sema is estopped from
questioning COMELEC Resolution No. 7902 because in her certificate of
candidacy filed on 29 March 2007, Sema indicated that she was seeking
election as representative of "Shariff Kabunsuan including Cotabato City."
Respondent Dilangalen added that COMELEC Resolution No. 7902 is
constitutional because it did not apportion a legislative district for Shariff
Kabunsuan or reapportion the legislative districts in Maguindanao but merely
renamed Maguindanao’s first legislative district. Respondent Dilangalen further
claimed that the COMELEC could not reapportion Maguindanao’s first
legislative district to make Cotabato City its sole component unit as the power
to reapportion legislative districts lies exclusively with Congress, not to mention
that Cotabato City does not meet the minimum population requirement under
Section 5 (3), Article VI of the Constitution for the creation of a legislative
district within a city.13
Sema filed a Consolidated Reply controverting the matters raised in
respondents’ Comments and reiterating her claim that the COMELEC
acted ultra vires in issuing Resolution No. 7902.
In the Resolution of 4 September 2007, the Court required the parties in G.R.
No. 177597 to comment on the issue of whether a province created by the
ARMM Regional Assembly under Section 19, Article VI of RA 9054 is entitled
to one representative in the House of Representatives without need of a
national law creating a legislative district for such new province. The parties
submitted their compliance as follows:
(1) Sema answered the issue in the affirmative on the following
grounds: (a) the Court in Felwa v. Salas14 stated that "when a province
is created by statute, the corresponding representative district comes
into existence neither by authority of that statute — which cannot
provide otherwise — nor by apportionment, but by operation of the
Constitution, without a reapportionment"; (b) Section 462 of Republic
 Act No. 7160 (RA 7160) "affirms" the apportionment of a legislative
district incident to the creation of a province; and (c) Section 5 (3),
Article VI of the Constitution and Section 3 of the Ordinance appended
to the Constitution mandate the apportionment of a legislative district in
newly created provinces.
(2) The COMELEC, again represented by the OSG, apparently
abandoned its earlier stance on the propriety of issuing Resolution
Nos. 07-0407 and 7902 and joined causes with Sema, contending that
Section 5 (3), Article VI of the Constitution is "self-executing." Thus,
every new province created by the ARMM Regional Assembly is ipso
facto entitled to one representative in the House of Representatives
even in the absence of a national law; and
(3) Respondent Dilangalen answered the issue in the negative on the
following grounds: (a) the "province" contemplated in Section 5 (3),
Article VI of the Constitution is one that is created by an act of
Congress taking into account the provisions in RA 7160 on the creation
of provinces; (b) Section 3, Article IV of RA 9054 withheld from the
ARMM Regional Assembly the power to enact measures relating to
national elections, which encompasses the apportionment of legislative
districts for members of the House of Representatives; (c) recognizing
a legislative district in every province the ARMM Regional Assembly
creates will lead to the disproportionate representation of the ARMM in
the House of Representatives as the Regional Assembly can create
provinces without regard to the requirements in Section 461 of RA
7160; and (d) Cotabato City, which has a population of less than
250,000, is not entitled to a representative in the House of
Representatives.
On 27 November 2007, the Court heard the parties in G.R. No. 177597 in oral
arguments on the following issues: (1) whether Section 19, Article VI of RA
9054, delegating to the ARMM Regional Assembly the power to create
provinces, is constitutional; and (2) if in the affirmative, whether a province
created under Section 19, Article VI of RA 9054 is entitled to one
representative in the House of Representatives without need of a national law
creating a legislative district for such new province. 15
In compliance with the Resolution dated 27 November 2007, the parties in
G.R. No. 177597 filed their respective Memoranda on the issues raised in the
oral arguments.16 On the question of the constitutionality of Section 19, Article
VI of RA 9054, the parties in G.R. No. 177597 adopted the following positions:
(1) Sema contended that Section 19, Article VI of RA 9054 is
constitutional (a) as a valid delegation by Congress to the ARMM of the
power to create provinces under Section 20 (9), Article X of the
Constitution granting to the autonomous regions, through their organic
acts, legislative powers over "other matters as may be authorized by
law for the promotion of the general welfare of the people of the region"
and (b) as an amendment to Section 6 of RA 7160. 17 However, Sema
concedes that, if taken literally, the grant in Section 19, Article VI of RA
9054 to the ARMM Regional Assembly of the power to "prescribe
standards lower than those mandated" in RA 7160 in the creation of
provinces contravenes Section 10, Article X of the Constitution. 18 Thus,
Sema proposed that Section 19 "should be construed as prohibiting
the Regional Assembly from prescribing standards x x x that do not
comply with the minimum criteria" under RA 7160. 19
(2) Respondent Dilangalen contended that Section 19, Article VI of RA
9054 is unconstitutional on the following grounds: (a) the power to
create provinces was not among those granted to the autonomous
regions under Section 20, Article X of the Constitution and (b) the grant
under Section 19, Article VI of RA 9054 to the ARMM Regional
Assembly of the power to prescribe standards lower than those
mandated in Section 461 of RA 7160 on the creation of provinces
contravenes Section 10, Article X of the Constitution and the Equal
Protection Clause; and
(3) The COMELEC, through the OSG, joined causes with respondent
Dilangalen (thus effectively abandoning the position the COMELEC
adopted in its Compliance with the Resolution of 4 September 2007)
and contended that Section 19, Article VI of RA 9054 is
unconstitutional because (a) it contravenes Section 10 and Section
6,20 Article X of the Constitution and (b) the power to create provinces
was withheld from the autonomous regions under Section 20, Article X
of the Constitution.
On the question of whether a province created under Section 19, Article VI of
RA 9054 is entitled to one representative in the House of Representatives
without need of a national law creating a legislative district for such new
province, Sema and respondent Dilangalen reiterated in their Memoranda the
positions they adopted in their Compliance with the Resolution of 4 September
2007. The COMELEC deemed it unnecessary to submit its position on this
issue considering its stance that Section 19, Article VI of RA 9054 is
unconstitutional.
The pendency of the petition in G.R. No. 178628 was disclosed during the oral
arguments on 27 November 2007. Thus, in the Resolution of 19 February
2008, the Court ordered G.R. No. 178628 consolidated with G.R. No. 177597.
The petition in G.R. No. 178628 echoed Sema's contention that the COMELEC
acted ultra vires in issuing Resolution No. 7902 depriving the voters of
Cotabato City of a representative in the House of Representatives. In its
Comment to the petition in G.R. No. 178628, the COMELEC, through the
OSG, maintained the validity of COMELEC Resolution No. 7902 as a
temporary measure pending the enactment by Congress of the "appropriate
law."
The Issues
The petitions raise the following issues:
I. In G.R. No. 177597:
(A) Preliminarily –
(1) whether the writs of Certiorari, Prohibition, and Mandamus
are proper to test the constitutionality of COMELEC Resolution
No. 7902; and
(2) whether the proclamation of respondent Dilangalen as
representative of Shariff Kabunsuan Province with Cotabato
City mooted the petition in G.R. No. 177597.
(B) On the merits –
(1) whether Section 19, Article VI of RA 9054, delegating to the
ARMM Regional Assembly the power to create provinces,
cities, municipalities and barangays, is constitutional; and
(2) if in the affirmative, whether a province created by the
ARMM Regional Assembly under MMA Act 201 pursuant to
Section 19, Article VI of RA 9054 is entitled to one
representative in the House of Representatives without need of
a national law creating a legislative district for such province.
II. In G.R No. 177597 and G.R No. 178628, whether COMELEC
Resolution No. 7902 is valid for maintaining the status quo in the first
legislative district of Maguindanao (as "Shariff Kabunsuan Province
with Cotabato City [formerly First District of Maguindanao with
Cotabato City]"), despite the creation of the Province of Shariff
Kabunsuan out of such district (excluding Cotabato City).
The Ruling of the Court
The petitions have no merit. We rule that (1) Section 19, Article VI of
RA 9054 is unconstitutional insofar as it grants to the ARMM Regional
Assembly the power to create provinces and cities; (2) MMA Act 201
creating the Province of Shariff Kabunsuan is void; and (3) COMELEC
Resolution No. 7902 is valid.
On the Preliminary Matters
The Writ of Prohibition is Appropriate
to Test the Constitutionality of
Election Laws, Rules and Regulations
The purpose of the writ of Certiorari is to correct grave abuse of discretion by
"any tribunal, board, or officer exercising judicial or quasi-judicial
functions."21 On the other hand, the writ of Mandamus will issue to compel a
tribunal, corporation, board, officer, or person to perform an act "which the law
specifically enjoins as a duty."22 True, the COMELEC did not issue Resolution
No. 7902 in the exercise of its judicial or quasi-judicial functions.23 Nor is there
a law which specifically enjoins the COMELEC to exclude from canvassing the
votes cast in Cotabato City for representative of "Shariff Kabunsuan Province
with Cotabato City." These, however, do not justify the outright dismissal of the
petition in G.R. No. 177597 because Sema also prayed for the issuance of the
writ of Prohibition and we have long recognized this writ as proper for testing
the constitutionality of election laws, rules, and regulations. 24
Respondent Dilangalen’s Proclamation
Does Not Moot the Petition
There is also no merit in the claim that respondent Dilangalen’s proclamation
as winner in the 14 May 2007 elections for representative of "Shariff
Kabunsuan Province with Cotabato City" mooted this petition. This case does
not concern respondent Dilangalen’s election. Rather, it involves an inquiry
into the validity of COMELEC Resolution No. 7902, as well as the
constitutionality of MMA Act 201 and Section 19, Article VI of RA 9054.
Admittedly, the outcome of this petition, one way or another, determines
whether the votes cast in Cotabato City for representative of the district of
"Shariff Kabunsuan Province with Cotabato City" will be included in the
canvassing of ballots. However, this incidental consequence is no reason for
us not to proceed with the resolution of the novel issues raised here. The
Court’s ruling in these petitions affects not only the recently concluded
elections but also all the other succeeding elections for the office in question,
as well as the power of the ARMM Regional Assembly to create in the future
additional provinces.
On the Main Issues
Whether the ARMM Regional Assembly
Can Create the Province of Shariff Kabunsuan
The creation of local government units is governed by Section 10, Article X of
the Constitution, which provides:
Sec. 10. No province, city, municipality, or barangay may be created, divided,
merged, abolished or its boundary substantially altered except in accordance
with the criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the political units
directly affected.
Thus, the creation of any of the four local government units – province, city,
municipality or barangay – must comply with three conditions. First, the
creation of a local government unit must follow the criteria fixed in the Local
Government Code. Second, such creation must not conflict with any provision
of the Constitution. Third, there must be a plebiscite in the political units
affected.
There is neither an express prohibition nor an express grant of authority in the
Constitution for Congress to delegate to regional or local legislative bodies the
power to create local government units. However, under its plenary legislative
powers, Congress can delegate to local legislative bodies the power to create
local government units, subject to reasonable standards and provided no
conflict arises with any provision of the Constitution. In fact, Congress has
delegated to provincial boards, and city and municipal councils, the power to
create barangays within their jurisdiction, 25 subject to compliance with the
criteria established in the Local Government Code, and the plebiscite
requirement in Section 10, Article X of the Constitution. However, under the
Local Government Code, "only x x x an Act of Congress" can create provinces,
cities or municipalities.26
1avvphi1
Under Section 19, Article VI of RA 9054, Congress delegated to the ARMM
Regional Assembly the power to create provinces, cities, municipalities and
barangays within the ARMM. Congress made the delegation under its plenary
legislative powers because the power to create local government units is not
one of the express legislative powers granted by the Constitution to regional
legislative bodies.27 In the present case, the question arises whether the
delegation to the ARMM Regional Assembly of the power to create provinces,
cities, municipalities and barangays conflicts with any provision of the
Constitution.
There is no provision in the Constitution that conflicts with the delegation to
regional legislative bodies of the power to create municipalities and barangays,
provided Section 10, Article X of the Constitution is followed. However, the
creation of provinces and cities is another matter. Section 5 (3), Article VI of
the Constitution provides, "Each city with a population of at least two hundred
fifty thousand, or each province, shall have at least one representative" in the
House of Representatives. Similarly, Section 3 of the Ordinance appended to
the Constitution provides, "Any province that may hereafter be created, or any
city whose population may hereafter increase to more than two hundred fifty
thousand shall be entitled in the immediately following election to at least one
Member x x x."
Clearly, a province cannot be created without a legislative district because it
will violate Section 5 (3), Article VI of the Constitution as well as Section 3 of
the Ordinance appended to the Constitution. For the same reason, a city with a
population of 250,000 or more cannot also be created without a legislative
district. Thus, the power to create a province, or a city with a population of
250,000 or more, requires also the power to create a legislative district. Even
the creation of a city with a population of less than 250,000 involves the power
to create a legislative district because once the city’s population reaches
250,000, the city automatically becomes entitled to one representative under
Section 5 (3), Article VI of the Constitution and Section 3 of the Ordinance
appended to the Constitution. Thus, the power to create a province or city
inherently involves the power to create a legislative district.
For Congress to delegate validly the power to create a province or city, it must
also validly delegate at the same time the power to create a legislative district.
The threshold issue then is, can Congress validly delegate to the ARMM
Regional Assembly the power to create legislative districts for the House of
Representatives? The answer is in the negative.
Legislative Districts are Created or Reapportioned
Only by an Act of Congress
Under the present Constitution, as well as in past 28 Constitutions, the power to
increase the allowable membership in the House of Representatives, and to
reapportion legislative districts, is vested exclusively in Congress. Section 5,
Article VI of the Constitution provides:
SECTION 5. (1) The House of Representatives shall be composed of not
more than two hundred and fifty members, unless otherwise fixed by law,
who shall be elected from legislative districts apportioned among the
provinces, cities, and the Metropolitan Manila area in accordance with the
number of their respective inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by law, shall be elected through
a party-list system of registered national, regional, and sectoral parties or
organizations.
xxxx
(3) Each legislative district shall comprise, as far as practicable,
contiguous, compact, and adjacent territory. Each city with a population
of at least two hundred fifty thousand, or each province, shall have at
least one representative.
(4) Within three years following the return of every census, the
Congress shall make a reapportionment of legislative districts based
on the standards provided in this section. (Emphasis supplied)
Section 5 (1), Article VI of the Constitution vests in Congress the power to
increase, through a law, the allowable membership in the House of
Representatives. Section 5 (4) empowers Congress to reapportion legislative
districts. The power to reapportion legislative districts necessarily includes the
power to create legislative districts out of existing ones. Congress exercises
these powers through a law that Congress itself enacts, and not through a law
that regional or local legislative bodies enact. The allowable membership of the
House of Representatives can be increased, and new legislative districts of
Congress can be created, only through a national law passed by Congress.
In Montejo v. COMELEC,29 we held that the "power of redistricting x x x is
traditionally regarded as part of the power (of Congress) to make laws," and
thus is vested exclusively in Congress.
This textual commitment to Congress of the exclusive power to create or
reapportion legislative districts is logical. Congress is a national legislature and
any increase in its allowable membership or in its incumbent membership
through the creation of legislative districts must be embodied in a national law.
Only Congress can enact such a law. It would be anomalous for regional or
local legislative bodies to create or reapportion legislative districts for a
national legislature like Congress. An inferior legislative body, created by a
superior legislative body, cannot change the membership of the superior
legislative body.
The creation of the ARMM, and the grant of legislative powers to its Regional
Assembly under its organic act, did not divest Congress of its exclusive
authority to create legislative districts. This is clear from the Constitution and
the ARMM Organic Act, as amended. Thus, Section 20, Article X of the
Constitution provides:
SECTION 20. Within its territorial jurisdiction and subject to the provisions of
this Constitution and national laws, the organic act of autonomous regions
shall provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social, and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the promotion
of the general welfare of the people of the region.
Nothing in Section 20, Article X of the Constitution authorizes
autonomous regions, expressly or impliedly, to create or reapportion
legislative districts for Congress.
On the other hand, Section 3, Article IV of RA 9054 amending the ARMM
Organic Act, provides, "The Regional Assembly may exercise legislative
power x x x except on the following matters: x x x (k) National elections. x
x x." Since the ARMM Regional Assembly has no legislative power to enact
laws relating to national elections, it cannot create a legislative district whose
representative is elected in national elections. Whenever Congress enacts a
law creating a legislative district, the first representative is always elected in
the "next national elections" from the effectivity of the law. 30
Indeed, the office of a legislative district representative to Congress is
a national office, and its occupant, a Member of the House of
Representatives, is a national official.31 It would be incongruous for a regional
legislative body like the ARMM Regional Assembly to create a national office
when its legislative powers extend only to its regional territory. The office of a
district representative is maintained by national funds and the salary of its
occupant is paid out of national funds. It is a self-evident inherent limitation on
the legislative powers of every local or regional legislative body that it can only
create local or regional offices, respectively, and it can never create a national
office.
To allow the ARMM Regional Assembly to create a national office is to allow
its legislative powers to operate outside the ARMM’s territorial jurisdiction. This
violates Section 20, Article X of the Constitution which expressly limits the
coverage of the Regional Assembly’s legislative powers "[w]ithin its territorial
jurisdiction x x x."
The ARMM Regional Assembly itself, in creating Shariff Kabunsuan,
recognized the exclusive nature of Congress’ power to create or reapportion
legislative districts by abstaining from creating a legislative district for Shariff
Kabunsuan. Section 5 of MMA Act 201 provides that:
Except as may be provided by national law, the existing legislative district,
which includes Cotabato City as a part thereof, shall remain. (Emphasis
supplied)
However, a province cannot legally be created without a legislative district
because the Constitution mandates that "each province shall have at least one
representative." Thus, the creation of the Province of Shariff Kabunsuan
without a legislative district is unconstitutional.
Sema, petitioner in G.R. No. 177597, contends that Section 5 (3), Article VI of
the Constitution, which provides:
Each legislative district shall comprise, as far as practicable, contiguous,
compact, and adjacent territory. Each city with a population of at least two
hundred fifty thousand, or each province, shall have at least one
representative. (Emphasis supplied)
and Section 3 of the Ordinance appended to the Constitution, which states:
Any province that may hereafter be created, or any city whose population
may hereafter increase to more than two hundred fifty thousand shall be
entitled in the immediately following election to at least one Member or
such number of Members as it may be entitled to on the basis of the
number of its inhabitants and according to the standards set forth in
paragraph (3), Section 5 of Article VI of the Constitution. The number of
Members apportioned to the province out of which such new province was
created or where the city, whose population has so increased, is
geographically located shall be correspondingly adjusted by the Commission
on Elections but such adjustment shall not be made within one hundred and
twenty days before the election. (Emphasis supplied)
serve as bases for the conclusion that the Province of Shariff Kabunsuan,
created on 29 October 2006, is automatically entitled to one member in the
House of Representatives in the 14 May 2007 elections. As further support for
her stance, petitioner invokes the statement in Felwa that "when a province is
created by statute, the corresponding representative district comes into
existence neither by authority of that statute — which cannot provide otherwise
— nor by apportionment, but by operation of the Constitution, without a
reapportionment."
The contention has no merit.
First. The issue in Felwa, among others, was whether Republic Act No. 4695
(RA 4695), creating the provinces of Benguet, Mountain Province, Ifugao, and
Kalinga-Apayao and providing for congressional representation in the old and
new provinces, was unconstitutional for "creati[ng] congressional districts
without the apportionment provided in the Constitution." The Court answered in
the negative, thus:
The Constitution ordains:
"The House of Representatives shall be composed of not more than one
hundred and twenty Members who shall be apportioned among the several
provinces as nearly as may be according to the number of their respective
inhabitants, but each province shall have at least one Member. The Congress
shall by law make an apportionment within three years after the return of every
enumeration, and not otherwise. Until such apportionment shall have been
made, the House of Representatives shall have the same number of Members
as that fixed by law for the National Assembly, who shall be elected by the
qualified electors from the present Assembly districts. Each representative
district shall comprise as far as practicable, contiguous and compact territory."
Pursuant to this Section, a representative district may come into
existence: (a) indirectly, through the creation of a province — for "each
province shall have at least one member" in the House of
Representatives; or (b) by direct creation of several representative
districts within a province. The requirements concerning the apportionment
of representative districts and the territory thereof refer only to the second
method of creation of representative districts, and do not apply to those
incidental to the creation of provinces, under the first method. This is
deducible, not only from the general tenor of the provision above quoted, but,
also, from the fact that the apportionment therein alluded to refers to that which
is made by an Act of Congress. Indeed, when a province is created by statute,
the corresponding representative district, comes into existence neither by
authority of that statute — which cannot provide otherwise — nor by
apportionment, but by operation of the Constitution, without a reapportionment.
There is no constitutional limitation as to the time when, territory of, or other
conditions under which a province may be created, except, perhaps, if the
consequence thereof were to exceed the maximum of 120 representative
districts prescribed in the Constitution, which is not the effect of the legislation
under consideration. As a matter of fact, provinces have been created or
subdivided into other provinces, with the consequent creation of additional
representative districts, without complying with the aforementioned
requirements.32 (Emphasis supplied)
Thus, the Court sustained the constitutionality of RA 4695 because (1) it validly
created legislative districts "indirectly" through a special law enacted by
Congress creating a province and (2) the creation of the legislative districts
will not result in breaching the maximum number of legislative districts
provided under the 1935 Constitution. Felwa does not apply to the present
case because in Felwa the new provinces were created by a national law
enacted by Congress itself. Here, the new province was created merely by
a regional law enacted by the ARMM Regional Assembly.
What Felwa teaches is that the creation of a legislative district by Congress
does not emanate alone from Congress’ power to reapportion legislative
districts, but also from Congress’ power to create provinces which cannot be
created without a legislative district. Thus, when a province is created, a
legislative district is created by operation of the Constitution because the
Constitution provides that "each province shall have at least one
representative" in the House of Representatives. This does not detract from
the constitutional principle that the power to create legislative districts belongs
exclusively to Congress. It merely prevents any other legislative body, except
Congress, from creating provinces because for a legislative body to create a
province such legislative body must have the power to create legislative
districts. In short, only an act of Congress can trigger the creation of a
legislative district by operation of the Constitution. Thus, only Congress has
the power to create, or trigger the creation of, a legislative district.
Moreover, if as Sema claims MMA Act 201 apportioned a legislative district to
Shariff Kabunsuan upon its creation, this will leave Cotabato City as the lone
component of the first legislative district of Maguindanao. However, Cotabato
City cannot constitute a legislative district by itself because as of the census
taken in 2000, it had a population of only 163,849. To constitute Cotabato City
alone as the surviving first legislative district of Maguindanao will violate
Section 5 (3), Article VI of the Constitution which requires that "[E]ach city with
a population of at least two hundred fifty thousand x x x, shall have at least one
representative."
Second. Sema’s theory also undermines the composition and independence of
the House of Representatives. Under Section 19, 33 Article VI of RA 9054, the
ARMM Regional Assembly can create provinces and cities within the ARMM
with or without regard to the criteria fixed in Section 461 of RA 7160, namely:
minimum annual income of ₱20,000,000, and minimum contiguous territory of
2,000 square kilometers or minimum population of 250,000. 34 The following
scenarios thus become distinct possibilities:
(1) An inferior legislative body like the ARMM Regional Assembly can
create 100 or more provinces and thus increase the membership of a
superior legislative body, the House of Representatives, beyond the
maximum limit of 250 fixed in the Constitution (unless a national law
provides otherwise);
 (2) The proportional representation in the House of Representatives
based on one representative for at least every 250,000 residents will
be negated because the ARMM Regional Assembly need not comply
with the requirement in Section 461(a)(ii) of RA 7160 that every
province created must have a population of at least 250,000; and
(3) Representatives from the ARMM provinces can become the
majority in the House of Representatives through the ARMM Regional
Assembly’s continuous creation of provinces or cities within the ARMM.
The following exchange during the oral arguments of the petition in G.R. No.
177597 highlights the absurdity of Sema’s position that the ARMM Regional
Assembly can create provinces:
Justice Carpio:
So, you mean to say [a] Local Government can create legislative district[s] and
pack Congress with their own representatives [?]
Atty. Vistan II:35
Yes, Your Honor, because the Constitution allows that.
Justice Carpio:
So, [the] Regional Assembly of [the] ARMM can create and create x x x
provinces x x x and, therefore, they can have thirty-five (35) new
representatives in the House of Representatives without Congress agreeing to
it, is that what you are saying? That can be done, under your theory[?]
Atty. Vistan II:
Yes, Your Honor, under the correct factual circumstances.
Justice Carpio:
Under your theory, the ARMM legislature can create thirty-five (35) new
provinces, there may be x x x [only] one hundred thousand (100,000)
[population], x x x, and they will each have one representative x x x to
Congress without any national law, is that what you are saying?
Atty. Vistan II:
Without law passed by Congress, yes, Your Honor, that is what we are saying.
xxxx
Justice Carpio:
So, they can also create one thousand (1000) new provinces, sen[d] one
thousand (1000) representatives to the House of Representatives without a
national law[,] that is legally possible, correct?
Atty. Vistan II:
Yes, Your Honor.36 (Emphasis supplied)
Neither the framers of the 1987 Constitution in adopting the provisions in
Article X on regional autonomy,37 nor Congress in enacting RA 9054,
envisioned or intended these disastrous consequences that certainly would
wreck the tri-branch system of government under our Constitution. Clearly, the
power to create or reapportion legislative districts cannot be delegated by
Congress but must be exercised by Congress itself. Even the ARMM Regional
Assembly recognizes this.
The Constitution empowered Congress to create or reapportion legislative
districts, not the regional assemblies. Section 3 of the Ordinance to the
Constitution which states, "[A]ny province that may hereafter be created x x x
shall be entitled in the immediately following election to at least one Member,"
refers to a province created by Congress itself through a national law. The
reason is that the creation of a province increases the actual membership of
the House of Representatives, an increase that only Congress can decide.
Incidentally, in the present 14th Congress, there are 21938 district
representatives out of the maximum 250 seats in the House of
Representatives. Since party-list members shall constitute 20 percent of total
membership of the House, there should at least be 50 party-list seats available
in every election in case 50 party-list candidates are proclaimed winners. This
leaves only 200 seats for district representatives, much less than the 219
incumbent district representatives. Thus, there is a need now for Congress to
increase by law the allowable membership of the House, even before
Congress can create new provinces.
It is axiomatic that organic acts of autonomous regions cannot prevail over the
Constitution. Section 20, Article X of the Constitution expressly provides that
the legislative powers of regional assemblies are limited "[w]ithin its
territorial jurisdiction and subject to the provisions of the Constitution
and national laws, x x x." The Preamble of the ARMM Organic Act (RA 9054)
itself states that the ARMM Government is established "within the framework
of the Constitution." This follows Section 15, Article X of the Constitution which
mandates that the ARMM "shall be created x x x within the framework of
this Constitution and the national sovereignty as well as territorial
integrity of the Republic of the Philippines."
The present case involves the creation of a local government unit that
necessarily involves also the creation of a legislative district. The Court will not
pass upon the constitutionality of the creation of municipalities and barangays
that does not comply with the criteria established in Section 461 of RA 7160,
as mandated in Section 10, Article X of the Constitution, because the creation
of such municipalities and barangays does not involve the creation of
legislative districts. We leave the resolution of this issue to an appropriate
case.
Section 20 of Article X of the Constitution, as well as Section 1 of the
Ordinance appended to the Constitution.
WHEREFORE, we declare Section 19, Article VI of Republic Act No. 9054
UNCONSTITUTIONAL insofar as it grants to the Regional Assembly of the
Autonomous Region in Muslim Mindanao the power to create provinces and
cities. Thus, we declare VOID Muslim Mindanao Autonomy Act No. 201
creating the Province of Shariff Kabunsuan. Consequently, we rule that
COMELEC Resolution No. 7902 is VALID.
Let a copy of this ruling be served on the President of the Senate and the
Speaker of the House of Representatives.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

In summary, we rule that Section 19, Article VI of RA 9054, insofar as it grants

to the ARMM Regional Assembly the power to create provinces and cities, is
void for being contrary to Section 5 of Article VI and Section 20 of Article X of
the Constitution, as well as Section 3 of the Ordinance appended to the
Constitution. Only Congress can create provinces and cities because the
creation of provinces and cities necessarily includes the creation of legislative
districts, a power only Congress can exercise under Section 5, Article VI of the
Constitution and Section 3 of the Ordinance appended to the Constitution. The
ARMM Regional Assembly cannot create a province without a legislative
district because the Constitution mandates that every province shall have a
legislative district. Moreover, the ARMM Regional Assembly cannot enact a
law creating a national office like the office of a district representative of
Congress because the legislative powers of the ARMM Regional Assembly
operate only within its territorial jurisdiction as provided in Section 20, Article X
of the Constitution. Thus, we rule that MMA Act 201, enacted by the ARMM
Regional Assembly and creating the Province of Shariff Kabunsuan, is void.

Resolution No. 7902 Complies with the Constitution

Consequently, we hold that COMELEC Resolution No. 7902, preserving the

geographic and legislative district of the First District of Maguindanao with
Cotabato City, is valid as it merely complies with Section 5 of Article VI and
G.R. No. 176951 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National
President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR
JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL
SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as
taxpayer, petitioners,
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF BAYBAY, PROVINCE OF
LEYTE; MUNICIPALITY OF BOGO, PROVINCE OF CEBU; MUNICIPALITY OF
CATBALOGAN, PROVINCE OF WESTERN SAMAR; MUNICIPALITY OF
TANDAG, PROVINCE OF SURIGAO DEL SUR; MUNICIPALITY OF
BORONGAN, PROVINCE OF EASTERN SAMAR; and MUNICIPALITY OF
TAYABAS, PROVINCE OF QUEZON, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO,
CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF
BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN,
CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG,
CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF
VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF
BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-
in-intervention.
x-----------------------------x
G.R. No. 177499 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National
President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR
JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL
SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as
taxpayer, petitioners,
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF LAMITAN, PROVINCE OF
BASILAN; MUNICIPALITY OF TABUK, PROVINCE OF KALINGA;
MUNICIPALITY OF BAYUGAN, PROVINCE OF AGUSAN DEL SUR;
MUNICIPALITY OF BATAC, PROVINCE OF ILOCOS NORTE; MUNICIPALITY
OF MATI, PROVINCE OF DAVAO ORIENTAL; and MUNICIPALITY OF
GUIHULNGAN, PROVINCE OF NEGROS ORIENTAL, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO,
CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF
BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN,
CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG,
CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF
VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF
BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-
in-intervention.
x - - - - - - - - - - - - - - - - - - - - - - - - - - --x
G.R. No. 178056 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National
President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR
JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL
SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as
taxpayer, petitioners
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF CABADBARAN,
PROVINCE OF AGUSAN DEL NORTE; MUNICIPALITY OF CARCAR,
PROVINCE OF CEBU; and MUNICIPALITY OF EL SALVADOR, MISAMIS
ORIENTAL, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO,
CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF
BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN,
CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG,
CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF
VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF
BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-
in-intervention.
DECISION
CARPIO, J.:
The Case
These are consolidated petitions for prohibition 1 with prayer for the issuance of a
writ of preliminary injunction or temporary restraining order filed by the League of
Cities of the Philippines, City of Iloilo, City of Calbayog, and Jerry P.
Treñas2 assailing the constitutionality of the subject Cityhood Laws and enjoining
the Commission on Elections (COMELEC) and respondent municipalities from
conducting plebiscites pursuant to the Cityhood Laws.
 The Facts
During the 11th Congress,3 Congress enacted into law 33 bills converting 33
municipalities into cities. However, Congress did not act on bills converting 24
other municipalities into cities.
During the 12th Congress,4 Congress enacted into law Republic Act No. 9009 (RA
9009),5 which took effect on 30 June 2001. RA 9009 amended Section 450 of the
Local Government Code by increasing the annual income requirement for
conversion of a municipality into a city from P20 million to P100 million. The
rationale for the amendment was to restrain, in the words of Senator Aquilino
Pimentel, "the mad rush" of municipalities to convert into cities solely to secure a
larger share in the Internal Revenue Allotment despite the fact that they are
incapable of fiscal independence.6
After the effectivity of RA 9009, the House of Representatives of the
12th Congress7 adopted Joint Resolution No. 29,8 which sought to exempt from
the P100 million income requirement in RA 9009 the 24 municipalities whose
cityhood bills were not approved in the 11th Congress. However, the 12th Congress
ended without the Senate approving Joint Resolution No. 29.
During the 13th Congress,9 the House of Representatives re-adopted Joint
Resolution No. 29 as Joint Resolution No. 1 and forwarded it to the Senate for
approval. However, the Senate again failed to approve the Joint Resolution.
Following the advice of Senator Aquilino Pimentel, 16 municipalities filed, through
their respective sponsors, individual cityhood bills. The 16 cityhood bills contained
a common provision exempting all the 16 municipalities from the P100 million
income requirement in RA 9009.
On 22 December 2006, the House of Representatives approved the cityhood bills.
The Senate also approved the cityhood bills in February 2007, except that of
Naga, Cebu which was passed on 7 June 2007. The cityhood bills lapsed into law
(Cityhood Laws10) on various dates from March to July 2007 without the
President's signature.11
The Cityhood Laws direct the COMELEC to hold plebiscites to determine whether
the voters in each respondent municipality approve of the conversion of their
municipality into a city.
Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional
for violation of Section 10, Article X of the Constitution, as well as for violation of
the equal protection clause.12 Petitioners also lament that the wholesale
conversion of municipalities into cities will reduce the share of existing cities in the
Internal Revenue Allotment because more cities will share the same amount of
internal revenue set aside for all cities under Section 285 of the Local Government
Code.13
The Issues
The petitions raise the following fundamental issues:
1. Whether the Cityhood Laws violate Section 10, Article X of the
Constitution; and
2. Whether the Cityhood Laws violate the equal protection clause.
The Ruling of the Court
We grant the petitions.
The Cityhood Laws violate Sections 6 and 10, Article X of the Constitution, and are
thus unconstitutional.
First, applying the P100 million income requirement in RA 9009 to the present
case is a prospective, not a retroactive application, because RA 9009 took effect in
2001 while the cityhood bills became law more than five years later.
Second, the Constitution requires that Congress shall prescribe all the criteria for
the creation of a city in the Local Government Code and not in any other law,
including the Cityhood Laws.
Third, the Cityhood Laws violate Section 6, Article X of the Constitution because
they prevent a fair and just distribution of the national taxes to local government
units.
Fourth, the criteria prescribed in Section 450 of the Local Government Code, as
amended by RA 9009, for converting a municipality into a city are clear, plain and
unambiguous, needing no resort to any statutory construction.
Fifth, the intent of members of the 11th Congress to exempt certain municipalities
from the coverage of RA 9009 remained an intent and was never written into
Section 450 of the Local Government Code.
Sixth, the deliberations of the 11th or 12th Congress on unapproved bills or
resolutions are not extrinsic aids in interpreting a law passed in the 13 th Congress.
Seventh, even if the exemption in the Cityhood Laws were written in Section 450 of
the Local Government Code, the exemption would still be unconstitutional for
violation of the equal protection clause.
Preliminary Matters
Prohibition is the proper action for testing the constitutionality of laws administered
by the COMELEC,14 like the Cityhood Laws, which direct the COMELEC to hold
plebiscites in implementation of the Cityhood Laws. Petitioner League of Cities of
the Philippines has legal standing because Section 499 of the Local Government
Code tasks the League with the "primary purpose of ventilating, articulating and
crystallizing issues affecting city government administration and securing, through
proper and legal means, solutions thereto." 15 Petitioners-in-intervention,16 which
are existing cities, have legal standing because their Internal Revenue Allotment
will be reduced if the Cityhood Laws are declared constitutional. Mayor Jerry P.
Treñas has legal standing because as Mayor of Iloilo City and as a taxpayer he
has sufficient interest to prevent the unlawful expenditure of public funds, like the
release of more Internal Revenue Allotment to political units than what the law
allows.
Applying RA 9009 is a Prospective Application of the Law
RA 9009 became effective on 30 June 2001 during the 11th Congress. This law
specifically amended Section 450 of the Local Government Code, which now
provides:
Section 450. Requisites for Creation. – (a) A municipality or a cluster of
barangays may be converted into a component city if it has a locally
generated average annual income, as certified by the Department of
Finance, of at least One hundred million pesos (P100,000,000.00) for
the last two (2) consecutive years based on 2000 constant prices, and
if it has either of the following requisites:
(i) a contiguous territory of at least one hundred (100) square
kilometers, as certified by the Land Management Bureau; or
(ii) a population of not less than one hundred fifty thousand
(150,000) inhabitants, as certified by the National Statistics Office.
The creation thereof shall not reduce the land area, population and income
of the original unit or units at the time of said creation to less than the
minimum requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created city shall be properly
identified by metes and bounds. The requirement on land area shall not
apply where the city proposed to be created is composed of one (1) or
more islands. The territory need not be contiguous if it comprises two (2)
or more islands.
(c) The average annual income shall include the income accruing to the
general fund, exclusive of special funds, transfers, and non-recurring
income. (Emphasis supplied)
Thus, RA 9009 increased the income requirement for conversion of a municipality
into a city from P20 million to P100 million. Section 450 of the Local Government
Code, as amended by RA 9009, does not provide any exemption from the
increased income requirement.
Prior to the enactment of RA 9009, a total of 57 municipalities had cityhood bills
pending in Congress. Thirty-three cityhood bills became law before the enactment
of RA 9009. Congress did not act on 24 cityhood bills during the
11th Congress.
During the 12th Congress, the House of Representatives adopted Joint Resolution
No. 29, exempting from the income requirement of P100 million in RA 9009 the 24
municipalities whose cityhood bills were not acted upon during the 11 th Congress.
This Resolution reached the Senate. However, the 12th Congress adjourned
without the Senate approving Joint Resolution No. 29.
During the 13th Congress, 16 of the 24 municipalities mentioned in the
unapproved Joint Resolution No. 29 filed between November and December of
2006, through their respective sponsors in Congress, individual cityhood bills
containing a common provision, as follows:
Exemption from Republic Act No. 9009. - The City of x x x shall be
exempted from the income requirement prescribed under Republic Act No.
9009.
This common provision exempted each of the 16 municipalities from the
income requirement of P100 million prescribed in Section 450 of the Local
Government Code, as amended by RA 9009. These cityhood bills lapsed into
law on various dates from March to July 2007 after President Gloria Macapagal-
Arroyo failed to sign them.
Indisputably, Congress passed the Cityhood Laws long after the effectivity of RA
9009. RA 9009 became effective on 30 June 2001 or during the 11 th Congress.
The 13th Congress passed in December 2006 the cityhood bills which
became law only in 2007. Thus, respondent municipalities cannot invoke the
principle of non-retroactivity of laws.17 This basic rule has no application because
RA 9009, an earlier law to the Cityhood Laws, is not being applied retroactively but
prospectively.
Congress Must Prescribe in the Local Government Code All Criteria
Section 10, Article X of the 1987 Constitution provides:
No province, city, municipality, or barangay shall be created, divided,
merged, abolished or its boundary substantially altered, except in
accordance with the criteria established in the local government
code and subject to approval by a majority of the votes cast in a plebiscite
in the political units directly affected. (Emphasis supplied)
The Constitution is clear. The creation of local government units must follow
the criteria established in the Local Government Code and not in any other
law. There is only one Local Government Code.18 The Constitution requires
Congress to stipulate in the Local Government Code all the criteria necessary for
the creation of a city, including the conversion of a municipality into a city.
Congress cannot write such criteria in any other law, like the Cityhood Laws.
The criteria prescribed in the Local Government Code govern exclusively the
creation of a city. No other law, not even the charter of the city, can govern such
creation. The clear intent of the Constitution is to insure that the creation of cities
and other political units must follow the same uniform, non-discriminatory
criteria found solely in the Local Government Code. Any derogation or
deviation from the criteria prescribed in the Local Government Code violates
Section 10, Article X of the Constitution.
RA 9009 amended Section 450 of the Local Government Code to increase the
income requirement from P20 million to P100 million for the creation of a city. This
took effect on 30 June 2001. Hence, from that moment the Local Government
Code required that any municipality desiring to become a city must satisfy
the P100 million income requirement. Section 450 of the Local Government
Code, as amended by RA 9009, does not contain any exemption from this income
requirement.
In enacting RA 9009, Congress did not grant any exemption to respondent
municipalities, even though their cityhood bills were pending in Congress when
Congress passed RA 9009. The Cityhood Laws, all enacted after the effectivity of
RA 9009, explicitly exempt respondent municipalities from the increased income
requirement in Section 450 of the Local Government Code, as amended by RA
9009. Such exemption clearly violates Section 10, Article X of the
Constitution and is thus patently unconstitutional. To be valid, such
exemption must be written in the Local Government Code and not in any
other law, including the Cityhood Laws.
Cityhood Laws Violate Section 6, Article X of the Constitution
Uniform and non-discriminatory criteria as prescribed in the Local Government
Code are essential to implement a fair and equitable distribution of national taxes
to all local government units. Section 6, Article X of the Constitution provides:
Local government units shall have a just share, as determined by law, in
the national taxes which shall be automatically released to them.
(Emphasis supplied)
If the criteria in creating local government units are not uniform and discriminatory,
there can be no fair and just distribution of the national taxes to local government
units.
A city with an annual income of only P20 million, all other criteria being equal,
should not receive the same share in national taxes as a city with an annual
income of P100 million or more. The criteria of land area, population and income,
as prescribed in Section 450 of the Local Government Code, must be strictly
followed because such criteria, prescribed by law, are material in determining the
"just share" of local government units in national taxes. Since the Cityhood Laws
do not follow the income criterion in Section 450 of the Local Government Code,
they prevent the fair and just distribution of the Internal Revenue Allotment in
violation of Section 6, Article X of the Constitution.
Section 450 of the Local Government Code is Clear,
Plain and Unambiguous
There can be no resort to extrinsic aids – like deliberations of Congress – if the
language of the law is plain, clear and unambiguous. Courts determine the intent
of the law from the literal language of the law, within the law's four corners. 19 If the
language of the law is plain, clear and unambiguous, courts simply apply the law
according to its express terms. If a literal application of the law results in absurdity,
impossibility or injustice, then courts may resort to extrinsic aids of statutory
construction like the legislative history of the law.20
Congress, in enacting RA 9009 to amend Section 450 of the Local Government
Code, did not provide any exemption from the increased income requirement, not
even to respondent municipalities whose cityhood bills were then pending when
Congress passed RA 9009. Section 450 of the Local Government Code, as
amended by RA 9009, contains no exemption whatsoever. Since the law is clear,
plain and unambiguous that any municipality desiring to convert into a city must
meet the increased income requirement, there is no reason to go beyond the letter
of the law in applying Section 450 of the Local Government Code, as amended by
RA 9009.
The 11th Congress' Intent was not Written into the Local Government Code
True, members of Congress discussed exempting respondent municipalities from
RA 9009, as shown by the various deliberations on the matter during the
11th Congress. However, Congress did not write this intended exemption into law.
Congress could have easily included such exemption in RA 9009 but Congress did
not. This is fatal to the cause of respondent municipalities because such
exemption must appear in RA 9009 as an amendment to Section 450 of the Local
Government Code. The Constitution requires that the criteria for the conversion of
a municipality into a city, including any exemption from such criteria, must all be
written in the Local Government Code. Congress cannot prescribe such criteria or
exemption from such criteria in any other law. In short, Congress cannot create
a city through a law that does not comply with the criteria or exemption
found in the Local Government Code.
Section 10 of Article X is similar to Section 16, Article XII of the Constitution
prohibiting Congress from creating private corporations except by a general law.
Section 16 of Article XII provides:
The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and
subject to the test of economic viability. (Emphasis supplied)
Thus, Congress must prescribe all the criteria for the "formation, organization, or
regulation" of private corporations in a general law applicable to all without
discrimination.21 Congress cannot create a private corporation through a special
law or charter.
Deliberations of the 11th Congress on Unapproved Bills Inapplicable
Congress is not a continuing body.22 The unapproved cityhood bills filed during
the 11th Congress became mere scraps of paper upon the adjournment of the
11th Congress. All the hearings and deliberations conducted during the
11th Congress on unapproved bills also became worthless upon the adjournment
of the 11th Congress. These hearings and deliberations cannot be used to
interpret bills enacted into law in the 13 th or subsequent Congresses.
The members and officers of each Congress are different. All unapproved bills filed
in one Congress become functus officio upon adjournment of that Congress and
must be re-filed anew in order to be taken up in the next Congress. When their
respective authors re-filed the cityhood bills in 2006 during the 13 th Congress, the
bills had to start from square one again, going through the legislative mill just like
bills taken up for the first time, from the filing to the approval. Section 123, Rule
XLIV of the Rules of the Senate, on Unfinished Business, provides:
Sec. 123. x x x
All pending matters and proceedings shall terminate upon the
expiration of one (1) Congress, but may be taken by the succeeding
Congress as if presented for the first time. (Emphasis supplied)
Similarly, Section 78 of the Rules of the House of Representatives, on Unfinished
Business, states:
Section 78. Calendar of Business. The Calendar of Business shall consist
of the following:
a. Unfinished Business. This is business being considered by the
House at the time of its last adjournment. Its consideration shall be
resumed until it is disposed of. The Unfinished Business at the
end of a session shall be resumed at the commencement of the
next session as if no adjournment has taken place. At the end of
the term of a Congress, all Unfinished Business are deemed
terminated. (Emphasis supplied)
Thus, the deliberations during the 11th Congress on the unapproved cityhood bills,
as well as the deliberations during the 12 th and 13th Congresses on the
unapproved resolution exempting from RA 9009 certain municipalities, have no
legal significance. They do not qualify as extrinsic aids in construing laws passed
by subsequent Congresses.
Applicability of Equal Protection Clause
If Section 450 of the Local Government Code, as amended by RA 9009, contained
an exemption to the P100 million annual income requirement, the criteria for such
exemption could be scrutinized for possible violation of the equal protection clause.
Thus, the criteria for the exemption, if found in the Local Government Code, could
be assailed on the ground of absence of a valid classification. However, Section
450 of the Local Government Code, as amended by RA 9009, does not contain
any exemption. The exemption is contained in the Cityhood Laws, which are
unconstitutional because such exemption must be prescribed in the Local
Government Code as mandated in Section 10, Article X of the Constitution.
Even if the exemption provision in the Cityhood Laws were written in Section 450
of the Local Government Code, as amended by RA 9009, such exemption would
still be unconstitutional for violation of the equal protection clause. The exemption
provision merely states, "Exemption from Republic Act No. 9009 ─ The City of
x x x shall be exempted from the income requirement prescribed under
Republic Act No. 9009." This one sentence exemption provision contains no
classification standards or guidelines differentiating the exempted municipalities
from those that are not exempted.
Even if we take into account the deliberations in the 11 th Congress that
municipalities with pending cityhood bills should be exempt from the P100 million
income requirement, there is still no valid classification to satisfy the equal
protection clause. The exemption will be based solely on the fact that the 16
municipalities had cityhood bills pending in the 11 th Congress when RA 9009
was enacted. This is not a valid classification between those entitled and those
not entitled to exemption from the P100 million income requirement.
To be valid, the classification in the present case must be based on substantial
distinctions, rationally related to a legitimate government objective which is the
purpose of the law,23 not limited to existing conditions only, and applicable to all
similarly situated. Thus, this Court has ruled:
The equal protection clause of the 1987 Constitution permits a valid
classification under the following conditions:
1. The classification must rest on substantial distinctions;
2. The classification must be germane to the purpose of the law;
3. The classification must not be limited to existing conditions only; and
4. The classification must apply equally to all members of the same
class.24
There is no substantial distinction between municipalities with pending cityhood
bills in the 11th Congress and municipalities that did not have pending bills. The
mere pendency of a cityhood bill in the 11 th Congress is not a material difference to
distinguish one municipality from another for the purpose of the income
requirement. The pendency of a cityhood bill in the 11 th Congress does not affect
or determine the level of income of a municipality. Municipalities with pending
cityhood bills in the 11th Congress might even have lower annual income than
municipalities that did not have pending cityhood bills. In short, the classification
criterion − mere pendency of a cityhood bill in the 11 th Congress − is not rationally
related to the purpose of the law which is to prevent fiscally non-viable
municipalities from converting into cities.
Municipalities that did not have pending cityhood bills were not informed that a
pending cityhood bill in the 11th Congress would be a condition for exemption from
the increased P100 million income requirement. Had they been informed, many
municipalities would have caused the filing of their own cityhood bills. These
municipalities, even if they have bigger annual income than the 16 respondent
municipalities, cannot now convert into cities if their income is less than P100
million.
The fact of pendency of a cityhood bill in the 11 th Congress limits the exemption to
a specific condition existing at the time of passage of RA 9009. That specific
condition will never happen again. This violates the requirement that a valid
classification must not be limited to existing conditions only. This requirement is
illustrated in Mayflower Farms, Inc. v. Ten Eyck,25 where the challenged law
allowed milk dealers engaged in business prior to a fixed date to sell at a price
lower than that allowed to newcomers in the same business. In Mayflower, the
U.S. Supreme Court held:
We are referred to a host of decisions to the effect that a regulatory law
may be prospective in operation and may except from its sweep those
presently engaged in the calling or activity to which it is directed. Examples
are statutes licensing physicians and dentists, which apply only to those
entering the profession subsequent to the passage of the act and exempt
those then in practice, or zoning laws which exempt existing buildings, or
laws forbidding slaughterhouses within certain areas, but excepting
existing establishments. The challenged provision is unlike such laws,
since, on its face, it is not a regulation of a business or an activity in
the interest of, or for the protection of, the public, but an attempt to
give an economic advantage to those engaged in a given business at
an arbitrary date as against all those who enter the industry after that
date. The appellees do not intimate that the classification bears any
relation to the public health or welfare generally; that the provision will
discourage monopoly; or that it was aimed at any abuse, cognizable by
law, in the milk business. In the absence of any such showing, we have no
right to conjure up possible situations which might justify the
 discrimination. The classification is arbitrary and unreasonable and denies G.R. No. 175457 July 6, 2011
the appellant the equal protection of the law. (Emphasis supplied)
RUPERTO A. AMBIL, JR., Petitioner,
In the same vein, the exemption provision in the Cityhood Laws gives the 16 vs.
municipalities a unique advantage based on an arbitrary date − the filing of their SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, Respondent.
cityhood bills before the end of the 11th Congress - as against all other
municipalities that want to convert into cities after the effectivity of RA 9009.
x - - - - - - - - - - - - - - - - - - - - - - -x
Furthermore, limiting the exemption only to the 16 municipalities violates the
G.R. No. 175482
requirement that the classification must apply to all similarly situated. Municipalities
with the same income as the 16 respondent municipalities cannot convert into
cities, while the 16 respondent municipalities can. Clearly, as worded the ALEXANDRINO R. APELADO, SR., Petitioner,
exemption provision found in the Cityhood Laws, even if it were written in Section vs.
450 of the Local Government Code, would still be unconstitutional for violation of PEOPLE OF THE PHILIPPINES, Respondent.
the equal protection clause.
DECISION
WHEREFORE, we GRANT the petitions and declare UNCONSTITUTIONAL the
Cityhood Laws, namely: Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, VILLARAMA, JR., J.:
9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491.
Before us are two consolidated petitions for review on certiorari filed by
SO ORDERED. petitioner Ruperto A. Ambil, Jr.1 and petitioner Alexandrino R. Apelado
Sr.2 assailing the Decision3 promulgated on September 16, 2005 and
Resolution4 dated November 8, 2006 of the Sandiganbayan in Criminal Case
No. 25892.

The present controversy arose from a letter5 of Atty. David B. Loste, President
of the Eastern Samar Chapter of the Integrated Bar of the Philippines (IBP), to
the Office of the Ombudsman, praying for an investigation into the alleged
transfer of then Mayor Francisco Adalim, an accused in Criminal Case No.
10963 for murder, from the provincial jail of Eastern Samar to the residence of
petitioner, then Governor Ruperto A. Ambil, Jr. In a Report 6 dated January 4,
1999, the National Bureau of Investigation (NBI) recommended the filing of
criminal charges against petitioner Ambil, Jr. for violation of Section 3(e) 7 of
Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act, as amended. On September 22, 1999, the new President of the
IBP, Eastern Samar Chapter, informed the Ombudsman that the IBP is no
longer interested in pursuing the case against petitioners. Thus, he
recommended the dismissal of the complaint against petitioners. 8

Nonetheless, in an Information9 dated January 31, 2000, petitioners Ambil, Jr.

and Alexandrino R. Apelado, Sr. were charged with violation of Section 3(e) of
R.A. No. 3019, together with SPO3 Felipe A. Balano. Upon reinvestigation, the
Office of the Ombudsman issued a Memorandum 10 dated August 4, 2000,
recommending the dismissal of the complaint as regards Balano and the
amendment of the Information to include the charge of Delivering Prisoners
from Jail under Article 15611 of the Revised Penal Code, as amended, (RPC)
against the remaining accused. The Amended Information12 reads:
That on or about the 6th day of September 1998, and for sometime prior [or]
subsequent thereto, [in] the Municipality of Borongan, Province of Eastern
Samar, Philippines, and within the jurisdiction of this Honorable Court, [the]
above-named accused, Ruperto A. Ambil, Jr.[,] being then the Provincial
Governor of Eastern Samar, and Alexandrino R. Apelado, being then the
Provincial Warden of Eastern Samar, both having been public officers, duly
elected, appointed and qualified as such, committing the offense in relation to
office, conniving and confederating together and mutually helping x x x each
other, with deliberate intent, manifest partiality and evident bad faith, did then
and there wilfully, unlawfully and criminally order and cause the release from
the Provincial Jail of detention prisoner Mayor Francisco Adalim, accused in
Criminal Case No. 10963, for Murder, by virtue of a warrant of Arrest issued by
Honorable Arnulfo P. Bugtas, Presiding Judge, RTC-Branch 2, Borongan,
Eastern Samar, and thereafter placed said detention prisoner (Mayor
Francisco Adalim) under accused RUPERTO A. AMBIL, JR.’s custody, by
allowing said Mayor Adalim to stay at accused Ambil’s residence for a period
of Eighty-Five (85) days, more or less which act was done without any court
order, thus accused in the performance of official functions had given
unwarranted benefits and advantage to detainee Mayor Francisco Adalim to
the prejudice of the government.
CONTRARY TO LAW.
BAIL BOND RECOMMENDED: P30,000.00 each.13
On arraignment, petitioners pleaded not guilty and posted bail.
At the pre-trial, petitioners admitted the allegations in the Information. They
reason, however, that Adalim’s transfer was justified considering the imminent
threats upon his person and the dangers posed by his detention at the
provincial jail. According to petitioners, Adalim’s sister, Atty. Juliana A. Adalim-
White, had sent numerous prisoners to the same jail where Mayor Adalim was
to be held.
Consequently, the prosecution no longer offered testimonial evidence and
rested its case after the admission of its documentary exhibits. Petitioners filed
a Motion for Leave to File Demurrer to Evidence with Reservation to Present
Evidence in Case of Denial14 but the same was denied.
At the trial, petitioners presented three witnesses: petitioner Ambil, Jr., Atty.
Juliana A. Adalim-White and Mayor Francisco C. Adalim.
Petitioner Ambil, Jr. testified that he was the Governor of Eastern Samar from
1998 to 2001. According to him, it was upon the advice of Adalim’s lawyers
that he directed the transfer of Adalim’s detention to his home. He cites poor
security in the provincial jail as the primary reason for taking personal custody
of Adalim considering that the latter would be in the company of inmates who
were put away by his sister and guards identified with his political opponents. 15
For her part, Atty. White stated that she is the District Public Attorney of
Eastern Samar and the sister of Mayor Adalim. She recounted how Mayor
Adalim was arrested while they were attending a wedding in Sulat, Eastern
Samar, on September 6, 1998. According to Atty. White, she sought the
alternative custody of Gov. Ambil, Jr. after Provincial Warden and herein
petitioner Apelado, Sr. failed to guarantee the mayor’s safety. 16
Meanwhile, Francisco Adalim introduced himself as the Mayor of Taft, Eastern
Samar. He confirmed his arrest on September 6, 1998 in connection with a
murder case filed against him in the Regional Trial Court (RTC) of Borongan,
Eastern Samar. Adalim confirmed Atty. White’s account that he spotted
inmates who served as bodyguards for, or who are associated with, his
political rivals at the provincial jail. He also noticed a prisoner, Roman Akyatan,
gesture to him with a raised clenched fist. Sensing danger, he called on his
sister for help. Adalim admitted staying at Ambil, Jr.’s residence for almost
three months before he posted bail after the charge against him was
downgraded to homicide.17
Petitioner Apelado, Sr. testified that he was the Provincial Jail Warden of
Eastern Samar. He recalls that on September 6, 1998, SPO3 Felipe Balano
fetched him at home to assist in the arrest of Mayor Adalim. Allegedly, Atty.
White was contesting the legality of Mayor Adalim’s arrest and arguing with the
jail guards against booking him for detention. At the provincial jail, petitioner
was confronted by Atty. White who informed him that he was under the
governor, in the latter’s capacity as a provincial jailer. Petitioner claims that it is
for this reason that he submitted to the governor’s order to relinquish custody
of Adalim.18
Further, petitioner Apelado, Sr. described the physical condition of the jail to be
dilapidated and undermanned. According to him, only two guards were
incharge of looking after 50 inmates. There were two cells in the jail, each
housing 25 inmates, while an isolation cell of 10 square meters was
unserviceable at the time. Also, there were several nipa huts within the
perimeter for use during conjugal visits. 19
On September 16, 2005, the Sandiganbayan, First Division, promulgated the
assailed Decision20 finding petitioners guilty of violating Section 3(e) of R.A.
No. 3019. The court ruled that in moving Adalim to a private residence,
petitioners have conspired to accord him unwarranted benefits in the form of
more comfortable quarters with access to television and other privileges that
other detainees do not enjoy. It stressed that under the Rules, no person under
detention by legal process shall be released or transferred except upon order
of the court or when he is admitted to bail. 21
The Sandiganbayan brushed aside petitioners’ defense that Adalim’s transfer
was made to ensure his safety. It observed that petitioner Ambil, Jr. did not
personally verify any actual threat on Adalim’s life but relied simply on the
advice of Adalim’s lawyers. The Sandiganbayan also pointed out the
availability of an isolation cell and nipa huts within the 10-meter-high perimeter
fence of the jail which could have been used to separate Adalim from other
prisoners. Finally, it cited petitioner Ambil, Jr.’s failure to turn over Adalim
despite advice from Assistant Secretary Jesus Ingeniero of the Department of
Interior and Local Government.
Consequently, the Sandiganbayan sentenced petitioner Ambil, Jr. to an
indeterminate penalty of imprisonment for nine (9) years, eight (8) months and
one (1) day to twelve (12) years and four (4) months. In favor of petitioner
Apelado, Sr., the court appreciated the incomplete justifying circumstance of
obedience to a superior order and sentenced him to imprisonment for six (6)
years and one (1) month to nine (9) years and eight (8) months.
Hence, the present petitions.
Petitioner Ambil, Jr. advances the following issues for our consideration:
I I
WHETHER OR NOT SECTION 3(e) REPUBLIC ACT NO. 3019, AS
AMENDED, APPLIES TO PETITIONER’S CASE BEFORE THE
SANDIGANBAYAN.
II
WHETHER OR NOT A PUBLIC OFFICER SUCH AS PETITIONER IS
A PRIVATE PARTY FOR PURPOSES OF SECTION 3(e), REPUBLIC
ACT NO. 3019, AS AMENDED.
III
WHETHER OR NOT PETITIONER ACTED WITH DELIBERATE
INTENT, MANIFEST PARTIALITY, EVIDENT BAD FAITH OR GROSS
INEXCUSABLE NEGLIGENCE IN THE CONTEXT OF SAID SECTION
3(e).
IV
WHETHER OR NOT PETITIONER AS PROVINCIAL GOVERNOR
AND JAILER UNDER SECTIONS 1730 AND 1733, ARTICLE III,
CHAPTER 45 OF THE ADMINISTRATIVE CODE OF 1917 AND
SECTION 61, CHAPTER V, REPUBLIC ACT 6975 HAS THE
AUTHORITY TO TAKE CUSTODY OF A DETENTION PRISONER.
V
WHETHER OR NOT PETITIONER IS ENTITLED TO THE
JUSTIFYING CIRCUMSTANCE OF FULFILLMENT OF A DUTY OR
THE LAWFUL EXERCISE OF A RIGHT OR OFFICE.
VI
WHETHER OR NOT PETITIONER SHOULD HAVE BEEN
ACQUITTED BECAUSE THE PROSECUTION EVIDENCE DID NOT
ESTABLISH HIS GUILT BEYOND REASONABLE DOUBT.22
For his part, petitioner Apelado, Sr. imputes the following errors on the
Sandiganbayan:
THERE WAS MISAPPREHENSION OF FACTS AND/OR
MISAPPLICATION OF THE LAW AND JURISPRUDENCE IN
 CONVICTING ACCUSED APELADO, EITHER AS PRINCIPAL OR IN
CONSPIRACY WITH HIS CO-ACCUSED AMBIL.
II
IN THE ABSENCE OF COMPETENT PROOF BEYOND
REASONABLE DOUBT OF CONSPIRACY BETWEEN ACCUSED
AMBIL AND HEREIN PETITIONER, THE LATTER SHOULD BE
ACCORDED FULL CREDIT FOR THE JUSTIFYING
CIRCUMSTANCE UNDER PARAGRAPH 6, ARTICLE 11 OF THE
REVISED PENAL CODE.
III
THE COURT A QUO’S BASIS IN CONVICTING BOTH ACCUSED
AMBIL AND HEREIN PETITIONER OF HAVING GIVEN MAYOR
ADALIM "UNWARRANTED BENEFITS AND ADVANTAGE TO THE
PREJUDICE x x x OF THE GOVERNMENT IS, AT THE MOST,
SPECULATIVE.23
The issues raised by petitioner Ambil, Jr. can be summed up into three: (1)
Whether he is guilty beyond reasonable doubt of violating Section 3(e), R.A.
No. 3019; (2) Whether a provincial governor has authority to take personal
custody of a detention prisoner; and (3) Whether he is entitled to the justifying
circumstance of fulfillment of duty under Article 11(5) 24 of the RPC.
Meanwhile, petitioner Apelado, Sr.’s assignment of errors can be condensed
into two: (1) Whether he is guilty beyond reasonable doubt of violating Section
3(e), R.A. No. 3019; and (2) Whether he is entitled to the justifying
circumstance of obedience to an order issued by a superior for some lawful
purpose under Article 11(6)25 of the RPC.
Fundamentally, petitioner Ambil, Jr. argues that Section 3(e), R.A. No. 3019
does not apply to his case because the provision contemplates only
transactions of a pecuniary nature. Since the law punishes a public officer who
extends unwarranted benefits to a private person, petitioner avers that he
cannot be held liable for extending a favor to Mayor Adalim, a public officer.
Further, he claims good faith in taking custody of the mayor pursuant to his
duty as a "Provincial Jailer" under the Administrative Code of 1917.
Considering this, petitioner believes himself entitled to the justifying
circumstance of fulfillment of duty or lawful exercise of duty.
Petitioner Apelado, Sr., on the other hand, denies allegations of conspiracy
between him and petitioner Ambil, Jr. Petitioner Apelado, Sr. defends that he
was merely following the orders of a superior when he transferred the
detention of Adalim. As well, he invokes immunity from criminal liability.
For the State, the Office of the Special Prosecutor (OSP) points out the
absence of jurisprudence that restricts the application of Section 3(e), R.A. No.
3019 to transactions of a pecuniary nature. The OSP explains that it is enough
to show that in performing their functions, petitioners have accorded undue
preference to Adalim for liability to attach under the provision. Further, the
OSP maintains that Adalim is deemed a private party for purposes of applying
Section 3(e), R.A. No. 3019 because the unwarranted benefit redounded, not
to his person as a mayor, but to his person as a detention prisoner accused of
murder. It suggests further that petitioners were motivated by bad faith as
evidenced by their refusal to turn over Adalim despite instruction from Asst.
Sec. Ingeniero. The OSP also reiterates petitioners’ lack of authority to take
custody of a detention prisoner without a court order. Hence, it concludes that
petitioners are not entitled to the benefit of any justifying circumstance.
After a careful review of this case, the Court finds the present petitions bereft
of merit.
Petitioners were charged with violation of Section 3(e) of R.A. No. 3019 or
the Anti-Graft and Corrupt Practices Act which provides:
Section. 3. Corrupt practices of public officers. - In addition to acts or
omissions of public officers already penalized by existing law, the following
shall constitute corrupt practices of any public officer and are hereby declared
to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or giving
any private party any unwarranted benefits, advantage or preference in the
discharge of his official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence. This provision
shall apply to officers and employees of offices or government corporations
charged with the grant of licenses or permits or other concessions.
In order to hold a person liable under this provision, the following elements
must concur: (1) the accused must be a public officer discharging
administrative, judicial or official functions; (2) he must have acted with
manifest partiality, evident bad faith or gross inexcusable negligence; and (3)
his action caused any undue injury to any party, including the government, or
gave any private party unwarranted benefits, advantage or preference in the
discharge of his functions.26
As to the first element, there is no question that petitioners are public officers
discharging official functions and that jurisdiction over them lay with the
Sandiganbayan. Jurisdiction of the Sandiganbayan over public officers
charged with violation of the Anti-Graft Law is provided under Section 4 of
Presidential Decree No. 1606,27 as amended by R.A. No. 8249.28 The pertinent
portions of Section 4, P.D. No. 1606, as amended, read as follows:
SEC. 4. Jurisdiction.—The Sandiganbayan shall exercise exclusive original
jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as amended, otherwise known as the
Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II,
Section 2, Title VII, Book II of the Revised Penal Code, where one or more of
the accused are officials occupying the following positions in the government,
whether in a permanent, acting or interim capacity, at the time of the
commission of the offense:
(1) Officials of the executive branch occupying the positions of regional director
and higher, otherwise classified as Grade ‘27’ and higher, of the
Compensation and Position Classification Act of 1989 (Republic Act No.
6758), specifically including:
(a) Provincial governors, vice-governors, members of the sangguniang
panlalawigan and provincial treasurers, assessors, engineers and other
provincial department heads[;]
xxxx
In cases where none of the accused are occupying positions corresponding to
Salary Grade ‘27’ or higher, as prescribed in the said Republic Act No. 6758,
or military and PNP officers mentioned above, exclusive original jurisdiction
thereof shall be vested in the proper regional trial court, metropolitan trial court,
municipal trial court, and municipal circuit trial court, as the case may be,
pursuant to their respective jurisdiction as provided in Batas Pambansa Blg.
129, as amended.
xxxx
Thus, the jurisdiction of the Sandiganbayan over petitioner Ambil, Jr. is beyond
question. The same is true as regards petitioner Apelado, Sr. As to him, a
Certification29 from the Provincial Government Department Head of the HRMO
shows that his position as Provincial Warden is classified as Salary Grade 22.
Nonetheless, it is only when none of the accused are occupying positions
corresponding to salary grade ‘27’ or higher shall exclusive jurisdiction be
vested in the lower courts. Here, petitioner Apelado, Sr. was charged as a co-
principal with Governor Ambil, Jr., over whose position the Sandiganbayan has
jurisdiction. Accordingly, he was correctly tried jointly with said public officer in
the proper court which had exclusive original jurisdiction over them – the
Sandiganbayan.
The second element, for its part, describes the three ways by which a violation
of Section 3(e) of R.A. No. 3019 may be committed, that is, through manifest
partiality, evident bad faith or gross inexcusable negligence.
In Sison v. People,30 we defined "partiality," "bad faith" and "gross negligence"
as follows:
"Partiality" is synonymous with "bias" which "excites a disposition to see and
report matters as they are wished for rather than as they are." "Bad faith does
not simply connote bad judgment or negligence; it imputes a dishonest
purpose or some moral obliquity and conscious doing of a wrong; a breach of
sworn duty through some motive or intent or ill will; it partakes of the nature of
fraud." "Gross negligence has been so defined as negligence characterized by
the want of even slight care, acting or omitting to act in a situation where there
is a duty to act, not inadvertently but wilfully and intentionally with a conscious
indifference to consequences in so far as other persons may be affected. It is
the omission of that care which even inattentive and thoughtless men never fail
to take on their own property." x x x31
In this case, we find that petitioners displayed manifest partiality and evident
bad faith in transferring the detention of Mayor Adalim to petitioner Ambil, Jr.’s
house. There is no merit to petitioner Ambil, Jr.’s contention that he is
authorized to transfer the detention of prisoners by virtue of his power as the
"Provincial Jailer" of Eastern Samar.
Section 28 of the Local Government Code draws the extent of the power of
local chief executives over the units of the Philippine National Police within
their jurisdiction:
SEC. 28. Powers of Local Chief Executives over the Units of the Philippine
National Police.—The extent of operational supervision and control of local
chief executives over the police force, fire protection unit, and jail management
personnel assigned in their respective jurisdictions shall be governed by the
provisions of Republic Act Numbered Sixty-nine hundred seventy-five (R.A.
No. 6975), otherwise known as "The Department of the Interior and Local
Government Act of 1990," and the rules and regulations issued pursuant
thereto.
In particular, Section 61, Chapter 5 of R.A. No. 697532 on the Bureau of Jail
Management and Penology provides:
Sec. 61. Powers and Functions. - The Jail Bureau shall exercise supervision
and control over all city and municipal jails. The provincial jails shall be
supervised and controlled by the provincial government within its
jurisdiction, whose expenses shall be subsidized by the National Government
for not more than three (3) years after the effectivity of this Act.
The power of control is the power of an officer to alter or modify or set aside
what a subordinate officer had done in the performance of his duties and to
substitute the judgment of the former for that of the latter.33 An officer in control
lays down the rules in the doing of an act. If they are not followed, he may, in
his discretion, order the act undone or re-done by his subordinate or he may
even decide to do it himself.34
On the other hand, the power of supervision means "overseeing or the
authority of an officer to see to it that the subordinate officers perform their
duties."35 If the subordinate officers fail or neglect to fulfill their duties, the
official may take such action or step as prescribed by law to make them
perform their duties. Essentially, the power of supervision means no more than
the power of ensuring that laws are faithfully executed, or that subordinate
officers act within the law.36 The supervisor or superintendent merely sees to it
that the rules are followed, but he does not lay down the rules, nor does he
have discretion to modify or replace them.37
Significantly, it is the provincial government and not the governor alone which
has authority to exercise control and supervision over provincial jails. In any
case, neither of said powers authorizes the doing of acts beyond the
parameters set by law. On the contrary, subordinates must be enjoined to act
within the bounds of law. In the event that the subordinate performs an
act ultra vires, rules may be laid down on how the act should be done, but
always in conformity with the law.
In a desperate attempt to stretch the scope of his powers, petitioner Ambil, Jr.
cites Section 1731, Article III of the Administrative Code of 1917 on Provincial
jails in support. Section 1731 provides:
SEC. 1731. Provincial governor as keeper of jail.—The governor of the
province shall be charged with the keeping of the provincial jail, and it
shall be his duty to administer the same in accordance with law and the
regulations prescribed for the government of provincial prisons. The
immediate custody and supervision of the jail may be committed to the care of
a jailer to be appointed by the provincial governor. The position of jailer shall
be regarded as within the unclassified civil service but may be filled in the
manner in which classified positions are filled, and if so filled, the appointee
shall be entitled to all the benefits and privileges of classified employees,
except that he shall hold office only during the term of office of the appointing
governor and until a successor in the office of the jailer is appointed and
qualified, unless sooner separated. The provincial governor shall, under the
direction of the provincial board and at the expense of the province,
supply proper food and clothing for the prisoners; though the provincial
board may, in its discretion, let the contract for the feeding of the prisoners to
some other person. (Emphasis supplied.)
This provision survived the advent of the Administrative Code of 1987. But
again, nowhere did said provision designate the provincial governor as the
"provincial jailer," or even slightly suggest that he is empowered to take
personal custody of prisoners. What is clear from the cited provision is that the
provincial governor’s duty as a jail keeper is confined to the administration of
the jail and the procurement of food and clothing for the prisoners. After all,
administrative acts pertain only to those acts which are necessary to be done
to carry out legislative policies and purposes already declared by the
legislative body or such as are devolved upon it 38 by the Constitution.
Therefore, in the exercise of his administrative powers, the governor can only
enforce the law but not supplant it.
Besides, the only reference to a transfer of prisoners in said article is found in
Section 173739 under which prisoners may be turned over to the jail of the
neighboring province in case the provincial jail be insecure or insufficient to
accommodate all provincial prisoners. However, this provision has been
superseded by Section 3, Rule 114 of the Revised Rules of Criminal
Procedure, as amended. Section 3, Rule 114 provides:
SEC. 3. No release or transfer except on court order or bail.-No person under
detention by legal process shall be released or transferred except upon order
of the court or when he is admitted to bail.
Indubitably, the power to order the release or transfer of a person under
detention by legal process is vested in the court, not in the provincial
government, much less the governor. This was amply clarified by Asst. Sec.
Ingeniero in his communication40 dated October 6, 1998 addressed to
petitioner Ambil, Jr. Asst. Sec. Ingeniero wrote:
06 October 1996
GOVERNOR RUPERTO AMBIL
Provincial Capitol
Borongan, Eastern Samar
Dear Sir:
This has reference to the letter of Atty. Edwin B. Docena, and the reports
earlier received by this Department, relative to your alleged action in taking
into custody Mayor Francisco "Aising" Adalim of Taft, that province, who has
been previously arrested by virtue by a warrant of arrest issued in Criminal
Case No. 10963.
If the report is true, it appears that your actuation is not in accord with the
provision of Section 3, Rule 113 of the Rules of Court, which mandates that an
arrested person be delivered to the nearest police station or jail.
Moreover, invoking Section 61 of RA 6975 as legal basis in taking custody of
the accused municipal mayor is misplaced. Said section merely speaks of the
power of supervision vested unto the provincial governor over provincial jails. It
does not, definitely, include the power to take in custody any person in
detention.
In view of the foregoing, you are hereby enjoined to conduct yourself within the
bounds of law and to immediately deliver Mayor Adalim to the provincial jail in
order to avoid legal complications.
Please be guided accordingly.
Very truly yours,
(SGD.)
JESUS I. INGENIERO
Assistant Secretary
Still, petitioner Ambil, Jr. insisted on his supposed authority as a "provincial
jailer." Said petitioner’s usurpation of the court's authority, not to mention his
open and willful defiance to official advice in order to accommodate a former
political party mate,41 betray his unmistakable bias and the evident bad faith
that attended his actions.
Likewise amply established beyond reasonable doubt is the third element of
the crime. As mentioned above, in order to hold a person liable for violation of
Section 3(e), R.A. No. 3019, it is required that the act constituting the offense
consist of either (1) causing undue injury to any party, including the
government, or (2) giving any private party any unwarranted benefits,
advantage or preference in the discharge by the accused of his official,
administrative or judicial functions.
In the case at hand, the Information specifically accused petitioners of giving
unwarranted benefits and advantage to Mayor Adalim, a public officer charged
with murder, by causing his release from prison and detaining him instead at
the house of petitioner Ambil, Jr. Petitioner Ambil, Jr. negates the applicability
of Section 3(e), R.A. No. 3019 in this case on two points. First, Section 3(e) is
not applicable to him allegedly because the last sentence thereof provides that
the "provision shall apply to officers and employees of offices or government
corporations charged with the grant of licenses, permits or other concessions"
and he is not such government officer or employee. Second, the purported
unwarranted benefit was accorded not to a private party but to a public officer.
However, as regards his first contention, it appears that petitioner Ambil, Jr.
has obviously lost sight, if he is not altogether unaware, of our ruling
in Mejorada v. Sandiganbayan42 where we held that a prosecution for violation
of Section 3(e) of the Anti-Graft Law will lie regardless of whether or not the
accused public officer is "charged with the grant of licenses or permits or other
concessions." Following is an excerpt of what we said in Mejorada,
Section 3 cited above enumerates in eleven subsections the corrupt practices
of any public officers (sic) declared unlawful. Its reference to "any public
officer" is without distinction or qualification and it specifies the acts declared
unlawful. We agree with the view adopted by the Solicitor General that the last
sentence of paragraph [Section 3] (e) is intended to make clear the inclusion of
officers and employees of officers (sic) or government corporations which,
under the ordinary concept of "public officers" may not come within the term. It
is a strained construction of the provision to read it as applying exclusively to
public officers charged with the duty of granting licenses or permits or other
concessions.43 (Italics supplied.)
In the more recent case of Cruz v. Sandiganbayan,44 we affirmed that a
prosecution for violation of said provision will lie regardless of whether the
accused public officer is charged with the grant of licenses or permits or other
concessions.45
Meanwhile, regarding petitioner Ambil, Jr.’s second contention, Section 2(b) of
R.A. No. 3019 defines a "public officer" to include elective and appointive
officials and employees, permanent or temporary, whether in the classified or
unclassified or exemption service receiving compensation, even nominal from
the government. Evidently, Mayor Adalim is one. But considering that Section
3(e) of R.A. No. 3019 punishes the giving by a public officer of unwarranted
benefits to a private party, does the fact that Mayor Adalim was the recipient of
such benefits take petitioners’ case beyond the ambit of said law?
We believe not.
In drafting the Anti-Graft Law, the lawmakers opted to use "private party"
rather than "private person" to describe the recipient of the unwarranted
benefits, advantage or preference for a reason. The term "party" is a technical
word having a precise meaning in legal parlance46 as distinguished from
"person" which, in general usage, refers to a human being. 47 Thus, a private
person simply pertains to one who is not a public officer. While a private party
is more comprehensive in scope to mean either a private person or a public
officer acting in a private capacity to protect his personal interest.
In the present case, when petitioners transferred Mayor Adalim from the
provincial jail and detained him at petitioner Ambil, Jr.’s residence, they
accorded such privilege to Adalim, not in his official capacity as a mayor, but
as a detainee charged with murder. Thus, for purposes of applying the
provisions of Section 3(e), R.A. No. 3019, Adalim was a private party.
Moreover, in order to be found guilty under the second mode, it suffices that
the accused has given unjustified favor or benefit to another in the exercise of
his official, administrative or judicial functions. 48 The word "unwarranted"
means lacking adequate or official support; unjustified; unauthorized or without
justification or adequate reason. "Advantage" means a more favorable or
improved position or condition; benefit, profit or gain of any kind; benefit from
some course of action. "Preference" signifies priority or higher evaluation or
desirability; choice or estimation above another. 49
Without a court order, petitioners transferred Adalim and detained him in a
place other than the provincial jail. The latter was housed in much more
comfortable quarters, provided better nourishment, was free to move about the
house and watch television. Petitioners readily extended these benefits to
Adalim on the mere representation of his lawyers that the mayor’s life would be
put in danger inside the provincial jail.
As the Sandiganbayan ruled, however, petitioners were unable to establish the
existence of any risk on Adalim’s safety. To be sure, the latter would not be
alone in having unfriendly company in lockup. Yet, even if we treat Akyatan’s
gesture of raising a closed fist at Adalim as a threat of aggression, the same
would still not constitute a special and compelling reason to warrant Adalim’s
detention outside the provincial jail. For one, there were nipa huts within the
perimeter fence of the jail which could have been used to separate Adalim
from the rest of the prisoners while the isolation cell was undergoing repair.
Anyhow, such repair could not have exceeded the 85 days that Adalim stayed
in petitioner Ambil, Jr.’s house. More importantly, even if Adalim could have
proven the presence of an imminent peril on his person to petitioners, a court
order was still indispensable for his transfer.
The foregoing, indeed, negates the application of the justifying circumstances
claimed by petitioners.
Specifically, petitioner Ambil, Jr. invokes the justifying circumstance of
fulfillment of duty or lawful exercise of right or office. Under paragraph 5,
Article 11 of the RPC, any person who acts in the fulfillment of a duty or in the
lawful exercise of a right or office does not incur any criminal liability. In order
for this justifying circumstance to apply, two requisites must be satisfied: (1)
the accused acted in the performance of a duty or in the lawful exercise of a
right or office; and (2) the injury caused or the offense committed be the
necessary consequence of the due performance of duty or the lawful exercise
of such right or office.50 Both requisites are lacking in petitioner Ambil, Jr.’s
case.
As we have earlier determined, petitioner Ambil, Jr. exceeded his authority
when he ordered the transfer and detention of Adalim at his house. Needless
to state, the resulting violation of the Anti-Graft Law did not proceed from the
due performance of his duty or lawful exercise of his office.
In like manner, petitioner Apelado, Sr. invokes the justifying circumstance of the minimum shall not be less than the minimum term prescribed by the
obedience to an order issued for some lawful purpose. Under paragraph 6, same. 1avvphi1

Article 11 of the RPC, any person who acts in obedience to an order issued by
a superior for some lawful purpose does not incur any criminal liability. For this
justifying circumstance to apply, the following requisites must be present: (1)
an order has been issued by a superior; (2) such order must be for some
lawful purpose; and (3) the means used by the subordinate to carry out said
order is lawful.51 Only the first requisite is present in this case.
Thus, the penalty imposed by the Sandiganbayan upon petitioner Ambil, Jr. of
imprisonment for nine (9) years, eight (8) months and one (1) day to twelve
(12) years and four (4) months is in accord with law. As a co-principal without
the benefit of an incomplete justifying circumstance to his credit, petitioner
Apelado, Sr. shall suffer the same penalty.

While the order for Adalim’s transfer emanated from petitioner Ambil, Jr., who
was then Governor, neither said order nor the means employed by petitioner
Apelado, Sr. to carry it out was lawful. In his capacity as the Provincial Jail
Warden of Eastern Samar, petitioner Apelado, Sr. fetched Mayor Adalim at the
provincial jail and, unarmed with a court order, transported him to the house of
petitioner Ambil, Jr. This makes him liable as a principal by direct participation
under Article 17(1)52 of the RPC.
WHEREFORE, the consolidated petitions are DENIED. The Decision of the
Sandiganbayan in Criminal Case No. 25892 is AFFIRMED WITH
MODIFICATION. We find petitioners Ruperto A. Ambil, Jr. and Alexandrino R.
Apelado, Sr. guilty beyond reasonable doubt of violating Section 3(e), R.A. No.
3019. Petitioner Alexandrino R. Apelado, Sr. is, likewise, sentenced to an
indeterminate penalty of imprisonment for nine (9) years, eight (8) months and
one (1) day to twelve (12) years and four (4) months.

An accepted badge of conspiracy is when the accused by their acts aimed at With costs against the petitioners.
the same object, one performing one part of and another performing another
so as to complete it with a view to the attainment of the same object, and their SO ORDERED.
acts although apparently independent were in fact concerted and cooperative,
indicating closeness of personal association, concerted action and
MARTIN S. VILLARAMA, JR.
concurrence of sentiments.53
Associate Justice
Conspiracy was sufficiently demonstrated by petitioner Apelado, Sr.’s willful
cooperation in executing petitioner Ambil, Jr.’s order to move Adalim from jail,
despite the absence of a court order. Petitioner Apelado, Sr., a law graduate,
cannot hide behind the cloak of ignorance of the law. The Rule requiring a
court order to transfer a person under detention by legal process is
elementary. Truth be told, even petitioner governor who is unschooled in the
intricacies of the law expressed reservations on his power to transfer Adalim.
All said, the concerted acts of petitioners Ambil, Jr. and Apelado, Sr. resulting
in the violation charged, makes them equally responsible as conspirators.

As regards the penalty imposed upon petitioners, Section 9(a) of R.A. No.
3019 punishes a public officer or a private person who violates Section 3 of
R.A. No. 3019 with imprisonment for not less than six (6) years and one (1)
month to not more than fifteen (15) years and perpetual disqualification from
public office. Under Section 1 of the Indeterminate Sentence Law or Act No.
4103, as amended by Act No. 4225, if the offense is punished by a special law,
the court shall sentence the accused to an indeterminate sentence, the
maximum term of which shall not exceed the maximum fixed by said law and
G.R. No. 196271 February 28, 2012
DATU MICHAEL ABAS KIDA, in his personal capacity, and in
representation of MAGUINDANAO FEDERATION OF AUTONOMOUS
IRRIGATORS ASSOCIATION, INC., HADJI MUHMINA J. USMAN, JOHN
ANTHONY L. LIM, JAMILON T. ODIN, ASRIN TIMBOL JAIYARI, MUJIB M.
KALANG, ALIH AL-SAIDI J. SAPI-E, KESSAR DAMSIE ABDIL, and
BASSAM ALUH SAUPI, Petitioners,
vs.
SENATE OF THE PHILIPPINES, represented by its President JUAN
PONCE ENRILE, HOUSE OF REPRESENTATIVES, thru SPEAKER
FELICIANO BELMONTE, COMMISSION ON ELECTIONS, thru its
Chairman, SIXTO BRILLANTES, JR., PAQUITO OCHOA, JR., Office of the
President Executive Secretary, FLORENCIO ABAD, JR., Secretary of
Budget, and ROBERTO TAN, Treasurer of the Philippines, Respondents.
x-----------------------x
G.R. No. 196305
ALMARIM CENTI TILLAH, DATU CASAN CONDING CANA, and PARTIDO
DEMOKRATIKO PILIPINO LAKAS NG BAYAN (PDP-LABAN), Petitioners,
vs.
THE COMMISSION ON ELECTIONS, through its Chairman, SIXTO
BRILLANTES, JR., HON. PAQUITO N. OCHOA, JR., in his capacity as
Executive Secretary, HON. FLORENCIO B. ABAD, JR., in his capacity as
Secretary of the Department of Budget and Management, and HON.
ROBERTO B. TAN, in his capacity as Treasurer of the
Philippines, Respondents.
x-----------------------x
G.R. No. 197282
ATTY. ROMULO B. MACALINTAL, Petitioner,
vs.
COMMISSION ON ELECTIONS and THE OFFICE OF THE PRESIDENT,
through EXECUTIVE SECRETARY PAQUITO N. OCHOA,
JR., Respondents.

BASARI D. MAPUPUNO, Petitioner, x-----------------------x

vs.
SIXTO BRILLANTES, in his capacity as Chairman of the Commission on G.R. No. 197392
Elections, FLORENCIO ABAD, JR. in his capacity as Secretary of the
Department of Budget and Management, PAQUITO OCHOA, JR., in his LOUIS "BAROK" C. BIRAOGO, Petitioner,
capacity as Executive Secretary, JUAN PONCE ENRILE, in his capacity vs.
as Senate President, and FELICIANO BELMONTE, in his capacity as THE COMMISSION ON ELECTIONS and EXECUTIVE SECRETARY
Speaker of the House of Representatives, Respondents. PAQUITO N. OCHOA, JR., Respondents.

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

G.R. No. 197221 G.R. No. 197454

REP. EDCEL C. LAGMAN, Petitioner, JACINTO V. PARAS, Petitioner,

vs. vs.
PAQUITO N. OCHOA, JR., in his capacity as the Executive Secretary, and EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., and THE
the COMMISSION ON ELECTIONS, Respondents. COMMISSION ON ELECTIONS, Respondents.

x-----------------------x MINORITY RIGHTS FORUM, PHILIPPINES, INC., Respondents-Intervenor.

G.R. No. 197280 RESOLUTION

BRION, J.:
We resolve: (a) the motion for reconsideration filed by petitioners Datu Michael
Abas Kida, et al. in G.R. No. 196271; (b) the motion for reconsideration filed by
petitioner Rep. Edcel Lagman in G.R. No. 197221; (c) the ex abundante ad
cautelam motion for reconsideration filed by petitioner Basari Mapupuno in
G.R. No. 196305; (d) the motion for reconsideration filed by petitioner Atty.
Romulo Macalintal in G.R. No. 197282; (e) the motion for reconsideration filed
by petitioners Almarim Centi Tillah, Datu Casan Conding Cana and Partido
Demokratiko Pilipino Lakas ng Bayan in G.R. No. 197280; (f) the manifestation
and motion filed by petitioners Almarim Centi Tillah, et al. in G.R. No. 197280;
and (g) the very urgent motion to issue clarificatory resolution that the
temporary restraining order (TRO) is still existing and effective.
These motions assail our Decision dated October 18, 2011, where we upheld
the constitutionality of Republic Act (RA) No. 10153. Pursuant to the
constitutional mandate of synchronization, RA No. 10153 postponed the
regional elections in the Autonomous Region in Muslim Mindanao (ARMM)
(which were scheduled to be held on the second Monday of August 2011) to
the second Monday of May 2013 and recognized the President’s power to
appoint officers-in-charge (OICs) to temporarily assume these positions upon
the expiration of the terms of the elected officials.
The Motions for Reconsideration
The petitioners in G.R. No. 196271 raise the following grounds in support of
their motion:
I. THE HONORABLE COURT ERRED IN CONCLUDING THAT THE
ARMM ELECTIONS ARE LOCAL ELECTIONS, CONSIDERING THAT
THE CONSTITUTION GIVES THE ARMM A SPECIAL STATUS AND
IS SEPARATE AND DISTINCT FROM ORDINARY LOCAL
GOVERNMENT UNITS.
II. R.A. 10153 AND R.A. 9333 AMEND THE ORGANIC ACT.
III. THE SUPERMAJORITY PROVISIONS OF THE ORGANIC ACT
(R.A. 9054) ARE NOT IRREPEALABLE LAWS.
IV. SECTION 3, ARTICLE XVII OF R.A. 9054 DOES NOT VIOLATE
SECTION 18, ARTICLE X OF THE CONSTITUTION.
V. BALANCE OF INTERESTS TILT IN FAVOR OF THE
DEMOCRATIC PRINCIPLE[.]1
The petitioner in G.R. No. 197221 raises similar grounds, arguing that:
I. THE ELECTIVE REGIONAL EXECUTIVE AND LEGISLATIVE
OFFICIALS OF ARMM CANNOT BE CONSIDERED AS OR
EQUATED WITH THE TRADITIONAL LOCAL GOVERNMENT
OFFICIALS IN THE LOCAL GOVERNMENT UNITS (LGUs)
BECAUSE (A) THERE IS NO EXPLICIT CONSTITUTIONAL
PROVISION ON SUCH PARITY; AND (B) THE ARMM IS MORE
SUPERIOR THAN LGUs IN STRUCTURE, POWERS AND
AUTONOMY, AND CONSEQUENTLY IS A CLASS OF ITS OWN
APART FROM TRADITIONAL LGUs.
II. THE UNMISTAKABLE AND UNEQUIVOCAL CONSTITUTIONAL
MANDATE FOR AN ELECTIVE AND REPRESENTATIVE
EXECUTIVE DEPARTMENT AND LEGISLATIVE ASSEMBLY IN
ARMM INDUBITABLY PRECLUDES THE APPOINTMENT BY THE
PRESIDENT OF OFFICERS-IN-CHARGE (OICs), ALBEIT
MOMENTARY OR TEMPORARY, FOR THE POSITIONS OF ARMM
GOVERNOR, VICE GOVERNOR AND MEMBERS OF THE
REGIONAL ASSEMBLY.
III. THE PRESIDENT’S APPOINTING POWER IS LIMITED TO
APPOINTIVE OFFICIALS AND DOES NOT EXTEND TO ELECTIVE
OFFICIALS EVEN AS THE PRESIDENT IS ONLY VESTED WITH
SUPERVISORY POWERS OVER THE ARMM, THEREBY NEGATING
THE AWESOME POWER TO APPOINT AND REMOVE OICs
OCCUPYING ELECTIVE POSITIONS.
IV. THE CONSTITUTION DOES NOT PROSCRIBE THE HOLDOVER
OF ARMM ELECTED OFFICIALS PENDING THE ELECTION AND
QUALIFICATION OF THEIR SUCCESSORS.
V. THE RULING IN OSMENA DOES NOT APPLY TO ARMM
ELECTED OFFICIALS WHOSE TERMS OF OFFICE ARE NOT
PROVIDED FOR BY THE CONSTITUTION BUT PRESCRIBED BY
THE ORGANIC ACTS.
VI. THE REQUIREMENT OF A SUPERMAJORITY OF ¾ VOTES IN
THE HOUSE OF REPRESENTATIVES AND THE SENATE FOR THE
 VALIDITY OF A SUBSTANTIVE AMENDMENT OR REVISION OF
THE ORGANIC ACTS DOES NOT IMPOSE AN IRREPEALABLE
LAW.
VII. THE REQUIREMENT OF A PLEBISCITE FOR THE EFFECTIVITY
OF A SUBSTANTIVE AMENDMENT OR REVISION OF THE
ORGANIC ACTS DOES NOT UNDULY EXPAND THE PLEBISCITE
REQUIREMENT OF THE CONSTITUTION.
VIII. SYNCHRONIZATION OF THE ARMM ELECTION WITH THE
NATIONAL AND LOCAL ELECTIONS IS NOT MANDATED BY THE
CONSTITUTION.
IX. THE COMELEC HAS THE AUTHORITY TO HOLD AND
CONDUCT SPECIAL ELECTIONS IN ARMM, AND THE ENACTMENT
OF AN IMPROVIDENT AND UNCONSTITUTIONAL STATUTE IS AN
ANALOGOUS CAUSE WARRANTING COMELEC’S HOLDING OF
SPECIAL ELECTIONS.2 (italics supplied)
The petitioner in G.R. No. 196305 further asserts that:
I. BEFORE THE COURT MAY CONSTRUE OR INTERPRET A
STATUTE, IT IS A CONDITION SINE QUA NON THAT THERE BE
DOUBT OR AMBIGUITY IN ITS LANGUAGE.
The petitioner in G.R. No. 197282 contends that:
THE TRANSITORY PROVISIONS HOWEVER ARE CLEAR AND
UNAMBIGUOUS: THEY REFER TO THE 1992 ELECTIONS AND
TURN-OVER OF ELECTIVE OFFICIALS.
IN THUS RECOGNIZING A SUPPOSED "INTENT" OF THE
FRAMERS, AND APPLYING THE SAME TO ELECTIONS 20 YEARS
AFTER, THE HONORABLE SUPREME COURT MAY HAVE
VIOLATED THE FOREMOST RULE IN STATUTORY
CONSTRUCTION.
xxxx
II. THE HONORABLE COURT SHOULD HAVE CONSIDERED THAT
RA 9054, AN ORGANIC ACT, WAS COMPLETE IN ITSELF. HENCE,
RA 10153 SHOULD BE CONSIDERED TO HAVE BEEN ENACTED
PRECISELY TO AMEND RA 9054.
xxxx
III. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS
ERROR IN DECLARING THE 2/3 VOTING REQUIREMENT SET
FORTH IN RA 9054 AS UNCONSTITUTIONAL.
xxxx
IV. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS
ERROR IN HOLDING THAT A PLEBISCITE IS NOT NECESSARY IN
AMENDING THE ORGANIC ACT.
xxxx
V. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN
DECLARING THE HOLD-OVER OF ARMM ELECTIVE OFFICIALS
UNCONSTITUTIONAL.
xxxx
VI. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN
UPHOLDING THE APPOINTMENT OF OFFICERS-IN-
CHARGE.3 (italics and underscoring supplied)
A.
ASSUMING WITHOUT CONCEDING THAT THE APPOINTMENT OF
OICs FOR THE REGIONAL GOVERNMENT OF THE ARMM IS NOT
UNCONSTITUTIONAL TO BEGIN WITH, SUCH APPOINTMENT OF
OIC REGIONAL OFFICIALS WILL CREATE A FUNDAMENTAL
CHANGE IN THE BASIC STRUCTURE OF THE REGIONAL
GOVERNMENT SUCH THAT R.A. NO. 10153 SHOULD HAVE BEEN
SUBMITTED TO A PLEBISCITE IN THE ARMM FOR APPROVAL BY
ITS PEOPLE, WHICH PLEBISCITE REQUIREMENT CANNOT BE
CIRCUMVENTED BY SIMPLY CHARACTERIZING THE
PROVISIONS OF R.A. NO. 10153 ON APPOINTMENT OF OICs AS
AN "INTERIM MEASURE".
B.
 THE HONORABLE COURT ERRED IN RULING THAT THE
APPOINTMENT BY THE PRESIDENT OF OICs FOR THE ARMM
REGIONAL GOVERNMENT IS NOT VIOLATIVE OF THE
CONSTITUTION.
C.
THE HOLDOVER PRINCIPLE ADOPTED IN R.A. NO. 9054 DOES
NOT VIOLATE THE CONSTITUTION, AND BEFORE THEIR
SUCCESSORS ARE ELECTED IN EITHER AN ELECTION TO BE
HELD AT THE SOONEST POSSIBLE TIME OR IN MAY 2013, THE
SAID INCUMBENT ARMM REGIONAL OFFICIALS MAY VALIDLY
CONTINUE FUNCTIONING AS SUCH IN A HOLDOVER CAPACITY
IN ACCORDANCE WITH SECTION 7, ARTICLE VII OF R.A. NO.
9054.
D.
WITH THE CANCELLATION OF THE AUGUST 2011 ARMM
ELECTIONS, SPECIAL ELECTIONS MUST IMMEDIATELY BE HELD
FOR THE ELECTIVE REGIONAL OFFICIALS OF THE ARMM WHO
SHALL SERVE UNTIL THEIR SUCCESSORS ARE ELECTED IN THE
MAY 2013 SYNCHRONIZED ELECTIONS.4
Finally, the petitioners in G.R. No. 197280 argue that:
a) the Constitutional mandate of synchronization does not apply to the
ARMM elections;
b) RA No. 10153 negates the basic principle of republican democracy
which, by constitutional mandate, guides the governance of the
Republic;
c) RA No. 10153 amends the Organic Act (RA No. 9054) and, thus,
has to comply with the 2/3 vote from the House of Representatives and
the Senate, voting separately, and be ratified in a plebiscite;
d) if the choice is between elective officials continuing to hold their
offices even after their terms are over and non-elective individuals
getting into the vacant elective positions by appointment as OICs, the
holdover option is the better choice;
e) the President only has the power of supervision over autonomous
regions, which does not include the power to appoint OICs to take the
place of ARMM elective officials; and
f) it would be better to hold the ARMM elections separately from the
national and local elections as this will make it easier for the authorities
to implement election laws.
In essence, the Court is asked to resolve the following questions:
(a) Does the Constitution mandate the synchronization of ARMM
regional elections with national and local elections?
(b) Does RA No. 10153 amend RA No. 9054? If so, does RA No.
10153 have to comply with the supermajority vote and plebiscite
requirements?
(c) Is the holdover provision in RA No. 9054 constitutional?
(d) Does the COMELEC have the power to call for special elections in
ARMM?
(e) Does granting the President the power to appoint OICs violate the
elective and representative nature of ARMM regional legislative and
executive offices?
(f) Does the appointment power granted to the President exceed the
President’s supervisory powers over autonomous regions?
The Court’s Ruling
We deny the motions for lack of merit.
Synchronization mandate includes ARMM elections
The Court was unanimous in holding that the Constitution mandates the
synchronization of national and local elections. While the Constitution does not
expressly instruct Congress to synchronize the national and local elections, the
intention can be inferred from the following provisions of the Transitory
Provisions (Article XVIII) of the Constitution, which state:
Section 1. The first elections of Members of the Congress under this
Constitution shall be held on the second Monday of May, 1987.
The first local elections shall be held on a date to be determined by the
President, which may be simultaneous with the election of the Members of the
Congress. It shall include the election of all Members of the city or municipal
councils in the Metropolitan Manila area.
Section 2. The Senators, Members of the House of Representatives, and the
local officials first elected under this Constitution shall serve until noon of June
30, 1992.
Of the Senators elected in the elections in 1992, the first twelve obtaining the
highest number of votes shall serve for six years and the remaining twelve for
three years.
xxxx
Section 5. The six-year term of the incumbent President and Vice-President
elected in the February 7, 1986 election is, for purposes of synchronization of
elections, hereby extended to noon of June 30, 1992.
The first regular elections for the President and Vice-President under this
Constitution shall be held on the second Monday of May, 1992.
To fully appreciate the constitutional intent behind these provisions, we refer to
the discussions of the Constitutional Commission:
MR. MAAMBONG. For purposes of identification, I will now read a section
which we will temporarily indicate as Section 14. It reads: "THE SENATORS,
MEMBERS OF THE HOUSE OF REPRESENTATIVES AND THE LOCAL
OFFICIALS ELECTED IN THE FIRST ELECTION SHALL SERVE FOR FIVE
YEARS, TO EXPIRE AT NOON OF JUNE 1992."
This was presented by Commissioner Davide, so may we ask that
Commissioner Davide be recognized.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner Davide is
recognized.
MR. DAVIDE. Before going to the proposed amendment, I would only state
that in view of the action taken by the Commission on Section 2 earlier, I am
formulating a new proposal. It will read as follows: "THE SENATORS,
MEMBERS OF THE HOUSE OF REPRESENTATIVES AND THE LOCAL
OFFICIALS FIRST ELECTED UNDER THIS CONSTITUTION SHALL SERVE
UNTIL NOON OF JUNE 30, 1992."
I proposed this because of the proposed section of the Article on Transitory
Provisions giving a term to the incumbent President and Vice-President until
1992. Necessarily then, since the term provided by the Commission for
Members of the Lower House and for local officials is three years, if there will
be an election in 1987, the next election for said officers will be in 1990, and it
would be very close to 1992. We could never attain, subsequently, any
synchronization of election which is once every three years.
So under my proposal we will be able to begin actual synchronization in
1992, and consequently, we should not have a local election or an election for
Members of the Lower House in 1990 for them to be able to complete their
term of three years each. And if we also stagger the Senate, upon the first
election it will result in an election in 1993 for the Senate alone, and there will
be an election for 12 Senators in 1990. But for the remaining 12 who will be
elected in 1987, if their term is for six years, their election will be in 1993. So,
consequently we will have elections in 1990, in 1992 and in 1993. The later
election will be limited to only 12 Senators and of course to the local officials
and the Members of the Lower House. But, definitely, thereafter we can never
have an election once every three years, therefore defeating the very purpose
of the Commission when we adopted the term of six years for the President
and another six years for the Senators with the possibility of staggering with 12
to serve for six years and 12 for three years insofar as the first Senators are
concerned. And so my proposal is the only way to effect the first
synchronized election which would mean, necessarily, a bonus of two
years to the Members of the Lower House and a bonus of two years to
the local elective officials.
THE PRESIDING OFFICER (Mr. Rodrigo). What does the committee say?
MR. DE CASTRO. Mr. Presiding Officer.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner de Castro is
recognized.
MR. DE CASTRO. Thank you.
During the discussion on the legislative and the synchronization of elections, I
was the one who proposed that in order to synchronize the elections every
three years, which the body approved — the first national and local officials to
be elected in 1987 shall continue in office for five years, the same thing the
Honorable Davide is now proposing. That means they will all serve until 1992,
assuming that the term of the President will be for six years and continue
beginning in 1986. So from 1992, we will again have national, local and
presidential elections. This time, in 1992, the President shall have a term
until 1998 and the first 12 Senators will serve until 1998, while the next 12
shall serve until 1995, and then the local officials elected in 1992 will
serve until 1995. From then on, we shall have an election every three
years.
So, I will say that the proposition of Commissioner Davide is in order, if we
have to synchronize our elections every three years which was already
approved by the body.
Thank you, Mr. Presiding Officer.
xxxx
MR. GUINGONA. What will be synchronized, therefore, is the election of the
incumbent President and Vice-President in 1992.
MR. DAVIDE. Yes.
MR. GUINGONA. Not the reverse. Will the committee not synchronize the
election of the Senators and local officials with the election of the President?
MR. DAVIDE. It works both ways, Mr. Presiding Officer. The attempt here is on
the assumption that the provision of the Transitory Provisions on the term of
the incumbent President and Vice-President would really end in 1992.
MR. GUINGONA. Yes.
MR. DAVIDE. In other words, there will be a single election in 1992 for all,
from the President up to the municipal officials.5 (emphases and
underscoring ours)
The framers of the Constitution could not have expressed their objective more
clearly – there was to be a single election in 1992 for all elective officials –
from the President down to the municipal officials. Significantly, the framers
were even willing to temporarily lengthen or shorten the terms of elective
officials in order to meet this objective, highlighting the importance of this
constitutional mandate.
We came to the same conclusion in Osmeña v. Commission on
Elections,6 where we unequivocally stated that "the Constitution has mandated
synchronized national and local elections."7 Despite the length and verbosity of
their motions, the petitioners have failed to convince us to deviate from this
established ruling.
Neither do we find any merit in the petitioners’ contention that the ARMM
elections are not covered by the constitutional mandate of synchronization
because the ARMM elections were not specifically mentioned in the above-
quoted Transitory Provisions of the Constitution.
That the ARMM elections were not expressly mentioned in the Transitory
Provisions of the Constitution on synchronization cannot be interpreted to
mean that the ARMM elections are not covered by the constitutional mandate
of synchronization. We have to consider that the ARMM, as we now know it,
had not yet been officially organized at the time the Constitution was enacted
and ratified by the people. Keeping in mind that a constitution is not intended
to provide merely for the exigencies of a few years but is to endure through
generations for as long as it remains unaltered by the people as ultimate
sovereign, a constitution should be construed in the light of what actually is a
continuing instrument to govern not only the present but also the unfolding
events of the indefinite future. Although the principles embodied in a
constitution remain fixed and unchanged from the time of its adoption, a
constitution must be construed as a dynamic process intended to stand for a
great length of time, to be progressive and not static.8
To reiterate, Article X of the Constitution, entitled "Local Government," clearly
shows the intention of the Constitution to classify autonomous regions, such as
the ARMM, as local governments. We refer to Section 1 of this Article, which
provides:
Section 1. The territorial and political subdivisions of the Republic of the
Philippines are the provinces, cities, municipalities, and barangays. There shall
be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter
provided.
The inclusion of autonomous regions in the enumeration of political
subdivisions of the State under the heading "Local Government" indicates
quite clearly the constitutional intent to consider autonomous regions as one of
the forms of local governments.
That the Constitution mentions only the "national government" and the "local
governments," and does not make a distinction between the "local
government" and the "regional government," is particularly revealing, betraying
as it does the intention of the framers of the Constitution to consider the
autonomous regions not as separate forms of government, but as political
units which, while having more powers and attributes than other local
government units, still remain under the category of local governments. Since
autonomous regions are classified as local governments, it follows that
elections held in autonomous regions are also considered as local elections.
The petitioners further argue that even assuming that the Constitution
mandates the synchronization of elections, the ARMM elections are not
covered by this mandate since they are regional elections and not local
elections.
In construing provisions of the Constitution, the first rule is verba legis, "that is,
wherever possible, the words used in the Constitution must be given their
ordinary meaning except where technical terms are employed." 9 Applying this
principle to determine the scope of "local elections," we refer to the meaning of
the word "local," as understood in its ordinary sense. As defined in Webster’s
Third New International Dictionary Unabridged, "local" refers to something
"that primarily serves the needs of a particular limited district, often a
community or minor political subdivision." Obviously, the ARMM elections,
which are held within the confines of the autonomous region of Muslim
Mindanao, fall within this definition.
To be sure, the fact that the ARMM possesses more powers than other
provinces, cities, or municipalities is not enough reason to treat the ARMM
regional elections differently from the other local elections. Ubi lex non
distinguit nec nos distinguire debemus. When the law does not distinguish, we
must not distinguish.10
RA No. 10153 does not amend RA No. 9054
The petitioners are adamant that the provisions of RA No. 10153, in
postponing the ARMM elections, amend RA No. 9054.
We cannot agree with their position.
A thorough reading of RA No. 9054 reveals that it fixes the schedule for only
the first ARMM elections;11 it does not provide the date for the succeeding
regular ARMM elections. In providing for the date of the regular ARMM
elections, RA No. 9333 and RA No. 10153 clearly do not amend RA No. 9054
since these laws do not change or revise any provision in RA No. 9054. In
fixing the date of the ARMM elections subsequent to the first election, RA No.
9333 and RA No. 10153 merely filled the gap left in RA No. 9054.
We reiterate our previous observations:
This view – that Congress thought it best to leave the determination of the date
of succeeding ARMM elections to legislative discretion – finds support in
ARMM’s recent history.
To recall, RA No. 10153 is not the first law passed that rescheduled the ARMM
elections. The First Organic Act – RA No. 6734 – not only did not fix the date
of the subsequent elections; it did not even fix the specific date of the first
ARMM elections, leaving the date to be fixed in another legislative enactment.
Consequently, RA No. 7647, RA No. 8176, RA No. 8746, RA No. 8753, and
RA No. 9012 were all enacted by Congress to fix the dates of the ARMM
elections. Since these laws did not change or modify any part or provision of
RA No. 6734, they were not amendments to this latter law. Consequently,
there was no need to submit them to any plebiscite for ratification.
The Second Organic Act – RA No. 9054 – which lapsed into law on March 31,
2001, provided that the first elections would be held on the second Monday of
September 2001. Thereafter, Congress passed RA No. 9140 to reset the date
of the ARMM elections. Significantly, while RA No. 9140 also scheduled the
plebiscite for the ratification of the Second Organic Act (RA No. 9054), the
new date of the ARMM regional elections fixed in RA No. 9140 was not
among the provisions ratified in the plebiscite held to approve RA No.
9054. Thereafter, Congress passed RA No. 9333, which further reset the date
of the ARMM regional elections. Again, this law was not ratified through a
plebiscite.
From these legislative actions, we see the clear intention of Congress to treat
the laws which fix the date of the subsequent ARMM elections as separate and
distinct from the Organic Acts. Congress only acted consistently with this intent
when it passed RA No. 10153 without requiring compliance with the
amendment prerequisites embodied in Section 1 and Section 3, Article XVII of
RA No. 9054.12 (emphases supplied)
The petitioner in G.R. No. 196305 contends, however, that there is no lacuna
in RA No. 9054 as regards the date of the subsequent ARMM elections. In his
estimation, it can be implied from the provisions of RA No. 9054 that the
succeeding elections are to be held three years after the date of the first
ARMM regional elections.
We find this an erroneous assertion. Well-settled is the rule that the court may
not, in the guise of interpretation, enlarge the scope of a statute and include
therein situations not provided nor intended by the lawmakers. An omission at
the time of enactment, whether careless or calculated, cannot be judicially
supplied however later wisdom may recommend the inclusion.13 Courts are not
authorized to insert into the law what they think should be in it or to supply
what they think the legislature would have supplied if its attention had been
called to the omission.14 Providing for lapses within the law falls within the
exclusive domain of the legislature, and courts, no matter how well-meaning,
have no authority to intrude into this clearly delineated space.
Since RA No. 10153 does not amend, but merely fills in the gap in RA No.
9054, there is no need for RA No. 10153 to comply with the amendment
requirements set forth in Article XVII of RA No. 9054.
Supermajority vote requirement makes RA No. 9054 an irrepealable law
Even assuming that RA No. 10153 amends RA No. 9054, however, we have
already established that the supermajority vote requirement set forth in Section
1, Article XVII of RA No. 905415 is unconstitutional for violating the principle that
Congress cannot pass irrepealable laws.
The power of the legislature to make laws includes the power to amend and
repeal these laws. Where the legislature, by its own act, attempts to limit its
power to amend or repeal laws, the Court has the duty to strike down such act
for interfering with the plenary powers of Congress. As we explained in Duarte
v. Dade:16
A state legislature has a plenary law-making power over all subjects, whether
pertaining to persons or things, within its territorial jurisdiction, either to
introduce new laws or repeal the old, unless prohibited expressly or by
implication by the federal constitution or limited or restrained by its own. It
cannot bind itself or its successors by enacting irrepealable laws except when
so restrained. Every legislative body may modify or abolish the acts passed by
itself or its predecessors. This power of repeal may be exercised at the same
session at which the original act was passed; and even while a bill is in its
progress and before it becomes a law. This legislature cannot bind a future
legislature to a particular mode of repeal. It cannot declare in advance
the intent of subsequent legislatures or the effect of subsequent
legislation upon existing statutes. [emphasis ours]
Under our Constitution, each House of Congress has the power to approve
bills by a mere majority vote, provided there is quorum. 17 In requiring all laws
which amend RA No. 9054 to comply with a higher voting requirement than the
Constitution provides (2/3 vote), Congress, which enacted RA No. 9054,
clearly violated the very principle which we sought to establish in Duarte. To
reiterate, the act of one legislature is not binding upon, and cannot tie the
hands of, future legislatures.18
We also highlight an important point raised by Justice Antonio T. Carpio in his
dissenting opinion, where he stated: "Section 1, Article XVII of RA 9054 erects
a high vote threshold for each House of Congress to surmount, effectively and
unconstitutionally, taking RA 9054 beyond the reach of Congress’ amendatory
powers. One Congress cannot limit or reduce the plenary legislative power of
succeeding Congresses by requiring a higher vote threshold than what the
Constitution requires to enact, amend or repeal laws. No law can be passed
fixing such a higher vote threshold because Congress has no power, by
ordinary legislation, to amend the Constitution." 19
Plebiscite requirement in RA No. 9054 overly broad
Similarly, we struck down the petitioners’ contention that the plebiscite
requirement20 applies to all amendments of RA No. 9054 for being an
unreasonable enlargement of the plebiscite requirement set forth in the
Constitution.
Section 18, Article X of the Constitution provides that "[t]he creation of the
autonomous region shall be effective when approved by majority of the votes
cast by the constituent units in a plebiscite called for the purpose[.]" We
interpreted this to mean that only amendments to, or revisions of, the Organic
Act constitutionally-essential to the creation of autonomous regions – i.e.,
those aspects specifically mentioned in the Constitution which Congress must
provide for in the Organic Act21 – require ratification through a plebiscite. We
stand by this interpretation.
The petitioners argue that to require all amendments to RA No. 9054 to comply
with the plebiscite requirement is to recognize that sovereignty resides
primarily in the people.
While we agree with the petitioners’ underlying premise that sovereignty
ultimately resides with the people, we disagree that this legal reality
necessitates compliance with the plebiscite requirement for all amendments to
RA No. 9054. For if we were to go by the petitioners’ interpretation of Section
18, Article X of the Constitution that all amendments to the Organic Act have to
undergo the plebiscite requirement before becoming effective, this would lead
to impractical and illogical results – hampering the ARMM’s progress by
impeding Congress from enacting laws that timely address problems as they
arise in the region, as well as weighing down the ARMM government with the
costs that unavoidably follow the holding of a plebiscite.
Interestingly, the petitioner in G.R. No. 197282 posits that RA No. 10153, in
giving the President the power to appoint OICs to take the place of the elective
officials of the ARMM, creates a fundamental change in the basic structure of
the government, and thus requires compliance with the plebiscite requirement
embodied in RA No. 9054.
Again, we disagree.
The pertinent provision in this regard is Section 3 of RA No. 10153, which
reads:
Section 3. Appointment of Officers-in-Charge. — The President shall appoint
officers-in-charge for the Office of the Regional Governor, Regional Vice
Governor and Members of the Regional Legislative Assembly who shall
perform the functions pertaining to the said offices until the officials duly
elected in the May 2013 elections shall have qualified and assumed office.
We cannot see how the above-quoted provision has changed the basic
structure of the ARMM regional government. On the contrary, this provision
clearly preserves the basic structure of the ARMM regional government when
it recognizes the offices of the ARMM regional government and directs the
OICs who shall temporarily assume these offices to "perform the functions
pertaining to the said offices."
Unconstitutionality of the holdover provision
The petitioners are one in defending the constitutionality of Section 7(1), Article
VII of RA No. 9054, which allows the regional officials to remain in their
positions in a holdover capacity. The petitioners essentially argue that the
ARMM regional officials should be allowed to remain in their respective
positions until the May 2013 elections since there is no specific provision in the
Constitution which prohibits regional elective officials from performing their
duties in a holdover capacity.
The pertinent provision of the Constitution is Section 8, Article X which
provides:
Section 8. The term of office of elective local officials, except barangay
officials, which shall be determined by law, shall be three years and no such
official shall serve for more than three consecutive terms. [emphases ours]
On the other hand, Section 7(1), Article VII of RA No. 9054 provides:
Section 7. Terms of Office of Elective Regional Officials. – (1) Terms of Office.
The terms of office of the Regional Governor, Regional Vice Governor and
members of the Regional Assembly shall be for a period of three (3) years,
which shall begin at noon on the 30th day of September next following the day
of the election and shall end at noon of the same date three (3) years
thereafter. The incumbent elective officials of the autonomous region shall
continue in effect until their successors are elected and qualified.
The clear wording of Section 8, Article X of the Constitution expresses the
intent of the framers of the Constitution to categorically set a limitation on the
period within which all elective local officials can occupy their offices. We have
already established that elective ARMM officials are also local officials; they
are, thus, bound by the three-year term limit prescribed by the Constitution. It,
therefore, becomes irrelevant that the Constitution does not expressly prohibit
elective officials from acting in a holdover capacity. Short of amending the
Constitution, Congress has no authority to extend the three-year term limit by
inserting a holdover provision in RA No. 9054. Thus, the term of three years for
local officials should stay at three (3) years, as fixed by the Constitution, and
cannot be extended by holdover by Congress.
Admittedly, we have, in the past, recognized the validity of holdover provisions
in various laws. One significant difference between the present case and these
past cases22 is that while these past cases all refer to
elective barangay or sangguniang kabataan officials whose terms of office are
not explicitly provided for in the Constitution, the present case refers to local
elective officials - the ARMM Governor, the ARMM Vice Governor, and the
members of the Regional Legislative Assembly - whose terms fall within the
three-year term limit set by Section 8, Article X of the Constitution.
Even assuming that a holdover is constitutionally permissible, and there had
been statutory basis for it (namely Section 7, Article VII of RA No. 9054), the
rule of holdover can only apply as an available option where no express or
implied legislative intent to the contrary exists; it cannot apply where such
contrary intent is evident.23
Congress, in passing RA No. 10153 and removing the holdover option, has
made it clear that it wants to suppress the holdover rule expressed in RA No.
9054. Congress, in the exercise of its plenary legislative powers, has clearly
acted within its discretion when it deleted the holdover option, and this Court
has no authority to question the wisdom of this decision, absent any evidence
of unconstitutionality or grave abuse of discretion. It is for the legislature and
the executive, and not this Court, to decide how to fill the vacancies in the
ARMM regional government which arise from the legislature complying with
the constitutional mandate of synchronization.
COMELEC has no authority to hold special elections
Neither do we find any merit in the contention that the Commission on
Elections (COMELEC) is sufficiently empowered to set the date of special
elections in the ARMM. To recall, the Constitution has merely empowered the
COMELEC to enforce and administer all laws and regulations relative to the
conduct of an election.24 Although the legislature, under the Omnibus Election
Code (Batas Pambansa Bilang [BP] 881), has granted the COMELEC the
power to postpone elections to another date, this power is confined to the
specific terms and circumstances provided for in the law. Specifically, this
power falls within the narrow confines of the following provisions:
Section 5. Postponement of election. - When for any serious cause such
as violence, terrorism, loss or destruction of election paraphernalia or
records, force majeure, and other analogous causes of such a nature that
the holding of a free, orderly and honest election should become impossible in
any political subdivision, the Commission, motu proprio or upon a verified
petition by any interested party, and after due notice and hearing, whereby all
interested parties are afforded equal opportunity to be heard, shall postpone
the election therein to a date which should be reasonably close to the
date of the election not held, suspended or which resulted in a failure to
elect but not later than thirty days after the cessation of the cause for such
postponement or suspension of the election or failure to elect.
Section 6. Failure of election. - If, on account of force
majeure, violence, terrorism, fraud, or other analogous causes the
election in any polling place has not been held on the date fixed, or had
been suspended before the hour fixed by law for the closing of the voting, or
after the voting and during the preparation and the transmission of the election
returns or in the custody or canvass thereof, such election results in a
failure to elect, and in any of such cases the failure or suspension of election
would affect the result of the election, the Commission shall, on the basis of a
verified petition by any interested party and after due notice and hearing, call
for the holding or continuation of the election not held, suspended or which
resulted in a failure to elect on a date reasonably close to the date of the
election not held, suspended or which resulted in a failure to elect but not later
than thirty days after the cessation of the cause of such postponement or
suspension of the election or failure to elect. [emphases and underscoring
ours]
As we have previously observed in our assailed decision, both Section 5 and
Section 6 of BP 881 address instances where elections have already been
scheduled to take place but do not occur or had to be suspended because
of unexpected and unforeseen circumstances, such as violence, fraud,
terrorism, and other analogous circumstances.
In contrast, the ARMM elections were postponed by law, in furtherance of the
constitutional mandate of synchronization of national and local elections.
Obviously, this does not fall under any of the circumstances contemplated by
Section 5 or Section 6 of BP 881.
More importantly, RA No. 10153 has already fixed the date for the next ARMM
elections and the COMELEC has no authority to set a different election date.
Even assuming that the COMELEC has the authority to hold special elections,
and this Court can compel the COMELEC to do so, there is still the problem of
having to shorten the terms of the newly elected officials in order to
synchronize the ARMM elections with the May 2013 national and local
elections. Obviously, neither the Court nor the COMELEC has the authority to
do this, amounting as it does to an amendment of Section 8, Article X of the
Constitution, which limits the term of local officials to three years.
President’s authority to appoint OICs
The petitioner in G.R. No. 197221 argues that the President’s power to appoint
pertains only to appointive positions and cannot extend to positions held by
elective officials.
The power to appoint has traditionally been recognized as executive in
nature.25 Section 16, Article VII of the Constitution describes in broad strokes
the extent of this power, thus:
Section 16. The President shall nominate and, with the consent of the
Commission on Appointments, appoint the heads of the executive
departments, ambassadors, other public ministers and consuls, or officers of
the armed forces from the rank of colonel or naval captain, and other officers
whose appointments are vested in him in this Constitution. He shall also
appoint all other officers of the Government whose appointments are not
otherwise provided for by law, and those whom he may be authorized by
law to appoint. The Congress may, by law, vest the appointment of other
officers lower in rank in the President alone, in the courts, or in the heads of
departments, agencies, commissions, or boards. [emphasis ours]
The 1935 Constitution contained a provision similar to the one quoted above.
Section 10(3), Article VII of the 1935 Constitution provides:
(3) The President shall nominate and with the consent of the Commission on
Appointments, shall appoint the heads of the executive departments and
bureaus, officers of the Army from the rank of colonel, of the Navy and Air
Forces from the rank of captain or commander, and all other officers of the
Government whose appointments are not herein otherwise provided for, and
those whom he may be authorized by law to appoint; but the Congress may by
law vest the appointment of inferior officers, in the President alone, in the
courts, or in the heads of departments. [emphasis ours]
The main distinction between the provision in the 1987 Constitution and its
counterpart in the 1935 Constitution is the sentence construction; while in the
1935 Constitution, the various appointments the President can make are
enumerated in a single sentence, the 1987 Constitution enumerates the
various appointments the President is empowered to make and divides the
enumeration in two sentences. The change in style is significant; in providing
for this change, the framers of the 1987 Constitution clearly sought to make a
distinction between the first group of presidential appointments and the second
group of presidential appointments, as made evident in the following
exchange:
MR. FOZ. Madame President x x x I propose to put a period (.) after "captain"
and x x x delete "and all" and substitute it with HE SHALL ALSO APPOINT
ANY.
MR. REGALADO. Madam President, the Committee accepts the proposed
amendment because it makes it clear that those other officers mentioned
therein do not have to be confirmed by the Commission on Appointments. 26
The first group of presidential appointments, specified as the heads of the
executive departments, ambassadors, other public ministers and consuls, or
officers of the Armed Forces, and other officers whose appointments are
vested in the President by the Constitution, pertains to the appointive officials
who have to be confirmed by the Commission on Appointments.
The second group of officials the President can appoint are "all other officers of
the Government whose appointments are not otherwise provided for by law,
and those whom he may be authorized by law to appoint." 27 The second
sentence acts as the "catch-all provision" for the President’s appointment
power, in recognition of the fact that the power to appoint is essentially
executive in nature.28 The wide latitude given to the President to appoint is
further demonstrated by the recognition of the President’s power to appoint
officials whose appointments are not even provided for by law. In other
words, where there are offices which have to be filled, but the law does not
provide the process for filling them, the Constitution recognizes the power of
the President to fill the office by appointment.
Any limitation on or qualification to the exercise of the President’s appointment
power should be strictly construed and must be clearly stated in order to be
recognized.29 Given that the President derives his power to appoint OICs in the
ARMM regional government from law, it falls under the classification of
presidential appointments covered by the second sentence of Section 16,
Article VII of the Constitution; the President’s appointment power thus rests on
clear constitutional basis.
The petitioners also jointly assert that RA No. 10153, in granting the President
the power to appoint OICs in elective positions, violates Section 16, Article X of
the Constitution,30 which merely grants the President the power of supervision
over autonomous regions.
This is an overly restrictive interpretation of the President’s appointment
power. There is no incompatibility between the President’s power of
supervision over local governments and autonomous regions, and the power
granted to the President, within the specific confines of RA No. 10153, to
appoint OICs.
The power of supervision is defined as "the power of a superior officer to see
to it that lower officers perform their functions in accordance with law." 31 This is
distinguished from the power of control or "the power of an officer to alter or
modify or set aside what a subordinate officer had done in the performance of
his duties and to substitute the judgment of the former for the latter." 32
The petitioners’ apprehension regarding the President’s alleged power of
control over the OICs is rooted in their belief that the President’s appointment
power includes the power to remove these officials at will. In this way, the
petitioners foresee that the appointed OICs will be beholden to the President,
and act as representatives of the President and not of the people.
Section 3 of RA No. 10153 expressly contradicts the petitioners’ supposition.
The provision states:
Section 3. Appointment of Officers-in-Charge. — The President shall appoint
officers-in-charge for the Office of the Regional Governor, Regional Vice
Governor and Members of the Regional Legislative Assembly who shall
perform the functions pertaining to the said offices until the officials duly
elected in the May 2013 elections shall have qualified and assumed office.
The wording of the law is clear. Once the President has appointed the OICs for
the offices of the Governor, Vice Governor and members of the Regional
Legislative Assembly, these same officials will remain in office until they are
replaced by the duly elected officials in the May 2013 elections. Nothing in this
provision even hints that the President has the power to recall the
appointments he already made. Clearly, the petitioners’ fears in this regard are
more apparent than real.
RA No. 10153 as an interim measure
We reiterate once more the importance of considering RA No. 10153 not in a
vacuum, but within the context it was enacted in. In the first place, Congress
enacted RA No. 10153 primarily to heed the constitutional mandate to
synchronize the ARMM regional elections with the national and local elections.
To do this, Congress had to postpone the scheduled ARMM elections for
another date, leaving it with the problem of how to provide the ARMM with
governance in the intervening period, between the expiration of the term of
those elected in August 2008 and the assumption to office – twenty-one (21)
months away – of those who will win in the synchronized elections on May 13,
2013.
In our assailed Decision, we already identified the three possible solutions
open to Congress to address the problem created by synchronization – (a)
allow the incumbent officials to remain in office after the expiration of their
terms in a holdover capacity; (b) call for special elections to be held, and
shorten the terms of those to be elected so the next ARMM regional elections
can be held on May 13, 2013; or (c) recognize that the President, in the
exercise of his appointment powers and in line with his power of supervision
over the ARMM, can appoint interim OICs to hold the vacated positions in the
ARMM regional government upon the expiration of their terms. We have
already established the unconstitutionality of the first two options, leaving us to
consider the last available option.
In this way, RA No. 10153 is in reality an interim measure, enacted to respond
to the adjustment that synchronization requires. Given the context, we have to
judge RA No. 10153 by the standard of reasonableness in responding to the
challenges brought about by synchronizing the ARMM elections with the
national and local elections. In other words, "given the plain
unconstitutionality of providing for a holdover and the unavailability of
constitutional possibilities for lengthening or shortening the term of the
elected ARMM officials, is the choice of the President’s power to appoint
– for a fixed and specific period as an interim measure, and as allowed
under Section 16, Article VII of the Constitution – an unconstitutional or
unreasonable choice for Congress to make?"33
We admit that synchronization will temporarily disrupt the election process in a
local community, the ARMM, as well as the community’s choice of leaders.
However, we have to keep in mind that the adoption of this measure is a
matter of necessity in order to comply with a mandate that the Constitution
itself has set out for us. Moreover, the implementation of the provisions of RA
No. 10153 as an interim measure is comparable to the interim measures
traditionally practiced when, for instance, the President appoints officials
holding elective offices upon the creation of new local government units.
The grant to the President of the power to appoint OICs in place of the elective
members of the Regional Legislative Assembly is neither novel nor innovative.
The power granted to the President, via RA No. 10153, to appoint members of
the Regional Legislative Assembly is comparable to the power granted by BP
881 (the Omnibus Election Code) to the President to fill any vacancy for any
cause in the Regional Legislative Assembly (then called the Sangguniang
Pampook).34
Executive is not bound by the principle of judicial courtesy
The petitioners in G.R. No. 197280, in their Manifestation and Motion dated
December 21, 2011, question the propriety of the appointment by the
President of Mujiv Hataman as acting Governor and Bainon Karon as acting
Vice Governor of the ARMM. They argue that since our previous decision was
based on a close vote of 8-7, and given the numerous motions for
reconsideration filed by the parties, the President, in recognition of the
principle of judicial courtesy, should have refrained from implementing our
decision until we have ruled with finality on this case.
We find the petitioners’ reasoning specious.
Firstly, the principle of judicial courtesy is based on the hierarchy of courts and
applies only to lower courts in instances where, even if there is no writ of
preliminary injunction or TRO issued by a higher court, it would be proper for a
lower court to suspend its proceedings for practical and ethical
considerations.35 In other words, the principle of "judicial courtesy" applies
where there is a strong probability that the issues before the higher court
would be rendered moot and moribund as a result of the continuation of the
proceedings in the lower court or court of origin. 36 Consequently, this principle
cannot be applied to the President, who represents a co-equal branch of
government. To suggest otherwise would be to disregard the principle of
separation of powers, on which our whole system of government is founded
upon.
Secondly, the fact that our previous decision was based on a slim vote of 8-7
does not, and cannot, have the effect of making our ruling any less effective or
binding. Regardless of how close the voting is, so long as there is concurrence
of the majority of the members of the en banc who actually took part in the
deliberations of the case,37 a decision garnering only 8 votes out of 15
members is still a decision of the Supreme Court en banc and must be
respected as such. The petitioners are, therefore, not in any position to
speculate that, based on the voting, "the probability exists that their motion for
reconsideration may be granted."38
Similarly, the petitioner in G.R. No. 197282, in his Very Urgent Motion to Issue
Clarificatory Resolution, argues that since motions for reconsideration were
filed by the aggrieved parties challenging our October 18, 2011 decision in the
present case, the TRO we initially issued on September 13, 2011 should
remain subsisting and effective. He further argues that any attempt by the
Executive to implement our October 18, 2011 decision pending resolution of
the motions for reconsideration "borders on disrespect if not outright
insolence"39 to this Court.
In support of this theory, the petitioner cites Samad v. COMELEC, 40 where the
Court held that while it had already issued a decision lifting the TRO, the lifting
of the TRO is not yet final and executory, and can also be the subject of a
motion for reconsideration. The petitioner also cites the minute resolution
issued by the Court in Tolentino v. Secretary of Finance, 41 where the Court
reproached the Commissioner of the Bureau of Internal Revenue for
manifesting its intention to implement the decision of the Court, noting that the
Court had not yet lifted the TRO previously issued. 42
We agree with the petitioner that the lifting of a TRO can be included as a
subject of a motion for reconsideration filed to assail our decision. It does not
follow, however, that the TRO remains effective until after we have issued a
final and executory decision, especially considering the clear wording of the
dispositive portion of our October 18, 2011 decision, which states:
WHEREFORE, premises considered, we DISMISS the consolidated petitions
assailing the validity of RA No. 10153 for lack of merit, and UPHOLD the
constitutionality of this law. We likewise LIFT the temporary restraining order
we issued in our Resolution of September 13, 2011. No costs. 43 (emphases
ours)
In this regard, we note an important distinction between Tolentino and the
present case. While it may be true that Tolentino and the present case are
similar in that, in both cases, the petitions assailing the challenged laws were
dismissed by the Court, an examination of the dispositive portion of the
decision in Tolentino reveals that the Court did not categorically lift the TRO. In
sharp contrast, in the present case, we expressly lifted the TRO issued on
September 13, 2011. There is, therefore, no legal impediment to prevent the
1âwphi1
President from exercising his authority to appoint an acting ARMM Governor
and Vice Governor as specifically provided for in RA No. 10153.
Conclusion
As a final point, we wish to address the bleak picture that the petitioner in G.R.
No. 197282 presents in his motion, that our Decision has virtually given the
President the power and authority to appoint 672,416 OICs in the event that
the elections of barangay and Sangguniang Kabataan officials are postponed
or cancelled.
We find this speculation nothing short of fear-mongering.
This argument fails to take into consideration the unique factual and legal
circumstances which led to the enactment of RA No. 10153. RA No. 10153
was passed in order to synchronize the ARMM elections with the national and
local elections. In the course of synchronizing the ARMM elections with the
national and local elections, Congress had to grant the President the power to
appoint OICs in the ARMM, in light of the fact that: (a) holdover by the
incumbent ARMM elective officials is legally impermissible; and (b) Congress
cannot call for special elections and shorten the terms of elective local officials
for less than three years.
Unlike local officials, as the Constitution does not prescribe a term limit for
barangay and Sangguniang Kabataan officials, there is no legal proscription
which prevents these specific government officials from continuing in a
holdover capacity should some exigency require the postponement of
barangay or Sangguniang Kabataan elections. Clearly, these fears have
neither legal nor factual basis to stand on.
For the foregoing reasons, we deny the petitioners’ motions for
reconsideration.
WHEREFORE, premises considered, we DENY with FINALITY the motions for
reconsideration for lack of merit and UPHOLD the constitutionality of RA No.
10153.
SO ORDERED.
ARTURO D. BRION
Associate Justice
G.R. No. 196271 February 28, 2012
DATU MICHAEL ABAS KIDA, in his personal capacity, and in
representation of MAGUINDANAO FEDERATION OF AUTONOMOUS
IRRIGATORS ASSOCIATION, INC., HADJI MUHMINA J. USMAN, JOHN
ANTHONY L. LIM, JAMILON T. ODIN, ASRIN TIMBOL JAIYARI, MUJIB M.
KALANG, ALIH AL-SAIDI J. SAPI-E, KESSAR DAMSIE ABDIL, and
BASSAM ALUH SAUPI, Petitioners,
vs.
SENATE OF THE PHILIPPINES, represented by its President JUAN
PONCE ENRILE, HOUSE OF REPRESENTATIVES, thru SPEAKER
FELICIANO BELMONTE, COMMISSION ON ELECTIONS, thru its
Chairman, SIXTO BRILLANTES, JR., PAQUITO OCHOA, JR., Office of the
President Executive Secretary, FLORENCIO ABAD, JR., Secretary of
Budget, and ROBERTO TAN, Treasurer of the Philippines, Respondents.
x-----------------------x
G.R. No. 196305
BASARI D. MAPUPUNO, Petitioner,
vs.
SIXTO BRILLANTES, in his capacity as Chairman of the Commission on
Elections, FLORENCIO ABAD, JR. in his capacity as Secretary of the
Department of Budget and Management, PAQUITO OCHOA, JR., in his
capacity as Executive Secretary, JUAN PONCE ENRILE, in his capacity
as Senate President, and FELICIANO BELMONTE, in his capacity as
Speaker of the House of Representatives, Respondents.
x-----------------------x
G.R. No. 197221
REP. EDCEL C. LAGMAN, Petitioner,
vs.
PAQUITO N. OCHOA, JR., in his capacity as the Executive Secretary, and
the COMMISSION ON ELECTIONS, Respondents.
x-----------------------x
G.R. No. 197280
ALMARIM CENTI TILLAH, DATU CASAN CONDING CANA, and PARTIDO
DEMOKRATIKO PILIPINO LAKAS NG BAYAN (PDP-LABAN), Petitioners,
vs.
THE COMMISSION ON ELECTIONS, through its Chairman, SIXTO
BRILLANTES, JR., HON. PAQUITO N. OCHOA, JR., in his capacity as
Executive Secretary, HON. FLORENCIO B. ABAD, JR., in his capacity as
Secretary of the Department of Budget and Management, and HON.
ROBERTO B. TAN, in his capacity as Treasurer of the
Philippines, Respondents.
x-----------------------x
G.R. No. 197282
ATTY. ROMULO B. MACALINTAL, Petitioner,
vs.
COMMISSION ON ELECTIONS and THE OFFICE OF THE PRESIDENT,
through EXECUTIVE SECRETARY PAQUITO N. OCHOA,
JR., Respondents.
x-----------------------x
G.R. No. 197392
LOUIS "BAROK" C. BIRAOGO, Petitioner,
vs.
THE COMMISSION ON ELECTIONS and EXECUTIVE SECRETARY
PAQUITO N. OCHOA, JR., Respondents.
x-----------------------x
G.R. No. 197454
JACINTO V. PARAS, Petitioner,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., and THE
COMMISSION ON ELECTIONS, Respondents.
MINORITY RIGHTS FORUM, PHILIPPINES, INC., Respondents-Intervenor.
RESOLUTION
BRION, J.:
We resolve: (a) the motion for reconsideration filed by petitioners Datu Michael
Abas Kida, et al. in G.R. No. 196271; (b) the motion for reconsideration filed by
petitioner Rep. Edcel Lagman in G.R. No. 197221; (c) the ex abundante ad
cautelam motion for reconsideration filed by petitioner Basari Mapupuno in
G.R. No. 196305; (d) the motion for reconsideration filed by petitioner Atty.
Romulo Macalintal in G.R. No. 197282; (e) the motion for reconsideration filed
by petitioners Almarim Centi Tillah, Datu Casan Conding Cana and Partido
Demokratiko Pilipino Lakas ng Bayan in G.R. No. 197280; (f) the manifestation
and motion filed by petitioners Almarim Centi Tillah, et al. in G.R. No. 197280;
and (g) the very urgent motion to issue clarificatory resolution that the
temporary restraining order (TRO) is still existing and effective.
These motions assail our Decision dated October 18, 2011, where we upheld
the constitutionality of Republic Act (RA) No. 10153. Pursuant to the
constitutional mandate of synchronization, RA No. 10153 postponed the
regional elections in the Autonomous Region in Muslim Mindanao (ARMM)
(which were scheduled to be held on the second Monday of August 2011) to
the second Monday of May 2013 and recognized the President’s power to
appoint officers-in-charge (OICs) to temporarily assume these positions upon
the expiration of the terms of the elected officials.
The Motions for Reconsideration
The petitioners in G.R. No. 196271 raise the following grounds in support of
their motion:
I. THE HONORABLE COURT ERRED IN CONCLUDING THAT THE
ARMM ELECTIONS ARE LOCAL ELECTIONS, CONSIDERING THAT
THE CONSTITUTION GIVES THE ARMM A SPECIAL STATUS AND
IS SEPARATE AND DISTINCT FROM ORDINARY LOCAL
GOVERNMENT UNITS.
II. R.A. 10153 AND R.A. 9333 AMEND THE ORGANIC ACT.
III. THE SUPERMAJORITY PROVISIONS OF THE ORGANIC ACT
(R.A. 9054) ARE NOT IRREPEALABLE LAWS.
IV. SECTION 3, ARTICLE XVII OF R.A. 9054 DOES NOT VIOLATE
SECTION 18, ARTICLE X OF THE CONSTITUTION.
 V. BALANCE OF INTERESTS TILT IN FAVOR OF THE
DEMOCRATIC PRINCIPLE[.]1
The petitioner in G.R. No. 197221 raises similar grounds, arguing that:
I. THE ELECTIVE REGIONAL EXECUTIVE AND LEGISLATIVE
OFFICIALS OF ARMM CANNOT BE CONSIDERED AS OR
EQUATED WITH THE TRADITIONAL LOCAL GOVERNMENT
OFFICIALS IN THE LOCAL GOVERNMENT UNITS (LGUs)
BECAUSE (A) THERE IS NO EXPLICIT CONSTITUTIONAL
PROVISION ON SUCH PARITY; AND (B) THE ARMM IS MORE
SUPERIOR THAN LGUs IN STRUCTURE, POWERS AND
AUTONOMY, AND CONSEQUENTLY IS A CLASS OF ITS OWN
APART FROM TRADITIONAL LGUs.
II. THE UNMISTAKABLE AND UNEQUIVOCAL CONSTITUTIONAL
MANDATE FOR AN ELECTIVE AND REPRESENTATIVE
EXECUTIVE DEPARTMENT AND LEGISLATIVE ASSEMBLY IN
ARMM INDUBITABLY PRECLUDES THE APPOINTMENT BY THE
PRESIDENT OF OFFICERS-IN-CHARGE (OICs), ALBEIT
MOMENTARY OR TEMPORARY, FOR THE POSITIONS OF ARMM
GOVERNOR, VICE GOVERNOR AND MEMBERS OF THE
REGIONAL ASSEMBLY.
III. THE PRESIDENT’S APPOINTING POWER IS LIMITED TO
APPOINTIVE OFFICIALS AND DOES NOT EXTEND TO ELECTIVE
OFFICIALS EVEN AS THE PRESIDENT IS ONLY VESTED WITH
SUPERVISORY POWERS OVER THE ARMM, THEREBY NEGATING
THE AWESOME POWER TO APPOINT AND REMOVE OICs
OCCUPYING ELECTIVE POSITIONS.
IV. THE CONSTITUTION DOES NOT PROSCRIBE THE HOLDOVER
OF ARMM ELECTED OFFICIALS PENDING THE ELECTION AND
QUALIFICATION OF THEIR SUCCESSORS.
V. THE RULING IN OSMENA DOES NOT APPLY TO ARMM
ELECTED OFFICIALS WHOSE TERMS OF OFFICE ARE NOT
PROVIDED FOR BY THE CONSTITUTION BUT PRESCRIBED BY
THE ORGANIC ACTS.
VI. THE REQUIREMENT OF A SUPERMAJORITY OF ¾ VOTES IN
THE HOUSE OF REPRESENTATIVES AND THE SENATE FOR THE
VALIDITY OF A SUBSTANTIVE AMENDMENT OR REVISION OF
THE ORGANIC ACTS DOES NOT IMPOSE AN IRREPEALABLE
LAW.
VII. THE REQUIREMENT OF A PLEBISCITE FOR THE EFFECTIVITY
OF A SUBSTANTIVE AMENDMENT OR REVISION OF THE
ORGANIC ACTS DOES NOT UNDULY EXPAND THE PLEBISCITE
REQUIREMENT OF THE CONSTITUTION.
VIII. SYNCHRONIZATION OF THE ARMM ELECTION WITH THE
NATIONAL AND LOCAL ELECTIONS IS NOT MANDATED BY THE
CONSTITUTION.
IX. THE COMELEC HAS THE AUTHORITY TO HOLD AND
CONDUCT SPECIAL ELECTIONS IN ARMM, AND THE ENACTMENT
OF AN IMPROVIDENT AND UNCONSTITUTIONAL STATUTE IS AN
ANALOGOUS CAUSE WARRANTING COMELEC’S HOLDING OF
SPECIAL ELECTIONS.2 (italics supplied)
The petitioner in G.R. No. 196305 further asserts that:
I. BEFORE THE COURT MAY CONSTRUE OR INTERPRET A
STATUTE, IT IS A CONDITION SINE QUA NON THAT THERE BE
DOUBT OR AMBIGUITY IN ITS LANGUAGE.
THE TRANSITORY PROVISIONS HOWEVER ARE CLEAR AND
UNAMBIGUOUS: THEY REFER TO THE 1992 ELECTIONS AND
TURN-OVER OF ELECTIVE OFFICIALS.
IN THUS RECOGNIZING A SUPPOSED "INTENT" OF THE
FRAMERS, AND APPLYING THE SAME TO ELECTIONS 20 YEARS
AFTER, THE HONORABLE SUPREME COURT MAY HAVE
VIOLATED THE FOREMOST RULE IN STATUTORY
CONSTRUCTION.
xxxx
II. THE HONORABLE COURT SHOULD HAVE CONSIDERED THAT
RA 9054, AN ORGANIC ACT, WAS COMPLETE IN ITSELF. HENCE,
RA 10153 SHOULD BE CONSIDERED TO HAVE BEEN ENACTED
PRECISELY TO AMEND RA 9054.
 xxxx
III. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS
ERROR IN DECLARING THE 2/3 VOTING REQUIREMENT SET
FORTH IN RA 9054 AS UNCONSTITUTIONAL.
xxxx
IV. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS
ERROR IN HOLDING THAT A PLEBISCITE IS NOT NECESSARY IN
AMENDING THE ORGANIC ACT.
xxxx
V. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN
DECLARING THE HOLD-OVER OF ARMM ELECTIVE OFFICIALS
UNCONSTITUTIONAL.
xxxx
VI. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN
UPHOLDING THE APPOINTMENT OF OFFICERS-IN-
CHARGE.3 (italics and underscoring supplied)
Finally, the petitioners in G.R. No. 197280 argue that:
The petitioner in G.R. No. 197282 contends that:
A.
ASSUMING WITHOUT CONCEDING THAT THE APPOINTMENT OF
OICs FOR THE REGIONAL GOVERNMENT OF THE ARMM IS NOT
UNCONSTITUTIONAL TO BEGIN WITH, SUCH APPOINTMENT OF
OIC REGIONAL OFFICIALS WILL CREATE A FUNDAMENTAL
CHANGE IN THE BASIC STRUCTURE OF THE REGIONAL
GOVERNMENT SUCH THAT R.A. NO. 10153 SHOULD HAVE BEEN
SUBMITTED TO A PLEBISCITE IN THE ARMM FOR APPROVAL BY
ITS PEOPLE, WHICH PLEBISCITE REQUIREMENT CANNOT BE
CIRCUMVENTED BY SIMPLY CHARACTERIZING THE
PROVISIONS OF R.A. NO. 10153 ON APPOINTMENT OF OICs AS
AN "INTERIM MEASURE".
B.
THE HONORABLE COURT ERRED IN RULING THAT THE
APPOINTMENT BY THE PRESIDENT OF OICs FOR THE ARMM
REGIONAL GOVERNMENT IS NOT VIOLATIVE OF THE
CONSTITUTION.
C.
THE HOLDOVER PRINCIPLE ADOPTED IN R.A. NO. 9054 DOES
NOT VIOLATE THE CONSTITUTION, AND BEFORE THEIR
SUCCESSORS ARE ELECTED IN EITHER AN ELECTION TO BE
HELD AT THE SOONEST POSSIBLE TIME OR IN MAY 2013, THE
SAID INCUMBENT ARMM REGIONAL OFFICIALS MAY VALIDLY
CONTINUE FUNCTIONING AS SUCH IN A HOLDOVER CAPACITY
IN ACCORDANCE WITH SECTION 7, ARTICLE VII OF R.A. NO.
9054.
D.
WITH THE CANCELLATION OF THE AUGUST 2011 ARMM
ELECTIONS, SPECIAL ELECTIONS MUST IMMEDIATELY BE HELD
FOR THE ELECTIVE REGIONAL OFFICIALS OF THE ARMM WHO
SHALL SERVE UNTIL THEIR SUCCESSORS ARE ELECTED IN THE
MAY 2013 SYNCHRONIZED ELECTIONS.4
a) the Constitutional mandate of synchronization does not apply to the
ARMM elections;
b) RA No. 10153 negates the basic principle of republican democracy
which, by constitutional mandate, guides the governance of the
Republic;
c) RA No. 10153 amends the Organic Act (RA No. 9054) and, thus,
has to comply with the 2/3 vote from the House of Representatives and
the Senate, voting separately, and be ratified in a plebiscite;
d) if the choice is between elective officials continuing to hold their
offices even after their terms are over and non-elective individuals
getting into the vacant elective positions by appointment as OICs, the
holdover option is the better choice;
 e) the President only has the power of supervision over autonomous
regions, which does not include the power to appoint OICs to take the
place of ARMM elective officials; and
f) it would be better to hold the ARMM elections separately from the
national and local elections as this will make it easier for the authorities
to implement election laws.
In essence, the Court is asked to resolve the following questions:
(a) Does the Constitution mandate the synchronization of ARMM
regional elections with national and local elections?
(b) Does RA No. 10153 amend RA No. 9054? If so, does RA No.
10153 have to comply with the supermajority vote and plebiscite
requirements?
(c) Is the holdover provision in RA No. 9054 constitutional?
(d) Does the COMELEC have the power to call for special elections in
ARMM?
(e) Does granting the President the power to appoint OICs violate the
elective and representative nature of ARMM regional legislative and
executive offices?
(f) Does the appointment power granted to the President exceed the
President’s supervisory powers over autonomous regions?
The Court’s Ruling
We deny the motions for lack of merit.
Synchronization mandate includes ARMM elections
The Court was unanimous in holding that the Constitution mandates the
synchronization of national and local elections. While the Constitution does not
expressly instruct Congress to synchronize the national and local elections, the
intention can be inferred from the following provisions of the Transitory
Provisions (Article XVIII) of the Constitution, which state:
Section 1. The first elections of Members of the Congress under this
Constitution shall be held on the second Monday of May, 1987.
The first local elections shall be held on a date to be determined by the
President, which may be simultaneous with the election of the Members of the
Congress. It shall include the election of all Members of the city or municipal
councils in the Metropolitan Manila area.
Section 2. The Senators, Members of the House of Representatives, and the
local officials first elected under this Constitution shall serve until noon of June
30, 1992.
Of the Senators elected in the elections in 1992, the first twelve obtaining the
highest number of votes shall serve for six years and the remaining twelve for
three years.
xxxx
Section 5. The six-year term of the incumbent President and Vice-President
elected in the February 7, 1986 election is, for purposes of synchronization of
elections, hereby extended to noon of June 30, 1992.
The first regular elections for the President and Vice-President under this
Constitution shall be held on the second Monday of May, 1992.
To fully appreciate the constitutional intent behind these provisions, we refer to
the discussions of the Constitutional Commission:
MR. MAAMBONG. For purposes of identification, I will now read a section
which we will temporarily indicate as Section 14. It reads: "THE SENATORS,
MEMBERS OF THE HOUSE OF REPRESENTATIVES AND THE LOCAL
OFFICIALS ELECTED IN THE FIRST ELECTION SHALL SERVE FOR FIVE
YEARS, TO EXPIRE AT NOON OF JUNE 1992."
This was presented by Commissioner Davide, so may we ask that
Commissioner Davide be recognized.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner Davide is
recognized.
MR. DAVIDE. Before going to the proposed amendment, I would only state
that in view of the action taken by the Commission on Section 2 earlier, I am
formulating a new proposal. It will read as follows: "THE SENATORS,
MEMBERS OF THE HOUSE OF REPRESENTATIVES AND THE LOCAL
OFFICIALS FIRST ELECTED UNDER THIS CONSTITUTION SHALL SERVE
UNTIL NOON OF JUNE 30, 1992."
I proposed this because of the proposed section of the Article on Transitory
Provisions giving a term to the incumbent President and Vice-President until
1992. Necessarily then, since the term provided by the Commission for
Members of the Lower House and for local officials is three years, if there will
be an election in 1987, the next election for said officers will be in 1990, and it
would be very close to 1992. We could never attain, subsequently, any
synchronization of election which is once every three years.
So under my proposal we will be able to begin actual synchronization in
1992, and consequently, we should not have a local election or an election for
Members of the Lower House in 1990 for them to be able to complete their
term of three years each. And if we also stagger the Senate, upon the first
election it will result in an election in 1993 for the Senate alone, and there will
be an election for 12 Senators in 1990. But for the remaining 12 who will be
elected in 1987, if their term is for six years, their election will be in 1993. So,
consequently we will have elections in 1990, in 1992 and in 1993. The later
election will be limited to only 12 Senators and of course to the local officials
and the Members of the Lower House. But, definitely, thereafter we can never
have an election once every three years, therefore defeating the very purpose
of the Commission when we adopted the term of six years for the President
and another six years for the Senators with the possibility of staggering with 12
to serve for six years and 12 for three years insofar as the first Senators are
concerned. And so my proposal is the only way to effect the first
synchronized election which would mean, necessarily, a bonus of two
years to the Members of the Lower House and a bonus of two years to
the local elective officials.
THE PRESIDING OFFICER (Mr. Rodrigo). What does the committee say?
MR. DE CASTRO. Mr. Presiding Officer.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner de Castro is
recognized.
MR. DE CASTRO. Thank you.
During the discussion on the legislative and the synchronization of elections, I
was the one who proposed that in order to synchronize the elections every
three years, which the body approved — the first national and local officials to
be elected in 1987 shall continue in office for five years, the same thing the
Honorable Davide is now proposing. That means they will all serve until 1992,
assuming that the term of the President will be for six years and continue
beginning in 1986. So from 1992, we will again have national, local and
presidential elections. This time, in 1992, the President shall have a term
until 1998 and the first 12 Senators will serve until 1998, while the next 12
shall serve until 1995, and then the local officials elected in 1992 will
serve until 1995. From then on, we shall have an election every three
years.
So, I will say that the proposition of Commissioner Davide is in order, if we
have to synchronize our elections every three years which was already
approved by the body.
Thank you, Mr. Presiding Officer.
xxxx
MR. GUINGONA. What will be synchronized, therefore, is the election of the
incumbent President and Vice-President in 1992.
MR. DAVIDE. Yes.
MR. GUINGONA. Not the reverse. Will the committee not synchronize the
election of the Senators and local officials with the election of the President?
MR. DAVIDE. It works both ways, Mr. Presiding Officer. The attempt here is on
the assumption that the provision of the Transitory Provisions on the term of
the incumbent President and Vice-President would really end in 1992.
MR. GUINGONA. Yes.
MR. DAVIDE. In other words, there will be a single election in 1992 for all,
from the President up to the municipal officials.5 (emphases and
underscoring ours)
The framers of the Constitution could not have expressed their objective more
clearly – there was to be a single election in 1992 for all elective officials –
from the President down to the municipal officials. Significantly, the framers
were even willing to temporarily lengthen or shorten the terms of elective
officials in order to meet this objective, highlighting the importance of this
constitutional mandate.
We came to the same conclusion in Osmeña v. Commission on
Elections,6 where we unequivocally stated that "the Constitution has mandated
synchronized national and local elections."7 Despite the length and verbosity of
their motions, the petitioners have failed to convince us to deviate from this
established ruling.
Neither do we find any merit in the petitioners’ contention that the ARMM
elections are not covered by the constitutional mandate of synchronization
because the ARMM elections were not specifically mentioned in the above-
quoted Transitory Provisions of the Constitution.
That the ARMM elections were not expressly mentioned in the Transitory
Provisions of the Constitution on synchronization cannot be interpreted to
mean that the ARMM elections are not covered by the constitutional mandate
of synchronization. We have to consider that the ARMM, as we now know it,
had not yet been officially organized at the time the Constitution was enacted
and ratified by the people. Keeping in mind that a constitution is not intended
to provide merely for the exigencies of a few years but is to endure through
generations for as long as it remains unaltered by the people as ultimate
sovereign, a constitution should be construed in the light of what actually is a
continuing instrument to govern not only the present but also the unfolding
events of the indefinite future. Although the principles embodied in a
constitution remain fixed and unchanged from the time of its adoption, a
constitution must be construed as a dynamic process intended to stand for a
great length of time, to be progressive and not static.8
To reiterate, Article X of the Constitution, entitled "Local Government," clearly
shows the intention of the Constitution to classify autonomous regions, such as
the ARMM, as local governments. We refer to Section 1 of this Article, which
provides:
Section 1. The territorial and political subdivisions of the Republic of the
Philippines are the provinces, cities, municipalities, and barangays. There shall
be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter
provided.
The inclusion of autonomous regions in the enumeration of political
subdivisions of the State under the heading "Local Government" indicates
quite clearly the constitutional intent to consider autonomous regions as one of
the forms of local governments.
That the Constitution mentions only the "national government" and the "local
governments," and does not make a distinction between the "local
government" and the "regional government," is particularly revealing, betraying
as it does the intention of the framers of the Constitution to consider the
autonomous regions not as separate forms of government, but as political
units which, while having more powers and attributes than other local
government units, still remain under the category of local governments. Since
autonomous regions are classified as local governments, it follows that
elections held in autonomous regions are also considered as local elections.
The petitioners further argue that even assuming that the Constitution
mandates the synchronization of elections, the ARMM elections are not
covered by this mandate since they are regional elections and not local
elections.
In construing provisions of the Constitution, the first rule is verba legis, "that is,
wherever possible, the words used in the Constitution must be given their
ordinary meaning except where technical terms are employed." 9 Applying this
principle to determine the scope of "local elections," we refer to the meaning of
the word "local," as understood in its ordinary sense. As defined in Webster’s
Third New International Dictionary Unabridged, "local" refers to something
"that primarily serves the needs of a particular limited district, often a
community or minor political subdivision." Obviously, the ARMM elections,
which are held within the confines of the autonomous region of Muslim
Mindanao, fall within this definition.
To be sure, the fact that the ARMM possesses more powers than other
provinces, cities, or municipalities is not enough reason to treat the ARMM
regional elections differently from the other local elections. Ubi lex non
distinguit nec nos distinguire debemus. When the law does not distinguish, we
must not distinguish.10
RA No. 10153 does not amend RA No. 9054
The petitioners are adamant that the provisions of RA No. 10153, in
postponing the ARMM elections, amend RA No. 9054.
We cannot agree with their position.
A thorough reading of RA No. 9054 reveals that it fixes the schedule for only
the first ARMM elections;11 it does not provide the date for the succeeding
regular ARMM elections. In providing for the date of the regular ARMM
elections, RA No. 9333 and RA No. 10153 clearly do not amend RA No. 9054
since these laws do not change or revise any provision in RA No. 9054. In
fixing the date of the ARMM elections subsequent to the first election, RA No.
9333 and RA No. 10153 merely filled the gap left in RA No. 9054.
We reiterate our previous observations:
This view – that Congress thought it best to leave the determination of the date
of succeeding ARMM elections to legislative discretion – finds support in
ARMM’s recent history.
To recall, RA No. 10153 is not the first law passed that rescheduled the ARMM
elections. The First Organic Act – RA No. 6734 – not only did not fix the date
of the subsequent elections; it did not even fix the specific date of the first
ARMM elections, leaving the date to be fixed in another legislative enactment.
Consequently, RA No. 7647, RA No. 8176, RA No. 8746, RA No. 8753, and
RA No. 9012 were all enacted by Congress to fix the dates of the ARMM
elections. Since these laws did not change or modify any part or provision of
RA No. 6734, they were not amendments to this latter law. Consequently,
there was no need to submit them to any plebiscite for ratification.
The Second Organic Act – RA No. 9054 – which lapsed into law on March 31,
2001, provided that the first elections would be held on the second Monday of
September 2001. Thereafter, Congress passed RA No. 9140 to reset the date
of the ARMM elections. Significantly, while RA No. 9140 also scheduled the
plebiscite for the ratification of the Second Organic Act (RA No. 9054), the
new date of the ARMM regional elections fixed in RA No. 9140 was not
among the provisions ratified in the plebiscite held to approve RA No.
9054. Thereafter, Congress passed RA No. 9333, which further reset the date
of the ARMM regional elections. Again, this law was not ratified through a
plebiscite.
From these legislative actions, we see the clear intention of Congress to treat
the laws which fix the date of the subsequent ARMM elections as separate and
distinct from the Organic Acts. Congress only acted consistently with this intent
when it passed RA No. 10153 without requiring compliance with the
amendment prerequisites embodied in Section 1 and Section 3, Article XVII of
RA No. 9054.12 (emphases supplied)
The petitioner in G.R. No. 196305 contends, however, that there is no lacuna
in RA No. 9054 as regards the date of the subsequent ARMM elections. In his
estimation, it can be implied from the provisions of RA No. 9054 that the
succeeding elections are to be held three years after the date of the first
ARMM regional elections.
We find this an erroneous assertion. Well-settled is the rule that the court may
not, in the guise of interpretation, enlarge the scope of a statute and include
therein situations not provided nor intended by the lawmakers. An omission at
the time of enactment, whether careless or calculated, cannot be judicially
supplied however later wisdom may recommend the inclusion. 13 Courts are not
authorized to insert into the law what they think should be in it or to supply
what they think the legislature would have supplied if its attention had been
called to the omission.14 Providing for lapses within the law falls within the
exclusive domain of the legislature, and courts, no matter how well-meaning,
have no authority to intrude into this clearly delineated space.
Since RA No. 10153 does not amend, but merely fills in the gap in RA No.
9054, there is no need for RA No. 10153 to comply with the amendment
requirements set forth in Article XVII of RA No. 9054.
Supermajority vote requirement makes RA No. 9054 an irrepealable law
Even assuming that RA No. 10153 amends RA No. 9054, however, we have
already established that the supermajority vote requirement set forth in Section
1, Article XVII of RA No. 905415 is unconstitutional for violating the principle that
Congress cannot pass irrepealable laws.
The power of the legislature to make laws includes the power to amend and
repeal these laws. Where the legislature, by its own act, attempts to limit its
power to amend or repeal laws, the Court has the duty to strike down such act
for interfering with the plenary powers of Congress. As we explained in Duarte
v. Dade:16
A state legislature has a plenary law-making power over all subjects, whether
pertaining to persons or things, within its territorial jurisdiction, either to
introduce new laws or repeal the old, unless prohibited expressly or by
implication by the federal constitution or limited or restrained by its own. It
cannot bind itself or its successors by enacting irrepealable laws except when
so restrained. Every legislative body may modify or abolish the acts passed by
itself or its predecessors. This power of repeal may be exercised at the same
session at which the original act was passed; and even while a bill is in its
progress and before it becomes a law. This legislature cannot bind a future
legislature to a particular mode of repeal. It cannot declare in advance
the intent of subsequent legislatures or the effect of subsequent
legislation upon existing statutes. [emphasis ours]
Under our Constitution, each House of Congress has the power to approve
bills by a mere majority vote, provided there is quorum. 17 In requiring all laws
which amend RA No. 9054 to comply with a higher voting requirement than the
Constitution provides (2/3 vote), Congress, which enacted RA No. 9054,
clearly violated the very principle which we sought to establish in Duarte. To
reiterate, the act of one legislature is not binding upon, and cannot tie the
hands of, future legislatures.18
We also highlight an important point raised by Justice Antonio T. Carpio in his
dissenting opinion, where he stated: "Section 1, Article XVII of RA 9054 erects
a high vote threshold for each House of Congress to surmount, effectively and
unconstitutionally, taking RA 9054 beyond the reach of Congress’ amendatory
powers. One Congress cannot limit or reduce the plenary legislative power of
succeeding Congresses by requiring a higher vote threshold than what the
Constitution requires to enact, amend or repeal laws. No law can be passed
fixing such a higher vote threshold because Congress has no power, by
ordinary legislation, to amend the Constitution." 19
Plebiscite requirement in RA No. 9054 overly broad
Similarly, we struck down the petitioners’ contention that the plebiscite
requirement20 applies to all amendments of RA No. 9054 for being an
unreasonable enlargement of the plebiscite requirement set forth in the
Constitution.
Section 18, Article X of the Constitution provides that "[t]he creation of the
autonomous region shall be effective when approved by majority of the votes
cast by the constituent units in a plebiscite called for the purpose[.]" We
interpreted this to mean that only amendments to, or revisions of, the Organic
Act constitutionally-essential to the creation of autonomous regions – i.e.,
those aspects specifically mentioned in the Constitution which Congress must
provide for in the Organic Act21 – require ratification through a plebiscite. We
stand by this interpretation.
The petitioners argue that to require all amendments to RA No. 9054 to comply
with the plebiscite requirement is to recognize that sovereignty resides
primarily in the people.
While we agree with the petitioners’ underlying premise that sovereignty
ultimately resides with the people, we disagree that this legal reality
necessitates compliance with the plebiscite requirement for all amendments to
RA No. 9054. For if we were to go by the petitioners’ interpretation of Section
18, Article X of the Constitution that all amendments to the Organic Act have to
undergo the plebiscite requirement before becoming effective, this would lead
to impractical and illogical results – hampering the ARMM’s progress by
impeding Congress from enacting laws that timely address problems as they
arise in the region, as well as weighing down the ARMM government with the
costs that unavoidably follow the holding of a plebiscite.
Interestingly, the petitioner in G.R. No. 197282 posits that RA No. 10153, in
giving the President the power to appoint OICs to take the place of the elective
officials of the ARMM, creates a fundamental change in the basic structure of
the government, and thus requires compliance with the plebiscite requirement
embodied in RA No. 9054.
Again, we disagree.
The pertinent provision in this regard is Section 3 of RA No. 10153, which
reads:
Section 3. Appointment of Officers-in-Charge. — The President shall appoint
officers-in-charge for the Office of the Regional Governor, Regional Vice
Governor and Members of the Regional Legislative Assembly who shall
perform the functions pertaining to the said offices until the officials duly
elected in the May 2013 elections shall have qualified and assumed office.
We cannot see how the above-quoted provision has changed the basic
structure of the ARMM regional government. On the contrary, this provision
clearly preserves the basic structure of the ARMM regional government when
it recognizes the offices of the ARMM regional government and directs the
OICs who shall temporarily assume these offices to "perform the functions
pertaining to the said offices."
Unconstitutionality of the holdover provision
The petitioners are one in defending the constitutionality of Section 7(1), Article
VII of RA No. 9054, which allows the regional officials to remain in their
positions in a holdover capacity. The petitioners essentially argue that the
ARMM regional officials should be allowed to remain in their respective
positions until the May 2013 elections since there is no specific provision in the
Constitution which prohibits regional elective officials from performing their
duties in a holdover capacity.
The pertinent provision of the Constitution is Section 8, Article X which
provides:
Section 8. The term of office of elective local officials, except barangay
officials, which shall be determined by law, shall be three years and no such
official shall serve for more than three consecutive terms. [emphases ours]
On the other hand, Section 7(1), Article VII of RA No. 9054 provides:
Section 7. Terms of Office of Elective Regional Officials. – (1) Terms of Office.
The terms of office of the Regional Governor, Regional Vice Governor and
members of the Regional Assembly shall be for a period of three (3) years,
which shall begin at noon on the 30th day of September next following the day
of the election and shall end at noon of the same date three (3) years
thereafter. The incumbent elective officials of the autonomous region shall
continue in effect until their successors are elected and qualified.
The clear wording of Section 8, Article X of the Constitution expresses the
intent of the framers of the Constitution to categorically set a limitation on the
period within which all elective local officials can occupy their offices. We have
already established that elective ARMM officials are also local officials; they
are, thus, bound by the three-year term limit prescribed by the Constitution. It,
therefore, becomes irrelevant that the Constitution does not expressly prohibit
elective officials from acting in a holdover capacity. Short of amending the
Constitution, Congress has no authority to extend the three-year term limit by
inserting a holdover provision in RA No. 9054. Thus, the term of three years for
local officials should stay at three (3) years, as fixed by the Constitution, and
cannot be extended by holdover by Congress.
Admittedly, we have, in the past, recognized the validity of holdover provisions
in various laws. One significant difference between the present case and these
past cases22 is that while these past cases all refer to
elective barangay or sangguniang kabataan officials whose terms of office are
not explicitly provided for in the Constitution, the present case refers to local
elective officials - the ARMM Governor, the ARMM Vice Governor, and the
members of the Regional Legislative Assembly - whose terms fall within the
three-year term limit set by Section 8, Article X of the Constitution.
Even assuming that a holdover is constitutionally permissible, and there had
been statutory basis for it (namely Section 7, Article VII of RA No. 9054), the
rule of holdover can only apply as an available option where no express or
implied legislative intent to the contrary exists; it cannot apply where such
contrary intent is evident.23
Congress, in passing RA No. 10153 and removing the holdover option, has
made it clear that it wants to suppress the holdover rule expressed in RA No.
9054. Congress, in the exercise of its plenary legislative powers, has clearly
acted within its discretion when it deleted the holdover option, and this Court
has no authority to question the wisdom of this decision, absent any evidence
of unconstitutionality or grave abuse of discretion. It is for the legislature and
the executive, and not this Court, to decide how to fill the vacancies in the
ARMM regional government which arise from the legislature complying with
the constitutional mandate of synchronization.
COMELEC has no authority to hold special elections
Neither do we find any merit in the contention that the Commission on
Elections (COMELEC) is sufficiently empowered to set the date of special
elections in the ARMM. To recall, the Constitution has merely empowered the
COMELEC to enforce and administer all laws and regulations relative to the
conduct of an election.24 Although the legislature, under the Omnibus Election
Code (Batas Pambansa Bilang [BP] 881), has granted the COMELEC the
power to postpone elections to another date, this power is confined to the
specific terms and circumstances provided for in the law. Specifically, this
power falls within the narrow confines of the following provisions:
Section 5. Postponement of election. - When for any serious cause such
as violence, terrorism, loss or destruction of election paraphernalia or
records, force majeure, and other analogous causes of such a nature that
the holding of a free, orderly and honest election should become impossible in
any political subdivision, the Commission, motu proprio or upon a verified
petition by any interested party, and after due notice and hearing, whereby all
interested parties are afforded equal opportunity to be heard, shall postpone
the election therein to a date which should be reasonably close to the
date of the election not held, suspended or which resulted in a failure to
elect but not later than thirty days after the cessation of the cause for such
postponement or suspension of the election or failure to elect.
Section 6. Failure of election. - If, on account of force
majeure, violence, terrorism, fraud, or other analogous causes the
election in any polling place has not been held on the date fixed, or had
been suspended before the hour fixed by law for the closing of the voting, or
after the voting and during the preparation and the transmission of the election
returns or in the custody or canvass thereof, such election results in a
failure to elect, and in any of such cases the failure or suspension of election
would affect the result of the election, the Commission shall, on the basis of a
verified petition by any interested party and after due notice and hearing, call
for the holding or continuation of the election not held, suspended or which
resulted in a failure to elect on a date reasonably close to the date of the
election not held, suspended or which resulted in a failure to elect but not later
than thirty days after the cessation of the cause of such postponement or
suspension of the election or failure to elect. [emphases and underscoring
ours]
As we have previously observed in our assailed decision, both Section 5 and
Section 6 of BP 881 address instances where elections have already been
scheduled to take place but do not occur or had to be suspended because
of unexpected and unforeseen circumstances, such as violence, fraud,
terrorism, and other analogous circumstances.
In contrast, the ARMM elections were postponed by law, in furtherance of the
constitutional mandate of synchronization of national and local elections.
Obviously, this does not fall under any of the circumstances contemplated by
Section 5 or Section 6 of BP 881.
More importantly, RA No. 10153 has already fixed the date for the next ARMM
elections and the COMELEC has no authority to set a different election date.
Even assuming that the COMELEC has the authority to hold special elections,
and this Court can compel the COMELEC to do so, there is still the problem of
having to shorten the terms of the newly elected officials in order to
synchronize the ARMM elections with the May 2013 national and local
elections. Obviously, neither the Court nor the COMELEC has the authority to
do this, amounting as it does to an amendment of Section 8, Article X of the
Constitution, which limits the term of local officials to three years.
President’s authority to appoint OICs
The petitioner in G.R. No. 197221 argues that the President’s power to appoint
pertains only to appointive positions and cannot extend to positions held by
elective officials.
The power to appoint has traditionally been recognized as executive in
nature.25 Section 16, Article VII of the Constitution describes in broad strokes
the extent of this power, thus:
Section 16. The President shall nominate and, with the consent of the
Commission on Appointments, appoint the heads of the executive
departments, ambassadors, other public ministers and consuls, or officers of
the armed forces from the rank of colonel or naval captain, and other officers
whose appointments are vested in him in this Constitution. He shall also
appoint all other officers of the Government whose appointments are not
otherwise provided for by law, and those whom he may be authorized by
law to appoint. The Congress may, by law, vest the appointment of other
officers lower in rank in the President alone, in the courts, or in the heads of
departments, agencies, commissions, or boards. [emphasis ours]
The 1935 Constitution contained a provision similar to the one quoted above.
Section 10(3), Article VII of the 1935 Constitution provides:
(3) The President shall nominate and with the consent of the Commission on
Appointments, shall appoint the heads of the executive departments and
bureaus, officers of the Army from the rank of colonel, of the Navy and Air
Forces from the rank of captain or commander, and all other officers of the
Government whose appointments are not herein otherwise provided for, and
those whom he may be authorized by law to appoint; but the Congress may by
law vest the appointment of inferior officers, in the President alone, in the
courts, or in the heads of departments. [emphasis ours]
The main distinction between the provision in the 1987 Constitution and its
counterpart in the 1935 Constitution is the sentence construction; while in the
1935 Constitution, the various appointments the President can make are
enumerated in a single sentence, the 1987 Constitution enumerates the
various appointments the President is empowered to make and divides the
enumeration in two sentences. The change in style is significant; in providing
for this change, the framers of the 1987 Constitution clearly sought to make a
distinction between the first group of presidential appointments and the second
group of presidential appointments, as made evident in the following
exchange:
MR. FOZ. Madame President x x x I propose to put a period (.) after "captain"
and x x x delete "and all" and substitute it with HE SHALL ALSO APPOINT
ANY.
MR. REGALADO. Madam President, the Committee accepts the proposed
amendment because it makes it clear that those other officers mentioned
therein do not have to be confirmed by the Commission on Appointments.26
The first group of presidential appointments, specified as the heads of the
executive departments, ambassadors, other public ministers and consuls, or
officers of the Armed Forces, and other officers whose appointments are
vested in the President by the Constitution, pertains to the appointive officials
who have to be confirmed by the Commission on Appointments.
The second group of officials the President can appoint are "all other officers of
the Government whose appointments are not otherwise provided for by law,
and those whom he may be authorized by law to appoint." 27 The second
sentence acts as the "catch-all provision" for the President’s appointment
power, in recognition of the fact that the power to appoint is essentially
executive in nature.28 The wide latitude given to the President to appoint is
further demonstrated by the recognition of the President’s power to appoint
officials whose appointments are not even provided for by law. In other
words, where there are offices which have to be filled, but the law does not
provide the process for filling them, the Constitution recognizes the power of
the President to fill the office by appointment.
Any limitation on or qualification to the exercise of the President’s appointment
power should be strictly construed and must be clearly stated in order to be
recognized.29 Given that the President derives his power to appoint OICs in the
ARMM regional government from law, it falls under the classification of
presidential appointments covered by the second sentence of Section 16,
Article VII of the Constitution; the President’s appointment power thus rests on
clear constitutional basis.
The petitioners also jointly assert that RA No. 10153, in granting the President
the power to appoint OICs in elective positions, violates Section 16, Article X of
the Constitution,30 which merely grants the President the power of supervision
over autonomous regions.
This is an overly restrictive interpretation of the President’s appointment
power. There is no incompatibility between the President’s power of
supervision over local governments and autonomous regions, and the power
granted to the President, within the specific confines of RA No. 10153, to
appoint OICs.
The power of supervision is defined as "the power of a superior officer to see
to it that lower officers perform their functions in accordance with law." 31 This is
distinguished from the power of control or "the power of an officer to alter or
modify or set aside what a subordinate officer had done in the performance of
his duties and to substitute the judgment of the former for the latter." 32
The petitioners’ apprehension regarding the President’s alleged power of
control over the OICs is rooted in their belief that the President’s appointment
power includes the power to remove these officials at will. In this way, the
petitioners foresee that the appointed OICs will be beholden to the President,
and act as representatives of the President and not of the people.
Section 3 of RA No. 10153 expressly contradicts the petitioners’ supposition.
The provision states:
Section 3. Appointment of Officers-in-Charge. — The President shall appoint
officers-in-charge for the Office of the Regional Governor, Regional Vice
Governor and Members of the Regional Legislative Assembly who shall
perform the functions pertaining to the said offices until the officials duly
elected in the May 2013 elections shall have qualified and assumed office.
The wording of the law is clear. Once the President has appointed the OICs for
the offices of the Governor, Vice Governor and members of the Regional
Legislative Assembly, these same officials will remain in office until they are
replaced by the duly elected officials in the May 2013 elections. Nothing in this
provision even hints that the President has the power to recall the
appointments he already made. Clearly, the petitioners’ fears in this regard are
more apparent than real.
RA No. 10153 as an interim measure
We reiterate once more the importance of considering RA No. 10153 not in a
vacuum, but within the context it was enacted in. In the first place, Congress
enacted RA No. 10153 primarily to heed the constitutional mandate to
synchronize the ARMM regional elections with the national and local elections.
To do this, Congress had to postpone the scheduled ARMM elections for
another date, leaving it with the problem of how to provide the ARMM with
governance in the intervening period, between the expiration of the term of
those elected in August 2008 and the assumption to office – twenty-one (21)
months away – of those who will win in the synchronized elections on May 13,
2013.
In our assailed Decision, we already identified the three possible solutions
open to Congress to address the problem created by synchronization – (a)
allow the incumbent officials to remain in office after the expiration of their
terms in a holdover capacity; (b) call for special elections to be held, and
shorten the terms of those to be elected so the next ARMM regional elections
can be held on May 13, 2013; or (c) recognize that the President, in the
exercise of his appointment powers and in line with his power of supervision
over the ARMM, can appoint interim OICs to hold the vacated positions in the
ARMM regional government upon the expiration of their terms. We have
already established the unconstitutionality of the first two options, leaving us to
consider the last available option.
In this way, RA No. 10153 is in reality an interim measure, enacted to respond
to the adjustment that synchronization requires. Given the context, we have to
judge RA No. 10153 by the standard of reasonableness in responding to the
challenges brought about by synchronizing the ARMM elections with the
national and local elections. In other words, "given the plain
unconstitutionality of providing for a holdover and the unavailability of
constitutional possibilities for lengthening or shortening the term of the
elected ARMM officials, is the choice of the President’s power to appoint
– for a fixed and specific period as an interim measure, and as allowed
under Section 16, Article VII of the Constitution – an unconstitutional or
unreasonable choice for Congress to make?"33
We admit that synchronization will temporarily disrupt the election process in a
local community, the ARMM, as well as the community’s choice of leaders.
However, we have to keep in mind that the adoption of this measure is a
matter of necessity in order to comply with a mandate that the Constitution
itself has set out for us. Moreover, the implementation of the provisions of RA
No. 10153 as an interim measure is comparable to the interim measures
traditionally practiced when, for instance, the President appoints officials
holding elective offices upon the creation of new local government units.
The grant to the President of the power to appoint OICs in place of the elective
members of the Regional Legislative Assembly is neither novel nor innovative.
The power granted to the President, via RA No. 10153, to appoint members of
the Regional Legislative Assembly is comparable to the power granted by BP
881 (the Omnibus Election Code) to the President to fill any vacancy for any
cause in the Regional Legislative Assembly (then called the Sangguniang
Pampook).34
Executive is not bound by the principle of judicial courtesy
The petitioners in G.R. No. 197280, in their Manifestation and Motion dated
December 21, 2011, question the propriety of the appointment by the
President of Mujiv Hataman as acting Governor and Bainon Karon as acting
Vice Governor of the ARMM. They argue that since our previous decision was
based on a close vote of 8-7, and given the numerous motions for
reconsideration filed by the parties, the President, in recognition of the
principle of judicial courtesy, should have refrained from implementing our
decision until we have ruled with finality on this case.
We find the petitioners’ reasoning specious.
Firstly, the principle of judicial courtesy is based on the hierarchy of courts and
applies only to lower courts in instances where, even if there is no writ of
preliminary injunction or TRO issued by a higher court, it would be proper for a
lower court to suspend its proceedings for practical and ethical
considerations.35 In other words, the principle of "judicial courtesy" applies
where there is a strong probability that the issues before the higher court
would be rendered moot and moribund as a result of the continuation of the
proceedings in the lower court or court of origin. 36 Consequently, this principle
cannot be applied to the President, who represents a co-equal branch of
government. To suggest otherwise would be to disregard the principle of
separation of powers, on which our whole system of government is founded
upon.
Secondly, the fact that our previous decision was based on a slim vote of 8-7
does not, and cannot, have the effect of making our ruling any less effective or
binding. Regardless of how close the voting is, so long as there is concurrence
of the majority of the members of the en banc who actually took part in the
deliberations of the case,37 a decision garnering only 8 votes out of 15
members is still a decision of the Supreme Court en banc and must be
respected as such. The petitioners are, therefore, not in any position to
speculate that, based on the voting, "the probability exists that their motion for
reconsideration may be granted."38
Similarly, the petitioner in G.R. No. 197282, in his Very Urgent Motion to Issue
Clarificatory Resolution, argues that since motions for reconsideration were
filed by the aggrieved parties challenging our October 18, 2011 decision in the
present case, the TRO we initially issued on September 13, 2011 should
remain subsisting and effective. He further argues that any attempt by the
Executive to implement our October 18, 2011 decision pending resolution of
the motions for reconsideration "borders on disrespect if not outright
insolence"39 to this Court.
In support of this theory, the petitioner cites Samad v. COMELEC, 40 where the
Court held that while it had already issued a decision lifting the TRO, the lifting
of the TRO is not yet final and executory, and can also be the subject of a
motion for reconsideration. The petitioner also cites the minute resolution
issued by the Court in Tolentino v. Secretary of Finance, 41 where the Court
reproached the Commissioner of the Bureau of Internal Revenue for
manifesting its intention to implement the decision of the Court, noting that the
Court had not yet lifted the TRO previously issued. 42
We agree with the petitioner that the lifting of a TRO can be included as a
subject of a motion for reconsideration filed to assail our decision. It does not
follow, however, that the TRO remains effective until after we have issued a
final and executory decision, especially considering the clear wording of the
dispositive portion of our October 18, 2011 decision, which states:
WHEREFORE, premises considered, we DISMISS the consolidated petitions
assailing the validity of RA No. 10153 for lack of merit, and UPHOLD the
constitutionality of this law. We likewise LIFT the temporary restraining order
we issued in our Resolution of September 13, 2011. No costs. 43 (emphases
ours)
In this regard, we note an important distinction between Tolentino and the
present case. While it may be true that Tolentino and the present case are
similar in that, in both cases, the petitions assailing the challenged laws were
dismissed by the Court, an examination of the dispositive portion of the
decision in Tolentino reveals that the Court did not categorically lift the TRO. In
sharp contrast, in the present case, we expressly lifted the TRO issued on
September 13, 2011. There is, therefore, no legal impediment to prevent the
1âwphi1
President from exercising his authority to appoint an acting ARMM Governor
and Vice Governor as specifically provided for in RA No. 10153.
Conclusion
As a final point, we wish to address the bleak picture that the petitioner in G.R.
No. 197282 presents in his motion, that our Decision has virtually given the
President the power and authority to appoint 672,416 OICs in the event that
the elections of barangay and Sangguniang Kabataan officials are postponed
or cancelled.
We find this speculation nothing short of fear-mongering.
This argument fails to take into consideration the unique factual and legal
circumstances which led to the enactment of RA No. 10153. RA No. 10153
was passed in order to synchronize the ARMM elections with the national and
local elections. In the course of synchronizing the ARMM elections with the
national and local elections, Congress had to grant the President the power to
appoint OICs in the ARMM, in light of the fact that: (a) holdover by the
incumbent ARMM elective officials is legally impermissible; and (b) Congress
cannot call for special elections and shorten the terms of elective local officials
for less than three years.
Unlike local officials, as the Constitution does not prescribe a term limit for
barangay and Sangguniang Kabataan officials, there is no legal proscription
which prevents these specific government officials from continuing in a
holdover capacity should some exigency require the postponement of
barangay or Sangguniang Kabataan elections. Clearly, these fears have
neither legal nor factual basis to stand on.
For the foregoing reasons, we deny the petitioners’ motions for
reconsideration.
WHEREFORE, premises considered, we DENY with FINALITY the motions for
reconsideration for lack of merit and UPHOLD the constitutionality of RA No.
10153.
SO ORDERED.
ARTURO D. BRION
Associate Justice
G.R. No. 135385 December 6, 2000
ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES,
SECRETARY OF BUDGET AND MANAGEMENT and CHAIRMAN and
COMMISSIONERS OF THE NATIONAL COMMISSION ON INDIGENOUS
PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI
ASCARRAGA, EDTAMI MANSAYANGAN, BASILIO WANDAG, EVELYN
DUNUAN, YAOM TUGAS, ALFREMO CARPIANO, LIBERATO A. GABIN,
MATERNIDAD M. COLAS, NARCISA M. DALUPINES, BAI KIRAM-CONNIE
SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU BALITUNGTUNG-
ANTONIO D. LUMANDONG, DATU MANTUMUKAW TEOFISTO
SABASALES, DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU
RAMON BAYAAN, TIMUAY JOSE ANOY, TIMUAY MACARIO D.
SALACAO, TIMUAY EDWIN B. ENDING, DATU SAHAMPONG MALANAW
VI, DATU BEN PENDAO CABIGON, BAI NANAPNAY-LIZA SAWAY, BAY
INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA T.
PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-
CRISPEN SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT P.
HOGGANG, TERESA GASPAR, MANUEL S. ONALAN, MIA GRACE L.
GIRON, ROSEMARIE G. PE, BENITO CARINO, JOSEPH JUDE
CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY SEGUNDO, SATUR
S. BUGNAY, CARLING DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO
ABUGAN, VIRGILIO CAYETANO, CONCHITA G. DESCAGA, LEVY
ESTEVES, ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO
VALONES, PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B. GUINOSAO,
WALTER N. TIMOL, MANUEL T. SELEN, OSCAR DALUNHAY, RICO O.
SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS, JESSIE ANDILAB,
MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A.
LINDAHAY, ROEL S. MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G.
SAWAY, HERMINIA S. SAWAY, JULIUS S. SAWAY, LEONARDA SAWAY,
JIMMY UGYUB, SALVADOR TIONGSON, VENANCIO APANG, MADION
MALID, SUKIM MALID, NENENG MALID, MANGKATADONG AUGUSTO
DIANO, JOSEPHINE M. ALBESO, MORENO MALID, MARIO MANGCAL,
FELAY DIAMILING, SALOME P. SARZA, FELIPE P. BAGON, SAMMY
SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO
SALIGA, SR., JERSON P. GERADA, RENATO T. BAGON, JR., SARING
MASALONG, SOLEDAD M. GERARDA, ELIZABETH L. MENDI, MORANTE
S. TIWAN, DANILO M. MALUDAO, MINORS MARICEL MALID, represented
by her father CORNELIO MALID, MARCELINO M. LADRA, represented by
her father MONICO D. LADRA, JENNYLYN MALID, represented by her
father TONY MALID, ARIEL M. EVANGELISTA, represented by her mother
LINAY BALBUENA, EDWARD M. EMUY, SR., SUSAN BOLANIO, OND,
PULA BATO B'LAAN TRIBAL FARMER'S ASSOCIATION, INTER-
PEOPLE'S EXCHANGE, INC. and GREEN FORUM-WESTERN
VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE
CONSERVATION OF NATURAL RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and
mandamus as citizens and taxpayers, assailing the constitutionality of certain
provisions of Republic Act No. 8371 (R.A. 8371), otherwise known as the
Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing Rules
and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to
comment.1 In compliance, respondents Chairperson and Commissioners of the
National Commission on Indigenous Peoples (NCIP), the government agency
created under the IPRA to implement its provisions, filed on October 13, 1998
their Comment to the Petition, in which they defend the constitutionality of the
IPRA and pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of
Environment and Natural Resources (DENR) and Secretary of the Department
of Budget and Management (DBM) filed through the Solicitor General a
consolidated Comment. The Solicitor General is of the view that the IPRA is
partly unconstitutional on the ground that it grants ownership over natural
resources to indigenous peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan
Flavier, one of the authors of the IPRA, Mr. Ponciano Bennagen, a member of
the 1986 Constitutional Commission, and the leaders and members of 112
groups of indigenous peoples (Flavier, et. al), filed their Motion for Leave to
Intervene. They join the NCIP in defending the constitutionality of IPRA and
praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a
Motion to Intervene and/or to Appear as Amicus Curiae. The CHR asserts that
IPRA is an expression of the principle of parens patriae and that the State has
the responsibility to protect and guarantee the rights of those who are at a
serious disadvantage like indigenous peoples. For this reason it prays that the
petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous
People and the Haribon Foundation for the Conservation of Natural
Resources, Inc. (Haribon, et al.), filed a motion to Intervene with attached
Comment-in-Intervention. They agree with the NCIP and Flavier, et al. that
IPRA is consistent with the Constitution and pray that the petition for
prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were
granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and
intervenors filed their respective memoranda in which they reiterate the
arguments adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA
and its Implementing Rules on the ground that they amount to an unlawful
deprivation of the State’s ownership over lands of the public domain as well as
minerals and other natural resources therein, in violation of the regalian
doctrine embodied in Section 2, Article XII of the Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral domains,
and Section 3(b) which, in turn, defines ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral
domains including inalienable public lands, bodies of water, mineral and other
resources found within ancestral domains are private but community property
of the indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition
of ancestral domains and ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the indigenous
peoples over the ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous
peoples over the ancestral lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples in
the harvesting, extraction, development or exploration of minerals and other
natural resources within the areas claimed to be their ancestral domains, and
the right to enter into agreements with nonindigenous peoples for the
development and utilization of natural resources therein for a period not
exceeding 25 years, renewable for not more than 25 years; and
"(7) Section 58 which gives the indigenous peoples the responsibility to
maintain, develop, protect and conserve the ancestral domains and portions
thereof which are found to be necessary for critical watersheds, mangroves,
wildlife sanctuaries, wilderness, protected areas, forest cover or reforestation." 2
Petitioners also content that, by providing for an all-encompassing definition of
"ancestral domains" and "ancestral lands" which might even include private
lands found within said areas, Sections 3(a) and 3(b) violate the rights of
private landowners.3
In addition, petitioners question the provisions of the IPRA defining the powers
and jurisdiction of the NCIP and making customary law applicable to the
settlement of disputes involving ancestral domains and ancestral lands on the
ground that these provisions violate the due process clause of the
Constitution.4
These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation
and recognition of ancestral domains and which vest on the NCIP the
sole authority to delineate ancestral domains and ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP
that a particular area is an ancestral domain and upon notification to
the following officials, namely, the Secretary of Environment and
Natural Resources, Secretary of Interior and Local Governments,
Secretary of Justice and Commissioner of the National Development
Corporation, the jurisdiction of said officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and
practices of indigenous peoples shall be applied first with respect to
property rights, claims of ownership, hereditary succession and
settlement of land disputes, and that any doubt or ambiguity in the
interpretation thereof shall be resolved in favor of the indigenous
peoples;
 "(4) Section 65 which states that customary laws and practices shall be
used to resolve disputes involving indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims
and disputes involving rights of the indigenous peoples." 5
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP
Administrative Order No. 1, series of 1998, which provides that "the
administrative relationship of the NCIP to the Office of the President is
characterized as a lateral but autonomous relationship for purposes of policy
and program coordination." They contend that said Rule infringes upon the
President’s power of control over executive departments under Section 17,
Article VII of the Constitution.6
Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65
and 66 and other related provisions of R.A. 8371 are unconstitutional
and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and
Commissioners of the NCIP to cease and desist from implementing the
assailed provisions of R.A. 8371 and its Implementing Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the
Department of Environment and Natural Resources to cease and
desist from implementing Department of Environment and Natural
Resources Circular No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of
Budget and Management to cease and desist from disbursing public
funds for the implementation of the assailed provisions of R.A. 8371;
and
"(5) The issuance of a writ of mandamus commanding the Secretary of
Environment and Natural Resources to comply with his duty of carrying
out the State’s constitutional mandate to control and supervise the
exploration, development, utilization and conservation of Philippine
natural resources."7
After due deliberation on the petition, the members of the Court voted as
follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion,
which the Chief Justice and Justices Bellosillo, Quisumbing, and Santiago join,
sustaining the validity of the challenged provisions of R.A. 8371. Justice Puno
also filed a separate opinion sustaining all challenged provisions of the law
with the exception of Section 1, Part II, Rule III of NCIP Administrative Order
No. 1, series of 1998, the Rules and Regulations Implementing the IPRA, and
Section 57 of the IPRA which he contends should be interpreted as dealing
with the large-scale exploitation of natural resources and should be read in
conjunction with Section 2, Article XII of the 1987 Constitution. On the other
hand, Justice Mendoza voted to dismiss the petition solely on the ground that it
does not raise a justiciable controversy and petitioners do not have standing to
question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice
Panganiban filed a separate opinion expressing the view that Sections 3 (a)(b),
5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371 are unconstitutional. He
reserves judgment on the constitutionality of Sections 58, 59, 65, and 66 of the
law, which he believes must await the filing of specific cases by those whose
rights may have been violated by the IPRA. Justice Vitug also filed a separate
opinion expressing the view that Sections 3(a), 7, and 57 of R.A. 8371 are
unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-Reyes, and De Leon
join in the separate opinions of Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not
obtained, the case was redeliberated upon. However, after redeliberation, the
voting remained the same. Accordingly, pursuant to Rule 56, Section 7 of the
Rules of Civil Procedure, the petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of
Justices Puno, Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-
Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.
Puno, Vitug, Kapunan, Mendoza and Panganiban JJ., see separate opinion
Footnotes 'paradigm shifts,' and the energy and brashness of youth. These ingrained
attitudes are obstacles to anyone who wants to re-orient law in a more
1
Rollo, p. 114. pragmatic direction. But, by the same token, pragmatic jurisprudence must
come to terms with history."
2
Petition, Rollo, pp. 16-23.
When Congress enacted the Indigenous Peoples Rights Act (IPRA), it
3
Id. at 23-25. introduced radical concepts into the Philippine legal system which appear to
collide with settled constitutional and jural precepts on state ownership of land
and other natural resources. The sense and subtleties of this law cannot be
4
Section 1, Article III of the Constitution states: "No person shall be
appreciated without considering its distinct sociology and the labyrinths of its
deprived of life, liberty or property without due process of law, nor shall
history. This Opinion attempts to interpret IPRA by discovering its soul
any person be denied the equal protection of the laws."
shrouded by the mist of our history. After all, the IPRA was enacted by
Congress not only to fulfill the constitutional mandate of protecting the
5
Rollo, pp. 25-27. indigenous cultural communities' right to their ancestral land but more
importantly, to correct a grave historical injustice to our indigenous
6
Id. at 27-28. people.
7
Transcript of Stenographic Notes of the hearing held on April 13, This Opinion discusses the following:
1999, pp. 5-6.
I. The Development of the Regalian Doctrine in the Philippine Legal System.

The Lawphil Project - Arellano Law Foundation A. The Laws of the Indies

B. Valenton v. Murciano

C. The Public Land Acts and the Torrens System

SEPARATE OPINION
D. The Philippine Constitutions
PUNO, J.:
II. The Indigenous Peoples Rights Act (IPRA).
PRECIS
A. Indigenous Peoples
A classic essay on the utility of history was written in 1874 by Friedrich
Nietzsche entitled "On the Uses and Disadvantages of History for Life." 1. Indigenous Peoples: Their History
Expounding on Nietzsche's essay, Judge Richard Posner 1 wrote:2
2. Their Concept of Land
"Law is the most historically oriented, or if you like the most backward-looking,
the most 'past-dependent,' of the professions. It venerates tradition, precedent, III. The IPRA is a Novel Piece of Legislation.
pedigree, ritual, custom, ancient practices, ancient texts, archaic terminology,
maturity, wisdom, seniority, gerontocracy, and interpretation conceived of as a
method of recovering history. It is suspicious of innovation, discontinuities, A. Legislative History
IV. The Provisions of the IPRA Do Not Contravene the Constitution.
A. Ancestral domains and ancestral lands are the private property of
indigenous peoples and do not constitute part of the land of the public
domain.
1. The right to ancestral domains and ancestral lands: how
acquired
2. The concept of native title
(a) Cariño v. Insular Government
(b) Indian Title to land
(c) Why the Cariño doctrine is unique
3. The option of securing a torrens title to the ancestral land
B. The right of ownership and possession by the ICCs/IPs to their
ancestral domains is a limited form of ownership and does not include
the right to alienate the same.
1. The indigenous concept of ownership and customary law
C. Sections 7 (a), 7 (b) and 57 of the IPRA do not violate the Regalian
Doctrine enshrined in Section 2, Article XII of the 1987 Constitution.
1. The rights of ICCs/IPs over their ancestral domains and
lands
2. The right of ICCs/IPs to develop lands and natural resources
within the ancestral domains does not deprive the State of
ownership over the natural resources, control and supervision
in their development and exploitation.
(a) Section 1, Part II, Rule III of the Implementing Rules
goes beyond the parameters of Section 7(a) of the law
on ownership of ancestral domains and is ultra vires.
(b) The small-scale utilization of natural resources in
Section 7 (b) of the IPRA is allowed under Paragraph 3,
Section 2, Article XII of the 1987 Consitution.
(c) The large-scale utilization of natural resources in
Section 57 of the IPRA may be harmonized with
Paragraphs 1 and 4, Section 2, Article XII of the 1987
Constitution.
V. The IPRA is a Recognition of Our Active Participation in the International
Indigenous Movement.
DISCUSSION
I. THE DEVELOPMENT OF THE REGALIAN DOCTRINE IN THE PHILIPPINE
LEGAL SYSTEM.
A. The Laws of the Indies
The capacity of the State to own or acquire property is the state's power
of dominium.3 This was the foundation for the early Spanish decrees
embracing the feudal theory of jura regalia. The "Regalian Doctrine" or jura
regalia is a Western legal concept that was first introduced by the
Spaniards into the country through the Laws of the Indies and the Royal
Cedulas. The Laws of the Indies, i.e., more specifically, Law 14, Title 12, Book
4 of the Novisima Recopilacion de Leyes de las Indias, set the policy of the
Spanish Crown with respect to the Philippine Islands in the following manner:
"We, having acquired full sovereignty over the Indies, and all lands, territories,
and possessions not heretofore ceded away by our royal predecessors, or by
us, or in our name, still pertaining to the royal crown and patrimony, it is our
will that all lands which are held without proper and true deeds of grant be
restored to us as they belong to us, in order that after reserving before all what
to us or to our viceroys, audiencias, and governors may seem necessary for
public squares, ways, pastures, and commons in those places which are
peopled, taking into consideration not only their present condition, but also
their future and their probable increase, and after distributing to the natives
what may be necessary for tillage and pasturage, confirming them in what they
now have and giving them more if necessary, all the rest of said lands may
remain free and unencumbered for us to dispose of as we may wish.
We therefore order and command that all viceroys and presidents of pretorial
courts designate at such time as shall to them seem most expedient, a suitable
period within which all possessors of tracts, farms, plantations, and estates
shall exhibit to them and to the court officers appointed by them for this
purpose, their title deeds thereto. And those who are in possession by virtue of
proper deeds and receipts, or by virtue of just prescriptive right shall be
protected, and all the rest shall be restored to us to be disposed of at our will." 4
The Philippines passed to Spain by virtue of "discovery" and conquest.
Consequently, all lands became the exclusive patrimony and dominion of the
Spanish Crown. The Spanish Government took charge of distributing the lands
by issuing royal grants and concessions to Spaniards, both military and
civilian.5 Private land titles could only be acquired from the government either
by purchase or by the various modes of land grant from the Crown.6
The Laws of the Indies were followed by the Ley Hipotecaria, or the
Mortgage Law of 1893.7 The Spanish Mortgage Law provided for the
systematic registration of titles and deeds as well as possessory claims. The
law sought to register and tax lands pursuant to the Royal Decree of 1880. The
Royal Decree of 1894, or the "Maura Law," was partly an amendment of the
Mortgage Law as well as the Laws of the Indies, as already amended by
previous orders and decrees.8 This was the last Spanish land law promulgated
in the Philippines. It required the "adjustment" or registration of all agricultural
lands, otherwise the lands shall revert to the state.
Four years later, by the Treaty of Paris of December 10, 1898, Spain ceded
to the government of the United States all rights, interests and claims over the
national territory of the Philippine Islands. In 1903, the United States colonial
government, through the Philippine Commission, passed Act No. 926, the
first Public Land Act.
B. Valenton v. Murciano
In 1904, under the American regime, this Court decided the case of Valenton
v. Murciano.9
Valenton resolved the question of which is the better basis for ownership of
land: long-time occupation or paper title. Plaintiffs had entered into peaceful
occupation of the subject land in 1860. Defendant's predecessor-in-interest, on
the other hand, purchased the land from the provincial treasurer of Tarlac in
1892. The lower court ruled against the plaintiffs on the ground that they had
lost all rights to the land by not objecting to the administrative sale. Plaintiffs
appealed the judgment, asserting that their 30-year adverse possession, as an
extraordinary period of prescription in the Partidas and the Civil Code, had
given them title to the land as against everyone, including the State; and that
the State, not owning the land, could not validly transmit it.
The Court, speaking through Justice Willard, decided the case on the basis of
"those special laws which from earliest time have regulated the disposition of
the public lands in the colonies."10 The question posed by the Court was: "Did
these special laws recognize any right of prescription as against the State as
to these lands; and if so, to what extent was it recognized?"
Prior to 1880, the Court said, there were no laws specifically providing for the
disposition of land in the Philippines. However, it was understood that in the
absence of any special law to govern a specific colony, the Laws of the Indies
would be followed. Indeed, in the Royal Order of July 5, 1862, it was decreed
that until regulations on the subject could be prepared, the authorities of the
Philippine Islands should follow strictly the Laws of the Indies,
the Ordenanza of the Intendentes of 1786, and the Royal Cedula of 1754.11
Quoting the preamble of Law 14, Title 12, Book 4 of the Recopilacion de
Leyes de las Indias, the court interpreted it as follows:
"In the preamble of this law there is, as is seen, a distinct statement that all
those lands belong to the Crown which have not been granted by Philip, or in
his name, or by the kings who preceded him. This statement excludes the
idea that there might be lands not so granted, that did not belong to the
king. It excludes the idea that the king was not still the owner of all
ungranted lands, because some private person had been in the adverse
occupation of them. By the mandatory part of the law all the occupants of the
public lands are required to produce before the authorities named, and within a
time to be fixed by them, their title papers. And those who had good title or
showed prescription were to be protected in their holdings. It is apparent that it
was not the intention of the law that mere possession for a length of time
should make the possessors the owners of the land possessed by them
without any action on the part of the authorities." 12
The preamble stated that all those lands which had not been granted by Philip,
or in his name, or by the kings who preceded him, belonged to the
Crown.13 For those lands granted by the king, the decree provided for a system
of assignment of such lands. It also ordered that all possessors of agricultural
land should exhibit their title deed, otherwise, the land would be restored to the
Crown.14
The Royal Cedula of October 15, 1754 reinforced the Recopilacion when it
ordered the Crown's principal subdelegate to issue a general order directing
the publication of the Crown's instructions:
"x x x to the end that any and all persons who, since the year 1700, and up to
the date of the promulgation and publication of said order, shall have occupied
royal lands, whether or not x x x cultivated or tenanted, may x x x appear and
exhibit to said subdelegates the titles and patents by virtue of which said lands
are occupied. x x x. Said subdelegates will at the same time warn the parties
interested that in case of their failure to present their title deeds within the term
designated, without a just and valid reason therefor, they will be deprived of
and evicted from their lands, and they will be granted to others." 15
On June 25, 1880, the Crown adopted regulations for the adjustment of lands
"wrongfully occupied" by private individuals in the Philippine
Islands. Valenton construed these regulations together with contemporaneous
legislative and executive interpretations of the law, and concluded that
plaintiffs' case fared no better under the 1880 decree and other laws which
followed it, than it did under the earlier ones. Thus as a general doctrine, the
Court stated:
"While the State has always recognized the right of the occupant to a deed if
he proves a possession for a sufficient length of time, yet it has always
insisted that he must make that proof before the proper administrative
officers, and obtain from them his deed, and until he did that the State
remained the absolute owner."16
In conclusion, the Court ruled: "We hold that from 1860 to 1892 there was no
law in force in these Islands by which the plaintiffs could obtain the ownership
of these lands by prescription, without any action by the State." 17 Valenton had
no rights other than those which accrued to mere possession. Murciano, on
the other hand, was deemed to be the owner of the land by virtue of the grant
by the provincial secretary. In effect, Valenton upheld the Spanish concept of
state ownership of public land.
As a fitting observation, the Court added that "[t]he policy pursued by the
Spanish Government from earliest times, requiring settlers on the public
lands to obtain title deeds therefor from the State, has been continued by
the American Government in Act No. 926."18
C. The Public Land Acts and the Torrens System
Act No. 926, the first Public Land Act, was passed in pursuance of the
provisions of the the Philippine Bill of 1902. The law governed the disposition
of lands of the public domain. It prescribed rules and regulations for the
homesteading, selling, and leasing of portions of the public domain of the
Philippine Islands, and prescribed the terms and conditions to enable persons
to perfect their titles to public lands in the Islands. It also provided for the
"issuance of patents to certain native settlers upon public lands," for the
establishment of town sites and sale of lots therein, for the completion of
imperfect titles, and for the cancellation or confirmation of Spanish
concessions and grants in the Islands." In short, the Public Land Act operated
on the assumption that title to public lands in the Philippine Islands remained in
the government;19 and that the government's title to public land sprung from
the Treaty of Paris and other subsequent treaties between Spain and the
United States.20 The term "public land" referred to all lands of the public
domain whose title still remained in the government and are thrown open to
private appropriation and settlement,21 and excluded the patrimonial property
of the government and the friar lands.22
Act No. 926 was superseded in 1919 by Act 2874, the second Public Land
Act. This new law was passed under the Jones Law. It was more
comprehensive in scope but limited the exploitation of agricultural lands to
Filipinos and Americans and citizens of other countries which gave Filipinos
the same privileges.23 After the passage of the 1935 Constitution, Act 2874
was amended in 1936 by Commonwealth Act No. 141. Commonwealth Act
No. 141 remains the present Public Land Law and it is essentially the same as
Act 2874. The main difference between the two relates to the transitory
provisions on the rights of American citizens and corporations during the
Commonwealth period at par with Filipino citizens and corporations. 24
Grants of public land were brought under the operation of the Torrens
system under Act 496, or the Land Registration Law of 1903. Enacted by
the Philippine Commission, Act 496 placed all public and private lands in the
Philippines under the Torrens system. The law is said to be almost a verbatim
copy of the Massachussetts Land Registration Act of 1898, 25 which, in turn,
followed the principles and procedure of the Torrens system of registration
formulated by Sir Robert Torrens who patterned it after the Merchant Shipping
Acts in South Australia. The Torrens system requires that the government
issue an official certificate of title attesting to the fact that the person named is
the owner of the property described therein, subject to such liens and
encumbrances as thereon noted or the law warrants or reserves. 26 The
certificate of title is indefeasible and imprescriptible and all claims to the parcel
of land are quieted upon issuance of said certificate. This system highly
facilitates land conveyance and negotiation. 27
D. The Philippine Constitutions
The Regalian doctrine was enshrined in the 1935 Constitution. One of the
fixed and dominating objectives of the 1935 Constitutional Convention was the
nationalization and conservation of the natural resources of the
country.28 There was an overwhelming sentiment in the Convention in
favor of the principle of state ownership of natural resources and the
adoption of the Regalian doctrine.29 State ownership of natural resources
was seen as a necessary starting point to secure recognition of the state's
power to control their disposition, exploitation, development, or
utilization.30 The delegates to the Constitutional Convention very well knew that
the concept of State ownership of land and natural resources was introduced
by the Spaniards, however, they were not certain whether it was continued and
applied by the Americans. To remove all doubts, the Convention approved the
provision in the Constitution affirming the Regalian doctrine. 31
Thus, the 1935 Constitution, in Section 1 of Article XIII on "Conservation and
Utilization of Natural Resources," reads as follows:
"Sec. 1. All agricultural, timber, and mineral lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, and other natural resources of the Philippines belong to
the State, and their disposition, exploitation, development, or utilization
shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by
such citizens, subject to any existing right, grant, lease, or concession at
the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural
land, shall not be alienated, and no license, concession, or lease for the
exploitation, development, or utilization of any of the natural resources shall be
granted for a period exceeding twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development
of water power, in which cases beneficial use may be the measure and the
limit of the grant."
The 1973 Constitution reiterated the Regalian doctrine in Section 8, Article
XIV on the "National Economy and the Patrimony of the Nation," to wit:
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy, fisheries, wildlife,
and other natural resources of the Philippines belong to the State. With
the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be
alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for
not more than twenty-five years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of water
power, in which cases beneficial use may be the measure and the limit of the
grant."
The 1987 Constitution reaffirmed the Regalian doctrine in Section 2 of Article
XII on "National Economy and Patrimony," to wit:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned
by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development and
utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities
or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at
least sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as
may be provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.
x x x."
Simply stated, all lands of the public domain as well as all natural
resources enumerated therein, whether on public or private land, belong to
the State. It is this concept of State ownership that petitioners claim is
being violated by the IPRA.
II. THE INDIGENOUS PEOPLES RIGHTS ACT.
Republic Act No. 8371 is entitled "An Act to Recognize, Protect and Promote
the Rights of Indigenous Cultural Communities/ Indigenous Peoples, Creating
a National Commission on Indigenous Peoples, Establishing Implementing
Mechanisms, Appropriating Funds Therefor, and for Other Purposes." It is
simply known as "The Indigenous Peoples Rights Act of 1997" or the
IPRA.
The IPRA recognizes the existence of the indigenous cultural communities
or indigenous peoples (ICCs/IPs) as a distinct sector in Philippine society. It
grants these people the ownership and possession of their ancestral
domains and ancestral lands, and defines the extent of these lands and
domains. The ownership given is the indigenous concept of ownership
under customary law which traces its origin to native title.
Other rights are also granted the ICCs/IPs, and these are:
- the right to develop lands and natural resources;
- the right to stay in the territories;
- the right in case of displacement;
- the right to safe and clean air and water;
- the right to claim parts of reservations;
- the right to resolve conflict;32
- the right to ancestral lands which include
a. the right to transfer land/property to/among members of the
same ICCs/IPs, subject to customary laws and traditions of the
community concerned;
b. the right to redemption for a period not exceeding 15 years
from date of transfer, if the transfer is to a non-member of the
ICC/IP and is tainted by vitiated consent of the ICC/IP, or if the
transfer is for an unconscionable consideration. 33
Within their ancestral domains and ancestral lands, the ICCs/IPs are given the
right to self-governance and empowerment,34 social justice and human
rights,35 the right to preserve and protect their culture, traditions, institutions
and community intellectual rights, and the right to develop their own sciences
and technologies.36
To carry out the policies of the Act, the law created the National Commission
on Indigenous Peoples (NCIP). The NCIP is an independent agency under the
Office of the President and is composed of seven (7) Commissioners
belonging to ICCs/IPs from each of the ethnographic areas- Region I and the
Cordilleras; Region II; the rest of Luzon; Island groups including Mindoro,
Palawan, Romblon, Panay and the rest of the Visayas; Northern and Western
Mindanao; Southern and Eastern Mindanao; and Central Mindanao.37 The
NCIP took over the functions of the Office for Northern Cultural Communities
and the Office for Southern Cultural Communities created by former President
Corazon Aquino which were merged under a revitalized structure. 38
Disputes involving ICCs/IPs are to be resolved under customary laws
and practices. When still unresolved, the matter may be brought to the NCIP,
which is granted quasi-judicial powers.39 The NCIP's decisions may be
appealed to the Court of Appeals by a petition for review.
Any person who violates any of the provisions of the Act such as, but not
limited to, unauthorized and/or unlawful intrusion upon ancestral lands and
domains shall be punished in accordance with customary laws or imprisoned
from 9 months to 12 years and/or fined from ₱100,000.00 to ₱500,000.00 and
obliged to pay damages.40
A. Indigenous Peoples
The IPRA is a law dealing with a specific group of people, i.e., the Indigenous
Cultural Communities (ICCs) or the Indigenous Peoples (IPs). The term "ICCs"
is used in the 1987 Constitution while that of "IPs" is the contemporary
international language in the International Labor Organization (ILO)
Convention 16941 and the United Nations (UN) Draft Declaration on the Rights
of Indigenous Peoples.42
ICCs/IPs are defined by the IPRA as:
"Sec. 3 [h]. Indigenous Cultural Communities/ Indigenous Peoples- refer to a
group of people or homogeneous societies identified by self-ascription and
ascription by others, who have continuously lived as organized community on
communally bounded and defined territory, and who have, under claims of
ownership since time immemorial, occupied, possessed and utilized such
territories, sharing common bonds of language, customs, traditions and other
distinctive cultural traits, or who have, through resistance to political, social and
cultural inroads of colonization, non-indigenous religions and cultures, became
historically differentiated from the majority of Filipinos. ICCs/IPs shall likewise
include peoples who are regarded as indigenous on account of their descent
from the populations which inhabited the country, at the time of conquest or
colonization, or at the time of inroads of non-indigenous religions and cultures,
or the establishment of present state boundaries, who retain some or all of
their own social, economic, cultural and political institutions, but who may have
been displaced from their traditional domains or who may have resettled
outside their ancestral domains."
Indigenous Cultural Communities or Indigenous Peoples refer to a group
of people or homogeneous societies who have continuously lived as an
organized community on communally bounded and defined
territory. These groups of people have actually occupied, possessed and
utilized their territories under claim of ownership since time immemorial. They
share common bonds of language, customs, traditions and other distinctive
cultural traits, or, they, by their resistance to political, social and cultural
inroads of colonization, non-indigenous religions and cultures, became
historically differentiated from the Filipino majority. ICCs/IPs also include
descendants of ICCs/IPs who inhabited the country at the time of conquest or
colonization, who retain some or all of their own social, economic, cultural and
political institutions but who may have been displaced from their traditional
territories or who may have resettled outside their ancestral domains.
1. Indigenous Peoples: Their History
Presently, Philippine indigenous peoples inhabit the interiors and mountains of
Luzon, Mindanao, Mindoro, Negros, Samar, Leyte, and the Palawan and Sulu
group of islands. They are composed of 110 tribes and are as follows:
1. In the Cordillera Autonomous Region- Kankaney, Ibaloi, Bontoc,
Tinggian or Itneg, Ifugao, Kalinga, Yapayao, Aeta or Agta or Pugot,
and Bago of Ilocos Norte and Pangasinan; Ibanag of Isabela,
Cagayan; Ilongot of Quirino and Nueva Vizcaya; Gaddang of Quirino,
Nueva Vizcaya, Itawis of Cagayan; Ivatan of Batanes, Aeta of
Cagayan, Quirino and Isabela.
2. In Region III- Aetas.
3. In Region IV- Dumagats of Aurora, Rizal; Remontado of Aurora,
Rizal, Quezon; Alangan or Mangyan, Batangan, Buid or Buhid,
Hanunuo and Iraya of Oriental and Occidental Mindoro; Tadyawan of
Occidental Mindoro; Cuyonon, Palawanon, Tagbanua and Tao't bato of
Palawan.
4. In Region V- Aeta of Camarines Norte and Camarines Sur; Aeta-
Abiyan, Isarog, and Kabihug of Camarines Norte; Agta, and Mayon of
Camarines Sur; Itom of Albay, Cimaron of Sorsogon; and the Pullon of
Masbate and Camarines Sur.
5. In Region VI- Ati of Negros Occidental, Iloilo and Antique, Capiz; the
Magahat of Negros Occidental; the Corolano and Sulod.
6. In Region VII- Magahat of Negros Oriental and Eskaya of Bohol.
7. In Region IX- the Badjao numbering about 192,000 in Tawi-Tawi,
Zamboanga del Sur; the Kalibugan of Basilan, the Samal, Subanon
and Yakat.
8. Region X- Numbering 1.6 million in Region X alone, the IPs are: the
Banwaon, Bukidnon, Matigsalog, Talaanding of Bukidnon; the
Camiguin of Camiguin Island; the Higa-unon of Agusan del Norte,
Agusan del Sur, Bukidnon and Misamis Occidental; the Tigwahanon of
Agusan del Sur, Misamis Oriental and and Misamis Occidental, the
Manobo of the Agusan provinces, and the Umayamnon of Agusan and
Bukidnon.
9. In Region XI- There are about 1,774,065 IPs in Region XI. They are
tribes of the Dibabaon, Mansaka of Davao del Norte; B'laan, Kalagan,
Langilad, T'boli and Talaingod of Davao del Sur; Mamamanua of
Surigao del Sur; Mandaya of the Surigao provinces and Davao
Oriental; Manobo Blit of South Cotabato; the Mangguangon of Davao
and South Cotabato; Matigsalog of Davao del Norte and Del Sur;
Tagakaolo, Tasaday and Ubo of South Cotabato; and Bagobo of
Davao del sur and South Cotabato.
10. In Region XII- Ilianen, Tiruray, Maguindanao, Maranao, Tausug,
Yakan/Samal, and Iranon.43
How these indigenous peoples came to live in the Philippines goes back
to as early as 25,000 to 30,000 B.C.
Before the time of Western contact, the Philippine archipelago was peopled
largely by the Negritos, Indonesians and Malays. 44 The strains from these
groups eventually gave rise to common cultural features which became the
dominant influence in ethnic reformulation in the archipelago. Influences from
the Chinese and Indian civilizations in the third or fourth millenium B.C.
augmented these ethnic strains. Chinese economic and socio-cultural
influences came by way of Chinese porcelain, silk and traders. Indian influence
found their way into the religious-cultural aspect of pre-colonial society.45
The ancient Filipinos settled beside bodies of water. Hunting and food
gathering became supplementary activities as reliance on them was reduced
by fishing and the cultivation of the soil. 46 From the hinterland, coastal, and
riverine communities, our ancestors evolved an essentially homogeneous
culture, a basically common way of life where nature was a primary
factor. Community life throughout the archipelago was influenced by, and
responded to, common ecology. The generally benign tropical climate and the
largely uniform flora and fauna favored similarities, not differences. 47 Life was
essentially subsistence but not harsh. 48
The early Filipinos had a culture that was basically Malayan in structure and
form. They had languages that traced their origin to the Austronesian parent-
stock and used them not only as media of daily communication but also as
vehicles for the expression of their literary moods. 49 They fashioned concepts
and beliefs about the world that they could not see, but which they sensed to
be part of their lives.50 They had their own religion and religious beliefs. They
believed in the immortality of the soul and life after death. Their rituals were
based on beliefs in a ranking deity whom they called Bathalang Maykapal, and
a host of other deities, in the environmental spirits and in soul spirits. The early
Filipinos adored the sun, the moon, the animals and birds, for they seemed to
consider the objects of Nature as something to be respected. They venerated
almost any object that was close to their daily life, indicating the importance of
the relationship between man and the object of nature. 51
The unit of government was the "barangay," a term that derived its meaning
from the Malay word "balangay," meaning, a boat, which transported them to
these shores.52 The barangay was basically a family-based community and
consisted of thirty to one hundred families. Each barangay was different and
ruled by a chieftain called a "dato." It was the chieftain's duty to rule and
govern his subjects and promote their welfare and interests. A chieftain had
wide powers for he exercised all the functions of government. He was the
executive, legislator and judge and was the supreme commander in time of
war.53
Laws were either customary or written. Customary laws were handed
down orally from generation to generation and constituted the bulk of the
laws of the barangay. They were preserved in songs and chants and in the
memory of the elder persons in the community. 54 The written laws were those
that the chieftain and his elders promulgated from time to time as the necessity
arose.55 The oldest known written body of laws was the Maragtas Code by
Datu Sumakwel at about 1250 A.D. Other old codes are the Muslim Code of
Luwaran and the Principal Code of Sulu.56 Whether customary or written, the
laws dealt with various subjects, such as inheritance, divorce, usury, loans,
partnership, crime and punishment, property rights, family relations and
adoption. Whenever disputes arose, these were decided peacefully through a
court composed by the chieftain as "judge" and the barangay elders as "jury."
Conflicts arising between subjects of different barangays were resolved by
arbitration in which a board composed of elders from neutral barangays acted
as arbiters.57
Baranganic society had a distinguishing feature: the absence of private
property in land. The chiefs merely administered the lands in the name of the
barangay. The social order was an extension of the family with chiefs
embodying the higher unity of the community. Each individual, therefore,
participated in the community ownership of the soil and the instruments of
production as a member of the barangay. 58 This ancient communalism was
practiced in accordance with the concept of mutual sharing of resources so
that no individual, regardless of status, was without sustenance. Ownership of
land was non-existent or unimportant and the right of usufruct was what
regulated the development of lands.59 Marine resources and fishing grounds
were likewise free to all. Coastal communities depended for their economic
welfare on the kind of fishing sharing concept similar to those in land
communities.60 Recognized leaders, such as the chieftains and elders, by
virtue of their positions of importance, enjoyed some economic privileges and
benefits. But their rights, related to either land and sea, were subject to their
responsibility to protect the communities from danger and to provide them with
the leadership and means of survival.61
Sometime in the 13th century, Islam was introduced to the archipelago in
Maguindanao. The Sultanate of Sulu was established and claimed jurisdiction
over territorial areas represented today by Tawi-tawi, Sulu, Palawan, Basilan
and Zamboanga. Four ethnic groups were within this jurisdiction: Sama,
Tausug, Yakan and Subanon.62 The Sultanate of Maguindanao spread out
from Cotabato toward Maranao territory, now Lanao del Norte and Lanao del
Sur.63
The Muslim societies evolved an Asiatic form of feudalism where land
was still held in common but was private in use. This is clearly indicated in
the Muslim Code of Luwaran. The Code contains a provision on the lease of
cultivated lands. It, however, has no provision for the acquisition, transfer,
cession or sale of land.64
The societies encountered by Magellan and Legaspi therefore were primitive
economies where most production was geared to the use of the producers and
to the fulfillment of kinship obligations. They were not economies geared to
exchange and profit.65 Moreover, the family basis of barangay membership as
well as of leadership and governance worked to splinter the population of the
islands into numerous small and separate communities. 66
When the Spaniards settled permanently in the Philippines in 1565, they
found the Filipinos living in barangay settlements scattered along water
routes and river banks. One of the first tasks imposed on the missionaries
and the encomenderos was to collect all scattered Filipinos together in
a reduccion.67 As early as 1551, the Spanish government assumed an
unvarying solicitous attitude towards the natives. 68 The Spaniards regarded it a
sacred "duty to conscience and humanity to civilize these less fortunate people
living in the obscurity of ignorance" and to accord them the "moral and material
advantages" of community life and the "protection and vigilance afforded them
by the same laws."69
The Spanish missionaries were ordered to establish pueblos where the church
and convent would be constructed. All the new Christian converts were
required to construct their houses around the church and the unbaptized were
invited to do the same.70 With the reduccion, the Spaniards attempted to
"tame" the reluctant Filipinos through Christian indoctrination using
the convento/casa real/plaza complex as focal point. The reduccion, to the
Spaniards, was a "civilizing" device to make the Filipinos law-abiding citizens
of the Spanish Crown, and in the long run, to make them ultimately adopt
Hispanic culture and civilization.71
All lands lost by the old barangays in the process of pueblo organization
as well as all lands not assigned to them and the pueblos, were now
declared to be crown lands or realengas, belonging to the Spanish king.
It was from the realengas that land grants were made to non-Filipinos.72
The abrogation of the Filipinos' ancestral rights in land and the
introduction of the concept of public domain were the most immediate
fundamental results of Spanish colonial theory and law.73 The concept
that the Spanish king was the owner of everything of value in the Indies
or colonies was imposed on the natives, and the natives were stripped of
their ancestral rights to land.74
Increasing their foothold in the Philippines, the Spanish colonialists, civil and
religious, classified the Filipinos according to their religious practices and
beliefs, and divided them into three types . First were the Indios, the
Christianized Filipinos, who generally came from the lowland populations.
Second, were the Moros or the Muslim communities, and third, were
the infieles or the indigenous communities.75
The Indio was a product of the advent of Spanish culture. This class was
favored by the Spaniards and was allowed certain status although below the
Spaniards. The Moros and infieles were regarded as the lowest classes.76
The Moros and infieles resisted Spanish rule and Christianity. The Moros
were driven from Manila and the Visayas to Mindanao; while the infieles, to
the hinterlands. The Spaniards did not pursue them into the deep interior.
The upland societies were naturally outside the immediate concern of Spanish
interest, and the cliffs and forests of the hinterlands were difficult and
inaccessible, allowing the infieles, in effect, relative security.77 Thus,
the infieles, which were peripheral to colonial administration, were not only
able to preserve their own culture but also thwarted the Christianization
process, separating themselves from the newly evolved Christian
community.78 Their own political, economic and social systems were kept
constantly alive and vibrant.
The pro-Christian or pro-Indio attitude of colonialism brought about a generally
mutual feeling of suspicion, fear, and hostility between the Christians on the
one hand and the non-Christians on the other. Colonialism tended to divide
and rule an otherwise culturally and historically related populace through a
colonial system that exploited both the virtues and vices of the Filipinos.79
President McKinley, in his instructions to the Philippine Commission of
April 7, 1900, addressed the existence of the infieles:
"In dealing with the uncivilized tribes of the Islands, the Commission
should adopt the same course followed by Congress in permitting the
tribes of our North American Indians to maintain their tribal organization
and government, and under which many of those tribes are now living in
peace and contentment, surrounded by civilization to which they are unable or
unwilling to conform. Such tribal government should, however, be subjected to
wise and firm regulation; and, without undue or petty interference, constant
and active effort should be exercised to prevent barbarous practices and
introduce civilized customs."80
Placed in an alternative of either letting the natives alone or guiding them in
the path of civilization, the American government chose "to adopt the latter
measure as one more in accord with humanity and with the national
conscience."81
The Americans classified the Filipinos into two: the Christian Filipinos and
the non-Christian Filipinos. The term "non-Christian" referred not to religious
belief, but to a geographical area, and more directly, "to natives of the
Philippine Islands of a low grade of civilization, usually living in tribal
relationship apart from settled communities." 82
Like the Spaniards, the Americans pursued a policy of assimilation. In
1903, they passed Act No. 253 creating the Bureau of Non-Christian
Tribes (BNCT). Under the Department of the Interior, the BNCT's primary task
was to conduct ethnographic research among unhispanized Filipinos, including
those in Muslim Mindanao, with a "special view to determining the most
practicable means for bringing about their advancement in civilization and
prosperity." The BNCT was modeled after the bureau dealing with
American Indians. The agency took a keen anthropological interest in
Philippine cultural minorities and produced a wealth of valuable materials
about them.83
The 1935 Constitution did not carry any policy on the non-Christian
Filipinos. The raging issue then was the conservation of the national
patrimony for the Filipinos.
In 1957, the Philippine Congress passed R.A. No. 1888, an "Act to effectuate
in a more rapid and complete manner the economic, social, moral and political
advancement of the non-Christian Filipinos or national cultural minorities and
to render real, complete, and permanent the integration of all said national
cultural minorities into the body politic, creating the Commission on National
Integration charged with said functions." The law called for a policy of
integration of indigenous peoples into the Philippine mainstream and for this
purpose created the Commission on National Integration (CNI).84 The CNI
was given, more or less, the same task as the BNCT during the American
regime. The post-independence policy of integration was like the colonial
policy of assimilation understood in the context of a guardian-ward
relationship.85
The policy of assimilation and integration did not yield the desired result. Like
the Spaniards and Americans, government attempts at integration met
with fierce resistance. Since World War II, a tidal wave of Christian settlers
from the lowlands of Luzon and the Visayas swamped the highlands and wide
open spaces in Mindanao.86 Knowledge by the settlers of the Public Land
Acts and the Torrens system resulted in the titling of several ancestral
lands in the settlers' names. With government initiative and participation,
this titling displaced several indigenous peoples from their lands. Worse,
these peoples were also displaced by projects undertaken by the national
government in the name of national development.87
It was in the 1973 Constitution that the State adopted the following provision:
"The State shall consider the customs, traditions, beliefs, and interests of
national cultural communities in the formulation and implementation of State
policies."88
For the first time in Philippine history, the "non-Christian tribes" or the
"cultural minorities" were addressed by the highest law of the Republic,
and they were referred to as "cultural communities." More importantly this
time, their "uncivilized" culture was given some recognition and their "customs,
traditions, beliefs and interests" were to be considered by the State in the
formulation and implementation of State policies. President Marcos abolished
the CNI and transferred its functions to the Presidential Adviser on National
Minorities (PANAMIN). The PANAMIN was tasked to integrate the ethnic
groups that sought full integration into the larger community, and at the same
time "protect the rights of those who wish to preserve their original lifeways
beside the larger community."89 In short, while still adopting the integration
policy, the decree recognized the right of tribal Filipinos to preserve their
way of life.90
In 1974, President Marcos promulgated P.D. No. 410, otherwise known as
the Ancestral Lands Decree. The decree provided for the issuance of land
occupancy certificates to members of the national cultural communities who
were given up to 1984 to register their claims. 91 In 1979, the Commission on
the Settlement of Land Problems was created under E.O. No. 561 which
provided a mechanism for the expeditious resolution of land problems
involving small settlers, landowners, and tribal Filipinos. 92
Despite the promulgation of these laws, from 1974 to the early 1980's, some
100,000 Kalingas and Bontoks of the Cordillera region were displaced by the
Chico River dam project of the National Power Corporation (NPC). The
Manobos of Bukidnon saw their land bulldozed by the Bukidnon Sugar
Industries Company (BUSCO). In Agusan del Sur, the National Development
Company was authorized by law in 1979 to take approximately 40,550
hectares of land that later became the NDC-Guthrie plantation in Agusan del
Sur. Most of the land was possessed by the Agusan natives.93 Timber
concessions, water projects, plantations, mining, and cattle ranching and other
projects of the national government led not only to the eviction of the
indigenous peoples from their land but also to the reduction and destruction of
their natural environment.94
The Aquino government signified a total shift from the policy of
integration to one of preservation. Invoking her powers under the Freedom
Constitution, President Aquino created the Office of Muslim Affairs, Office
for Northern Cultural Communities and the Office for Southern Cultural
Communities all under the Office of the President.95
The 1987 Constitution carries at least six (6) provisions which insure the
right of tribal Filipinos to preserve their way of life. 96 This Constitution
goes further than the 1973 Constitution by expressly guaranteeing the
rights of tribal Filipinos to their ancestral domains and ancestral lands.
By recognizing their right to their ancestral lands and domains, the State
has effectively upheld their right to live in a culture distinctly their own.
2. Their Concept of Land
Indigenous peoples share distinctive traits that set them apart from the
Filipino mainstream. They are non-Christians. They live in less accessible,
marginal, mostly upland areas. They have a system of self-government not
dependent upon the laws of the central administration of the Republic of the
Philippines. They follow ways of life and customs that are perceived as
different from those of the rest of the population. 97 The kind of response the
indigenous peoples chose to deal with colonial threat worked well to their
advantage by making it difficult for Western concepts and religion to erode
their customs and traditions. The "infieles societies" which had become
peripheral to colonial administration, represented, from a cultural perspective,
a much older base of archipelagic culture. The political systems were still
structured on the patriarchal and kinship oriented arrangement of power and
authority. The economic activities were governed by the concepts of an
ancient communalism and mutual help. The social structure which emphasized
division of labor and distinction of functions, not status, was maintained. The
cultural styles and forms of life portraying the varieties of social courtesies and
ecological adjustments were kept constantly vibrant. 98
Land is the central element of the indigenous peoples' existence. There is
no traditional concept of permanent, individual, land ownership. Among the
Igorots, ownership of land more accurately applies to the tribal right to use the
land or to territorial control. The people are the secondary owners or stewards
of the land and that if a member of the tribe ceases to work, he loses his claim
of ownership, and the land reverts to the beings of the spirit world who are its
true and primary owners. Under the concept of "trusteeship," the right to
possess the land does not only belong to the present generation but the future
ones as well.99
Customary law on land rests on the traditional belief that no one owns the
land except the gods and spirits, and that those who work the land are its mere
stewards.100 Customary law has a strong preference for communal
ownership, which could either be ownership by a group of individuals or
families who are related by blood or by marriage,101 or ownership by residents
of the same locality who may not be related by blood or marriage. The system
of communal ownership under customary laws draws its meaning from the
subsistence and highly collectivized mode of economic production. The
Kalingas, for instance, who are engaged in team occupation like hunting,
foraging for forest products, and swidden farming found it natural that forest
areas, swidden farms, orchards, pasture and burial grounds should be
communally-owned.102 For the Kalingas, everybody has a common right to a
common economic base. Thus, as a rule, rights and obligations to the land are
shared in common.
Although highly bent on communal ownership, customary law on land
also sanctions individual ownership. The residential lots and terrace rice
farms are governed by a limited system of individual ownership. It is limited
because while the individual owner has the right to use and dispose of the
property, he does not possess all the rights of an exclusive and full owner as
defined under our Civil Code.103 Under Kalinga customary law, the alienation of
individually-owned land is strongly discouraged except in marriage and
succession and except to meet sudden financial needs due to sickness, death
in the family, or loss of crops.104 Moreover, and to be alienated should first be
offered to a clan-member before any village-member can purchase it, and in
no case may land be sold to a non-member of the ili.105
Land titles do not exist in the indigenous peoples' economic and social
system. The concept of individual land ownership under the civil law is
alien to them. Inherently colonial in origin, our national land laws and
governmental policies frown upon indigenous claims to ancestral lands.
Communal ownership is looked upon as inferior, if not inexistent.106
III. THE IPRA IS A NOVEL PIECE OF LEGISLATION.
 A. The Legislative History of the IPRA
It was to address the centuries-old neglect of the Philippine indigenous
peoples that the Tenth Congress of the Philippines, by their joint efforts,
passed and approved R.A. No. 8371, the Indigenous Peoples Rights Act
(IPRA) of 1997. The law was a consolidation of two Bills- Senate Bill No. 1728
and House Bill No. 9125.
Principally sponsored by Senator Juan M. Flavier,107 Senate Bill No.
1728 was a consolidation of four proposed measures referred to the
Committees on Cultural Communities, Environment and Natural Resources,
Ways and Means, as well as Finance. It adopted almost en toto the
comprehensive version of Senate Bill Nos. 1476 and 1486 which was a result
of six regional consultations and one national consultation with
indigenous peoples nationwide.108 At the Second Regular Session of the
Tenth Congress, Senator Flavier, in his sponsorship speech, gave a
background on the situation of indigenous peoples in the Philippines, to wit:
"The Indigenous Cultural Communities, including the Bangsa Moro, have long
suffered from the dominance and neglect of government controlled by the
majority. Massive migration of their Christian brothers to their homeland shrunk
their territory and many of the tribal Filipinos were pushed to the hinterlands.
Resisting the intrusion, dispossessed of their ancestral land and with the
massive exploitation of their natural resources by the elite among the migrant
population, they became marginalized. And the government has been an
indispensable party to this insidious conspiracy against the Indigenous Cultural
Communities (ICCs). It organized and supported the resettlement of people to
their ancestral land, which was massive during the Commonwealth and early
years of the Philippine Republic. Pursuant to the Regalian Doctrine first
introduced to our system by Spain through the Royal Decree of 13 February
1894 or the Maura Law, the government passed laws to legitimize the
wholesale landgrabbing and provide for easy titling or grant of lands to migrant
homesteaders within the traditional areas of the ICCs." 109
Senator Flavier further declared:
"The IPs are the offsprings and heirs of the peoples who have first inhabited
and cared for the land long before any central government was established.
Their ancestors had territories over which they ruled themselves and related
with other tribes. These territories- the land- include people, their dwelling, the
mountains, the water, the air, plants, forest and the animals. This is their
environment in its totality. Their existence as indigenous peoples is manifested
in their own lives through political, economic, socio-cultural and spiritual
practices. The IPs culture is the living and irrefutable proof to this.
Their survival depends on securing or acquiring land rights; asserting their
rights to it; and depending on it. Otherwise, IPs shall cease to exist as distinct
peoples."110
To recognize the rights of the indigenous peoples effectively, Senator Flavier
proposed a bill based on two postulates: (1) the concept of native title; and
(2) the principle of parens patriae.
According to Senator Flavier, "[w]hile our legal tradition subscribes to the
Regalian Doctrine reinstated in Section 2, Article XII of the 1987 Constitution,"
our "decisional laws" and jurisprudence passed by the State have "made
exception to the doctrine." This exception was first laid down in the case
of Cariño v. Insular Government where:
"x x x the court has recognized long occupancy of land by an indigenous
member of the cultural communities as one of private ownership, which, in
legal concept, is termed "native title." This ruling has not been overturned. In
fact, it was affirmed in subsequent cases."111
Following Cariño, the State passed Act No. 926, Act No. 2874, C.A. No. 141,
P.D. 705, P.D. 410, P.D. 1529, R.A. 6734 (the Organic Act for the Autonomous
Region of Muslim Mindanao). These laws, explicitly or implicitly, and liberally
or restrictively, recognized "native title" or "private right" and the existence of
ancestral lands and domains. Despite the passage of these laws, however,
Senator Flavier continued:
"x x x the executive department of government since the American occupation
has not implemented the policy. In fact, it was more honored in its breach than
in its observance, its wanton disregard shown during the period unto the
Commonwealth and the early years of the Philippine Republic when
government organized and supported massive resettlement of the people to
the land of the ICCs."
Senate Bill No. 1728 seeks to genuinely recognize the IPs right to own and
possess their ancestral land. The bill was prepared also under the principle
of parens patriae inherent in the supreme power of the State and deeply
embedded in Philippine legal tradition. This principle mandates that persons
suffering from serious disadvantage or handicap, which places them in a
position of actual inequality in their relation or transaction with others, are
entitled to the protection of the State.
Senate Bill No. 1728 was passed on Third Reading by twenty-one (21)
Senators voting in favor and none against, with no abstention. 112
House Bill No. 9125 was sponsored by Rep. Zapata, Chairman of the
Committee on Cultural Communities. It was originally authored and
subsequently presented and defended on the floor by Rep. Gregorio
Andolana of North Cotabato.113
Rep. Andolana's sponsorhip speech reads as follows:
"This Representation, as early as in the 8th Congress, filed a bill of similar
implications that would promote, recognize the rights of indigenous cultural
communities within the framework of national unity and development.
Apart from this, Mr. Speaker, is our obligation, the government's obligation to
assure and ascertain that these rights shall be well-preserved and the cultural
traditions as well as the indigenous laws that remained long before this
Republic was established shall be preserved and promoted. There is a need,
Mr. Speaker, to look into these matters seriously and early approval of the
substitute bill shall bring into reality the aspirations, the hope and the dreams
of more than 12 million Filipinos that they be considered in the mainstream of
the Philippine society as we fashion for the year 2000." 114
Rep. Andolana stressed that H.B. No. 9125 is based on the policy of
preservation as mandated in the Constitution. He also emphasized that the
rights of IPs to their land was enunciated in Cariño v. Insular
Government which recognized the fact that they had vested rights prior to the
establishment of the Spanish and American regimes. 115
After exhaustive interpellation, House Bill No. 9125, and its
corresponding amendments, was approved on Second Reading with no
objections.
IV. THE PROVISIONS OF THE IPRA DO NOT CONTRAVENE THE
CONSTITUTION.
A. Ancestral Domains and Ancestral Lands are the Private Property of
Indigenous Peoples and Do Not Constitute Part of the Land of the Public
Domain.
The IPRA grants to ICCs/IPs a distinct kind of ownership over ancestral
domains and ancestral lands. Ancestral lands are not the same as ancestral
domains. These are defined in Section 3 [a] and [b] of the Indigenous Peoples
Right Act, viz:
"Sec. 3 a) Ancestral Domains. - Subject to Section 56 hereof, refer to all
areas generally belonging to ICCs/IPs comprising lands, inland waters, coastal
areas, and natural resources therein, held under a claim of ownership,
occupied or possessed by ICCs/IPs by themselves or through their ancestors,
communally or individually since time immemorial, continuously to the present
except when interrupted by war, force majeure or displacement by force,
deceit, stealth or as a consequence of government projects or any other
voluntary dealings entered into by government and private
individuals/corporations, and which are necessary to ensure their economic,
social and cultural welfare. It shall include ancestral lands, forests, pasture,
residential, agricultural, and other lands individually owned whether alienable
and disposable or otherwise, hunting grounds, burial grounds, worship areas,
bodies of water, mineral and other natural resources, and lands which may no
longer be exclusively occupied by ICCs/IPs but from which they traditionally
had access to for their subsistence and traditional activities, particularly the
home ranges of ICCs/IPs who are still nomadic and/or shifting cultivators;
b) Ancestral Lands.- Subject to Section 56 hereof, refers to land occupied,
possessed and utilized by individuals, families and clans who are members of
the ICCs/IPs since time immemorial, by themselves or through their
predecessors-in-interest, under claims of individual or traditional group
ownership, continuously, to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth, or as a consequence of
government projects and other voluntary dealings entered into by government
and private individuals/corporations, including, but not limited to, residential
lots, rice terraces or paddies, private forests, swidden farms and tree lots."
Ancestral domains are all areas belonging to ICCs/IPs held under a claim of
ownership, occupied or possessed by ICCs/IPs by themselves or through their
ancestors, communally or individually since time immemorial, continuously
until the present, except when interrupted by war, force majeure or
displacement by force, deceit, stealth or as a consequence of government
projects or any other voluntary dealings with government and/or private
individuals or corporations. Ancestral domains comprise lands, inland
waters, coastal areas, and natural resources therein and includes
ancestral lands, forests, pasture, residential, agricultural, and other lands
individually owned whether alienable or not, hunting grounds, burial
grounds, worship areas, bodies of water, mineral and other natural
resources. They also include lands which may no longer be exclusively
occupied by ICCs/IPs but from which they traditionally had access to for their
subsistence and traditional activities, particularly the home ranges of ICCs/IPs
who are still nomadic and/or shifting cultivators.116
Ancestral lands are lands held by the ICCs/IPs under the same conditions as
ancestral domains except that these are limited to lands and that these lands
are not merely occupied and possessed but are also utilized by the ICCs/IPs
under claims of individual or traditional group ownership. These lands include
but are not limited to residential lots, rice terraces or paddies, private forests,
swidden farms and tree lots.117
The procedures for claiming ancestral domains and lands are similar to the
procedures embodied in Department Administrative Order (DAO) No. 2, series
of 1993, signed by then Secretary of the Department of Environment and
Natural Resources (DENR) Angel Alcala.118 DAO No. 2 allowed the delineation
of ancestral domains by special task forces and ensured the issuance of
Certificates of Ancestral Land Claims (CALC's) and Certificates of Ancestral
Domain Claims (CADC's) to IPs.
The identification and delineation of these ancestral domains and lands is a
power conferred by the IPRA on the National Commission on Indigenous
Peoples (NCIP).119 The guiding principle in identification and delineation is self-
delineation.120 This means that the ICCs/IPs have a decisive role in
determining the boundaries of their domains and in all the activities pertinent
thereto.121
The procedure for the delineation and recognition of ancestral domains is set
forth in Sections 51 and 52 of the IPRA. The identification, delineation and
certification of ancestral lands is in Section 53 of said law.
Upon due application and compliance with the procedure provided under the
law and upon finding by the NCIP that the application is meritorious, the NCIP
shall issue a Certificate of Ancestral Domain Title (CADT) in the name of the
community concerned.122 The allocation of lands within the ancestral
domain to any individual or indigenous corporate (family or clan) claimants is
left to the ICCs/IPs concerned to decide in accordance with customs and
traditions.123 With respect to ancestral lands outside the ancestral domain,
the NCIP issues a Certificate of Ancestral Land Title (CALT).124
CADT's and CALT's issued under the IPRA shall be registered by the NCIP
before the Register of Deeds in the place where the property is situated. 125
(1) Right to Ancestral Domains and Ancestral Lands: How Acquired
The rights of the ICCs/IPs to their ancestral domains and ancestral lands may
be acquired in two modes: (1) by native title over both ancestral lands and
domains; or (2) by torrens title under the Public Land Act and the Land
Registration Act with respect to ancestral lands only.
(2) The Concept of Native Title
Native title is defined as:
"Sec. 3 [l]. Native Title- refers to pre-conquest rights to lands and domains
which, as far back as memory reaches, have been held under a claim
of private ownership by ICCs/IPs, have never been public lands and are
thus indisputably presumed to have been held that way since before the
Spanish Conquest."126
Native title refers to ICCs/IPs' preconquest rights to lands and domains held
under a claim of private ownership as far back as memory reaches. These
lands are deemed never to have been public lands and are indisputably
presumed to have been held that way since before the Spanish Conquest. The
rights of ICCs/IPs to their ancestral domains (which also include ancestral
lands) by virtue of native title shall be recognized and respected. 127 Formal
recognition, when solicited by ICCs/IPs concerned, shall be embodied in a
Certificate of Ancestral Domain Title (CADT), which shall recognize the title of
the concerned ICCs/IPs over the territories identified and delineated. 128
Like a torrens title, a CADT is evidence of private ownership of land by native
title. Native title, however, is a right of private ownership peculiarly granted to
ICCs/IPs over their ancestral lands and domains. The IPRA categorically
declares ancestral lands and domains held by native title as never to have
been public land. Domains and lands held under native title are, therefore,
indisputably presumed to have never been public lands and are private.
(a) Cariño v. Insular Government129
The concept of native title in the IPRA was taken from the 1909 case of Cariño
v. Insular Government.130 Cariño firmly established a concept of private land
title that existed irrespective of any royal grant from the State.
In 1903, Don Mateo Cariño, an Ibaloi, sought to register with the land
registration court 146 hectares of land in Baguio Municipality, Benguet
Province. He claimed that this land had been possessed and occupied by his
ancestors since time immemorial; that his grandfather built fences around the
property for the holding of cattle and that his father cultivated some parts of the
land. Cariño inherited the land in accordance with Igorot custom. He tried to
have the land adjusted under the Spanish land laws, but no document issued
from the Spanish Crown.131 In 1901, Cariño obtained a possessory title to the
land under the Spanish Mortgage Law.132 The North American colonial
government, however, ignored his possessory title and built a public road on
the land prompting him to seek a Torrens title to his property in the land
registration court. While his petition was pending, a U.S. military
reservation133 was proclaimed over his land and, shortly thereafter, a military
detachment was detailed on the property with orders to keep cattle and
trespassers, including Cariño, off the land. 134
In 1904, the land registration court granted Cariño's application for absolute
ownership to the land. Both the Government of the Philippine Islands and the
U.S. Government appealed to the C.F.I. of Benguet which reversed the land
registration court and dismissed Cariño's application. The Philippine Supreme
Court135 affirmed the C.F.I. by applying the Valenton ruling. Cariño took the
case to the U.S. Supreme Court.136 On one hand, the Philippine government
invoked the Regalian doctrine and contended that Cariño failed to comply with
the provisions of the Royal Decree of June 25, 1880, which required
registration of land claims within a limited period of time. Cariño, on the other,
asserted that he was the absolute owner of the land jure gentium, and that the
land never formed part of the public domain.
In a unanimous decision written by Justice Oliver Wendell Holmes, the U.S.
Supreme Court held:
"It is true that Spain, in its earlier decrees, embodied the universal feudal
theory that all lands were held from the Crown, and perhaps the general
attitude of conquering nations toward people not recognized as entitled to the
treatment accorded to those in the same zone of civilization with themselves. It
is true, also, that in legal theory, sovereignty is absolute, and that, as against
foreign nations, the United States may assert, as Spain asserted, absolute
power. But it does not follow that, as against the inhabitants of the Philippines,
the United States asserts that Spain had such power. When theory is left on
one side, sovereignty is a question of strength, and may vary in degree. How
far a new sovereign shall insist upon the theoretical relation of the subjects to
the head in the past, and how far it shall recognize actual facts, are matters for
it to decide."137
The U.S. Supreme Court noted that it need not accept Spanish doctrines. The
choice was with the new colonizer. Ultimately, the matter had to be decided
under U.S. law.
The Cariño decision largely rested on the North American constitutionalist's
concept of "due process" as well as the pronounced policy "to do justice to the
natives."138 It was based on the strong mandate extended to the Islands via the
Philippine Bill of 1902 that "No law shall be enacted in said islands which shall
deprive any person of life, liberty, or property without due process of law, or
deny to any person therein the equal protection of the laws." The court
declared:
"The acquisition of the Philippines was not like the settlement of the white race
in the United States. Whatever consideration may have been shown to the
North American Indians, the dominant purpose of the whites in America was to
occupy land. It is obvious that, however stated, the reason for our taking over
the Philippines was different. No one, we suppose, would deny that, so far as
consistent with paramount necessities, our first object in the internal
administration of the islands is to do justice to the natives, not to exploit their
country for private gain. By the Organic Act of July 1, 1902, chapter 1369,
section 12 (32 Statutes at Large, 691), all the property and rights acquired
there by the United States are to be administered 'for the benefit of the
inhabitants thereof.' It is reasonable to suppose that the attitude thus assumed
by the United States with regard to what was unquestionably its own is also its
attitude in deciding what it will claim for its own. The same statute made a bill
of rights, embodying the safeguards of the Constitution, and, like the
Constitution, extends those safeguards to all. It provides that 'no law shall be
enacted in said islands which shall deprive any person of life, liberty, or
property without due process of law, or deny to any person therein the equal
protection of the laws.' In the light of the declaration that we have quoted from
section 12, it is hard to believe that the United States was ready to declare in
the next breath that "any person" did not embrace the inhabitants of Benguet,
or that it meant by "property" only that which had become such by ceremonies
of which presumably a large part of the inhabitants never had heard, and that it
proposed to treat as public land what they, by native custom and by long
association,- of the profoundest factors in human thought,- regarded as their
own."139
The Court went further:
"Every presumption is and ought to be against the government in a case like
the present. It might, perhaps, be proper and sufficient to say that when,
as far back as testimony or memory goes, the land has been held by
individuals under a claim of private ownership, it will be presumed to
have been held in the same way from before the Spanish conquest, and
never to have been public land. Certainly in a case like this, if there is doubt
or ambiguity in the Spanish law, we ought to give the applicant the benefit of
the doubt."140
The court thus laid down the presumption of a certain title held (1) as far back
as testimony or memory went, and (2) under a claim of private ownership.
Land held by this title is presumed to "never have been public land."
Against this presumption, the U.S. Supreme Court analyzed the Spanish
decrees upheld in the 1904 decision of Valenton v. Murciano. The U.S.
Supreme Court found no proof that the Spanish decrees did not honor native
title. On the contrary, the decrees discussed in Valenton appeared to
recognize that the natives owned some land, irrespective of any royal grant.
The Regalian doctrine declared in the preamble of the Recopilacion was all
"theory and discourse" and it was observed that titles were admitted to exist
beyond the powers of the Crown, viz:
"If the applicant's case is to be tried by the law of Spain, we do not
discover such clear proof that it was bad by that law as to satisfy us that
he does not own the land. To begin with, the older decrees and laws
cited by the counsel for the plaintiff in error seem to indicate pretty
clearly that the natives were recognized as owning some lands,
irrespective of any royal grant. In other words, Spain did not assume to
convert all the native inhabitants of the Philippines into trespassers or even
into tenants at will. For instance, Book 4, title 12, Law 14 of the
the Recopilacion de Leyes de las Indias, cited for a contrary conclusion in
Valenton v. Murciano, 3 Philippine 537, while it commands viceroys and
others, when it seems proper, to call for the exhibition of grants, directs them
to confirm those who hold by good grants or justa prescripcion. It is true that
it begins by the characteristic assertion of feudal overlordship and the
origin of all titles in the King or his predecessors. That was theory and
discourse. The fact was that titles were admitted to exist that owed
nothing to the powers of Spain beyond this recognition in their
books." (Emphasis supplied).141
The court further stated that the Spanish "adjustment" proceedings never held
sway over unconquered territories. The wording of the Spanish laws were not
framed in a manner as to convey to the natives that failure to register what to
them has always been their own would mean loss of such land. The
registration requirement was "not to confer title, but simply to establish it;" it
was "not calculated to convey to the mind of an Igorot chief the notion that
ancient family possessions were in danger, if he had read every word of it."
By recognizing this kind of title, the court clearly repudiated the doctrine
of Valenton. It was frank enough, however, to admit the possibility that the
applicant might have been deprived of his land under Spanish law because of
the inherent ambiguity of the decrees and concomitantly, the various
interpretations which may be given them. But precisely because of the
ambiguity and of the strong "due process mandate" of the Constitution,
the court validated this kind of title.142 This title was sufficient, even without
government administrative action, and entitled the holder to a Torrens
certificate. Justice Holmes explained:
"It will be perceived that the rights of the applicant under the Spanish law
present a problem not without difficulties for courts of a legal tradition. We
have deemed it proper on that account to notice the possible effect of the
change of sovereignty and the act of Congress establishing the fundamental
principles now to be observed. Upon a consideration of the whole case we are
of the opinion that law and justice require that the applicant should be granted
what he seeks, and should not be deprived of what, by the practice and belief
of those among whom he lived, was his property, through a refined
interpretation of an almost forgotten law of Spain." 143
Thus, the court ruled in favor of Cariño and ordered the registration of
the 148 hectares in Baguio Municipality in his name.144
Examining Cariño closer, the U.S. Supreme Court did not categorically refer to
the title it upheld as "native title." It simply said:
"The Province of Benguet was inhabited by a tribe that the Solicitor-
General, in his argument, characterized as a savage tribe that never was
brought under the civil or military government of the Spanish Crown. It
seems probable, if not certain, that the Spanish officials would not have
granted to anyone in that province the registration to which formerly the
plaintiff was entitled by the Spanish Laws, and which would have made
his title beyond question good. Whatever may have been the technical
position of Spain it does not follow that, in the view of the United States, he
had lost all rights and was a mere trespasser when the present government
seized his land. The argument to that effect seems to amount to a denial
of native titles through an important part of the Island of Luzon, at least, for
the want of ceremonies which the Spaniards would not have permitted and
had not the power to enforce."145
This is the only instance when Justice Holmes used the term "native title" in
the entire length of the Cariño decision. It is observed that the widespread use
of the term "native title" may be traced to Professor Owen James Lynch, Jr., a
Visiting Professor at the University of the Philippines College of Law from the
Yale University Law School. In 1982, Prof. Lynch published an article in
the Philippine Law Journal entitled Native Title, Private Right and Tribal
Land Law.146 This article was made after Professor Lynch visited over thirty
tribal communities throughout the country and studied the origin and
development of Philippine land laws. 147 He discussed Cariño extensively and
used the term "native title" to refer to Cariño's title as discussed and upheld by
the U.S. Supreme Court in said case.
(b) Indian Title
In a footnote in the same article, Professor Lynch stated that the concept of
"native title" as defined by Justice Holmes in Cariño "is conceptually similar to
"aboriginal title" of the American Indians.148 This is not surprising, according to
Prof. Lynch, considering that during the American regime, government policy
towards ICCs/IPs was consistently made in reference to native
Americans.149 This was clearly demonstrated in the case of Rubi v. Provincial
Board of Mindoro.150
In Rubi, the Provincial Board of Mindoro adopted a Resolution authorizing the
provincial governor to remove the Mangyans from their domains and place
them in a permanent reservation in Sitio Tigbao, Lake Naujan. Any Mangyan
who refused to comply was to be imprisoned. Rubi and some Mangyans,
including one who was imprisoned for trying to escape from the reservation,
filed for habeas corpus claiming deprivation of liberty under the Board
Resolution. This Court denied the petition on the ground of police power. It
upheld government policy promoting the idea that a permanent settlement was
the only successful method for educating the Mangyans, introducing civilized
customs, improving their health and morals, and protecting the public forests in
which they roamed.151 Speaking through Justice Malcolm, the court said:
"Reference was made in the President's instructions to the Commission to the
policy adopted by the United States for the Indian Tribes. The methods
followed by the Government of the Philippine Islands in its dealings with the
so-called non-Christian people is said, on argument, to be practically identical
with that followed by the United States Government in its dealings with the
Indian tribes. Valuable lessons, it is insisted, can be derived by an
investigation of the American-Indian policy.
From the beginning of the United States, and even before, the Indians have
been treated as "in a state of pupilage." The recognized relation between the
Government of the United States and the Indians may be described as that of
guardian and ward. It is for the Congress to determine when and how the
guardianship shall be terminated. The Indians are always subject to the
plenary authority of the United States.152
x x x.
As to the second point, the facts in the Standing Bear case and the Rubi case
are not exactly identical. But even admitting similarity of facts, yet it is known to
all that Indian reservations do exist in the United States, that Indians have
been taken from different parts of the country and placed on these
reservations, without any previous consultation as to their own wishes, and
that, when once so located, they have been made to remain on the reservation
for their own good and for the general good of the country. If any lesson can
be drawn from the Indian policy of the United States, it is that the
determination of this policy is for the legislative and executive branches of the
government and that when once so decided upon, the courts should not
interfere to upset a carefully planned governmental system. Perhaps, just as
many forceful reasons exist for the segregation of the Manguianes in Mindoro
as existed for the segregation of the different Indian tribes in the United
States."153
Rubi applied the concept of Indian land grants or reservations in the
Philippines. An Indian reservation is a part of the public domain set apart by
proper authority for the use and occupation of a tribe or tribes of Indians. 154 It
may be set apart by an act of Congress, by treaty, or by executive order, but it
cannot be established by custom and prescription. 155
Indian title to land, however, is not limited to land grants or reservations.
It also covers the "aboriginal right of possession or occupancy."156 The
aboriginal right of possession depends on the actual occupancy of the lands in
question by the tribe or nation as their ancestral home, in the sense that such
lands constitute definable territory occupied exclusively by the particular tribe
or nation.157 It is a right which exists apart from any treaty, statute, or other
governmental action, although in numerous instances treaties have been
negotiated with Indian tribes, recognizing their aboriginal possession and
delimiting their occupancy rights or settling and adjusting their boundaries. 158
American jurisprudence recognizes the Indians' or native Americans'
rights to land they have held and occupied before the "discovery" of the
Americas by the Europeans. The earliest definitive statement by the U.S.
Supreme Court on the nature of aboriginal title was made in 1823
in Johnson & Graham's Lessee v. M'Intosh.159
In Johnson, the plaintiffs claimed the land in question under two (2) grants
made by the chiefs of two (2) Indian tribes. The U.S. Supreme Court refused to
recognize this conveyance, the plaintiffs being private persons. The only
conveyance that was recognized was that made by the Indians to the
government of the European discoverer. Speaking for the court, Chief Justice
Marshall pointed out that the potentates of the old world believed that they had
made ample compensation to the inhabitants of the new world by bestowing
civilization and Christianity upon them; but in addition, said the court, they
found it necessary, in order to avoid conflicting settlements and consequent
war, to establish the principle that discovery gives title to the government
by whose subjects, or by whose authority, the discovery was made,
against all other European governments, which title might be
consummated by possession.160 The exclusion of all other Europeans gave
to the nation making the discovery the sole right of acquiring the soil from the
natives and establishing settlements upon it. As regards the natives, the court
further stated that:
"Those relations which were to exist between the discoverer and the natives
were to be regulated by themselves. The rights thus acquired being exclusive,
no other power could interpose between them.
In the establishment of these relations, the rights of the
original inhabitants were, in no instance, entirely disregarded; but were
necessarily, to a considerable extent, impaired. They were admitted to be the
rightful occupants of the soil, with a legal as well as just claim to retain
possession of it, and to use it according to their own discretion; but their
rights to complete sovereignty, as independent nations, were necessarily
diminished, and their power to dispose of the soil at their own will, to
whomsoever they pleased, was denied by the fundamental principle that
discovery gave exclusive title to those who made it.
While the different nations of Europe respected the right of the natives as
occupants, they asserted the ultimate dominion to be in themselves; and
claimed and exercised, as a consequence of this ultimate dominion, a
power to grant the soil, while yet in possession of the natives. These
grants have been understood by all to convey a title to the grantees,
subject only to the Indian right of occupancy."161
Thus, the discoverer of new territory was deemed to have obtained
the exclusive right to acquire Indian land and extinguish Indian titles. Only to
the discoverer- whether to England, France, Spain or Holland- did this right
belong and not to any other nation or private person. The mere acquisition of
the right nonetheless did not extinguish Indian claims to land. Rather, until the
discoverer, by purchase or conquest, exercised its right, the concerned Indians
were recognized as the "rightful occupants of the soil, with a legal as well as
just claim to retain possession of it." Grants made by the discoverer to her
subjects of lands occupied by the Indians were held to convey a title to the
grantees, subject only to the Indian right of occupancy. Once the discoverer
purchased the land from the Indians or conquered them, it was only then that
the discoverer gained an absolute title unrestricted by Indian rights.
The court concluded, in essence, that a grant of Indian lands by Indians could
not convey a title paramount to the title of the United States itself to other
parties, saying:
"It has never been contended that the Indian title amounted to nothing. Their
right of possession has never been questioned. The claim of government
extends to the complete ultimate title, charged with this right of
possession, and to the exclusive power of acquiring that right."162
It has been said that the history of America, from its discovery to the present
day, proves the universal recognition of this principle. 163
The Johnson doctrine was a compromise. It protected Indian rights and their
native lands without having to invalidate conveyances made by the
government to many U.S. citizens.164
Johnson was reiterated in the case of Worcester v. Georgia.165 In this case,
the State of Georgia enacted a law requiring all white persons residing within
the Cherokee nation to obtain a license or permit from the Governor of
Georgia; and any violation of the law was deemed a high misdemeanor. The
plaintiffs, who were white missionaries, did not obtain said license and were
thus charged with a violation of the Act.
The U.S. Supreme Court declared the Act as unconstitutional for interfering
with the treaties established between the United States and the Cherokee
nation as well as the Acts of Congress regulating intercourse with them. It
characterized the relationship between the United States government and the
Indians as:
"The Indian nations were, from their situation, necessarily dependent on some
foreign potentate for the supply of their essential wants, and for their protection
from lawless and injurious intrusions into their country. That power was
naturally termed their protector. They had been arranged under the protection
of Great Britain; but the extinguishment of the British power in their
neighborhood, and the establishment of that of the United States in its place,
led naturally to the declaration, on the part of the Cherokees, that they were
under the protection of the United States, and of no other power. They
assumed the relation with the United States which had before subsisted with
Great Britain.
This relation was that of a nation claiming and receiving the protection of one
more powerful, not that of individuals abandoning their national character, and
submitting as subjects to the laws of a master." 166
It was the policy of the U.S. government to treat the Indians as nations with
distinct territorial boundaries and recognize their right of occupancy over all the
lands within their domains. Thus:
"From the commencement of our government Congress has passed acts to
regulate trade and intercourse with the Indians; which treat them as nations,
respect their rights, and manifest a firm purpose to afford that protection which
treaties stipulate. All these acts, and especially that of 1802, which is still in
force, manifestly consider the several Indian nations as distinct political
communities, having territorial boundaries, within which their authority
is exclusive, and having a right to all the lands within those boundaries,
which is not only acknowledged, but guaranteed by the United States.
x x x.
"The Indian nations had always been considered as distinct, independent
political communities, retaining their original natural rights, as the
undisputed possessors of the soil from time immemorial, with the single
exception of that imposed by irresistible power, which excluded them from
intercourse with any other European potentate than the first discoverer of the
coast of the particular region claimed: and this was a restriction which those
European potentates imposed on themselves, as well as on the Indians. The
very term "nation," so generally applied to them, means "a people distinct from
others." x x x.167
The Cherokee nation, then, is a distinct community, occupying its own territory,
with boundaries accurately described, in which the laws of Georgia can have
no force, and which the citizens of Georgia have no right to enter but with the
assent of the Cherokees themselves or in conformity with treaties and with the
acts of Congress. The whole intercourse between the United States and this
nation is, by our Constitution and laws, vested in the government of the United
States."168
The discovery of the American continent gave title to the government of the
discoverer as against all other European governments. Designated as the
naked fee,169 this title was to be consummated by possession and was subject
to the Indian title of occupancy. The discoverer acknowledged the Indians'
legal and just claim to retain possession of the land, the Indians being the
original inhabitants of the land. The discoverer nonetheless asserted the
exclusive right to acquire the Indians' land- either by purchase, "defensive"
conquest, or cession- and in so doing, extinguish the Indian title. Only the
discoverer could extinguish Indian title because it alone asserted ultimate
dominion in itself. Thus, while the different nations of Europe respected the
rights of the natives as occupants, they all asserted the ultimate dominion and
title to be in themselves.170
As early as the 19th century, it became accepted doctrine that although
fee title to the lands occupied by the Indians when the colonists arrived
became vested in the sovereign- first the discovering European nation
and later the original 13 States and the United States- a right of
occupancy in the Indian tribes was nevertheless recognized. The Federal
Government continued the policy of respecting the Indian right of occupancy,
sometimes called Indian title, which it accorded the protection of complete
ownership.171 But this aboriginal Indian interest simply constitutes "permission"
from the whites to occupy the land, and means mere possession not
specifically recognized as ownership by Congress. 172 It is clear that this right of
occupancy based upon aboriginal possession is not a property right.173 It is
vulnerable to affirmative action by the federal government who, as sovereign,
possessed exclusive power to extinguish the right of occupancy at
will.174 Thus, aboriginal title is not the same as legal title. Aboriginal title
rests on actual, exclusive and continuous use and occupancy for a long
time.175 It entails that land owned by Indian title must be used within the tribe,
subject to its laws and customs, and cannot be sold to another sovereign
government nor to any citizen.176 Such title as Indians have to possess and
occupy land is in the tribe, and not in the individual Indian; the right of
individual Indians to share in the tribal property usually depends upon tribal
membership, the property of the tribe generally being held in communal
ownership.177
As a rule, Indian lands are not included in the term "public lands," which is
ordinarily used to designate such lands as are subject to sale or other disposal
under general laws.178 Indian land which has been abandoned is deemed to fall
into the public domain.179 On the other hand, an Indian reservation is a part of
the public domain set apart for the use and occupation of a tribe of
Indians.180 Once set apart by proper authority, the reservation ceases to be
public land, and until the Indian title is extinguished, no one but Congress can
initiate any preferential right on, or restrict the nation's power to dispose of,
them.181
The American judiciary struggled for more than 200 years with the
ancestral land claims of indigenous Americans.182 And two things are
clear. First, aboriginal title is recognized. Second, indigenous property
systems are also recognized. From a legal point of view, certain benefits can
be drawn from a comparison of Philippine IPs to native Americans. 183 Despite
the similarities between native title and aboriginal title, however, there are at
present some misgivings on whether jurisprudence on American Indians may
be cited authoritatively in the Philippines. The U.S. recognizes the possessory
rights of the Indians over their land; title to the land, however, is deemed to
have passed to the U.S. as successor of the discoverer. The aboriginal title of
ownership is not specifically recognized as ownership by action authorized by
Congress.184 The protection of aboriginal title merely guards against
encroachment by persons other than the Federal Government. 185 Although
there are criticisms against the refusal to recognize the native Americans'
ownership of these lands,186 the power of the State to extinguish these titles
has remained firmly entrenched.187
Under the IPRA, the Philippine State is not barred form asserting sovereignty
over the ancestral domains and ancestral lands. 188 The IPRA, however, is still
in its infancy and any similarities between its application in the Philippines vis-
à-vis American Jurisprudence on aboriginal title will depend on the peculiar
facts of each case.
(c) Why the Cariño doctrine is unique
In the Philippines, the concept of native title first upheld in Cariño and
enshrined in the IPRA grants ownership, albeit in limited form, of the land to
the ICCs/IPs. Native title presumes that the land is private and was never
public. Cariño is the only case that specifically and categorically
recognizes native title. The long line of cases citing Cariño did not touch
on native title and the private character of ancestral domains and
lands. Cariño was cited by the succeeding cases to support the concept
of acquisitive prescription under the Public Land Act which is a different
matter altogether. Under the Public Land Act, land sought to be registered
must be public agricultural land. When the conditions specified in Section 48
[b] of the Public Land Act are complied with, the possessor of the land is
deemed to have acquired, by operation of law, a right to a grant of the
land.189 The land ceases to be part of the public domain, 190 ipso jure,191 and is
converted to private property by the mere lapse or completion of the
prescribed statutory period.
It was only in the case of Oh Cho v. Director of Lands192 that the court
declared that the rule that all lands that were not acquired from the
government, either by purchase or grant, belong to the public domain has an
exception. This exception would be any land that should have been in the
possession of an occupant and of his predecessors-in-interest since time
immemorial. It is this kind of possession that would justify the presumption that
the land had never been part of the public domain or that it had been private
property even before the Spanish conquest. 193 Oh Cho, however, was decided
under the provisions of the Public Land Act and Cariño was cited to support
the applicant's claim of acquisitive prescription under the said Act.
All these years, Cariño had been quoted out of context simply to justify long,
continuous, open and adverse possession in the concept of owner of public
agricultural land. It is this long, continuous, open and adverse possession in
the concept of owner of thirty years both for ordinary citizens194 and members
of the national cultural minorities195 that converts the land from public into
private and entitles the registrant to a torrens certificate of title.
(3) The Option of Securing a Torrens Title to the Ancestral Land Indicates
that the Land is Private.
The private character of ancestral lands and domains as laid down in the IPRA
is further strengthened by the option given to individual ICCs/IPs over their
individually-owned ancestral lands. For purposes of registration under the
Public Land Act and the Land Registration Act, the IPRA expressly
converts ancestral land into public agricultural land which may be
disposed of by the State. The necessary implication is that ancestral land
is private. It, however, has to be first converted to public agricultural land
simply for registration purposes. To wit:
"Sec. 12. Option to Secure Certificate of Title Under Commonwealth Act 141,
as amended, or the Land Registration Act 496- Individual members of cultural
communities, with respect to their individually-owned ancestral lands who, by
themselves or through their predecessors-in-interest, have been in continuous
possession and occupation of the same in the concept of owner since time
immemorial or for a period of not less than thirty (30) years immediately
preceding the approval of this Act and uncontested by the members of the
same ICCs/IPs shall have the option to secure title to their ancestral lands
under the provisions of Commonwealth Act 141, as amended, or the Land
Registration Act 496.
For this purpose, said individually-owned ancestral lands, which are
agricultural in character and actually used for agricultural, residential, pasture,
and tree farming purposes, including those with a slope of eighteen percent
(18%) or more, are hereby classified as alienable and disposable agricultural
lands.
The option granted under this section shall be exercised within twenty (20)
years from the approval of this Act."196
ICCs/IPs are given the option to secure a torrens certificate of title over their
individually-owned ancestral lands. This option is limited to
ancestral lands only, not domains, and such lands must be individually, not
communally, owned.
Ancestral lands that are owned by individual members of ICCs/IPs who, by
themselves or through their predecessors-in-interest, have been in continuous
possession and occupation of the same in the concept of owner since time
immemorial197 or for a period of not less than 30 years, which claims are
uncontested by the members of the same ICCs/IPs, may be registered under
C.A. 141, otherwise known as the Public Land Act, or Act 496, the Land
Registration Act. For purposes of registration, the individually-owned ancestral
lands are classified as alienable and disposable agricultural lands of the public
domain, provided, they are agricultural in character and are actually used for
agricultural, residential, pasture and tree farming purposes. These lands shall
be classified as public agricultural lands regardless of whether they have a
slope of 18% or more.
The classification of ancestral land as public agricultural land is in compliance
with the requirements of the Public Land Act and the Land Registration Act.
C.A. 141, the Public Land Act, deals specifically with lands of the public
domain.198 Its provisions apply to those lands "declared open to disposition or
concession" x x x "which have not been reserved for public or quasi-public
purposes, nor appropriated by the Government, nor in any manner become
private property, nor those on which a private right authorized and recognized
by this Act or any other valid law x x x or which having been reserved or
appropriated, have ceased to be so."199 Act 496, the Land Registration Act,
allows registration only of private lands and public agricultural lands. Since
ancestral domains and lands are private, if the ICC/IP wants to avail of
the benefits of C.A. 141 and Act 496, the IPRA itself converts his
ancestral land, regardless of whether the land has a slope of eighteen
per cent (18%) or over,200 from private to public agricultural land for
proper disposition.
The option to register land under the Public Land Act and the Land
Registration Act has nonetheless a limited period. This option must be
exercised within twenty (20) years from October 29, 1997, the date of approval
of the IPRA.
Thus, ancestral lands and ancestral domains are not part of the lands of
the public domain. They are private and belong to the ICCs/IPs. Section 3
of Article XII on National Economy and Patrimony of the 1987 Constitution
classifies lands of the public domain into four categories: (a) agricultural, (b)
forest or timber, (c) mineral lands, and (d) national parks. Section 5 of
the same Article XII mentions ancestral lands and ancestral domains but it
does not classify them under any of the said four categories. To classify them
as public lands under any one of the four classes will render the entire
IPRA law a nullity. The spirit of the IPRA lies in the distinct concept of
ancestral domains and ancestral lands. The IPRA addresses the major
problem of the ICCs/IPs which is loss of land. Land and space are of vital
concern in terms of sheer survival of the ICCs/IPs. 201
The 1987 Constitution mandates the State to "protect the rights of
indigenous cultural communities to their ancestral lands" and that
"Congress provide for the applicability of customary laws x x x in
determining the ownership and extent of ancestral domain."202 It is the
recognition of the ICCs/IPs distinct rights of ownership over their
ancestral domains and lands that breathes life into this constitutional
mandate.
B. The right of ownership and possession by the ICCs/IPs of their
ancestral domains is a limited form of ownership and does not include
the right to alienate the same.
Registration under the Public Land Act and Land Registration Act recognizes
the concept of ownership under the civil law. This ownership is based on
adverse possession for a specified period, and harkens to Section 44 of the
Public Land Act on administrative legalization (free patent) of imperfect or
incomplete titles and Section 48 (b) and (c) of the same Act on the judicial
confirmation of imperfect or incomplete titles. Thus:
"Sec. 44. Any natural-born citizen of the Philippines who is not the owner of
more than twenty-four hectares and who since July fourth, 1926 or prior
thereto, has continuously occupied and cultivated, either by himself or through
his predecessors-in-interest, a tract or tracts of agricultural public lands subject
to disposition, or who shall have paid the real estate tax thereon while the
same has not been occupied by any person shall be entitled, under the
provisions of this chapter, to have a free patent issued to him for such tract or
tracts of such land not to exceed twenty-four hectares.
A member of the national cultural minorities who has continuously
occupied and cultivated, either by himself or through his predecessors-
in-interest, a tract or tracts of land, whether disposable or not since July
4, 1955, shall be entitled to the right granted in the preceding paragraph
of this section: Provided, That at the time he files his free patent
application he is not the owner of any real property secured or
disposable under the provision of the Public Land Law.203
x x x.
"Sec. 48. The following described citizens of the Philippines, occupying lands
of the public domain or claiming to own any such lands or an interest therein,
but whose titles have not been perfected or completed, may apply to the Court
of First Instance of the province where the land is located for confirmation of
their claims and the issuance of a certificate of title therefor, under the Land
Registration Act, to wit:
(a) [perfection of Spanish titles] xxx.
(b) Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession
and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition or ownership, for at least thirty years
immediately preceding the filing of the application for confirmation of
title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential
to a Government grant and shall be entitled to a certificate of title under
the provisions of this Chapter.
(c) Members of the national cultural minorities who by themselves
or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation
of lands of the public domain suitable to agriculture, whether
disposable or not, under a bona fide claim of ownership for at
least 30 years shall be entitled to the rights granted in sub-section
(b) hereof."204
Registration under the foregoing provisions presumes that the land was
originally public agricultural land but because of adverse possession since July
4, 1955 (free patent) or at least thirty years (judicial confirmation), the land has
become private. Open, adverse, public and continuous possession is
sufficient, provided, the possessor makes proper application therefor. The
possession has to be confirmed judicially or administratively after which a
torrens title is issued.
A torrens title recognizes the owner whose name appears in the certificate as
entitled to all the rights of ownership under the civil law. The Civil Code of the
Philippines defines ownership in Articles 427, 428 and 429. This concept is
based on Roman Law which the Spaniards introduced to the Philippines
through the Civil Code of 1889. Ownership, under Roman Law, may be
exercised over things or rights. It primarily includes the right of the owner to
enjoy and dispose of the thing owned. And the right to enjoy and dispose of
the thing includes the right to receive from the thing what it produces, 205 the
right to consume the thing by its use, 206 the right to alienate, encumber,
transform or even destroy the thing owned, 207 and the right to exclude from the
possession of the thing owned by any other person to whom the owner has not
transmitted such thing.208
1. The Indigenous Concept of Ownership and Customary Law.
Ownership of ancestral domains by native title does not entitle the ICC/IP to a
torrens title but to a Certificate of Ancestral Domain Title (CADT). The CADT
formally recognizes the indigenous concept of ownership of the ICCs/IPs over
their ancestral domain. Thus:
"Sec. 5. Indigenous concept of ownership.- Indigenous concept of ownership
sustains the view that ancestral domains and all resources found therein shall
serve as the material bases of their cultural integrity. The indigenous concept
of ownership generally holds that ancestral domains are the ICCs/IPs private
but community property which belongs to all generations and therefore cannot
be sold, disposed or destroyed. It likewise covers sustainable traditional
resource rights."
The right of ownership and possession of the ICCs/IPs to their ancestral
domains is held under the indigenous concept of ownership. This
concept maintains the view that ancestral domains are the ICCs/IPs
private but community property. It is private simply because it is not part
of the public domain. But its private character ends there. The ancestral
domain is owned in common by the ICCs/IPs and not by one particular
person. The IPRA itself provides that areas within the ancestral domains,
whether delineated or not, are presumed to be communally held. 209 These
communal rights, however, are not exactly the same as co-ownership
rights under the Civil Code.210 Co-ownership gives any co-owner the right to
demand partition of the property held in common. The Civil Code expressly
provides that "no co-owner shall be obliged to remain in the co-ownership."
Each co-owner may demand at any time the partition of the thing in common,
insofar as his share is concerned.211 To allow such a right over ancestral
domains may be destructive not only of customary law of the community but of
the very community itself.212
Communal rights over land are not the same as corporate rights over
real property, much less corporate condominium rights. A corporation can
exist only for a maximum of fifty (50) years subject to an extension of another
fifty years in any single instance. 213 Every stockholder has the right to
disassociate himself from the corporation. 214 Moreover, the corporation itself
may be dissolved voluntarily or involuntarily. 215
Communal rights to the land are held not only by the present possessors
of the land but extends to all generations of the ICCs/IPs, past, present
and future, to the domain. This is the reason why the ancestral domain must
be kept within the ICCs/IPs themselves. The domain cannot be transferred,
sold or conveyed to other persons. It belongs to the ICCs/IPs as a community.
Ancestral lands are also held under the indigenous concept of
ownership. The lands are communal. These lands, however, may be
transferred subject to the following limitations: (a) only to the members of the
same ICCs/IPs; (b) in accord with customary laws and traditions; and (c)
subject to the right of redemption of the ICCs/IPs for a period of 15 years if the
land was transferred to a non-member of the ICCs/IPs.
Following the constitutional mandate that "customary law govern property
rights or relations in determining the ownership and extent of ancestral
domains,"216 the IPRA, by legislative fiat, introduces a new concept of
ownership. This is a concept that has long existed under customary
law.217
Custom, from which customary law is derived, is also recognized under
the Civil Code as a source of law.218 Some articles of the Civil Code
expressly provide that custom should be applied in cases where no codal
provision is applicable.219 In other words, in the absence of any applicable
provision in the Civil Code, custom, when duly proven, can define rights and
liabilities.220
Customary law is a primary, not secondary, source of rights under the IPRA
and uniquely applies to ICCs/IPs. Its recognition does not depend on the
absence of a specific provision in the civil law. The indigenous concept of
ownership under customary law is specifically acknowledged and recognized,
and coexists with the civil law concept and the laws on land titling and land
registration.221
To be sure, the indigenous concept of ownership exists even without a
paper title. The CADT is merely a "formal recognition" of native title. This is
clear from Section 11 of the IPRA, to wit:
"Sec. 11. Recognition of Ancestral Domain Rights.- The rights of ICCs/IPs to
their ancestral domains by virtue of Native Title shall be recognized and
respected. Formal recognition, when solicited by ICCs/IPs concerned shall be
embodied in a Certificate of Ancestral Domain Title, which shall recognize the
title of the concerned ICCs/IPs over the territories identified and delineated."
The moral import of ancestral domain, native land or being native is
"belongingness" to the land, being people of the land- by sheer force of having
sprung from the land since time beyond recall, and the faithful nurture of the
land by the sweat of one's brow. This is fidelity of usufructuary relation to the
land- the possession of stewardship through perduring, intimate tillage, and the
mutuality of blessings between man and land; from man, care for land; from
the land, sustenance for man.222
C. Sections 7 (a), 7 (b) and 57 of the IPRA Do Not Violate the Regalian
Doctrine Enshrined in Section 2, Article XII of the 1987 Constitution.
1. The Rights of ICCs/IPs Over Their Ancestral Domains and Lands
The IPRA grants the ICCs/IPs several rights over their ancestral domains and
ancestral lands. Section 7 provides for the rights over ancestral domains:
"Sec. 7. Rights to Ancestral Domains.- The rights of ownership and possession
of ICCs/IPs to their ancestral domains shall be recognized and protected. Such
rights include:
a) Right of Ownership.- The right to claim ownership over lands,
bodies of water traditionally and actually occupied by ICCs/IPs,
sacred places, traditional hunting and fishing grounds, and all
improvements made by them at any time within the domains;
b) Right to Develop Lands and Natural Resources.- Subject to
Section 56 hereof, the right to develop, control and use lands and
territories traditionally occupied, owned, or used; to manage and
conserve natural resources within the territories and uphold the
responsibilities for future generations; to benefit and share the
profits from allocation and utilization of the natural resources
found therein; the right to negotiate the terms and conditions for
the exploration of natural resources in the areas for the purpose
of ensuring ecological, environmental protection and the
conservation measures, pursuant to national and customary
laws; the right to an informed and intelligent participation in the
formulation and implementation of any project, government or private,
that will affect or impact upon the ancestral domains and to receive just
and fair compensation for any damages which they may sustain as a
result of the project; and the right to effective measures by the
government to prevent any interference with, alienation and
encroachment upon these rights;"
c) Right to Stay in the Territories.- The right to stay in the territory and
not to be removed therefrom. No ICCs/IPs will be relocated without
their free and prior informed consent, nor through any means other
than eminent domain. x x x;
d) Right in Case of Displacement.- In case displacement occurs as a
result of natural catastrophes, the State shall endeavor to resettle the
displaced ICCs/IPs in suitable areas where they can have temporary
life support systems: x x x;
e) Right to Regulate the Entry of Migrants.- Right to regulate the entry
of migrant settlers and organizations into their domains;
f) Right to Safe and Clean Air and Water.-For this purpose, the
ICCs/IPs shall have access to integrated systems for the management
of their inland waters and air space;
g) Right to Claim Parts of Reservations.- The right to claim parts of the
ancestral domains which have been reserved for various purposes,
except those reserved and intended for common and public welfare
and service;
h) Right to Resolve Conflict.- Right to resolve land conflicts in
accordance with customary laws of the area where the land is located,
and only in default thereof shall the complaints be submitted to
amicable settlement and to the Courts of Justice whenever necessary."
Section 8 provides for the rights over ancestral lands:
"Sec. 8. Rights to Ancestral Lands.- The right of ownership and possession of
the ICCs/IPs to their ancestral lands shall be recognized and protected.
a) Right to transfer land/property.- Such right shall include the right to
transfer land or property rights to/among members of the same
ICCs/IPs, subject to customary laws and traditions of the community
concerned.
b) Right to Redemption.- In cases where it is shown that the transfer of
land/property rights by virtue of any agreement or devise, to a non-
member of the concerned ICCs/IPs is tainted by the vitiated consent of
the ICCs/IPs, or is transferred for an unconscionable consideration or
price, the transferor ICC/IP shall have the right to redeem the same
within a period not exceeding fifteen (15) years from the date of
transfer."
Section 7 (a) defines the ICCs/IPs the right of ownership over their
ancestral domains which covers (a) lands, (b) bodies of water traditionally and
actually occupied by the ICCs/IPs, (c) sacred places, (d) traditional hunting
and fishing grounds, and (e) all improvements made by them at any time within
the domains. The right of ownership includes the following rights: (1) the
right to develop lands and natural resources; (b) the right to stay in the
territories; (c) the right to resettlement in case of displacement; (d) the right to
regulate the entry of migrants; (e) the right to safe and clean air and water; (f)
the right to claim parts of the ancestral domains as reservations; and (g) the
right to resolve conflict in accordance with customary laws.
Section 8 governs their rights to ancestral lands. Unlike ownership over the
ancestral domains, Section 8 gives the ICCs/IPs also the right to transfer the
land or property rights to members of the same ICCs/IPs or non-members
thereof. This is in keeping with the option given to ICCs/IPs to secure a torrens
title over the ancestral lands, but not to domains.
2. The Right of ICCs/IPs to Develop Lands and Natural Resources Within the
Ancestral Domains Does Not Deprive the State of Ownership Over the Natural
Resources and Control and Supervision in their Development and Exploitation.
The Regalian doctrine on the ownership, management and utilization of natural
resources is declared in Section 2, Article XII of the 1987 Constitution, viz:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned
by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such
activities, or, it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and under such terms
and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, water supply, fisheries, or industrial uses
other than the development of water power, beneficial use may be the
measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural
resources by Filipino citizens, as well as cooperative fish farming, with
priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and
lagoons.
The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral
oils according to the general terms and conditions provided by law, based on
real contributions to the economic growth and general welfare of the country.
In such agreements, the state shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution." 223
All lands of the public domain and all natural resources- waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources- are
owned by the State. The Constitution provides that in the exploration,
development and utilization of these natural resources, the State exercises full
control and supervision, and may undertake the same in four (4) modes:
1. The State may directly undertake such activities; or
2. The State may enter into co-production, joint venture or production-
sharing agreements with Filipino citizens or qualified corporations;
3. Congress may, by law, allow small-scale utilization of natural
resources by Filipino citizens;
4. For the large-scale exploration, development and utilization of
minerals, petroleum and other mineral oils, the President may enter
into agreements with foreign-owned corporations involving technical or
financial assistance.
As owner of the natural resources, the State is accorded primary power
and responsibility in the exploration, development and utilization of
these natural resources. The State may directly undertake the exploitation
and development by itself, or, it may allow participation by the private sector
through co-production,224 joint venture,225 or production-sharing
agreements.226 These agreements may be for a period of 25 years, renewable
for another 25 years. The State, through Congress, may allow the small-scale
utilization of natural resources by Filipino citizens. For the large-scale
exploration of these resources, specifically minerals, petroleum and other
mineral oils, the State, through the President, may enter into technical and
financial assistance agreements with foreign-owned corporations.
Under the Philippine Mining Act of 1995, (R.A. 7942) and the People's Small-
Scale Mining Act of 1991 (R.A. 7076) the three types of agreements, i.e., co-
production, joint venture or production-sharing, may apply to both large-
scale227 and small-scale mining.228 "Small-scale mining" refers to "mining
activities which rely heavily on manual labor using simple implements and
methods and do not use explosives or heavy mining equipment." 229
Examining the IPRA, there is nothing in the law that grants to the
ICCs/IPs ownership over the natural resources within their ancestral
domains. The right of ICCs/IPs in their ancestral domains
includes ownership, but this "ownership" is expressly defined and limited
in Section 7 (a) as:
"Sec. 7. a) Right of ownership- The right to claim ownership over lands, bodies
of water traditionally and actually occupied by ICCs/IPs, sacred places,
traditional hunting and fishing grounds, and all improvements made by them at
any time within the domains;"
The ICCs/IPs are given the right to claim ownership over "lands, bodies of
water traditionally and actually occupied by ICCs/IPs, sacred places, traditional
hunting and fishing grounds, and all improvements made by them at any time
within the domains." It will be noted that this enumeration does not
mention bodies of water not occupied by the
ICCs/IPs, minerals, coal, wildlife, flora and fauna in the traditional hunting
grounds, fish in the traditional fishing grounds, forests or timber in the sacred
places, etc. and all other natural resources found within the ancestral
domains. Indeed, the right of ownership under Section 7 (a) does not
cover "waters, minerals, coal, petroleum and other mineral oils, all forces
of potential
energy, fisheries, forests or timber, wildlife, flora and fauna and all other
natural resources" enumerated in Section 2, Article XII of the 1987
Constitution as belonging to the State.
The non-inclusion of ownership by the ICCs/IPs over the natural resources in
Section 7(a) complies with the Regalian doctrine.
(a) Section 1, Part II, Rule III of the Implementing Rules Goes Beyond the
Parameters of Sec. 7 (a) of the IPRA And is Unconstitutional.
The Rules Implementing the IPRA230 in Section 1, Part II, Rule III reads:
"Section 1. Rights of Ownership. ICCs/IPs have rights of ownership over lands,
waters, and natural resources and all improvements made by them at any time
within the ancestral domains/ lands. These rights shall include, but not limited
to, the right over the fruits, the right to possess, the right to use, right to
consume, right to exclude and right to recover ownership, and the rights or
interests over land and natural resources. The right to recover shall be
particularly applied to lands lost through fraud or any form or vitiated consent
or transferred for an unconscionable price."
Section 1 of the Implementing Rules gives the ICCs/IPs rights of ownership
over "lands, waters and natural resources." The term "natural resources" is not
one of those expressly mentioned in Section 7 (a) of the law. Our Constitution
and jurisprudence clearly declare that the right to claim ownership over land
does not necessarily include the right to claim ownership over the natural
resources found on or under the land.231 The IPRA itself makes a distinction
between land and natural resources. Section 7 (a) speaks of the right of
ownership only over the land within the ancestral domain. It is Sections 7
(b) and 57 of the law that speak of natural resources, and these
provisions, as shall be discussed later, do not give the ICCs/IPs the right
of ownership over these resources.
The constitutionality of Section 1, Part II, Rule III of the Implementing Rules
was not specifically and categorically challenged by petitioners. Petitioners
actually assail the constitutionality of the Implementing Rules in
general.232 Nevertheless, to avoid any confusion in the implementation of the
law, it is necessary to declare that the inclusion of "natural resources" in
Section 1, Part II, Rule III of the Implementing Rules goes beyond the
parameters of Section 7 (b) of the law and is contrary to Section 2, Article
XII of the 1987 Constitution.
(b) The Small-Scale Utilization of Natural Resources In Sec. 7 (b) of the
IPRA Is Allowed Under Paragraph 3, Section 2 of Article XII of the
Constitution.
Ownership over natural resources remain with the State and the IPRA in
Section 7 (b) merely grants the ICCs/IPs the right to manage them, viz:
"Sec. 7 (b) Right to Develop Lands and Natural Resources.- Subject to Section
56 hereof, right to develop, control and use lands and territories traditionally
occupied, owned, or used; to manage and conserve natural resources within
the territories and uphold the responsibilities for future generations; to benefit
and share the profits from allocation and utilization of the natural resources
found therein; the right to negotiate the terms and conditions for the
exploration of natural resources in the areas for the purpose of ensuring
ecological, environmental protection and the conservation measures, pursuant
to national and customary laws; the right to an informed and intelligent
participation in the formulation and implementation of any project, government
or private, that will affect or impact upon the ancestral domains and to receive
just and fair compensation for any damages which they may sustain as a result
of the project; and the right to effective measures by the government to
prevent any interference with, alienation and encroachment upon these rights;"
The right to develop lands and natural resources under Section 7 (b) of the
IPRA enumerates the following rights:
a) the right to develop, control and use lands and territories traditionally
occupied;
b) the right to manage and conserve natural resources within the
territories and uphold the responsibilities for future generations;
c) the right to benefit and share the profits from the allocation and
utilization of the natural resources found therein;
d) the right to negotiate the terms and conditions for the exploration
of natural resources for the purpose of ensuring ecological,
environmental protection and the conservation measures, pursuant to
national and customary laws;
e) the right to an informed and intelligent participation in the formulation
and implementation of any project, government or private, that will
affect or impact upon the ancestral domains and to receive just and fair
compensation for any damages which they may sustain as a result of
the project;
f) the right to effective measures by the government to prevent any
interference with, alienation and encroachment upon these rights. 233
Ownership over the natural resources in the ancestral domains remains
with the State and the ICCs/IPs are merely granted the right to "manage
and conserve" them for future generations, "benefit and share" the
profits from their allocation and utilization, and "negotiate the terms and
conditions for their exploration" for the purpose of "ensuring ecological
and environmental protection and conservation measures." It must be
noted that the right to negotiate the terms and conditions over the natural
resources covers only their exploration which must be for the purpose of
ensuring ecological and environmental protection of, and conservation
measures in the ancestral domain. It does not extend to the exploitation and
development of natural resources.
Simply stated, the ICCs/IPs' rights over the natural resources take the
form of management or stewardship. For the ICCs/IPs may use these
resources and share in the profits of their utilization or negotiate the terms for
their exploration. At the same time, however, the ICCs/IPs must ensure that
the natural resources within their ancestral domains are conserved for future
generations and that the "utilization" of these resources must not harm the
ecology and environment pursuant to national and customary laws. 234
The limited rights of "management and use" in Section 7 (b) must be
taken to contemplate small-scale utilization of natural resources as
distinguished from large-scale. Small-scale utilization of natural
resources is expressly allowed in the third paragraph of Section 2,
Article XII of the Constitution "in recognition of the plight of forest dwellers,
gold panners, marginal fishermen and others similarly situated who exploit our
natural resources for their daily sustenance and survival." 235 Section 7 (b) also
expressly mandates the ICCs/IPs to manage and conserve these resources
and ensure environmental and ecological protection within the domains, which
duties, by their very nature, necessarily reject utilization in a large-scale.
(c) The Large-Scale Utilization of Natural Resources In Section 57 of the
IPRA Is Allowed Under Paragraphs 1 and 4, Section 2, Article XII of the
1987 Constitution.
Section 57 of the IPRA provides:
"Sec. 57. Natural Resources within Ancestral Domains.- The ICCs/IPs shall
have priority rights in the harvesting, extraction, development or
exploitation of any natural resources within the ancestral domains. A non-
member of the ICCs/IPs concerned may be allowed to take part in the
development and utilization of the natural resources for a period of not
exceeding twenty-five (25) years renewable for not more than twenty-five (25)
years: Provided, That a formal and written agreement is entered into with the
ICCs/IPs concerned or that the community, pursuant to its own decision-
making process, has agreed to allow such operation: Provided finally, That the
NCIP may exercise visitorial powers and take appropriate action to safeguard
the rights of the ICCs/IPs under the same contract."
Section 57 speaks of the "harvesting, extraction, development or
exploitation of natural resources within ancestral domains" and "gives the
ICCs/IPs 'priority rights' therein." The terms "harvesting, extraction,
development or exploitation" of any natural resources within the
ancestral domains obviously refer to large-scale utilization. It is utilization
not merely for subsistence but for commercial or other extensive use that
require technology other than manual labor.236 The law recognizes the
probability of requiring a non-member of the ICCs/IPs to participate in the
development and utilization of the natural resources and thereby allows such
participation for a period of not more than 25 years, renewable for another 25
years. This may be done on condition that a formal written agreement be
entered into by the non-member and members of the ICCs/IPs.
Section 57 of the IPRA does not give the ICCs/IPs the right to "manage and
conserve" the natural resources. Instead, the law only grants the ICCs/IPs
"priority rights" in the development or exploitation thereof. Priority means giving
preference. Having priority rights over the natural resources does not
necessarily mean ownership rights. The grant of priority rights implies that
there is a superior entity that owns these resources and this entity has the
power to grant preferential rights over the resources to whosoever itself
chooses.
Section 57 is not a repudiation of the Regalian doctrine. Rather, it is an
affirmation of the said doctrine that all natural resources found within the
ancestral domains belong to the State. It incorporates by implication the
Regalian doctrine, hence, requires that the provision be read in the light of
Section 2, Article XII of the 1987 Constitution. Interpreting Section 2, Article
XII of the 1987 Constitution237 in relation to Section 57 of IPRA, the State,
as owner of these natural resources, may directly undertake the
development and exploitation of the natural resources by itself, or in the
alternative, it may recognize the priority rights of the ICCs/IPs as owners
of the land on which the natural resources are found by entering into a
co-production, joint venture, or production-sharing agreement with them.
The State may likewise enter into any of said agreements with a non-
member of the ICCs/IPs, whether natural or juridical, or enter into
agreements with foreign-owned corporations involving either technical
or financial assistance for the large-scale exploration, development and
utilization of minerals, petroleum, and other mineral oils, or allow such
non-member to participate in its agreement with the ICCs/IPs. If the State
decides to enter into an agreement with a non-ICC/IP member, the National
Commission on Indigenous Peoples (NCIP) shall ensure that the rights of the
ICCs/IPs under the agreement shall be protected. The agreement shall be for
a period of 25 years, renewable for another 25 years.
To reiterate, in the large-scale utilization of natural resources within the
ancestral domains, the State, as owner of these resources, has four (4)
options: (1) it may, of and by itself, directly undertake the development and
exploitation of the natural resources; or (2) it may recognize the priority rights
of the ICCs/IPs by entering into an agreement with them for such development
and exploitation; or (3) it may enter into an agreement with a non-member of
the ICCs/IPs, whether natural or juridical, local or foreign; or (4) it may allow
such non-member to participate in the agreement with the ICCs/IPs.
The rights granted by the IPRA to the ICCs/IPs over the natural resources
in their ancestral domains merely gives the ICCs/IPs, as owners and
occupants of the land on which the resources are found, the right to the
small-scale utilization of these resources, and at the same time, a priority
in their large-scale development and exploitation. Section 57 does not
mandate the State to automatically give priority to the ICCs/IPs. The State
has several options and it is within its discretion to choose which option
to pursue. Moreover, there is nothing in the law that gives the ICCs/IPs the
right to solely undertake the large-scale development of the natural resources
within their domains. The ICCs/IPs must undertake such endeavour
always under State supervision or control. This indicates that the State does
not lose control and ownership over the resources even in their exploitation.
Sections 7 (b) and 57 of the law simply give due respect to the ICCs/IPs who,
as actual occupants of the land where the natural resources lie, have
traditionally utilized these resources for their subsistence and survival.
Neither is the State stripped of ownership and control of the natural resources
by the following provision:
"Section 59. Certification Precondition.- All departments and other
governmental agencies shall henceforth be strictly enjoined from issuing,
renewing or granting any concession, license or lease, or entering into any
production-sharing agreement. without prior certification from the NCIP that the
area affected does not overlap with any ancestral domain. Such certification
shall only be issued after a field-based investigation is conducted by the
Ancestral Domains Office of the area concerned: Provided, That no
certification shall be issued by the NCIP without the free and prior informed
and written consent of the ICCs/IPs concerned: Provided, further, That no
department, government agency or government-owned or -controlled
corporation may issue new concession, license, lease, or production sharing
agreement while there is a pending application for a CADT: Provided, finally,
That the ICCs/IPs shall have the right to stop or suspend, in accordance with
this Act, any project that has not satisfied the requirement of this consultation
process."
Concessions, licenses, lease or production-sharing agreements for the
exploitation of natural resources shall not be issued, renewed or granted by all
departments and government agencies without prior certification from the
NCIP that the area subject of the agreement does not overlap with any
ancestral domain. The NCIP certification shall be issued only after a field-
based investigation shall have been conducted and the free and prior informed
written consent of the ICCs/IPs obtained. Non-compliance with the
consultation requirement gives the ICCs/IPs the right to stop or suspend any
project granted by any department or government agency.
As its subtitle suggests, this provision requires as a precondition for the
issuance of any concession, license or agreement over natural resources, that
a certification be issued by the NCIP that the area subject of the agreement
does not lie within any ancestral domain. The provision does not vest the NCIP
with power over the other agencies of the State as to determine whether to
grant or deny any concession or license or agreement. It merely gives the
NCIP the authority to ensure that the ICCs/IPs have been informed of the
agreement and that their consent thereto has been obtained. Note that the
certification applies to agreements over natural resources that do not
necessarily lie within the ancestral domains. For those that are found within the
said domains, Sections 7(b) and 57 of the IPRA apply.
V. THE IPRA IS A RECOGNITION OF OUR ACTIVE PARTICIPATION IN
THE INDIGENOUS INTERNATIONAL MOVEMENT.
The indigenous movement can be seen as the heir to a history of anti-
imperialism stretching back to prehistoric times. The movement received a
massive impetus during the 1960's from two sources. First, the decolonization
of Asia and Africa brought into the limelight the possibility of peoples
controlling their own destinies. Second, the right of self-determination was
enshrined in the UN Declaration on Human Rights. 238 The rise of the civil rights
movement and anti-racism brought to the attention of North American Indians,
Aborigines in Australia, and Maori in New Zealand the possibility of fighting for
fundamental rights and freedoms.
In 1974 and 1975, international indigenous organizations were founded, 239 and
during the 1980's, indigenous affairs were on the international agenda. The
people of the Philippine Cordillera were the first Asians to take part in the
international indigenous movement. It was the Cordillera People's Alliance that
carried out successful campaigns against the building of the Chico River Dam
in 1981-82 and they have since become one of the best-organized indigenous
bodies in the world.240
Presently, there is a growing concern for indigenous rights in the international
scene. This came as a result of the increased publicity focused on the
continuing disrespect for indigenous human rights and the destruction of the
indigenous peoples' environment, together with the national governments'
inability to deal with the situation.241 Indigenous rights came as a result of both
human rights and environmental protection, and have become a part of today's
priorities for the international agenda.242
International institutions and bodies have realized the necessity of applying
policies, programs and specific rules concerning IPs in some nations. The
World Bank, for example, first adopted a policy on IPs as a result of the dismal
experience of projects in Latin America.243 The World Bank now seeks to apply
its current policy on IPs to some of its projects in Asia. This policy has provided
an influential model for the projects of the Asian Development Bank. 244
The 1987 Philippine Constitution formally recognizes the existence of ICCs/IPs
and declares as a State policy the promotion of their rights within the
framework of national unity and development. 245 The IPRA amalgamates the
Philippine category of ICCs with the international category of IPs, 246 and is
heavily influenced by both the International Labor Organization (ILO)
Convention 169 and the United Nations (UN) Draft Declaration on the Rights of
Indigenous Peoples.247
ILO Convention No. 169 is entitled the "Convention Concerning Indigenous
and Tribal Peoples in Independent Countries"248 and was adopted on June 27,
1989. It is based on the Universal Declaration of Human Rights, the
International Covenant on Economic, Social and Cultural Rights, the
International Covenant on Civil and Political Rights, and many other
international instruments on the prevention of discrimination. 249 ILO Convention
No. 169 revised the "Convention Concerning the Protection and Integration of
Indigenous and Other Tribal and Semi-Tribal Populations in Independent
Countries" (ILO No. 107) passed on June 26, 1957. Developments in
international law made it appropriate to adopt new international standards on
indigenous peoples "with a view to removing the assimilationist orientation of
the earlier standards," and recognizing the aspirations of these peoples to
exercise control over their own institutions, ways of life and economic
development."250
CONCLUSION
The struggle of the Filipinos throughout colonial history had been plagued by
ethnic and religious differences. These differences were carried over and
magnified by the Philippine government through the imposition of a national
legal order that is mostly foreign in origin or derivation.251 Largely unpopulist,
the present legal system has resulted in the alienation of a large sector of
society, specifically, the indigenous peoples. The histories and cultures of the
indigenes are relevant to the evolution of Philippine culture and are vital to the
understanding of contemporary problems.252 It is through the IPRA that an
attempt was made by our legislators to understand Filipino society not in terms
of myths and biases but through common experiences in the course of history.
The Philippines became a democracy a centennial ago and the decolonization
process still continues. If the evolution of the Filipino people into a democratic
society is to truly proceed democratically, i.e., if the Filipinos as a whole are to
participate fully in the task of continuing democratization, 253 it is this Court's
duty to acknowledge the presence of indigenous and customary laws in the
country and affirm their co-existence with the land laws in our national legal
system.
With the foregoing disquisitions, I vote to uphold the constitutionality of the
Indigenous Peoples Rights Act of 1997.
G.R. No. 130716 December 9, 1998
FRANCISCO I. CHAVEZ, petitioner,
vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) and
MAGTANGGOL GUNIGUNDO (in his capacity as chairman of the PCGG),
respondents, GLORIA A. JOPSON, CELNAN A. JOPSON, SCARLET A.
JOPSON, and TERESA A. JOPSON, petitioners-in-intervention.
PANGANIBAN, J.:
Petitioner asks this Court to define the nature and the extent of the people's
constitutional right to information on matters of public concern. Does this right
include access to the terms of government negotiations prior to their
consummation or conclusion? May the government, through the Presidential
Commission on Good Government (PCGG), be required to reveal the
proposed terms of a compromise agreement with the Marcos heirs as regards
their alleged ill-gotten wealth? More specifically, are the "General Agreement"
and "Supplemental Agreement," both dated December 28, 1993 and executed
between the PCGG and the Marcos heirs, valid and binding?
The Case
These are the main questions raised in this original action seeking (1) to
prohibit and "[e]njoin respondents [PCGG and its chairman] from privately
entering into, perfecting and/or executing any greement with the heirs of the
late President Ferdinand E. Marcos . . . relating to and concerning the
properties and assets of Ferdinand Marcos located in the Philippines and/or
abroad — including the so-called Marcos gold hoard"; and (2) to "[c]ompel
respondent[s] to make public all negotiations and agreement, be they ongoing
or perfected, and all documents related to or relating to such negotiations and
agreement between the PCGG and the Marcos heirs." 1
The Facts
Petitioner Francisco I. Chavez, as "taxpayer, citizen and former government
official who initiated the prosecution of the Marcoses and their cronies who
committed unmitigated plunder of the public treasury and the systematic
subjugation of the country's economy," alleges that what impelled him to bring
this action were several news reports 2 bannered in a number of broadsheets
sometime in September 1997. These news items referred to (1) the alleged
discovery of billions of dollars of Marcos assets deposited in various coded
accounts in Swiss banks; and (2) the reported execution of a compromise,
between the government (through PCGG) and the Marcos heirs, on how to
split or share these assets.
Petitioner, invoking his constitutional right to information 3 and the correlative
duty of the state to disclose publicly all its transactions involving the national
interest,4 demands that respondents make public any and all negotiations and
agreements pertaining to PCGG's task of recovering the Marcoses' ill-gotten
wealth. He claims that any compromise on the alleged billions of ill-gotten
wealth involves an issue of "paramount public interest," since it has a
"debilitating effect on the country's economy" that would be greatly prejudicial
to the national interest of the Filipino people. Hence, the people in general
have a right to know the transactions or deals being contrived and effected by
the government.
Respondents, on the other hand, do not deny forging a compromise
agreement with the Marcos heirs. They claim, though, that petitioner's action is
premature, because there is no showing that he has asked the PCGG to
disclose the negotiations and the Agreements. And even if he has, PCGG may
not yet be compelled to make any disclosure, since the proposed terms and
conditions of the Agreements have not become effective and binding.
Respondents further aver that the Marcos heirs have submitted the subject
Agreements to the Sandiganbayan for its approval in Civil Case No. 141,
entitled Republic v. Heirs of Ferdinand E. Marcos, and that the Republic
opposed such move on the principal grounds that (1) said Agreements have
not been ratified by or even submitted to the President for approval, pursuant
to Item No. 8 of the General Agreement; and (2) the Marcos heirs have failed
to comply with their undertakings therein, particularly the collation and
submission of an inventory of their assets. The Republic also cited an April 11,
1995 Resolution in Civil Case No. 0165, in which the Sandiganbayan
dismissed a similar petition filed by the Marcoses' attorney-in-fact.
Furthermore, then President Fidel V. Ramos, in his May 4, 1998
Memorandum 5 to then PCGG Chairman Magtanggol Gunigundo, categorically
stated:
This is to reiterate my previous position embodied in the Palace
Press Release of 6 April 1995 that I have not authorized you to
approve the Compromise Agreements of December 28, 1993
or any agreement at all with the Marcoses, and would have
disapproved them had they been submitted to me.
The Full Powers of Attorney of March 1994 and July 4, 1994,
did not authorize you to approve said Agreements, which I
reserve for myself as President of the Republic of the
Philippines.
The assailed principal Agreement 6 reads:
GENERAL AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement entered into this 28th day of December, 1993,
by and between —
The Republic of the Philippines, through the
Presidential Commission on Good Government
(PCGG), a governmental agency vested with
authority defined under Executive Orders Nos.
1, 2 and 14, with offices at the philcomcen
Building, Pasig, Metro Manila, represented by
its Chairman referred to as FIRST PARTY,
— and —
Estate of Ferdinand E. Marcos, represented by
Imelda Romualdez Marcos and Ferdinand R.
Marcos, Jr., all of legal age, and with address at
c/o No. 154 Lopez Rizal St., Mandaluyong,
Metro Manila, and Imelda Romualdez Marcos,
Imee Marcos Manotoc, Ferdinand E. Marcos,
Jr., and Irene Marcos Araneta, hereinafter
collectively referred to as the PRIVATE PARTY.
W I T N E S S E T H:
WHEREAS, the PRIVATE PARTY has been impelled by their thereof, namely: (a) real estate;
sense of nationalism and love of country and of the entire (b) jewelry; (c) paintings and
Filipino people, and their desire to set up a foundation and other works of art; (d) securities;
finance impact projects like installation of power plants in (e) funds on deposit; (f)
selected rural areas and initiation of other community projects precious metals, if any, and (g)
for the empowerment of the people; miscellaneous assets or assets
which could not appropriately
WHEREAS, the FIRST PARTY has obtained a judgment from fall under any of the preceding
the Swiss Federal Tribunal of December 21, 1990, that the classification. The list shall be
$356 million belongs in principle to the Republic of the based on the full disclosure of
Philippines provided certain conditionalities are met, but even the PRIVATE PARTY to insure
after 7 years, the FIRST PARTY has not been able to procure its accuracy.
a final judgment of conviction against the PRIVATE PARTY;
2. Based on the inventory, the
WHEREAS, the FIRST PARTY is desirous of avoiding a long- FIRST PARTY shall determine
drawn out litigation which, as proven by the past 7 years, is which shall be ceded to the
consuming money, time and effort, and is counter-productive FIRST PARTY, and which shall
and ties up assets which the FIRST PARTY could otherwise be assigned to/retained by the
utilize for its Comprehensive Agrarian Reform Program, and PRIVATE PARTY. The assets
other urgent needs; of the PRIVATE PARTY shall
be net of and exempt from, any
WHEREAS, His Excellency, President Fidel V. Ramos, has form of taxes due the Republic
adopted a policy of unity and reconciliation in order to bind the of the Philippines. However,
nation's wounds and start the process of rebuilding this nation considering the unavailability of
as it goes on to the twenty-first century; all pertinent and relevant
documents and information as
to balances and ownership, the
WHEREAS, this Agreement settles all claims and
actual specification of assets to
counterclaims which the parties may have against one another,
be retained by the PRIVATE
whether past, present, or future, matured or inchoate.
PARTY shall be covered by
supplemental agreements which
NOW, THEREFORE, for and in consideration of the mutual shall form part of this
covenants set forth herein, the parties agree as follows: Agreement.

1. The parties will collate all 3. Foreign assets which the

assets presumed to be owned
by, or held by other parties for
the benefit of, the PRIVATE
PARTY for purposes of
determining the totality of the
assets covered by the
settlement. The subject assets
shall be classified by the nature
PRIVATE PARTY shall fully
disclose but which are held by
trustees, nominees, agents or
foundations are hereby waived
over by the PRIVATE PARTY in
favor of the FIRST PARTY. For
this purpose, the parties shall
cooperate in taking the
appropriate action, judicial
and/or extrajudicial, to recover
the same for the FIRST PARTY.
4. All disclosures of assets
made by the PRIVATE PARTY
shall not be used as evidence
by the FIRST PARTY in any
criminal, civil, tax or
administrative case, but shall be
valid and binding against said
PARTY for use by the FIRST
PARTY in withdrawing any
account and/or recovering any
asset. The PRIVATE PARTY
withdraws any objection to the
withdrawal by and/or release to
the FIRST PARTY by the Swiss
banks and/or Swiss authorities
of the $356 million, its accrued
interests, and/or any other
account; over which the
PRIVATE PARTY waives any
right, interest or participation in
favor of the FIRST PARTY.
However, any withdrawal or
release of any account
aforementioned by the FIRST
PARTY shall be made in the
presence of any authorized
representative of the PRIVATE
PARTY.
5. The trustees, custodians,
safekeepers, depositaries,
agents, nominees,
administrators, lawyers, or any
other party acting in similar
capacity in behalf of the
PRIVATE PARTY are hereby
informed through this General
Agreement to insure that it is
fully implemented and this shall
serve as absolute authority from
both parties for full disclosure to
the FIRST PARTY of said
assets and for the FIRST
PARTY to withdraw said
account and/or assets and any
other assets which the FIRST
PARTY on its own or through
the help of the PRIVATE
PARTY/their trustees, etc., may
discover.
6. Any asset which may be
discovered in the future as
belonging to the PRIVATE
PARTY or is being held by
another for the benefit of the
PRIVATE PARTY and which is
not included in the list per No. 1
for whatever reason shall
automatically belong to the
FIRST PARTY, and the
PRIVATE PARTY in
accordance with No. 4 above,
waives any right thereto.
7. This Agreement shall be
binding on and inure to the
benefit of, the parties and their
respective legal representatives,
successors and assigns and
shall supersede any other prior
agreement.
8. The PARTIES shall submit
this and any other implementing
Agreements to the President of
the Philippines for approval. In
the same manner, the PRIVATE
PARTY shall provide the FIRST
PARTY assistance by way of
testimony or deposition on any
 information it may have that ESTATE OF
could shed light on the cases FERDINAND E.
being pursued by the FIRST MARCOS,
PARTY against other parties.
The FIRST PARTY shall desist IMELDA R.
from instituting new suits MARCOS, MA.
already subject of this IMELDA
Agreement against the
PRIVATE PARTY and cause MARCOS-
the dismissal of all other cases MANOTOC,
pending in the Sandiganbayan FERDINAND R.
and in other courts.
MARCOS, JR.,
9. In case of violation by the & IRENE
PRIVATE PARTY of any of the MARCOS-
conditions herein contained, the
PARTIES shall be restored
ARANETA
automatically to the status
quo ante the signing of this
Agreement. By:

For purposes of this Agreement, the PRIVATE PARTY shall be [Sgd.] IMELDA
represented by Atty. Simeon M. Mesina, Jr., as their only ROMUALDEZ-
Attorney-in-Fact. MARCOS

IN WITNESS WHEREOF, the parties have signed this [Sgd.] MA.

instrument this 28th day of December, 1993, in Makati, Metro IMELDA
Manila. MARCOS-
MANOTOC
PRESIDENTIAL COMMISSION ON
FERDINAND R.
MARCOS, JR.7
GOOD GOVERNMENT
[Sgd.] IRENE
By:
MARCOS-
ARANETA
[Sgd.] MAGTANGGOL C. GUNIGUNDO
Assisted by:
Chairman
[Sgd.] ATTY.
SIMEON M.
MESINA, JR.
 C Estate of Ferdinand E. Marcos, represented by
o Imelda Romualdez Marcos and Ferdinand R.
u Marcos, Jr., all of legal age, and with address at
n c/o No. 154 Lopez Rizal St., Mandaluyong,
s Metro Manila, and Imelda Romualdez Marcos,
e Imee Marcos Manotoc, Ferdinand E. Marcos,
l Jr., and Irene Marcos Araneta, hereinafter
& collectively referred to as the PRIVATE PARTY.
A
tt W I T N E S S E T H:
o
r The parties in this case entered into a General
n Agreement dated Dec. 28, 1993;
e
y
The PRIVATE PARTY expressly reserve their
-
right to pursue their interest and/or sue over
i
local assets located in the Philippines against
n
parties other than the FIRST PARTY.
-
F
a The parties hereby agree that all expenses
c related to the recovery and/or withdrawal of all
t assets including lawyers' fees, agents' fees,
nominees' service fees, bank charges, traveling
expenses and all other expenses related
Petitioner also denounces this supplement to the above Agreement:8
thereto shall be for the account of the PRIVATE
PARTY.
SUPPLEMENTAL AGREEMENT
In consideration of the foregoing, the parties hereby agree that
This Agreement entered into this 28th day of December, 1993, the PRIVATE PARTY shall be entitled to the equivalent of 25%
by and between — of the amount that may be eventually withdrawn from said $356
million Swiss deposits.
The Republic of the Philippines, through the
Presidential Commission on Good Government IN WITNESS WHEREOF, the parties have signed this
(PCGG), a governmental agency vested with instrument this 28th day of December, 1993, in Makati, Metro
authority defined under Executive Orders Nos. Manila.
1, 2 and 14, with offices at the Philcomcen
Building, Pasig, Metro Manila, represented by
PRESIDENTIAL COMMISSION ON
its Chairman Magtanggol C. Gunigundo,
hereinafter referred to as the FIRST PARTY,
GOOD GOVERNMENT
— and —
By:
[Sgd.] MAGTANGGOL C. GUNIGUNDO Acting on a motion of petitioner, the Court issued a Temporary Restraining
Order 10 dated March 23, enjoining respondents, their agents and/or
Chairman representatives from "entering into, or perfecting and/or executing any
agreement with the heirs of the late President Ferdinand E. Marcos relating to
ESTATE OF FERDINAND E. and concerning their ill-gotten wealth."
MARCOS,
Issues
IMELDA R. MARCOS, MA.
IMELDA The Oral Argument, held on March 16, 1998, focused on the following issues:

MARCOS-MANOTOC, (a) Procedural:

FERDINAND R.
(1) Whether or not the petitioner has the personality or legal
MARCOS, JR., & IRENE standing to file the instant petition; and
MARCOS-
(2) Whether or not this Court is the proper court before which
ARANETA this action may be filed.

By: (b) Substantive:

[Sgd.] IMELDA ROMUALDEZ- (1) Whether or not this Court could require the PCGG to
MARCOS disclose to the public the details of any agreement, perfected or
not, with the Marcoses; and
[Sgd.] MA. IMELDA MARCOS-
MANOTOC (2) Whether or not there exist any legal restraints against a
compromise agreement between the Marcoses and the PCGG
FERDINAND R. MARCOS, JR.9 relative to the Marcoses' ill-gotten wealth. 11

[Sgd.] IRENE MARCOS- After their oral presentations, the parties filed their respective memoranda.
ARANETA
On August 19, 1998, Gloria, Celnan, Scarlet and Teresa, all surnamed Jopson,
Assisted by: filed before the Court a Motion for Intervention, attaching thereto their Petition
in Intervention. They aver that they are "among the 10,000 claimants whose
right to claim from the Marcos Family and/or the Marcos Estate is recognized
[Sgd.] ATTY. SIMEON M.
by the decision in In re Estate of Ferdinand Marcos, Human Rights Litigation,
MESINA, JR.
Maximo Hilao, et al., Class Plaintiffs No. 92-15526, U.S. Court of Appeals for
the 9th Circuit US App. Lexis 14796, June 16, 1994 and the Decision of the
Counsel & Swiss Supreme Court of December 10, 1997." As such, they claim to have
Attorney-in-Fact personal and direct interest in the subject matter of the instant case, since a
distribution or disposition of the Marcos properties may adversely affect their
legitimate claims. In a minute Resolution issued on August 24, 1998, the Court
granted their motion to intervene and required the respondents to comment
thereon. The September 25, 1998 Comment 12 of the solicitor general on said
motion merely reiterated his aforecited arguments against the main petition. 13
The Court's Ruling
The petition id imbued with merit.
First Procedural Issue:
Petitioner's Standing
Petitioner, on the one hand, explains that as a taxpayer and citizen, he has the
legal personality to file the instant petition. He submits that since ill-gotten
wealth "belongs to the Filipino people and [is], in truth hand in fact, part of the
public treasury," any compromise in relation to it would constitute a diminution
of the public funds, which can be enjoined by a taxpayer whose interest is for a
full, if not substantial, recovery of such assets.
Besides, petitioner emphasize, the matter of recovering the ill-gotten wealth of
the Marcoses is an issue "of transcendental importance the public." He asserts
that ordinary taxpayers have a right to initiate and prosecute actions
questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are "of paramount public interest;" and if
they "immeasurably affect the social, economic, and moral well-being of the
people."
Moreover, the mere fact that he is a citizen satisfies the requirement of
personal interest, when the proceeding involves the assertion of a public
right, 14 such as in this case. He invokes several decisions 15 of this Court which
have set aside the procedural matter of locus standi, when the subject of the
case involved public interest.
On the other hand, the solicitor general, on behalf of respondents, contends
that petitioner has no standing to institute the present action, because no
expenditure of public funds is involved and said petitioner has no actual
interest in the alleged agreement. Respondents further insist that the instant
petition is premature, since there is no showing that petitioner has requested
PCGG to disclose any such negotiations and agreements; or that, if he has,
the Commission has refused to do so.
Indeed, the arguments cited by petitioner constitute the controlling decisional
rule as regards his legal standing to institute the instant petition. Access to
public documents and records is a public right, and the real parties in interest
are the people themselves. 16
In Tañada v. Tuvera, 17 the Court asserted that when the issue concerns a
public a right and the object of mandamus is to obtain the enforcement of a
public duty, the people are regarded as the real parties in interest; and
because it is sufficient that petitioner is a citizen and as such is interested in
the execution of the laws, he need not show that he has any legal or special
interest in the result of the action. 18 In the aforesaid case, the petitioners
sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, 19 in
connection with the rule that laws in order to be valid and enforceable must be
published in the Official Gazette or otherwise effectively promulgated. In ruling
for the petitioners' legal standing, the Court declared that the right they sought
to be enforced "is a public right recognized by no less than the fundamental
law of the land."
Legaspi v. Civil Service Commission, 20 while reiterating Tañada, further
declared that "when a mandamus proceeding involves the assertion of a public
right, the requirement of personal interest is satisfied by the mere fact that
petitioner is a citizen and, therefore, part of the general 'public' which
possesses the right." 21
Further, in Albano v. Reyes, 22 we said that while expenditure of public funds
may not have been involved under the questioned contract for the
development, the management and the operation of the Manila International
Container Terminal, "public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic development of the
country and the magnitude of the financial consideration involved." We
concluded that, as a consequence, the disclosure provision in the Constitution
would constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to
information and access to official records, documents and papers — a right
guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a
former solicitor general, is a Filipino citizen. Because of the satisfaction of the
two basic requisites laid down by decisional law to sustain petitioner's legal
standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino
citizen, we rule that the petition at bar should be allowed.
In any event, the question on the standing of Petitioner Chavez is rendered
moot by the intervention of the Jopsons, who are among the legitimate
claimants to the Marcos wealth. The standing of the Jopsons is not seriously
contested by the solicitor general. Indeed, said petitioners-intervenors have a
legal interest in the subject matter of the instant case, since a distribution or
disposition of the Marcoses' ill-gotten properties may adversely affect the
satisfaction of their claims.
Second Procedural Issue:
The Court's Jurisdiction
Petitioner asserts that because this petition is an original action
for mandamus and one that is not intended to delay any proceeding in the
Sandiganbayan, its having been filed before this Court was proper. He invokes
Section 5, Article VIII of the Constitution, which confers upon the Supreme
Court original jurisdiction over petitions for prohibition and mandamus.
The solicitor general, on the other hand, argues that the petition has been
erroneously brought before this Court, since there is neither a justiciable
controversy nor a violation of petitioner's rights by the PCGG. He alleges that
the assailed agreements are already the very lis mota in Sandiganbayan Civil
Case No. 0141, which has yet to dispose of the issue; thus, this petition is
premature. Furthermore, respondents themselves have opposed the Marcos
heirs' motion, filed in the graft court, for the approval of the subject
Agreements. Such opposition belies petitioner's claim that the government,
through respondents, has concluded a settlement with the Marcoses as
regards their alleged ill-gotten assets.
In Tañada and Legaspi, we upheld therein petitioners' resort to
a mandamus proceeding, seeking to enforce a public right as well as to
compel performance of a public duty mandated by no less than the
fundamental law. 23 Further, Section 5, Article VIII of the Constitution, expressly
confers upon the Supreme Court original jurisdiction over petitions
for certiorari, prohibition, mandamus, quo warranto and habeas corpus.
Respondents argue that petitioner should have properly sought relief before
the Sandiganbayan, particularly in Civil Case No. 0141, in which the
enforcement of the compromise Agreements is pending resolution. There may
seem to be some merit in such argument, if petitioner is merely seeking to
enjoin the enforcement of the compromise and/or to compel the PCGG to
disclose to the public the terms contained in said Agreements. However,
petitioner is here seeking the public disclose of "all negotiations and
agreement, be they ongoing or perfected, and documents related to or relating
to such negotiations and agreement between the PCGG and the Marcos
heirs."
In other words, this petition is not confined to the Agreements that have
already been drawn, but likewise to any other ongoing or future undertaking
towards any settlement on the alleged Marcos loot. Ineluctably, the core issue
boils down to the precise interpretation, in terms of scope, of the twin
constitutional provisions on "public transactions." This broad and prospective
relief sought by the instant petition brings it out of the realm of Civil Case No.
0141.
First Substantive Issue:
Public Disclosure of Terms of
Any Agreement, Perfected or Not
In seeking the public disclosure of negotiations and agreements pertaining to a
compromise settlement with the Marcoses as regards their alleged ill-gotten
wealth, petitioner invokes the following provisions of the Constitution:
Sec. 7 [Article III]. The right of the people to information on
matters of public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to official
acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be
provided by law.
Sec. 28 [Article II]. Subject to reasonable conditions prescribed
by law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
Respondents' opposite view is that the above constitutional provisions refer to
completed and operative official acts, not to those still being considered. As
regards the assailed Agreements entered into by the PCGG with the
Marcoses, there is yet no right of action that has accrued, because said
Agreements have not been approved by the President, and the Marcos heirs
have failed to fulfill their express undertaking therein. Thus, the Agreements
have not become effective. Respondents add that they are not aware of any
ongoing negotiation for another compromise with the Marcoses regarding their
alleged ill-gotten assets.
The "information" and the "transactions" referred to in the subject provisions of
the Constitution have as yet no defined scope and extent. There are no
specific laws prescribing the exact limitations within which the right may be
exercised or the correlative state duty may be obliged. However, the following
are some of the recognized restrictions: (1) national security matters and
intelligence information, (2) trade secrets and banking transactions, (3)
criminal matters, and (4) other confidential information.
Limitations to the Right:
(1) National Security Matters
At the very least, this jurisdiction recognizes the common law holding that
there is a governmental privilege against public disclosure with respect to state
secrets regarding military, diplomatic and other national security matters. 24 But
where there is no need to protect such state secrets, the privilege may not be
invoked to withhold documents and other information, 25 provided that they are
examined "in strict confidence" and given "scrupulous protection."
Likewise, information on inter-government exchanges prior to the conclusion of
treaties and executive agreements may be subject to reasonable safeguards
for the sake of national interest. 26
(2) Trade Secrets and
Banking Transactions
The drafters of the Constitution also unequivocally affirmed that, aside from
national security matters and intelligence information, trade or industrial
secrets (pursuant to the Intellectual Property Code 27 and other related laws) as
well as banking transactions (pursuant to the Secrecy of Bank Deposits Act 28)
are also exempted from compulsory disclosure. 29
(3) Criminal Matters
Also excluded are classified law enforcement matters, such as those relating
to the apprehension, the prosecution and the detention of criminals, 30 which
courts may nor inquire into prior to such arrest, detention and prosecution.
Efforts at effective law enforcement would be seriously jeopardized by free
public access to, for example, police information regarding rescue operations,
the whereabouts of fugitives, or leads on covert criminal activities.
(4) Other Confidential
Information
The Ethical Standards Act 31 further prohibits public officials and employees
from using or divulging "confidential or classified information officially known to
them by reason of their office and not made available to the public." 32
Other acknowledged limitations to information access include diplomatic
correspondence, closed door Cabinet meetings and executive sessions of
either house of Congress, as well as the internal deliberations of the Supreme
Court. 33
Scope: Matters of Public Concern and
Transactions Involving Public Interest
In Valmonte v. Belmonte Jr., 34 the Court emphasized that the information
sought must be "matters of public concern," access to which may be limited by
law. Similarly, the state policy of full public disclosure extends only to
"transactions involving public interest" and may also be "subject to reasonable
conditions prescribed by law." As to the meanings of the terms "public interest"
and "public concern," the Court, in Legaspi v. Civil Service
Commission, 35 elucidated:
In determining whether or not a particular information is of
public concern there is no rigid test which can be applied.
"Public concern" like "public interest" is a term that eludes
exact definition. Both terms embrace a broad spectrum of
subjects which the public may want to know, either because
these directly affect their lives, or simply because such matters
naturally arouse the interest of an ordinary citizen. In the final
analysis, it is for the courts to determine on a case by case
basis whether the matter at issue is of interest or importance,
as it relates to or affects the public.
Considered a public concern in the above-mentioned case was the "legitimate
concern of citizens to ensure that government positions requiring civil service
eligibility are occupied only by persons who are eligibles." So was the need to
give the general public adequate notification of various laws that regulate and
affect the actions and conduct of citizens, as held in Tañada. Likewise did the
"public nature of the loanable funds of the GSIS and the public office held by
the alleged borrowers (members of the defunct Batasang Pambansa)" qualify
the information sought in Valmonte as matters of public interest and concern.
In Aquino-Sarmiento v. Morato, 36 the Court also held that official acts of public
officers done in pursuit if their official functions are public in character; hence,
the records pertaining to such official acts and decisions are within the ambit of
the constitutional right of access to public records.
Under Republic Act No. 6713, public officials and employees are mandated to
"provide information on their policies and procedures in clear and
understandable language, [and] ensure openness of information, public
consultations and hearings whenever appropriate . . .," except when
"otherwise provided by law or when required by the public interest." In
particular, the law mandates free public access, at reasonable hours, to the
annual performance reports of offices and agencies of government and
government-owned or controlled corporations; and the statements of assets,
liabilities and financial disclosures of all public officials and employees. 37
In general, writings coming into the hands of public officers in connection with
their official functions must be accessible to the public, consistent with the
policy of transparency of governmental affairs. This principle is aimed at
affording the people an opportunity to determine whether those to whom they
have entrusted the affairs of the government are honesty, faithfully and
competently performing their functions as public servants. 38 Undeniably, the
essence of democracy lies in the free flow of thought; 39 but thoughts and ideas
must be well-informed so that the public would gain a better perspective of vital
issues confronting them and, thus, be able to criticize as well as participate in
the affairs of the government in a responsible, reasonable and effective
manner. Certainly, it is by ensuring an unfettered and uninhibited exchange of
ideas among a well-informed public that a government remains responsive to
the changes desired by the people. 40
The Nature of the Marcoses'
Alleged Ill-Gotten Wealth
We now come to the immediate matter under consideration.
Upon the departure from the country of the Marcos family and their cronies in
February 1986, the new government headed by President Corazon C. Aquino
was specifically mandated to "[r]ecover ill-gotten properties amassed by the
leaders and supporters of the previous regime and [to] protect the interest of
the people through orders of sequestration or freezing of assets or
accounts." 41 Thus, President Aquino's very first executive orders (which
partook of the nature of legislative enactments) dealt with the recovery of these
alleged ill-gotten properties.
Executive Order No. 1, promulgated on February 28, 1986, only two (2) days
after the Marcoses fled the country, created the PCGG which was primarily
tasked to assist the President in the recovery of vast government resources
allegedly amassed by former President Marcos, his immediate family, relatives
and close associates both here and abroad.
Under Executive Order No. 2, issued twelve (12) days later, all persons and
entities who had knowledge or possession of ill-gotten assets and properties
were warned and, under pain of penalties prescribed by law, prohibited from
concealing, transferring or dissipating them or from otherwise frustrating or
obstructing the recovery efforts of the government.
On May 7, 1986, another directive (EO No. 14) was issued giving additional
powers to the PCGG which, taking into account the overriding considerations
of national interest and national survival, required it to achieve expeditiously
and effectively its vital task of recovering ill-gotten wealth.
With such pronouncements of our government, whose authority emanates
from the people, there is no doubt that the recovery of the Marcoses' alleged
ill-gotten wealth is a matter of public concern and imbued with public
interest. 42 We may also add that "ill-gotten wealth," by its very nature, assumes
a public character. Based on the aforementioned Executive Orders, "ill-gotten
wealth" refers to assets and properties purportedly acquired, directly or
indirectly, by former President Marcos, his immediate family, relatives and
close associates through or as a result of their improper or illegal use of
government funds or properties; or their having taken undue advantage of their
public office; or their use of powers, influences or relationships, "resulting in
their unjust enrichment and causing grave damage and prejudice to the
Filipino people and the Republic of the Philippines." Clearly, the assets and
properties referred to supposedly originated from the government itself. To all
intents and purposes, therefore, they belong to the people. As such, upon
reconveyance they will be returned to the public treasury, subject only to the
satisfaction of positive claims of certain persons as may be adjudged by
competent courts. Another declared overriding consideration for the
expeditious recovery of ill-gotten wealth is that it may be used for national
economic recovery.
We believe the foregoing disquisition settles the question of whether petitioner
has a right to respondents' disclosure of any agreement that may be arrived at
concerning the Marcoses' purported ill-gotten wealth.
Access to Information
on Negotiating Terms
But does the constitutional provision likewise guarantee access to information
regarding ongoing negotiations or proposals prior to the final agreement? This
same clarification was sought and clearly addressed by the constitutional
commissioners during their deliberations, which we quote hereunder: 43
MR. SUAREZ. And when we say "transactions" which should
be distinguished from contracts, agreements, or treaties or
whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract
itself?
MR. OPLE. The "transactions" used here, I suppose, is generic
and, therefore, it can cover both steps leading to a contract,
and already a consummated contract, Mr. Presiding Officer.
MR. SUAREZ. This contemplates inclusion of negotiations
leading to the consummation of the transaction?
MR. OPLE. Yes, subject to reasonable safeguards on the
national interest.
Considering the intent of the Constitution, we believe that it is incumbent upon
the PCGG and its officers, as well as other government representatives, to
disclose sufficient public information on any proposed settlement they have
decided to take up with the ostensible owners and holders of ill-gotten wealth.
Such information, though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency recommendations
or communications 44 during the stage when common assertions are still in the
process of being formulated or are in the "exploratory" stage. There is a need,
of course, to observe the same restrictions on disclosure of information in
general, as discussed earlier — such as on matters involving national security,
diplomatic or foreign relations, intelligence and other classified information.
Second Substantive Issue:
Legal Restraints on a Marcos-PCGG Compromise
Petitioner lastly contends that any compromise agreement between the
government and the Marcoses will be a virtual condonation of all the alleged
wrongs done by them, as well as an unwarranted permission to commit graft
and corruption.
Respondents, for their part, assert that there is no legal restraint on entering
into a compromise with the Marcos heirs, provided the agreement does not
violate any law.
Prohibited Compromises
In general, the law encourages compromises in civil cases, except with regard
to the following matters: (1) the civil status of persons, (2) the validity of a
marriage or a legal separation, (3) any ground for legal separation, (4) future
support, (5) the jurisdiction of courts, and (6) future legitimate. 45 And like any
other contract, the terms and conditions of a compromise must not be contrary
to law, morals, good customs, public policy or public order. 46 A compromise is
binding and has the force of law between the parties, 47 unless the consent of a
party is vitiated — such as by mistake, fraud, violence, intimidation or undue
influence — or when there is forgery, or if the terms of the settlment are so
palpably unconscionable. In the latter instances, the agreement may be
invalidated by the courts. 48
Effect of Compromise
on Civil Actions
One of the consequences of a compromise, and usually its primary object, is to
avoid or to end a litigation. 49 In fact, the law urges courts to persuade the
parties in a civil case to agree to a fair settlement. 50 As an incentive, a court
may mitigate damages to be paid by a losing party who shows a sincere desire
to compromise. 51
In Republic & Campos Jr. v. Sandiganbayan, 52 which affirmed the grant by the
PCGG of civil and criminal immunity to Jose Y. Campos and the family, the
Court held that in the absence an express prohibition, the rule on compromises
in civil actions under the Civil Code is applicable to PCGG cases. Such
principle is pursuant to the objectives of EO No. 14 particularly the just and
expeditious recovery of ill-gotten wealth, so that it may be used to hasten
economic recovery. The same principle was upheld in Benedicto v. Board of
Administrators of Television Stations RPN, BBC and IBC 53 and Republic v.
Benedicto, 54 which ruled in favor of the validity of the PCGG compromise
agreement with Roberto S. Benedicto.
Immunity from
Criminal Prosecution
However, any compromise relating to the civil liability arising from an offense
does not automatically terminate the criminal proceeding against or extinguish
the criminal liability of the malefactor. 55 While a compromise in civil suits is
expressly authorized by law, there is no similar general sanction as regards
criminal liability. The authority must be specifically conferred. In the present
case, the power to grant criminal immunity was confered on PCGG by Section
5 of EO No. 14, as amended by EO No. 14-A, whci provides:
Sec. 5. The President Commission on Good Government is
authorized to grant immunity from criminal prosecution to any
person who provides information or testifies in any investigation
conducted by such Commission to establish the unlawful
manner in which any respondent, defendant or accused has
acquired or accumulated the property or properties in question
in any case where such information or testimony is necessary
to ascertain or prove the latter's guilt or his civil liability. The
immunity thereby granted shall be continued to protect the
witness who repeats such testimony before the Sandiganbayan
when required to do so by the latter or by the Commission.
The above provision specifies that the PCGG may exercise such authority
under these conditions: (1) the person to whom criminal immunity is granted
provides information or testifies in an investigation conducted by the
Commission; (2) the information or testimony pertains to the unlawful manner
in which the respondent, defendant or accused acquired or accumulated ill-
gotten property; and (3) such information or testimony is necessary to
ascertain or prove guilt or civil liability of such individual. From the wording of
the law, it can be easily deducted that the person referred to is a witness in the
proceeding, not the principal respondent, defendant or accused.
Thus, in the case of Jose Y. Campos, the grant of both civil and criminal
immunity to him and his family was "[i]n consideration of the full cooperation of
Mr. Jose Y. Campos [with] this Commission, his voluntary surrender of the
properties and assets [—] disclosed and declared by him to belong to deposed
President Ferdinand E. Marcos [—] to the Government of the Republic of the
Philippines[;] his full, complete and truthful disclosures[;] and his commitment
to pay a sum of money as determined by the Philippine
Government." 56 Moreover, the grant of criminal immunity to the Camposes and
the Benedictos was limited to acts and omissions prior to February 25, 1996.
At the time such immunity was granted, no criminal cases have yet been filed
against them before the competent court.
Validity of the PCGG-Marcos
Compromise Agreements
Going now to the subject General and Supplemental Agreements between the
PCGG and the Marcos heirs, a cursory perusal thereof reveals serious legal
flaws. First, the Agreements do not conform to the above requirements of EO
Nos. 14 and 14-A. We believe that criminal immunity under Section 5 cannot
be granted to the Marcoses, who are the principal defendants in the spate of
ill-gotten wealth cases now pending before the Sandiganbayan. As stated
earlier, the provision is applicable mainly to witnesses who provide information
or testify against a respondent, defendant or accused in an ill-gotten wealth
case.
While the General Agreement states that the Marcoses "shall provide the
[government] assistance by way of testimony or deposition on any information
[they] may have that could shed light on the cases being pursued by the
[government] against other parties," 57 the clause does not fully comply with the
law. Its inclusion in the Agreement may have been only an afterthought,
conceived in pro forma compliance with Section 5 of EO No. 14, as amended.
There is no indication whatsoever that any of the Marcos heirs has indeed
provided vital information against any respondent or defendant as to the
manner in which the latter may have unlawfully acquired public property.
Second, under Item No. 2 of the General Agreement, the PCGG commits to
exempt from all forms of taxes the properties to be retained by the Marcos
heirs. This is a clear violation of the Construction. The power to tax and to
grant tax exemptions is vested in the Congress and, to a certain extent, in the
local legislative bodies. 58 Section 28 (4), Article VI of the Constitution,
specifically provides: "No law granting any tax exemption shall be passed
without the concurrence of a majority of all the Member of the Congress." The
PCGG has absolutely no power to grant tax exemptions, even under the cover
of its authority to compromise ill-gotten wealth cases.
Even granting that Congress enacts a law exempting the Marcoses form
paying taxes on their properties, such law will definitely not pass the test of the
equal protection clause under the Bill of Rights. Any special grant of tax
exemption in favor only of the Marcos heirs will constitute class legislation. It
will also violate the constitutional rule that "taxation shall be uniform and
equitable." 59
Neither can the stipulation be construed to fall within the power of the
commissioner of internal revenue to compromise taxes. Such authority may be
exercised only when (1) there is reasonable doubt as to the validity of the
claim against the taxpayer, and (2) the taxpayer's financial position
demonstrates a clear inability to pay. 60 Definitely, neither requisite is present in
the case of the Marcoses, because under the Agreement they are effectively
conceding the validity of the claims against their properties, part of which they
will be allowed to retain. Nor can the PCGG grant of tax exemption fall within
the power of the commissioner to abate or cancel a tax liability. This power can
be exercised only when (1) the tax appears to be unjustly or excessively
assessed, or (2) the administration and collection costs involved do not justify
the collection of the tax due. 61 In this instance, the cancellation of tax liability is
done even before the determination of the amount due. In any event, criminal
violations of the Tax Code, for which legal actions have been filed in court or in
which fraud is involved, cannot be compromised. 62
Third, the government binds itself to cause the dismissal of all cases against
the Marcos heirs, pending before the Sandiganbayan and other court. 63 This is
a direct encroachment on judicial powers, particularly in regard to criminal
jurisdiction. Well-settled is the doctrine that once a case has been filed before
a court of competent jurisdiction, the matter of its dismissal or pursuance lies
within the full discretion and control of the judge. In a criminal case, the
manner in which the prosecution is handled, including the matter of whom to
present as witnesses, may lie within the sound discretion of the government
prosecution; 64 but the court decides, based on the evidence proffered, in what
manner it will dispose of the case. Jurisdiction, once acquired by the trial court,
is not lost despite a resolution, even by the justice secretary, to withdraw the
information or to dismiss the complaint. 65 The prosecution's motion to withdraw
or to dismiss is not the least binding upon the court. On the contrary,
decisional rules require the trial court to make its own evaluation of the merit of
the case, because granting such motion is equivalent to effecting a disposition
of the case itself. 66
Thus, the PCGG, as the government prosecutor of ill-gotten wealth cases,
cannot guarantee the dismissal of all such criminal cases against the
Marcoses pending in the courts, for said dismissal is not within its sole power
and discretion.
Fourth, the government also waives all claims and counterclaims, "whether
past, present, or future, matured or inchoate," against the Marcoses. 67 Again,
this ill-encompassing stipulation is contrary to law. Under the Civil Code, an
action for future fraud may not be waived. 68 The stipulation in the Agreement
does not specify the exact scope of future claims against the Marcoses that
the government thereby relinquishes. Such vague and broad statement may
well be interpreted to include all future illegal acts of any of the Marcos heirs,
practically giving them a license to perpetrate fraud against the government
without any liability at all. This is a palpable violation of the due process and
equal protection guarantees of the Constitution. It effectively ensconces the
Marcoses beyond the reach of the law. It also sets a dangerous precedent for
public accountability. It is a virtual warrant for public officials to amass public
funds illegally, since there is an open option to compromise their liability in
exchange for only a portion of their ill-gotten wealth.
Fifth, the Agreements do not provide for a definite or determinable period
within which the parties shall fulfill their respective prestations. It may take a
lifetime before the Marcoses submit an inventory of their total assets.
Sixth, the Agreements do not state with specificity the standards for
determining which assets shall be forfeited by the government and which shall
be retained by the Marcoses. While the Supplemental Agreement provides that
the Marcoses shall be entitled to 25 per cent of the $356 million Swiss deposits
(less government recovery expenses), such sharing arrangement pertains only
to the said deposits. No similar splitting scheme is defined with respect to the
other properties. Neither is there, anywhere in the Agreements, a statement of
the basis for the 25-75 percent sharing ratio. Public officers entering into an
arrangement appearing to be manifestly and grossly disadvantageous to the
government, in violation of the Ati-Graft and Corruption Practice Act, 69 invite
their indictment for corruption under the said law.
Finally, the absence of then President Ramos' approval of the principal
Agreement, an express condition therein, renders the compromise incomplete
and unenforceable. Nevertheless, as detailed above, even if such approval
were obtained, the Agreements would still not be valid.
From the foregoing disquisition, it is crystal clear to the Court that the General
and Supplemental Agreements, both dated December 28, 1993, which the
PCGG entered into with the Marcos heirs, are violative of the Constitution and
the laws aforementioned.
WHEREFORE, the petition is GRANTED. The General and Supplemental
Agreement dated December 28, 1993, which PCGG and the Marcos heirs
entered into are hereby declared NULL AND VOID for being contrary to law
and the Constitution. Respondent PCGG, its officers and all government
functionaries and officials who are or may be directly ot indirectly involved in
the recovery of the alleged ill-gotten wealth of the Marcoses and their
associates are DIRECTED to disclose to the public the terms of any proposed
compromise settlment, as well as the final agreement, relating to such alleged
ill-gotten wealth, in accordance with the discussions embodied in this Decision.
No pronouncement as to cost.
SO ORDERED.
Davide, Jr., C.J., Melo and Quisumbing, JJ., concur.
Vitug, J., Please see separate opinion.
Separate Opinions
VITUG, J., separate opinion;
In concur in the results, pro hac vice, for it is paramount that matters of
national interest deserve a proper place in any forum. The procedural rules in
the courts of law, like the locus standi of petitioner Francisco I. Chavez, the
propriety of the special legal action of mandamus used as a vehicle to reach
this Court on the issues involved and considered by the Court, as well as
kindred legal technicalities and nicety raised by respondents to thwart the
petition are no trickle matters, to be sure, but I do not see them to be cogent
reasons to deny to the Court its taking cognizance of the case.
It is a cardinal principle in constitutional adjudication that anyone who invokes
it has a personal and substantial interest on the dispute. 1 Jurisprudentially
there is either the lenient or the strict approach in the appreciation of legal
standing of legal standing. The liberal approach recognizes legal standing to
raise constitutional issues of nontraditional plaintiffs, such as taxpayers and
citizens, directly affecting them. 2 A developing trend appears to be towards a
narrow and exacting approach, requiring that a logical nexus must be shown
between the status asserted and the claim sought to be adjudicated in order to
ensure that one is the proper and appropriate party to invoke judicial power. 3
With respect to the right to information, it being a public right where the real
parties in interest are the people themselves in general 4 and where the only
recognized limitations is "public concern," it would seem that the framers of the
Constitution have favored the liberal approach. Rev. Fr. Joaquin Bernas, S.J.,
a member of the Constitutional Commission, observe:
The real problem, however, lies in determining what matters
are of public concern and what are not. Unwitingly perhaps, by
this provision the Constitution might have opened a Pandora's
box. For certainly every act of a public officer in the conduct of
the governmental process is a matter of public concern.
Jurisprudence in fact has said that "public concern," like "public
interest," eludes exact definition and embraces a broad
spectrum of subjects which the public may want to kno, either
because these directly affect their lives or simply because such
matters arouse the interest of an ordinary sitizen. 5
Corrolarily, there is need of preserving a certain degree of
confidentiality in matters involving national security and public
relations, to cite a few, 6 and until a balance is struck, the Court may be
constrained on occasions to accept an electric notion that frees itself
from the shackles of the trenchant requisites of locus standi.
The Presidential Commission on Good Government (PCGG) has a
limited life in carying out its tasks and time is running short. It is thus
 imperative that the Court must hold even now, and remind PCGG, that
it has indeed exceeded its bounds in entering into the General and
Supplemental Agreements. The agreements clearly suffer from
Constitutional and statutory infirmities, 7 to wit: (1) The agreements
contravene the statute in granting criminal immunity to the Marcos
heirs; 8 (2) PCGG's commitment to exempt from all form of taxes the
property to be retained the Marcos' heirs controverts the
Constitution; 9 and (3) the government's underatking to cause the
dismissal of all cases filed against the Marcoses pending before the
Sandiganbayan and other courts encroaches upon judicial powers. I
also see, like my other colleagues, too much vagueness on such items
as the period within which the parties shall fulfill their respective
prestations and the lack of appropriate standards for determining the
assets to be forfeited by the government and those to be retained by
the Marcoses.
In this respect, while there is legal posibility when the terms of a contract are
not totally invalidated and only those opposed to law, morals, good customs,
public order and public policy are rendered inefficacious, when however, the
assailed provisions can be seen to be of essence, like here, the agreement in
its entirety can be adversely affected. True, the validity or invalidity of a
contract is a matter that generally may not be passed upon in
a mandamus petitonn, for it is as if petitioner were seeking declaratory relief or
an advisory opinion from this Court over which it has no original
jurisdiction, 10 the immediacy and significance of the issues, neverthless, has
impelled the Court to rightly assume jurisdiction and to resolve the incidental,
albeit major, issues that evidently and continually vex the parties.
WHEREFORE, I vote to grant the petition.
Separate Opinions
VITUG, J., separate opinion;
In concur in the results, pro hac vice, for it is paramount that matters of
national interest deserve a proper place in any forum. The procedural rules in
the courts of law, like the locus standi of petitioner Francisco I. Chavez, the
propriety of the special legal action of mandamus used as a vehicle to reach
this Court on the issues involved and considered by the Court, as well as
kindred legal technicalities and nicety raised by respondents to thwart the
petition are no trickle matters, to be sure, but I do not see them to be cogent
reasons to deny to the Court its taking cognizance of the case.
It is a cardinal principle in constitutional adjudication that anyone who invokes
it has a personal and substantial interest on the dispute. 1 Jurisprudentially
there is either the lenient or the strict approach in the appreciation of legal
standing of legal standing. The liberal approach recognizes legal standing to
raise constitutional issues of nontraditional plaintiffs, such as taxpayers and
citizens, directly affecting them. 2 A developing trend appears to be towards a
narrow and exacting approach, requiring that a logical nexus must be shown
between the status asserted and the claim sought to be adjudicated in order to
ensure that one is the proper and appropriate party to invoke judicial power. 3
With respect to the right to information, it being a public right where the real
parties in interest are the people themselves in general 4 and where the only
recognized limitations is "public concern," it would seem that the framers of the
Constitution have favored the liberal approach. Rev. Fr. Joaquin Bernas, S.J.,
a member of the Constitutional Commission, observe:
The real problem, however, lies in determining what matters
are of public concern and what are not. Unwitingly perhaps, by
this provision the Constitution might have opened a Pandora's
box. For certainly every act of a public officer in the conduct of
the governmental process is a matter of public concern.
Jurisprudence in fact has said that "public concern," like "public
interest," eludes exact definition and embraces a broad
spectrum of subjects which the public may want to kno, either
because these directly affect their lives or simply because such
matters arouse the interest of an ordinary sitizen. 5
Corrolarily, there is need of preserving a certain degree of
confidentiality in matters involving national security and public
relations, to cite a few, 6 and until a balance is struck, the Court may be
constrained on occasions to accept an electric notion that frees itself
from the shackles of the trenchant requisites of locus standi.
The Presidential Commission on Good Government (PCGG) has a
limited life in carying out its tasks and time is running short. It is thus
imperative that the Court must hold even now, and remind PCGG, that
it has indeed exceeded its bounds in entering into the General and
Supplemental Agreements. The agreements clearly suffer from
Constitutional and statutory infirmities, 7 to wit: (1) The agreements
contravene the statute in granting criminal immunity to the Marcos
heirs; 8 (2) PCGG's commitment to exempt from all form of taxes the
property to be retained the Marcos' heirs controverts the
 Constitution; 9 and (3) the government's underatking to cause the G.R. No. 74930 February 13, 1989
dismissal of all cases filed against the Marcoses pending before the
Sandiganbayan and other courts encroaches upon judicial powers. I RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO,
also see, like my other colleagues, too much vagueness on such items ROLANDO BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO
as the period within which the parties shall fulfill their respective BAGATSING, JUN "NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and
prestations and the lack of appropriate standards for determining the ROLANDO FADUL, petitioners,
assets to be forfeited by the government and those to be retained by vs.
the Marcoses. FELICIANO BELMONTE, JR., respondent.

In this respect, while there is legal posibility when the terms of a contract are Ricardo C. Valmonte for and in his own behalf and his co-petitioners.
not totally invalidated and only those opposed to law, morals, good customs,
public order and public policy are rendered inefficacious, when however, the The Solicitor General for respondent.
assailed provisions can be seen to be of essence, like here, the agreement in
its entirety can be adversely affected. True, the validity or invalidity of a
contract is a matter that generally may not be passed upon in
a mandamus petitonn, for it is as if petitioner were seeking declaratory relief or
an advisory opinion from this Court over which it has no original CORTES, J.:
jurisdiction, 10 the immediacy and significance of the issues, neverthless, has
impelled the Court to rightly assume jurisdiction and to resolve the incidental, Petitioners in this special civil action for mandamus with preliminary injunction
albeit major, issues that evidently and continually vex the parties. invoke their right to information and pray that respondent be directed:

WHEREFORE, I vote to grant the petition.

(a) to furnish petitioners the list of the names of

the Batasang Pambansa members belonging to
the UNIDO and PDP-Laban who were able to
secure clean loans immediately before the
February 7 election thru the
intercession/marginal note of the then First
Lady Imelda Marcos; and/or

(b) to furnish petitioners with certified true

copies of the documents evidencing their
respective loans; and/or

(c) to allow petitioners access to the public

records for the subject information. (Petition,
pp. 4-5; paragraphing supplied.]

The controversy arose when petitioner Valmonte wrote respondent Belmonte

the following letter:
June 4, 1986

Hon. Feliciano Belmonte

GSIS General Manager
Arroceros, Manila

Sir:

As a lawyer, member of the media and plain citizen of our

Republic, I am requesting that I be furnished with the list of
names of the opposition members of (the) Batasang Pambansa
who were able to secure a clean loan of P2 million each on
guarranty (sic) of Mrs. Imelda Marcos. We understand that OIC
Mel Lopez of Manila was one of those aforesaid MPs.
Likewise, may we be furnished with the certified true copies of
the documents evidencing their loan. Expenses in connection
herewith shall be borne by us.

If we could not secure the above documents could we have

access to them?

We are premising the above request on the following provision

of the Freedom Constitution of the present regime.

The right of the people to information on

matters of public concern shall be recognized.
Access to official records, and to documents
and papers pertaining to official acts,
transactions or decisions, shall be afforded the
citizen subject to such limitation as may be
provided by law. (Art. IV, Sec. 6).

We trust that within five (5) days from receipt hereof we will [Rollo, p. 7.]
receive your favorable response on the matter.
To the aforesaid letter, the Deputy General Counsel of the GSIS replied:
V
June 17, 1986 e
r
y
Atty. Ricardo C. Valmonte
t
108 E. Benin Street
r
Caloocan City
u
 Dear Compañero:
Possibly because he must have thought that it contained
serious legal implications, President & General Manager
Feliciano Belmonte, Jr. referred to me for study and reply your
letter to him of June 4, 1986 requesting a list of the opposition
members of Batasang Pambansa who were able to secure a
clean loan of P2 million each on guaranty of Mrs. Imelda
Marcos.
My opinion in this regard is that a confidential relationship
exists between the GSIS and all those who borrow from it,
whoever they may be; that the GSIS has a duty to its
customers to preserve this confidentiality; and that it would not
be proper for the GSIS to breach this confidentiality unless so
ordered by the courts.
As a violation of this confidentiality may mar the image of the
GSIS as a reputable financial institution, I regret very much that
at this time we cannot respond positively to your request.
Very truly yours,
(Sgd.) MEYNARDO A. TIRO
Deputy General Counsel
[Rollo, p. 40.]
On June 20, 1986, apparently not having yet received the reply of the
Government Service and Insurance System (GSIS) Deputy General Counsel,
petitioner Valmonte wrote respondent another letter, saying that for failure to
receive a reply, "(W)e are now considering ourselves free to do whatever
action necessary within the premises to pursue our desired objective in
pursuance of public interest." [Rollo, p. 8.]
On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant
suit.
On July 19, 1986, the Daily Express carried a news item reporting that 137
former members of the defunct interim and regular Batasang Pambansa,
including ten (10) opposition members, were granted housing loans by the
GSIS [Rollo, p. 41.]
Separate comments were filed by respondent Belmonte and the Solicitor
General. After petitioners filed a consolidated reply, the petition was given due
course and the parties were required to file their memoranda. The parties
having complied, the case was deemed submitted for decision.
In his comment respondent raises procedural objections to the issuance of a
writ of mandamus, among which is that petitioners have failed to exhaust
administrative remedies.
Respondent claims that actions of the GSIS General Manager are reviewable
by the Board of Trustees of the GSIS. Petitioners, however, did not seek relief
from the GSIS Board of Trustees. It is therefore asserted that since
administrative remedies were not exhausted, then petitioners have no cause of
action.
To this objection, petitioners claim that they have raised a purely legal
issue, viz., whether or not they are entitled to the documents sought, by virtue
of their constitutional right to information. Hence, it is argued that this case falls
under one of the exceptions to the principle of exhaustion of administrative
remedies.
Among the settled principles in administrative law is that before a party can be
allowed to resort to the courts, he is expected to have exhausted all means of
administrative redress available under the law. The courts for reasons of law,
comity and convenience will not entertain a case unless the available
administrative remedies have been resorted to and the appropriate authorities
have been given opportunity to act and correct the errors committed in the
administrative forum. However, the principle of exhaustion of administrative
remedies is subject to settled exceptions, among which is when only a
question of law is involved [Pascual v. Provincial Board, 106 Phil. 466 (1959);
Aguilar v. Valencia, et al., G.R. No. L-30396, July 30, 1971, 40 SCRA 210;
Malabanan v. Ramento, G.R. No. L-2270, May 21, 1984, 129 SCRA 359.] The
issue raised by petitioners, which requires the interpretation of the scope of the
constitutional right to information, is one which can be passed upon by the
regular courts more competently than the GSIS or its Board of Trustees,
involving as it does a purely legal question. Thus, the exception of this case
from the application of the general rule on exhaustion of administrative
remedies is warranted. Having disposed of this procedural issue, We now
address ourselves to the issue of whether or not mandamus hes to compel
respondent to perform the acts sought by petitioners to be done, in pursuance
of their right to information.
We shall deal first with the second and third alternative acts sought to be done,
both of which involve the issue of whether or not petitioners are entitled to
access to the documents evidencing loans granted by the GSIS.
This is not the first time that the Court is confronted with a controversy directly
involving the constitutional right to information. In Tañada v. Tuvera, G.R. No.
63915, April 24,1985, 136 SCRA 27 and in the recent case of Legaspi v. Civil
Service Commission, G.R. No. 72119, May 29, 1987,150 SCRA 530, the Court
upheld the people's constitutional right to be informed of matters of public
interest and ordered the government agencies concerned to act as prayed for
by the petitioners.
The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which
states:
The right of the people to information on matters of public
concern shall be recognized. Access to official records, and to
documents, and papers pertaining to official acts, transactions,
or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen,
subject to such limitations as may be provided by law.
The right of access to information was also recognized in the 1973
Constitution, Art. IV Sec. 6 of which provided:
The right of the people to information on 'matters of public
concern shall be recognized. Access to official records, and to
documents and papers pertaining to official acts, transactions,
or decisions, shall be afforded the citizen subject to such
limitations as may be provided by law.
An informed citizenry with access to the diverse currents in political, moral and
artistic thought and data relative to them, and the free exchange of ideas and
discussion of issues thereon, is vital to the democratic government envisioned
under our Constitution. The cornerstone of this republican system of
government is delegation of power by the people to the State. In this system,
governmental agencies and institutions operate within the limits of the authority
conferred by the people. Denied access to information on the inner workings of
government, the citizenry can become prey to the whims and caprices of those
to whom the power had been delegated. The postulate of public office as a
public trust, institutionalized in the Constitution (in Art. XI, Sec. 1) to protect the
people from abuse of governmental power, would certainly be were empty
words if access to such information of public concern is denied, except under
limitations prescribed by implementing legislation adopted pursuant to the
Constitution.
Petitioners are practitioners in media. As such, they have both the right to
gather and the obligation to check the accuracy of information the disseminate.
For them, the freedom of the press and of speech is not only critical, but vital
to the exercise of their professions. The right of access to information ensures
that these freedoms are not rendered nugatory by the government's
monopolizing pertinent information. For an essential element of these
freedoms is to keep open a continuing dialogue or process of communication
between the government and the people. It is in the interest of the State that
the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the people's will. Yet, this
open dialogue can be effective only to the extent that the citizenry is informed
and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating
thereto can such bear fruit.
The right to information is an essential premise of a meaningful right to speech
and expression. But this is not to say that the right to information is merely an
adjunct of and therefore restricted in application by the exercise of the
freedoms of speech and of the press. Far from it. The right to information goes
hand-in-hand with the constitutional policies of full public disclosure * and honesty
in the public service. ** It is meant to enhance the widening role of the citizenry in governmental decision-
making as well as in checking abuse in government.
Yet, like all the constitutional guarantees, the right to information is not
absolute. As stated in Legaspi, the people's right to information is limited to
"matters of public concern," and is further "subject to such limitations as may
be provided by law." Similarly, the State's policy of full disclosure is limited to
"transactions involving public interest," and is "subject to reasonable conditions
prescribed by law."
Hence, before mandamus may issue, it must be clear that the information
sought is of "public interest" or "public concern," and is not exempted by law
from the operation of the constitutional guarantee [Legazpi v. Civil Service
Commission, supra, at p. 542.]
The Court has always grappled with the meanings of the terms "public interest"
and "public concern". As observed in Legazpi:
 In determining whether or not a particular information is of
public concern there is no rigid test which can be applied.
"Public concern" like "public interest" is a term that eludes
exact definition. Both terms embrace a broad spectrum of
subjects which the public may want to know, either because
these directly affect their lives, or simply because such matters
naturally arouse the interest of an ordinary citezen. In the final
analysis, it is for the courts to determine on a case by case
basis whether the matter at issue is of interest or importance,
as it relates to or affects the public. [Ibid. at p. 541]
In the Tañada case the public concern deemed covered by the constitutional
right to information was the need for adequate notice to the public of the
various laws which are to regulate the actions and conduct of citezens.
In Legaspi, it was the "legitimate concern of citezensof ensure that government
positions requiring civil service eligibility are occupied only by persons who are
eligibles" [Supra at p. 539.]
The information sought by petitioners in this case is the truth of reports that
certain Members of the Batasang Pambansa belonging to the opposition were
able to secure "clean" loans from the GSIS immediately before the February 7,
1986 election through the intercession of th eformer First Lady, Mrs. Imelda
Marcos.
The GSIS is a trustee of contributions from the government and its employees
and the administrator of various insurance programs for the benefit of the
latter. Undeniably, its funds assume a public character. More particularly,
Secs. 5(b) and 46 of P.D. 1146, as amended (the Revised Government
Service Insurance Act of 1977), provide for annual appropriations to pay the
contributions, premiums, interest and other amounts payable to GSIS by the
government, as employer, as well as the obligations which the Republic of the
Philippines assumes or guarantees to pay. Considering the nature of its funds,
the GSIS is expected to manage its resources with utmost prudence and in
strict compliance with the pertinent laws or rules and regulations. Thus, one of
the reasons that prompted the revision of the old GSIS law (C.A. No. 186, as
amended) was the necessity "to preserve at all times the actuarial solvency of
the funds administered by the System" [Second Whereas Clause, P.D. No.
1146.] Consequently, as respondent himself admits, the GSIS "is not
supposed to grant 'clean loans.'" [Comment, p. 8.] It is therefore the legitimate
concern of the public to ensure that these funds are managed properly with the
end in view of maximizing the benefits that accrue to the insured government
employees. Moreover, the supposed borrowers were Members of the defunct
Batasang Pambansa who themselves appropriated funds for the GSIS and
were therefore expected to be the first to see to it that the GSIS performed its
tasks with the greatest degree of fidelity and that an its transactions were
above board.
In sum, the public nature of the loanable funds of the GSIS and the public
office held by the alleged borrowers make the information sought clearly a
matter of public interest and concern.
A second requisite must be met before the right to information may be
enforced through mandamus proceedings, viz., that the information sought
must not be among those excluded by law.
Respondent maintains that a confidential relationship exists between the GSIS
and its borrowers. It is argued that a policy of confidentiality restricts the
indiscriminate dissemination of information.
Yet, respondent has failed to cite any law granting the GSIS the privilege of
confidentiality as regards the documents subject of this petition. His position is
apparently based merely on considerations of policy. The judiciary does not
settle policy issues. The Court can only declare what the law is, and not what
the law should be. Under our system of government, policy issues are within
the domain of the political branches of the government, and of the people
themselves as the repository of all State power.
Respondent however contends that in view of the right to privacy which is
equally protected by the Constitution and by existing laws, the documents
evidencing loan transactions of the GSIS must be deemed outside the ambit of
the right to information.
There can be no doubt that right to privacy is constitutionally protected. In the
landmark case of Morfe v. Mutuc [130 Phil. 415 (1968), 22 SCRA 424], this
Court, speaking through then Mr. Justice Fernando, stated:
... The right to privacy as such is accorded recognition
independently of its identification with liberty; in itself, it is fully
deserving of constitutional protection. The language of Prof.
Emerson is particularly apt: "The concept of limited government
has always included the idea that governmental powers stop
short of certain intrusions into the personal life of the citizen.
This is indeed one of the basic distinctions between absolute
and limited government. UItimate and pervasive control of the
 individual, in all aspects of his life, is the hallmark of the
absolute. state, In contrast, a system of limited government
safeguards a private sector, which belongs to the individual,
firmly distinguishing it from the public sector, which the state
can control. Protection of this private sector — protection, in
other words, of the dignity and integrity of the individual — has
become increasingly important as modem society has
developed. All the forces of technological age —
industrialization, urbanization, and organization — operate to
narrow the area of privacy and facilitate intrusion into it. In
modern terms, the capacity to maintain and support this
enclave of private life marks the difference between a
democratic and a totalitarian society." [at pp. 444-445.]
When the information requested from the government intrudes into the privacy
of a citizen, a potential conflict between the rights to information and to privacy
may arise. However, the competing interests of these rights need not be
resolved in this case. Apparent from the above-quoted statement of the Court
in Morfe is that the right to privacy belongs to the individual in his private
capacity, and not to public and governmental agencies like the GSIS.
Moreover, the right cannot be invoked by juridical entities like the GSIS. As
held in the case of Vassar College v. Loose Wills Biscuit Co. [197 F. 982
(1912)], a corporation has no right of privacy in its name since the entire basis
of the right to privacy is an injury to the feelings and sensibilities of the party
and a corporation would have no such ground for relief.
Neither can the GSIS through its General Manager, the respondent, invoke the
right to privacy of its borrowers. The right is purely personal in nature
[Cf. Atkinson v. John Doherty & Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219
(1899); Schuyler v. Curtis, 147 N.Y. 434, 42 N.E. 22, 31 L.R.A. 286 (1895)),
and hence may be invoked only by the person whose privacy is claimed to be
violated.
It may be observed, however, that in the instant case, the concerned
borrowers themselves may not succeed if they choose to invoke their right to
privacy, considering the public offices they were holding at the time the loans
were alleged to have been granted. It cannot be denied that because of the
interest they generate and their newsworthiness, public figures, most
especially those holding responsible positions in government, enjoy a more
limited right to privacy as compared to ordinary individuals, their actions being
subject to closer public scrutiny [Cf. Ayer Productions Pty. Ltd. v. Capulong,
G.R. Nos. 82380 and 82398, April 29, 1988; See also Cohen v. Marx, 211 P.
2d 321 (1949).]
Respondent next asserts that the documents evidencing the loan transactions
of the GSIS are private in nature and hence, are not covered by the
Constitutional right to information on matters of public concern which
guarantees "(a)ccess to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions" only.
It is argued that the records of the GSIS, a government corporation performing
proprietary functions, are outside the coverage of the people's right of access
to official records.
It is further contended that since the loan function of the GSIS is merely
incidental to its insurance function, then its loan transactions are not covered
by the constitutional policy of full public disclosure and the right to information
which is applicable only to "official" transactions.
First of all, the "constituent — ministrant" dichotomy characterizing government
function has long been repudiated. In ACCFA v. Confederation of Unions and
Government Corporations and Offices (G.R. Nos. L-21484 and L-23605,
November 29, 1969, 30 SCRA 6441, the Court said that the government,
whether carrying out its sovereign attributes or running some business,
discharges the same function of service to the people.
Consequently, that the GSIS, in granting the loans, was exercising a
proprietary function would not justify the exclusion of the transactions from the
coverage and scope of the right to information.
Moreover, the intent of the members of the Constitutional Commission of 1986,
to include government-owned and controlled corporations and transactions
entered into by them within the coverage of the State policy of fun public
disclosure is manifest from the records of the proceedings:
xxx xxx xxx
THE PRESIDING OFFICER (Mr. Colayco).
Commissioner Suarez is recognized.
MR. SUAREZ. Thank you. May I ask the Gentleman a few
question?
MR. OPLE. Very gladly.
MR. SUAREZ. Thank you.
When we declare a "policy of full public
disclosure of all its transactions" — referring to
the transactions of the State — and when we
say the "State" which I suppose would include
all of the various agencies, departments,
ministries and instrumentalities of the
government....
MR. OPLE. Yes, and individual public officers, Mr. Presiding
Officer.
MR. SUAREZ. Including government-owned and controlled
corporations.
MR. OPLE. That is correct, Mr. Presiding Officer.
MR. SUAREZ. And when we
say "transactions" which should
be distinguished from contracts,
agreements, or treaties or
whatever, does the Gentleman
refer to the steps leading to the
consummation of the contract,
or does he refer to the contract
itself?
MR. OPLE. The "transactions"
used here I suppose is generic
and, therefore, it can cover both
steps leading to a contract, and
already a consummated
contract, Mr. Presiding Officer.
MR. SUAREZ. This
contemplates inclusion of
negotiations leading to the
consummation of the
transaction.
MR. OPLE. Yes, subject only to
reasonable safeguards on the
national interest.
MR. SUAREZ. Thank you. [V
Record of the Constitutional
Commission 24-25.] (Emphasis
supplied.)
Considering the intent of the framers of the Constitution which, though not
binding upon the Court, are nevertheless persuasive, and considering further
that government-owned and controlled corporations, whether performing
proprietary or governmental functions are accountable to the people, the Court
is convinced that transactions entered into by the GSIS, a government-
controlled corporation created by special legislation are within the ambit of the
people's right to be informed pursuant to the constitutional policy of
transparency in government dealings.
In fine, petitioners are entitled to access to the documents evidencing loans
granted by the GSIS, subject to reasonable regulations that the latter may
promulgate relating to the manner and hours of examination, to the end that
damage to or loss of the records may be avoided, that undue interference with
the duties of the custodian of the records may be prevented and that the right
of other persons entitled to inspect the records may be insured [Legaspi v.
Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil.
383, 387.] The petition, as to the second and third alternative acts sought to be
done by petitioners, is meritorious.
However, the same cannot be said with regard to the first act sought by
petitioners, i.e., "to furnish petitioners the list of the names of the Batasang
Pambansa members belonging to the UNIDO and PDP-Laban who were able
to secure clean loans immediately before the February 7 election thru the
intercession/marginal note of the then First Lady Imelda Marcos."
Although citizens are afforded the right to information and, pursuant thereto,
are entitled to "access to official records," the Constitution does not accord
them a right to compel custodians of official records to prepare lists, abstracts,
summaries and the like in their desire to acquire information on matters of
public concern.

It must be stressed that it is essential for a writ of mandamus to issue that the Separate Opinions
applicant has a well-defined, clear and certain legal right to the thing
demanded and that it is the imperative duty of defendant to perform the act CRUZ, J., concurring:
required. The corresponding duty of the respondent to perform the required act
must be clear and specific [Lemi v. Valencia, G.R. No. L-20768, November
Instead of merely affixing my signature to signify my concurrence, I write this
29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August 27,
separate opinion simply to say I have nothing to add to Justice Irene R. Cortes'
1976, 72 SCRA 443.] The request of the petitioners fails to meet this standard,
exceptionally eloquent celebration of the right to information on matters of
there being no duty on the part of respondent to prepare the list requested.
public concern.
WHEREFORE, the instant petition is hereby granted and respondent General
Manager of the Government Service Insurance System is ORDERED to allow
petitioners access to documents and records evidencing loans granted to
Members of the former Batasang Pambansa, as petitioners may specify,
subject to reasonable regulations as to the time and manner of inspection, not
incompatible with this decision, as the GSIS may deem necessary.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,

Gancayco, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado,
JJ., concur.

Separate Opinions

CRUZ, J., concurring:

Instead of merely affixing my signature to signify my concurrence, I write this

separate opinion simply to say I have nothing to add to Justice Irene R. Cortes'
exceptionally eloquent celebration of the right to information on matters of
public concern.
G.R. No. 165036 July 5, 2010 Business Law 66 %
Management Services 69 %
HAZEL MA. C. ANTOLIN, Petitioner,
vs. Auditing Theory 82 %
ABELARDO T. DOMONDON, JOSE A. GANGAN, and VIOLETA J. Auditing Problems 70 %
JOSEF, Respondents.
Practical Accounting I 68 %
x - - - - - - - - - - - - - - - - - - - - - - -x Practical Accounting II 77 %

G.R. No. 175705
HAZEL MA. C. ANTOLIN Petitioner,
vs.
ANTONIETA FORTUNA-IBE, Respondent.
DECISION
DEL CASTILLO, J.:
Examinations have a two-fold purpose. First, they are summative;
examinations are intended to assess and record what and how much the
students have learned. Second, and perhaps more importantly, they are
formative; examinations are intended to be part and parcel of the learning
process. In a perfect system, they are tools for learning. In view of the
pedagogical aspect of national examinations, the need for all parties to fully
ventilate their respective positions, and the view that government transactions
can only be improved by public scrutiny, we remand these cases to the trial
court for further proceedings.
Factual Antecedents
Petitioner took the accountancy licensure examinations (the Certified Public
Accountant [CPA] Board Exams) conducted by the Board of Accountancy (the
Board) in October 1997.1 The examination results were released on October
Convinced that she deserved to pass the examinations, she wrote to
respondent Abelardo T. Domondon (Domondon), Acting Chairman of the
Board of Accountancy, and requested that her answer sheets be re-
corrected.3 On November 3, 1997, petitioner was shown her answer sheets,
but these consisted merely of shaded marks, so she was unable to determine
why she failed the exam.4 Thus, on November 10, 1997, she again wrote to
the Board to request for copies of (a) the questionnaire in each of the seven
subjects (b) her answer sheets; (c) the answer keys to the questionnaires, and
(d) an explanation of the grading system used in each subject (collectively, the
Examination Papers).5
Acting Chairman Domondon denied petitioner’s request on two grounds: first,
that Section 36, Article III of the Rules and Regulations Governing the
Regulation and Practice of Professionals, as amended by Professional
Regulation Commission (PRC) Resolution No. 332, series of 1994, only
permitted access to the petitioner’s answer sheet (which she had been shown
previously), and that reconsideration of her examination result was only proper
under the grounds stated therein:
Sec. 36 An examinee shall be allowed to have access or to go over his/her test
papers or answer sheets on a date not later than thirty (30) days from the
official release of the results of the examination. Within ten (10) days from
such date, he/she may file his/her request for reconsideration of ratings.
Reconsideration of rating shall be effected only on grounds of mechanical error
in the grading of his/her testpapers or answer sheets, or malfeasance. 6
lawph!l

29, 1997; out of 6,481 examinees, only 1,171 passed. Unfortunately, petitioner
did not make it. When the results were released, she received failing grades in Second, Acting Chairman Domondon clarified that the Board was precluded
four out of the seven subjects.2 from releasing the Examination Papers (other than petitioner’s answer sheet)
by Section 20, Article IV of PRC Resolution No. 338, series of 1994, which
provides:
Subject Petitioner’s Grade
Theory of Accounts 65 %
Sec. 20. Illegal, Immoral, Dishonorable, Unprofessional Acts – The hereunder
acts shall constitute prejudicial, illegal, grossly immoral, dishonorable, or
unprofessional conduct:
A. Providing, getting, receiving, holding, using or reproducing questions
xxxx
3. that have been given in the examination except if the test bank for the
subject has on deposit at least two thousand (2,000) questions. 7
After a further exchange of correspondence, 8 the Board informed petitioner
that an investigation was conducted into her exam and there was no
mechanical error found in the grading of her test papers. 9
Proceedings before the Regional Trial Court
Undeterred, on January 12, 1998, petitioner filed a Petition for Mandamus with
Damages against the Board of Accountancy and its members10 before the
Regional Trial Court (RTC) of Manila. The case was raffled to Branch 33, and
docketed as Civil Case No. 98-86881. The Petition included a prayer for the
issuance of a preliminary mandatory injunction ordering the Board of
Accountancy and its members (the respondents) to furnish petitioner with
copies of the Examination Papers. Petitioner also prayed that final judgment
be issued ordering respondents to furnish petitioner with all documents and
other materials as would enable her to determine whether respondents fairly
administered the examinations and correctly graded petitioner’s performance
therein, and, if warranted, to issue to her a certificate of registration as a
CPA.11
On February 5, 1998, respondents filed their Opposition to the Application for a
Writ of Preliminary Mandatory Injunction, and argued, inter alia, that petitioner
was not entitled to the relief sought, that the respondents did not have the duty
to furnish petitioner with copies of the Examination Papers, and that petitioner
had other plain, speedy, adequate remedy in the ordinary course of law,
namely, recourse to the PRC.12 Respondents also filed their Answer with
Compulsory Counterclaim in the main case, which asked that the Petition for
Mandamus with Damages be dismissed for lack of merit on the following
grounds: (1) petitioner failed to exhaust administrative remedies; (2) the
petition stated no cause of action because there was no ministerial duty to
release the information demanded; and (3) the constitutional right to
information on matters of public concern is subject to limitations provided by
law, including Section 20, Article IV, of PRC Resolution No. 338, series of
1994.13
On March 3, 1998, petitioner filed an Amended Petition (which was admitted
by the RTC), where she included the following allegation in the body of her
petition:
The allegations in this amended petition are meant only to plead a cause of
action for access to the documents requested, not for re-correction which
petitioner shall assert in the proper forum depending on, among others,
whether she finds sufficient error in the documents to warrant such or any
other relief. None of the allegations in this amended petition, including those in
the following paragraphs, is made to assert a cause of action for re-
correction.14
If only to underscore the fact that she was not asking for a re-checking of her
exam, the following prayer for relief was deleted from the Amended Petition:
"and, if warranted, to issue to her a certificate of registration as a CPA."
On June 23, 1998, respondents filed a Manifestation and Motion to Dismiss
Application for Writ of Preliminary Mandatory Injunction, on the ground that
petitioner had taken and passed the May 1998 CPA Licensure Examination
and had taken her oath as a CPA.15 Petitioner filed her Opposition on July 8,
1998.16 Subsequently, on October 29, 1998, respondents filed their Answer
with Counterclaim to the amended petition. They reiterated their original
allegations and further alleged that there was no cause of action because at
the time the Amended Petition was admitted, they had ceased to be members
of the Board of Accountancy and they were not in possession of the
documents sought by the petitioner.17
Ruling of the Regional Trial Court
In an Order dated October 16, 1998, the trial court granted respondent’s
Motion to Dismiss Petitioner’s Application for a Writ of Preliminary Mandatory
Injunction (not the main case), ruling that the matter had become moot since
petitioner passed the May CPA Licensure 1998 Examination and had already
taken her oath as a CPA.18
Undaunted, petitioner sought and obtained leave to file a Second Amended
Petition for Mandamus with Damages19 where she finally impleaded the PRC
as respondent and included the following plea in her prayer:
WHEREFORE, petitioner respectfully prays that:
xxxx
2. Judgment be issued –
(a) commanding respondents to give petitioner all documents and other
materials as would enable her to determine whether respondents fairly
administered the same examinations and correctly graded petitioner’s
performance therein and, if warranted, to make the appropriate revisions on
the results of her examination. (Emphasis ours)
On June 21, 2002, the trial court dismissed the petition on the ground that the
petition had already become moot, since petitioner managed to pass the 1998
CPA Board examinations.20 Petitioner sought reconsideration21 which was
granted by the trial court in its Omnibus Order 22 dated November 11, 2002.
The Omnibus Order provides in part:
On the motion for reconsideration filed by the petitioner, the Court is inclined to
reconsider its Order dismissing the petition. The Court agrees with the
petitioner that the passing of the petitioner in the subsequent CPA examination
did not render the petition moot and academic because the relief "and if
warranted, to issue to her a certificate of registration as Certified Public
Accountant" was deleted from the original petition. As regard the issue of
whether the petitioner has the constitutional right to have access to the
questioned documents, the Court would want first the parties to adduce
evidence before it can resolve the issue so that it can make a complete
determination of the rights of the parties.
The Court would also want the Professional Regulation Commission to give its
side of the case the moment it is impleaded as a respondent in the Second
Amended Petition for Mandamus filed by the petitioner which this Court is
inclined to grant.
As to the Motion for Conservatory Measures filed by the petitioner, the Court
denies the same. It is clear that the PRC has in custody the documents being
requested by the petitioner. It has also an adequate facility to preserve and
safeguard the documents. To be sure that the questioned documents are
preserved and safeguarded, the Court will order the PRC to preserve and
safeguard the documents and make them available anytime the Court or
petitioner needs them.
WHEREFORE, the Order of this Court dated June 20, 2002 is reconsidered
and set aside. The Professional Regulation Commission is ordered to preserve
and safeguard the following documents:
a) Questionnaire in each of the seven subjects comprising the
Accountancy Examination of October, 1997;
b) Petitioner’s Answer Sheets; and
c) Answer keys to the questionnaires.
SO ORDERED.23
Respondents filed a motion for reconsideration which was denied.24
Proceedings before the Court of Appeals
The RTC Decisions led to the filing of three separate petitions
for certiorari before the Court of Appeals (CA):
(a) CA-GR SP No. 76498, a petition filed by respondents Domondon,
Gangan, and Josef on April 11, 2003;
(b) CA-GR SP No. 76546, a petition filed by respondent Ibe on April
30, 2003; and
(c) CA-GR SP No. 76545, a petition filed by the Board of Accountancy
and PRC.
It is the first two proceedings that are pending before us. In both cases, the CA
set aside the RTC Decisions and ordered the dismissal of Civil Case No. 98-
8681.
Ruling of the Court of Appeals
In its December 11, 2006 Decision25 in CA-GR SP No. 76546, the CA ruled
that the petition has become moot in view of petitioner’s eventual passing of
the 1998 CPA Board Exam. In CA-GR SP No. 76498, the CA found, in a
Decision dated February 16, 2004,26 that (i) Section 20, Article IV of PRC
Resolution No. 338 constituted a valid limitation on petitioner’s right to
information and access to government documents; (ii) the Examination
Documents were not of public concern, because petitioner merely sought
review of her failing marks; (iii) it was not the ministerial or mandatory function
of the respondents to review and reassess the answers to examination
questions of a failing examinee; (iv) the case has become moot, since
petitioner already passed the May 1998 CPA Board Examinations and took her
oath as a CPA; and (v) petitioner failed to exhaust administrative remedies,
because, having failed to secure the desired outcome from the respondents,
she did not elevate the matter to the PRC before seeking judicial intervention. 27
CA-GR SP No. 76498 and CA-GR SP No. 76546 were brought before us by
the petitioner and docketed as G.R. Nos. 165036 and 175705, respectively.
The cases were then consolidated, in view of the similarity of the factual
antecedents and issues, and to avoid the possibility of conflicting decisions by
different divisions of this Court.28
Issues
Before us, petitioner argues that she has a right to obtain copies of the
examination papers so she can determine for herself why and how she failed
and to ensure that the Board properly performed its duties. She argues that the
Constitution29 as well as the Code of Conduct and Ethical Standards for Public
Officials and Employees30 support her right to demand access to the
Examination Papers. Furthermore, she claims that there was no need to
exhaust administrative remedies, since no recourse to the PRC was available,
and only a pure question of law is involved in this case. Finally, she claims that
her demand for access to documents was not rendered moot by her passing of
the 1998 CPA Board Exams.
Our Ruling
Propriety of Writ of Mandamus
At the very outset let us be clear of our ruling. Any claim for re-correction or
revision of her 1997 examination cannot be compelled by mandamus. This
much was made evident by our ruling in Agustin-Ramos v. Sandoval,31 where
we stated:
After deliberating on the petition in relation to the other pleadings filed in the
proceedings at bar, the Court resolved to DENY said petition for lack of merit.
The petition at bar prays for the setting aside of the Order of respondent Judge
dismissing petitioners’ mandamus action to compel the other respondents
(Medical Board of Examiners and the Professional Regulation Commission) "to
reconsider, recorrect and/or rectify the board ratings of the petitioners from
their present failing grades to higher or passing marks." The function of
reviewing and re-assessing the petitioners’ answers to the examination
questions, in the light of the facts and arguments presented by them x x x is a
discretionary function of the Medical Board, not a ministerial and mandatory
one, hence, not within the scope of the writ of mandamus. The obvious remedy
of the petitioners from the adverse judgment by the Medical Board of
Examiners was an appeal to the Professional Regulation Commission itself,
and thence to the Court of Appeals; and since they did not apply for relief to
the Commission prior to their institution of the special civil action of mandamus
in the Regional Trial Court, the omission was fatal to the action under the
familiar doctrine requiring exhaustion of administrative remedies. Apart from
the obvious undesirability of a procedure which would allow Courts to
substitute their judgment for that of Government boards in the determination of
successful examinees in any administered examination – an area in which
courts have no expertise – and the circumstance that the law declares the
Court of Appeals to be the appropriate review Court, the Regional Trial Court
was quite correct in refusing to take cognizance of an action seeking reversal
of the quasi-judicial action taken by the Medical Board of
Examiners.32 (Emphasis ours)
For a writ of mandamus to issue, the applicant must have a well-defined, clear,
and certain legal right to the thing demanded. The corresponding duty of the
respondent to perform the required act must be equally clear. 33 No such clarity
exists here; neither does petitioner’s right to demand a revision of her
examination results. And despite petitioner’s assertions that she has not made
any demand for re-correction, the most cursory perusal of her Second
Amended Petition and her prayer that the respondents "make the appropriate
revisions on the results of her examination" belies this claim.
Like the claimants in Agustin, the remedy of petitioner from the refusal of the
Board to release the Examination Papers should have been through an appeal
to the PRC. Undoubtedly, petitioner had an adequate remedy from the Board’s
refusal to provide her with copies of the Examination Papers. Under Section
5(a) of Presidential Decree No. 223,34 the PRC has the power to promulgate
rules and regulations to implement policies for the regulation of the accounting
profession.35 In fact, it is one such regulation (PRC Resolution No. 338) that is
at issue in this case. In addition, under Section 5(c), the PRC has the power to
review, coordinate, integrate and approve the policies, resolutions, rules and
regulations, orders or decisions promulgated by the various Boards with
respect to the profession or occupation under their jurisdictions including the
results of their licensure examinations but their decisions on administrative
cases shall be final and executory unless appealed to the Commission within
thirty (30) days from the date of promulgation thereof.
Petitioner posits that no remedy was available because the PRC’s power to
"review" and "approve" in Section 5(c) only refers to appeals in decisions
concerning administrative investigations 36 and not to instances where
documents are being requested. Not only is this position myopic and self-
serving, it is bereft of either statutory or jurisprudential basis. The PRC’s quasi-
legislative and enforcement powers, encompassing its authority to review and
approve "policies, resolutions, rules and regulations, orders, or decisions"
cover more than administrative investigations conducted pursuant to its quasi-
judicial powers.37 More significantly, since the PRC itself issued the resolution
questioned by the petitioner here, it was in the best position to resolve
questions addressed to its area of expertise. Indeed, petitioner could have
saved herself a great deal of time and effort had she given the PRC the
opportunity to rectify any purported errors committed by the Board.
One of the reasons for exhaustion of administrative remedies is our well-
entrenched doctrine on separation of powers, which enjoins upon the Judiciary
a becoming policy of non-interference with matters falling primarily (albeit not
exclusively) within the competence of other departments. 38 Courts, for reasons
of law, comity and convenience, should not entertain suits unless the available
administrative remedies have first been resorted to and the proper authorities
have been given an appropriate opportunity to act and correct their alleged
errors, if any, committed in the administrative forum. 39
However, the principle of exhaustion of administrative remedies is subject to
exceptions, among which is when only a question of law is involved. 40 This is
because issues of law – such as whether petitioner has a constitutional right to
demand access to the Examination Papers - cannot be resolved with finality by
the administrative officer.41
Issues of Mootness
We now turn to the question of whether the petition has become moot in view
of petitioner’s having passed the 1998 CPA examination. An issue becomes
moot and academic when it ceases to present a justiciable controversy, so that
a declaration on the issue would be of no practical use or value.42
In this jurisdiction, any citizen may challenge any attempt to obstruct the
exercise of his or her right to information and may seek its enforcement by
mandamus.43 And since every citizen possesses the inherent right to be
informed by the mere fact of citizenship,44 we find that petitioner’s belated
passing of the CPA Board Exams does not automatically mean that her
interest in the Examination Papers has become mere superfluity. Undoubtedly,
the constitutional question presented, in view of the likelihood that the issues in
this case will be repeated, warrants review. 45
The crux of this case is whether petitioner may compel access to the
Examination Documents through mandamus. As always, our inquiry must
begin with the Constitution. Section 7, Article III provides:
Sec.7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.
Together with the guarantee of the right to information, Section 28, Article II
promotes full disclosure and transparency in government, viz:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions involving
public interest.
Like all the constitutional guarantees, the right to information is not absolute.
The people's right to information is limited to "matters of public concern," and is
further "subject to such limitations as may be provided by law." Similarly, the
State's policy of full disclosure is limited to "transactions involving public
interest," and is "subject to reasonable conditions prescribed by law". The
Court has always grappled with the meanings of the terms "public interest" and
"public concern." As observed in Legaspi v. Civil Service Commission: 46
In determining whether x x x a particular information is of public concern there
is no rigid test which can be applied. "Public concern" like "public interest" is a
term that eludes exact definition. Both terms embrace a broad spectrum of
subjects which the public may want to know, either because these directly
affect their lives, or simply because such matters naturally arouse the interest
of an ordinary citizen. In the final analysis, it is for the courts to determine on a
case by case basis whether the matter at issue is of interest or importance, as
it relates to or affects the public.
We have also recognized the need to preserve a measure of confidentiality on
some matters, such as national security, trade secrets and banking
transactions, criminal matters, and other confidential matters. 47
We are prepared to concede that national board examinations such as the
CPA Board Exams are matters of public concern. The populace in general,
and the examinees in particular, would understandably be interested in the fair
and competent administration of these exams in order to ensure that only
those qualified are admitted into the accounting profession. And as with all
matters pedagogical, these examinations could be not merely quantitative
means of assessment, but also means to further improve the teaching and
learning of the art and science of accounting.
On the other hand, we do realize that there may be valid reasons to limit
access to the Examination Papers in order to properly administer the exam.
More than the mere convenience of the examiner, it may well be that there
exist inherent difficulties in the preparation, generation, encoding,
administration, and checking of these multiple choice exams that require that
the questions and answers remain confidential for a limited duration. However,
the PRC is not a party to these proceedings. They have not been given an
opportunity to explain the reasons behind their regulations or articulate the
justification for keeping the Examination Documents confidential. In view of the
far-reaching implications of this case, which may impact on every board
examination administered by the PRC, and in order that all relevant issues
may be ventilated, we deem it best to remand these cases to the RTC for
further proceedings.
IN VIEW OF THE FOREGOING, the petitions are GRANTED. The December
11, 2006 and February 16, 2004 Decisions of the Court of Appeals in CA-GR
SP No. 76546 and CA-GR SP No. 76498, respectively, are hereby SET
ASIDE. The November 11, 2002 and January 30, 2003 Orders of the Regional
Trial Court of Manila, Branch 33, in Civil Case No. 98-86881 are AFFIRMED.
The case is remanded to the Regional Trial Court for further proceedings.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary
injunction and a temporary restraining order. The petition seeks to compel the
Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then
on-going renegotiations with Amari Coastal Bay and Development Corporation
("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further
seeks to enjoin PEA from signing a new agreement with AMARI involving such
reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public
Highways, signed a contract with the Construction and Development
Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore
and offshore areas of Manila Bay. The contract also included the construction
of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to
carry out all the works in consideration of fifty percent of the total reclaimed
land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential
Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land,
including foreshore and submerged areas," and "to develop, improve, acquire,
x x x lease and sell any and all kinds of lands." 1 On the same date, then
President Marcos issued Presidential Decree No. 1085 transferring to PEA the
"lands reclaimed in the foreshore and offshore of the Manila Bay" 2 under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum
directing PEA to amend its contract with CDCP, so that "[A]ll future works in
MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA and
CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:
 "(i) CDCP shall undertake all reclamation, construction, and such other
works in the MCCRRP as may be agreed upon by the parties, to be
paid according to progress of works on a unit price/lump sum basis for
items of work to be agreed upon, subject to price escalation, retention
and other terms and conditions provided for in Presidential Decree No.
1594. All the financing required for such works shall be provided by
PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby
agrees to cede and transfer in favor of PEA, all of the rights, title,
interest and participation of CDCP in and to all the areas of land
reclaimed by CDCP in the MCCRRP as of December 30, 1981 which
have not yet been sold, transferred or otherwise disposed of by CDCP
as of said date, which areas consist of approximately Ninety-Nine
Thousand Four Hundred Seventy Three (99,473) square meters in the
Financial Center Area covered by land pledge No. 5 and approximately
Three Million Three Hundred Eighty Two Thousand Eight Hundred
Eighty Eight (3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the Financial
Center Area and the First Neighborhood Unit."3
On January 19, 1988, then President Corazon C. Aquino issued Special
Patent No. 3517, granting and transferring to PEA "the parcels of land so
reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen thousand
eight hundred ninety four (1,915,894) square meters." Subsequently, on April
9, 1988, the Register of Deeds of the Municipality of Parañaque issued
Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA,
covering the three reclaimed islands known as the "Freedom Islands" located
at the southern portion of the Manila-Cavite Coastal Road, Parañaque City.
The Freedom Islands have a total land area of One Million Five Hundred
Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for
brevity) with AMARI, a private corporation, to develop the Freedom Islands.
The JVA also required the reclamation of an additional 250 hectares of
submerged areas surrounding these islands to complete the configuration in
the Master Development Plan of the Southern Reclamation Project-MCCRRP.
PEA and AMARI entered into the JVA through negotiation without public
bidding.4 On April 28, 1995, the Board of Directors of PEA, in its Resolution
No. 1245, confirmed the JVA.5 On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a
privilege speech in the Senate and denounced the JVA as the "grandmother of
all scams." As a result, the Senate Committee on Government Corporations
and Public Enterprises, and the Committee on Accountability of Public Officers
and Investigations, conducted a joint investigation. The Senate Committees
reported the results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report are: (1) the
reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of
the public domain which the government has not classified as alienable lands
and therefore PEA cannot alienate these lands; (2) the certificates of title
covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a study
on the legality of the JVA in view of Senate Committee Report No. 560. The
members of the Legal Task Force were the Secretary of Justice,8 the Chief
Presidential Legal Counsel,9 and the Government Corporate Counsel.10 The
Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published
reports that there were on-going renegotiations between PEA and AMARI
under an order issued by then President Fidel V. Ramos. According to these
reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired
Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for
Prohibition with Application for the Issuance of a Temporary Restraining Order
and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the
JVA. The Court dismissed the petition "for unwarranted disregard of judicial
hierarchy, without prejudice to the refiling of the case before the proper
court."12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a
taxpayer, filed the instant Petition for Mandamus with Prayer for the Issuance
of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner
contends the government stands to lose billions of pesos in the sale by PEA of
the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the
terms of any renegotiation of the JVA, invoking Section 28, Article II, and
Section 7, Article III, of the 1987 Constitution on the right of the people to
information on matters of public concern. Petitioner assails the sale to AMARI
of lands of the public domain as a blatant violation of Section 3, Article XII of
the 1987 Constitution prohibiting the sale of alienable lands of the public
domain to private corporations. Finally, petitioner asserts that he seeks to
enjoin the loss of billions of pesos in properties of the State that are of public
dominion.
After several motions for extension of time, 13 PEA and AMARI filed their
Comments on October 19, 1998 and June 25, 1998, respectively. Meanwhile,
on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA
to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance
of a temporary restraining order; and (c) to set the case for hearing on oral
argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated
May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the
petition and required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture
Agreement ("Amended JVA," for brevity). On May 28, 1999, the Office of the
President under the administration of then President Joseph E. Estrada
approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President,
petitioner now prays that on "constitutional and statutory grounds the
renegotiated contract be declared null and void." 14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE
PETITION ARE MOOT AND ACADEMIC BECAUSE OF
SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO
OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF
COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-
EXHAUSTION OF ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS
SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION
INCLUDES OFFICIAL INFORMATION ON ON-GOING
NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT
VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF
CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED,
VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR
RAISING THE ISSUE OF WHETHER THE AMENDED JOINT
VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO
THE GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the petition are
moot and academic because of subsequent events.
The petition prays that PEA publicly disclose the "terms and conditions of the
on-going negotiations for a new agreement." The petition also prays that the
Court enjoin PEA from "privately entering into, perfecting and/or executing any
new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI
furnished petitioner on June 21, 1999 a copy of the signed Amended JVA
containing the terms and conditions agreed upon in the renegotiations. Thus,
PEA has satisfied petitioner's prayer for a public disclosure of the
renegotiations. Likewise, petitioner's prayer to enjoin the signing of the
Amended JVA is now moot because PEA and AMARI have already signed the
Amended JVA on March 30, 1999. Moreover, the Office of the President has
approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue
by simply fast-tracking the signing and approval of the Amended JVA before
the Court could act on the issue. Presidential approval does not resolve the
constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its
approval by the President cannot operate to moot the petition and divest the
Court of its jurisdiction. PEA and AMARI have still to implement the Amended
JVA. The prayer to enjoin the signing of the Amended JVA on constitutional
grounds necessarily includes preventing its implementation if in the meantime
PEA and AMARI have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of
Section 3, Article XII of the Constitution, which prohibits the government from
alienating lands of the public domain to private corporations. If the Amended
JVA indeed violates the Constitution, it is the duty of the Court to enjoin its
implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and
submerged areas of Manila Bay to a single private corporation. It now
becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended to
safeguard the national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a
grave violation of the Constitution. In the instant case, if the Amended JVA
runs counter to the Constitution, the Court can still prevent the transfer of title
and ownership of alienable lands of the public domain in the name of AMARI.
Even in cases where supervening events had made the cases moot, the Court
did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and the public. 17
Also, the instant petition is a case of first impression. All previous decisions of
the Court involving Section 3, Article XII of the 1987 Constitution, or its
counterpart provision in the 1973 Constitution, 18 covered agricultural
lands sold to private corporations which acquired the lands from private
parties. The transferors of the private corporations claimed or could claim the
right to judicial confirmation of their imperfect titles19 under Title II of
Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI
seeks to acquire from PEA, a public corporation, reclaimed lands and
submerged areas for non-agricultural purposes by purchase under PD No.
1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings by
AMARI under the Amended JVA constitute the consideration for the purchase.
Neither AMARI nor PEA can claim judicial confirmation of their titles because
the lands covered by the Amended JVA are newly reclaimed or still to be
reclaimed. Judicial confirmation of imperfect title requires open, continuous,
exclusive and notorious occupation of agricultural lands of the public domain
for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for
filing applications for judicial confirmation of imperfect title expired on
December 31, 1987.20
Lastly, there is a need to resolve immediately the constitutional issue raised in
this petition because of the possible transfer at any time by PEA to AMARI of
title and ownership to portions of the reclaimed lands. Under the Amended
JVA, PEA is obligated to transfer to AMARI the latter's seventy percent
proportionate share in the reclaimed areas as the reclamation progresses. The
Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.21
Second issue: whether the petition merits dismissal for failing to observe
the principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to
cases involving factual questions. As it is not a trier of facts, the Court cannot
entertain cases involving factual issues. The instant case, however, raises
constitutional issues of transcendental importance to the public. 22 The Court
can resolve this case without determining any factual issue related to the case.
Also, the instant case is a petition for mandamus which falls under the original
jurisdiction of the Court under Section 5, Article VIII of the Constitution. We
resolve to exercise primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to
disclose publicly certain information without first asking PEA the needed
information. PEA claims petitioner's direct resort to the Court violates the
principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate
remedy in the ordinary course of law.
PEA distinguishes the instant case from Tañada v. Tuvera23 where the Court
granted the petition for mandamus even if the petitioners there did not initially
demand from the Office of the President the publication of the presidential
decrees. PEA points out that in Tañada, the Executive Department had
an affirmative statutory duty under Article 2 of the Civil Code24 and Section 1
of Commonwealth Act No. 63825 to publish the presidential decrees. There
was, therefore, no need for the petitioners in Tañada to make an initial demand
from the Office of the President. In the instant case, PEA claims it has no
affirmative statutory duty to disclose publicly information about its renegotiation
of the JVA. Thus, PEA asserts that the Court must apply the principle of
exhaustion of administrative remedies to the instant case in view of the failure
of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a
government corporation. Under Section 79 of the Government Auditing
Code,26 the disposition of government lands to private parties requires public
bidding. PEA was under a positive legal duty to disclose to the public the
terms and conditions for the sale of its lands. The law obligated PEA to
make this public disclosure even without demand from petitioner or from
anyone. PEA failed to make this public disclosure because the original JVA,
like the Amended JVA, was the result of a negotiated contract, not of a public
bidding. Considering that PEA had an affirmative statutory duty to make the
public disclosure, and was even in breach of this legal duty, petitioner had the
right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of
exhaustion of administrative remedies does not apply when the issue involved
is a purely legal or constitutional question. 27 The principal issue in the instant
case is the capacity of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public domain to
private corporations. We rule that the principle of exhaustion of administrative
remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings
to enforce his constitutional right to information without a showing that PEA
refused to perform an affirmative duty imposed on PEA by the Constitution.
PEA also claims that petitioner has not shown that he will suffer any concrete
injury because of the signing or implementation of the Amended JVA. Thus,
there is no actual controversy requiring the exercise of the power of judicial
review.
The petitioner has standing to bring this taxpayer's suit because the petition
seeks to compel PEA to comply with its constitutional duties. There are two
constitutional issues involved here. First is the right of citizens to information
on matters of public concern. Second is the application of a constitutional
provision intended to insure the equitable distribution of alienable lands of the
public domain among Filipino citizens. The thrust of the first issue is to compel
PEA to disclose publicly information on the sale of government lands worth
billions of pesos, information which the Constitution and statutory law mandate
PEA to disclose. The thrust of the second issue is to prevent PEA from
alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional
duty to the nation.
Moreover, the petition raises matters of transcendental importance to the
public. In Chavez v. PCGG,28 the Court upheld the right of a citizen to bring a
taxpayer's suit on matters of transcendental importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten
wealth of the Marcoses is an issue of 'transcendental importance to the
public.' He asserts that ordinary taxpayers have a right to initiate and
prosecute actions questioning the validity of acts or orders of
government agencies or instrumentalities, if the issues raised are of
'paramount public interest,' and if they 'immediately affect the social,
economic and moral well being of the people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of
personal interest, when the proceeding involves the assertion of a
public right, such as in this case. He invokes several decisions of this
Court which have set aside the procedural matter of locus standi, when
the subject of the case involved public interest.
xxx
In Tañada v. Tuvera, the Court asserted that when the issue concerns
a public right and the object of mandamus is to obtain the enforcement
of a public duty, the people are regarded as the real parties in interest;
and because it is sufficient that petitioner is a citizen and as such is
interested in the execution of the laws, he need not show that he has
any legal or special interest in the result of the action. In the aforesaid
case, the petitioners sought to enforce their right to be informed on
matters of public concern, a right then recognized in Section 6, Article
IV of the 1973 Constitution, in connection with the rule that laws in
order to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated. In ruling for the
petitioners' legal standing, the Court declared that the right they sought
 to be enforced 'is a public right recognized by no less than the
fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Tañada, further
declared that 'when a mandamus proceeding involves the assertion of
a public right, the requirement of personal interest is satisfied by the
mere fact that petitioner is a citizen and, therefore, part of the general
'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public
funds may not have been involved under the questioned contract for
the development, management and operation of the Manila
International Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject contract] . . . in
the economic development of the country and the magnitude of the
financial consideration involved.' We concluded that, as a
consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to
information and access to official records, documents and papers — a
right guaranteed under Section 7, Article III of the 1987 Constitution.
Petitioner, a former solicitor general, is a Filipino citizen. Because of
the satisfaction of the two basic requisites laid down by decisional law
to sustain petitioner's legal standing, i.e. (1) the enforcement of a
public right (2) espoused by a Filipino citizen, we rule that the petition
at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights - to information and to the equitable
diffusion of natural resources - matters of transcendental public importance,
the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes
official information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to
information on matters of public concern in this manner:
"Sec. 7. The right of the people to information on matters of public
concern shall be recognized. Access to official records, and to
documents, and papers pertaining to official acts, transactions, or
decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest
reinforces the people's right to information on matters of public concern. This
State policy is expressed in Section 28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State
adopts and implements a policy of full public disclosure of all its
transactions involving public interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in
policy-making and in the operations of the government, as well as provide the
people sufficient information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom of expression. If
the government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to
hold public officials "at all times x x x accountable to the people," 29 for unless
citizens have the proper information, they cannot hold public officials
accountable for anything. Armed with the right information, citizens can
participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential to
the existence and proper functioning of any democracy. As explained by the
Court in Valmonte v. Belmonte, Jr.30 –
"An essential element of these freedoms is to keep open a continuing
dialogue or process of communication between the government and
the people. It is in the interest of the State that the channels for free
political discussion be maintained to the end that the government may
perceive and be responsive to the people's will. Yet, this open dialogue
can be effective only to the extent that the citizenry is informed and
thus able to formulate its will intelligently. Only when the participants in
the discussion are aware of the issues and have access to information
relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations
the right to information is limited to "definite propositions of the government."
PEA maintains the right does not include access to "intra-agency or inter-
agency recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the 'exploratory
stage'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-
decisional stage or before the closing of the transaction. To support its
contention, AMARI cites the following discussion in the 1986 Constitutional
Commission:
"Mr. Suarez. And when we say 'transactions' which should be
distinguished from contracts, agreements, or treaties or whatever, does
the Gentleman refer to the steps leading to the consummation of the
contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and
therefore, it can cover both steps leading to a contract and
already a consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading
to the consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the
national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner
can invoke the right. Requiring government officials to reveal their
deliberations at the pre-decisional stage will degrade the quality of decision-
making in government agencies. Government officials will hesitate to express
their real sentiments during deliberations if there is immediate public
dissemination of their discussions, putting them under all kinds of pressure
before they decide.
We must first distinguish between information the law on public bidding
requires PEA to disclose publicly, and information the constitutional right to
information requires PEA to release to the public. Before the consummation of
the contract, PEA must, on its own and without demand from anyone, disclose
to the public matters relating to the disposition of its property. These include
the size, location, technical description and nature of the property being
disposed of, the terms and conditions of the disposition, the parties qualified to
bid, the minimum price and similar information. PEA must prepare all these
data and disclose them to the public at the start of the disposition process,
long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure,
any citizen can demand from PEA this information at any time during the
bidding process.
Information, however, on on-going evaluation or review of bids or proposals
being undertaken by the bidding or review committee is not immediately
accessible under the right to information. While the evaluation or review is still
on-going, there are no "official acts, transactions, or decisions" on the bids or
proposals. However, once the committee makes its official recommendation,
there arises a "definite proposition" on the part of the government. From this
moment, the public's right to information attaches, and any citizen can access
all the non-proprietary information leading to such definite proposition.
In Chavez v. PCGG,33 the Court ruled as follows:
"Considering the intent of the framers of the Constitution, we believe
that it is incumbent upon the PCGG and its officers, as well as other
government representatives, to disclose sufficient public information on
any proposed settlement they have decided to take up with the
ostensible owners and holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of the government, not
necessarily to intra-agency or inter-agency recommendations or
communications during the stage when common assertions are still in
the process of being formulated or are in the "exploratory" stage. There
is need, of course, to observe the same restrictions on disclosure of
information in general, as discussed earlier – such as on matters
involving national security, diplomatic or foreign relations, intelligence
and other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information "contemplates inclusion
of negotiations leading to the consummation of the
transaction." Certainly, a consummated contract is not a requirement for the
exercise of the right to information. Otherwise, the people can never exercise
the right if no contract is consummated, and if one is consummated, it may be
too late for the public to expose its defects.
1âwphi1.nêt
Requiring a consummated contract will keep the public in the dark until the
contract, which may be grossly disadvantageous to the government or even
illegal, becomes a fait accompli. This negates the State policy of full
transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the
citizenry from participating in the public discussion of any proposed contract,
effectively truncating a basic right enshrined in the Bill of Rights. We can allow
neither an emasculation of a constitutional right, nor a retreat by the State of its
avowed "policy of full disclosure of all its transactions involving public interest."
The right covers three categories of information which are "matters of public
concern," namely: (1) official records; (2) documents and papers pertaining to
official acts, transactions and decisions; and (3) government research data
used in formulating policies. The first category refers to any document that is
part of the public records in the custody of government agencies or officials.
The second category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official acts,
transactions or decisions of government agencies or officials. The third
category refers to research data, whether raw, collated or processed, owned
by the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA
includes evaluation reports, recommendations, legal and expert opinions,
minutes of meetings, terms of reference and other documents attached to such
reports or minutes, all relating to the JVA. However, the right to information
does not compel PEA to prepare lists, abstracts, summaries and the like
relating to the renegotiation of the JVA. 34 The right only affords access to
records, documents and papers, which means the opportunity to inspect and
copy them. One who exercises the right must copy the records, documents
and papers at his expense. The exercise of the right is also subject to
reasonable regulations to protect the integrity of the public records and to
minimize disruption to government operations, like rules specifying when and
how to conduct the inspection and copying. 35
The right to information, however, does not extend to matters recognized as
privileged information under the separation of powers.36 The right does not also
apply to information on military and diplomatic secrets, information affecting
national security, and information on investigations of crimes by law
enforcement agencies before the prosecution of the accused, which courts
have long recognized as confidential.37 The right may also be subject to other
limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is
privileged information rooted in the separation of powers. The information does
not cover Presidential conversations, correspondences, or discussions during
closed-door Cabinet meetings which, like internal deliberations of the Supreme
Court and other collegiate courts, or executive sessions of either house of
Congress,38 are recognized as confidential. This kind of information cannot be
pried open by a co-equal branch of government. A frank exchange of
exploratory ideas and assessments, free from the glare of publicity and
pressure by interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential, Legislative and
Judicial power.39 This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official
information on on-going negotiations before a final contract. The information,
however, must constitute definite propositions by the government and should
not cover recognized exceptions like privileged information, military and
diplomatic secrets and similar matters affecting national security and public
order.40 Congress has also prescribed other limitations on the right to
information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA for the transfer to
AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is
rooted in the Regalian doctrine which holds that the State owns all lands and
waters of the public domain. Upon the Spanish conquest of the Philippines,
ownership of all "lands, territories and possessions" in the Philippines passed
to the Spanish Crown.42 The King, as the sovereign ruler and representative of
the people, acquired and owned all lands and territories in the Philippines
except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine
substituting, however, the State, in lieu of the King, as the owner of all lands
and waters of the public domain. The Regalian doctrine is the foundation of the
time-honored principle of land ownership that "all lands that were not acquired
from the Government, either by purchase or by grant, belong to the public
domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of the
Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the
ownership and disposition of reclaimed lands in the Philippines. On May 18,
1907, the Philippine Commission enacted Act No. 1654 which provided for the
lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. Later, on November 29, 1919, the Philippine
Legislature approved Act No. 2874, the Public Land Act, which authorized the
lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. On November 7, 1936, the National Assembly
passed Commonwealth Act No. 141, also known as the Public Land Act,
which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this
day as the general law governing the classification and disposition of lands of
the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and
all waters within the maritime zone of the Spanish territory belonged to the
public domain for public use.44 The Spanish Law of Waters of 1866 allowed the
reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of works
constructed by the State, or by the provinces, pueblos or private
persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the
grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to
the party undertaking the reclamation, provided the government issued the
necessary permit and did not reserve ownership of the reclaimed land to the
State.
Article 339 of the Civil Code of 1889 defined property of public dominion as
follows:
"Art. 339. Property of public dominion is –
1. That devoted to public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, riverbanks, shores,
roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of
general public use, is employed in some public service, or in the
development of the national wealth, such as walls, fortresses, and
other works for the defense of the territory, and mines, until granted to
private individuals."
Property devoted to public use referred to property open for use by the public.
In contrast, property devoted to public service referred to property used for
some specific public service and open only to those authorized to use the
property.
Property of public dominion referred not only to property devoted to public use,
but also to property not so used but employed to develop the national
wealth. This class of property constituted property of public dominion although
employed for some economic or commercial activity to increase the national
wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property
of public dominion into private property, to wit:
"Art. 341. Property of public dominion, when no longer devoted to
public use or to the defense of the territory, shall become a part of the
private property of the State."
This provision, however, was not self-executing. The legislature, or the
executive department pursuant to law, must declare the property no longer
needed for public use or territorial defense before the government could lease
or alienate the property to private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which
regulated the lease of reclaimed and foreshore lands. The salient provisions of
this law were as follows:
"Section 1. The control and disposition of the foreshore as defined
in existing law, and the title to all Government or public lands made
or reclaimed by the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by the
Government without prejudice to vested rights and without prejudice
to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government
or public lands made or reclaimed by the Government by dredging or
filling or otherwise to be divided into lots or blocks, with the necessary
streets and alleyways located thereon, and shall cause plats and plans
of such surveys to be prepared and filed with the Bureau of Lands.
 (b) Upon completion of such plats and plans the Governor-General
shall give notice to the public that such parts of the lands so
made or reclaimed as are not needed for public purposes will be
leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the
highest and best bidder therefore, subject to such regulations and
safeguards as the Governor-General may by executive order
prescribe." (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government control
and disposition of foreshore lands. Private parties could lease lands reclaimed
by the government only if these lands were no longer needed for public
purpose. Act No. 1654 mandated public bidding in the lease of government
reclaimed lands. Act No. 1654 made government reclaimed lands sui
generis in that unlike other public lands which the government could sell to
private parties, these reclaimed lands were available only for lease to private
parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters
of 1866. Act No. 1654 did not prohibit private parties from reclaiming parts of
the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from
the sea by private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the
Public Land Act.46 The salient provisions of Act No. 2874, on reclaimed lands,
were as follows:
"Sec. 6. The Governor-General, upon the recommendation of the
Secretary of Agriculture and Natural Resources, shall from time to
time classify the lands of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of
alienable or disposable public lands, the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural
Resources, shall from time to time declare what lands are open to
disposition or concession under this Act."
Sec. 8. Only those lands shall be declared open to disposition or
concession which have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither
timber nor mineral land, shall be classified as suitable for residential
purposes or for commercial, industrial, or other productive
purposes other than agricultural purposes, and shall be open to
disposition or concession, shall be disposed of under the provisions of
this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as
follows:
(a) Lands reclaimed by the Government by dredging,
filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon
the shores or banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section
fifty-six shall be disposed of to private parties by lease only and
not otherwise, as soon as the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural
Resources, shall declare that the same are not necessary for the
public service and are open to disposition under this chapter. The
 lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands
of the public domain into x x x alienable or disposable" 47 lands. Section 7 of the
Act empowered the Governor-General to "declare what lands are open to
disposition or concession." Section 8 of the Act limited alienable or disposable
lands only to those lands which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title 48 shall
be classified" as government reclaimed, foreshore and marshy lands, as well
as other lands. All these lands, however, must be suitable for residential,
commercial, industrial or other productive non-agricultural purposes. These
provisions vested upon the Governor-General the power to classify inalienable
lands of the public domain into disposable lands of the public domain. These
provisions also empowered the Governor-General to classify further such
disposable lands of the public domain into government reclaimed, foreshore or
marshy lands of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the
public domain classified as government reclaimed, foreshore and marshy
lands "shall be disposed of to private parties by lease only and not
otherwise." The Governor-General, before allowing the lease of these lands
to private parties, must formally declare that the lands were "not necessary for
the public service." Act No. 2874 reiterated the State policy to lease and not to
sell government reclaimed, foreshore and marshy lands of the public domain,
a policy first enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only alienable or
disposable lands of the public domain that the government could not sell to
private parties.
The rationale behind this State policy is obvious. Government reclaimed,
foreshore and marshy public lands for non-agricultural purposes retain their
inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands to
private parties. The State always reserved these lands for some future public
service.
Act No. 2874 did not authorize the reclassification of government reclaimed,
foreshore and marshy lands into other non-agricultural lands under Section 56
(d). Lands falling under Section 56 (d) were the only lands for non-agricultural
purposes the government could sell to private parties. Thus, under Act No.
2874, the government could not sell government reclaimed, foreshore and
marshy lands to private parties, unless the legislature passed a law
allowing their sale.49
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea
pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed
from the sea by private parties with government permission remained private
lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the
Filipino people. The 1935 Constitution, in adopting the Regalian doctrine,
declared in Section 1, Article XIII, that –
"Section 1. All agricultural, timber, and mineral lands of the public
domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy and other natural resources of the
Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines
or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources,
with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be
granted for a period exceeding twenty-five years, renewable for
another twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of
water power, in which cases beneficial use may be the measure and
limit of the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except
public agricultural lands, which were the only natural resources the State could
alienate. Thus, foreshore lands, considered part of the State's natural
resources, became inalienable by constitutional fiat, available only for lease for
25 years, renewable for another 25 years. The government could alienate
foreshore lands only after these lands were reclaimed and classified as
alienable agricultural lands of the public domain. Government reclaimed and
marshy lands of the public domain, being neither timber nor mineral lands, fell
under the classification of public agricultural lands. 50 However, government
reclaimed and marshy lands, although subject to classification as disposable "officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as
public agricultural lands, could only be leased and not sold to private parties follows:
because of Act No. 2874.
"Sec. 6. The President, upon the recommendation of the Secretary
The prohibition on private parties from acquiring ownership of government of Agriculture and Commerce, shall from time to time classify the
reclaimed and marshy lands of the public domain was only a statutory lands of the public domain into –
prohibition and the legislature could therefore remove such prohibition. The
1935 Constitution did not prohibit individuals and corporations from acquiring (a) Alienable or disposable,
government reclaimed and marshy lands of the public domain that were
classified as agricultural lands under existing public land laws. Section 2, (b) Timber, and
Article XIII of the 1935 Constitution provided as follows:
(c) Mineral lands,
"Section 2. No private corporation or association may acquire,
lease, or hold public agricultural lands in excess of one thousand
and may at any time and in like manner transfer such lands from one
and twenty four hectares, nor may any individual acquire such
class to another,53 for the purpose of their administration and
lands by purchase in excess of one hundred and forty hectares,
disposition.
or by lease in excess of one thousand and twenty-four hectares,
or by homestead in excess of twenty-four hectares. Lands adapted to
grazing, not exceeding two thousand hectares, may be leased to an Sec. 7. For the purposes of the administration and disposition of
individual, private corporation, or association." (Emphasis supplied) alienable or disposable public lands, the President, upon
recommendation by the Secretary of Agriculture and Commerce,
shall from time to time declare what lands are open to disposition
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal
or concession under this Act.
Section 58 of Act No. 2874 to open for sale to private parties government
reclaimed and marshy lands of the public domain. On the contrary, the
legislature continued the long established State policy of retaining for the Sec. 8. Only those lands shall be declared open to disposition or
government title and ownership of government reclaimed and marshy lands of concession which have been officially delimited and
the public domain. classified and, when practicable, surveyed, and which have not
been reserved for public or quasi-public uses, nor appropriated by
the Government, nor in any manner become private property, nor
Commonwealth Act No. 141 of the Philippine National Assembly
those on which a private right authorized and recognized by this Act or
any other valid law may be claimed, or which, having been reserved or
On November 7, 1936, the National Assembly approved Commonwealth Act appropriated, have ceased to be so. x x x."
No. 141, also known as the Public Land Act, which compiled the then existing
laws on lands of the public domain. CA No. 141, as amended, remains to this
Thus, before the government could alienate or dispose of lands of the public
day the existing general law governing the classification and disposition of
domain, the President must first officially classify these lands as alienable or
lands of the public domain other than timber and mineral lands. 51
disposable, and then declare them open to disposition or concession. There
must be no law reserving these lands for public or quasi-public uses.
Section 6 of CA No. 141 empowers the President to classify lands of the public
domain into "alienable or disposable"52 lands of the public domain, which prior
The salient provisions of CA No. 141, on government reclaimed, foreshore and
to such classification are inalienable and outside the commerce of man.
marshy lands of the public domain, are as follows:
Section 7 of CA No. 141 authorizes the President to "declare what lands are
open to disposition or concession." Section 8 of CA No. 141 states that the
government can declare open for disposition or concession only lands that are
 "Sec. 58. Any tract of land of the public domain which, being
neither timber nor mineral land, is intended to be used for
residential purposes or for commercial, industrial, or other
productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the
provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as
follows:
(a) Lands reclaimed by the Government by dredging,
filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon
the shores or banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or
sold, as the case may be, to any person, corporation, or association
authorized to purchase or lease public lands for agricultural purposes.
x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section
fifty-nine shall be disposed of to private parties by lease only and
not otherwise, as soon as the President, upon recommendation by
the Secretary of Agriculture, shall declare that the same are not
necessary for the public service and are open to disposition under
this chapter. The lands included in class (d) may be disposed of by
sale or lease under the provisions of this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935
Constitution, Section 58 of Act No. 2874 prohibiting the sale of government
reclaimed, foreshore and marshy disposable lands of the public domain. All
these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such
lands to private parties. The government could sell to private parties only lands
falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural
purposes not classified as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became
inalienable under the 1935 Constitution which only allowed the lease of these
lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public
domain intended for residential, commercial, industrial or other productive
purposes other than agricultural "shall be disposed of under the provisions
of this chapter and not otherwise." Under Section 10 of CA No. 141, the
term "disposition" includes lease of the land. Any disposition of government
reclaimed, foreshore and marshy disposable lands for non-agricultural
purposes must comply with Chapter IX, Title III of CA No. 141,54 unless a
subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate
Corporation v. Court of Appeals,55 Justice Reynato S. Puno summarized
succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for public use.
So too are lands reclaimed by the government by dredging, filling, or
other means. Act 1654 mandated that the control and disposition of the
foreshore and lands under water remained in the national government.
Said law allowed only the 'leasing' of reclaimed land. The Public Land
Acts of 1919 and 1936 also declared that the foreshore and lands
reclaimed by the government were to be "disposed of to private parties
by lease only and not otherwise." Before leasing, however, the
Governor-General, upon recommendation of the Secretary of
Agriculture and Natural Resources, had first to determine that the land
reclaimed was not necessary for the public service. This requisite must
have been met before the land could be disposed of. But even then,
the foreshore and lands under water were not to be alienated and
sold to private parties. The disposition of the reclaimed land was
only by lease. The land remained property of the State." (Emphasis
supplied)
As observed by Justice Puno in his concurring opinion, "Commonwealth Act
No. 141 has remained in effect at present."
The State policy prohibiting the sale to private parties of government
reclaimed, foreshore and marshy alienable lands of the public domain, first
implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935
Constitution took effect. The prohibition on the sale of foreshore lands,
however, became a constitutional edict under the 1935 Constitution. Foreshore
lands became inalienable as natural resources of the State, unless reclaimed
by the government and classified as agricultural lands of the public domain, in
which case they would fall under the classification of government reclaimed
lands.
After the effectivity of the 1935 Constitution, government reclaimed and
marshy disposable lands of the public domain continued to be only leased and
not sold to private parties.56 These lands remained sui generis, as the only
alienable or disposable lands of the public domain the government could not
sell to private parties.
Since then and until now, the only way the government can sell to private
parties government reclaimed and marshy disposable lands of the public
domain is for the legislature to pass a law authorizing such sale. CA No. 141
does not authorize the President to reclassify government reclaimed and
marshy lands into other non-agricultural lands under Section 59 (d). Lands
classified under Section 59 (d) are the only alienable or disposable lands for
non-agricultural purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional
authority before lands under Section 59 that the government previously
transferred to government units or entities could be sold to private parties.
Section 60 of CA No. 141 declares that –
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the
judgment of the Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which such sale or lease is
requested, and shall not exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said
entities conducive to the public interest; but the land so granted,
donated, or transferred to a province, municipality or branch or
subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its
title, except when authorized by Congress: x x x." (Emphasis
supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the
legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public
lands that could be acquired from the State. These government units and
entities should not just turn around and sell these lands to private parties in
violation of constitutional or statutory limitations. Otherwise, the transfer of
lands for non-agricultural purposes to government units and entities could be
used to circumvent constitutional limitations on ownership of alienable or
disposable lands of the public domain. In the same manner, such transfers
could also be used to evade the statutory prohibition in CA No. 141 on the sale
of government reclaimed and marshy lands of the public domain to private
parties. Section 60 of CA No. 141 constitutes by operation of law a lien on
these lands.57
In case of sale or lease of disposable lands of the public domain falling under
Section 59 of CA No. 141, Sections 63 and 67 require a public bidding.
Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are
not needed for public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce (now the Secretary of Natural
Resources) for authority to dispose of the same. Upon receipt of such
authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or sales of
agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and
adjudication shall be made to the highest bidder. x x x." (Emphasis
supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases
or sales of alienable or disposable lands of the public domain. 58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal
Section 5 of the Spanish Law of Waters of 1866. Private parties could still
reclaim portions of the sea with government permission. However,
the reclaimed land could become private land only if classified as
alienable agricultural land of the public domain open to disposition under
CA No. 141. The 1935 Constitution prohibited the alienation of all natural
resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of
public dominion found in the Civil Code of 1889. Articles 420 and 422 of the
Civil Code of 1950 state that –
"Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the
national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial
property of the State."
Again, the government must formally declare that the property of public
dominion is no longer needed for public use or public service, before the same
could be classified as patrimonial property of the State. 59 In the case of
government reclaimed and marshy lands of the public domain, the declaration
of their being disposable, as well as the manner of their disposition, is
governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of
public dominion those properties of the State which, without being for public
use, are intended for public service or the "development of the national
wealth." Thus, government reclaimed and marshy lands of the State, even if
not employed for public use or public service, if developed to enhance the
national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise
adopted the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution
stated that –
"Sec. 8. All lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
fisheries, wildlife, and other natural resources of the Philippines belong
to the State. With the exception of agricultural, industrial or
commercial, residential, and resettlement lands of the public
domain, natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development, exploitation, or
utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more than twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which
cases, beneficial use may be the measure and the limit of the grant."
(Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of "agricultural, industrial or commercial, residential, and
resettlement lands of the public domain." In contrast, the 1935 Constitution
barred the alienation of all natural resources except "public agricultural lands."
However, the term "public agricultural lands" in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement lands of the
public domain.60 If the land of public domain were neither timber nor mineral
land, it would fall under the classification of agricultural land of the public
domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the
alienation of all natural resources except agricultural lands of the public
domain.
The 1973 Constitution, however, limited the alienation of lands of the public
domain to individuals who were citizens of the Philippines. Private
corporations, even if wholly owned by Philippine citizens, were no longer
allowed to acquire alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution declared that –
"Sec. 11. The Batasang Pambansa, taking into account conservation,
ecological, and development requirements of the natural resources,
shall determine by law the size of land of the public domain which may
be developed, held or acquired by, or leased to, any qualified
individual, corporation, or association, and the conditions therefor. No
private corporation or association may hold alienable lands of the
public domain except by lease not to exceed one thousand hectares
in area nor may any citizen hold such lands by lease in excess of five
hundred hectares or acquire by purchase, homestead or grant, in
excess of twenty-four hectares. No private corporation or association
 may hold by lease, concession, license or permit, timber or forest lands
and other timber or forest resources in excess of one hundred
thousand hectares. However, such area may be increased by the
Batasang Pambansa upon recommendation of the National Economic
and Development Authority." (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable
lands of the public domain only through lease. Only individuals could now
acquire alienable lands of the public domain, and private corporations
became absolutely barred from acquiring any kind of alienable land of
the public domain. The constitutional ban extended to all kinds of alienable
lands of the public domain, while the statutory ban under CA No. 141 applied
only to government reclaimed, foreshore and marshy alienable lands of the
public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential
Decree No. 1084 creating PEA, a wholly government owned and controlled
corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests
PEA with the following purposes and powers:
"Sec. 4. Purpose. The Authority is hereby created for the following
purposes:
(a) To reclaim land, including foreshore and submerged areas, by
dredging, filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide,
dispose, lease and sell any and all kinds of lands, buildings, estates
and other forms of real property, owned, managed, controlled and/or
operated by the government;
(c) To provide for, operate or administer such service as may be
necessary for the efficient, economical and beneficial utilization of the
above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in
carrying out the purposes for which it is created, have the following
powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area
permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any
stream, watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be
necessary for the attainment of the purposes and objectives herein
specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas
of the public domain. Foreshore areas are those covered and uncovered by
the ebb and flow of the tide.61 Submerged areas are those permanently under
water regardless of the ebb and flow of the tide. 62 Foreshore and submerged
areas indisputably belong to the public domain63 and are inalienable unless
reclaimed, classified as alienable lands open to disposition, and further
declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring
alienable lands of the public domain did not apply to PEA since it was then,
and until today, a fully owned government corporation. The constitutional ban
applied then, as it still applies now, only to "private corporations and
associations." PD No. 1084 expressly empowers PEA "to hold lands of the
public domain" even "in excess of the area permitted to private corporations
by statute." Thus, PEA can hold title to private lands, as well as title to
lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands
of the public domain, there must be legislative authority empowering PEA to
sell these lands. This legislative authority is necessary in view of Section 60 of
CA No.141, which states –
"Sec. 60. x x x; but the land so granted, donated or transferred to a
province, municipality, or branch or subdivision of the Government
shall not be alienated, encumbered or otherwise disposed of in a
 manner affecting its title, except when authorized by Congress; x x
x." (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public domain.
Nevertheless, any legislative authority granted to PEA to sell its reclaimed
alienable lands of the public domain would be subject to the constitutional ban
on private corporations from acquiring alienable lands of the public domain.
Hence, such legislative authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has
adopted the Regalian doctrine. The 1987 Constitution declares that all natural
resources are "owned by the State," and except for alienable agricultural
lands of the public domain, natural resources cannot be alienated. Sections 2
and 3, Article XII of the 1987 Constitution state that –
"Section 2. All lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural
resources shall be under the full control and supervision of the State. x
x x.
Section 3. Lands of the public domain are classified into agricultural,
forest or timber, mineral lands, and national parks. Agricultural lands of
the public domain may be further classified by law according to the
uses which they may be devoted. Alienable lands of the public
domain shall be limited to agricultural lands. Private corporations
or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and not to
exceed one thousand hectares in area. Citizens of the Philippines
may lease not more than five hundred hectares, or acquire not more
than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and
development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the
conditions therefor." (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution
banning private corporations from acquiring any kind of alienable land of
the public domain. Like the 1973 Constitution, the 1987 Constitution allows
private corporations to hold alienable lands of the public domain only through
lease. As in the 1935 and 1973 Constitutions, the general law governing the
lease to private corporations of reclaimed, foreshore and marshy alienable
lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring,
except through lease, alienable lands of the public domain is not well
understood. During the deliberations of the 1986 Constitutional Commission,
the commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to
page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the
public domain except by lease, not to exceed one thousand hectares in
area.'
If we recall, this provision did not exist under the 1935 Constitution, but
this was introduced in the 1973 Constitution. In effect, it prohibits
private corporations from acquiring alienable public lands. But it has
not been very clear in jurisprudence what the reason for this is. In
some of the cases decided in 1982 and 1983, it was indicated that
the purpose of this is to prevent large landholdings. Is that the
intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there
were instances where the Iglesia ni Cristo was not allowed to acquire a
mere 313-square meter land where a chapel stood because the
Supreme Court said it would be in violation of this." (Emphasis
supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional
ban in this way:
"Indeed, one purpose of the constitutional prohibition against
purchases of public agricultural lands by private corporations is to
equitably diffuse land ownership or to encourage 'owner-cultivatorship
and the economic family-size farm' and to prevent a recurrence of
cases like the instant case. Huge landholdings by corporations or
private persons had spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the
Constitution could have simply limited the size of alienable lands of the public
domain that corporations could acquire. The Constitution could have followed
the limitations on individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution, and not more
than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing
the land in the name of a corporation would be more effective in preventing the
break-up of farmlands. If the farmland is registered in the name of a
corporation, upon the death of the owner, his heirs would inherit shares in the
corporation instead of subdivided parcels of the farmland. This would prevent
the continuing break-up of farmlands into smaller and smaller plots from one
generation to the next.
In actual practice, the constitutional ban strengthens the constitutional
limitation on individuals from acquiring more than the allowed area of alienable
lands of the public domain. Without the constitutional ban, individuals who
already acquired the maximum area of alienable lands of the public domain
could easily set up corporations to acquire more alienable public lands. An
individual could own as many corporations as his means would allow him. An
individual could even hide his ownership of a corporation by putting his
nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals
of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer
ownership of only a limited area of alienable land of the public domain to a
qualified individual. This constitutional intent is safeguarded by the provision
prohibiting corporations from acquiring alienable lands of the public domain,
since the vehicle to circumvent the constitutional intent is removed. The
available alienable public lands are gradually decreasing in the face of an
ever-growing population. The most effective way to insure faithful adherence to
this constitutional intent is to grant or sell alienable lands of the public domain
only to individuals. This, it would seem, is the practical benefit arising from the
constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas
clause, consists of three properties, namely:
1. "[T]hree partially reclaimed and substantially eroded islands along
Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro
Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three
islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350
hectares more or less to regularize the configuration of the reclaimed
area."65
PEA confirms that the Amended JVA involves "the development of the
Freedom Islands and further reclamation of about 250 hectares x x x," plus an
option "granted to AMARI to subsequently reclaim another 350 hectares x x
x."66
In short, the Amended JVA covers a reclamation area of 750 hectares. Only
157.84 hectares of the 750-hectare reclamation project have been
reclaimed, and the rest of the 592.15 hectares are still submerged areas
forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the Freedom
Islands. AMARI will also complete, at its own expense, the reclamation of the
Freedom Islands. AMARI will further shoulder all the reclamation costs of all
the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and
PEA will share, in the proportion of 70 percent and 30 percent, respectively,
the total net usable area which is defined in the Amended JVA as the total
reclaimed area less 30 percent earmarked for common areas. Title to AMARI's
share in the net usable area, totaling 367.5 hectares, will be issued in the
name of AMARI. Section 5.2 (c) of the Amended JVA provides that –
 "x x x, PEA shall have the duty to execute without delay the necessary xxx
deed of transfer or conveyance of the title pertaining to AMARI's Land
share based on the Land Allocation Plan. PEA, when requested in Section 3. x x x Alienable lands of the public domain shall be limited to
writing by AMARI, shall then cause the issuance and delivery of agricultural lands. Private corporations or associations may not
the proper certificates of title covering AMARI's Land Share in the hold such alienable lands of the public domain except by lease, x
name of AMARI, x x x; provided, that if more than seventy percent x x."(Emphasis supplied)
(70%) of the titled area at any given time pertains to AMARI, PEA shall
deliver to AMARI only seventy percent (70%) of the titles pertaining to Classification of Reclaimed Foreshore and Submerged Areas
AMARI, until such time when a corresponding proportionate area of
additional land pertaining to PEA has been titled." (Emphasis supplied)
PEA readily concedes that lands reclaimed from foreshore or submerged
areas of Manila Bay are alienable or disposable lands of the public domain. In
Indisputably, under the Amended JVA AMARI will acquire and own a its Memorandum,67 PEA admits that –
maximum of 367.5 hectares of reclaimed land which will be titled in its
name.
"Under the Public Land Act (CA 141, as amended), reclaimed lands
are classified as alienable and disposable lands of the public
To implement the Amended JVA, PEA delegated to the unincorporated PEA- domain:
AMARI joint venture PEA's statutory authority, rights and privileges to reclaim
foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended
'Sec. 59. The lands disposable under this title shall be
JVA states that –
classified as follows:
"PEA hereby contributes to the joint venture its rights and privileges to
(a) Lands reclaimed by the government by dredging, filling, or
perform Rawland Reclamation and Horizontal Development as well as
other means;
own the Reclamation Area, thereby granting the Joint Venture the full
and exclusive right, authority and privilege to undertake the Project in
accordance with the Master Development Plan." x x x.'" (Emphasis supplied)

The Amended JVA is the product of a renegotiation of the original JVA dated
April 25, 1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and
own under the Amended JVA 367.5 hectares of reclaimed foreshore and
submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the
1987 Constitution which state that:
"Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated. x x x.
Likewise, the Legal Task Force68 constituted under Presidential Administrative
Order No. 365 admitted in its Report and Recommendation to then President
Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and
disposable lands of the public domain."69 The Legal Task Force concluded
that –
"D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory
authority, the rights of ownership and disposition over reclaimed lands
have been transferred to PEA, by virtue of which PEA, as owner, may
validly convey the same to any qualified person without violating the
Constitution or any statute.
The constitutional provision prohibiting private corporations from
holding public land, except by lease (Sec. 3, Art. XVII, 70 1987
 Constitution), does not apply to reclaimed lands whose ownership has
passed on to PEA by statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and
submerged areas of Manila Bay are part of the "lands of the public domain,
waters x x x and other natural resources" and consequently "owned by the
State." As such, foreshore and submerged areas "shall not be alienated,"
unless they are classified as "agricultural lands" of the public domain. The
mere reclamation of these areas by PEA does not convert these inalienable
natural resources of the State into alienable or disposable lands of the public
domain. There must be a law or presidential proclamation officially classifying
these reclaimed lands as alienable or disposable and open to disposition or
concession. Moreover, these reclaimed lands cannot be classified as alienable
or disposable if the law has reserved them for some public or quasi-public
use.71
Section 8 of CA No. 141 provides that "only those lands shall be declared open
to disposition or concession which have been officially delimited and
classified."72 The President has the authority to classify inalienable lands of
the public domain into alienable or disposable lands of the public domain,
pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia, 73 the Executive
Department attempted to sell the Roppongi property in Tokyo, Japan, which
was acquired by the Philippine Government for use as the Chancery of the
Philippine Embassy. Although the Chancery had transferred to another
location thirteen years earlier, the Court still ruled that, under Article 42274 of
the Civil Code, a property of public dominion retains such character until
formally declared otherwise. The Court ruled that –
"The fact that the Roppongi site has not been used for a long time for
actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and Acetylene Co. v.
Bercilles, 66 SCRA 481 [1975]. A property continues to be part of
the public domain, not available for private appropriation or
ownership 'until there is a formal declaration on the part of the
government to withdraw it from being such' (Ignacio v. Director of
Lands, 108 Phil. 335 [1960]." (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special
land patents for lands reclaimed by PEA from the foreshore or submerged
areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino
issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares
comprising the partially reclaimed Freedom Islands. Subsequently, on April 9,
1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos.
7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No.
1529 authorizing the issuance of certificates of title corresponding to land
patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a special
patent covering the Freedom Islands, is equivalent to an official proclamation
classifying the Freedom Islands as alienable or disposable lands of the public
domain. PD No. 1085 and President Aquino's issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for
public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to
qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had
already reclaimed the Freedom Islands although subsequently there were
partial erosions on some areas. The government had also completed the
necessary surveys on these islands. Thus, the Freedom Islands were no
longer part of Manila Bay but part of the land mass. Section 3, Article XII of the
1987 Constitution classifies lands of the public domain into "agricultural, forest
or timber, mineral lands, and national parks." Being neither timber, mineral, nor
national park lands, the reclaimed Freedom Islands necessarily fall under the
classification of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties. All other
natural resources, such as the seas or bays, are "waters x x x owned by the
State" forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP,
then a private corporation, reclaimed the islands under a contract dated
November 20, 1973 with the Commissioner of Public Highways. AMARI, citing
Article 5 of the Spanish Law of Waters of 1866, argues that "if the ownership of
reclaimed lands may be given to the party constructing the works, then it
cannot be said that reclaimed lands are lands of the public domain which the
State may not alienate."75 Article 5 of the Spanish Law of Waters reads as
follows:
"Article 5. Lands reclaimed from the sea in consequence of works
constructed by the State, or by the provinces, pueblos or private
persons, with proper permission, shall become the property of the party
 constructing such works, unless otherwise provided by the terms of
the grant of authority." (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could
reclaim from the sea only with "proper permission" from the State. Private
parties could own the reclaimed land only if not "otherwise provided by the
terms of the grant of authority." This clearly meant that no one could reclaim
from the sea without permission from the State because the sea is property of
public dominion. It also meant that the State could grant or withhold ownership
of the reclaimed land because any reclaimed land, like the sea from which it
emerged, belonged to the State. Thus, a private person reclaiming from the
sea without permission from the State could not acquire ownership of the
reclaimed land which would remain property of public dominion like the sea it
replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-
honored principle of land ownership that "all lands that were not acquired from
the government, either by purchase or by grant, belong to the public domain." 77
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA No.
141 requires that lands of the public domain must first be classified as
alienable or disposable before the government can alienate them. These lands
must not be reserved for public or quasi-public purposes.78 Moreover, the
contract between CDCP and the government was executed after the effectivity
of the 1973 Constitution which barred private corporations from acquiring any
kind of alienable land of the public domain. This contract could not have
converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in the
National Government the power to reclaim lands. Section 1 of PD No. 3-A
declared that –
"The provisions of any law to the contrary notwithstanding, the
reclamation of areas under water, whether foreshore or inland, shall
be limited to the National Government or any person authorized
by it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the
National Government or by a person contracted by the National Government.
Private parties may reclaim from the sea only under a contract with the
National Government, and no longer by grant or permission as provided in
Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as
the National Government's implementing arm to undertake "all reclamation
projects of the government," which "shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity."
Under such contract, a private party receives compensation for reclamation
services rendered to PEA. Payment to the contractor may be in cash, or in
kind consisting of portions of the reclaimed land, subject to the constitutional
ban on private corporations from acquiring alienable lands of the public
domain. The reclaimed land can be used as payment in kind only if the
reclaimed land is first classified as alienable or disposable land open to
disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional
592.15 hectares which are still submerged and forming part of Manila
Bay. There is no legislative or Presidential act classifying these
submerged areas as alienable or disposable lands of the public domain
open to disposition. These submerged areas are not covered by any patent
or certificate of title. There can be no dispute that these submerged areas form
part of the public domain, and in their present state are inalienable and
outside the commerce of man. Until reclaimed from the sea, these
submerged areas are, under the Constitution, "waters x x x owned by the
State," forming part of the public domain and consequently inalienable. Only
when actually reclaimed from the sea can these submerged areas be
classified as public agricultural lands, which under the Constitution are the only
natural resources that the State may alienate. Once reclaimed and
transformed into public agricultural lands, the government may then officially
classify these lands as alienable or disposable lands open to disposition.
Thereafter, the government may declare these lands no longer needed for
public service. Only then can these reclaimed lands be considered alienable or
disposable lands of the public domain and within the commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into
alienable or disposable lands open to disposition is necessary because PEA is
tasked under its charter to undertake public services that require the use of
lands of the public domain. Under Section 5 of PD No. 1084, the functions of
PEA include the following: "[T]o own or operate railroads, tramways and other
kinds of land transportation, x x x; [T]o construct, maintain and operate such
systems of sanitary sewers as may be necessary; [T]o construct, maintain and
operate such storm drains as may be necessary." PEA is empowered to issue
"rules and regulations as may be necessary for the proper use by private
parties of any or all of the highways, roads, utilities, buildings and/or any
of its properties and to impose or collect fees or tolls for their use." Thus, part
of the reclaimed foreshore and submerged lands held by the PEA would
actually be needed for public use or service since many of the functions
imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be
primarily responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government." The same section also
states that "[A]ll reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity; x x x." Thus, under EO
No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary
implementing agency of the National Government to reclaim foreshore and
submerged lands of the public domain. EO No. 525 recognized PEA as the
government entity "to undertake the reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests."79 Since
large portions of these reclaimed lands would obviously be needed for public
service, there must be a formal declaration segregating reclaimed lands no
longer needed for public service from those still needed for public service. 1âwphi1.nêt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall
belong to or be owned by the PEA," could not automatically operate to classify
inalienable lands into alienable or disposable lands of the public domain.
Otherwise, reclaimed foreshore and submerged lands of the public domain
would automatically become alienable once reclaimed by PEA, whether or not
classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084
or EO No. 525, vests in the Department of Environment and Natural
Resources ("DENR" for brevity) the following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable
and disposable public lands, mineral resources and, in the process
of exercising such control, impose appropriate taxes, fees, charges,
rentals and any such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance
of licenses, permits, concessions, lease agreements and such
other privileges concerning the development, exploration and
utilization of the country's marine, freshwater, and brackish water
and over all aquatic resources of the country and shall continue
to oversee, supervise and police our natural resources; cancel or
cause to cancel such privileges upon failure, non-compliance or
violations of any regulation, order, and for all other causes which are in
furtherance of the conservation of natural resources and supportive of
the national interest;
(15) Exercise exclusive jurisdiction on the management and
disposition of all lands of the public domain and serve as the sole
agency responsible for classification, sub-classification, surveying
and titling of lands in consultation with appropriate
agencies."80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State,
DENR exercises "supervision and control over alienable and disposable public
lands." DENR also exercises "exclusive jurisdiction on the management and
disposition of all lands of the public domain." Thus, DENR decides whether
areas under water, like foreshore or submerged areas of Manila Bay, should
be reclaimed or not. This means that PEA needs authorization from DENR
before PEA can undertake reclamation projects in Manila Bay, or in any part of
the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of
the public domain. Hence, DENR decides whether reclaimed lands of PEA
should be classified as alienable under Sections 681 and 782 of CA No. 141.
Once DENR decides that the reclaimed lands should be so classified, it then
recommends to the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open to
disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas
under water, while PEA is vested with the power to undertake the physical
reclamation of areas under water, whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain
into alienable or disposable lands subject to the approval of the President. On
the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable
lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or disposable
lands of the public domain, much less patrimonial lands of PEA. Likewise, the
mere transfer by the National Government of lands of the public domain to
PEA does not make the lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA.
Absent two official acts – a classification that these lands are alienable or
disposable and open to disposition and a declaration that these lands are not
needed for public service, lands reclaimed by PEA remain inalienable lands of
the public domain. Only such an official classification and formal declaration
can convert reclaimed lands into alienable or disposable lands of the public
domain, open to disposition under the Constitution, Title I and Title III 83 of CA
No. 141 and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of
the public domain, the reclaimed lands shall be disposed of in accordance with
CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits
that reclaimed lands transferred to a branch or subdivision of the government
"shall not be alienated, encumbered, or otherwise disposed of in a manner
affecting its title, except when authorized by Congress: x x x."85 (Emphasis
by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that –
"Sec. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by
the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property
belonging to the Government. The Court declared that -
"It is not for the President to convey real property of the government on
his or her own sole will. Any such conveyance must be authorized
and approved by a law enacted by the Congress. It requires
executive and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative
authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on
February 4, 1977, provides that –
"The land reclaimed in the foreshore and offshore area of Manila
Bay pursuant to the contract for the reclamation and construction of
the Manila-Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the
Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of the Public
Estates Authority established pursuant to PD No. 1084; Provided,
however, That the rights and interests of the Construction and
Development Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and
assume the obligations of the Republic of the Philippines (Department
of Public Highways) arising from, or incident to, the aforesaid contract
between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public
Estates Authority shall issue in favor of the Republic of the Philippines
the corresponding shares of stock in said entity with an issued value of
said shares of stock (which) shall be deemed fully paid and non-
assessable.
The Secretary of Public Highways and the General Manager of the
Public Estates Authority shall execute such contracts or agreements,
including appropriate agreements with the Construction and
Development Corporation of the Philippines, as may be necessary to
implement the above.
 Special land patent/patents shall be issued by the Secretary of
Natural Resources in favor of the Public Estates Authority without
prejudice to the subsequent transfer to the contractor or his
assignees of such portion or portions of the land reclaimed or to
be reclaimed as provided for in the above-mentioned contract. On
the basis of such patents, the Land Registration Commission
shall issue the corresponding certificate of title." (Emphasis
supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979,
provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be owned
by the PEA which shall be responsible for its administration,
development, utilization or disposition in accordance with the
provisions of Presidential Decree No. 1084. Any and all income that
the PEA may derive from the sale, lease or use of reclaimed lands
shall be used in accordance with the provisions of Presidential Decree
No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA
to sell its reclaimed lands. PD No. 1085 merely transferred "ownership and
administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525
declared that lands reclaimed by PEA "shall belong to or be owned by PEA."
EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in
accordance with the provisions of Presidential Decree No. 1084," the charter of
PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of
lands x x x owned, managed, controlled and/or operated by the
government."87 (Emphasis supplied) There is, therefore, legislative authority
granted to PEA to sell its lands, whether patrimonial or alienable lands of
the public domain. PEA may sell to private parties its patrimonial
properties in accordance with the PEA charter free from constitutional
limitations. The constitutional ban on private corporations from acquiring
alienable lands of the public domain does not apply to the sale of PEA's
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to
private individuals since, with the legislative authority, there is no longer any
statutory prohibition against such sales and the constitutional ban does not
apply to individuals. PEA, however, cannot sell any of its alienable or
disposable lands of the public domain to private corporations since Section 3,
Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain
barred from acquiring any kind of alienable land of the public domain, including
government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could
be transferred by PEA to the "contractor or his assignees" (Emphasis supplied)
would not apply to private corporations but only to individuals because of the
constitutional ban. Otherwise, the provisions of PD No. 1085 would violate
both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable
lands open to disposition, and further declared no longer needed for public
service, PEA would have to conduct a public bidding in selling or leasing these
lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141
requiring public auction, in the absence of a law exempting PEA from holding a
public auction.88 Special Patent No. 3517 expressly states that the patent is
issued by authority of the Constitution and PD No. 1084, "supplemented by
Commonwealth Act No. 141, as amended." This is an acknowledgment that
the provisions of CA No. 141 apply to the disposition of reclaimed alienable
lands of the public domain unless otherwise provided by law. Executive Order
No. 654,89 which authorizes PEA "to determine the kind and manner of
payment for the transfer" of its assets and properties, does not exempt PEA
from the requirement of public auction. EO No. 654 merely authorizes PEA to
decide the mode of payment, whether in kind and in installment, but does not
authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the
Government Auditing Code, the government is required to sell valuable
government property through public bidding. Section 79 of PD No. 1445
mandates that –
"Section 79. When government property has become unserviceable
for any cause, or is no longer needed, it shall, upon application of the
officer accountable therefor, be inspected by the head of the agency or
his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsaleable, it may be
destroyed in their presence. If found to be valuable, it may be sold
 at public auction to the highest bidder under the supervision of the
proper committee on award or similar body in the presence of the
auditor concerned or other authorized representative of the
Commission, after advertising by printed notice in the Official
Gazette, or for not less than three consecutive days in any
newspaper of general circulation, or where the value of the property
does not warrant the expense of publication, by notices posted for a
like period in at least three public places in the locality where the
property is to be sold. In the event that the public auction fails, the
property may be sold at a private sale at such price as may be
fixed by the same committee or body concerned and approved by
the Commission."
It is only when the public auction fails that a negotiated sale is allowed, in
which case the Commission on Audit must approve the selling price. 90 The
Commission on Audit implements Section 79 of the Government Auditing
Code through Circular No. 89-29691 dated January 27, 1989. This circular
emphasizes that government assets must be disposed of only through public
auction, and a negotiated sale can be resorted to only in case of "failure of
public auction."
At the public auction sale, only Philippine citizens are qualified to bid for PEA's
reclaimed foreshore and submerged alienable lands of the public domain.
Private corporations are barred from bidding at the auction sale of any kind of
alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on
December 10, 1991. PEA imposed a condition that the winning bidder should
reclaim another 250 hectares of submerged areas to regularize the shape of
the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas
in favor of the winning bidder.92 No one, however, submitted a bid. On
December 23, 1994, the Government Corporate Counsel advised PEA it could
sell the Freedom Islands through negotiation, without need of another public
bidding, because of the failure of the public bidding on December 10, 1991. 93
However, the original JVA dated April 25, 1995 covered not only the Freedom
Islands and the additional 250 hectares still to be reclaimed, it also granted an
option to AMARI to reclaim another 350 hectares. The original JVA, a
negotiated contract, enlarged the reclamation area to 750 hectares.94 The
failure of public bidding on December 10, 1991, involving only 407.84
hectares,95 is not a valid justification for a negotiated sale of 750 hectares,
almost double the area publicly auctioned. Besides, the failure of public
bidding happened on December 10, 1991, more than three years before the
signing of the original JVA on April 25, 1995. The economic situation in the
country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is
absolute and clear: "Private corporations or associations may not hold such
alienable lands of the public domain except by lease, x x x." Even Republic Act
No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative
authority to sell reclaimed lands to private parties, recognizes the constitutional
ban. Section 6 of RA No. 6957 states –
"Sec. 6. Repayment Scheme. - For the financing, construction,
operation and maintenance of any infrastructure projects undertaken
through the build-operate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the project proponent x
x x may likewise be repaid in the form of a share in the revenue of the
project or other non-monetary payments, such as, but not limited to,
the grant of a portion or percentage of the reclaimed land, subject to
the constitutional requirements with respect to the ownership of
the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the
public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and
AMARI, authorizes local governments in land reclamation projects to pay the
contractor or developer in kind consisting of a percentage of the reclaimed
land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and
Management of Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the
repayment plan may consist of the grant of a portion or percentage of
the reclaimed land or the industrial estate constructed."
Although Section 302 of the Local Government Code does not contain a
proviso similar to that of the BOT Law, the constitutional restrictions on land
ownership automatically apply even though not expressly mentioned in the
Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor
or developer, if a corporate entity, can only be paid with leaseholds on portions
of the reclaimed land. If the contractor or developer is an individual, portions of
the reclaimed land, not exceeding 12 hectares 96 of non-agricultural lands, may
be conveyed to him in ownership in view of the legislative authority allowing
such conveyance. This is the only way these provisions of the BOT Law and
the Local Government Code can avoid a direct collision with Section 3, Article
XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of the
reclaimed lands to public respondent PEA transformed such lands of the public
domain to private lands." This theory is echoed by AMARI which maintains that
the "issuance of the special patent leading to the eventual issuance of title
takes the subject land away from the land of public domain and converts the
property into patrimonial or private property." In short, PEA and AMARI
contend that with the issuance of Special Patent No. 3517 and the
corresponding certificates of titles, the 157.84 hectares comprising the
Freedom Islands have become private lands of PEA. In support of their theory,
PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the Court held –
"Once the patent was granted and the corresponding certificate of title
was issued, the land ceased to be part of the public domain and
became private property over which the Director of Lands has neither
control nor jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared -
"After the registration and issuance of the certificate and duplicate
certificate of title based on a public land patent, the land covered
thereby automatically comes under the operation of Republic Act 496
subject to all the safeguards provided therein."3. Heirs of Gregorio
Tengco v. Heirs of Jose Aliwalas,99 where the Court ruled -
"While the Director of Lands has the power to review homestead
patents, he may do so only so long as the land remains part of the
public domain and continues to be under his exclusive control; but
once the patent is registered and a certificate of title is issued, the land
ceases to be part of the public domain and becomes private property
over which the Director of Lands has neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where the Court held –
"When the lots in dispute were certified as disposable on May 19,
1971, and free patents were issued covering the same in favor of the
private respondents, the said lots ceased to be part of the public
domain and, therefore, the Director of Lands lost jurisdiction over the
same."
5.Republic v. Court of Appeals,101 where the Court stated –
"Proclamation No. 350, dated October 9, 1956, of President
Magsaysay legally effected a land grant to the Mindanao Medical
Center, Bureau of Medical Services, Department of Health, of the
whole lot, validly sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a 'fee simple' title or
absolute title in favor of petitioner Mindanao Medical Center. Thus,
Section 122 of the Act, which governs the registration of grants or
patents involving public lands, provides that 'Whenever public lands in
the Philippine Islands belonging to the Government of the United
States or to the Government of the Philippines are alienated, granted
or conveyed to persons or to public or private corporations, the same
shall be brought forthwith under the operation of this Act (Land
Registration Act, Act 496) and shall become registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the
corresponding certificates of titles issued to private parties. These four cases
uniformly hold that the Director of Lands has no jurisdiction over private lands
or that upon issuance of the certificate of title the land automatically comes
under the Torrens System. The fifth case cited involves the registration under
the Torrens System of a 12.8-hectare public land granted by the National
Government to Mindanao Medical Center, a government unit under the
Department of Health. The National Government transferred the 12.8-hectare
public land to serve as the site for the hospital buildings and other facilities of
Mindanao Medical Center, which performed a public service. The Court
affirmed the registration of the 12.8-hectare public land in the name of
Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is
an example of a public land being registered under Act No. 496 without the
land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in
the name of PEA, a wholly government owned corporation performing public
as well as proprietary functions. No patent or certificate of title has been issued
to any private party. No one is asking the Director of Lands to cancel PEA's
patent or certificates of title. In fact, the thrust of the instant petition is that
PEA's certificates of title should remain with PEA, and the land covered by
these certificates, being alienable lands of the public domain, should not be
sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the
registrant private or public ownership of the land. Registration is not a mode of
acquiring ownership but is merely evidence of ownership previously conferred
by any of the recognized modes of acquiring ownership. Registration does not
give the registrant a better right than what the registrant had prior to the
registration.102 The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands. 103
Jurisprudence holding that upon the grant of the patent or issuance of the
certificate of title the alienable land of the public domain automatically
becomes private land cannot apply to government units and entities like PEA.
The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517
issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution
of the Philippines and in conformity with the provisions of Presidential
Decree No. 1084, supplemented by Commonwealth Act No. 141, as
amended, there are hereby granted and conveyed unto the Public
Estates Authority the aforesaid tracts of land containing a total area of
one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters; the technical description of which are
hereto attached and made an integral part hereof." (Emphasis
supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters
not covered by PD No. 1084. Section 60 of CA No. 141 prohibits, "except
when authorized by Congress," the sale of alienable lands of the public domain
that are transferred to government units or entities. Section 60 of CA No. 141
constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of
the registered land even if not annotated on the certificate of title. 104 Alienable
lands of the public domain held by government entities under Section 60 of CA
No. 141 remain public lands because they cannot be alienated or encumbered
unless Congress passes a law authorizing their disposition. Congress,
however, cannot authorize the sale to private corporations of reclaimed
alienable lands of the public domain because of the constitutional ban. Only
individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section
60 of CA No. 141 does not automatically convert alienable lands of the public
domain into private or patrimonial lands. The alienable lands of the public
domain must be transferred to qualified private parties, or to government
entities not tasked to dispose of public lands, before these lands can become
private or patrimonial lands. Otherwise, the constitutional ban will become
illusory if Congress can declare lands of the public domain as private or
patrimonial lands in the hands of a government agency tasked to dispose of
public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are
concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the
National Government to reclaim foreshore and submerged areas of the public
domain. Thus, EO No. 525 declares that –
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily
Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or
being proposed to be undertaken in various parts of the country which
need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the
Government's declared policy to provide for a coordinated, economical
and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of
areas shall be limited to the National Government or any person
authorized by it under proper contract;
 Whereas, a central authority is needed to act on behalf of the
National Government which shall ensure a coordinated and
integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates
Authority as a government corporation to undertake reclamation
of lands and ensure their maximum utilization in promoting public
welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with
continuing authority to reorganize the national government including
the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution
and pursuant to Presidential Decree No. 1416, do hereby order and
direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily
responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National
Government. All reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken
by the PEA or through a proper contract executed by it with any person
or entity; Provided, that, reclamation projects of any national
government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the
President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR
as the government agency charged with leasing or selling reclaimed lands of
the public domain. The reclaimed lands being leased or sold by PEA are not
private lands, in the same manner that DENR, when it disposes of other
alienable lands, does not dispose of private lands but alienable lands of the
public domain. Only when qualified private parties acquire these lands will the
lands become private lands. In the hands of the government agency tasked
and authorized to dispose of alienable of disposable lands of the public
domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of
the public domain" as well as "any and all kinds of lands." PEA can hold both
lands of the public domain and private lands. Thus, the mere fact that alienable
lands of the public domain like the Freedom Islands are transferred to PEA
and issued land patents or certificates of title in PEA's name does not
automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred
to PEA as private lands will sanction a gross violation of the constitutional ban
on private corporations from acquiring any kind of alienable land of the public
domain. PEA will simply turn around, as PEA has now done under the
Amended JVA, and transfer several hundreds of hectares of these reclaimed
and still to be reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional ban in Section
3, Article XII of the 1987 Constitution which was intended to diffuse equitably
the ownership of alienable lands of the public domain among Filipinos, now
numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of
the public domain since PEA can "acquire x x x any and all kinds of lands."
This will open the floodgates to corporations and even individuals acquiring
hundreds of hectares of alienable lands of the public domain under the guise
that in the hands of PEA these lands are private lands. This will result in
corporations amassing huge landholdings never before seen in this country -
creating the very evil that the constitutional ban was designed to prevent. This
will completely reverse the clear direction of constitutional development in this
country. The 1935 Constitution allowed private corporations to acquire not
more than 1,024 hectares of public lands.105 The 1973 Constitution prohibited
private corporations from acquiring any kind of public land, and the 1987
Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act
No. 496 or PD No. 1529, automatically become private lands is contrary to
existing laws. Several laws authorize lands of the public domain to be
registered under the Torrens System or Act No. 496, now PD No. 1529,
without losing their character as public lands. Section 122 of Act No. 496, and
Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to
the x x x Government of the Philippine Islands are alienated, granted,
 or conveyed to persons or the public or private corporations, the
same shall be brought forthwith under the operation of this Act and
shall become registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is by
the Government alienated, granted or conveyed to any person, the
same shall be brought forthwith under the operation of this Decree."
(Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person" in
Section 103 of PD No. 1529 includes conveyances of public lands to public
corporations.
Alienable lands of the public domain "granted, donated, or transferred to a
province, municipality, or branch or subdivision of the Government," as
provided in Section 60 of CA No. 141, may be registered under the Torrens
System pursuant to Section 103 of PD No. 1529. Such registration, however,
is expressly subject to the condition in Section 60 of CA No. 141 that the land
"shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress." This provision
refers to government reclaimed, foreshore and marshy lands of the public
domain that have been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for legislative authority
prevents the registered land of the public domain from becoming private land
that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the
public domain may be registered under the Torrens System. Section 48,
Chapter 12, Book I of the Code states –
"Sec. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by
the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of
a public wharf may be titled in the name of a government corporation
regulating port operations in the country. Private property purchased by the
National Government for expansion of an airport may also be titled in the name
of the government agency tasked to administer the airport. Private property
donated to a municipality for use as a town plaza or public school site may
likewise be titled in the name of the municipality.106 All these properties
become properties of the public domain, and if already registered under Act
No. 496 or PD No. 1529, remain registered land. There is no requirement or
provision in any existing law for the de-registration of land from the Torrens
System.
Private lands taken by the Government for public use under its power of
eminent domain become unquestionably part of the public domain.
Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to
issue in the name of the National Government new certificates of title covering
such expropriated lands. Section 85 of PD No. 1529 states –
"Sec. 85. Land taken by eminent domain. Whenever any registered
land, or interest therein, is expropriated or taken by eminent domain,
the National Government, province, city or municipality, or any other
agency or instrumentality exercising such right shall file for registration
in the proper Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular property or interest
expropriated, the number of the certificate of title, and the nature of the
public use. A memorandum of the right or interest taken shall be made
on each certificate of title by the Register of Deeds, and where the fee
simple is taken, a new certificate shall be issued in favor of the
National Government, province, city, municipality, or any other
agency or instrumentality exercising such right for the land so taken.
The legal expenses incident to the memorandum of registration or
issuance of a new certificate of title shall be for the account of the
authority taking the land or interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not
exclusively private or patrimonial lands. Lands of the public domain may also
be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of
the Freedom Islands or of the lands to be reclaimed from submerged areas of
Manila Bay. In the words of AMARI, the Amended JVA "is not a sale but a joint
venture with a stipulation for reimbursement of the original cost incurred by
PEA for the earlier reclamation and construction works performed by the
CDCP under its 1973 contract with the Republic." Whether the Amended JVA
is a sale or a joint venture, the fact remains that the Amended JVA requires
PEA to "cause the issuance and delivery of the certificates of title conveying
AMARI's Land Share in the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution
which provides that private corporations "shall not hold such alienable lands of
the public domain except by lease." The transfer of title and ownership to
AMARI clearly means that AMARI will "hold" the reclaimed lands other than by
lease. The transfer of title and ownership is a "disposition" of the reclaimed
lands, a transaction considered a sale or alienation under CA No. 141, 108 the
Government Auditing Code,109 and Section 3, Article XII of the 1987
Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and
submerged areas form part of the public domain and are inalienable. Lands
reclaimed from foreshore and submerged areas also form part of the public
domain and are also inalienable, unless converted pursuant to law into
alienable or disposable lands of the public domain. Historically, lands
reclaimed by the government are sui generis, not available for sale to private
parties unlike other alienable public lands. Reclaimed lands retain their
inherent potential as areas for public use or public service. Alienable lands of
the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such
equitable distribution, the 1973 and 1987 Constitutions have barred private
corporations from acquiring any kind of alienable land of the public domain.
Those who attempt to dispose of inalienable natural resources of the State, or
seek to circumvent the constitutional ban on alienation of lands of the public
domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom
Islands, now covered by certificates of title in the name of PEA,
are alienable lands of the public domain. PEA may lease these
lands to private corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain
inalienable natural resources of the public domain until classified as
alienable or disposable lands open to disposition and declared no
longer needed for public service. The government can make such
classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the
government can alienate. In their present state, the 592.15 hectares of
submerged areas are inalienable and outside the commerce of
man.
3. Since the Amended JVA seeks to transfer to AMARI, a private
corporation, ownership of 77.34 hectares 110 of the Freedom Islands,
such transfer is void for being contrary to Section 3, Article XII of the
1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership
of 290.156 hectares111 of still submerged areas of Manila Bay, such
transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other
than agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the
reclaimed lands as alienable or disposable, and further declare them
no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of
Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public
domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the
1987 Constitution. Under Article 1409112 of the Civil Code, contracts whose
"object or purpose is contrary to law," or whose "object is outside the
commerce of men," are "inexistent and void from the beginning." The Court
must perform its duty to defend and uphold the Constitution, and therefore
declares the Amended JVA null and void ab initio.
 Seventh issue: whether the Court is the proper forum to raise the issue
of whether the Amended JVA is grossly disadvantageous to the
government.

Considering that the Amended JVA is null and void ab initio, there is no
necessity to rule on this last issue. Besides, the Court is not a trier of facts, and
this last issue involves a determination of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and

Amari Coastal Bay Development Corporation are PERMANENTLY
ENJOINED from implementing the Amended Joint Venture Agreement which
is hereby declared NULL and VOID ab initio.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban,

Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, and
Corona, JJ., concur.