Constitutional Law II Part 1 - Due Process and Equal Protection

CONSTITUTIONAL LAW II: Due Process and Equal Protection as
Limitations on Police Power, Eminent Domain and Taxation
A. Fundamental Principles on Constitutional Law and the Bill of Rights..............................2

Manila Prince Hotel vs. GSIS (G.R. No. 122156 February 3, 1997)................................2
Tanada vs. Angara (G.R. No. 118295 May 2, 1997)......................................................26
Domino vs. Comelec (G.R. No. 134015 July 19, 1999).................................................38
Pamatong vs. Comelec (G.R. No. 161872
Yrasuegui vs. PAL (G.R. No. 168081
April 13, 2004)................................45

October 17, 2008).................................47
B. Basic Principles on the Fundamental Powers of the State, their Characteristics,

Similarities and Distinctions, and their Limitations.............................................................53
C. Due Process in General................................................................................................53
People vs. Siton.............................................................................................................53
DLSU vs. CA.................................................................................................................. 58
EUSEBIO vs. LUIS (G.R. No. 162474 October 13, 2009)...........................................139

CITY OF ILOILO vs. CONTRERAS-BESANA (G.R. No. 168967, February 12, 2010)142
REPUBLIC vs. MANGOTARA (G.R. No. 170375, October 13, 2010).........................145
REPUBLIC vs. MENDOZA (G.R. No. 185091, August 08, 2010)................................147
LBP vs. LIVIOCO (G.R. No. 170685 : September 22, 2010).......................................148
APO FRUITS CORP. vs. LBP (G.R. No. 164195 : October 12, 2010).........................153
SPOUSES LETICIA & JOSE ERVIN ABAD vs. FIL-HOMES REALTY and
DEVELOPMENT CORPORATION (G.R. No. 189239 : November 24, 2010).............161
F. Equal Protection...........................................................................................................164
PATRICIO DUMLAO vs. COMMISSION ON ELECTION (G.R. No. L-52245, January
22, 1980)...................................................................................................................... 164
Romualdez vs. Comelec................................................................................................65
ELEAZAR P. QUINTO vs. COMMISSION ON ELECTIONS, (G.R. No. 189698,

December 1, 2009)......................................................................................................167
Garcillano vs. Committees.............................................................................................72
ANG LADLAD LGBT PARTY vs. COMELEC (G.R. No. 190582, April 8, 2010)..........175
Placido vs. NLRC...........................................................................................................75
ELISEO F. SORIANO vs. MA. CONSOLIZA P. LAGUARDIA (G.R. No. 164785 and
G.R. No. 165636).........................................................................................................183
Mendoza vs. Comelec...................................................................................................77

Surigao Electric vs. ERC...............................................................................................83
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. vs. ROMULO

(G.R. No. 160756, March 9, 2010)..............................................................................193
Southern Hemisphere vs. Anti-Terrorism.......................................................................87
BIRAOGO vs. PHIL TRUTH (G.R. No. 192935, December 7, 2010............................203
Lejano vs. People, 638 SCRA 104 (2010).....................................................................93

D. DUE PROCESS AND POLICE POWER.......................................................................94
White Light Corporation vs. City of Manila.....................................................................94
Office of the Solicitor vs. City of Manila.........................................................................99
BSP MB vs. Antonio-Valenzuela..................................................................................107
Roxas and Company vs. Damba-NSFW......................................................................111
Chevron vs. BCDA.......................................................................................................118
Espina vs. Zamora.......................................................................................................121
E. Due Process and Eminent Domain..............................................................................123
SOLGEN vs. AYALA (G.R. No. 177056, September 18, 2009)....................................123
ORTEGA vs. CEBU (G.R. No. 181583-84, October 2, 2009)......................................130
LAND BANK OF THE PHILIPPINES vs. JOSE MARIE M. RUFINO (G.R. No. 175644,
October 2, 2009)..........................................................................................................133
LBP vs. J.L. JOCSON AND SONS (G.R. No. 180803, October 23, 2009)..................137
For the mountains may move and the hills

disappear, but even then my Faithful love for you
will remain. My covenant of blessing will never be
broken, says the Lord, who has mercy on you.
Isaiah 54:10 NLT

b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/OGCC

(Office of the Government Corporate Counsel) are obtained. 3
A. Fundamental Principles on Constitutional Law and the Bill of Rights
Manila Prince Hotel vs. GSIS (G.R. No. 122156 February 3, 1997)
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
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 patrimonyof 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 nonself-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 selfexecuting 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 nationbuilding 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
heritage. 35 When the Constitution speaks of national patrimony, it refers not only to the
natural resources of the Philippines, as the Constitution could have very well used the
term natural resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark a living testimonial of Philippine 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 elite, it has since then become the venue of
various significant events which have shaped Philippine history. It was called the Cultural
Center of the 1930's. It was the site of the festivities during the inauguration of the
Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine
Government. it plays host to dignitaries and official visitors who are accorded the
traditional Philippine hospitality. 36
The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and
Memory of a City. 37During World War II the hotel was converted by the Japanese Military
Administration into a military headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese together with Intramuros as the
two (2) places fro their final stand. Thereafter, in the 1950's and 1960's, the hotel became
the center of political activities, playing host to almost every political convention. In 1970
the hotel reopened after a renovation and reaped numerous international recognitions, 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 "proclaimed" President of the
Philippine Republic.
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 impressed with public
interest; its own historicity associated with our struggle 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 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 instance, 51%
of the MHC cannot be disassociated from the hotel and the land on which the hotel edifice
stands. Consequently, we cannot sustain respondents' claim that theFilipino First
Policy provision is not applicable 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. 38

The argument is pure sophistry. The term qualified Filipinos as used in Our Constitution
also includes corporations at least 60% of which is owned by Filipinos. This is very clear
from the proceedings of the 1986 Constitutional Commission
MR. NOLLEDO. The answer is "yes."
THE PRESIDENT. Commissioner Davide is recognized.
Expounding further on the Filipino First Policy provision Commissioner Nolledo continues
MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And the
amendment would consist in substituting the words "QUALIFIED FILIPINOS" with the
following: "CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS
WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH
CITIZENS.
MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it will be "SHALL THE
STATE SHALL GlVE PREFERENCE TO QUALIFIED FILIPINOS. This embodies the socalled "Filipino First" policy. That means that Filipinos should be given preference in the
grant of concessions, privileges and rights covering the national patrimony. 42
xxx xxx xxx

MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to
raise a question. Suppose it is a corporation that is 80-percent Filipino, do we not give it
preference?
MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about a
corporation wholly owned by Filipino citizens?
MR. MONSOD. At least 60 percent, Madam President.
MR. DAVIDE. Is that the intention?
MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the preference
should only be 100-percent Filipino.
MR: DAVIDE. I want to get that meaning clear because "QUALIFIED FILIPINOS" may
refer only to individuals and not to juridical personalities or entities.
MR. MONSOD. We agree, Madam President.
39
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?
MR. FOZ. Thank you,
41
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. 2study 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 nonFilipino 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,
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. Cuaderno 4 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. 9Indeed, 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
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 the
highlights in the 1987 Constitution Commission proceedings thus:
xxx xxx xxx
MR. NOLLEDO. The Amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES
STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS". And the word "Filipinos"
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?
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.
I vote GRANT the petition.
10
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.
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
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

11
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:
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.
a. Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC
Privatization
V. GUIDELINES FOR THE PUBLIC BIDDING
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.
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).
G. SHORTLIST OF QUALIFIED BIDDERS
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.
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.
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:
12
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.
ii. The Bid Security accompanying the bid is for less than the required amount.
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.
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.
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.
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.
H. OPENING AND READING OF BIDS
i. The bid does not have Bid Security; or
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.
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.
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.
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.
13
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
Constitution 4 on the "National Economy and Patrimony" which provides:
xxx xxx xxx

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 selfexecuting 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, 13the 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 selfexecuting 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
14
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.
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, 28where 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 biased mind.
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 national patrimony. Republic
Act No. 4846, "The Cultural Properties Preservation and Protection Act," merely provides
a procedure whereby a particular cultural property may be classified a "national cultural
treasure" or an "important cultural property. 32 Approved on June 18, 1966 and amended
by P.D. 374 in 1974, the law is limited in its reach and cannot be read as the 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."
The third issue is whether the constitutional command to the State includes the
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 funds are held in trust for a distinct
purpose which cannot be disposed of indifferently. 34 They are to be used to finance the
retirement, disability and life insurance benefits of the employees and the administrative
15
and operational expenses of the GSIS, 35 Excess funds, however, are allowed to be
invested in business and other ventures for the benefit of the employees. 36 It is thus
contended that the GSIS investment in the Manila Hotel Corporation is a simple business
venture, hence, an act beyond the contemplation of section 10, paragraph 2 of Article XII
of the Constitution.
The submission is unimpressive. The GSIS is not a pure private corporation. It is
essentially a public corporation created by Congress and granted an original 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 controlled
corporation, it is skin-bound to adhere to the policies spelled out in the general welfare of
the people. One of these policies is the Filipino First policy which the people elevated as a
constitutional command.
The fourth issue demands that we look at the content of phrase "qualified Filipinos" and
their "preferential right." The Constitution desisted from defining their contents. This is as it
ought to be for a Constitution only lays down flexible policies and principles which can
bent to meet today's manifest needs and tomorrow's unmanifested demands. Only a
constitution strung with elasticity can grow as a living constitution.
Thus, during the deliberations in the Constitutional Commission, Commissioner Nolledo to
define the phrase brushed aside a suggestion to define the phrase "qualified Filipinos." He
explained that present and prospective "laws" will take care of the problem of its
interpretation, viz:
xxx xxx xxx
THE PRESIDENT. What is the suggestion of Commissioner Rodrigo? Is it to remove the
word "QUALIFIED?"
As against aliens over aliens?
"QUALIFIED" because the existing laws or the prospective laws will always lay down
conditions under which business map be done, for example, qualifications on capital,
qualifications on the setting up of other financial structures, et cetera.
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, antialien 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 policymakers 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
16
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 selfdestructing 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
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. 2study 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
17
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 nonFilipino 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,
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
18
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. Cuaderno 4 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. 9Indeed, 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

19
only to those who have "validly submitted bids." 14 The suggestion is, to say the least,
fanciful and has no basis in fact.
will the Filipino still be preferred:?
For the foregoing reasons, I vote to grant the petition.
MR. NOLLEDO. The answer is "yes". (Vol. III, p. 616, Records of the Constitutional
Commission).
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
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 the
highlights in the 1987 Constitution Commission proceedings thus:
xxx xxx xxx
MR. NOLLEDO. The Amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES
STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS". And the word "Filipinos"
Filipino-Controlled entities fully controlled by Filipinos (Vol. III, Records of the
Constitutional Commission, p. 608).
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.
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).
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.
Commissioner Jose Nolledo explaining the provision adverted to above, said:
I vote GRANT the petition.
MR. NOLLEDO. In the grant of rights, privileges and concessions covering the national
economy and patrimony, the State shall give preference to qualified Filipinos.
PUNO, J., dissenting:
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?
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
20
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.
21
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
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."
ii. Pay the full amount of the offered purchase price not later than October 23, 1995; or
F. SUPPORTING DOCUMENTS
G. SUBMISSION OF BIDS
During the Public Bidding, the following documents should be submitted along with the bid
in a separate envelop marked "SUPPORTING DOCUMENTS":
1. The Public Bidding will be held on September 7, 1995 at the following location:
1. WRITTEN AUTHORITY TO BID (UNDER OATH).
New GSIS Headquarters Building

Financial Center, Reclamation Area
Roxas Boulevard, Pasay City, Metro Manila.
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.
iii. Consummate the sale of the Block of Shares for any other reason.

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.
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:
22
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.
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.
23
Petitioner anchors its plea on the second paragraph of Article XII, Section 10 of the
Constitution 4 on the "National Economy and Patrimony" which provides:
xxx xxx xxx
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 selfexecuting 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, 13the 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 selfexecuting 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
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, 28where 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
24
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 biased mind.
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 national patrimony. Republic
Act No. 4846, "The Cultural Properties Preservation and Protection Act," merely provides
a procedure whereby a particular cultural property may be classified a "national cultural
treasure" or an "important cultural property. 32 Approved on June 18, 1966 and amended
by P.D. 374 in 1974, the law is limited in its reach and cannot be read as the 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."
The third issue is whether the constitutional command to the State includes the
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 funds are held in trust for a distinct
purpose which cannot be disposed of indifferently. 34 They are to be used to finance the
retirement, disability and life insurance benefits of the employees and the administrative
and operational expenses of the GSIS, 35 Excess funds, however, are allowed to be
invested in business and other ventures for the benefit of the employees. 36 It is thus
contended that the GSIS investment in the Manila Hotel Corporation is a simple business
venture, hence, an act beyond the contemplation of section 10, paragraph 2 of Article XII
of the Constitution.
The submission is unimpressive. The GSIS is not a pure private corporation. It is
essentially a public corporation created by Congress and granted an original 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 controlled
corporation, it is skin-bound to adhere to the policies spelled out in the general welfare of
the people. One of these policies is the Filipino First policy which the people elevated as a
constitutional command.
The fourth issue demands that we look at the content of phrase "qualified Filipinos" and
their "preferential right." The Constitution desisted from defining their contents. This is as it
ought to be for a Constitution only lays down flexible policies and principles which can
bent to meet today's manifest needs and tomorrow's unmanifested demands. Only a
constitution strung with elasticity can grow as a living constitution.
Thus, during the deliberations in the Constitutional Commission, Commissioner Nolledo to
define the phrase brushed aside a suggestion to define the phrase "qualified Filipinos." He
explained that present and prospective "laws" will take care of the problem of its
interpretation, viz:
xxx xxx xxx
THE PRESIDENT. What is the suggestion of Commissioner Rodrigo? Is it to remove the
word "QUALIFIED?"
As against aliens over aliens?
"QUALIFIED" because the existing laws or the prospective laws will always lay down
conditions under which business map be done, for example, qualifications on capital,
qualifications on the setting up of other financial structures, et cetera.
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
25
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, antialien 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 policymakers 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:
26
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 selfdestructing 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.
Tanada vs. Angara (G.R. No. 118295 May 2, 1997)

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.
27
are the main questions raised in this petition for certiorari, prohibition
andmandamus 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:
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
(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
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.
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."
The Petition in Brief
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 137et 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:
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
(b) to adopt the Ministerial Declarations and Decisions.
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
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture

28
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
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.
Annex 1B: General Agreement on Trade in Services and Annexes
(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.
Annex 1C: Agreement on Trade-Related Aspects of Intellectual

Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing
the Settlement of Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed 7 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.
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
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.
29
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?
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.
The First Issue: Does the Court

Have Jurisdiction Over the Controversy?
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.
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
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. Taada 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
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."
As this Court has repeatedly and firmly emphasized in many cases, 18 it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in matters
that involve grave abuse of discretion brought before it in appropriate cases, committed by
any officer, agency, instrumentality or department of the government.

As the petition alleges grave abuse of discretion and as there is no other plain, speedy or
adequate remedy in the ordinary course of law, we have no hesitation at all in holding that
this petition should be given due course and the vital questions raised therein ruled upon
under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition andmandamus are
appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify,
when proper, acts of legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not
review the wisdom of the decision of the President and the Senate in enlisting the country
into the WTO, or pass upon the merits of trade liberalization as a policy espoused by said
international body. Neither will it rule on the propriety of the government's economic policy
of reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other
import/trade barriers. Rather, it will only exercise its constitutional duty "to determine
whether or not there had been a grave abuse of discretion amounting to lack or excess of
jurisdiction" on the part of the Senate in ratifying the WTO Agreement and its three
annexes.
Second Issue: The WTO Agreement
and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
30
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
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.
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:
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:
(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
Article II
DECLARATION OF PRINCIPLES
AND STATE POLICIES
xxx xxx xxx
Sec. 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.
xxx xxx xxx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xxx xxx xxx
(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
Sec. 10. . . . The Congress shall enact measures that will encourage the formation and
(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:
xxx xxx xxx

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.
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.
31
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. 22These 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 inOposa
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:
32
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.
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.
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.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall
be given optimum opportunity to develop. . . .
WTO Recognizes Need to

Protect Weak Economies
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.
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;
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 tradecommensurate with the needs of their economic
development." These basic principles are found in the preamble34 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
33
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
34
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

35
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
(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.
UN Charter and Other Treaties

Limit Sovereignty
(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.
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 autolimitation." 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.
(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.
(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,
full text as follows:
51
it will be fruitful to restate its
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)
36
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
37
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
Taada 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 Taada and later on Senator Tolentino since they
were the ones that raised this question yesterday?
Senator Taada, please.
SEN. TAADA: 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.
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.
I am now satisfied with the wording of the new submission of President Ramos.
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.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And
after him Senator Neptali Gonzales and Senator Lina.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
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.
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.
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
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
38
It is true, as alleged by petitioners, that broad constitutional principles require the State to
develop an independent national economy effectively controlled by Filipinos; and to
protect and/or prefer Filipino labor, products, domestic materials and locally produced
goods. But it is equally true that such principles while serving as judicial and legislative
guides are not in themselves sources of causes of action. Moreover, there are other
equally fundamental constitutional principles relied upon by the Senate which mandate the
pursuit of a "trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity" and the promotion of
industries "which are competitive in both domestic and foreign markets," thereby justifying
its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise
of legislative and judicial powers is balanced by the adoption of the generally accepted
principles of international law as part of the law of the land and the adherence of the
Constitution to the policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it "a part of the law of the land" is a
legitimate exercise of its sovereign duty and power. We find no "patent and gross"
arbitrariness or despotism "by reason of passion or personal hostility" in such exercise. It
is not impossible to surmise that this Court, or at least some of its members, may even
agree with petitioners that it is more advantageous to the national interest to strike down
Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of
discretion to the Senate and to nullify its decision. To do so would constitute grave abuse
in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a
valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is
outside the realm of judicial inquiry and review. That is a matter between the elected policy
makers and the people. As to whether the nation should join the worldwide march toward
trade liberalization and economic globalization is a matter that our people should
determine in electing their policy makers. After all, the WTO Agreement allows withdrawal
of membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance 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.
Domino vs. Comelec (G.R. No. 134015 July 19, 1999)
Challenged in this case for certiorari with a prayer for preliminary injunction are the
Resolution of 6 May 1998 1 of the Second Division of the Commission on Elections
(hereafter COMELEC), declaring petitioner Juan Domino (hereafter DOMINO) disqualified

as candidate for representative of the Lone Legislative District of the Province of

Sarangani in the 11 May 1998 elections, and the Decision of 29 May 1998 2 of the
COMELEC en banc denying DOMINO's motion for reconsideration.
The antecedents are not disputed.1wphi1.nt
On 25 March 1998, DOMINO filed his certificate of candidacy for the position of
Representative of the Lone Legislative District of the Province of Sarangani indicating in
item nine (9) of his certificate that he had resided in the constituency where he seeks to be
elected for one (1) year and two (2) months immediately preceding the election. 3
On 30 March 1998, private respondents Narciso Ra. Grafilo, Jr., Eddy B. Java, Juan P.
Bayonito, Jr., Rosario Samson and Dionisio P. Lim, Sr., fied with the COMELEC a Petition
to Deny Due Course to or Cancel Certificate of Candidacy, which was docketed as SPA
No. 98-022 and assigned to the Second Division of the COMELEC. Private respondents
alleged that DOMINO, contrary to his declaration in the certificate of candidacy, is not a
resident, much less a registered voter, of the province of Sarangani where he seeks
election. To substantiate their allegations, private respondents presented the following
evidence:
1. Annex "A" the Certificate of Candidacy of respondent for the position of
Congressman of the Lone District of the Province of Sarangani filed with the Office of the
Provincial Election Supervisor of Sarangani on March 25, 1998, where in item 4 thereof he
wrote his date of birth as December 5, 1953; in item 9, he claims he have resided in the
constituency where he seeks election for one (1) year and two (2) months; and, in item 10,
that he is registered voter of Precinct No. 14A-1, Barangay Poblacion, Alabel, Sarangani;
2. Annex "B" Voter's Registration Record with SN 31326504 dated June 22, 1997
indicating respondent's registration at Precinct No. 4400-A, Old Balara, Quezon City;
3. Annex "C" Respondent's Community Tax Certificate No. 11132214C dated January
15, 1997;
4. Annex "D" Certified true copy of the letter of Herson D. Dema-ala, Deputy Provincial
& Municipal Treasurer of Alabel, Sarangani, dated February 26, 1998, addressed to Mr.
Conrado G. Butil, which reads:
In connection with your letter of even date, we are furnishing you herewith certified xerox
copy of the triplicate copy of COMMUNITY TAX CERTIFICATE NO. 11132214C in the
name of Juan Domino.
Furthermore, Community Tax Certificate No. 11132212C of the same stub was issued to
Carlito Engcong on September 5, 1997, while Certificate No. 11132213C was also issued
to Mr. Juan Domino but was cancelled and serial no. 11132215C was issued in the name
of Marianita Letigio on September 8, 1997.
5. Annex "E" The triplicate copy of the Community Tax Certificate No. 11132214C in the
name of Juan Domino dated September 5, 1997;
6. Annex "F" Copy of the letter of Provincial Treasurer Lourdes P. Riego dated March 2,
1998 addressed to Mr. Herson D. Dema-ala, Deputy Provincial Treasurer and Municipal
Treasurer of Alabel, Sarangani, which states:
For easy reference, kindly turn-over to the undersigned for safekeeping, the stub of
Community Tax Certificate containing Nos. 11132201C-11132250C issued to you on June
13, 1997 and paid under Official Receipt No. 7854744.
39
Upon request of Congressman James L. Chiongbian.

7. Annex "G" Certificate of Candidacy of respondent for the position of Congressman in
the 3rd District of Quezon City for the 1995 elections filed with the Office of the Regional
Election Director, National Capital Region, on March 17, 1995, where, in item 4 thereof, he
wrote his birth date as December 22, 1953; in item 8 thereof his "residence in the
constituency where I seek to be elected immediately preceding the election" as 3 years
and 5 months; and, in item 9, that he is a registered voter of Precinct No. 182, Barangay
Balara, Quezon City;
8. Annex "H" a copy of the APPLICATION FOR TRANSFER OF REGISTRATION
RECORDS DUE TO CHANGE OF RESIDENCE of respondent dated August 30, 1997
addressed to and received by Election Officer Mantil Alim, Alabel, Sarangani, on
September 22, 1997, stating among others, that "[T]he undersigned's previous residence
is at 24 Bonifacio Street, Ayala Heights, Quezon City, III District, Quezon City; wherein he
is a registered voter" and "that for business and residence purposes, the undersigned has
transferred and conducts his business and reside at Barangay Poblacion, Alabel, Province
of Sarangani prior to this application;"
9. Annex "I" Copy of the SWORN APPLICATION FOR OF CANCELLATION OF THE
VOTER'S [TRANSFER OF] PREVIOUS REGISTRATION of respondent subscribed and
sworn to on 22 October 1997 before Election Officer Mantil Allim at Alabel, Sarangani. 4
For his defense, DOMINO maintains that he had complied with the one-year residence
requirement and that he has been residing in Sarangani since January 1997. In support of
the said contention, DOMINO presented before the COMELEC the following exhibits, to
wit:
1. Annex "1" Copy of the Contract of Lease between Nora Dacaldacal as Lessor and
Administrator of the properties of deceased spouses Maximo and Remedios Dacaldacal
and respondent as Lessee executed on January 15, 1997, subscribed and sworn to
before Notary Public Johnny P. Landero;
2. Annex "2" Copy of the Extra-Judicial Settlement of Estate with Absolute Deed of sale
executed by and between the heirs of deceased spouses Maximo and Remedios
Dacaldacal, namely: Maria Lourdes, Jupiter and Beberlie and the respondent on
November 4, 1997, subscribed and sworn to before Notary Public Jose A. Alegario;
3. Annex "3" True Carbon Xerox copy of the Decision dated January 19, 1998, of the
Metropolitan Trial Court of Metro Manila, Branch 35, Quezon City, in Election Case NO.
725 captioned as "In the Matter of the Petition for the Exclusion from the List of voters of
Precinct No. 4400-A Brgy. Old Balara, Quezon City, Spouses Juan and Zorayda Domino,
Petitioners, -versus- Elmer M. Kayanan, Election Officer, Quezon City, District III, and the
Board of Election Inspectors of Precinct No. 4400-A, Old Balara, Quezon City,
Respondents." The dispositive portion of which reads:
1. Declaring the registration of petitioners as voters of Precinct No. 4400-A, Barangay Old
Balara, in District III Quezon City as completely erroneous as petitioners were no longer
residents of Quezon City but of Alabel, Sarangani where they have been residing since
December 1996;
2. Declaring this erroneous registration of petitioners in Quezon City as done in good faith
due to an honest mistake caused by circumstances beyond their control and without any
fault of petitioners;

40
3. Approving the transfer of registration of voters of petitioners from Precint No. 4400-A of
Barangay Old Balara, Quezon City to Precinct No. 14A1 of Barangay Poblacion of Alabel,
Sarangani; and
Annexes "A", "B", "C", "D", "D-1", "E", "F", "G" with sub-markings "G-1" and "G-2" and "H"
his CTC No. 111`32214C dated September 5, 1997, which are the same as Annexes "1",
"2", "4", "5", "6-a", "3", "7", "9" with sub-markings "9-a" and "9-b" except Annex "H". 5
4. Ordering the respondents to immediately transfer and forward all the election/voter's
registration records of the petitioners in Quezon City to the Election Officer, the Election
Registration Board and other Comelec Offices of Alabel, Sarangani where the petitioners
are obviously qualified to excercise their respective rights of suffrage.
On 6 May 1998, the COMELEC 2nd Division promulgated a resolution declaring DOMINO
disqualified as candidate for the position of representative of the lone district of Sarangani
for lack of the one-year residence requirement and likewise ordered the cancellation of his
certificate of candidacy, on the basis of the following findings:
4. Annex "4" Copy of the Application for Transfer of Registration Records due to
Change of Residence addressed to Mantil Alim, COMELEC Registrar, Alabel, Sarangani,
dated August 30, 1997.
What militates against respondent's claim that he has met the residency requirement for
the position sought is his own Voter's Registration Record No. 31326504 dated June 22,
1997 [Annex "B", Petition] and his address indicated as 24 Bonifacio St., Ayala Heights,
Old Balara, Quezon City. This evidence, standing alone, negates all his protestations that
he established residence at Barangay Poblacion, Alabel, Sarangani, as early as January
1997. It is highly improbable, nay incredible, for respondent who previously ran for the
same position in the 3rd Legislative District of Quezon City during the elections of 1995 to
unwittingly forget the residency requirement for the office sought.
5. Annex "5" Certified True Copy of the Notice of Approval of Application, the roster of
applications for registration approved by the Election Registration Board on October 20,
1997, showing the spouses Juan and Zorayda Bailon Domino listed as numbers 111 and
112 both under Precinct No. 14A1, the last two names in the slate indicated as transferees
without VRR numbers and their application dated August 30, 1997 and September 30,
1997, respectively.
6. Annex "6" same as Annex "5"
7. Annex "6-a" Copy of the Sworn Application for Cancellation of Voter's Previous
Registration (Annex "I", Petition);
8. Annex "7" Copy of claim card in the name of respondent showing his VRR No.
31326504 dated October 20, 1997 as a registered voter of Precinct No. 14A1, Barangay
Poblacion, Alabel, Sarangani;
9. Annex "7-a" Certification dated April 16, 1998, issued by Atty. Elmer M. Kayanan,
Election Officer IV, District III, Quezon City, which reads:
This is to certify that the spouses JUAN and ZORAYDA DOMINO are no longer registered
voters of District III, Quezon City. Their registration records (VRR) were transferred and
are now in the possession of the Election Officer of Alabel, Sarangani.
This certification is being issued upon the request of Mr. JUAN DOMINO.
10. Annex "8" Affidavit of Nora Dacaldacal and Maria Lourdes Dacaldacal stating the
circumstances and incidents detailing their alleged acquaintance with respondent.
11. Annexes "8-a", "8-b", "8-c" and "8-d" Copies of the uniform affidavits of witness
Myrna Dalaguit, Hilario Fuentes, Coraminda Lomibao and Elena V. Piodos subscribed and
sworn to before Notary Public Bonifacio F. Doria, Jr., on April 18, 1998, embodying their
alleged personal knowledge of respondent's residency in Alabel, Sarangani;
12. Annex "8-e" A certification dated April 20, 1998, subscribed and sworn to before
Notary Public Bonifacio, containing a listing of the names of fifty-five (55) residents of
Alabel, Sarangani, declaring and certifying under oath that they personally know the
respondent as a permanent resident of Alabel, Sarangani since January 1997 up to
present;
13. Annexes "9", "9-a" and "9-b" Copies of Individual Income Tax Return for the year
1997, BIR form 2316 and W-2, respectively, of respondent; and,
14. Annex "10" The affidavit of respondent reciting the chronology of events and
circumstances leading to his relocation to the Municipality of Alabel, Sarangani, appending
Counting, therefore, from the day after June 22, 1997 when respondent registered at
Precinct No. 4400-A, up to and until the day of the elections on May 11, 1998, respondent
clearly lacks the one (1) year residency requirement provided for candidates for Member
of the House of Representatives under Section 6, Article VI of the Constitution.
All told, petitioner's evidence conspire to attest to respondent's lack of residence in the
constituency where he seeks election and while it may be conceded that he is a registered
voter as contemplated under Section 12 of R.A. 8189, he lacks the qualification to run for
the position of Congressman for the Lone District of the Province of Sarangani. 6
On 11 May 1998, the day of the election, the COMELEC issued Supplemental Omnibus
Resolution No. 3046, ordering that the votes cast for DOMINO be counted but to suspend
the proclamation if winning, considering that the Resolution disqualifying him as candidate
had not yet become final and executory. 7
The result of the election, per Statement of Votes certified by the Chairman of the
Provincial Board of Canvassers,8 shows that DOMINO garnered the highest number of
votes over his opponents for the position of Congressman of the Province of Sarangani.
On 15 May 1998, DOMINO filed a motion for reconsideration of the Resolution dated 6
May 1998, which was denied by the COMELEC en banc in its decision dated 29 May
1998. Hence, the present Petition for Certiorari with prayer for Preliminary Mandatory
Injunction alleging, in the main, that the COMELEC committed grave abuse of discretion
amounting to excess or lack of jurisdiction when it ruled that he did not meet the one-year
residence requirement.
On 14 July 1998, acting on DOMINO's Motion for Issuance of Temporary Restraining
Order, the Court directed the parties to maintain the status quo prevailing at the time of the
filing of the instant petition. 9
On 15 September 1998, Lucille L. Chiongbian-Solon, (hereafter INTERVENOR), the
candidate receiving the second highest number of votes, was allowed by the Court to
Intervene. 10 INTERVENOR in her Motion for Leave to Intervene and in her Comment in
Intervention 11 is asking the Court to uphold the disqualification of petitioner Juan Domino
and to proclaim her as the duly elected representative of Sarangani in the 11 May 1998
elections.
Before us DOMINO raised the following issues for resolution, to wit:

a. Whether or not the judgment of the Metropolitan Trial Court of Quezon City declaring
petitioner as resident of Sarangani and not of Quezon City is final, conclusive and binding
upon the whole world, including the Commission on Elections.
b. Whether or not petitioner herein has resided in the subject congressional district for at
least one (1) year immediately preceding the May 11, 1998 elections; and
c. Whether or not respondent COMELEC has jurisdiction over the petition a quo for the
disqualification of petitioner. 12
The first issue.
The contention of DOMINO that the decision of the Metropolitan Trial Court of Quezon
City in the exclusion proceedings declaring him a resident of the Province of Sarangani
and not of Quezon City is final and conclusive upon the COMELEC cannot be sustained.
The COMELEC has jurisdiction as provided in Sec. 78, Art. IX of the Omnibus Election
Code, over a petition to deny due course to or cancel certificate of candidacy. In the
exercise of the said jurisdiction, it is within the competence of the COMELEC to determine
whether false representation as to material facts was made in the certificate of candidacy,
that will include, among others, the residence of the candidate.
The determination of the Metropolitan Trial Court of Quezon City in the exclusion
proceedings as to the right of DOMINO to be included or excluded from the list of voters in
the precinct within its territorial jurisdicton, does not preclude the COMELEC, in the
determination of DOMINO's qualification as a candidate, to pass upon the issue of
compliance with the residency requirement.
The proceedings for the exclusion or inclusion of voters in the list of voters are summary in
character. Thus, the factual findings of the trial court and its resultant conclusions in the
exclusion proceedings on matters other than the right to vote in the precinct within its
territorial jurisdiction are not conclusive upon the COMELEC. Although the court in
inclusion or exclusion proceedings may pass upon any question necessary to decide the
issue raised including the questions of citizenship and residence of the challenged voter,
the authority to order the inclusion in or exclusion from the list of voters necessarily caries
with it the power to inquire into and settle all matters essential to the exercise of said
authority. However, except for the right to remain in the list of voters or for being excluded
therefrom for the particular election in relation to which the proceedings had been held, a
decision in an exclusion or inclusion proceeding, even if final and unappealable, does not
acquire the nature of res judicata. 13 In this sense, it does not operate as a bar to any
future action that a party may take concerning the subject passed upon in the
proceeding. 14 Thus, a decision in an exclusion proceeding would neither be conclusive on
the voter's political status, nor bar subsequent proceedings on his right to be registered as
a voter in any other election. 15
Thus, in Tan Cohon v. Election Registrar 16 we ruled that:
. . . It is made clear that even as it is here held that the order of the City Court in question
has become final, the same does not constitute res adjudicata as to any of the matters
therein contained. It is ridiculous to suppose that such an important and intricate matter of
citizenship may be passed upon and determined with finality in such a summary and
peremptory proceeding as that of inclusion and exclusion of persons in the registry list of
voters. Even if the City Court had granted appellant's petition for inclusion in the
permanent list of voters on the allegation that she is a Filipino citizen qualified to vote, her
alleged Filipino citizenship would still have been left open to question.
41
Moreover, the Metropolitan Trial Court of Quezon City in its 18 January decision exceeded
its jurisdiction when it declared DOMINO a resident of the Province of Sarangani,
approved and ordered the transfer of his voter's registration from Precinct No. 4400-A of
Barangay Old Balara, Quezon City to precinct 14A1 of Barangay Poblacion, Alabel,
Sarangani. It is not within the competence of the trial court, in an exclusion proceedings,
to declare the challenged voter a resident of another municipality. The jurisdiction of the
lower court over exclusion cases is limited only to determining the right of voter to remain
in the list of voters or to declare that the challenged voter is not qualified to vote in the
precint in which he is registered, specifying the ground of the voter's disqualification. The
trial court has no power to order the change or transfer of registration from one place of
residence to another for it is the function of the election Registration Board as provided
under Section 12 of R.A. No. 8189. 17 The only effect of the decision of the lower court
excluding the challenged voter from the list of voters, is for the Election Registration
Board, upon receipt of the final decision, to remove the voter's registration record from the
corresponding book of voters, enter the order of exclusion therein, and thereafter place
the record in the inactive file. 18
Finally, the application of the rule on res judicata is unavailing. Identity of parties, subject
matter and cause of action are indispensable requirements for the application of said
doctrine. Neither herein Private Respondents nor INTERVENOR, is a party in the
exclusion proceedings. The Petition for Exclusion was filed by DOMINDO himself and his
wife, praying that he and his wife be excluded from the Voter's List on the ground of
erroneous registration while the Petition to Deny Due Course to or Cancel Certificate of
Candidacy was filed by private respondents against DOMINO for alleged false
representation in his certificate of candidacy. For the decision to be a basis for the
dismissal by reason of res judicata, it is essential that there must be between the first and
the second action identity of parties, identity of subject matter and identity of causes of
action. 19 In the present case, the aforesaid essential requisites are not present. In the
case of Nuval v. Guray, et al., 20 the Supreme Court in resolving a similar issue ruled that:
The question to be solved under the first assignment of error is whether or not the
judgment rendered in the case of the petition for the exclusion of Norberto Guray's name
from the election list of Luna, isres judicata, so as to prevent the institution and
prosecution of an action in quo warranto, which is now before us.
The procedure prescribed by section 437 of the Administrative Code, as amended by Act
No. 3387, is of a summary character and the judgment rendered therein is not appealable
except when the petition is tried before the justice of the peace of the capital or the circuit
judge, in which case it may be appealed to the judge of first instance, with whom said two
lower judges have concurrent jurisdiction.
The petition for exclusion was presented by Gregorio Nuval in his dual capacity as
qualified voter of the municipality of Luna, and as a duly registered candidate for the office
of president of said municipality, against Norberto Guray as a registered voter in the
election list of said municipality. The present proceeding of quo warranto was interposed
by Gregorio Nuval in his capacity as a registered candidate voted for the office of
municipal president of Luna, against Norberto Guray, as an elected candidate for the
same office. Therefore, there is no identity of parties in the two cases, since it is not
enough that there be an identity of persons, but there must be an identity of capacities in
which said persons litigate. (Art. 1259 of the Civil Code; Bowler vs. Estate of Alvarez, 23
Phil., 561; 34 Corpus Juris, p. 756, par. 1165)

In said case of the petition for the exclusion, the object of the litigation, or the litigious
matter was the exclusion of Norberto Guray as a voter from the election list of the
municipality of Luna, while in the present que warranto proceeding, the object of the
litigation, or the litigious matter is his exclusion or expulsion from the office to which he
has been elected. Neither does there exist, then, any identity in the object of the litigation,
or the litigious matter.
In said case of the petition for exclusion, the cause of action was that Norberto Guray had
not the six months' legal residence in the municipality of Luna to be a qualified voter
thereof, while in the present proceeding of quo warranto, the cause of action is that
Norberto Guray has not the one year's legal residence required for eligibility to the office of
municipal president of Luna. Neither does there exist therefore, identity of causes of
action.
In order that res judicata may exist the following are necessary: (a) identity of parties; (b)
identity of things; and (c) identity of issues (Aquino v. Director of Lands, 39 Phil. 850). And
as in the case of the petition for excluision and in the present quo warranto proceeding, as
there is no identity of parties, or of things or litigious matter, or of issues or causes of
action, there is no res judicata.
The Second Issue.
Was DOMINO a resident of the Province of Sarangani for at least one year immediately
preceding the 11 May 1998 election as stated in his certificate of candidacy?
We hold in the negative.
It is doctrinally settled that the term "residence," as used in the law prescribing the
qualifications for suffrage and for elective office, means the same thing as "domicile,"
which imports not only an intention to reside in a fixed place but also personal presence in
that place, coupled with conduct indicative of such intention. 21 "Domicile" denotes a fixed
permanent residence to which, whenever absent for business, pleasure, or some other
reasons, one intends to return. 22 "Domicile" is a question of intention and circumstances.
In the consideration of circumstances, three rules must be borne in mind, namely: (1) that
a man must have a residence or domicile somewhere; (2) when once established it
remains until a new one is acquired; and (3) a man can have but one residence or
domicile at a time.23
Records show that petitioner's domicile of origin was Candon, Ilocos
Sur 24 and that sometime in 1991, he acquired a new domicile of choice at 24 Bonifacio St.
Ayala Heights, Old Balara, Quezon City, as shown by his certificate of candidacy for the
position of representative of the 3rd District of Quezon City in the May 1995 election.
Petitioner is now claiming that he had effectively abandoned his "residence" in Quezon
City and has established a new "domicile" of choice at the Province of Sarangani.
A person's "domicile" once established is considered to continue and will not be deemed
lost until a new one is established. 25 To successfully effect a change of domicile one must
demonstrate an actual removal or an actual change of domicile; a bona fide intention of
abandoning the former place of residence and establishing a new one and definite acts
which correspond with the
purpose. 26 In other words, there must basically be animus manendi coupled
with animus non revertendi. The purpose to remain in or at the domicile of choice must be
for an indefinite period of time; the change of residence must be voluntary; and the
residence at the place chosen for the new domicile must be actual. 27
42
It is the contention of petitioner that his actual physical presence in Alabel, Sarangani
since December 1996 was sufficiently established by the lease of a house and lot located
therein in January 1997 and by the affidavits and certifications under oath of the residents
of that place that they have seen petitioner and his family residing in their locality.
While this may be so, actual and physical is not in itself sufficient to show that from said
date he had transferred his residence in that place. To establish a new domicile of choice,
personal presence in the place must be coupled with conduct indicative of that intention.
While "residence" simply requires bodily presence in a given place, "domicile" requires not
only such bodily presence in that place but also a declared and probable intent to make it
one's fixed and permanent place of abode, one's home. 28
As a general rule, the principal elements of domicile, physical presence in the locality
involved and intention to adopt it as a domicile, must concur in order to establish a new
domicile. No change of domicile will result if either of these elements is absent. Intention
to acquire a domicile without actual residence in the locality does not result in acquisition
of domicile, nor does the fact of physical presence without intention. 29
The lease contract entered into sometime in January 1997, does not adequately support a
change of domicile. The lease contract may be indicative of DOMINO's intention to reside
in Sarangani but it does not engender the kind of permanency required to prove
abandonment of one's original domicile. The mere absence of individual from his
permanent residence, no matter how long, without the intention to abandon it does not
result in loss or change of
domicile. 30 Thus the date of the contract of lease of a house and lot located in the
province of Sarangani, i.e., 15 January 1997, cannot be used, in the absence of other
circumstances, as the reckoning period of the one-year residence requirement.
Further, Domino's lack of intention to abandon his residence in Quezon City is further
strengthened by his act of registering as voter in one of the precincts in Quezon City.
While voting is not conclusive of residence, it does give rise to a strong presumption of
residence especially in this case where DOMINO registered in his former barangay.
Exercising the right of election franchise is a deliberate public assertion of the fact of
residence, and is said to have decided preponderance in a doubtful case upon the place
the elector claims as, or believes to be, his residence. 31 The fact that a party continously
voted in a particular locality is a strong factor in assisting to determine the status of his
domicile. 32
His claim that his registration in Quezon City was erroneous and was caused by events
over which he had no control cannot be sustained. The general registration of voters for
purposes of the May 1998 elections was scheduled for two (2) consecutive
weekends, viz.: June 14, 15, 21, and 22. 33
While, Domino's intention to establish residence in Sarangani can be gleaned from the
fact that be bought the house he was renting on November 4, 1997, that he sought
cancellation of his previous registration in Qezon City on 22 October 1997, 34 and that he
applied for transfer of registration from Quezon City to Sarangani by reason of change of
residence on 30 August 1997, 35 DOMINO still falls short of the one year residency
requirement under the Constitution.
In showing compliance with the residency requirement, both intent and actual presence in
the district one intends to represent must satisfy the length of time prescribed by the
fundamental law. 36 Domino's failure to do so rendered him ineligible and his election to
office null and void. 37

The Third Issue.

DOMINO's contention that the COMELEC has no jurisdiction in the present petition is
bereft of merit.
As previously mentioned, the COMELEC, under Sec. 78, Art. IX of the Omnibus Election
Code, has jurisdiction over a petition to deny due course to or cancel certificate of
candidacy. Such jurisdiction continues even after election, if for any reason no final
judgment of disqualification is rendered before the election, and the candidate facing
disqualification is voted for and receives the highest number of votes 38 and provided
further that the winning candidate has not been proclaimed or has taken his oath of
office. 39
It has been repeatedly held in a number of cases, that the House of Representatives
Electoral Tribunal's sole and exclusive jurisdiction over all contests relating to the election,
returns and qualifications of members of Congress as provided under Section 17 of Article
VI of the Constitution begins only after a candidate has become a member of the House of
Representatives. 40
The fact of obtaining the highest number of votes in an election does not automatically
vest the position in the winning candidate. 41 A candidate must be proclaimed and must
have taken his oath of office before he can be considered a member of the House of
Representatives.
In the instant case, DOMINO was not proclaimed as Congressman-elect of the Lone
Congressional District of the Province of Sarangani by reason of a Supplemental Omnibus
Resolution issued by the COMELEC on the day of the election ordering the suspension of
DOMINO's proclamation should he obtain the winning number of votes. This resolution
was issued by the COMELEC in view of the non-finality of its 6 May 1998 resolution
disqualifying DOMINO as candidate for the position.
Cosidering that DOMINO has not been proclaimed as Congressman-elect in the Lone
Congressional District of the Province of Sarangani he cannot be deemed a member of
the House of Representatives. Hence, it is the COMELEC and not the Electoral Tribunal
which has jurisdiction over the issue of his ineligibility as a candidate. 42
Issue raised by INTERVENOR.
After finding that DOMINO is disqualified as candidate for the position of representative of
the province of Sarangani, may INTERVENOR, as the candidate who received the next
highest number of votes, be proclaimed as the winning candidate?
It is now settled doctrine that the candidate who obtains the second highest number of
votes may not be proclaimed winner in case the winning candidate is disqualified. 43 In
every election, the people's choice is the paramount consideration and their expressed will
must, at all times, be given effect. When the majority speaks and elects into office a
candidate by giving the highest number of votes cast in the election for that office, no one
can be declared elected in his place. 44
It would be extremely repugnant to the basic concept of the constitutionally guaranteed
right to suffrage if a candidate who has not acquired the majority or plurality of votes is
proclaimed a winner and imposed as the representative of a constituency, the majority of
which have positively declared through their ballots that they do not choose him. 45 To
simplistically assume that the second placer would have received the other votes would
be to substitute our judgment for the mind of the voters. He could not be considered the
43
first among qualified candidates because in a field which excludes the qualified candidate,
the conditions would have substantially changed. 46
Sound policy dictates that public elective offices are filled by those who have received the
highest number of votes cast in the election for that office, and it is fundamental idea in all
republican forms of government that no one can be declared elected and no measure can
be declared carried unless he or it receives a majority or plurality of the legal votes cast in
the election. 47
The effect of a decision declaring a person ineligible to hold an office is only that the
election fails entirely, that the wreath of victory cannot be transferred 48 from the
disqualified winner to the repudiated loser because the law then as now only authorizes a
declaration of election in favor of the person who has obtained a plurality of votes 49and
does not entitle the candidate receiving the next highest number of votes to be declared
elected. In such case, the electors have failed to make a choice and the election is a
nullity. 50 To allow the defeated and repudiated candidate to take over the elective position
despite his rejection by the electorate is to disenfranchise the electorate without any fault
on their part and to undermine the importance and meaning of democracy and the
people's right to elect officials of their choice. 51
INTERVENOR's plea that the votes cast in favor of DOMINO be considered stray votes
cannot be sustained. INTERVENOR's reliance on the opinion made in the Labo, Jr.
case 52 to wit: if the electorate, fully aware in fact and in law of a candidate's
disqualification so as to bring such awareness within the realm of notoriety, would
nevertheless cast their votes in favor of the ineligible candidate, the electorate may be
said to have waived the validity and efficacy of their votes by notoriously misapplying their
franchise or throwing away their votes, in which case, the eligible candidate obtaining the
next higher number of votes may be deemed elected, is misplaced.
Contrary to the claim of INTERVENOR, petitioner was not notoriously known by the public
as an ineligible candidate. Although the resolution declaring him ineligible as candidate
was rendered before the election, however, the same is not yet final and executory. In fact,
it was no less than the COMELEC in its Supplemental Omnibus Resolution No. 3046 that
allowed DOMINO to be voted for the office and ordered that the votes cast for him be
counted as the Resolution declaring him ineligible has not yet attained finality. Thus the
votes cast for DOMINO are presumed to have been cast in the sincere belief that he was
a qualified candidate, without any intention to misapply their franchise. Thus, said votes
can not be treated as stray, void, or meaningless. 53
WHEREFORE, the instant petition is DISMISSED. The resolution dated 6 May 1998 of the
COMELEC 2nd Division and the decision dated 29 May 1998 of the COMELEC En Banc,
are hereby AFFIRMED.1wphi1.nt
SO ORDERED.
Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Buena, Gonzaga-Reyes and
Santiago, JJ., concur.
Panganiban J., In the result; please see separate opinion.
Quisumbing, J., In the result, only insofar or Petitioner Domino is adjudged disqualified.
Purisima and Pardo JJ., took no part.

44
These reasons, which were, to an extent at least, historical and patriotic, found early
expression in the decisions of the courts on the question of domicile. . . .
Separate Opinions
PANGANIBAN, J., separate opinion;
I concur "in the result": the petitioner failed to fulfill the one-year residence requirement in
order to qualify as a candidate for congressman of the lone district of Sarangani. With all
due respect, I disagree however with the majority view that residence as a qualification for
candidacy for an elective public office imports the same meaning as domicile.
That a member of the House of Representative must be a resident of the district which he
or she seeks to represent "for a period of not less than one year immediately preceding
the day of the election" 1 is a constitutional requirement that should be interpreted in the
sense in which ordinary lay persons understand it. The common people who ratified the
Constitution and were thereafter expected to abide by it would normally refer to the
journals of the Constitutional Commission in order to understand the words and phrases
contained therein. Rather, they would usually refer to the common source being used
when they look up for the meaning of words the dictionary. 2 In this sense, Webster's
definition of residence 3 should be controlling.
When the Constitution speaks of residence, the word should be understood, consistent
with Webster, to mean actual, physical and personal presence in the district that a
candidate seeks to represent. In other words, the candidate's presence should be
substantial enough to show by overts acts his intention to fulfill the duties of the position
he seeks.
If the framers of our basic law intended our people to understand residence as legal
domicile, they should have said so. Then our people would have looked up the meaning of
domicile and would have understood the constitutional provision in that context. However,
the framers of our Constitution did not. I therefore submit that residence must be
understood in its common dictionary meaning as understood by ordinary lay persons.
At any rate, the original concept of domicile, which arose from American jurisprudence,
was not intended to govern political rights. Rather, it was designed to resolve the conflict
of laws between or among states where a decedent may have lived for various reasons,
for the purpose of determining which law was applicable as regards his estate. Allow me
to quote this short disquisition: 4
. . . This question first came before the courts at an early day, long before our present
easy and extensive means of transportation, and at a time before the present ready
movement from one country to another. At that time, men left for Europe for the Western
Continent or elsewhere largely for purposes of adventure or in search of an opportunity for
the promotion of commerce. It was at the time before the invention of the steamboat and
before the era of the oceanic cable. Men left their native land knowing that they would be
gone for long periods of time, and that means of communication with their home land were
infrequent, difficult, and slow. The traditions of their native country were strong with these
men. In the event of death, while absent, they desired that their property should descend
in accordance with the laws of the land of their birth. Many such men where adventurers
who had the purpose and intent to eventually return to the land of their nativity. There was
a large degree of sentiment connected with the first announcement of the rules of law in
the matter of the estates of such men. . . .
xxx xxx xxx
Subsequently, domicile was used in other "conflicts cases involving taxation, divorce and
other civil matters. To use it to determine qualifications for political office is to enlarge its
meaning beyond what was intended, resulting in strained and contortive interpretations of
the Constitution.
Specifically, I submit that applying the concept of domicile in determining residence as a
qualification for an elective office would negate the objective behind the residence
requirement of one year (or six months, in the case of local positions). This required
period of residence preceding the day of the election, I believe, is rooted in the desire that
officials of districts or localities be acquainted not only with the metes and bounds of their
constituencies but, more important, with the constituents themselves their needs,
difficulties, potentials for growth and development and all matters vital to their common
welfare. Such requisite period would precisely give candidates the opportunity to be
familiar with their desired constituencies, and likewise for the electorate to evaluate their
fitness for the offices they seek.
If all that is required of elective officials is legal domicile, then they would qualify even if,
for several years prior to the election, they have never set foot in their districts (or in the
country, for that matter), since it is possible to maintain legal domicile even without actual
presence, provided one retains the animus revertendi or the intention to return.
The Constitution is the most basic law of the land. It enshrines the most cherished
aspirations and ideals of the population at large. It is not a document reserved only for
sholarly disquisition by the most eminent legal minds of the land. In ascertaining its import,
lawyers are not meant to quibble over it, to define its legal niceties, or to articulate its
nuances. Its contents and words should be interpreted in the sense understood by the
ordinary men and women who place their lives on the line in its defense and who pin their
hopes for a better life on its fulfillment.
The call for simplicity in understanding and interpreting our Constitution has been made a
number of times. About three decades ago, this Court declared: 5
It is to be assumed that the words in which constitutional provisions are couched express
the objective sought to be attained. They are to be given their ordinary meaning except
where technical terms are employed in which case the significance thus attached to them
prevails. As the Constitution is not primarily a lawyer's document, it being essential for the
rule of law to obtain that it should ever be present in the people's consciousness, its
language as much as possible 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. Thus there are cases where the need for
construction is reduced to a minimum.
Having said this, I still believe that Petitioner Juan Domino failed to adduce sufficient
convincing evidence to prove his actual, physical and personal presence in the district of
Sarangani for at least one year prior to the 1998 elections.
WHEREFORE, I vote to DISMISS the Petition at bar.
Separate Opinions
PANGANIBAN, J., separate opinion;

I concur "in the result": the petitioner failed to fulfill the one-year residence requirement in
order to qualify as a candidate for congressman of the lone district of Sarangani. With all
due respect, I disagree however with the majority view that residence as a qualification for
candidacy for an elective public office imports the same meaning as domicile.
That a member of the House of Representative must be a resident of the district which he
or she seeks to represent "for a period of not less than one year immediately preceding
the day of the election" 1 is a constitutional requirement that should be interpreted in the
sense in which ordinary lay persons understand it. The common people who ratified the
Constitution and were thereafter expected to abide by it would normally refer to the
journals of the Constitutional Commission in order to understand the words and phrases
contained therein. Rather, they would usually refer to the common source being used
when they look up for the meaning of words the dictionary. 2 In this sense, Webster's
definition of residence 3 should be controlling.
When the Constitution speaks of residence, the word should be understood, consistent
with Webster, to mean actual, physical and personal presence in the district that a
candidate seeks to represent. In other words, the candidate's presence should be
substantial enough to show by overts acts his intention to fulfill the duties of the position
he seeks.
If the framers of our basic law intended our people to understand residence as legal
domicile, they should have said so. Then our people would have looked up the meaning of
domicile and would have understood the constitutional provision in that context. However,
the framers of our Constitution did not. I therefore submit that residence must be
understood in its common dictionary meaning as understood by ordinary lay persons.
At any rate, the original concept of domicile, which arose from American jurisprudence,
was not intended to govern political rights. Rather, it was designed to resolve the conflict
of laws between or among states where a decedent may have lived for various reasons,
for the purpose of determining which law was applicable as regards his estate. Allow me
to quote this short disquisition: 4
. . . This question first came before the courts at an early day, long before our present
easy and extensive means of transportation, and at a time before the present ready
movement from one country to another. At that time, men left for Europe for the Western
Continent or elsewhere largely for purposes of adventure or in search of an opportunity for
the promotion of commerce. It was at the time before the invention of the steamboat and
before the era of the oceanic cable. Men left their native land knowing that they would be
gone for long periods of time, and that means of communication with their home land were
infrequent, difficult, and slow. The traditions of their native country were strong with these
men. In the event of death, while absent, they desired that their property should descend
in accordance with the laws of the land of their birth. Many such men where adventurers
who had the purpose and intent to eventually return to the land of their nativity. There was
a large degree of sentiment connected with the first announcement of the rules of law in
the matter of the estates of such men. . . .
xxx xxx xxx
These reasons, which were, to an extent at least, historical and patriotic, found early
expression in the decisions of the courts on the question of domicile. . . .
Subsequently, domicile was used in other "conflicts cases involving taxation, divorce and
other civil matters. To use it to determine qualifications for political office is to enlarge its
45
meaning beyond what was intended, resulting in strained and contortive interpretations of
the Constitution.
Specifically, I submit that applying the concept of domicile in determining residence as a
qualification for an elective office would negate the objective behind the residence
requirement of one year (or six months, in the case of local positions). This required
period of residence preceding the day of the election, I believe, is rooted in the desire that
officials of districts or localities be acquainted not only with the metes and bounds of their
constituencies but, more important, with the constituents themselves their needs,
difficulties, potentials for growth and development and all matters vital to their common
welfare. Such requisite period would precisely give candidates the opportunity to be
familiar with their desired constituencies, and likewise for the electorate to evaluate their
fitness for the offices they seek.
If all that is required of elective officials is legal domicile, then they would qualify even if,
for several years prior to the election, they have never set foot in their districts (or in the
country, for that matter), since it is possible to maintain legal domicile even without actual
presence, provided one retains the animus revertendi or the intention to return.
The Constitution is the most basic law of the land. It enshrines the most cherished
aspirations and ideals of the population at large. It is not a document reserved only for
sholarly disquisition by the most eminent legal minds of the land. In ascertaining its import,
lawyers are not meant to quibble over it, to define its legal niceties, or to articulate its
nuances. Its contents and words should be interpreted in the sense understood by the
ordinary men and women who place their lives on the line in its defense and who pin their
hopes for a better life on its fulfillment.
The call for simplicity in understanding and interpreting our Constitution has been made a
number of times. About three decades ago, this Court declared: 5
It is to be assumed that the words in which constitutional provisions are couched express
the objective sought to be attained. They are to be given their ordinary meaning except
where technical terms are employed in which case the significance thus attached to them
prevails. As the Constitution is not primarily a lawyer's document, it being essential for the
rule of law to obtain that it should ever be present in the people's consciousness, its
language as much as possible 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. Thus there are cases where the need for
construction is reduced to a minimum.
Having said this, I still believe that Petitioner Juan Domino failed to adduce sufficient
convincing evidence to prove his actual, physical and personal presence in the district of
Sarangani for at least one year prior to the 1998 elections.
WHEREFORE, I vote to DISMISS the Petition at bar.
Pamatong vs. Comelec (G.R. No. 161872
April 13, 2004)
Petitioner Rev. Elly Velez Pamatong filed his Certificate of Candidacy for President on
December 17, 2003. Respondent Commission on Elections (COMELEC) refused to give
due course to petitioners Certificate of Candidacy in its Resolution No. 6558 dated

January 17, 2004. The decision, however, was not unanimous since Commissioners
Luzviminda G. Tancangco and Mehol K. Sadain voted to include petitioner as they
believed he had parties or movements to back up his candidacy.
On January 15, 2004, petitioner moved for reconsideration of Resolution No.
6558. Petitioners Motion for Reconsideration was docketed as SPP (MP) No. 04-001. The
COMELEC, acting on petitioners Motion for Reconsideration and on similar motions filed
by other aspirants for national elective positions, denied the same under the aegis
of Omnibus Resolution No. 6604 dated February 11, 2004. The COMELEC declared
petitioner and thirty-five (35) others nuisance candidates who could not wage a nationwide
campaign and/or are not nominated by a political party or are not supported by a
registered political party with a national constituency. Commissioner Sadain maintained
his vote for petitioner. By then, Commissioner Tancangco had retired.
In this Petition For Writ of Certiorari, petitioner seeks to reverse the resolutions which were
allegedly rendered in violation of his right to "equal access to opportunities for public
service" under Section 26, Article II of the 1987
Constitution,1 by limiting the number of qualified candidates only to those who can afford
to wage a nationwide campaign and/or are nominated by political parties. In so doing,
petitioner argues that the COMELEC indirectly amended the constitutional provisions on
the electoral process and limited the power of the sovereign people to choose their
leaders. The COMELEC supposedly erred in disqualifying him since he is the most
qualified among all the presidential candidates, i.e., he possesses all the constitutional
and legal qualifications for the office of the president, he is capable of waging a national
campaign since he has numerous national organizations under his leadership, he also has
the capacity to wage an international campaign since he has practiced law in other
countries, and he has a platform of government. Petitioner likewise attacks the validity of
the form for theCertificate of Candidacy prepared by the COMELEC. Petitioner claims that
the form does not provide clear and reasonable guidelines for determining the
qualifications of candidates since it does not ask for the candidates bio-data and his
program of government.
First, the constitutional and legal dimensions involved.
Implicit in the petitioners invocation of the constitutional provision ensuring "equal access
to opportunities for public office" is the claim that there is a constitutional right to run for or
hold public office and, particularly in his case, to seek the presidency. There is none. What
is recognized is merely a privilege subject to limitations imposed by law. Section 26, Article
II of the Constitution neither bestows such a right nor elevates the privilege to the level of
an enforceable right. There is nothing in the plain language of the provision which
suggests such a thrust or justifies an interpretation of the sort.
The "equal access" provision is a subsumed part of Article II of the Constitution, entitled
"Declaration of Principles and State Policies." The provisions under the Article are
generally considered not self-executing,2 and there is no plausible reason for according a
different treatment to the "equal access" provision. Like the rest of the policies
enumerated in Article II, the provision does not contain any judicially enforceable
constitutional right but merely specifies a guideline for legislative or executive action.3 The
disregard of the provision does not give rise to any cause of action before the courts.4
An inquiry into the intent of the framers5 produces the same determination that the
provision is not self-executory. The original wording of the present Section 26, Article II
had read, "The State shall broaden opportunities to public office and prohibit public
46
dynasties."6 Commissioner (now Chief Justice) Hilario Davide, Jr. successfully brought
forth an amendment that changed the word "broaden" to the phrase "ensure equal
access," and the substitution of the word "office" to "service." He explained his proposal in
this wise:
I changed the word "broaden" to "ENSURE EQUAL ACCESS TO" because what is
important would be equal access to the opportunity. If you broaden, it would
necessarily mean that the government would be mandated to create as many
offices as are possible to accommodate as many people as are also possible. That
is the meaning of broadening opportunities to public service. So, in order that we should
not mandate the State to make the government the number one employer and to
limit offices only to what may be necessary and expedient yet offering equal
opportunities to access to it, I change the word "broaden." 7 (emphasis supplied)
Obviously, the provision is not intended to compel the State to enact positive measures
that would accommodate as many people as possible into public office. The approval of
the "Davide amendment" indicates the design of the framers to cast the provision as
simply enunciatory of a desired policy objective and not reflective of the imposition of a
clear State burden.
Moreover, the provision as written leaves much to be desired if it is to be regarded as the
source of positive rights. It is difficult to interpret the clause as operative in the absence of
legislation since its effective means and reach are not properly defined. Broadly written,
the myriad of claims that can be subsumed under this rubric appear to be entirely openended.8 Words and phrases such as "equal access," "opportunities," and "public service"
are susceptible to countless interpretations owing to their inherent impreciseness.
Certainly, it was not the intention of the framers to inflict on the people an operative but
amorphous foundation from which innately unenforceable rights may be sourced.
As earlier noted, the privilege of equal access to opportunities to public office may be
subjected to limitations. Some valid limitations specifically on the privilege to seek elective
office are found in the provisions9 of the Omnibus Election Code on "Nuisance
Candidates" and COMELEC Resolution No. 645210 dated December 10, 2002 outlining
the instances wherein the COMELEC may motu proprio refuse to give due course to or
cancel aCertificate of Candidacy.
As long as the limitations apply to everybody equally without discrimination, however, the
equal access clause is not violated. Equality is not sacrificed as long as the burdens
engendered by the limitations are meant to be borne by any one who is minded to file a
certificate of candidacy. In the case at bar, there is no showing that any person is exempt
from the limitations or the burdens which they create.
Significantly, petitioner does not challenge the constitutionality or validity of Section 69 of
the Omnibus Election Code and COMELEC Resolution No. 6452 dated 10 December
2003. Thus, their presumed validity stands and has to be accorded due weight.
Clearly, therefore, petitioners reliance on the equal access clause in Section 26, Article II
of the Constitution is misplaced.
The rationale behind the prohibition against nuisance candidates and the disqualification
of candidates who have not evinced a bona fide intention to run for office is easy to divine.
The State has a compelling interest to ensure that its electoral exercises are rational,
objective, and orderly. Towards this end, the State takes into account the practical
considerations in conducting elections. Inevitably, the greater the number of candidates,
the greater the opportunities for logistical confusion, not to mention the increased

allocation of time and resources in preparation for the election. These practical difficulties
should, of course, never exempt the State from the conduct of a mandated electoral
exercise. At the same time, remedial actions should be available to alleviate these
logistical hardships, whenever necessary and proper. Ultimately, a disorderly election is
not merely a textbook example of inefficiency, but a rot that erodes faith in our democratic
institutions. As the United States Supreme Court held:
[T]here is surely an important state interest in requiring some preliminary showing of a
significant modicum of support before printing the name of a political organization and its
candidates on the ballot the interest, if no other, in avoiding confusion, deception and
even frustration of the democratic [process].11
The COMELEC itself recognized these practical considerations when it
promulgated Resolution No. 6558 on 17 January 2004, adopting the study Memorandum
of its Law Department dated 11 January 2004. As observed in the COMELECs Comment:
There is a need to limit the number of candidates especially in the case of candidates for
national positions because the election process becomes a mockery even if those who
cannot clearly wage a national campaign are allowed to run. Their names would have to
be printed in the Certified List of Candidates, Voters Information Sheet and the Official
Ballots. These would entail additional costs to the government. For the official ballots in
automated counting and canvassing of votes, an additional page would amount to more or
less FOUR HUNDRED FIFTY MILLION PESOS (P450,000,000.00).
xxx[I]t serves no practical purpose to allow those candidates to continue if they cannot
wage a decent campaign enough to project the prospect of winning, no matter how slim.12
The preparation of ballots is but one aspect that would be affected by allowance of
"nuisance candidates" to run in the elections. Our election laws provide various
entitlements for candidates for public office, such as watchers in every polling
place,13 watchers in the board of canvassers,14 or even the receipt of electoral
contributions.15Moreover, there are election rules and regulations the formulations of which
are dependent on the number of candidates in a given election.
Given these considerations, the ignominious nature of a nuisance candidacy becomes
even more galling. The organization of an election with bona fide candidates standing is
onerous enough. To add into the mix candidates with no serious intentions or capabilities
to run a viable campaign would actually impair the electoral process. This is not to
mention the candidacies which are palpably ridiculous so as to constitute a one-note joke.
The poll body would be bogged by irrelevant minutiae covering every step of the electoral
process, most probably posed at the instance of these nuisance candidates. It would be a
senseless sacrifice on the part of the State.
Owing to the superior interest in ensuring a credible and orderly election, the State could
exclude nuisance candidates and need not indulge in, as the song goes, "their trips to the
moon on gossamer wings."
The Omnibus Election Code and COMELEC Resolution No. 6452 are cognizant of the
compelling State interest to ensure orderly and credible elections by excising impediments
thereto, such as nuisance candidacies that distract and detract from the larger purpose.
The COMELEC is mandated by the Constitution with the administration of elections16 and
endowed with considerable latitude in adopting means and methods that will ensure the
promotion of free, orderly and honest elections.17 Moreover, the Constitution guarantees
that only bona fide candidates for public office shall be free from any form of harassment
and discrimination.18 The determination of bona fidecandidates is governed by the
47
statutes, and the concept, to our mind is, satisfactorily defined in the Omnibus Election
Code.
Now, the needed factual premises.
However valid the law and the COMELEC issuance involved are, their proper application
in the case of the petitioner cannot be tested and reviewed by this Court on the basis of
what is now before it. The assailed resolutions of the COMELEC do not direct the Court to
the evidence which it considered in determining that petitioner was a nuisance candidate.
This precludes the Court from reviewing at this instance whether the COMELEC
committed grave abuse of discretion in disqualifying petitioner, since such a review would
necessarily take into account the matters which the COMELEC considered in arriving at
its decisions.
Petitioner has submitted to this Court mere photocopies of various documents purportedly
evincing his credentials as an eligible candidate for the presidency. Yet this Court, not
being a trier of facts, can not properly pass upon the reproductions as evidence at this
level. Neither the COMELEC nor the Solicitor General appended any document to their
respective Comments.
The question of whether a candidate is a nuisance candidate or not is both legal and
factual. The basis of the factual determination is not before this Court. Thus, the remand of
this case for the reception of further evidence is in order.
A word of caution is in order. What is at stake is petitioners aspiration and offer to serve in
the government. It deserves not a cursory treatment but a hearing which conforms to the
requirements of due process.
As to petitioners attacks on the validity of the form for the certificate of candidacy, suffice
it to say that the form strictly complies with Section 74 of the Omnibus Election Code. This
provision specifically enumerates what a certificate of candidacy should contain, with the
required information tending to show that the candidate possesses the minimum
qualifications for the position aspired for as established by the Constitution and other
election laws.
IN VIEW OF THE FOREGOING, COMELEC Case No. SPP (MP) No. 04-001 is hereby
remanded to the COMELEC for the reception of further evidence, to determine the
question on whether petitioner Elly Velez Lao Pamatong is a nuisance candidate as
contemplated in Section 69 of the Omnibus Election Code.
The COMELEC is directed to hold and complete the reception of evidence and report its
findings to this Court with deliberate dispatch.
SO ORDERED.
Yrasuegui vs. PAL (G.R. No. 168081
October 17, 2008)
THIS case portrays the peculiar story of an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline company.
He is now before this Court via a petition for review on certiorari claiming that he was
illegally dismissed. To buttress his stance, he argues that (1) his dismissal does not fall
under 282(e) of the Labor Code; (2) continuing adherence to the weight standards of the

company is not a bona fide occupational qualification; and (3) he was discriminated
against because other overweight employees were promoted instead of being disciplined.
After a meticulous consideration of all arguments pro and con, We uphold the legality of
dismissal. Separation pay, however, should be awarded in favor of the employee as an act
of social justice or based on equity. This is so because his dismissal is not for serious
misconduct. Neither is it reflective of his moral character.
The Facts
Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine
Airlines, Inc. (PAL). He stands five feet and eight inches (58") with a large body frame.
The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual1 of PAL.
The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on
an extended vacation leave from December 29, 1984 to March 4, 1985 to address his
weight concerns. Apparently, petitioner failed to meet the companys weight standards,
prompting another leave without pay from March 5, 1985 to November 1985.
48
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he was informed of the PAL decision for him to
remain grounded until such time that he satisfactorily complies with the weight standards.
Again, he was directed to report every two weeks for weight checks.
Petitioner failed to report for weight checks. Despite that, he was given one more month to
comply with the weight requirement. As usual, he was asked to report for weight check on
different dates. He was reminded that his grounding would continue pending satisfactory
compliance with the weight standards.5
Again, petitioner failed to report for weight checks, although he was seen submitting his
passport for processing at the PAL Staff Service Division.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for
weight check would be dealt with accordingly. He was given another set of weight check
dates.6 Again, petitioner ignored the directive and did not report for weight checks. On
June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.7
When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he
was still way over his ideal weight of 166 pounds.
After meeting the required weight, petitioner was allowed to return to work. But petitioners
weight problem recurred. He again went on leave without pay from October 17, 1988 to
February 1989.
From then on, nothing was heard from petitioner until he followed up his case requesting
for leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992
and 205 pounds on November 5, 1992.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line
with company policy, he was removed from flight duty effective May 6, 1989 to July 3,
1989. He was formally requested to trim down to his ideal weight and report for weight
checks on several dates. He was also told that he may avail of the services of the
company physician should he wish to do so. He was advised that his case will be
evaluated on July 3, 1989.2
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for
violation of company standards on weight requirements. He was given ten (10) days from
receipt of the charge within which to file his answer and submit controverting evidence.8
On February 25, 1989, petitioner underwent weight check. It was discovered that he
gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds
beyond the limit. Consequently, his off-duty status was retained.
On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at
his residence to check on the progress of his effort to lose weight. Petitioner weighed 217
pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a
commitment3 to reduce weight in a letter addressed to Cabin Crew Group Manager
Augusto Barrios. The letter, in full, reads:
On December 7, 1992, petitioner submitted his Answer.9 Notably, he did not deny being
overweight. What he claimed, instead, is that his violation, if any, had already been
condoned by PAL since "no action has been taken by the company" regarding his case
"since 1988." He also claimed that PAL discriminated against him because "the company
has not been fair in treating the cabin crew members who are similarly situated."
On December 8, 1992, a clarificatory hearing was held where petitioner manifested that
he was undergoing a weight reduction program to lose at least two (2) pounds per week
so as to attain his ideal weight.10
Dear Sir:
On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, "and considering the utmost leniency" extended to him "which
spanned a period covering a total of almost five (5) years," his services were considered
terminated "effective immediately." 11
I would like to guaranty my commitment towards a weight loss from 217 pounds to 200
pounds from today until 31 Dec. 1989.
His motion for reconsideration having been denied,12 petitioner filed a complaint for illegal
dismissal against PAL.
From thereon, I promise to continue reducing at a reasonable percentage until such time
that my ideal weight is achieved.
Likewise, I promise to personally report to your office at the designated time schedule you
will set for my weight check.
Respectfully Yours,
F/S Armando Yrasuegui4
Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled13 that petitioner was illegally
dismissed. The dispositive part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the
complainants dismissal illegal, and ordering the respondent to reinstate him to his former
position or substantially equivalent one, and to pay him:

49
a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until
reinstated, which for purposes of appeal is hereby set from June 15, 1993 up to August
15, 1998 at P651,000.00;
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC
decision is declared NULL and VOID and is hereby SET ASIDE. The private respondents
complaint is hereby DISMISSED. No costs.
b. Attorneys fees of five percent (5%) of the total award.
SO ORDERED.32
SO ORDERED.14
The CA opined that there was grave abuse of discretion on the part of the NLRC because
it "looked at wrong and irrelevant considerations"33 in evaluating the evidence of the
parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be
a continuing qualification for an employees position.34 The failure to adhere to the weight
standards is an analogous cause for the dismissal of an employee under Article 282(e) of
the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC
seemed to suggest.35 Said the CA, "the element of willfulness that the NLRC decision cites
is an irrelevant consideration in arriving at a conclusion on whether the dismissal is legally
proper."36 In other words, "the relevant question to ask is not one of willfulness but one of
reasonableness of the standard and whether or not the employee qualifies or continues to
qualify under this standard."37
The Labor Arbiter held that the weight standards of PAL are reasonable in view of the
nature of the job of petitioner.15 However, the weight standards need not be complied with
under pain of dismissal since his weight did not hamper the performance of his
duties.16 Assuming that it did, petitioner could be transferred to other positions where his
weight would not be a negative factor.17 Notably, other overweight employees, i.e., Mr.
Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined.18
Both parties appealed to the National Labor Relations Commission (NLRC).19
On October 8, 1999, the Labor Arbiter issued a writ of execution directing the
reinstatement of petitioner without loss of seniority rights and other benefits.20
On February 1, 2000, the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of
PAL.
On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.23
On June 23, 2000, the NLRC rendered judgment24 in the following tenor:
WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November
1998 as modified by our findings herein, is hereby AFFIRMED and that part of the
dispositive portion of said decision concerning complainants entitlement to backwages
shall be deemed to refer to complainants entitlement to his full backwages, inclusive of
allowances and to his other benefits or their monetary equivalent instead of simply
backwages, from date of dismissal until his actual reinstatement or finality hereof.
Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of
complainant, whether physical or through payroll within ten (10) days from notice failing
which, the same shall be deemed as complainants reinstatement through payroll and
execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals
of respondent thus, are DISMISSED for utter lack of merit.25
According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless
of the amount of food intake, is a disease in itself."26 As a consequence, there can be no
intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him
to lose weight.27
Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable.
However, it found as unnecessary the Labor Arbiter holding that petitioner was not remiss
in the performance of his duties as flight steward despite being overweight. According to
the NLRC, the Labor Arbiter should have limited himself to the issue of whether the failure
of petitioner to attain his ideal weight constituted willful defiance of the weight standards of
PAL.28
PAL moved for reconsideration to no avail.29 Thus, PAL elevated the matter to the Court of
Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure.30
31
By Decision dated August 31, 2004, the CA reversed the NLRC:
Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are
reasonable.38 Thus, petitioner was legally dismissed because he repeatedly failed to meet
the prescribed weight standards.39 It is obvious that the issue of discrimination was only
invoked by petitioner for purposes of escaping the result of his dismissal for being
overweight.40
On May 10, 2005, the CA denied petitioners motion for reconsideration.41 Elaborating on
its earlier ruling, the CA held that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, "justifies an employees separation from the
service."42
Issues
In this Rule 45 petition for review, the following issues are posed for resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONERS OBESITY CAN BE A GROUND FOR DISMISSAL UNDER
PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES;
II.
THAT PETITIONERS DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE
"BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE";
III.
THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS
DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER
GIVEN FLYING DUTIES OR PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED
ASIDE PETITIONERS CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY
FOR BEING MOOT AND ACADEMIC.43 (Underscoring supplied)

Our Ruling
I. The obesity of petitioner is a ground for dismissal under Article 282(e)
Labor Code.
44
of the
A reading of the weight standards of PAL would lead to no other conclusion than that they
constitute a continuing qualification of an employee in order to keep the job. Tersely put,
an employee may be dismissed the moment he is unable to comply with his ideal weight
as prescribed by the weight standards. The dismissal of the employee would thus fall
under Article 282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of the employer; they
were the "prescribed weights" that a cabin crew must maintain in order to qualify for and
keep his or her position in the company. In other words, they were standards that
establish continuing qualifications for an employees position. In this sense, the failure
to maintain these standards does not fall under Article 282(a) whose express terms
require the element of willfulness in order to be a ground for dismissal. The failure to meet
the employers qualifying standards is in fact a ground that does not squarely fall under
grounds (a) to (d) and is therefore one that falls under Article 282(e) the "other causes
analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior to and after an
employee is hired. They apply prior to employment because these are the standards a
job applicant must initially meet in order to be hired. They apply after hiring because an
employee must continue to meet these standards while on the job in order to keep his job.
Under this perspective, a violation is not one of the faults for which an employee can be
dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed
simply because he no longer "qualifies" for his job irrespective of whether or not the failure
to qualify was willful or intentional. x x x45
Petitioner, though, advances a very interesting argument. He claims that obesity is a
"physical abnormality and/or illness."46 Relying on Nadura v. Benguet Consolidated,
Inc.,47 he says his dismissal is illegal:
Conscious of the fact that Naduras case cannot be made to fall squarely within the
specific causes enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions
of subparagraph 1(f) and says that Naduras illness occasional attacks of asthma is a
cause analogous to them.
Even a cursory reading of the legal provision under consideration is sufficient to convince
anyone that, as the trial court said, "illness cannot be included as an analogous cause by
any stretch of imagination."
It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others
expressly enumerated in the law are due to the voluntary and/or willful act of the
employee. How Naduras illness could be considered as "analogous" to any of them is
beyond our understanding, there being no claim or pretense that the same was contracted
through his own voluntary act.48
The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially
different from the case at bar.First, Nadura was not decided under the Labor Code. The
law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight safety
is absent in Nadura, thus, the rationale there cannot apply here. Third, inNadura, the
employee who was a miner, was laid off from work because of illness, i.e., asthma. Here,
petitioner was dismissed for his failure to meet the weight standards of PAL. He was not
50
dismissed due to illness. Fourth, the issue in Nadura is whether or not the dismissed
employee is entitled to separation pay and damages. Here, the issue centers on the
propriety of the dismissal of petitioner for his failure to meet the weight standards of
PAL.Fifth, in Nadura, the employee was not accorded due process. Here, petitioner was
accorded utmost leniency. He was given more than four (4) years to comply with the
weight standards of PAL.
In the case at bar, the evidence on record militates against petitioners claims that obesity
is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that
it is possible for him to lose weight given the proper attitude, determination, and selfdiscipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself
claimed that "[t]he issue is could I bring my weight down to ideal weight which is 172, then
the answer is yes. I can do it now."49
True, petitioner claims that reducing weight is costing him "a lot of expenses."50 However,
petitioner has only himself to blame. He could have easily availed the assistance of the
company physician, per the advice of PAL.51He chose to ignore the suggestion. In fact, he
repeatedly failed to report when required to undergo weight checks, without offering a
valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than
an illness.
Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health,
Retardation and Hospitals,52decided by the United States Court of Appeals (First Circuit).
In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional
attendant for the mentally retarded at the Ladd Center that was being operated by
respondent. She twice resigned voluntarily with an unblemished record. Even respondent
admitted that her performance met the Centers legitimate expectations. In 1988, Cook reapplied for a similar position. At that time, "she stood 52" tall and weighed over 320
pounds." Respondent claimed that the morbid obesity of plaintiff compromised her ability
to evacuate patients in case of emergency and it also put her at greater risk of serious
diseases.
Cook contended that the action of respondent amounted to discrimination on the basis of
a handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of
1973,53 which incorporates the remedies contained in Title VI of the Civil Rights Act of
1964. Respondent claimed, however, that morbid obesity could never constitute a
handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable
condition, thus plaintiff could simply lose weight and rid herself of concomitant disability.
The appellate Court disagreed and held that morbid obesity is a disability under the
Rehabilitation Act and that respondent discriminated against Cook based on "perceived"
disability. The evidence included expert testimony that morbid obesity is a physiological
disorder. It involves a dysfunction of both the metabolic system and the neurological
appetite suppressing signal system, which is capable of causing adverse effects within
the musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated
that "mutability is relevant only in determining the substantiality of the limitation flowing
from a given impairment," thus "mutability only precludes those conditions that an
individual can easily and quickly reverse by behavioral alteration."
Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court
for the District of Rhode Island, Cook was sometime before 1978 "at least one hundred
pounds more than what is considered appropriate of her height." According to the Circuit
Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case here. At his
heaviest, petitioner was only less than 50 pounds over his ideal weight.

51
In fine, We hold that the obesity of petitioner, when placed in the context of his work as
flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His obesity may not be unintended, but is
nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness basically means that the
just cause is solely attributable to the employee without any external force influencing or
controlling his actions. This element runs through all just causes under Article 282,
whether they be in the nature of a wrongful action or omission. Gross and habitual
neglect, a recognized just cause, is considered voluntary although it lacks the element of
intent found in Article 282(a), (c), and (d)."54
weight standards of PAL are reasonable. A common carrier, from the nature of its business
and for reasons of public policy, is bound to observe extraordinary diligence for the safety
of the passengers it transports.74 It is bound to carry its passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with
due regard for all the circumstances.75
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense.
The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the aircraft. The
weight standards of PAL should be viewed as imposing strict norms of discipline upon its
employees.
Employment in particular jobs may not be limited to persons of a particular sex, religion, or
national origin unless the employer can show that sex, religion, or national origin is an
actual qualification for performing the job. The qualification is called a bona fide
occupational qualification (BFOQ).55 In the United States, there are a few federal and
many state job discrimination laws that contain an exception allowing an employer to
engage in an otherwise unlawful form of prohibited discrimination when the action is
based on a BFOQ necessary to the normal operation of a business or enterprise.56
Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute
providing for it.57Further, there is no existing BFOQ statute that could justify his dismissal.58
Both arguments must fail.
First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the Magna Carta for
Disabled Persons62contain provisions similar to BFOQ.
Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The
British Columbia Government and Service Employees Union (BCGSEU),63 the Supreme
Court of Canada adopted the so-called "Meiorin Test" in determining whether an
employment policy is justified. Under this test, (1) the employer must show that it adopted
the standard for a purpose rationally connected to the performance of the job;64 (2) the
employer must establish that the standard is reasonably necessary65 to the
accomplishment of that work-related purpose; and (3) the employer must establish that
the standard is reasonably necessary in order to accomplish the legitimate work-related
purpose. Similarly, in Star Paper Corporation v. Simbol,66 this Court held that in order to
justify a BFOQ, the employer must prove that (1) the employment qualification is
reasonably related to the essential operation of the job involved; and (2) that there is
factual basis for believing that all or substantially all persons meeting the qualification
would be unable to properly perform the duties of the job.67
In short, the test of reasonableness of the company policy is used because it is parallel to
BFOQ.68 BFOQ is valid "provided it reflects an inherent quality reasonably necessary for
satisfactory job performance."69
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc.,70 the
Court did not hesitate to pass upon the validity of a company policy which prohibits its
employees from marrying employees of a rival company. It was held that the company
policy is reasonable considering that its purpose is the protection of the interests of the
company against possible competitor infiltration on its trade secrets and procedures.
Verily, there is no merit to the argument that BFOQ cannot be applied if it has no
supporting statute. Too, the Labor Arbiter,71 NLRC,72 and CA73 are one in holding that the
The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it
is only logical to hold that the weight standards of PAL show its effort to comply with the
exacting obligations imposed upon it by law by virtue of being a common carrier.
In other words, the primary objective of PAL in the imposition of the weight standards for
cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility
at all times in order to inspire passenger confidence on their ability to care for the
passengers when something goes wrong. It is not farfetched to say that airline companies,
just like all common carriers, thrive due to public confidence on their safety records.
People, especially the riding public, expect no less than that airline companies transport
their passengers to their respective destinations safely and soundly. A lesser performance
is unacceptable.
The task of a cabin crew or flight attendant is not limited to serving meals or attending to
the whims and caprices of the passengers. The most important activity of the cabin crew
is to care for the safety of passengers and the evacuation of the aircraft when an
emergency occurs. Passenger safety goes to the core of the job of a cabin attendant.
Truly, airlines need cabin attendants who have the necessary strength to open emergency
doors, the agility to attend to passengers in cramped working conditions, and the stamina
to withstand grueling flight schedules.
On board an aircraft, the body weight and size of a cabin attendant are important factors
to consider in case of emergency. Aircrafts have constricted cabin space, and narrow
aisles and exit doors. Thus, the arguments of respondent that "[w]hether the airlines flight
attendants are overweight or not has no direct relation to its mission of transporting
passengers to their destination"; and that the weight standards "has nothing to do with
airworthiness of respondents airlines," must fail.
The rationale in Western Air Lines v. Criswell76 relied upon by petitioner cannot apply to his
case. What was involved there were two (2) airline pilots who were denied reassignment
as flight engineers upon reaching the age of 60, and a flight engineer who was forced to
retire at age 60. They sued the airline company, alleging that the age-60 retirement for
flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based
BFOQ and being overweight are not the same. The case of overweight cabin attendants is
another matter. Given the cramped cabin space and narrow aisles and emergency exit
doors of the airplane, any overweight cabin attendant would certainly have difficulty
navigating the cramped cabin area.
In short, there is no need to individually evaluate their ability to perform their task. That an
obese cabin attendant occupies more space than a slim one is an unquestionable fact
which courts can judicially recognize without introduction of evidence.77 It would also be

absurd to require airline companies to reconfigure the aircraft in order to widen the aisles
and exit doors just to accommodate overweight cabin attendants like petitioner.
The biggest problem with an overweight cabin attendant is the possibility of impeding
passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin
attendant during emergencies is to speedily get the passengers out of the aircraft
safely. Being overweight necessarily impedes mobility. Indeed, in an emergency situation,
seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can
translate into three lost lives. Evacuation might slow down just because a wide-bodied
cabin attendant is blocking the narrow aisles. These possibilities are not remote.
Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were
made known to him prior to his employment. He is presumed to know the weight limit that
he must maintain at all times.78 In fact, never did he question the authority of PAL when he
was repeatedly asked to trim down his weight. Bona fides exigit ut quod convenit fiat.
Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat
kanyang tutuparin ang napagkasunduan.
Too, the weight standards of PAL provide for separate weight limitations based on height
and body frame for both male and female cabin attendants. A progressive discipline is
imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight
standards. Thus, the clear-cut rules obviate any possibility for the commission of abuse or
arbitrary action on the part of PAL.
III. Petitioner failed to substantiate his claim that he was discriminated against by
PAL.
Petitioner next claims that PAL is using passenger safety as a convenient excuse to
discriminate against him.79We are constrained, however, to hold otherwise. We agree with
the CA that "[t]he element of discrimination came into play in this case as a secondary
position for the private respondent in order to escape the consequence of dismissal that
being overweight entailed. It is a confession-and-avoidance position that impliedly
admitted the cause of dismissal, including the reasonableness of the applicable standard
and the private respondents failure to comply."80 It is a basic rule in evidence that each
party must prove his affirmative allegation.81
Since the burden of evidence lies with the party who asserts an affirmative allegation,
petitioner has to prove his allegation with particularity. There is nothing on the records
which could support the finding of discriminatory treatment. Petitioner cannot establish
discrimination by simply naming the supposed cabin attendants who are allegedly similarly
situated with him. Substantial proof must be shown as to how and why they are similarly
situated and the differential treatment petitioner got from PAL despite the similarity of his
situation with other employees.
Indeed, except for pointing out the names of the supposed overweight cabin attendants,
petitioner miserably failed to indicate their respective ideal weights; weights over their
ideal weights; the periods they were allowed to fly despite their being overweight; the
particular flights assigned to them; the discriminating treatment they got from PAL; and
other relevant data that could have adequately established a case of discriminatory
treatment by PAL. In the words of the CA, "PAL really had no substantial case of
discrimination to meet."82
We are not unmindful that findings of facts of administrative agencies, like the Labor
Arbiter and the NLRC, are accorded respect, even finality.83 The reason is simple:
administrative agencies are experts in matters within their specific and specialized
52
jurisdiction.84 But the principle is not a hard and fast rule. It only applies if the findings of
facts are duly supported by substantial evidence. If it can be shown that administrative
bodies grossly misappreciated evidence of such nature so as to compel a conclusion to
the contrary, their findings of facts must necessarily be reversed. Factual findings of
administrative agencies do not have infallibility and must be set aside when they fail the
test of arbitrariness.85
Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus
annul their findings.
To make his claim more believable, petitioner invokes the equal protection clause
guaranty86 of the Constitution. However, in the absence of governmental interference, the
liberties guaranteed by the Constitution cannot be invoked.87 Put differently, the Bill of
Rights is not meant to be invoked against acts of private individuals.88 Indeed, the United
States Supreme Court, in interpreting the Fourteenth Amendment,89 which is the source of
our equal protection guarantee, is consistent in saying that the equal protection erects no
shield against private conduct, however discriminatory or wrongful.90 Private actions, no
matter how egregious, cannot violate the equal protection guarantee.91
IV. The claims of petitioner for reinstatement and wages are moot.
As his last contention, petitioner avers that his claims for reinstatement and wages have
not been mooted. He is entitled to reinstatement and his full backwages, "from the time he
was illegally dismissed" up to the time that the NLRC was reversed by the CA.92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
The law is very clear. Although an award or order of reinstatement is self-executory and
does not require a writ of execution,93 the option to exercise actual reinstatement or payroll
reinstatement belongs to the employer. It does not belong to the employee, to the labor
tribunals, or even to the courts.
Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate
his "immediate return to his previous position,"94 there is evidence that PAL opted to
physically reinstate him to a substantially equivalent position in accordance with the order
of the Labor Arbiter.95 In fact, petitioner duly received the return to work notice on February
23, 2001, as shown by his signature.96
Petitioner cannot take refuge in the pronouncements of the Court in a case97 that "[t]he
unjustified refusal of the employer to reinstate the dismissed employee entitles him to
payment of his salaries effective from the time the employer failed to reinstate him despite
the issuance of a writ of execution"98 and ""even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and
pay the wages of the employee during the period of appeal until reversal by the higher
court."99 He failed to prove that he complied with the return to work order of PAL. Neither
does it appear on record that he actually rendered services for PAL from the moment he
was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being overweight, petitioner
in effect wants to render the issues in the present case moot. He asks PAL to comply with
the impossible. Time and again, the Court ruled that the law does not exact compliance
with the impossible.100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to separation pay. This may be
deduced from the language of Article 279 of the Labor Code that "[a]n employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement." Luckily for petitioner, this is
not an ironclad rule.
Exceptionally, separation pay is granted to a legally dismissed employee as an act "social
justice,"101 or based on "equity."102 In both instances, it is required that the dismissal (1)
was not for serious misconduct; and (2) does not reflect on the moral character of the
employee.103
Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for
every year of service.104 It should include regular allowances which he might have been
receiving.105 We are not blind to the fact that he was not dismissed for any serious
misconduct or to any act which would reflect on his moral character. We also recognize
that his employment with PAL lasted for more or less a decade.
WHEREFORE, the appealed Decision of the Court of Appeals
is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled to
separation pay in an amount equivalent to one-half (1/2) months pay for every year of
service, which should include his regular allowances.
53
F. Equal Protection...........................................................................................................163
C. Due Process in General
People vs. Siton
If a man is called to be a street sweeper, he should sweep streets even as Michelangelo
painted, or Beethoven composed music, or Shakespeare wrote poetry. He should sweep
streets so well that all the hosts of Heaven and Earth will pause to say, here lived a great
street sweeper who did his job well.
Martin Luther King, Jr.
Assailed in this petition for review on certiorari is the July 29, 2005 Order of Branch 11,
Davao City Regional Trial Court in Special Civil Case No. 30-500-2004 granting
respondents Petition for Certiorari and declaring paragraph 2 of Article 202 of the Revised
Penal Code unconstitutional.
Respondents Evangeline Siton and Krystel Kate Sagarano were charged with vagrancy
pursuant to Article 202 (2) of the Revised Penal Code in two separate Informations dated
November 18, 2003, docketed as Criminal Case Nos. 115,716-C-2003 and 115,717-C2003 and raffled to Branch 3 of the Municipal Trial Court in Cities, Davao City. The
Informations, read:
That on or about November 14, 2003, in the City of Davao, Philippines, and within the
jurisdiction of this Honorable Court, the above-mentioned accused, willfully, unlawfully and
feloniously wandered and loitered around San Pedro and Legaspi Streets, this City,
without any visible means to support herself nor lawful and justifiable purpose.
Article 202 of the Revised Penal Code provides:
Art. 202. Vagrants and prostitutes; penalty. The following are vagrants:
SO ORDERED.
1.
Any person having no apparent means of subsistence, who has the physical
ability to work and who neglects to apply himself or herself to some lawful calling;

Similarities and Distinctions, and their Limitations.
2.
Any person found loitering about public or semi-public buildings or places or
tramping or wandering about the country or the streets without visible means of support;
3.
Any idle or dissolute person who lodges in houses of ill fame; ruffians or pimps
and those who habitually associate with prostitutes;
A. Fundamental Principles on Constitutional Law and the Bill of Rights..............................2
4.
Any person who, not being included in the provisions of other articles of this Code,
shall be found loitering in any inhabited or uninhabited place belonging to another without
any lawful or justifiable purpose;
5.

Similarities and Distinctions, and their Limitations.............................................................53
C. Due Process in General................................................................................................53
D. DUE PROCESS AND POLICE POWER.......................................................................94
E. Due Process and Eminent Domain..............................................................................123
Prostitutes.
For the purposes of this article, women who, for money or profit, habitually indulge in
sexual intercourse or lascivious conduct, are deemed to be prostitutes.
Any person found guilty of any of the offenses covered by this articles shall be punished
by arresto menor or a fine not exceeding 200 pesos, and in case of recidivism, by arresto
mayor in its medium period to prision correccional in its minimum period or a fine ranging
from 200 to 2,000 pesos, or both, in the discretion of the court.

Instead of submitting their counter-affidavits as directed, respondents filed separate

Motions to Quash on the ground that Article 202 (2) is unconstitutional for being vague
and overbroad.
In an Order dated April 28, 2004, the municipal trial court denied the motions and directed
respondents anew to file their respective counter-affidavits. The municipal trial court also
declared that the law on vagrancy was enacted pursuant to the States police power and
justified by the Latin maxim salus populi est suprem(a) lex, which calls for the
subordination of individual benefit to the interest of the greater number, thus:
Our law on vagrancy was enacted pursuant to the police power of the State. An authority
on police power, Professor Freund describes laconically police power as the power of
promoting public welfare by restraining and regulating the use of liberty and property.
(Citations omitted). In fact the persons acts and acquisitions are hemmed in by the police
power of the state. The justification found in the Latin maxim, salus populi est supreme
(sic) lex (the god of the people is the Supreme Law). This calls for the subordination of
individual benefit to the interests of the greater number.In the case at bar the affidavit of
the arresting police officer, SPO1 JAY PLAZA with Annex A lucidly shows that there was
a prior surveillance conducted in view of the reports that vagrants and prostitutes
proliferate in the place where the two accused (among other women) were wandering and
in the wee hours of night and soliciting male customer. Thus, on that basis the
prosecution should be given a leeway to prove its case. Thus, in the interest of
substantial justice, both prosecution and defense must be given their day in Court: the
prosecution proof of the crime, and the author thereof; the defense, to show that the acts
of the accused in the indictment cant be categorized as a crime.
The municipal trial court also noted that in the affidavit of the arresting police officer,
SPO1 Jay Plaza, it was stated that there was a prior surveillance conducted on the two
accused in an area reported to be frequented by vagrants and prostitutes who solicited
sexual favors. Hence, the prosecution should be given the opportunity to prove the crime,
and the defense to rebut the evidence.
Respondents thus filed an original petition for certiorari and prohibition with the Regional
Trial Court of Davao City, directly challenging the constitutionality of the anti-vagrancy law,
claiming that the definition of the crime of vagrancy under Article 202 (2), apart from being
vague, results as well in an arbitrary identification of violators, since the definition of the
crime includes in its coverage persons who are otherwise performing ordinary peaceful
acts. They likewise claimed that Article 202 (2) violated the equal protection clause under
the Constitution because it discriminates against the poor and unemployed, thus
permitting an arbitrary and unreasonable classification.
The State, through the Office of the Solicitor General, argued that pursuant to the Courts
ruling in Estrada v. Sandiganbayan, the overbreadth and vagueness doctrines apply only
to free speech cases and not to penal statutes. It also asserted that Article 202 (2) must
be presumed valid and constitutional, since the respondents failed to overcome this
presumption.
54
petitioners Motion to Quash is set aside and the said court is ordered to dismiss the
subject criminal cases against the petitioners pending before it.
SO ORDERED.
In declaring Article 202 (2) unconstitutional, the trial court opined that the law is
vague and it violated the equal protection clause. It held that the void for vagueness
doctrine is equally applicable in testing the validity of penal statutes. Citing Papachristou
v. City of Jacksonville, where an anti vagrancy ordinance was struck down as
unconstitutional by the Supreme Court of the United States, the trial court ruled:
The U.S. Supreme Courts justifications for striking down the Jacksonville
Vagrancy Ordinance are equally applicable to paragraph 2 of Article 202 of the Revised
Penal Code.
Indeed, to authorize a police officer to arrest a person for being found loitering about
public or semi-public buildings or places or tramping or wandering about the country or the
streets without visible means of support offers too wide a latitude for arbitrary
determinations as to who should be arrested and who should not.
Loitering about and wandering have become national pastimes particularly in
these times of recession when there are many who are without visible means of support
not by reason of choice but by force of circumstance as borne out by the high
unemployment rate in the entire country.
To authorize law enforcement authorities to arrest someone for nearly no
other reason than the fact that he cannot find gainful employment would indeed be adding
insult to injury.
On its pronouncement that Article 202 (2) violated the equal protection clause of the
Constitution, the trial court declared:
The application of the Anti-Vagrancy Law, crafted in the 1930s, to our situation at present
runs afoul of the equal protection clause of the constitution as it offers no reasonable
classification between those covered by the law and those who are not.
Class legislation is such legislation which denies rights to one which are accorded to
others, or inflicts upon one individual a more severe penalty than is imposed upon another
in like case offending.
Applying this to the case at bar, since the definition of Vagrancy under Article 202 of the
Revised Penal Code offers no guidelines or any other reasonable indicators to
differentiate those who have no visible means of support by force of circumstance and
those who choose to loiter about and bum around, who are the proper subjects of
vagrancy legislation, it cannot pass a judicial scrutiny of its constitutionality.
Hence, this petition for review on certiorari raising the sole issue of:
On July 29, 2005, the Regional Trial Court issued the assailed Order granting the petition,
the dispositive portion of which reads:
WHETHER THE REGIONAL TRIAL COURT COMMITTED A REVERSIBLE ERROR IN

DECLARING UNCONSTITUTIONAL ARTICLE 202 (2) OF THE REVISED PENAL CODE
WHEREFORE, PRESCINDING FROM THE FOREGOING, the instant Petition is hereby

GRANTED. Paragraph 2 of Article 202 of the Revised Penal Code is hereby declared
unconstitutional and the Order of the court a quo, dated April 28, 2004, denying the
Petitioner argues that every statute is presumed valid and all reasonable doubts should
be resolved in favor of its constitutionality; that, citing Romualdez v. Sandiganbayan, the
overbreadth and vagueness doctrines have special application to free-speech cases only
and are not appropriate for testing the validity of penal statutes; that respondents failed to

overcome the presumed validity of the statute, failing to prove that it was vague under the
standards set out by the Courts; and that the State may regulate individual conduct for the
promotion of public welfare in the exercise of its police power.
On the other hand, respondents argue against the limited application of the overbreadth
and vagueness doctrines. They insist that Article 202 (2) on its face violates the
constitutionally-guaranteed rights to due process and the equal protection of the laws; that
the due process vagueness standard, as distinguished from the free speech vagueness
doctrine, is adequate to declare Article 202 (2) unconstitutional and void on its face; and
that the presumption of constitutionality was adequately overthrown.
The Court finds for petitioner.

The power to define crimes and prescribe their corresponding penalties is legislative in
nature and inherent in the sovereign power of the state to maintain social order as an
aspect of police power. The legislature may even forbid and penalize acts formerly
considered innocent and lawful provided that no constitutional rights have been abridged.
However, in exercising its power to declare what acts constitute a crime, the legislature
must inform the citizen with reasonable precision what acts it intends to prohibit so that he
may have a certain understandable rule of conduct and know what acts it is his duty to
avoid. This requirement has come to be known as the void-for-vagueness doctrine which
states that a statute which either forbids or requires the doing of an act in terms so vague
that men of common intelligence must necessarily guess at its meaning and differ as to its
application, violates the first essential of due process of law.
In Spouses Romualdez v. COMELEC, the Court recognized the application of the voidfor-vagueness doctrine to criminal statutes in appropriate cases. The Court therein held:
At the outset, we declare that under these terms, the opinions of the dissent which seek
to bring to the fore the purported ambiguities of a long list of provisions in Republic Act No.
8189 can be deemed as a facial challenge. An appropriate as applied challenge in the
instant Petition should be limited only to Section 45 (j) in relation to Sections 10 (g) and (j)
of Republic Act No. 8189 the provisions upon which petitioners are charged. An
expanded examination of the law covering provisions which are alien to petitioners case
would be antagonistic to the rudiment that for judicial review to be exercised, there must
be an existing case or controversy that is appropriate or ripe for determination, and not
conjectural or anticipatory.
The first statute punishing vagrancy Act No. 519 was modeled after American
vagrancy statutes and passed by the Philippine Commission in 1902. The Penal Code of
Spain of 1870 which was in force in this country up to December 31, 1931 did not contain
a provision on vagrancy. While historically an Anglo-American concept of crime
prevention, the law on vagrancy was included by the Philippine legislature as a permanent
feature of the Revised Penal Code in Article 202 thereof which, to repeat, provides:
ART. 202. Vagrants and prostitutes; penalty. The following are vagrants:
1.
Any person having no apparent means of subsistence, who has the physical
ability to work and who neglects to apply himself or herself to some lawful calling;
2.
Any person found loitering about public or semi-public buildings or places, or
tramping or wandering about the country or the streets without visible means of support;
55
3.
Any idle or dissolute person who lodges in houses of ill-fame; ruffians or pimps
and those who habitually associate with prostitutes;
4.
Any person who, not being included in the provisions of other articles of this Code,
shall be found loitering in any inhabited or uninhabited place belonging to another without
any lawful or justifiable purpose;
5.
Prostitutes.
For the purposes of this article, women who, for money or profit, habitually indulge in
sexual intercourse or lascivious conduct, are deemed to be prostitutes.
Any person found guilty of any of the offenses covered by this article shall be punished by
arresto menor or a fine not exceeding 200 pesos, and in case of recidivism, by arresto
mayor in its medium period to prision correccional in its minimum period or a fine ranging
from 200 to 2,000 pesos, or both, in the discretion of the court.
In the instant case, the assailed provision is paragraph (2), which defines a vagrant as
any person found loitering about public or semi-public buildings or places, or tramping or
wandering about the country or the streets without visible means of support. This
provision was based on the second clause of Section 1 of Act No. 519 which defined
vagrant as every person found loitering about saloons or dramshops or gambling
houses, or tramping or straying through the country without visible means of support.
The second clause was essentially retained with the modification that the places under
which the offense might be committed is now expressed in general terms public or semipublic places.
The Regional Trial Court, in asserting the unconstitutionality of Article 202 (2), take
support mainly from the U.S. Supreme Courts opinion in the Papachristou v. City of
Jacksonville case, which in essence declares:
Living under a rule of law entails various suppositions, one of which is that [all persons]
are entitled to be informed as to what the State commands or forbids. Lanzetta v. New
Jersey, 306 U. S. 451, 306 U. S. 453.
Lanzetta is one of a well recognized group of cases insisting that the law give fair notice
of the offending conduct. See Connally v. General Construction Co., 269 U. S. 385, 269 U.
S. 391; Cline v. Frink Dairy Co., 274 U. S. 445; United States v. Cohen Grocery Co., 255
U. S. 81. In the field of regulatory statutes governing business activities, where the acts
limited are in a narrow category, greater leeway is allowed. Boyce Motor Lines, Inc. v.
United States, 342 U. S. 337; United States v. National Dairy Products Corp., 372 U. S.
29; United States v. Petrillo, 332 U. S. 1.
The poor among us, the minorities, the average householder, are not in business and not
alerted to the regulatory schemes of vagrancy laws; and we assume they would have no
understanding of their meaning and impact if they read them. Nor are they protected from
being caught in the vagrancy net by the necessity of having a specific intent to commit an
unlawful act. See Screws v. United States, 325 U. S. 91; Boyce Motor Lines, Inc. v. United
States, supra.
The Jacksonville ordinance makes criminal activities which, by modern standards, are
normally innocent. Nightwalking is one. Florida construes the ordinance not to make
criminal one night's wandering, Johnson v. State, 202 So.2d at 855, only the habitual
wanderer or, as the ordinance describes it, common night walkers. We know, however,
from experience that sleepless people often walk at night, perhaps hopeful that sleepinducing relaxation will result.

Luis Munoz-Marin, former Governor of Puerto Rico, commented once that loafing was a
national virtue in his Commonwealth, and that it should be encouraged. It is, however, a
crime in Jacksonville.
xxxx
Persons wandering or strolling from place to place have been extolled by Walt Whitman
and Vachel Lindsay. The qualification without any lawful purpose or object may be a trap
for innocent acts. Persons neglecting all lawful business and habitually spending their
time by frequenting . . . places where alcoholic beverages are sold or served would
literally embrace many members of golf clubs and city clubs.
Walkers and strollers and wanderers may be going to or coming from a burglary. Loafers
or loiterers may be casing a place for a holdup. Letting one's wife support him is an intrafamily matter, and normally of no concern to the police. Yet it may, of course, be the
setting for numerous crimes.
The difficulty is that these activities are historically part of the amenities of life as we have
known them. They are not mentioned in the Constitution or in the Bill of Rights. These
unwritten amenities have been, in part, responsible for giving our people the feeling of
independence and self-confidence, the feeling of creativity. These amenities have
dignified the right of dissent, and have honored the right to be nonconformists and the
right to defy submissiveness. They have encouraged lives of high spirits, rather than
hushed, suffocating silence.
xxxx
Where the list of crimes is so all-inclusive and generalized as the one in this ordinance,
those convicted may be punished for no more than vindicating affronts to police authority:
The common ground which brings such a motley assortment of human troubles before
the magistrates in vagrancy-type proceedings is the procedural laxity which permits
'conviction' for almost any kind of conduct and the existence of the House of Correction as
an easy and convenient dumping-ground for problems that appear to have no other
immediate solution. Foote, Vagrancy-Type Law and Its Administration, 104 U.Pa.L.Rev.
603, 631.
xxxx
Another aspect of the ordinance's vagueness appears when we focus not on the lack of
notice given a potential offender, but on the effect of the unfettered discretion it places in
the hands of the Jacksonville police. Caleb Foote, an early student of this subject, has
called the vagrancy-type law as offering punishment by analogy. Such crimes, though
long common in Russia, are not compatible with our constitutional system.
xxxx
A presumption that people who might walk or loaf or loiter or stroll or frequent houses
where liquor is sold, or who are supported by their wives or who look suspicious to the
police are to become future criminals is too precarious for a rule of law. The implicit
presumption in these generalized vagrancy standards -- that crime is being nipped in the
bud -- is too extravagant to deserve extended treatment. Of course, vagrancy statutes are
useful to the police. Of course, they are nets making easy the roundup of so-called
undesirables. But the rule of law implies equality and justice in its application. Vagrancy
laws of the Jacksonville type teach that the scales of justice are so tipped that evenhanded administration of the law is not possible. The rule of law, evenly applied to
56
minorities as well as majorities, to the poor as well as the rich, is the great mucilage that
holds society together.
The underlying principles in Papachristou are that: 1) the assailed Jacksonville ordinance
fails to give a person of ordinary intelligence fair notice that his contemplated conduct is
forbidden by the statute; and 2) it encourages or promotes opportunities for the
application of discriminatory law enforcement.
The said underlying principle in Papachristou that the Jacksonville ordinance, or Article
202 (2) in this case, fails to give fair notice of what constitutes forbidden conduct, finds no
application here because under our legal system, ignorance of the law excuses no one
from compliance therewith. This principle is of Spanish origin, and we adopted it to
govern and limit legal conduct in this jurisdiction. Under American law, ignorance of the
law is merely a traditional rule that admits of exceptions.
Moreover, the Jacksonville ordinance was declared unconstitutional on account of specific

provisions thereof, which are not found in Article 202 (2). The ordinance (Jacksonville
Ordinance Code 257) provided, as follows:
Rogues and vagabonds, or dissolute persons who go about begging; common gamblers,
persons who use juggling or unlawful games or plays, common drunkards, common night
walkers, thieves, pilferers or pickpockets, traders in stolen property, lewd, wanton and
lascivious persons, keepers of gambling places, common railers and brawlers, persons
wandering or strolling around from place to place without any lawful purpose or object,
habitual loafers, disorderly persons, persons neglecting all lawful business and habitually
spending their time by frequenting houses of ill fame, gaming houses, or places where
alcoholic beverages are sold or served, persons able to work but habitually living upon the
earnings of their wives or minor children shall be deemed vagrants and, upon conviction in
the Municipal Court shall be punished as provided for Class D offenses.
Thus, the U.S. Supreme Court in Jacksonville declared the ordinance unconstitutional,
because such activities or habits as nightwalking, wandering or strolling around without
any lawful purpose or object, habitual loafing, habitual spending of time at places where
alcoholic beverages are sold or served, and living upon the earnings of wives or minor
children, which are otherwise common and normal, were declared illegal. But these are
specific acts or activities not found in Article 202 (2). The closest to Article 202 (2) any
person found loitering about public or semi-public buildings or places, or tramping or
wandering about the country or the streets without visible means of support from the
Jacksonville ordinance, would be persons wandering or strolling around from place to
place without any lawful purpose or object. But these two acts are still not the same:
Article 202 (2) is qualified by without visible means of support while the Jacksonville
ordinance prohibits wandering or strolling without any lawful purpose or object, which
was held by the U.S. Supreme Court to constitute a trap for innocent acts.
Under the Constitution, the people are guaranteed the right to be secure in their persons,
houses, papers and effects against unreasonable searches and seizures of whatever
nature and for any purpose, and no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized. Thus, as with

any other act or offense, the requirement of probable cause provides an acceptable limit
on police or executive authority that may otherwise be abused in relation to the search or
arrest of persons found to be violating Article 202 (2). The fear exhibited by the
respondents, echoing Jacksonville, that unfettered discretion is placed in the hands of the
police to make an arrest or search, is therefore assuaged by the constitutional
requirement of probable cause, which is one less than certainty or proof, but more than
suspicion or possibility.
Evidently, the requirement of probable cause cannot be done away with arbitrarily without
pain of punishment, for, absent this requirement, the authorities are necessarily guilty of
abuse. The grounds of suspicion are reasonable when, in the absence of actual belief of
the arresting officers, the suspicion that the person to be arrested is probably guilty of
committing the offense, is based on actual facts, i.e., supported by circumstances
sufficiently strong in themselves to create the probable cause of guilt of the person to be
arrested. A reasonable suspicion therefore must be founded on probable cause, coupled
with good faith of the peace officers making the arrest.
The State cannot in a cavalier fashion intrude into the persons of its citizens as well as
into their houses, papers and effects. The constitutional provision sheathes the private
individual with an impenetrable armor against unreasonable searches and seizures. It
protects the privacy and sanctity of the person himself against unlawful arrests and other
forms of restraint, and prevents him from being irreversibly cut off from that domestic
security which renders the lives of the most unhappy in some measure agreeable.
As applied to the instant case, it appears that the police authorities have been conducting
previous surveillance operations on respondents prior to their arrest. On the surface, this
satisfies the probable cause requirement under our Constitution. For this reason, we are
not moved by respondents trepidation that Article 202 (2) could have been a source of
police abuse in their case.
Since the Revised Penal Code took effect in 1932, no challenge has ever been made
upon the constitutionality of Article 202 except now. Instead, throughout the years, we
have witnessed the streets and parks become dangerous and unsafe, a haven for
beggars, harassing watch-your-car boys, petty thieves and robbers, pickpockets,
swindlers, gangs, prostitutes, and individuals performing acts that go beyond decency and
morality, if not basic humanity. The streets and parks have become the training ground for
petty offenders who graduate into hardened and battle-scarred criminals. Everyday, the
news is rife with reports of innocent and hardworking people being robbed, swindled,
harassed or mauled if not killed by the scourge of the streets. Blue collar workers are
robbed straight from withdrawing hard-earned money from the ATMs (automated teller
machines); students are held up for having to use and thus exhibit publicly their mobile
phones; frail and helpless men are mauled by thrill-seeking gangs; innocent passers-by
are stabbed to death by rowdy drunken men walking the streets; fair-looking or pretty
women are stalked and harassed, if not abducted, raped and then killed; robbers, thieves,
pickpockets and snatchers case streets and parks for possible victims; the old are
swindled of their life savings by conniving streetsmart bilkers and con artists on the prowl;
beggars endlessly pester and panhandle pedestrians and commuters, posing a health
threat and putting law-abiding drivers and citizens at risk of running them over. All these
happen on the streets and in public places, day or night.
57
The streets must be protected. Our people should never dread having to ply them each
day, or else we can never say that we have performed our task to our brothers and sisters.
We must rid the streets of the scourge of humanity, and restore order, peace, civility,
decency and morality in them.
This is exactly why we have public order laws, to which Article 202 (2) belongs. These
laws were crafted to maintain minimum standards of decency, morality and civility in
human society. These laws may be traced all the way back to ancient times, and today,
they have also come to be associated with the struggle to improve the citizens quality of
life, which is guaranteed by our Constitution. Civilly, they are covered by the abuse of
rights doctrine embodied in the preliminary articles of the Civil Code concerning Human
Relations, to the end, in part, that 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. This provision is, together with the succeeding articles on human
relations, intended to embody certain basic principles that are to be observed for the
rightful relationship between human beings and for the stability of the social order.
In civil law, for example, the summary remedy of ejectment is intended to prevent criminal
disorder and breaches of the peace and to discourage those who, believing themselves
entitled to the possession of the property, resort to force rather than to some appropriate
action in court to assert their claims. Any private person may abate a public nuisance
which is specially injurious to him by removing, or if necessary, by destroying the thing
which constitutes the same, without committing a breach of the peace, or doing
unnecessary injury.
Criminally, public order laws encompass a whole range of acts from public indecencies
and immoralities, to public nuisances, to disorderly conduct. The acts punished are made
illegal by their offensiveness to societys basic sensibilities and their adverse effect on the
quality of life of the people of society. For example, the issuance or making of a bouncing
check is deemed a public nuisance, a crime against public order that must be abated. As
a matter of public policy, the failure to turn over the proceeds of the sale of the goods
covered by a trust receipt or to return said goods, if not sold, is a public nuisance to be
abated by the imposition of penal sanctions. Thus, public nuisances must be abated
because they have the effect of interfering with the comfortable enjoyment of life or
property by members of a community.
Article 202 (2) does not violate the equal protection clause; neither does it discriminate
against the poor and the unemployed. Offenders of public order laws are punished not for
their status, as for being poor or unemployed, but for conducting themselves under such
circumstances as to endanger the public peace or cause alarm and apprehension in the
community. Being poor or unemployed is not a license or a justification to act indecently
or to engage in immoral conduct.
Vagrancy must not be so lightly treated as to be considered constitutionally offensive. It is
a public order crime which punishes persons for conducting themselves, at a certain place
and time which orderly society finds unusual, under such conditions that are repugnant
and outrageous to the common standards and norms of decency and morality in a just,
civilized and ordered society, as would engender a justifiable concern for the safety and
well-being of members of the community.

Instead of taking an active position declaring public order laws unconstitutional, the State
should train its eye on their effective implementation, because it is in this area that the
Court perceives difficulties. Red light districts abound, gangs work the streets in the wee
hours of the morning, dangerous robbers and thieves ply their trade in the trains stations,
drunken men terrorize law-abiding citizens late at night and urinate on otherwise decent
corners of our streets. Rugby-sniffing individuals crowd our national parks and busy
intersections. Prostitutes wait for customers by the roadside all around the metropolis,
some even venture in bars and restaurants. Drug-crazed men loiter around dark avenues
waiting to pounce on helpless citizens. Dangerous groups wander around, casing homes
and establishments for their next hit. The streets must be made safe once more. Though
a mans house is his castle, outside on the streets, the king is fair game.
The dangerous streets must surrender to orderly society.
Finally, we agree with the position of the State that first and foremost, Article 202 (2)
should be presumed valid and constitutional. When confronted with a constitutional
question, it is elementary that every court must approach it with grave care and
considerable caution bearing in mind that every statute is presumed valid and every
reasonable doubt should be resolved in favor of its constitutionality. The policy of our
courts is to avoid ruling on constitutional questions and to presume that the acts of the
political departments are valid in the absence of a clear and unmistakable showing to the
contrary. To doubt is to sustain, this presumption is based on the doctrine of separation of
powers which enjoins upon each department a becoming respect for the acts of the other
departments. The theory is that as the joint act of Congress and the President of the
Philippines, a law has been carefully studied, crafted and determined to be in accordance
with the fundamental law before it was finally enacted.
It must not be forgotten that police power is an inherent attribute of sovereignty. It has
been defined as the power vested by the Constitution in the legislature to make, ordain,
and establish all manner of wholesome and reasonable laws, statutes and ordinances,
either with penalties or without, not repugnant to the Constitution, as they shall judge to be
for the good and welfare of the commonwealth, and for the subjects of the same. The
power is plenary and its scope is vast and pervasive, reaching and justifying measures for
public health, public safety, public morals, and the general welfare. As an obvious police
power measure, Article 202 (2) must therefore be viewed in a constitutional light.
WHEREFORE, the petition is GRANTED. The Decision of Branch 11 of the Regional Trial
Court of Davao City in Special Civil Case No. 30-500-2004 declaring Article 202,
paragraph 2 of the Revised Penal Code UNCONSTITUTIONAL is REVERSED and SET
ASIDE.
Let the proceedings in Criminal Cases Nos. 115,716-C-2003 and 115,717-C-2003 thus
continue.
No costs.
SO ORDERED.
58
DLSU vs. CA
NAGTATAGIS sa kasong ito ang karapatang mag-aral ng apat na estudyante na

nasangkot sa away ng dalawang fraternity at ang karapatang akademiko ng isang
pamantasan.
PRIVATE respondents Alvin Aguilar, James Paul Bungubung, Richard Reverente and
Roberto Valdes, Jr. are members of Tau Gamma Phi Fraternity who were expelled by the
De La Salle University (DLSU) and College of Saint Benilde (CSB)1 Joint Discipline Board
because of their involvement in an offensive action causing injuries to petitioner James
Yap and three other student members of Domino Lux Fraternity. This is the backdrop of
the controversy before Us pitting private respondents' right to education vis-a-vis the
University's right to academic freedom.
ASSAILED in this Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the
Rules of Court are the following: (1) Resolution of the Court of Appeals (CA) dated July
30, 1996 dismissing DLSU's petition for certiorariagainst respondent Judge and private
respondents Aguilar, Bungubung, Reverente, and Valdes, Jr.;2 (2) Resolution of the CA
dated October 15, 1996 denying the motion for reconsideration;3 (3) Order dated January
7, 1997 of the Regional Trial Court (RTC), Branch 36 Manila granting private respondent
Aguilar's motion to reiterate writ of preliminary injunction;4 and (4) Resolution No. 181-96
dated May 14, 1996 of the Commission on Higher Education (CHED) exonerating private
respondent Aguilar and lowering the penalties for the other private respondents from
expulsion to exclusion.5
Factual Antecedents
Gleaned from the May 3, 1995 Decision of the DLSU-CSB Joint Discipline Board, two
violent incidents on March 29, 1995 involving private respondents occurred:
x x x From the testimonies of the complaining witnesses, it appears that one week prior to
March 29, 1995, Mr. James Yap was eating his dinner alone in Manang's Restaurant near
La Salle, when he overheard two men bad-mouthing and apparently angry at Domino Lux.
He ignored the comments of the two. When he arrived at his boarding house, he
mentioned the remarks to his two other brods while watching television. These two brods
had earlier finished eating their dinner at Manang's. Then, the three, together with four
other persons went back to Manang's and confronted the two who were still in the
restaurant. By admission of respondent Bungubung in his testimony, one of the two was a
member of the Tau Gamma Phi Fraternity. There was no rumble or physical violence then.
After this incident, a meeting was conducted between the two heads of the fraternity
through the intercession of the Student Council. The Tau Gamma Phi Fraternity was
asking for an apology. "Kailanganng apology" in the words of respondent Aguilar. But no
apology was made.
Then, 5 members of the Tau Gamma Phi Fraternity went to the tambayan of the Domino
Lux Fraternity in the campus. Among them were respondents Bungubung, Reverente and
Papio. They were looking for a person whose description matched James Yap. According
to them, this person supposedly "nambastos ng brod." As they could not find Mr. Yap, one
of them remarked "Paano ba iyan. Pasensiya na lang."
Came March 29, 1995 and the following events.

Ten minutes before his next class at 6:00 p.m., Mr. James Yap went out of the campus
using the Engineering Gate to buy candies across Taft Avenue. As he was about to recross Taft Avenue, he heard heavy footsteps at his back. Eight to ten guys were running
towards him. He panicked. He did not know what to do. Then, respondent Bungubung
punched him in the head with something heavy in his hands "parangknuckles."
Respondents Reverente and Lee were behind Yap, punching him. Respondents
Bungubung and Valdes who were in front of him, were also punching him. As he was lying
on the street, respondent Aguilar kicked him. People shouted; guards arrived; and the
group of attackers left.
Mr. Yap could not recognize the other members of the group who attacked him. With
respect to respondent Papio, Mr. Yap said "hindi ko nakita ang mukha niya, hindi ko nakita
sumuntok siya." What Mr. Yap saw was a long haired guy also running with the group.
Two guards escorted Mr. Yap inside the campus. At this point, Mr. Dennis Pascual was at
the Engineering Gate. Mr. Pascual accompanied Yap to the university clinic; reported the
incident to the Discipline Office; and informed his fraternity brods at their tambayan.
According to Mr. Pascual, their head of the Domino Lux Fraternity said: "Walang gagalaw.
Uwian na lang."
Mr. Ericson Cano, who was supposed to hitch a ride with Dennis Pascual, saw him under
the clock in Miguel Building. However, they did not proceed directly for home. With a
certain Michael Perez, they went towards the direction of Dagonoy Street because Mr.
Pascual was supposed to pick up a book for his friend from another friend who lives
somewhere in the area.
As they were along Dagonoy Street, and before they could pass the Kolehiyo ng Malate
Restaurant, Mr. Cano first saw several guys inside the restaurant. He said not to mind
them and just keep on walking. However, the group got out of the restaurant, among them
respondents Reverente, Lee and Valdes. Mr. Cano told Mr. Lee: "Ayaw namin ng gulo."
But, respondent Lee hit Mr. Cano without provocation. Respondent Reverente kicked Mr.
Pascual and respondent Lee also hit Mr. Pascual. Mr. Cano and Mr. Perez managed to
run from the mauling and they were chased by respondent Lee and two others.
Mr. Pascual was left behind. After respondent Reverente first kicked him, Mr. Pascual was
ganged-upon by the rest. He was able to run, but the group was able to catch up with him.
His shirt was torn and he was hit at the back of his head with a lead pipe. Respondent Lee
who was chasing Cano and Perez, then returned to Mr. Pascual.
Mr. Pascual identified respondents Reverente and Lee, as among those who hit him.
Although Mr. Pascual did not see respondent Valdes hit him, he identified respondent
Valdez (sic) as also one of the members of the group.
In fact, Mr. Cano saw respondent Valdes near Mr. Pascual. He was almost near the corner
of Leon Guinto and Estrada; while respondent Pascual who managed to run was stopped
at the end of Dagonoy along Leon Guinto. Respondent Valdes shouted: "Mga putang-ina
niyo." Respondent Reverente hit Mr. Pascual for the last time. Apparently being satisfied
with their handiwork, the group left. The victims, Cano, Perez and Pascual proceeded to a
friend's house and waited for almost two hours, or at around 8:00 in the evening before
they returned to the campus to have their wounds treated. Apparently, there were three
cars roaming the vicinity.6
The mauling incidents were a result of a fraternity war. The victims, namely: petitioner
James Yap and Dennis Pascual, Ericson Cano, and Michael Perez, are members of the
"Domino Lux Fraternity," while the alleged assailants, private respondents Alvin Aguilar,
59
James Paul Bungubung, Richard Reverente and Roberto Valdes, Jr. are members of "Tau
Gamma Phi Fraternity," a rival fraternity.
The next day, March 30, 1995, petitioner Yap lodged a complaint7 with the Discipline
Board of DLSU charging private respondents with "direct assault." Similar
complaints8 were also filed by Dennis Pascual and Ericson Cano against Alvin Lee and
private respondents Valdes and Reverente. Thus, cases entitled "De La Salle University
and College of St. Benilde v. Alvin Aguilar (AB-BSM/9152105), James Paul Bungubung
(AB-PSM/9234403), Robert R. Valdes, Jr. (BS-BS-APM/9235086), Alvin Lee
(EDD/9462325), Richard Reverente (AB-MGT/9153837) and Malvin A. Papio (ABMGT/9251227)" were docketed as Discipline Case No. 9495-3-25121.
The Director of the DLSU Discipline Office sent separate notices to private respondents
Aguilar, Bungubung and Valdes, Jr. and Reverente informing them of the complaints and
requiring them to answer. Private respondents filed their respective answers.9
As it appeared that students from DLSU and CSB10 were involved in the mauling
incidents, a joint DLSU-CSB Discipline Board11 was formed to investigate the incidents.
Thus, petitioner Board Chairman Emmanuel Sales sent notices of hearing12 to private
respondents on April 12, 1995. Said notices uniformly stated as follows:
Please be informed that a joint and expanded Discipline Board had been constituted to
hear and deliberate the charge against you for violation of CHED Order No. 4 arising from
the written complaints of James Yap, Dennis C. Pascual, and Ericson Y. Cano.
You are directed to appear at the hearing of the Board scheduled on April 19, 1995 at 9:00
a.m. at the Bro. Connon Hall for you and your witnesses to give testimony and present
evidence in your behalf. You may be assisted by a lawyer when you give your testimony or
those of your witnesses.
On or before April 18, 1995, you are further directed to provide the Board, through the
Discipline Office, with a list of your witnesses as well as the sworn statement of their
proposed testimony.
Your failure to appear at the scheduled hearing or your failure to submit the list of
witnesses and the sworn statement of their proposed testimony will be considered a
waiver on your part to present evidence and as an admission of the principal act
complained of.
For your strict compliance.13
During the proceedings before the Board on April 19 and 28, 1995, private respondents
interposed the common defense of alibi, summarized by the DLSU-CSB Joint Discipline
Board as follows:
First, in the case of respondent Bungubung, March 29, 1995 was one of the few instances
when he was picked-up by a driver, a certain Romeo S. Carillo. Most of the time,
respondent Bungubung goes home alone sans driver. But on this particular date,
respondent Bungubung said that his dad asked his permission to use the car and thus, his
dad instructed this driver Carillo to pick-up his son. Mr. Carillo is not a family driver, but
works from 8:00 a.m. to 5:00 p.m. for the Philippine Ports Authority where the elder
Bungubung is also employed.
Thus, attempting to corroborate the alibi of respondent Bungubung, Mr. Carillo said that he
arrived at La Salle at 4:56 p.m.; picked-up respondent at 5:02 p.m.; took the Roxas Blvd.
route towards respondent's house in BF Paraaque (on a Wednesday in Baclaran); and

arrived at the house at 6:15 p.m. Respondent Bungubung was dropped-off in his house,
and taking the same route back, Mr. Carillo arrived at the South Harbor at 6:55 p.m. the
Philippine Ports Authority is located at the South Harbor.14
xxxx
Secondly, respondent Valdes said that he was with his friends at McDonald's Taft just
before 6:00 p.m. of March 29, 1995. He said that he left McDonald at 5:50 p.m. together to
get some medicine at the university clinic for his throat irritation. He said that he was at the
clinic at 5:52 p.m. and went back to McDonald, all within a span of 3 or even 4 minutes.
Two witnesses, a certain Sharon Sia and the girlfriend of respondent Valdes, a certain
Jorgette Aquino, attempted to corroborate Valdez' alibi.15
xxxx
Third, respondent Reverente told that (sic) the Board that he was at his home at 5:00 p.m.
of March 29, 1995. He said that he was given the responsibility to be the paymaster of the
construction workers who were doing some works in the apartment of his parents.
Although he had classes in the evening, the workers according to him would wait for him
sometimes up to 9:00 p.m. when he arrives from his classes. The workers get paid
everyday.
Respondent Reverente submitted an affidavit, unsigned by the workers listed there,
supposedly attesting to the fact that he paid the workers at the date and time in
question.16
xxxx
Fourth, respondent Aguilar "solemnly sw[ore] that [he] left DLSU at 5:00 p.m. for Camp
Crame for a meeting with some of the officers that we were preparing."17
On May 3, 1995, the DLSU-CSB Joint Discipline Board issued a Resolution18 finding
private respondents guilty. They were meted the supreme penalty of automatic
expulsion,19 pursuant to CHED Order No. 4.20 The dispositive part of the resolution
reads:
WHEREFORE, considering all the foregoing, the Board finds respondents ALVIN
AGUILAR (AB-BSM/9152105), JAMES PAUL BUNGUBUNG (AB-PSM/9234403), ALVIN
LEE (EDD/94623250) and RICHARD V. REVERENTE (AB-MGT/9153837) guilty of having
violated CHED Order No. 4 and thereby orders their automatic expulsion.
In the case of respondent MALVIN A. PAPIO (AB-MGT/9251227), the Board acquits him of
the charge.
SO ORDERED.21
Private respondents separately moved for reconsideration22 before the Office of the
Senior Vice-President for Internal Operations of DLSU. The motions were all denied in a
Letter-Resolution23 dated June 1, 1995.
On June 5, 1995, private respondent Aguilar filed with the RTC, Manila, against petitioners
a petition for certiorariand injunction under Rule 65 of the Rules of Court with prayer for
temporary restraining order (TRO) and/or writ of preliminary injunction. It was docketed as
Civil Case No. 95-74122 and assigned to respondent Judge of Branch 36. The petition
essentially sought to annul the May 3, 1995 Resolution of the DLSU-CSB Joint Discipline
60
Board and the June 1, 1995 Letter-Resolution of the Office of the Senior Vice-President
for Internal Affairs.
The following day, June 6, 1995, respondent Judge issued a TRO24 directing DLSU, its
subordinates, agents, representatives and/or other persons acting for and in its behalf to
refrain and desist from implementing Resolution dated May 3, 1995 and Letter-Resolution
dated June 1, 1995 and to immediately desist from barring the enrollment of Aguilar for the
second term of school year (SY) 1995.
Subsequently, private respondent Aguilar filed an ex parte motion to amend his petition to
correct an allegation in paragraph 3.2125 of his original petition. Respondent Judge
amended the TRO26 to conform to the correction made in the amended petition.27
On June 7, 1995, the CHED directed DLSU to furnish it with copies of the case records of
Discipline Case No. 9495-3-25121,28 in view of the authority granted to it under Section
77(c) of the Manual of Regulations for Private Schools (MRPS).
On the other hand, private respondents Bungubung and Reverente, and later, Valdes, filed
petitions-in-intervention29 in Civil Case No. 95-74122. Respondent Judge also issued
corresponding temporary restraining orders to compel petitioner DLSU to admit said
private respondents.
On June 19, 1995, petitioner Sales filed a motion to dismiss30 in behalf of all petitioners,
except James Yap. On June 20, 1995, petitioners filed a supplemental motion to
dismiss31 the petitions-in-intervention.
On September 20, 1995, respondent Judge issued an Order32 denying petitioners'
(respondents there) motion to dismiss and its supplement, and granted private
respondents' (petitioners there) prayer for a writ of preliminary injunction. The pertinent
part of the Order reads:
For this purpose, respondent, its agents, representatives or any and all other persons
acting for and in its behalf is/are restrained and enjoined from
1. Implementing and enforcing the Resolution dated May 3, 1995 ordering the automatic
expulsion of petitioner and the petitioners-in-intervention from the De La Salle University
and the letter-resolution dated June 1, 1995, affirming the Resolution dated May 3, 1995;
and
2. Barring the enrolment of petitioner and petitioners-in-intervention in the courses offered
at respondent De La Salle University and to immediately allow them to enroll and
complete their respective courses/degrees until their graduation thereat in accordance
with the standards set by the latter.
WHEREFORE, the ancillary remedy prayed for is granted. Respondent, its agents,
representatives, or any and all persons acting for and its behalf are hereby restrained and
enjoyed from:
1. Implementing and enforcing the Resolution dated May 3, 1995 ordering the automatic
expulsion of petitioner and petitioners-in-intervention and the Letter-Resolution dated June
1, 1995; and
2. Barring the enrollment of petitioner and petitioners-in-intervention in the courses offered
at respondent (De La Salle University) and to forthwith allow all said petitioner and
petitioners-in-intervention to enroll and complete their respective courses/degrees until
their graduation thereat.

The Writ of Preliminary Injunction shall take effect upon petitioner and petitioners-inintervention posting an injunctive bond in the amount of P15,000.00 executed in favor of
respondent to the effect that petitioner and petitioners-in-intervention will pay to
respondent all damages that the latter may suffer by reason of the injunction if the Court
will finally decide that petitioner and petitioners-in-intervention are not entitled thereto.
The motion to dismiss and the supplement thereto is denied for lack of merit.
Respondents are directed to file their Answer to the Petition not later than fifteen (15) days
from receipt thereof.
SO ORDERED.33
Despite the said order, private respondent Aguilar was refused enrollment by petitioner
DLSU when he attempted to enroll on September 22, 1995 for the second term of SY
1995-1996. Thus, on September 25, 1995, Aguilar filed with respondent Judge an urgent
motion to cite petitioners (respondents there) in contempt of court.34 Aguilar also prayed
that petitioners be compelled to enroll him at DLSU in accordance with respondent
Judge's Order dated September 20, 1995. On September 25, 1995, respondent Judge
issued35 a writ of preliminary injunction, the relevant portion of which reads:
IT IS HEREBY ORDERED by the undersigned of the REGIONAL TRIAL COURT OF
MANILA that until further orders, you the said DE LA SALLE University as well as your
subordinates, agents, representatives, employees and any other person assisting or
acting for or on your behalf, to immediately desist from implementing the Resolution dated
May 3, 1995 ordering the automatic expulsion of petitioner and the intervenors in DLSU,
and the letter-resolution dated June 1, 1995 affirming the said Resolution of May 3, 1995
and to immediately desist from barring the enrolment of petitioner and intervenors in the
courses offered at DLSU and to allow them to enroll and complete their degree courses
until their graduation from said school.36
On October 16, 1995, petitioner DLSU filed with the CA a petition for certiorari37 (CA-G.R.
SP No. 38719) with prayer for a TRO and/or writ of preliminary injunction to enjoin the
enforcement of respondent Judge's September 20, 1995 Order and writ of preliminary
injunction dated September 25, 1995.
On April 12, 1996, the CA granted petitioners' prayer for preliminary injunction.
On May 14, 1996, the CHED issued its questioned Resolution No. 181-96, summarily
disapproving the penalty of expulsion for all private respondents. As for Aguilar, he was to
be reinstated, while other private respondents were to be excluded.38 The Resolution
states:
RESOLUTION 181-96
RESOLVED THAT THE REQUEST OF THE DE LA SALLE UNIVERSITY (DLSU), TAFT
AVENUE, MANILA FOR THE APPROVAL OF THE PENALTY OF EXPULSION IMPOSED
ON MR. ALVIN AGUILAR, JAMES PAUL BUNGUBUNG, ROBERT R. VALDES, JR.,
ALVIN LEE AND RICHARD V. REVERENTE BE, AS IT IS HEREBY IS, DISAPPROVED.
RESOLVED FURTHER, THAT THE COMMISSION DIRECT THE DLSU TO
IMMEDIATELY EFFECT THE REINSTATEMENT OF MR. AGUILAR AND THE
LOWERING OF THE PENALTY OF MR. JAMES PAUL BUNGUBUNG, MR. ROBER R.
VALDEZ, JR., (sic) MR. ALVIN LEE AND MR. RICHARD V. REVERENTE FROM
EXPULSION TO EXCLUSION.39
61
Despite the directive of CHED, petitioner DLSU again prevented private respondent
Aguilar from enrolling and/or attending his classes, prompting his lawyer to write several
demand letters40 to petitioner DLSU. In view of the refusal of petitioner DLSU to enroll
private respondent Aguilar, CHED wrote a letter dated June 26, 1996 addressed to
petitioner Quebengco requesting that private respondent Aguilar be allowed to continue
attending his classes pending the resolution of its motion for reconsideration of Resolution
No. 181-96. However, petitioner Quebengco refused to do so, prompting CHED to
promulgate an Order dated September 23, 1996 which states:
Acting on the above-mentioned request of Mr. Aguilar through counsel enjoining De La
Salle University (DLSU) to comply with CHED Resolution 181-96 (Re: Expulsion Case of
Alvin Aguilar, et al. v. DLSU) directing DLSU to reinstate Mr. Aguilar and finding the urgent
request as meritorious, there being no other plain and speedy remedy available,
considering the set deadline for enrollment this current TRIMESTER, and in order to
prevent further prejudice to his rights as a student of the institution, DLSU, through the
proper school authorities, is hereby directed to allow Mr. Alvin Aguilar to provisionally
enroll, pending the Commission's Resolution of the instant Motion for Reconsideration
filed by DLSU.
SO ORDERED.41
Notwithstanding the said directive, petitioner DLSU, through petitioner Quebengco, still
refused to allow private respondent Aguilar to enroll. Thus, private respondent Aguilar's
counsel wrote another demand letter to petitioner DLSU.42
Meanwhile, on June 3, 1996, private respondent Aguilar, using CHED Resolution No. 18196, filed a motion to dismiss43 in the CA, arguing that CHED Resolution No. 181-96
rendered the CA case moot and academic.
On July 30, 1996, the CA issued its questioned resolution granting the motion to dismiss
of private respondent Aguilar, disposing thus:
THE FOREGOING CONSIDERED, dismissal of herein petition is hereby directed.
SO ORDERED.44
On October 15, 1996, the CA issued its resolution denying petitioners' motion for
reconsideration, as follows:
It is obvious to Us that CHED Resolution No. 181-96 is immediately executory in
character, the pendency of a Motion for Reconsideration notwithstanding.
After considering the Opposition and for lack of merit, the Motion for Reconsideration is
hereby denied.
SO ORDERED.45
On October 28, 1996, petitioners requested transfer of case records to the Department of
Education, Culture and Sports (DECS) from the CHED.46 Petitioners claimed that it is the
DECS, not CHED, which has jurisdiction over expulsion cases, thus, necessitating the
transfer of the case records of Discipline Case No. 9495-3-25121 to the DECS.
On November 4, 1996, in view of the dismissal of the petition for certiorari in CA-G.R. SP
No. 38719 and the automatic lifting of the writ of preliminary injunction, private respondent
Aguilar filed an urgent motion to reiterate writ of preliminary injunction dated September
25, 1995 before respondent RTC Judge of Manila.47

On January 7, 1997, respondent Judge issued its questioned order granting private
respondent Aguilar's urgent motion to reiterate preliminary injunction. The pertinent portion
of the order reads:
In light of the foregoing, petitioner Aguilar's urgent motion to reiterate writ of preliminary
injunction is hereby granted, and respondents' motion to dismiss is denied.
The writ of preliminary injunction dated September 25, 1995 is declared to be in force and
effect.
Let a copy of this Order and the writ be served personally by the Court's sheriff upon the
respondents at petitioners' expense.
SO ORDERED.48
Accordingly, private respondent Aguilar was allowed to conditionally enroll in petitioner
DLSU, subject to the continued effectivity of the writ of preliminary injunction dated
September 25, 1995 and to the outcome of Civil Case No. 95-74122.
On February 17, 1997, petitioners filed the instant petition.
On June 15, 1998, We issued a TRO49 as prayed for by the urgent motion for the
issuance of a TRO50 dated June 4, 1998 of petitioners, and enjoined respondent Judge
from implementing the writ of preliminary injunction dated September 25, 1995 issued in
Civil Case No. 95-74122, effective immediately and until further orders from this Court.
On March 27, 2006, private respondent Aguilar filed his manifestation51 stating that he
has long completed his course at petitioner DLSU. He finished and passed all his enrolled
subjects for the second trimester of 1997-1998, as indicated in his transcript of
records52 issued by DLSU. However, despite having completed all the academic
requirements for his course, DLSU has not issued a certificate of completion/graduation in
his favor.
Issues
We are tasked to resolve the following issues:
1. Whether it is the DECS or the CHED which has legal authority to review decisions of
institutions of higher learning that impose disciplinary action on their students found
violating disciplinary rules.
2. Whether or not petitioner DLSU is within its rights in expelling private respondents.
2.a Were private respondents accorded due process of law?
2.b Can petitioner DLSU invoke its right to academic freedom?
2.c Was the guilt of private respondents proven by substantial evidence?
3. Whether or not the penalty imposed by DLSU on private respondents is proportionate to
their misdeed.
62
respondents Bungubung, Reverente, and Valdes, Jr., and the Judge ordering petitioner
DLSU to allow them to enroll and complete their degree courses until their graduation.
This is the reason We opt to decide the whole case on the merits, brushing aside
technicalities, in order to settle the substantial issues involved. This Court has the power
to take cognizance of the petition at bar due to compelling reasons, and the nature and
importance of the issues raised warrant the immediate exercise of Our jurisdiction.54 This
is in consonance with our case law now accorded near-religious reverence that rules of
procedure are but tools designed to facilitate the attainment of justice, such that when its
rigid application tends to frustrate rather than promote substantial justice, this Court has
the duty to suspend their operation.55
I.
It
is
power
of
disciplinary
of higher learning.
the
CHED,
not
DECS,
supervision
and
cases
decided
which
review
by
has
the
over
institutions
Ang CHED, hindi ang DECS, ang may kapangyarihan ng pagsubaybay at pagrepaso sa
mga desisyong pandisiplina ng mga institusyon ng mas mataas na pag-aaral.
Petitioners posit that the jurisdiction and duty to review student expulsion cases, even
those involving students in secondary and tertiary levels, is vested in the DECS not in the
CHED. In support of their stance, petitioners cite Sections 4,56 15(2) &
(3),57 54,58 57(3)59 and 7060 of Batas Pambansa (B.P.) Blg. 232, otherwise known as
the "Education Act of 1982."
According to them, Republic Act (R.A.) No. 7722 did not transfer to the CHED the DECS'
power of supervision/review over expulsion cases involving institutions of higher learning.
They say that unlike B.P. Blg. 232, R.A. No. 7722 makes no reference to the right and duty
of learning institutions to develop moral character and instill discipline among its students.
The clear concern of R.A. No. 7722 in the creation of the CHED was academic, i.e., the
formulation, recommendation, setting, and development of academic plans, programs and
standards for institutions of higher learning. The enumeration of CHED's powers and
functions under Section 8 does not include supervisory/review powers in student
disciplinary cases. The reference in Section 3 to CHED's "coverage" of institutions of
higher education is limited to the powers and functions specified in Section 8. The Bureau
of Higher Education, which the CHED has replaced and whose functions and
responsibilities it has taken over, never had any authority over student disciplinary cases.
We cannot agree.
On May 18, 1994, Congress approved R.A. No. 7722, otherwise known as "An Act
Creating the Commission on Higher Education, Appropriating Funds Thereof and for other
purposes."
Section 3 of the said law, which paved the way for the creation of the CHED, provides:
Our Ruling
Section 3. Creation of the Commission on Higher Education. In pursuance of the

abovementioned policies, the Commission on Higher Education is hereby created,
hereinafter referred to as Commission.
Prefatorily, there is merit in the observation of petitioners53 that while CHED Resolution
No. 181-96 disapproved the expulsion of other private respondents, it nonetheless
authorized their exclusion from petitioner DLSU. However, because of the dismissal of the
CA case, petitioner DLSU is now faced with the spectacle of having two different directives
from the CHED and the respondent Judge CHED ordering the exclusion of private
The Commission shall be independent and separate from the Department of Education,
Culture and Sports (DECS) and attached to the office of the President for administrative
purposes only. Its coverage shall be both public and private institutions of higher
education as well as degree-granting programs in all post secondary educational
institutions, public and private.

The powers and functions of the CHED are enumerated in Section 8 of R.A. No. 7722.
They include the following:
Sec. 8. Powers and functions of the Commission. The Commission shall have the
following powers and functions:
xxxx
n) promulgate such rules and regulations and exercise such other powers and functions
as may be necessary to carry out effectively the purpose and objectives of this Act; and
o) perform such other functions as may be necessary for its effective operations and for
the continued enhancement of growth or development of higher education.
Clearly, there is no merit in the contention of petitioners that R.A. No. 7722 did not transfer
to the CHED the DECS' power of supervision/review over expulsion cases involving
institutions of higher learning.
First, the foregoing provisions are all-embracing. They make no reservations of powers to
the DECS insofar as institutions of higher learning are concerned. They show that the
authority and supervision over all public and private institutions of higher education, as
well as degree-granting programs in all post-secondary educational institutions, public and
private, belong to the CHED, not the DECS.
Second, to rule that it is the DECS which has authority to decide disciplinary cases
involving students on the tertiary level would render nugatory the coverage of the CHED,
which is "both public and private institutions of higher education as well as degree
granting programs in all post secondary educational institutions, public and private." That
would be absurd.
It is of public knowledge that petitioner DLSU is a private educational institution which
offers tertiary degree programs. Hence, it is under the CHED authority.
Third, the policy of R.A. No. 772261 is not only the protection, fostering and promotion of
the right of all citizens to affordable quality education at all levels and the taking of
appropriate steps to ensure that education shall be accessible to all. The law
is likewise concerned with ensuring and protecting academic freedom and with promoting
its exercise and observance for the continued intellectual growth of students, the
advancement of learning and research, the development of responsible and effective
leadership, the education of high-level and middle-level professionals, and the enrichment
of our historical and cultural heritage.
It is thus safe to assume that when Congress passed R.A. No. 7722, its members were
aware that disciplinary cases involving students on the tertiary level would continue to
arise in the future, which would call for the invocation and exercise of institutions of higher
learning of their right to academic freedom.
Fourth, petitioner DLSU cited no authority in its bare claim that the Bureau of Higher
Education, which CHED replaced, never had authority over student disciplinary cases. In
fact, the responsibilities of other government entities having functions similar to those of
the CHED were transferred to the CHED.62
Section 77 of the MRPS63 on the process of review in student discipline cases should
therefore be read in conjunction with the provisions of R.A. No. 7722.
Fifth, Section 18 of R.A. No. 7722 is very clear in stating that "[j]urisdiction over DECSsupervised or chartered state-supported post-secondary degree-granting vocational and
63
tertiary institutions shall be transferred to the Commission [On Higher Education]." This
provision does not limit or distinguish that what is being transferred to the CHED is merely
the formulation, recommendation, setting and development of academic plans, programs
and standards for institutions of higher learning, as what petitioners would have us believe
as the only concerns of R.A. No. 7722. Ubi lex non distinguit nec nos distinguere
debemus: Where the law does not distinguish, neither should we.
To Our mind, this provision, if not an explicit grant of jurisdiction to the CHED, necessarily
includes the transfer to the CHED of any jurisdiction which the DECS might have
possessed by virtue of B.P. Blg. 232 or any other law or rule for that matter.
IIa.
Private
due process of law.
respondents
were
accorded
Ang mga private respondents ay nabigyan ng tamang proseso ng batas.

The Due Process Clause in Article III, Section 1 of the Constitution embodies a system of
rights based on moral principles so deeply imbedded in the traditions and feelings of our
people as to be deemed fundamental to a civilized society as conceived by our entire
history.64 The constitutional behest that no person shall be deprived of life, liberty or
property without due process of law is solemn and inflexible.65
In administrative cases, such as investigations of students found violating school
discipline, "[t]here are withal minimum standards which must be met before to satisfy the
demands of procedural due process and these are: that (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 and with the assistance if 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."66
Where a party was afforded an opportunity to participate in the proceedings but failed to
do so, he cannot complain of deprivation of due process.67 Notice and hearing is the
bulwark of administrative due process, the right to which is among the primary rights that
must be respected even in administrative proceedings.68 The essence of due process is
simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one's side or an opportunity to seek reconsideration of the action or
ruling complained of.69So long as the party is given the opportunity to advocate her cause
or defend her interest in due course, it cannot be said that there was denial of due
process.70
A formal trial-type hearing is not, at all times and in all instances, essential to due process
it is enough that the parties are given a fair and reasonable opportunity to explain their
respective sides of the controversy and to present supporting evidence on which a fair
decision can be based.71 "To be heard" does not only mean presentation of testimonial
evidence in court one may also be heard through pleadings and where the opportunity
to be heard through pleadings is accorded, there is no denial of due process.72
Private respondents were duly informed in writing of the charges against them by the
DLSU-CSB Joint Discipline Board through petitioner Sales. They were given the
opportunity to answer the charges against them as they, in fact, submitted their respective
answers. They were also informed of the evidence presented against them as they
attended all the hearings before the Board. Moreover, private respondents were given the
right to adduce evidence on their behalf and they did. Lastly, the Discipline Board

considered all the pieces of evidence submitted to it by all the parties before rendering its
resolution in Discipline Case No. 9495-3-25121.
Private respondents cannot claim that they were denied due process when they were not
allowed to cross-examine the witnesses against them. This argument was already
rejected in Guzman v. National University73 where this Court held that "x x x the
imposition of disciplinary sanctions requires observance of procedural due process. And it
bears stressing 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. The proceedings in student discipline cases may be summary; and cross
examination is not, x x x an essential part thereof."
IIb.
Petitioner
DLSU,
higher
learning,
freedom
which
of who to admit for study.
as
an
possesses
includes
institution
of
academic
determination
Ang petitioner DLSU, bilang institusyon ng mas mataas na pag-aaral, ay nagtataglay ng

kalayaang akademiko na sakop ang karapatang pumili ng mga mag-aaral dito.
64
testimonies are not substantiated by clear and convincing evidence.80 Well-settled is the
rule that denial and alibi, being weak defenses, cannot overcome the positive testimonies
of the offended parties.81
Courts reject alibi when there are credible eyewitnesses to the crime who can positively
identify the accused.82Alibi is an inherently weak defense and courts must receive it with
caution because one can easily fabricate an alibi.83 Jurisprudence holds that denial, like
alibi, is inherently weak and crumbles in light of positive declarations of truthful witnesses
who testified on affirmative matters that accused were at the scene of the crime and were
the victim's assailants. As between categorical testimonies that ring of truth on one hand
and a bare denial on the other, the former must prevail.84 Alibi is the weakest of all
defenses for it is easy to fabricate and difficult to disprove, and it is for this reason that it
cannot prevail over the positive identification of accused by the witnesses.85
The required proof in administrative cases, such as in student discipline cases, is neither
proof beyond reasonable doubt nor preponderance of evidence but only substantial
evidence. According to Ang Tibay v. Court of Industrial Relations,86 it means "such
reasonable evidence as a reasonable mind might accept as adequate to support a
conclusion."
Section 5(2), Article XIV of the Constitution guaranties all institutions of higher learning
academic freedom. This institutional academic freedom includes the right of the school or
college to decide for itself, its aims and objectives, and how best to attain them free from
outside coercion or interference save possibly when the overriding public interest calls for
some restraint.74 According to present jurisprudence, academic freedom encompasses
the independence of an academic institution to determine for itself (1) who may teach, (2)
what may be taught, (3) how it shall teach, and (4) who may be admitted to study.75
Viewed from the foregoing, We reject the alibi of private respondents Bungubung, Valdes
Jr., and Reverente. They were unable to show convincingly that they were not at the
scene of the crime on March 29, 1995 and that it was impossible for them to have been
there. Moreover, their alibi cannot prevail over their positive identification by the victims.
It cannot be gainsaid that "the school has an interest in teaching the student discipline, a
necessary, if not indispensable, value in any field of learning. By instilling discipline, the
school teaches discipline. Accordingly, the right to discipline the student likewise finds
basis in the freedom "what to teach."76 Indeed, while it is categorically stated under the
Education Act of 1982 that students have a right "to freely choose their field of study,
subject to existing curricula and to continue their course therein up to graduation,"77 such
right is subject to the established academic and disciplinary standards laid down by the
academic institution. Petitioner DLSU, therefore, can very well exercise its academic
freedom, which includes its free choice of students for admission to its school.
No one can be so myopic as to doubt that the immediate reinstatement of respondent

students who have been investigated and found guilty by the Disciplinary Board to have
violated petitioner university's disciplinary rules and standards will certainly undermine the
authority of the administration of the school. This we would be most loathe to do.
IIc.
The
guilt
Bungubung,
Reverente
Jr. was proven by substantial evidence.
of
private
and
respondents
Valdes,
Ang pagkakasala ng private respondents na sina Bungubung, Reverente at Valdes, Jr. ay

napatunayan ng ebidensiyang substansyal.
As has been stated earlier, private respondents interposed the common defense of alibi.
However, in order that alibi may succeed as a defense, "the accused must establish by
clear and convincing evidence (a) his presence at another place at the time of the
perpetration of the offense and (b) the physical impossibility of his presence at the scene
of the crime."78
On the other hand, the defense of alibi may not be successfully invoked where the identity
of the assailant has been established by witnesses.79 Positive identification of accused
where categorical and consistent, without any showing of ill motive on the part of the
eyewitness testifying, should prevail over the alibi and denial of appellants whose
We hark back to this Court's pronouncement affirming the expulsion of several students
found guilty of hazing:
More importantly, it will seriously impair petitioner university's academic freedom which
has been enshrined in the 1935, 1973 and the present 1987 Constitution.87
Certainly, private respondents Bungubung, Reverente and Valdes, Jr. do not deserve to
claim a venerable institution as their own, for they may foreseeably cast a malevolent
influence on the students currently enrolled, as well as those who come after them.88 It
must be borne in mind that universities are established, not merely to develop the intellect
and skills of the studentry, but to inculcate lofty values, ideals and attitudes; nay, the
development, or flowering if you will, of the total man.89
As for private respondent Aguilar, however, We are inclined to give credence to his alibi
that he was at Camp Crame in Quezon City at the time of the incident in question on
March 29, 1995. This claim was amply corroborated by the certification that he submitted
before the DLSU-CSB Joint Discipline Board, to wit:
C E R T I F I CAT I O N
TO WHOM THIS MAY CONCERN:
We, the undersigned, hereby declare and affirm by way of this Certification that sometime
on March 29, 1995, at about and between 4:30 P.M. and 5:30 P.M., we were together with
Alvin A. Aguilar, at Kiangan Hall, inside Camp Crame, Quezon City, meeting in connection

with an affair of our class known as Class 7, Batch 89 of the Philippine Constabulary
discussing on the proposed sponsorship of TAU GAMMA PHI from said Batch '89 affair.
That the meeting was terminated at about 6:30 P.M. that evening and Alvin Aguilar had
asked our permission to leave and we saw him leave Camp Crame, in his car with the
driver.
April 18, 1995, Camp Crame, Quezon City.90
The said certification was duly signed by PO3 Nicanor R. Faustino (Anti-Organized Crime
CIC, NCR), PO3 Alejandro D. Deluviar (ODITRM, Camp Crame, Quezon City), PO2
Severino C. Filler (TNTSC, Camp Crame, Quezon City), and PO3 Ireneo M. Desesto
(Supply Center, PNPLSS). The rule is that alibi assumes significance or strength when it is
amply corroborated by credible and disinterested witnesses.91 It is true that alibi is a weak
defense which an accused can easily fabricate to escape criminal liability. But where the
prosecution evidence is weak, and betrays lack of credibility as to the identification of
defendant, alibi assumes commensurate strength. This is but consistent with the
presumption of innocence in favor of accused.92
Alibi is not always undeserving of credit, for there are times when accused has no other
possible defense for what could really be the truth as to his whereabouts at the crucial
time, and such defense may, in fact, tilt the scales of justice in his favor.93
III.
The
penalty
on
private
to their misdeed.
of
expulsion
respondents
imposed
is
by
DLSU
disproportionate
Ang parusang expulsion na ipinataw ng DLSU sa private respondents ay hindi angkop sa

kanilang pagkakasala.
It is true that schools have the power to instill discipline in their students as subsumed in
their academic freedom and that "the establishment of rules governing university-student
relations, particularly those pertaining to student discipline, may be regarded as vital, not
merely to the smooth and efficient operation of the institution, but to its very
survival."94 This power, however, does not give them the untrammeled discretion to
impose a penalty which is not commensurate with the gravity of the misdeed. If the
concept of proportionality between the offense committed and the sanction imposed is not
followed, an element of arbitrariness intrudes. That would give rise to a due process
question.95
We agree with respondent CHED that under the circumstances, the penalty of expulsion is
grossly disproportionate to the gravity of the acts committed by private respondents
Bungubung, Reverente, and Valdes, Jr. Each of the two mauling incidents lasted only for
few seconds and the victims did not suffer any serious injury. Disciplinary measures
especially where they involve suspension, dismissal or expulsion, cut significantly into the
future of a student. They attach to him for life and become a mortgage of his future, hardly
redeemable in certain cases. Officials of colleges and universities must be anxious to
protect it, conscious of the fact that, appropriately construed, a disciplinary action should
be treated as an educational tool rather than a punitive measure.96
Accordingly, We affirm the penalty of exclusion97 only, not expulsion,98 imposed on them
by the CHED. As such, pursuant to Section 77(b) of the MRPS, petitioner DLSU may
exclude or drop the names of the said private respondents from its rolls for being
undesirable, and transfer credentials immediately issued.
65
WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Resolutions

dated July 30, 1996 and dated October 15, 1996, and Regional Trial Court of Manila,
Branch 36, Order dated January 7, 1997 areANNULLED AND SET ASIDE, while CHED
Resolution 181-96 dated May 14, 1996 is AFFIRMED.
Petitioner DLSU is ordered to issue a certificate of completion/graduation in favor of
private respondent Aguilar. On the other hand, it may exclude or drop the names of private
respondents Bungubung, Reverente, and Valdes, Jr. from its rolls, and their transfer
credentials immediately issued.
SO ORDERED.
Ynares-Santiago, Chairperson, Quisumbing *, Chico-Nazario, Velasco, Jr. ** , JJ., concur.
Romualdez vs. Comelec
This treats of the Petition for Review on Certiorari with a prayer for the issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction filed by petitioners
Spouses Carlos S. Romualdez and Erlinda R. Romualdez seeking to annul and set aside
the Resolutions, dated 11 June 20041 and 27 January 20052 of the Commission on
Elections (COMELEC) in E.O. Case No. 2000-36. In the Resolution of 11 June 2004, the
COMELEC En Banc directed the Law Department to file the appropriate Information with
the proper court against petitioners Carlos S. Romualdez and Erlinda Romualdez for
violation of Section 10(g) and (j)3 in relation to Section 45(j)4 of Republic Act No. 8189,
otherwise known as The Voters Registration Act of 1996.5 Petitioners Motion for
Reconsideration thereon was denied.
The factual antecedents leading to the instant Petition are presented hereunder:
On 12 July 2000, private respondent Dennis Garay, along with Angelino Apostol6 filed a
Complaint-Affidavit7 with the COMELEC thru the Office of the Election Officer in Burauen,
Leyte, charging petitioners with violation of Section 261(y)(2)8 and Section 261(y)(5)9 of
the Omnibus Election Code, similarly referred to as Batas Pambansa Blg. 881; and
Section 1210 of Republic Act No. 8189.
Private respondent deposed, inter alia, that: petitioners are of legal ages and residents of
113 Mariposa Loop, Mariposa Street, Bagong Lipunan ng Crame, Quezon City; on 9 May
2000 and 11 May 2000, petitioners Carlos S. Romualdez and Erlinda R. Romualdez,
applied for registration as new voters with the Office of the Election Officer of Burauen,
Leyte, as evidenced by Voter Registration Record Nos. 42454095 and 07902952,
respectively; in their sworn applications, petitioners made false and untruthful
representations in violation of Section 1011 of Republic Act Nos. 8189, by indicating
therein that they are residents of 935 San Jose Street, Burauen, Leyte, when in truth and
in fact, they were and still are residents of 113 Mariposa Loop, Mariposa Street, Bagong
Lipunan ng Crame, Quezon City, and registered voters of Barangay Bagong Lipunan ng
Crame, District IV, Quezon City, Precinct No. 4419-A, as evidenced by Voter Registration
Record Nos. 26195824 and 26195823; and that petitioners, knowing fully well said truth,
intentionally and willfully, did not fill the blank spaces in said applications corresponding to
the length of time which they have resided in Burauen, Leyte. In fine, private respondent
charged petitioners, to wit:

Respondent-spouses, Carlos Sison Romualdez and Erlinda Reyes Romualdez committed

and consummated election offenses in violation of our election laws, specifically, Sec. 261,
paragraph (y), subparagraph (2), for knowingly making any false or untruthful statements
relative to any data or information required in the application for registration, and of Sec.
261, paragraph (y), subparagraph (5), committed by any person who, being a registered
voter, registers anew without filing an application for cancellation of his previous
registration, both of the Omnibus Election Code (BP Blg. 881), and of Sec. 12, RA 8189
(Voter Registration Act) for failure to apply for transfer of registration records due to
change of residence to another city or municipality."12
The Complaint-Affidavit contained a prayer that a preliminary investigation be conducted
by the COMELEC, and if the evidence so warrants, the corresponding Information against
petitioners be filed before the Regional Trial Court (RTC) for the prosecution of the same.
Petitioners filed a Joint Counter-Affidavit with Motion to Dismiss13 dated 2 April 2001.
They contended therein that they did not make any false or untruthful statements in their
application for registration. They avowed that they intended to reside in Burauen, Leyte,
since the year 1989. On 9 May 2000, they took actual residence in Burauen, Leyte, by
leasing for five (5) years, the house of Juanito and Fe Renomeron at No. 935, San Jose
Street in Burauen, Leyte. On even date, the Barangay District III Council of Burauen
passed a Resolution of Welcome, expressing therein its gratitude and appreciation to
petitioner Carlos S. Romualdez for choosing the Barangay as his official residence.14
On 28 November 2003, Atty. Maria Norina S. Tangaro-Casingal, COMELEC Investigating
Officer, issued a Resolution, recommending to the COMELEC Law Department
(Investigation and Prosecution Division), the filing of the appropriate Information against
petitioners, disposing, thus:
PREMISES CONSIDERED, the Law Department (Investigation and Prosecution Division),
RECOMMENDS to file the necessary information against Carlos Sison Romualdez before
the proper Regional Trial Court for violation of Section 10 (g) and (j) in relation to Section
45 (j) of Republic Act 8189 and to authorize the Director IV of the Law Department to
designate a Comelec Prosecutor to handle the prosecution of the case with the duty to
submit periodic report after every hearing of the case.15
On 11 June 2004, the COMELEC En Banc found no reason to depart from the
recommendatory Resolution of 28 November 2003, and ordered, viz:
WHEREFORE, premises considered, the Law Department is hereby directed to file the
appropriate information with the proper court against respondents CARLOS S.
ROMUALDEZ AND ERLINDA ROMUALDEZ for violation of Section 10 (g) and (j) in
relation to Section 45 (j) of the Republic Act No. 8189.16
Petitioners filed a Motion for Reconsideration thereon.
Acting on the Motion, the COMELEC found no cogent reason to disturb the assailed En
Banc Resolution of 11 June 2004,17 rationalizing, thus:
However, perusal of the records reveal (sic) that the arguments and issues raised in the
Motion for Reconsideration are merely a rehash of the arguments advanced by the
Respondents in [their] Memorandum received by the Law Department on 17 April 2001,
the same [w]as already considered by the Investigating Officer and was discussed in her
recommendation which eventually was made as the basis for the En Bancs resolution.
As aptly observed by the Investigating Officer, the filing of request for the cancellation and
transfer of Voting Registration Record does not automatically cancel the registration
66
records. The fact remains that at the time of application for registration as new voter of the
herein Respondents on May 9 and 11, 2001 in the Office of Election Officer of Burauen,
Leyte their registration in Barangay 4419-A, Barangay Bagong Lipunan ng Crame Quezon
City was still valid and subsisting.18
On 12 January 2006, Alioden D. Dalaig, Director IV, Law Department of the COMELEC
filed with the RTC, Burauen, Leyte, separate Informations against petitioner Carlos S.
Romualdez19 for violation of Section 10(g), in relation to Section 45(j) of Republic Act No.
8189, and against petitioner Erlinda R. Romualdez20 for violation of Section 10(g), in
relation to Section 45(j) of Republic Act No. 8189, subsequently docketed as Crim. Case
No. BN-06-03-4185 and Crim. Case No. BN-06-03-4183, respectively. Moreover, separate
Informations for violation of Section 10(j), in relation to Section 45(j) of Republic Act No.
8189 were filed against petitioners.21
Hence, petitioners come to us via the instant Petition, submitting the following arguments:
I
RESPONDENT COMMISSION ON ELECTIONS GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF ITS JURISDICTION; and
II
COMELEC GRAVELY ABUSED ITS DISCRETION WHEN IT PREMISED ITS
RESOLUTION ON A MISAPPREHENSION OF FACTS AND FAILED TO CONSIDER
CERTAIN RELEVANT FACTS THAT WOULD JUSTIFY A DIFFERENT CONCLUSION.22
On 4 May 2006, petitioners filed a Motion Reiterating Prayer for Issuance of Writ of
Preliminary Injunction and to Cite for Indirect Contempt,23 alleging that two separate
Informations, both dated 12 January 2006, were filed with the RTC by the COMELEC
against petitioner Carlos S. Romualdez for violation of Section 10(j), in relation to Section
45(j) of Republic Act No. 8189, in Criminal Case No. BN-06-03-9184; and for violation of
Section 10(g), in relation to Section 45(j) of Republic Act No. 8189, in Criminal Case No.
BN-06-03-9185. Similarly, the Motion alleged that the COMELEC filed with the RTC, two
separate Informations, both dated 12 January 2006, against petitioner Erlinda R.
Romualdez, charging her with the same offenses as those charged against petitioner
Carlos S. Romualdez, and thereafter, docketed as Criminal Case No. BN-06-03-9182, and
No. BN-06-03-9183.
On 20 June 2006, this Court issued a Resolution24 denying for lack of merit petitioners
Motion Reiterating Prayer for Issuance of Writ of Preliminary Injunction and to Cite for
Indirect Contempt.
We shall now resolve, in seriatim, the arguments raised by petitioners.
Petitioners contend that the election offenses for which they are charged by private
respondent are entirely different from those which they stand to be accused of before the
RTC by the COMELEC. According to petitioners, private respondents complaint charged
them for allegedly violating, to wit: 1) Section 261(y)(2) and Section 261(y)(5) of the
Omnibus Election Code, and 2) Section 12 of the Voters Registration Act; however, the
COMELEC En Banc directed in the assailed Resolutions, that they be charged for
violations of Section 10(g) and (j), in relation to Section 45(j) of the Voters Registration
Act. Essentially, petitioners are of the view that they were not accorded due process of
law. Specifically, their right to refute or submit documentary evidence against the new
charges which COMELEC ordered to be filed against them. Moreover, petitioners insist
that Section 45(j) of the Voters Registration Act is vague as it does not refer to a definite

provision of the law, the violation of which would constitute an election offense; hence, it
runs contrary to Section 14(1)25 and Section 14(2),26 Article III of the 1987 Constitution.
We are not persuaded.
First. The Complaint-Affidavit filed by private respondent with the COMELEC is couched in
a language which embraces the allegations necessary to support the charge for violation
of Section 10(g) and (j), in relation to Section 45(j) of Republic Act No. 8189.
A reading of the relevant laws is in order, thus:
Section 10(g) and Section 10(j) of Republic Act No. 8189, provide as follows:
SEC. 10 Registration of Voters. - A qualified voter shall be registered in the permanent
list of voters in a precinct of the city or municipality wherein he resides to be able to vote in
any election. To register as a voter, he shall personally accomplish an application form for
registration as prescribed by the Commission in three (3) copies before the Election
Officer on any date during office hours after having acquired the qualifications of a voter.
The application shall contain the following data:
xxxx
(g) Periods of residence in the Philippines and in the place of registration;
xxxx
(j) A statement that the application is not a registered voter of any precinct;
The application for registration shall contain three (3) specimen signatures of the
applicant, clear and legible rolled prints of his left and right thumbprints, with four
identification size copies of his latest photograph, attached thereto, to be taken at the
expense of the Commission.
Before the applicant accomplishes his application for registration, the Election Officer shall
inform him of the qualifications and disqualifications prescribed by law for a voter, and
thereafter, see to it that the accomplished application contains all the data therein required
and that the applicants specimen signatures, fingerprints, and photographs are properly
affixed in all copies of the voters application.
Moreover, Section 45(j) of the same Act, recites, thus:
SEC. 45. Election Offense. The following shall be considered election offenses under
this Act:
xxxx
(j) Violation of any of the provisions of this Act.
Significantly, the allegations in the Complaint-Affidavit which was filed with the Law
Department of the COMELEC, support the charge directed by the COMELEC En Banc to
be filed against petitioners with the RTC. Even a mere perusal of the Complaint-Affidavit
would readily show that Section 10 of Republic Act No. 8189 was specifically mentioned
therein. On the matter of the acts covered by Section 10(g) and (j), the ComplaintAffidavit, spells out the following allegations, to wit:
5. Respondent-spouses made false and untruthful representations in their applications
(Annexes "B" and "C") in violation of the requirements of Section 10, RA 8189 (The Voters
Registration Act):
67
5.1 Respondent-spouses, in their sworn applications (Annexes "B" and "C", claimed to be
residents of 935 San Jose [S]treet, Burauen, Leyte, when in truth and in fact, they were
and still are residents of 113 Mariposa Loop, Mariposa [S]treet, Bagong Lipunan ng
Crame, Quezon City and registered voters of Barangay Bagong Lipunan ng Crame,
District IV, Quezon City, Precinct No. 4419-A, a copy of the Certification issued by Hon.
Emmanuel V. Gozon, Punong Barangay, Bagong Lipunan ng Crame, Quezon City is
hereto attached and made an integral part hereof, as Annex "D";
5.2 Respondent-spouses knowing fully well said truth, intentionally and willfully, did not fill
the blank spaces in their applications (Annexes "B" and "C") corresponding to the length
of time they have resided in Burauen, Leyte;
6. Respondent-spouses, in (sic) all intents and purposes, were and still are residents and
registered voters of Quezon City, as evidenced by Voter Registration Record Nos.
26195824 and 26195823, respectively; photocopies of which are hereto attached as
Annexes "E" and "F"[.] Likewise, attached is a "Certification" (Annex "G") of Ms. Evelyn B.
Bautista, Officer-in-Charge of the Office of the Election Officer, Fourth District, Quezon
City, dated May 31, 2000, together with a certified copy of the computer print-out of the list
of voters of Precinct No. 4419-A (Annex "G-1" ) containing the names of voters Carlos
Romualdez and Erlinda Reyes Romualdez. The Certification reads as follows:
"THIS IS TO CERTIFY that as per office record MR. CARLOS ROMUALDEZ and MS.
ERLINDA REYES ROMUALDEZ are registered voters of Barangay Bagong Lipunan ng
Crame, District IV, Quezon City, Precinct Number 4419A with voters affidavit serial nos.
26195824 and 26195823, respectively.
This certification is issued for whatever legal purpose it may serve."
7. Respondent-spouses, registered as new voters of the Municipality of Burauen, Leyte,
[in spite of] the fact that they were and still are, registered voters of Quezon City as early
as June 22, 1997;
7.1 That, Double Registration is an election offense.
A person qualified as a voter is only allowed to register once.
If a person registers anew as a voter in spite of a subsisting registration, the new
application for registration will be disapproved. The registrant is also liable not only for an
election offense of double registration, but also for another election offense of knowingly
making any false or untruthful statement relative to any data or information required in the
application for registration.
In fact, when a person applies for registration as a voter, he or she fills up a Voter
Registration Record form in his or her own handwriting, which contains a Certification
which reads:
"I do solemnly swear that the above statements regarding my person are true and correct;
that I possess all the qualifications and none of the disqualifications of a voter; that the
thumbprints, specimen signatures and photographs appearing herein are mine; and that I
am not registered as a voter in any other precinct."27
Petitioners cannot be said to have been denied due process on the claim that the election
offenses charged against them by private respondent are entirely different from those for
which they stand to be accused of before the RTC, as charged by the COMELEC. In the
first place, there appears to be no incongruity between the charges as contained in the
Complaint-Affidavit and the Informations filed before the RTC, notwithstanding the

68
denomination by private respondent of the alleged violations to be covered by Section

261(y)(2) and Section 261(y)(5) of the Omnibus Election Code and Section 12 of Republic
Act No. 8189. Evidently, the Informations directed to be filed by the COMELEC against
petitioners, and which were, in fact, filed with the RTC, were based on the same set of
facts as originally alleged in the private respondents Complaint-Affidavit.
conduct of another preliminary investigation for the offense of acts of lasciviousness would
be a futile exercise because the complainant would only be presenting the same facts and
evidence which have already been studied by the prosecutor.32 The court frowns upon
such superfluity which only serves to delay the prosecution and disposition of the criminal
complaint.33
Petitioners buttress their claim of lack of due process by relying on the case of Lacson v.
Executive Secretary.28 Citing Lacson, petitioners argue that the real nature of the criminal
charge is determined by the actual recital of facts in the Complaint or Information; and that
the object of such written accusations was to furnish the accused with such a description
of the charge against him, as will enable him to make his defense. Let it be said that, in
Lacson, this court resolved the issue of whether under the allegations in the subject
Informations therein, it is the Sandiganbayan or the Regional Trial Court which has
jurisdiction over the multiple murder case against therein petitioner and intervenors. In
Lacson, we underscored the elementary rule that the jurisdiction of a court is determined
by the allegations in the Complaint or Information, and not by the evidence presented by
the parties at the trial.29 Indeed, in Lacson, we articulated that the real nature of the
criminal charge is determined not from the caption or preamble of the Information nor from
the specification of the provision of law alleged to have been violated, they being
conclusions of law, but by the actual recital of facts in the Complaint or Information.30
Second. Petitioners would have this court declare Section 45(j) of Republic Act No. 8189
vague, on the ground that it contravenes the fair notice requirement of the 1987
Constitution, in particular, Section 14(1) and Section 14(2), Article III of thereof. Petitioners
submit that Section 45(j) of Republic Act No. 8189 makes no reference to a definite
provision of the law, the violation of which would constitute an election offense.
Petitioners reliance on Lacson, however, does not support their claim of lack of due
process because, as we have said, the charges contained in private respondents
Complaint-Affidavit and the charges as directed by the COMELEC to be filed are based on
the same set of facts. In fact, the nature of the criminal charges in private respondents
Complaint-Affidavit and that of the charges contained in the Informations filed with the
RTC, pursuant to the COMELEC Resolution En Banc are the same, such that, petitioners
cannot claim that they were not able to refute or submit documentary evidence against the
charges that the COMELEC filed with the RTC. Petitioners were afforded due process
because they were granted the opportunity to refute the allegations in private respondents
Complaint-Affidavit. On 2 April 2001, in opposition to the Complaint-Affidavit, petitioners
filed a Joint Counter-Affidavit with Motion to Dismiss with the Law Department of the
COMELEC. They similarly filed a Memorandum before the said body. Finding that due
process was not dispensed with under the circumstances in the case at bar, we agree with
the stance of the Office of the Solicitor General that petitioners were reasonably apprised
of the nature and description of the charges against them. It likewise bears stressing that
preliminary investigations were conducted whereby petitioners were informed of the
complaint and of the evidence submitted against them. They were given the opportunity to
adduce controverting evidence for their defense. In all these stages, petitioners actively
participated.
The instant case calls to our minds Orquinaza v. People,31 wherein the concerned police
officer therein designated the offense charged as sexual harassment; but, the prosecutor
found that there was no transgression of the anti-sexual harassment law, and instead, filed
an Information charging therein petitioner with acts of lasciviousness. On a claim that
there was deprivation of due process, therein petitioner argued that the Information for
acts of lasciviousness was void as the preliminary investigation conducted was for sexual
harassment. The court held that the designation by the police officer of the offense is not
conclusive as it is within the competence of the prosecutor to assess the evidence
submitted and determine therefrom the appropriate offense to be charged.
Accordingly, the court pronounced that the complaint contained all the allegations to
support the charge of acts of lasciviousness under the Revised Penal Code; hence, the
We are not convinced.

The void-for-vagueness doctrine holds that a law is facially invalid if men of common
intelligence must necessarily guess at its meaning and differ as to its application.34
However, this Court has imposed certain limitations by which a criminal statute, as in the
challenged law at bar, may be scrutinized. This Court has declared that facial
invalidation35 or an "on-its-face" invalidation of criminal statutes is not appropriate.36 We
have so enunciated in no uncertain terms in Romualdez v. Sandiganbayan, 37 thus:
In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools
developed for testing "on their faces" statutes in free speech cases or, as they are called
in American law, First Amendment cases. They cannot be made to do service when what
is involved is a criminal statute. With respect to such statute, the established rule is that
'one to whom application of a statute is constitutional will not be heard to attack the statute
on the ground that impliedly it might also be taken as applying to other persons or other
situations in which its application might be unconstitutional.' As has been pointed out,
'vagueness challenges in the First Amendment context, like overbreadth challenges
typically produce facial invalidation, while statutes found vague as a matter of due process
typically are invalidated [only] 'as applied' to a particular defendant.'" (underscoring
supplied)
"To this date, the Court has not declared any penal law unconstitutional on the ground of
ambiguity." While mentioned in passing in some cases, the void-for-vagueness concept
has yet to find direct application in our jurisdiction. In Yu Cong Eng v. Trinidad, the
Bookkeeping Act was found unconstitutional because it violated the equal protection
clause, not because it was vague. Adiong v. Comelec decreed as void a mere Comelec
Resolution, not a statute. Finally, Santiago v. Comelec held that a portion of RA 6735 was
unconstitutional because of undue delegation of legislative powers, not because of
vagueness.
Indeed, an "on-its-face" invalidation of criminal statutes would result in a mass acquittal of
parties whose cases may not have even reached the courts. Such invalidation would
constitute a departure from the usual requirement of "actual case and controversy" and
permit decisions to be made in a sterile abstract context having no factual concreteness.
In Younger v. Harris, this evil was aptly pointed out by the U.S. Supreme Court in these
words:
"[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring
correction of these deficiencies before the statute is put into effect, is rarely if ever an
appropriate task for the judiciary. The combination of the relative remoteness of the
controversy, the impact on the legislative process of the relief sought, and above all the
speculative and amorphous nature of the required line-by-line analysis of detailed

statutes, x x x ordinarily results in a kind of case that is wholly unsatisfactory for deciding
constitutional questions, whichever way they might be decided."
For this reason, generally disfavored is an on-its-face invalidation of statutes, described as
a "manifestly strong medicine" to be employed "sparingly and only as a last resort." In
determining the constitutionality of a statute, therefore, its provisions that have allegedly
been violated must be examined in the light of the conduct with which the defendant has
been charged. (Emphasis supplied.)
At the outset, we declare that under these terms, the opinions of the dissent which seek to
bring to the fore the purported ambiguities of a long list of provisions in Republic Act No.
8189 can be deemed as a facial challenge. An appropriate "as applied" challenge in the
instant Petition should be limited only to Section 45 (j) in relation to Sections 10 (g) and (j)
of Republic Act No. 8189the provisions upon which petitioners are charged. An
expanded examination of the law covering provisions which are alien to petitioners case
would be antagonistic to the rudiment that for judicial review to be exercised, there must
be an existing case or controversy that is appropriate or ripe for determination, and not
conjectural or anticipatory.
We further quote the relevant ruling in David v. Arroyo on the proscription anent a facial
challenge:38
Moreover, the overbreadth doctrine is not intended for testing the validity of a law that
"reflects legitimate state interest in maintaining comprehensive control over harmful,
constitutionally unprotected conduct." Undoubtedly, lawless violence, insurrection and
rebellion are considered "harmful" and "constitutionally unprotected conduct." In Broadrick
v. Oklahoma, it was held:
It remains a matter of no little difficulty to determine when a law may properly be held void
on its face and when such summary action is inappropriate. But the plain import of our
cases is, at the very least, that facial overbreadth adjudication is an exception to our
traditional rules of practice and that its function, a limited one at the outset, attenuates as
the otherwise unprotected behavior that it forbids the State to sanction moves from pure
speech toward conduct and that conduct even if expressive falls within the scope of
otherwise valid criminal laws that reflect legitimate state interests in maintaining
comprehensive controls over harmful, constitutionally unprotected conduct.
Thus, claims of facial overbreadth are entertained in cases involving statutes which, by
their terms, seek to regulate only "spoken words" and again, that "overbreadth claims, if
entertained at all, have been curtailed when invoked against ordinary criminal laws that
are sought to be applied to protected conduct." Here, the incontrovertible fact remains that
PP 1017 pertains to a spectrum of conduct, not free speech, which is manifestly subject to
state regulation.
Second, facial invalidation of laws is considered as "manifestly strong medicine," to be
used "sparingly and only as a last resort," and is "generally disfavored;" The reason for
this is obvious. Embedded in the traditional rules governing constitutional adjudication is
the principle that a person to whom a law may be applied will not be heard to challenge a
law on the ground that it may conceivably be applied unconstitutionally to others, i.e., in
other situations not before the Court. A writer and scholar in Constitutional Law explains
further:
The most distinctive feature of the overbreadth technique is that it marks an exception to
some of the usual rules of constitutional litigation. Ordinarily, a particular litigant claims
that a statute is unconstitutional as applied to him or her; if the litigant prevails, the courts
69
carve away the unconstitutional aspects of the law by invalidating its improper applications
on a case to case basis. Moreover, challengers to a law are not permitted to raise the
rights of third parties and can only assert their own interests. In overbreadth analysis,
those rules give way; challenges are permitted to raise the rights of third parties; and the
court invalidates the entire statute "on its face," not merely "as applied for" so that the
overbroad law becomes unenforceable until a properly authorized court construes it more
narrowly. The factor that motivates courts to depart from the normal adjudicatory rules is
the concern with the "chilling;" deterrent effect of the overbroad statute on third parties not
courageous enough to bring suit. The Court assumes that an overbroad laws "very
existence may cause others not before the court to refrain from constitutionally protected
speech or expression." An overbreadth ruling is designed to remove that deterrent effect
on the speech of those third parties.
In other words, a facial challenge using the overbreadth doctrine will require the Court to
examine PP 1017 and pinpoint its flaws and defects, not on the basis of its actual
operation to petitioners, but on the assumption or prediction that its very existence may
cause others not before the Court to refrain from constitutionally protected speech or
expression.
Xxx xxx xxx
And third, a facial challenge on the ground of overbreadth is the most difficult challenge to
mount successfully, since the challenger must establish that there can be no instance
when the assailed law may be valid. Here, petitioners did not even attempt to show
whether this situation exists.
Petitioners likewise seek a facial review of PP 1017 on the ground of vagueness. This,
too, is unwarranted.
Related to the "overbreadth" doctrine is the "void for vagueness doctrine" which holds that
"a law is facially invalid if men of common intelligence must necessarily guess at its
meaning and differ as to its application." It is subject to the same principles governing
overbreadth doctrine. For one, it is also an analytical tool for testing "on their faces"
statutes in free speech cases. And like overbreadth, it is said that a litigant may challenge
a statute on its face only if it is vague in all its possible applications.
Be that as it may, the test in determining whether a criminal statute is void for uncertainty
is whether the language conveys a sufficiently definite warning as to the proscribed
conduct when measured by common understanding and practice.39 This Court has
similarly stressed that the vagueness doctrine merely requires a reasonable degree of
certainty for the statute to be upheld - not absolute precision or mathematical
exactitude.40
As structured, Section 4541 of Republic Act No. 8189 makes a recital of election offenses
under the same Act. Section 45(j) is, without doubt, crystal in its specification that a
violation of any of the provisions of Republic Act No. 8189 is an election offense. The
language of Section 45(j) is precise. The challenged provision renders itself to no other
interpretation. A reading of the challenged provision involves no guesswork. We do not
see herein an uncertainty that makes the same vague.
Notably, herein petitioners do not cite a word in the challenged provision, the import or
meaning of which they do not understand. This is in stark contrast to the case of Estrada
v. Sandiganbayan42 where therein petitioner sought for statutory definition of particular
words in the challenged statute. Even then, the Court in Estrada rejected the argument.

This Court reasoned:

The rationalization seems to us to be pure sophistry. A statute is not rendered uncertain
and void merely because general terms are used therein, or because of the employment
of terms without defining them; much less do we have to define every word we use.
Besides, there is no positive constitutional or statutory command requiring the legislature
to define each and every word in an enactment. Congress is not restricted in the form of
expression of its will, and its inability to so define the words employed in a statute will not
necessarily result in the vagueness or ambiguity of the law so long as the legislative will is
clear, or at least, can be gathered from the whole act, which is distinctly expressed in the
Plunder Law."
Moreover, it is a well-settled principle of legal hermeneutics that words of a statute will be
interpreted in their natural, plain and ordinary acceptation and signification, unless it is
evident that the legislature intended a technical or special legal meaning to those words.
The intention of the lawmakers who are, ordinarily, untrained philologists and
lexicographers to use statutory phraseology in such a manner is always presumed.
Perforce, this Court has underlined that an act will not be held invalid merely because it
might have been more explicit in its wordings or detailed in its provisions, especially
where, because of the nature of the act, it would be impossible to provide all the details in
advance as in all other statutes.43
The evident intent of the legislature in including in the catena of election offenses the
violation of any of the provisions of Republic Act No. 8189, is to subsume as punishable,
not only the commission of proscribed acts, but also the omission of acts enjoined to be
observed. On this score, the declared policy of Republic Act No. 8189 is illuminating. The
law articulates the policy of the State to systematize the present method of registration in
order to establish a clean, complete, permanent and updated list of voters. A reading of
Section 45 (j) conjointly with the provisions upon which petitioners are charged, i.e.,
Sections 10 (g) and (j) would reveal that the matters that are required to be set forth under
the aforesaid sections are crucial to the achievement of a clean, complete, permanent and
updated list of voters. The factual information required by the law is sought not for mere
embellishment.
There is a definitive governmental purpose when the law requires that such facts should
be set forth in the application. The periods of residence in the Philippines and in the place
of registration delve into the matter of residency, a requisite which a voter must satisfy to
be deemed a qualified voter and registered in the permanent list of voters in a precinct of
the city or municipality wherein he resides. Of even rationality exists in the case of the
requirement in Section 10 (j), mandating that the applicant should state that he/she is not
a registered voter of any precinct. Multiple voting by so-called flying voters are glaring
anomalies which this country strives to defeat. The requirement that such facts as
required by Section 10 (g) and Section 10 (j) be stated in the voters application form for
registration is directly relevant to the right of suffrage, which the State has the right to
regulate.
It is the opportune time to allude to the case of People v. Gatchalian44 where the therein
assailed law contains a similar provision as herein assailed before us. Republic Act No.
602 also penalizes any person who willfully violates any of the provisions of the Act. The
Court dismissed the challenged, and declared the provision constitutional. The Court in
Gatchalian read the challenged provision, "any of the provisions of this [A]ct" conjointly
with Section 3 thereof which was the pertinent portion of the law upon which therein
accused was prosecuted. Gatchalian considered the terms as all-embracing; hence, the
70
same must include what is enjoined in Section 3 thereof which embodies the very
fundamental purpose for which the law has been adopted. This Court ruled that the law by
legislative fiat intends to punish not only those expressly declared unlawful but even those
not so declared but are clearly enjoined to be observed to carry out the fundamental
purpose of the law.45 Gatchalian remains good law, and stands unchallenged.
It also does not escape the mind of this Court that the phraseology in Section 45(j) is
employed by Congress in a number of our laws.46 These provisions have not been
declared unconstitutional.
Moreover, every statute has in its favor the presumption of validity.47 To justify its
nullification, there must be a clear and unequivocal breach of the Constitution, and not one
that is doubtful, speculative or argumentative.48 We hold that petitioners failed to
overcome the heavy presumption in favor of the law. Its constitutionality must be upheld in
the absence of substantial grounds for overthrowing the same.
A salient point. Courts will refrain from touching upon the issue of constitutionality unless it
is truly unavoidable and is the very lis mota. In the case at bar, the lis mota is the alleged
grave abuse of discretion of the COMELEC in finding probable cause for the filing of
criminal charges against petitioners.
Third. Petitioners maintain that the COMELEC En Banc, premised its finding on a
misapprehension of facts, and committed grave abuse of discretion in directing the filing of
Informations against them with the RTC.
We are once again unimpressed.
The constitutional grant of prosecutorial power in the COMELEC finds statutory
expression under Section 26549 of Batas Pambansa Blg. 881, otherwise known as the
Omnibus Election Code.50 The task of the COMELEC whenever any election offense
charge is filed before it is to conduct the preliminary investigation of the case, and make a
determination of probable cause. Under Section 8(b), Rule 34 of the COMELEC Rules of
Procedure, the investigating officer makes a determination of whether there is a
reasonable ground to believe that a crime has been committed.51 In Baytan v.
COMELEC,52 this Court, sufficiently elucidated on the matter of probable cause in the
prosecution of election offenses, viz:
It is also well-settled that the finding of probable cause in the prosecution of election
offenses rests in the COMELEC's sound discretion. The COMELEC exercises the
constitutional authority to investigate and, where appropriate, prosecute cases for violation
of election laws, including acts or omissions constituting election frauds, offense and
malpractices. Generally, the Court will not interfere with such finding of the COMELEC
absent a clear showing of grave abuse of discretion. This principle emanates from the
COMELEC's exclusive power to conduct preliminary investigation of all election offenses
punishable under the election laws and to prosecute the same, except as may otherwise
be provided by law.53
It is succinct that courts will not substitute the finding of probable cause by the COMELEC
in the absence of grave abuse of discretion. The abuse of discretion must be 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, or to act at all in contemplation of law as where the power is
exercised in an arbitrary and despotic manner by reason of passion or hostility.54
According to the COMELEC En Banc, the investigating officer, in the case at bar, held that
there was sufficient cause for the filing of criminal charges against petitioners, and found

71
no reason to depart therefrom. Without question, on May 9 and 11 of 2001, petitioners

applied for registration as new voters with the Office of the Election Officer of Burauen,
Leyte, notwithstanding the existence of petitioners registration records as registered
voters of Precinct No. 4419-A of Barangay Bagong Lipunan ng Crame, District IV, Quezon
City. The directive by the COMELEC which affirmed the Resolution55 of 28 November
2000 of Investigating Officer Atty. Tangaro-Casingal does not appear to be wanting in
factual basis, such that a reasonably prudent man would conclude that there exists
probable cause to hold petitioners for trial. Thus, in the aforesaid Resolution, the
Investigating Officer, found:
lack of malice is beside the point. Commission of the act is sufficient. It is the act itself that
is punished.
A violation therefore of Section 10 of Republic Act No. 8189 is an election offense.
We take occasion to reiterate that the Constitution grants to the COMELEC the power to
prosecute cases or violations of election laws. Article IX (C), Section 2 (6) of the 1987
Constitution, provides:
In the instant case, when respondents Carlos Romualdez and Erlinda Romualdez filed
their respective applications for registration as new voters with the Office of the Election
Officer of Burauen, Leyte on May 9 and 11, 2001, respectively, they stated under oath that
they are not registered voters in other precinct (VRR Nos. 42454095 and 07902941).
However, contrary to their statements, records show they are still registered voters of
Precinct No. 4419-A, barangay Bagong Lipunan ng Crame, District IV, Quezon City, as per
VRR Nos. 26195825 and 26195823. In other words, respondents registration records in
Quezon City is (sic) still in existence.
While it may be true that respondents had written the City Election Officer of District IV,
Quezon City for cancellation of their voters registration record as voters (sic) therein, they
cannot presume that the same will be favorably acted upon. Besides, RA 8189 provides
for the procedure in cases of transfer of residence to another city/municipality which must
be complied with, to wit:
"Section 12. Change of Residence to Another City or Municipality. Any registered voter
who has transferred residence to another city or municipality may apply with the Election
Officer of his new residence for the transfer of his registration records.
The application for transfer of registration shall be subject to the requirements of notice
and hearing and the approval of the Election Registration Board, in accordance with this
Act. Upon approval, of the application for transfer, and after notice of such approval to the
Election Officer of their former residence of the voter, said Election Officer shall transmit
by registered mail the voters registration record to the Election Officer of the voters new
residence."
They cannot claim ignorance of the abovestated provision on the procedure for transfer of
registration records by reason of transferred new residence to another municipality. Based
on the affidavit executed by one Eufemia S. Cotoner, she alleged that the refusal of the
Assistant Election Officer Ms. Estrella Perez to accept the letter of respondents was due
to improper procedure because respondents should have filed the required request for
transfer with the Election Officer of Burauen, Leyte. Despite this knowledge, however, they
proceeded to register as new voters of Burauen, Leyte, notwithstanding the existence of
their previous registrations in Quezon City.
In their subsequent affidavit of Transfer of Voters Registration under Section 12 of
Republic Act 8189, respondents admitted that they erroneously filed an application as a
new voter (sic) with the office of the Election Officer of Burauen, Leyte, by reason of an
honest mistake, which they now desire to correct. (underscoring ours).
Respondents lose sight of the fact that a statutory offense, such as violation of election
law, is mala prohibita. Proof of criminal intent is not necessary. Good faith, ignorance or
xxxx
In view of the foregoing, the Law Department respectfully submits that there is probable
cause to hold respondents Carlos Romualdez and Erlinda Romualdez for trial in violation
of Section 10(g) and (j) in relation to Section 45(j) of Republic Act No. 8189. There is no
doubt that they applied for registration as new voters of Burauen, Leyte consciously, freely
and voluntarily.56
(6) File, upon a verified complaint, or on its own initiative, petitions in court for inclusion or
exclusion of voters; investigate and where appropriate, prosecute cases or violations of
election laws, including acts or omissions constituting election frauds, offenses, and
malpractices.
This power to prosecute necessarily involves the power to determine who shall be
prosecuted, and the corollary right to decide whom not to prosecute.57 Evidently, must
this power to prosecute also include the right to determine under which laws prosecution
will be pursued. The courts cannot dictate the prosecution nor usurp its discretionary
powers. As a rule, courts cannot interfere with the prosecutors discretion and control of
the criminal prosecution.58 Its rationale cannot be doubted. For the business of a court of
justice is to be an impartial tribunal, and not to get involved with the success or failure of
the prosecution to prosecute.59 Every now and then, the prosecution may err in the
selection of its strategies, but such errors are not for neutral courts to rectify, any more
than courts should correct the blunders of the defense.60
Fourth. In People v. Delgado,61 this Court said that when the COMELEC, through its duly
authorized law officer, conducts the preliminary investigation of an election offense and
upon a prima facie finding of a probable cause, files the Information in the proper court,
said court thereby acquires jurisdiction over the case. Consequently, all the subsequent
disposition of said case must be subject to the approval of the court. The records show
that Informations charging petitioners with violation of Section 10(g) and (j), in relation to
Section 45(j) of Republic Act No. 8189 had been filed with the RTC. The case must, thus,
be allowed to take its due course.
It may be recalled that petitioners prayed for the issuance of a Temporary Restraining
Order or Writ of Preliminary Injunction before this Court to restrain the COMELEC from
executing its Resolutions of 11 June 2004 and 27 January 2005. In a Resolution dated 20
June 2006, this Court En Banc denied for lack of merit petitioners Motion Reiterating
Prayer for Issuance of Writ of Preliminary Injunction and to Cite for Indirect Contempt.
Logically, the normal course of trial is expected to have continued in the proceedings a
quo.
WHEREFORE, the Petition is DENIED. The assailed Resolutions, dated 11 June 2004
and 27 January 2005 of the COMELEC En Banc are AFFIRMED. Costs against
petitioners.
SO ORDERED.

Garcillano vs. Committees

More than three years ago, tapes ostensibly containing a wiretapped conversation
purportedly between the President of the Philippines and a high-ranking official of the
Commission on Elections (COMELEC) surfaced. They captured unprecedented public
attention and thrust the country into a controversy that placed the legitimacy of the present
administration on the line, and resulted in the near-collapse of the Arroyo government. The
tapes, notoriously referred to as the "Hello Garci" tapes, allegedly contained the
Presidents instructions to COMELEC Commissioner Virgilio Garcillano to manipulate in
her favor results of the 2004 presidential elections. These recordings were to become the
subject of heated legislative hearings conducted separately by committees of both Houses
of Congress.1
In the House of Representatives (House), on June 8, 2005, then Minority Floor Leader
Francis G. Escudero delivered a privilege speech, "Tale of Two Tapes," and set in motion
a congressional investigation jointly conducted by the Committees on Public Information,
Public Order and Safety, National Defense and Security, Information and Communications
Technology, and Suffrage and Electoral Reforms (respondent House Committees). During
the inquiry, several versions of the wiretapped conversation emerged. But on July 5, 2005,
National Bureau of Investigation (NBI) Director Reynaldo Wycoco, Atty. Alan Paguia and
the lawyer of former NBI Deputy Director Samuel Ong submitted to the respondent House
Committees seven alleged "original" tape recordings of the supposed three-hour taped
conversation. After prolonged and impassioned debate by the committee members on the
admissibility and authenticity of the recordings, the tapes were eventually played in the
chambers of the House.2
72
In the Senates plenary session the following day, a lengthy debate ensued when Senator
Richard Gordon aired his concern on the possible transgression of Republic Act (R.A.) No.
42008 if the body were to conduct a legislative inquiry on the matter. On August 28, 2007,
Senator Miriam Defensor-Santiago delivered a privilege speech, articulating her
considered view that the Constitution absolutely bans the use, possession, replay or
communication of the contents of the "Hello Garci" tapes. However, she recommended a
legislative investigation into the role of the Intelligence Service of the AFP (ISAFP), the
Philippine National Police or other government entities in the alleged illegal wiretapping of
public officials.9
On September 6, 2007, petitioners Santiago Ranada and Oswaldo Agcaoili, retired
justices of the Court of Appeals, filed before this Court a Petition for Prohibition with
Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction,10 docketed as G.R. No. 179275, seeking to bar the Senate from conducting its
scheduled legislative inquiry. They argued in the main that the intended legislative inquiry
violates R.A. No. 4200 and Section 3, Article III of the Constitution.11
As the Court did not issue an injunctive writ, the Senate proceeded with its public hearings
on the "Hello Garci" tapes on September 7,12 1713 and October 1,14 2007.
Intervening as respondents,15 Senators Aquilino Q. Pimentel, Jr., Benigno Noynoy C.
Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda, M.A. Jamby A.S.
Madrigal and Antonio F. Trillanes filed their Comment16 on the petition on September 25,
2007.
The Court subsequently heard the case on oral argument.17
On August 3, 2005, the respondent House Committees decided to suspend the hearings
indefinitely. Nevertheless, they decided to prepare committee reports based on the said
recordings and the testimonies of the resource persons.3
On October 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and one of the
resource persons summoned by the Senate to appear and testify at its hearings, moved to
intervene as petitioner in G.R. No. 179275.18
Alarmed by these developments, petitioner Virgilio O. Garcillano (Garcillano) filed with this
Court a Petition for Prohibition and Injunction, with Prayer for Temporary Restraining
Order and/or Writ of Preliminary Injunction4docketed as G.R. No. 170338. He prayed that
the respondent House Committees be restrained from using these tape recordings of the
"illegally obtained" wiretapped conversations in their committee reports and for any other
purpose. He further implored that the said recordings and any reference thereto be
ordered stricken off the records of the inquiry, and the respondent House Committees
directed to desist from further using the recordings in any of the House proceedings.5
On November 20, 2007, the Court resolved to consolidate G.R. Nos. 170338 and
179275.19
Without reaching its denouement, the House discussion and debates on the "Garci tapes"
abruptly stopped.
It may be noted that while both petitions involve the "Hello Garci" recordings, they have
different objectivesthe first is poised at preventing the playing of the tapes in the House
and their subsequent inclusion in the committee reports, and the second seeks to prohibit
and stop the conduct of the Senate inquiry on the wiretapped conversation.
The Court dismisses the first petition, G.R. No. 170338, and grants the second, G.R. No.
179275.
-I-
After more than two years of quiescence, Senator Panfilo Lacson roused the slumbering
issue with a privilege speech, "The Lighthouse That Brought Darkness." In his discourse,
Senator Lacson promised to provide the public "the whole unvarnished truth the whats,
whens, wheres, whos and whys" of the alleged wiretap, and sought an inquiry into the
perceived willingness of telecommunications providers to participate in nefarious
wiretapping activities.
Before delving into the merits of the case, the Court shall first resolve the issue on the
parties standing, argued at length in their pleadings.
On motion of Senator Francis Pangilinan, Senator Lacsons speech was referred to the
Senate Committee on National Defense and Security, chaired by Senator Rodolfo Biazon,
who had previously filed two bills6 seeking to regulate the sale, purchase and use of
wiretapping equipment and to prohibit the Armed Forces of the Philippines (AFP) from
performing electoral duties.7
generally, a party will be allowed to litigate only when (1) he can show that he has
personally suffered some actual or threatened injury because of the allegedly illegal
conduct of the government; (2) the injury is fairly traceable to the challenged action; and
(3) the injury is likely to be redressed by a favorable action.21
In Tolentino v. COMELEC,20 we explained that "[l]egal standing or locus standi refers to

a personal and substantial interest in a case such that the party has sustained or will
sustain direct injury because of the challenged governmental act x x x," thus,

The gist of the question of standing is whether a party has "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."22
However, considering that locus standi is a mere procedural technicality, the Court, in
recent cases, has relaxed the stringent direct injury test. David v. MacapagalArroyo23 articulates that a "liberal policy has been observed, allowing ordinary citizens,
members of Congress, and civic organizations to prosecute actions involving the
constitutionality or validity of laws, regulations and rulings."24 The fairly recent Chavez v.
Gonzales25 even permitted a non-member of the broadcast media, who failed to allege a
personal stake in the outcome of the controversy, to challenge the acts of the Secretary of
Justice and the National Telecommunications Commission. The majority, in the said case,
echoed the current policy that "this Court has repeatedly and consistently refused to wield
procedural barriers as impediments to its addressing and resolving serious legal questions
that greatly impact on public interest, in keeping with the Courts duty under the 1987
Constitution to determine whether or not other branches of government have kept
themselves within the limits of the Constitution and the laws, and that they have not
abused the discretion given to them."26
In G.R. No. 170338, petitioner Garcillano justifies his standing to initiate the petition by
alleging that he is the person alluded to in the "Hello Garci" tapes. Further, his was
publicly identified by the members of the respondent committees as one of the voices in
the recordings.27 Obviously, therefore, petitioner Garcillano stands to be directly injured
by the House committees actions and charges of electoral fraud. The Court recognizes
his standing to institute the petition for prohibition.
In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standing by alleging that
they are concerned citizens, taxpayers, and members of the IBP. They are of the firm
conviction that any attempt to use the "Hello Garci" tapes will further divide the country.
They wish to see the legal and proper use of public funds that will necessarily be defrayed
in the ensuing public hearings. They are worried by the continuous violation of the laws
and individual rights, and the blatant attempt to abuse constitutional processes through
the conduct of legislative inquiries purportedly in aid of legislation.28
Intervenor Sagge alleges violation of his right to due process considering that he is
summoned to attend the Senate hearings without being apprised not only of his rights
therein through the publication of the Senate Rules of Procedure Governing Inquiries in
Aid of Legislation, but also of the intended legislation which underpins the investigation.
He further intervenes as a taxpayer bewailing the useless and wasteful expenditure of
public funds involved in the conduct of the questioned hearings.29
73
own rightsas taxpayers, members of Congress, citizens, individually or in a class suit,

and members of the bar and of the legal professionwhich were also supposedly violated
by the therein assailed unconstitutional acts.33
Likewise, a reading of the petition in G.R. No. 179275 shows that the petitioners and
intervenor Sagge advance constitutional issues which deserve the attention of this Court
in view of their seriousness, novelty and weight as precedents. The issues are of
transcendental and paramount importance not only to the public but also to the Bench and
the Bar, and should be resolved for the guidance of all.34
Thus, in the exercise of its sound discretion and given the liberal attitude it has shown in
prior cases climaxing in the more recent case of Chavez, the Court recognizes the legal
standing of petitioners Ranada and Agcaoili and intervenor Sagge.
- II The Court, however, dismisses G.R. No. 170338 for being moot and academic.
Repeatedly stressed in our prior decisions is the principle that the exercise by this Court of
judicial power is limited to the determination and resolution of actual cases and
controversies.35 By actual cases, we mean existing conflicts appropriate or ripe for
judicial determination, not conjectural or anticipatory, for otherwise the decision of the
Court will amount to an advisory opinion. The power of judicial inquiry does not extend to
hypothetical questions because any attempt at abstraction could only lead to dialectics
and barren legal questions and to sterile conclusions unrelated to actualities.36 Neither
will the Court determine a moot question in a case in which no practical relief can be
granted. A case becomes moot when its purpose has become stale.37 It is unnecessary to
indulge in academic discussion of a case presenting a moot question as a judgment
thereon cannot have any practical legal effect or, in the nature of things, cannot be
enforced.38
In G.R. No. 170338, petitioner Garcillano implores from the Court, as aforementioned, the
issuance of an injunctive writ to prohibit the respondent House Committees from playing
the tape recordings and from including the same in their committee report. He likewise
prays that the said tapes be stricken off the records of the House proceedings. But the
Court notes that the recordings were already played in the House and heard by its
members.39 There is also the widely publicized fact that the committee reports on the
"Hello Garci" inquiry were completed and submitted to the House in plenary by the
respondent committees.40 Having been overtaken by these events, the Garcillano petition
has to be dismissed for being moot and academic. After all, prohibition is a preventive
remedy to restrain the doing of an act about to be done, and not intended to provide a
remedy for an act already accomplished.41
Given that petitioners Ranada and Agcaoili allege an interest in the execution of the laws
and that intervenor Sagge asserts his constitutional right to due process,30 they satisfy
the requisite personal stake in the outcome of the controversy by merely being citizens of
the Republic.
- III -
Following the Courts ruling in Francisco, Jr. v. The House of Representatives,31 we find
sufficient petitioners Ranadas and Agcaoilis and intervenor Sagges allegation that the
continuous conduct by the Senate of the questioned legislative inquiry will necessarily
involve the expenditure of public funds.32 It should be noted that inFrancisco, rights
personal to then Chief Justice Hilario G. Davide, Jr. had been injured by the alleged
unconstitutional acts of the House of Representatives, yet the Court granted standing to
the petitioners therein for, as in this case, they invariably invoked the vindication of their
Section 21, Article VI of the 1987 Constitution explicitly provides that "[t]he Senate or the
House of Representatives, or any of its respective committees may conduct inquiries in
aid of legislation in accordance with its duly published rules of procedure." The requisite of
publication of the rules is intended to satisfy the basic requirements of due
process.42 Publication is indeed imperative, for it will be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law or rule of which he had no notice
whatsoever, not even a constructive one.43 What constitutes publication is set forth in
As to the petition in G.R. No. 179275, the Court grants the same. The Senate cannot be
allowed to continue with the conduct of the questioned legislative inquiry without duly
published rules of procedure, in clear derogation of the constitutional requirement.

Article 2 of the Civil Code, which provides that "[l]aws shall take effect after 15 days
following the completion of their publication either in the Official Gazette, or in a
newspaper of general circulation in the Philippines."44
The respondents in G.R. No. 179275 admit in their pleadings and even on oral argument
that the Senate Rules of Procedure Governing Inquiries in Aid of Legislation had been
published in newspapers of general circulation only in 1995 and in 2006.45 With respect
to the present Senate of the 14th Congress, however, of which the term of half of its
members commenced on June 30, 2007, no effort was undertaken for the publication of
these rules when they first opened their session.
Recently, the Court had occasion to rule on this very same question. In Neri v. Senate
Committee on Accountability of Public Officers and Investigations,46 we said:
Fourth, we find merit in the argument of the OSG that respondent Committees likewise
violated Section 21 of Article VI of the Constitution, requiring that the inquiry be in
accordance with the "duly published rules of procedure." We quote the OSGs explanation:
The phrase "duly published rules of procedure" requires the Senate of every Congress to
publish its rules of procedure governing inquiries in aid of legislation because every
Senate is distinct from the one before it or after it. Since Senatorial elections are held
every three (3) years for one-half of the Senates membership, the composition of the
Senate also changes by the end of each term. Each Senate may thus enact a different set
of rules as it may deem fit. Not having published its Rules of Procedure, the subject
hearings in aid of legislation conducted by the 14th Senate, are therefore, procedurally
infirm.
Justice Antonio T. Carpio, in his Dissenting and Concurring Opinion, reinforces this ruling
with the following rationalization:
The present Senate under the 1987 Constitution is no longer a continuing legislative body.
The present Senate has twenty-four members, twelve of whom are elected every three
years for a term of six years each. Thus, the term of twelve Senators expires every three
years, leaving less than a majority of Senators to continue into the next Congress. The
1987 Constitution, like the 1935 Constitution, requires a majority of Senators to "constitute
a quorum to do business." Applying the same reasoning in Arnault v. Nazareno, the
Senate under the 1987 Constitution is not a continuing body because less than majority of
the Senators continue into the next Congress. The consequence is that the Rules of
Procedure must be republished by the Senate after every expiry of the term of twelve
Senators.47
The subject was explained with greater lucidity in our Resolution48 (On the Motion for
Reconsideration) in the same case, viz.:
On the nature of the Senate as a "continuing body," this Court sees fit to issue a
clarification. Certainly, there is no debate that the Senate as an institution is "continuing,"
as it is not dissolved as an entity with each national election or change in the composition
of its members. However, in the conduct of its day-to-day business the Senate of each
Congress acts separately and independently of the Senate of the Congress before it. The
Rules of the Senate itself confirms this when it states:
RULE
UNFINISHED BUSINESS
XLIV
SEC. 123. Unfinished business at the end of the session shall be taken up at the next
session in the same status.
74
All pending matters and proceedings shall terminate upon the expiration of one (1)
Congress, but may be taken by the succeeding Congress as if present for the first time.
Undeniably from the foregoing, all pending matters and proceedings, i.e., unpassed bills
and even legislative investigations, of the Senate of a particular Congress are
considered terminated upon the expiration of that Congress and it is merely optional on
the Senate of the succeeding Congress to take up such unfinished matters, not in the
same status, but as if presented for the first time. The logic and practicality of such a rule
is readily apparent considering that the Senate of the succeeding Congress (which will
typically have a different composition as that of the previous Congress) should not be
bound by the acts and deliberations of the Senate of which they had no part. If the Senate
is a continuing body even with respect to the conduct of its business, then pending
matters will not be deemed terminated with the expiration of one Congress but will, as a
matter of course, continue into the next Congress with the same status.
This dichotomy of the continuity of the Senate as an institution and of the opposite nature
of the conduct of its business is reflected in its Rules. The Rules of the Senate (i.e. the
Senates main rules of procedure) states:
RULE
AMENDMENTS TO, OR REVISIONS OF, THE RULES
LI
SEC. 136. At the start of each session in which the Senators elected in the preceding
elections shall begin their term of office, the President may endorse the Rules to the
appropriate committee for amendment or revision.
The Rules may also be amended by means of a motion which should be presented at
least one day before its consideration, and the vote of the majority of the Senators present
in the session shall be required for its approval.
RULE
DATE OF TAKING EFFECT
LII
SEC. 137. These Rules shall take effect on the date of their adoption and shall remain in
force until they are amended or repealed.
Section 136 of the Senate Rules quoted above takes into account the new composition of
the Senate after an election and the possibility of the amendment or revision of the Rules
at the start of each session in which the newly elected Senators shall begin their term.
However, it is evident that the Senate has determined that its main rules are intended to
be valid from the date of their adoption until they are amended or repealed. Such
language is conspicuously absent from theRules. The Rules simply state "(t)hese Rules
shall take effect seven (7) days after publication in two (2) newspapers of general
circulation." The latter does not explicitly provide for the continued effectivity of such rules
until they are amended or repealed. In view of the difference in the language of the two
sets of Senate rules, it cannot be presumed that the Rules (on legislative inquiries) would
continue into the next Congress. The Senate of the next Congress may easily adopt
different rules for its legislative inquiries which come within the rule on unfinished
business.
The language of Section 21, Article VI of the Constitution requiring that the inquiry be
conducted in accordance with the duly published rules of procedure is categorical. It is
incumbent upon the Senate to publish the rules for its legislative inquiries in each
Congress or otherwise make the published rules clearly state that the same shall be

75
effective in subsequent Congresses or until they are amended or repealed to sufficiently

put public on notice.
With the foregoing disquisition, the Court finds it unnecessary to discuss the other issues
raised in the consolidated petitions.
If it was the intention of the Senate for its present rules on legislative inquiries to be
effective even in the next Congress, it could have easily adopted the same language it
had used in its main rules regarding effectivity.
WHEREFORE, the petition in G.R. No. 170338 is DISMISSED, and the petition in G.R.
No. 179275 is GRANTED. Let a writ of prohibition be issued enjoining the Senate of the
Republic of the Philippines and/or any of its committees from conducting any inquiry in aid
of legislation centered on the "Hello Garci" tapes.
Respondents justify their non-observance of the constitutionally mandated publication by

arguing that the rules have never been amended since 1995 and, despite that, they are
published in booklet form available to anyone for free, and accessible to the public at the
Senates internet web page.49
The Court does not agree. The absence of any amendment to the rules cannot justify the
Senates defiance of the clear and unambiguous language of Section 21, Article VI of the
Constitution. The organic law instructs, without more, that the Senate or its committees
may conduct inquiries in aid of legislation only in accordance with duly published rules of
procedure, and does not make any distinction whether or not these rules have undergone
amendments or revision. The constitutional mandate to publish the said rules prevails over
any custom, practice or tradition followed by the Senate.
Justice Carpios response to the same argument raised by the respondents is illuminating:
The publication of the Rules of Procedure in the website of the Senate, or in pamphlet
form available at the Senate, is not sufficient under the Taada v. Tuvera ruling which
requires publication either in the Official Gazette or in a newspaper of general circulation.
The Rules of Procedure even provide that the rules "shall take effect seven (7) days after
publication in two (2) newspapers of general circulation," precluding any other form of
publication. Publication in accordance with Taada is mandatory to comply with the due
process requirement because the Rules of Procedure put a persons liberty at risk. A
person who violates the Rules of Procedure could be arrested and detained by the
Senate.
The invocation by the respondents of the provisions of R.A. No. 8792,50 otherwise known
as the Electronic Commerce Act of 2000, to support their claim of valid publication through
the internet is all the more incorrect. R.A. 8792 considers an electronic data message or
an electronic document as the functional equivalent of a written document only
for evidentiary purposes.51 In other words, the law merely recognizes the admissibility in
evidence (for their being the original) of electronic data messages and/or electronic
documents.52 It does not make the internet a medium for publishing laws, rules and
regulations.
Placido vs. NLRC

Petitioners Rolando Placido (Placido) and Edgardo Caragay (Caragay) had been
employed since January 22, 1981 and June 1, 1983, respectively, both as cable splicers
by respondent Philippine Long Distance Telephone Company, Incorporated (PLDT).
It appears that since August 2000, PLDT had been receiving reports of theft and
destruction of its cables.1 On March 13, 2001, PLDT Duty Inspector Ricardo Mojica
(Mojica) and PLDT Security Guard/Driver Mark Anthony Cruto (Cruto), responding to a
report that cables were being stripped and burned in one of the residences along Alley 2
Street, Project 6, Quezon City, proceeded to the said area where they saw petitioners
service vehicle parked infront of the house at No. 162. They likewise saw petitioners
stripping and burning cables inside the compound of the house which turned out to belong
to Caragays mother. With the assistance of police and barangay officials, PLDT recovered
the cables bearing the "PLDT" marking.
The incident spawned the filing, on complaint of PLDT, of an Information for Qualified
Theft against petitioners before the Regional Trial Court (RTC) of Quezon City, docketed
as Criminal Case No. 99467.
In a related move, PLDT required petitioners to explain within 72 hours why no severe
disciplinary action should be taken against them for Serious Misconduct and Dishonesty.2
After several requests for extension to submit their explanations, petitioners submitted a
joint explanation3 on June 11, 2001 denying the charges against them. By their claim,
they were on their way back from the house of one Jabenz Quezada (Quezada) from
whom they were inquiring about a vehicle when they were detained by Mojica.
On petitioners request, a formal hearing was scheduled. Their request for a copy of the
Security Investigation was denied, however, on the ground that they are only entitled to
"be informed of the charges, and they cannot demand for the report as it is still on the
confidential stage."
Given this discussion, the respondent Senate Committees, therefore, could not, in
violation of the Constitution, use its unpublished rules in the legislative inquiry subject of
these consolidated cases. The conduct of inquiries in aid of legislation by the Senate has
to be deferred until it shall have caused the publication of the rules, because it can do so
only "in accordance with its duly published rules of procedure."
During the June 25, 2001 formal hearing scheduled by PLDT, representatives from
petitioners union Manggagawa ng Komunikasyon sa Pilipinas (MKP) were present. As
petitioners counsel could not attend the hearing due to a previously scheduled hearing at
the RTC Makati, petitioners requested for another setting4 but it was denied. Petitioners
were, however, given a non-extendible period of three days to submit their evidence.5
Very recently, the Senate caused the publication of the Senate Rules of Procedure
Governing Inquiries in Aid of Legislation in the October 31, 2008 issues of Manila
Bulletin and Malaya. While we take judicial notice of this fact, the recent publication does
not cure the infirmity of the inquiry sought to be prohibited by the instant petitions. Insofar
as the consolidated cases are concerned, the legislative investigation subject thereof still
could not be undertaken by the respondent Senate Committees, because no published
rules governed it, in clear contravention of the Constitution.
Mojica testified during the hearing that when petitioners saw him as they were stripping
and burning the cables, they fled but surfaced thirty minutes later from Alley 6 Street
wearing different clothes; and that according to Rodolfo R. Anor, PLDT Work Order
Supervisor, the cables could be dead cables that were not recovered by contractors.6
Petitioners counsel later reiterated the request for a setting of a hearing and an audiotape
of the June 25, 2001 hearing, but the same was denied. A third time request for another
hearing was likewise denied.7

76
On May 17, 2002, PLDT sent notices of termination8 to petitioners, prompting them to file
on May 24, 2002 a complaint9 for illegal dismissal before the Labor Arbiter.
lay on petitioners to prove that they acquired the cables lawfully. This they failed to
discharge.
By Decision of January 12, 2004, Labor Arbiter Catalino R. Laderas held that petitioners
were illegally dismissed, there being no provision in PLDTs rules and regulations that
stripping and burning of PLDT cables and wires constitute Serious Misconduct and
Dishonesty; that PLDTs seeming lack of urgency in taking any disciplinary action against
petitioners negates the charges;10 and that dismissal is too harsh, given petitioners years
of service and lack of previous derogatory record.
And as also did the NLRC and the Court of Appeals, the Court finds that petitioners were
not denied due process.
On appeal,11 the National Labor Relations Commission (NLRC), by Decision dated

February 28, 2005, reversed the Labor Arbiters Decision and dismissed petitioners
complaint for lack of merit,12 it holding that they were validly dismissed for just cause
"theft of company property."13
In brushing aside petitioners disclaimer of the acts attributed to them, the NLRC noted
that, inter alia, they failed to present any affidavit of Quezada to prove that they were
indeed at his house inquiring about a vehicle.
Petitioners appealed to the Court of Appeals.
In the meantime or on February 15, 2007, Branch 104 of the Quezon City RTC acquitted
petitioners in Criminal Case No. 99467 on the ground of reasonable doubt, it holding that
the prosecution failed to prove that the cables were in fact stolen from PLDT.14
By Decision of September 28, 2007, the appellate court affirmed the NLRC Decision,15 it
holding that since the cables bore the "PLDT" marking, they were presumed to be owned
by PLDT, hence, the burden of evidence shifted on petitioners to prove that they were no
longer owned by PLDT, but they failed.
Article 277 of the Labor Code provides:

xxxx
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just or authorized cause and without prejudice to
the requirement of notice under Article 283 of this Code, the employer shall furnish the
workers whose employment is sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the latter ample opportunity to be
heard and defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to the guidelines
set by the Department of Labor and Employment. Any decision taken by the employer
shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized
cause shall rest on the employer. (Emphasis supplied)
And the Omnibus Rules Implementing the Labor Code require a hearing and conference
during which the employee concerned is given the opportunity to respond to the charge,
and present his evidence or rebut the evidence presented against him. Thus Rule I,
Section 2(d), provides:
Section 2. Security of Tenure.
Ruling out petitioners claim that they were denied due process, the appellate court held
that they were given ample opportunity to defend themselves during the administrative
hearing during which they were furnished with written invitations for their appearance
before the investigating unit on several dates, but they refused to submit themselves to
the investigation. Petitioners motion for reconsideration having been denied by
Resolution16 of December 17, 2007, the present petition was filed.17
xxxx
Petitioners insist that the presence of the "PLDT" marking on the cables does not prove
that PLDT owned them at the time. They aver that PLDT disposes of used and
unserviceable materials, including cables and telephone wires which had been declared
junked and classified as scrap --- a substantial amount of which remains insulated ---, and
once disposed of, these cables, although still bearing the "PLDT" marking, are no longer
its property .
(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to explain his
side.
In fine, petitioners contend that PLDTs ownership of cables or wires bearing the "PLDT"
marking on the insulation cannot be presumed, hence, a persons possession thereof
does not give rise to the presumption that he obtained or stole them from PLDT.18
Additionally, petitioners aver that they were denied due process when PLDT refused to
furnish them a copy of the Investigation Report and grant them a formal hearing in which
they could be represented by counsel of their choice.
The petition is bereft of merit.
As did the NLRC and the Court of Appeals,19 the Court finds that as the cables bore the
"PLDT" marking, the presumption is that PLDT owned them. The burden of evidence thus
(d) In all cases of termination of employment, the following standards of due process shall
be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor
Code:
(ii) A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him.1avvphi1
(iii) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination. (Emphasis and underscoring supplied)
The abovequoted provision of Section 2(d) should not be taken to mean, however, that
holding an actual hearing or conference is a condition sine qua non for compliance with
the due process requirement in case of termination of employment. For the test for the fair
procedure guaranteed under the above-quoted Article 277(b) of the Labor Code is not
whether there has been a formal pretermination confrontation between the employer and
the employee. The "ample opportunity to be heard" standard is neither synonymous nor

similar to a formal hearing. To confine the employees right to be heard to a solitary form
narrows down that right.20
The essence of due process is simply an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to explain one's side or an opportunity to seek
a reconsideration of the action or ruling complained of. What the law prohibits is absolute
absence of the opportunity to be heard, hence, a party cannot feign denial of due process
where he had been afforded the opportunity to present his side. A formal or trial type
hearing is not at all times and in all instances essential to due process, the requirements
of which are satisfied where the parties are afforded fair and reasonable opportunity to
explain their side of the controversy.21
In the present case, petitioners were, among other things, given several written invitations
to submit themselves to PLDTs Investigation Unit to explain their side, but they failed to
heed them. A hearing, which petitioners attended along with their union MKP
representatives, was conducted on June 25, 2001 during which the principal witnesses to
the incident were presented. Petitioners were thus afforded the opportunity to confront
those witnesses and present evidence in their behalf, but they failed to do so.
77
The COMELEC approved the parties formal offer of evidence and then required the
parties to submit their respective memoranda. The parties complied with the COMELECs
order. The case was thereafter submitted for resolution.
On March 2, 2009 the COMELEC transferred the Bulacan ballot boxes, including those
involved in the provincial election contest, to the Senate Electoral Tribunal (SET) in
connection with the protest filed by Aquilino Pimentel III against Juan Miguel Zubiri. In light
of this development, the petitioner moved to suspend further proceedings. .
The COMELECs Second Division denied the petitioners motion in its Order of April 29,
2009, ruling that the COMELEC has plenary powers to find alternative methods to
facilitate the resolution of the election protest; thus, it concluded that it would continue the
proceedings after proper coordination with the SET. The petitioner moved to reconsider
this Order, but the COMELECs Second Division denied the motion in its Order of May 26,
2009. These inter-related Resolutions led to the COMELECs continued action
specifically, the appreciation of ballots on the provincial election contest at the SET
offices.
SO ORDERED.
Allegedly alarmed by information on COMELEC action on the provincial election contest

within the SET premises without notice to him and without his participation, the petitioners
counsel wrote the SET Secretary, Atty. Irene Guevarra, a letter dated June 10, 2009 to
confirm the veracity of the reported conduct of proceedings.2 The SET Secretary
responded on June 17, 2009 as follows:
Mendoza vs. Comelec
x x x please be informed that the conduct of proceedings in COMELEC EPC No. 2007-44
(Pagdanganan vs. Mendoza) within the Tribunal Premises was authorized by then Acting
Chairman of the Tribunal, Justice Antonio T. Carpio, upon formal request of the Office of
Commissioner Lucenito N. Tagle.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated
September 28, 2007 is AFFIRMED.
The present case involves a clash between the power under the Philippine Constitution of
the respondent Commission on Elections (COMELEC) in the handling of a provincial
election contest, and the claimed due process rights of a party to the contest. The
petitioner Joselito R. Mendoza (the petitioner) essentially asserts in his petition
for certiorari1 that the COMELEC conducted proceedings in the election contest for the
gubernatorial position of the Province of Bulacan, between him and the respondent
Roberto M. Pagdanganan (the respondent), without due regard to his fundamental due
process rights. The COMELEC, on the other hand, claims that its decision-making
deliberations are internal, confidential and do not require notice to and the participation of
the contending parties.
Basis of such grant is Section 3, Comelec Resolution No. 2812 dated 17 October 1995,
stating that "(t)he Tribunals, the Commission and the Courts shall coordinate and make
arrangement with each other so as not to delay or interrupt the revision of ballots being
conducted. The synchronization of revision of ballots shall be such that the expeditious
disposition of the respective protest case shall be the primary concern." While the said
provision speaks only of revision, it has been the practice of the Tribunal to allow the
conduct of other proceedings in local election protest cases within its premises as may be
requested. [emphasis supplied]3
THE ANTECEDENTS
The SET Secretarys response triggered the filing of the present petition raising the
following ISSUES
The petitioner and the respondent vied for the position of Governor of the Province of
Bulacan in the May 14, 2007 elections. The petitioner was proclaimed winning candidate
and assumed the office of Governor.
The respondent seasonably filed an election protest with the COMELEC, which was
raffled to the Second Division and docketed as EPC No. 2007-44. Revision of ballots
involving the protested and counter-protested precincts in Angat, Bocaue, Calumpit, Doa
Remedios Trinidad, Guiginto, Malolos, Meycauayan, Norzagaray, Pandi, Paombong,
Plaridel, Pulilan, San Rafael and San Jose del Monte soon followed. The revision was
conducted at the COMELECs office in Intramuros. After revision, the parties presented
their other evidence, leading to the parties formal offer of their respective evidence.
THE PETITION
A. WHETHER OR NOT THE COMELEC VIOLATED DUE PROCESS BY CONDUCTING

PROCEEDINGS WITHOUT GIVING DUE NOTICE TO THE PETITIONER.
B. WHETHER OR NOT THE COMELEC GRAVELY ABUSED ITS DISCRETION
TANTAMOUNT TO AN EXCESS OF JURISDICTION IN APPRECIATING BALLOTS
WHICH ARE NOT IN ITS OFFICIAL CUSTODY AND ARE OUTSIDE ITS OWN
PREMISES, AUTHORITY AND CONTROL.
The petitioner argues that the election protest involves his election as Governor; thus, its
subject matter involves him and the people of the Province of Bulacan who elected him.
On this basis, he claims entitlement to notice and participation in all matters that involve or
are related to the election protest. He further asserts that he had the legitimate

78
expectation that no further proceedings would be held or conducted in the case after its
submission for decision.
After a preliminary finding of a genuine due process issue, we issued a Status Quo Order
on July 14, 2009.
Citing the commentaries of Father Joaquin Bernas,4 the petitioner argues that the
proceedings before the COMELEC in election protests are judicial in nature and character.
Thus, the strictures of judicial due process specifically, (a) opportunity to be heard and
(b) that judgment be rendered only after lawful hearing apply. Notices in judicial dispute,
he claims, are not really just a matter of courtesy; they are elementary fundamental
element of due process, they are part and parcel of a right of a party to be heard. He
further cites Justice Isagani A. Cruz,5 who wrote:
THE RESPONDENTS COMMENTS
x x x Every litigant is entitled to his day in court. He has a right to be notified of every
incident of the proceeding and to be present at every stage thereof so that he may be
heard by himself and counsel for the protection of his interest.
The petitioner claims that without notice to him of the proceedings, the due process
element of the right to have judgment only after lawful hearing is absent. There is no way,
he claims, that a judicial proceeding held without notice to the parties could be described
as a lawful hearing, especially a proceeding which has as its subject matter the sovereign
will of an entire province.
He was therefore denied his day in court, he claims, when the COMELEC conducted the
examination and appreciation of ballots. The proceedings should be stopped and declared
null and void; its future results, too, should be nullified, as nothing derived from the
anomalous and unconstitutional clandestine and unilateral proceedings should ever be
part of any decision that the COMELEC may subsequently render. The poisonous fruits
(derived from the proceedings) should have no part and should not be admitted for any
purpose and/or in any judicial proceeding.
Other than his due process concern, the petitioner takes issue with the COMELECs
appreciation of ballots even when the ballots and other election materials were no longer
in its official custody and were outside its premises, authority and control. He asserts that
an important element of due process is that the judicial body should have jurisdiction over
the property that is the subject matter of the proceedings. In this case, the COMELEC has
transferred possession, custody and jurisdiction over the ballots to the SET, a tribunal
separate and independent from the COMELEC and over which the COMELEC exercises
no authority or jurisdiction. For the COMELEC to still conduct proceedings on property,
materials and evidence no longer in its custody violates the principle of separation of
powers.
The petitioner also points out that the COMELECs unilateral appreciation of the ballots in
the SET premises deviates from the Commissions usual and time honored practice and
procedure of conducting proceedings within its premises and while it has custody over the
ballots. There is no precedent, according to the petitioner, for this deviation, nor is there
any compelling reason to make the present case an exception. Citing Cabagnot v.
Commission on Elections (G.R. No. 124383, August 9, 1996) which involves a transfer or
change of venue of the revision of ballots, the petitioner alleges that this Court has been
very emphatic in denouncing the COMELEC for its departure from its own rules and usual
practice; while Cabagnot involves the issue of change of venue, the petitioner finds
parallel applicability in the present case which also involves a deviation from COMELEC
rules and usual practice. The petitioner adds that the act of the Second Division is
effectively an arrogation of the authority to promulgate rules of procedure a power that
solely belongs to the COMELEC en banc.
In his Comment to the Petition with Extremely Urgent Motion to Lift/Dissolve Status Quo
Ante Order, the private respondent asserts that the petition contains deliberate falsehoods
and misleading allegations that led the Court to grant the injunctive relief the petitioner had
asked. He asserts that the "proceeding" the petitioner stated in his petition was actually
the COMELECs decision-making process, i.e., the appreciation of ballots, which is a
procedure internal to the Members of the Second Division of the COMELEC and their staff
members; no revision of ballots took place as revision had long been finished. What was
therefore undertaken within the SETs premises was unilateral COMELEC action that is
exclusive to the COMELEC and an internal matter that is confidential in nature. In this
light, no due process violation ever arose.
The private respondent also asserts that the petitioner cannot claim that he was not
notified of and denied participation in the revision proceedings, as the petitioner himself is
fully aware that the revision of the ballots was completed as early as July 28, 2008 and the
petitioner was present and actively participated in the entire proceedings, all the way to
the filing of the required memoranda. Thus, the petitioners right to due process was duly
satisfied.
The private respondent implores us to commence contempt proceedings against the
petitioner who, the respondent claims, has not been forthright in his submissions and was
not guided by the highest standards of truthfulness, fair play and nobility in his conduct as
a party and in his relations with the opposing party, the other counsel and the Court.
Lastly, the private respondent posits that the present petition was filed out of time i.e.,
beyond the reglementary period provided under Rule 64. All these reasons, the private
respondent argues, constitute sufficient basis for the lifting of the status quo order and the
dismissal of the petition.
Public respondent COMELEC, for its part, claims that the petition is without basis in fact
and in law and ought to be dismissed outright. Given the possibility of simultaneous
election contests involving national and local officials, it has institutionalized an order of
preference in the custody and revision of ballots in contested ballot boxes. The
established order of preference is not without exception, as the expeditious disposition of
protest cases is a primary concern. Additionally, the order of preference does not prevent
the COMELEC from proceeding with pending protest cases, particularly those already
submitted for decision. It claims that it has wide latitude to employ means to effectively
perform its duty in safeguarding the sanctity of the elections and the integrity of the ballot.
The COMELEC further argues that in the absence of a specific rule on whether it can
conduct appreciation of ballots outside its premises or official custody, the issue boils
down to one of discretion the authority of the COMELEC to control as it deems fit the
processes or incidents of a pending election protest. Under Section 4 of the COMELEC
Rules of Procedure, the COMELEC may use all auxiliary writs, processes and other
means to carry into effect its powers or jurisdiction; if the procedure to be followed in the
exercise of such power or jurisdiction is not specifically provided for by law or the Rules of
Procedure, any suitable process or proceeding not prohibited by law or by its rules may be
adopted.
The COMELEC lastly submits that while due process requires giving the parties an
opportunity to intervene in all stages of the proceedings, the COMELEC in the present

79
case is not actually conducting further proceedings requiring notice to the parties; there is
no revision or correction of the ballots, as the election protest had already been submitted
for resolution. When the COMELEC coordinated with the SET, it was simply for purposes
of resolving the submitted provincial election contest before it; the parties do not take part
in this aspect of the case which necessarily requires utmost secrecy. On the whole, the
petitioner was afforded every opportunity to present his case. To now hold the election
protest hostage until the conclusion of the protest pending before the SET defeats the
COMELECs mandate of ensuring free, orderly and honest election.
(1) Enforce and administer all laws and regulations relative to the conduct of an election,
plebiscite, initiative, referendum, and recall.
THE COURTS RULING
Decisions, final orders, or rulings of the Commission on election contests involving

elective municipal and barangay officials shall be final, executory, and not appealable.
We review the present petition on the basis of the combined application of Rules 64 and
65 of the Rules of Court. While COMELEC jurisdiction over the Bulacan election contest is
not disputed, the legality of subsequent COMELEC action is assailed for having been
undertaken with grave abuse of discretion amounting to lack or excess of jurisdiction.
Thus, our standard of review is "grave abuse of discretion," a term that defies exact
definition, but generally refers to "capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to
amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion and hostility."6 Mere abuse of discretion is not
enough; the abuse must be grave to merit our positive action.7
After due consideration, we find the petition devoid of merit.
The petition is anchored on the alleged conduct of proceedings in the election protest
following the completed revision of ballots at the SET premises without notice to and
without the participation of the petitioner. Significantly, "the conduct of proceedings" is
confirmed by the SET Secretary in the letter we quoted above.8 As the issues raised show
the petitioners focus is not really on the COMELEC Orders denying the suspension of
proceedings when the ballot boxes and other election materials pertinent to the election
contest were transferred to the SET; the focus is on what the COMELEC did after to the
issuance of the Resolutions. We read the petition in this context as these COMELEC
Orders are now unassailable as the period to challenge them has long passed.9
The substantive issue we are primarily called upon to resolve is whether there were
proceedings within the SET premises, entitling the petitioner to notice and participation,
which were denied to him; in other words, the issue is whether the petitioners right to due
process has been violated. A finding of due process violation, because of the inherent
arbitrariness it carries, necessarily amounts to grave abuse of discretion.
As a preliminary matter, we note that the petitioner has claimed that COMELEC exercises
judicial power in its action over provincial election contests and has argued its due
process position from this view. We take this opportunity to clarify that judicial power in our
country is "vested in one Supreme Court and in such lower courts as may be established
by law."10 This exclusive grant of authority to the Judiciary is reinforced under the second
paragraph of Section 1, Article VIII of the Constitution which further states that "Judicial
power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable.. .," thus constitutionally locating the
situs of the exercise of judicial power in the courts.
In contrast with the above definitions, Section 2, Article IX(C) of the Constitution lists the
COMELECs powers and functions, among others, as follows:
(2) Exercise exclusive original jurisdiction over all contests relating to the elections, returns
and qualifications of all elective regional, provincial, and city officials, and appellate
jurisdiction over all contests involving elective municipal officials decided by trial courts of
general jurisdiction, or involving electivebarangay officials by trial courts of limited
jurisdiction.
(3) Decide, except those involving the right to vote, all questions affecting elections,
including determination of the number and location of polling places, appointment of
election officials and inspectors, and registration of voters.
Under these terms, the COMELEC under our governmental structure is a constitutional
administrative agency and its powers are essentially executive in nature (i.e., to enforce
and administer election laws),11 quasi-judicial (to exercise original jurisdiction over
election contests of regional, provincial and city officials and appellate jurisdiction over
election contests of other lower ranking officials), and quasi-legislative (rulemaking on all
questions affecting elections and the promulgation of its rules of procedure).
Historically, the COMELEC has always been an administrative agency whose powers
have been increased from the 1935 Constitution to the present one, to reflect the countrys
awareness of the need to provide greater regulation and protection to our electoral
processes to ensure their integrity. In the 1935 Constitution, the powers and functions of
the COMELEC were defined as follows:
SECTION 2. The Commission on Elections shall have exclusive charge of the
enforcement and administration of all laws relative to the conduct of elections and shall
exercise all other functions which may be conferred upon it by law. It shall decide, save
those involving the right to vote, all administrative questions affecting elections, including
the determination of the number and location of polling places, and the appointment of
election inspectors and of other election officials. All law enforcement agencies and
instrumentalities of the Government, when so required by the Commission, shall act as its
deputies for the purpose of insuring free, orderly, and honest election. The decisions,
orders, and rulings of the Commission shall be subject to review by the Supreme Court.
[emphasis supplied]
These evolved into the following powers and functions under the 1973 Constitution:
(1) Enforce and administer all laws relative to the conduct of elections.
(2) Be the sole judge of all contests relating to the elections, returns, and qualifications of
all members of the National Assembly and elective provincial and city officials.
(3) Decide, save those involving the right to vote, administrative questions affecting
elections, including the determination of the number and location of polling places, the
appointment of election officials and inspectors, and the registration of voters.
These powers have been enhanced in scope and details under the 1987 Constitution, but
retained all the while the character of an administrative agency.
The COMELECs adjudicative function is quasi-judicial since it is a constitutional body,
other than a court, vested with authority to decide election contests, and in the course of

the exercise of its jurisdiction, to hold hearings and exercise discretion of a judicial
nature;12 it receives evidence, ascertain the facts from these submissions, determine the
law and the legal rights of the parties, and on the basis of all these decides on the merits
of the case and renders judgment.13 Despite the exercise of discretion that is essentially
judicial in character, particularly with respect to election contests, COMELEC is not a
tribunal within the judicial branch of government and is not a court exercising judicial
power in the constitutional sense;14 hence, its adjudicative function, exercised as it is in
the course of administration and enforcement, is quasi-judicial.
As will be seen on close examination, the 1973 Constitution used the unique wording that
the COMELEC shall "be the sole judge of all contests," thus giving the appearance that
judicial power had been conferred. This phraseology, however, was changed in the 1987
Constitution to give the COMELEC "exclusive jurisdiction over all contests," thus removing
any vestige of exercising its adjudicatory power as a court and correctly aligning it with
what it is a quasi-judicial body.15 Consistent with the characterization of its adjudicatory
power as quasi-judicial, the judicial review of COMELEC en banc decisions (together with
the review of Civil Service Commission decisions) is via the prerogative writ of certiorari,
not through an appeal, as the traditional mode of review of quasi-judicial decisions of
administrative tribunals in the exercise the Courts supervisory authority. This means that
the Court will not supplant the decision of the COMELEC as a quasi-judicial body except
where a grave abuse of discretion or any other jurisdictional error exists.
The appropriate due process standards that apply to the COMELEC, as an administrative
or quasi-judicial tribunal, are those outlined in the seminal case of Ang Tibay v. Court of
Industrial Relations,16 quoted below:
(1) The first of these rights is the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit evidence in support thereof. xxx
(2) Not only must the party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the tribunal must consider
the evidence presented.
(3) While the duty to deliberate does not impose the obligation to decide right, it does
imply a necessity which cannot be disregarded, namely, that of having something to
support its decision. A decision with absolutely nothing to support it is a nullity, a place
when directly attached.
(4) Not only must there be some evidence to support a finding or conclusion, but the
evidence must be "substantial." "Substantial evidence is more than a mere scintilla. It
means such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion."
(5) The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.
(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his
own independent consideration of the law and facts of the controversy, and not simply
accept the views of a subordinate in arriving at a decision.
(7) The Court of Industrial Relations should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can know the various issues
involved, and the reasons for the decisions rendered. The performance of this duty is
inseparable from the authority conferred upon it.
80
These are now commonly referred to as cardinal primary rights in administrative

proceedings.
The first of the enumerated rights pertain to the substantive rights of a party at hearing
stage of the proceedings. The essence of this aspect of due process, we have
consistently held, is simply the opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained of.17 A formal or trial-type hearing is not
at all times and in all instances essential; in the case of COMELEC, Rule 17 of its Rules of
Procedure defines the requirements for a hearing and these serve as the standards in the
determination of the presence or denial of due process.
The second, third, fourth, fifth, and sixth aspects of the Ang Tibay requirements are
reinforcements of the right to a hearing and are the inviolable rights applicable at the
deliberative stage, as the decision-maker decides on the evidence presented during the
hearing. These standards set forth the guiding considerations in deliberating on the case
and are the material and substantial components of decision-making. Briefly, the tribunal
must consider the totality of the evidence presented which must all be found in the records
of the case (i.e., those presented or submitted by the parties); the conclusion, reached by
the decision-maker himself and not by a subordinate, must be based on substantial
evidence.18
Finally, the last requirement, relating to the form and substance of the decision of a quasijudicial body, further complements the hearing and decision-making due process rights
and is similar in substance to the constitutional requirement that a decision of a court must
state distinctly the facts and the law upon which it is based.19 As a component of the rule
of fairness that underlies due process, this is the "duty to give reason" to enable the
affected person to understand how the rule of fairness has been administered in his case,
to expose the reason to public scrutiny and criticism, and to ensure that the decision will
be thought through by the decision-maker.
In the present case, the petitioner invokes both the due process component rights at the
hearing and deliberative stages and alleges that these component rights have all been
violated. We discuss all these allegations below.
The Right to Notice and to be Heard.
a. At the Hearing and Revision of Ballots.
Based on the pleadings filed, we see no factual and legal basis for the petitioner to
complain of denial of his hearing stage rights. In the first place, he does not dispute that
he fully participated in the proceedings of the election protest until the case was deemed
submitted for resolution; he had representation at the revision of the ballots, duly
presented his evidence, and summed up his case through a memorandum. These various
phases of the proceedings constitute the hearing proper of the election contest and the
COMELEC has more than satisfied the opportunity to be heard that the Ang Tibay hearing
stage rights require. In these proceedings, the petitioner stood head-to-head with the
respondent in an adversarial contest where both sides were given their respective rights to
speak, make their presentations, and controvert each others submission, subject only to
established COMELEC rules of procedures. Under these undisputed facts, both parties
had their day in court, so to speak, and neither one can complain of any denial of notice or
of the right to be heard.
b. At the "Proceedings" at the SET.

A critical question to be answered in passing upon due process questions at this stage of
the election contest is the nature of the so-called "proceedings" after the ballots and other
materials pertinent to the provincial election contest were transferred to the SET.
In the petition, the petitioner alleged that there were "strange proceedings"20 which were
"unilateral, clandestine and surreptitious" within the premises of the SET, on "documents,
ballots and election materials whose possession and custody have been transferred" to
the SET, and the "petitioner was NEVER OFFICIALLY NOTIFIED of the strange ongoings" at the SET.21 Attached to the petition was the letter of the Secretary of the SET
confirming the "conduct of proceedings" in the provincial election contest, and citing as
basis the authority of Acting SET Chairman, Justice Antonio T. Carpio, upon the formal
request of the Office of Commissioner Lucenito N. Tagle, and citing Section 3, COMELEC
Resolution No. 2812 dated 17 October 1995 on the coordination envisioned among the
COMELEC, the SET and the courts "so as not to delay or interrupt the revision of ballots
being conducted." While the SET letter made the reservation that "While the said provision
speaks only of revision, it has been the practice of the Tribunal to allow the conduct of
other proceedings in local election protest cases within its premises as may be
requested," no mention whatsoever was made of the kind of proceedings taking place.
It was at this point that this Court intervened, in response to the petitioners prayer for the
issuance of temporary injunctive relief, through the issuance of a Status Quo Order with a
non-extendible directive for the respondents to file their comments on the petition; for
indeed, any further revision of ballots or other adversarial proceedings after the case has
been submitted for resolution, would not only be strange and unusual but would indicate a
gross violation of due process rights.
After consideration of the respondents Comments and the petitioners petition and Reply,
we hold that the contested proceedings at the SET ("contested proceedings) are no longer
part of the adversarial aspects of the election contest that would require notice of hearing
and the participation of the parties. As the COMELEC stated in its Comment and without
any contrary or disputing claim in the petitioners Reply:22
"However, contrary to the claim of petitioner, public respondent in the appreciation of the
contested ballots in EPC No. 2007-44 simultaneously with the SET in SET Case No. 00107 is not conducting "further proceedings" requiring notice to the parties. There is no
revision or correction of the ballots because EPC No. 2007-04 was already submitted for
resolution. Public respondent, in coordinating with the SET, is simply resolving the
submitted protest case before it. The parties necessarily take no part in said deliberation,
which require utmost secrecy. Needless to state, the actual decision-making process is
supposed to be conducted only by the designated members of the Second Division of the
public respondent in strict confidentiality."
In other words, what took place at the SET were the internal deliberations of the
COMELEC, as a quasi-judicial body, in the course of appreciating the evidence presented
and deciding the provincial election contest on the merits. These deliberations are no
different from judicial deliberations which are considered confidential and privileged.23 We
find it significant that the private respondents Comment fully supported the COMELECs
position and disavowed any participation in the contested proceeding the petitioner
complained about. The petitioner, on the other hand, has not shown that the private
respondent was ever present in any proceeding at the SET relating to the provincial
election contest.
To conclude, the rights to notice and to be heard are not material considerations in the
COMELECs handling of the Bulacan provincial election contest after the transfer of the
81
ballot boxes to the SET; no proceedings at the instance of one party or of COMELEC has
been conducted at the SET that would require notice and hearing because of the
possibility of prejudice to the other party. The COMELEC is under no legal obligation to
notify either party of the steps it is taking in the course of deliberating on the merits of the
provincial election contest. In the context of our standard of review for the petition, we see
no grave abuse of discretion amounting to lack or excess of jurisdiction committed by the
COMELEC in its deliberation on the Bulacan election contest and the appreciation of
ballots this deliberation entailed.
Alleged Violations of
Deliberation Stage Rights.
On the basis of the above conclusion, we see no point in discussing any alleged violation
of the deliberative stage rights. First, no illegal proceeding ever took place that would bear
the "poisonous fruits" that the petitioner fears. Secondly, in the absence of the results of
the COMELEC deliberations through its decision on the election protest, no basis exists to
apply the Ang Tibay deliberative stage rights; there is nothing for us to test under the
standards of the due process deliberative stages rights before the COMELEC renders its
decision. Expressed in terms of our standard of review, we have as yet no basis to
determine the existence of any grave abuse of discretion.
Conduct of COMELEC
Deliberations at the SET Premises
We turn to the issue of the propriety of the COMELECs consideration of the provincial
election contest (specifically its appreciation of the contested ballots) at the SET premises
and while the same ballots are also under consideration by the SET for another election
contest legitimately within the SETs own jurisdiction.
We state at the outset that the COMELEC did not lose jurisdiction over the provincial
election contest, as the petitioner seems to imply, because of the transmittal of the
provincial ballot boxes and other election materials to the SET. The Constitution conferred
upon the COMELEC jurisdiction over election protests involving provincial officials. The
COMELEC in this case has lawfully acquired jurisdiction over the subject matter, i.e., the
provincial election contest, as well as over the parties. After its jurisdiction attached, this
jurisdiction cannot be ousted by subsequent events such as the temporary transfer of
evidence and material records of the proceedings to another tribunal exercising its own
jurisdiction over another election contest pursuant to the Constitution. This is the rule of
adherence of jurisdiction.24
Thus, the jurisdiction of the COMELEC over provincial election contest exists side by side
with the jurisdiction of the Senate Electoral Tribunal, with each tribunal being supreme in
their respective areas of concern (the Senate election contests for the SET, and the
regional, provincial and city election contests for the COMELEC), and with neither one
being higher than the other in terms of precedence so that the jurisdiction of one must
yield to the other.
But while no precedence in jurisdiction exists, the COMELEC, vowing to the reality that
only a single ballot exists in an election for national and local officials, saw it fit to lay down
the rule on the "order of preference in the custody and revision of ballots and other
documents contained in the ballot boxes." The order, in terms of the adjudicatory tribunal
and as provided in COMELEC Resolution No. 2812, runs:
1. Presidential Electoral Tribunal;

2. Senate Electoral Tribunal;

3. House of Representatives Electoral Tribunal;
4. Commission on Elections; and
5. Regional Trial Courts.
This order of preference dictated that the ballot boxes and other election materials in
Bulacans provincial election contest, had to be transferred to the SET when the latter
needed these materials for its revision of ballots. The transfer to the SET, however, did not
mean that the Bulacan provincial election contest at that time already submitted for
decision had to be suspended as the COMELEC held in its Orders of 29 April 2009 and
26 May 2009 in EPC No. 2007-44.25 This is particularly true in Bulacans case as no
revision had to be undertaken, the revision having been already terminated.
With the COMELEC retaining its jurisdiction over the Bulacan provincial election contest,
the legal effect of the physical transfer of the ballots and other election materials to the
SET for purposes of its own revision becomes a non-issue, given the arrangement
between the COMELEC and the SET, pursuant to COMELEC Resolution No. 2812, to
"coordinate and make arrangements with each other so as not to delay or interrupt the
revision of ballots being conducted," all for the purpose of the expeditious disposition of
their respective protest cases. The SET itself honored this arrangement as shown by the
letter of the SET Secretary that the COMELEC could "conduct proceedings" within the
Tribunal premises as authorized by the Acting Chairman of the Tribunal, Justice Antonio T.
Carpio.26 This arrangement recognized the COMELECs effective authority over the
Bulacan ballots and other election materials, although these were temporarily located at
the SET premises. This arrangement, too, together with the side by side and nonconflicting existence of the COMELEC and SET jurisdictions, negate the validity of the
petitioners argument that the COMELEC transgressed the rule on separation of powers
when it acted on the Bulacan provincial election contest while the ballot boxes were at the
SET premises. Rather than negate, this arrangement reinforced the separate but coexisting nature of these tribunals respective jurisdictions.1avvphi1
As the petitioner argues and the COMELEC candidly admits, "there is no specific rule
which allows the COMELEC to conduct an appreciation of ballots outside its premises and
of those which are outside its own custody."27 But while this is true, there is likewise
nothing to prohibit the COMELEC from undertaking the appreciation of ballot side by side
with the SETs own revision of ballots for the senatorial votes, in light especially of the
COMELECs general authority to adopt means to effect its powers and jurisdiction under
its Rules of Procedure. Section 4 of these Rules states:
Sec. 4. Means to Effect Jurisdiction. - All auxiliary writs, processes and other means
necessary to carry into effect its powers or jurisdiction may be employed by the
Commission; and if the procedure to be followed in the exercise of such power or
jurisdiction is not specifically provided for by law or these rules, any suitable process or
proceeding may be adopted.
This rule is by no means unusual and unique to the COMELEC as the courts have the
benefit of this same type of rule under Section 6, Rule 136 of the Rules of Court. The
courts own rule provides:
Means to Carry Jurisdiction into Effect. When by law jurisdiction is conferred o n a court or
judicial officer, all auxiliary writs, writs, processes and other means necessary to carry it
into effect may be employed by such court or officer; and if the procedure to be followed in
82
the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears conformable to
the spirit of said law or rules.
Incidentally, the COMELEC authority to promulgate the above rule enjoys constitutional
moorings; in the grant to the COMELEC of its jurisdiction, the Constitution provided it with
the accompanying authority to promulgate its own rules concerning pleadings and practice
before it or before any of its offices, provided that these rules shall not diminish, increase
or modify substantive rights.28 The Constitution additionally requires that the rules of
procedure that the COMELEC will promulgate must expedite the disposition of election
cases, including pre-proclamation controversies.29 This constitutional standard is
authority, no less, that the COMELEC can cite in defending its action. For ultimately, the
appreciation of the Bulacan ballots that the COMELEC undertook side by side with the
SETs own revision of ballots, constitutes an exercise of discretion made under the
authority of the above-cited COMELEC rule of procedure.
On the basis of the standards set by Section 4 of the COMELEC Rules of Procedure, and
of the Constitution itself in the handling of election cases, we rule that the COMELEC
action is a valid exercise of discretion as it is a suitable and reasonable process within the
exercise of its jurisdiction over provincial election contests, aimed at expediting the
disposition of this case, and with no adverse, prejudicial or discriminatory effects on the
parties to the contest that would render the rule unreasonable.
Since the COMELEC action, taken by its Second Division, is authorized under the
COMELEC Rules of Procedure, the Second Division cannot in any sense be said to be
intruding into the COMELEC en banc rule-making prerogative when the Second Division
chose to undertake ballot appreciation within the SET premises side by side with the SET
revision of ballots. To be exact, the Second Division never laid down any new rule; it
merely acted pursuant to a rule that the COMELEC en banc itself had previously enacted.
In light of these conclusions, we need not discuss the other issues raised.
WHEREFORE, premises considered, we DISMISS the petition for certiorari for lack of
merit. We accordingly LIFT the STATUS QUO ORDER we issued, effective immediately.
SO ORDERED.
Surigao Electric vs. ERC

Assailed in this petition for review on certiorari1 under Rule 45 of the Rules of Court are
the Decision dated April 17, 20082 and the Resolution dated June 25, 20083 of the Court
of Appeals (CA) in CA-G.R. SP No. 99781.
The antecedent facts and proceedings follow
Petitioner Surigao Del Norte Electric Cooperative, Inc. (SURNECO) is a rural electric
cooperative organized and existing by virtue of Presidential Decree No. 269.
On February 8, 1996, the Association of Mindanao Rural Electric Cooperatives, as
representative of SURNECO and of the other 33 rural electric cooperatives in Mindanao,
filed a petition before the then Energy Regulatory Board (ERB) for the approval of the
formula for automatic cost adjustment and adoption of the National Power Corporation
(NPC) restructured rate adjustment to comply with Republic Act (R.A.) No. 7832.4 The

83
case was docketed as ERB Case No. 96-49, and later consolidated with identical petitions
of other associations of electric cooperatives in the Philippines.
amended Purchased Power Adjustment Clause that would reflect the new system loss cap
to be included in its schedule of rates.
The relevant provisions of R.A. No. 7832 for compliance are Sections 10 and 14, which
provide
The automatic cost adjustment of every electric cooperative shall be guided by the
following formula:
Sec. 10. Rationalization of System Losses by Phasing Out Pilferage Losses as a

Component Thereof. There is hereby established a cap on the recoverable rate of
system losses as follows:
Purchased Power Adjustment Clause

A
(PPA) =
xxxx
B (C + D)
(b) For rural electric cooperatives:

(i) Twenty-two percent (22%) at the end of the first year following the effectivity of this Act;
Where:
(ii) Twenty percent (20%) at the end of the second year following the effectivity of this Act;
A = Cost of electricity purchased and generated for the previous month
(iii) Eighteen percent (18%) at the end of the third year following the effectivity of this Act;
B = Total Kwh purchased and generated for the previous month
(iv) Sixteen percent (16%) at the end of the fourth year following the effectivity of this Act;
and
C = The actual system loss but not to exceed the maximum recoverable rate of system
loss in Kwh plus actual company use in kwhrs but not to exceed 1% of total kwhrs
purchased and generated
(v) Fourteen percent (14%) at the end of the fifth year following the effectivity of this Act.
Provided, that the ERB is hereby authorized to determine at the end of the fifth year
following the effectivity of this Act, and as often as is necessary, taking into account the
viability of rural electric cooperatives and the interest of consumers, whether the caps
herein or theretofore established shall be reduced further which shall, in no case, be lower
than nine percent (9%) and accordingly fix the date of the effectivity of the new caps.
xxxx
Sec. 14. Rules and Regulations. The ERB shall, within thirty (30) working days after the
conduct of hearings which must commence within thirty (30) working days upon the
effectivity of this Act, issue the rules and regulation as may be necessary to ensure the
efficient and effective implementation of the provisions of this Act, to include but not limited
to, the development of methodologies for computing the amount of electricity illegally used
and the amount of payment or deposit contemplated in Section 7 hereof as a result of the
presence of the prima facie evidence discovered.
Corollary thereto, Sections 4 and 5 of Rule IX of the Implementing Rules and Regulations
(IRR) of R.A. No. 7832 provide
Section 4. Caps on System Loss allowed to Rural Electric Cooperatives. The maximum
rate of system loss that the cooperative can pass on to its customers shall be as follows:
a. Twenty-two percent (22%) effective on February 1996 billing.
b. Twenty percent (20%) effective on February 1997 billing.
c. Eighteen percent (18%) effective on February 1998 billing.
d. Sixteen percent (16%) effective on February 1999 billing.
e. Fourteen percent (14%) effective on February 2000 billing.
Section 5. Automatic Cost Adjustment Formula. Each and every cooperative shall file
with the ERB, on or before September 30, 1995, an application for approval of an
D = kwh consumed by subsidized consumers

E = Applicable base cost of power equal to the amount incorporated into their basic rate
per kwh.
In an Order5 dated February 19, 1997, the ERB granted SURNECO and other rural
electric cooperatives provisional authority to use and implement the Purchased Power
Adjustment (PPA) formula pursuant to the mandatory provisions of R.A. No. 7832 and its
IRR, with a directive to submit relevant and pertinent documents for the Boards review,
verification, and confirmation.
In the meantime, the passage of R.A. No. 91366 led to the creation of the Energy
Regulatory Commission (ERC), replacing and succeeding the ERB. All pending cases
before the ERB were transferred to the ERC. ERB Case No. 96-49 was re-docketed as
ERC Case No. 2001-343.
In the Order dated June 17, 2003, the ERC clarified ERBs earlier policy regarding the
PPA formula to be used by the electric cooperatives, viz.
After a careful evaluation of the records, the Commission noted that the PPA formula
which was approved by the ERB was silent on whether the calculation of the cost of
electricity purchased and generated in the formula should be "gross" or "net" of the
discounts.
Let it be noted that the power cost is said to be at "gross" if the discounts are not passedon to the end-users whereas it is said to be at "net" if the said discounts are passed-on to
the end-users.
To attain uniformity in the implementation of the PPA formula, the Commission has
resolved that:
1. In the confirmation of past PPAs, the power cost shall still be based on "gross," and
2. In the confirmation of future PPAs, the power cost shall be based on "net."

The electric cooperatives filed their respective motions for clarification and/or
reconsideration. Hence, the ERC issued an Order7 dated January 14, 2005, stating that
the PPA was a cost-recovery mechanism, not a revenue-generating scheme, so that the
distribution utilities or the electric cooperatives must recover from their customers only the
actual cost of purchased power. The ERC thus adopted a new PPA policy, to wit
A. The computation and confirmation of the PPA prior to the Commissions Order dated
June 17, 2003 shall be based on the approved PPA Formula;
B. The computation and confirmation of the PPA after the Commissions Order dated June
17, 2003 shall be based on the power cost "net" of discount; and
C. If the approved PPA Formula is silent on the terms of discount, the computation and
confirmation of the PPA shall be based on the power cost at "gross," subject to the
submission of proofs that said discounts are being extended to the end-users.8
Thereafter, the ERC continued its review, verification, and confirmation of the electric
cooperatives implementation of the PPA formula based on the available data and
information submitted by the latter.
On March 19, 2007, the ERC issued its assailed Order,9 mandating that the discounts
earned by SURNECO from its power supplier should be deducted from the computation of
the power cost, disposing in this wise
WHEREFORE, the foregoing premises considered, the Commission hereby confirms the
Purchased Power Adjustment (PPA) of Surigao del Norte Electric Cooperative, Inc.
(SURNECO) for the period February 1996 to July 2004 which resulted to an over-recovery
amounting to EIGHTEEN MILLION ONE HUNDRED EIGHTY EIGHT THOUSAND
SEVEN HUNDRED NINETY FOUR PESOS (PhP18,188,794.00) equivalent to
PhP0.0500/kwh. In this connection, SURNECO is hereby directed to refund the amount of
PhP0.0500/kwh to its Main Island consumers starting the next billing cycle from receipt of
this Order until such time that the full amount shall have been refunded.
The Commission likewise confirms the PPA of SURNECO for its Hikdop Island consumers
for the period February 1996 to July 2004 which resulted to an under-recovery amounting
to TWO MILLION FOUR HUNDRED SEVENTY EIGHT THOUSAND FORTY FIVE
PESOS (PhP2,478,045.00). SURNECO is hereby authorized to collect from its Hikdop
Island consumers the amount of PhP0.0100/kwh starting the next billing cycle from receipt
of this Order until such time that the full amount shall have been collected.
Accordingly, SURNECO is directed to:
a) Reflect the PPA refund/collection as a separate item in the bill using the phrase
"Previous Years Adjustment on Power Cost";
b) Submit, within ten (10) days from its initial implementation of the refund/collection, a
sworn statement indicating its compliance with the aforecited directive; and
c) Accomplish and submit a report in accordance with the attached prescribed format, on
or before the 30th day of January of the succeeding year and every year thereafter until
the amount shall have been fully refunded/collected.
SO ORDERED.10
SURNECO filed a motion for reconsideration, but it was denied by the ERC in its
Order11 dated May 29, 2007 on the ground that the motion did not raise any new matter
which was not already passed upon by the ERC.
84
Aggrieved, SURNECO went to the CA via a petition for review,12 with prayer for the
issuance of a temporary restraining order and preliminary injunction, seeking the
annulment of the ERC Orders dated March 19, 2007 and May 29, 2007.
In its Decision dated April 17, 2008, the CA denied SURNECOs petition and affirmed the
assailed Orders of the ERC.
On June 25, 2008, upon motion for reconsideration13 of SURNECO, the CA issued its
Resolution denying the same.
Hence, this petition, with SURNECO ascribing error to the CA and the ERC in: (1)
disallowing its use of the multiplier scheme to compute its systems loss; (2) ordering it to
deduct from the power cost or refund to its consumers the discounts extended to it by its
power supplier, NPC; and (3) ordering it to refund alleged over-recoveries arrived at by the
ERC without giving SURNECO the opportunity to be heard.
The petition should be denied.
First. SURNECO points out that the National Electrification Administration (NEA), which
used to be the government authority charged by law with the power to fix rates of rural
electric cooperatives, entered into a loan agreement with the Asian Development Bank
(ADB). The proceeds of the loan were intended for use by qualified rural electric
cooperatives, SURNECO included, in their rehabilitation and expansion projects. The loan
agreement imposed a 15% system loss cap, but provided a Power Cost Adjustment
Clause authorizing cooperatives to charge and show "system losses in excess of 15%" as
a separate item in their consumers bill. Thus, the cooperatives charged their consumermembers "System Loss Levy" for system losses in excess of the 15% cap.
SURNECO states that, in January 1984, it was authorized by the NEA that all increases in
the NPC power cost (in case of NPC-connected cooperatives) shall be uniformly passed
on to the member-consumers using the 1.4 multiplier, which is divided into 1.3 as
allowance for 23% system loss and 0.1 as provision for the corresponding increase in
operating expenses to partly offset the effects of inflation.14 Subsequently, the NEA,
through NEA Memorandum No. 1-A dated March 30, 1992, revised the aforesaid issuance
as follows
Pursuant to NEA Board Resolution No. 98, Series of 1991, x x x, the revised cooperatives
multiplier will be as follows:
1.2 Rural Electric Cooperatives (RECs) with system loss of 15% and below;
1.3 RECs with system loss ranging from 16% to 22%;
1.4 RECs with system loss of 23% and above.
SURNECO posits that, per NEA Memorandum No. 1-A, the NEA had authorized it to
adopt a multiplier scheme as the method to recover system loss. It claims that this cannot
be abrogated, revoked, or superseded by any order, resolution, or issuance by the ERC
prescribing a certain formula to implement the caps of recoverable rate of system loss
under R.A. No. 7832 without violating the non-impairment clause15 of the Constitution.
We disagree. SURNECO cannot insist on using the multiplier scheme even after the
imposition of the system loss caps under Section 10 of R.A. No. 7832. The law took effect
on January 17, 1995. Perusing Section 10, and also Section 11,16 providing for the
application of the caps as of the date of the effectivity of R.A. No. 7832, readily shows that
the imposition of the caps was self-executory and did not require the issuance of any

enabling set of rules or any action by the then ERB, now ERC. Thus, the caps should
have been applied as of January 17, 1995 when R.A. No. 7832 took effect.
Indeed, under NEA Memorandum No. 1-A, the use of the multiplier scheme allows the
recovery of system losses even beyond the caps mandated in R.A. No. 7832, which is
intended to gradually phase out pilferage losses as a component of the recoverable
system losses by the distributing utilities such as SURNECO. However, it is totally
repugnant to and incompatible with the system loss caps established in R.A. No. 7832,
and is repealed by Section 1617 of the law. As between NEA Memorandum No. 1-A, a
mere administrative issuance, and R.A. No. 7832, a legislative enactment, the latter must
prevail.18
Second. The ERC was merely implementing the system loss caps in R.A. No. 7832 when
it reviewed and confirmed SURNECOS PPA charges, and ordered the refund of the
amount collected in excess of the allowable system loss caps through its continued use of
the multiplier scheme. As the ERC held in its March 19, 2007 Order
On January 14, 2005, the Commission issued an Order adopting a new PPA policy as
follows: (a) the computation and confirmation of the PPA prior to the Commissions Order
dated June 17, 2003 shall be based on the approved PPA Formula; (b) the computation
and confirmation of the PPA after the Commissions Order dated June 17, 2003 shall be
based on the power cost "net" of discount; and (c) if the approved PPA Formula is silent in
terms of discount, the computation and confirmation of the PPA shall be based on the
power cost at "gross" reduced by the amount of discounts extended to customers, subject
to the submission of proofs that said discounts are indeed being extended to customers.
b.1. If a DU bills at gross (i.e., gross power cost not reduced by discounts from power
supplier/s) and the DU is extending discounts to end-users, the actual revenue shall be
calculated as: gross power revenue less discounts extended to end-users. The result shall
then be compared to the allowable power cost; and
b.2. If a DU bills at gross (i.e., gross power cost not reduced by discounts from power
supplier/s) and the DU is not extending discounts to end-users, the actual revenue shall
be taken as is which shall be compared to the allowable power cost.
IV. In the calculation of the DUs actual revenues, the amount of discounts extended to
end-users shall, in no case, be higher than the discounts availed by the DU from its power
supplier/s.
The foregoing clarification was intended to ensure that only the actual costs of purchased
power are recovered by the DUs.
In the meantime, SURNECO submitted reports on its monthly implementation of the PPA
covering the period January 1998 to July 2004 and attended the conferences conducted
by the Commission on December 11, 2003 and May 4, 2005 relative thereto.
The Commission evaluated SURNECOs monthly PPA implementation covering the period
February 1996 to July 2004, which disclosed the following:
Schedule 1, Main Island
Period Covered
However, the Commission deemed it appropriate to clarify its PPA confirmation process
particularly on the treatment of the Prompt Payment Discount (PPD) granted to distribution
utilities (DUs) by their power suppliers, to wit:
I. The over-or-under recovery will be determined by comparing the allowable power cost
with the actual revenue billed to end-users.
II. Calculation of the DUs allowable power cost as prescribed in the PPA formula:
a. If the PPA formula explicitly provides the manner by which discounts availed from the
power supplier/s shall be treated, the allowable power cost will be computed based on the
specific provision of the formula, which may either be at "net" or "gross"; and
b. If the PPA formula is silent in terms of discounts, the allowable power cost will be
computed at "net" of discounts availed from the power supplier/s, if there be any.
III. Calculation of DUs actual revenues/actual amount billed to end-users.
a. On actual PPA computed at net of discounts availed from power supplier/s:
a.1. If a DU bills at net of discounts availed from the power supplier/s (i.e., gross power
cost minus discounts from power supplier/s) and the DU is not extending discounts to endusers, the actual revenue should be equal to the allowable power cost; and
a.2. If a DU bills at net of discounts availed from the power supplier/s (i.e., gross power
cost minus discounts from power supplier/s) and the DU is extending discounts to endusers, the discount extended to end-users shall be added back to the actual revenue.
b. On actual PPA computed at gross:
85
Over
(Under)
Recoveries
(In PhP)
Over
(Under)
(In kWh)
20,737,074
0.2077
February
1996
December 1998
to
January
July 2004
to (2,548,280)
1999
TOTAL
18,188,794
Recove
(0.0097)
0.0500
Schedule 2, Municipality of Hikdop

February
December
PPA
Cha[r]ge
January
July 2004
1996
Plus
1999
to 70,235
1998
Basic
to
TOTAL
The over-recoveries were due to the following:
0.3190
(2,548,280)
(0.0097)
(2,478,045)
(0.0100)

1. For the period February 1996 to December 1998, SURNECOs PPA computation
included the power cost and the corresponding kWh purchased from Hikdop end-users.
The Commission excluded those months which SURNECO did not impose variable
charges to Hikdop end-user which resulted to a total net over-recovery of
PhP21,245,034.00; and
2. SURNECOs basic charge for Hikdop end-users were beyond the approved basic
charge for the period February 1996 to September 1998 resulting to a net over-recovery of
PhP128,489.00.
SURNECOs under recoveries for the period January 1999 to June 2004 were due to the
following:
1. For the period August 2001 to June 2004, SURNECO erroneously deducted the Power
Act Reduction Adjustments (PARA) in the total purchased power cost of its PPA
computation resulting to an under-recovery of PhP1,377,763.00;
2. SURNECOs power cost and kWh computation includes Dummy Load resulting to an
under recovery amounting to PhP226,196.00; and
3. The new grossed-up factor scheme adopted by the Commission which provided a trueup mechanism to allow the DUs to recover the actual costs of purchased power.19
In directing SURNECO to refund its over-recoveries based on PPA policies, which only
ensured that the PPA mechanism remains a purely cost-recovery mechanism and not a
revenue-generating scheme for the electric cooperatives, the ERC merely exercised its
authority to regulate and approve the rates imposed by the electric cooperatives on their
consumers. The ERC simply performed its mandate to protect the public interest imbued
in those rates.
It is beyond cavil that the State, in the exercise of police power, can regulate the rates
imposed by a public utility such as SURNECO. As we held in Republic of the Philippines v.
Manila Electric Company20
The regulation of rates to be charged by public utilities is founded upon the police powers
of the State and statutes prescribing rules for the control and regulation of public utilities
are a valid exercise thereof. When private property is used for a public purpose and is
affected with public interest, it ceases to be juris privati only and becomes subject to
regulation. The regulation is to promote the common good. Submission to regulation may
be withdrawn by the owner by discontinuing use; but as long as use of the property is
continued, the same is subject to public regulation.
Likewise, SURNECO cannot validly assert that the caps set by R.A. No. 7832 are
arbitrary, or that they violate the non-impairment clause of the Constitution for allegedly
traversing the loan agreement between NEA and ADB. Striking down a legislative
enactment, or any of its provisions, can be done only by way of a direct action, not through
a collateral attack, and more so, not for the first time on appeal in order to avoid
compliance. The challenge to the laws constitutionality should also be raised at the
earliest opportunity.21
Even assuming, merely for arguments sake, that the ERC issuances violated the NEA
and ADB covenant, the contract had to yield to the greater authority of the States exercise
of police power. It has long been settled that police power legislation, adopted by the State
to promote the health, morals, peace, education, good order, safety, and general welfare
of the people prevail not only over future contracts but even over those already in
86
existence, for all private contracts must yield to the superior and legitimate measures
taken by the State to promote public welfare.22
SURNECO also avers that the Electric Power Industry Reform Act of 2001 (EPIRA)
removed the alleged arbitrary caps in R.A. No. 7832. We differ. The EPIRA allows the
caps to remain until replaced by the caps to be determined by the ERC, pursuant to its
delegated authority under Section 4323 of R.A. No. 9136 to prescribe new system loss
caps, based on technical parameters such as load density, sales mix, cost of service,
delivery voltage, and other technical considerations it may promulgate.
Third. We also disagree with SURNECO in its insistence that the PPA confirmation
policies constituted an amendment to the IRR of R.A. No. 7832 and must, therefore,
comply with the publication requirement for the effectivity of administrative issuances.
The PPA formula provided in the IRR of R.A. No. 7832 was only a model to be used as a
guide by the electric cooperatives in proposing their own PPA formula for approval by the
then ERB. Sections 4 and 5, Rule IX of the IRR directed the electric cooperatives to apply
for approval of such formula with the ERB so that the system loss caps under the law
would be incorporated in their computation of power cost adjustments. The IRR did not
provide for a specific formula; therefore, there was nothing in the IRR that was amended
or could have been amended relative to the PPA formula. The IRR left to the ERB, now
the ERC, the authority to approve and oversee the implementation of the electric
cooperatives PPA formula in the exercise of its rate-making power over them.1avvphi1
We likewise differ from SURNECOs stance that it was denied due process when the ERC
issued its questioned Orders. Administrative due process simply requires an opportunity to
explain ones side or to seek reconsideration of the action or ruling complained of.24 It
means being given the opportunity to be heard before judgment, and for this purpose, a
formal trial-type hearing is not even essential. It is enough that the parties are given a fair
and reasonable chance to demonstrate their respective positions and to present evidence
in support thereof.25
Verily, the PPA confirmation necessitated a review of the electric cooperatives monthly
documentary submissions to substantiate their PPA charges. The cooperatives were duly
informed of the need for other required supporting documents and were allowed to submit
them accordingly. In fact, hearings were conducted. Moreover, the ERC conducted exit
conferences with the electric cooperatives representatives, SURNECO included, to
discuss preliminary figures and to double-check these figures for inaccuracies, if there
were any. In addition, after the issuance of the ERC Orders, the electric cooperatives were
allowed to file their respective motions for reconsideration. It cannot be gainsaid,
therefore, that SURNECO was not denied due process.
Finally, the core of the issues raised is factual in character. It needs only to be reiterated
that factual findings of administrative bodies on technical matters within their area of
expertise should be accorded not only respect but even finality if they are supported by
substantial evidence even if not overwhelming or preponderant,26 more so if affirmed by
the CA. Absent any grave abuse of discretion on the part of ERC, we must sustain its
findings. Hence, its assailed Orders, following the rule of non-interference on matters
addressed to the sound discretion of government agencies entrusted with the regulation of
activities coming their special technical knowledge and training, must be upheld.27
WHEREFORE, the petition is DENIED. The Decision dated April 17, 2008 and the
Resolution dated June 25, 2008 of the Court of Appeals in CA-G.R. SP No. 99781 are
AFFIRMED. Costs against petitioner.

SO ORDERED.
Southern Hemisphere vs. Anti-Terrorism

Before the Court are six petitions challenging the constitutionality of Republic Act No. 9372
(RA 9372), "An Act to Secure the State and Protect our People from Terrorism," otherwise
known as the Human Security Act of 2007,1signed into law on March 6, 2007.
Following the effectivity of RA 9372 on July 15, 2007,2 petitioner Southern Hemisphere
Engagement Network, Inc., a non-government organization, and Atty. Soliman Santos, Jr.,
a concerned citizen, taxpayer and lawyer, filed a petition for certiorari and prohibition on
July 16, 2007 docketed as G.R. No. 178552. On even date, petitioners Kilusang Mayo
Uno (KMU), National Federation of Labor Unions-Kilusang Mayo Uno (NAFLU-KMU), and
Center for Trade Union and Human Rights (CTUHR), represented by their respective
officers3 who are also bringing the action in their capacity as citizens, filed a petition for
certiorari and prohibition docketed as G.R. No. 178554.
The following day, July 17, 2007, organizations Bagong Alyansang Makabayan (BAYAN),
General Alliance Binding Women for Reforms, Integrity, Equality, Leadership and Action
(GABRIELA), Kilusang Magbubukid ng Pilipinas (KMP), Movement of Concerned Citizens
for Civil Liberties (MCCCL), Confederation for Unity, Recognition and Advancement of
Government Employees (COURAGE), Kalipunan ng Damayang Mahihirap (KADAMAY),
Solidarity of Cavite Workers (SCW), League of Filipino Students (LFS), Anakbayan,
Pambansang Lakas ng Kilusang Mamamalakaya (PAMALAKAYA), Alliance of Concerned
Teachers (ACT), Migrante, Health Alliance for Democracy (HEAD), and Agham,
represented by their respective officers,4 and joined by concerned citizens and taxpayers
Teofisto Guingona, Jr., Dr. Bienvenido Lumbera, Renato Constantino, Jr., Sister Mary
John Manansan, OSB, Dean Consuelo Paz, Atty. Josefina Lichauco, Retired Col. Gerry
Cunanan, Carlitos Siguion-Reyna, Dr. Carolina Pagaduan-Araullo, Renato Reyes, Danilo
Ramos, Emerenciana de Jesus, Rita Baua and Rey Claro Casambre filed a petition for
On August 6, 2007, Karapatan and its alliance member organizations Hustisya,
Desaparecidos, Samahan ng mga Ex-Detainees Laban sa Detensyon at para sa
Amnestiya (SELDA), Ecumenical Movement for Justice and Peace (EMJP), and
Promotion of Church Peoples Response (PCPR), which were represented by their
respective officers5 who are also bringing action on their own behalf, filed a petition for
On August 29, 2007, the Integrated Bar of the Philippines (IBP), Counsels for the Defense
of Liberty (CODAL),6Senator Ma. Ana Consuelo A.S. Madrigal, Sergio Osmea III, and
Wigberto E. Taada filed a petition for certiorari and prohibition docketed as G.R. No.
179157.
Bagong Alyansang Makabayan-Southern Tagalog (BAYAN-ST), other regional chapters
and organizations mostly based in the Southern Tagalog Region,7 and
individuals8 followed suit by filing on September 19, 2007 a petition for certiorari and
prohibition docketed as G.R. No. 179461 that replicates the allegations raised in the
BAYAN petition in G.R. No. 178581.
Impleaded as respondents in the various petitions are the Anti-Terrorism
Council9 composed of, at the time of the filing of the petitions, Executive Secretary
Eduardo Ermita as Chairperson, Justice Secretary Raul Gonzales as Vice Chairperson,
87
and Foreign Affairs Secretary Alberto Romulo, Acting Defense Secretary and National
Security Adviser Norberto Gonzales, Interior and Local Government Secretary Ronaldo
Puno, and Finance Secretary Margarito Teves as members. All the petitions, except that of
the IBP, also impleaded Armed Forces of the Philippines (AFP) Chief of Staff Gen.
Hermogenes Esperon and Philippine National Police (PNP) Chief Gen. Oscar Calderon.
The Karapatan, BAYAN and BAYAN-ST petitions likewise impleaded President Gloria
Macapagal-Arroyo and the support agencies for the Anti-Terrorism Council like the
National Intelligence Coordinating Agency, National Bureau of Investigation, Bureau of
Immigration, Office of Civil Defense, Intelligence Service of the AFP, Anti-Money
Laundering Center, Philippine Center on Transnational Crime, and the PNP intelligence
and investigative elements.
The petitions fail.
Petitioners resort to certiorari is improper
Preliminarily, certiorari does not lie against respondents who do not exercise judicial or
quasi-judicial functions. Section 1, Rule 65 of the Rules of Court is clear:
Section 1. Petition for certiorari.When any tribunal, board or officer exercising judicial or
quasi-judicial functionshas acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor
any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law and justice may
require. (Emphasis and underscoring supplied)
Parenthetically, petitioners do not even allege with any modicum of particularity how
respondents acted without or in excess of their respective jurisdictions, or with grave
abuse of discretion amounting to lack or excess of jurisdiction.
The impropriety of certiorari as a remedy aside, the petitions fail just the same.
In constitutional litigations, the power of judicial review is limited by four exacting
requisites, viz: (a) there must be an actual case or controversy; (b) petitioners must
possess locus standi; (c) the question of constitutionality must be raised at the earliest
opportunity; and (d) the issue of constitutionality must be the lis mota of the case.10
In the present case, the dismal absence of the first two requisites, which are the most
essential, renders the discussion of the last two superfluous.
Petitioners lack locus standi
Locus standi or legal standing requires a personal stake in the outcome of the controversy
as to assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional questions.11
Anak Mindanao Party-List Group v. The Executive Secretary12 summarized the rule on
locus standi, thus:
Locus standi or legal standing has been defined as a personal and substantial interest in a
case such that the party has sustained or will sustain direct injury as a result of the
governmental act that is being challenged. The gist of the question on standing is whether
a party alleges such personal stake in the outcome of the controversy as to assure that

concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions.
[A] party who assails the constitutionality of a statute must have a direct and personal
interest. It must show not only that the law or any governmental act is invalid, but also
that it sustained or is in immediate danger of sustaining some direct injury as a result of its
enforcement, and not merely that it suffers thereby in some indefinite way. It must show
that it has been or is about to be denied some right or privilege to which it is lawfully
entitled or that it is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.
For a concerned party to be allowed to raise a constitutional question, it must show that
(1) it has personally suffered some actual or threatened injury as a result of the allegedly
illegal conduct of the government, (2) the injury is fairly traceable to the challenged action,
and (3) the injury is likely to be redressed by a favorable action. (emphasis and
underscoring supplied.)
Petitioner-organizations assert locus standi on the basis of being suspected "communist
fronts" by the government, especially the military; whereas individual petitioners invariably
invoke the "transcendental importance" doctrine and their status as citizens and
taxpayers.
While Chavez v. PCGG13 holds that transcendental public importance dispenses with the
requirement that petitioner has experienced or is in actual danger of suffering direct and
personal injury, cases involving the constitutionality of penal legislation belong to an
altogether different genus of constitutional litigation. Compelling State and societal
interests in the proscription of harmful conduct, as will later be elucidated, necessitate a
closer judicial scrutiny of locus standi.
Petitioners have not presented any personal stake in the outcome of the controversy.
None of them faces any charge under RA 9372.
KARAPATAN, Hustisya, Desaparecidos, SELDA, EMJP and PCR, petitioners in G.R. No.
178890, allege that they have been subjected to "close security surveillance by state
security forces," their members followed by "suspicious persons" and "vehicles with dark
windshields," and their offices monitored by "men with military build." They likewise claim
that they have been branded as "enemies of the [S]tate."14
Even conceding such gratuitous allegations, the Office of the Solicitor General (OSG)
correctly points out that petitioners have yet to show any connection between the
purported "surveillance" and the implementation of RA 9372.
BAYAN, GABRIELA, KMP, MCCCL, COURAGE, KADAMAY, SCW, LFS, Anakbayan,
PAMALAKAYA, ACT, Migrante, HEAD and Agham, petitioner-organizations in G.R. No.
178581, would like the Court to take judicial notice of respondents alleged action of
tagging them as militant organizations fronting for the Communist Party of the Philippines
(CPP) and its armed wing, the National Peoples Army (NPA). The tagging, according to
petitioners, is tantamount to the effects of proscription without following the procedure
under the law.15 The petition of BAYAN-ST, et al. in G.R. No. 179461 pleads the same
allegations.
The Court cannot take judicial notice of the alleged "tagging" of petitioners.
Generally speaking, matters of judicial notice have three material requisites: (1) the matter
must be one of common and general knowledge; (2) it must be well and authoritatively
settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the
88
jurisdiction of the court. The principal guide in determining what facts may be assumed to
be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to
facts evidenced by public records and facts of general notoriety. Moreover, a judicially
noticed fact must be one not subject to a reasonable dispute in that it is either: (1)
generally known within the territorial jurisdiction of the trial court; or (2) capable of
accurate and ready determination by resorting to sources whose accuracy cannot
reasonably be questionable.
Things of "common knowledge," of which courts take judicial matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may
be matters which are generally accepted by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are universally known, and which may be
found in encyclopedias, dictionaries or other publications, are judicially noticed, provided,
they are of such universal notoriety and so generally understood that they may be
regarded as forming part of the common knowledge of every person. As the common
knowledge of man ranges far and wide, a wide variety of particular facts have been
judicially noticed as being matters of common knowledge. But a court cannot take judicial
notice of any fact which, in part, is dependent on the existence or non-existence of a fact
of which the court has no constructive knowledge.16 (emphasis and underscoring
supplied.)
No ground was properly established by petitioners for the taking of judicial notice.
Petitioners apprehension is insufficient to substantiate their plea. That no specific
charge or proscription under RA 9372 has been filed against them, three years after its
effectivity, belies any claim of imminence of their perceived threat emanating from the socalled tagging.
The same is true with petitioners KMU, NAFLU and CTUHR in G.R. No. 178554, who
merely harp as well on their supposed "link" to the CPP and NPA. They fail to particularize
how the implementation of specific provisions of RA 9372 would result in direct injury to
their organization and members.
While in our jurisdiction there is still no judicially declared terrorist organization, the United
States of America17(US) and the European Union18 (EU) have both classified the CPP,
NPA and Abu Sayyaf Group as foreign terrorist organizations. The Court takes note of the
joint statement of Executive Secretary Eduardo Ermita and Justice Secretary Raul
Gonzales that the Arroyo Administration would adopt the US and EU classification of the
CPP and NPA as terrorist organizations.19 Such statement notwithstanding, there is yet to
be filed before the courts an application to declare the CPP and NPA organizations as
domestic terrorist or outlawed organizations under RA 9372. Again, RA 9372 has been in
effect for three years now. From July 2007 up to the present, petitioner-organizations have
conducted their activities fully and freely without any threat of, much less an actual,
prosecution or proscription under RA 9372.
Parenthetically, the Fourteenth Congress, in a resolution initiated by Party-list
Representatives Saturnino Ocampo, Teodoro Casio, Rafael Mariano and Luzviminda
Ilagan,20 urged the government to resume peace negotiations with the NDF by removing
the impediments thereto, one of which is the adoption of designation of the CPP and NPA
by the US and EU as foreign terrorist organizations. Considering the policy statement of
the Aquino Administration21 of resuming peace talks with the NDF, the government is not
imminently disposed to ask for the judicial proscription of the CPP-NPA consortium and its
allied organizations.

More important, there are other parties not before the Court with direct and specific
interests in the questions being raised.22 Of recent development is the filing of
the first case for proscription under Section 1723 of RA 9372 by the Department of Justice
before the Basilan Regional Trial Court against the Abu Sayyaf Group.24 Petitionerorganizations do not in the least allege any link to the Abu Sayyaf Group.
Some petitioners attempt, in vain though, to show the imminence of a prosecution under
RA 9372 by alluding to past rebellion charges against them.
In Ladlad v. Velasco,25 the Court ordered the dismissal of rebellion charges filed in 2006
against then Party-List Representatives Crispin Beltran and Rafael Mariano of Anakpawis,
Liza Maza of GABRIELA, and Joel Virador, Teodoro Casio and Saturnino Ocampo of
Bayan Muna. Also named in the dismissed rebellion charges were petitioners Rey Claro
Casambre, Carolina Pagaduan-Araullo, Renato Reyes, Rita Baua, Emerencia de Jesus
and Danilo Ramos; and accused of being front organizations for the Communist
movement were petitioner-organizations KMU, BAYAN, GABRIELA, PAMALAKAYA, KMP,
KADAMAY, LFS and COURAGE.26
The dismissed rebellion charges, however, do not save the day for petitioners. For one,
those charges were filed in 2006, prior to the enactment of RA 9372, and dismissed by
this Court. For another, rebellion is defined and punished under the Revised Penal Code.
Prosecution for rebellion is not made more imminent by the enactment of RA 9372, nor
does the enactment thereof make it easier to charge a person with rebellion, its elements
not having been altered.
Conversely, previously filed but dismissed rebellion charges bear no relation to
prospective charges under RA 9372. It cannot be overemphasized that three years after
the enactment of RA 9372, none of petitioners has been charged.
Petitioners IBP and CODAL in G.R. No. 179157 base their claim of locus standi on their
sworn duty to uphold the Constitution. The IBP zeroes in on Section 21 of RA 9372
directing it to render assistance to those arrested or detained under the law.
89
to corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared
by the general public.
Neither can locus standi be conferred upon individual petitioners as taxpayers and
citizens. A taxpayer suit is proper only when there is an exercise of the spending or taxing
power of Congress,28 whereas citizen standing must rest on direct and personal interest
in the proceeding.29
RA 9372 is a penal statute and does not even provide for any appropriation from
Congress for its implementation, while none of the individual petitioner-citizens has
alleged any direct and personal interest in the implementation of the law.
It bears to stress that generalized interests, albeit accompanied by the assertion of a
public right, do not establish locus standi. Evidence of a direct and personal interest is key.
Petitioners fail to present an actual case or controversy
By constitutional fiat, judicial power operates only when there is an actual case or
controversy.
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the
Government.30(emphasis and underscoring supplied.)
As early as Angara v. Electoral Commission,31 the Court ruled that the power of judicial
review is limited to actual cases or controversies to be exercised after full opportunity of
argument by the parties. Any attempt at abstraction could only lead to dialectics and
barren legal questions and to sterile conclusions unrelated to actualities.
The mere invocation of the duty to preserve the rule of law does not, however, suffice to
clothe the IBP or any of its members with standing.27 The IBP failed to sufficiently
demonstrate how its mandate under the assailed statute revolts against its constitutional
rights and duties. Moreover, both the IBP and CODAL have not pointed to even a single
arrest or detention effected under RA 9372.
An actual case or controversy means an existing case or controversy that is appropriate or

ripe for determination, not conjectural or anticipatory, lest the decision of the court would
amount to an advisory opinion.32
Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject of
"political surveillance," also lacks locus standi. Prescinding from the veracity, let alone
legal basis, of the claim of "political surveillance," the Court finds that she has not shown
even the slightest threat of being charged under RA 9372. Similarly lacking in locus standi
are former Senator Wigberto Taada and Senator Sergio Osmea III, who cite their being
respectively a human rights advocate and an oppositor to the passage of RA 9372.
Outside these gratuitous statements, no concrete injury to them has been pinpointed.
[C]ourts do not sit to adjudicate mere academic questions to satisfy scholarly interest,
however intellectually challenging. The controversy must be justiciabledefinite and
concrete, touching on the legal relations of parties having adverse legal interests. In other
words, the pleadings must show an active antagonistic assertion of a legal right, on the
one hand, and a denial thereof on the other hand; that is, it must concern a real and not
merely a theoretical question or issue. There ought to be an actual and substantial
controversy admitting of specific relief through a decree conclusive in nature, as
distinguished from an opinion advising what the law would be upon a hypothetical state of
facts. (Emphasis and underscoring supplied)
Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos Jr. in
G.R. No. 178552 also conveniently state that the issues they raise are of transcendental
importance, "which must be settled early" and are of "far-reaching implications," without
mention of any specific provision of RA 9372 under which they have been charged, or may
be charged. Mere invocation of human rights advocacy has nowhere been held sufficient
to clothe litigants with locus standi. Petitioners must show an actual, or immediate danger
of sustaining, direct injury as a result of the laws enforcement. To rule otherwise would be
Information Technology Foundation of the Philippines v. COMELEC33 cannot be more

emphatic:
Thus, a petition to declare unconstitutional a law converting the Municipality of Makati into
a Highly Urbanized City was held to be premature as it was tacked on uncertain,
contingent events.34 Similarly, a petition that fails to allege that an application for a license
to operate a radio or television station has been denied or granted by the authorities does

90
not present a justiciable controversy, and merely wheedles the Court to rule on a
hypothetical problem.35
A facial invalidation of a statute is allowed only in free speech cases, wherein certain rules
of constitutional litigation are rightly excepted
The Court dismissed the petition in Philippine Press Institute v. Commission on

Elections36 for failure to cite any specific affirmative action of the Commission on
Elections to implement the assailed resolution. It refused, in Abbas v. Commission on
Elections,37 to rule on the religious freedom claim of the therein petitioners based merely
on a perceived potential conflict between the provisions of the Muslim Code and those of
the national law, there being no actual controversy between real litigants.
Petitioners assail for being intrinsically vague and impermissibly broad the definition of the
crime of terrorism46under RA 9372 in that terms like "widespread and extraordinary fear
and panic among the populace" and "coerce the government to give in to an unlawful
demand" are nebulous, leaving law enforcement agencies with no standard to measure
the prohibited acts.
The list of cases denying claims resting on purely hypothetical or anticipatory grounds
goes on ad infinitum.
The Court is not unaware that a reasonable certainty of the occurrence of a perceived
threat to any constitutional interest suffices to provide a basis for mounting a constitutional
challenge. This, however, is qualified by the requirement that there must be sufficient
facts to enable the Court to intelligently adjudicate the issues.38
Very recently, the US Supreme Court, in Holder v. Humanitarian Law Project,39 allowed
the pre-enforcement review of a criminal statute, challenged on vagueness grounds, since
plaintiffs faced a "credible threat of prosecution" and "should not be required to await and
undergo a criminal prosecution as the sole means of seeking relief."40 The plaintiffs
therein filed an action before a federal court to assail the constitutionality of the material
support statute, 18 U.S.C. 2339B (a) (1),41 proscribing the provision of material support
to organizations declared by the Secretary of State as foreign terrorist organizations. They
claimed that they intended to provide support for the humanitarian and political activities of
two such organizations.
Prevailing American jurisprudence allows an adjudication on the merits when an
anticipatory petition clearly shows that the challenged prohibition forbids the conduct or
activity that a petitioner seeks to do, as there would then be a justiciable controversy.42
Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that the
challenged provisions of RA 9372 forbid constitutionally protected conduct or activity that
they seek to do. No demonstrable threat has been established, much less a real and
existing one.
Petitioners obscure allegations of sporadic "surveillance" and supposedly being tagged as
"communist fronts" in no way approximate a credible threat of prosecution. From these
allegations, the Court is being lured to render an advisory opinion, which is not its
function.43
Without any justiciable controversy, the petitions have become pleas for declaratory relief,
over which the Court has no original jurisdiction. Then again, declaratory actions
characterized by "double contingency," where both the activity the petitioners intend to
undertake and the anticipated reaction to it of a public official are merely theorized, lie
beyond judicial review for lack of ripeness.44
The possibility of abuse in the implementation of RA 9372 does not avail to take the
present petitions out of the realm of the surreal and merely imagined. Such possibility is
not peculiar to RA 9372 since the exercise of any power granted by law may be
abused.45 Allegations of abuse must be anchored on real events before courts may step
in to settle actual controversies involving rights which are legally demandable and
enforceable.
Respondents, through the OSG, counter that the doctrines of void-for-vagueness and
overbreadth find no application in the present case since these doctrines apply only to free
speech cases; and that RA 9372 regulates conduct, not speech.
For a jurisprudentially guided understanding of these doctrines, it is imperative to outline
the schools of thought on whether the void-for-vagueness and overbreadth doctrines are
equally applicable grounds to assail a penal statute.
Respondents interpret recent jurisprudence as slanting toward the idea of limiting the
application of the two doctrines to free speech cases. They particularly cite Romualdez v.
Hon. Sandiganbayan47 and Estrada v. Sandiganbayan.48
The Court clarifies.
At issue in Romualdez v. Sandiganbayan was whether the word "intervene" in Section
549 of the Anti-Graft and Corrupt Practices Act was intrinsically vague and impermissibly
broad. The Court stated that "the overbreadth and the vagueness doctrines have special
application only to free-speech cases," and are "not appropriate for testing the validity of
penal statutes."50 It added that, at any rate, the challenged provision, under which the
therein petitioner was charged, is not vague.51
While in the subsequent case of Romualdez v. Commission on Elections,52 the Court
stated that a facial invalidation of criminal statutes is not appropriate, it nonetheless
proceeded to conduct a vagueness analysis, and concluded that the therein subject
election offense53 under the Voters Registration Act of 1996, with which the therein
petitioners were charged, is couched in precise language.54
The two Romualdez cases rely heavily on the Separate Opinion55 of Justice Vicente V.
Mendoza in the Estradacase, where the Court found the Anti-Plunder Law (Republic Act
No. 7080) clear and free from ambiguity respecting the definition of the crime of plunder.
The position taken by Justice Mendoza in Estrada relates these two doctrines to the
concept of a "facial" invalidation as opposed to an "as-applied" challenge. He basically
postulated that allegations that a penal statute is vague and overbroad do not justify a
facial review of its validity. The pertinent portion of the Concurring Opinion of Justice
Mendoza, which was quoted at length in the main Estrada decision, reads:
A facial challenge is allowed to be made to a vague statute and to one which is overbroad
because of possible"chilling effect" upon protected speech. The theory is that "[w]hen
statutes regulate or proscribe speech and no readily apparent construction suggests itself
as a vehicle for rehabilitating the statutes in a single prosecution, the transcendent value
to all society of constitutionally protected expression is deemed to justify allowing attacks
on overly broad statutes with no requirement that the person making the attack
demonstrate that his own conduct could not be regulated by a statute drawn with narrow
specificity." The possible harm to society in permitting some unprotected speech to go
unpunished is outweighed by the possibility that the protected speech of others may be

deterred and perceived grievances left to fester because of possible inhibitory effects of
overly broad statutes.
This rationale does not apply to penal statutes. Criminal statutes have general in
terrorem effect resulting from their very existence, and, if facial challenge is allowed for
this reason alone, the State may well be prevented from enacting laws against socially
harmful conduct. In the area of criminal law, the law cannot take chances as in the area of
free speech.
The overbreadth and vagueness doctrines then have special application only to free
speech cases. They are inapt for testing the validity of penal statutes. As the U.S.
Supreme Court put it, in an opinion by Chief Justice Rehnquist, "we have not recognized
an 'overbreadth' doctrine outside the limited context of the First Amendment." In Broadrick
v. Oklahoma, the Court ruled that "claims of facial overbreadth have been entertained in
cases involving statutes which, by their terms, seek to regulate only spoken words" and,
again, that "overbreadth claims, if entertained at all, have been curtailed when invoked
against ordinary criminal laws that are sought to be applied to protected conduct." For this
reason, it has been held that "a facial challenge to a legislative act is the most difficult
challenge to mount successfully, since the challenger must establish that no set of
circumstances exists under which the Act would be valid." As for the vagueness doctrine, it
is said that a litigant may challenge a statute on its face only if it is vague in all its possible
applications. "A plaintiff who engages in some conduct that is clearly proscribed cannot
complain of the vagueness of the law as applied to the conduct of others."
In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools
developed for testing "on their faces" statutes in free speech cases or, as they are called
in American law, First Amendment cases. They cannot be made to do service when what
is involved is a criminal statute. With respect to such statute, the established rule is that
"one to whom application of a statute is constitutional will not be heard to attack the
statute on the ground that impliedly it might also be taken as applying to other persons or
other situations in which its application might be unconstitutional." As has been pointed
out, "vagueness challenges in the First Amendment context, like overbreadth challenges
typically produce facial invalidation, while statutes found vague as a matter of due process
typically are invalidated [only] 'as applied' to a particular defendant." Consequently, there
is no basis for petitioner's claim that this Court review the Anti-Plunder Law on its face and
in its entirety.
Indeed, "on its face" invalidation of statutes results in striking them down entirely on the
ground that they might be applied to parties not before the Court whose activities are
constitutionally protected. It constitutes a departure from the case and controversy
requirement of the Constitution and permits decisions to be made without concrete factual
settings and in sterile abstract contexts. But, as the U.S. Supreme Court pointed out
in Younger v. Harris
[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring
correction of these deficiencies before the statute is put into effect, is rarely if ever an
appropriate task for the judiciary. The combination of the relative remoteness of the
controversy, the impact on the legislative process of the relief sought, and above all the
speculative and amorphous nature of the required line-by-line analysis of detailed
statutes, . . . ordinarily results in a kind of case that is wholly unsatisfactory for deciding
constitutional questions, whichever way they might be decided.
For these reasons, "on its face" invalidation of statutes has been described as "manifestly
strong medicine," to be employed "sparingly and only as a last resort," and is generally
91
disfavored. In determining the constitutionality of a statute, therefore, its provisions which

are alleged to have been violated in a case must be examined in the light of the conduct
with which the defendant is charged.56 (Underscoring supplied.)
The confusion apparently stems from the interlocking relation of the overbreadth and
vagueness doctrines as grounds for a facial or as-applied challenge against a penal
statute (under a claim of violation of due process of law) or a speech regulation (under a
claim of abridgement of the freedom of speech and cognate rights).
To be sure, the doctrine of vagueness and the doctrine of overbreadth do not operate on
the same plane.
A statute or act suffers from the defect of vagueness when it lacks comprehensible
standards that men of common intelligence must necessarily guess at its meaning and
differ as to its application. It is repugnant to the Constitution in two respects: (1) it violates
due process for failure to accord persons, especially the parties targeted by it, fair notice
of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion in carrying out
its provisions and becomes an arbitrary flexing of the Government
muscle.57 The overbreadth doctrine, meanwhile, decrees that a governmental purpose to
control or prevent activities constitutionally subject to state regulations may not be
achieved by means which sweep unnecessarily broadly and thereby invade the area of
protected freedoms.58
As distinguished from the vagueness doctrine, the overbreadth doctrine assumes that
individuals will understand what a statute prohibits and will accordingly refrain from that
behavior, even though some of it is protected.59
A "facial" challenge is likewise different from an "as-applied" challenge.
Distinguished from an as-applied challenge which considers only extant facts
affecting real litigants, a facialinvalidation is an examination of the entire law, pinpointing
its flaws and defects, not only on the basis of its actual operation to the parties, but also
on the assumption or prediction that its very existence may cause others not before the
court to refrain from constitutionally protected speech or activities.60
Justice Mendoza accurately phrased the subtitle61 in his concurring opinion that the
vagueness and overbreadth doctrines, as grounds for a facial challenge, are not
applicable to penal laws. A litigant cannot thus successfully mount a facial challenge
against a criminal statute on either vagueness or overbreadth grounds.
The allowance of a facial challenge in free speech cases is justified by the aim to avert the
"chilling effect" on protected speech, the exercise of which should not at all times be
abridged.62 As reflected earlier, this rationale is inapplicable to plain penal statutes that
generally bear an "in terrorem effect" in deterring socially harmful conduct. In fact, the
legislature may even forbid and penalize acts formerly considered innocent and lawful, so
long as it refrains from diminishing or dissuading the exercise of constitutionally protected
rights.63
The Court reiterated that there are "critical limitations by which a criminal statute may be
challenged" and "underscored that an on-its-face invalidation of penal statutes x x x may
not be allowed."64
[T]he rule established in our jurisdiction is, only statutes on free speech, religious freedom,
and other fundamental rights may be facially challenged. Under no case may ordinary
penal statutes be subjected to a facial challenge. The rationale is obvious. If a facial
challenge to a penal statute is permitted, the prosecution of crimes may be hampered. No

prosecution would be possible. A strong criticism against employing a facial challenge in

the case of penal statutes, if the same is allowed, would effectively go against the grain of
the doctrinal requirement of an existing and concrete controversy before judicial power
may be appropriately exercised. A facial challenge against a penal statute is, at best,
amorphous and speculative. It would, essentially, force the court to consider third parties
who are not before it. As I have said in my opposition to the allowance of a facial
challenge to attack penal statutes, such a test will impair the States ability to deal with
crime. If warranted, there would be nothing that can hinder an accused from defeating the
States power to prosecute on a mere showing that, as applied to third parties, the penal
statute is vague or overbroad, notwithstanding that the law is clear as applied to
him.65(Emphasis and underscoring supplied)
It is settled, on the other hand, that the application of the overbreadth doctrine is limited to
a facial kind of challenge and, owing to the given rationale of a facial challenge, applicable
only to free speech cases.
By its nature, the overbreadth doctrine has to necessarily apply a facial type of invalidation
in order to plot areas of protected speech, inevitably almost always under situations not
before the court, that are impermissibly swept by the substantially overbroad regulation.
Otherwise stated, a statute cannot be properly analyzed for being substantially overbroad
if the court confines itself only to facts as applied to the litigants.
The most distinctive feature of the overbreadth technique is that it marks an exception to
some of the usual rules of constitutional litigation. Ordinarily, a particular litigant claims
that a statute is unconstitutional as applied to him or her; if the litigant prevails, the courts
carve away the unconstitutional aspects of the law by invalidating its improper applications
on a case to case basis. Moreover, challengers to a law are not permitted to raise the
rights of third parties and can only assert their own interests. In overbreadth analysis,
those rules give way; challenges are permitted to raise the rights of third parties; and the
court invalidates the entire statute "on its face," not merely"as applied for" so that the
overbroad law becomes unenforceable until a properly authorized court construes it more
narrowly. The factor that motivates courts to depart from the normal adjudicatory rules is
the concern with the "chilling;" deterrent effect of the overbroad statute on third parties not
courageous enough to bring suit. The Court assumes that an overbroad laws "very
existence may cause others not before the court to refrain from constitutionally protected
speech or expression." An overbreadth ruling is designed to remove that deterrent effect
on the speech of those third parties.66 (Emphasis in the original omitted; underscoring
supplied.)
In restricting the overbreadth doctrine to free speech claims, the Court, in at least two
cases,67 observed that the US Supreme Court has not recognized an overbreadth
doctrine outside the limited context of the First Amendment,68 and that claims of facial
overbreadth have been entertained in cases involving statutes which, by their terms, seek
to regulate only spoken words.69 In Virginia v. Hicks,70 it was held that rarely, if ever, will
an overbreadth challenge succeed against a law or regulation that is not specifically
addressed to speech or speech-related conduct. Attacks on overly broad statutes are
justified by the "transcendent value to all society of constitutionally protected
expression."71
Since a penal statute may only be assailed for being vague as applied to petitioners,
a limited vagueness analysis of the definition of "terrorism" in RA 9372 is legally
impermissible absent an actual or imminent chargeagainst them
92
While Estrada did not apply the overbreadth doctrine, it did not preclude the operation of
the vagueness test on the Anti-Plunder Law as applied to the therein petitioner, finding,
however, that there was no basis to review the law "on its face and in its entirety." 72 It
stressed that "statutes found vague as a matter of due process typically are invalidated
only 'as applied' to a particular defendant."73
American jurisprudence74 instructs that "vagueness challenges that do not involve the
First Amendment must be examined in light of the specific facts of the case at hand and
not with regard to the statute's facial validity."
For more than 125 years, the US Supreme Court has evaluated defendants claims that
criminal statutes are unconstitutionally vague, developing a doctrine hailed as "among the
most important guarantees of liberty under law."75
In this jurisdiction, the void-for-vagueness doctrine asserted under the due process clause
has been utilized in examining the constitutionality of criminal statutes. In at least three
cases,76 the Court brought the doctrine into play in analyzing an ordinance penalizing the
non-payment of municipal tax on fishponds, the crime of illegal recruitment punishable
under Article 132(b) of the Labor Code, and the vagrancy provision under Article 202 (2) of
the Revised Penal Code. Notably, the petitioners in these three cases, similar to those in
the two Romualdezand Estrada cases, were actually charged with the therein assailed
penal statute, unlike in the present case.
There is no merit in the claim that RA 9372 regulates speech so as to permit a facial
analysis of its validity
From the definition of the crime of terrorism in the earlier cited Section 3 of RA 9372, the
following elements may be culled: (1) the offender commits an act punishable under any
of the cited provisions of the Revised Penal Code, or under any of the enumerated special
penal laws; (2) the commission of the predicate crime sows and creates a condition of
widespread and extraordinary fear and panic among the populace; and (3) the offender is
actuated by the desire to coerce the government to give in to an unlawful demand.
In insisting on a facial challenge on the invocation that the law penalizes speech,
petitioners contend that the element of "unlawful demand" in the definition of
terrorism77 must necessarily be transmitted through some form of expression protected
by the free speech clause.
The argument does not persuade. What the law seeks to penalize is conduct, not speech.
Before a charge for terrorism may be filed under RA 9372, there must first be a predicate
crime actually committed to trigger the operation of the key qualifying phrases in the other
elements of the crime, including the coercion of the government to accede to an "unlawful
demand." Given the presence of the first element, any attempt at singling out or
highlighting the communicative component of the prohibition cannot recategorize the
unprotected conduct into a protected speech.
Petitioners notion on the transmission of message is entirely inaccurate, as it unduly
focuses on just one particle of an element of the crime. Almost every commission of a
crime entails some mincing of words on the part of the offender like in declaring to launch
overt criminal acts against a victim, in haggling on the amount of ransom or conditions, or
in negotiating a deceitful transaction. An analogy in one U.S. case78 illustrated that the
fact that the prohibition on discrimination in hiring on the basis of race will require an
employer to take down a sign reading "White Applicants Only" hardly means that the law
should be analyzed as one regulating speech rather than conduct.

93
Utterances not elemental but inevitably incidental to the doing of the criminal conduct alter
neither the intent of the law to punish socially harmful conduct nor the essence of the
whole act as conduct and not speech. This holds true a fortiori in the present case where
the expression figures only as an inevitable incident of making the element of coercion
perceptible.
that resulted in the miscarriage of justice; or committed grave abuse in its treatment of the
evidence and prosecution witnesses."1
[I]t is true that the agreements and course of conduct here were as in most instances
brought about through speaking or writing. But it has never been deemed an abridgement
of freedom of speech or press to make a course of conduct illegal merely because
the conduct was, in part, initiated, evidenced, or carried out by means of language, either
spoken, written, or printed. Such an expansive interpretation of the constitutional
guaranties of speech and press would make it practically impossible ever to enforce laws
against agreements in restraint of trade as well as many other agreements and
conspiracies deemed injurious to society.79 (italics and underscoring supplied)
Section 21. No person shall be twice put in jeopardy of punishment for the same offense.
xxx
Certain kinds of speech have been treated as unprotected conduct, because they merely
evidence a prohibited conduct.80 Since speech is not involved here, the Court cannot
heed the call for a facial analysis.1avvphi1
IN FINE, Estrada and the other cited authorities engaged in a vagueness analysis of the
therein subject penal statute as applied to the therein petitioners inasmuch as they were
actually charged with the pertinent crimes challenged on vagueness grounds. The Court in
said cases, however, found no basis to review the assailed penal statute on its face and in
its entirety.
In Holder, on the other hand, the US Supreme Court allowed the pre-enforcement review
of a criminal statute, challenged on vagueness grounds, since the therein plaintiffs faced
a "credible threat of prosecution" and "should not be required to await and undergo a
criminal prosecution as the sole means of seeking relief."
As earlier reflected, petitioners have established neither an actual charge nor a credible
threat of prosecutionunder RA 9372. Even a limited vagueness analysis of the assailed
definition of "terrorism" is thus legally impermissible. The Court reminds litigants that
judicial power neither contemplates speculative counseling on a statutes future effect on
hypothetical scenarios nor allows the courts to be used as an extension of a failed
legislative lobbying in Congress.
WHEREFORE, the petitions are DISMISSED.
SO ORDERED.
Lejano vs. People, 638 SCRA 104 (2010)

On December 14, 2010 the Court reversed the judgment of the Court of Appeals (CA) and
acquitted the accused in this case, Hubert Jeffrey P. Webb, Antonio Lejano, Michael A.
Gatchalian, Hospicio Fernandez, Miguel Rodriguez, Peter Estrada, and Gerardo Biong of
the charges against them on the ground of lack of proof of their guilt beyond reasonable
doubt.
On December 28, 2010 complainant Lauro G. Vizconde, an immediate relative of the
victims, asked the Court to reconsider its decision, claiming that it "denied the prosecution
due process of law; seriously misappreciated the facts; unreasonably regarded Alfaro as
lacking credibility; issued a tainted and erroneous decision; decided the case in a manner
But, as a rule, a judgment of acquittal cannot be reconsidered because it places the

accused under double jeopardy. The Constitution provides in Section 21, Article III, that:
To reconsider a judgment of acquittal places the accused twice in jeopardy of being

punished for the crime of which he has already been absolved. There is reason for this
provision of the Constitution. In criminal cases, the full power of the State is ranged
against the accused. If there is no limit to attempts to prosecute the accused for the same
offense after he has been acquitted, the infinite power and capacity of the State for a
sustained and repeated litigation would eventually overwhelm the accused in terms of
resources, stamina, and the will to fight.
As the Court said in People of the Philippines v. Sandiganbayan:2
[A]t the heart of this policy is the concern that permitting the sovereign freely to subject the
citizen to a second judgment for the same offense would arm the government with a
potent instrument of oppression. The provision therefore guarantees that the State shall
not be permitted to make repeated attempts to convict an individual for an alleged offense,
thereby subjecting him to embarrassment, expense, and ordeal and compelling him to live
in a continuing state of anxiety and insecurity, as well as enhancing the possibility that
even though innocent he may be found guilty. Societys awareness of the heavy personal
strain which a criminal trial represents for the individual defendant is manifested in the
willingness to limit the government to a single criminal proceeding to vindicate its very vital
interest in the enforcement of criminal laws.3
Of course, on occasions, a motion for reconsideration after an acquittal is possible. But
the grounds are exceptional and narrow as when the court that absolved the accused
gravely abused its discretion, resulting in loss of jurisdiction, or when a mistrial has
occurred. In any of such cases, the State may assail the decision by special civil action of
certiorari under Rule 65.4
Here, although complainant Vizconde invoked the exceptions, he has been unable to
bring his pleas for reconsideration under such exceptions. For instance, he avers that the
Court "must ensure that due process is afforded to all parties and there is no grave abuse
of discretion in the treatment of witnesses and the evidence."5But he has not specified the
violations of due process or acts constituting grave abuse of discretion that the Court
supposedly committed. His claim that "the highly questionable and suspicious evidence
for the defense taints with serious doubts the validity of the decision"6 is, without more, a
mere conclusion drawn from personal perception.
Complainant Vizconde cites the decision in Galman v. Sandiganbayan7 as authority that
the Court can set aside the acquittal of the accused in the present case. But the
government proved in Galman that the prosecution was deprived of due process since the
judgment of acquittal in that case was "dictated, coerced and scripted."8 It was a sham
trial. Here, however, Vizconde does not allege that the Court held a sham review of the
decision of the CA. He has made out no case that the Court held a phony deliberation in
this case such that the seven Justices who voted to acquit the accused, the four who
dissented, and the four who inhibited themselves did not really go through the process.

Ultimately, what the complainant actually questions is the Courts appreciation of the
evidence and assessment of the prosecution witnesses credibility. He ascribes grave
error on the Courts finding that Alfaro was not a credible witness and assails the value
assigned by the Court to the evidence of the defense. In other words, private complainant
wants the Court to review the evidence anew and render another judgment based on such
a re-evaluation. This is not constitutionally allowed as it is merely a repeated attempt to
secure Webb, et als conviction. The judgment acquitting Webb, et al is final and can no
longer be disturbed.
WHEREFORE, the Court DENIES for lack of merit complainant Lauro G. Vizcondes
motion for reconsideration dated December 28, 2010.
For essentially the same reason, the Court DENIES the motions for leave to intervene of
Fr. Robert P. Reyes, Sister Mary John R. Mananzan, Bishop Evangelio L. Mercado, and
Dante L.A. Jimenez, representing the Volunteers Against Crime and Corruption and of
former Vice President Teofisto Guingona, Jr.
No further pleadings shall be entertained in this case.
SO ORDERED.
D. DUE PROCESS AND POLICE POWER
94
SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short time
admission in hotels, motels, lodging houses, pension houses and similar establishments in
the City of Manila.
SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-up rate or
other similarly concocted terms, are hereby prohibited in hotels, motels, inns, lodging
houses, pension houses and similar establishments in the City of Manila.
SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and charging of
room rate for less than twelve (12) hours at any given time or the renting out of rooms
more than twice a day or any other term that may be concocted by owners or managers of
said establishments but would mean the same or would bear the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who shall violate any provision of this
ordinance shall upon conviction thereof be punished by a fine of Five Thousand
(P5,000.00) Pesos or imprisonment for a period of not exceeding one (1) year or both
such fine and imprisonment at the discretion of the court; Provided, That in case of [a]
juridical person, the president, the manager, or the persons in charge of the operation
thereof shall be liable: Provided, further, That in case of subsequent conviction for the
same offense, the business license of the guilty party shall automatically be cancelled.
White Light Corporation vs. City of Manila

With another city ordinance of Manila also principally involving the tourist district as
subject, the Court is confronted anew with the incessant clash between government power
and individual liberty in tandem with the archetypal tension between law and morality.
SEC. 6. Repealing Clause. Any or all provisions of City ordinances not consistent with or
contrary to this measure or any portion hereof are hereby deemed repealed.
In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city ordinance
barring the operation of motels and inns, among other establishments, within the ErmitaMalate area. The petition at bar assails a similarly-motivated city ordinance that prohibits
those same establishments from offering short-time admission, as well as pro-rated or
"wash up" rates for such abbreviated stays. Our earlier decision tested the city ordinance
against our sacred constitutional rights to liberty, due process and equal protection of law.
The same parameters apply to the present petition.
Enacted by the city Council of Manila at its regular session today, November 10, 1992.
This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which seeks the
reversal of the Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of Appeals, challenges
the validity of Manila City Ordinance No. 7774 entitled, "An Ordinance Prohibiting ShortTime Admission, Short-Time Admission Rates, and Wash-Up Rate Schemes in Hotels,
Motels, Inns, Lodging Houses, Pension Houses, and Similar Establishments in the City of
Manila" (the Ordinance).
I.
The facts are as follows:
On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the
Ordinance.4 The Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the declared policy of the City Government
to protect the best interest, health and welfare, and the morality of its constituents in
general and the youth in particular.
SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.
Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or
temporary restraining order (TRO)5 with the Regional Trial Court (RTC) of Manila, Branch
9 impleading as defendant, herein respondent City of Manila (the City) represented by
Mayor Lim.6 MTDC prayed that the Ordinance, insofar as it includes motels and inns as
among its prohibited establishments, be declared invalid and unconstitutional. MTDC
claimed that as owner and operator of the Victoria Court in Malate, Manila it was
authorized by Presidential Decree (P.D.) No. 259 to admit customers on a short time basis
as well as to charge customers wash up rates for stays of only three hours.
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation
(TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to
intervene and to admit attached complaint-in-intervention7 on the ground that the
Ordinance directly affects their business interests as operators of drive-in-hotels and
motels in Manila.8 The three companies are components of the Anito Group of Companies
which owns and operates several hotels and motels in Metro Manila.9

On December 23, 1992, the RTC granted the motion to intervene.10 The RTC also
notified the Solicitor General of the proceedings pursuant to then Rule 64, Section 4 of the
Rules of Court. On the same date, MTDC moved to withdraw as plaintiff.11
95
On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The RTC issued
a TRO on January 14, 1993, directing the City to cease and desist from enforcing the
Ordinance.13 The City filed an Answer dated January 22, 1993 alleging that the
Ordinance is a legitimate exercise of police power.14
"to enact all ordinances it may deem necessary and proper for the sanitation and safety,
the furtherance of the prosperity and the promotion of the morality, peace, good order,
comfort, convenience and general welfare of the city and its inhabitants, and such others
as be necessary to carry into effect and discharge the powers and duties conferred by this
Chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months imprisonment, or both such fine and imprisonment for a
single offense.23
On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to
desist from the enforcement of the Ordinance.15 A month later, on March 8, 1993, the
Solicitor General filed his Comment arguing that the Ordinance is constitutional.
Petitioners argued that the Ordinance is unconstitutional and void since it violates the right
to privacy and the freedom of movement; it is an invalid exercise of police power; and it is
an unreasonable and oppressive interference in their business.
During the pre-trial conference, the WLC, TC and STDC agreed to submit the case for
decision without trial as the case involved a purely legal question.16 On October 20, 1993,
the RTC rendered a decision declaring the Ordinance null and void. The dispositive
portion of the decision reads:
The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of
the Ordinance.24First, it held that the Ordinance did not violate the right to privacy or the
freedom of movement, as it only penalizes the owners or operators of establishments that
admit individuals for short time stays. Second, the virtually limitless reach of police power
is only constrained by having a lawful object obtained through a lawful method. The lawful
objective of the Ordinance is satisfied since it aims to curb immoral activities. There is a
lawful method since the establishments are still allowed to operate. Third, the adverse
effect on the establishments is justified by the well-being of its constituents in general.
Finally, as held in Ermita-Malate Motel Operators Association v. City Mayor of
Manila, liberty is regulated by law.
WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of Manila is
hereby declared null and void.
Accordingly, the preliminary injunction heretofor issued is hereby made permanent.
SO ORDERED.17
The RTC noted that the ordinance "strikes at the personal liberty of the individual
guaranteed and jealously guarded by the Constitution."18 Reference was made to the
provisions of the Constitution encouraging private enterprises and the incentive to needed
investment, as well as the right to operate economic enterprises. Finally, from the
observation that the illicit relationships the Ordinance sought to dissuade could
nonetheless be consummated by simply paying for a 12-hour stay, the RTC likened the
law to the ordinance annulled in Ynot v. Intermediate Appellate Court,19 where the
legitimate purpose of preventing indiscriminate slaughter of carabaos was sought to be
effected through an inter-province ban on the transport of carabaos and carabeef.
The City later filed a petition for review on certiorari with the Supreme Court.20 The
petition was docketed as G.R. No. 112471. However in a resolution dated January 26,
1994, the Court treated the petition as a petition forcertiorari and referred the petition to
the Court of Appeals.21
Before the Court of Appeals, the City asserted that the Ordinance is a valid exercise of
police power pursuant to Section 458 (4)(iv) of the Local Government Code which confers
on cities, among other local government units, the power:
[To] regulate the establishment, operation and maintenance of cafes, restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging houses and other similar
establishments, including tourist guides and transports.22
The Ordinance, it is argued, is also a valid exercise of the power of the City under Article
III, Section 18(kk) of the Revised Manila Charter, thus:
TC, WLC and STDC come to this Court via petition for review on certiorari.25 In their
petition and Memorandum, petitioners in essence repeat the assertions they made before
the Court of Appeals. They contend that the assailed Ordinance is an invalid exercise of
police power.
II.
We must address the threshold issue of petitioners standing. Petitioners allege that as
owners of establishments offering "wash-up" rates, their business is being unlawfully
interfered with by the Ordinance. However, petitioners also allege that the equal protection
rights of their clients are also being interfered with. Thus, the crux of the matter is whether
or not these establishments have the requisite standing to plead for protection of their
patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate to the court sufficient
connection to and harm from the law or action challenged to support that party's
participation in the case. More importantly, the doctrine of standing is built on the principle
of separation of powers,26 sparing as it does unnecessary interference or invalidation by
the judicial branch of the actions rendered by its co-equal branches of government.
The requirement of standing is a core component of the judicial system derived directly
from the Constitution.27The constitutional component of standing doctrine incorporates
concepts which concededly are not susceptible of precise definition.28 In this jurisdiction,
the extancy of "a direct and personal interest" presents the most obvious cause, as well as
the standard test for a petitioner's standing.29 In a similar vein, the United States

Supreme Court reviewed and elaborated on the meaning of the three constitutional
standing requirements of injury, causation, and redressability in Allen v. Wright.30
Nonetheless, the general rules on standing admit of several exceptions such as the
overbreadth doctrine, taxpayer suits, third party standing and, especially in the Philippines,
the doctrine of transcendental importance.31
For this particular set of facts, the concept of third party standing as an exception and the
overbreadth doctrine are appropriate. In Powers v. Ohio,32 the United States Supreme
Court wrote that: "We have recognized the right of litigants to bring actions on behalf of
third parties, provided three important criteria are satisfied: the litigant must have suffered
an injury-in-fact, thus giving him or her a "sufficiently concrete interest" in the outcome of
the issue in dispute; the litigant must have a close relation to the third party; and there
must exist some hindrance to the third party's ability to protect his or her own
interests."33 Herein, it is clear that the business interests of the petitioners are likewise
injured by the Ordinance. They rely on the patronage of their customers for their continued
viability which appears to be threatened by the enforcement of the Ordinance. The relative
silence in constitutional litigation of such special interest groups in our nation such as the
American Civil Liberties Union in the United States may also be construed as a hindrance
for customers to bring suit.34
American jurisprudence is replete with examples where parties-in-interest were allowed
standing to advocate or invoke the fundamental due process or equal protection claims of
other persons or classes of persons injured by state action. In Griswold v.
Connecticut,35 the United States Supreme Court held that physicians had standing to
challenge a reproductive health statute that would penalize them as accessories as well
as to plead the constitutional protections available to their patients. The Court held that:
"The rights of husband and wife, pressed here, are likely to be diluted or adversely
affected unless those rights are considered in a suit involving those who have this kind of
confidential relation to them."36
An even more analogous example may be found in Craig v. Boren,37 wherein the United
States Supreme Court held that a licensed beverage vendor has standing to raise the
equal protection claim of a male customer challenging a statutory scheme prohibiting the
sale of beer to males under the age of 21 and to females under the age of 18. The United
States High Court explained that the vendors had standing "by acting as advocates of the
rights of third parties who seek access to their market or function."38
Assuming arguendo that petitioners do not have a relationship with their patrons for the
former to assert the rights of the latter, the overbreadth doctrine comes into play. In
overbreadth analysis, challengers to government actionare in effect permitted to raise the
rights of third parties. Generally applied to statutes infringing on the freedom of speech,
the overbreadth doctrine applies when a statute needlessly restrains even constitutionally
guaranteed rights.39 In this case, the petitioners claim that the Ordinance makes a
sweeping intrusion into the right to liberty of their clients. We can see that based on the
allegations in the petition, the Ordinance suffers from overbreadth.
We thus recognize that the petitioners have a right to assert the constitutional rights of
their clients to patronize their establishments for a "wash-rate" time frame.
96
III.
To students of jurisprudence, the facts of this case will recall to mind not only the
recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and Motel
Operations Association, Inc., v. Hon. City Mayor of Manila.40Ermita-Malate concerned the
City ordinance requiring patrons to fill up a prescribed form stating personal information
such as name, gender, nationality, age, address and occupation before they could be
admitted to a motel, hotel or lodging house. This earlier ordinance was precisely enacted
to minimize certain practices deemed harmful to public morals. A purpose similar to the
annulled ordinance in City of Manila which sought a blanket ban on motels, inns and
similar establishments in the Ermita-Malate area. However, the constitutionality of the
ordinance in Ermita-Malate was sustained by the Court.
The common thread that runs through those decisions and the case at bar goes beyond
the singularity of the localities covered under the respective ordinances. All three
ordinances were enacted with a view of regulating public morals including particular illicit
activity in transient lodging establishments. This could be described as the middle case,
wherein there is no wholesale ban on motels and hotels but the services offered by these
establishments have been severely restricted. At its core, this is another case about the
extent to which the State can intrude into and regulate the lives of its citizens.
The test of a valid ordinance is well established. A long line of decisions including City of
Manila has held that for an ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and pass according to the procedure
prescribed by law, it must also conform to the following substantive requirements: (1) must
not contravene the Constitution or any statute; (2) must not be unfair or oppressive; (3)
must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must
be general and consistent with public policy; and (6) must not be unreasonable.41
The Ordinance prohibits two specific and distinct business practices, namely wash rate
admissions and renting out a room more than twice a day. The ban is evidently sought to
be rooted in the police power as conferred on local government units by the Local
Government Code through such implements as the general welfare clause.
A.
Police power, while incapable of an exact definition, has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response as the conditions warrant.42 Police power is
based upon the concept of necessity of the State and its corresponding right to protect
itself and its people.43 Police power has been used as justification for numerous and
varied actions by the State. These range from the regulation of dance halls,44 movie
theaters,45 gas stations46 and cockpits.47 The awesome scope of police power is best
demonstrated by the fact that in its hundred or so years of presence in our nations legal
system, its use has rarely been denied.
The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves,
are unimpeachable and certainly fall within the ambit of the police power of the State. Yet
the desirability of these ends do not sanctify any and all means for their achievement.
Those means must align with the Constitution, and our emerging sophisticated analysis of
its guarantees to the people. The Bill of Rights stands as a rebuke to the seductive theory
of Macchiavelli, and, sometimes even, the political majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due
process or equal protection questions, the courts are naturally inhibited by a due
deference to the co-equal branches of government as they exercise their political
functions. But when we are compelled to nullify executive or legislative actions, yet
another form of caution emerges. If the Court were animated by the same passing fancies
or turbulent emotions that motivate many political decisions, judicial integrity is
compromised by any perception that the judiciary is merely the third political branch of
government. We derive our respect and good standing in the annals of history by acting
as judicious and neutral arbiters of the rule of law, and there is no surer way to that end
than through the development of rigorous and sophisticated legal standards through which
the courts analyze the most fundamental and far-reaching constitutional questions of the
day.
B.
The primary constitutional question that confronts us is one of due process, as guaranteed
under Section 1, Article III of the Constitution. Due process evades a precise
definition.48 The purpose of the guaranty is to prevent arbitrary governmental
encroachment against the life, liberty and property of individuals. The due process
guaranty serves as a protection against arbitrary regulation or seizure. Even corporations
and partnerships are protected by the guaranty insofar as their property is concerned.
The due process guaranty has traditionally been interpreted as imposing two related but
distinct restrictions on government, "procedural due process" and "substantive due
process." Procedural due process refers to the procedures that the government must
follow before it deprives a person of life, liberty, or property.49 Procedural due process
concerns itself with government action adhering to the established process when it makes
an intrusion into the private sphere. Examples range from the form of notice given to the
level of formality of a hearing.
If due process were confined solely to its procedural aspects, there would arise absurd
situation of arbitrary government action, provided the proper formalities are followed.
Substantive due process completes the protection envisioned by the due process clause.
It inquires whether the government has sufficient justification for depriving a person of life,
liberty, or property.50
The question of substantive due process, moreso than most other fields of law, has
reflected dynamism in progressive legal thought tied with the expanded acceptance of
fundamental freedoms. Police power, traditionally awesome as it may be, is now
confronted with a more rigorous level of analysis before it can be upheld. The vitality
though of constitutional due process has not been predicated on the frequency with which
it has been utilized to achieve a liberal result for, after all, the libertarian ends should
sometimes yield to the prerogatives of the State. Instead, the due process clause has
acquired potency because of the sophisticated methodology that has emerged to
determine the proper metes and bounds for its application.
C.
97
The general test of the validity of an ordinance on substantive due process grounds is
best tested when assessed with the evolved footnote 4 test laid down by the U.S.
Supreme Court in U.S. v. Carolene Products.51 Footnote 4 of the Carolene Products case
acknowledged that the judiciary would defer to the legislature unless there is a
discrimination against a "discrete and insular" minority or infringement of a "fundamental
right."52 Consequently, two standards of judicial review were established: strict scrutiny
for laws dealing with freedom of the mind or restricting the political process, and the
rational basis standard of review for economic legislation.
A third standard, denominated as heightened or immediate scrutiny, was later adopted by
the U.S. Supreme Court for evaluating classifications based on gender53 and
legitimacy.54 Immediate scrutiny was adopted by the U.S. Supreme Court in
Craig,55 after the Court declined to do so in Reed v. Reed.56 While the test may have first
been articulated in equal protection analysis, it has in the United States since been
applied in all substantive due process cases as well.
We ourselves have often applied the rational basis test mainly in analysis of equal
protection challenges.57 Using the rational basis examination, laws or ordinances are
upheld if they rationally further a legitimate governmental interest.58 Under intermediate
review, governmental interest is extensively examined and the availability of less
restrictive measures is considered.59 Applying strict scrutiny, the focus is on the presence
of compelling, rather than substantial, governmental interest and on the absence of less
restrictive means for achieving that interest.
In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard
for determining the quality and the amount of governmental interest brought to justify the
regulation of fundamental freedoms.60 Strict scrutiny is used today to test the validity of
laws dealing with the regulation of speech, gender, or race as well as other fundamental
rights as expansion from its earlier applications to equal protection.61 The United States
Supreme Court has expanded the scope of strict scrutiny to protect fundamental rights
such as suffrage,62 judicial access63 and interstate travel.64
If we were to take the myopic view that an Ordinance should be analyzed strictly as to its
effect only on the petitioners at bar, then it would seem that the only restraint imposed by
the law which we are capacitated to act upon is the injury to property sustained by the
petitioners, an injury that would warrant the application of the most deferential standard
the rational basis test. Yet as earlier stated, we recognize the capacity of the petitioners to
invoke as well the constitutional rights of their patrons those persons who would be
deprived of availing short time access or wash-up rates to the lodging establishments in
question.
Viewed cynically, one might say that the infringed rights of these customers were are trivial
since they seem shorn of political consequence. Concededly, these are not the sort of
cherished rights that, when proscribed, would impel the people to tear up their cedulas.
Still, the Bill of Rights does not shelter gravitas alone. Indeed, it is those "trivial" yet
fundamental freedoms which the people reflexively exercise any day without the
impairing awareness of their constitutional consequence that accurately reflect the
degree of liberty enjoyed by the people. Liberty, as integrally incorporated as a
fundamental right in the Constitution, is not a Ten Commandments-style enumeration of
what may or what may not be done; but rather an atmosphere of freedom where the

people do not feel labored under a Big Brother presence as they interact with each other,
their society and nature, in a manner innately understood by them as inherent, without
doing harm or injury to others.
D.
The rights at stake herein fall within the same fundamental rights to liberty which we
upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most primordial of
rights, thus:
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the
right to exist and the right to be free from arbitrary restraint or servitude. The term cannot
be dwarfed into mere freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which he has been
endowed by his Creator, subject only to such restraint as are necessary for the common
welfare."[65] In accordance with this case, the rights of the citizen to be free to use his
faculties in all lawful ways; to live and work where he will; to earn his livelihood by any
lawful calling; and to pursue any avocation are all deemed embraced in the concept of
liberty.[66]
98
his will is set by the will of others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion
of which should be justified by a compelling state interest. Morfe accorded recognition to
the right to privacy independently of its identification with liberty; in itself it is fully
deserving of constitutional protection. Governmental powers should stop short of certain
intrusions into the personal life of the citizen.70
We cannot discount other legitimate activities which the Ordinance would proscribe or
impair. There are very legitimate uses for a wash rate or renting the room out for more
than twice a day. Entire families are known to choose pass the time in a motel or hotel
whilst the power is momentarily out in their homes. In transit passengers who wish to
wash up and rest between trips have a legitimate purpose for abbreviated stays in motels
or hotels. Indeed any person or groups of persons in need of comfortable private spaces
for a span of a few hours with purposes other than having sex or using illegal drugs can
legitimately look to staying in a motel or hotel as a convenient alternative.
E.
The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to clarify the
meaning of "liberty." It said:
While the Court has not attempted to define with exactness the liberty . . . guaranteed [by
the Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily
restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own conscience, and generally to
enjoy those privileges long recognized . . . as essential to the orderly pursuit of happiness
by free men. In a Constitution for a free people, there can be no doubt that the meaning of
"liberty" must be broad indeed.67 [Citations omitted]
It cannot be denied that the primary animus behind the ordinance is the curtailment of
sexual behavior. The City asserts before this Court that the subject establishments "have
gained notoriety as venue of prostitution, adultery and fornications in Manila since they
provide the necessary atmosphere for clandestine entry, presence and exit and thus
became the ideal haven for prostitutes and thrill-seekers."68 Whether or not this
depiction of a mise-en-scene of vice is accurate, it cannot be denied that legitimate sexual
behavior among willing married or consenting single adults which is constitutionally
protected69 will be curtailed as well, as it was in the City of Manila case. Our holding
therein retains significance for our purposes:
The concept of liberty compels respect for the individual whose claim to privacy and
interference demands respect. As the case of Morfe v. Mutuc, borrowing the words of
Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on
which his civic obligations are built. He cannot abandon the consequences of his isolation,
which are, broadly speaking, that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to others, he surrenders himself. If
That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product
and the petitioners of lucrative business ties in with another constitutional requisite for the
legitimacy of the Ordinance as a police power measure. It must appear that the interests
of the public generally, as distinguished from those of a particular class, require an
interference with private rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of private rights.71 It must also
be evident that no other alternative for the accomplishment of the purpose less intrusive of
private rights can work. More importantly, a reasonable relation must exist between the
purposes of the measure and the means employed for its accomplishment, for even under
the guise of protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.72
Lacking a concurrence of these requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the exercise of police
power is subject to judicial review when life, liberty or property is affected.73 However, this
is not in any way meant to take it away from the vastness of State police power whose
exercise enjoys the presumption of validity.74
Similar to the Comelec resolution requiring newspapers to donate advertising space to
candidates, this Ordinance is a blunt and heavy instrument.75 The Ordinance makes no
distinction between places frequented by patrons engaged in illicit activities and patrons
engaged in legitimate actions. Thus it prevents legitimate use of places where illicit
activities are rare or even unheard of. A plain reading of section 3 of the Ordinance shows
it makes no classification of places of lodging, thus deems them all susceptible to illicit
patronage and subject them without exception to the unjustified prohibition.
The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its
longtime home,76 and it is skeptical of those who wish to depict our capital city the Pearl
of the Orient as a modern-day Sodom or Gomorrah for the Third World set. Those still
steeped in Nick Joaquin-dreams of the grandeur of Old Manila will have to accept that

99
Manila like all evolving big cities, will have its problems. Urban decay is a fact of mega
cities such as Manila, and vice is a common problem confronted by the modern metropolis
wherever in the world. The solution to such perceived decay is not to prevent legitimate
businesses from offering a legitimate product. Rather, cities revive themselves by offering
incentives for new businesses to sprout up thus attracting the dynamism of individuals that
would bring a new grandeur to Manila.
with any more extensive elaboration on our part of what is moral and immoral, but from
our recognition that the individual liberty to make the choices in our lives is innate, and
protected by the State. Independent and fair-minded judges themselves are under a moral
duty to uphold the Constitution as the embodiment of the rule of law, by reason of their
expression of consent to do so when they take the oath of office, and because they are
entrusted by the people to uphold the law.81
The behavior which the Ordinance seeks to curtail is in fact already prohibited and could
in fact be diminished simply by applying existing laws. Less intrusive measures such as
curbing the proliferation of prostitutes and drug dealers through active police work would
be more effective in easing the situation. So would the strict enforcement of existing laws
and regulations penalizing prostitution and drug use. These measures would have minimal
intrusion on the businesses of the petitioners and other legitimate merchants. Further, it is
apparent that the Ordinance can easily be circumvented by merely paying the whole day
rate without any hindrance to those engaged in illicit activities. Moreover, drug dealers and
prostitutes can in fact collect "wash rates" from their clientele by charging their customers
a portion of the rent for motel rooms and even apartments.
Even as the implementation of moral norms remains an indispensable complement to

governance, that prerogative is hardly absolute, especially in the face of the norms of due
process of liberty. And while the tension may often be left to the courts to relieve, it is
possible for the government to avoid the constitutional conflict by employing more
judicious, less drastic means to promote morality.
IV.
We reiterate that individual rights may be adversely affected only to the extent that may
fairly be required by the legitimate demands of public interest or public welfare. The State
is a leviathan that must be restrained from needlessly intruding into the lives of its citizens.
However well-intentioned the Ordinance may be, it is in effect an arbitrary and whimsical
intrusion into the rights of the establishments as well as their patrons. The Ordinance
needlessly restrains the operation of the businesses of the petitioners as well as restricting
the rights of their patrons without sufficient justification. The Ordinance rashly equates
wash rates and renting out a room more than twice a day with immorality without
accommodating innocuous intentions.
The promotion of public welfare and a sense of morality among citizens deserves the full
endorsement of the judiciary provided that such measures do not trample rights this Court
is sworn to protect.77 The notion that the promotion of public morality is a function of the
State is as old as Aristotle.78 The advancement of moral relativism as a school of
philosophy does not de-legitimize the role of morality in law, even if it may foster wider
debate on which particular behavior to penalize. It is conceivable that a society with
relatively little shared morality among its citizens could be functional so long as the pursuit
of sharply variant moral perspectives yields an adequate accommodation of different
interests.79
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals

is REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 9,
is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.
SO ORDERED.
Office of the Solicitor vs. City of Manila
Before this Court is a Petition for Review on Certiorari,[1] under Rule 45 of the Revised
Rules of Court, filed by petitioner Office of the Solicitor General (OSG), seeking the
reversal and setting aside of the Decision[2] dated 25 January 2007 of the Court of
Appeals in CA-G.R. CV No. 76298, which affirmed in totothe Joint Decision[3] dated 29
May 2002 of the Regional Trial Court (RTC) of Makati City, Branch 138, in Civil Cases No.
00-1208 and No. 00-1210; and (2) the Resolution[4] dated 14 March 2007 of the appellate
court in the same case which denied the Motion for Reconsideration of the OSG. The
RTC adjudged that respondents Ayala Land Incorporated (Ayala Land), Robinsons Land
Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime
Holdings, Inc. (SM Prime) could not be obliged to provide free parking spaces in their
malls to their patrons and the general public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping
malls in various locations in Metro Manila. Respondent SM Prime constructs, operates,
and leases out commercial buildings and other structures, among which, are SM
City, Manila; SM Centerpoint, Sta. Mesa, Manila; SM City,North Avenue, Quezon City; and
SM Southmall, Las Pias.
To be candid about it, the oft-quoted American maxim that "you cannot legislate morality"
is ultimately illegitimate as a matter of law, since as explained by Calabresi, that phrase is
more accurately interpreted as meaning that efforts to legislate morality will fail if they are
widely at variance with public attitudes about right and wrong.80 Our penal laws, for one,
are founded on age-old moral traditions, and as long as there are widely accepted
distinctions between right and wrong, they will remain so oriented.
The shopping malls operated or leased out by respondents have parking facilities for all
kinds of motor vehicles, either by way of parking spaces inside the mall buildings or in
separate buildings and/or adjacent lots that are solely devoted for use as parking
spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the construction of
their own parking facilities. Respondent Shangri-la is renting its parking facilities,
consisting of land and building specifically used as parking spaces, which were
constructed for the lessors account.
Yet the continuing progression of the human story has seen not only the acceptance of the
right-wrong distinction, but also the advent of fundamental liberties as the key to the
enjoyment of life to the fullest. Our democracy is distinguished from non-free societies not
Respondents expend for the maintenance and administration of their respective parking
facilities. They provide security personnel to protect the vehicles parked in their parking
facilities and maintain order within the area. In turn, they collect the following parking fees

from the persons making use of their parking facilities, regardless of whether said persons
are mall patrons or not:
Respondent
Parking Fees
Ayala Land
On weekdays, P25.00 for the first four hours andP10.00

for every succeeding hour; on weekends, flat rate
of P25.00 per day
Robinsons
P20.00 for the first three hours and P10.00 for every
succeeding hour
Shangri-la
Flat rate of P30.00 per day
SM Prime
P10.00 to P20.00 (depending on whether the parking

space is outdoors or indoors) for the first three hours and
59 minutes, and P10.00 for every succeeding hour or
fraction thereof
The parking tickets or cards issued by respondents to vehicle owners contain the
stipulation that respondents shall not be responsible for any loss or damage to the
vehicles parked in respondents parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on Justice and Human
Rights conducted a joint investigation for the following purposes: (1) to inquire into the
legality of the prevalent practice of shopping malls of charging parking fees; (2)
assuming arguendo that the collection of parking fees was legally authorized, to find out
the basis and reasonableness of the parking rates charged by shopping malls; and (3) to
determine the legality of the policy of shopping malls of denying liability in cases of theft,
robbery, or carnapping, by invoking the waiver clause at the back of the parking
tickets. Said Senate Committees invited the top executives of respondents, who operate
the major malls in the country; the officials from the Department of Trade and Industry
(DTI), Department of Public Works and Highways (DPWH), Metro Manila Development
Authority (MMDA), and other local government officials; and the Philippine Motorists
Association (PMA) as representative of the consumers group.
After three public hearings held on 30 September, 3 November, and 1 December 1999,
the afore-mentioned Senate Committees jointly issued Senate Committee Report No.
225[5] on 2 May 2000, in which they concluded:
In view of the foregoing, the Committees find that the collection of parking fees by
shopping malls is contrary to the National Building Code and is therefor [sic] illegal. While
it is true that the Code merely requires malls to provide parking spaces, without specifying
whether it is free or not, both Committees believe that the reasonable and logical
interpretation of the Code is that the parking spaces are for free. This interpretation is not
only reasonable and logical but finds support in the actual practice in other countries like
theUnited States of America where parking spaces owned and operated by mall owners
are free of charge.
100
Figuratively speaking, the Code has expropriated the land for parking something
similar to the subdivision law which require developers to devote so much of the land area
for parks.
Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides that it is
the policy of the State to protect the interest of the consumers, promote the general
welfare and establish standards of conduct for business and industry. Obviously, a
contrary interpretation (i.e., justifying the collection of parking fees) would be going against
the declared policy of R.A. 7394.
Section 201 of the National Building Code gives the responsibility for the administration
and enforcement of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This set up, however, is
not being carried out in reality.
In the position paper submitted by the Metropolitan Manila Development Authority
(MMDA), its chairman, Jejomar C. Binay, accurately pointed out that the Secretary of the
DPWH is responsible for the implementation/enforcement of the National Building
Code. After the enactment of the Local Government Code of 1991, the local government
units (LGUs) were tasked to discharge the regulatory powers of the DPWH. Hence, in the
local level, the Building Officials enforce all rules/ regulations formulated by the DPWH
relative to all building plans, specifications and designs including parking space
requirements. There is, however, no single national department or agency directly tasked
to supervise the enforcement of the provisions of the Code on parking, notwithstanding
the national character of the law.[6]
Senate Committee Report No. 225, thus, contained the following recommendations:
In light of the foregoing, the Committees on Trade and Commerce and Justice and Human
Rights hereby recommend the following:
1.
The Office of the Solicitor General should institute the necessary action to enjoin
the collection of parking fees as well as to enforce the penal sanction provisions of the
National Building Code. The Office of the Solicitor General should likewise study how
refund can be exacted from mall owners who continue to collect parking fees.
2.
The Department of Trade and Industry pursuant to the provisions of R.A. No. 7394,
otherwise known as the Consumer Act of the Philippines should enforce the provisions of
the Code relative to parking. Towards this end, the DTI should formulate the necessary
implementing rules and regulations on parking in shopping malls, with prior consultations
with the local government units where these are located. Furthermore, the DTI, in
coordination with the DPWH, should be empowered to regulate and supervise the
construction and maintenance of parking establishments.
3.
Finally, Congress should amend and update the National Building Code to
expressly prohibit shopping malls from collecting parking fees by at the same time,
prohibit them from invoking the waiver of liability.[7]

Respondent SM Prime thereafter received information that, pursuant to Senate Committee

Report No. 225, the DPWH Secretary and the local building officials of Manila, Quezon
City, and Las Pias intended to institute, through the OSG, an action to enjoin respondent
SM Prime and similar establishments from collecting parking fees, and to impose upon
said establishments penal sanctions under Presidential Decree No. 1096, otherwise
known as the National Building Code of the Philippines (National Building Code), and its
Implementing Rules and Regulations (IRR). With the threatened action against it,
respondent SM Prime filed, on 3 October 2000, a Petition for Declaratory Relief[8] under
Rule 63 of the Revised Rules of Court, against the DPWH Secretary and local building
officials of Manila, Quezon City, and Las Pias. Said Petition was docketed as Civil Case
No. 00-1208 and assigned to the RTC of Makati City, Branch 138, presided over by Judge
Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM Prime prayed for
judgment:
a)
Declaring Rule XIX of the Implementing Rules and Regulations of the National
Building Code as ultra vires, hence, unconstitutional and void;
b)
Declaring [herein respondent SM Prime]s clear legal right to lease parking spaces
appurtenant to its department stores, malls, shopping centers and other commercial
establishments; and
c)
Declaring the National Building Code of the Philippines Implementing Rules and
Regulations as ineffective, not having been published once a week for three (3)
consecutive weeks in a newspaper of general circulation, as prescribed by Section 211 of
Presidential Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as may be deemed just and
equitable under the premises.[9]
The very next day, 4 October 2000, the OSG filed a Petition for Declaratory Relief and
Injunction (with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction)
[10] against respondents. This Petition was docketed as Civil Case No. 00-1210 and
raffled to the RTC of Makati, Branch 135, presided over by Judge Francisco B. Ibay
(Judge Ibay). Petitioner prayed that the RTC:
1.
After summary hearing, a temporary restraining order and a writ of preliminary
injunction be issued restraining respondents from collecting parking fees from their
customers; and
2.
After hearing, judgment be rendered declaring that the practice of respondents in
charging parking fees is violative of the National Building Code and its Implementing
Rules and Regulations and is therefore invalid, and making permanent any injunctive writ
issued in this case.
Other reliefs just and equitable under the premises are likewise prayed for.[11]
101
On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued an Order
consolidating Civil Case No. 00-1210 with Civil Case No. 00-1208 pending before Judge
Marella of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August 2001, the RTC
issued a Pre-Trial Order[12] of even date which limited the issues to be resolved in Civil
Cases No. 00-1208 and No. 00-1210 to the following:
1.
Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the present
proceedings and relative thereto whether the controversy in the collection of parking fees
by mall owners is a matter of public welfare.
2.
Whether declaratory relief is proper.
3.
Whether respondent Ayala Land, Robinsons, Shangri-La and SM Prime are
obligated to provide parking spaces in their malls for the use of their patrons or the public
in general, free of charge.
4.
Entitlement of the parties of [sic] award of damages.[13]
On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-1208 and No.
00-1210.
The RTC resolved the first two issues affirmatively. It ruled that the OSG can initiate Civil
Case No. 00-1210 under Presidential Decree No. 478 and the Administrative Code of
1987.[14] It also found that all the requisites for an action for declaratory relief were
present, to wit:
The requisites for an action for declaratory relief are: (a) there is a justiciable controversy;
(b) the controversy is between persons whose interests are adverse; (c) the party seeking
the relief has a legal interest in the controversy; and (d) the issue involved is ripe for
judicial determination.
SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who stands to be
affected directly by the position taken by the government officials sued namely the
Secretary of Public Highways and the Building Officials of the local government units
where it operates shopping malls. The OSG on the other hand acts on a matter of public
interest and has taken a position adverse to that of the mall owners whom it sued. The
construction of new and bigger malls has been announced, a matter which the Court can
take judicial notice and the unsettled issue of whether mall operators should provide
parking facilities, free of charge needs to be resolved.[15]
As to the third and most contentious issue, the RTC pronounced that:
The Building Code, which is the enabling law and the Implementing Rules and
Regulations do not impose that parking spaces shall be provided by the mall owners free

of charge. Absent such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are
under no obligation to provide them for free. Article 1158 of the Civil Code is clear:
102
CA-G.R. CV No. 76298 involved the separate appeals of the OSG[18] and
respondent SM Prime[19] filed with the Court of Appeals. The sole assignment of error of
the OSG in its Appellants Brief was:
Obligations derived from law are not presumed. Only those expressly determined in this
Code or in special laws are demandable and shall be regulated by the precepts of the law
which establishes them; and as to what has not been foreseen, by the provisions of this
Book (1090).[]
THE TRIAL COURT ERRED IN HOLDING THAT THE NATIONAL BUILDING CODE DID
NOT INTEND MALL PARKING SPACES TO BE FREE OF CHARGE[;][20]
xxxx
while the four errors assigned by respondent SM Prime in its Appellants Brief were:
The provision on ratios of parking slots to several variables, like shopping floor area or
customer area found in Rule XIX of the Implementing Rules and Regulations cannot be
construed as a directive to provide free parking spaces, because the enabling law, the
Building Code does not so provide. x x x.
To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide parking spaces
for free can be considered as an unlawful taking of property right without just
compensation.
Parking spaces in shopping malls are privately owned and for their use, the mall operators
collect fees. The legal relationship could be either lease or deposit. In either case[,] the
mall owners have the right to collect money which translates into income. Should parking
spaces be made free, this right of mall owners shall be gone. This, without just
compensation. Further, loss of effective control over their property will ensue which is
frowned upon by law.
The presence of parking spaces can be viewed in another light. They can be looked at as
necessary facilities to entice the public to increase patronage of their malls because
without parking spaces, going to their malls will be inconvenient. These are[,] however[,]
business considerations which mall operators will have to decide for themselves. They
are not sufficient to justify a legal conclusion, as the OSG would like the Court to adopt
that it is the obligation of the mall owners to provide parking spaces for free.[16]
The RTC then held that there was no sufficient evidence to justify any award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No. 001208 and No. 00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc., Robinsons Land
Corporation, Shangri-la Plaza Corporation and SM Prime Holdings[,] Inc. are not obligated
to provide parking spaces in their malls for the use of their patrons or public in general,
free of charge.
All counterclaims in Civil Case No. 00-1210 are dismissed.
No pronouncement as to costs.[17]
THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE

IMPLEMENTING RULES AS HAVING BEEN ENACTED ULTRA VIRES, HENCE,
UNCONSTITUTIONAL AND VOID.
II
THE TRIAL COURT ERRED IN FAILING TO DECLARE THE IMPLEMENTING RULES
INEFFECTIVE FOR NOT HAVING BEEN PUBLISHED AS REQUIRED BY LAW.
III
THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSGS PETITION FOR
DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS NO LEGAL
CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL PARTY-IN-INTEREST IN THE
INSTANT CASE.[21]
Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the ground
that the lone issue raised therein involved a pure question of law, not reviewable by the
Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on 25
January 2007. The appellate court agreed with respondent Robinsons that the appeal of
the OSG should suffer the fate of dismissal, since the issue on whether or not the
National Building Code and its implementing rules require shopping mall operators to
provide parking facilities to the public for free was evidently a question of law. Even so,
since CA-G.R. CV No. 76298 also included the appeal of respondent SM Prime, which
raised issues worthy of consideration, and in order to satisfy the demands of substantial
justice, the Court of Appeals proceeded to rule on the merits of the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate Civil
Case No. 00-1210 before the RTC as the legal representative of the government,[22] and

as the one deputized by the Senate of the Republic of the Philippines through Senate
Committee Report No. 225.
The Court of Appeals rejected the contention of respondent SM Prime that the OSG failed
to exhaust administrative remedies. The appellate court explained that an administrative
review is not a condition precedent to judicial relief where the question in dispute is purely
a legal one, and nothing of an administrative nature is to be or can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR of the National
Building Code, as such issue was not among those the parties had agreed to be resolved
by the RTC during the pre-trial conference for Civil Cases No. 00-1208 and No. 001210. Issues cannot be raised for the first time on appeal. Furthermore, the appellate
court found that the controversy could be settled on other grounds, without touching on
the issue of the validity of the IRR. It referred to the settled rule that courts should refrain
from passing upon the constitutionality of a law or implementing rules, because of the
principle that bars judicial inquiry into a constitutional question, unless the resolution
thereof is indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the National Building Code and
Rule XIX of the IRR were clear and needed no further construction. Said provisions were
only intended to control the occupancy or congestion of areas and structures. In the
absence of any express and clear provision of law, respondents could not be obliged and
expected to provide parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the instant appeals are DENIED. Accordingly,
appealed Decision is hereby AFFIRMED in toto.[23]
In its Resolution issued on 14 March 2007, the Court of Appeals denied the Motion
for Reconsideration of the OSG, finding that the grounds relied upon by the latter had
already been carefully considered, evaluated, and passed upon by the appellate court,
and there was no strong and cogent reason to modify much less reverse the assailed
judgment.
The OSG now comes before this Court, via the instant Petition for Review, with a single
assignment of error:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING OF
THE LOWER COURT THAT RESPONDENTS ARE NOT OBLIGED TO PROVIDE FREE
PARKING SPACES TO THEIR CUSTOMERS OR THE PUBLIC.[24]
The OSG argues that respondents are mandated to provide free parking by Section 803 of
the National Building Code and Rule XIX of the IRR.
According to Section 803 of the National Building Code:
103
SECTION 803. Percentage of Site Occupancy

(a) Maximum site occupancy shall be governed by the use, type of construction, and
height of the building and the use, area, nature, and location of the site; and subject to the
provisions of the local zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.
In connection therewith, Rule XIX of the old IRR,[25] provides:

RULE XIX PARKING AND LOADING SPACE REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum
site occupancy, the following provisions on parking and loading space requirements shall
be observed:
1.
The parking space ratings listed below are minimum off-street requirements for
specific uses/occupancies for buildings/structures:
1.1
The size of an average automobile parking slot shall be computed as 2.4 meters by
5.00 meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel
parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60
meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of
which shall be indicated on the plans and specified whether or not parking
accommodations, are attendant-managed. (See Section 2 for computation of parking
requirements).
xxxx
1.7
Neighborhood shopping center 1 slot/100 sq. m. of shopping floor area
The OSG avers that the aforequoted provisions should be read together with Section 102
of the National Building Code, which declares:
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health, property, and
public welfare, consistent with the principles of sound environmental management and
control; and to this end, make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction, use, occupancy, and
maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim
of safeguarding life, health, property, and public welfare, consistent with the principles of
sound environmental management and control. Adequate parking spaces would
contribute greatly to alleviating traffic congestion when complemented by quick and easy

access thereto because of free-charge parking. Moreover, the power to regulate and
control the use, occupancy, and maintenance of buildings and structures carries with it the
power to impose fees and, conversely, to control -- partially or, as in this case, absolutely
-- the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory provisions, garnered
from a plain reading thereof, is that respondents, as operators/lessors of neighborhood
shopping centers, should provide parking and loading spaces, in accordance with the
minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing
therein pertaining to the collection (or non-collection) of parking fees by respondents. In
fact, the term parking fees cannot even be found at all in the entire National Building
Code and its IRR.
Statutory construction has it that if a statute is clear and unequivocal, it must be given its
literal meaning and applied without any attempt at interpretation.[26] Since Section 803 of
the National Building Code and Rule XIX of its IRR do not mention parking fees, then
simply, said provisions do not regulate the collection of the same. The RTC and the Court
of Appeals correctly applied Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable, and shall be regulated by the
precepts of the law which establishes them; and as to what has not been foreseen, by the
provisions of this Book. (Emphasis ours.)
Hence, in order to bring the matter of parking fees within the ambit of the National Building
Code and its IRR, the OSG had to resort to specious and feeble argumentation, in which
the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to expand the
coverage of Section 803 of the same Code and Rule XIX of the IRR, so as to include the
regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the
National Building Code declaring the policy of the State to safeguard life, health, property,
and public welfare, consistent with the principles of sound environmental management
and control; but totally ignores the second part of said provision, which reads, and to this
end, make it the purpose of this Code to provide for all buildings and structures, a
framework of minimum standards and requirements to regulate and control their location,
site, design, quality of materials, construction, use, occupancy, and maintenance. While
the first part of Section 102 of the National Building Code lays down the State policy, it is
the second part thereof that explains how said policy shall be carried out in the
Code. Section 102 of the National Building Code is not an all-encompassing grant of
regulatory power to the DPWH Secretary and local building officials in the name of life,
health, property, and public welfare. On the contrary, it limits the regulatory power of said
officials to ensuring that the minimum standards and requirements for all buildings and
structures, as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements
for parking spaces for buildings, Rule XIX of the IRR also mandates that such parking
104
spaces be provided by building owners free of charge. If Rule XIX is not covered by the
enabling law, then it cannot be added to or included in the implementing rules. The rulemaking power of administrative agencies must be confined to details for regulating the
mode or proceedings to carry into effect the law as it has been enacted, and it cannot be
extended to amend or expand the statutory requirements or to embrace matters not
covered by the statute. Administrative regulations must always be in harmony with the
provisions of the law because any resulting discrepancy between the two will always be
resolved in favor of the basic law.[27]
From the RTC all the way to this Court, the OSG repeatedly referred to Republic v.
Gonzales[28] and City of Ozamis v. Lumapas[29] to support its position that the State has
the power to regulate parking spaces to promote the health, safety, and welfare of the
public; and it is by virtue of said power that respondents may be required to provide free
parking facilities. The OSG, though, failed to consider the substantial differences in the
factual and legal backgrounds of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants of two parcels of
land of the public domain to give way to a road-widening project. It was in this context that
the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main thoroughfares was
prevalent; this, of course, caused the build up of traffic in the surrounding area to the great
discomfort and inconvenience of the public who use the streets. Traffic congestion
constitutes a threat to the health, welfare, safety and convenience of the people and it can
only be substantially relieved by widening streets and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been clothed with full power to
control and regulate its streets for the purpose of promoting public health, safety and
welfare. The City can regulate the time, place, and manner of parking in the streets and
public places; and charge minimal fees for the street parking to cover the expenses for
supervision, inspection and control, to ensure the smooth flow of traffic in the environs of
the public market, and for the safety and convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in contrast, the present
case deals with privately owned parking facilities available for use by the general
public. In Republic and City of Ozamis, the concerned local governments regulated
parking pursuant to their power to control and regulate their streets; in the instant case,
the DPWH Secretary and local building officials regulate parking pursuant to their authority
to ensure compliance with the minimum standards and requirements under the National
Building Code and its IRR. With the difference in subject matters and the bases for the
regulatory powers being invoked, Republic and City of Ozamis do not constitute
precedents for this case.
Indeed, Republic and City of Ozamis both contain pronouncements that weaken the
position of the OSG in the case at bar. In Republic, the Court, instead of placing the
burden on private persons to provide parking facilities to the general public, mentioned the
trend in other jurisdictions wherein the municipal governments themselves took the
initiative to make more parking spaces available so as to alleviate the traffic problems,
thus:

Under the Land Transportation and Traffic Code, parking in designated areas along public
streets or highways is allowed which clearly indicates that provision for parking spaces
serves a useful purpose. In other jurisdictions where traffic is at least as voluminous as
here, the provision by municipal governments of parking space is not limited to parking
along public streets or highways. There has been a marked trend to build off-street
parking facilities with the view to removing parked cars from the streets. While the
provision of off-street parking facilities or carparks has been commonly undertaken by
private enterprise, municipal governments have been constrained to put up carparks in
response to public necessity where private enterprise had failed to keep up with the
growing public demand. American courts have upheld the right of municipal governments
to construct off-street parking facilities as clearly redounding to the public benefit.[30]
In City of Ozamis, the Court authorized the collection by the City of minimal fees for the
parking of vehicles along the streets: so why then should the Court now preclude
respondents from collecting from the public a fee for the use of the mall parking
facilities? Undoubtedly, respondents also incur expenses in the maintenance and
operation of the mall parking facilities, such as electric consumption, compensation for
parking attendants and security, and upkeep of the physical structures.
It is not sufficient for the OSG to claim that the power to regulate and control the use,
occupancy, and maintenance of buildings and structures carries with it the power to
impose fees and, conversely, to control, partially or, as in this case, absolutely, the
imposition of such fees. Firstly, the fees within the power of regulatory agencies to
impose are regulatory fees. It has been settled law in this jurisdiction that this broad and
all-compassing governmental competence to restrict rights of liberty and property carries
with it the undeniable power to collect a regulatory fee. It looks to the enactment of
specific measures that govern the relations not only as between individuals but also as
between private parties and the political society.[31] True, if the regulatory agencies have
the power to impose regulatory fees, then conversely, they also have the power to remove
the same. Even so, it is worthy to note that the present case does not involve the
imposition by the DPWH Secretary and local building officials of regulatory fees upon
respondents; but the collection by respondents of parking fees from persons who use the
mall parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local
building officials do have regulatory powers over the collection of parking fees for the use
of privately owned parking facilities, they cannot allow or prohibit such collection arbitrarily
or whimsically. Whether allowing or prohibiting the collection of such parking fees, the
action of the DPWH Secretary and local building officials must pass the test of classic
reasonableness and propriety of the measures or means in the promotion of the ends
sought to be accomplished.[32]
Keeping in mind the aforementioned test of reasonableness and propriety of measures or
means, the Court notes that Section 803 of the National Building Code falls under Chapter
8 on Light and Ventilation. Evidently, the Code deems it necessary to regulate site
occupancy to ensure that there is proper lighting and ventilation in every
building. Pursuant thereto, Rule XIX of the IRR requires that a building, depending on its
specific use and/or floor area, should provide a minimum number of parking spaces. The
Court, however, fails to see the connection between regulating site occupancy to ensure
proper light and ventilation in every building vis--vis regulating the collection by building
owners of fees for the use of their parking spaces. Contrary to the averment of the OSG,
105
the former does not necessarily include or imply the latter. It totally escapes this Court
how lighting and ventilation conditions at the malls could be affected by the fact that
parking facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary parking spaces are
required to enhance light and ventilation, that is, to avoid traffic congestion in areas
surrounding the building, which certainly affects the ventilation within the building itself,
which otherwise, the annexed parking spaces would have served. Free-of-charge parking
avoids traffic congestion by ensuring quick and easy access of legitimate shoppers to offstreet parking spaces annexed to the malls, and thereby removing the vehicles of these
legitimate shoppers off the busy streets near the commercial establishments.[33]
The Court is unconvinced. The National Building Code regulates buildings, by setting the
minimum specifications and requirements for the same. It does not concern itself
with traffic congestion in areas surrounding the building. It is already a stretch to say that
the National Building Code and its IRR also intend to solve the problem of traffic
congestion around the buildings so as to ensure that the said buildings shall have
adequate lighting and ventilation. Moreover, the Court cannot simply assume, as the OSG
has apparently done, that the traffic congestion in areas around the malls is due to the fact
that respondents charge for their parking facilities, thus, forcing vehicle owners to just park
in the streets. The Court notes that despite the fees charged by respondents, vehicle
owners still use the mall parking facilities, which are even fully occupied on some
days. Vehicle owners may be parking in the streets only because there are not enough
parking spaces in the malls, and not because they are deterred by the parking fees
charged by respondents. Free parking spaces at the malls may even have the opposite
effect from what the OSG envisioned: more people may be encouraged by the free
parking to bring their own vehicles, instead of taking public transport, to the malls; as a
result, the parking facilities would become full sooner, leaving more vehicles without
parking spaces in the malls and parked in the streets instead, causing even more traffic
congestion.
Without using the term outright, the OSG is actually invoking police power to justify the
regulation by the State, through the DPWH Secretary and local building officials, of
privately owned parking facilities, including the collection by the owners/operators of such
facilities of parking fees from the public for the use thereof. The Court finds, however, that
in totally prohibiting respondents from collecting parking fees from the public for the use of
the mall parking facilities, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the
use of liberty and property. It is usually exerted in order to merely regulate the use and
enjoyment of the property of the owner. The power to regulate, however, does not include
the power to prohibit. A fortiori, the power to regulate does not include the power to
confiscate. Police power does not involve the taking or confiscation of property, with the
exception of a few cases where there is a necessity to confiscate private property in order
to destroy it for the purpose of protecting peace and order and of promoting the general
welfare; for instance, the confiscation of an illegally possessed article, such as opium and
firearms. [34]

When there is a taking or confiscation of private property for public use, the State is no
longer exercising police power, but another of its inherent powers, namely, eminent
domain. Eminent domain enables the State to forcibly acquire private lands intended for
public use upon payment of just compensation to the owner.[35]
Normally, of course, the power of eminent domain results in the taking or appropriation of
title to, and possession of, the expropriated property; but no cogent reason appears why
the said power may not be availed of only to impose a burden upon the owner of
condemned property, without loss of title and possession.[36] It is a settled rule that
neither acquisition of title nor total destruction of value is essential to taking. It is usually in
cases where title remains with the private owner that inquiry should be made to determine
whether the impairment of a property is merely regulated or amounts to a compensable
taking. A regulation that deprives any person of the profitable use of his property
constitutes a taking and entitles him to compensation, unless the invasion of rights is so
slight as to permit the regulation to be justified under the police power. Similarly, a police
regulation that unreasonably restricts the right to use business property for business
purposes amounts to a taking of private property, and the owner may recover therefor.[37]
Although in the present case, title to and/or possession of the parking facilities remain/s
with respondents, the prohibition against their collection of parking fees from the public, for
the use of said facilities, is already tantamount to a taking or confiscation of their
properties. The State is not only requiring that respondents devote a portion of the latters
properties for use as parking spaces, but is also mandating that they give the public
access to said parking spaces for free. Such is already an excessive intrusion into the
property rights of respondents. Not only are they being deprived of the right to use a
portion of their properties as they wish, they are further prohibited from profiting from its
use or even just recovering therefrom the expenses for the maintenance and operation of
the required parking facilities.
The ruling of this Court in City Government of Quezon City v. Judge Ericta[38] is
edifying. Therein, the City Government of Quezon City passed an ordinance obliging
private cemeteries within its jurisdiction to set aside at least six percent of their total area
for charity, that is, for burial grounds of deceased paupers. According to the Court, the
ordinance in question was null and void, for it authorized the taking of private property
without just compensation:
There is no reasonable relation between the setting aside of at least six (6) percent of the
total area of all private cemeteries for charity burial grounds of deceased paupers and the
promotion of' health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private
cemetery to benefit paupers who are charges of the municipal corporation. Instead of'
building or maintaining a public cemetery for this purpose, the city passes the burden to
private cemeteries.
'The expropriation without compensation of a portion of private cemeteries is not covered
by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers
the city council to prohibit the burial of the dead within the center of population of the city
and to provide for their burial in a proper place subject to the provisions of general law
regulating burial grounds and cemeteries. When the Local Government Code, Batas
106
Pambansa Blg. 337 provides in Section 177(q) that a sangguniang panlungsod may
"provide for the burial of the dead in such place and in such manner as prescribed by law
or ordinance" it simply authorizes the city to provide its own city owned land or to buy or
expropriate private properties to construct public cemeteries. This has been the law, and
practise in the past. It continues to the present. Expropriation, however, requires payment
of just compensation. The questioned ordinance is different from laws and regulations
requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds,
and other public facilities from the land they sell to buyers of subdivision lots. The
necessities of public safety, health, and convenience are very clear from said
requirements which are intended to insure the development of communities with
salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are
made to pay by the subdivision developer when individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by respondents of parking

fees from persons who use the mall parking facilities has no basis in the National Building
Code or its IRR. The State also cannot impose the same prohibition by generally invoking
police power, since said prohibition amounts to a taking of respondents property without
payment of just compensation.
Given the foregoing, the Court finds no more need to address the issue persistently
raised by respondent SM Prime concerning the unconstitutionality of Rule XIX of the
IRR. In addition, the said issue was not among those that the parties, during the pre-trial
conference for Civil Cases No. 12-08 and No. 00-1210, agreed to submit for resolution of
the RTC. It is likewise axiomatic that the constitutionality of a law, a regulation, an
ordinance or an act will not be resolved by courts if the controversy can be, as in this case
it has been, settled on other grounds.[39]
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The
Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of
Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002
of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No.
00-1210 are hereby AFFIRMED. No costs.
SO ORDERED.
BSP MB vs. Antonio-Valenzuela
The Case
This is a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a
Temporary Restraining Order (TRO)/Writ of Preliminary Injunction, questioning the
Decision dated September 30, 20081 of the Court of Appeals (CA) in CA-G.R. SP No.
103935. The CA Decision upheld the Order2 dated June 4, 2008 of the Regional Trial
Court (RTC), Branch 28 in Manila, issuing writs of preliminary injunction in Civil Case Nos.
08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08119250, 08-119251, and 08-119273, and the Order dated May 21, 2008 that consolidated
the civil cases.
The Facts

In September of 2007, the Supervision and Examination Department (SED) of the Bangko
Sentral ng Pilipinas (BSP) conducted examinations of the books of the following banks:
Rural Bank of Paraaque, Inc. (RBPI), Rural Bank of San Jose (Batangas), Inc., Rural
Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc., Philippine Countryside Rural Bank,
Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank), Rural Bank of
Darbci, Inc., Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank), Rural
Bank de Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development
Bank, Inc.
After the examinations, exit conferences were held with the officers or representatives of
the banks wherein the SED examiners provided them with copies of Lists of
Findings/Exceptions containing the deficiencies discovered during the examinations.
These banks were then required to comment and to undertake the remedial measures
stated in these lists within 30 days from their receipt of the lists, which remedial measures
included the infusion of additional capital. Though the banks claimed that they made the
additional capital infusions, petitioner Chuchi Fonacier, officer-in-charge of the SED, sent
separate letters to the Board of Directors of each bank, informing them that the SED found
that the banks failed to carry out the required remedial measures. In response, the banks
requested that they be given time to obtain BSP approval to amend their Articles of
Incorporation, that they have an opportunity to seek investors. They requested as well that
the basis for the capital infusion figures be disclosed, and noted that none of them had
received the Report of Examination (ROE) which finalizes the audit findings. They also
requested meetings with the BSP audit teams to reconcile audit figures. In response,
Fonacier reiterated the banks failure to comply with the directive for additional capital
infusions.
On May 12, 2008, the RBPI filed a complaint for nullification of the BSP ROE with
application for a TRO and writ of preliminary injunction before the RTC docketed as Civil
Case No. 08-119243 against Fonacier, the BSP, Amado M. Tetangco, Jr., Romulo L. Neri,
Vicente B. Valdepenas, Jr., Raul A. Boncan, Juanita D. Amatong, Alfredo C. Antonio, and
Nelly F. Villafuerte. RBPI prayed that Fonacier, her subordinates, agents, or any other
person acting in her behalf be enjoined from submitting the ROE or any similar report to
the Monetary Board (MB), or if the ROE had already been submitted, the MB be enjoined
from acting on the basis of said ROE, on the allegation that the failure to furnish the bank
with a copy of the ROE violated its right to due process.
The Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino
Rural Bank, Inc., Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan
(Batangas), Inc., Rural Bank of Darbci, Inc., Rural Bank of Kananga (Leyte), Inc., and
Rural Bank de Bisayas Minglanilla followed suit, filing complaints with the RTC
substantially similar to that of RBPI, including the reliefs prayed for, which were raffled to
different branches and docketed as Civil Cases Nos. 08-119244, 08-119245, 08-119246,
08-119247, 08-119248, 08-119249, 08-119250, and 08-119251, respectively.
On May 13, 2008, the RTC denied the prayer for a TRO of Pilipino Rural Bank, Inc. The
bank filed a motion for reconsideration the next day.
On May 14, 2008, Fonacier and the BSP filed their opposition to the application for a TRO
and writ of preliminary injunction in Civil Case No. 08-119243 with the RTC. Respondent
107
Judge Nina Antonio-Valenzuela of Branch 28 granted RBPIs prayer for the issuance of a
TRO.
The other banks separately filed motions for consolidation of their cases in Branch 28,
which motions were granted. Judge Valenzuela set the complaint of Rural Bank of San
Jose (Batangas), Inc. for hearing on May 15, 2008. Petitioners assailed the validity of the
consolidation of the nine cases before the RTC, alleging that the court had already
prejudged the case by the earlier issuance of a TRO in Civil Case No. 08-119243, and
moved for the inhibition of respondent judge. Petitioners filed a motion for reconsideration
regarding the consolidation of the subject cases.
On May 16, 2008, San Pablo City Development Bank, Inc. filed a similar complaint against
the same defendants with the RTC, and this was docketed as Civil Case No. 08-119273
that was later on consolidated with Civil Case No. 08-119243. Petitioners filed an Urgent
Motion to Lift/Dissolve the TRO and an Opposition to the earlier motion for reconsideration
of Pilipino Rural Bank, Inc.
On May 19, 2008, Judge Valenzuela issued an Order granting the prayer for the issuance
of TROs for the other seven cases consolidated with Civil Case No. 08-119243. On May
21, 2008, Judge Valenzuela issued an Order denying petitioners motion for
reconsideration regarding the consolidation of cases in Branch 28. On May 22, 2008,
Judge Valenzuela granted the urgent motion for reconsideration of Pilipino Rural Bank,
Inc. and issued a TRO similar to the ones earlier issued.
On May 26, 2008, petitioners filed a Motion to Dismiss against all the complaints (except
that of the San Pablo City Development Bank, Inc.), on the grounds that the complaints
stated no cause of action and that a condition precedent for filing the cases had not been
complied with. On May 29, 2008, a hearing was conducted on the application for a TRO
and for a writ of preliminary injunction of San Pablo City Development Bank, Inc.
The Ruling of the RTC
After the parties filed their respective memoranda, the RTC, on June 4, 2008, ruled that
the banks were entitled to the writs of preliminary injunction prayed for. It held that it had
been the practice of the SED to provide the ROEs to the banks before submission to the
MB. It further held that as the banks are the subjects of examinations, they are entitled to
copies of the ROEs. The denial by petitioners of the banks requests for copies of the
ROEs was held to be a denial of the banks right to due process.
The dispositive portion of the RTCs order reads:
WHEREFORE, the Court rules as follows:
1) Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b) of the Revised Rules
of Court, plaintiff Rural Bank of Paranaque Inc. is directed to post a bond executed to the
defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the injunction if the Court
should finally decide that the plaintiff was not entitled thereto. After posting of the bond
and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain
the defendants from submitting the Report of Examination or any other similar report
prepared in connection with the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been submitted to the
Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas,
Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the
basis of said report.
of Court, plaintiff Rural Bank of San Jose (Batangas), Inc. is directed to post a bond
executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will
pay to the defendants all damages which they may sustain by reason of the injunction if
the Court should finally decide that the plaintiff was not entitled thereto. After posting of the
bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and
restrain the defendants from submitting the Report of Examination or any other similar
report prepared in connection with the examination conducted on the plaintiff, to the
Monetary Board. In case such a Report on Examination [sic] or any other similar report
prepared in connection with the examination conducted on the plaintiff has been submitted
to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri,
Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from
acting on the basis of said report.
of Court, plaintiff Rural Bank of Carmen (Cebu), Inc. is directed to post a bond executed to
the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the
of Court, plaintiff Pilipino Rural Bank Inc. is directed to post a bond executed to the
of Court, plaintiff Philippine Countryside Rural Bank Inc. is directed to post a bond
108
of Court, plaintiff Dynamic Bank Inc. (Rural Bank of Calatagan) is directed to post a bond
of Court, plaintiff Rural Bank of DARBCI, Inc. is directed to post a bond executed to the
of Court, plaintiff Rural Bank of Kananga Inc. (First Intestate Bank), is directed to post a
bond executed to the defendants, in the amount of P500,000.00 to the effect that the
plaintiff will pay to the defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not entitled thereto. After
posting of the bond and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination conducted on the plaintiff, to
the Monetary Board. In case such a Report on Examination [sic] or any other similar report

of Court, plaintiff Banco Rural De Bisayas Minglanilla (Cebu) Inc. (Bank of East Asia) is
directed to post a bond executed to the defendants, in the amount of P500,000.00 to the
effect that the plaintiff will pay to the defendants all damages which they may sustain by
reason of the injunction if the Court should finally decide that the plaintiff was not entitled
thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction
be issued to enjoin and restrain the defendants from submitting the Report of Examination
or any other similar report prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other
similar report prepared in connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members (i.e. defendants
Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and
restrained from acting on the basis of said report.
of Court, plaintiff San Pablo City Development Bank, Inc. is directed to post a bond
acting on the basis of said report.3
The Ruling of the CA
Petitioners then brought the matter to the CA via a petition for certiorari under Rule 65
claiming grave abuse of discretion on the part of Judge Valenzuela when she issued the
orders dated May 21, 2008 and June 4, 2008.
109
Regarding the consolidation of the 10 cases, the CA found that there was a similarity of
facts, reliefs sought, issues raised, defendants, and that plaintiffs and defendants were
represented by the same sets of counsels. It found that the joint trial of these cases would
prejudice any substantial right of petitioners.
Finding that no grave abuse of discretion attended the issuance of the orders by the RTC,
the CA denied the petition.
On November 24, 2008, a TRO was issued by this Court, restraining the CA, RTC, and
respondents from implementing and enforcing the CA Decision dated September 30, 2008
in CA-G.R. SP No. 103935.
By reason of the TRO issued by this Court, the SED was able to submit their ROEs to the
MB. The MB then prohibited the respondent banks from transacting business and placed
them under receivership under Section 53 of Republic Act No. (RA) 87915 and Sec. 30 of
RA
76536 through MB Resolution No. 1616 dated December 9, 2008; Resolution Nos. 1637
and 1638 dated December 11, 2008; Resolution Nos. 1647, 1648, and 1649 dated
December 12, 2008; Resolution Nos. 1652 and 1653 dated December 16, 2008; and
Resolution Nos. 1692 and 1695 dated December 19, 2008, with the Philippine Deposit
Insurance Corporation as the appointed receiver.
Now we resolve the main petition.
Grounds in Support of Petition
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT
THE INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT VIOLATED SECTION 25
OF THE NEW CENTRAL BANK ACT AND EFFECTIVELY HANDCUFFED THE BANGKO
SENTRAL FROM DISCHARGING ITS FUNCTIONS TO THE GREAT AND
IRREPARABLE DAMAGE OF THE COUNTRYS BANKING SYSTEM;
The CA ruled that the RTC committed no grave abuse of discretion when it ordered the
issuance of a writ of preliminary injunction and when it ordered the consolidation of the 10
cases.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT

RESPONDENTS ARE ENTITLED TO BE FURNISHED COPIES OF THEIR RESPECTIVE
ROEs BEFORE THE SAME IS SUBMITTED TO THE MONETARY BOARD IN VIEW OF
THE PRINCIPLES OF FAIRNESS AND TRANSPARENCY DESPITE LACK OF EXPRESS
PROVISION IN THE NEW CENTRAL BANK ACT REQUIRING BSP TO DO THE SAME
It held that petitioners should have first filed a motion for reconsideration of the assailed
orders, and failed to justify why they resorted to a special civil action of certiorari instead.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DEPARTING FROM

WELL-ESTABLISHED PRECEPTS OF LAW AND JURISPRUDENCE
The CA also found that aside from the technical aspect, there was no grave abuse of
discretion on the part of the RTC, and if there was a mistake in the assessment of
evidence by the trial court, that should be characterized as an error of judgment, and
should be correctable via appeal.
The CA held that the principles of fairness and transparency dictate that the respondent
banks are entitled to copies of the ROE.
A. THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED RESORT TO PETITION FOR

CERTIORARI UNDER RULE 65 INSTEAD OF FIRST FILING A MOTION FOR
RECONSIDERATION
B. RESPONDENT BANKS ACT OF RESORTING IMMEDIATELY TO THE COURT WAS
PREMATURE SINCE IT WAS MADE IN UTTER DISREGARD OF THE PRINCIPLE OF
PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDY

C. THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION BY THE REGIONAL

TRIAL COURT WAS NOT ONLY IMPROPER BUT AMOUNTED TO GRAVE ABUSE OF
DISCRETION7
Our Ruling
The petition is meritorious.
In Lim v. Court of Appeals it was stated:
The requisites for preliminary injunctive relief are: (a) the invasion of right sought to be
protected is material and substantial; (b) the right of the complainant is clear and
unmistakable; and (c) there is an urgent and paramount necessity for the writ to prevent
serious damage.
As such, a writ of preliminary injunction may be issued only upon clear showing of an
actual existing right to be protected during the pendency of the principal action. The twin
requirements of a valid injunction are the existence of a right and its actual or threatened
violations. Thus, to be entitled to an injunctive writ, the right to be protected and the
violation against that right must be shown.8
These requirements are absent in the present case.
In granting the writs of preliminary injunction, the trial court held that the submission of the
ROEs to the MB before the respondent banks would violate the right to due process of
said banks.
This is erroneous.
The respondent banks have failed to show that they are entitled to copies of the ROEs.
They can point to no provision of law, no section in the procedures of the BSP that shows
that the BSP is required to give them copies of the ROEs. Sec. 28 of RA 7653, or the New
Central Bank Act, which governs examinations of banking institutions, provides that the
ROE shall be submitted to the MB; the bank examined is not mentioned as a recipient of
the ROE.
The respondent banks cannot claim a violation of their right to due process if they are not
provided with copies of the ROEs. The same ROEs are based on the lists of
findings/exceptions containing the deficiencies found by the SED examiners when they
examined the books of the respondent banks. As found by the RTC, these lists of
findings/exceptions were furnished to the officers or representatives of the respondent
banks, and the respondent banks were required to comment and to undertake remedial
measures stated in said lists. Despite these instructions, respondent banks failed to
comply with the SEDs directive.
Respondent banks are already aware of what is required of them by the BSP, and cannot
claim violation of their right to due process simply because they are not furnished with
copies of the ROEs. Respondent banks were held by the CA to be entitled to copies of the
ROEs prior to or simultaneously with their submission to the MB, on the principles of
110
fairness and transparency. Further, the CA held that if the contents of the ROEs are
essentially the same as those of the lists of findings/exceptions provided to said banks,
there is no reason not to give copies of the ROEs to the banks. This is a flawed
conclusion, since if the banks are already aware of the contents of the ROEs, they cannot
say that fairness and transparency are not present. If sanctions are to be imposed upon
the respondent banks, they are already well aware of the reasons for the sanctions,
having been informed via the lists of findings/exceptions, demolishing that particular
argument. The ROEs would then be superfluities to the respondent banks, and should not
be the basis for a writ of preliminary injunction. Also, the reliance of the RTC on Banco
Filipino v. Monetary Board9 is misplaced. The petitioner in that case was held to be
entitled to annexes of the Supervision and Examination Sectors reports, as it already had
a copy of the reports themselves. It was not the subject of the case whether or not the
petitioner was entitled to a copy of the reports. And the ruling was made after the
petitioner bank was ordered closed, and it was allowed to be supplied with annexes of the
reports in order to better prepare its defense. In this instance, at the time the respondent
banks requested copies of the ROEs, no action had yet been taken by the MB with regard
to imposing sanctions upon said banks.
The issuance by the RTC of writs of preliminary injunction is an unwarranted interference
with the powers of the MB. Secs. 29 and 30 of RA 765310 refer to the appointment of a
conservator or a receiver for a bank, which is a power of the MB for which they need the
ROEs done by the supervising or examining department. The writs of preliminary
injunction issued by the trial court hinder the MB from fulfilling its function under the law.
The actions of the MB under Secs. 29 and 30 of RA 7653 "may not be restrained or set
aside by the court except on petition for certiorari on the ground that the action taken was
in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction." The writs of preliminary injunction order are precisely what cannot
be done under the law by preventing the MB from taking action under either Sec. 29 or
Sec. 30 of RA 7653.
As to the third requirement, the respondent banks have shown no necessity for the writ of
preliminary injunction to prevent serious damage. The serious damage contemplated by
the trial court was the possibility of the imposition of sanctions upon respondent banks,
even the sanction of closure. Under the law, the sanction of closure could be imposed
upon a bank by the BSP even without notice and hearing. The apparent lack of procedural
due process would not result in the invalidity of action by the MB. This was the ruling in
Central Bank of the Philippines v. Court of Appeals.11 This "close now, hear later" scheme
is grounded on practical and legal considerations to prevent unwarranted dissipation of
the banks assets and as a valid exercise of police power to protect the depositors,
creditors, stockholders, and the general public. The writ of preliminary injunction cannot,
thus, prevent the MB from taking action, by preventing the submission of the ROEs and
worse, by preventing the MB from acting on such ROEs.
The trial court required the MB to respect the respondent banks right to due process by
allowing the respondent banks to view the ROEs and act upon them to forestall any
sanctions the MB might impose. Such procedure has no basis in law and does in fact
violate the "close now, hear later" doctrine. We held in Rural Bank of San Miguel, Inc. v.
Monetary Board, Bangko Sentral ng Pilipinas:
It is well-settled that the closure of a bank may be considered as an exercise of police
power. The action of the MB on this matter is final and executory. Such exercise may
nonetheless be subject to judicial inquiry and can be set aside if found to be in excess of

jurisdiction or with such grave abuse of discretion as to amount to lack or excess of

jurisdiction.12
The respondent banks cannotthrough seeking a writ of preliminary injunction by
appealing to lack of due process, in a roundabout manner prevent their closure by the
MB. Their remedy, as stated, is a subsequent one, which will determine whether the
closure of the bank was attended by grave abuse of discretion. Judicial review enters the
picture only after the MB has taken action; it cannot prevent such action by the MB. The
threat of the imposition of sanctions, even that of closure, does not violate their right to
due process, and cannot be the basis for a writ of preliminary injunction.
The "close now, hear later" doctrine has already been justified as a measure for the
protection of the public interest. Swift action is called for on the part of the BSP when it
finds that a bank is in dire straits. Unless adequate and determined efforts are taken by
the government against distressed and mismanaged banks, public faith in the banking
system is certain to deteriorate to the prejudice of the national economy itself, not to
mention the losses suffered by the bank depositors, creditors, and stockholders, who all
deserve the protection of the government.13
The respondent banks have failed to show their entitlement to the writ of preliminary
injunction. It must be emphasized that an application for injunctive relief is construed
strictly against the pleader.14 The respondent banks cannot rely on a simple appeal to
procedural due process to prove entitlement. The requirements for the issuance of the writ
have not been proved. No invasion of the rights of respondent banks has been shown, nor
is their right to copies of the ROEs clear and unmistakable. There is also no necessity for
the writ to prevent serious damage. Indeed the issuance of the writ of preliminary
injunction tramples upon the powers of the MB and prevents it from fulfilling its functions.
There is no right that the writ of preliminary injunction would protect in this particular case.
In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave
abuse of discretion.15 In the absence of proof of a legal right and the injury sustained by
the plaintiff, an order for the issuance of a writ of preliminary injunction will be nullified.16
Courts are hereby reminded to take greater care in issuing injunctive relief to litigants, that
it would not violate any law. The grant of a preliminary injunction in a case rests on the
sound discretion of the court with the caveat that it should be made with great
caution.17 Thus, the issuance of the writ of preliminary injunction must have basis in and
be in accordance with law. All told, while the grant or denial of an injunction generally rests
on the sound discretion of the lower court, this Court may and should intervene in a clear
case of abuse.18
WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision dated
September 30, 2008 in CA-G.R. SP No. 103935 is hereby REVERSED. The assailed
order and writ of preliminary injunction of respondent Judge Valenzuela in Civil Case Nos.
08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08119250, 08-119251, and 08-119273 are hereby declared NULL and VOID.
SO ORDERED.
Roxas and Company vs. Damba-NSFW
111
The main subject of the seven consolidated petitions is the application of petitioner Roxas
& Co., Inc. (Roxas & Co.) for conversion from agricultural to non-agricultural use of its
three haciendas located in Nasugbu, Batangas containing a total area of almost 3,000
hectares. The facts are not new, the Court having earlier resolved intimately-related
issues dealing with these haciendas. Thus, in the 1999 case of Roxas & Co., Inc. v. Court
of Appeals,[1] the Court presented the facts as follows:
. . . Roxas & Co. is a domestic corporation and is the registered owner of three haciendas,
namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of
Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is registered under
Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos.
0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area,
registered under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390.
Hacienda Caylaway is 867.4571 hectares in area and is registered under TCT Nos. T44662, T-44663, T-44664 and T-44665.
xxxx
On July 27, 1987, the Congress of the Philippines formally convened and took over
legislative power from the President. This Congress passed Republic Act No. 6657, the
Comprehensive Agrarian Reform Law (CARL) of 1988. The Act was signed by the
President on June 10, 1988 and took effect on June 15, 1988.
Before the laws effectivity, on May 6, 1988, [Roxas & Co.] filed with respondent DAR a
voluntary offer to sell [VOS] Hacienda Caylaway pursuant to the provisions of E.O. No.
229. Haciendas Palico and Banilad were later placed under compulsory acquisition by
DAR in accordance with the CARL.
xxxx
Nevertheless, on August 6, 1992, [Roxas & Co.], through its President, Eduardo J. Roxas,
sent a letter to the Secretary of DAR withdrawing its VOS of Hacienda Caylaway. The
Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the reclassification of
Hacienda Caylaway from agricultural to non-agricultural. As a result, petitioner informed
respondent DAR that it was applying for conversion of Hacienda Caylaway from
agricultural to other uses.
x x x x[2] (emphasis and underscoring supplied)
The petitions in G.R. Nos. 167540 and 167543 nub on the interpretation of Presidential
Proclamation (PP) 1520 which was issued on November 28, 1975 by then President
Ferdinand Marcos. The PP reads:
DECLARING THE MUNICIPALITIES OF MARAGONDON AND TERNATE IN CAVITE
PROVINCE AND THE MUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURIST
ZONE, AND FOR OTHER PURPOSES

WHEREAS, certain areas in the sector comprising the Municipalities of Maragondon and
Ternate in Cavite Province and Nasugbu in Batangas have potential tourism value after
being developed into resort complexes for the foreign and domestic market; and
WHEREAS, it is necessary to conduct the necessary studies and to segregate specific
geographic areas for concentrated efforts of both the government and private sectors in
developing their tourism potential;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue
of the powers vested in me by the Constitution, do hereby declare the area comprising the
Municipalities of Maragondon and Ternate in Cavite Province and Nasugbu in Batangas
Province as a tourist zone under the administration and control of the Philippine Tourism
Authority (PTA) pursuant to Section 5 (D) of P.D. 564.
The PTA shall identify well-defined geographic areas within the zone with potential tourism
value, wherein optimum use of natural assets and attractions, as well as existing facilities
and concentration of efforts and limited resources of both government and private sector
may be affected and realized in order to generate foreign exchange as well as other
tourist receipts.
Any duly established military reservation existing within the zone shall be excluded from
this proclamation.
All proclamation, decrees or executive orders inconsistent herewith are hereby revoked or
modified accordingly. (emphasis and underscoring supplied).
The incidents which spawned the filing of the petitions in G.R. Nos. 149548, 167505,
167845, 169163 and 179650 are stated in the dissenting opinion of Justice Minita ChicoNazario, the original draft of which was made the basis of the Courts deliberations.
Essentially, Roxas & Co. filed its application for conversion of its three haciendas from
argricultural to non-agricultural on the assumption that the issuance of PP 1520 which
declared Nasugbu, Batangas as a tourism zone, reclassified them to non-agricultural
uses. Its pending application notwithstanding, the Department of Agrarian Reform (DAR)
issued Certificates of Land Ownership Award (CLOAs) to the farmer-beneficiaries in the
three haciendas including CLOA No. 6654 which was issued on October 15, 1993
covering 513.983 hectares, the subject of G.R. No. 167505.
The application for conversion of Roxas & Co. was the subject of the above-stated Roxas
& Co., Inc. v. Court of Appeals which the Court remanded to the DAR for the observance
of proper acquisition proceedings. As reflected in the above-quoted statement of facts in
said case, during the pendency before the DAR of its application for conversion following
its remand to the DAR or on May 16, 2000, Roxas & Co. filed with the DAR an application
for exemption from the coverage of the Comprehensive Agrarian Reform Program (CARP)
of 1988 on the basis of PP 1520 and of DAR Administrative Order (AO) No. 6, Series of
1994[3] which states that all lands already classified as commercial, industrial, or
residential before the effectivity of CARP no longer need conversion clearance from the
DAR.
112
It bears mentioning at this juncture that on April 18, 1982, the Sangguniang Bayan of
Nasugbu enacted Municipal Zoning Ordinance No. 4 (Nasugbu MZO No. 4) which was
approved on May 4, 1983 by the Human Settlements Regulation Commission, now the
Housing and Land Use Regulatory Board (HLURB).
The records show that Sangguniang Bayan and Association of Barangay Captains of
Nasugbu filed before this Court petitions for intervention which were, however, denied by
Resolution of June 5, 2006 for lack of standing.[4]
After the seven present petitions were consolidated and referred to the Court en banc,[5]
oral arguments were conducted on July 7, 2009.
The core issues are:
1.
Whether PP 1520 reclassified in 1975 all lands in the Maragondon-Ternate-Nasugbu
tourism zone to non-agricultural use to exempt Roxas & Co.s three haciendas in Nasugbu
from CARP coverage;
2.
Whether Nasugbu MSO No. 4, Series of 1982 exempted certain lots in Hacienda
Palico from CARP coverage; and
3.
Whether the partial and complete cancellations by the DAR of CLOA No. 6654
subject of G.R. No. 167505 is valid.
The Court shall discuss the issues in seriatim.

I.
PP 1520 DID NOT AUTOMATICALLY CONVERT THE AGRICULTURAL LANDS IN
THE THREE MUNICIPALITIES INCLUDING NASUGBU TO NON-AGRICULTURAL
LANDS.
Roxas & Co. contends that PP 1520 declared the three municipalities as each constituting
a tourism zone, reclassified all lands therein to tourism and, therefore, converted their use
to non-agricultural purposes.
To determine the chief intent of PP 1520, reference to the whereas clauses is in
order. By and large, a reference to the congressional deliberation records would provide
guidance in dissecting the intent of legislation. But since PP 1520 emanated from the
legislative powers of then President Marcos during martial rule, reference to the whereas
clauses cannot be dispensed with.[6]
The perambulatory clauses of PP 1520 identified only certain areas in the sector
comprising the [three Municipalities that] have potential tourism value and mandated the
conduct of necessary studies and the segregation of specific geographic areas to
achieve its purpose. Which is why the PP directed the Philippine Tourism Authority (PTA)
to identify what those potential tourism areas are. If all the lands in those tourism zones
were to be wholly converted to non-agricultural use, there would have been no need for
the PP to direct the PTA to identify what those specific geographic areas are.

113
The Court had in fact passed upon a similar matter before. Thus in DAR v. Franco,[7] it
pronounced:
commercial, as embodied in the land use plan. (Joint HLURB, DAR, DA, DILG Memo.
Circular Prescribing Guidelines for MC 54, S. 1995, Sec.2)
Thus, the DAR Regional Office VII, in coordination with the Philippine Tourism Authority,
has to determine precisely which areas are for tourism development and excluded from
the Operation Land Transfer and the Comprehensive Agrarian Reform Program. And
suffice it to state here that the Court has repeatedly ruled that lands already classified as
non-agricultural before the enactment of RA 6657 on 15 June 1988 do not need any
conversion clearance.[8] (emphasis and underscoring supplied).
A proclamation that merely recognizes the potential tourism value of certain areas
within the general area declared as tourist zone clearly does not allocate, reserve, or
intend the entirety of the land area of the zone for non-agricultural purposes. Neither does
said proclamation direct that otherwise CARPable lands within the zone shall already be
used for purposes other than agricultural.
While the above pronouncement in Franco is an obiter, it should not be ignored in the
resolution of the present petitions since it reflects a more rational and just interpretation of
PP 1520. There is no prohibition in embracing the rationale of an obiter dictum in settling
controversies, or in considering related proclamations establishing tourism zones.
In the above-cited case of Roxas & Co. v. CA,[9] the Court made it clear that the
power to determine whether Haciendas Palico, Banilad and Caylaway are nonagricultural, hence, exempt from the coverage of the [Comprehensive Agrarian Reform
Law] lies with the [Department of Agrarian Reform], not with this Court.[10] The DAR, an
administrative body of special competence, denied, by Order of October 22, 2001, the
application for CARP exemption of Roxas & Co., it finding that PP 1520 did not
automatically reclassify all the lands in the affected municipalities from their original uses.
It appears that the PTA had not yet, at that time, identified the specific geographic areas
for tourism development and had no pending tourism development projects in the areas.
Further, report from the Center for Land Use Policy Planning and Implementation
(CLUPPI) indicated that the areas were planted with sugar cane and other crops.[11]
Relatedly, the DAR, by Memorandum Circular No. 7, Series of 2004,[12] came up
with clarificatory guidelines and therein decreed that
A. x x x x.
B. Proclamations declaring general areas such as whole provinces, municipalities,
barangays, islands or peninsulas as tourist zones that merely:
(1) recognize certain still unidentified areas within the covered provinces, municipalities,
barangays, islands, or peninsulas to be with potential tourism value and charge the
Philippine Tourism Authority with the task to identify/delineate specific geographic areas
within the zone with potential tourism value and to coordinate said areas development; or
(2) recognize the potential value of identified spots located within the general area
declared as tourist zone (i.e. x x x x) and direct the Philippine Tourism Authority to
coordinate said areas development;
could not be regarded as effecting an automatic reclassification of the entirety of the land
area declared as tourist zone. This is so because reclassification of lands denotes their
allocation into some specific use and providing for the manner of their utilization and
disposition (Sec. 20, Local Government Code) or the act of specifying how agricultural
lands shall be utilized for non-agricultural uses such as residential, industrial, or
Moreover, to view these kinds of proclamation as a reclassification for nonagricultural purposes of entire provinces, municipalities, barangays, islands, or peninsulas
would be unreasonable as it amounts to an automatic and sweeping exemption from
CARP in the name of tourism development. The same would also undermine the land use
reclassification powers vested in local government units in conjunction with pertinent
agencies of government.
C. There being no reclassification, it is clear that said proclamations/issuances, assuming
[these] took effect before June 15, 1988, could not supply a basis for exemption of the
entirety of the lands embraced therein from CARP coverage x x x x.
D. x x x x. (underscoring in the original; emphasis and italics supplied)
The DARs reading into these general proclamations of tourism zones deserves utmost
consideration, more especially in the present petitions which involve vast tracts of
agricultural land. To reiterate, PP 1520 merely recognized the potential tourism value of
certain areas within the general area declared as tourism zones. It did not reclassify the
areas to non-agricultural use.
Apart from PP 1520, there are similarly worded proclamations declaring the whole of
Ilocos Norte and Bataan Provinces, Camiguin, Puerto Prinsesa, Siquijor, Panglao Island,
parts of Cebu City and Municipalities of Argao and Dalaguete in Cebu Province as tourism
zones.[13]
Indubitably, these proclamations, particularly those pertaining to the Provinces of Ilocos
Norte and Bataan, did not intend to reclassify all agricultural lands into non-agricultural
lands in one fell swoop. The Court takes notice of how the agrarian reform program was
and still isimplemented in these provinces since there are lands that do not have any
tourism potential and are more appropriate for agricultural utilization.
Relatedly, a reference to the Special Economic Zone Act of 1995[14] provides a parallel
orientation on the issue. Under said Act, several towns and cities encompassing the
whole Philippines were readily identified as economic zones.[15] To uphold Roxas & Co.s
reading of PP 1520 would see a total reclassification of practically all the agricultural
lands in the country to non-agricultural use. Propitiously, the legislature had the foresight
to include a bailout provision in Section 31 of said Act for land conversion.[16] The same
cannot be said of PP 1520, despite the existence of Presidential Decree (PD) No. 27 or
the Tenant Emancipation Decree,[17] which is the precursor of the CARP.

Interestingly, then President Marcos also issued on September 26, 1972 PD No. 2 which
declared the entire Philippines as land reform area.[18] Such declaration did not intend to
reclassify all lands in the entire country to agricultural lands. President Marcos, about a
month later or on October 21, 1972, issued PD 27 which decreed that all private
agricultural lands primarily devoted to rice and corn were deemed awarded to their tenantfarmers.
Given these martial law-era decrees and considering the socio-political backdrop at the
time PP 1520 was issued in 1975, it is inconceivable that PP 1520, as well as other
similarly worded proclamations which are completely silent on the aspect of
reclassification of the lands in those tourism zones, would nullify the gains already then
achieved by
PD 27.
Even so, Roxas & Co. turns to Natalia Realty v. DAR and NHA v. Allarde to support its
position. These cases are not even closely similar to the petitions in G.R. Nos. 167540
and 167543. The only time that these cases may find application to said petitions is when
the PTA actually identifies well-defined geographic areas within the zone with potential
tourism value.
In remotely tying these two immediately-cited cases that involve specific and defined
townsite reservations for the housing program of the National Housing Authority to the
present petitions, Roxas & Co. cites Letter of Instructions No. 352 issued on December
22, 1975 which states that the survey and technical description of the tourism zones shall
be considered an integral part of PP 1520. There were, however, at the time no surveys
and technical delineations yet of the intended tourism areas.
On hindsight, Natalia and Allarde find application in the petitions in G.R. Nos. 179650 &
167505, which petitions are anchored on the extenuating effects of Nasugbu MZO No. 4,
but not in the petitions in G.R. Nos. 167540 & 167543 bearing on PP 1520, as will later be
discussed.
Of significance also in the present petitions is the issuance on August 3, 2007 of Executive
Order No. 647[19] by President Arroyo which proclaimed the areas in the Nasugbu
Tourism Development Plan as Special Tourism Zone. Pursuant to said Executive Order,
the PTA completed its validation of 21 out of 42 barangays as tourism priority areas,
hence, it is only after such completion that these identified lands may be subjected to
reclassification proceedings.
It bears emphasis that a mere reclassification of an agricultural land does not
automatically allow a landowner to change its use since there is still that process of
conversion before one is permitted to use it for other purposes.[20]
Tourism Act, and not to PP 1520, for possible exemption.
II.
ROXAS & CO.S APPLICATION IN DAR ADMINISTRATIVE CASE NO. A-9999-14297 FOR CARP EXEMPTION IN HACIENDA PALICO SUBJECT OF G.R. NO. 179650
CANNOT BE GRANTED IN VIEW OF DISCREPANCIES IN THE LOCATION AND
IDENTITY OF THE SUBJECT PARCELS OF LAND.
114
Since PP 1520 did not automatically convert Haciendas Caylaway, Banilad and Palico into
non-agricultural estates, can Roxas & Co. invoke in the alternative Nasugbu MZO No. 4,
which reclassified in 1982 the haciendas to non-agricultural use to exclude six parcels of
land in Hacienda Palico from CARP coverage?
By Roxas & Co.s contention, the affected six parcels of land which are the subject of DAR
Administrative Case No. A-9999-142-97 and nine parcels of land which are the subject of
DAR Administrative Case No.
A-9999-008-98 involved in G.R. No. 167505, all in
Hacienda Palico, have been reclassified to non-agricultural uses via Nasugbu MZO No. 4
which was approved by the forerunner of HLURB.
Roxas & Co.s contention fails.
To be sure, the Court had on several occasions decreed that a local government unit has
the power to classify and convert land from agricultural to non-agricultural prior to the
effectivity of the CARL.[23] In Agrarian Reform Beneficiaries Association v. Nicolas,[24] it
reiterated that
. . . the facts obtaining in this case are similar to those in Natalia Realty. Both subject
lands form part of an area designated for non-agricultural purposes. Both were classified
as non-agricultural lands prior to June 15, 1988, the date of effectivity of CARL.
xxxx
In the case under review, the subject parcels of lands were reclassified within an urban
zone as per approved Official Comprehensive Zoning Map of the City of Davao. The
reclassification was embodied in City Ordinance No. 363, Series of 1982. As such, the
subject parcels of land are considered non-agricultural and may be utilized for
residential, commercial, and industrial purposes. The reclassification was later approved
by the HLURB.[25] (emphasis, italics and underscoring supplied)
The DAR Secretary[26] denied the application for exemption of Roxas & Co., however, in
this wise:
Initially, CLUPPI-2 based [its] evaluation on the lot nos. as appearing in CLOA No. 6654.
However, for purposes of clarity and to ensure that the area applied for exemption is
indeed part of TCT No. T-60034, CLUPPI-2 sought to clarify with [Roxas & Co.] the origin
of TCT No. T-60034. In a letter dated May 28, 1998, [Roxas & Co.] explains that portions
of TCT No. T-985, the mother title, was subdivided into 125 lots pursuant to PD 27. A
total of 947.8417 was retained by the landowners and was subsequently registered under
TCT No. 49946. [[Roxas & Co.] further explains that TCT No. 49946 was further
subdivided into several lots (Lot 125-A to Lot 125-P) with Lot No. 125-N registered under
TCT No. 60034. [A] review of the titles, however, shows that the origin of T-49946 is T783 and not T-985. On the other hand, the origin of T-60034 is listed as 59946, and not T49946. The discrepancies were attributed by [Roxas & Co.] to typographical errors which
were acknowledged and initialled [sic] by the ROD. Per verification, the discrepancies
. . . cannot be ascertained.[27] (emphasis and underscoring supplied)
In denying Roxas & Co.s motion for reconsideration, the DAR Secretary held:

The landholdings covered by the aforesaid titles do not correspond to the Certification
dated February 11, 1998 of the [HLURB] , the Certification dated September 12, 1996
issued by the Municipal Planning and Development Coordinator, and the Certifications
dated July 31, 1997 and May 27, 1997 issued by the National Irrigation Authority. The
certifications were issued for Lot Nos. 21, 24, 28, 31, 32 and 34. Thus, it was not even
possible to issue exemption clearance over the lots covered by TCT Nos. 60019 to 60023.
Furthermore, we also note the discrepancies between the certifications issued by the
HLURB and the Municipal Planning Development Coordinator as to the area of the
specific lots.[28] (emphasis and underscoring supplied)
In affirming the DAR Secretarys denial of Roxas & Co.s application for exemption, the
Court of Appeals, in CA-G.R. SP No. 63146 subject of G.R. No. 179650, observed:
In the instant case, a perusal of the documents before us shows that there is no indication
that the said TCTs refer to the same properties applied for exemption by [Roxas & Co.] It
is true that the certifications refer, among others, to DAR Lot Nos. 21, 24, 28, 31, 32 and
34But these certifications contain nothing to show that these lots are the same as Lots
125-A, 125-B, 125-C, 125-D and 125-E covered by TCT Nos. 60019, 60020, 60021,
60022 and 60023, respetively. While [Roxas & Co.] claims that DAR Lot Nos. 21, 24 and
31 correspond to the aforementioned TCTs submitted to the DAR no evidence was
presented to substantiate such allegation.
Moreover, [Roxas & Co.] failed to submit TCT 634 which it claims covers DAR Lot Nos.
28, 32 and 24.(TSN, April 24, 2001, pp. 43-44)
xxxx
115
In granting the application, the DAR Secretary[30] examined anew the evidence submitted
by Roxas & Co. which consisted mainly of certifications from various local and national
government agencies.[31] Petitioner in G.R. Nos. 167505, 167540, 169163 and 179650,
Damayan Ng Mga Manggagawang Bukid Sa Asyenda Roxas-National Federation of
Sugar Workers (DAMBA-NFSW), the organization of the farmer-beneficiaries, moved to
have the grant of the application reconsidered but the same was denied by the DAR by
Order of December 12, 2003, hence, it filed a petition for certiorari before the Court of
Appeals, docketed as CA-G.R. SP No. 82225, on grounds of forum-shopping and grave
abuse of discretion. The appellate court, by Decision of October 31, 2006, ruled that
DAMBA-NFSW availed of the wrong mode of appeal. At all events, it dismissed its
petition as it upheld the DAR Secretarys ruling that Roxas & Co. did not commit forumshopping, hence, the petition of DAMBA-NGSW in G.R. No. 179650.
While ordinarily findings of facts of quasi-judicial agencies are generally accorded great
weight and even finality by the Court if supported by substantial evidence in recognition of
their expertise on the specific matters under their consideration,[32] this legal precept
cannot be made to apply in G.R. No. 179650.
Even as the existence and validity of Nasugbu MZO No. 4 had already been established,
there remains in dispute the issue of whether the parcels of land involved in DAR
Administrative Case No. A-9999-142-97 subject of G.R. No. 179650 are actually within the
said zoning ordinance.
The Court finds that the DAR Secretary indeed committed grave abuse of discretion when
he ignored the glaring inconsistencies in the certifications submitted early on by Roxas &
Co. in support of its application vis--vis the certifications it later submitted when the DAR
Secretary reopened DAR Administrative Case No. A-9999-142-97.
[Roxas & Co.] also claims that subject properties are located at Barangay Cogunan and
Lumbangan and that these properties are part of the zone classified as Industrial under
Municipal Ordinance No. 4, Series of 1982 of the Municipality of Nasugbu, Batangas. .a
scrutiny of the said Ordinance shows that only Barangays Talangan and Lumbangan of
the said municipality were classified as Industrial ZonesBarangay Cogunan was not
included. x x x x. In fact, the TCTs submitted by [Roxas & Co.] show that the properties
covered by said titles are all located at Barrio Lumbangan.[29] (emphasis and
underscoring supplied)
Notably, then DAR Secretary Horacio Morales, on one hand, observed that the
landholdings covered by the aforesaid titles do not correspond to the Certification dated
February 11, 1998 of the [HLURB], the Certification dated September 12, 1996 issued by
the Municipal Planning and Development Coordinator, and the Certifications dated July
31, 1997 and May 27, 1997 issued by the National Irrigation Authority. On the other
hand, then Secretary Hernani Braganza relied on a different set of certifications which
were issued later or on September 19, 1996.
Its foregoing findings notwithstanding, the appellate court still allowed Roxas & Co. to
adduce additional evidence to support its application for exemption under Nasugbu MZO
No. 4.
In this regard, the Court finds in order the observation of DAMBA-NFSW that Roxas & Co.
should have submitted the comprehensive land use plan and pointed therein the exact
locations of the properties to prove that indeed they are within the area of coverage of
Nasugbu MZO No. 4.
Meanwhile, Roxas & Co. appealed the appellate courts decision in CA-G.R. No. SP No.
63146 affirming the DAR Secretarys denial of its application for CARP exemption in
Hacienda Palico (now the subject of G.R. No. 149548).
When Roxas & Co. sought the re-opening of the proceedings in DAR Administrative Case
No. A-9999-142-97 (subject of G.R. No. 179650), and offered additional evidence in
support of its application for CARP exemption, the DAR Secretary, this time, granted its
application for the six lots including Lot No. 36 since the additional documents offered by
Roxas & Co. mentioned the said lot.
The petitions in G.R. Nos. 179650 & 149548 must be distinguished from Junio v.
Garilao[33] wherein the certifications submitted in support of the application for exemption
of the therein subject lot were mainly considered on the presumption of regularity in their
issuance, there being no doubt on the location and identity of the subject lot.[34] In G.R.
No. 179650, there exist uncertainties on the location and identities of the properties being
applied for exemption.
G.R. No. 179650 & G.R. No. 149548 must accordingly be denied for lack of merit.

III.
ROXAS & CO.S APPLICATION FOR CARP EXEMPTION IN DAR
ADMINISTRATIVE CASE NO. A-9999-008-98 FOR THE NINE PARCELS OF LAND IN
HACIENDA PALICO SUBJECT OF G.R. NO. 167505 SHOULD BE GRANTED.
The Court, however, takes a different stance with respect to Roxas & Co.s application for
CARP exemption in DAR Administrative Case No. A-9999-008-98 over nine parcels of
land identified as Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions
of TCT No. 985 covering 45.9771 hectares in Hacienda Palico, subject of G.R. No.
167505.
In its application, Roxas & Co. submitted the following documents:
1.
Letter-application dated 29 September 1997 signed by Elino SJ. Napigkit, for and on
behalf of Roxas & Company, Inc., seeking exemption from CARP coverage of subject
landholdings;
2.
Secretarys Certificate dated September 2002 executed by Mariano M. Ampil III,
Corporate Secretary of Roxas & Company, Inc., indicating a Board Resolution authorizing
him to represent the corporation in its application for exemption with the DAR. The same
Board Resolution revoked the authorization previously granted to the Sierra Management
& Resources Corporation;
3.
Photocopy of TCT No. 985 and its corresponding Tax Declaration No. 0401;
4.
Location and vicinity maps of subject landholdings;
5.
Certification dated 10 July 1997 issued by Reynaldo Garcia, Municipal Planning and
Development Coordinator (MPDC) and Zoning Administrator of Nasugbu, Batangas,
stating that the subject parcels of land are within the Urban Core Zone as specified in
Zone A. VII of Municipal Zoning Ordinance No. 4, Series of 1982, approved by the Human
Settlements Regulatory Commission (HSRC), now the Housing and Land Use Regulatory
Board (HLURB), under Resolution No. 123, Series of 1983, dated 4 May 1983;
6.
Two (2) Certifications both dated 31 August 1998, issued by Alfredo Tan II, Director,
HLURB, Region IV, stating that the subject parcels of land appear to be within the
Residential cluster Area as specified in Zone VII of Municipal Zoning Ordinance No. 4,
Series of 1982, approved under HSRC Resolution No. 123, Series of 1983, dated 4 May
1983;[35]
x x x x (emphasis and underscoring supplied)
By Order of November 6, 2002, the DAR Secretary granted the application for exemption
but issued the following conditions:
1.
The farmer-occupants within subject parcels of land shall be maintained in their
peaceful possession and cultivation of their respective areas of tillage until a final
determination has been made on the amount of disturbance compensation due and
entitlement of such farmer-occupants thereto by the PARAD of Batangas;
116
2.
No development shall be undertaken within the subject parcels of land until the
appropriate disturbance compensation has been paid to the farmer-occupants who are
determined by the PARAD to be entitled thereto. Proof of payment of disturbance
compensation shall be submitted to this Office within ten (10) days from such payment;
and
3.
The cancellation of the CLOA issued to the farmer-beneficiaries shall be subject of a
separate proceeding before the PARAD of Batangas.[36]
DAMBA-NSFW moved for reconsideration but the DAR Secretary denied the same and
explained further why CLOA holders need not be informed of the pending application for
exemption in this wise:
As regards the first ground raised by [DAMBA-NSFW], it should be remembered that an
application for CARP-exemption pursuant to DOJ Opinion No. 44, series of 1990, as
implemented by DAR Administrative Order No. 6, series of 1994, is non-adversarial or
non-litigious in nature. Hence, applicant is correct in saying that nowhere in the rules is it
required that occupants of a landholding should be notified of an initiated or pending
exemption application.
xxxx
With regard [to] the allegation that oppositors-movants are already CLOA holders of
subject propert[ies] and deserve to be notified, as owners, of the initiated questioned
exemption application, is of no moment. The Supreme Court in the case of Roxas [&] Co.,
Inc. v. Court of Appeals, 321 SCRA 106, held:
We stress that the failure of respondent DAR to comply with the requisites of due process
in the acquisition proceedings does not give this Court the power to nullify the CLOAs
already issued to the farmer beneficiaries. x x x x. Anyhow, the farmer[-]beneficiaries hold
the property in trust for the rightful owner of the land.
Since subject landholding has been validly determined to be CARP-exempt, therefore, the
previous issuance of the CLOA of oppositors-movants is erroneous. Hence, similar to the
situation of the above-quoted Supreme Court Decision, oppositors-movants only hold the
property in trust for the rightful owners of the land and are not the owners of subject
landholding who should be notified of the exemption application of applicant Roxas &
Company, Incorporated.
Finally, this Office finds no substantial basis to reverse the assailed Orders since there is
substantial compliance by the applicant with the requirements for the issuance of
exemption clearance under DAR AO 6 (1994).[37]
On DAMBA-NSFWs petition for certiorari, the Court of Appeals, noting that the
petition was belatedly filed, sustained, by Decision of December 20, 1994 and Resolution
of May 7, 2007,[38] the DAR Secretarys finding that Roxas & Co. had substantially
complied with the prerequisites of DAR AO 6, Series of 1994. Hence, DAMBA-NFSWs
petition in G.R. No. 167505.

The Court finds no reversible error in the Court of Appeals assailed issuances, the orders
of the DAR Secretary which it sustained being amply supported by evidence.
117
canceling CLOA No. 6654 is of utmost importance, involving as it does the probable
displacement of hundreds of farmer-beneficiaries and their families. x x x x (underscoring
supplied)
IV. THE CLOAs ISSUED BY THE DAR in ADMINISTRATIVE CASE NO. A-9999-008-98
SUBJECT OF G.R. No. 179650 TO THE FARMER-BENEFICIARIES INVOLVING THE
NINE PARCELS OF LAND IN HACIENDA PALICO MUST BE CANCELLED.
Unlike courts of justice, the DARAB, as a quasi-judicial body, is not bound to strictly
observe rules of procedure and evidence. To strictly enforce rules on appeals in this case
would render to naught the Courts dispositions on the other issues in these consolidated
petitions.
Turning now to the validity of the issuance of CLOAs in Hacienda Palico vis--vis the
present dispositions: It bears recalling that in DAR Administrative Case Nos. A-9999-00898 and A-9999-142-97 (G.R. No. 179650), the Court ruled for Roxas & Co.s grant of
exemption in DAR Administrative Case No. A-9999-008-98 but denied the grant of
exemption in DAR Administrative Case No. A-9999-142-97 for reasons already discussed.
It follows that the CLOAs issued to the farmer-beneficiaries in DAR Administrative Case
No. A-9999-008-98 must be cancelled.
In the main, there is no logical recourse except to cancel the CLOAs issued for the nine
parcels of land identified as Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are
portions of TCT No. 985 covering 45.9771 hectares in Hacienda Palico (or those covered
by DAR Administrative Case No. A-9999-008-98). As for the rest of the CLOAs, they
should be respected since Roxas & Co., as shown in the discussion in G.R. Nos. 167540,
167543 and 167505, failed to prove that the other lots in Hacienda Palico and the other
two haciendas, aside from the above-mentioned nine lots, are CARP-exempt.
But first, the Court digresses. The assertion of DAMBA-NSFW that the petitions for partial
and complete cancellations of the CLOAs subject of DARAB Case Nos. R-401-003-2001
to R-401-005-2001 and No. 401-239-2001 violated the earlier order in Roxas v. Court of
Appeals does not lie. Nowhere did the Court therein pronounce that the CLOAs issued
cannot and should not be cancelled, what was involved therein being the legality of the
acquisition proceedings. The Court merely reiterated that it is the DAR which has primary
jurisdiction to rule on the validity of CLOAs. Thus it held:
Conformably, Republic Act No. 3844 (R.A. No. 3844), as amended,[42] mandates that
disturbance compensation be given to tenants of parcels of land upon finding that (t)he
landholding is declared by the department head upon recommendation of the National
Planning Commission to be suited for residential, commercial, industrial or some other
urban purposes.[43] In addition, DAR AO No. 6, Series of 1994 directs the payment of
disturbance compensation before the application for exemption may be completely
granted.
. . . [t]he failure of respondent DAR to comply with the requisites of due process in the
acquisition proceedings does not give this Court the power to nullify the [CLOAs] already
issued to the farmer-beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular course. Respondent DAR must be
given the chance to correct its procedural lapses in the acquisition proceedings. x x x x.
Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the
land.[39]
Roxas & Co. is thus mandated to first satisfy the disturbance compensation of affected
farmer-beneficiaries in the areas covered by the nine parcels of lands in DAR AO No. A9999-008-98 before the CLOAs covering them can be cancelled. And it is enjoined to
strictly follow the instructions of R.A. No. 3844.
On the procedural question raised by Roxas & Co. on the appellate courts relaxation of
the rules by giving due course to DAMBA-NFSWs appeal in CA G.R. SP No. 72198, the
subject of G.R. No. 167845:
Indeed, the perfection of an appeal within the statutory period is jurisdictional and failure to
do so renders the assailed decision final and executory.[40] A relaxation of the rules may,
however, for meritorious reasons, be allowed in the interest of justice.[41] The Court finds
that in giving due course to DAMBA-NSFWs appeal, the appellate court committed no
reversible error. Consider its ratiocination:
x x x x. To deny [DAMBA-NSFW]s appeal with the PARAD will not only affect their right
over the parcel of land subject of this petition with an area of 103.1436 hectares, but also
that of the whole area covered by CLOA No. 6654 since the PARAD rendered a Joint
Resolution of the Motion for Reconsideration filed by the [DAMBA-NSFW] with regard to
[Roxas & Co.]s application for partial and total cancellation of the CLOA in DARAB Cases
No. R-401-003-2001 to R-401-005-2001 and No. 401-239-2001. There is a pressing need
for an extensive discussion of the issues as raised by both parties as the matter of
Finally then, and in view of the Courts dispositions in G.R. Nos. 179650 and 167505, the
May 27, 2001 Decision of the Provincial Agrarian Reform Adjudicator (PARAD)[44] in
DARAB Case No. 401-239-2001 ordering the total cancellation of CLOA No. 6654, subject
of G.R. No. 169163, is SET ASIDE except with respect to the CLOAs issued for Lot Nos.
20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985 covering
45.9771 hectares in Hacienda Palico (or those covered by DAR Administrative Case No.
A-9999-008-98). It goes without saying that the motion for reconsideration of DAMBANFSW is granted to thus vacate the Courts October 19, 2005 Resolution dismissing
DAMBA-NFSWs petition for review of the appellate courts Decision in CA-G.R. SP No.
75952;[45]
WHEREFORE,
1) In G.R. No. 167540, the Court REVERSES and SETS ASIDE the November 24, 2003
Decision[46] and March 18, 2005 Resolution of the Court of Appeals in CA-G.R. SP No.
72131 which declared that Presidential Proclamation No. 1520 reclassified the lands in the
municipalities of Nasugbu in Batangas and Maragondon and Ternate in Cavite to nonagricultural use;

2) The Court accordingly GRANTS the Motion for Reconsideration of the Department of
Agrarian Reform in G.R. No. 167543 and REVERSES and SETS ASIDE its Resolution of
July 20, 2005;
3) In G.R. No. 149548, the Court DENIES the petition for review of Roxas & Co. for lack
of merit;
4) In G.R. No. 179650, the Court GRANTS the petition for review of DAMBA-NSFW and
REVERSES and SETS ASIDE the October 31, 2006 Decision and August 16, 2007
Resolution of the Court of Appeals in CA-G.R. SP No. 82225;
5) In G.R. No. 167505, the Court DENIES the petition for review of DAMBA-NSFW and
AFFIRMS the December 20, 2004 Decision and March 7, 2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 82226;
6) In G.R. No. 167845, the Court DENIES Roxas & Co.s petition for review for lack of
merit and AFFIRMS the September 10, 2004 Decision and April 14, 2005 Resolution of
the Court of Appeals;
7) In G.R. No. 169163, the Court SETS ASIDE the Decisions of the Provincial Agrarian
Reform Adjudicator in DARAB Case No. 401-239-2001 ordering the cancellation of CLOA
No. 6654 and DARAB Cases Nos. R-401-003-2001 to No. R-401-005-2001 granting the
partial cancellation of CLOA No. 6654. The CLOAs issued for Lots No. 21 No. 24, No.
26, No. 31, No. 32 and No. 34 or those covered by DAR Administrative Case No. A-9999142-97) remain; and
8) Roxas & Co. is ORDERED to pay the disturbance compensation of affected farmerbeneficiaries in the areas covered by the nine parcels of lands in DAR Administrative Case
No. A-9999-008-98 before the CLOAs therein can be cancelled, and is ENJOINED to
strictly follow the mandate of R.A. No. 3844.
No pronouncement as to costs.
SO ORDERED.
Chevron vs. BCDA

This petition for review on certiorari assails the Decision1 dated November 30, 2005 of the
Court of Appeals (CA) in CA-G.R. SP No. 87117, which affirmed the Resolution2 dated
August 2, 2004 and the Order3 dated September 30, 2004 of the Office of the President in
O.P. Case No. 04-D-170.
The facts follow.
On June 28, 2002, the Board of Directors of respondent Clark Development Corporation
(CDC) issued and approved Policy Guidelines on the Movement of Petroleum Fuel to and
from the Clark Special Economic Zone (CSEZ)4 which provided, among others, for the
following fees and charges:
1. Accreditation Fee
118
xxxx
2. Annual Inspection Fee
xxxx
3. Royalty Fees
Suppliers delivering fuel from outside sources shall be assessed the following royalty fees:
- Php0.50 per liter those delivering Coastal petroleum fuel to CSEZ locators not
sanctioned by CDC
- Php1.00 per liter those bringing-in petroleum fuel (except Jet A-1) from outside sources
xxxx
4. Gate Pass Fee
x x x x5
The above policy guidelines were implemented effective July 27, 2002. On October 1,
2002, CDC sent a letter6 to herein petitioner Chevron Philippines, Inc. (formerly Caltex
Philippines, Inc.), a domestic corporation which has been supplying fuel to Nanox
Philippines, a locator inside the CSEZ since 2001, informing the petitioner that a royalty
fee of P0.50 per liter shall be assessed on its deliveries to Nanox Philippines effective
August 1, 2002. Thereafter, on October 21, 2002 a Statement of Account7 was sent by
CDC billing the petitioner for royalty fees in the amount of P115,000.00 for its fuel sales
from Coastal depot to Nanox Philippines from August 1-31 to September 3-21, 2002.
Claiming that nothing in the law authorizes CDC to impose royalty fees or any fees based
on a per unit measurement of any commodity sold within the special economic zone,
petitioner sent a letter8 dated October 30, 2002 to the President and Chief Executive
Officer of CDC, Mr. Emmanuel Y. Angeles, to protest the assessment for royalty fees.
Petitioner nevertheless paid the said fees under protest on November 4, 2002.
On August 18, 2003, CDC again wrote a letter9 to petitioner regarding the latters
unsettled royalty fees covering the period of December 2002 to July 2003. Petitioner
responded through a letter10 dated September 8, 2003 reiterating its continuing objection
over the assessed royalty fees and requested a refund of the amount paid under protest
on November 4, 2002. The letter also asked CDC to revoke the imposition of such royalty
fees. The request was denied by CDC in a letter11 dated September 29, 2003.
Petitioner elevated its protest before respondent Bases Conversion Development
Authority (BCDA) arguing that the royalty fees imposed had no reasonable relation to the
probable expenses of regulation and that the imposition on a per unit measurement of fuel
sales was for a revenue generating purpose, thus, akin to a "tax". The protest was
however denied by BCDA in a letter12 dated March 3, 2004.
Petitioner appealed to the Office of the President which dismissed13 the appeal for lack of
merit on August 2, 2004 and denied14 petitioners motion for reconsideration thereof on
September 30, 2004.
Aggrieved, petitioner elevated the case to the CA which likewise dismissed15 the appeal
for lack of merit on November 30, 2005 and denied16 the motion for reconsideration on
July 26, 2006.
The CA held that in imposing the challenged royalty fees, respondent CDC was exercising
its right to regulate the flow of fuel into CSEZ, which is bolstered by the fact that it

possesses exclusive right to distribute fuel within CSEZ pursuant to its Joint Venture
Agreement (JVA)17 with Subic Bay Metropolitan Authority (SBMA) and Coastal Subic Bay
Terminal, Inc. (CSBTI) dated April 11, 1996. The appellate court also found that royalty
fees were assessed on fuel delivered, not on the sale, by petitioner and that the basis of
such imposition was petitioners delivery receipts to Nanox Philippines. The fact that
revenue is incidentally also obtained does not make the imposition a tax as long as the
primary purpose of such imposition is regulation.18
Petitioner filed a motion for reconsideration but the CA denied the same in its
Resolution19 dated July 26, 2006.
Hence, this petition raising the following grounds:
I. THE ISSUE RAISED BEFORE THE COURT A QUO IS A QUESTION OF SUBSTANCE
NOT HERETOFORE DETERMINED BY THE HONORABLE SUPREME COURT.
II. THE RULING OF THE COURT OF APPEALS THAT THE CDC HAS THE POWER TO
IMPOSE THE QUESTIONED "ROYALTY FEES" IS CONTRARY TO LAW.
III. THE COURT OF APPEALS WAS MANIFESTLY MISTAKEN AND COMMITTED
GRAVE ABUSE OF DISCRETION AND A CLEAR MISUNDERSTANDING OF FACTS
WHEN IT RULED CONTRARY TO THE EVIDENCE THAT: (i) THE QUESTIONED
"ROYALTY FEE" IS PRIMARILY FOR REGULATION; AND (ii) ANY REVENUE EARNED
THEREFROM IS MERELY INCIDENTAL TO THE PURPOSE OF REGULATION.
IV. THE COURT OF APPEALS FAILED TO GIVE DUE WEIGHT AND CONSIDERATION
TO THE EVIDENCE PRESENTED BY CPI SUCH AS THE LETTERS COMING FROM
RESPONDENT CDC ITSELF PROVING THAT THE QUESTIONED ROYALTY FEES ARE
IMPOSED ON THE BASIS OF FUEL SALES (NOT DELIVERY OF FUEL) AND NOT FOR
REGULATION BUT PURELY FOR INCOME GENERATION, I.E. AS PRICE OR
CONSIDERATION FOR THE RIGHT TO MARKET AND DISTRIBUTE FUEL INSIDE THE
CSEZ.20
Petitioner argues that CDC does not have any power to impose royalty fees on sale of fuel
inside the CSEZ on the basis of purely income generating functions and its exclusive right
to market and distribute goods inside the CSEZ. Such imposition of royalty fees for
revenue generating purposes would amount to a tax, which the respondents have no
power to impose. Petitioner stresses that the royalty fee imposed by CDC is not regulatory
in nature but a revenue generating measure to increase its profits and to further enhance
its exclusive right to market and distribute fuel in CSEZ.21
Petitioner would also like this Court to note that the fees imposed, assuming arguendo
they are regulatory in nature, are unreasonable and are grossly in excess of regulation
costs. It adds that the amount of the fees should be presumed to be unreasonable and
that the burden of proving that the fees are not unreasonable lies with the respondents.22
On the part of the respondents, they argue that the purpose of the royalty fees is to
regulate the flow of fuel to and from the CSEZ. Such being its main purpose, and revenue
(if any) just an incidental product, the imposition cannot be considered a tax. It is their
position that the regulation is a valid exercise of police power since it is aimed at
119
promoting the general welfare of the public. They claim that being the administrator of the
CSEZ, CDC is responsible for the safe distribution of fuel products inside the CSEZ.23
The petition has no merit.
In distinguishing tax and regulation as a form of police power, the determining factor is the
purpose of the implemented measure. If the purpose is primarily to raise revenue, then it
will be deemed a tax even though the measure results in some form of regulation. On the
other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an
exercise of the police power of the state, even though incidentally, revenue is generated.
Thus, in Gerochi v. Department of Energy,24 the Court stated:
The conservative and pivotal distinction between these two (2) powers rests in the
purpose for which the charge is made. If generation of revenue is the primary purpose and
regulation is merely incidental, the imposition is a tax; but if regulation is the primary
purpose, the fact that revenue is incidentally raised does not make the imposition a tax.
In the case at bar, we hold that the subject royalty fee was imposed primarily for regulatory
purposes, and not for the generation of income or profits as petitioner claims. The Policy
Guidelines on the Movement of Petroleum Fuel to and from the Clark Special Economic
Zone25 provides:
DECLARATION OF POLICY
It is hereby declared the policy of CDC to develop and maintain the Clark Special
Economic Zone (CSEZ) as a highly secured zone free from threats of any kind, which
could possibly endanger the lives and properties of locators, would-be investors, visitors,
and employees.
It is also declared the policy of CDC to operate and manage the CSEZ as a separate
customs territory ensuring free flow or movement of goods and capital within, into and
exported out of the CSEZ.26 (Emphasis supplied.)
From the foregoing, it can be gleaned that the Policy Guidelines was issued, first and
foremost, to ensure the safety, security, and good condition of the petroleum fuel industry
within the CSEZ. The questioned royalty fees form part of the regulatory framework to
ensure "free flow or movement" of petroleum fuel to and from the CSEZ. The fact that
respondents have the exclusive right to distribute and market petroleum products within
CSEZ pursuant to its JVA with SBMA and CSBTI does not diminish the regulatory purpose
of the royalty fee for fuel products supplied by petitioner to its client at the CSEZ.
As pointed out by the respondents in their Comment, from the time the JVA took effect up
to the time CDC implemented its Policy Guidelines on the Movement of Petroleum Fuel to
and from the CSEZ, suppliers/distributors were allowed to bring in petroleum products
inside CSEZ without any charge at all. But this arrangement clearly negates CDCs
mandate under the JVA as exclusive distributor of CSBTIs fuel products within CSEZ and
respondents ownership of the Subic-Clark Pipeline.27 On this score, respondents were
justified in charging royalty fees on fuel delivered by outside suppliers.

However, it was erroneous for petitioner to argue that such exclusive right of respondent
CDC to market and distribute fuel inside CSEZ is the sole basis of the royalty fees
imposed under the Policy Guidelines. Being the administrator of CSEZ, the responsibility
of ensuring the safe, efficient and orderly distribution of fuel products within the Zone falls
on CDC. Addressing specific concerns demanded by the nature of goods or products
involved is encompassed in the range of services which respondent CDC is expected to
provide under the law, in pursuance of its general power of supervision and control over
the movement of all supplies and equipment into the CSEZ.
Section 2 of Executive Order No. 8028 provides:
SEC. 2. Powers and Functions of the Clark Development Corporation. The BCDA, as
the incorporator and holding company of its Clark subsidiary, shall determine the powers
and functions of the CDC. Pursuant to Section 15 of RA 7227, the CDC shall have the
specific powers of the Export Processing Zone Authority as provided for in Section 4 of
Presidential Decree No. 66 (1972) as amended.
Among those specific powers granted to CDC under Section 4 of Presidential Decree No.
66 are:
(a) To operate, administer and manage the export processing zone established in the Port
of Mariveles, Bataan, and such other export processing zones as may be established
under this Decree; to construct, acquire, own, lease, operate and maintain infrastructure
facilities, factory building, warehouses, dams, reservoir, water distribution, electric light
and power system, telecommunications and transportation, or such other facilities and
services necessary or useful in the conduct of commerce or in the attainment of the
purposes and objectives of this Decree;
xxxx
(g) To fix, assess and collect storage charges and fees, including rentals for the lease, use
or occupancy of lands, buildings, structure, warehouses, facilities and other properties
owned and administered by the Authority; and to fix and collect the fees and charges
for the issuance of permits, licenses and the rendering of services not enumerated herein,
the provisions of law to the contrary notwithstanding;
(h) For the due and effective exercise of the powers conferred by law and to the extend
(sic) [extent] requisite therefor, to exercise exclusive jurisdiction and sole police authority
over all areas owned or administered by the Authority. For this purpose, the Authority shall
have supervision and control over the bringing in or taking out of the Zone, including the
movement therein, of all cargoes, wares, articles, machineries, equipment,supplies or
merchandise of every type and description;
x x x x (Emphasis supplied.)
In relation to the regulatory purpose of the imposed fees, this Court in Progressive
Development Corporation v. Quezon City,29 stated that "x x x the imposition questioned
must relate to an occupation or activity that so engages the public interest in health,
morals, safety and development as to require regulation for the protection and promotion
of such public interest; the imposition must also bear a reasonable relation to the probable
expenses of regulation, taking into account not only the costs of direct regulation but also
its incidental consequences as well."
120
In the case at bar, there can be no doubt that the oil industry is greatly imbued with public
interest as it vitally affects the general welfare.30 In addition, fuel is a highly combustible
product which, if left unchecked, poses a serious threat to life and property. Also, the
reasonable relation between the royalty fees imposed on a "per liter" basis and the
regulation sought to be attained is that the higher the volume of fuel entering CSEZ, the
greater the extent and frequency of supervision and inspection required to ensure safety,
security, and order within the Zone.
Respondents submit that increased administrative costs were triggered by security risks
that have recently emerged, such as terrorist strikes in airlines and military/government
facilities. Explaining the regulatory feature of the charges imposed under the Policy
Guidelines, then BCDA President Rufo Colayco in his letter dated March 3, 2004
addressed to petitioners Chief Corporate Counsel, stressed:
The need for regulation is more evident in the light of the 9/11 tragedy considering that
what is being moved from one location to another are highly combustible fuel products
that could cause loss of lives and damage to properties, hence, a set of guidelines was
promulgated on 28 June 2002. It must be emphasized also that greater security measure
must be observed in the CSEZ because of the presence of the airport which is a vital
public infrastructure.
We are therefore constrained to sustain the imposition of the royalty fees on deliveries of
CPIs fuel products to Nanox Philippines.31
As to the issue of reasonableness of the amount of the fees, we hold that no evidence
was adduced by the petitioner to show that the fees imposed are unreasonable.
Administrative issuances have the force and effect of law.32 They benefit from the same
presumption of validity and constitutionality enjoyed by statutes. These two precepts place
a heavy burden upon any party assailing governmental regulations.33 Petitioners plain
allegations are simply not enough to overcome the presumption of validity and
reasonableness of the subject imposition.
WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of
Appeals dated November 30, 2005 in CA-G.R. SP No. 87117 is hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.
Espina vs. Zamora
This case calls upon the Court to exercise its power of judicial review and determine the
constitutionality of the Retail Trade Liberalization Act of 2000, which has been assailed as
in breach of the constitutional mandate for the development of a self-reliant and
independent national economy effectively controlled by Filipinos.
The Facts and the Case
On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.) 8762,
also known as the Retail Trade Liberalization Act of 2000. It expressly repealed R.A. 1180,

which absolutely prohibited foreign nationals from engaging in the retail trade business.
R.A. 8762 now allows them to do so under four categories:
Category A
Less
than
US$2,500,000.00
Exclusively for Filipino citizens and corporations

wholly owned by Filipino citizens.
Category B
US$2,500,000.00 up
but
less
than
US$7,500,000.00
For the first two years of R.A. 8762s effectivity,

foreign ownership is allowed up to
60%. After the two-year period,
100% foreign equity shall be allowed.
Category C
US$7,500,000.00
more
May be wholly owned by foreigners. Foreign

investments for establishing a store in
Categories B and C shall not be less than
the equivalent in Philippine Pesos of US$830,000.00.
Category D
US$250,000.00
per
store
of
foreign
enterprises
specializing in highend
or
luxury
products
or
May be wholly owned by foreigners.
R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and now
reside in the Philippines, to engage in the retail trade business with the same rights as
Filipino citizens.
On October 11, 2000 petitioners ***Magtanggol T. Gunigundo I, Michael T. Defensor,
Gerardo S. Espina, Benjamin S. Lim, Orlando Fua, Jr., Prospero Amatong, Sergio Apostol,
Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales, Jaime Jacob, Apolinario
Lozada, Jr., Leonardo Montemayor, Ma. Elena Palma-Gil, Prospero Pichay, Juan Miguel
Zubiri and Franklin Bautista, all members of the House of Representatives, filed the
present petition, assailing the constitutionality of R.A. 8762 on the following grounds:
First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution which
enjoins the State to place the national economy under the control of Filipinos to achieve
equal distribution of opportunities, promote industrialization and full employment, and
protect Filipino enterprise against unfair competition and trade policies.
121
Fifth, there is a clear and present danger that the law would promote monopolies or
combinations in restraint of trade.
Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary Mar
Roxas, National Economic and Development Authority (NEDA) Secretary Felipe Medalla,
Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities and Exchange
Commission Chairman Lilia Bautista countered that:
First, petitioners have no legal standing to file the petition. They cannot invoke the fact that
they are taxpayers since R.A. 8762 does not involve the disbursement of public funds. Nor
can they invoke the fact that they are members of Congress since they made no claim that
the law infringes on their right as legislators.
Second, the petition does not involve any justiciable controversy. Petitioners of course
claim that, as members of Congress, they represent the small retail vendors in their
respective districts but the petition does not allege that the subject law violates the rights
of those vendors.
Third, petitioners have failed to overcome the presumption of constitutionality of R.A.
8762. Indeed, they could not specify how the new law violates the constitutional provisions
they cite. Sections 9, 19, and 20 of Article II of the Constitution are not self-executing
provisions that are judicially demandable.
Fourth, the Constitution mandates the regulation but not the prohibition of foreign
investments. It directs Congress to reserve to Filipino citizens certain areas of investments
upon the recommendation of the NEDA and when the national interest so dictates. But the
Constitution leaves to the discretion of the Congress whether or not to make such
reservation. It does not prohibit Congress from enacting laws allowing the entry of
foreigners into certain industries not reserved by the Constitution to Filipino citizens.
The Issues Presented
Simplified, the case presents two issues:
1. Whether or not petitioner lawmakers have the legal standing to challenge the
constitutionality of R.A. 8762; and
2. Whether or not R.A. 8762 is unconstitutional.
Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-sari
store vendors, destroy self-employment, and bring about more unemployment.
The Courts Ruling

One. The long settled rule is that he who challenges the validity of a law must have a
standing to do so.1 Legal standing or locus standi refers to the right of a party to come to
a court of justice and make such a challenge. More particularly, standing refers to his
personal and substantial interest in that he has suffered or will suffer direct injury as a
result of the passage of that law.2 To put it another 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 law he complains of.
Fourth, the World Bank-International Monetary Fund had improperly imposed the passage
of R.A. 8762 on the government as a condition for the release of certain loans.
Here, there is no clear showing that the implementation of the Retail Trade Liberalization
Act prejudices petitioners or inflicts damages on them, either as taxpayers4 or as
Second, the implementation of R.A. 8762 would lead to alien control of the retail trade,
which taken together with alien dominance of other areas of business, would result in the
loss of effective Filipino control of the economy.

122
legislators.5 Still the Court will resolve the question they raise since the rule on standing
can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators
when as in this case the public interest so requires or the matter is of transcendental
importance, of overarching significance to society, or of paramount public interest.6
But, as the Court explained in Taada v. Angara,7 the provisions of Article II of the 1987
Constitution, the declarations of principles and state policies, are not self-executing.
Legislative failure to pursue such policies cannot give rise to a cause of action in the
courts.
Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987
Constitution for the State to develop a self-reliant and independent national economy
effectively controlled by Filipinos. They invoke the provisions of the Declaration of
Principles and State Policies under Article II of the 1987 Constitution, which read as
follows:
The Court further explained in Taada that Article XII of the 1987 Constitution lays down
the ideals of economic nationalism: (1) by expressing preference in favor of qualified
Filipinos in the grant of rights, privileges and concessions covering the national economy
and patrimony and in the use of Filipino labor, domestic materials and locally-produced
goods; (2) by mandating the State to adopt measures that help make them competitive;
and (3) by requiring the State to develop a self-reliant and independent national economy
Section 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising standard
of living, and an improved quality of life for all.
xxxx
Section 19. The State shall develop a self-reliant and independent national economy
Section 20. The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments.
Petitioners also invoke the provisions of the National Economy and Patrimony under
Article XII of the 1987 Constitution, which reads:
Section 10. The Congress shall, upon recommendation of the economic and planning
xxxx
Section 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.
Section 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.
In other words, while Section 19, Article II of the 1987 Constitution requires the
development of a self-reliant and independent national economy effectively controlled by
Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic
environment. The objective is simply to prohibit foreign powers or interests from
maneuvering our economic policies and ensure that Filipinos are given preference in all
areas of development.
Indeed, the 1987 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 and reciprocity; 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.
Thus, while the Constitution mandates a bias in favor of Filipino goods, services, labor and
enterprises, it also 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.9
In other words, the 1987 Constitution does not rule out the entry of foreign investments,
goods, and services. While it does not encourage their unlimited entry 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.10 The key, as in all
economies in the world, is to strike a balance between protecting local businesses and
allowing the entry of foreign investments and services.
More importantly, Section 10, Article XII of the 1987 Constitution gives Congress the
discretion to reserve to Filipinos certain areas of investments upon the recommendation of
the NEDA and when the national interest requires. Thus, Congress can determine what
policy to pass and when to pass it depending on the economic exigencies. It can enact
laws allowing the entry of foreigners into certain industries not reserved by the
Constitution to Filipino citizens. In this case, Congress has decided to open certain areas
of the retail trade business to foreign investments instead of reserving them exclusively to
Filipino citizens. The NEDA has not opposed such policy.
The control and regulation of trade in the interest of the public welfare is of course an
exercise of the police power of the State. A persons right to property, whether he is a
Filipino citizen or foreign national, cannot be taken from him without due process of law. In
1954, Congress enacted the Retail Trade Nationalization Act or R.A. 1180 that restricts the

retail business to Filipino citizens. In denying the petition assailing the validity of such Act
for violation of the foreigners right to substantive due process of law, the Supreme Court
held that the law constituted a valid exercise of police power.11 The State had an interest
in preventing alien control of the retail trade and R.A. 1180 was reasonably related to that
purpose. That law is not arbitrary.
Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the restraint
on the foreigners right to property or to engage in an ordinarily lawful business, it cannot
be said that the law amounts to a denial of the Filipinos right to property and to due
process of law. Filipinos continue to have the right to engage in the kinds of retail business
to which the law in question has permitted the entry of foreign investors.
Certainly, it is not within the province of the Court to inquire into the wisdom of R.A. 8762
save when it blatantly violates the Constitution. But as the Court has said, there is no
showing that the law has contravened any constitutional mandate. The Court is not
convinced that the implementation of R.A. 8762 would eventually lead to alien control of
the retail trade business. Petitioners have not mustered any concrete and strong argument
to support its thesis. The law itself has provided strict safeguards on foreign participation
in that business. Thus
First, aliens can only engage in retail trade business subject to the categories aboveenumerated; Second, only nationals from, or juridical entities formed or incorporated in
countries which allow the entry of Filipino retailers shall be allowed to engage in retail
trade business; and Third, qualified foreign retailers shall not be allowed to engage in
certain retailing activities outside their accredited stores through the use of mobile or
rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants
and sari-sari stores and such other similar retailing activities.
In sum, petitioners have not shown how the retail trade liberalization has prejudiced and
can prejudice the local small and medium enterprises since its implementation about a
decade ago.
WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.
SO ORDERED.
E. Due Process and Eminent Domain
SOLGEN vs. AYALA (G.R. No. 177056, September 18, 2009)
DECISION
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the Revised
Rules of Court, filed by petitioner Office of the Solicitor General (OSG), seeking the
reversal and setting aside of the Decision dated 25 January 2007 of the Court of Appeals
in CA-G.R. CV No. 76298, which affirmed in toto the Joint Decision dated 29 May 2002 of
the Regional Trial Court (RTC) of Makati City, Branch 138, in Civil Cases No. 00-1208 and
No. 00-1210; and (2) the Resolution4 dated 14 March 2007 of the appellate court in the
same case which denied the Motion for Reconsideration of the OSG. The RTC adjudged
that respondents Ayala Land Incorporated (Ayala Land), Robinsons Land Corporation
(Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM
Prime) could not be obliged to provide free parking spaces in their malls to their patrons
and the general public.
123
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping
malls in various locations in Metro Manila. Respondent SM Prime constructs, operates,
and leases out commercial buildings and other structures, among which, are SM City,
Manila; SM Centerpoint, Sta. Mesa, Manila; SM City, North Avenue, Quezon City; and SM
Southmall, Las Pias.
The shopping malls operated or leased out by respondents have parking facilities for all
kinds of motor vehicles, either by way of parking spaces inside the mall buildings or in
separate buildings and/or adjacent lots that are solely devoted for use as parking spaces.
Respondents Ayala Land, Robinsons, and SM Prime spent for the construction of their
own parking facilities. Respondent Shangri-la is renting its parking facilities, consisting of
land and building specifically used as parking spaces, which were constructed for the
lessors account.
Respondents expend for the maintenance and administration of their respective parking
facilities. They provide security personnel to protect the vehicles parked in their parking
facilities and maintain order within the area. In turn, they collect the following parking fees
from the persons making use of their parking facilities, regardless of whether said persons
are mall patrons or not:
Respondent
Parking Fees
Ayala Land
On weekdays, P25.00 for the first four hours andP10.00 for eve
succeeding hour; on weekends, flat rate of P25.00 per day
Robinsons
P20.00 for the first three hours and P10.00 for every succeed
hour
Shangri-la
Flat rate of P30.00 per day
SM Prime
P10.00 to P20.00 (depending on whether the parking space

outdoors or indoors) for the first three hours and 59 minut
and P10.00 for every succeeding hour or fraction thereof
The parking tickets or cards issued by respondents to vehicle owners contain the
stipulation that respondents shall not be responsible for any loss or damage to the
vehicles parked in respondents parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on Justice and Human
Rights conducted a joint investigation for the following purposes: (1) to inquire into the
legality of the prevalent practice of shopping malls of charging parking fees; (2) assuming
arguendo that the collection of parking fees was legally authorized, to find out the basis
and reasonableness of the parking rates charged by shopping malls; and (3) to determine
the legality of the policy of shopping malls of denying liability in cases of theft, robbery, or
carnapping, by invoking the waiver clause at the back of the parking tickets. Said Senate
Committees invited the top executives of respondents, who operate the major malls in the
country; the officials from the Department of Trade and Industry (DTI), Department of
Public Works and Highways (DPWH), Metro Manila Development Authority (MMDA), and

other local government officials; and the Philippine Motorists Association (PMA) as
representative of the consumers group.
After three public hearings held on 30 September, 3 November, and 1 December 1999,
the afore-mentioned Senate Committees jointly issued Senate Committee Report No.
225 on 2 May 2000, in which they concluded:
In view of the foregoing, the Committees find that the collection of parking fees by
shopping malls is contrary to the National Building Code and is therefor [sic] illegal. While
it is true that the Code merely requires malls to provide parking spaces, without specifying
whether it is free or not, both Committees believe that the reasonable and logical
interpretation of the Code is that the parking spaces are for free. This interpretation is not
only reasonable and logical but finds support in the actual practice in other countries like
the United States of America where parking spaces owned and operated by mall owners
are free of charge.
Figuratively speaking, the Code has "expropriated" the land for parking something
similar to the subdivision law which require developers to devote so much of the land area
for parks.
Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides that "it is
the policy of the State to protect the interest of the consumers, promote the general
welfare and establish standards of conduct for business and industry." Obviously, a
contrary interpretation (i.e., justifying the collection of parking fees) would be going against
the declared policy of R.A. 7394.
Section 201 of the National Building Code gives the responsibility for the administration
and enforcement of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This set up, however, is
not being carried out in reality.
In the position paper submitted by the Metropolitan Manila Development Authority
(MMDA), its chairman, Jejomar C. Binay, accurately pointed out that the Secretary of the
DPWH is responsible for the implementation/enforcement of the National Building Code.
After the enactment of the Local Government Code of 1991, the local government units
(LGUs) were tasked to discharge the regulatory powers of the DPWH. Hence, in the local
level, the Building Officials enforce all rules/ regulations formulated by the DPWH relative
to all building plans, specifications and designs including parking space requirements.
There is, however, no single national department or agency directly tasked to supervise
the enforcement of the provisions of the Code on parking, notwithstanding the national
character of the law.
124
2. The Department of Trade and Industry pursuant to the provisions of R.A. No. 7394,
otherwise known as the Consumer Act of the Philippines should enforce the provisions of
the Code relative to parking. Towards this end, the DTI should formulate the necessary
implementing rules and regulations on parking in shopping malls, with prior consultations
with the local government units where these are located. Furthermore, the DTI, in
coordination with the DPWH, should be empowered to regulate and supervise the
construction and maintenance of parking establishments.
3. Finally, Congress should amend and update the National Building Code to expressly
prohibit shopping malls from collecting parking fees by at the same time, prohibit them
from invoking the waiver of liability.7
Respondent SM Prime thereafter received information that, pursuant to Senate Committee
Report No. 225, the DPWH Secretary and the local building officials of Manila, Quezon
City, and Las Pias intended to institute, through the OSG, an action to enjoin respondent
SM Prime and similar establishments from collecting parking fees, and to impose upon
said establishments penal sanctions under Presidential Decree No. 1096, otherwise
known as the National Building Code of the Philippines (National Building Code), and its
Implementing Rules and Regulations (IRR). With the threatened action against it,
respondent SM Prime filed, on 3 October 2000, a Petition for Declaratory Relief8 under
Rule 63 of the Revised Rules of Court, against the DPWH Secretary and local building
officials of Manila, Quezon City, and Las Pias. Said Petition was docketed as Civil Case
No. 00-1208 and assigned to the RTC of Makati City, Branch 138, presided over by Judge
Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM Prime prayed for
judgment:
a) Declaring Rule XIX of the Implementing Rules and Regulations of the National Building
Code as ultra vires, hence, unconstitutional and void;
b) Declaring [herein respondent SM Prime]s clear legal right to lease parking spaces
appurtenant to its department stores, malls, shopping centers and other commercial
establishments; and
c) Declaring the National Building Code of the Philippines Implementing Rules and
Regulations as ineffective, not having been published once a week for three (3)
consecutive weeks in a newspaper of general circulation, as prescribed by Section 211 of
Presidential Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as may be deemed just and
equitable under the premises.
Senate Committee Report No. 225, thus, contained the following recommendations:
In light of the foregoing, the Committees on Trade and Commerce and Justice and Human
Rights hereby recommend the following:
The very next day, 4 October 2000, the OSG filed a Petition for Declaratory Relief and
Injunction (with Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction) against respondents. This Petition was docketed as Civil Case No. 00-1210
and raffled to the RTC of Makati, Branch 135, presided over by Judge Francisco B. Ibay
(Judge Ibay). Petitioner prayed that the RTC:
1. The Office of the Solicitor General should institute the necessary action to enjoin the
collection of parking fees as well as to enforce the penal sanction provisions of the
National Building Code. The Office of the Solicitor General should likewise study how
refund can be exacted from mall owners who continue to collect parking fees.
1. After summary hearing, a temporary restraining order and a writ of preliminary

injunction be issued restraining respondents from collecting parking fees from their
customers; and

2. After hearing, judgment be rendered declaring that the practice of respondents in

charging parking fees is violative of the National Building Code and its Implementing
Rules and Regulations and is therefore invalid, and making permanent any injunctive writ
issued in this case.
Other reliefs just and equitable under the premises are likewise prayed for.
On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued an Order
consolidating Civil Case No. 00-1210 with Civil Case No. 00-1208 pending before Judge
Marella of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August 2001, the RTC
issued a Pre-Trial Order of even date which limited the issues to be resolved in Civil
Cases No. 00-1208 and No. 00-1210 to the following:
1. Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the present
proceedings and relative thereto whether the controversy in the collection of parking fees
by mall owners is a matter of public welfare.
2. Whether declaratory relief is proper.
3. Whether respondent Ayala Land, Robinsons, Shangri-La and SM Prime are obligated to
provide parking spaces in their malls for the use of their patrons or the public in general,
free of charge.
4. Entitlement of the parties of [sic] award of damages.
On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-1208 and No.
00-1210.
The RTC resolved the first two issues affirmatively. It ruled that the OSG can initiate Civil
Case No. 00-1210 under Presidential Decree No. 478 and the Administrative Code of
1987. It also found that all the requisites for an action for declaratory relief were present,
to wit:
The requisites for an action for declaratory relief are: (a) there is a justiciable controversy;
(b) the controversy is between persons whose interests are adverse; (c) the party seeking
the relief has a legal interest in the controversy; and (d) the issue involved is ripe for
judicial determination.
SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who stands to be
affected directly by the position taken by the government officials sued namely the
Secretary of Public Highways and the Building Officials of the local government units
where it operates shopping malls. The OSG on the other hand acts on a matter of public
interest and has taken a position adverse to that of the mall owners whom it sued. The
construction of new and bigger malls has been announced, a matter which the Court can
take judicial notice and the unsettled issue of whether mall operators should provide
parking facilities, free of charge needs to be resolved.15
As to the third and most contentious issue, the RTC pronounced that:
The Building Code, which is the enabling law and the Implementing Rules and
Regulations do not impose that parking spaces shall be provided by the mall owners free
125
of charge. Absent such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are
under no obligation to provide them for free. Article 1158 of the Civil Code is clear:
"Obligations derived from law are not presumed. Only those expressly determined in this
Code or in special laws are demandable and shall be regulated by the precepts of the law
which establishes them; and as to what has not been foreseen, by the provisions of this
Book (1090).["]
xxxx
The provision on ratios of parking slots to several variables, like shopping floor area or
customer area found in Rule XIX of the Implementing Rules and Regulations cannot be
construed as a directive to provide free parking spaces, because the enabling law, the
Building Code does not so provide. x x x.
To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide parking spaces
for free can be considered as an unlawful taking of property right without just
compensation.
Parking spaces in shopping malls are privately owned and for their use, the mall operators
collect fees. The legal relationship could be either lease or deposit. In either case[,] the
mall owners have the right to collect money which translates into income. Should parking
spaces be made free, this right of mall owners shall be gone. This, without just
compensation. Further, loss of effective control over their property will ensue which is
frowned upon by law.
The presence of parking spaces can be viewed in another light. They can be looked at as
necessary facilities to entice the public to increase patronage of their malls because
without parking spaces, going to their malls will be inconvenient. These are[,] however[,]
business considerations which mall operators will have to decide for themselves. They are
not sufficient to justify a legal conclusion, as the OSG would like the Court to adopt that it
is the obligation of the mall owners to provide parking spaces for free.
The RTC then held that there was no sufficient evidence to justify any award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No. 00-1208 and
No. 00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc., Robinsons Land
Corporation, Shangri-la Plaza Corporation and SM Prime Holdings[,] Inc. are not obligated
to provide parking spaces in their malls for the use of their patrons or public in general,
free of charge.
All counterclaims in Civil Case No. 00-1210 are dismissed.
CA-G.R. CV No. 76298 involved the separate appeals of the OSG and respondent SM
Prime filed with the Court of Appeals. The sole assignment of error of the OSG in its
Appellants Brief was:

THE TRIAL COURT ERRED IN HOLDING THAT THE NATIONAL BUILDING CODE DID
NOT INTEND MALL PARKING SPACES TO BE FREE OF CHARGE[;]
while the four errors assigned by respondent SM Prime in its Appellants Brief were:
I
THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE
IMPLEMENTING RULES AS HAVING BEEN ENACTED ULTRA VIRES, HENCE,
UNCONSTITUTIONAL AND VOID.
II
THE TRIAL COURT ERRED IN FAILING TO DECLARE THE IMPLEMENTING RULES
INEFFECTIVE FOR NOT HAVING BEEN PUBLISHED AS REQUIRED BY LAW.
III
THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSGS PETITION FOR
DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS NO LEGAL
CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL PARTY-IN-INTEREST IN THE
INSTANT CASE.
Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the ground that
the lone issue raised therein involved a pure question of law, not reviewable by the Court
of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on 25 January
2007. The appellate court agreed with respondent Robinsons that the appeal of the OSG
should suffer the fate of dismissal, since "the issue on whether or not the National Building
Code and its implementing rules require shopping mall operators to provide parking
facilities to the public for free" was evidently a question of law. Even so, since CA-G.R. CV
No. 76298 also included the appeal of respondent SM Prime, which raised issues worthy
of consideration, and in order to satisfy the demands of substantial justice, the Court of
Appeals proceeded to rule on the merits of the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate Civil Case
No. 00-1210 before the RTC as the legal representative of the government, and as the
one deputized by the Senate of the Republic of the Philippines through Senate Committee
Report No. 225.
126
found that the controversy could be settled on other grounds, without touching on the
issue of the validity of the IRR. It referred to the settled rule that courts should refrain from
passing upon the constitutionality of a law or implementing rules, because of the principle
that bars judicial inquiry into a constitutional question, unless the resolution thereof is
indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the National Building Code and
Rule XIX of the IRR were clear and needed no further construction. Said provisions were
only intended to control the occupancy or congestion of areas and structures. In the
absence of any express and clear provision of law, respondents could not be obliged and
expected to provide parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the instant appeals are DENIED. Accordingly,
appealed Decision is hereby AFFIRMED in toto.
In its Resolution issued on 14 March 2007, the Court of Appeals denied the Motion for
Reconsideration of the OSG, finding that the grounds relied upon by the latter had already
been carefully considered, evaluated, and passed upon by the appellate court, and there
was no strong and cogent reason to modify much less reverse the assailed judgment.
The OSG now comes before this Court, via the instant Petition for Review, with a single
assignment of error:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING OF THE
LOWER COURT THAT RESPONDENTS ARE NOT OBLIGED TO PROVIDE FREE
PARKING SPACES TO THEIR CUSTOMERS OR THE PUBLIC.
The OSG argues that respondents are mandated to provide free parking by Section 803 of
the National Building Code and Rule XIX of the IRR.
According to Section 803 of the National Building Code:
SECTION 803. Percentage of Site Occupancy
(a) Maximum site occupancy shall be governed by the use, type of construction, and
height of the building and the use, area, nature, and location of the site; and subject to the
provisions of the local zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.
In connection therewith, Rule XIX of the old IRR, provides:
RULE XIX PARKING AND LOADING SPACE REQUIREMENTS
The Court of Appeals rejected the contention of respondent SM Prime that the OSG failed
to exhaust administrative remedies. The appellate court explained that an administrative
review is not a condition precedent to judicial relief where the question in dispute is purely
a legal one, and nothing of an administrative nature is to be or can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR of the National
Building Code, as such issue was not among those the parties had agreed to be resolved
by the RTC during the pre-trial conference for Civil Cases No. 00-1208 and No. 00-1210.
Issues cannot be raised for the first time on appeal. Furthermore, the appellate court
Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum
site occupancy, the following provisions on parking and loading space requirements shall
be observed:
1. The parking space ratings listed below are minimum off-street requirements for specific
uses/occupancies for buildings/structures:

1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by
5.00 meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel
parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60
meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of
which shall be indicated on the plans and specified whether or not parking
accommodations, are attendant-managed. (See Section 2 for computation of parking
requirements).
xxxx
1.7 Neighborhood shopping center 1 slot/100 sq. m. of shopping floor area
The OSG avers that the aforequoted provisions should be read together with Section 102
of the National Building Code, which declares:
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health, property, and
public welfare, consistent with the principles of sound environmental management and
control; and to this end, make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction, use, occupancy, and
maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim
of safeguarding "life, health, property, and public welfare, consistent with the principles of
sound environmental management and control." Adequate parking spaces would
contribute greatly to alleviating traffic congestion when complemented by quick and easy
access thereto because of free-charge parking. Moreover, the power to regulate and
control the use, occupancy, and maintenance of buildings and structures carries with it the
power to impose fees and, conversely, to control -- partially or, as in this case, absolutely
-- the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory provisions, garnered
from a plain reading thereof, is that respondents, as operators/lessors of neighborhood
shopping centers, should provide parking and loading spaces, in accordance with the
minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing
therein pertaining to the collection (or non-collection) of parking fees by respondents. In
fact, the term "parking fees" cannot even be found at all in the entire National Building
Code and its IRR.
Statutory construction has it that if a statute is clear and unequivocal, it must be given its
literal meaning and applied without any attempt at interpretation.26 Since Section 803 of
the National Building Code and Rule XIX of its IRR do not mention parking fees, then
simply, said provisions do not regulate the collection of the same. The RTC and the Court
of Appeals correctly applied Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable, and shall be regulated by the
127
precepts of the law which establishes them; and as to what has not been foreseen, by the
provisions of this Book. (Emphasis ours.)
Hence, in order to bring the matter of parking fees within the ambit of the National Building
Code and its IRR, the OSG had to resort to specious and feeble argumentation, in which
the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to expand the
coverage of Section 803 of the same Code and Rule XIX of the IRR, so as to include the
regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the
National Building Code declaring the policy of the State "to safeguard life, health, property,
and public welfare, consistent with the principles of sound environmental management
and control"; but totally ignores the second part of said provision, which reads, "and to this
end, make it the purpose of this Code to provide for all buildings and structures, a
framework of minimum standards and requirements to regulate and control their location,
site, design, quality of materials, construction, use, occupancy, and maintenance." While
the first part of Section 102 of the National Building Code lays down the State policy, it is
the second part thereof that explains how said policy shall be carried out in the Code.
Section 102 of the National Building Code is not an all-encompassing grant of regulatory
power to the DPWH Secretary and local building officials in the name of life, health,
property, and public welfare. On the contrary, it limits the regulatory power of said officials
to ensuring that the minimum standards and requirements for all buildings and structures,
as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements
for parking spaces for buildings, Rule XIX of the IRR also mandates that such parking
spaces be provided by building owners free of charge. If Rule XIX is not covered by the
enabling law, then it cannot be added to or included in the implementing rules. The rulemaking power of administrative agencies must be confined to details for regulating the
mode or proceedings to carry into effect the law as it has been enacted, and it cannot be
extended to amend or expand the statutory requirements or to embrace matters not
covered by the statute. Administrative regulations must always be in harmony with the
provisions of the law because any resulting discrepancy between the two will always be
resolved in favor of the basic law.27
From the RTC all the way to this Court, the OSG repeatedly referred to Republic v.
Gonzales28 and City of Ozamis v. Lumapas29 to support its position that the State has
the power to regulate parking spaces to promote the health, safety, and welfare of the
public; and it is by virtue of said power that respondents may be required to provide free
parking facilities. The OSG, though, failed to consider the substantial differences in the
factual and legal backgrounds of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants of two parcels of
land of the public domain to give way to a road-widening project. It was in this context that
the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main thoroughfares was
prevalent; this, of course, caused the build up of traffic in the surrounding area to the great
discomfort and inconvenience of the public who use the streets. Traffic congestion

constitutes a threat to the health, welfare, safety and convenience of the people and it can
only be substantially relieved by widening streets and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been clothed with full power to
control and regulate its streets for the purpose of promoting public health, safety and
welfare. The City can regulate the time, place, and manner of parking in the streets and
public places; and charge minimal fees for the street parking to cover the expenses for
supervision, inspection and control, to ensure the smooth flow of traffic in the environs of
the public market, and for the safety and convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in contrast, the present
case deals with privately owned parking facilities available for use by the general public. In
Republic and City of Ozamis, the concerned local governments regulated parking
pursuant to their power to control and regulate their streets; in the instant case, the DPWH
Secretary and local building officials regulate parking pursuant to their authority to ensure
compliance with the minimum standards and requirements under the National Building
Code and its IRR. With the difference in subject matters and the bases for the regulatory
powers being invoked, Republic and City of Ozamis do not constitute precedents for this
case.
Indeed, Republic and City of Ozamis both contain pronouncements that weaken the
position of the OSG in the case at bar. In Republic, the Court, instead of placing the
burden on private persons to provide parking facilities to the general public, mentioned the
trend in other jurisdictions wherein the municipal governments themselves took the
initiative to make more parking spaces available so as to alleviate the traffic problems,
thus:
Under the Land Transportation and Traffic Code, parking in designated areas along public
streets or highways is allowed which clearly indicates that provision for parking spaces
serves a useful purpose. In other jurisdictions where traffic is at least as voluminous as
here, the provision by municipal governments of parking space is not limited to parking
along public streets or highways. There has been a marked trend to build off-street
parking facilities with the view to removing parked cars from the streets. While the
provision of off-street parking facilities or carparks has been commonly undertaken by
private enterprise, municipal governments have been constrained to put up carparks in
response to public necessity where private enterprise had failed to keep up with the
growing public demand. American courts have upheld the right of municipal governments
to construct off-street parking facilities as clearly redounding to the public benefit.30
In City of Ozamis, the Court authorized the collection by the City of minimal fees for the
parking of vehicles along the streets: so why then should the Court now preclude
respondents from collecting from the public a fee for the use of the mall parking facilities?
Undoubtedly, respondents also incur expenses in the maintenance and operation of the
mall parking facilities, such as electric consumption, compensation for parking attendants
and security, and upkeep of the physical structures.
It is not sufficient for the OSG to claim that "the power to regulate and control the use,
occupancy, and maintenance of buildings and structures carries with it the power to
impose fees and, conversely, to control, partially or, as in this case, absolutely, the
imposition of such fees." Firstly, the fees within the power of regulatory agencies to
128
impose are regulatory fees. It has been settled law in this jurisdiction that this broad and
all-compassing governmental competence to restrict rights of liberty and property carries
with it the undeniable power to collect a regulatory fee. It looks to the enactment of
specific measures that govern the relations not only as between individuals but also as
between private parties and the political society.31 True, if the regulatory agencies have
the power to impose regulatory fees, then conversely, they also have the power to remove
the same. Even so, it is worthy to note that the present case does not involve the
imposition by the DPWH Secretary and local building officials of regulatory fees upon
respondents; but the collection by respondents of parking fees from persons who use the
mall parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local
building officials do have regulatory powers over the collection of parking fees for the use
of privately owned parking facilities, they cannot allow or prohibit such collection arbitrarily
or whimsically. Whether allowing or prohibiting the collection of such parking fees, the
action of the DPWH Secretary and local building officials must pass the test of classic
reasonableness and propriety of the measures or means in the promotion of the ends
sought to be accomplished.32
Keeping in mind the aforementioned test of reasonableness and propriety of measures or
means, the Court notes that Section 803 of the National Building Code falls under Chapter
8 on Light and Ventilation. Evidently, the Code deems it necessary to regulate site
occupancy to ensure that there is proper lighting and ventilation in every building.
Pursuant thereto, Rule XIX of the IRR requires that a building, depending on its specific
use and/or floor area, should provide a minimum number of parking spaces. The Court,
however, fails to see the connection between regulating site occupancy to ensure proper
light and ventilation in every building vis--vis regulating the collection by building owners
of fees for the use of their parking spaces. Contrary to the averment of the OSG, the
former does not necessarily include or imply the latter. It totally escapes this Court how
lighting and ventilation conditions at the malls could be affected by the fact that parking
facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary parking spaces are
required to enhance light and ventilation, that is, to avoid traffic congestion in areas
surrounding the building, which certainly affects the ventilation within the building itself,
which otherwise, the annexed parking spaces would have served. Free-of-charge parking
avoids traffic congestion by ensuring quick and easy access of legitimate shoppers to offstreet parking spaces annexed to the malls, and thereby removing the vehicles of these
legitimate shoppers off the busy streets near the commercial establishments.33
The Court is unconvinced. The National Building Code regulates buildings, by setting the
minimum specifications and requirements for the same. It does not concern itself with
traffic congestion in areas surrounding the building. It is already a stretch to say that the
National Building Code and its IRR also intend to solve the problem of traffic congestion
around the buildings so as to ensure that the said buildings shall have adequate lighting
and ventilation. Moreover, the Court cannot simply assume, as the OSG has apparently
done, that the traffic congestion in areas around the malls is due to the fact that
respondents charge for their parking facilities, thus, forcing vehicle owners to just park in
the streets. The Court notes that despite the fees charged by respondents, vehicle owners
still use the mall parking facilities, which are even fully occupied on some days. Vehicle
owners may be parking in the streets only because there are not enough parking spaces

in the malls, and not because they are deterred by the parking fees charged by
respondents. Free parking spaces at the malls may even have the opposite effect from
what the OSG envisioned: more people may be encouraged by the free parking to bring
their own vehicles, instead of taking public transport, to the malls; as a result, the parking
facilities would become full sooner, leaving more vehicles without parking spaces in the
malls and parked in the streets instead, causing even more traffic congestion.
Without using the term outright, the OSG is actually invoking police power to justify the
regulation by the State, through the DPWH Secretary and local building officials, of
privately owned parking facilities, including the collection by the owners/operators of such
facilities of parking fees from the public for the use thereof. The Court finds, however, that
in totally prohibiting respondents from collecting parking fees from the public for the use of
the mall parking facilities, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the
use of liberty and property. It is usually exerted in order to merely regulate the use and
enjoyment of the property of the owner. The power to regulate, however, does not include
the power to prohibit. A fortiori, the power to regulate does not include the power to
confiscate. Police power does not involve the taking or confiscation of property, with the
exception of a few cases where there is a necessity to confiscate private property in order
to destroy it for the purpose of protecting peace and order and of promoting the general
welfare; for instance, the confiscation of an illegally possessed article, such as opium and
firearms. 34
When there is a taking or confiscation of private property for public use, the State is no
longer exercising police power, but another of its inherent powers, namely, eminent
domain. Eminent domain enables the State to forcibly acquire private lands intended for
public use upon payment of just compensation to the owner.35
Normally, of course, the power of eminent domain results in the taking or appropriation of
title to, and possession of, the expropriated property; but no cogent reason appears why
the said power may not be availed of only to impose a burden upon the owner of
condemned property, without loss of title and possession.36 It is a settled rule that neither
acquisition of title nor total destruction of value is essential to taking. It is usually in cases
where title remains with the private owner that inquiry should be made to determine
whether the impairment of a property is merely regulated or amounts to a compensable
taking. A regulation that deprives any person of the profitable use of his property
constitutes a taking and entitles him to compensation, unless the invasion of rights is so
slight as to permit the regulation to be justified under the police power. Similarly, a police
regulation that unreasonably restricts the right to use business property for business
purposes amounts to a taking of private property, and the owner may recover therefor.
Although in the present case, title to and/or possession of the parking facilities remain/s
with respondents, the prohibition against their collection of parking fees from the public, for
the use of said facilities, is already tantamount to a taking or confiscation of their
properties. The State is not only requiring that respondents devote a portion of the latters
properties for use as parking spaces, but is also mandating that they give the public
access to said parking spaces for free. Such is already an excessive intrusion into the
property rights of respondents. Not only are they being deprived of the right to use a
portion of their properties as they wish, they are further prohibited from profiting from its
129
use or even just recovering therefrom the expenses for the maintenance and operation of
the required parking facilities.
The ruling of this Court in City Government of Quezon City v. Judge Ericta38 is edifying.
Therein, the City Government of Quezon City passed an ordinance obliging private
cemeteries within its jurisdiction to set aside at least six percent of their total area for
charity, that is, for burial grounds of deceased paupers. According to the Court, the
ordinance in question was null and void, for it authorized the taking of private property
without just compensation:
There is no reasonable relation between the setting aside of at least six (6) percent of the
total area of all private cemeteries for charity burial grounds of deceased paupers and the
promotion of' health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private
cemetery to benefit paupers who are charges of the municipal corporation. Instead of'
building or maintaining a public cemetery for this purpose, the city passes the burden to
private cemeteries.
'The expropriation without compensation of a portion of private cemeteries is not covered
by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers
the city council to prohibit the burial of the dead within the center of population of the city
and to provide for their burial in a proper place subject to the provisions of general law
regulating burial grounds and cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177(q) that a sangguniang panlungsod may
"provide for the burial of the dead in such place and in such manner as prescribed by law
or ordinance" it simply authorizes the city to provide its own city owned land or to buy or
expropriate private properties to construct public cemeteries. This has been the law, and
practise in the past. It continues to the present. Expropriation, however, requires payment
of just compensation. The questioned ordinance is different from laws and regulations
requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds,
and other public facilities from the land they sell to buyers of subdivision lots. The
necessities of public safety, health, and convenience are very clear from said
requirements which are intended to insure the development of communities with
salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are
made to pay by the subdivision developer when individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by respondents of parking fees
from persons who use the mall parking facilities has no basis in the National Building
Code or its IRR. The State also cannot impose the same prohibition by generally invoking
police power, since said prohibition amounts to a taking of respondents property without
payment of just compensation.
Given the foregoing, the Court finds no more need to address the issue persistently raised
by respondent SM Prime concerning the unconstitutionality of Rule XIX of the IRR. In
addition, the said issue was not among those that the parties, during the pre-trial
conference for Civil Cases No. 12-08 and No. 00-1210, agreed to submit for resolution of
the RTC. It is likewise axiomatic that the constitutionality of a law, a regulation, an
ordinance or an act will not be resolved by courts if the controversy can be, as in this case
it has been, settled on other grounds.39
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The
Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of

130
Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002
of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No.
00-1210 are hereby AFFIRMED. No costs.
SO ORDERED.
the value of the land subject to expropriation at ELEVEN THOUSAND PESOS

(P11,000.00) per square meter and ordering [Cebu City] to pay [Spouses Ortega] the sum
of THIRTY ONE MILLION AND FOUR HUNDRED SIXTEEN THOUSAND PESOS
(P31,416,000.00) as just compensation for the expropriated portion of Lot No. 310-B.
ORTEGA vs. CEBU (G.R. No. 181583-84, October 2, 2009)1
The Decision of the [RTC] became final and executory because of [Cebu Citys] failure to
perfect an appeal on time, and a Writ of Execution was issued on September 17, 1999 to
enforce the courts judgment. Upon motion of [the Spouses Ortega], the [RTC] issued an
Order dated March 11, 2002, quoted as follows:
These are consolidated petitions for review on certiorari filed by petitioners Ciriaco and
Arminda Ortega (Spouses Ortega) in G.R. Nos. 181562-63 and petitioner City of Cebu
(Cebu City) in G.R. Nos. 181583-84 assailing the Decision of the Court of Appeals (CA) in
the similarly consolidated petitions docketed as CA-G.R. SP No. 80187 and CA-G.R. SP
No. 00147, respectively.
The facts, summarized by the CA, follow.
Spouses Ciriaco and Arminda Ortega x x x are the registered owners of a parcel of land
known as Lot No. 310-B, situated in Hipodromo, Cebu City, with an area of 5,712 square
meters and covered by Transfer Certificate of Title No. 113311, issued by the Register of
Deeds of the City of Cebu.
One-half of the above described land is occupied by squatters. On September 24, 1990,
[the Spouses Ortega] filed an ejectment case against the squatters before the Municipal
Trial Court in Cities (MTCC) of Cebu City, which rendered decision in favor of [the spouses
Ortega]. The case eventually reached the Supreme Court, which affirmed the decision of
the MTCC. The decision of the MTCC became final and executory, and a writ of execution
was issued on February 1, 1994.
On May 23, 1994, the Sangguniang Panglungsod of [Cebu City] enacted City Ordinance
No. 1519, giving authority to the City Mayor to expropriate one-half (1/2) portion (2,856
square meters) of [the spouses Ortegas] land (which is occupied by the squatters), and
appropriating for that purpose the amount of P3,284,400.00 or at the price of ONE
THOUSAND ONE HUNDRED FIFTY PESOS (P1,150.00) per square meter. The amount
will be charged against Account No. 8-93-310, Continuing Appropriation, Account No. 1018918-334, repurchase of lots for various projects. The value of the land was determined
by the Cebu City Appraisal Committee in Resolution No. 19, series of 1994, dated April 15,
1994.
"Reading of the aforestated resolution shows that the City Council of Cebu approved
Ordinance No. 1519 appropriating the sum of P3,284,400.00 for payment of the subject lot
chargeable to Account No. 101-8918-334.
"In view thereof, the above-mentioned sum is now subject for execution or garnishment for
the same is no longer exempt from execution."
[Cebu City] filed an Omnibus Motion to Stay Execution, Modification of Judgment and
Withdrawal of the Case, contending that the price set by the [RTC] as just compensation
to be paid to [the Spouses Ortega] is way beyond the reach of its intended beneficiaries
for its socialized housing program. The motion was denied by the [RTC]. [Cebu Citys]
Motion for Reconsideration was likewise denied.
By virtue of the Order of the [RTC], dated July 2, 2003, x x x Sheriff Benigno B. Reas[,] Jr.
served a Notice of Garnishment to Philippine Postal Bank, P. del Rosario and Junquera
Branch Cebu City, garnishing [Cebu Citys] bank deposit therein.
Hence, [Cebu City] filed the instant Petition for Certiorari before [the CA] (CA-G.R. SP NO.
80187).
During the pendency of x x x CA-G.R. SP NO. 80187, [Cebu City] filed before the [RTC] a
Motion to Dissolve, Quash or Recall the Writ of Garnishment, contending that Account No.
101-8918-334 mentioned in Ordinance No. 1519 is not actually an existing bank account
and that the garnishment of [Cebu Citys] bank account with Philippine Postal Bank was
illegal, because government funds and properties may not be seized under writ of
execution or garnishment to satisfy such judgment, on obvious reason of public policy.
The [RTC] issued an Order dated March 8, 2004, denying said motion. [Cebu Citys]
Motion for Reconsideration was also denied.
Pursuant to said ordinance, [Cebu City] filed a Complaint for Eminent Domain [before the
Regional Trial Court (RTC), Branch 23, Cebu City] against [the spouses Ortega], docketed
as Civil Case No. CEB-16577.
On March 13, 1998, the [RTC] issued an order declaring that [Cebu City] "has the lawful
right to take the property subject of the instant case, for public use or purpose described in
the complaint upon payment of just compensation."
[The Spouses Ortega] filed an Ex-Parte Motion to Direct the New Manager of Philippine
Postal Bank to Release to the Sheriff the Garnished Amount, which was granted by the
[RTC]. [Cebu City] filed a Motion for Reconsideration, but the same was denied.
Based on the recommendation of the appointed Commissioners (one of whom was the
City Assessor of [Cebu City], the [RTC] issued another Order dated May 21, 1999, fixing
Ruling on the petitions for certiorari, the CA disposed of the cases, to wit:
WHEREFORE, all the foregoing premises considered, the instant Petitions for Certiorari
are hereby PARTIALLY GRANTED. The assailed Orders of the [RTC] [Assailed Orders
dated March 11, 2002 and July 2, 2003, respectively, in CA-G.R SP NO. 80187] are
hereby ANNULLED AND SET ASIDE insofar as they denied [Cebu Citys] Motion to Stay
Execution, but they are hereby AFFIRMED insofar as they denied [Cebu Citys] Motion to
1INDIVIDUAL RIGHTS (DUE PROCESS AND EQUAL PROTECTION AS LIMITATIONS ON POLICE

POWER, EMINENT DOMAIN AND TAXATION) E. DUE PROCESS AND EMINENT DOMAIN
(ARTICLE III, SECTION 9)
Hence, [Cebu City] filed another Petition for Certiorari (CA-G.R. SP NO. 00147) [with the
Court of Appeals].2

Modify Judgment and Withdraw from the Expropriation Proceedings. Furthermore, the
assailed Orders of the [RTC dated March 8, 2004 in CA-G.R. SP NO. 00147] are hereby
ANNULLED AND SET ASIDE. Let the Decision of the [RTC] be executed in a manner
prescribed by applicable law and jurisprudence.
SO ORDERED.
Hence, these consolidated appeals by petitioners Cebu City and the Spouses Ortega
positing the following issues:
1. Whether the CA erred in affirming the RTCs denial of Cebu Citys Omnibus Motion to
Modify Judgment and to be Allowed to Withdraw from the Expropriation Proceedings.
2. Whether the deposit of Cebu City with the Philippine Postal Bank, appropriated for a
different purpose by its Sangguniang Panglungsod, can be subject to garnishment as
payment for the expropriated lot covered by City Ordinance No. 1519.
We deny both petitions.
On the first issue, the CA did not err in affirming the RTCs Order that the expropriation
case had long been final and executory. Consequently, both the Order of expropriation
and the Order fixing just compensation by the RTC can no longer be modified. In short,
Cebu City cannot withdraw from the expropriation proceedings.
Section 4, Rule 67 of the Rules of Court on Expropriation provides:
SEC. 4. Order of expropriation. If the objections to and the defenses against the right of
the plaintiff to expropriate the property are overruled, or when no party appears to defend
as required by this Rule, the court may issue an order of expropriation declaring that the
plaintiff has a lawful right to take the property sought to be expropriated, for the public use
or purpose described in the complaint, upon the payment of just compensation to be
determined as of the date of the taking of the property or the filing of the complaint,
whichever came first.
A final order sustaining the right to expropriate the property may be appealed by any party
aggrieved thereby. Such appeal, however, shall not prevent the court from determining the
just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to dismiss or
discontinue the proceeding except on such terms as the court deems just and equitable.
Plainly, from the aforequoted provision, expropriation proceedings speak of two (2) stages,
i.e.:
1. Determination of the authority of the plaintiff to exercise the power of eminent domain
and the propriety of its exercise in the context of the facts involved in the suit. This ends
with an order, if not of dismissal of the action, of condemnation [or order of expropriation]
declaring that the plaintiff has the lawful right to take the property sought to be
condemned, for the public use or purpose described in the complaint, upon the payment
of just compensation to be determined as of the date of the filing of the complaint; and
2. Determination by the court of the just compensation for the property sought to be taken.
131
We held in the recent case of Republic v. Phil-Ville Development and Housing

Corporation5 that:
[A]n order of expropriation denotes the end of the first stage of expropriation. Its end then
paves the way for the second stagethe determination of just compensation, and,
ultimately, payment. An order of expropriation puts an end to any ambiguity regarding the
right of the petitioner to condemn the respondents properties. Because an order of
expropriation merely determines the authority to exercise the power of eminent domain
and the propriety of such exercise, its issuance does not hinge on the payment of just
compensation. After all, there would be no point in determining just compensation if, in the
first place, the plaintiffs right to expropriate the property was not first clearly established.
Conversely, as is evident from the foregoing, an order by the trial court fixing just
compensation does not affect a prior order of expropriation. As applied to the case at bar,
Cebu City can no longer ask for modification of the judgment, much less, withdraw its
complaint, after it failed to appeal even the first stage of the expropriation proceedings.
Cebu City is adamant, however, that it should be allowed to withdraw its complaint as the
just compensation fixed by the RTC is too high, and the intended expropriation of the
Spouses Ortegas property is dependent on whether Cebu City would have sufficient
funds to pay for the same.
We cannot subscribe to Cebu Citys ridiculous contention.
It is well-settled in jurisprudence that the determination of just compensation is a judicial
prerogative.7 In Export Processing Zone Authority v. Dulay, we declared:
The determination of "just compensation" in eminent domain cases is a judicial function.
The executive department or the legislature may make the initial determinations but when
a party claims a violation of the guarantee in the Bill of Rights that private property may
not be taken for public use without just compensation, no statute, decree, or executive
order can mandate that its own determination shall prevail over the courts findings. Much
less can the courts be precluded from looking into the "just-ness" of the decreed
compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the courts discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To
hold otherwise would be to undermine the very purpose why this Court exists in the first
place.
Likewise, in the recent cases of National Power Corporation v. dela Cruz and Forfom
Development Corporation v. Philippine National Railways, we emphasized the primacy of
judicial prerogative in the ascertainment of just compensation as aided by the appointed
commissioners, to wit:
Though the ascertainment of just compensation is a judicial prerogative, the appointment
of commissioners to ascertain just compensation for the property sought to be taken is a
mandatory requirement in expropriation cases. While it is true that the findings of
commissioners may be disregarded and the trial court may substitute its own estimate of
the value, it may only do so for valid reasons; that is, where the commissioners have

applied illegal principles to the evidence submitted to them, where they have disregarded
a clear preponderance of evidence, or where the amount allowed is either grossly
inadequate or excessive. Thus, "trial with the aid of the commissioners is a substantial
right that may not be done away with capriciously or for no reason at all."
As regards the second issue raised by the Spouses Ortega, we quote with favor the CAs
disquisition thereon, to wit:
While the claim of [the Spouses Ortega] against [Cebu City] is valid, the [RTC] cannot, by
itself, order the City Council of [Cebu City] to enact an appropriation ordinance in order to
satisfy its judgment.
The proper remedy of [the Spouses Ortega] is to file a mandamus case against [Cebu
City] in order to compel its Sangguniang Panglungsod to enact an appropriation ordinance
for the satisfaction of [the Spouses Ortegas] claim. This remedy is provided in the case of
Municipality of Makati v. Court of Appeals, which provides:
Nevertheless, this is not to say that private respondent and PSB are left with no legal
recourse. Where a municipality fails or refuses, without justifiable reason[s], to effect
payment of a final money judgment rendered against it, the claimant may avail of the
remedy of mandamus in order to compel the enactment and approval of the necessary
appropriation ordinance, and the corresponding disbursement of municipal funds therefor.
x x x.
xxxx
The Sangguniang Panglungsod of [Cebu City] enacted Ordinance No. 1519, appropriating
the sum ofP3,284,400.00 for payment of just compensation for the expropriated land,
chargeable to Account No. 101-8918-334.
Pursuant to such ordinance, the [RTC] issued an order dated March 11, 2002, which was
the basis for the issuance of the Writ of Garnishment, garnishing [Cebu Citys] bank
account with Philippine Postal Bank.
However, Philippine Postal Bank issued a Certification dated February 7, 2005, certifying
that Account No. 8-93-310 (Continuing Account) and Account No. 101-8918-334 intended
for purchase of lot for various projects are not bank account numbers with Philippine
Postal Bank.
It is a settled rule that government funds and properties may not be seized under writs of
execution or garnishment to satisfy judgments, based on obvious consideration of public
policy. Disbursements of public funds must be covered by the corresponding appropriation
as required by law. The functions and public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law.
In Municipality of Makati v. Court of Appeals, x x x where the Municipality of Makati
enacted an ordinance appropriating certain sum of money as payment for the land the
municipality expropriated, chargeable to Account No. S/A 265-537154-3 deposited in PNB
Buendia Branch, the Supreme Court held that the trial court has no authority to garnish
the Municipalitys other bank account (Account No. S/A 263-530850-7) in order to cover
the deficiency in Account No. S/A 265-537154-3, even if both accounts are in the same
branch of the PNB. In said case, the Supreme Court held:
132
Absent any showing that the municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to the balance due under the
RTC decision dated June 4, 1987, less the sum ofP99,743.94 deposited in Account No.
S/A 265-537154-3, no levy under execution may be validly effected on the public funds of
petitioner deposited in Account No. S/A 263-530850-7.
The foregoing rules find application in the case at bar. While the Sangguniang
Panglungsod of petitioner enacted Ordinance No. 1519 appropriating the sum
of P3,284,400.00 for payment of just compensation for the expropriated land, such
ordinance cannot be considered as a source of authority for the [RTC] to garnish [Cebu
Citys] bank account with Philippine Postal Bank, which was already appropriated for
another purpose. [Cebu Citys] account with Philippine Postal Bank was not specifically
opened for the payment of just compensation nor was it specifically appropriated by
Ordinance No. 1519 for such purpose. Said account, therefore, is exempt from
garnishment.
Since the [RTC] has no authority to garnish [Cebu Citys] other bank accounts in order to
satisfy its judgment, consequently, it has no authority to order the release of [Cebu Citys]
other deposits with Philippine Postal Bank x x x.11
Even assuming that Cebu City Ordinance No. 1519 actually appropriated the amount
of P3,284,400.00 for payment of just compensation thus, within the reach of a writ of
garnishment issued by the trial court12 there remains the inescapable fact that the
Philippine Postal Bank account referred to in the ordinance does not actually exist, as
certified to by the Bank. Accordingly, no writ of garnishment may be validly issued against
such non-existent account with Philippine Postal Bank. This circumstance translates to a
situation where there is no valid appropriation ordinance.
WHEREFORE, the petitions in G.R. Nos. 181562-63 and 181583-84 are hereby DENIED.
The Decision of the Court of Appeals in CA-G.R. SP Nos. 80187 and 00147 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
LAND BANK OF THE PHILIPPINES vs. JOSE MARIE M. RUFINO (G.R. No. 175644,
October 2, 2009)2
DECISION
Challenged in these consolidated Petitions for Review is the December 15, 2005 Decision
of the Court of Appeals in CA-G.R. CV No. 69640 affirming with modification that of
Branch 52 of the Regional Trial Court (RTC) of Sorsogon in Civil Case No. 98-6438 setting
the valuation of respondents 138.4018-hectare land taken under the Comprehensive
Agrarian Reform Program (CARP) at P29,926,000, exclusive of the value of secondary
crops thereon.

(ARTICLE III, SECTION 9)

Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion (Resureccion), Arnel

M. Atanacio (Atanacio), and Suzette G. Mateo (Suzette) are the registered owners in
equal share of a parcel of agricultural land situated in Barangay San Benon, Irosin,
Sorsogon, with an area of 239.7113 hectares covered by Transfer Certificate of Title (TCT)
No. T-22934.
By respondents claim, in 1989, they voluntarily offered the aforesaid property to the
government for CARP coverage at P120,000 per hectare. Acting thereon, petitioner
Department of Agrarian Reform (DAR) issued a Notice of Land Valuation and Acquisition
dated October 21, 1996 declaring that out of the total area indicated in the title, 138.4018
hectares was subject to immediate acquisition at a valuation of P8,736,270.40 based on
the assessment of petitioner Land Bank of the Philippines (LBP).
Respondents having found the valuation unacceptable, the matter was referred by the
provincial agrarian reform officer of Sorsogon to the DAR Adjudication Board (DARAB) for
the conduct of summary administrative proceedings to determine just compensation.
By Decision of November 21, 1997, the DARAB sustained LBPs valuation upon
respondents failure to present any evidence to warrant an increase thereof.
133
Commissioner Amando Chua of Cuervo Appraisers, Inc., respondents nominee, used the
market data approach which relies primarily on sales and listings of comparable lots in the
neighborhood. Excluding the secondary crops planted thereon, he valued the property
at P29,925,725.
At the witness stand, Eugenio Mateo, Sr. (Mateo), attorney-in-fact of respondents Rufino,
Resurreccion, and Atanacio, declared that Commissioner Chua erroneously considered
the secondary crops as merely enhancing the demand for the property without them
significantly increasing its value; and that the coffee intercropping on the property which
yielded an estimated profit of P3,000,000, spread over a 12-year period, should be
considered in the determination of just compensation.
By Decision of July 4, 2000, the trial court found the market data approach to be more
realistic and consistent with law and jurisprudence on the full and fair equivalent of the
property. Applying the average rate of P216,226 per hectare, it arrived at a valuation of the
138.4018-hectare property at P29,926,000, to which it addedP8,000,000 representing
50% of the value of trees, plants, and other improvements thereon, bringing the total
toP37,926,000. It disposed thus:
WHEREFORE, premises considered, judgment is hereby rendered to wit:
Meanwhile, upon the DARs application, accompanied with LBPs certification of deposit of
payment, the Register of Deeds of Sorsogon partially cancelled TCT No. T-22934
corresponding to the 138.4018-hectare covered area (hereafter the property) and issued
TCT No. T-47571 in the name of the Republic of the Philippines (the Republic). The
Republic thereupon subdivided the property into 85 lots for distribution to qualified farmerbeneficiaries under Republic Act No. 6657 (RA 6657) or the Comprehensive Agrarian
Reform Law of 1988.
a) Fixing the Just Compensation of the entire 138.4018 hectares for acquisition covered
by TCT No. T-22934 in the total amount of THIRTY SEVEN MILLION NINE HUNDRED
TWENTY-SIX THOUSAND (Php37,926,000.00) Pesos Philippine Currency, less the
amount previously deposited in trust with the Land Bank which was already received by
the plaintiffs.
b) The Land Bank of the Philippines is hereby ordered to pay the landowners-plaintiffs the
afore-cited amount less the amount previously paid to them in the manner provided by
law.
c) Without pronouncement as to costs.
On February 23, 1998, respondents lodged with Branch 52 of the Sorsogon RTC (acting
as a Special Agrarian Court) a complaint for determination of just compensation against
Ernesto Garilao, in his capacity as then DAR Secretary, and LBP. Respondents contended
that LBPs valuation was not the full and fair equivalent of the property at the time of its
taking, the same having been offered in 1989 at P120,000 per hectare.
LBP filed a Motion for Reconsideration, while the DAR filed a Notice of Appeal. By Order
dated August 21, 2000, the trial court denied the motion of LBP, prompting it to also file a
Notice of Appeal.
LBP countered that the property was acquired by the DAR for CARP coverage in 1993 by
compulsory acquisition and not by respondents voluntary offer to sell; and that it
determined the valuation thereof in accordance with RA 6657 and pertinent DAR
regulations.
The DAR Secretary argued that LBPs valuation was properly based on DAR issuances.
The trial court appointed the parties respective nominated commissioners to appraise the
property.
Commissioner Jesus S. Empleo, LBPs nominee, appraised the property based on,
among other things, the applicable DAR issuances, average gross production, and
prevailing selling prices of the crops planted thereon which included coconut, abaca,
coffee, and rice. He arrived at a valuation of P13,449,579.08.
By consolidated Decision of December 15, 2005, the Court of Appeals sustained the trial
courts valuation ofP29,926,000 as just compensation.
The appellate court found that, among other things, it would be specious to rely on the
DARs computation in ostensible compliance with its own issuances; that Commissioner
Empleo failed to consider available sales data of comparable properties in the locality; and
that the value of secondary crops should be excluded as the same is inconclusive in view
of conflicting evidence.
Petitioners and respondents filed their respective Motions for Reconsideration which were
denied by the appellate court by Resolution of November 28, 2006.16 Hence, petitioners
LBP and DAR separately sought recourse to this Court through the present Petitions for
Review, which were consolidated in the interest of uniformity of rulings on related cases.
In G.R. No. 175644, LBP maintains that its valuation of the property at P13,449,579.08
was based on the factors mentioned in RA 6657 and formula prescribed by the DAR; that

its determination should be given weight as it has the expertise to do the same; and that
the taking of private property for agrarian reform is not a traditional exercise of the power
of eminent domain as it also involves the exercise of police power, hence, part of the loss
is not compensable.
134
The threshold issue then is whether the appellate court correctly upheld the valuation by
the trial court of the property on the basis of the market data approach, in disregard of the
formula prescribed by DAR AO 6-92, as amended.
The petitions are partly meritorious.
In G.R. No. 175702, the DAR avers that the valuation sustained by the appellate court
was determined in contravention of the criteria set by RA 6657 and relevant jurisprudence.
Respondents, for their part, posit in their consolidated Comment that factual findings of the
trial court, when affirmed by the appellate court, are conclusive; and that the just
compensation due them should be equivalent to the market value of the property.
In determining the just compensation due owners of lands taken for CARP coverage, the
RTC, acting as a Special Agrarian Court, should take into account the factors enumerated
in Section 17 of RA 6657, as amended, to wit:
Sec. 17. Determination of Just Compensation. In determining just compensation, the
cost of acquisition of the land, the current value of like properties, its nature, actual use
and income, the sworn valuation by the owner, the tax declarations, and the assessment
made by government assessors shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers and by the Government to the property as
well as the non-payment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its
valuation.
The DAR, being the government agency primarily charged with the implementation of the
CARP, issued Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended by
DAR Administrative Order No. 11, Series of 1994 (DAR AO 11-94), translating the factors
mentioned in Section 17 of RA 6657 into a basic formula, presented as follows:
LV = (CNI x 0.6) + ( CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant, and
applicable.
A.1. When the CS factor is not present and CNI and MV are applicable, the formula shall
be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2. When the CNI factor is not present, and CS and MV are applicable, the formula shall
be:
LV = (CS x 0.9) + (MV x 0.1)
A.3. When both the CS and CNI are not present and only MV is applicable, the formula
shall be:
LV = MV x 2
While the determination of just compensation is essentially a judicial function which is

vested in the RTC acting as a Special Agrarian Court, the Court, in LBP v. Banal, LBP v.
Celada, and LBP v. Lim, nonetheless disregarded the RTCs determination thereof when,
as in the present case, the judge did not fully consider the factors specifically identified by
law and implementing rules.
In LBP v. Banal, the Court ruled that the factors laid down in Section 17 of RA 6657 and
the formula stated in DAR AO 6-92, as amended, must be adhered to by the RTC in fixing
the valuation of lands subjected to agrarian reform:
In determining just compensation, the RTC is required to consider several factors
enumerated in Section 17 of R.A. 6657, as amended, thus:
xxxx
These factors have been translated into a basic formula in [DAO 6-92], as amended by
[DAO 11-94], issued pursuant to the DAR's rule-making power to carry out the object and
purposes of R.A. 6657, as amended.
xxxx
While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC
wantonly disregarded R.A. 6657, as amended, and its implementing rules and regulations.
([DAO 6-92], as amended by [DAO 11-94]).
xxxx
WHEREFORE, . . . The trial judge is directed to observe strictly the procedures specified
above in determining the proper valuation of the subject property.
And in LBP v. Celada, the Court was emphatic that the RTC is not at liberty to disregard
the DAR valuation formula which filled in the details of Section 17 of RA 6657, it being
elementary that rules and regulations issued by administrative bodies to interpret the law
they are entrusted to enforce have the force of law.
In fixing the just compensation in the present case, the trial court, adopting the market
data approach on which Commissioner Chua relied,25 merely put premium on the location
of the property and the crops planted thereon which are not among the factors
enumerated in Section 17 of RA 6657. And the trial court did not apply the formula
provided in DAR AO 6-92, as amended. This is a clear departure from the settled doctrine
regarding the mandatory nature of Section 17 of RA 6657 and the DAR issuances
implementing it.
Not only did Commissioner Chua not consider Section 17 of RA 6657 and DAR AO 6-92,
as amended, in his appraisal of the property. His conclusion that the market data
approach conformed with statutory and regulatory requirements is bereft of basis.

Resolving in the negative the issue of whether the RTC can resort to any other means of
determining just compensation, aside from Section 17 of RA 6657 and DAR AO 6-92, as
amended, this Court, in LBP v. Lim,26 held that Section 17 of RA 6657 and DAR AO 6-92,
as amended, are mandatory and not mere guides that the RTC may disregard.
Petitioners maintain that the correct valuation of the property is P13,449,579.08 as
computed by Commissioner Empleo.
The pertinent provisions of Item II of DAR AO 6-92, as amended by DAR AO 11-94, read:
A. There shall be one basic formula for the valuation of lands covered by [Voluntary Offer
to Sell] or [Compulsory Acquisition] regardless of the date of offer or coverage of the
claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant and
applicable.
A.1. When the CS factor is not present and CNI and MV are applicable, the formula shall
be:
LV = (CNI x 0.9) + (MV x 0.1)
xxxx
A.5 For purposes of this Administrative Order, the date of receipt of claimfolder by LBP
from DAR shall mean the date when the claimfolder is determined by the LBP to be
complete with all the required documents and valuation inputs duly verified and validated,
and is ready for final computation/processing.
A.6 The basic formula in the grossing-up of valuation inputs such as . . . Market Value per
Tax Declaration (MV) shall be:
Grossed-up
Valuation input
RCPI
Adjustment
Factor
RCPI for the Month Issued as of the

Date/Effectivity/Registration
of
the
Valuation Input
B. Capitalized Net Income (CNI) This shall refer to the difference between the gross
sales (AGP x SP) and total cost of operations (CO) capitalized at 12%.
Expressed in equation form:
(AGP x SP) - CO
CNI
=
.12
Where: CNI
Capitalized Net Income
AGP
Latest available 12-month's gross production immediately

preceding the date of offer in case of VOS or date of notice
of coverage in case of CA.
SP
The average of the latest available 12-month's selling

prices prior to the date of receipt of the claimfolder by LBP
for processing, such prices to be secured from the
Department of Agriculture (DA) and other appropriate
regulatory bodies or, in their absence, from the Bureau of
Agricultural Statistics. If possible, SP data shall be
gathered from the barangay or municipality where the
property is located. In the absence thereof, SP may be
secured within the province or region.
CO
Cost
of
Operations
Whenever the cost of operations could not be obtained or
verified, an assumed net income rate (NIR) of 20% shall
be used. Landholdings planted to coconut which are
productive at the time of offer/coverage shall continue to
use the 70% NIR. DAR and LBP shall continue to conduct
joint industry studies to establish the applicable NIR for
each crop covered under CARP.
.12
Capitalization Rate
Valuation Input Regional

Consumer
Price
Index
(RCPI) Adjustment Factor
The RCPI Adjustment Factor shall refer to the ratio of RCPI for the month issued by the
National Statistics Office as of the date when the claimfolder (CF) was received by LBP
from DAR for processing or, in its absence, the most recent available RCPI for the month
issued prior to the date of receipt of CF from DAR and the RCPI for the month as of the
date/effectivity/registration of the valuation input. Expressed in equation form:
RCPI for the Month as of the Date of
Receipt of Claimfolder by LBP from
DAR or the Most recent RCPI for the
Month Issued Prior to the Date of
Receipt of CF
135
xxxx
D. In the computation of Market Value per Tax Declaration (MV), the most recent Tax
Declaration (TD) and Schedule of Unit Market Value (SMV) issued prior to receipt of
claimfolder by LBP shall be considered. The Unit Market Value (UMV) shall be grossed up
from the date of its effectivity up to the date of receipt of claimfolder by LBP from DAR for
processing, in accordance with item II.A.A.6.

In thus computing Capitalized Net Income (CNI), the Average Gross Production (AGP) of
the latest available 12 months immediately preceding the date of offer in case of voluntary
offer to sell or date of notice of coverage in case of compulsory acquisition, and the
average Selling Price (SP) of the latest available 12 months prior to the date of receipt of
the claimfolder by LBP for processing, should be used.
While these dates-bases of computation are not clearly indicated in the records (as the
mode of acquisition is in fact disputed), the date of offer (assuming the acquisition was by
voluntary offer to sell) would have to be sometime in 1989, the alleged time of voluntary
offer to sell; whereas the date of notice of coverage (assuming the acquisition was
compulsory) would be sometime prior to October 21, 1996, which is the date of the Notice
of Land Valuation and Acquisition, because under DAR Administrative Order No. 9, series
of 1990, as amended by DAR Administrative Order No. 1, series of 1993, the notice of
coverage precedes the Notice of Land Valuation and Acquisition.
And the claimfolder would have been received by LBP in or before 1997, the year the
property was distributed to agrarian reform beneficiaries, because land distribution is the
last step in the procedure prescribed by the above-said DAR administrative orders.
Hence, the data for the AGP should pertain to a period in 1989 (in case of voluntary offer
to sell) or prior to October, 1996 (in case of compulsory acquisition), while the data for the
SP should pertain to 1997 or earlier.
Commissioner Empleo, however, instead used available data within the 12-month period
prior to his ocular inspection in October 1998 for the AGP, and the average selling price for
the period January 1998 to December 1998 for the SP,30 contrary to DAR AO 6-92, as
amended.
Furthermore, the Regional Consumer Price Index (RCPI) Adjustment Factor, which is
used in computing the market value of the property, is the ratio of the RCPI for the month
when the claimfolder was received by LBP, to the RCPI for the month of the registration of
the most recent Tax Declaration and Schedule of Unit Market Value31issued prior to
receipt of claimfolder by LBP. Consistent with the previous discussion, the applicable
RCPIs should therefore be dated 1997 or earlier.
136
the combination of crops actually produced on the covered land whether seasonal or
permanent."
In fine, the valuation asserted by petitioners does not lie.
While the Court is minded to write finis to this protracted litigation by itself computing the
just compensation due respondents, the evidence on record is not sufficient for the
purpose. The Court is thus constrained to remand the case for determination of the
valuation of the property by the trial court, which is mandated to consider the factors
provided under Section 17 of RA 6657, as amended, and as translated into the formula
prescribed in DAR AO 6-92, as amended by DAR AO 11-94.
The trial court may, motu proprio or at the instance of any of the parties, again appoint one
or more commissioners to ascertain facts relevant to the dispute and file a written report
thereof. The amount determined by the trial court would then be the basis of interest
income on the cash and bond deposits due respondents from the time of the taking of the
property up to the time of actual payment of just compensation.36
WHEREFORE, the challenged Decision of the Court of Appeals is REVERSED and SET
ASIDE. Civil Case No. 98-6438 is REMANDED to Branch 52 of the Sorsogon RTC which
is directed to determine with dispatch the just compensation due respondents strictly in
accordance with the procedures specified above.
SO ORDERED.
LBP vs. J.L. JOCSON AND SONS (G.R. No. 180803, October 23,
2009)3
Subject of the present controversy is a 27.3808-hectare portion (the property) of two (2)
parcels of tenanted rice land located at Barangay Magallon Cadre, Moises Padilla, Negros
Occidental, covered by Transfer Certificates of Title (TCT) Nos. T-72323 and T-72324
registered in the name of J. L. Jocson and Sons (respondent).
Again, Commissioner Empleo instead used RCPI data for January 1999 in computing the
RCPI Adjustment Factor, contrary to DAR AO 6-92, as amended.
The property was placed under the coverage of the governments Operation Land
Transfer (OLT) pursuant to Presidential Decree (P.D.) No. 27 and awarded to the tenantbeneficiaries by the Department of Agrarian Reform (DAR), which valued the
compensation therefor in the total amount of P250,563.80 following the formula prescribed
in P.D. No. 27 and Executive Order (E.O.) No. 228.
Parenthetically, Commissioner Empleo testified that his computations were based on DAR
Administrative Order No. 5, series of 1998. This Administrative Order took effect only on
May 11, 1998, however, hence, the applicable valuation rules in this case remain to be
those prescribed by DAR AO 6-92, as amended by DAR AO 11-94.
The valuation was later increased to P903,637.03 after computing the 6% annual interest
increment5 due on the property per DAR Administrative Order No. 13, series of 1994,
which amount respondent withdrew in 1997, without prejudice to the outcome of the case
it had filed hereunder to fix just compensation.
But even if the 1998 valuation rules were applied, the data for the AGP would still pertain
to a period prior to October 1996, the revised reference date being the date of the field
investigation which precedes the Notice of Land Valuation and Acquisition; while the data
for the SP and the RCPIs would still pertain to 1997 or earlier, there being no substantial
revisions in their reference dates.
Finally, as reflected earlier, Commissioner Empleo did not consider in his computation the
secondary crops planted on the property (coffee, pili, cashew, etc.), contrary to DAR AO 692, as amended, which provides that the "[t]otal income shall be computed from
Finding the DARs offer of compensation for the property to be grossly inadequate,
respondent filed a complaint on July 18, 1997 before the Regional Trial Court of Bacolod
City, Br. 46, sitting as a Special Agrarian Court (SAC), against the Land Bank

(ARTICLE III, Section 9)

(petitioner), the DAR, and the tenant-beneficiaries, for "Determination and Fixing of Just
Compensation for the Acquisition of Land and Payment of Rentals."
The complaint prayed that petitioner and the DAR be ordered to compute the just
compensation for the property in accordance with the guidelines laid down in Section 17 of
Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law of 1988.
In their respective Answers, petitioner and the DAR claimed that the property was
acquired by the government under its OLT program and their valuation thereof constituted
just compensation, having been made pursuant to the guidelines set by E.O. No. 228 and
P.D. No. 27.
By Decision of May 19, 2003, the SAC, after noting the report contained in a
Compliance submitted on February 29, 2000 of the Commissioners appointed to receive
and evaluate evidence on the amount of compensation to be paid to respondent, fixed the
just compensation at P2,564,403.58 (inclusive of theP903,637.03 earlier withdrawn).
In arriving at the just compensation, the SAC adopted a higher valuation
(P93,657.00/hectare) which the DAR had applied to a similar landholding belonging to one
Pablo Estacion adjacent to respondents. Thus the SAC disposed:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendant
Land Bank of the Philippines to pay plaintiff the total amount of P1,660,766.55.
SO ORDERED.
Both petitioner and the DAR filed motions for reconsideration of the SAC Decision but the
same were denied,prompting petitioner to appeal to the Court of Appeals via petition for
review pursuant to Section 6017 of R.A. No. 6657 vis a vis Rule 42 of the Revised Rules
of Court.
Assailing the SACs decision fixing the amount of just compensation for respondents
properties at P2,564,403.58 as a violation of P.D. No. 27 and E.O. No. 228, petitioner
insisted that the SAC erred in using P300.00 as the government support price (GSP) in
1992, instead of P35.00 as provided under E.O. No. 228, considering that respondents
property was acquired under OLT pursuant to P.D. No. 27.
The appellate court dismissed petitioners petition for review for lack of jurisdiction. It held
that aside from the fact that the SACs factual findings were not controverted, the main
issue - whether P.D. No. 27 and E.O. No. 228, as claimed by petitioner, or R.A. No. 6657,
as claimed by respondent, should govern in determining the value of the property involved pure questions of law and, as such, cognizable only by this Court.
Its Motion for Reconsideration having been denied, the present petition for review was
filed, petitioner arguing that "the allegations in petitioner LBPs Petition for Review filed
with the Court of Appeals raise mixed questions of fact and law, . . . [hence,] cognizable by
the Court of Appeals."
137
The petition is partly impressed with merit.

Gabatin v. Land Bank of the Philippines reiterated the settled rule that a petition for review
under Rule 42 of the Revised Rules of Court, and not an ordinary appeal under Rule 41, is
the appropriate mode of appeal from decisions of RTCs acting as SACs. In Gabatin, the
Court sustained the appellate courts assumption of jurisdiction over an appeal from the
SAC even if its dismissal had been sought on the ground that the issues presented before
the appellate court was purely legal in nature. Also apropos is this Courts ruling in Land
Bank of the Philippines v. De Leon:
Third, far from being in conflict, Section 61 of RA 6657 can easily be harmonized with
Section 60. The reference to the Rules of Court means that the specific rules for petitions
for review in the Rules of Court and other relevant procedures in appeals filed before the
Court of Appeals shall be followed in appealed decisions of Special Agrarian
Courts. Considering that RA 6657 cannot and does not provide the details on how the
petition for review shall be conducted, a suppletory application of the pertinent provisions
of the Rules of Court is necessary. In fact, Section 61 uses the word "review" to designate
the mode by which the appeal is to be effected. The reference therefore by Section 61 to
the Rules of Court only means that the procedure under Rule 42 for petitions for review is
to be followed for appeals in agrarian cases.
Clearly, jurisdiction over appeals from decisions of the SAC resides in the Court of
Appeals via a Rule 42 petition for review, which may raise either questions of fact, or of
law, or mixed questions of fact and law.
AT ALL EVENTS, this Court resolves to exercise its mandate as a court of justice and
equity,24 taking into account that more than a decade has passed since the case was filed
before the SAC, and thus disposes of the lonesubstantive issue raised whether the SAC
erred in using P300.00 as the GSP in 1992.
Petitioner maintains that the SAC erred in adopting such GSP rate in determining just
compensation for rice and corn lands; and that the factual question brought before the
appellate court for resolution is: "What is the GSP that must be used in valuing subject
property? Is it THIRTY FIVE PESOS (Php 35.00), as mandated under P.D. No. 27/E.O.
No. 228? Or THREE HUNDRED PESOS (Php 300.00), the alleged GSP for 1992?"
What petitioner essentially assails is the SACs application of R.A. No. 6657 in the
valuation of properties acquired under P.D. No. 27s OLT.
Citing National Power Corp. v. Gutierrez, petitioner argues that the determination of just
compensation should be based on the value of the land at the time it was taken by the
government, and since it is not disputed that respondents property falls under the
coverage of OLT, then P.D. No. 27 should apply vis a vis Section 2 of E.O. No. 228 which
laid down the formula for determining the value of remaining unvalued rice and corn lands
subject to P.D. No. 27, to wit:
SECTION 2. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27 shall
be based on the average gross production determined by the Barangay Committee on
Land Production in accordance with Department Memorandum Circular No. 26, Series of

1973, and related issuances and regulations of the Department of Agrarian Reform. The
average gross production per hectare shall be multiplied by two and a half (2.5), the
product of which shall be multiplied by Thirty Five Pesos (P35.00), the government
support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty One Pesos
(P31.00), the government support price for one cavan of 50 kilos of corn on October 21,
1972, and the amount arrived at shall be the value of the rice and corn land, as the case
may be, for the purpose of determining its cost to the farmer and compensation to the
landowner.
Petitioners interpretation is flawed. In the recent case of Land Bank of the Philippines v.
Chico,27 the Court declared in no uncertain terms that R.A. No. 6657 is the relevant law
for determining just compensation after noting several decided cases28 where the Court
found it more equitable to determine just compensation based on the value of the property
at the time of payment. This was a clear departure from the Courts earlier stance
inGabatin v. Land Bank of the Philippines29 where it declared that the reckoning period for
the determination of just compensation is the time when the land was taken applying P.D.
No. 27 and E.O. No. 228.
P.D. No. 27/E.O. No. 228 vis a vis R.A. No. 6657 was applied to cases involving lands
placed under the coverage of P.D. No. 27/E.O. No. 228 where payment of just
compensation had not been completed. When in the interim R.A. No. 6657 was passed
before the full payment of just compensation, as in the case at bar, the provisions of R.A.
No. 6657 on just compensation control.
Discussing the retroactive application of the provisions of R.A. No. 6657 for lands yet to be
paid by the government although expropriated under P.D. No. 27, this Court in Land Bank
of the Philippines v. Estanislao31ratiocinated:
Petitioner, citing Gabatin v. Land Bank of the Philippines, contends that the taking of the
subject lots was deemed effected on October 21, 1972, when respondents were, under
P.D. No. 27 deprived of ownership over the subject lands in favor of qualified beneficiaries.
Petitioner further contends that the fixing of the value of the land under E.O. 228, using
the government support price of P35 for one cavan of 50 kilos of palay as of October 21,
1972, was in keeping with the settled rule that just compensation should be based on the
value of the property at the time of taking.
The petition is bereft of merit.
This Court held in Land Bank of the Philippines v. Natividad that seizure of landholdings or
properties covered by P.D. No. 27 did not take place on October 21, 1972, but upon the
payment of just compensation. Taking into account the passage in 1988 of R.A. No. 6657
pending the settlement of just compensation, this Court concluded that it is R.A. No. 6657
which is the applicable law, with P.D. No. 27 and E.O. 228 having only suppletory effect.
Land Bank's contention that the property was acquired for purposes of agrarian reform on
October 21, 1972, the time of the effectivity of PD 27, ergo just compensation should be
based on the value of the property as of that time and not at the time of possession in
1993, is likewise erroneous. In Office of the President, Malacaang, Manila v. Court of
138
Appeals, we ruled that the seizure of the landholding did not take place on the date of
effectivity of PD 27 but would take effect on the payment of just compensation.
Under the factual circumstances of this case, the agrarian reform process is still
incomplete as the just compensation to be paid private respondents has yet to be settled.
Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of this
process, the just compensation should be determined and the process concluded under
the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only
suppletory effect, conformably with our ruling in Paris v. Alfeche.
xxxx
It would certainly be inequitable to determine just compensation based on the guideline
provided by PD 27 and EO 228 considering the DAR's failure to determine the just
compensation for a considerable length of time. That just compensation should be
determined in accordance with RA 6657, and not PD 27 or EO 228, is especially
imperative considering that just compensation should be the full and fair equivalent of the
property taken from its owner by the expropriator, the equivalent being real, substantial,
full and ample.
In this case, the trial court arrived at the just compensation due private respondents for
their property, taking into account its nature as irrigated land, location along the highway,
market value, assessor's value and the volume and value of its produce. This Court is
convinced that the trial court correctly determined the amount of just compensation due
private respondents in accordance with, and guided by, RA 6657 and existing
jurisprudence."
The SACs adoption of P300.00 as GSP for one cavan of 50 kilos of palay for 1992 is thus
in order, petitioner not having adduced any evidence that a different or contrary figure
should apply for that period.
The determination of just compensation in eminent domain cases is a judicial function,
and the Court does not find the SAC to have acted capriciously or arbitrarily in setting the
price at P93,657.00 per hectare as the said amount does not appear to be grossly
exorbitant or otherwise unjustified. For the Court notes that the SAC properly took into
account various factors such as the nature of the land, when it is irrigated, the average
harvests per hectare (expressed as AGP based on three normal crop years) at 117.73
cavans per hectare, and the higher valuation applied by the DAR to a similar adjacent
landholding belonging to Estacion. Petitioner itself admits that a higher land valuation
formula was applied to Estacions property because it had been acquired under R.A. No.
6657.32
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 79663 are SET ASIDE. The May 19, 2003 Decision of the Bacolod City RTC, Br.
46, sitting as a SAC in Special Carp Case No. 97-9886, is REINSTATED.
SO ORDERED.

139
EUSEBIO vs. LUIS (G.R. No. 162474 October 13, 2009)4

DECISION
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
praying that the Decision[1]of the Court of Appeals (CA) dated November 28, 2003,
affirming the trial court judgment, and the CA Resolution[2] dated February 27, 2004,
denying petitioners motion for reconsideration, be reversed and set aside.
The antecedent facts are as follows:
Respondents are the registered owners of a parcel of land covered by Transfer Certificate
of Title Nos. 53591 and 53589 with an area of 1,586 square meters. Said parcel of land
was taken by the City of Pasig sometime in 1980 and used as a municipal road now
known as A. Sandoval Avenue, Barangay Palatiw, Pasig City. On February 1, 1993,
the Sanggunian of Pasig City passed Resolution No. 15 authorizing payments to
respondents for said parcel of land. However, the Appraisal Committee of the City
of Pasig, in Resolution No. 93-13 dated October 19, 1993, assessed the value of the land
only at P150.00 per square meter. In a letter dated June 26, 1995, respondents requested
the Appraisal Committee to consider P2,000.00 per square meter as the value of their
land.
One of the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente P.
Eusebio calling the latters attention to the fact that a property in the same area, as the
land subject of this case, had been paid for by petitioners at the price of P2,000.00 per
square meter when said property was expropriated in the year 1994 also for conversion
into a public road. Subsequently, respondents counsel sent a demand letter dated August
26, 1996 to Mayor Eusebio, demanding the amount of P5,000.00 per square meter, or a
total of P7,930,000.00, as just compensation for respondents property. In response, Mayor
Eusebio wrote a letter dated September 9, 1996informing respondents that the City
of Pasig cannot pay them more than the amount set by the Appraisal Committee.
Thus, on October 8, 1996, respondents filed a Complaint for Reconveyance and/or
Damages (Civil Case No. 65937) against herein petitioners before the Regional Trial Court
(RTC) of Pasig City, Branch 155. Respondents prayed that the property be returned to
them with payment of reasonable rental for sixteen years of use at P500.00 per square
meter, or P793,000.00, with legal interest of 12% per annum from date of filing of the
complaint until full payment, or in the event that said property can no longer be returned,
that petitioners be ordered to pay just compensation in the amount of P7,930,000.00 and
rental for sixteen years of use at P500.00 per square meter, orP793,000.00, both with
legal interest of 12% per annum from the date of filing of the complaint until full
payment. In addition, respondents prayed for payment of moral and exemplary damages,
attorneys fees and costs.
After trial, the RTC rendered a Decision[3] dated January 2, 2001, the dispositive portion
of which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the
plaintiffs and against the defendants:

1.
Declaring as ILLEGAL and UNJUST the action of the defendants in taking the
properties of plaintiffs covered by Transfer Certificates of Title Nos. 53591 and 53589
without their consent and without the benefit of an expropriation proceedings required by
law in the taking of private property for public use;
2.
Ordering the defendants to jointly RETURN the subject properties to plaintiffs with
payment of reasonable rental for its use in the amount of P793,000.00 with legal interest
at the rate of 6% per annum from the filing of the instant Complaint until full payment is
made;
3.
In the event that said properties can no longer be returned to the plaintiffs as the
same is already being used as a public road known as A. Sandoval Avenue, Pasig City,
the defendants are hereby ordered to jointly pay the plaintiffs the fair and reasonable
value therefore atP5,000.00 per square meter or a total of P7,930,000.00 with payment of
reasonable rental for its use in the amount of P500.00 per square meter or a total
of P793,000.00, both with legal interest at the rate of 6% per annum from the filing of the
instant Complaint until full payment is made; and
4.
Ordering the defendants to jointly pay the plaintiffs attorneys fees in the amount
ofP200,000.00.
SO ORDERED.
Petitioners then appealed the case to the CA, but the CA affirmed the RTC judgment in its
Decision dated November 28, 2003.
Petitioners motion for reconsideration of the CA Decision was denied per Resolution
dated February 27, 2004.
Hence, this petition where it is alleged that:
I.
PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE RULING OF
THE LOWER COURTDESPITE THE APPARENT LACK OF JURISDICTION BY REASON
OF PRESCRIPTION OF PRIVATE RESPONDENTS CLAIM FOR JUST
COMPENSATION;
II.
PUBLIC RESPONDENT COURT ERRED IN FIXING THE FAIR AND
REASONABLE COMPENSATION FOR RESPONDENTS PROPERTY AT P5,000.00 PER
SQUARE METER DESPITE THE GLARING FACT THAT AT THE TIME OF TAKING IN
THE YEAR 1980 THE FAIR MARKET VALUE WAS PEGGED BY AN APPRAISAL
COMMITTEE AT ONE HUNDRED SIXTY PESOS (PHP160.00);
III.
PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE JUDGMENT OF
THE LOWER COURT AWARDING THE AMOUNT OF P793,000.00 AS REASONABLE

RENTAL FOR THE USE OF RESPONDENTS PROPERTY IN SPITE OF THE FACT

THAT THE SAME WAS CONVERTED INTO A PUBLIC ROAD BY A PREVIOUSLY
ELECTED MUNICIPAL MAYOR WITHOUT RESPONDENTS REGISTERING ANY
COMPLAINT OR PROTEST FOR THE TAKING AND DESPITE THE FACT THAT SUCH
TAKING DID NOT PERSONALLY BENEFIT THE PETITIONERS BUT THE PUBLIC AT
LARGE; AND
IV.
PUBLIC RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING
THE P200,000.00 AWARD FOR ATTORNEYS FEES TO THE PRIVATE RESPONDENTS
COUNSEL DESPITE THE ABSENCE OF NEGLIGENCE OR INACTION ON THE PART
OF PETITIONERS RELATIVE TO THE INSTANT CLAIM FOR JUST COMPENSATION.
At the outset, petitioners must be disabused of their belief that respondents action for
recovery of their property, which had been taken for public use, or to claim just
compensation therefor is already barred by prescription. In Republic of the Philippines v.
Court of Appeals, the Court emphasized that where private property is taken by the
Government for public use without first acquiring title thereto either through expropriation
or negotiated sale, the owners action to recover the land or the value thereof does not
prescribe. The Court went on to remind government agencies not to exercise the power of
eminent domain with wanton disregard for property rights as Section 9, Article III of the
Constitution provides that private property shall not be taken for public use without just
compensation.
The remaining issues here are whether respondents are entitled to regain possession of
their property taken by the city government in the 1980s and, in the event that said
property can no longer be returned, how should just compensation to respondents be
determined.
These issues had been squarely addressed in Forfom Development Corporation v.
Philippine National Railways,[7] which is closely analogous to the present case. In said
earlier case, the Philippine National Railways (PNR) took possession of the private
property in 1972 without going through expropriation proceedings. The San PedroCarmona Commuter Line Project was then implemented with the installation of railroad
facilities on several parcels of land, including that of petitioner Forfom. Said owner of the
private property then negotiated with PNR as to the amount of just compensation. No
agreement having been reached, Forfom filed a complaint for Recovery of Possession of
Real Property and/or Damages with the trial court sometime in August 1990.
In said case, the Court held that because the landowner did not act to question the lack of
expropriation proceedings for a very long period of time and even negotiated with the PNR
as to how much it should be paid as just compensation, said landowner is deemed to have
waived its right and is estopped from questioning the power of the PNR to expropriate or
the public use for which the power was exercised. It was further declared therein that:
x x x recovery of possession of the property by the landowner can no longer be allowed on
the grounds of estoppel and, more importantly, of public policy which imposes upon the
public utility the obligation to continue its services to the public. The non-filing of the case
for expropriation will not necessarily lead to the return of the property to the
landowner. What is left to the landowner is the right of compensation.
140
x x x It is settled that non-payment of just compensation does not entitle the private
landowners to recover possession of their expropriated lot.
Just like in the Forfom case, herein respondents also failed to question the taking of their
property for a long period of time (from 1980 until the early 1990s) and, when asked
during trial what action they took after their property was taken, witness Jovito Luis, one of
the respondents, testified that when we have an occasion to talk to Mayor Caruncho we
always asked for compensation.[9] It is likewise undisputed that what was constructed by
the city government on respondents property was a road for public use, namely, A.
Sandoval Avenue in Pasig City.Clearly, as in Forfom, herein respondents are also
estopped from recovering possession of their land, but are entitled to just compensation.
Now, with regard to the trial courts determination of the amount of just compensation to
which respondents are entitled, the Court must strike down the same for being contrary to
established rules and jurisprudence.
The prevailing doctrine on judicial determination of just compensation is that set forth
in Forfom.[10] Therein, the Court ruled that even if there are no expropriation proceedings
instituted to determine just compensation, the trial court is still mandated to act in
accordance with the procedure provided for in Section 5, Rule 67 of the 1997 Rules of
Civil Procedure, requiring the appointment of not more than three competent and
disinterested commissioners to ascertain and report to the court the just compensation for
the subject property. The Court reiterated its ruling in National Power Corporation v. Dela
Cruz[11] that trial with the aid of commissioners is a substantial right that may not be done
away with capriciously or for no reason at all.[12] It was also emphasized therein that
although ascertainment of just compensation is a judicial prerogative, the commissioners
findings may only be disregarded or substituted with the trial courts own estimation of the
propertys value only if the commissioners have applied illegal principles to the evidence
submitted to them, where they have disregarded a clear preponderance of evidence, or
where the amount allowed is either grossly inadequate or excessive. Thus, the Court
concluded in Forfom that:
The judge should not have made a determination of just compensation without first having
appointed the required commissioners who would initially ascertain and report the just
compensation for the property involved. This being the case, we find the valuation made
by the trial court to beineffectual, not having been made in accordance with the procedure
provided for by the rules.
Verily, the determination of just compensation for property taken for public use must be
done not only for the protection of the landowners interest but also for the good of the
public. In Republic v. Court of Appeals, the Court explained as follows:
The concept of just compensation, however, does not imply fairness to the property owner
alone.Compensation must be just not only to the property owner, but also to the public
which ultimately bears the cost of expropriation.
It is quite clear that the Court, in formulating and promulgating the procedure provided for
in Sections 5 and 6, Rule 67, found this to be the fairest way of arriving at the just
compensation to be paid for private property taken for public use.

With regard to the time as to when just compensation should be fixed, it is settled
jurisprudence that where property was taken without the benefit of expropriation
proceedings, and its owner files an action for recovery of possession thereof before the
commencement of expropriation proceedings, it is the value of the property at the time of
taking that is controlling. Explaining the reason for this rule in Manila International Airport
Authority v. Rodriguez,[17]the Court, quoting Ansaldo v. Tantuico, Jr., stated, thus:
The reason for the rule, as pointed out in Republic v. Lara, is that
. . . [w]here property is taken ahead of the filing of the condemnation proceedings, the
value thereof may be enchanced by the public purpose for which it is taken; the entry by
the plaintiff upon the property may have depreciated its value thereby; or, there may have
been a natural increase in the value of the property from the time the complaint is filed,
due to general economic conditions. The owner of private property should be
compensated only for what he actually loses; it is not intended that his compensation shall
extend beyond his loss or injury. And what he loses is only the actual value of his property
at the time it is taken. This is the only way that compensation to be paid can be truly just;
i.e., just not only to the individual whose property is taken,' 'but to the public, which is to
pay for it.
In this case, the trial court should have fixed just compensation for the property at its value
as of the time of taking in 1980, but there is nothing on record showing the value of the
property at that time. The trial court, therefore, clearly erred when it based its valuation for
the subject land on the price paid for properties in the same location, taken by the city
government only sometime in the year 1994.
However, in taking respondents property without the benefit of expropriation proceedings
and without payment of just compensation, the City of Pasig clearly acted in utter
disregard of respondents proprietary rights. Such conduct cannot be countenanced by the
Court. For said illegal taking, the City of Pasig should definitely be held liable for damages
to respondents. Again, in Manila International Airport Authority v. Rodriguez,[20] the Court
held that the government agencys illegal occupation of the owners property for a very long
period of time surely resulted in pecuniary loss to the owner. The Court held as follows:
Such pecuniary loss entitles him to adequate compensation in the form of actual or
compensatory damages, which in this case should be the legal interest (6%) on the value
of the land at the time of taking, from said point up to full payment by the MIAA. This is
based on the principle that interest runs as a matter of law and follows from the right of the
landowner to be placed in as good position as money can accomplish, as of the date of
the taking.
The award of interest renders unwarranted the grant of back rentals as extended by the
courts below. In Republic v. Lara, et al., the Court ruled that the indemnity for rentals is
inconsistent with a property owners right to be paid legal interest on the value of the
property, for if the condemnor is to pay the compensation due to the owners from the time
of the actual taking of their property, the payment of such compensation is deemed to
retroact to the actual taking of the property; and, hence, there is no basis for claiming
rentals from the time of actual taking.http://127.0.0.1:7860/source/2006.zip
141
%3e17e,df%7C2006/FEB2006/161836.htm - _ftn33#_ftn33 More

explicitly, the Court held inRepublic v. Garcellano that:
The uniform rule of this Court, however, is that this compensation must be, not in the form
of rentals, but by way of 'interest from the date that the company [or entity] exercising the
right of eminent domain take possession of the condemned lands, and the amounts
granted by the court shall cease to earn interest only from the moment they are paid to the
owners or deposited in court x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of
the lot and negotiating with any of the owners of the property. To our mind, these are
wanton and irresponsible acts which should be suppressed and corrected. Hence, the
award of exemplary damages and attorneys fees is in order. However, while Rodriguez is
entitled to such exemplary damages and attorneys fees, the award granted by the courts
below should be equitably reduced. We hold that Rodriguez is entitled only
to P200,000.00 as exemplary damages, and attorneys fees equivalent to one percent
(1%) of the amount due.[21]
Lastly, with regard to the liability of petitioners Vicente P. Eusebio, Lorna A. Bernardo, and
Victor Endriga all officials of the city government the Court cannot uphold the ruling
that said petitioners are jointly liable in their personal capacity with the City of Pasig for
payments to be made to respondents. There is a dearth of evidence which would show
that said petitioners were already city government officials in 1980 or that they had any
involvement whatsoever in the illegal taking of respondents property. Thus, any liability to
respondents is the sole responsibility of the City of Pasig.
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of
the Court of Appeals datedNovember 28, 2003 is MODIFIED to read as follows:
1.
The valuation of just compensation and award of back rentals made by
the Regional Trial Court of PasigCity, Branch 155 in Civil Case No. 65937 are hereby SET
ASIDE. The City of Pasig, represented by its duly-authorized officials, is DIRECTED to
institute the appropriate expropriation action over the subject parcel of land within fifteen
(15) days from finality of this Decision, for the proper determination of just compensation
due to respondents, with interest at the legal rate of six (6%) percent per annum from the
time of taking until full payment is made.
2.
The City of Pasig is ORDERED to pay respondents the
of P200,000.00 as exemplary damages and P200,000.00 as attorneys fees.
No costs.
SO ORDERED.
amounts

CITY OF ILOILO vs. CONTRERAS-BESANA (G.R. No. 168967, February 12,

2010)5
DECISION
It is arbitrary and capricious for the government to initiate expropriation proceedings, seize
a person's property, allow the order of expropriation to become final, but then fail to justly
compensate the owner for over 25 years. This is government at its most high-handed and
irresponsible, and should be condemned in the strongest possible terms. For its failure to
properly compensate the landowner, the City of Iloilo is liable for damages.
This Petition for Certiorari under Rule 65 of the Rules of Court with a prayer for the
issuance of a temporary restraining order seeks to overturn the three Orders issued by
Regional Trial Court (RTC) of Iloilo City, Branch 32 on the following dates: December 12,
2003 (the First Assailed Order),1cralaw June 15, 2004 (the Second Assailed
Order),2cralaw and March 9, 2005 (the Third Assailed Order) (the three aforementioned
Orders are collectively referred to as the Assailed Orders).
Factual Antecedents
The essential facts are not in dispute.
On September 18, 1981, petitioner filed a Complaint4cralaw for eminent domain against
private respondent Elpidio T. Javellana (Javellana) and Southern Negros Development
Bank, the latter as mortgagee. The complaint sought to expropriate two parcels of land
known as Lot Nos. 3497-CC and 3497-DD registered in Javellana's name under Transfer
Certificate of Title (TCT) No. T-44894 (the Subject Property) to be used as a school site for
Lapaz High School. Petitioner alleged that the Subject Property was declared for tax
purposes in Tax Declaration No. 40080 to have a value of P60.00 per square meter, or a
total value ofP43,560.00. The case was docketed as Civil Case No. 14052 and raffled to
then Court of First Instance of Iloilo, Branch 7.
On December 9, 1981, Javellana filed his Answer where he admitted ownership of the
Subject Property but denied the petitioner's avowed public purpose of the sought-for
expropriation, since the City of Iloilo already had an existing school site for Lapaz High
School. Javellana also claimed that the true fair market value of his property was no less
than P220.00 per square meter.
142
Javellana filed an Opposition to the Motion for the Issuance of Writ of Possession citing
the same grounds he raised in his Answer that the city already had a vast tract of land
where its existing school site was located, and the deposit of a mere 10% of the Subject
Property's tax valuation was grossly inadequate.
On May 17, 1983, the trial court issued an Order which granted petitioner's Motion for
Issuance of Writ of Possession and authorized the petitioner to take immediate
possession of the Subject Property. The court ruled:
Premises considered, the Motion for the Issuance of a Writ of Possession dated May 10,
1982, filed by plaintiff is hereby granted. Plaintiff is hereby allowed to take immediate
possession, control and disposition of the properties known as Lot Nos. 3497-CC and
3497-DD x x x.
Thereafter, a Writ of Possession was issued in petitioner's favor, and petitioner was able to
take physical possession of the properties sometime in the middle of 1985. At no time has
Javellana ever denied that the Subject Property was actually used as the site of Lapaz
National High School. Aside from the filing by the private respondent of his Amended
Answer on April 21, 1984, the expropriation proceedings remained dormant.
Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte Motion/Manifestation,
where he alleged that when he finally sought to withdraw the P40,000.00 allegedly
deposited by the petitioner, he discovered that no such deposit was ever made. In support
of this contention, private respondent presented a Certification from the Philippine
National Bank stating that no deposit was ever made for the expropriation of the Subject
Property. Private respondent thus demanded his just compensation as well as interest.
Attempts at an amicable resolution and a negotiated sale were unsuccessful. It bears
emphasis that petitioner could not present any evidence whether documentary or
testimonial to prove that any payment was actually made to private respondent.
Thereafter, on April 2, 2003, private respondent filed a Complaint against petitioner for
Recovery of Possession, Fixing and Recovery of Rental and Damages. The case was
docketed as Civil Case No. 03-27571, and raffled to Branch 28 of the Iloilo City Regional
Trial Court. Private respondent alleged that since he had not been compensated for the
Subject Property, petitioner's possession was illegal, and he was entitled to recovery of
possession of his lots. He prayed that petitioner be ordered to vacate the Subject Property
and pay rentals amounting to P15,000.00 per month together with moral, exemplary, and
actual damages, as well as attorney's fees.
On May 11, 1982, petitioner filed a Motion for Issuance of Writ of Possession, alleging that
it had deposited the amount ofP40,000.00 with the Philippine National Bank-Iloilo Branch.
Petitioner claimed that it was entitled to the immediate possession of the Subject Property,
citing Section 1 of Presidential Decree No. 1533, after it had deposited an amount
equivalent to 10% of the amount of compensation. Petitioner attached to its motion a
Certification issued by Estefanio C. Libutan, then Officer-in-Charge of the Iloilo City
Treasurer's Office, stating that said deposit was made.
On May 15, 2003, petitioner filed its Answer, arguing that Javellana could no longer bring
an action for recovery since the Subject Property was already taken for public use. Rather,
private respondent could only demand for the payment of just compensation. Petitioner
also maintained that the legality or illegality of petitioner's possession of the property
should be determined in the eminent domain case and not in a separate action for
recovery of possession.
Both parties jointly moved to consolidate the expropriation case (Civil Case No. 14052)
and the case for recovery of possession (Civil Case No. 03-27571), which motion was
granted by the trial court in an Order dated August 26, 2003. On November 14, 2003, a
commission was created to determine the just compensation due to Javellana.

On November 20, 2003, private respondent filed a Motion/Manifestation dated November

19, 2003 claiming that before a commission is created, the trial court should first order the
condemnation of the property, in accordance with the Rules of Court. Javellana likewise
insisted that the fair market value of the Subject Property should be reckoned from the
date when the court orders the condemnation of the property, and not the date of actual
taking, since petitioner's possession of the property was questionable. Before petitioner
could file its Comment, the RTC issued an Order dated November 21, 2003 denying the
Motion.
Undeterred, Javellana filed on November 25, 2003, an Omnibus Motion to Declare Null
and Void the Order of May 17, 1983 and toRequire Plaintiff to Deposit 10%
or P254,000.00 . Javellana claimed that the amount is equivalent to the 10% of the fair
market value of the Subject Property, as determined by the Iloilo City Appraisal Committee
in 2001, at the time when the parties were trying to negotiate a settlement.
First Assailed Order
On December 12, 2003, the RTC issued the First Assailed Order, which nullified the Order
dated May 17, 1983 (concerning the issuance of a writ of possession over the Subject
Property). The trial court ruled:
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is]
hereby ordered to immediately deposit with the PNB the 10% of the just
compensation after the Commission shall have rendered its report and have determined
the value of the property not at the time it was condemned but at the time the complaint
was filed in court.24cralaw (Emphasis ours)
Second Assailed Order
Neither party sought reconsideration of this Order.25cralaw Nonetheless, about six
months later, the RTC issued the Second Assailed Order, which it denominated as an
"Amended Order". The Second Assailed Order was identical to the first, except that the
reckoning point for just compensation was now the "time this order was issued," which is
June 15, 2004.
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is]
hereby ordered to immediately deposit with the PNB the 10% of the just compensation
after the Commission shall have rendered its report and have determined the value of the
property not at the time it was condemned but at the time this order was issued.
(Underscoring in original text)
This time, petitioner filed a Motion for Reconsideration claiming that there was no legal
basis for the issuance of the Second Assailed Order. Javellana opposed, arguing that
since the May 17, 1983 Order and the Second Assailed Order were interlocutory in
character, they were always subject to modification and revision by the court anytime.
The Order dated June 15, 2004 among other things stated that parties and counsels must
be bound by the Commissioner's Report regarding the value of the property not at the
time it was condemned but at the time this order was issued.
This is true inasmuch as there was no deposit at the PNB and their taking was illegal.
The plaintiff thru [sic] Atty. Laurea alleged that this Court had a change of heart and issued
an Amended Order with the same wordings as the order of December 12, 2003 but this
time stated not at the time it was condemned but at the time the order was
issued. Naturally, this Court in the interest of justice, can amend its order because there
was no deposit by plaintiff.
The jurisprudence cited by plaintiff that the just compensation must be determined as of
the date of the filing of the complaint is true if there was a deposit. Because there was
none the filing was not in accordance with law, hence, must be at the time the order was
issued.
The allegation of defendant thru [sic] counsel that the orders attacked by plaintiff thru [sic]
counsel saying it has become final and executory are interlocutory orders subject to the
control of the Judge until final judgment is correct. Furthermore, it is in the interes[t] of
justice to correct errors.
In the meantime, on April 15, 2004, the Commission submitted its Report, providing the
following estimates of value, but without making a proper recommendation:
Reckoning
Point
Value
per
Fair Market Value Basis
square meter
1981 - at the
time
the
P110.00/sqm
complaint
was filed
P79,860.00
based on three or more

recorded sales of similar
types of land in the vicinity
in the same year
1981 at the
time
the
P686.81/sqm
complaint
was filed
P498,625.22
Appraisal by Southern
Negros
Development
Bank based on market
value,
zonal
value,
appraised value of other
banks, recent selling price
of neighboring lots
2002
P3,500.00/sqm
P2,541,000.00
Appraisal by the City

Appraisal
Committee,
Office of the City Assessor
2004
P4,200.00/sqm
PhP3,049,200.00
Private Appraisal Report

(Atty. Roberto Cal Catolico
dated April 6, 2004)
Third Assailed Order

After the parties were able to fully ventilate their respective positions, the public
respondent issued the Third Assailed Order, denying the Motion for Reconsideration, and
ruling as follows:
143

Hence, the present petition.

Petitioner's Arguments
Petitioner is before us claiming that (1) the trial court gravely abused its discretion
amounting to lack or excess of jurisdiction in overturning the Order dated May 17, 1983,
which was already a final order; and (2) just compensation for the expropriation should be
based on the Subject Property's fair market value either at the time of taking or filing of the
complaint.
Private Respondent's Arguments
Private respondent filed his Comment on October 3, 2005,31cralaw arguing that (1) there
was no error of jurisdiction correctible bycertiorari ; and (2) that the Assailed Orders were
interlocutory orders that were subject to amendment and nullification at the discretion of
the court.
Issues
There are only two questions we need answer, and they are not at all novel. First, does an
order of expropriation become final? Second, what is the correct reckoning point for the
determination of just compensation?
Our Ruling
Expropriation proceedings have two stages. The first phase ends with an order of
dismissal, or a determination that the property is to be acquired for a public
purpose. Either order will be a final order that may be appealed by the aggrieved party.
The second phase consists of the determination of just compensation. It ends with an
order fixing the amount to be paid to the landowner. Both orders, being final, are
appealable.
An order of condemnation or dismissal is final, resolving the question of whether or not the
plaintiff has properly and legally exercised its power of eminent domain. Once the first
order becomes final and no appeal thereto is taken, the authority to expropriate and its
public use can no longer be questioned.
Javellana did not bother to file an appeal from the May 17, 1983 Order which granted
petitioner's Motion for Issuance of Writ of Possession and which authorized petitioner to
take immediate possession of the Subject Property. Thus, it has become final, and the
petitioner's right to expropriate the property for a public use is no longer subject to review.
On the first question, therefore, we rule that the trial court gravely erred in nullifying the
May 17, 1983 Order.
We now turn to the reckoning date for the determination of just compensation. Petitioner
claims that the computation should be made as of September 18, 1981, the date when the
expropriation complaint was filed. We agree.
In a long line of cases, we have constantly affirmed that:
x x x just compensation is to be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation proceedings. Where the institution
of the action precedes entry into the property, the just compensation is to be ascertained
as of the time of the filing of the complaint.
144
When the taking of the property sought to be expropriated coincides with the
commencement of the expropriation proceedings, or takes place subsequent to the filing
of the complaint for eminent domain, the just compensation should be determined as of
the date of the filing of the complaint. Even under Sec. 4, Rule 67 of the 1964 Rules of
Procedure, under which the complaint for expropriation was filed, just compensation is to
be determined "as of the date of the filing of the complaint." Here, there is no reason to
depart from the general rule that the point of reference for assessing the value of the
Subject Property is the time of the filing of the complaint for expropriation.
Private respondent claims that the reckoning date should be in 2004 because of the "clear
injustice to the private respondent who all these years has been deprived of the beneficial
use of his properties."
We commiserate with the private respondent. The school was constructed and has been
in operation since 1985. Petitioner and the residents of Iloilo City have long reaped the
benefits of the property. However, non-payment of just compensation does not entitle the
private landowners to recover possession of their expropriated lot.
Concededly, Javellana also slept on his rights for over 18 years and did not bother to
check with the PNB if a deposit was actually made by the petitioner. Evidently, from his
inaction in failing to withdraw or even verify the amounts purportedly deposited, private
respondent not only accepted the valuation made by the petitioner, but also was not
interested enough to pursue the expropriation case until the end. As such, private
respondent may not recover possession of the Subject Property, but is entitled to just
compensation. It is high time that private respondent be paid what was due him after
almost 30 years.
We stress, however, that the City of Iloilo should be held liable for damages for taking
private respondent's property without payment of just compensation. In Manila
International Airport Authority v. Rodriguez, 43cralaw the Court held that a government
agency's prolonged occupation of private property without the benefit of expropriation
proceedings undoubtedly entitled the landowner to damages:
Such pecuniary loss entitles him to adequate compensation in the form of actual or
compensatory damages, which in this case should be the legal interest (6%) on the value
of the land at the time of taking, from said point up to full payment by the MIAA.This is
based on the principle that interest "runs as a matter of law and follows from the right of
the landowner to be placed in as good position as money can accomplish, as of the date
of the taking x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of
the lot and negotiating with any of the owners of the property. To our mind,these are
wanton and irresponsible acts which should be suppressed and corrected. Hence, the
award of exemplary damages and attorneys fees is in order.x x x.

WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Iloilo
City, Branch 32 in Civil Case No. 14052 and Civil Case No. 03-27571 dated December 12,
2003, June 15, 2004, and March 9, 2005 are hereby ANNULLED and SET ASIDE.
The Regional Trial Court of Iloilo City, Branch 32 is DIRECTED to immediately determine
the just compensation due to private respondent Elpidio T. Javellana based on the fair
market value of the Subject Property at the time Civil Case No. 14052 was filed, or on
September 18, 1981 with interest at the legal rate of six percent (6%) per annum from the
time of filing until full payment is made.
The City of Iloilo is ORDERED to pay private respondent the amount of P200,000.00 as
exemplary damages.
SO ORDERED.
REPUBLIC vs. MANGOTARA (G.R. No. 170375, October 13, 2010)6
On July 7, 2010, the First Division of this Court promulgated its Decision in seven
consolidated Petitions, with the following dispositive portion:
WHEREFORE, premises considered, the Court renders the following judgment in the
Petitions at bar:
1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition for Review of
the Republic of the Philippines. It REVERSES and SETS ASIDE the Resolutions dated uly
12, 2005 and October 24, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao
del Norte. It further ORDERS the reinstatement of the Complaint in Civil Case No. 106,
the admission of the Supplemental Complaint of the Republic, and the return of the
original record of the case to the court of origin for further proceedings. No costs.
2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court DENIES the
consolidated Petitions for Review of Landtrade Realty Corporation, Teofilo Cacho, and/or
Atty. Godofredo Cabildo for lack of merit. It AFFIRMS the Decision dated January 19,
2007 and Resolution dated July 4, 2007 of the Court of Appeals in CA-G.R. CV. No.
00456, affirming in toto the Decision dated July 17, 2004 of the Regional Trial Court,
Branch 3 of Iligan City, Lanao del Norte, in Civil Case No. 4452. Costs against Landtrade
Realty Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.
3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case execution pending
appeal before the Regional Trial Court), the Court DENIES the Petition for Review of
Landtrade Realty Corporation for being moot and academic given that the Regional Trial
Court, Branch 1 of Iligan City, Lanao del Norte had already rendered a Decision dated
December 12, 2005 in Civil Case No. 6613. No costs.
4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful Detainer Case
execution pending appeal before the Court of Appeals), the Court GRANTS the
consolidated Petitions for Certiorari and Prohibition of the National Power Corporation and
National Transmission Corporation. It SETS ASIDE the Resolution dated June 30, 2006 of
the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 for having been rendered with
grave abuse of discretion amounting to lack or excess of jurisdiction. It
further ORDERS the Court of Appeals to issue a writ of preliminary injunction enjoining the

145
execution of the Decision dated December 12, 2005 of the Regional Trial Court, Branch 1
of Iligan City, Lanao del Norte, in Civil Case No. 6613, while the same is pending appeal
before the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889. It finally DIRECTS the
Court of Appeals to resolve without further delay the pending appeals before it, in CA-G.R.
SP Nos. 00854 and 00889, in a manner not inconsistent with this Decision. No costs.
5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the Court GRANTSthe
Petition for Review of the Republic of the Philippines. It REVERSES and SETS ASIDEthe
Orders dated December 13, 2005 and May 16, 2006 of the Regional Trial Court, Branch 4
of Iligan City in Civil Case No. 6686. It further ORDERS the reinstatement of the
Complaint in Civil Case No. 6686 and the return of the original record of the case to the
court of origin for further proceedings. No costs.1chanroblesvirtuallawlibrary
In a Resolution dated August 25, 2010, the Court denied with finality the separate motions
for reconsideration filed by [1] Teofilo Cacho (Teofilo) and Atty. Godofredo Cabildo (Atty.
Cabildo); [2] Land Trade Realty Corporation (LANDTRADE); and [3] Demetria Vidal
(Vidal), Azimuth International Development Corporation (AZIMUTH), and Maria Cristina
Fertilizer Corporation (MCFC), considering that the basic issues were already passed
upon and there was no substantial argument to warrant a modification of the previous
judgment of the Court.
Also in the August 25, 2010 Resolution, the Court denied the joint motion of Vidal,
AZIMUTH, and MCFC to refer the cases to the Court En Banc because per SC Circular
No. 2-89 dated February 7, 1989, as amended by the Resolution dated November 18,
1993, the Court En Banc is not an appellate court to which decisions or resolutions of the
Divisions may be appealed. It is for this same reason that the Court is now similarly
denying the Motion [To Refer to Court En Banc G.R. Nos. 178779 and 178894, G.R. Nos.
170505, 173355-56, 173562-64 (sic) and G.R. No. 173401] of LANDTRADE.
Thus, the only other matter left for determination of this Court is the Motion for Leave to
File and Admit Attached Motion for Clarification, with the appended Motion for Clarification,
of the Republic of the Philippines (Republic). The Republic is concerned that the
pronouncements of this Court as regards the Quieting of Title Case (G.R. Nos. 178779
and 178894) would effectively bar or limit the prosecution of the Cancellation of Titles and
Reversion Case (G.R. No. 173401) and Expropriation Case (G.R. No. 170375). Hence,
the Republic seeks the following reliefs from this Court:
WHEREFORE, it is respectfully prayed that a clarification be made confirming that:
1. The pronouncement in G.R. Nos. 178779 and 178894 that: "Azimuth is the successorin-interest of Demetria Vidal to the extent of 23 hectares" is without prejudice to the final
disposition of Civil Case No. 6686 for reversion; and,
2. The pronouncement in G.R. Nos. 178779 and 178894, on Demetria Vidal Confesors
heirship vis--vis her supposed right to transfer title to Azimuth, is without prejudice to the
outcome of Civil Case No. 106 (Expropriation) where the government may present
eveidence (sic) to belie the aforestated heirship andor (sic) Demetria Confesor Vidals
entitlement to just compensation.
Other reliefs deemed just and equitable under the premises are likewise prayed for.
The Court only partly grants the Motion for Clarification of the Republic.

In the Quieting of Title Case, the Court held:

Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTCBranch 3 which declared, among other things, that (a) Vidal is the sole surviving heir of
Doa Demetria, who alone has rights to and interest in the subject parcels of land; (b)
AZIMUTH is Vidals successor-in-interest to portions of the said properties in accordance
with the 1998 Memorandum of Agreement and 2004 Deed of Conditional Conveyance; (c)
Teofilo is not the son or heir of Doa Demetria; and (d) Teofilo, Atty. Cabildo, and their
transferees/assignees, including LANDTRADE, have no valid right to or interest in the
same properties.
Of the total land area of 38.23 hectares covered by Original Certificate of Title (OCT) Nos.
0-1200 (a.f.) and 0-1201 (a.f.), in the name of Doa Demetria Cacho (Doa Demetria),
Vidal transferred her rights to and interests in a portion thereof, measuring 23 hectares, to
AZIMUTH by virtue of the aforementioned 1998 Memorandum of Agreement and 2004
Deed of Conditional Conveyance. However, it should be stressed that the main issue in
the Quieting of Title Case was who between Vidal and Teofilo had valid title to the subject
properties as Doa Demetrias rightful surviving heir. The extent or area of the properties
inherited was not put into question in said case.
Moreover, the Court also ordered in its July 7, 2010 Decision that the Cancellation of Titles
and Reversion Case be reinstated before the Regional Trial Court, Branch 4 (RTC-Branch
4) of Iligan City, Lanao del Norte. It is the main contention of the Republic in said case that
OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) are null and void because they covered parcels
of land beyond those granted by the land registration court to Doa Demetria in GLRO
Record Nos. 6908 and 6909. Should the RTC-Branch 4 affirm the nullity of the two OCTs,
then it can order the cancellation of said certificates of title and the reversion to the
Republic of the parcels of land unlawfully included therein.
The Court agrees with the Republic that necessarily, the rights to and interests in the
entire 38.23 hectares, covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), claimed by
Vidal as the declared sole heir of Doa Demetria in the Quieting of Title Case, should be
without prejudice to the outcome of the Cancellation of Titles and Reversion Case yet to
be heard by the RTC-Branch 4. As Vidals successor-in-interest to the 23 hectares of the
subject properties, AZIMUTH only stepped into the formers shoes in so far as said portion
is concerned. No one can acquire a right greater than what the transferor himself has. As
the saying goes, the spring cannot rise higher than its source. As a consequence, the
rights to and interests in the 23-hectare portion of the subject properties, acquired by
AZIMUTH under the 1998 Memorandum of Agreement and 2004 Deed of Conditional
Conveyance, referred to by this Court in the Quieting of Title Case, are likewise dependent
on the final judgment in the Cancellation of Titles and Reversion Case.
As to whether the Republic may still challenge Vidals heirship in the Expropriation Case,
this is an issue not raised in any of the Petitions resolved by this Court in its July 7, 2010
Decision. It involves legal and factual matters that need to be argued and established in
the Expropriation Case, which was ordered reinstated by this Court before the RTCBranch 1. Thus, it is beyond the ambit of this Court to determine by mere motion for
clarification of the Republic.
WHEREFORE, premises considered, the Court hereby RESOLVES:
146
(1) TO DENY WITH FINALITY the Motion [To Refer to Court En Banc G.R. Nos. 178779
and 178894, G.R. Nos. 170505, 173355-56, 173562-64 (sic) and G.R. No. 173401] of
Land Trade Realty Corporation;
(2) TO PARTLY GRANT the Motion for Clarification of the Republic of the Philippines by
declaring that the rights to and interests in the 23-hectare portion of the subject properties,
transferred by Demetria Vidal to Azimuth International Development Corporation by virtue
of the 1998 Memorandum of Agreement and 2004 Deed of Conditional Conveyance,
referred to by this Court in G.R. Nos. 178779 and 178894 (Quieting of Title Case), shall be
without prejudice to the outcome of Civil Case No. 6686 (Cancellation of Titles and
Reversion Case), which this Court, in its Decision dated July 7, 2010, ordered reinstated
before the Regional Trial Court, Branch 4 of Iligan City, Lanao del Norte; and
(3) TO ORDER that no further pleadings shall be entertained in these consolidated cases
and that entry of judgment be made in due course.
SO ORDERED.
REPUBLIC vs. MENDOZA (G.R. No. 185091, August 08, 2010)7
This case is about the propriety of filing an ejectment suit against the Government for its
failure to acquire ownership of a privately owned property that it had long used as a school
site and to pay just compensation for it.
The Facts and the Case
Paninsingin Primary School (PPS) is a public school operated by petitioner Republic of the
Philippines (the Republic) through the Department of Education. PPS has been using
1,149 square meters of land in Lipa City, Batangas since 1957 for its school. But the
property, a portion of Lots 1923 and 1925, were registered in the name of respondents
Primo and Maria Mendoza (the Mendozas) under Transfer Certificate of Title (TCT)
T-11410.
On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and
subdivided into four lots, as follows:
Lot 1 - 292 square meters in favor of Claudia Dimayuga
Lot 2 - 292 square meters in favor of the Mendozas
Lot 3 - 543 square meters in favor of Gervacio Ronquillo; and
Lot 4 - 1,149 square meters in favor of the City Government of Lipa[2]
As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and
issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2
remained in the name of the Mendozas but no new title was issued in the name of the City
Government of Lipa for Lot 4. Meantime, PPS remained in possession of the property.
The Republic claimed that, while no title was issued in the name of the City Government
of Lipa, the Mendozas had relinquished to it their right over the school lot as evidenced by
the consolidation and subdivision plan. Further, the property had long been tax-declared in
the name of the City Government and PPS built significant, permanent improvements on
the same. These improvements had also been tax-declared.


The Mendozas claim, on the other hand, that although PPS sought permission from them
to use the property as a school site, they never relinquished their right to it. They allowed
PPS to occupy the property since they had no need for it at that time. Thus, it has
remained registered in their name under the original title, TCT T-11410, which had only
been partially cancelled.
On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed
property. When PPS declined to do so, on January 12, 1999 the Mendozas filed a
complaint with the Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 000299 against PPS for unlawful detainer with application for temporary restraining order and
writ of preliminary injunction.
On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of
the Republic's immunity from suit. The Mendozas appealed to the Regional Trial Court
(RTC) of Lipa City which ruled that the Republic's consent was not necessary since the
action before the MTCC was not against it.
In light of the RTC's decision, the Mendozas filed with the MTCC a motion to render
judgment in the case before it. The MTCC denied the motion, however, saying that
jurisdiction over the case had passed to the RTC upon appeal. Later, the RTC remanded
the case back to the MTCC,[11] which then dismissed the case for insufficiency of
evidence. Consequently, the Mendozas once again appealed to the RTC in Civil Case
2001-0236.
On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the
property. It held that the Mendozas had the better right of possession since they were its
registered owners. PPS, on the other hand, could not produce any document to prove the
transfer of ownership of the land in its favor. PPS moved for reconsideration, but the RTC
denied it.
The Republic, through the Office of the Solicitor General (OSG), appealed the RTC
decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the
Mendozas were barred by laches from recovering possession of the school lot; (2)
sufficient evidence showed that the Mendozas relinquished ownership of the subject lot to
the City Government of Lipa City for use as school; and (3) Lot 4, Pcs-5019 has long been
declared in the name of the City Government since 1957 for taxation purposes.
In a decision dated February 26, 2008, the CA affirmed the RTC decision. Upholding the
Torrens system, it emphasized the indefeasibility of the Mendozas' registered title and the
imprescriptible nature of their right to eject any person occupying the property. The CA
held that, this being the case, the Republic's possession of the property through PPS
should be deemed merely a tolerated one that could not ripen into ownership.
The CA also rejected the Republic's claim of ownership since it presented no documentary
evidence to prove the transfer of the property in favor of the government. Moreover, even
assuming that the Mendozas relinquished their right to the property in 1957 in the
government's favor, the latter never took steps to have the title to the property issued in its
name or have its right as owner annotated on the Mendozas' title. The CA held that, by its
omissions, the Republic may be held in estoppel to claim that the Mendozas were barred
by laches from bringing its action.
147
With the denial of its motion for reconsideration, the Republic has taken recourse to this
Court viapetition for review on certiorari under Rule 45.
The Issue Presented
The issue in this case is whether or not the CA erred in holding that the Mendozas were
entitled to evict the Republic from the subject property that it had used for a public school.
The Court's Ruling
A decree of registration is conclusive upon all persons, including the Government of the
Republic and all its branches, whether or not mentioned by name in the application for
registration or its notice.[16] Indeed, title to the land, once registered, is imprescriptible.
[17] No one may acquire it from the registered owner by adverse, open, and notorious
possession.[18] Thus, to a registered owner under the Torrens system, the right to
recover possession of the registered property is equally imprescriptible since possession
is a mere consequence of ownership.
Here, the existence and genuineness of the Mendozas' title over the property has not
been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows
that a 1,149 square meter lot had been designated to the City Government, the Republic
itself admits that no new title was issued to it or to any of its subdivisions for the portion
that PPS had been occupying since 1957.
That the City Government of Lipa tax-declared the property and its improvements in its
name cannot defeat the Mendozas' title. This Court has allowed tax declarations to stand
as proof of ownership only in the absence of a certificate of title. Otherwise, they have
little evidentiary weight as proof of ownership.
The CA erred, however, in ordering the eviction of PPS from the property that it had held
as government school site for more than 50 years. The evidence on record shows that
the Mendozas intended to cede the property to the City Government of Lipa permanently.
In fact, they allowed the city to declare the property in its name for tax purposes. And
when they sought in 1962 to have the bigger lot subdivided into four, the Mendozas
earmarked Lot 4, containing 1,149 square meters, for the City Government of Lipa. Under
the circumstances, it may be assumed that the Mendozas agreed to transfer ownership of
the land to the government, whether to the City Government of Lipa or to the Republic,
way back but never got around to do so and the Republic itself altogether forgot about it.
Consequently, the Republic should be deemed entitled to possession pending the
Mendozas' formal transfer of ownership to it upon payment of just compensation.
The Court holds that, where the owner agrees voluntarily to the taking of his property by
the government for public use, he thereby waives his right to the institution of a formal
expropriation proceeding covering such property. Further, as the Court also held
in Eusebio v. Luis, the failure for a long time of the owner to question the lack of
expropriation proceedings covering a property that the government had taken constitutes
a waiver of his right to gain back possession. The Mendozas' remedy is an action for the
payment of just compensation, not ejectment.
In Republic of the Philippines v. Court of Appeals, the Court affirmed the RTC's power to
award just compensation even in the absence of a proper expropriation proceeding. It held

that the RTC can determine just compensation based on the evidence presented before it
in an ordinary civil action for recovery of possession of property or its value and damages.
As to the time when just compensation should be fixed, it is settled that where property
was taken without the benefit of expropriation proceedings and its owner filed an action for
recovery of possession before the commencement of expropriation proceedings, it is the
value of the property at the time of taking that is controlling.
Since the MTCC did not have jurisdiction either to evict the Republic from the land it had
taken for public use or to hear and adjudicate the Mendozas' right to just compensation for
it, the CA should have ordered the complaint for unlawful detainer dismissed without
prejudice to their filing a proper action for recovery of such compensation.
WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26,
2008 decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R.
96604, and ORDERS the dismissal of respondents Primo and Maria Mendoza's action for
eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without
prejudice to their filing an action for payment of just compensation against the Republic of
the Philippines or, when appropriate, against the City of Lipa.
SO ORDERED.
LBP vs. LIVIOCO (G.R. No. 170685 : September 22, 2010)8
DECISION
When the evidence received by the trial court are irrelevant to the issue of just
compensation and in total disregard of the requirements provided under Section 17 of the
Comprehensive Agrarian Reform Law, the Court is left with no evidence on record that
could aid in the proper resolution of the case. While remand is frowned upon for obviating
the speedy dispensation of justice, it becomes necessary to ensure compliance with the
law and to give everyone - the landowner, the farmers, and the State - their due.
This is a Petition for Review under Rule 45, assailing the August 30, 2005 Decision of the
Court of Appeals (CA), as well as its December 5, 2005 Resolution in CA-GR SP No.
83138. The dispositive portion of the assailed Decision reads as follows:
WHEREFORE, premises considered, the petition is DENIED. The Decision dated January
29, 2004 and the Order dated March 16, 2004 of the RTC, Branch 56, Angeles City in Civil
Case No. 10405 are hereby AFFIRMED.
Factual Antecedents
Petitioner Land Bank of the Philippines (LBP) is the government financial
institution established to aid in the implementation of the Comprehensive Agrarian Reform
Program (CARP) as well as to act as financial intermediary of the Agrarian Reform Fund.
Respondent Enrique Livioco (Livioco) was the owner of 30.6329 hectares of
sugarland located in Dapdap, Mabalacat, Pampanga. Sometime between 1987 and
1988, Livioco offered his sugarland to the Department of Agrarian Reform (DAR) for
acquisition under the CARP at P30.00 per square meter, for a total of P9,189,870.00. The

148
voluntary-offer-to-sell (VOS) form he submitted to the DAR indicated that his property is
adjacent to residential subdivisions and to an international paper mill.
The DAR referred Livioco's offer to the LBP for valuation. Following Section 17 of Republic
Act (RA) No. 6657 and DAR Administrative Order No. 17, series of 1989, as amended by
Administrative Order No. 3, series of 1991, the LBP set the price at P3.21 per square
meter or a total of P827,943.48 for 26 hectares. Livioco was then promptly informed of the
valuation and that the cash portion of the claim proceeds have been "kept in trust pending
[his] submission of the [ownership documentary] requirements." It appears however that
Livioco did not act upon the notice given to him by both government agencies. On
September 20, 1991, LBP issued a certification to the Register of Deeds of Pampanga
that it has earmarked the amount of P827,943.48 as compensation for Livioco's 26
hectares.
It was only two years later that Livioco requested for a reevaluation of the compensation
on the ground that its value had already appreciated from the time it was first offered for
sale. The request was denied by Regional Director Antonio Nuesa on the ground that
there was already a perfected sale.
The DAR proceeded to take possession of Livioco's property. In 1994, the DAR awarded
Certificates of Land Ownership Award (CLOAs) covering Livioco's property to 26 qualified
farmer-beneficiaries.
Livioco filed separate complaints to cancel the CLOAs and to recover his property but the
same proved futile. The first case he filed in 1995 was for quieting of title, recovery of
possession and damages against the DAR, LBP, Register of Deeds, and the farmerbeneficiaries. In its final and executory Decision, the CA sustained the validity of the
CLOAs The relevant portions of the Decision read:
What matters most is the fact that the requirements for "Compulsory Acquisition" of private
lands, especially the indispensable ones, to wit: (1) valuation of the subject property by the
proper government agency which is the LBP; (2) DAR's "Notice of Land Valuation" to
petitioner and; (3) most importantly, the deposit of the amount of land valuation in the
name of petitioner after he rejected the said amount, were substantially complied with in
the instant case.
Considering therefore that there was material and substantial compliance with the
requirements for the "Compulsory Acquisition" of the subject land, the acquisition of the
same is indubitably in order and in accordance with law.
Livioco then filed in 1998 a petition for reconveyance before the DAR Regional Office. The
case eventually reached the CA, which dismissed the petition on the ground that the
validity of the compulsory acquisition had already been decided with finality in the earlier
CA case, to wit:
As the disputed property was eventually acquired through Compulsory Acquisition, its
reconveyance to the petitioners was properly disallowed by the DAR. The certifications by
other government agencies that the land was identified as a resettlement area [are] of no
avail as the DAR is vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and has exclusive original jurisdiction over all matters involving the
implementation of agrarian reform.

xxxx
Indeed, it is to the best interest of the public that the litigation regarding the reconveyance
of the disputed property between the same parties for the same grounds must come to an
end, the matter having [been] already fully and fairly adjudicated by the DAR, this Court
and the Supreme Court which had declined to disturb the judgment of this Court.
Upon the request of DAR, LBP made two amendments to the valuation. At first, they
reduced the acquired area from 30.6329 hectares to 23.9191 hectares. Later, they
increased the acquired area to 24.2088 hectares. The remaining 6.4241 hectares of the
property was determined as not compensable because this comprised a residential area,
a creek, road, and a chapel. The total value for 24.2088 hectares was P770,904.54.
Livioco was informed on August 8, 2001 that the payment was already deposited in cash
and agrarian reform bonds and may be withdrawn upon submission of the documentary
requirements.
Unable to recover his property but unwilling to accept what he believes was an
outrageously low valuation of his property, Livioco finally filed a petition for judicial
determination of just compensation against DAR, LBP, and the CLOA holders before
Branch 56 of the Regional Trial Court (RTC) of Angeles City on December 18, 2001. He
maintained that between 1990 and 2000, the area where his property is located has
become predominantly residential hence he should be paid his property's value as such.
To prove that his property is now residential, Livioco presented a Certification from the
Office of the Municipal Planning and Development Coordinator of the Municipality of
Mabalacat that, as per zoning ordinance, Livioco's land is located in an area where the
dominant land use is residential. He also presented certifications from the Housing and
Land Use Regulatory Board, the Mt. Pinatubo Commission and the National Housing
Authority that his property is suitable for a resettlement area or for socialized housing.
None of these plans pushed through.
Livioco then presented evidence to prove the value of his property as of 2002. According
to his sworn valuation, his property has a market value of P700.00/square meter. He also
presented the Bureau of Internal Revenue (BIR) zonal value for residential lands in
Dapdap, as ranging from P150.00 to P200.00/square meter. He then presented Franklin
Olay (Olay), chief appraiser of the Rural Bank of Mabalacat, who testified and certified that
he valued the property at P800.00 per square meter, whether or not the property is
residential. Olay explained that he arrived at the said value by asking the buyers of
adjacent residential properties as to the prevailing selling price in the area. There was also
a certification from the Pinatubo Project Management Office that Livioco's property was
valued at P300.00/square meter. Livioco prayed that just compensation be computed
at P700.00/square meter.
Only LBP filed its Answerand participated in the trial. It justified the P3.21/square meter
valuation of the property on the ground that it was made pursuant to the guidelines in RA
6657 and DAR Administrative Order No. 3, series of 1991. LBP objected to respondent's
theory that his property should be valued as a residential land because the same was
acquired for agricultural purposes, not for its potential for conversion to other uses. LBP
presented its agrarian affairs specialist who testified4 that, due to the increase in the
acquired area, she was assigned to amend the claim of Livioco. She computed the total
value thereof at P770,904.54, using the DAR Administrative Order No. 3, series of
1991. The only other witness of LBP was its lawyer, who explained the legal basis for the
149
DAR administrative orders and the factors for land valuation provided in Section 17 of RA
6657.
Ruling of the Regional Trial Court
Apparently aware that neither party presented relevant evidence for the proper
computation of the just compensation, the trial court issued its April 2, 2003 Order
requiring the reception of additional evidence:
A perusal of the record of this case as well as the evidence adduced by the parties shows
that the facts required for the proper computation and/or determination of just
compensation for the plaintiff's property i.e., land value of the property in accordance with
the Listasaka, capitalized net income, comparable sales and market value pursuant to the
corresponding tax declaration, are unavailable and insufficient.
WHEREFORE, for the Court to properly determine and fix the just compensation to be
accorded to [respondent's] property, the reopening of this case for the purpose of the
presentation of additional evidence is hereby ordered.
Let the reception of aforesaid additional evidence be set on April 22, 2003 at 8:30 am.
xxxx
Based on the records, the next hearing took place on July 10, 2003 where none of the
parties presented additional evidence, whether testimonial or documentary. Nevertheless,
the trial court proceeded to rule in favor of Livioco:
WHEREFORE, premises considered, the Court hereby renders judgment in favor of the
[respondent], Enrique Livioco, and against the Department of Agrarian Reform and the
Land Bank of the Philippines with a determination that the just compensation of Livioco's
property, consisting of 24.2088 hectares located at Mabalacat, Pampanga is worth
Php700.00 per square meter.
Defendants Department of Agrarian Reform and Land Bank of the Philippines are,
therefore, ordered to pay [respondent] the amount of Php700.00 per square meter
multiplied by 24.2088 hectares representing the entire area taken by the government from
the plaintiff.
The trial court was of the opinion that Livioco was able to prove the higher valuation of his
property with a preponderance of evidence. In contrast, there was a dearth of evidence to
support LBP's P3.21 per square meter valuation of the property. Not a single documentary
evidence was presented to substantiate its valuation.
LBP sought a reconsideration of the adverse decision arguing that the court should have
considered the factors appearing in Section 17. It stressed that in failing to consider the
property's productive capacity (capitalized net income), the court placed the farmerbeneficiaries in a very difficult position. They would not be able to pay off the just
compensation for their lands because it is valued way beyond its productive capacity. The
same was denied by the trial court.

Upon respondent's motion, the lower court ordered LBP on March 29, 2004 to release as
initial cash down payment the amount ofP827,943.48, inclusive of legal interest accruing
from the time of taking on September 20, 1991 (the date when LBP informed the Register
of Deeds that it has earmarked the said amount in favor of Livioco).
LBP sought a reconsideration of the said order. It clarified that the just compensation
deposited by LBP in the account of respondent was only P770,904.54 for the 24.2088
hectares. It likewise asked that the release of the deposit be subject to respondent's
compliance with the release requirements of the ownership documents. The records are
silent as to the court's action on the motion as well as to the execution of this order.
150
LBP likewise assails the lower courts' valuation on the ground that they disregarded the
factors set out in Section 17 of RA 6657 for the determination of just compensation. It
argues that the factors stated in that provision are exclusive and the courts cannot
consider factors that are not included therein.
Respondent's arguments
Respondent argues that by seeking a review of the just compensation, LBP is raising a
question of fact, which entails an examination of the probative value of the evidence
presented by the parties. He points out that LBP is merely reiterating the arguments
already presented in its motion for reconsideration before the CA, which makes the instant
petition dilatory.
Ruling of the Court of Appeals

Petitioner turned to the CA to no avail. The CA affirmed the trial court's decision in toto.
First it held that factual findings of the trial courts are entitled to respect. It held that the
factors for determining just compensation, set out in Section 17 of RA 6657, were all
considered by the trial court in arriving at its decision. It stated that among the relevant
evidence considered were Livioco's sworn valuation, tax declarations, zonal value, actual
use of the property, and the socio-economic benefits contributed by the government to the
property. It likewise noted that the taking of Livioco's property coincided with the Mt.
Pinatubo eruption in 1991, which event affected its valuation. Pursuant to Section 18(1)(b)
of RA 6657, the CA ordered LBP to pay 30% of the purchase price in cash, while the
balance may be paid in government financial instruments negotiable at any time.
A motion for reconsiderationwas filed on September 29, 2005, which was denied in a
Resolution dated December 5, 2005.
Hence, this petition.
Petitioner's arguments
In this Petition before us, LBP assails the CA's assent to the valuation of Livioco's property
as a residential land. It maintains that it is not the State's policy to purchase residential
land. Since the property was acquired under the CARP, it had to be valued as an
agricultural land. Moreover, the assumption that Livioco's property has a residential use is
entirely speculative and baseless because none of the government plans to use it as a
residential land was carried out
LBP also assails the Decision of the trial court which valued the land as of 1997 when the
rule is that just compensation must be valued at the time of taking, which in this case was
in 1988. By considering events that transpired after 1988, the court obviously relied on
factors that were not in existence at the time of taking.
LBP further argues that the trial court should have given more weight to its land valuation
because it is the authorized agency recognized by the legislature as having expertise on
the matter.
LBP insists that the Claim Valuation and Processing Form that it presented before the
appellate court "clearly established the area covered, the land use or crop planted, the
average price/hectare and the total value of the subject land." LBP describes this
document as clear and convincing evidence of the correctness of its valuation.
Respondent then argues that, with respect to the determination of just compensation,
courts are not bound by the findings of administrative agencies such as LBP. Courts are
the final authority in this matter. LBP's valuation is only preliminary and it has the duty to
prove to the trial courts the veracity of its valuation. In the instant case, the trial court
decided based on the evidence presented but found LBP's valuation unsubstantiated. He
then prays for the dismissal of the instant petition for review.
Issue
Was the compensation for respondent's property determined in accordance with law?
Our Ruling
For purposes of just compensation, the fair market value of an expropriated property is
determined by its character and its price at the time of taking. There are three important
concepts in this definition - the character of the property, its price, and the time of actual
taking. Did the appellate court properly consider these three concepts when it affirmed the
trial court's decision? We find that it did not.
As to the character of the property
The trial and appellate courts valued respondent's property as a residential land
worth P700.00 per square meter. They considered the use for the property as having
changed from agricultural in 1988 (when Livioco offered it to DAR) to residential by 2002
(allegedly due to the eruption of Mt. Pinatubo). Both courts erred in treating the land as
residential and accepting the change in the character of the property, without any proof
that authorized land conversion had taken place.
In expropriation cases (including cases involving lands for agrarian reform), the property's
character refers to its actual use at the time of taking, not its potential uses. Respondent
himself admitted that his property was agricultural at the time he offered it for sale to DAR
in 1988. In his letter to the DAR in 1988, respondent manifested that his land is
agricultural and suitable for agricultural purposes, although it stood adjacent to residential
properties. Moreover, it has been conclusively decided by final judgment in the earlier
cases filed by respondent that his property was validly acquired under RA 6657 and validly
distributed to agrarian reform beneficiaries. Since the coverage of RA 6657 only extends
to agricultural lands, respondent's property should be conclusively treated as an
agricultural land and valued as such.

The lower courts erred in ruling that the character or use of the property has changed from
agricultural to residential, because there is no allegation or proof that the property was
approved for conversion to other uses by DAR. It is the DAR that is mandated by law to
evaluate and to approve land use conversions so as to prevent fraudulent evasions from
agrarian reform coverage. Even reclassification and plans for expropriation by local
government units (LGUs) will not ipso facto convert an agricultural property to residential,
industrial or commercial. Thus, in the absence of any DAR approval for the conversion of
respondent's property or an actual expropriation by an LGU, it cannot be said that the
character or use of said property changed from agricultural to residential. Respondent's
property remains agricultural and should be valued as such. Hence, the CA and the trial
court had no legal basis for considering the subject property's value as residential.
Respondent's evidence of the value of his land as residential property (which the lower
courts found to be preponderant) could, at most, refer to the potential use of the property.
While the potential use of an expropriated property is sometimes considered in cases
where there is a great improvement in the general vicinity of the expropriated property, it
should never control the determination of just compensation (which appears to be what
the lower courts have erroneously done).nad The potential use of a property should not be
the principal criterion for determining just compensation for this will be contrary to the wellsettled doctrine that the fair market value of an expropriated property is determined by its
character and its price at the time of taking, not its potential uses. If at all, the potential use
of the property or its "adaptability for conversion in the future is a factor, not the ultimate in
determining just compensation."
The proper approach should have been to value respondent's property as an agricultural
land, which value may be adjusted in light of the improvements in the Municipality of
Mabalacat. Valuing the property as a residential land (as the lower courts have done) is
not the correct approach, for reasons explained above. It would also be contrary to the
social policy of agrarian reform, which is to free the tillers of the land from the bondage of
the soil without delivering them to the new oppression of exorbitant land valuations. Note
that in lands acquired under RA 6657, it is the farmer-beneficiaries who will ultimately pay
the valuations paid to the former land owners (LBP merely advances the payment). If the
farmer-beneficiaries are made to pay for lands valued as residential lands (the valuation
for which is substantially higher than the valuation for agricultural lands), it is not unlikely
that such farmers, unable to keep up with payment amortizations, will be forced to give up
their landholdings in favor of the State or be driven to sell the property to other parties.
This may just bring the State right back to the starting line where the landless remain
landless and the rich acquire more landholdings from desperate farmers.
The CA also erroneously considered the Mt. Pinatubo eruption in 1991 as converting the
use for respondent's property from agricultural to residential. We find no basis for the
appellate court's conclusion. First, as already explained, there was no conversion order
from DAR, or even an application for conversion with DAR, to justify the CA's decision to
treat the property as residential. Second, respondent himself testified that his property was
not affected by the volcanic ashfall, which can only mean that its nature as an agricultural
land was not drastically affected. The Mt. Pinatubo eruption only served to make his
property attractive to government agencies as a resettlement area, but none of these
government plans panned out; hence, his property remained agricultural. Third, the
circumstance that respondent's property was surrounded by residential subdivisions was
already in existence when he offered it for sale sometime between 1987 and 1988. The
VOS form that respondent accomplished described his property as being located adjacent
151
to residential subdivisions. It was not therefore a drastic change caused by volcanic

eruption. All together, these circumstances negate the CA's ruling that the subject property
should be treated differently because of the natural calamity.
As to the price: Applying Section 17 of RA 6657
The trial and appellate courts also erred in disregarding Section 17 of RA 6657 in their
determination of just compensation. Section 17 of RA 6657 provides:
Sec. 17. Determination of Just Compensation. - In determining just compensation, the
cost of acquisition of the land, the current value of the like properties, its nature, actual use
and income, the sworn valuation by the owner, the tax declarations, and the assessments
made by government assessors shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers and by the Government to the property as
well as the non-payment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its
valuation.
Jurisprudence is replete with reminders to special agrarian courts to strictly adhere to the
factors set out in Section 17 of RA 6657.
By issuing its April 2, 2003 Order requiring the reception of additional evidence, the trial
court revealed its awareness of the importance of adhering to Section 17 of RA 6657. It
recognized that the evidence presented by the parties were insufficient to arrive at the just
compensation and that the necessary evidence were unavailable for its consideration. For
some reason, however, the trial court proceeded to rule on the case without actually
receiving such relevant evidence. Instead, the trial court, as affirmed by the CA, ruled in
favor of respondent based on preponderance of evidence, regardless of the fact that the
evidence presented by respondent were not really relevant to the factors mentioned in
section 17 of RA 6657.
The CA ruled that the trial court took into account all the factors in Section 17 of RA 6657.
We disagree. Going over the factors in Section 17, it is clear that almost all were not
properly considered and some positively ignored. For instance: (a) The "cost of
acquisition" was not even inquired into. It would not have been difficult to require
respondent to present evidence of the property's price when he acquired the same. (b) As
to the "nature" of the property, it has already been explained that the lower courts
erroneously treated it as residential rather than agricultural. (c) Also, no heed was given to
the "current value of like properties." Since respondent's property is agricultural in nature,
"like properties" in this case would be agricultural lands, preferably also sugarcane lands,
within the municipality or adjacent municipalities. But the chief appraiser of the Rural Bank
of Mabalacat testified that he considered the value of adjacent residential properties, not
"like properties" as required under the law. Comparing respondent's agricultural property
to residential properties is not what the law envisioned. (d) The factor of "actual use and
income of the property" was also ignored; what was instead considered was the property's
potential use.
Thus, we cannot accept the valuation by the lower courts, as it is not in accordance with
Section 17 of RA 6657. It was based on respondent's evidence which were irrelevant or
off-tangent to the factors laid down by Section 17.

However, we also cannot accept the valuation proffered by LBP for lack of proper
substantiation.
LBP argues that its valuation should be given more weight because it is the recognized
agency with expertise on the matter, but this same argument had been struck down in
Landbank of the Philippines v. Luciano. The Court ruled that LBP's authority is only
preliminary and the landowner who disagrees with the LBP's valuation may bring the
matter to court for a judicial determination of just compensation. The RTCs, organized as
special agrarian courts, are the final adjudicators on the issue of just compensation.
We have ruled in several cases that in determining just compensation, LBP must
substantiate its valuation. In Luciano, the Court held:
LAND BANK's valuation of lands covered by CARL is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a SAC, that should
make the final determination of just compensation, taking into consideration the factors
enumerated in Section 17 of RA 6657 and the applicable DAR regulations. Land Bank's
valuation had to be substantiated during the hearing before it could be considered
sufficient in accordance with Section 17 of RA 6657 and DAR AO No. x x x
It is not enough that the landowner fails to prove a higher valuation for the property; LBP
must still prove the correctness of its claims. In the absence of such substantiation, the
case may have to be remanded for the reception of evidence.
In the case at bar, we find that LBP did not sufficiently substantiate its valuation. While
LBP insists that it strictly followed the statutory provision and its relevant implementing
guidelines in arriving at its valuation, the Court notes the lack of evidence to prove the
veracity of LBP's claims. LBP merely submitted its computation to the court without any
evidence on record, whether documentary or testimonial, that would support the
correctness of the values or data used in such computation.
LBP presented two of its officials, but their testimonies were hardly of any use. The first
witness only testified that she prepared the documents, computed the value, and had the
same approved by her superior. The other testified that LBP follows Section 17 of RA 6657
and the relevant administrative orders in arriving at its valuations. LBP also offered in
evidence the Claims Valuation and Processing Form "to show the total valuation" of the
property. The effort was however futile because LBP did not prove the correctness of the
values or data contained in the said Form. The computation in the Form may be
mathematically correct, but there is no way of knowing if the values or data used in the
computation are true. For this Court to accept such valuation would be jumping to a
conclusion without anything to support it.
Remand of the case
Given that both parties failed to adduce evidence of the property's value as an agricultural
land at the time of taking, it is premature for the Court to make a final decision on the
matter. The barren records of this case leave us in no position to resolve the dispute. Not
being a trier of facts, the Court cannot also receive new evidence from the parties that
would aid in the prompt resolution of this case. We are thus constrained to remand the
case to the trial court for the reception of evidence and determination of just compensation
in accordance with Section 17 of RA 6657.
152
Guidelines in the remand of the case

The trial court should value the property as an agricultural land.
It is reminded to adhere strictly to the doctrine that just compensation must be valued at
the time of taking. The "time of taking" is the time when the landowner was deprived of the
use and benefit of his property, such as when title is transferred to the Republic. In the
instant case, the records are silent as to the date when title was transferred to the
Republic. However, we can take guidance from the findings contained in the final and
executory decision in CA-GR SP No. 45486, which ruled on the validity of the DAR
acquisition and is binding on both Livioco and LBP. The said Decision states that between
1993 and 1994, "the Republic[,] through DAR[,] took possession of the subject portion of
[Livioco's] land and awarded the same to [agrarian reform beneficiaries] who were issued
Certificates of Land Ownership Award sometime in 1994."
So as not to lose time in resolving this issue, the Court declares that the evidence to be
presented by the parties before the trial court for the valuation of the property must be
based on the values prevalent in 1994 for like agricultural lands. The evidence must
conform to Section 17 of RA 6657 and, as far as practicable, to DAR Administrative Order
No. 6, series of 1992, as amended by DAR Administrative Order No. 11, series of 1994.
Given the expertise of the DAR on the matter, due reliance on DAR Administrative Orders
is encouraged; but, as the Administrative Orders themselves recognize, there are
situations where their application is not practicable or possible. If the cited factors in the
DAR Administrative Order are absent, irrelevant, or unavailable, the trial court should
exercise judicial discretion and make its own computation of the just compensation based
on the factors set in Section 17 of RA 6657.
The trial court may impose interest on the just compensation as may be warranted by the
circumstances of the case and based on prevailing jurisprudence.
The trial court is reminded that the practice of earmarking funds and opening trust
accounts has been rejected by the Court for purposes of effecting payment; hence, it must
not be considered as valid payment.
In the event that the respondent had already withdrawn the amount deposited in the LBP
as required by the trial court's March 29, 2004 Order, the withdrawn amount should be
deducted from the final land valuation to be paid by LBP.
In case the release required by the trial court's March 29, 2004 Order has not yet been
effected, the trial court's first order of business should be to require LBP's immediate
compliance therewith.
WHEREFORE, premises considered, the petition is DENIED insofar as it seeks to have
the Land Bank of the Philippines' valuation of the subject property sustained. The assailed
August 30, 2005 Decision of the Court of Appeals and its December 5, 2005 Resolution in
CA-G.R. SP No. 83138 are REVERSED and SET ASIDE for lack of factual and legal
basis. Civil Case No. 10405 is REMANDED to Branch 56 of the Regional Trial Court of
Angeles City for reception of evidence on the issue of just compensation. The trial court is

directed to determine the just compensation in accordance with the guidelines set in this
Decision. The trial court is further directed to conclude the proceedings and to submit to
this Court a report on its findings and recommended conclusions within sixty (60) days
from notice of this Decision.
SO ORDERED.
APO FRUITS CORP. vs. LBP (G.R. No. 164195 : October 12, 2010)9
We resolve the petitioners motion for reconsideration addressing our Resolution of
December 4, 2009 whose dispositive portion directs:
WHEREFORE, the Court denies the petitioners second motion for reconsideration (with
respect to the denial of the award of legal interest and attorneys fees), and reiterates the
decision dated February 6, 2007 and the resolution dated December 19, 2007 of the Third
Division.
For a fuller and clearer presentation and appreciation of this Resolution, we hark back to
the roots of this case.
Factual Antecedents
Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), together also referred to as
petitioners, were registered owners of vast tracks of land; AFC owned 640.3483 hectares,
while HPI owned 805.5308 hectares. On October 12, 1995, they voluntarily offered to sell
these landholdings to the government via Voluntary Offer to Sell applications filed with the
Department of Agrarian Reform (DAR).
On October 16, 1996, AFC and HPI received separate notices of land acquisition and
valuation of their properties from the DARs Provincial Agrarian Reform Officer (PARO). At
the assessed valuation of P165,484.47 per hectare, AFCs land was valued
at P86,900,925.88, while HPIs property was valued at P164,478,178.14. HPI and AFC
rejected these valuations for being very low.
In its follow through action, the DAR requested the Land Bank of the Philippines (LBP) to
deposit P26,409,549.86 in AFCs bank account and P45,481,706.76 in HPIs bank account,
which amounts the petitioners then withdrew. The titles over AFC and HPIs properties
were thereafter cancelled, and new ones were issued on December 9, 1996 in the name
of the Republic of the Philippines.
On February 14, 1997, AFC and HPI filed separate petitions for determination of just
compensation with the DAR Adjudication Board (DARAB). When the DARAB failed to act
on these petitions for more than three years, AFC and HPI filed separate complaints for
determination and payment of just compensation with the Regional Trial Court (RTC) of
Tagum City, acting as a Special Agrarian Court. These complaints were subsequently
consolidated.

153
On September 25, 2001, the RTC resolved the consolidated cases, fixing the just
compensation
for
the
petitioners
1,338.6027
hectares
of
land1cra1aw at P1,383,179,000.00, with interest on this amount at the prevailing market
interest rates, computed from the taking of the properties on December 9, 1996 until fully
paid, minus the amounts the petitioners already received under the initial valuation. The
RTC also awarded attorneys fees.
LBP moved for the reconsideration of the decision. The RTC, in its order of December 5,
2001, modified its ruling and fixed the interest at the rate of 12% per annum from the time
the complaint was filed until finality of the decision. The Third Division of this Court, in its
Decision of February 6, 2007, affirmed this RTC decision.
On motion for reconsideration, the Third Division issued its Resolution of December 19,
2007, modifying its February 6, 2007 Decision by deleting the 12% interest due on the
balance of the awarded just compensation. The Third Division justified the deletion by the
finding that the LBP did not delay the payment of just compensation as it had deposited
the pertinent amounts due to AFC and HPI within fourteen months after they filed their
complaints for just compensation with the RTC. The Court also considered that AFC had
already collected approximately P149.6 million, while HPI had already collected
approximately P262 million from the LBP. The Third Division also deleted the award of
attorneys fees.
All parties moved for the reconsideration of the modified ruling. The Court uniformly
denied all the motions in its April 30, 2008 Resolution. Entry of Judgment followed on May
16, 2008.
Notwithstanding the Entry of Judgment, AFC and HPI filed the following motions on May
28, 2008: (1) Motion for Leave to File and Admit Second Motion for Reconsideration; (2)
Second Motion for Reconsideration, with respect to the denial of the award of legal
interest and attorneys fees; and (3) Motion to Refer the Second Motion for
Reconsideration to the Honorable Court En Banc.
The Third Division found the motion to admit the Second Motion for Reconsideration and
the motion to refer this second motion to the Court En Banc meritorious, and accordingly
referred the case to the Court En Banc. On September 8, 2009, the Court En Banc
accepted the referral.
The Court En Banc Resolution
On December 4, 2009, the Court En Banc, by a majority vote, denied the petitioners
second motion for reconsideration based on two considerations.
First, the grant of the second motion for reconsideration runs counter to the immutability of
final decisions. Moreover, the Court saw no reason to recognize the case as an exception
to the immutability principle as the petitioners private claim for the payment of interest
does not qualify as either a substantial or transcendental matter or an issue of paramount
public interest.
Second, on the merits, the petitioners are not entitled to recover interest on the just
compensation and attorneys fees because they caused the delay in the payment of the

154
just compensation due them; they erroneously filed their complaints with the DARAB when
they should have directly filed these with the RTC acting as an agrarian court.
Furthermore, the Court found it significant that the LBP deposited the pertinent amounts in
the petitioners favor within fourteen months after the petitions were filed with the RTC.
Under these circumstances, the Court found no unreasonable delay on the part of LBP to
warrant the award of 12% interest.
properties and this rate is not subject to reduction. The power of the courts to equitably
reduce interest rates applies solely to liquidated damages under a contract and not to
interest set by the Honorable Court itself as due and owing in just compensation cases;
and (d) the Honorable Courts fears that the interest payments due to the petitioners will
produce more harm than good to the system of agrarian reform are misplaced and are
based merely on conjectures.
The Chico-Nazario Dissent
The Comment of the Land Bank of the Philippines
Justice Minita V. Chico-Nazario, the ponente of the original December 19, 2007
Resolution (deleting the 12% interest), dissented from the Court En Bancs December 4,
2009 Resolution.
The LBP commented on the petitioners motion for reconsideration on April 28, 2010. It
maintained that: (a) the doctrine of immutability of the decisions of the Supreme Court
clearly applies to the present case; (b) the LBP is not guilty of undue delay in the payment
of just compensation as the petitioners were promptly paid once the Court had determined
the final value of the properties expropriated; (c) the Supreme Court rulings invoked by the
petitioners are inapplicable to the present case; (d) since the obligation to pay just
compensation is not a forbearance of money, interest should commence only after the
amount due becomes ascertainable or liquidated, and the 12% interest per annum applies
only to the liquidated amount, from the date of finality of judgment; (e) the imposition of
12% interest on the balance of P971,409,831.68 is unwarranted because there was no
unjustified refusal by LBP to pay just compensation, and no contractual breach is involved;
(f) the deletion of the attorneys fees equivalent to 10% of the amount finally awarded as
just compensation is proper; (g) this case does not involve a violation of substantial justice
to justify the alteration of the immutable resolution dated December 19, 2007 that deleted
the award of interest and attorneys fees.
On the issue of immutability of judgment, Justice Chico-Nazario pointed out that under
extraordinary circumstances, this Court has recalled entries of judgment on the ground of
substantial justice. Given the special circumstances involved in the present case, the
Court En Banc should have taken a second hard look at the petitioners positions in their
second motion for reconsideration, and acted to correct the clearly erroneous December
19, 2007 Resolution.
Specifically, Justice Chico-Nazario emphasized the obligation of the State, in the exercise
of its inherent power of eminent domain, to pay just compensation to the owner of the
expropriated property. To be just, the compensation must not only be the correct amount
to be paid; it must also be paid within a reasonable time from the time the land is taken
from the owner. If not, the State must pay the landowner interest, by way of damages,
from the time the property was taken until just compensation is fully paid. This interest,
deemed a part of just compensation due, has been established by prevailing
jurisprudence to be 12% per annum.
On these premises, Justice Nazario pointed out that the government deprived the
petitioners of their property on December 9, 1996, and paid the balance of the just
compensation due them only on May 9, 2008. The delay of almost twelve years earned
the petitioners interest in the total amount of P1,331,124,223.05.
Despite this finding, Justice Chico-Nazario did not see it fit to declare the computed
interest to be totally due; she found it unconscionable to apply the full force of the law on
the LBP because of the magnitude of the amount due. She thus reduced the awarded
interest toP400,000,000.00, or approximately 30% of the computed interest.
The Present Motion for Reconsideration
In their motion to reconsider the Court En Bancs December 4, 2009 Resolution (the
present Motion for Reconsideration), the petitioners principally argue that: (a) the principle
of immutability of judgment does not apply since the Entry of Judgment was issued even
before the lapse of fifteen days from the parties receipt of the April 30, 2008 Resolution
and the petitioners timely filed their second motion for reconsideration within fifteen days
from their receipt of this resolution; (b) the April 30, 2008 Resolution cannot be considered
immutable considering the special and compelling circumstances attendant to the present
case which fall within the exceptions to the principle of immutability of judgments; (c) the
legal interest due is at 12% per annum, reckoned from the time of the taking of the subject
The Courts Ruling

We find the petitioners arguments meritorious and accordingly GRANT the present motion
for reconsideration.
Just compensation a Basic Limitation on the States
Power of Eminent Domain
At the heart of the present controversy is the Third Divisions December 19, 2007
Resolution which held that the petitioners are not entitled to 12% interest on the balance
of the just compensation belatedly paid by the LBP. In the presently assailed December 4,
2009 Resolution, we affirmed the December 19, 2007 Resolutions findings that: (a) the
LBP deposited "pertinent amounts" in favor of the petitioners within fourteen months after
they filed their complaint for determination of just compensation; and (b) the LBP had
already paid the petitioners P411,769,168.32. We concluded then that these
circumstances refuted the petitioners assertion of unreasonable delay on the part of the
LBP.
A re-evaluation of the circumstances of this case and the parties arguments, viewed in
light of the just compensation requirement in the exercise of the States inherent power of
eminent domain, compels us to re-examine our findings and conclusions.
Eminent domain is the power of the State to take private property for public use. It is an
inherent power of State as it is a power necessary for the States existence; it is a power
the State cannot do without. As an inherent power, it does not need at all to be embodied

in the Constitution; if it is mentioned at all, it is solely for purposes of limiting what is

otherwise an unlimited power. The limitation is found in the Bill of Rights that part of the
Constitution whose provisions all aim at the protection of individuals against the excessive
exercise of governmental powers.
Section 9, Article III of the 1987 Constitution (which reads "No private property shall be
taken for public use without just compensation.") provides two essential limitations to the
power of eminent domain, namely, that (1) the purpose of taking must be for public use
and (2) just compensation must be given to the owner of the private property.
It is not accidental that Section 9 specifies that compensation should be "just" as the
safeguard is there to ensure a balance property is not to be taken for public use at the
expense of private interests; the public, through the State, must balance the injury that the
taking of property causes through compensation for what is taken, value for value.
Nor is it accidental that the Bill of Rights is interpreted liberally in favor of the individual
and strictly against the government. The protection of the individual is the reason for the
Bill of Rights being; to keep the exercise of the powers of government within reasonable
bounds is what it seeks.6chanroblesvirtuallawlibrary
The concept of "just compensation" is not new to Philippine constitutional law,7cra1aw but
is not original to the Philippines; it is a transplant from the American
Constitution.8cra1aw It found fertile application in this country particularly in the area of
agrarian reform where the taking of private property for distribution to landless farmers has
been equated to the "public use" that the Constitution requires. In Land Bank of the
Philippines v. Orilla, a valuation case under our agrarian reform law, this Court had
occasion to state:
Constitutionally, "just compensation" is the sum equivalent to the market value of the
property, broadly described as the price fixed by the seller in open market in the usual and
ordinary course of legal action and competition, or the fair value of the property as
between the one who receives and the one who desires to sell, it being fixed at the time of
the actual taking by the government. Just compensation is defined as the full and fair
equivalent of the property taken from its owner by the expropriator. It has been repeatedly
stressed by this Court that the true measure is not the taker's gain but the owner's loss.
The word "just" is used to modify the meaning of the word "compensation" to convey the
idea that the equivalent to be given for the property to be taken shall be real, substantial,
full and ample.
In the present case, while the DAR initially valued the petitioners landholdings at a total
of P251,379,104.02,11cra1aw the RTC, acting as a special agrarian court, determined the
actual value of the petitioners landholdings to be P1,383,179,000.00. This valuation, a
finding of fact, has subsequently been affirmed by this Court, and is now beyond question.
In eminent domain terms, this amount is the "real, substantial, full and ample"
compensation the government must pay to be "just" to the landowners.
Significantly, this final judicial valuation is far removed from the initial valuation made by
the DAR; their values differ by P1,131,799,897.00 in itself a very substantial sum that is
roughly four times the original DAR valuation. We mention these valuations as they
indicate to us how undervalued the petitioners lands had been at the start, particularly at
155
the time the petitioners landholdings were "taken". This reason apparently compelled the
petitioners to relentlessly pursue their valuation claims all they way up to the level of this
Court.
While the LBP deposited the total amount of P71,891,256.62 into the petitioners accounts
(P26,409,549.86 for AFC and P45,481,706.76 for HPI) at the time the landholdings were
taken, these amounts were mere partial payments that only amounted to 5% of
theP1,383,179,000.00 actual value of the expropriated properties. We point this aspect
out to show that the initial payments made by the LBP when the petitioners landholdings
were taken, although promptly withdrawn by the petitioners, could not by any means be
considered a fair exchange of values at the time of taking; in fact, the LBPs actual deposit
could not be said to be substantial even from the original LBP valuation
of P251,379,103.90.
Thus, the deposits might have been sufficient for purposes of the immediate taking of the
landholdings but cannot be claimed as amounts that would excuse the LBP from the
payment of interest on the unpaid balance of the compensation due. As discussed at
length below, they were not enough to compensate the petitioners for the potential income
the landholdings could have earned for them if no immediate taking had taken place.
Under the circumstances, the State acted oppressively and was far from "just" in their
position to deny the petitioners of the potential income that the immediate taking of their
properties entailed.
Just Compensation from the Prism of the Element of Taking.
Apart from the requirement that compensation for expropriated land must be fair and
reasonable, compensation, to be "just," must also be made without delay. Without prompt
payment, compensation cannot be considered "just" if the property is immediately taken
as the property owner suffers the immediate deprivation of both his land and its fruits or
income.
This is the principle at the core of the present case where the petitioners were made to
wait for more than a decade after the taking of their property before they actually received
the full amount of the principal of the just compensation due them. What they have not
received to date is the income of their landholdings corresponding to what they would
have received had no uncompensated taking of these lands been immediately made. This
income, in terms of the interest on the unpaid principal, is the subject of the current
litigation.
We recognized in Republic v. Court of Appeals the need for prompt payment and the
necessity of the payment of interest to compensate for any delay in the payment of
compensation for property already taken. We ruled in this case that:
The constitutional limitation of "just compensation" is considered to be the sum equivalent
to the market value of the property, broadly described to be the price fixed by the seller in
open market in the usual and ordinary course of legal action and competition or the fair
value of the property as between one who receives, and one who desires to sell, i[f] fixed
at the time of the actual taking by the government. Thus, if property is taken for public use
before compensation is deposited with the court having jurisdiction over the case, the final
compensation must include interest[s] on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the

court. In fine, between the taking of the property and the actual payment, legal interest[s]
accrue in order to place the owner in a position as good as (but not better than) the
position he was in before the taking occurred.
Aside from this ruling, Republic notably overturned the Courts previous ruling in National
Power Corporation v. Angas which held that just compensation due for expropriated
properties is not a loan or forbearance of money but indemnity for damages for the delay
in payment; since the interest involved is in the nature of damages rather than earnings
from loans, then Art. 2209 of the Civil Code, which fixes legal interest at 6%, shall apply.
In Republic, the Court recognized that the just compensation due to the landowners for
their expropriated property amounted to an effective forbearance on the part of the State.
Applying the Eastern Shipping Lines ruling, the Court fixed the applicable interest rate at
12% per annum, computed from the time the property was taken until the full amount of
just compensation was paid, in order to eliminate the issue of the constant fluctuation and
inflation of the value of the currency over time. In the Courts own words:
The Bulacan trial court, in its 1979 decision, was correct in imposing interest[s] on the
zonal value of the property to be computed from the time petitioner instituted
condemnation proceedings and "took" the property in September 1969. This allowance of
interest on the amount found to be the value of the property as of the time of the taking
computed, being an effective forbearance, at 12% per annum should help eliminate the
issue of the constant fluctuation and inflation of the value of the currency over time.
We subsequently upheld Republics 12% per annum interest rate on the unpaid
expropriation compensation in the following cases: Reyes v. National Housing
Authority, Land Bank of the Philippines v. Wycoco, Republic v. Court of Appeals, Land
Bank of the Philippines v. Imperial, Philippine Ports Authority v. Rosales-Bondoc, and
Curata v. Philippine Ports Authority.
These were the established rulings that stood before this Court issued the currently
assailed Resolution of December 4, 2009. These would be the rulings this Court shall
reverse and de-establish if we maintain and affirm our ruling deleting the 12% interest on
the unpaid balance of compensation due for properties already taken.
Under the circumstances of the present case, we see no compelling reason to depart from
the rule that Republic firmly established. Let it be remembered that shorn of its eminent
domain and social justice aspects, what the agrarian land reform program involves is the
purchase by the government, through the LBP, of agricultural lands for sale and
distribution to farmers. As a purchase, it involves an exchange of values the landholdings
in exchange for the LBPs payment. In determining the just compensation for this
exchange, however, the measure to be borne in mind is not the taker's gain but the
owner's loss25cra1aw since what is involved is the takeover of private property under the
States coercive power. As mentioned above, in the value-for-value exchange in an
eminent domain situation, the State must ensure that the individual whose property is
taken is not shortchanged and must hence carry the burden of showing that the "just
compensation" requirement of the Bill of Rights is satisfied.
The owners loss, of course, is not only his property but also its income-generating
potential. Thus, when property is taken, full compensation of its value must immediately
156
be paid to achieve a fair exchange for the property and the potential income lost. The just
compensation is made available to the property owner so that he may derive income from
this compensation, in the same manner that he would have derived income from his
expropriated property. If full compensation is not paid for property taken, then the State
must make up for the shortfall in the earning potential immediately lost due to the taking,
and the absence of replacement property from which income can be derived; interest on
the unpaid compensation becomes due as compliance with the constitutional mandate on
eminent domain and as a basic measure of fairness.
In the context of this case, when the LBP took the petitioners landholdings without the
corresponding full payment, it became liable to the petitioners for the income the
landholdings would have earned had they not immediately been taken from the
petitioners. What is interesting in this interplay, under the developments of this case, is
that the LBP, by taking landholdings without full payment while holding on at the same
time to the interest that it should have paid, effectively used or retained funds that should
go to the landowners and thereby took advantage of these funds for its own account.
From this point of view, the December 19, 2007 Resolution deleting the award of 12%
interest is not only patently and legally wrong, but is also morally unconscionable for being
grossly unfair and unjust. If the interest on the just compensation due in reality the
equivalent of the fruits or income of the landholdings would have yielded had these lands
not been taken would be denied, the result is effectively a confiscatory action by this Court
in favor of the LBP. We would be allowing the LBP, for twelve long years, to have free use
of the interest that should have gone to the landowners. Otherwise stated, if we continue
to deny the petitioners present motion for reconsideration, we would illogically and without
much thought to the fairness that the situation demands uphold the interests of the LBP,
not only at the expense of the landowners but also that of substantial justice as well.
Lest this Court be a party to this monumental unfairness in a social program aimed at
fostering balance in our society, we now have to ring the bell that we have muted in the
past, and formally declare that the LBPs position is legally and morally wrong. To do less
than this is to leave the demands of the constitutional just compensation standard (in
terms of law) and of our own conscience (in terms of morality) wanting and unsatisfied.
The Delay in Payment Issue
Separately from the demandability of interest because of the failure to fully pay for
property already taken, a recurring issue in the case is the attribution of the delay.
That delay in payment occurred is not and cannot at all be disputed. While the LBP
claimed that it made initial payments ofP411,769,168.32 (out of the principal sum due of
P1,383,179,000.00), the undisputed fact is that the petitioners were deprived of their lands
on December 9, 1996 (when titles to their landholdings were cancelled and transferred to
the Republic of the Philippines), andreceived full payment of the principal amount due
them only on May 9, 2008.
In the interim, they received no income from their landholdings because these
landholdings had been taken. Nor did they receive adequate income from what should
replace the income potential of their landholdings because the LBP refused to pay interest
while withholding the full amount of the principal of the just compensation due by claiming

a grossly low valuation. This sad state continued for more than a decade. In any language
and by any measure, a lengthy delay in payment occurred.
An important starting point in considering attribution for the delay is that the petitioners
voluntarily offered to sell their landholdings to the governments land reform program; they
themselves submitted their Voluntary Offer to Sell applications to the DAR, and they fully
cooperated with the governments program. The present case therefore is not one where
substantial conflict arose on the issue of whether expropriation is proper; the petitioners
voluntarily submitted to expropriation and surrendered their landholdings, although they
contested the valuation that the government made.
Presumably, had the landholdings been properly valued, the petitioners would have
accepted the payment of just compensation and there would have been no need for them
to go to the extent of filing a valuation case. But, as borne by the records, the petitioners
lands were grossly undervalued by the DAR, leaving the petitioners with no choice but to
file actions to secure what is justly due them.
The DARs initial gross undervaluation started the cycle of court actions that followed,
where the LBP eventually claimed that it could not be faulted for seeking judicial recourse
to defend the governments and its own interests in light of the petitioners valuation claims.
This LBP claim, of course, conveniently forgets that at the root of all these valuation
claims and counterclaims was the initial gross undervaluation by DAR that the LBP stoutly
defended. At the end, this undervaluation was proven incorrect by no less than this Court;
the petitioners were proven correct in their claim, and the correct valuation more than fivefold the initial DAR valuation was decreed and became final.
All these developments cannot now be disregarded and reduced to insignificance. In
blunter terms, the government and the LBP cannot now be heard to claim that they were
simply protecting their interests when they stubbornly defended their undervalued
positions before the courts. The more apt and accurate statement is that they adopted a
grossly unreasonable position and the adverse developments that followed, particularly
the concomitant delay, should be directly chargeable to them.
To be sure, the petitioners were not completely correct in the legal steps they took in their
valuation claims. They initially filed their valuation claim before the DARAB instead of
immediately seeking judicial intervention. The DARAB, however, contributed its share to
the petitioners error when it failed or refused to act on the valuation petitions for more than
three (3) years. Thus, on top of the DAR undervaluation was the DARAB inaction after the
petitioners landholdings had been taken. This Courts Decision of February 6, 2007 duly
noted this and observed:
It is not controverted that this case started way back on 12 October 1995, when AFC and
HPI voluntarily offered to sell the properties to the DAR. In view of the failure of the parties
to agree on the valuation of the properties, the Complaint for Determination of Just
Compensation was filed before the DARAB on 14 February 1997. Despite the lapse of
more than three years from the filing of the complaint, the DARAB failed to render a
decision on the valuation of the land. Meantime, the titles over the properties of AFC and
HPI had already been cancelled and in their place a new certificate of title was issued in
the name of the Republic of the Philippines, even as far back as 9 December 1996. A
period of almost 10 years has lapsed. For this reason, there is no dispute that this case
157
has truly languished for a long period of time, the delay being mainly attributable to both
official inaction and indecision, particularly on the determination of the amount of just
compensation, to the detriment of AFC and HPI, which to date, have yet to be fully
compensated for the properties which are already in the hands of farmer-beneficiaries,
who, due to the lapse of time, may have already converted or sold the land awarded to
them.
Verily, these two cases could have been disposed with dispatch were it not for LBPs
counsel causing unnecessary delay. At the inception of this case, DARAB, an agency of
the DAR which was commissioned by law to determine just compensation, sat on the
cases for three years, which was the reason that AFC and HPI filed the cases before the
RTC. We underscore the pronouncement of the RTC that "the delay by DARAB in the
determination of just compensation could only mean the reluctance of the Department of
Agrarian Reform and the Land Bank of the Philippines to pay the claim of just
compensation by corporate landowners."
To allow the taking of landowners properties, and to leave them empty-handed while
government withholds compensation is undoubtedly oppressive.
These statements cannot but be true today as they were when we originally decided the
case and awarded 12% interest on the balance of the just compensation due. While the
petitioners were undisputedly mistaken in initially seeking recourse through the DAR, this
agency itself hence, the government committed a graver transgression when it failed to
act at all on the petitioners complaints for determination of just compensation.
In sum, in a balancing of the attendant delay-related circumstances of this case, delay
should be laid at the doorsteps of the government, not at the petitioners. We conclude,
too, that the government should not be allowed to exculpate itself from this delay and
should suffer all the consequences the delay caused.
The LBPs arguments on the applicability of cases imposing 12% interest
The LBP claims in its Comment that our rulings in Republic v. Court of Appeals, Reyes v.
National Housing Authority, and Land Bank of the Philippines v. Imperial, cannot be
applied to the present case.
According to the LBP, Republic is inapplicable because, first, the landowners in Republic
remained unpaid, notwithstanding the fact that the award for just compensation had
already been fixed by final judgment; in the present case, the Court already acknowledged
that "pertinent amounts" were deposited in favor of the landowners within 14 months from
the filing of their complaint. Second, while Republic involved an ordinary expropriation
case, the present case involves expropriation for agrarian reform. Finally, the just
compensation in Republic remained unpaid notwithstanding the finality of judgment, while
the just compensation in the present case was immediately paid in full after LBP received
a copy of the Courts resolution
We find no merit in these assertions.
As we discussed above, the "pertinent amounts" allegedly deposited by LBP were mere
partial payments that amounted to a measly 5% of the actual value of the properties
expropriated. They could be the basis for the immediate taking of the expropriated

property but by no stretch of the imagination can these nominal amounts be considered
"pertinent" enough to satisfy the full requirement of just compensation i.e., the full and fair
equivalent of the expropriated property, taking into account its income potential and the
foregone income lost because of the immediate taking.
We likewise find no basis to support the LBPs theory that Republic and the present case
have to be treated differently because the first involves a "regular" expropriation case,
while the present case involves expropriation pursuant to the countrys agrarian reform
program. In both cases, the power of eminent domain was used and private property was
taken for public use. Why one should be different from the other, so that the just
compensation ruling in one should not apply to the other, truly escapes us. If there is to be
a difference, the treatment of agrarian reform expropriations should be stricter and on a
higher plane because of the governments societal concerns and objectives. To be sure,
the government cannot attempt to remedy the ills of one sector of society by sacrificing the
interests of others within the same society.
Finally, we note that the finality of the decision (that fixed the value of just compensation)
in Republic was not a material consideration for the Court in awarding the landowners
12% interest. The Court, in Republic, simply affirmed the RTC ruling imposing legal
interest on the amount of just compensation due. In the process, the Court determined
that the legal interest should be 12% after recognizing that the just compensation due was
effectively a forbearance on the part of the government. Had the finality of the judgment
been the critical factor, then the 12% interest should have been imposed from the time the
RTC decision fixing just compensation became final. Instead, the 12% interest was
imposed from the time that the Republic commenced condemnation proceedings and
"took" the property.
The LBP additionally asserts that the petitioners erroneously relied on the ruling in Reyes
v. National Housing Authority. The LBP claims that we cannot apply Reyes because it
involved just compensation that remained unpaid despite the finality of the expropriation
decision. LBPs point of distinction is that just compensation was immediately paid in the
present case upon the Courts determination of the actual value of the expropriated
properties. LBP claims, too, that in Reyes, the Court established that the refusal of the
NHA to pay just compensation was unfounded and unjustified, whereas the LBP in the
present case clearly demonstrated its willingness to pay just compensation. Lastly, in
Reyes, the records showed that there was an outstanding balance that ought to be paid,
while the element of an outstanding balance is absent in the present case.
Contrary to the LBPs opinion, the imposition of the 12% interest in Reyes did not depend
on either the finality of the decision of the expropriation court, or on the finding that the
NHAs refusal to pay just compensation was unfounded and unjustified. Quite clearly, the
Court imposed 12% interest based on the ruling in Republic v. Court of Appeals that "x x x
if property is taken for public use before compensation is deposited with the court having
jurisdiction over the case, the final compensation must include interest[s] on its just value
to be computed from the time the property is taken to the time when compensation is
actually paid or deposited with the court. In fine, between the taking of the property and
the actual payment, legal interest[s] accrue in order to place the owner in a position as
good as (but not better than) the position he was in before the taking
occurred."29cra1aw This is the same legal principle applicable to the present case, as
discussed above.
158
While the LBP immediately paid the remaining balance on the just compensation due to
the petitioners after this Court had fixed the value of the expropriated properties, it
overlooks one essential fact from the time that the State took the petitioners properties
until the time that the petitioners were fully paid, almost 12 long years passed. This is the
rationale for imposing the 12% interest in order to compensate the petitioners for the
income they would have made had they been properly compensated for their properties at
the time of the taking.
Finally, the LBP insists that the petitioners quoted our ruling in Land Bank of the
Philippines v. Imperial out of context. According to the LBP, the Court imposed legal
interest of 12% per annum only after December 31, 2006, the date when the decision on
just compensation became final.
The LBP is again mistaken. The Imperial case involved land that was expropriated
pursuant to Presidential Decree No. 27, and fell under the coverage of DAR Administrative
Order (AO) No. 13.31cra1aw This AO provided for the payment of a 6% annual interest if
there is any delay in payment of just compensation. However, Imperial was decided in
2007 and AO No. 13 was only effective up to December 2006. Thus, the Court, relying on
our ruling in the Republic case, applied the prevailing 12% interest ruling to the period
when the just compensation remained unpaid after December 2006. It is for this reason
that December 31, 2006 was important, not because it was the date of finality of the
decision on just compensation.
The 12% Interest Rate and the Chico-Nazario Dissent
To fully reflect the concerns raised in this Courts deliberations on the present case, we feel
it appropriate to discuss the Justice Minita Chico-Nazarios dissent from the Courts
December 4, 2009 Resolution.
While Justice Chico-Nazario admitted that the petitioners were entitled to the 12% interest,
she saw it appropriate to equitably reduce the interest charges from P1,331,124,223.05
to P400,000,000.00. In support of this proposal, she enumerated various cases where the
Court, pursuant to Article 1229 of the Civil Code, equitably reduced interest charges.
We differ with our esteemed colleagues views on the application of equity.
While we have equitably reduced the amount of interest awarded in numerous cases in
the past, those cases involved interest that was essentially consensual in nature, i.e.,
interest stipulated in signed agreements between the contracting parties. In contrast, the
interest involved in the present case "runs as a matter of law and follows as a matter of
course from the right of the landowner to be placed in as good a position as money can
accomplish, as of the date of taking."
Furthermore, the allegedly considerable payments made by the LBP to the petitioners
cannot be a proper premise in denying the landowners the interest due them under the
law and established jurisprudence. If the just compensation for the landholdings is
considerable, this compensation is not undue because the landholdings the owners gave
up in exchange are also similarly considerable AFC gave up an aggregate landholding of
640.3483 hectares, while HPIs gave up 805.5308 hectares. When the petitioners
surrendered these sizeable landholdings to the government, the incomes they gave up
were likewise sizeable and cannot in any way be considered miniscule. The incomes due
from these properties, expressed as interest, are what the government should return to

the petitioners after the government took over their lands without full payment of just
compensation. In other words, the value of the landholdings themselves should be
equivalent to the principal sum of the just compensation due; interest is due and should be
paid to compensate for the unpaid balance of this principal sum after taking has been
completed. This is the compensation arrangement that should prevail if such
compensation is to satisfy the constitutional standard of being "just."
Neither can LBPs payment of the full compensation due before the finality of the judgment
of this Court justify the reduction of the interest due them. To rule otherwise would be to
forget that the petitioners had to wait twelve years from the time they gave up their lands
before the government fully paid the principal of the just compensation due them. These
were twelve years when they had no income from their landholdings because these
landholdings have immediately been taken; no income, or inadequate income, accrued to
them from the proceeds of compensation payment due them because full payment has
been withheld by government.
If the full payment of the principal sum of the just compensation is legally significant at all
under the circumstances of this case, the significance is only in putting a stop to the
running of the interest due because the principal of the just compensation due has been
paid. To close our eyes to these realities is to condone what is effectively a confiscatory
action in favor of the LBP.
That the legal interest due is now almost equivalent to the principal to be paid is not per se
an inequitable or unconscionable situation, considering the length of time the interest has
remained unpaid almost twelve long years. From the perspective of interest income,
twelve years would have been sufficient for the petitioners to double the principal, even if
invested conservatively, had they been promptly paid the principal of the just
compensation due them. Moreover, the interest, however enormous it may be, cannot be
inequitable and unconscionable because it resulted directly from the application of law and
jurisprudence standards that have taken into account fairness and equity in setting the
interest rates due for the use or forebearance of money.
If the LBP sees the total interest due to be immense, it only has itself to blame, as this
interest piled up because it unreasonably acted in its valuation of the landholdings and
consequently failed to promptly pay the petitioners. To be sure, the consequences of this
failure i.e., the enormity of the total interest due and the alleged financial hemorrhage the
LBP may suffer should not be the very reason that would excuse it from full compliance.
To so rule is to use extremely flawed logic. To so rule is to disregard the question of how
the LBP, a government financial institution that now professes difficulty in paying interest
at 12% per annum, managed the funds that it failed to pay the petitioners for twelve long
years.
It would be utterly fallacious, too, to argue that this Court should tread lightly in imposing
liabilities on the LBP because this bank represents the government and, ultimately, the
public interest. Suffice it to say that public interest refers to what will benefit the public, not
necessarily the government and its agencies whose task is to contribute to the benefit of
the public. Greater public benefit will result if government agencies like the LBP are
conscientious in undertaking its tasks in order to avoid the situation facing it in this case.
Greater public interest would be served if it can contribute to the credibility of the
159
governments land reform program through the conscientious handling of its part of this
program.
As our last point, equity and equitable principles only come into full play when a gap exists
in the law and jurisprudence. As we have shown above, established rulings of this Court
are in place for full application to the present case. There is thus no occasion for the
equitable consideration that Justice Chico-Nazario suggested.
The Amount Due the Petitioners as Just Compensation
As borne by the records, the 12% interest claimed is only on the difference between the
price of the expropriated lands (determined with finality to be P1,383,179,000.00) and the
amount of P411,769,168.32 already paid to the petitioners. The difference between these
figures amounts to the remaining balance of P971,409,831.68 that was only paid on May
9, 2008.
As above discussed, this amount should bear interest at the rate of 12% per annum from
the time the petitioners properties were taken on December 9, 1996 up to the time of
payment. At this rate, the LBP now owes the petitioners the total amount of One Billion
Three Hundred Thirty-One Million One Hundred Twenty-Four Thousand Two Hundred
Twenty-Three and 05/100 Pesos (P1,331,124,223.05), computed as follows:
Just Compensation P971,409,831.68
Legal Interest from 12/09/1996
To 05/09/2008 @ 12%/annum
12/09/1996 to 12/31/1996 23 days 7,345,455.17
01/01/1997 to 12/31/2007 11 years 1,282,260,977.82
01/01/2008 to 05/09/2008 130 days 41,517,790.07
P1,331,124,223.05
The Immutability of Judgment Issue
As a rule, a final judgment may no longer be altered, amended or modified, even if the
alteration, amendment or modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law and regardless of what court, be it the highest Court of
the land, rendered it.36cra1aw In the past, however, we have recognized exceptions to
this rule by reversing judgments and recalling their entries in the interest of substantial
justice and where special and compelling reasons called for such actions.
Notably, in San Miguel Corporation v. National Labor Relations Commission, Galman v.
Sandiganbayan, Philippine Consumers Foundation v. National Telecommunications
Commission, and Republic v. de los Angeles, we reversed our judgment on the second
motion for reconsideration, while in Vir-Jen Shipping and Marine Services v. National
Labor Relations Commission, we did so on a third motion for reconsideration. In Cathay
Pacific v. Romillo and Cosio v. de Rama, we modified or amended our ruling on the
second motion for reconsideration. More recently, in the cases of Munoz v. Court of
Appeals, Tan Tiac Chiong v. Hon. Cosico, Manotok IV v. Barque, and Barnes v. Padilla, we
recalled entries of judgment after finding that doing so was in the interest of substantial
justice. In Barnes, we said:
x x x Phrased elsewise, a final and executory judgment can no longer be attacked by any
of the parties or be modified, directly or indirectly, even by the highest court of the land.

However, this Court has relaxed this rule in order to serve substantial justice considering
(a) matters of life, liberty, honor or property, (b) the existence of special or compelling
circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the fault
or negligence of the party favored by the suspension of the rules, (e) a lack of any
showing that the review sought is merely frivolous and dilatory, and (f) the other party will
not be unjustly prejudiced thereby.
Invariably, rules of procedure should be viewed as mere tools designed to facilitate the
attainment 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.
Even the Rules of Court reflects this principle. The power to suspend or even disregard
rules can be so pervasive and compelling as to alter even that which this Court itself had
already declared to be final.
That the issues posed by this case are of transcendental importance is not hard to discern
from these discussions. A constitutional limitation, guaranteed under no less than the allimportant Bill of Rights, is at stake in this case: how can compensation in an eminent
domain be "just" when the payment for the compensation for property already taken has
been unreasonably delayed? To claim, as the assailed Resolution does, that only private
interest is involved in this case is to forget that an expropriation involves the government
as a necessary actor. It forgets, too, that under eminent domain, the constitutional limits or
standards apply to government who carries the burden of showing that these standards
have been met. Thus, to simply dismiss this case as a private interest matter is an
extremely shortsighted view that this Court should not leave uncorrected.
As duly noted in the above discussions, this issue is not one of first impression in our
jurisdiction; the consequences of delay in the payment of just compensation have been
settled by this Court in past rulings. Our settled jurisprudence on the issue alone accords
this case primary importance as a contrary ruling would unsettle, on the flimsiest of
grounds, all the rulings we have established in the past.
More than the stability of our jurisprudence, the matter before us is of transcendental
importance to the nation because of the subject matter involved agrarian reform, a societal
objective that the government has unceasingly sought to achieve in the past half century.
This reform program and its objectives would suffer a major setback if the government
falters or is seen to be faltering, wittingly or unwittingly, through lack of good faith in
implementing the needed reforms. Truly, agrarian reform is so important to the national
agenda that the Solicitor General, no less, pointedly linked agricultural lands, its
ownership and abuse, to the idea of revolution. This linkage, to our mind, remains valid
even if the landowner, not the landless farmer, is at the receiving end of the distortion of
the agrarian reform program.
As we have ruled often enough, rules of procedure should not be applied in a very rigid,
technical sense; rules of procedure are used only to help secure, not override, substantial
justice. As we explained in Ginete v. Court of Appeals:
Let it be emphasized that the rules of procedure should be viewed as mere tools designed
to facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be
160
eschewed. Even the Rules of Court reflect this principle. The power to suspend or even
disregard rules can be so pervasive and compelling as to alter even that which this Court
itself has already declared to be final, as we are now constrained to do in the instant case.
xxxx
The emerging trend in the rulings of this Court is to afford every party litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities. Time and again, this Court has consistently held that rules must not be
applied rigidly so as not to override substantial justice.
Similarly, in de Guzman v. Sandiganbayan, we had occasion to state:
The Rules of Court was conceived and promulgated to set forth guidelines in the
dispensation of justice but not to bind and chain the hand that dispenses it, for otherwise,
courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That
is precisely why courts in rendering justice have always been, as they ought to be,
conscientiously guided by the norm that when on the balance, technicalities take a
backseat against substantive rights, and not the other way around. Truly then,
technicalities, in the appropriate language of Justice Makalintal, "should give way to the
realities of the situation.
We made the same recognition in Barnes, on the underlying premise that a courts
primordial and most important duty is to render justice; in discharging the duty to render
substantial justice, it is permitted to re-examine even a final and executory judgment.
Based on all these considerations, particularly the patently illegal and erroneous
conclusion that the petitioners are not entitled to 12% interest, we find that we are dutybound to re-examine and overturn the assailed Resolution. We shall completely and
inexcusably be remiss in our duty as defenders of justice if, given the chance to make the
rectification, we shall let the opportunity pass.
Attorneys Fees
We are fully aware that the RTC has awarded the petitioners attorneys fees when it fixed
the just compensation due and decreed that interest of 12% should be paid on the
balance outstanding after the taking of the petitioners landholdings took place. The
petitioners, however, have not raised the award of attorneys fees as an issue in the
present motion for reconsideration. For this reason, we shall not touch on this issue at all
in this Resolution.
WHEREFORE, premises considered, we GRANT the petitioners motion for
reconsideration. The Court En Bancs Resolution dated December 4, 2009, as well as the
Third Divisions Resolutions dated April 30, 2008 and December 19, 2007, are hereby
REVERSED and SET ASIDE.
The respondent Land Bank of the Philippines is hereby ORDERED to pay petitioners Apo
Fruits Corporation and Hijo Plantation, Inc. interest at the rate of 12% per annum on the
unpaid balance of the just compensation, computed from the date the Government took
the properties on December 9, 1996, until the respondent Land Bank of the Philippines
paid on May 9, 2008 the balance on the principal amount.

Unless the parties agree to a shorter payment period, payment shall be in monthly
installments at the rate of P60,000,000.00 per month until the whole amount owing,
including interest on the outstanding balance, is fully paid.
Costs against the respondent Land Bank of the Philippines.
SO ORDERED.
SPOUSES LETICIA & JOSE ERVIN ABAD vs. FIL-HOMES REALTY
DEVELOPMENT CORPORATION (G.R. No. 189239 : November 24, 2010)10
and
Fil-Homes Realty and Development Corporation and Magdiwang Realty Corporation

(respondents), co-owners of two lots situated in Sucat, Paraaque City and covered by
Transfer Certificates of Title Nos. 21712 and 21713, filed a complaint for unlawful detainer
on May 7, 2003 against above-named petitioners before the Paraaque Metropolitan Trial
Court (MeTC).
Respondents alleged that petitioners, through tolerance, had occupied the subject lots
since 1980 but ignored their repeated demands to vacate them.
Petitioners countered that there is no possession by tolerance for they have been in
adverse, continuous and uninterrupted possession of the lots for more than 30 years; and
that respondents predecessor-in-interest, Pilipinas Development Corporation, had no title
to the lots. In any event, they contend that the question of ownership must first be settled
before the issue of possession may be resolved.
During the pendency of the case or on June 30, 2004, the City of Paraaque filed
expropriation proceedings covering the lots before the Regional Trial Court of Paraaque
with the intention of establishing a socialized housing project therein for distribution to the
occupants including petitioners. A writ of possession was consequently issued and a
Certificate of Turn-over given to the City.
Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the unlawful
detainer case against petitioners, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants Leticia and Ervin Abad et. als. ordering the latter and all persons claiming
rights under them to VACATE and SURRENDER possession of the premises (Lots
covered by TCT NOS. (71065) 21712 and (71066) 21713 otherwise known as Purok I
Silverio Compound, Barangay San Isidro, Paraaque City to plaintiff and to PAY the said
plaintiff as follows:
1. The reasonable compensation in the amount of P20,000.00 a month
commencing November 20, 2002 and every month thereafter until the defendants shall
have finally vacated the premises and surrender peaceful possession thereof to the
plaintiff;
2. P20,000.00 as and for attorneys fees, and finally
3. Costs of suit.
10INDIVIDUAL RIGHTS (DUE PROCESS AND EQUAL PROTECTION AS LIMITATIONS ON

POLICE POWER, EMINENT DOMAIN AND TAXATION) E. DUE PROCESS AND EMINENT DOMAIN
161
SO ORDERED.
The MeTC held that as no payment had been made to respondents for the lots, they still
maintain ownership thereon. It added that petitioners cannot claim a better right by virtue
of the issuance of a Writ of Possession for the project beneficiaries have yet to be named.
On appeal, the Regional Trial Court (RTC), by Decision of September 4, 2008,
[2]cra reversed the MeTC decision and dismissed respondents complaint in this wise:
x x x The court a quo ruled that the case filed by plaintiffs (respondents herein) is unlawful
detainer as shown by the allegations of the Complaint. The ruling of the court a quo is not
accurate. It is not the allegations of the Complaint that finally determine whether a case is
unlawful detainer, rather it is the evidence in the case.
Unlawful detainer requires the significant element of tolerance. Tolerance of the
occupation of the property must be present right from the start of the defendants
possession. The phrase from the start of defendants possession is significant. When
there is no tolerance right from the start of the possession sought to be recovered, the
case of unlawful detainer will not prosper.
The RTC went on to rule that the issuance of a writ of possession in favor of the City bars
the continuation of the unlawful detainer proceedings, and since the judgment had already
been rendered in the expropriation proceedings which effectively turned over the lots to
the City, the MeTC has no jurisdiction to disregard the . . . final judgment and writ of
possession due to non-payment of just compensation:
The Writ of Possession shows that possession over the properties subject of this case had
already been given to the City of Paraaque since January 19, 2006 after they were
expropriated. It is serious error for the court a quo to rule in the unlawful detainer case that
Magdiwang Realty Corporation and Fil-Homes Realty and Development Corporation could
still be given possession of the properties which were already expropriated in favor of the
City of Paraaque.
There is also another serious lapse in the ruling of the court a quo that the case for
expropriation in the Regional Trial Court would not bar, suspend or abate the ejectment
proceedings. The court a quo had failed to consider the fact that the case for expropriation
was already decided by the Regional Trial Court, Branch 196 way back in the year 2006 or
2 years before the court a quo rendered its judgment in the unlawful detainer case in the
year 2008. In fact, there was already a Writ of Possession way back in the year 1996 (sic)
issued in the expropriation case by the Regional Trial Court, Branch 196. The court a quo
has no valid reason to disregard the said final judgment and the writ of possession already
issued by the Regional Trial Court in favor of the City of Paraaque and against
Magdiwang Realty Corporation and Fil-Homes Realty Development Corporation and make
another judgment concerning possession of the subject properties contrary to the final
judgment of the Regional Trial Court, Branch 196.
Before the Court of Appeals where respondents filed a petition for review, they maintained
that respondents act of allowing several years to pass without requiring [them] to vacate
nor filing an ejectment case against them amounts to acquiescence or tolerance of their
possession.

By Decision of May 27, 2009, the appellate court, noting that petitioners did not present
evidence to rebut respondents allegation of possession by tolerance, and considering
petitioners admission that they commenced occupation of the property without the
permission of the previous owner - Pilipinas Development Corporation - as indicium of
tolerance by respondents predecessor-in-interest, ruled in favor of respondents. Held the
appellate court:
Where the defendants entry upon the land was with plaintiffs tolerance from the date and
fact of entry, unlawful detainer proceedings may be instituted within one year from the
demand on him to vacate upon demand. The status of such defendant is analogous to
that of a tenant or lessee, the term of whose lease, has expired but whose occupancy is
continued by the tolerance of the lessor. The same rule applies where the defendant
purchased the house of the former lessee, who was already in arrears in the payment of
rentals, and thereafter occupied the premises without a new lease contract with the
landowner.
Respecting the issuance of a writ of possession in the expropriation proceedings, the
appellate court, citing Republic v. Gingoyon, held the same does not signify the
completion of the expropriation proceedings. Thus it disposed:
WHEREFORE, premises considered, the instant Petition is GRANTED. The assailed
Decision of the Court a quo is REVOKED and SET ASIDE. The Decision of the
Metropolitan Trial Court dated March 3, 2008 is hereby REINSTATED with
MODIFICATION [by] deleting the award for attorneys fees.
SO ORDERED.
Petitioners motion for reconsideration was denied by Resolution dated August 26, 2009,
hence, the filing of the present petition for review.
The petition fails.
In the exercise of the power of eminent domain, the State expropriates private property for
public use upon payment of just compensation. A socialized housing project falls within the
ambit of public use as it is in furtherance of the constitutional provisions on social justice.
As a general rule, ejectment proceedings, due to its summary nature, are not suspended
or their resolution held in abeyance despite the pendency of a civil action regarding
ownership.
Section 1 of Commonwealth Act No. 538 enlightens, however:
Section 1. When the Government seeks to acquire, through purchase or expropriation
proceedings, lands belonging to any estate or chaplaincy (cappellania), any action for
ejectment against the tenants occupying said lands shall be automatically suspended, for
such time as may be required by the expropriation proceedings or the necessary
negotiations for the purchase of the lands, in which latter case, the period of suspension
shall not exceed one year.
162
To avail himself of the benefits of the suspension, the tenants shall pay to the landowner
the current rents as they become due or deposit the same with the court where the action
for ejectment has been instituted.
Petitioners did not comply with any of the acts mentioned in the law to avail of the benefits
of the suspension. They nevertheless posit that since the lots are the subject of
expropriation proceedings, respondents can no longer assert a better right of possession;
and that the City Ordinance authorizing the initiation of expropriation proceedings
designated them as beneficiaries of the lots, hence, they are entitled to continue staying
there.
Petitioners position does not lie.
The exercise of expropriation by a local government unit is covered by Section 19 of the
Local Government Code (LGC):
SEC. 19. Eminent Domain. A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided,
however, That the power of eminent domain may not be exercised unless a valid and
definite offer has been previously made to the owner, and such offer was not accepted:
Provided, further, That the local government unit may immediately take possession of the
property upon the filing of the expropriation proceedings and upon making a deposit with
the proper court of at least fifteen percent (15%) of the fair market value of the property
based on the current tax declaration of the property to be expropriated: Provided, finally,
That the amount to be paid for the expropriated property shall be determined by the
proper court, based on the fair market value of the property.
Lintag v. National Power Corporation clearly outlines the stages of expropriation, viz:
Expropriation of lands consists of two stages:
The first is concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a lawful right to take the property sought to
be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the complaint
x x x.
The second phase of the eminent domain action is concerned with the determination by
the court of "the just compensation for the property sought to be taken." This is done by
the court with the assistance of not more than three (3) commissioners x x x.
It is only upon the completion of these two stages that expropriation is said to have been
completed. The process is not complete until payment of just compensation. Accordingly,
the issuance of the writ of possession in this case does not write finis to the expropriation
proceedings. To effectuate the transfer of ownership, it is necessary for the NPC to pay
the property owners the final just compensation.

In the present case, the mere issuance of a writ of possession in the expropriation
proceedings did not transfer ownership of the lots in favor of the City. Such issuance was
only the first stage in expropriation. There is even no evidence that judicial deposit had
been made in favor of respondents prior to the Citys possession of the lots, contrary to
Section 19 of the LGC.
Respecting petitioners claim that they have been named beneficiaries of the lots, the city
ordinance authorizing the initiation of expropriation proceedings does not state
so. Petitioners cannot thus claim any right over the lots on the basis of the ordinance.
Even if the lots are eventually transferred to the City, it is non sequitur for petitioners to
claim that they are automatically entitled to be beneficiaries thereof. For certain
requirements must be met and complied with before they can be considered to be
beneficiaries.
In another vein, petitioners posit that respondents failed to prove that their possession is
by mere tolerance. This too fails. Apropos is the ruling in Calubayan v. Pascual:
In allowing several years to pass without requiring the occupant to vacate the premises
nor filing an action to eject him, plaintiffs have acquiesced to defendants possession and
use of the premises. It has been held that a person who occupies the land of another at
the latters tolerance or permission, without any contract between them, is necessarily
bound by an implied promise that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against them. The status of the defendant is
analogous to that of a lessee or tenant whose term of lease has expired but whose
occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation
or withholding of possession is to be counted from the date of the demand to vacate.
Respondents bought the lots from Pilipinas Development Corporation in 1983. They
stepped into the shoes of the seller with respect to its relationship with petitioners. Even if
early on respondents made no demand or filed no action against petitioners to eject them
from the lots, they thereby merely maintained the status quo allowed petitioners
possession by tolerance.
WHEREFORE, the petition for review is DENIED.
SO ORDERED.
F. Equal Protection
PATRICIO DUMLAO vs. COMMISSION ON ELECTION (G.R. No. L-52245, January 22,
1980)
MELENCIO-HERRERA, J:
163
This is a Petition for Prohibition with Preliminary Injunction and/or Restraining Order filed
by petitioners, in their own behalf and all others allegedly similarly situated, seeking to
enjoin respondent Commission on Elections (COMELEC) from implementing certain
provisions of Batas Pambansa Big. 51, 52, and 53 for being unconstitutional.
The Petition alleges that petitioner, Patricio Dumlao, is a former Governor of Nueva
Vizcaya, who has filed his certificate of candidacy for said position of Governor in the
forthcoming elections of January 30, 1980. Petitioner, Romeo B. Igot, is a taxpayer, a
qualified voter and a member of the Bar who, as such, has taken his oath to support the
Constitution and obey the laws of the land. Petitioner, Alfredo Salapantan, Jr., is also a
taxpayer, a qualified voter, and a resident of San Miguel, Iloilo.
Petitioner Dumlao specifically questions the constitutionality of section 4 of Batas
Pambansa Blg. 52 as discriminatory and contrary to the equal protection and due process
guarantees of the Constitution. Said Section 4 provides:
Sec. 4. Special Disqualification in addition to violation of section 10 of Art. XI I-C of the
Constitution and disqualification mentioned in existing laws, which are hereby declared as
disqualification for any of the elective officials enumerated in section 1 hereof.
Any retired elective provincial city or municipal official who has received payment of the
retirement benefits to which he is entitled under the law, and who shall have been 6,5
years of age at the commencement of the term of office to which he seeks to be elected
shall not be qualified to run for the same elective local office from which he has retired
(Emphasis supplied)
Petitioner Dumlao alleges that the aforecited provision is directed insidiously against him,
and that the classification provided therein is based on "purely arbitrary grounds and,
therefore, class legislation."
For their part, petitioners igot and Salapantan, Jr. assail the validity of the following
statutory provisions:
Sec 7. Terms of Office Unless sooner removed for cause, all local elective officials
hereinabove mentioned shall hold office for a term of six (6) years, which shall commence
on the first Monday of March 1980.
.... (Batas Pambansa Blg. 51) Sec. 4.
Sec. 4. ...
Any person who has committed any act of disloyalty to the State, including acts amounting
to subversion, insurrection, rebellion or other similar crimes, shall not be qualified to be a
candidate for any of the offices covered by this Act, or to participate in any partisan
political activity therein:
provided that a judgment of conviction for any of the aforementioned crimes shall be
conclusive evidence of such fact and
the filing of charges for the commission of such crimes before a civil court or military
tribunal after preliminary investigation shall be prima fascie evidence of such fact.
... (Batas Pambansa Big. 52) (Paragraphing and Emphasis supplied).
Section 1. Election of certain Local Officials ... The election shall be held on January
30, 1980. (Batas Pambansa, Blg. 52)

Section 6. Election and Campaign Period The election period shall be fixed by the
Commission on Elections in accordance with Section 6, Art. XII-C of the Constitution. The
period of campaign shall commence on December 29, 1979 and terminate on January 28,
1980. (ibid.)
In addition to the above-cited provisions, petitioners Igot and Salapantan, Jr. also question
the accreditation of some political parties by respondent COMELEC, as authorized by
Batas Pambansa Blg. 53, on the ground that it is contrary to section 9(1)Art. XIIC of the
Constitution, which provides that a "bona fide candidate for any public office shall be it.
from any form of harassment and discrimination. "The question of accreditation will not be
taken up in this case but in that of Bacalso, et als. vs. COMELEC et als. No. L-52232)
where the issue has been squarely raised,
Petitioners then pray that the statutory provisions they have challenged be declared null
and void for being violative of the Constitution.
I . The procedural Aspect
At the outset, it should be stated that this Petition suffers from basic procedural infirmities,
hence, traditionally unacceptable for judicial resolution. For one, there is a misjoinder of
parties and actions. Petitioner Dumlao's interest is alien to that of petitioners Igot and
Salapantan Petitioner Dumlao does not join petitioners Igot and Salapantan in the burden
of their complaint, nor do the latter join Dumlao in his. The respectively contest completely
different statutory provisions. Petitioner Dumlao has joined this suit in his individual
capacity as a candidate. The action of petitioners Igot and Salapantan is more in the
nature of a taxpayer's suit. Although petitioners plead nine constraints as the reason of
their joint Petition, it would have required only a modicum more of effort tor petitioner
Dumlao, on one hand said petitioners lgot and Salapantan, on the other, to have filed
separate suits, in the interest of orderly procedure.
For another, there are standards that have to be followed inthe exercise of the function of
judicial review, namely (1) the existence of an appropriate case:, (2) an interest personal
and substantial by the party raising the constitutional question: (3) the plea that the
function be exercised at the earliest opportunity and (4) the necessity that the constiutional
question be passed upon in order to decide the case (People vs. Vera 65 Phil. 56 [1937]).
It may be conceded that the third requisite has been complied with, which is, that the
parties have raised the issue of constitutionality early enough in their pleadings.
This Petition, however, has fallen far short of the other three criteria.
A. Actual case and controversy.
It is basic that the power of judicial review is limited to the determination of actual cases
and controversies.
Petitioner Dumlao assails the constitutionality of the first paragraph of section 4 of Batas
Pambansa Blg. 52, quoted earlier, as being contrary to the equal protection clause
guaranteed by the Constitution, and seeks to prohibit respondent COMELEC from
implementing said provision. Yet, Dumlao has not been adversely affected by the
application of that provision. No petition seeking Dumlao's disqualification has been filed
164
before the COMELEC. There is no ruling of that constitutional body on the matter, which
this Court is being asked to review on Certiorari. His is a question posed in the abstract, a
hypothetical issue, and in effect, a petition for an advisory opinion from this Court to be
rendered without the benefit of a detailed factual record Petitioner Dumlao's case is clearly
within the primary jurisdiction (see concurring Opinion of now Chief Justice Fernando in
Peralta vs. Comelec, 82 SCRA 30, 96 [1978]) of respondent COMELEC as provided for in
section 2, Art. XII-C, for the Constitution the pertinent portion of which reads:
"Section 2. The Commission on Elections shall have the following power and functions:
1) xxx
2) Be the sole judge of all contests relating to the elections, returns and qualifications of all
members of the National Assembly and elective provincial and city officials.
The aforequoted provision must also be related to section 11 of Art. XII-C, which provides:
Section 11. Any decision, order, or ruling of the Commission may be brought to the
Supreme Court on certiorari by the aggrieved party within thirty days from his receipt of a
copy thereof.
B. Proper party.
The long-standing rule has been that "the person who impugns the validity of a statute
must have a personal and substantial interest in the case such that he has sustained, or
will sustain, direct injury as a result of its enforcement" (People vs. Vera, supra).
In the case of petitioners Igot and Salapantan, it was only during the hearing, not in their
Petition, that Igot is said to be a candidate for Councilor. Even then, it cannot be denied
that neither one has been convicted nor charged with acts of disloyalty to the State, nor
disqualified from being candidates for local elective positions. Neither one of them has
been calle ed to have been adversely affected by the operation of the statutory provisions
they assail as unconstitutional Theirs is a generated grievance. They have no personal
nor substantial interest at stake. In the absence of any litigate interest, they can claim no
locus standi in seeking judicial redress.
It is true that petitioners Igot and Salapantan have instituted this case as a taxpayer's suit,
and that the rule enunciated in People vs. Vera, above stated, has been relaxed in
Pascual vs. The Secretary of Public Works (110 Phil. 331 [1960], thus:
... it is well settled that the validity of a statute may be contested only by one who will
sustain a direct injury in consequence of its enforcement. Yet, there are many decisions
nullifying at the instance of taxpayers, laws providing for the disbursement of public funds,
upon the theory that "the expenditure of public funds, by an officer of the State for the
purpose of administering an unconstitutional act constitutes a misapplication of such
funds," which may be enjoined at the request of a taxpayer.
In the same vein, it has been held:
In the determination of the degree of interest essential to give the requisite standing to
attack the constitutionality of a statute, the general rule is that not only persons individually

affected, but also taxpayers have sufficient interest in preventing the illegal expenditure of
moneys raised by taxation and they may, therefore, question the constitutionality of
statutes requiring expenditure of public moneys. (Philippine Constitution Association, Inc.,
et als., vs. Gimenez, et als., 15 SCRA 479 [1965]).
However, the statutory provisions questioned in this case, namely, sec. 7, BP Blg. 51, and
sections 4, 1, and 6 BP Blg. 52, do not directly involve the disbursement of public funds.
While, concededly, the elections to be held involve the expenditure of public moneys,
nowhere in their Petition do said petitioners allege that their tax money is "being extracted
and spent in violation of specific constitutional protections against abuses of legislative
power" (Flast v. Cohen, 392 U.S., 83 [1960]), or that there is a misapplication of such
funds by respondent COMELEC (see Pascual vs. Secretary of Public Works, 110 Phil. 331
[1960]), or that public money is being deflected to any improper purpose. Neither do
petitioners seek to restrain respondent from wasting public funds through the enforcement
of an invalid or unconstitutional law. (Philippine Constitution Association vs. Mathay, 18
SCRA 300 [1966]), citing Philippine Constitution Association vs. Gimenez, 15 SCRA 479
[1965]). Besides, the institution of a taxpayer's suit, per se is no assurance of judicial
review. As held by this Court in Tan vs. Macapagal (43 SCRA 677 [1972]), speaking
through our present Chief Justice, this Court is vested with discretion as to whether or not
a taxpayer's suit should be entertained.
C. Unavoidability of constitutional question.
Again upon the authority of People vs. Vera, "it is a wellsettled rule that the
constitutionality of an act of the legislature will not be determined by the courts unless that
question is properly raised and presented in appropriate cases and is necessary to a
determination of the case; i.e., the issue of constitutionality must be the very lis mota
presented."
We have already stated that, by the standards set forth in People vs. Vera, the present is
not an "appropriate case" for either petitioner Dumlao or for petitioners Igot and
Salapantan. They are actually without cause of action. It follows that the necessity for
resolving the issue of constitutionality is absent, and procedural regularity would require
that this suit be dismissed.
II. The substantive viewpoint.
We have resolved, however, to rule squarely on two of the challenged provisions, the
Courts not being entirely without discretion in the matter. Thus, adherence to the strict
procedural standard was relaxed in Tinio vs. Mina(26 SCRA 512 [1968]); Edu vs. Ericta
(35 SCRA 481 [1970]); and in Gonzalez vs. Comelec (27 SCRA 835 [1969]), the Opinion
in the Tinio and Gonzalez cases having been penned by our present Chief Justice. The
reasons which have impelled us are the paramount public interest involved and the
proximity of the elections which will be held only a few days hence.
Petitioner Dumlao's contention that section 4 of BP Blg. 52 is discriminatory against him
personally is belied by the fact that several petitions for the disqualification of other
candidates for local positions based on the challenged provision have already been filed
with the COMELEC (as listed in p. 15, respondent's Comment). This tellingly overthrows
Dumlao's contention of intentional or purposeful discrimination.
165
The assertion that Section 4 of BP Blg. 52 is contrary to the safer guard of equal
protection is neither well taken. The constitutional guarantee of equal protection of the
laws is subject to rational classification. If the groupings are based on reasonable and real
differentiations, one class can be treated and regulated differently from another class. For
purposes of public service, employees 65 years of age, have been validly classified
differently from younger employees. Employees attaining that age are subject to
compulsory retirement, while those of younger ages are not so compulsorily retirable.
In respect of election to provincial, city, or municipal positions, to require that candidates
should not be more than 65 years of age at the time they assume office, if applicable to
everyone, might or might not be a reasonable classification although, as the Solicitor
General has intimated, a good policy of the law would be to promote the emergence of
younger blood in our political elective echelons. On the other hand, it might be that
persons more than 65 years old may also be good elective local officials.
Coming now to the case of retirees. Retirement from government service may or may not
be a reasonable disqualification for elective local officials. For one thing, there can also be
retirees from government service at ages, say below 65. It may neither be reasonable to
disqualify retirees, aged 65, for a 65 year old retiree could be a good local official just like
one, aged 65, who is not a retiree.
But, in the case of a 65-year old elective local official, who has retired from a provincial,
city or municipal office, there is reason to disqualify him from running for the same office
from which he had retired, as provided for in the challenged provision. The need for new
blood assumes relevance. The tiredness of the retiree for government work is present,
and what is emphatically significant is that the retired employee has already declared
himself tired and unavailable for the same government work, but, which, by virtue of a
change of mind, he would like to assume again. It is for this very reason that inequality will
neither result from the application of the challenged provision. Just as that provision does
not deny equal protection neither does it permit of such denial (see People vs. Vera, 65
Phil. 56 [1933]). Persons similarly situated are sinlilarly treated.
In fine, it bears reiteration that the equal protection clause does not forbid all legal
classification. What is proscribes is a classification which is arbitrary and unreasonable.
That constitutional guarantee is not violated by a reasonable classification based upon
substantial distinctions, where the classification is germane to the purpose of the law and
applies to all Chose belonging to the same class (Peralta vs. Comelec, 82 SCRA 30
[1978] citing Felwa vs. Salas, 18 SCRA 606 [1966]; Rafael v. Embroidery and Apparel
Control and Inspection Board, 21 SCRA 336 [1967]; Inchong etc., et al. vs. Hernandez
101 Phil. 1155 [1957]). The purpose of the law is to allow the emergence of younger blood
in local governments. The classification in question being pursuant to that purpose, it
cannot be considered invalid "even it at times, it may be susceptible to the objection that it
is marred by theoretical inconsistencies" (Chief Justice Fernando, The Constitution of the
Philippines, 1977 ed., p. 547).
There is an additional consideration. Absent herein is a showing of the clear invalidity of
the questioned provision. Well accepted is the rule that to justify the nullification of a law,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and
equivocal breach. Courts are practically unanimous in the pronouncement that laws shall
not be declared invalid unless the conflict with the Constitution is clear beyond reasonable

doubt (Peralta vs. COMELEC, 82 SCRA 55 [1978], citing Cooper vs. Telfair 4 Dall 14;
Dodd, Cases on Constitutional Law, 3rd ed. 1942, 56). Lastly, it is within the compentence
of the legislature to prescribe qualifications for one who desires to become a candidate for
office provided they are reasonable, as in this case.
In so far as the petition of Igot and Salapantan are concerned, the second paragraph of
section 4 of Batas Pambansa Blg. 52, quoted in full earlier, and which they challenge, may
be divided in two parts. The first provides:
a. judgment of conviction jor any of the aforementioned crimes shall be conclusive
evidence of such fact ...
The supremacy of the Constitution stands out as the cardinal principle. We are aware of
the presumption of validity that attaches to a challenged statute, of the well-settled
principle that "all reasonable doubts should be resolved in favor of constitutionality," and
that Courts will not set aside a statute as constitutionally defective "except in a clear
case." (People vs. Vera, supra). We are constrained to hold that this is one such clear
case.
Explicit is the constitutional provision that, in all criminal prosecutions, the accused shall
be presumed innocent until the contrary is proved, and shall enjoy the right to be heard by
himself and counsel (Article IV, section 19, 1973 Constitution). An accusation, according to
the fundamental law, is not synonymous with guilt. The challenged proviso contravenes
the constitutional presumption of innocence, as a candidate is disqualified from running for
public office on the ground alone that charges have been filed against him before a civil or
military tribunal. It condemns before one is fully heard. In ultimate effect, except as to the
degree of proof, no distinction is made between a person convicted of acts of dislotalty
and one against whom charges have been filed for such acts, as both of them would be
ineligible to run for public office. A person disqualified to run for public office on the ground
that charges have been filed against him is virtually placed in the same category as a
person already convicted of a crime with the penalty of arresto, which carries with it the
accessory penalty of suspension of the right to hold office during the term of the sentence
(Art. 44, Revised Penal Code).
And although the filing of charges is considered as but prima facie evidence, and
therefore, may be rebutted, yet. there is "clear and present danger" that because of the
proximity of the elections, time constraints will prevent one charged with acts of disloyalty
from offering contrary proof to overcome the prima facie evidence against him.
166
WHEREFORE, 1) the first paragraph of section 4 of Batas pambansa Bilang 52 is hereby

declared valid. Said paragraph reads:
SEC. 4. Special disqualification. In addition to violation of Section 10 of Article XII(C) of
the Constitution and disqualifications mentioned in existing laws which are hereby
declared as disqualification for any of the elective officials enumerated in Section 1 hereof,
any retired elective provincial, city or municipal official, who has received payment of the
retirement benefits to which he is entitled under the law and who shall have been 65 years
of age at the commencement of the term of office to which he seeks to be elected, shall
not be qualified to run for the same elective local office from which he has retired.
2) That portion of the second paragraph of section 4 of Batas Pambansa Bilang 52
providing that "... the filing of charges for the commission of such crimes before a civil
court or military tribunal after preliminary investigation shall be prima facie evidence of
such fact", is hereby declared null and void, for being violative of the constitutional
presumption of innocence guaranteed to an accused.
SO ORDERED.
ELEAZAR P. QUINTO vs. COMMISSION ON ELECTIONS, (G.R. No. 189698,

December 1, 2009)
DECISION
In our predisposition to discover the "original intent" of a statute, courts become the
unfeeling pillars of the status quo. Little do we realize that statutes or even constitutions
are bundles of compromises thrown our way by their framers. Unless we exercise
vigilance, the statute may already be out of tune and irrelevant to our day.1 It is in this light
that we should address the instant case.
Before the Court is a petition for prohibition and certiorari, with prayer for the issuance of a
temporary restraining order and a writ of preliminary injunction, assailing Section 4(a) of
Resolution No. 8678 of the Commission on Elections (COMELEC). In view of pressing
contemporary events, the petition begs for immediate resolution.
The Antecedents
Additionally, it is best that evidence pro and con of acts of disloyalty be aired before the
Courts rather than before an administrative body such as the COMELEC. A highly
possible conflict of findings between two government bodies, to the extreme detriment of a
person charged, will thereby be avoided. Furthermore, a legislative/administrative
determination of guilt should not be allowed to be substituted for a judicial determination.
Being infected with constitutional infirmity, a partial declaration of nullity of only that
objectionable portion is mandated. It is separable from the first portion of the second
paragraph of section 4 of Batas Pambansa Big. 52 which can stand by itself.
This controversy actually stems from the law authorizing the COMELEC to use an
automated election system (AES).
On December 22, 1997, Congress enacted Republic Act (R.A.) No. 8436, entitled "AN
ACT AUTHORIZING THE COMMISSION ON ELECTIONS TO USE AN AUTOMATED
ELECTION SYSTEM IN THE MAY 11, 1998 NATIONAL OR LOCAL ELECTIONS AND IN
SUBSEQUENT NATIONAL AND LOCAL ELECTORAL EXERCISES, PROVIDING FUNDS
THEREFOR AND FOR OTHER PURPOSES." Section 11 thereof reads:

SEC. 11. Official Ballot.- The Commission shall prescribe the size and form of the official
ballot which shall contain the titles of the positions to be filled and/or the propositions to be
voted upon in an initiative, referendum or plebiscite. Under each position, the names of
candidates shall be arranged alphabetically by surname and uniformly printed using the
same type size. A fixed space where the chairman of the Board of Election inspectors
shall affix his/her signature to authenticate the official ballot shall be provided.
Both sides of the ballots may be used when necessary.
For this purpose, the deadline for the filing of certificate of candidacy/petition for
registration/manifestation to participate in the election shall not be later than one hundred
twenty (120) days before the elections: - Provided, That, any elective official, whether
national or local, running for any office other than the one which he/she is holding in a
permanent capacity, except for president and vice president, shall be deemed resigned
only upon the start of the campaign period corresponding to the position for which he/she
is running: Provided, further, That, unlawful acts or omissions applicable to a candidate
shall take effect upon the start of the aforesaid campaign period: Provided, finally, That, for
purposes of the May 11, 1998 elections, the deadline for filing of the certificate of
candidacy for the positions of President, Vice President, Senators and candidates under
the Party-List System as well as petitions for registration and/or manifestation to
participate in the Party-List System shall be on February 9, 1998 while the deadline for the
filing of certificate of candidacy for other positions shall be on March 27, 1998.
The official ballots shall be printed by the National Printing Office and/or the Bangko
Sentral ng Pilipinas at the price comparable with that of private printers under proper
security measures which the Commission shall adopt. The Commission may contract the
services of private printers upon certification by the National Printing Office/Bangko
Sentral ng Pilipinas that it cannot meet the printing requirements. Accredited political
parties and deputized citizens' arms of the Commission may assign watchers in the
printing, storage and distribution of official ballots.
To prevent the use of fake ballots, the Commission through the Committee shall ensure
that the serial number on the ballot stub shall be printed in magnetic ink that shall be
easily detectable by inexpensive hardware and shall be impossible to reproduce on a
photocopying machine and that identification marks, magnetic strips, bar codes and other
technical and security markings, are provided on the ballot.
The official ballots shall be printed and distributed to each city/municipality at the rate of
one (1) ballot for every registered voter with a provision of additional four (4) ballots per
precinct.2
Almost a decade thereafter, Congress amended the law on January 23, 2007 by enacting
R.A. No. 9369, entitled "AN ACT AMENDING REPUBLIC ACT NO. 8436, ENTITLED "AN
ACT AUTHORIZING THE COMMISSION ON ELECTIONS TO USE AN AUTOMATED
ELECTION SYSTEM IN THE MAY 11, 1998 NATIONAL OR LOCAL ELECTIONS AND IN
SUBSEQUENT NATIONAL AND LOCAL ELECTORAL EXERCISES, TO ENCOURAGE
TRANSPARENCY, CREDIBILITY, FAIRNESS AND ACCURACY OF ELECTIONS,
AMENDING FOR THE PURPOSE BATAS PAMPANSA BLG. 881, AS AMEMDED,
REPUBLIC ACT NO. 7166 AND OTHER RELATED ELECTION LAWS, PROVIDING
167
FUNDS THEREFOR AND FOR OTHER PURPOSES." Section 13 of the amendatory law
modified Section 11 of R.A. No. 8436, thus:
SEC. 13. Section 11 of Republic Act No. 8436 is hereby amended to read as follows:
Section 15. Official Ballot.- The Commission shall prescribe the format of the electronic
display and/or the size and form of the official ballot, which shall contain the titles of the
position to be filled and/or the propositions to be voted upon in an initiative, referendum or
plebiscite. Where practicable, electronic displays must be constructed to present the
names of all candidates for the same position in the same page or screen, otherwise, the
electronic displays must be constructed to present the entire ballot to the voter, in a series
of sequential pages, and to ensure that the voter sees all of the ballot options on all pages
before completing his or her vote and to allow the voter to review and change all ballot
choices prior to completing and casting his or her ballot. Under each position to be filled,
the names of candidates shall be arranged alphabetically by surname and uniformly
indicated using the same type size. The maiden or married name shall be listed in the
official ballot, as preferred by the female candidate. Under each proposition to be vote
upon, the choices should be uniformly indicated using the same font and size.
A fixed space where the chairman of the board of election inspectors shall affix his/her
signature to authenticate the official ballot shall be provided.
For this purpose, the Commission shall set the deadline for the filing of certificate of
candidacy/petition of registration/manifestation to participate in the election. Any person
who files his certificate of candidacy within this period shall only be considered as a
candidate at the start of the campaign period for which he filed his certificate of candidacy:
Provided, That, unlawful acts or omissions applicable to a candidate shall take effect only
upon the start of the aforesaid campaign period: Provided, finally, That any person holding
a public appointive office or position, including active members of the armed forces, and
officers and employees in government-owned or -controlled corporations, shall be
considered ipso facto resigned from his/her office and must vacate the same at the start of
the day of the filing of his/her certificate of candidacy.
Political parties may hold political conventions to nominate their official candidates within
thirty (30) days before the start of the period for filing a certificate of candidacy.
With respect to a paper-based election system, the official ballots shall be printed by the
National Printing Office and/or the Bangko Sentral ng Pilipinas at the price comparable
with that of private printers under proper security measures which the Commission shall
adopt. The Commission may contract the services of private printers upon certification by
the National Printing Office/Bangko Sentral ng Pilipinas that it cannot meet the printing
requirements. Accredited political parties and deputized citizens' arms of the Commission
shall assign watchers in the printing, storage and distribution of official ballots.
To prevent the use of fake ballots, the Commission through the Committee shall ensure
that the necessary safeguards, such as, but not limited to, bar codes, holograms, color
shifting ink, microprinting, are provided on the ballot.

The official ballots shall be printed and distributed to each city/municipality at the rate of
one ballot for every registered voter with a provision of additional three ballots per
precinct.
Pursuant to its constitutional mandate to enforce and administer election laws, COMELEC
issued Resolution No. 8678,4 the Guidelines on the Filing of Certificates of Candidacy
(CoC) and Nomination of Official Candidates of Registered Political Parties in Connection
with the May 10, 2010 National and Local Elections. Sections 4 and 5 of Resolution No.
8678 provide:
SEC. 4. Effects of Filing Certificates of Candidacy.- a) Any person holding a public
appointive office or position including active members of the Armed Forces of the
Philippines, and other officers and employees in government-owned or controlled
corporations, shall be considered ipso facto resigned from his office upon the filing of his
certificate of candidacy.
b) Any person holding an elective office or position shall not be considered resigned upon
the filing of his certificate of candidacy for the same or any other elective office or position.
SEC. 5. Period for filing Certificate of Candidacy.- The certificate of candidacy shall be
filed on regular days, from November 20 to 30, 2009, during office hours, except on the
last day, which shall be until midnight.
Alarmed that they will be deemed ipso facto resigned from their offices the moment they
file their CoCs, petitioners Eleazar P. Quinto and Gerino A. Tolentino, Jr., who hold
appointive positions in the government and who intend to run in the coming elections, filed
the instant petition for prohibition and certiorari, seeking the declaration of the aforequoted Section 4(a) of Resolution No. 8678 as null and void.
The Petitioners' Contention
Petitioners contend that the COMELEC gravely abused its discretion when it issued the
assailed Resolution. They aver that the advance filing of CoCs for the 2010 elections is
intended merely for the purpose of early printing of the official ballots in order to cope with
time limitations. Such advance filing does not automatically make the person who filed the
CoC a candidate at the moment of filing. In fact, the law considers him a candidate only at
the start of the campaign period. Petitioners then assert that this being so, they should not
be deemed ipso facto resigned from their government offices when they file their CoCs,
because at such time they are not yet treated by law as candidates. They should be
considered resigned from their respective offices only at the start of the campaign period
when they are, by law, already considered as candidates.
Petitioners also contend that Section 13 of R.A. No. 9369, the basis of the assailed
COMELEC resolution, contains two conflicting provisions. These must be harmonized or
reconciled to give effect to both and to arrive at a declaration that they are not ipso facto
resigned from their positions upon the filing of their CoCs.
Petitioners further posit that the provision considering them as ipso facto resigned from
office upon the filing of their CoCs is discriminatory and violates the equal protection
clause in the Constitution.
The Respondent's Arguments
168
On the procedural aspect of the petition, the Office of the Solicitor General (OSG),
representing respondent COMELEC, argues that petitioners have no legal standing to
institute the suit." Petitioners have not yet filed their CoCs, hence, they are not yet affected
by the assailed provision in the COMELEC resolution. The OSG further claims that the
petition is premature or unripe for judicial determination." Petitioners have admitted that
they are merely planning to file their CoCs for the coming 2010 elections. Their interest in
the present controversy is thus merely speculative and contingent upon the filing of the
same. The OSG likewise contends that petitioners availed of the wrong remedy. They are
questioning an issuance of the COMELEC made in the exercise of the latter's rule-making
power. Certiorari under Rule 65 is then an improper remedy.
On the substantive aspect, the OSG maintains that the COMELEC did not gravely abuse
its discretion in phrasing Section 4(a) of Resolution No. 8678 for it merely copied what is
in the law. The OSG, however, agrees with petitioners that there is a conflict in Section 13
of R.A. No. 9369 that should be resolved. According to the OSG, there seems to be no
basis to consider appointive officials as ipso facto resigned and to require them to vacate
their positions on the same day that they file their CoCs, because they are not yet
considered as candidates at that time. Further, this - deemed resigned- provision existed
in Batas Pambansa Bilang (B.P. Blg.) 881, and no longer finds a place in our present
election laws with the innovations brought about by the automated system.
Our Ruling
I.
At first glance, the petition suffers from an incipient procedural defect. What petitioners
assail in their petition is a resolution issued by the COMELEC in the exercise of its quasilegislative power. Certiorari under Rule 65, in relation to Rule 64, cannot be availed of,
because it is a remedy to question decisions, resolutions and issuances made in the
exercise of a judicial or quasi-judicial function. Prohibition is also an inappropriate remedy,
because what petitioners actually seek from the Court is a determination of the proper
construction of a statute and a declaration of their rights thereunder. Obviously, their
petition is one for declaratory relief, over which this Court does not exercise original
jurisdiction.
However, petitioners raise a challenge on the constitutionality of the questioned provisions
of both the COMELEC resolution and the law. Given this scenario, the Court may step in
and resolve the instant petition.
The transcendental nature and paramount importance of the issues raised and the
compelling state interest involved in their early resolution the period for the filing of CoCs
for the 2010 elections has already started and hundreds of civil servants intending to run
for elective offices are to lose their employment, thereby causing imminent and irreparable
damage to their means of livelihood and, at the same time, crippling the government's
manpowerfurther dictate that the Court must, for propriety, if only from a sense of
obligation, entertain the petition so as to expedite the adjudication of all, especially the
constitutional, issues.
In any event, the Court has ample authority to set aside errors of practice or technicalities
of procedure and resolve the merits of a case. Repeatedly stressed in our prior decisions
is the principle that the Rules were promulgated to provide guidelines for the orderly

administration of justice, not to shackle the hand that dispenses it. Otherwise, the courts
would be consigned to being mere slaves to technical rules, deprived of their judicial
discretion.
II.
To put things in their proper perspective, it is imperative that we trace the brief history of
the assailed provision. Section 4(a) of COMELEC Resolution No. 8678 is a reproduction
of the second proviso in the third paragraph of Section 13 of R.A. No. 9369, which for
ready reference is quoted as follows:
For this purpose, the Commission shall set the deadline for the filing of certificate of
candidacy/petition for registration/manifestation to participate in the election. Any person
who files his certificate of candidacy within this period shall only be considered as a
candidate at the start of the campaign period for which he filed his certificate of candidacy:
Provided, That, unlawful acts or omissions applicable to a candidate shall take effect only
upon the start of the aforesaid campaign period: Provided, finally, That any person holding
a public appointive office or position, including active members of the armed forces, and
officers and employees in government-owned or -controlled corporations, shall be
considered ipso facto resigned from his/her office and must vacate the same at the start of
the day of the filing of his/her certificate of candidacy.
Notably, this proviso is not present in Section 11 of R.A. No. 8436, the law amended by
R.A. No. 9369. The proviso was lifted from Section 66 of B.P. Blg. 881 or the Omnibus
Election Code (OEC) of the Philippines, which reads:
Sec. 66. Candidates holding appointive office or position.- Any person holding a public
appointive office or position, including active members of the Armed Forces of the
Philippines, and officers and employees in government-owned or controlled corporations,
shall be considered ipso facto resigned from his office upon the filing of his certificate of
candidacy.
It may be recalled-in inverse chronology-that earlier, Presidential Decree No. 1296, or the
1978 Election Code, contained a similar provision, thus'
SECTION 29. Candidates holding appointive office or position. - Every person holding a
public appointive office or position, including active members of the Armed Forces of the
Philippines, and officers and employees in government-owned or controlled corporations,
shall ipso facto cease in his office or position on the date he files his certificate of
candidacy. Members of the Cabinet shall continue in the offices they presently hold
notwithstanding the filing of certificate of candidacy, subject to the pleasure of the
President of the Philippines.
Much earlier, R.A. No. 6388, or the Election Code of 1971, likewise stated in its Section 23
the following:
SECTION 23. Candidates Holding Appointive Office or Position. - Every person holding a
public appointive office or position, including active members of the Armed Forces of the
Philippines and every officer or employee in government-owned or controlled
corporations, shall ipso facto cease in his office or position on the date he files his
169
certificate of candidacy: Provided, That the filing of a certificate of candidacy shall not
affect whatever civil, criminal or administrative liabilities which he may have incurred.
Going further back in history, R.A. No. 180, or the Revised Election Code approved on
June 21, 1947, also provided that
SECTION 26. Automatic cessation of appointive officers and employees who are
candidates. - Every person holding a public appointive office or position shall ipso facto
cease in his office or position on the date he files his certificate of candidacy.
During the Commonwealth era, Commonwealth Act (C.A.) No. 725, entitled "AN ACT TO
PROVIDE FOR THE NEXT ELECTION FOR PRESIDENT AND VICE-PRESIDENT OF
THE PHILIPPINES, SENATORS AND MEMBERS OF THE HOUSE OF
REPRESENTATIVES, AND APPROPRIATING THE NECESSARY FUNDS THEREFOR,"
approved on January 5, 1946, contained, in the last paragraph of its Section 2, the
following:
A person occupying any civil office by appointment in the government or any of its political
subdivisions or agencies or government-owned or controlled corporations, whether such
office by appointive or elective, shall be considered to have resigned from such office from
the moment of the filing of such certificate of candidacy.
Significantly, however, C.A. No. 666, entitled "AN ACT TO PROVIDE FOR THE FIRST
ELECTION FOR PRESIDENT AND VICE-PRESIDENT OF THE PHILIPPINES,
SENATORS, AND MEMBERS OF THE HOUSE OF REPRESENTATIVES, UNDER THE
CONSTITUTION AND THE AMENDMENTS THEREOF," enacted without executive
approval on June 22, 1941, the precursor of C.A. No. 725, only provided for automatic
resignation of elective, but not appointive, officials.
Nevertheless, C.A. No. 357, or the Election Code approved on August 22, 1938, had, in its
Section 22, the same verbatim provision as Section 26 of R.A. No. 180.
The earliest recorded Philippine law on the subject is Act No. 1582, or the Election Law
enacted by the Philippine Commission in 1907, the last paragraph of Section 29 of which
reads:
Sec. 29. Penalties upon officers.- x x x.
No public officer shall offer himself as a candidate for election, nor shall he be eligible
during the time that he holds said public office to election, at any municipal, provincial or
Assembly election, except for reelection to the position which he may be holding, and no
judge of the Court of First Instance, justice of the peace, provincial fiscal, or officer or
employee of the Bureau of Constabulary or of the Bureau of Education shall aid any
candidate or influence in any manner or take any part in any municipal, provincial, or
Assembly election under penalty of being deprived of his office and being disqualified to
hold any public office whatever for a term of five years: Provided, however, That the
foregoing provisions shall not be construed to deprive any person otherwise qualified of
the right to vote at any election.

From this brief historical excursion, it may be gleaned that the second proviso in the third
paragraph of Section 13 of R.A. No. 9369- that any person holding a public appointive
office or position, including active members of the armed forces, and officers, and
employees in government-owned or controlled corporations, shall be considered ipso
facto resigned from his/her office and must vacate the same at the start of the day of the
filing of his/her certificate of candidacy- traces its roots to the period of the American
occupation.
In fact, during the deliberations of Senate Bill No. 2231, the bill later to be consolidated
with House Bill No. 5352 and enacted as R.A. No. 9369, Senator Richard Gordon, the
principal author of the bill, acknowledged that the said proviso in the proposed legislative
measure is an old provision which was merely copied from earlier existing legislation, thus'
Senator Osmea.- May I just opine here and perhaps obtain the opinion of the good
Sponsor.- This reads like, "ANY PERSON HOLDING [means currently] A PUBLIC
APPOINTIVE POSITION" SHALL BE CONSIDERED IPSO FACTO RESIGNED- [which
means that the prohibition extends only to appointive officials] "INCLUDING ACTIVE
MEMBERS OF THE ARMED FORCES, OFFICERS AND EMPLOYEES"- This is a
prohibition, Mr. President.- This means if one is chairman of SSS or PDIC, he is deemed
ipso facto resigned when he files his certificate of candidacy.- Is that the intention
Senator Gordon.- This is really an old provision, Mr. President.
Senator Osmea.- It is in bold letters, so I think it was a Committee amendment.
Senator Gordon.- No, it has always been there.
Senator Osmea.- I see.
Senator Gordon.- I guess the intention is not to give them undue advantage, especially
certain people.
Senator Osmea.- All right.
In that Senate deliberation, however, Senator Miriam Defensor-Santiago expressed her
concern over the inclusion of the said provision in the new law, given that the same would
be disadvantageous and unfair to potential candidates holding appointive positions, while
it grants a consequent preferential treatment to elective officials, thus'
Senator Santiago: On page 15, line 31, I know that this is a losing cause, so I make this
point more as a matter of record than of any feasible hope that it can possibly be either
accepted or if we come to a division of the House, it will be upheld by the majority.
I am referring to page 15, line 21.- The proviso begins: "PROVIDED FINALLY, THAT ANY
PERSON HOLDING A PUBLIC APPOINTIVE OFFICE - SHALL BE CONSIDERED IPSO
FACTO RESIGNED FROM HIS/HER OFFICE."
The point that I made during the appropriate debate in the past in this Hall is that there is,
for me, no valid reason for exempting elective officials from this inhibition or
disqualification imposed by the law.- If we are going to consider appointive officers of the
government, including AFP members and officers of government-owned and controlled
corporations, or any other member of the appointive sector of the civil service, why should
it not apply to the elective sector for, after all, even senators and congressmen are
members of the civil service as well
170
Further, it is self-serving for the Senate, or for the Congress in general, to give an
exception to itself which is not available to other similarly situated officials of government.
Of course, the answer is, the reason why we are special is that we are elected. Since we
are imposing a disqualification on all other government officials except ourselves, I think, it
is the better part of delicadeza to inhibit ourselves as well, so that if we want to stay as
senators, we wait until our term expires. But if we want to run for some other elective
office during our term, then we have to be considered resigned just like everybody else.
That is my proposed amendment. But if it is unacceptable to the distinguished Sponsor,
because of sensitivity to the convictions of the rest of our colleagues, I will understand.
Senator Gordon: Mr. President, I think the suggestion is well-thought of.- It is a good
policy.- However, this is something that is already in the old law which was upheld by the
Supreme court in a recent case that the rider was not upheld and that it was valid.
The obvious inequality brought about by the provision on automatic resignation of
appointive civil servants must have been the reason why Senator Recto proposed the
inclusion of the following during the period of amendments: "ANY PERSON WHO FILES
HIS CERTIFICATE OF CANDIDACY WITHIN THIS PERIOD SHALL ONLY BE
CONSIDERED AS A CANDIDATE AT THE START OF THE CAMPAIGN PERIOD FOR
WHICH HE FILED HIS COC."18 The said proviso seems to mitigate the situation of
disadvantage afflicting appointive officials by considering persons who filed their CoCs as
candidates only at the start of the campaign period, thereby, conveying the tacit intent that
persons holding appointive positions will only be considered as resigned at the start of the
campaign period when they are already treated by law as candidates.
Parenthetically, it may be remembered that Section 67 of the OEC and Section 11 of R.A.
No. 8436 contained a similar provision on automatic resignation of elective officials upon
the filing of their CoCs for any office other than that which they hold in a permanent
capacity or for President or Vice-President. However, with the enactment of R.A. No.
9006, or the Fair Election Act,19 in 2001, this provision was repealed by Section 14 of the
said act. There was, thus, created a situation of obvious discrimination against appointive
officials who were deemed ipso facto resigned from their offices upon the filing of their
CoCs, while elective officials were not.
i
This situation was incidentally addressed by the Court in Fari v. The Executive Secretary
when it ruled that Section 14 of Rep. Act No. 9006 Is Not Violative of the Equal Protection
Clause of the Constitution
The petitioners' contention, that the repeal of Section 67 of the Omnibus Election Code
pertaining to elective officials gives undue benefit to such officials as against the
appointive ones and violates the equal protection clause of the constitution, is tenuous.
The equal protection of the law clause in the Constitution is not absolute, but is subject to
reasonable classification.- If the groupings are characterized by substantial distinctions
that make real differences, one class may be treated and regulated differently from the
other. The Court has explained the nature of the equal protection guarantee in this
manner:
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality.- It is not

intended to prohibit legislation which is limited either in the object to which it is directed or
by territory within which it is to operate.- It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced.- The
equal protection clause is not infringed by legislation which applies only to those persons
falling within a specified class, if it applies alike to all persons within such class, and
reasonable grounds exist for making a distinction between those who fall within such class
and those who do not.
Substantial distinctions clearly exist between elective officials and appointive officials. The
former occupy their office by virtue of the mandate of the electorate. They are elected to
an office for a definite term and may be removed therefrom only upon stringent conditions.
On the other hand, appointive officials hold their office by virtue of their designation
thereto by an appointing authority.- Some appointive officials hold their office in a
permanent capacity and are entitled to security of tenure while others serve at the
pleasure of the appointing authority.
Another substantial distinction between the two sets of officials is that under Section 55,
Chapter 8, Title I, Subsection A. Civil Service Commission, Book V of the Administrative
Code of 1987 (Executive Order No. 292), appointive officials, as officers and employees in
the civil service, are strictly prohibited from engaging in any partisan political activity or
take part in any election except to vote.- Under the same provision, elective officials, or
officers or employees holding political offices, are obviously expressly allowed to take part
in political and electoral activities.
By repealing Section 67 but retaining Section 66 of the Omnibus Election Code, the
legislators deemed it proper to treat these two classes of officials differently with respect to
the effect on their tenure in the office of the filing of the certificates of candidacy for any
position other than those occupied by them.- Again, it is not within the power of the Court
to pass upon or look into the wisdom of this classification.
Since the classification justifying Section 14 of Rep. Act No. 9006, i.e., elected officials visa-vis appointive officials, is anchored upon material and significant distinctions and all the
persons belonging under the same classification are similarly treated, the equal protection
clause of the Constitution is, thus, not infringed.
However, it must be remembered that the Court, in Farii/i>, was intently focused on the
main issue of whether the repealing clause in the Fair Election Act was a constitutionally
proscribed rider, in that it unwittingly failed to ascertain with stricter scrutiny the impact of
the retention of the provision on automatic resignation of persons holding appointive
positions (Section 66) in the OEC, vis- is the equal protection clause.- Moreover,
i the
Court's vision in Farii/i> was shrouded by the fact that petitioners therein, Fariiet al.,
never posed a direct challenge to the constitutionality of Section 66 of the OEC. Fari et al.
rather merely questioned, on constitutional grounds, the repealing clause, or Section 14 of
the Fair Election Act. The Court's afore-quoted declaration in Farii/i> may then very well
be considered as an obiter dictum.
III.
The instant case presents a rare opportunity for the Court, in view of the constitutional
challenge advanced by petitioners, once and for all, to settle the issue of whether the
171
second proviso in the third paragraph of Section 13 of R.A. No. 9369, a reproduction of
Section 66 of the OEC, which, as shown above, was based on provisions dating back to
the American occupation, is violative of the equal protection clause.
But before delving into the constitutional issue, we shall first address the issues on legal
standing and on the existence of an actual controversy.
Central to the determination of locus standi is the question of whether a party has 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. In this case, petitioners allege
that they will be directly affected by COMELEC Resolution No. 8678 for they intend, and
they all have the qualifications, to run in the 2010 elections. The OSG, for its part,
contends that since petitioners have not yet filed their CoCs, they are not yet candidates;
hence, they are not yet directly affected by the assailed provision in the COMELEC
resolution.
The Court, nevertheless, finds that, while petitioners are not yet candidates, they have the
standing to raise the constitutional challenge, simply because they are qualified voters. A
restriction on candidacy, such as the challenged measure herein, affects the rights of
voters to choose their public officials. The rights of voters and the rights of candidates do
not lend themselves to neat separation; laws that affect candidates always have at least
some theoretical, correlative effect on voters.24 The Court believes that both candidates
and voters may challenge, on grounds of equal protection, the assailed measure because
of its impact on voting rights.
In any event, in recent cases, this Court has relaxed the stringent direct injury test and has
observed a liberal policy allowing ordinary citizens, members of Congress, and civil
organizations to prosecute actions involving the constitutionality or validity of laws,
regulations and rulings.
We have also stressed in our prior decisions that the exercise by this Court of judicial
power is limited to the determination and resolution of actual cases and controversies. The
Court, in this case, finds that an actual case or controversy exists between the petitioners
and the COMELEC, the body charged with the enforcement and administration of all
election laws. Petitioners have alleged in a precise manner that they would engage in the
very acts that would trigger the enforcement of the provision they would file their CoCs
and run in the 2010 elections. Given that the assailed provision provides for ipso facto
resignation upon the filing of the CoC, it cannot be said that it presents only a speculative
or hypothetical obstacle to petitioners' candidacy.
IV.
Having hurdled what the OSG posed as obstacles to judicial review, the Court now delves
into the constitutional challenge.
It is noteworthy to point out that the right to run for public office touches on two
fundamental freedoms, those of expression and of association. This premise is best
explained in Mancuso v. Taft, viz.:

172
Freedom of expression guarantees to the individual the opportunity to write a letter to the
local newspaper, speak out in a public park, distribute handbills advocating radical reform,
or picket an official building to seek redress of grievances. All of these activities are
protected by the First Amendment if done in a manner consistent with a narrowly defined
concept of public order and safety. The choice of means will likely depend on the amount
of time and energy the individual wishes to expend and on his perception as to the most
effective method of projecting his message to the public. But interest and commitment are
evolving phenomena. What is an effective means for protest at one point in time may not
seem so effective at a later date. The dilettante who participates in a picket line may
decide to devote additional time and resources to his expressive activity. As his
commitment increases, the means of effective expression changes, but the expressive
quality remains constant. He may decide to lead the picket line, or to publish the
newspaper. At one point in time he may decide that the most effective way to give
expression to his views and to get the attention of an appropriate audience is to become a
candidate for public office-means generally considered among the most appropriate for
those desiring to effect change in our governmental systems. He may seek to become a
candidate by filing in a general election as an independent or by seeking the nomination of
a political party. And in the latter instance, the individual's expressive activity has two
dimensions: besides urging that his views be the views of the elected public official, he is
also attempting to become a spokesman for a political party whose substantive program
extends beyond the particular office in question. But Cranston has said that a certain type
of its citizenry, the public employee, may not become a candidate and may not engage in
any campaign activity that promotes himself as a candidate for public office. Thus the city
has stifled what may be the most important expression an individual can summon, namely
that which he would be willing to effectuate, by means of concrete public action, were he
to be selected by the voters.
up a variety of communicative possibilities that are not available to even the most diligent
of picketers or the most loyal of party followers. A view today, that running for public office
is not an interest protected by the First Amendment, seems to us an outlook stemming
from an earlier era when public office was the preserve of the professional and the
wealthy. Consequently we hold that candidacy is both a protected First Amendment right
and a fundamental interest. Hence any legislative classification that significantly burdens
that interest must be subjected to strict equal protection review.30
Here, petitioners' interest in running for public office, an interest protected by
Sections 4 and 8 of Article III of the Constitution, is breached by the proviso in Section 13
of R.A. No. 9369. It is now the opportune time for the Court to strike down the said proviso
for being violative of the equal protection clause and for being overbroad.
It is impossible to ignore the additional fact that the right to run for office also affects the
freedom to associate. In Williams v. Rhodes, supra, the Court used strict review to
invalidate an Ohio election system that made it virtually impossible for third parties to
secure a place on the ballot. The Court found that the First Amendment protected the
freedom to associate by forming and promoting a political party and that that freedom was
infringed when the state effectively denied a party access to its electoral machinery. The
Cranston charter provision before us also affects associational rights, albeit in a slightly
different way. An individual may decide to join or participate in an organization or political
party that shares his beliefs. He may even form a new group to forward his ideas. And at
some juncture his supporters and fellow party members may decide that he is the ideal
person to carry the group's standard into the electoral fray. To thus restrict the options
available to political organization as the Cranston charter provision has done is to limit the
effectiveness of association; and the freedom to associate is intimately related with the
concept of making expression effective. Party access to the ballot becomes less
meaningful if some of those selected by party machinery to carry the party's programs to
the people are precluded from doing so because those nominees are civil servants.
The first requirement means that there must be real and substantial differences between
the classes treated differently. As illustrated in the fairly recent Mirasol v. Department of
Public Works and Highways,31 a real and substantial distinction exists between a
motorcycle and other motor vehicles sufficient to justify its classification among those
prohibited from plying the toll ways. Not all motorized vehicles are created equal a twowheeled vehicle is less stable and more easily overturned than a four-wheel vehicle.
Whether the right to run for office is looked at from the point of view of individual
expression or associational effectiveness, wide opportunities exist for the individual who
seeks public office. The fact of candidacy alone may open previously closed doors of the
media. The candidate may be invited to discuss his views on radio talk shows; he may be
able to secure equal time on television to elaborate his campaign program; the
newspapers may cover his candidacy; he may be invited to debate before various groups
that had theretofore never heard of him or his views. In short, the fact of candidacy opens
In considering persons holding appointive positions as ipso facto resigned from their posts
upon the filing of their CoCs, but not considering as resigned all other civil servants,
specifically the elective ones, the law unduly discriminates against the first class. The fact
alone that there is substantial distinction between those who hold appointive positions and
those occupying elective posts, does not justify such differential treatment.
In order that there can be valid classification so that a discriminatory governmental act
may pass the constitutional norm of equal protection, it is necessary that the four (4)
requisites of valid classification be complied with, namely:
(1) It must be based upon substantial distinctions;
(2) It must be germane to the purposes of the law;
(3) It must not be limited to existing conditions only; and
(4) It must apply equally to all members of the class.
Nevertheless, the classification would still be invalid if it does not comply with the second
requirement if it is not germane to the purpose of the law. Justice Isagani A. Cruz (Ret.), in
his treatise on constitutional law, explains,
The classification, even if based on substantial distinctions, will still be invalid if it is not
germane to the purpose of the law. To illustrate, the accepted difference in physical
stamina between men and women will justify the prohibition of the latter from employment
as miners or stevedores or in other heavy and strenuous work. On the basis of this same
classification, however, the law cannot provide for a lower passing average for women in
the bar examinations because physical strength is not the test for admission to the legal
profession. Imported cars may be taxed at a higher rate than locally assembled
automobiles for the protection of the national economy, but their difference in origin is no
justification for treating them differently when it comes to punishing violations of traffic
regulations. The source of the vehicle has no relation to the observance of these rules.
The third requirement means that the classification must be enforced not only for the
present but as long as the problem sought to be corrected continues to exist. And, under

the last requirement, the classification would be regarded as invalid if all the members of
the class are not treated similarly, both as to rights conferred and obligations imposed.
Applying the four requisites to the instant case, the Court finds that the differential
treatment of persons holding appointive offices as opposed to those holding elective ones
is not germane to the purposes of the law.
The obvious reason for the challenged provision is to prevent the use of a governmental
position to promote one's candidacy, or even to wield a dangerous or coercive influence
on the electorate. The measure is further aimed at promoting the efficiency, integrity, and
discipline of the public service by eliminating the danger that the discharge of official duty
would be motivated by political considerations rather than the welfare of the public. The
restriction is also justified by the proposition that the entry of civil servants to the electoral
arena, while still in office, could result in neglect or inefficiency in the performance of duty
because they would be attending to their campaign rather than to their office work.
If we accept these as the underlying objectives of the law, then the assailed provision
cannot be constitutionally rescued on the ground of valid classification. Glaringly absent is
the requisite that the classification must be germane to the purposes of the law. Indeed,
whether one holds an appointive office or an elective one, the evils sought to be prevented
by the measure remain. For example, the Executive Secretary, or any Member of the
Cabinet for that matter, could wield the same influence as the Vice-President who at the
same time is appointed to a Cabinet post (in the recent past, elected Vice-Presidents were
appointed to take charge of national housing, social welfare development, interior and
local government, and foreign affairs). With the fact that they both head executive offices,
there is no valid justification to treat them differently when both file their CoCs for the
elections. Under the present state of our law, the Vice-President, in the example, running
this time, let us say, for President, retains his position during the entire election period and
can still use the resources of his office to support his campaign.
As to the danger of neglect, inefficiency or partisanship in the discharge of the functions of
his appointive office, the inverse could be just as true and compelling. The public officer
who files his certificate of candidacy would be driven by a greater impetus for excellent
performance to show his fitness for the position aspired for.
Mancuso v. Taft, cited above, explains that the measure on automatic resignation, which
restricts the rights of civil servants to run for officea right inextricably linked to their
freedom of expression and association, is not reasonably necessary to the satisfaction of
the state interest. Thus, in striking down a similar measure in the United States, Mancuso
succinctly declares'
In proceeding to the second stage of active equal protection review, however, we do see
some contemporary relevance of the Mitchell decision. National Ass'n of Letter Carriers,
supra. In order for the Cranston charter provision to withstand strict scrutiny, the city must
show that the exclusion of all government employees from candidacy is necessary to
achieve a compelling state interest. And, as stated in Mitchell and other cases dealing with
similar statutes, see Wisconsin State Employees, supra; Broadrick, supra, government at
all levels has a substantial interest in protecting the integrity of its civil service. It is
obviously conceivable that the impartial character of the civil service would be seriously
jeopardized if people in positions of authority used their discretion to forward their electoral
173
ambitions rather than the public welfare. Similarly if a public employee pressured other
fellow employees to engage in corrupt practices in return for promises of post-election
reward, or if an employee invoked the power of the office he was seeking to extract
special favors from his superiors, the civil service would be done irreparable injury.
Conversely, members of the public, fellow-employees, or supervisors might themselves
request favors from the candidate or might improperly adjust their own official behavior
towards him. Even if none of these abuses actually materialize, the possibility of their
occurrence might seriously erode the public's confidence in its public employees. For the
reputation of impartiality is probably as crucial as the impartiality itself; the knowledge that
a clerk in the assessor's office who is running for the local zoning board has access to
confidential files which could provide pressure points for furthering his campaign is
destructive regardless of whether the clerk actually takes advantage of his opportunities.
For all of these reasons we find that the state indeed has a compelling interest in
maintaining the honesty and impartiality of its public work force.
We do not, however, consider the exclusionary measure taken by Cranston-a flat
prohibition on office-seeking of all kinds by all kinds of public employees-as even
reasonably necessary to satisfaction of this state interest. As Justice Marshall pointed out
in Dunn v. Blumstein, [s]tatutes affecting constitutional rights must be drawn with
precision. For three sets of reasons we conclude that the Cranston charter provision
pursues its objective in a far too heavy-handed manner and hence must fall under the
equal protection clause. First, we think the nature of the regulation-a broad prophylactic
rule-may be unnecessary to fulfillment of the city's objective. Second, even granting some
sort of prophylactic rule may be required, the provision here prohibits candidacies for all
types of public office, including many which would pose none of the problems at which the
law is aimed. Third, the provision excludes the candidacies of all types of public
employees, without any attempt to limit exclusion to those employees whose positions
make them vulnerable to corruption and conflicts of interest.
There is thus no valid justification to treat appointive officials differently from the elective
ones. The classification simply fails to meet the test that it should be germane to the
purposes of the law. The measure encapsulated in the second proviso of the third
paragraph of Section 13 of R.A. No. 9369 and in Section 66 of the OEC violates the equal
protection clause.
V.
The challenged provision also suffers from the infirmity of being overbroad.
First, the provision pertains to all civil servants holding appointive posts without distinction
as to whether they occupy high positions in government or not. Certainly, a utility worker in
the government will also be considered as ipso facto resigned once he files his CoC for
the 2010 elections. This scenario is absurd for, indeed, it is unimaginable how he can use
his position in the government to wield influence in the political world.
While it may be admitted that most appointive officials who seek public elective office are
those who occupy relatively high positions in government, laws cannot be legislated for
them alone, or with them alone in mind. For the right to seek public elective office is
universal, open and unrestrained, subject only to the qualification standards prescribed in
the Constitution and in the laws. These qualifications are, as we all know, general and
basic so as to allow the widest participation of the citizenry and to give free rein for the
pursuit of one's highest aspirations to public office. Such is the essence of democracy.

Second, the provision is directed to the activity of seeking any and all public offices,
whether they be partisan or nonpartisan in character, whether they be in the national,
municipal or barangay level. Congress has not shown a compelling state interest to
restrict the fundamental right involved on such a sweeping scale.
Specific evils require specific treatments, not through overly broad measures that unduly
restrict guaranteed freedoms of the citizenry. After all, sovereignty resides in the people,
and all governmental power emanates from them.
Mancuso v. Taft, on this point, instructs
As to approaches less restrictive than a prophylactic rule, there exists the device of the
leave of absence. Some system of leaves of absence would permit the public employee to
take time off to pursue his candidacy while assuring him his old job should his candidacy
be unsuccessful. Moreover, a leave of absence policy would eliminate many of the
opportunities for engaging in the questionable practices that the statute is designed to
prevent. While campaigning, the candidate would feel no conflict between his desire for
election and his publicly entrusted discretion, nor any conflict between his efforts to
persuade the public and his access to confidential documents. But instead of adopting a
reasonable leave of absence policy, Cranston has chosen a provision that makes the
public employee cast off the security of hard-won public employment should he desire to
compete for elected office.
The city might also promote its interest in the integrity of the civil service by enforcing,
through dismissal, discipline, or criminal prosecution, rules or statutes that treat conflict of
interests, bribery, or other forms of official corruption. By thus attacking the problem
directly, instead of using a broad prophylactic rule, the city could pursue its objective
without unduly burdening the First Amendment rights of its employees and the voting
rights of its citizens. Last term in Dunn v. Blumstein, the Supreme Court faced an
analogous question when the State of Tennessee asserted that the interest of ballot box
purity justified its imposition of one year and three month residency requirements before a
citizen could vote. Justice Marshall stated, inter alia, that Tennessee had available a
number of criminal statutes that could be used to punish voter fraud without unnecessary
infringement on the newcomer's right to vote. Similarly, it appears from the record in this
case that the Cranston charter contains some provisions that might be used against
opportunistic public employees.
Even if some sort of prophylactic rule is necessary, we cannot say that Cranston has put
much effort into tailoring a narrow provision that attempts to match the prohibition with the
problem. The charter forbids a Cranston public employee from running for any office,
anywhere. The prohibition is not limited to the local offices of Cranston, but rather extends
to statewide offices and even to national offices. It is difficult for us to see that a public
employee running for the United States Congress poses quite the same threat to the civil
service as would the same employee if he were running for a local office where the
contacts and information provided by his job related directly to the position he was
seeking, and hence where the potential for various abuses was greater. Nor does the
Cranston charter except the public employee who works in Cranston but aspires to office
in another local jurisdiction, most probably his town of residence. Here again the charter
precludes candidacies which can pose only a remote threat to the civil service. Finally, the
174
charter does not limit its prohibition to partisan office-seeking, but sterilizes also those
public employees who would seek nonpartisan elective office. The statute reviewed
inMitchell was limited to partisan political activity, and since that time other courts have
found the partisan-nonpartisan distinction a material one. See Kinnear, supra; Wisconsin
State Employees, supra; Gray v. Toledo, supra. While the line between nonpartisan and
partisan can often be blurred by systems whose true characters are disguised by the
names given them by their architects, it seems clear that the concerns of a truly partisan
office and the temptations it fosters are sufficiently different from those involved in an
office removed from regular party politics to warrant distinctive treatment in a charter of
this sort.
The third and last area of excessive and overinclusive coverage of the Cranston charter
relates not to the type of office sought, but to the type of employee seeking the office. As
Justice Douglas pointed out in his dissent inMitchell, 330 U.S. at 120-126, 67 S.Ct. 556,
restrictions on administrative employees who either participate in decision-making or at
least have some access to information concerning policy matters are much more
justifiable than restrictions on industrial employees, who, but for the fact that the
government owns the plant they work in, are, for purposes of access to official information,
identically situated to all other industrial workers. Thus, a worker in the Philadelphia mint
could be distinguished from a secretary in an office of the Department of Agriculture; so
also could a janitor in the public schools of Cranston be distinguished from an assistant
comptroller of the same city. A second line of distinction that focuses on the type of
employee is illustrated by the cases of Kinnear andMinielly, supra. In both of these cases
a civil service deputy decided to run for the elected office of sheriff. The courts in both
cases felt that the no-candidacy laws in question were much too broad and indicated that
perhaps the only situation sensitive enough to justify a flat rule was one in which an
inferior in a public office electorally challenged his immediate superior. Given all these
considerations, we think Cranston has not given adequate attention to the problem of
narrowing the terms of its charter to deal with the specific kinds of conflict-of-interest
problems it seeks to avoid.
We also do not find convincing the arguments that after-hours campaigning will drain the
energy of the public employee to the extent that he is incapable of performing his job
effectively and that inevitable on-the-job campaigning and discussion of his candidacy will
disrupt the work of others. Although it is indisputable that the city has a compelling interest
in the performance of official work, the exclusion is not well-tailored to effectuate that
interest. Presumably the city could fire the individual if he clearly shirks his employment
responsibilities or disrupts the work of others. Also, the efficiency rationale common to
both arguments is significantly underinclusive. It applies equally well to a number of nonpolitical, extracurricular activities that are not prohibited by the Cranston charter. Finally,
the connection between after-hours campaigning and the state interest seems tenuous; in
many cases a public employee would be able to campaign aggressively and still continue
to do his job well.
Incidentally, Clements v. Fashing sustained as constitutional a provision on the automatic
resignation of District Clerks, County Clerks, County Judges, County Treasurers, Criminal
District Attorneys, County Surveyors, Inspectors of Hides and Animals, County
Commissioners, Justices of the Peace, Sheriffs, Assessors and Collectors of Taxes,
District Attorneys, County Attorneys, Public Weighers, and Constables if they announce
their candidacy or if they become candidates in any general, special or primary election.

175
In Clements, it may be readily observed that a provision treating differently particular

officials, as distinguished from all others, under a classification that is germane to the
purposes of the law, merits the stamp of approval from American courts. Not, however, a
general and sweeping provision, and more so one violative of the second requisite for a
valid classification, which is on its face unconstitutional.
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 COMELECs refusal to accredit Ang Ladlad as a party-list organization
under Republic Act (RA) No. 7941, otherwise known as the Party-List System Act.
On a final note, it may not be amiss to state that the Americans, from whom we copied the
provision in question, had already stricken down a similar measure for being
unconstitutional. It is high-time that we, too, should follow suit and, thus, uphold
fundamental liberties over age-old, but barren, restrictions to such freedoms.
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 Petition for registration
with the COMELEC.
WHEREFORE, premises considered, the petition is GRANTED. The second proviso in the
third paragraph of Section 13 of Republic Act No. 9369, Section 66 of the Omnibus
Election Code and Section 4(a) of COMELEC Resolution No. 8678 are declared as
UNCONSTITUTIONAL.
SO ORDERED.
ANG LADLAD LGBT PARTY vs. COMELEC (G.R. No. 190582, April 8, 2010)
DECISION
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. Ang
Ladlad laid out its national membership base consisting of individual members and
organizational supporters, and outlined its platform of governance.
... [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.
On November 11, 2009, after admitting the petitioners evidence, the COMELEC (Second
Division) dismissed the Petition on moral grounds, stating that:
Justice Robert A. Jackson
x x x This Petition is dismissible on moral grounds. Petitioner defines the Filipino Lesbian,
Gay, Bisexual and Transgender (LGBT) Community, thus:
West Virginia State Board of Education v. Barnette

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)
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 persons 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 Petitions
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 disregardsdecency 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.
176
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
States avowed duty under Section 13, Article II of the Constitution to protect our youth
from moral and spiritual degradation.
When Ang Ladlad sought reconsideration, 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 Ladlads 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 Ladlads 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 nations 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 societys understanding, tolerance, and acceptance of LGBTs 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 groups 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.
177
this Court, directing the COMELEC to cease and desist from implementing the Assailed
Resolutions.
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 Ladladspetition 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 CHRs motion to intervene.
On January 26, 2010, Epifanio D. Salonga, Jr. filed his Motion to Intervene18 which
motion was granted on February 2, 2010.
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.
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 Petitions
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.
On January 4, 2010, Ang Ladlad filed this Petition, praying that the Court annul the
Assailed Resolutions and direct the COMELEC to grant Ang Ladlads 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. Instead
of filing a Comment, however, the OSG filed a Motion for Extension, requesting that it be
given until January 16, 2010 to Comment. Somewhat surprisingly, the OSG later filed a
Comment in support of petitioners application. Thus, in order to give COMELEC the
opportunity to fully ventilate its position, we required it to file its own comment. The
COMELEC, through its Law Department, filed its Comment on February 2, 2010.
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
The OSG concurred with Ang Ladlads petition and argued that the COMELEC erred in
denying petitioners application for registration since there was no basis for COMELECs
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 petitioners 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 COMELECs field personnel.
Our Ruling
We grant the petition.
Compliance with the Requirements of the Constitution and Republic Act No. 7941
The COMELEC denied Ang Ladlads 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, "the enumeration of marginalized and underrepresented 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."
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 petitioners accreditation mentioned or even alluded
to in the Assailed Resolutions. This, in itself, is quite curious, considering that the reports
of petitioners 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 respondents theory, and a serious violation of
petitioners right to procedural due process.
Nonetheless, we find that there has been no misrepresentation. A cursory perusal of Ang
Ladlads 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. 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)
Cant 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 Mens Support Group (GMSG) Metro Manila
Gay United for Peace and Solidarity (GUPS) Lanao del Norte
Iloilo City Gay Association Iloilo City
Kabulig Writers Group Camarines Sur
Lesbian Advocates Philippines, Inc. (LEAP)
LUMINA Baguio City
178
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
Womens Bisexual Network Metro Manila
Zamboanga Gay Association Zamboanga City
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 COMELECs findings are to be believed, petitioner does not even exist
in Quezon City, which is registered as Ang Ladlads 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 COMELECs
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 Ladlads morality, or lack thereof.
Religion as the Basis for Refusal to Accept Ang Ladlads 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." Clearly,
"governmental reliance on religious justification is inconsistent with this policy of
neutrality." 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:
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.
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.
Public Morals as a Ground to Deny Ang Ladlads 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:
Petitioners 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.
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.
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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 groups members have committed or are committing immoral acts."
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.
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 petitioners 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 COMELECs 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 Ladlads 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. Respondents 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." 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.
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, 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."
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 COMELECs 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 COMELECs 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 OSGs position that homosexuals are a class in
themselves for the purposes of the equal protection clause. 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. 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:
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
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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 selfdenying 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 ones 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. 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. 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 Courts 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. 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.
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 Ladlads 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 x
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 COMELECs action, from
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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 petitioners 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 nondiscrimination 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."Additionally, a variety of United Nations bodies have declared discrimination
on the basis of sexual orientation to be prohibited under various international agreements.
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.
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 petitioners
invocation of the Yogyakarta Principles (the Application of International Human Rights Law
In Relation to Sexual Orientation and Gender Identity), 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. 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
182
result of the notion that if "wants" are couched in "rights" language, then they are no
longer controversial.
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.
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 Courts 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
petitioners application for party-list accreditation.
SO ORDERED.
ELISEO F. SORIANO vs. MA. CONSOLIZA P. LAGUARDIA (G.R. No. 164785 and G.R.
No. 165636)
DECISION
In these two petitions for certiorari and prohibition under Rule 65, petitioner
Eliseo F. Soriano seeks to nullify and set aside an order and a decision of the Movie and
Television Review and Classification Board (MTRCB) in connection with certain utterances
he made in his television show, Ang Dating Daan.
Facts of the Case
On August 10, 2004, at around 10:00 p.m., petitioner, as host of the program Ang
Dating Daan, aired on UNTV 37, made the following remarks:
Lehitimong anak ng demonyo; sinungaling;
Gago ka talaga Michael, masahol ka pa sa putang babae o di ba. Yung putang
babae ang gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana ang itaas,
o di ba! O, masahol pa sa putang babae yan. Sabi ng lola ko masahol pa sa putang
babae yan. Sobra ang kasinungalingan ng mga demonyong ito. x x x
Two days after, before the MTRCB, separate but almost identical affidavitcomplaints were lodged by Jessie L. Galapon and seven other private respondents, all
members of the Iglesia ni Cristo (INC), against petitioner in connection with the above

183
broadcast. Respondent Michael M. Sandoval, who felt directly alluded to in petitioners

remark, was then a minister of INC and a regular host of the TV program Ang Tamang
Daan. Forthwith, the MTRCB sent petitioner a notice of the hearing on August 16, 2004 in
relation to the alleged use of some cuss words in the August 10, 2004 episode of Ang
Dating Daan.
(C)
(D)
(E)
FOR BEING VIOLATIVE OF EQUAL PROTECTION UNDER THE LAW;

FOR BEING VIOLATIVE OF FREEDOM OF RELIGION; AND
FOR BEING VIOLATIVE OF FREEDOM OF SPEECH AND EXPRESSION.
After a preliminary conference in which petitioner appeared, the MTRCB, by

Order of August 16, 2004, preventively suspended the showing of Ang Dating Daan
program for 20 days, in accordance with Section 3(d) of Presidential Decree No. (PD)
1986, creating the MTRCB, in relation to Sec. 3, Chapter XIII of the 2004 Implementing
Rules and Regulations (IRR) of PD 1986 and Sec. 7, Rule VII of the MTRCB Rules of
Procedure. The same order also set the case for preliminary investigation.
SECTION 3(C) OF [PD] 1986, IS PATENTLY UNCONSTITUTIONAL AND

ENACTED WITHOUT OR IN EXCESS OF JURISDICTION x x x CONSIDERING THAT:
In G.R. No. 165636, petitioner relies on the following grounds:
The following day, petitioner sought reconsideration of the preventive suspension

order, praying that Chairperson Consoliza P. Laguardia and two other members of the
adjudication board recuse themselves from hearing the case. Two days after, however,
petitioner sought to withdraw his motion for reconsideration, followed by the filing with this
Court of a petition for certiorari and prohibition, docketed as G.R. No. 164785, to nullify the
preventive suspension order thus issued.
SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON

THE CONSTITUTIONAL GUARANTEE OF FREEDOM OF RELIGION, SPEECH, AND
EXPRESSION AS IT PARTAKES OF THE NATURE OF A SUBSEQUENT PUNISHMENT
CURTAILING THE SAME; CONSEQUENTLY, THE IMPLEMENTING RULES AND
REGULATIONS, RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB
PURSUANT THERETO, I.E. DECISION DATED 27 SEPTEMBER 2004 AND ORDER
DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED
IN THE CASE AT BENCH;
On September 27, 2004, in Adm. Case No. 01-04, the MTRCB issued a decision,
disposing as follows:
II
WHEREFORE, in view of all the foregoing, a Decision is hereby rendered, finding

respondent Soriano liable for his utterances and thereby imposing on him a penalty of
three (3) months suspension from his program, Ang Dating Daan.
Co-respondents Joselito Mallari, Luzviminda Cruz and UNTV Channel 37 and its
owner, PBC, are hereby exonerated for lack of evidence.
SO ORDERED.
Petitioner then filed this petition for certiorari and prohibition with prayer for
injunctive relief, docketed as G.R. No. 165636.
In a Resolution dated April 4, 2005, the Court consolidated G.R. No. 164785 with
G.R. No. 165636.
In G.R. No. 164785, petitioner raises the following issues:
THE ORDER OF PREVENTIVE SUSPENSION PROMULGATED BY
RESPONDENT [MTRCB] DATED 16 AUGUST 2004 AGAINST THE TELEVISION
PROGRAM ANG DATING DAAN x x x IS NULL AND VOID FOR BEING ISSUED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION
(A)
BY REASON THAT THE [IRR] IS INVALID INSOFAR AS IT PROVIDES FOR THE
ISSUANCE OF PREVENTIVE SUSPENSION ORDERS;
(B)
BY REASON OF LACK OF DUE HEARING IN THE CASE AT BENCH;
SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON

THE CONSTITUTIONAL GUARANTEE OF DUE PROCESS OF LAW AND EQUAL
PROTECTION UNDER THE LAW; CONSEQUENTLY, THE [IRR], RULES OF
PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB PURSUANT THERETO, I.E.,
DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED 19 OCTOBER 2004,
ARE LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED IN THE CASE AT BENCH;
AND
III
[PD] 1986 IS NOT COMPLETE IN ITSELF AND DOES NOT PROVIDE FOR A
SUFFICIENT STANDARD FOR ITS IMPLEMENTATION THEREBY RESULTING IN AN
UNDUE DELEGATION OF LEGISLATIVE POWER BY REASON THAT IT DOES NOT
PROVIDE FOR THE PENALTIES FOR VIOLATIONS OF ITS PROVISIONS.
CONSEQUENTLY, THE [IRR], RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE
MTRCB PURSUANT THERETO, I.E. DECISION DATED 27 SEPTEMBER 2004 AND
ORDER DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS
APPLIED IN THE CASE AT BENCH
G.R. No. 164785
We shall first dispose of the issues in G.R. No. 164785, regarding the assailed
order of preventive suspension, although its implementability had already been overtaken
and veritably been rendered moot by the equally assailed September 27, 2004 decision.

It is petitioners threshold posture that the preventive suspension imposed

against him and the relevant IRR provision authorizing it are invalid inasmuch as PD 1986
does not expressly authorize the MTRCB to issue preventive suspension.
Petitioners contention is untenable.
Administrative agencies have powers and functions which may be administrative,
investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of the five, as may be
conferred by the Constitution or by statute.[12] They have in fine only such powers or
authority as are granted or delegated, expressly or impliedly, by law.[13] And in
determining whether an agency has certain powers, the inquiry should be from the law
itself. But once ascertained as existing, the authority given should be liberally construed.
A perusal of the MTRCBs basic mandate under PD 1986 reveals the possession
by the agency of the authority, albeit impliedly, to issue the challenged order of preventive
suspension. And this authority stems naturally from, and is necessary for the exercise of,
its power of regulation and supervision.
Sec. 3 of PD 1986 pertinently provides the following:
Section 3. Powers and Functions.The BOARD shall have the following functions,
powers and duties:
xxxx
c) To approve or disapprove, delete objectionable portions from and/or prohibit the x x x
production, x x x exhibition and/or television broadcast of the motion pictures, television
programs and publicity materials subject of the preceding paragraph, which, in the
judgment of the board applying contemporary Filipino cultural values as standard, are
objectionable for being immoral, indecent, contrary to law and/or good customs, injurious
to the prestige of the Republic of the Philippines or its people, or with a dangerous
tendency to encourage the commission of violence or of wrong or crime such as but not
limited to:
xxxx
vi) Those which are libelous or defamatory to the good name and reputation of any
person, whether living or dead;
xxxx
(d)
To supervise, regulate, and grant, deny or cancel, permits for the x x x production,
copying, distribution, sale, lease, exhibition, and/or television broadcast of all motion
pictures, television programs and publicity materials, to the end that no such pictures,
programs and materials as are determined by the BOARD to be objectionable in
accordance with paragraph (c) hereof shall be x x x produced, copied, reproduced,
distributed, sold, leased, exhibited and/or broadcast by television;
xxxx
184
k)
To exercise such powers and functions as may be necessary or incidental to the
attainment of the purposes and objectives of this Act x x x.
The issuance of a preventive suspension comes well within the scope of the
MTRCBs authority and functions expressly set forth in PD 1986, more particularly under
its Sec. 3(d), as quoted above, which empowers the MTRCB to supervise, regulate, and
grant, deny or cancel, permits for the x x x exhibition, and/or television broadcast of all
motion pictures, television programs and publicity materials, to the end that no such
pictures, programs and materials as are determined by the BOARD to be objectionable in
accordance with paragraph (c) hereof shall be x x x exhibited and/or broadcast by
television.
Surely, the power to issue preventive suspension forms part of the MTRCBs
express regulatory and supervisory statutory mandate and its investigatory and
disciplinary authority subsumed in or implied from such mandate. Any other construal
would render its power to regulate, supervise, or discipline illusory.
Preventive suspension, it ought to be noted, is not a penalty by itself, being
merely a preliminary step in an administrative investigation.[15] And the power to
discipline and impose penalties, if granted, carries with it the power to investigate
administrative complaints and, during such investigation, to preventively suspend the
person subject of the complaint.[16]
To reiterate, preventive suspension authority of the MTRCB springs from its
powers conferred under PD 1986. The MTRCB did not, as petitioner insinuates, empower
itself to impose preventive suspension through the medium of the IRR of PD 1986. It is
true that the matter of imposing preventive suspension is embodied only in the IRR of PD
1986. Sec. 3, Chapter XIII of the IRR provides:
Sec. 3. PREVENTION SUSPENSION ORDER.Any time during the pendency
of the case, and in order to prevent or stop further violations or for the interest and welfare
of the public, the Chairman of the Board may issue a Preventive Suspension Order
mandating the preventive x x x suspension of the permit/permits involved, and/or closure
of the x x x television network, cable TV station x x x provided that the
temporary/preventive order thus issued shall have a life of not more than twenty (20) days
from the date of issuance.
But the mere absence of a provision on preventive suspension in PD 1986,
without more, would not work to deprive the MTRCB a basic disciplinary tool, such as
preventive suspension. Recall that the MTRCB is expressly empowered by statute to
regulate and supervise television programs to obviate the exhibition or broadcast of,
among others, indecent or immoral materials and to impose sanctions for violations and,
corollarily, to prevent further violations as it investigates. Contrary to petitioners assertion,
the aforequoted Sec. 3 of the IRR neither amended PD 1986 nor extended the effect of
the law. Neither did the MTRCB, by imposing the assailed preventive suspension, outrun
its authority under the law. Far from it. The preventive suspension was actually done in
furtherance of the law, imposed pursuant, to repeat, to the MTRCBs duty of regulating or
supervising television programs, pending a determination of whether or not there has
actually been a violation. In the final analysis, Sec. 3, Chapter XIII of the 2004 IRR merely
formalized a power which PD 1986 bestowed, albeit impliedly, on MTRCB.

Sec. 3(c) and (d) of PD 1986 finds application to the present case, sufficient to
authorize the MTRCBs assailed action. Petitioners restrictive reading of PD 1986,
limiting the MTRCB to functions within the literal confines of the law, would give the
agency little leeway to operate, stifling and rendering it inutile, when Sec. 3(k) of PD 1986
clearly intends to grant the MTRCB a wide room for flexibility in its operation. Sec. 3(k), we
reiterate, provides, To exercise such powers and functions as may be necessary or
incidental to the attainment of the purposes and objectives of this Act x x x. Indeed, the
power to impose preventive suspension is one of the implied powers of MTRCB. As
distinguished from express powers, implied powers are those that can be inferred or are
implicit in the wordings or conferred by necessary or fair implication of the enabling act.
As we held in Angara v. Electoral Commission, when a general grant of power is conferred
or a duty enjoined, every particular power necessary for the exercise of one or the
performance of the other is also conferred by necessary implication. Clearly, the power to
impose preventive suspension pending investigation is one of the implied or inherent
powers of MTRCB.
We cannot agree with petitioners assertion that the aforequoted IRR provision
on preventive suspension is applicable only to motion pictures and publicity materials.
The scope of the MTRCBs authority extends beyond motion pictures. What the acronym
MTRCB stands for would suggest as much. And while the law makes specific reference to
the closure of a television network, the suspension of a television program is a far less
punitive measure that can be undertaken, with the purpose of stopping further violations of
PD 1986. Again, the MTRCB would regretfully be rendered ineffective should it be subject
to the restrictions petitioner envisages.
Just as untenable is petitioners argument on the nullity of the preventive
suspension order on the ground of lack of hearing. As it were, the MTRCB handed out the
assailed order after petitioner, in response to a written notice, appeared before that Board
for a hearing on private respondents complaint. No less than petitioner admitted that the
order was issued after the adjournment of the hearing, proving that he had already
appeared before the MTRCB. Under Sec. 3, Chapter XIII of the IRR of PD 1986,
preventive suspension shall issue [a]ny time during the pendency of the case. In this
particular case, it was done after MTRCB duly apprised petitioner of his having possibly
violated PD 1986 and of administrative complaints that had been filed against him for such
violation.
At any event, that preventive suspension can validly be meted out even without a
hearing.
Petitioner next faults the MTRCB for denying him his right to the equal protection
of the law, arguing that, owing to the preventive suspension order, he was unable to
answer the criticisms coming from the INC ministers.
Petitioners position does not persuade. The equal protection clause demands
that all persons subject to legislation should be treated alike, under like circumstances
and conditions both in the privileges conferred and liabilities imposed. It guards against
undue favor and individual privilege as well as hostile discrimination. Surely, petitioner
cannot, under the premises, place himself in the same shoes as the INC ministers, who,
for one, are not facing administrative complaints before the MTRCB. For another, he offers
185
no proof that the said ministers, in their TV programs, use language similar to that which
he used in his own, necessitating the MTRCBs disciplinary action. If the immediate result
of the preventive suspension order is that petitioner remains temporarily gagged and is
unable to answer his critics, this does not become a deprivation of the equal protection
guarantee. The Court need not belabor the fact that the circumstances of petitioner, as
host of Ang Dating Daan, on one hand, and the INC ministers, as hosts of Ang Tamang
Daan, on the other, are, within the purview of this case, simply too different to even
consider whether or not there is a prima facie indication of oppressive inequality.
Petitioner next injects the notion of religious freedom, submitting that what he
uttered was religious speech, adding that words like putang babae were said in exercise
of his religious freedom.
The argument has no merit.
The Court is at a loss to understand how petitioners utterances in question can
come within the pale of Sec. 5, Article III of the 1987 Constitution on religious freedom.
The section reads as follows:
No law shall be made respecting the establishment of a 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.
There is nothing in petitioners statements subject of the complaints expressing
any particular religious belief, nothing furthering his avowed evangelical mission. The fact
that he came out with his statements in a televised bible exposition program does not
automatically accord them the character of a religious discourse. Plain and simple insults
directed at another person cannot be elevated to the status of religious speech. Even
petitioners attempts to place his words in context show that he was moved by anger and
the need to seek retribution, not by any religious conviction. His claim, assuming its
veracity, that some INC ministers distorted his statements respecting amounts Ang Dating
Daan owed to a TV station does not convert the foul language used in retaliation as
religious speech. We cannot accept that petitioner made his statements in defense of his
reputation and religion, as they constitute no intelligible defense or refutation of the
alleged lies being spread by a rival religious group. They simply illustrate that petitioner
had descended to the level of name-calling and foul-language discourse. Petitioner could
have chosen to contradict and disprove his detractors, but opted for the low road.
Petitioner, as a final point in G.R. No. 164785, would have the Court nullify the
20-day preventive suspension order, being, as insisted, an unconstitutional abridgement of
the freedom of speech and expression and an impermissible prior restraint. The main
issue tendered respecting the adverted violation and the arguments holding such issue
dovetails with those challenging the three-month suspension imposed under the assailed
September 27, 2004 MTRCB decision subject of review under G.R. No. 165636. Both
overlapping issues and arguments shall be jointly addressed.
G.R. No. 165636

Petitioner urges the striking down of the decision suspending him from hosting
Ang Dating Daan for three months on the main ground that the decision violates, apart
from his religious freedom, his freedom of speech and expression guaranteed under Sec.
4, Art. III of the Constitution, which reads:
No law shall be passed abridging the freedom of speech, of expression, or of the
press, or the right of the people peaceably to assemble and petition the government for
redress of grievance.
He would also have the Court declare PD 1986, its Sec. 3(c) in particular,
unconstitutional for reasons articulated in this petition.
We are not persuaded as shall be explained shortly. But first, we restate certain
general concepts and principles underlying the freedom of speech and expression.
It is settled that expressions by means of newspapers, radio, television, and
motion pictures come within the broad protection of the free speech and expression
clause. Each method though, because of its dissimilar presence in the lives of people and
accessibility to children, tends to present its own problems in the area of free speech
protection, with broadcast media, of all forms of communication, enjoying a lesser degree
of protection.[26] Just as settled is the rule that restrictions, be it in the form of prior
restraint, e.g., judicial injunction against publication or threat of cancellation of
license/franchise, or subsequent liability, whether in libel and damage suits, prosecution
for sedition, or contempt proceedings, are anathema to the freedom of expression. Prior
restraint means official government restrictions on the press or other forms of expression
in advance of actual publication or dissemination. The freedom of expression, as with the
other freedoms encased in the Bill of Rights, is, however, not absolute. It may be
regulated to some extent to serve important public interests, some forms of speech not
being protected. As has been held, the limits of the freedom of expression are reached
when the expression touches upon matters of essentially private concern. In the oftquoted expression of Justice Holmes, the constitutional guarantee obviously was not
intended to give immunity for every possible use of language. From Lucas v. Royo comes
this line: [T]he freedom to express ones sentiments and belief does not grant one the
license to vilify in public the honor and integrity of another. Any sentiments must be
expressed within the proper forum and with proper regard for the rights of others.
Indeed, as noted in Chaplinsky v. State of New Hampshire, there are certain
well-defined and narrowly limited classes of speech that are harmful, the prevention and
punishment of which has never been thought to raise any Constitutional problems. In net
effect, some forms of speech are not protected by the Constitution, meaning that
restrictions on unprotected speech may be decreed without running afoul of the freedom
of speech clause.[32] A speech would fall under the unprotected type if the utterances
involved are no essential part of any exposition of ideas, and are of such slight social
value as a step of truth that any benefit that may be derived from them is clearly
outweighed by the social interest in order and morality. Being of little or no value, there
is, in dealing with or regulating them, no imperative call for the application of the clear and
present danger rule or the balancing-of-interest test, they being essentially modes of
weighing competing values,[34] or, with like effect, determining which of the clashing
interests should be advanced.
186
Petitioner asserts that his utterance in question is a protected form of speech.

The Court rules otherwise. It has been established in this jurisdiction that
unprotected speech or low-value expression refers to libelous statements, obscenity or
pornography, false or misleading advertisement, insulting or fighting words, i.e., those
which by their very utterance inflict injury or tend to incite an immediate breach of peace
and expression endangering national security.
The Court finds that petitioners statement can be treated as obscene, at least
with respect to the average child. Hence, it is, in that context, unprotected speech. In
Fernando v. Court of Appeals, the Court expressed difficulty in formulating a definition of
obscenity that would apply to all cases, but nonetheless stated the ensuing observations
on the matter:
There is no perfect definition of obscenity but the latest word is that of Miller v.
California which established basic guidelines, to wit: (a) whether to the average person,
applying contemporary standards would find the work, taken as a whole, appeals to the
prurient interest; (b) whether the work depicts or describes, in a patently offensive way,
sexual conduct specifically defined by the applicable state law; and (c) whether the work,
taken as a whole, lacks serious literary, artistic, political, or scientific value. But, it would
be a serious misreading of Miller to conclude that the trier of facts has the unbridled
discretion in determining what is patently offensive. x x x What remains clear is that
obscenity is an issue proper for judicial determination and should be treated on a case to
case basis and on the judges sound discretion.
Following the contextual lessons of the cited case of Miller v. California,[36] a

patently offensive utterance would come within the pale of the term obscenity should it
appeal to the prurient interest of an average listener applying contemporary standards.
A cursory examination of the utterances complained of and the circumstances of
the case reveal that to an average adult, the utterances Gago ka talaga x x x, masahol ka
pa sa putang babae x x x. Yung putang babae ang gumagana lang doon yung ibaba, [dito]
kay Michael ang gumagana ang itaas, o di ba! may not constitute obscene but merely
indecent utterances. They can be viewed as figures of speech or merely a play on words.
In the context they were used, they may not appeal to the prurient interests of an adult.
The problem with the challenged statements is that they were uttered in a TV program that
is rated G or for general viewership, and in a time slot that would likely reach even the
eyes and ears of children.
While adults may have understood that the terms thus used were not to be taken
literally, children could hardly be expected to have the same discernment. Without
parental guidance, the unbridled use of such language as that of petitioner in a television
broadcast could corrupt impressionable young minds. The term putang babae means a
female prostitute, a term wholly inappropriate for children, who could look it up in a
dictionary and just get the literal meaning, missing the context within which it was used.
Petitioner further used the terms, ang gumagana lang doon yung ibaba, making
reference to the female sexual organ and how a female prostitute uses it in her trade, then
stating that Sandoval was worse than that by using his mouth in a similar manner.

Children could be motivated by curiosity and ask the meaning of what petitioner said, also
without placing the phrase in context. They may be inquisitive as to why Sandoval is
different from a female prostitute and the reasons for the dissimilarity. And upon learning
the meanings of the words used, young minds, without the guidance of an adult, may,
from their end, view this kind of indecent speech as obscene, if they take these words
literally and use them in their own speech or form their own ideas on the matter. In this
particular case, where children had the opportunity to hear petitioners words, when
speaking of the average person in the test for obscenity, we are speaking of the average
child, not the average adult. The average child may not have the adults grasp of figures
of speech, and may lack the understanding that language may be colorful, and words may
convey more than the literal meaning. Undeniably the subject speech is very suggestive
of a female sexual organ and its function as such. In this sense, we find petitioners
utterances obscene and not entitled to protection under the umbrella of freedom of
speech.
Even if we concede that petitioners remarks are not obscene but merely indecent
speech, still the Court rules that petitioner cannot avail himself of the constitutional
protection of free speech. Said statements were made in a medium easily accessible to
children. With respect to the young minds, said utterances are to be treated as
unprotected speech.
No doubt what petitioner said constitutes indecent or offensive utterances. But
while a jurisprudential pattern involving certain offensive utterances conveyed in different
mediums has emerged, this case is veritably one of first impression, it being the first time
that indecent speech communicated via television and the applicable norm for its
regulation are, in this jurisdiction, made the focal point. Federal Communications
Commission (FCC) v. Pacifica Foundation,[37] a 1978 American landmark case cited in
Eastern Broadcasting Corporation v. Dans, Jr.[38] and Chavez v. Gonzales,[39] is a rich
source of persuasive lessons. Foremost of these relates to indecent speech without
prurient appeal component coming under the category of protected speech depending on
the context within which it was made, irresistibly suggesting that, within a particular
context, such indecent speech may validly be categorized as unprotected, ergo,
susceptible to restriction.
In FCC, seven of what were considered filthy words earlier recorded in a
monologue by a satiric humorist later aired in the afternoon over a radio station owned by
Pacifica Foundation. Upon the complaint of a man who heard the pre-recorded monologue
while driving with his son, FCC declared the language used as patently offensive and
indecent under a prohibiting law, though not necessarily obscene. FCC added, however,
that its declaratory order was issued in a special factual context, referring, in gist, to an
afternoon radio broadcast when children were undoubtedly in the audience. Acting on the
question of whether the FCC could regulate the subject utterance, the US Supreme Court
ruled in the affirmative, owing to two special features of the broadcast medium, to wit: (1)
radio is a pervasive medium and (2) broadcasting is uniquely accessible to children. The
US Court, however, hastened to add that the monologue would be protected speech in
other contexts, albeit it did not expound and identify a compelling state interest in putting
FCCs content-based regulatory action under scrutiny.
The Court in Chavez[41] elucidated on the distinction between regulation or
restriction of protected speech that is content-based and that which is content-neutral. A
content-based restraint is aimed at the contents or idea of the expression, whereas a
187
content-neutral restraint intends to regulate the time, place, and manner of the expression
under well-defined standards tailored to serve a compelling state interest, without restraint
on the message of the expression. Courts subject content-based restraint to strict scrutiny.
With the view we take of the case, the suspension MTRCB imposed under the
premises was, in one perspective, permissible restriction. We make this disposition
against the backdrop of the following interplaying factors: First, the indecent speech was
made via television, a pervasive medium that, to borrow from Gonzales v. Kalaw Katigbak,
easily reaches every home where there is a set [and where] [c]hildren will likely be among
the avid viewers of the programs therein shown; second, the broadcast was aired at the
time of the day when there was a reasonable risk that children might be in the audience;
and third, petitioner uttered his speech on a G or for general patronage rated program.
Under Sec. 2(A) of Chapter IV of the IRR of the MTRCB, a show for general patronage is
[s]uitable for all ages, meaning that the material for television x x x in the judgment of
the BOARD, does not contain anything unsuitable for children and minors, and may be
viewed without adult guidance or supervision. The words petitioner used were, by any
civilized norm, clearly not suitable for children. Where a language is categorized as
indecent, as in petitioners utterances on a general-patronage rated TV program, it may be
readily proscribed as unprotected speech.
A view has been advanced that unprotected speech refers only to pornography,
false or misleading advertisement, advocacy of imminent lawless action, and expression
endangering national security. But this list is not, as some members of the Court would
submit, exclusive or carved in stone. Without going into specifics, it may be stated without
fear of contradiction that US decisional law goes beyond the aforesaid general exceptions.
As the Court has been impelled to recognize exceptions to the rule against censorship in
the past, this particular case constitutes yet another exception, another instance of
unprotected speech, created by the necessity of protecting the welfare of our children. As
unprotected speech, petitioners utterances can be subjected to restraint or regulation.
Despite the settled ruling in FCC which has remained undisturbed since 1978,
petitioner asserts that his utterances must present a clear and present danger of bringing
about a substantive evil the State has a right and duty to prevent and such danger must
be grave and imminent.
Petitioners invocation of the clear and present danger doctrine, arguably the most
permissive of speech tests, would not avail him any relief, for the application of said test is
uncalled for under the premises. The doctrine, first formulated by Justice Holmes,
accords protection for utterances so that the printed or spoken words may not be subject
to prior restraint or subsequent punishment unless its expression creates a clear and
present danger of bringing about a substantial evil which the government has the power to
prohibit.[46] Under the doctrine, freedom of speech and of press is susceptible of
restriction when and only when necessary to prevent grave and immediate danger to
interests which the government may lawfully protect. As it were, said doctrine evolved in
the context of prosecutions for rebellion and other crimes involving the overthrow of
government. It was originally designed to determine the latitude which should be given to
speech that espouses anti-government action, or to have serious and substantial
deleterious consequences on the security and public order of the community. The clear
and present danger rule has been applied to this jurisdiction. As a standard of limitation on
free speech and press, however, the clear and present danger test is not a magic
incantation that wipes out all problems and does away with analysis and judgment in the

testing of the legitimacy of claims to free speech and which compels a court to release a
defendant from liability the moment the doctrine is invoked, absent proof of imminent
catastrophic disaster. As we observed in Eastern Broadcasting Corporation, the clear and
present danger test does not lend itself to a simplistic and all embracing interpretation
applicable to all utterances in all forums.
To be sure, the clear and present danger doctrine is not the only test which has
been applied by the courts. Generally, said doctrine is applied to cases involving the
overthrow of the government and even other evils which do not clearly undermine national
security. Since not all evils can be measured in terms of proximity and degree the Court,
however, in several casesAyer Productions v. Capulong and Gonzales v. COMELEC,
applied the balancing of interests test. Former Chief Justice Fred Ruiz Castro, in
Gonzales v. COMELEC, elucidated in his Separate Opinion that where the legislation
under constitutional attack interferes with the freedom of speech and assembly in a more
generalized way and where the effect of the speech and assembly in terms of the
probability of realization of a specific danger is not susceptible even of impressionistic
calculation, then the balancing of interests test can be applied.
The Court explained also in Gonzales v. COMELEC the balancing of interests test:
When particular conduct is regulated in the interest of public order, and the
regulation results in an indirect, conditional, partial abridgment of speech, the duty of the
courts is to determine which of the two conflicting interests demands the greater protection
under the particular circumstances presented. x x x We must, therefore, undertake the
delicate and difficult task x x x to weigh the circumstances and to appraise the
substantiality of the reasons advanced in support of the regulation of the free enjoyment of
rights x x x.
In enunciating standard premised on a judicial balancing of the conflicting social
values and individual interests competing for ascendancy in legislation which restricts
expression, the court in Douds laid the basis for what has been called the balancing-ofinterests test which has found application in more recent decisions of the U.S. Supreme
Court. Briefly stated, the balancing test requires a court to take conscious and detailed
consideration of the interplay of interests observable in a given situation or type of
situation.
xxxx
Although the urgency of the public interest sought to be secured by Congressional
power restricting the individuals freedom, and the social importance and value of the
freedom so restricted, are to be judged in the concrete, not on the basis of abstractions,
a wide range of factors are necessarily relevant in ascertaining the point or line of
equilibrium. Among these are (a) the social value and importance of the specific aspect of
the particular freedom restricted by the legislation; (b) the specific thrust of the restriction,
i.e., whether the restriction is direct or indirect, whether or not the persons affected are
few; (c) the value and importance of the public interest sought to be secured by the
legislationthe reference here is to the nature and gravity of the evil which Congress
seeks to prevent; (d) whether the specific restriction decreed by Congress is reasonably
appropriate and necessary for the protection of such public interest; and (e) whether the
188
necessary safeguarding of the public interest involved may be achieved by some other
measure less restrictive of the protected freedom.
This balancing of interest test, to borrow from Professor Kauper, rests on the theory
that it is the courts function in a case before it when it finds public interests served by
legislation, on the one hand, and the free expression clause affected by it, on the other, to
balance one against the other and arrive at a judgment where the greater weight shall be
placed. If, on balance, it appears that the public interest served by restrictive legislation is
of such nature that it outweighs the abridgment of freedom, then the court will find the
legislation valid. In short, the balance-of-interests theory rests on the basis that
constitutional freedoms are not absolute, not even those stated in the free speech and
expression clause, and that they may be abridged to some extent to serve appropriate
and important interests. To the mind of the Court, the balancing of interest doctrine is the
more appropriate test to follow.
In the case at bar, petitioner used indecent and obscene language and a three (3)month suspension was slapped on him for breach of MTRCB rules. In this setting, the
assertion by petitioner of his enjoyment of his freedom of speech is ranged against the
duty of the government to protect and promote the development and welfare of the youth.
After a careful examination of the factual milieu and the arguments raised by
petitioner in support of his claim to free speech, the Court rules that the governments
interest to protect and promote the interests and welfare of the children adequately
buttresses the reasonable curtailment and valid restraint on petitioners prayer to continue
as program host of Ang Dating Daan during the suspension period.
No doubt, one of the fundamental and most vital rights granted to citizens of a State
is the freedom of speech or expression, for without the enjoyment of such right, a free,
stable, effective, and progressive democratic state would be difficult to attain. Arrayed
against the freedom of speech is the right of the youth to their moral, spiritual, intellectual,
and social being which the State is constitutionally tasked to promote and protect.
Moreover, the State is also mandated to recognize and support the vital role of the youth
in nation building as laid down in Sec. 13, Art. II of the 1987 Constitution.
The Constitution has, therefore, imposed the sacred obligation and responsibility on
the State to provide protection to the youth against illegal or improper activities which may
prejudice their general well-being. The Article on youth, approved on second reading by
the Constitutional Commission, explained that the State shall extend social protection to
minors against all forms of neglect, cruelty, exploitation, immorality, and practices which
may foster racial, religious or other forms of discrimination.
Indisputably, the State has a compelling interest in extending social protection to
minors against all forms of neglect, exploitation, and immorality which may pollute
innocent minds. It has a compelling interest in helping parents, through regulatory
mechanisms, protect their childrens minds from exposure to undesirable materials and
corrupting experiences. The Constitution, no less, in fact enjoins the State, as earlier
indicated, to promote and protect the physical, moral, spiritual, intellectual, and social wellbeing of the youth to better prepare them fulfill their role in the field of nation-building.[59]
In the same way, the State is mandated to support parents in the rearing of the youth for
civic efficiency and the development of moral character.

Petitioners offensive and obscene language uttered in a television broadcast,

without doubt, was easily accessible to the children. His statements could have exposed
children to a language that is unacceptable in everyday use. As such, the welfare of
children and the States mandate to protect and care for them, as parens patriae,
constitute a substantial and compelling government interest in regulating petitioners
utterances in TV broadcast as provided in PD 1986.
FCC explains the duty of the government to act as parens patriae to protect the
children who, because of age or interest capacity, are susceptible of being corrupted or
prejudiced by offensive language, thus:
[B]roadcasting is uniquely accessible to children, even those too young to read.
Although Cohens written message, [Fuck the Draft], might have been incomprehensible
to a first grader, Pacificas broadcast could have enlarged a childs vocabulary in an
instant. Other forms of offensive expression may be withheld from the young without
restricting the expression at its source. Bookstores and motion picture theaters, for
example, may be prohibited from making indecent material available to children. We held
in Ginsberg v. New York that the governments interest in the well-being of its youth and
in supporting parents claim to authority in their own household justified the regulation of
otherwise protected expression. The ease with which children may obtain access to
broadcast material, coupled with the concerns recognized in Ginsberg, amply justify
special treatment of indecent broadcasting.
Moreover, Gonzales v. Kalaw Katigbak likewise stressed the duty of the State to
attend to the welfare of the young:
x x x It is the consensus of this Court that where television is concerned, a less
liberal approach calls for observance. This is so because unlike motion pictures where
the patrons have to pay their way, television reaches every home where there is a set.
Children then will likely will be among the avid viewers of the programs therein shown. As
was observed by Circuit Court of Appeals Judge Jerome Frank, it is hardly the concern of
the law to deal with the sexual fantasies of the adult population. It cannot be denied
though that the State as parens patriae is called upon to manifest an attitude of caring for
the welfare of the young.
The compelling need to protect the young impels us to sustain the regulatory action
MTRCB took in the narrow confines of the case. To reiterate, FCC justified the restraint
on the TV broadcast grounded on the following considerations: (1) the use of television
with its unique accessibility to children, as a medium of broadcast of a patently offensive
speech; (2) the time of broadcast; and (3) the G rating of the Ang Dating Daan program.
And in agreeing with MTRCB, the court takes stock of and cites with approval the
following excerpts from FCC:
It is appropriate, in conclusion, to emphasize the narrowness of our holding. This
case does not involve a two-way radio conversation between a cab driver and a
dispatcher, or a telecast of an Elizabethan comedy. We have not decided that an
occasional expletive in either setting would justify any sanction. x x x The [FFCs] decision
rested entirely on a nuisance rationale under which context is all important. The concept
189
requires consideration of a host of variables. The time of day was emphasized by the
[FFC]. The content of the program in which the language is used will affect the
composition of the audience x x x. As Mr. Justice Sutherland wrote a nuisance may be
merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard. We
simply hold that when the [FCC] finds that a pig has entered the parlor, the exercise of its
regulatory power does not depend on proof that the pig is obscene.
There can be no quibbling that the remarks in question petitioner uttered on primetime television are blatantly indecent if not outright obscene. It is the kind of speech that
PD 1986 proscribes necessitating the exercise by MTRCB of statutory disciplinary powers.
It is the kind of speech that the State has the inherent prerogative, nay duty, to regulate
and prevent should such action served and further compelling state interests. One who
utters indecent, insulting, or offensive words on television when unsuspecting children are
in the audience is, in the graphic language of FCC, a pig in the parlor. Public interest
would be served if the pig is reasonably restrained or even removed from the parlor.
Ergo, petitioners offensive and indecent language can be subjected to prior
restraint.
Petitioner theorizes that the three (3)-month suspension is either prior restraint or
subsequent punishment that, however, includes prior restraint, albeit indirectly.
After a review of the facts, the Court finds that what MTRCB imposed on petitioner
is an administrative sanction or subsequent punishment for his offensive and obscene
language in Ang Dating Daan.
To clarify, statutes imposing prior restraints on speech are generally illegal and
presumed unconstitutional breaches of the freedom of speech. The exceptions to prior
restraint are movies, television, and radio broadcast censorship in view of its access to
numerous people, including the young who must be insulated from the prejudicial effects
of unprotected speech. PD 1986 was passed creating the Board of Review for Motion
Pictures and Television (now MTRCB) and which requires prior permit or license before
showing a motion picture or broadcasting a TV program. The Board can classify movies
and television programs and can cancel permits for exhibition of films or television
broadcast.
The power of MTRCB to regulate and even impose some prior restraint on radio
and television shows, even religious programs, was upheld in Iglesia Ni Cristo v. Court of
Appeals. Speaking through Chief Justice Reynato S. Puno, the Court wrote:
We thus reject petitioners postulate that its religious program is per se beyond
review by the respondent Board. Its public broadcast on TV of its religious program brings
it out of the bosom of internal belief. Television is a medium that reaches even the eyes
and ears of children. The Court iterates the rule that the exercise of religious freedom can
be regulated by the State when it 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. x x x
xxxx

While the thesis has a lot to commend itself, we are not ready to hold that [PD 1986]
is unconstitutional for Congress to grant an administrative body quasi-judicial power to
preview and classify TV programs and enforce its decision subject to review by our courts.
As far back as 1921, we upheld this setup in Sotto vs. Ruiz, viz:
The use of the mails by private persons is in the nature of a privilege which can be
regulated in order to avoid its abuse. Persons possess no absolute right to put into the
mail anything they please, regardless of its character.
Bernas adds:
Under the decree a movie classification board is made the arbiter of what movies and
television programs or parts of either are fit for public consumption. It decides what
movies are immoral, indecent, contrary to law and/or good customs, injurious to the
prestige of the Republic of the Philippines or its people, and what tend to incite
subversion, insurrection, rebellion or sedition, or tend to undermine the faith and
confidence of the people in their government and/or duly constituted authorities, etc.
Moreover, its decisions are executory unless stopped by a court.
Moreover, in MTRCB v. ABS-CBN Broadcasting Corporation, it was held that the

power of review and prior approval of MTRCB extends to all television programs and is
valid despite the freedom of speech guaranteed by the Constitution. Thus, all broadcast
networks are regulated by the MTRCB since they are required to get a permit before they
air their television programs. Consequently, their right to enjoy their freedom of speech is
subject to that requirement. As lucidly explained by Justice Dante O. Tinga, government
regulations through the MTRCB became a necessary evil with the government taking the
role of assigning bandwidth to individual broadcasters. The stations explicitly agreed to
this regulatory scheme; otherwise, chaos would result in the television broadcast industry
as competing broadcasters will interfere or co-opt each others signals. In this scheme,
station owners and broadcasters in effect waived their right to the full enjoyment of their
right to freedom of speech in radio and television programs and impliedly agreed that said
right may be subject to prior restraintdenial of permit or subsequent punishment, like
suspension or cancellation of permit, among others.
The three (3) months suspension in this case is not a prior restraint on the right of
petitioner to continue with the broadcast of Ang Dating Daan as a permit was already
issued to him by MTRCB for such broadcast. Rather, the suspension is in the form of
permissible administrative sanction or subsequent punishment for the offensive and
obscene remarks he uttered on the evening of August 10, 2004 in his television program,
Ang Dating Daan. It is a sanction that the MTRCB may validly impose under its charter
without running afoul of the free speech clause. And the imposition is separate and
distinct from the criminal action the Board may take pursuant to Sec. 3(i) of PD 1986 and
the remedies that may be availed of by the aggrieved private party under the provisions on
libel or tort, if applicable. As FCC teaches, the imposition of sanctions on broadcasters
who indulge in profane or indecent broadcasting does not constitute forbidden censorship.
Lest it be overlooked, the sanction imposed is not per se for petitioners exercise of his
freedom of speech via television, but for the indecent contents of his utterances in a G
rated TV program.
190
More importantly, petitioner is deemed to have yielded his right to his full enjoyment
of his freedom of speech to regulation under PD 1986 and its IRR as television station
owners, program producers, and hosts have impliedly accepted the power of MTRCB to
regulate the broadcast industry.
Neither can petitioners virtual inability to speak in his program during the period of
suspension be plausibly treated as prior restraint on future speech. For viewed in its
proper perspective, the suspension is in the nature of an intermediate penalty for uttering
an unprotected form of speech. It is definitely a lesser punishment than the permissible
cancellation of exhibition or broadcast permit or license. In fine, the suspension meted
was simply part of the duties of the MTRCB in the enforcement and administration of the
law which it is tasked to implement. Viewed in its proper context, the suspension sought
to penalize past speech made on prime-time G rated TV program; it does not bar future
speech of petitioner in other television programs; it is a permissible subsequent
administrative sanction; it should not be confused with a prior restraint on speech. While
not on all fours, the Court, in MTRCB, sustained the power of the MTRCB to penalize a
broadcast company for exhibiting/airing a pre-taped TV episode without Board
authorization in violation of Sec. 7 of PD 1986.
Any simplistic suggestion, however, that the MTRCB would be crossing the limits of
its authority were it to regulate and even restrain the prime-time television broadcast of
indecent or obscene speech in a G rated program is not acceptable. As made clear in
Eastern Broadcasting Corporation, the freedom of television and radio broadcasting is
somewhat lesser in scope than the freedom accorded to newspaper and print media.
The MTRCB, as a regulatory agency, must have the wherewithal to enforce its mandate,
which would not be effective if its punitive actions would be limited to mere fines.
Television broadcasts should be subject to some form of regulation, considering the ease
with which they can be accessed, and violations of the regulations must be met with
appropriate and proportional disciplinary action. The suspension of a violating television
program would be a sufficient punishment and serve as a deterrent for those responsible.
The prevention of the broadcast of petitioners television program is justified, and does not
constitute prohibited prior restraint. It behooves the Court to respond to the needs of the
changing times, and craft jurisprudence to reflect these times.
Petitioner, in questioning the three-month suspension, also tags as unconstitutional
the very law creating the MTRCB, arguing that PD 1986, as applied to him, infringes also
upon his freedom of religion. The Court has earlier adequately explained why petitioners
undue reliance on the religious freedom cannot lend justification, let alone an exempting
dimension to his licentious utterances in his program. The Court sees no need to address
anew the repetitive arguments on religious freedom. As earlier discussed in the
disposition of the petition in G.R. No. 164785, what was uttered was in no way a religious
speech. Parenthetically, petitioners attempt to characterize his speech as a legitimate
defense of his religion fails miserably. He tries to place his words in perspective, arguing
evidently as an afterthought that this was his method of refuting the alleged distortion of
his statements by the INC hosts of Ang Tamang Daan. But on the night he uttered them in
his television program, the word simply came out as profane language, without any
warning or guidance for undiscerning ears.
As to petitioners other argument about having been denied due process and equal
protection of the law, suffice it to state that we have at length debunked similar arguments
in G.R. No. 164785. There is no need to further delve into the fact that petitioner was
afforded due process when he attended the hearing of the MTRCB, and that he was

unable to demonstrate that he was unjustly discriminated against in the MTRCB

proceedings.
Finally, petitioner argues that there has been undue delegation of legislative power,
as PD 1986 does not provide for the range of imposable penalties that may be applied
with respect to violations of the provisions of the law.
The argument is without merit.
In Edu v. Ericta, the Court discussed the matter of undue delegation of legislative
power in the following wise:
It is a fundamental principle flowing from the doctrine of separation of powers that
Congress may not delegate its legislative power to the two other branches of the
government, subject to the exception that local governments may over local affairs
participate in its exercise. What cannot be delegated is the authority under the
Constitution to make laws and to alter and repeal them; the test is the completeness of the
statute in all its term and provisions when it leaves the hands of the legislature. To
determine whether or not there is an undue delegation of legislative power, the inquiry
must be directed to the scope and definiteness of the measure enacted. The legislature
does not abdicate its functions when it describes what job must be done, who is to do it,
and what is the scope of his authority. For a complex economy, that may indeed be the
only way in which the legislative process can go forward. A distinction has rightfully been
made between delegation of power to make laws which necessarily involves a discretion
as to what it shall be, which constitutionally may not be done, and delegation of authority
or discretion as to its execution to be exercised under and in pursuance of the law, to
which no valid objection can be made. The Constitution is thus not to be regarded as
denying the legislature the necessary resources of flexibility and practicability.
191
materials to the end that no such objectionable pictures, programs, and materials shall be
exhibited and/or broadcast by television. Complementing this provision is Sec. 3(k) of the
decree authorizing the MTRCB to exercise such powers and functions as may be
necessary or incidental to the attainment of the purpose and objectives of [the law]. As
earlier explained, the investiture of supervisory, regulatory, and disciplinary power would
surely be a meaningless grant if it did not carry with it the power to penalize the
supervised or the regulated as may be proportionate to the offense committed, charged,
and proved. As the Court said in Chavez v. National Housing Authority:
x x x [W]hen a general grant of power is conferred or duty enjoined, every
particular power necessary for the exercise of the one or the performance of the other is
also conferred. x x x [W]hen the statute does not specify the particular method to be
followed or used by a government agency in the exercise of the power vested in it by law,
said agency has the authority to adopt any reasonable method to carry out its function.
Given the foregoing perspective, it stands to reason that the power of the MTRCB to
regulate and supervise the exhibition of TV programs carries with it or necessarily implies
the authority to take effective punitive action for violation of the law sought to be enforced.
And would it not be logical too to say that the power to deny or cancel a permit for the
exhibition of a TV program or broadcast necessarily includes the lesser power to
suspend?
To avoid the taint of unlawful delegation, there must be a standard, which implies
at the very least that the legislature itself determines matters of principle and lays down
fundamental policy. Otherwise, the charge of complete abdication may be hard to repel.
A standard thus defines legislative policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the circumstances under which the
legislative command is to be effected. It is the criterion by which legislative purpose may
be carried out. Thereafter, the executive or administrative office designated may in
pursuance of the above guidelines promulgate supplemental rules and regulations.
The MTRCB promulgated the IRR of PD 1986 in accordance with Sec. 3(a) which,
for reference, provides that agency with the power [to] promulgate such rules and
regulations as are necessary or proper for the implementation of this Act, and the
accomplishment of its purposes and objectives x x x. And Chapter XIII, Sec. 1 of the IRR
providing:
Section 1. VIOLATIONS AND ADMINISTRATIVE SANCTIONS.Without
prejudice to the immediate filing of the appropriate criminal action and the immediate
seizure of the pertinent articles pursuant to Section 13, any violation of PD 1986 and its
Implementing Rules and Regulations governing motion pictures, television programs, and
related promotional materials shall be penalized with suspension or cancellation of permits
and/or licenses issued by the Board and/or with the imposition of fines and other
administrative penalty/penalties.
The Board recognizes the existing Table of
Administrative Penalties attached without prejudice to the power of the Board to amend it
when the need arises. In the meantime the existing revised Table of Administrative
Penalties shall be enforced.
Based on the foregoing pronouncements and analyzing the law in question,

petitioners protestation about undue delegation of legislative power for the sole reason
that PD 1986 does not provide for a range of penalties for violation of the law is untenable.
His thesis is that MTRCB, in promulgating the IRR of PD 1986, prescribing a schedule of
penalties for violation of the provisions of the decree, went beyond the terms of the law.
This is, in the final analysis, no more than a measure to specifically implement the
aforequoted provisions of Sec. 3(d) and (k). Contrary to what petitioner implies, the IRR
does not expand the mandate of the MTRCB under the law or partake of the nature of an
unauthorized administrative legislation. The MTRCB cannot shirk its responsibility to
regulate the public airwaves and employ such means as it can as a guardian of the public.
Petitioners posture is flawed by the erroneous assumptions holding it together, the

first assumption being that PD 1986 does not prescribe the imposition of, or authorize the
MTRCB to impose, penalties for violators of PD 1986. As earlier indicated, however, the
MTRCB, by express and direct conferment of power and functions, is charged with
supervising and regulating, granting, denying, or canceling permits for the exhibition
and/or television broadcast of all motion pictures, television programs, and publicity
In Sec. 3(c), one can already find the permissible actions of the MTRCB, along
with the standards to be applied to determine whether there have been statutory
breaches. The MTRCB may evaluate motion pictures, television programs, and publicity
materials applying contemporary Filipino cultural values as standard, and, from there,
determine whether these audio and video materials are objectionable for being immoral,
indecent, contrary to law and/or good customs, [etc.] x x x and apply the sanctions it

192
deems proper. The lawmaking body cannot possibly provide for all the details in the
enforcement of a particular statute. The grant of the rule-making power to administrative
agencies is a relaxation of the principle of separation of powers and is an exception to the
non-delegation of legislative powers.
Administrative regulations or subordinate
legislation calculated to promote the public interest are necessary because of the
growing complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the law. Allowing the MTRCB
some reasonable elbow-room in its operations and, in the exercise of its statutory
disciplinary functions, according it ample latitude in fixing, by way of an appropriate
issuance, administrative penalties with due regard for the severity of the offense and
attending mitigating or aggravating circumstances, as the case may be, would be
consistent with its mandate to effectively and efficiently regulate the movie and television
industry.
Co-respondents Joselito Mallari, Luzviminda Cruz, and UNTV Channel 37 and its
owner, PBC, are hereby exonerated for lack of evidence.
Costs against petitioner.
But even as we uphold the power of the MTRCB to review and impose sanctions
for violations of PD 1986, its decision to suspend petitioner must be modified, for nowhere
in that issuance, particularly the power-defining Sec. 3 nor in the MTRCB Schedule of
Administrative Penalties effective January 1, 1999 is the Board empowered to suspend
the program host or even to prevent certain people from appearing in television programs.
The MTRCB, to be sure, may prohibit the broadcast of such television programs or cancel
permits for exhibition, but it may not suspend television personalities, for such would be
beyond its jurisdiction. The MTRCB cannot extend its exercise of regulation beyond what
the law provides. Only persons, offenses, and penalties clearly falling clearly within the
letter and spirit of PD 1986 will be considered to be within the decrees penal or
disciplinary operation. And when it exists, the reasonable doubt must be resolved in favor
of the person charged with violating the statute and for whom the penalty is sought. Thus,
the MTRCBs decision in Administrative Case No. 01-04 dated September 27, 2004 and
the subsequent order issued pursuant to said decision must be modified. The suspension
should cover only the television program on which petitioner appeared and uttered the
offensive and obscene language, which sanction is what the law and the facts obtaining
call for.
In this original petition for certiorari and mandamus, petitioner Chamber of Real
Estate and Builders Associations, Inc. is questioning the constitutionality of Section 27 (E)
of Republic Act (RA) 8424 and the revenue regulations (RRs) issued by the Bureau of
Internal Revenue (BIR) to implement said provision and those involving creditable
withholding taxes.
In ending, what petitioner obviously advocates is an unrestricted speech

paradigm in which absolute permissiveness is the norm. Petitioners flawed belief that he
may simply utter gutter profanity on television without adverse consequences, under the
guise of free speech, does not lend itself to acceptance in this jurisdiction. We repeat:
freedoms of speech and expression are not absolute freedoms. To say any act that
restrains speech should be greeted with furrowed brows is not to say that any act that
restrains or regulates speech or expression is per se invalid. This only recognizes the
importance of freedoms of speech and expression, and indicates the necessity to carefully
scrutinize acts that may restrain or regulate speech.
WHEREFORE, the decision of the MTRCB in Adm. Case No. 01-04 dated
September 27, 2004 is hereby AFFIRMED with the MODIFICATION of limiting the
suspension to the program Ang Dating Daan. As thus modified, the fallo of the MTRCB
shall read as follows:
WHEREFORE, in view of all the foregoing, a Decision is hereby rendered,
imposing a penalty of THREE (3) MONTHS SUSPENSION on the television program, Ang
Dating Daan, subject of the instant petition.
SO ORDERED.
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. vs. ROMULO

(G.R. No. 160756, March 9, 2010)
DECISION
Petitioner is an association of real estate developers and builders in the Philippines.

It impleaded former Executive Secretary Alberto Romulo, then acting Secretary of Finance
Juanita D. Amatong and then Commissioner of Internal Revenue Guillermo Parayno, Jr.
as respondents.
Petitioner assails the validity of the imposition of minimum corporate income tax
(MCIT) on corporations and creditable withholding tax (CWT) on sales of real properties
classified as ordinary assets.
Section 27(E) of RA 8424 provides for MCIT on domestic corporations and is implemented
by RR 9-98. Petitioner argues that the MCIT violates the due process clause because it
levies income tax even if there is no realized gain.
Petitioner also seeks to nullify Sections 2.57.2(J) (as amended by RR 6-2001) and
2.58.2 of RR 2-98, and Section 4(a)(ii) and (c)(ii) of RR 7-2003, all of which prescribe the
rules and procedures for the collection of CWT on the sale of real properties categorized
as ordinary assets. Petitioner contends that these revenue regulations are contrary to law
for two reasons: first, they ignore the different treatment by RA 8424 of ordinary assets
and capital assets and second, respondent Secretary of Finance has no authority to
collect CWT, much less, to base the CWT on the gross selling price or fair market value of
the real properties classified as ordinary assets.
Petitioner also asserts that the enumerated provisions of the subject revenue
regulations violate the due process clause because, like the MCIT, the government
collects income tax even when the net income has not yet been determined. They
contravene the equal protection clause as well because the CWT is being levied upon real
estate enterprises but not on other business enterprises, more particularly those in the
manufacturing sector.
The issues to be resolved are as follows:

(1) whether or not this Court should take cognizance of the present case;
(2)
whether or not the imposition of the MCIT on domestic corporations is
unconstitutional and
(3)
whether or not the imposition of CWT on income from sales of real properties
classified as ordinary assets under RRs 2-98, 6-2001 and 7-2003, is unconstitutional.
OVERVIEW OF THE ASSAILED PROVISIONS
Under the MCIT scheme, a corporation, beginning on its fourth year of operation, is
assessed an MCIT of 2% of its gross income when such MCIT is greater than the normal
corporate income tax imposed under Section 27(A).[4] If the regular income tax is higher
than the MCIT, the corporation does not pay the MCIT. Any excess of the MCIT over the
normal tax shall be carried forward and credited against the normal income tax for the
three immediately succeeding taxable years. Section 27(E) of RA 8424 provides:
Section 27 (E). [MCIT] on Domestic Corporations. (1)
Imposition of Tax. A [MCIT] of two percent (2%) of the gross income as of the end
of the taxable year, as defined herein, is hereby imposed on a corporation taxable under
this Title, beginning on the fourth taxable year immediately following the year in which
such corporation commenced its business operations, when the minimum income tax is
greater than the tax computed under Subsection (A) of this Section for the taxable year.
(2)
Carry Forward of Excess Minimum Tax. Any excess of the [MCIT] over the normal
income tax as computed under Subsection (A) of this Section shall be carried forward and
credited against the normal income tax for the three (3) immediately succeeding taxable
years.
(3)
Relief from the [MCIT] under certain conditions. The Secretary of Finance is
hereby authorized to suspend the imposition of the [MCIT] on any corporation which
suffers losses on account of prolonged labor dispute, or because of force majeure, or
because of legitimate business reverses.
The Secretary of Finance is hereby authorized to promulgate, upon recommendation of
the Commissioner, the necessary rules and regulations that shall define the terms and
conditions under which he may suspend the imposition of the [MCIT] in a meritorious
case.
(4)
Gross Income Defined. For purposes of applying the [MCIT] provided under
Subsection (E) hereof, the term gross income shall mean gross sales less sales returns,
discounts and allowances and cost of goods sold. Cost of goods sold shall include all
business expenses directly incurred to produce the merchandise to bring them to their
present location and use.
193
For trading or merchandising concern, cost of goods sold shall include the
invoice cost of the goods sold, plus import duties, freight in transporting the goods to the
place where the goods are actually sold including insurance while the goods are in transit.
For a manufacturing concern, cost of goods manufactured and sold shall
include all costs of production of finished goods, such as raw materials used, direct labor
and manufacturing overhead, freight cost, insurance premiums and other costs incurred to
bring the raw materials to the factory or warehouse.
In the case of taxpayers engaged in the sale of service, gross income means
gross receipts less sales returns, allowances, discounts and cost of services. Cost of
services shall mean all direct costs and expenses necessarily incurred to provide the
services required by the customers and clients including (A) salaries and employee
benefits of personnel, consultants and specialists directly rendering the service and (B)
cost of facilities directly utilized in providing the service such as depreciation or rental of
equipment used and cost of supplies: Provided, however, that in the case of banks, cost
of services shall include interest expense.
On August 25, 1998, respondent Secretary of Finance (Secretary), on the

recommendation of the Commissioner of Internal Revenue (CIR), promulgated RR 9-98
implementing Section 27(E). The pertinent portions thereof read:
Sec. 2.27(E) [MCIT] on Domestic Corporations.
(1)
Imposition of the Tax. A [MCIT] of two percent (2%) of the gross income as of the
end of the taxable year (whether calendar or fiscal year, depending on the accounting
period employed) is hereby imposed upon any domestic corporation beginning the fourth
(4th) taxable year immediately following the taxable year in which such corporation
commenced its business operations. The MCIT shall be imposed whenever such
corporation has zero or negative taxable income or whenever the amount of minimum
corporate income tax is greater than the normal income tax due from such corporation.
For purposes of these Regulations, the term, normal income tax means the income tax
rates prescribed under Sec. 27(A) and Sec. 28(A)(1) of the Code xxx at 32% effective
January 1, 2000 and thereafter.
xxx
xxx
xxx
(2)
Carry forward of excess [MCIT]. Any excess of the [MCIT] over the normal income
tax as computed under Sec. 27(A) of the Code shall be carried forward on an annual basis
and credited against the normal income tax for the three (3) immediately succeeding
taxable years.
xxx
xxx
xxx
Meanwhile, on April 17, 1998, respondent Secretary, upon recommendation of

respondent CIR, promulgated RR 2-98 implementing certain provisions of RA 8424
involving the withholding of taxes.[6] Under Section 2.57.2(J) of RR No. 2-98, income

payments from the sale, exchange or transfer of real property, other than capital assets,
by persons residing in the Philippines and habitually engaged in the real estate business
were subjected to CWT:
Sec. 2.57.2. Income payment subject to [CWT] and rates prescribed thereon:
xxx
xxx
xxx
(J) Gross selling price or total amount of consideration or its equivalent paid to the
seller/owner for the sale, exchange or transfer of. Real property, other than capital
assets, sold by an individual, corporation, estate, trust, trust fund or pension fund and the
seller/transferor is habitually engaged in the real estate business in accordance with the
following schedule
Those which are exempt from a withholding tax at source as prescribed in Sec. 2.57.5 of
these regulations.
194
xxx
xxx
xxx
(J)
Gross selling price or total amount of consideration or its equivalent paid to the
seller/owner for the sale, exchange or transfer of real property classified as ordinary asset.
- A [CWT] based on the gross selling price/total amount of consideration or the fair market
value determined in accordance with Section 6(E) of the Code, whichever is higher, paid
to the seller/owner for the sale, transfer or exchange of real property, other than capital
asset, shall be imposed upon the withholding agent,/buyer, in accordance with the
following schedule:
Where the seller/transferor is exempt from [CWT] in accordance with Sec. 2.57.5 of
these regulations.
Exempt
Upon the following values of real property, where the seller/transferor is habitually
engaged in the real estate business.
Exempt
With a selling price of Five Hundred Thousand Pesos (P500,000.00) or less.
With a selling price of five hundred thousand pesos (P500,000.00) or less.
1.5%
1.5%
With a selling price of more than five hundred thousand pesos (P500,000.00) but not more
than two million pesos (P2,000,000.00).
With a selling price of more than Five Hundred Thousand Pesos (P500,000.00) but not
more than Two Million Pesos (P2,000,000.00).
3.0%
3.0%
With a selling price of more than two Million Pesos (P2,000,000.00).
With selling price of more than two million pesos (P2,000,000.00)
5.0%
xxx
5.0%
xxx
xxx
xxx
xxx
xxx
Gross selling price shall mean the consideration stated in the sales document or
the fair market value determined in accordance with Section 6 (E) of the Code, as
amended, whichever is higher. In an exchange, the fair market value of the property
received in exchange, as determined in the Income Tax Regulations shall be used.
Gross selling price shall remain the consideration stated in the sales document or the fair
market value determined in accordance with Section 6 (E) of the Code, as amended,
whichever is higher. In an exchange, the fair market value of the property received in
exchange shall be considered as the consideration.
xxx
Where the consideration or part thereof is payable on installment, no withholding

tax is required to be made on the periodic installment payments where the buyer is an
individual not engaged in trade or business. In such a case, the applicable rate of tax
based on the entire consideration shall be withheld on the last installment or installments
to be paid to the seller.
However, if the buyer is engaged in trade or business, whether a corporation or
otherwise, the tax shall be deducted and withheld by the buyer on every installment.
This provision was amended by RR 6-2001 on July 31, 2001:
Sec. 2.57.2. Income payment subject to [CWT] and rates prescribed thereon:
xxx
xxx
However, if the buyer is engaged in trade or business, whether a corporation or otherwise,

these rules shall apply:
(i) If the sale is a sale of property on the installment plan (that is, payments in the year of
sale do not exceed 25% of the selling price), the tax shall be deducted and withheld by the
buyer on every installment.
(ii) If, on the other hand, the sale is on a cash basis or is a deferred-payment sale not on
the installment plan (that is, payments in the year of sale exceed 25% of the selling

price), the buyer shall withhold the tax based on the gross selling price or fair market value
of the property, whichever is higher, on the first installment.
In any case, no Certificate Authorizing Registration (CAR) shall be issued to the
buyer unless the [CWT] due on the sale, transfer or exchange of real property other than
capital asset has been fully paid.
Section 2.58.2 of RR 2-98 implementing Section 58(E) of RA 8424 provides that
any sale, barter or exchange subject to the CWT will not be recorded by the Registry of
Deeds until the CIR has certified that such transfers and conveyances have been reported
and the taxes thereof have been duly paid:
Sec. 2.58.2. Registration with the Register of Deeds. Deeds of conveyances of
land or land and building/improvement thereon arising from sales, barters, or exchanges
subject to the creditable expanded withholding tax shall not be recorded by the Register of
Deeds unless the [CIR] or his duly authorized representative has certified that such
transfers and conveyances have been reported and the expanded withholding tax,
inclusive of the documentary stamp tax, due thereon have been fully paid xxxx.
On February 11, 2003, RR No. 7-2003[8] was promulgated, providing for the
guidelines in determining whether a particular real property is a capital or an ordinary
asset for purposes of imposing the MCIT, among others. The pertinent portions thereof
state:
Section 4. Applicable taxes on sale, exchange or other disposition of real
property. - Gains/Income derived from sale, exchange, or other disposition of real
properties shall, unless otherwise exempt, be subject to applicable taxes imposed under
the Code, depending on whether the subject properties are classified as capital assets or
ordinary assets;
a. In the case of individual citizen (including estates and trusts), resident aliens,
and non-resident aliens engaged in trade or business in the Philippines;
xxx
xxx
xxx
(ii)
The sale of real property located in the Philippines, classified as ordinary
assets, shall be subject to the [CWT] (expanded) under Sec. 2.57..2(J) of [RR 2-98], as
amended, based on the gross selling price or current fair market value as determined in
accordance with Section 6(E) of the Code, whichever is higher, and consequently, to the
ordinary income tax imposed under Sec. 24(A)(1)(c) or 25(A)(1) of the Code, as the case
may be, based on net taxable income.
xxx
c.
xxx
xxx
xxx
In the case of domestic corporations.

xxx
xxx
195
(ii)
The sale of land and/or building classified as ordinary asset and other real
property (other than land and/or building treated as capital asset), regardless of the
classification thereof, all of which are located in the Philippines, shall be subject to the
[CWT] (expanded) under Sec. 2.57.2(J) of [RR 2-98], as amended, and consequently, to
the ordinary income tax under Sec. 27(A) of the Code. In lieu of the ordinary income tax,
however, domestic corporations may become subject to the [MCIT] under Sec. 27(E) of
the Code, whichever is applicable.
xxx
xxx
xxx
We shall now tackle the issues raised.
EXISTENCE OF A JUSTICIABLE CONTROVERSY

Courts will not assume jurisdiction over a constitutional question unless the following
requisites are satisfied: (1) there must be an actual case calling for the exercise of judicial
review; (2) the question before the court must be ripe for adjudication; (3) the person
challenging the validity of the act must have standing to do so; (4) the question of
constitutionality must have been raised at the earliest opportunity and (5) the issue of
constitutionality must be the very lis mota of the case
Respondents aver that the first three requisites are absent in this case.
According to them, there is no actual case calling for the exercise of judicial power and it
is not yet ripe for adjudication because [petitioner] did not allege that CREBA, as a
corporate entity, or any of its members, has been assessed by the BIR for the payment of
[MCIT] or [CWT] on sales of real property. Neither did petitioner allege that its members
have shut down their businesses as a result of the payment of the MCIT or CWT.
Petitioner has raised concerns in mere abstract and hypothetical form without any actual,
specific and concrete instances cited that the assailed law and revenue regulations have
actually and adversely affected it. Lacking empirical data on which to base any
conclusion, any discussion on the constitutionality of the MCIT or CWT on sales of real
property is essentially an academic exercise.
Perceived or alleged hardship to taxpayers alone is not an adequate justification
for adjudicating abstract issues. Otherwise, adjudication would be no different from the
giving of advisory opinion that does not really settle legal issues.
An actual case or controversy involves a conflict of legal rights or an assertion of
opposite legal claims which is susceptible of judicial resolution as distinguished from a
hypothetical or abstract difference or dispute. On the other hand, a question is considered
ripe for adjudication when the act being challenged has a direct adverse effect on the
individual challenging it.
Contrary to respondents assertion, we do not have to wait until petitioners
members have shut down their operations as a result of the MCIT or CWT. The assailed
provisions are already being implemented. As we stated in Didipio Earth-Savers MultiPurpose Association, Incorporated (DESAMA) v. Gozun:

By the mere enactment of the questioned law or the approval of the challenged
act, the dispute is said to have ripened into a judicial controversy even without any other
overt act. Indeed, even a singular violation of the Constitution and/or the law is enough to
awaken judicial duty.
If the assailed provisions are indeed unconstitutional, there is no better time than
the present to settle such question once and for all.
Respondents next argue that petitioner has no legal standing to sue:
Petitioner is an association of some of the real estate developers and builders in
the Philippines. Petitioners did not allege that [it] itself is in the real estate business. It did
not allege any material interest or any wrong that it may suffer from the enforcement of
[the assailed provisions].
Legal standing or locus standi is a partys personal and substantial interest in a
case such that it has sustained or will sustain direct injury as a result of the governmental
act being challenged. In Holy Spirit Homeowners Association, Inc. v. Defensor, we held
that the association had legal standing because its members stood to be injured by the
enforcement of the assailed provisions:
Petitioner association has the legal standing to institute the instant petition xxx.
There is no dispute that the individual members of petitioner association are residents of
the NGC. As such they are covered and stand to be either benefited or injured by the
enforcement of the IRR, particularly as regards the selection process of beneficiaries and
lot allocation to qualified beneficiaries. Thus, petitioner association may assail those
provisions in the IRR which it believes to be unfavorable to the rights of its members. xxx
Certainly, petitioner and its members have sustained direct injury arising from the
enforcement of the IRR in that they have been disqualified and eliminated from the
selection process.
In any event, this Court has the discretion to take cognizance of a suit which does
not satisfy the requirements of an actual case, ripeness or legal standing when paramount
public interest is involved. The questioned MCIT and CWT affect not only petitioners but
practically all domestic corporate taxpayers in our country. The transcendental importance
of the issues raised and their overreaching significance to society make it proper for us to
take cognizance of this petition.
CONCEPT AND RATIONALE OF THE MCIT
The MCIT on domestic corporations is a new concept introduced by RA 8424 to
the Philippine taxation system. It came about as a result of the perceived inadequacy of
the self-assessment system in capturing the true income of corporations. It was devised
as a relatively simple and effective revenue-raising instrument compared to the normal
income tax which is more difficult to control and enforce. It is a means to ensure that
everyone will make some minimum contribution to the support of the public sector. The
congressional deliberations on this are illuminating:
196
Senator Enrile. Mr. President, we are not unmindful of the practice of certain
corporations of reporting constantly a loss in their operations to avoid the payment of
taxes, and thus avoid sharing in the cost of government. In this regard, the Tax Reform
Act introduces for the first time a new concept called the [MCIT] so as to minimize tax
evasion, tax avoidance, tax manipulation in the country and for administrative
convenience. This will go a long way in ensuring that corporations will pay their just
share in supporting our public life and our economic advancement.
Domestic corporations owe their corporate existence and their privilege to do
business to the government. They also benefit from the efforts of the government to
improve the financial market and to ensure a favorable business climate. It is therefore fair
for the government to require them to make a reasonable contribution to the public
expenses.
Congress intended to put a stop to the practice of corporations which, while
having large turn-overs, report minimal or negative net income resulting in minimal or zero
income taxes year in and year out, through under-declaration of income or over-deduction
of expenses otherwise called tax shelters.
Mr. Javier (E.) [This] is what the Finance Dept. is trying to remedy, that is why
they have proposed the [MCIT]. Because from experience too, you have corporations
which have been losing year in and year out and paid no tax. So, if the corporation has
been losing for the past five years to ten years, then that corporation has no business to
be in business. It is dead. Why continue if you are losing year in and year out? So, we
have this provision to avoid this type of tax shelters, Your Honor.
The primary purpose of any legitimate business is to earn a profit. Continued
and repeated losses after operations of a corporation or consistent reports of minimal net
income render its financial statements and its tax payments suspect. For sure, certain tax
avoidance schemes resorted to by corporations are allowed in our jurisdiction. The MCIT
serves to put a cap on such tax shelters. As a tax on gross income, it prevents tax
evasion and minimizes tax avoidance schemes achieved through sophisticated and artful
manipulations of deductions and other stratagems. Since the tax base was broader, the
tax rate was lowered.
To further emphasize the corrective nature of the MCIT, the following safeguards
were incorporated into the law:
First, recognizing the birth pangs of businesses and the reality of the need to
recoup initial major capital expenditures, the imposition of the MCIT commences only on
the fourth taxable year immediately following the year in which the corporation
commenced its operations. This grace period allows a new business to stabilize first and
make its ventures viable before it is subjected to the MCIT.
Second, the law allows the carrying forward of any excess of the MCIT paid over
the normal income tax which shall be credited against the normal income tax for the three
immediately succeeding years.
Third, since certain businesses may be incurring genuine repeated losses, the
law authorizes the Secretary of Finance to suspend the imposition of MCIT if a corporation

suffers losses due to prolonged labor dispute, force majeure and legitimate business
reverses.
Even before the legislature introduced the MCIT to the Philippine taxation
system, several other countries already had their own system of minimum corporate
income taxation. Our lawmakers noted that most developing countries, particularly Latin
American and Asian countries, have the same form of safeguards as we do. As pointed
out during the committee hearings:
[Mr. Medalla:] Note that most developing countries where you have of course quite
a bit of room for underdeclaration of gross receipts have this same form of safeguards.
In the case of Thailand, half a percent (0.5%), theres a minimum of income tax of
half a percent (0.5%) of gross assessable income. In Korea a 25% of taxable income
before deductions and exemptions. Of course the different countries have different basis
for that minimum income tax.
The other thing youll notice is the preponderance of Latin American countries that
employed this method. Okay, those are additional Latin American countries.
At present, the United States of America, Mexico, Argentina, Tunisia, Panama
and Hungary have their own versions of the MCIT.
MCIT IS NOT VIOLATIVE OF DUE PROCESS
Petitioner claims that the MCIT under Section 27(E) of RA 8424 is unconstitutional
because it is highly oppressive, arbitrary and confiscatory which amounts to deprivation of
property without due process of law. It explains that gross income as defined under said
provision only considers the cost of goods sold and other direct expenses; other major
expenditures, such as administrative and interest expenses which are equally necessary
to produce gross income, were not taken into account. Thus, pegging the tax base of the
MCIT to a corporations gross income is tantamount to a confiscation of capital because
gross income, unlike net income, is not realized gain.
We disagree.
Taxes are the lifeblood of the government. Without taxes, the government can
neither exist nor endure. The exercise of taxing power derives its source from the very
existence of the State whose social contract with its citizens obliges it to promote public
interest and the common good.
Taxation is an inherent attribute of sovereignty. It is a power that is purely
legislative.[35] Essentially, this means that in the legislature primarily lies the discretion to
determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs
(place) of taxation.[36] It has the authority to prescribe a certain tax at a specific rate for a
particular public purpose on persons or things within its jurisdiction. In other words, the
legislature wields the power to define what tax shall be imposed, why it should be
imposed, how much tax shall be imposed, against whom (or what) it shall be imposed and
where it shall be imposed.
197
As a general rule, the power to tax is plenary and unlimited in its range,
acknowledging in its very nature no limits, so that the principal check against its abuse is
to be found only in the responsibility of the legislature (which imposes the tax) to its
constituency who are to pay it. Nevertheless, it is circumscribed by constitutional
limitations. At the same time, like any other statute, tax legislation carries a presumption
of constitutionality.
The constitutional safeguard of due process is embodied in the fiat [no] person
shall be deprived of life, liberty or property without due process of law. In Sison, Jr. v.
Ancheta, et al., we held that the due process clause may properly be invoked to invalidate,
in appropriate cases, a revenue measure when it amounts to a confiscation of property.
But in the same case, we also explained that we will not strike down a revenue measure
as unconstitutional (for being violative of the due process clause) on the mere allegation of
arbitrariness by the taxpayer. There must be a factual foundation to such an
unconstitutional taint. This merely adheres to the authoritative doctrine that, where the due
process clause is invoked, considering that it is not a fixed rule but rather a broad
standard, there is a need for proof of such persuasive character.
Petitioner is correct in saying that income is distinct from capital. Income means
all the wealth which flows into the taxpayer other than a mere return on capital. Capital is
a fund or property existing at one distinct point in time while income denotes a flow of
wealth during a definite period of time. Income is gain derived and severed from capital.
For income to be taxable, the following requisites must exist:
(1) there must be gain;
(2) the gain must be realized or received and
(3) the gain must not be excluded by law or treaty from
taxation.
Certainly, an income tax is arbitrary and confiscatory if it taxes capital because capital is
not income. In other words, it is income, not capital, which is subject to income tax.
However, the MCIT is not a tax on capital.
The MCIT is imposed on gross income which is arrived at by deducting the capital spent
by a corporation in the sale of its goods, i.e., the cost of goods[48] and other direct
expenses from gross sales. Clearly, the capital is not being taxed.
Furthermore, the MCIT is not an additional tax imposition. It is imposed in lieu of the
normal net income tax, and only if the normal income tax is suspiciously low. The MCIT
merely approximates the amount of net income tax due from a corporation, pegging the
rate at a very much reduced 2% and uses as the base the corporations gross income.
Besides, there is no legal objection to a broader tax base or taxable income by
eliminating all deductible items and at the same time reducing the applicable tax rate.
Statutes taxing the gross "receipts," "earnings," or "income" of particular corporations are
found in many jurisdictions. Tax thereon is generally held to be within the power of a state

to impose; or constitutional, unless it interferes with interstate commerce or violates the

requirement as to uniformity of taxation.
The United States has a similar alternative minimum tax (AMT) system which is
generally characterized by a lower tax rate but a broader tax base. Since our income tax
laws are of American origin, interpretations by American courts of our parallel tax laws
have persuasive effect on the interpretation of these laws. Although our MCIT is not
exactly the same as the AMT, the policy behind them and the procedure of their
implementation are comparable. On the question of the AMTs constitutionality, the United
States Court of Appeals for the Ninth Circuit stated in Okin v. Commissioner:
In enacting the minimum tax, Congress attempted to remedy general taxpayer
distrust of the system growing from large numbers of taxpayers with large incomes who
were yet paying no taxes.
xxx
xxx
xxx
We thus join a number of other courts in upholding the constitutionality of the [AMT]. xxx
[It] is a rational means of obtaining a broad-based tax, and therefore is constitutional.
The U.S. Court declared that the congressional intent to ensure that corporate taxpayers
would contribute a minimum amount of taxes was a legitimate governmental end to which
the AMT bore a reasonable relation.[55]
American courts have also emphasized that Congress has the power to condition,
limit or deny deductions from gross income in order to arrive at the net that it chooses to
tax. This is because deductions are a matter of legislative grace.
Absent any other valid objection, the assignment of gross income, instead of net
income, as the tax base of the MCIT, taken with the reduction of the tax rate from 32% to
2%, is not constitutionally objectionable.
Moreover, petitioner does not cite any actual, specific and concrete negative
experiences of its members nor does it present empirical data to show that the
implementation of the MCIT resulted in the confiscation of their property.
In sum, petitioner failed to support, by any factual or legal basis, its allegation
that the MCIT is arbitrary and confiscatory. The Court cannot strike down a law as
unconstitutional simply because of its yokes. Taxation is necessarily burdensome
because, by its nature, it adversely affects property rights. The party alleging the laws
unconstitutionality has the burden to demonstrate the supposed violations in
understandable terms.
RR 9-98 MERELY CLARIFIES SECTION 27(E) OF RA 8424
198
Petitioner alleges that RR 9-98 is a deprivation of property without due process of

law because the MCIT is being imposed and collected even when there is actually a loss,
or a zero or negative taxable income:
Sec. 2.27(E)
[MCIT] on Domestic Corporations.
(1) Imposition of the Tax. xxx The MCIT shall be imposed whenever such
corporation has zero or negative taxable income or whenever the amount of [MCIT] is
greater than the normal income tax due from such corporation. (Emphasis supplied)
RR 9-98, in declaring that MCIT should be imposed whenever such corporation
has zero or negative taxable income, merely defines the coverage of Section 27(E). This
means that even if a corporation incurs a net loss in its business operations or reports
zero income after deducting its expenses, it is still subject to an MCIT of 2% of its gross
income. This is consistent with the law which imposes the MCIT on gross income
notwithstanding the amount of the net income. But the law also states that the MCIT is to
be paid only if it is greater than the normal net income. Obviously, it may well be the case
that the MCIT would be less than the net income of the corporation which posts a zero or
negative taxable income.
We now proceed to the issues involving the CWT.
The withholding tax system is a procedure through which taxes (including income
taxes) are collected.[61] Under Section 57 of RA 8424, the types of income subject to
withholding tax are divided into three categories: (a) withholding of final tax on certain
incomes; (b) withholding of creditable tax at source and (c) tax-free covenant bonds.
Petitioner is concerned with the second category (CWT) and maintains that the revenue
regulations on the collection of CWT on sale of real estate categorized as ordinary assets
are unconstitutional.
Petitioner, after enumerating the distinctions between capital and ordinary assets
under RA 8424, contends that Sections 2.57.2(J) and 2.58.2 of RR 2-98 and Sections 4(a)
(ii) and (c)(ii) of RR 7-2003 were promulgated with grave abuse of discretion amounting
to lack of jurisdiction and patently in contravention of law because they ignore such
distinctions. Petitioners conclusion is based on the following premises: (a) the revenue
regulations use gross selling price (GSP) or fair market value (FMV) of the real estate as
basis for determining the income tax for the sale of real estate classified as ordinary
assets and (b) they mandate the collection of income tax on a per transaction basis, i.e.,
upon consummation of the sale via the CWT, contrary to RA 8424 which calls for the
payment of the net income at the end of the taxable period.
Petitioner theorizes that since RA 8424 treats capital assets and ordinary assets
differently, respondents cannot disregard the distinctions set by the legislators as regards
the tax base, modes of collection and payment of taxes on income from the sale of capital
and ordinary assets.
Petitioners arguments have no merit.

AUTHORITY OF THE SECRETARY OF FINANCE TO ORDER THE COLLECTION OF

CWT ON SALES OF REAL PROPERTY CONSIDERED AS ORDINARY ASSETS
The Secretary of Finance is granted, under Section 244 of RA 8424, the authority
to promulgate the necessary rules and regulations for the effective enforcement of the
provisions of the law. Such authority is subject to the limitation that the rules and
regulations must not override, but must remain consistent and in harmony with, the law
they seek to apply and implement. It is well-settled that an administrative agency cannot
amend an act of Congress.
We have long recognized that the method of withholding tax at source is a
procedure of collecting income tax which is sanctioned by our tax laws. The withholding
tax system was devised for three primary reasons: first, to provide the taxpayer a
convenient manner to meet his probable income tax liability; second, to ensure the
collection of income tax which can otherwise be lost or substantially reduced through
failure to file the corresponding returns and third, to improve the governments cash flow.
This results in administrative savings, prompt and efficient collection of taxes, prevention
of delinquencies and reduction of governmental effort to collect taxes through more
complicated means and remedies.
Respondent Secretary has the authority to require the withholding of a tax on
items of income payable to any person, national or juridical, residing in the Philippines.
Such authority is derived from Section 57(B) of RA 8424 which provides:
xxx
xxx
The taxes withheld are in the nature of advance tax payments by a taxpayer in
order to extinguish its possible tax obligation. They are installments on the annual tax
which may be due at the end of the taxable year.
Under RR 2-98, the tax base of the income tax from the sale of real property
classified as ordinary assets remains to be the entitys net income imposed under Section
24 (resident individuals) or Section 27 (domestic corporations) in relation to Section 31 of
RA 8424, i.e. gross income less allowable deductions. The CWT is to be deducted from
the net income tax payable by the taxpayer at the end of the taxable year. Precisely,
Section 4(a)(ii) and (c)(ii) of RR 7-2003 reiterate that the tax base for the sale of real
property classified as ordinary assets remains to be the net taxable income:
Section 4. Applicable taxes on sale, exchange or other disposition of real
property. - Gains/Income derived from sale, exchange, or other disposition of real
properties shall unless otherwise exempt, be subject to applicable taxes imposed under
the Code, depending on whether the subject properties are classified as capital assets or
ordinary assets;
xxx
xxx
(B)
Withholding of Creditable Tax at Source. The [Secretary] may, upon the
recommendation of the [CIR], require the withholding of a tax on the items of income
payable to natural or juridical persons, residing in the Philippines, by payorcorporation/persons as provided for by law, at the rate of not less than one percent (1%)
but not more than thirty-two percent (32%) thereof, which shall be credited against the
income tax liability of the taxpayer for the taxable year.
xxx
xxx
a. In the case of individual citizens (including estates and trusts), resident aliens, and
non-resident aliens engaged in trade or business in the Philippines;
xxx
SEC. 57. Withholding of Tax at Source.
199
xxx
xxx
(ii) The sale of real property located in the Philippines, classified as ordinary
assets, shall be subject to the [CWT] (expanded) under Sec. 2.57.2(j) of [RR 2-98], as
amended, based on the [GSP] or current [FMV] as determined in accordance with Section
6(E) of the Code, whichever is higher, and consequently, to the ordinary income tax
imposed under Sec. 24(A)(1)(c) or 25(A)(1) of the Code, as the case may be, based on
net taxable income.
xxx
xxx
xxx
c. In the case of domestic corporations.

The questioned provisions of RR 2-98, as amended, are well within the authority
given by Section 57(B) to the Secretary, i.e., the graduated rate of 1.5%-5% is between
the 1%-32% range; the withholding tax is imposed on the income payable and the tax is
creditable against the income tax liability of the taxpayer for the taxable year.
EFFECT OF RRS ON THE TAX BASE FOR THE INCOME TAX OF INDIVIDUALS OR
CORPORATIONS ENGAGED IN THE REAL ESTATE BUSINESS
Petitioner maintains that RR 2-98, as amended, arbitrarily shifted the tax base of a
real estate business income tax from net income to GSP or FMV of the property sold.
Petitioner is wrong.
The sale of land and/or building classified as ordinary asset and other real
property (other than land and/or building treated as capital asset), regardless of the
classification thereof, all of which are located in the Philippines, shall be subject to the
[CWT] (expanded) under Sec. 2.57.2(J) of [RR 2-98], as amended, and consequently, to
the ordinary income tax under Sec. 27(A) of the Code. In lieu of the ordinary income tax,
however, domestic corporations may become subject to the [MCIT] under Sec. 27(E) of
the same Code, whichever is applicable.
Accordingly, at the end of the year, the taxpayer/seller shall file its income tax return
and credit the taxes withheld (by the withholding agent/buyer) against its tax due. If the
tax due is greater than the tax withheld, then the taxpayer shall pay the difference. If, on

the other hand, the tax due is less than the tax withheld, the taxpayer will be entitled to a
refund or tax credit. Undoubtedly, the taxpayer is taxed on its net income.
The use of the GSP/FMV as basis to determine the withholding taxes is evidently
for purposes of practicality and convenience. Obviously, the withholding agent/buyer who
is obligated to withhold the tax does not know, nor is he privy to, how much the
taxpayer/seller will have as its net income at the end of the taxable year. Instead, said
withholding agents knowledge and privity are limited only to the particular transaction in
which he is a party. In such a case, his basis can only be the GSP or FMV as these are
the only factors reasonably known or knowable by him in connection with the performance
of his duties as a withholding agent.
NO BLURRING OF DISTINCTIONS BETWEEN
ASSETS
ORDINARY ASSETS AND CAPITAL
RR 2-98 imposes a graduated CWT on income based on the GSP or FMV of the
real property categorized as ordinary assets. On the other hand, Section 27(D)(5) of RA
8424 imposes a final tax and flat rate of 6% on the gain presumed to be realized from the
sale of a capital asset based on its GSP or FMV. This final tax is also withheld at source.
The differences between the two forms of withholding tax, i.e., creditable and
final, show that ordinary assets are not treated in the same manner as capital assets.
Final withholding tax (FWT) and CWT are distinguished as follows:
FWT CWT
a) The amount of income tax withheld by the withholding agent is constituted as a full
and final payment of the income tax due from the payee on the said income.
a) Taxes withheld on certain income payments are intended to equal or at least
approximate the tax due of the payee on said income.
b)The liability for payment of the tax rests primarily on the payor as a withholding agent.
b) Payee of income is required to report the income and/or pay the difference between the
tax withheld and the tax due on the income. The payee also has the right to ask for a
refund if the tax withheld is more than the tax due.
c) The payee is not required to file an income tax return for the particular income.
c) The income recipient is still required to file an income tax return, as prescribed in Sec.
51 and Sec. 52 of the NIRC, as amended.
As previously stated, FWT is imposed on the sale of capital assets. On the other
hand, CWT is imposed on the sale of ordinary assets. The inherent and substantial
differences between FWT and CWT disprove petitioners contention that ordinary assets
are being lumped together with, and treated similarly as, capital assets in contravention of
the pertinent provisions of RA 8424.
Petitioner insists that the levy, collection and payment of CWT at the time of
transaction are contrary to the provisions of RA 8424 on the manner and time of filing of
the return, payment and assessment of income tax involving ordinary assets.
200
The fact that the tax is withheld at source does not automatically mean that it is
treated exactly the same way as capital gains. As aforementioned, the mechanics of the
FWT are distinct from those of the CWT. The withholding agent/buyers act of collecting
the tax at the time of the transaction by withholding the tax due from the income payable is
the essence of the withholding tax method of tax collection.
NO RULE THAT ONLY PASSIVE INCOMES CAN BE SUBJECT TO CWT
Petitioner submits that only passive income can be subjected to withholding tax,
whether final or creditable. According to petitioner, the whole of Section 57 governs the
withholding of income tax on passive income. The enumeration in Section 57(A) refers to
passive income being subjected to FWT. It follows that Section 57(B) on CWT should also
be limited to passive income:
SEC. 57.
Withholding of Tax at Source.
(A) Withholding of Final Tax on Certain Incomes. Subject to rules and

regulations, the [Secretary] may promulgate, upon the recommendation of the [CIR],
requiring the filing of income tax return by certain income payees, the tax imposed or
prescribed by Sections 24(B)(1), 24(B)(2), 24(C), 24(D)(1); 25(A)(2), 25(A)(3), 25(B),
25(C), 25(D), 25(E); 27(D)(1), 27(D)(2), 27(D)(3), 27(D)(5); 28(A)(4), 28(A)(5), 28(A)(7)(a),
28(A)(7)(b), 28(A)(7)(c), 28(B)(1), 28(B)(2), 28(B)(3), 28(B)(4), 28(B)(5)(a), 28(B)(5)(b),
28(B)(5)(c); 33; and 282 of this Code on specified items of income shall be withheld by
payor-corporation and/or person and paid in the same manner and subject to the same
conditions as provided in Section 58 of this Code.
(B) Withholding of Creditable Tax at Source. The [Secretary] may, upon the
recommendation of the [CIR], require the withholding of a tax on the items of income
payable to natural or juridical persons, residing in the Philippines, by payorcorporation/persons as provided for by law, at the rate of not less than one percent (1%)
but not more than thirty-two percent (32%) thereof, which shall be credited against the
income tax liability of the taxpayer for the taxable year. (Emphasis supplied)
This line of reasoning is non sequitur.
Section 57(A) expressly states that final tax can be imposed on certain kinds of income
and enumerates these as passive income. The BIR defines passive income by stating
what it is not:
if the income is generated in the active pursuit and performance of the corporations
primary purposes, the same is not passive income
It is income generated by the taxpayers assets. These assets can be in the form
of real properties that return rental income, shares of stock in a corporation that earn
dividends or interest income received from savings.
On the other hand, Section 57(B) provides that the Secretary can require a CWT
on income payable to natural or juridical persons, residing in the Philippines. There is no

requirement that this income be passive income. If that were the intent of Congress, it
could have easily said so.
Indeed, Section 57(A) and (B) are distinct. Section 57(A) refers to FWT while
Section 57(B) pertains to CWT. The former covers the kinds of passive income
enumerated therein and the latter encompasses any income other than those listed in
57(A). Since the law itself makes distinctions, it is wrong to regard 57(A) and 57(B) in the
same way.
To repeat, the assailed provisions of RR 2-98, as amended, do not modify or
deviate from the text of Section 57(B). RR 2-98 merely implements the law by specifying
what income is subject to CWT. It has been held that, where a statute does not require
any particular procedure to be followed by an administrative agency, the agency may
adopt any reasonable method to carry out its functions. Similarly, considering that the law
uses the general term income, the Secretary and CIR may specify the kinds of income
the rules will apply to based on what is feasible. In addition, administrative rules and
regulations ordinarily deserve to be given weight and respect by the courts[78] in view of
the rule-making authority given to those who formulate them and their specific expertise in
their respective fields.
NO DEPRIVATION OF PROPERTY WITHOUT
DUE
201
Petitioners lamentations will not support its attack on the constitutionality of the
CWT. Petitioners complaints are essentially matters of policy best addressed to the
executive and legislative branches of the government. Besides, the CWT is applied only
on the amounts actually received or receivable by the real estate entity. Sales on
installment are taxed on a per-installment basis. Petitioners desire to utilize for its
operational and capital expenses money earmarked for the payment of taxes may be a
practical business option but it is not a fundamental right which can be demanded from the
court or from the government.
NO VIOLATION OF EQUAL PROTECTION
Petitioner claims that the revenue regulations are violative of the equal protection
clause because the CWT is being levied only on real estate enterprises. Specifically,
petitioner points out that manufacturing enterprises are not similarly imposed a CWT on
their sales, even if their manner of doing business is not much different from that of a real
estate enterprise. Like a manufacturing concern, a real estate business is involved in a
continuous process of production and it incurs costs and expenditures on a regular basis.
The only difference is that goods produced by the real estate business are house and lot
units.
PROCESS
Again, we disagree.
Petitioner avers that the imposition of CWT on GSP/FMV of real estate classified
as ordinary assets deprives its members of their property without due process of law
because, in their line of business, gain is never assured by mere receipt of the selling
price. As a result, the government is collecting tax from net income not yet gained or
earned.
Again, it is stressed that the CWT is creditable against the tax due from the seller of
the property at the end of the taxable year. The seller will be able to claim a tax refund if
its net income is less than the taxes withheld. Nothing is taken that is not due so there is
no confiscation of property repugnant to the constitutional guarantee of due process.
More importantly, the due process requirement applies to the power to tax. The CWT does
not impose new taxes nor does it increase taxes. It relates entirely to the method and
time of payment.
Petitioner protests that the refund remedy does not make the CWT less
burdensome because taxpayers have to wait years and may even resort to litigation
before they are granted a refund. This argument is misleading. The practical problems
encountered in claiming a tax refund do not affect the constitutionality and validity of the
CWT as a method of collecting the tax.
Petitioner complains that the amount withheld would have otherwise been used
by the enterprise to pay labor wages, materials, cost of money and other expenses which
can then save the entity from having to obtain loans entailing considerable interest
expense. Petitioner also lists the expenses and pitfalls of the trade which add to the
burden of the realty industry: huge investments and borrowings; long gestation period;
sudden
and
unpredictable
interest
rate
surges;
continually
spiraling
development/construction costs; heavy taxes and prohibitive up-front regulatory fees
from at least 20 government agencies.
The equal protection clause under the Constitution means 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. Stated
differently, all persons belonging to the same class shall be taxed alike. It follows that the
guaranty of the equal protection of the laws is not violated by legislation based on a
reasonable classification. Classification, to be valid, must (1) rest on substantial
distinctions; (2) be germane to the purpose of the law; (3) not be limited to existing
conditions only and (4) apply equally to all members of the same class.
The taxing power has the authority to make reasonable classifications for purposes
of taxation. Inequalities which result from a singling out of one particular class for taxation,
or exemption, infringe no constitutional limitation. The real estate industry is, by itself, a
class and can be validly treated differently from other business enterprises.
Petitioner, in insisting that its industry should be treated similarly as manufacturing
enterprises, fails to realize that what distinguishes the real estate business from other
manufacturing enterprises, for purposes of the imposition of the CWT, is not their
production processes but the prices of their goods sold and the number of transactions
involved. The income from the sale of a real property is bigger and its frequency of
transaction limited, making it less cumbersome for the parties to comply with the
withholding tax scheme.
On the other hand, each manufacturing enterprise may have tens of thousands of
transactions with several thousand customers every month involving both minimal and
substantial amounts. To require the customers of manufacturing enterprises, at present, to
withhold the taxes on each of their transactions with their tens or hundreds of suppliers

202
may result in an inefficient and unmanageable system of taxation and may well defeat the
purpose of the withholding tax system.
Petitioner counters that there are other businesses wherein expensive items are
also sold infrequently, e.g. heavy equipment, jewelry, furniture, appliance and other capital
goods yet these are not similarly subjected to the CWT. As already discussed, the
Secretary may adopt any reasonable method to carry out its functions.[90] Under Section
57(B), it may choose what to subject to CWT.
A reading of Section 2.57.2 (M) of RR 2-98 will also show that petitioners argument
is not accurate. The sales of manufacturers who have clients within the top 5,000
corporations, as specified by the BIR, are also subject to CWT for their transactions with
said 5,000 corporations.
SECTION 2.58.2 OF RR NO. 2-98 MERELY IMPLEMENTS SECTION 58 OF RA 8424
Lastly, petitioner assails Section 2.58.2 of RR 2-98, which provides that the
Registry of Deeds should not effect the regisration of any document transferring real
property unless a certification is issued by the CIR that the withholding tax has been paid.
Petitioner proffers hardly any reason to strike down this rule except to rely on its
contention that the CWT is unconstitutional. We have ruled that it is not. Furthermore,
this provision uses almost exactly the same wording as Section 58(E) of RA 8424 and is
unquestionably in accordance with it:
Sec. 58. Returns and Payment of Taxes Withheld at Source.
(E) Registration with Register of Deeds. - No registration of any document
transferring real property shall be effected by the Register of Deeds unless the [CIR] or his
duly authorized representative has certified that such transfer has been reported, and the
capital gains or [CWT], if any, has been paid: xxxx any violation of this provision by the
Register of Deeds shall be subject to the penalties imposed under Section 269 of this
Code.
CONCLUSION
The renowned genius Albert Einstein was once quoted as saying [the] hardest
thing in the world to understand is the income tax. When a party questions the
constitutionality of an income tax measure, it has to contend not only with Einsteins
observation but also with the vast and well-established jurisprudence in support of the
plenary powers of Congress to impose taxes. Petitioner has miserably failed to discharge
its burden of convincing the Court that the imposition of MCIT and CWT is
unconstitutional.
WHEREFORE, the petition is hereby DISMISSED.
Costs against petitioner.
SO ORDERED.
BIRAOGO vs. PHIL TRUTH (G.R. No. 192935, December 7, 2010)

DECISION
MENDOZA, J.:
The role of the Constitution cannot be overlooked. It is through the Constitution that the
fundamental powers of government are established, limited and defined, and by which
these powers are distributed among the several departments. The Constitution is the
basic and paramount law to which all other laws must conform and to which all persons,
including the highest officials of the land, must defer. Constitutional doctrines must remain
steadfast no matter what may be the tides of time. It cannot be simply made to sway and
accommodate the call of situations and much more tailor itself to the whims and caprices
of government and the people who run it.
For consideration before the Court are two consolidated cases both of which essentially
assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010,
entitled "Creating the Philippine Truth Commission of 2010."
The first case is G.R. No. 192935, a special civil action for prohibition instituted by
petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo
assails Executive Order No. 1 for being violative of the legislative power of Congress
under Section 1, Article VI of the Constitution as it usurps the constitutional authority of the
legislature to create a public office and to appropriate funds therefor.
The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition
filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and
Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of
Representatives.
The genesis of the foregoing cases can be traced to the events prior to the historic May
2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch
condemnation of graft and corruption with his slogan, "Kung walang corrupt, walang
mahirap." The Filipino people, convinced of his sincerity and of his ability to carry out this
noble objective, catapulted the good senator to the presidency.
To transform his campaign slogan into reality, President Aquino found a need for a special
body to investigate reported cases of graft and corruption allegedly committed during the
previous administration.
Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive
Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission).
Pertinent provisions of said executive order read:
EXECUTIVE ORDER NO. 1 CREATING THE PHILIPPINE TRUTH COMMISSION OF
2010

WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly
enshrines the principle that a public office is a public trust and mandates that public
officers and employees, who are servants of the people, must at all times be accountable
to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with
patriotism and justice, and lead modest lives;
WHEREAS, corruption is among the most despicable acts of defiance of this principle and
notorious violation of this mandate;
WHEREAS, corruption is an evil and scourge which seriously affects the political,
economic, and social life of a nation; in a very special way it inflicts untold misfortune and
misery on the poor, the marginalized and underprivileged sector of society;
WHEREAS, corruption in the Philippines has reached very alarming levels, and
undermined the peoples trust and confidence in the Government and its institutions;
WHEREAS, there is an urgent call for the determination of the truth regarding certain
reports of large scale graft and corruption in the government and to put a closure to them
by the filing of the appropriate cases against those involved, if warranted, and to deter
others from committing the evil, restore the peoples faith and confidence in the
Government and in their public servants;
WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last
elections "kung walang corrupt, walang mahirap" expresses a solemn pledge that if
elected, he would end corruption and the evil it breeds;
WHEREAS, there is a need for a separate body dedicated solely to investigating and
finding out the truth concerning the reported cases of graft and corruption during the
previous administration, and which will recommend the prosecution of the offenders and
secure justice for all;
WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise
known as the Revised Administrative Code of the Philippines, gives the President the
continuing authority to reorganize the Office of the President.
NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby order:
SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE
TRUTH COMMISSION, hereinafter referred to as the "COMMISSION," which shall
primarily seek and find the truth on, and toward this end, investigate reports of graft and
corruption of such scale and magnitude that shock and offend the moral and ethical
sensibilities of the people, committed by public officers and employees, their co-principals,
accomplices and accessories from the private sector, if any, during the previous
administration; and thereafter recommend the appropriate action or measure to be taken
thereon to ensure that the full measure of justice shall be served without fear or favor.
The Commission shall be composed of a Chairman and four (4) members who will act as
an independent collegial body.
203
SECTION 2. Powers and Functions. The Commission, which shall have all the powers
of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of
1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases
of graft and corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private sector, if any,
during the previous administration and thereafter submit its finding and recommendations
to the President, Congress and the Ombudsman.
In particular, it shall:
a) Identify and determine the reported cases of such graft and corruption which it will
investigate;
b) Collect, receive, review and evaluate evidence related to or regarding the cases of
large scale corruption which it has chosen to investigate, and to this end require any
agency, official or employee of the Executive Branch, including government-owned or
controlled corporations, to produce documents, books, records and other papers;
c) Upon proper request or representation, obtain information and documents from the
Senate and the House of Representatives records of investigations conducted by
committees thereof relating to matters or subjects being investigated by the Commission;
d) Upon proper request and representation, obtain information from the courts, including
the Sandiganbayan and the Office of the Court Administrator, information or documents in
respect to corruption cases filed with the Sandiganbayan or the regular courts, as the case
may be;
e) Invite or subpoena witnesses and take their testimonies and for that purpose,
administer oaths or affirmations as the case may be;
f) Recommend, in cases where there is a need to utilize any person as a state witness to
ensure that the ends of justice be fully served, that such person who qualifies as a state
witness under the Revised Rules of Court of the Philippines be admitted for that purpose;
g) Turn over from time to time, for expeditious prosecution, to the appropriate
prosecutorial authorities, by means of a special or interim report and recommendation, all
evidence on corruption of public officers and employees and their private sector coprincipals, accomplices or accessories, if any, when in the course of its investigation the
Commission finds that there is reasonable ground to believe that they are liable for graft
and corruption under pertinent applicable laws;
h) Call upon any government investigative or prosecutorial agency such as the
Department of Justice or any of the agencies under it, and the Presidential Anti-Graft
Commission, for such assistance and cooperation as it may require in the discharge of its
functions and duties;
i) Engage or contract the services of resource persons, professionals and other personnel
determined by it as necessary to carry out its mandate;
j) Promulgate its rules and regulations or rules of procedure it deems necessary to
effectively and efficiently carry out the objectives of this Executive Order and to ensure the
orderly conduct of its investigations, proceedings and hearings, including the presentation
of evidence;

204
k) Exercise such other acts incident to or are appropriate and necessary in connection
with the objectives and purposes of this Order.
Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc
body is one.
SECTION 3. Staffing Requirements. x x x.

SECTION 4. Detail of Employees. x x x.
SECTION 5. Engagement of Experts. x x x
SECTION 6. Conduct of Proceedings. x x x.
SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.
SECTION 8. Protection of Witnesses/Resource Persons. x x x.
SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government
official or personnel who, without lawful excuse, fails to appear upon subpoena issued by
the Commission or who, appearing before the Commission refuses to take oath or
affirmation, give testimony or produce documents for inspection, when required, shall be
subject to administrative disciplinary action. Any private person who does the same may
be dealt with in accordance with law.
To accomplish its task, the PTC shall have all the powers of an investigative body
under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however,
a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in
disputes between contending parties. All it can do is gather, collect and assess evidence
of graft and corruption and make recommendations. It may have subpoena powers but it
has no power to cite people in contempt, much less order their arrest. Although it is a factfinding body, it cannot determine from such facts if probable cause exists as to warrant the
filing of an information in our courts of law. Needless to state, it cannot impose criminal,
civil or administrative penalties or sanctions.
SECTION 10. Duty to Extend Assistance to the Commission. x x x.

SECTION 11. Budget for the Commission. The Office of the President shall provide the
necessary funds for the Commission to ensure that it can exercise its powers, execute its
functions, and perform its duties and responsibilities as effectively, efficiently, and
expeditiously as possible.
SECTION 12. Office. x x x.
SECTION 13. Furniture/Equipment. x x x.
SECTION 14. Term of the Commission. The Commission shall accomplish its mission on
or before December 31, 2012.
SECTION 15. Publication of Final Report. x x x.
SECTION 16. Transfer of Records and Facilities of the Commission. x x x.
SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the
President there is a need to expand the mandate of the Commission as defined in Section
1 hereof to include the investigation of cases and instances of graft and corruption during
the prior administrations, such mandate may be so extended accordingly by way of a
supplemental Executive Order.
SECTION 18. Separability Clause. If any provision of this Order is declared
unconstitutional, the same shall not affect the validity and effectivity of the other provisions
hereof.
SECTION 19. Effectivity. This Executive Order shall take effect immediately.
DONE in the City of Manila, Philippines, this 30th day of July 2010.
(SGD.) BENIGNO S. AQUINO III By the President:
(SGD.) PAQUITO N. OCHOA, JR. Executive Secretary
Nature of the Truth Commission
As can be gleaned from the above-quoted provisions, the Philippine Truth
Commission (PTC) is a mere ad hoc body formed under the Office of the President with
the primary task to investigate reports of graft and corruption committed by third-level
public officers and employees, their co-principals, accomplices and accessories during the
previous administration, and thereafter to submit its finding and recommendations to the
President, Congress and the Ombudsman. Though it has been described as an
"independent collegial body," it is essentially an entity within the Office of the President
The PTC is different from the truth commissions in other countries which have
been created as official, transitory and non-judicial fact-finding bodies "to establish the
facts and context of serious violations of human rights or of international humanitarian law
in a countrys past."9 They are usually established by states emerging from periods of
internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional
justice.
Truth commissions have been described as bodies that share the following
characteristics: (1) they examine only past events; (2) they investigate patterns of abuse
committed over a period of time, as opposed to a particular event; (3) they are temporary
bodies that finish their work with the submission of a report containing conclusions and
recommendations; and (4) they are officially sanctioned, authorized or empowered by the
State." Commissions members are usually empowered to conduct research, support
victims, and propose policy recommendations to prevent recurrence of crimes. Through
their investigations, the commissions may aim to discover and learn more about past
abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions
and recommend institutional reforms."
Thus, their main goals range from retribution to reconciliation. The Nuremburg
and Tokyo war crime tribunals are examples of a retributory or vindicatory body set up to
try and punish those responsible for crimes against humanity. A form of a reconciliatory
tribunal is the Truth and Reconciliation Commission of South Africa, the principal function
of which was to heal the wounds of past violence and to prevent future conflict by
providing a cathartic experience for victims.
The PTC is a far cry from South Africas model. The latter placed more emphasis on
reconciliation than on judicial retribution, while the marching order of the PTC is the
identification and punishment of perpetrators. As one writer puts it:
The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino
in his inaugural speech: "To those who talk about reconciliation, if they mean that they
would like us to simply forget about the wrongs that they have committed in the past, we
have this to say: There can be no reconciliation without justice. When we allow crimes to
go unpunished, we give consent to their occurring over and over again."
The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked
the Court to declare it unconstitutional and to enjoin the PTC from performing its functions.
A perusal of the arguments of the petitioners in both cases shows that they are essentially
the same. The petitioners-legislators summarized them in the following manner:
(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress
to create a public office and appropriate funds for its operation.
(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987
cannot legitimize E.O. No. 1 because the delegated authority of the President to
structurally reorganize the Office of the President to achieve economy, simplicity and
efficiency does not include the power to create an entirely new public office which was
hitherto inexistent like the "Truth Commission."
(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the
"Truth Commission" with quasi-judicial powers duplicating, if not superseding, those of the
Office of the Ombudsman created under the 1987 Constitution and the Department of
Justice created under the Administrative Code of 1987.
(d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation
and prosecution officials and personnel of the previous administration as if corruption is
their peculiar species even as it excludes those of the other administrations, past and
present, who may be indictable.
(e) The creation of the "Philippine Truth Commission of 2010" violates the consistent and
general international practice of four decades wherein States constitute truth commissions
to exclusively investigate human rights violations, which customary practice forms part of
the generally accepted principles of international law which the Philippines is mandated to
adhere to pursuant to the Declaration of Principles enshrined in the Constitution.
(f) The creation of the "Truth Commission" is an exercise in futility, an adventure in
partisan hostility, a launching pad for trial/conviction by publicity and a mere populist
propaganda to mistakenly impress the people that widespread poverty will altogether
vanish if corruption is eliminated without even addressing the other major causes of
poverty.
(g) The mere fact that previous commissions were not constitutionally challenged is of no
moment because neither laches nor estoppel can bar an eventual question on the
constitutionality and validity of an executive issuance or even a statute."
In their Consolidated Comment,14 the respondents, through the Office of the
Solicitor General (OSG), essentially questioned the legal standing of petitioners and
defended the assailed executive order with the following arguments:
1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because
the Presidents executive power and power of control necessarily include the inherent
power to conduct investigations to ensure that laws are faithfully executed and that, in any
event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), 15
Presidential Decree (P.D.) No. 1416 (as amended by P.D. No. 1772), R.A. No. 9970,17
and settled jurisprudence that authorize the President to create or form such bodies.
205
2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is
no appropriation but a mere allocation of funds already appropriated by Congress.
3] The Truth Commission does not duplicate or supersede the functions of the Office of
the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a factfinding body and not a quasi-judicial body and its functions do not duplicate, supplant or
erode the latters jurisdiction.
4] The Truth Commission does not violate the equal protection clause because it was
validly created for laudable purposes.
The OSG then points to the continued existence and validity of other executive orders and
presidential issuances creating similar bodies to justify the creation of the PTC such as
Presidential Complaint and Action Commission(PCAC) by President Ramon B.
Magsaysay, Presidential Committee on Administrative Performance Efficiency(PCAPE) by
President Carlos P. Garcia and Presidential Agency on Reform and Government
Operations(PARGO) by President Ferdinand E. Marcos.
From the petitions, pleadings, transcripts, and memoranda, the following are the principal
issues to be resolved:
1. Whether or not the petitioners have the legal standing to file their respective petitions
and question Executive Order No. 1;
2. Whether or not Executive Order No. 1 violates the principle of separation of powers by
usurping the powers of Congress to create and to appropriate funds for public offices,
agencies and commissions;
3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the
DOJ;
4. Whether or not Executive Order No. 1 violates the equal protection clause; and
5. Whether or not petitioners are entitled to injunctive relief.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1,
the Court needs to ascertain whether the requisites for a valid exercise of its power of
judicial review are present.
Like almost all powers conferred by the Constitution, the power of judicial review is subject
to limitations, to wit: (1) there must be an actual case or controversy calling for the
exercise of judicial power; (2) the person challenging the act must have the standing to
question the validity of the subject act or issuance; otherwise stated, he must have a
personal and substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement; (3) the question of constitutionality must be
raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis
mota of the case.
Among all these limitations, only the legal standing of the petitioners has been
put at issue.
Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition for
failure to demonstrate their personal stake in the outcome of the case. It argues that the
petitioners have not shown that they have sustained or are in danger of sustaining any
personal injury attributable to the creation of the PTC. Not claiming to be the subject of the
commissions investigations, petitioners will not sustain injury in its creation or as a result
of its proceedings.
The Court disagrees with the OSG in questioning the legal standing of the petitionerslegislators to assail Executive Order No. 1. Evidently, their petition primarily invokes
usurpation of the power of the Congress as a body to which they belong as members.
This certainly justifies their resolve to take the cudgels for Congress as an institution and
present the complaints on the usurpation of their power and rights as members of the
legislature before the Court. As held in Philippine Constitution Association v. Enriquez,
To the extent the powers of Congress are impaired, so is the power of each member
thereof, since his office confers a right to participate in the exercise of the powers of that
institution.
An act of the Executive which injures the institution of Congress causes a derivative but
nonetheless substantial injury, which can be questioned by a member of Congress. In
such a case, any member of Congress can have a resort to the courts.
Indeed, legislators have a legal standing to see to it that the prerogative, powers and
privileges vested by the Constitution in their office remain inviolate. Thus, they are allowed
to question the validity of any official action which, to their mind, infringes on their
prerogatives as legislators.
With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to
question the creation of the PTC and the budget for its operations. It emphasizes that the
funds to be used for the creation and operation of the commission are to be taken from
those funds already appropriated by Congress. Thus, the allocation and disbursement of
funds for the commission will not entail congressional action but will simply be an exercise
of the Presidents power over contingent funds.
As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in
danger of sustaining, any personal and direct injury attributable to the implementation of
Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may
justify his clamor for the Court to exercise judicial power and to wield the axe over
presidential issuances in defense of the Constitution. The case of David v. Arroyo24
explained the deep-seated rules on locus standi. Thus:
Locus standi is defined as "a right of appearance in a court of justice on a given question."
In private suits, standing is governed by the "real-parties-in interest" rule as contained in
Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that
"every action must be prosecuted or defended in the name of the real party in interest."
Accordingly, the "real-party-in interest" is "the party who stands to be benefited or injured
by the judgment in the suit or the party entitled to the avails of the suit." Succinctly put, the
plaintiffs standing is based on his own right to the relief sought.
206
The difficulty of determining locus standi arises in public suits. Here, the plaintiff who
asserts a "public right" in assailing an allegedly illegal official action, does so as a
representative of the general public. He may be a person who is affected no differently
from any other person. He could be suing as a "stranger," or in the category of a "citizen,"
or taxpayer." In either case, he has to adequately show that he is entitled to seek judicial
protection. In other words, he has to make out a sufficient interest in the vindication of the
public order and the securing of relief as a "citizen" or "taxpayer.
Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in public
actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that
the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit.
In the former, the plaintiff is affected by the expenditure of public funds, while in the latter,
he is but the mere instrument of the public concern. As held by the New York Supreme
Court in People ex rel Case v. Collins: "In matter of mere public right, howeverthe
people are the real partiesIt is at least the right, if not the duty, of every citizen to
interfere and see that a public offence be properly pursued and punished, and that a
public grievance be remedied." With respect to taxpayers suits, Terr v. Jordan held that
"the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful
use of public funds to his injury cannot be denied."
However, to prevent just about any person from seeking judicial interference in
any official policy or act with which he disagreed with, and thus hinders the activities of
governmental agencies engaged in public service, the United State Supreme Court laid
down the more stringent "direct injury" test in Ex Parte Levitt, later reaffirmed inTileston v.
Ullman. The same Court ruled that for a private individual to invoke the judicial power to
determine the validity of an executive or legislative action, he must show that he has
sustained a direct injury as a result of that action, and it is not sufficient that he has a
general interest common to all members of the public.
This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera, it
held that the person who impugns the validity of a statute must have "a personal and
substantial interest in the case such that he has sustained, or will sustain direct injury as a
result." The Vera doctrine was upheld in a litany of cases, such as, Custodio v. President
of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v.
Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix.
Notwithstanding, the Court leans on the doctrine that "the rule on standing is a
matter of procedure, hence, can be relaxed for nontraditional 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."
Thus, in Coconut Oil Refiners Association, Inc. v. Torres, the Court held that in
cases of paramount importance where serious constitutional questions are involved, the
standing requirements 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, 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.

The OSG claims that the determinants of transcendental importance28 laid down
in CREBA v. ERC and Meralco29are non-existent in this case. The Court, however, finds
reason in Biraogos assertion that the petition covers matters of transcendental
importance to justify the exercise of jurisdiction by the Court. There are constitutional
issues in the petition which deserve the attention of this Court in view of their seriousness,
novelty and weight as precedents. Where the issues are of transcendental and paramount
importance not only to the public but also to the Bench and the Bar, they should be
resolved for the guidance of all. Undoubtedly, the Filipino people are more than interested
to know the status of the Presidents first effort to bring about a promised change to the
country. The Court takes cognizance of the petition not due to overwhelming political
undertones that clothe the issue in the eyes of the public, but because the Court stands
firm in its oath to perform its constitutional duty to settle legal controversies with
overreaching significance to society.
Power of the President to Create the Truth Commission
In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth
Commission is a public office and not merely an adjunct body of the Office of the
President.31 Thus, in order that the President may create a public office he must be
empowered by the Constitution, a statute or an authorization vested in him by law.
According to petitioner, such power cannot be presumed since there is no provision in the
Constitution or any specific law that authorizes the President to create a truth
commission.33 He adds that Section 31 of the Administrative Code of 1987, granting the
President the continuing authority to reorganize his office, cannot serve as basis for the
creation of a truth commission considering the aforesaid provision merely uses verbs such
as "reorganize," "transfer," "consolidate," "merge," and "abolish." Insofar as it vests in the
President the plenary power to reorganize the Office of the President to the extent of
creating a public office, Section 31 is inconsistent with the principle of separation of
powers enshrined in the Constitution and must be deemed repealed upon the effectivity
thereof.
Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a
public office lies within the province of Congress and not with the executive branch of
government. They maintain that the delegated authority of the President to reorganize
under Section 31 of the Revised Administrative Code: 1) does not permit the President to
create a public office, much less a truth commission; 2) is limited to the reorganization of
the administrative structure of the Office of the President; 3) is limited to the restructuring
of the internal organs of the Office of the President Proper, transfer of functions and
transfer of agencies; and 4) only to achieve simplicity, economy and efficiency. Such
continuing authority of the President to reorganize his office is limited, and by issuing
Executive Order No. 1, the President overstepped the limits of this delegated authority.
The OSG counters that there is nothing exclusively legislative about the creation
by the President of a fact-finding body such as a truth commission. Pointing to numerous
offices created by past presidents, it argues that the authority of the President to create
public offices within the Office of the President Proper has long been recognized.
According to the OSG, the Executive, just like the other two branches of government,
possesses the inherent authority to create fact-finding committees to assist it in the
performance of its constitutionally mandated functions and in the exercise of its
administrative functions. This power, as the OSG explains it, is but an adjunct of the
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plenary powers wielded by the President under Section 1 and his power of control under
Section 17, both of Article VII of the Constitution.
It contends that the President is necessarily vested with the power to conduct
fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by
public officials and employees of his department and in the exercise of his authority to
assume directly the functions of the executive department, bureau and office, or interfere
with the discretion of his officials. The power of the President to investigate is not limited to
the exercise of his power of control over his subordinates in the executive branch, but
extends further in the exercise of his other powers, such as his power to discipline
subordinates,41 his power for rule making, adjudication and licensing purposes and in
order to be informed on matters which he is entitled to know.
The OSG also cites the recent case of Banda v. Ermita, where it was held that
the President has the power to reorganize the offices and agencies in the executive
department in line with his constitutionally granted power of control and by virtue of a valid
delegation of the legislative power to reorganize executive offices under existing statutes.
Thus, the OSG concludes that the power of control necessarily includes the
power to create offices. For the OSG, the President may create the PTC in order to,
among others, put a closure to the reported large scale graft and corruption in the
government.
The question, therefore, before the Court is this: Does the creation of the PTC fall
within the ambit of the power to reorganize as expressed in Section 31 of the Revised
Administrative Code? Section 31 contemplates "reorganization" as limited by the following
functional and structural lines: (1) restructuring the internal organization of the Office of the
President Proper by abolishing, consolidating or merging units thereof or transferring
functions from one unit to another; (2) transferring any function under the Office of the
President to any other Department/Agency or vice versa; or (3) transferring any agency
under the Office of the President to any other Department/Agency or vice versa. Clearly,
the provision refers to reduction of personnel, consolidation of offices, or abolition thereof
by reason of economy or redundancy of functions. These point to situations where a body
or an office is already existent but a modification or alteration thereof has to be effected.
The creation of an office is nowhere mentioned, much less envisioned in said provision.
Accordingly, the answer to the question is in the negative.
To say that the PTC is borne out of a restructuring of the Office of the President
under Section 31 is a misplaced supposition, even in the plainest meaning attributable to
the term "restructure" an "alteration of an existing structure." Evidently, the PTC was not
part of the structure of the Office of the President prior to the enactment of Executive
Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,
But of course, the list of legal basis authorizing the President to reorganize any
department or agency in the executive branch does not have to end here. We must not
lose sight of the very source of the power that which constitutes an express grant of
power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the
Administrative Code of 1987), "the President, subject to the policy in the Executive Office
and in order to achieve simplicity, economy and efficiency, shall have the continuing
authority to reorganize the administrative structure of the Office of the President." For this
purpose, he may transfer the functions of other Departments or Agencies to the Office of

the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that
reorganization "involves the reduction of personnel, consolidation of offices, or abolition
thereof by reason of economy or redundancy of functions." It takes place when there is an
alteration of the existing structure of government offices or units therein, including the lines
of control, authority and responsibility between them. The EIIB is a bureau attached to the
Department of Finance. It falls under the Office of the President. Hence, it is subject to the
Presidents continuing authority to reorganize. [Emphasis Supplied]
In the same vein, the creation of the PTC is not justified by the Presidents power
of control. Control is essentially the power to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the former with that of the latter.47 Clearly, the power of control is entirely
different from the power to create public offices. The former is inherent in the Executive,
while the latter finds basis from either a valid delegation from Congress, or his inherent
duty to faithfully execute the laws.
The question is this, is there a valid delegation of power from Congress,
empowering the President to create a public office?
According to the OSG, the power to create a truth commission pursuant to the above
provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772. The said
law granted the President the continuing authority to reorganize the national government,
including the power to group, consolidate bureaus and agencies, to abolish offices, to
transfer functions, to create and classify functions, services and activities, transfer
appropriations, and to standardize salaries and materials. This decree, in relation to
Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v.
Executive Secretary.
The Court, however, declines to recognize P.D. No. 1416 as a justification for the
President to create a public office. Said decree is already stale, anachronistic and
inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to
reorganize the administrative structure of the national government including the power to
create offices and transfer appropriations pursuant to one of the purposes of the decree,
embodied in its last "Whereas" clause:
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ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you
agree with me that P.D. 1416 should not be considered effective anymore upon the
promulgation, adoption, ratification of the 1987 Constitution.
SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.
ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire
National Government is deemed repealed, at least, upon the adoption of the 1987
Constitution, correct.
SOLICITOR GENERAL CADIZ: Yes, Your Honor.
While the power to create a truth commission cannot pass muster on the basis of
P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification
under Section 17, Article VII of the Constitution, imposing upon the President the duty to
ensure that the laws are faithfully executed. Section 17 reads:
Section 17. The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed.
As correctly pointed out by the respondents, the allocation of power in the three
principal branches of government is a grant of all powers inherent in them. The
Presidents power to conduct investigations to aid him in ensuring the faithful execution of
laws in this case, fundamental laws on public accountability and transparency is
inherent in the Presidents powers as the Chief Executive. That the authority of the
President to conduct investigations and to create bodies to execute this power is not
explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of
such authority.51 As explained in the landmark case of Marcos v. Manglapus:
x x x. The 1987 Constitution, however, brought back the presidential system of
government and restored the separation of legislative, executive and judicial powers by
their actual distribution among three distinct branches of government with provision for
checks and balances.
WHEREAS, the transition towards the parliamentary form of government will

necessitate flexibility in the organization of the national government.
It would not be accurate, however, to state that "executive power" is the power to
enforce the laws, for the President is head of state as well as head of government and
whatever powers inhere in such positions pertain to the office unless the Constitution itself
withholds it. Furthermore, the Constitution itself provides that the execution of the laws is
only one of the powers of the President. It also grants the President other powers that do
not involve the execution of any provision of law, e.g., his power over the country's foreign
relations.
Clearly, as it was only for the purpose of providing manageability and resiliency
during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio
upon the convening of the First Congress, as expressly provided in Section 6, Article XVIII
of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:
ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas
clause of P.D. 1416 says "it was enacted to prepare the transition from presidential to
parliamentary. Now, in a parliamentary form of government, the legislative and executive
powers are fused, correct?
On these premises, we hold the view that although the 1987 Constitution
imposes limitations on the exercise ofspecific powers of the President, it maintains intact
what is traditionally considered as within the scope of "executive power." Corollarily, the
powers of the President cannot be said to be limited only to the specific powers
enumerated in the Constitution. In other words, executive power is more than the sum of
specific powers so enumerated.
It has been advanced that whatever power inherent in the government that is
neither legislative nor judicial has to be executive. x x x.
SOLICITOR GENERAL CADIZ: Yes, Your Honor.
Indeed, the Executive is given much leeway in ensuring that our laws are
faithfully executed. As stated above, the powers of the President are not limited to those
specific powers under the Constitution. One of the recognized powers of the President

granted pursuant to this constitutionally-mandated duty is the power to create ad hoc

committees. This flows from the obvious need to ascertain facts and determine if laws
have been faithfully executed. Thus, in Department of Health v. Camposano,54 the
authority of the President to issue Administrative Order No. 298, creating an investigative
committee to look into the administrative charges filed against the employees of the
Department of Health for the anomalous purchase of medicines was upheld. In said case,
it was ruled:
The Chief Executives power to create the Ad hoc Investigating Committee
cannot be doubted. Having been constitutionally granted full control of the Executive
Department, to which respondents belong, the President has the obligation to ensure that
all executive officials and employees faithfully comply with the law. With AO 298 as
mandate, the legality of the investigation is sustained. Such validity is not affected by the
fact that the investigating team and the PCAGC had the same composition, or that the
former used the offices and facilities of the latter in conducting the inquiry.
It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to
allow an inquiry into matters which the President is entitled to know so that he can be
properly advised and guided in the performance of his duties relative to the execution and
enforcement of the laws of the land. And if history is to be revisited, this was also the
objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO,
the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There
being no changes in the government structure, the Court is not inclined to declare such
executive power as non-existent just because the direction of the political winds have
changed.
On the charge that Executive Order No. 1 transgresses the power of Congress to
appropriate funds for the operation of a public office, suffice it to say that there will be no
appropriation but only an allotment or allocations of existing funds already appropriated.
Accordingly, there is no usurpation on the part of the Executive of the power of Congress
to appropriate funds. Further, there is no need to specify the amount to be earmarked for
the operation of the commission because, in the words of the Solicitor General, "whatever
funds the Congress has provided for the Office of the President will be the very source of
the funds for the commission."55 Moreover, since the amount that would be allocated to
the PTC shall be subject to existing auditing rules and regulations, there is no impropriety
in the funding.
Power of the Truth Commission to Investigate
The Presidents power to conduct investigations to ensure that laws are faithfully
executed is well recognized. It flows from the faithful-execution clause of the Constitution
under Article VII, Section 17 thereof. As the Chief Executive, the president represents the
government as a whole and sees to it that all laws are enforced by the officials and
employees of his department. He has the authority to directly assume the functions of the
executive department.
Invoking this authority, the President constituted the PTC to primarily investigate
reports of graft and corruption and to recommend the appropriate action. As previously
stated, no quasi-judicial powers have been vested in the said body as it cannot adjudicate
rights of persons who come before it. It has been said that "Quasi-judicial powers involve
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the power to hear and determine questions of fact to which the legislative policy is to apply
and to decide in accordance with the standards laid down by law itself in enforcing and
administering the same law." In simpler terms, judicial discretion is involved in the exercise
of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be
clearly authorized by the legislature in the case of administrative agencies.
The distinction between the power to investigate and the power to adjudicate was
delineated by the Court in Cario v. Commission on Human Rights. Thus:
"Investigate," commonly understood, means to examine, explore, inquire or delve
or probe into, research on, study. The dictionary definition of "investigate" is "to observe or
study closely: inquire into systematically: "to search or inquire into: x x to subject to an
official probe x x: to conduct an official inquiry." The purpose of investigation, of course, is
to discover, to find out, to learn, obtain information. Nowhere included or intimated is the
notion of settling, deciding or resolving a controversy involved in the facts inquired into by
application of the law to the facts established by the inquiry.
The legal meaning of "investigate" is essentially the same: "(t)o follow up step by
step by patient inquiry or observation. To trace or track; to search into; to examine and
inquire into with care and accuracy; to find out by careful inquisition; examination; the
taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation"
being in turn described as "(a)n administrative function, the exercise of which ordinarily
does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise,
for the discovery and collection of facts concerning a certain matter or matters."
"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate,
judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to
settle finally (the rights and duties of the parties to a court case) on the merits of issues
raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means
"to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or
grant judicially in a case of controversy x x."
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To
determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means:
"To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies
a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations
Omitted]
Fact-finding is not adjudication and it cannot be likened to the judicial function of
a court of justice, or even a quasi-judicial agency or office. The function of receiving
evidence and ascertaining therefrom the facts of a controversy is not a judicial function. To
be considered as such, the act of receiving evidence and arriving at factual conclusions in
a controversy must be accompanied by the authority of applying the law to the factual
conclusions to the end that the controversy may be decided or resolved authoritatively,
finally and definitively, subject to appeals or modes of review as may be provided by law.
Even respondents themselves admit that the commission is bereft of any quasi-judicial
power.
Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman
or the DOJ or erode their respective powers. If at all, the investigative function of the

210
commission will complement those of the two offices. As pointed out by the Solicitor
General, the recommendation to prosecute is but a consequence of the overall task of the
commission to conduct a fact-finding investigation."62 The actual prosecution of
suspected offenders, much less adjudication on the merits of the charges against them,63
is certainly not a function given to the commission. The phrase, "when in the course of its
investigation," under Section 2(g), highlights this fact and gives credence to a contrary
interpretation from that of the petitioners. The function of determining probable cause for
the filing of the appropriate complaints before the courts remains to be with the DOJ and
the Ombudsman.
therefore, are not deprived of their mandated duties but will instead be aided by the
reports of the PTC for possible indictments for violations of graft laws.
At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not
exclusive but is shared with other similarly authorized government agencies. Thus, in the
case of Ombudsman v. Galicia, it was written:
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.
This power of investigation granted to the Ombudsman by the 1987 Constitution

and The Ombudsman Act is not exclusive but is shared with other similarly authorized
government agencies such as the PCGG and judges of municipal trial courts and
municipal circuit trial courts. The power to conduct preliminary investigation on charges
against public employees and officials is likewise concurrently shared with the Department
of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman
retains concurrent jurisdiction with the Office of the President and the local Sanggunians
to investigate complaints against local elective officials. [Emphasis supplied].
Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to
investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states:
(1) Investigate and prosecute on its own or on complaint by any person, any act
or omission of any public officer or employee, office or agency, when such act or omission
appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases
cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may
take over, at any stage, from any investigatory agency of government, the investigation of
such cases.
The act of investigation by the Ombudsman as enunciated above contemplates
the conduct of a preliminary investigation or the determination of the existence of probable
cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is
limited to obtaining facts so that it can advise and guide the President in the performance
of his duties relative to the execution and enforcement of the laws of the land. In this
regard, the PTC commits no act of usurpation of the Ombudsmans primordial duties.
The same holds true with respect to the DOJ. Its authority under Section 3 (2),
Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive
and, thus, can be shared with a body likewise tasked to investigate the commission of
crimes.
Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC
are to be accorded conclusiveness. Much like its predecessors, the Davide Commission,
the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be
recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider
degree of latitude to decide whether or not to reject the recommendation. These offices,
Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power
of the President, the Court finds difficulty in upholding the constitutionality of Executive
Order No. 1 in view of its apparent transgression of the equal protection clause enshrined
in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads:
The petitioners assail Executive Order No. 1 because it is violative of this

constitutional safeguard. They contend that it does not apply equally to all members of the
same class such that the intent of singling out the "previous administration" as its sole
object makes the PTC an "adventure in partisan hostility." Thus, in order to be accorded
with validity, the commission must also cover reports of graft and corruption in virtually all
administrations previous to that of former President Arroyo.
The petitioners argue that the search for truth behind the reported cases of graft
and corruption must encompass acts committed not only during the administration of
former President Arroyo but also during prior administrations where the "same magnitude
of controversies and anomalies" were reported to have been committed against the
Filipino people. They assail the classification formulated by the respondents as it does not
fall under the recognized exceptions because first, "there is no substantial distinction
between the group of officials targeted for investigation by Executive Order No. 1 and
other groups or persons who abused their public office for personal gain; and second, the
selective classification is not germane to the purpose of Executive Order No. 1 to end
corruption." In order to attain constitutional permission, the petitioners advocate that the
commission should deal with "graft and grafters prior and subsequent to the Arroyo
administration with the strong arm of the law with equal force."
Position of respondents
According to respondents, while Executive Order No. 1 identifies the "previous
administration" as the initial subject of the investigation, following Section 17 thereof, the
PTC will not confine itself to cases of large scale graft and corruption solely during the
said administration. Assuming arguendo that the commission would confine its
proceedings to officials of the previous administration, the petitioners argue that no
offense is committed against the equal protection clause for "the segregation of the
transactions of public officers during the previous administration as possible subjects of
investigation is a valid classification based on substantial distinctions and is germane to
the evils which the Executive Order seeks to correct." To distinguish the Arroyo
administration from past administrations, it recited the following:
First. E.O. No. 1 was issued in view of widespread reports of large scale graft
and corruption in the previous administration which have eroded public confidence in
public institutions. There is, therefore, an urgent call for the determination of the truth
regarding certain reports of large scale graft and corruption in the government and to put a

closure to them by the filing of the appropriate cases against those involved, if warranted,
and to deter others from committing the evil, restore the peoples faith and confidence in
the Government and in their public servants.
Second. The segregation of the preceding administration as the object of factfinding is warranted by the reality that unlike with administrations long gone, the current
administration will most likely bear the immediate consequence of the policies of the
previous administration.
Third. The classification of the previous administration as a separate class for
investigation lies in the reality that the evidence of possible criminal activity, the evidence
that could lead to recovery of public monies illegally dissipated, the policy lessons to be
learned to ensure that anti-corruption laws are faithfully executed, are more easily
established in the regime that immediately precede the current administration.
Fourth. Many administrations subject the transactions of their predecessors to
investigations to provide closure to issues that are pivotal to national life or even as a
routine measure of due diligence and good housekeeping by a nascent administration like
the Presidential Commission on Good Government (PCGG), created by the late President
Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth
of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag
Commission created by former President Joseph Estrada under Administrative Order No,
53, to form an ad-hoc and independent citizens committee to investigate all the facts and
circumstances surrounding "Philippine Centennial projects" of his predecessor, former
President Fidel V. Ramos.
Concept of the Equal Protection Clause
One of the basic principles on which this government was founded is that of the
equality of right which is embodied in Section 1, Article III of the 1987 Constitution. 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."7 It "requires public bodies and institutions to treat similarly
situated individuals in a similar manner." "The purpose of the equal protection clause is to
secure every person within a states jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the express terms of a statue or by its improper
execution through the states 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."
211
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
ofreasonableness. 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.81 "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. As elucidated in Victoriano v. Elizalde Rope Workers' Union and
reiterated in a long line of cases,
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against inequality, that every man, woman and
child should be affected alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination as
to things that are different. It does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the grouping
of things in speculation or practice because they agree with one another in certain
particulars. A law is not invalid because of simple inequality. The very idea of classification
is that of inequality, so that it goes without saying that the mere fact of inequality in no
manner determines the matter of constitutionality. All that is required of a valid
classification is that it be reasonable, which means that the classification should be based

on substantial distinctions which make for real differences, that it must be germane to the
purpose of the law; that it must not be limited to existing conditions only; and that it must
apply equally to each member of the class. This Court has held that the standard is
satisfied if the classification or distinction is based on a reasonable foundation or rational
basis and is not palpably arbitrary. [Citations omitted]
Applying these precepts to this case, Executive Order No. 1 should be struck
down as violative of the equal protection clause. The clear mandate of the envisioned truth
commission is to investigate and find out the truth "concerning the reported cases of graft
and corruption during the previous administration"87 only. The intent to single out the
previous administration is plain, patent and manifest. Mention of it has been made in at
least three portions of the questioned executive order. Specifically, these are:
WHEREAS, there is a need for a separate body dedicated solely to investigating and
finding out the truth concerning the reported cases of graft and corruption during the
previous administration, and which will recommend the prosecution of the offenders and
secure justice for all;
SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE
TRUTH COMMISSION, hereinafter referred to as the "COMMISSION," which shall
primarily seek and find the truth on, and toward this end, investigate reports of graft and
corruption of such scale and magnitude that shock and offend the moral and ethical
sensibilities of the people, committed by public officers and employees, their co-principals,
accomplices and accessories from the private sector, if any, during the previous
administration; and thereafter recommend the appropriate action or measure to be taken
thereon to ensure that the full measure of justice shall be served without fear or favor.
SECTION 2. Powers and Functions. The Commission, which shall have all the powers
of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of
1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases
of graft and corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private sector, if any,
during the previous administration and thereafter submit its finding and recommendations
to the President, Congress and the Ombudsman.
In this regard, it must be borne in mind that the Arroyo administration is but just a
member of a class, that is, a class of past administrations. It is not a class of its own. Not
to include past administrations similarly situated constitutes arbitrariness which the equal
protection clause cannot sanction. Such discriminating differentiation clearly reverberates
to label the commission as a vehicle for vindictiveness and selective retribution.
Though the OSG enumerates several differences between the Arroyo
administration and other past administrations, these distinctions are not substantial
enough to merit the restriction of the investigation to the "previous administration" only.
The reports of widespread corruption in the Arroyo administration cannot be taken as
basis for distinguishing said administration from earlier administrations which were also
blemished by similar widespread reports of impropriety. They are not inherent in, and do
not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, "Superficial
differences do not make for a valid classification."
212
The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope
of the intended investigation to the previous administration only. The OSG ventures to
opine that "to include other past administrations, at this point, may unnecessarily
overburden the commission and lead it to lose its effectiveness." The reason given is
specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to
stamp out or "end corruption and the evil it breeds."
The probability that there would be difficulty in unearthing evidence or that the earlier
reports involving the earlier administrations were already inquired into is beside the point.
Obviously, deceased presidents and cases which have already prescribed can no longer
be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct
simultaneous investigations of previous administrations, given the bodys limited time and
resources. "The law does not require the impossible" (Lex non cogit ad impossibilia).
Given the foregoing physical and legal impossibility, the Court logically
recognizes the unfeasibility of investigating almost a centurys worth of graft cases.
However, the fact remains that Executive Order No. 1 suffers from arbitrary classification.
The PTC, to be true to its mandate of searching for the truth, must not exclude the other
past administrations. The PTC must, at least, have the authority to investigate all past
administrations. Whilereasonable prioritization is permitted, it should not be arbitrary lest it
be struck down for being unconstitutional. In the often quoted language of Yick Wo v.
Hopkins,
Though the law itself be fair on its face and impartial in appearance, yet, if applied and
administered by public authority with an evil eye and an unequal hand, so as practically to
make unjust and illegal discriminations between persons in similar circumstances, material
to their rights, the denial of equal justice is still within the prohibition of the constitution.
It could be argued that considering that the PTC is an ad hoc body, its scope is limited.
The Court, however, is of the considered view that although its focus is restricted, the
constitutional guarantee of equal protection under the laws should not in any way be
circumvented. The Constitution is the fundamental and paramount law of the nation to
which all other laws must conform and in accordance with which all private rights
determined and all public authority administered. Laws that do not conform to the
Constitution should be stricken down for being unconstitutional. While the thrust of the
PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order
No. 1, to survive, must be read together with the provisions of the Constitution. To exclude
the earlier administrations in the guise of "substantial distinctions" would only confirm the
petitioners lament that the subject executive order is only an "adventure in partisan
hostility." In the case of US v. Cyprian, it was written: "A rather limited number of such
classifications have routinely been held or assumed to be arbitrary; those include: race,
national origin, gender, political activity or membership in a political party, union activity or
membership in a labor union, or more generally the exercise of first amendment rights."
To reiterate, in order for a classification to meet the requirements of
constitutionality, it must include or embrace all persons who naturally belong to the class.
"Such a classification must not be based on existing circumstances only, or so constituted
as to preclude additions to the number included within a class, but must be of such a
nature as to embrace all those who may thereafter be in similar circumstances and
conditions. Furthermore, all who are in situations and circumstances which are relative to

the discriminatory legislation and which are indistinguishable from those of the members
of the class must be brought under the influence of the law and treated by it in the same
way as are the members of the class."
The Court is not unaware that "mere underinclusiveness is not fatal to the validity of a law
under the equal protection clause." "Legislation is not unconstitutional merely because it is
not all-embracing and does not include all the evils within its reach." It has been written
that a regulation challenged under the equal protection clause is not devoid of a rational
predicate simply because it happens to be incomplete. In several instances, the
underinclusiveness was not considered a valid reason to strike down a law or regulation
where the purpose can be attained in future legislations or regulations. These cases refer
to the "step by step" process. "With regard to equal protection claims, a legislature does
not run the risk of losing the entire remedial scheme simply because it fails, through
inadvertence or otherwise, to cover every evil that might conceivably have been attacked."
In Executive Order No. 1, however, there is no inadvertence. That the previous
administration was picked out was deliberate and intentional as can be gleaned from the
fact that it was underscored at least three times in the assailed executive order. It must be
noted that Executive Order No. 1 does not even mention any particular act, event or report
to be focused on unlike the investigative commissions created in the past. "The equal
protection clause is violated by purposeful and intentional discrimination."
To disprove petitioners contention that there is deliberate discrimination, the
OSG clarifies that the commission does not only confine itself to cases of large scale graft
and corruption committed during the previous administration. The OSG points to Section
17 of Executive Order No. 1, which provides:
SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the
President there is a need to expand the mandate of the Commission as defined in Section
1 hereof to include the investigation of cases and instances of graft and corruption during
the prior administrations, such mandate may be so extended accordingly by way of a
supplemental Executive Order.
The Court is not convinced. Although Section 17 allows the President the
discretion to expand the scope of investigations of the PTC so as to include the acts of
graft and corruption committed in other past administrations, it does not guarantee that
they would be covered in the future. Such expanded mandate of the commission will still
depend on the whim and caprice of the President. If he would decide not to include them,
the section would then be meaningless. This will only fortify the fears of the petitioners that
the Executive Order No. 1 was "crafted to tailor-fit the prosecution of officials and
personalities of the Arroyo administration."1
The Court tried to seek guidance from the pronouncement in the case of Virata v.
Sandiganbayan, that the "PCGG Charter (composed of Executive Orders Nos. 1, 2 and
14) does not violate the equal protection clause." The decision, however, was devoid of
any discussion on how such conclusory statement was arrived at, the principal issue in
said case being only the sufficiency of a cause of action.
A final word
213
The issue that seems to take center stage at present is - whether or not the
Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review
with respect to recent initiatives of the legislature and the executive department, is
exercising undue interference. Is the Highest Tribunal, which is expected to be the
protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of
separation of powers? Time and again, this issue has been addressed by the Court, but it
seems that the present political situation calls for it to once again explain the legal basis of
its action lest it continually be accused of being a hindrance to the nations thrust to
progress.
The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987
Constitution, is vested with Judicial Power that "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 of abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the
government."
Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review
which is the power to declare a treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation
unconstitutional. This power also includes the duty to rule on the constitutionality of the
application, or operation of presidential decrees, proclamations, orders, instructions,
ordinances, and other regulations. These provisions, however, have been fertile grounds
of conflict between the Supreme Court, on one hand, and the two co-equal bodies of
government, on the other. Many times the Court has been accused of asserting superiority
over the other departments.
To answer this accusation, the words of Justice Laurel would be a good source of
enlightenment, to wit: "And 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."
Thus, the Court, in exercising its power of judicial review, is not imposing its own
will upon a co-equal body but rather simply making sure that any act of government is
done in consonance with the authorities and rights allocated to it by the Constitution. And,
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. Otherwise, the Court will not be
deterred to pronounce said act as void and unconstitutional.
It cannot be denied that most government actions are inspired with noble intentions, all
geared towards the betterment of the nation and its people. But then again, it is important
to remember this ethical principle: "The end does not justify the means." No matter how
noble and worthy of admiration the purpose of an act, but if the means to be employed in
accomplishing it is simply irreconcilable with constitutional parameters, then it cannot still
be allowed. The Court cannot just turn a blind eye and simply let it pass. It will continue to
uphold the Constitution and its enshrined principles.

"The Constitution must ever remain supreme. All must bow to the mandate of this
law. Expediency must not be allowed to sap its strength nor greed for power debase its
rectitude."
Lest it be misunderstood, this is not the death knell for a truth commission as
nobly envisioned by the present administration. Perhaps a revision of the executive
issuance so as to include the earlier past administrations would allow it to pass the test of
reasonableness and not be an affront to the Constitution. Of all the branches of the
government, it is the judiciary which is the most interested in knowing the truth and so it
will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be
emphasized that the search for the truth must be within constitutional bounds for "ours is
still a government of laws and not of men."
WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby
declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of
the Constitution.
As also prayed for, the respondents are hereby ordered to cease and desist from carrying
out the provisions of Executive Order No. 1.
SO ORDERED.
214

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Constitutional Law II Part 1 - Due Process and Equal Protection

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CONSTITUTIONAL LAW II: Due Process and Equal Protection as

Limitations on Police Power, Eminent Domain and Taxation

A. Fundamental Principles on Constitutional Law and the Bill of Rights..............................2

April 13, 2004)................................45

B. Basic Principles on the Fundamental Powers of the State, their Characteristics,

EUSEBIO vs. LUIS (G.R. No. 162474 October 13, 2009)...........................................139

Romualdez vs. Comelec................................................................................................65

ELEAZAR P. QUINTO vs. COMMISSION ON ELECTIONS, (G.R. No. 189698,

Garcillano vs. Committees.............................................................................................72

Placido vs. NLRC...........................................................................................................75

Mendoza vs. Comelec...................................................................................................77

CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. vs. ROMULO

Southern Hemisphere vs. Anti-Terrorism.......................................................................87

BIRAOGO vs. PHIL TRUTH (G.R. No. 192935, December 7, 2010............................203

Lejano vs. People, 638 SCRA 104 (2010).....................................................................93

For the mountains may move and the hills

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/OGCC

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

MR. NOLLEDO. The answer is "yes."

THE PRESIDENT. Commissioner Davide is recognized.

xxx xxx xxx

xxx xxx xxx

MR. FOZ. Thank you,

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

PADILLA, J., concurring:

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

PUNO, J., dissenting:

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

2. In the case of a Consortium/Joint Venture, the withdrawal by member whose

V. GUIDELINES FOR THE PUBLIC BIDDING

b. Confidential Information Memorandum: The Manila Hotel Corporation

A. PARTIES WHO MAY PARTICIPATE IN THE PUBLIC BIDDING

G. SHORTLIST OF QUALIFIED BIDDERS

1. A notice of prequalification results containing the shortlist of Qualified Bidders will be

If the Qualified Bidder is a Consortium/Joint Venture, each member of the

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

H. OPENING AND READING OF BIDS

i. The bid does not have Bid Security; or

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

2. All payments should be made in the form of a Manager's Check or unconditional

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

Principles and State Policies" should generally be construed as mere statements of

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

PANGANIBAN, J., dissenting:

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

VITUG, J., concurring:

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

For the foregoing reasons, I vote to grant the petition.

TORRES, JR., J., separate opinion:

Commissioner Jose Nolledo explaining the provision adverted to above, said:

I vote GRANT the petition.

PUNO, J., dissenting:

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

CONSTITUTIONAL LAW II: Due Process and Equal Protection as

G. SHORTLIST OF QUALIFIED BIDDERS

If the Qualified Bidder is a Consortium/Joint Venture, each member of the