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Republic of the Philippines


SUPREME COURT

Manila

EN BANC

G.R. No. 159796 July 17, 2007

R O M E O P. G E R O C H I , K A T U L O N G N G B A Y A N ( K B ) a n d
ENVIRONMENTALIST CONSUMERS NETWORK, INC. (ECN), Petitioners, 

vs.

DEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY COMMISSION
(ERC), NATIONAL POWER CORPORATION (NPC), POWER SECTOR
ASSETS AND LIABILITIES MANAGEMENT GROUP (PSALM Corp.),
STRATEGIC POWER UTILITIES GROUP (SPUG), and PANAY ELECTRIC
COMPANY INC. (PECO),Respondents.

DECISION

NACHURA, J.:

Petitioners Romeo P. Gerochi, Katulong Ng Bayan (KB), and Environmentalist


Consumers Network, Inc. (ECN) (petitioners), come before this Court in this
original action praying that Section 34 of Republic Act (RA) 9136, otherwise
known as the "Electric Power Industry Reform Act of 2001" (EPIRA), imposing
the Universal Charge,1and Rule 18 of the Rules and Regulations (IRR)2 which
seeks to implement the said imposition, be declared unconstitutional. Petitioners
also pray that the Universal Charge imposed upon the consumers be refunded
and that a preliminary injunction and/or temporary restraining order (TRO) be
issued directing the respondents to refrain from implementing, charging, and
collecting the said charge.3 The assailed provision of law reads:

SECTION 34. Universal Charge. — Within one (1) year from the effectivity of
this Act, a universal charge to be determined, fixed and approved by the ERC,
shall be imposed on all electricity end-users for the following purposes:

(a) Payment for the stranded debts4 in excess of the amount assumed by the
National Government and stranded contract costs of NPC5 and as well as
qualified stranded contract costs of distribution utilities resulting from the
restructuring of the industry;

(b) Missionary electrification;6


(c) The equalization of the taxes and royalties applied to indigenous or
renewable sources of energy vis-à-vis imported energy fuels;

(d) An environmental charge equivalent to one-fourth of one centavo per


kilowatt-hour (₱0.0025/kWh), which shall accrue to an environmental fund to be
used solely for watershed rehabilitation and management. Said fund shall be
managed by NPC under existing arrangements; and

(e) A charge to account for all forms of cross-subsidies for a period not
exceeding three (3) years.

The universal charge shall be a non-bypassable charge which shall be passed


on and collected from all end-users on a monthly basis by the distribution
utilities. Collections by the distribution utilities and the TRANSCO in any given
month shall be remitted to the PSALM Corp. on or before the fifteenth (15th) of
the succeeding month, net of any amount due to the distribution utility. Any end-
user or self-generating entity not connected to a distribution utility shall remit its
corresponding universal charge directly to the TRANSCO. The PSALM Corp., as
administrator of the fund, shall create a Special Trust Fund which shall be
disbursed only for the purposes specified herein in an open and transparent
manner. All amount collected for the universal charge shall be distributed to the
respective beneficiaries within a reasonable period to be provided by the ERC.

The Facts

Congress enacted the EPIRA on June 8, 2001; on June 26, 2001, it took effect.7

On April 5, 2002, respondent National Power Corporation-Strategic Power


Utilities Group8 (NPC-SPUG) filed with respondent Energy Regulatory
Commission (ERC) a petition for the availment from the Universal Charge of its
share for Missionary Electrification, docketed as ERC Case No. 2002-165.9

On May 7, 2002, NPC filed another petition with ERC, docketed as ERC Case
No. 2002-194, praying that the proposed share from the Universal Charge for
the Environmental charge of ₱0.0025 per kilowatt-hour (/kWh), or a total of
₱119,488,847.59, be approved for withdrawal from the Special Trust Fund (STF)
managed by respondent Power Sector Assets and

Liabilities Management Group (PSALM)10 for the rehabilitation and management


of watershed areas.11

On December 20, 2002, the ERC issued an Order12 in ERC Case No. 2002-165
provisionally approving the computed amount of ₱0.0168/kWh as the share of
the NPC-SPUG from the Universal Charge for Missionary Electrification and
authorizing the National Transmission Corporation (TRANSCO) and Distribution
Utilities to collect the same from its end-users on a monthly basis.

On June 26, 2003, the ERC rendered its Decision13 (for ERC Case No.
2002-165) modifying its Order of December 20, 2002, thus:

WHEREFORE, the foregoing premises considered, the provisional authority


granted to petitioner National Power Corporation-Strategic Power Utilities Group
(NPC-SPUG) in the Order dated December 20, 2002 is hereby modified to the
effect that an additional amount of ₱0.0205 per kilowatt-hour should be added to
the ₱0.0168 per kilowatt-hour provisionally authorized by the Commission in the
said Order. Accordingly, a total amount of ₱0.0373 per kilowatt-hour is hereby
APPROVED for withdrawal from the Special Trust Fund managed by PSALM as
its share from the Universal Charge for Missionary Electrification (UC-ME)
effective on the following billing cycles:

(a) June 26-July 25, 2003 for National Transmission Corporation (TRANSCO);
and

(b) July 2003 for Distribution Utilities (Dus).

Relative thereto, TRANSCO and Dus are directed to collect the UC-ME in the
amount of ₱0.0373 per kilowatt-hour and remit the same to PSALM on or before
the 15th day of the succeeding month.

In the meantime, NPC-SPUG is directed to submit, not later than April 30, 2004,
a detailed report to include Audited Financial Statements and physical status
(percentage of completion) of the projects using the prescribed format.1avvphi1

Let copies of this Order be furnished petitioner NPC-SPUG and all distribution
utilities (Dus).

SO ORDERED.

On August 13, 2003, NPC-SPUG filed a Motion for Reconsideration asking the
ERC, among others,14 to set aside the above-mentioned Decision, which the
ERC granted in its Order dated October 7, 2003, disposing:

WHEREFORE, the foregoing premises considered, the "Motion for


Reconsideration" filed by petitioner National Power Corporation-Small Power
Utilities Group (NPC-SPUG) is hereby GRANTED. Accordingly, the Decision
dated June 26, 2003 is hereby modified accordingly.

Relative thereto, NPC-SPUG is directed to submit a quarterly report on the


following:
1. Projects for CY 2002 undertaken;

2. Location

3. Actual amount utilized to complete the project;

4. Period of completion;

5. Start of Operation; and

6. Explanation of the reallocation of UC-ME funds, if any.

SO ORDERED.15

Meanwhile, on April 2, 2003, ERC decided ERC Case No. 2002-194, authorizing
the NPC to draw up to ₱70,000,000.00 from PSALM for its 2003 Watershed
Rehabilitation Budget subject to the availability of funds for the Environmental
Fund component of the Universal Charge.16

On the basis of the said ERC decisions, respondent Panay Electric Company,
Inc. (PECO) charged petitioner Romeo P. Gerochi and all other end-users with
the Universal Charge as reflected in their respective electric bills starting from
the month of July 2003.17

Hence, this original action.

Petitioners submit that the assailed provision of law and its IRR which sought to
implement the same are unconstitutional on the following grounds:

1) The universal charge provided for under Sec. 34 of the EPIRA and sought to
be implemented under Sec. 2, Rule 18 of the IRR of the said law is a tax which
is to be collected from all electric end-users and self-generating entities. The
power to tax is strictly a legislative function and as such, the delegation of said
power to any executive or administrative agency like the ERC is
unconstitutional, giving the same unlimited authority. The assailed provision
clearly provides that the Universal Charge is to be determined, fixed and
approved by the ERC, hence leaving to the latter complete discretionary
legislative authority.

2) The ERC is also empowered to approve and determine where the funds
collected should be used.

3) The imposition of the Universal Charge on all end-users is oppressive and


confiscatory and amounts to taxation without representation as the consumers
were not given a chance to be heard and represented.18
Petitioners contend that the Universal Charge has the characteristics of a tax
and is collected to fund the operations of the NPC. They argue that the
cases19 invoked by the respondents clearly show the regulatory purpose of the
charges imposed therein, which is not so in the case at bench. In said cases,
the respective funds20 were created in order to balance and stabilize the prices
of oil and sugar, and to act as buffer to counteract the changes and adjustments
in prices, peso devaluation, and other variables which cannot be adequately and
timely monitored by the legislature. Thus, there was a need to delegate powers
to administrative bodies.21 Petitioners posit that the Universal Charge is imposed
not for a similar purpose.

On the other hand, respondent PSALM through the Office of the Government
Corporate Counsel (OGCC) contends that unlike a tax which is imposed to
provide income for public purposes, such as support of the government,
administration of the law, or payment of public expenses, the assailed Universal
Charge is levied for a specific regulatory purpose, which is to ensure the viability
of the country's electric power industry. Thus, it is exacted by the State in the
exercise of its inherent police power. On this premise, PSALM submits that there
is no undue delegation of legislative power to the ERC since the latter merely
exercises a limited authority or discretion as to the execution and
implementation of the provisions of the EPIRA.22

Respondents Department of Energy (DOE), ERC, and NPC, through the Office
of the Solicitor General (OSG), share the same view that the Universal Charge
is not a tax because it is levied for a specific regulatory purpose, which is to
ensure the viability of the country's electric power industry, and is, therefore, an
exaction in the exercise of the State's police power. Respondents further
contend that said Universal Charge does not possess the essential
characteristics of a tax, that its imposition would redound to the benefit of the
electric power industry and not to the public, and that its rate is uniformly levied
on electricity end-users, unlike a tax which is imposed based on the individual
taxpayer's ability to pay. Moreover, respondents deny that there is undue
delegation of legislative power to the ERC since the EPIRA sets forth sufficient
determinable standards which would guide the ERC in the exercise of the
powers granted to it. Lastly, respondents argue that the imposition of the
Universal Charge is not oppressive and confiscatory since it is an exercise of
the police power of the State and it complies with the requirements of due
process.23

On its part, respondent PECO argues that it is duty-bound to collect and remit
the amount pertaining to the Missionary Electrification and Environmental Fund
components of the Universal Charge, pursuant to Sec. 34 of the EPIRA and the
Decisions in ERC Case Nos. 2002-194 and 2002-165. Otherwise, PECO could
be held liable under Sec. 4624 of the EPIRA, which imposes fines and penalties
for any violation of its provisions or its IRR.25

The Issues

The ultimate issues in the case at bar are:

1) Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is
a tax; and

2) Whether or not there is undue delegation of legislative power to tax on the


part of the ERC.26

Before we discuss the issues, the Court shall first deal with an obvious
procedural lapse.

Petitioners filed before us an original action particularly denominated as a


Complaint assailing the constitutionality of Sec. 34 of the EPIRA imposing the
Universal Charge and Rule 18 of the EPIRA's IRR. No doubt, petitioners
have locus standi. They impugn the constitutionality of Sec. 34 of the EPIRA
because they sustained a direct injury as a result of the imposition of the
Universal Charge as reflected in their electric bills.

However, petitioners violated the doctrine of hierarchy of courts when they filed
this "Complaint" directly with us. Furthermore, the Complaint is bereft of any
allegation of grave abuse of discretion on the part of the ERC or any of the
public respondents, in order for the Court to consider it as a petition for certiorari
or prohibition.

Article VIII, Section 5(1) and (2) of the 1987 Constitution27 categorically provides
that:

SECTION 5. The Supreme Court shall have the following powers:

1. Exercise original jurisdiction over cases affecting ambassadors, other public


ministers and consuls, and over petitions for certiorari, prohibition, mandamus,
quo warranto, and habeas corpus.

2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or


the rules of court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
But this Court's jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, and habeas corpus, while concurrent with
that of the regional trial courts and the Court of Appeals, does not give litigants
unrestrained freedom of choice of forum from which to seek such relief.28 It has
long been established that this Court will not entertain direct resort to it unless
the redress desired cannot be obtained in the appropriate courts, or where
exceptional and compelling circumstances justify availment of a remedy within
and call for the exercise of our primary jurisdiction.29 This circumstance alone
warrants the outright dismissal of the present action.

This procedural infirmity notwithstanding, we opt to resolve the constitutional


issue raised herein. We are aware that if the constitutionality of Sec. 34 of the
EPIRA is not resolved now, the issue will certainly resurface in the near future,
resulting in a repeat of this litigation, and probably involving the same parties. In
the public interest and to avoid unnecessary delay, this Court renders its ruling
now.

The instant complaint is bereft of merit.

The First Issue

To resolve the first issue, it is necessary to distinguish the State’s power of


taxation from the police power.

The power to tax is an incident of sovereignty and is unlimited in its range,


acknowledging in its very nature no limits, so that security against its abuse is to
be found only in the responsibility of the legislature which imposes the tax on the
constituency that is to pay it.30 It is based on the principle that taxes are the
lifeblood of the government, and their prompt and certain availability is an
imperious need.31 Thus, the theory behind the exercise of the power to tax
emanates from necessity; without taxes, government cannot fulfill its mandate of
promoting the general welfare and well-being of the people.32

On the other hand, police power is the power of the state to promote public
welfare by restraining and regulating the use of liberty and property.33 It is the
most pervasive, the least limitable, and the most demanding of the three
fundamental powers of the State. The justification is found in the Latin
maxims salus populi est suprema lex (the welfare of the people is the supreme
law) and sic utere tuo ut alienum non laedas (so use your property as not to
injure the property of others). As an inherent attribute of sovereignty which
virtually extends to all public needs, police power grants a wide panoply of
instruments through which the State, as parens patriae, gives effect to a host of
its regulatory powers.34 We have held that the power to "regulate" means the
power to protect, foster, promote, preserve, and control, with due regard for the
interests, first and foremost, of the public, then of the utility and of its patrons.35

The conservative and pivotal distinction between these two 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.36

In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the
State's police power, particularly its regulatory dimension, is invoked. Such can
be deduced from Sec. 34 which enumerates the purposes for which the
Universal Charge is imposed37 and which can be amply discerned as regulatory
in character. The EPIRA resonates such regulatory purposes, thus:

SECTION 2. Declaration of Policy. — It is hereby declared the policy of the


State:

(a) To ensure and accelerate the total electrification of the country;

(b) To ensure the quality, reliability, security and affordability of the supply of
electric power;

(c) To ensure transparent and reasonable prices of electricity in a regime of free


and fair competition and full public accountability to achieve greater operational
and economic efficiency and enhance the competitiveness of Philippine
products in the global market;

(d) To enhance the inflow of private capital and broaden the ownership base of
the power generation, transmission and distribution sectors;

(e) To ensure fair and non-discriminatory treatment of public and private sector
entities in the process of restructuring the electric power industry;

(f) To protect the public interest as it is affected by the rates and services of
electric utilities and other providers of electric power;

(g) To assure socially and environmentally compatible energy sources and


infrastructure;

(h) To promote the utilization of indigenous and new and renewable energy
resources in power generation in order to reduce dependence on imported
energy;
(i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);

(j) To establish a strong and purely independent regulatory body and system to
ensure consumer protection and enhance the competitive operation of the
electricity market; and

(k) To encourage the efficient use of energy and other modalities of demand side
management.

From the aforementioned purposes, it can be gleaned that the assailed


Universal Charge is not a tax, but an exaction in the exercise of the State's
police power. Public welfare is surely promoted.

Moreover, it is a well-established doctrine that the taxing power may be used as


an implement of police power.38In Valmonte v. Energy Regulatory Board, et al.
39 and in Gaston v. Republic Planters Bank,40 this Court held that the Oil Price

Stabilization Fund (OPSF) and the Sugar Stabilization Fund (SSF) were
exactions made in the exercise of the police power. The doctrine was reiterated
in Osmeña v. Orbos41 with respect to the OPSF. Thus, we disagree with
petitioners that the instant case is different from the aforementioned cases. With
the Universal Charge, a Special Trust Fund (STF) is also created under the
administration of PSALM.42 The STF has some notable characteristics similar to
the OPSF and the SSF, viz.:

1) In the implementation of stranded cost recovery, the ERC shall conduct a


review to determine whether there is under-recovery or over recovery and adjust
(true-up) the level of the stranded cost recovery charge. In case of an over-
recovery, the ERC shall ensure that any excess amount shall be remitted to the
STF. A separate account shall be created for these amounts which shall be held
in trust for any future claims of distribution utilities for stranded cost recovery. At
the end of the stranded cost recovery period, any remaining amount in this
account shall be used to reduce the electricity rates to the end-users.43

2) With respect to the assailed Universal Charge, if the total amount collected
for the same is greater than the actual availments against it, the PSALM shall
retain the balance within the STF to pay for periods where a shortfall occurs.44

3) Upon expiration of the term of PSALM, the administration of the STF shall be
transferred to the DOF or any of the DOF attached agencies as designated by
the DOF Secretary.45

The OSG is in point when it asseverates:


Evidently, the establishment and maintenance of the Special Trust Fund, under
the last paragraph of Section 34, R.A. No. 9136, is well within the pervasive and
non-waivable power and responsibility of the government to secure the physical
and economic survival and well-being of the community, that comprehensive
sovereign authority we designate as the police power of the State.46

This feature of the Universal Charge further boosts the position that the same is
an exaction imposed primarily in pursuit of the State's police objectives. The
STF reasonably serves and assures the attainment and perpetuity of the
purposes for which the Universal Charge is imposed, i.e., to ensure the viability
of the country's electric power industry.

The Second Issue

The principle of separation of powers ordains that each of the three branches of
government has exclusive cognizance of and is supreme in matters falling within
its own constitutionally allocated sphere. A logical corollary to the doctrine of
separation of powers is the principle of non-delegation of powers, as expressed
in the Latin maxim potestas delegata non delegari potest (what has been
delegated cannot be delegated). This is based on the ethical principle that such
delegated power constitutes not only a right but a duty to be performed by the
delegate through the instrumentality of his own judgment and not through the
intervening mind of another. 47

In the face of the increasing complexity of modern life, delegation of legislative


power to various specialized administrative agencies is allowed as an exception
to this principle.48 Given the volume and variety of interactions in today's society,
it is doubtful if the legislature can promulgate laws that will deal adequately with
and respond promptly to the minutiae of everyday life. Hence, the need to
delegate to administrative bodies - the principal agencies tasked to execute laws
in their specialized fields - the authority to promulgate rules and regulations to
implement a given statute and effectuate its policies. All that is required for the
valid exercise of this power of subordinate legislation is that the regulation be
germane to the objects and purposes of the law and that the regulation be not in
contradiction to, but in conformity with, the standards prescribed by the law.
These requirements are denominated as the completeness test and the
sufficient standard test.

Under the first test, the law must be complete in all its terms and conditions
when it leaves the legislature such that when it reaches the delegate, the only
thing he will have to do is to enforce it. The second test mandates adequate
guidelines or limitations in the law to determine the boundaries of the delegate's
authority and prevent the delegation from running riot.49
The Court finds that the EPIRA, read and appreciated in its entirety, in relation to
Sec. 34 thereof, is complete in all its essential terms and conditions, and that it
contains sufficient standards.

Although Sec. 34 of the EPIRA merely provides that "within one (1) year from
the effectivity thereof, a Universal Charge to be determined, fixed and approved
by the ERC, shall be imposed on all electricity end-users," and therefore, does
not state the specific amount to be paid as Universal Charge, the amount
nevertheless is made certain by the legislative parameters provided in the law
itself. For one, Sec. 43(b)(ii) of the EPIRA provides:

SECTION 43. Functions of the ERC. — The ERC shall promote competition,
encourage market development, ensure customer choice and penalize abuse of
market power in the restructured electricity industry. In appropriate cases, the
ERC is authorized to issue cease and desist order after due notice and hearing.
Towards this end, it shall be responsible for the following key functions in the
restructured industry:

xxxx

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce,
in accordance with law, a National Grid Code and a Distribution Code which
shall include, but not limited to the following:

xxxx

(ii) Financial capability standards for the generating companies, the TRANSCO,
distribution utilities and suppliers: Provided, That in the formulation of the
financial capability standards, the nature and function of the entity shall be
considered: Provided, further, That such standards are set to ensure that the
electric power industry participants meet the minimum financial standards to
protect the public interest. Determine, fix, and approve, after due notice and
public hearings the universal charge, to be imposed on all electricity end-users
pursuant to Section 34 hereof;

Moreover, contrary to the petitioners’ contention, the ERC does not enjoy a wide
latitude of discretion in the determination of the Universal Charge. Sec. 51(d)
and (e) of the EPIRA50 clearly provides:

SECTION 51. Powers. — The PSALM Corp. shall, in the performance of its
functions and for the attainment of its objective, have the following powers:

xxxx
(d) To calculate the amount of the stranded debts and stranded contract costs of
NPC which shall form the basis for ERC in the determination of the
universal charge;

(e) To liquidate the NPC stranded contract costs, utilizing the proceeds from
sales and other property contributed to it, including the proceeds from the
universal charge.

Thus, the law is complete and passes the first test for valid delegation of
legislative power.

As to the second test, this Court had, in the past, accepted as sufficient
standards the following: "interest of law and order;"51 "adequate and efficient
instruction;"52 "public interest;"53 "justice and equity;"54 "public convenience and
welfare;"55 "simplicity, economy and efficiency;"56 "standardization and regulation
o f m e d i c a l e d u c a t i o n ; "57 a n d " f a i r a n d e q u i t a b l e e m p l o y m e n t
practices."58 Provisions of the EPIRA such as, among others, "to ensure the total
electrification of the country and the quality, reliability, security and affordability
of the supply of electric power"59 and "watershed rehabilitation and
management"60 meet the requirements for valid delegation, as they provide the
limitations on the ERC’s power to formulate the IRR. These are sufficient
standards.

It may be noted that this is not the first time that the ERC's conferred powers
were challenged. In Freedom from Debt Coalition v. Energy Regulatory
Commission,61 the Court had occasion to say:

In determining the extent of powers possessed by the ERC, the provisions of the
EPIRA must not be read in separate parts. Rather, the law must be read in its
entirety, because a statute is passed as a whole, and is animated by one
general purpose and intent. Its meaning cannot to be extracted from any single
part thereof but from a general consideration of the statute as a whole.
Considering the intent of Congress in enacting the EPIRA and reading the
statute in its entirety, it is plain to see that the law has expanded the jurisdiction
of the regulatory body, the ERC in this case, to enable the latter to implement
the reforms sought to be accomplished by the EPIRA. When the legislators
decided to broaden the jurisdiction of the ERC, they did not intend to abolish or
reduce the powers already conferred upon ERC's predecessors. To sustain the
view that the ERC possesses only the powers and functions listed under Section
43 of the EPIRA is to frustrate the objectives of the law.

In his Concurring and Dissenting Opinion62 in the same case, then Associate
Justice, now Chief Justice, Reynato S. Puno described the immensity of police
power in relation to the delegation of powers to the ERC and its regulatory
functions over electric power as a vital public utility, to wit:

Over the years, however, the range of police power was no longer limited to the
preservation of public health, safety and morals, which used to be the primary
social interests in earlier times. Police power now requires the State to "assume
an affirmative duty to eliminate the excesses and injustices that are the
concomitants of an unrestrained industrial economy." Police power is now
exerted "to further the public welfare — a concept as vast as the good of society
itself." Hence, "police power is but another name for the governmental authority
to further the welfare of society that is the basic end of all government." When
police power is delegated to administrative bodies with regulatory functions, its
exercise should be given a wide latitude. Police power takes on an even broader
dimension in developing countries such as ours, where the State must take a
more active role in balancing the many conflicting interests in society. The
Questioned Order was issued by the ERC, acting as an agent of the State in the
exercise of police power. We should have exceptionally good grounds to curtail
its exercise. This approach is more compelling in the field of rate-regulation of
electric power rates. Electric power generation and distribution is a traditional
instrument of economic growth that affects not only a few but the entire nation. It
is an important factor in encouraging investment and promoting business. The
engines of progress may come to a screeching halt if the delivery of electric
power is impaired. Billions of pesos would be lost as a result of power outages
or unreliable electric power services. The State thru the ERC should be able to
exercise its police power with great flexibility, when the need arises.

This was reiterated in National Association of Electricity Consumers for Reforms


v. Energy Regulatory Commission63 where the Court held that the ERC, as
regulator, should have sufficient power to respond in real time to changes
wrought by multifarious factors affecting public utilities.

From the foregoing disquisitions, we therefore hold that there is no undue


delegation of legislative power to the ERC.

Petitioners failed to pursue in their Memorandum the contention in the


Complaint that the imposition of the Universal Charge on all end-users is
oppressive and confiscatory, and amounts to taxation without representation.
Hence, such contention is deemed waived or abandoned per Resolution64 of
August 3, 2004.65Moreover, the determination of whether or not a tax is
excessive, oppressive or confiscatory is an issue which essentially involves
questions of fact, and thus, this Court is precluded from reviewing the same.66
As a penultimate statement, it may be well to recall what this Court said of
EPIRA:

One of the landmark pieces of legislation enacted by Congress in recent years


is the EPIRA. It established a new policy, legal structure and regulatory
framework for the electric power industry. The new thrust is to tap private capital
for the expansion and improvement of the industry as the large government debt
and the highly capital-intensive character of the industry itself have long been
acknowledged as the critical constraints to the program. To attract private
investment, largely foreign, the jaded structure of the industry had to be
addressed. While the generation and transmission sectors were centralized and
monopolistic, the distribution side was fragmented with over 130 utilities, mostly
small and uneconomic. The pervasive flaws have caused a low utilization of
existing generation capacity; extremely high and uncompetitive power rates;
poor quality of service to consumers; dismal to forgettable performance of the
government power sector; high system losses; and an inability to develop a
clear strategy for overcoming these shortcomings.

Thus, the EPIRA provides a framework for the restructuring of the industry,
including the privatization of the assets of the National Power Corporation
(NPC), the transition to a competitive structure, and the delineation of the roles
of various government agencies and the private entities. The law ordains the
division of the industry into four (4) distinct sectors, namely: generation,
transmission, distribution and supply.

Corollarily, the NPC generating plants have to privatized and its transmission
business spun off and privatized thereafter.67

Finally, every law has in its favor the presumption of constitutionality, and to
justify its nullification, there must be a clear and unequivocal breach of the
Constitution and not one that is doubtful, speculative, or argumentative.
68Indubitably, petitioners failed to overcome this presumption in favor of the

EPIRA. We find no clear violation of the Constitution which would warrant a


pronouncement that Sec. 34 of the EPIRA and Rule 18 of its IRR are
unconstitutional and void.

WHEREFORE, the instant case is hereby DISMISSED for lack of merit.

SO ORDERED.
" 

THIRD DIVISION

G.R. No. 131512 January 20, 2000

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant


Secretary Manuel F. Bruan, LTO Regional Office, Region X represented by
its Regional Director, Timoteo A. Garcia; and LTO Butuan represented by
Rosita G. Sadiaga, its Registrar, petitioners, 

vs.

CITY OF BUTUAN, represented in this case by Democrito D. Plaza II, City
Mayor, respondents.

VITUG, J.:

The 1987 Constitution enunciates the policy that the territorial and political
subdivisions shall enjoy local autonomy.1 In obedience to that mandate of the
fundamental law, Republic Act ("R.A.") No. 7160, otherwise known as the Local
Government Code,2 expresses that the territorial and political subdivisions of the
State shall enjoy genuine and meaningful local autonomy in order to enable
them to attain their fullest development as self-reliant communities and make
them more effective partners in the attainment of national goals, and that it is a
basic aim of the State to provide for a more responsive and accountable local
government structure instituted through a system of decentralization whereby
local government units shall be given more powers, authority, responsibilities
and resources.

While the Constitution seeks to strengthen local units and ensure their viability,
clearly, however, it has never been the intention of that organic law to create
an imperuim in imperio and install an infra sovereign political subdivision
independent of a single sovereign state.

The Court is asked in this instance to resolve the issue of whether under the
present set up the power of the Land Registration Office ("LTO") to register,
tricycles in particular, as well as to issue licenses for the driving thereof, has
likewise devolved to local government units.

The Regional Trial Court (Branch 2) of Butuan City held3 that the authority to
register tricycles, the grant of the corresponding franchise, the issuance of
tricycle drivers' license, and the collection of fees therefor had all been vested in
the Local Government Units ("LGUs"). Accordingly, it decreed the issuance of a
permanent writ of injunction against LTO, prohibiting and enjoining LTO, as well
as its employees and other persons acting in its behalf, from (a) registering
tricycles and (b) issuing licenses to drivers of tricycles. The Court of Appeals, on
appeal to it, sustained the trial court.1âwphi1.nêt

The adverse rulings of both the court a quo and the appellate court prompted
the LTO to file the instant petition for review on certiorari to annul and set aside
the decision,4 dated 17 November 1997, of the Court of Appeals affirming the
permanent injunctive writ order of the Regional Trial Court (Branch 2) of Butuan
City.

Respondent City of Butuan asserts that one of the salient provisions introduced
by the Local Government Code is in the area of local taxation which allows
LGUs to collect registration fees or charges along with, in its view, the
corresponding issuance of all kinds of licenses or permits for the driving of
tricycles.

The 1987 Constitution provides:

Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively to the local
governments.5

Sec. 129 and Section 133 of the Local Government Code read:

Sec. 129. Power to Create Sources or Revenue. — Each local government unit
shall exercise its power to create its own sources of revenue and to levy taxes,
fees, and charges subject to the provisions herein, consistent with the basic
policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively
to the local government units.

Sec. 133. Common Limitations on the Taxing Powers of Local Government


Units. — Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of
the following:

xxx xxx xxx

(l) Taxes, fees or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for the driving thereof, except
tricycles.

Relying on the foregoing provisions of the law, the Sangguniang Panglungsod


("SP") of Butuan, on 16 August 1992, passed SP Ordinance No. 916-92 entitled
"An Ordinance Regulating the Operation of Tricycles-for-Hire, providing
mechanism for the issuance of Franchise, Registration and Permit, and
imposing Penalties for Violations thereof and for other Purposes." The ordinance
provided for, among other things, the payment of franchise fees for the grant of
the franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees
for the issuance of a permit for the driving thereof.

Petitioner LTO explains that one of the functions of the national government that,
indeed, has been transferred to local government units is the franchising
authority over tricycles-for-hire of the Land Transportation Franchising and
Regulatory Board ("LTFRB") but not, it asseverates, the authority of LTO to
register all motor vehicles and to issue to qualified persons of licenses to drive
such vehicles.

In order to settle the variant positions of the parties, the City of Butuan,
represented by its City Mayor Democrito D. Plaza, filed on 28 June 1994 with
the trial court a petition for "prohibition, mandamus, injunction with a prayer for
preliminary restraining order ex-parte" seeking the declaration of the validity of
SP Ordinance No. 962-93 and the prohibition of the registration of tricycles-for-
hire and the issuance of licenses for the driving thereof by the LTO.

LTO opposed the prayer in the petition.

On 20 March 1995, the trial court rendered a resolution; the dispositive portion
read:

In view of the foregoing, let a permanent injunctive writ be issued against the
respondent Land Transportation Office and the other respondents, prohibiting
and enjoining them, their employees, officers, attorney's or other persons acting
in their behalf from forcing or compelling Tricycles to be registered with, and
drivers to secure their licenses from respondent LTO or secure franchise from
LTFRB and from collecting fees thereon. It should be understood that the
registration, franchise of tricycles and driver's license/permit granted or issued
by the City of Butuan are valid only within the territorial limits of Butuan City.

No pronouncement as to costs.6

Petitioners timely moved for a reconsideration of the above resolution but it was
to no avail. Petitioners then appealed to the Court of Appeals. In its now
assailed decision, the appellate court, on 17 November 1997, sustained the trial
court. It ruled:

WHEREFORE, the petition is hereby DISMISSED and the questioned


permanent injunctive writ issued by the court a quo dated March 20, 1995
AFFIRMED.7

Coming up to this Court, petitioners raise this sole assignment of error, to wit:

The Court of Appeals [has] erred in sustaining the validity of the writ of injunction
issued by the trial court which enjoined LTO from (1) registering tricycles-for-hire
and (2) issuing licenses for the driving thereof since the Local Government Code
devolved only the franchising authority of the LTFRB. Functions of the LTO were
not devolved to the LGU's.8

The petition is impressed with merit.

The Department of Transportation and Communications9 ("DOTC"), through the


LTO and the LTFRB, has since been tasked with implementing laws pertaining
to land transportation. The LTO is a line agency under the DOTC whose powers
and functions, pursuant to Article III, Section 4 (d) [1],10 of R.A. No. 4136,
otherwise known as Land Transportation and Traffic Code, as amended, deal
primarily with the registration of all motor vehicles and the licensing of drivers
thereof. The LTFRB, upon the other hand, is the governing body tasked by E.O.
No. 202, dated 19 June 1987, to regulate the operation of public utility or "for
hire" vehicles and to grant franchises or certificates of public convenience
("CPC").11 Finely put, registration and licensing functions are vested in the LTO
while franchising and regulatory responsibilities had been vested in the LTFRB.

Under the Local Government Code, certain functions of the DOTC were
transferred to the LGUs, thusly:

Sec. 458. Powers, Duties, Functions and Compensation. —

xxx xxx xxx


(3) Subject to the provisions of Book II of this Code, enact ordinances granting
franchises and authorizing the issuance of permits or licenses, upon such
conditions and for such purposes intended to promote the general welfare of the
inhabitants of the city and pursuant to this legislative authority shall:

xxx xxx xxx

(VI) Subject to the guidelines prescribed by the Department of Transportation


and Communications, regulate the operation of tricycles and grant franchises for
the operation thereof within the territorial jurisdiction of the city. (Emphasis
supplied).

LGUs indubitably now have the power to regulate the operation of tricycles-for-
hire and to grant franchises for the operation thereof. "To regulate" means to fix,
establish, or control; to adjust by rule, method, or established mode; to direct by
rule or restriction; or to subject to governing principles or laws.12 A franchise is
defined to be a special privilege to do certain things conferred by government on
an individual or corporation, and which does not belong to citizens generally of
common right.13 On the other hand, "to register" means to record formally and
exactly, to enroll, or to enter precisely in a list or the like,14 and a "driver's
license" is the certificate or license issued by the government which authorizes a
person to operate a motor vehicle.15 The devolution of the functions of the
DOTC, performed by the LTFRB, to the LGUs, as so aptly observed by the
Solicitor General, is aimed at curbing the alarming increase of accidents in
national highways involving tricycles. It has been the perception that local
governments are in good position to achieve the end desired by the law-making
body because of their proximity to the situation that can enable them to address
that serious concern better than the national government.

It may not be amiss to state, nevertheless, that under Article 458 (a)[3-VI] of the
Local Government Code, the power of LGUs to regulate the operation of
tricycles and to grant franchises for the operation thereof is still subject to the
guidelines prescribed by the DOTC. In compliance therewith, the Department of
Transportation and Communications ("DOTC") issued "Guidelines to Implement
the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local
Government units pursuant to the Local Government Code." Pertinent
provisions of the guidelines state:

In lieu of the Land Transportation Franchising and Regulatory Board (LTFRB) in


the DOTC, the Sangguniang Bayan/Sangguniang Panglungsod (SB/SP) shall
perform the following:
(a) Issue, amend, revise, renew, suspend, or cancel MTOP and prescribe the
appropriate terms and conditions therefor;

xxx xxx xxx

Operating Conditions:

1. For safety reasons, no tricycles should operate on national highways utilized


by 4 wheel vehicles greater than 4 tons and where normal speed exceed 40
KPH. However, the SB/SP may provide exceptions if there is no alternative
route.

2. Zones must be within the boundaries of the municipality/city. However,


existing zones within more than one municipality/city shall be maintained,
provided that operators serving said zone shall secure MTOP's from each of the
municipalities/cities having jurisdiction over the areas covered by the zone.

3. A common color for tricycles-for-hire operating in the same zone may be


imposed. Each unit shall be assigned and bear an identification number, aside
from its LTO license plate number.

4. An operator wishing to stop service completely, or to suspend service for


more than one month, should report in writing such termination or suspension to
the SB/SP which originally granted the MTOP prior thereto. Transfer to another
zone may be permitted upon application.

5. The MTOP shall be valid for three (3) years, renewable for the same period.
Transfer to another zone, change of ownership of unit or transfer of MTOP shall
be construed as an amendment to an MTOP and shall require appropriate
approval of the SB/SP.

6. Operators shall employ only drivers duly licensed by LTO for tricycles-for-hire.

7. No tricycle-for-hire shall be allowed to carry more passengers and/or goods


than it is designed for.

8. A tricycle-for-hire shall be allowed to operate like a taxi service, i.e., service is


rendered upon demand and without a fixed route within a zone.16

Such as can be gleaned from the explicit language of the statute, as well as the
corresponding guidelines issued by DOTC, the newly delegated powers pertain
to the franchising and regulatory powers theretofore exercised by the LTFRB
and not to the functions of the LTO relative to the registration of motor vehicles
and issuance of licenses for the driving thereof. Clearly unaffected by the Local
Government Code are the powers of LTO under R.A. No. 4136 requiring the
registration of all kinds of motor vehicles "used or operated on or upon any
public highway" in the country. Thus —

Sec. 5. All motor vehicles and other vehicles must be registered. — (a) No
motor vehicle shall be used or operated on or upon any public highway of the
Philippines unless the same is properly registered for the current year in
accordance with the provisions of this Act (Article 1, Chapter II, R.A. No. 4136).

The Commissioner of Land Transportation and his deputies are empowered at


anytime to examine and inspect such motor vehicles to determine whether said
vehicles are registered, or are unsightly, unsafe, improperly marked or equipped,
or otherwise unfit to be operated on because of possible excessive damage to
highways, bridges and other infrastructures.17 The LTO is additionally charged
with being the central repository and custodian of all records of all motor
vehicles.18

The Court shares the apprehension of the Solicitor General if the above
functions were to likewise devolve to local government units; he states:

If the tricycle registration function of respondent LTO is decentralized, the


incidence of theft of tricycles will most certainly go up, and stolen tricycles
registered in one local government could be registered in another with ease. The
determination of ownership thereof will also become very difficult.

Fake driver's licenses will likewise proliferate. This likely scenario unfolds where
a tricycle driver, not qualified by petitioner LTO's testing, could secure a license
from one municipality, and when the same is confiscated, could just go another
municipality to secure another license.

Devolution will entail the hiring of additional personnel charged with inspecting
tricycles for road worthiness, testing drivers, and documentation. Revenues
raised from tricycle registration may not be enough to meet salaries of additional
personnel and incidental costs for tools and equipment.19

The reliance made by respondents on the broad taxing power of local


government units, specifically under Section 133 of the Local Government
Code, is tangential. Police power and taxation, along with eminent domain, are
inherent powers of sovereignty which the State might share with local
government units by delegation given under a constitutional or a statutory fiat.
All these inherent powers are for a public purpose and legislative in nature but
the similarities just about end there. The basic aim of police power is public good
and welfare. Taxation, in its case, focuses an the power of government to raise
revenue in order to support its existence and carry out its legitimate objectives.
Although correlative to each other in many respects, the grant of one does not
necessarily carry with it the grant of the other. The two powers are, by tradition
and jurisprudence, separate and distinct powers, varying in their respective
concepts, character, scopes and limitations. To construe the tax provisions of
Section 133(1) indistinctively would result in the repeal to that extent of LTO's
regulatory power which evidently has not been intended. If it were otherwise, the
law could have just said so in Section 447 and 458 of Book III of the Local
Government Code in the same manner that the specific devolution of LTFRB's
power on franchising of tricycles has been provided. Repeal by implication is not
favored.20 The power over tricycles granted under Section 458(8)(3)(VI) of the
Local Government Code to LGUs is the power to regulate their operation and to
grant franchises for the operation thereof. The exclusionary clause contained in
the tax provisions of Section 133(1) of the Local Government Code must not be
held to have had the effect of withdrawing the express power of LTO to cause
the registration of all motor vehicles and the issuance of licenses for the driving
thereof. These functions of the LTO are essentially regulatory in nature,
exercised pursuant to the police power of the State, whose basic objectives are
to achieve road safety by insuring the road worthiness of these motor vehicles
and the competence of drivers prescribed by R.A. 4136. Not insignificant is the
rule that a statute must not be construed in isolation but must be taken in
harmony with the extant body of laws.21

The Court cannot end this decision without expressing its own serious concern
over the seeming laxity in the grant of franchises for the operation of tricycles-
for-hire and in allowing the indiscriminate use by such vehicles on public
highways and principal thoroughfares. Senator Aquilino C. Pimentel, Jr., the
principal author and sponsor of the bill that eventually has become to be known
as the Local Government Code, has aptly remarked:

Tricycles are a popular means of transportation, specially in the countryside.


They are, unfortunately, being allowed to drive along highways and principal
thoroughfares where they pose hazards to their passengers arising from
potential collisions with buses, cars and jeepneys.

The operation of tricycles within a municipality may be regulated by the


Sangguniang Bayan. In this connection, the Sangguniang concerned would do
well to consider prohibiting the operation of tricycles along or across highways
invite collisions with faster and bigger vehicles and impede the flow of traffic.22
The need for ensuring public safety and convenience to commuters and
pedestrians alike is paramount. It might be well, indeed, for public officials
concerned to pay heed to a number of provisions in our laws that can warrant in
appropriate cases an incurrence of criminal and civil liabilities. Thus —

The Revised Penal Code —

Art. 208. Prosecution of offenses; negligence and tolerance. — The penalty


of prision correccional in its minimum period and suspension shall be imposed
upon any public officer, or officer of the law, who, in dereliction of the duties of
his office, shall maliciously refrain from instituting prosecution for the punishment
of violators of the law, or shall tolerate the commission of offenses.

The Civil Code —

Art. 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty
may file an action for damages and other relief against the latter, without
prejudice to any disciplinary administrative action that may be taken.1âwphi1.nêt

Art. 34. When a member of a city or municipal police force refuses or fails to
render aid or protection to any person in case of danger to life or property, such
peace officer shall be primarily liable for damages, and the city or municipality
shall be subsidiarily responsible therefor. The civil action herein recognized shall
be independent of any criminal proceedings, and a preponderance of evidence
shall suffice to support such action.

Art. 2189. Provinces, cities and municipalities shall be liable for damages for the
death of, or injuries suffered by, any person by reason of the defective condition
of roads, streets, bridges, public buildings, and other public works under their
control or supervision.

The Local Government Code —

Sec. 24. Liability for Damages. — Local government units and their officials are
not exempt from liability for death or injury to persons or damage to property.

WHEREFORE, the assailed decision which enjoins the Land Transportation


Office from requiring the due registration of tricycles and a license for the driving
thereof is REVERSED and SET ASIDE.

No pronouncements on costs.
Let copies of this decision be likewise furnished the Department of Interior and
Local Governments, the Department of Public Works and Highways and the
Department of Transportation and Communication.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 107383 February 20, 1996

CECILIA ZULUETA, petitioner, 



vs.

COURT OF APPEALS and ALFREDO MARTIN, respondents.

DECISION

MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals, affirming the
decision of the Regional Trial Court of Manila (Branch X) which ordered
petitioner to return documents and papers taken by her from private
respondent's clinic without the latter's knowledge and consent.

The facts are as follows:

Petitioner Cecilia Zulueta is the wife of private respondent Alfredo Martin. On


March 26, 1982, petitioner entered the clinic of her husband, a doctor of
medicine, and in the presence of her mother, a driver and private respondent's
secretary, forcibly opened the drawers and cabinet in her husband's clinic and
took 157 documents consisting of private correspondence between Dr. Martin
and his alleged paramours, greetings cards, cancelled checks, diaries, Dr.
Martin's passport, and photographs. The documents and papers were seized for
use in evidence in a case for legal separation and for disqualification from the
practice of medicine which petitioner had filed against her husband.

Dr. Martin brought this action below for recovery of the documents and papers
and for damages against petitioner. The case was filed with the Regional Trial
Court of Manila, Branch X, which, after trial, rendered judgment for private
respondent, Dr. Alfredo Martin, declaring him "the capital/exclusive owner of the
properties described in paragraph 3 of plaintiff's Complaint or those further
described in the Motion to Return and Suppress" and ordering Cecilia Zulueta
and any person acting in her behalf to a immediately return the properties to Dr.
Martin and to pay him P5,000.00, as nominal damages; P5,000.00, as moral
damages and attorney's fees; and to pay the costs of the suit. The writ of
preliminary injunction earlier issued was made final and petitioner Cecilia
Zulueta and her attorneys and representatives were enjoined from "using or
submitting/admitting as evidence" the documents and papers in question. On
appeal, the Court of Appeals affirmed the decision of the Regional Trial Court.
Hence this petition.

There is no question that the documents and papers in question belong to


private respondent, Dr. Alfredo Martin, and that they were taken by his wife, the
herein petitioner, without his knowledge and consent. For that reason, the trial
court declared the documents and papers to be properties of private
respondent, ordered petitioner to return them to private respondent and enjoined
her from using them in evidence. In appealing from the decision of the Court of
Appeals affirming the trial court's decision, petitioner's only ground is that in
Alfredo Martin v. Alfonso Felix, Jr.,1 this Court ruled that the documents and
papers (marked as Annexes A-1 to J-7 of respondent's comment in that case)
were admissible in evidence and, therefore, their use by petitioner's attorney,
Alfonso Felix did not constitute malpractice or gross misconduct, For this reason
it is contended that the Court of Appeals erred in affirming the decision of the
trial court instead of dismissing private respondent's complaint.

Petitioner's contention has no merit. The case against Atty. Felix, Jr. was for
disbarment. Among other things, private respondent, Dr. Alfredo Martin, as
complainant in that case, charged that in using the documents in evidence, Atty.
Felix, Jr. committed malpractice or gross misconduct because of the injunctive
order of the trial court. In dismissing the complaint against Atty. Felix, Jr., this
Court took note of the following defense of Atty. Felix; Jr. which it found to be
"impressed with merit:"2

On the alleged malpractice or gross misconduct of respondent [Alfonso Felix,


Jr.], he maintains that:

....

4. When respondent refiled Cecilia's case for legal separation before the Pasig
Regional Trial Court, there was admittedly an order of the Manila Regional Trial
Court prohibiting Cecilia from using the documents Annex "A-1 to J-7." On
September 6, 1983, however having appealed the said order to this Court on a
petition for certiorari, this Court issued a restraining order on aforesaid date
which order temporarily set aside the order of the trial court. Hence, during the
enforceability of this Court's order, respondent's request for petitioner to admit
the genuineness and authenticity of the subject annexes cannot be looked upon
as malpractice. Notably, petitioner Dr. Martin finally admitted the truth and
authenticity of the questioned annexes, At that point in time, would it have been
malpractice for respondent to use petitioner's admission as evidence against
him in the legal separation case pending in the Regional Trial Court of Makati?
Respondent submits it is not malpractice.

Significantly, petitioner's admission was done not thru his counsel but by Dr.
Martin himself under oath, Such verified admission constitutes an affidavit, and,
therefore, receivable in evidence against him. Petitioner became bound by his
admission. For Cecilia to avail herself of her husband's admission and use the
same in her action for legal separation cannot be treated as malpractice.

Thus, the acquittal of Atty. Felix, Jr. in the administrative case amounts to no
more than a declaration that his use of the documents and papers for the
purpose of securing Dr. Martin's admission as to their genuiness and
authenticity did not constitute a violation of the injunctive order of the trial court.
By no means does the decision in that case establish the admissibility of the
documents and papers in question.

It cannot be overemphasized that if Atty. Felix, Jr. was acquitted of the charge of
violating the writ of preliminary injunction issued by the trial court, it was only
because, at the time he used the documents and papers, enforcement of the
order of the trial court was temporarily restrained by this Court. The TRO issued
by this Court was eventually lifted as the petition for certiorari filed by petitioner
against the trial court's order was dismissed and, therefore, the prohibition
against the further use of the documents and papers became effective again.

Indeed the documents and papers in question are inadmissible in evidence. The
constitutional injunction declaring "the privacy of communication and
correspondence [to be] inviolable"3 is no less applicable simply because it is the
wife (who thinks herself aggrieved by her husband's infidelity) who is the party
against whom the constitutional provision is to be enforced. The only exception
to the prohibition in the Constitution is if there is a "lawful order [from a] court or
when public safety or order requires otherwise, as prescribed by law."4 Any
violation of this provision renders the evidence obtained inadmissible "for any
purpose in any proceeding." 5

The intimacies between husband and wife do not justify any one of them in
breaking the drawers and cabinets of the other and in ransacking them for any
telltale evidence of marital infidelity. A person, by contracting marriage, does not
shed his/her integrity or his right to privacy as an individual and the
constitutional protection is ever available to him or to her.

The law insures absolute freedom of communication between the spouses by


making it privileged. Neither husband nor wife may testify for or against the
other without the consent of the affected spouse while the marriage subsists.
6 Neither may be examined without the consent of the other as to any
communication received in confidence by one from the other during the
marriage, save for specified exceptions.7 But one thing is freedom of
communication; quite another is a compulsion for each one to share what one
knows with the other. And this has nothing to do with the duty of fidelity that
each owes to the other.

WHEREFORE, the petition for review is DENIED for lack of merit.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

A.M. No. P-11-2927 December 13, 2011



[Formerly A.M. OCA IPI No. 10-3532-P]

LEAVE DIVISION, OFFICE OF ADMINISTRATIVE SERVICES-Office of the


CourT Administrator (OCA),Complainant, 

vs.

WILMA SALVACION P. HEUSDENS, Clerk IV Municipal Trial Court in Cities,
Tagum City, Respondent.

DECISION

MENDOZA, J.:

This case stemmed from the leave application for foreign travel1 sent through
mail by Wilma Salvacion P. Heusdens (respondent), Staff Clerk IV of the
Municipal Trial Court in Cities, Tagum City, Davao del Norte.

Records disclose that on July 10, 2009, the Employees Leave Division, Office of
Administrative Services, Office of the Court Administrator (OCA), received
respondent’s leave application for foreign travel from September 11, 2009 to
October 11, 2009. Respondent left for abroad without waiting for the result of her
application. It turned out that no travel authority was issued in her favor because
she was not cleared of all her accountabilities as evidenced by the Supreme
Court Certificate of Clearance. Respondent reported back to work on October
19, 2009.2

The OCA, in its Memorandum3 dated November 26, 2009, recommended the
disapproval of respondent’s leave application. It further advised that respondent
be directed to make a written explanation of her failure to secure authority to
travel abroad in violation of OCA Circular No. 49-2003. On December 7, 2009,
then Chief Justice Reynato S. Puno approved the OCA recommendation.

Accordingly, in a letter4 dated January 6, 2010, OCA Deputy Court Administrator


Nimfa C. Vilches informed respondent that her leave application was
disapproved and her travel was considered unauthorized. Respondent was
likewise directed to explain within fifteen (15) days from notice her failure to
comply with the OCA circular.
In her Comment5 dated February 2, 2010, respondent admitted having travelled
overseas without the required travel authority. She explained that it was not her
intention to violate the rules as she, in fact, mailed her leave application which
was approved by her superior, Judge Arlene Lirag-Palabrica, as early as June
26, 2009. She honestly believed that her leave application would be eventually
approved by the Court.

The OCA, in its Report6 dated March 8, 2011, found respondent to have violated
OCA Circular No. 49-2003 for failing to secure the approval of her application for
travel authority.

Hence, the OCA recommended that the administrative complaint be re-docketed


as a regular administrative matter and that respondent be deemed guilty for
violation of OCA Circular No. 49-2003 and be reprimanded with a warning that a
repetition of the same or similar offense in the future would be dealt with more
severely.

OCA Circular No. 49-2003 (B) specifically requires that:

B. Vacation Leave to be Spent Abroad.

Pursuant to the resolution in A.M. No. 99-12-08-SC dated 6 November 2000,7 all
foreign travels of judges and court personnel, regardless of the number of days,
must be with prior permission from the Supreme Court through the Chief Justice
and the Chairmen of the Divisions.

1. Judges and court personnel who wish to travel abroad must secure a travel
authority from the Office of the Court Administrator. The judge or court personnel
must submit the following:

(a) For Judges

xxx

(b) For Court Personnel:

• application or letter-request addressed to the Court Administrator stating the


purpose of the travel abroad;

• application for leave covering the period of the travel abroad, favorably
recommended by the Presiding Judge or Executive Judge;

• clearance as to money and property accountability;


• clearance as to pending criminal and administrative case filed against him/her,
if any;

• for court stenographer, clearance as to pending stenographic notes for


transcription from his/her court and from the Court of Appeals; and

• Supreme Court clearance.

2. Complete requirements should be submitted to and received by the Office of


the Court Administrator at least two weeks before the intended period. No action
shall be taken on requests for travel authority with incomplete requirements.
Likewise, applications for travel abroad received less than two weeks of the
intended travel shall not be favorably acted upon. [Underscoring supplied]

Paragraph 4 of the said circular also provides that "judges and personnel who
shall leave the country without travel authority issued by the Office of the Court
Administrator shall be subject to disciplinary action." In addition, Section 67 of
the Civil Service Omnibus Rules on Leave8 expressly provides that "any
violation of the leave laws, rules or regulations, or any misrepresentation or
deception in connection with an application for leave, shall be a ground for
disciplinary action." In fact, every government employee who files an application
for leave of absence for at least thirty (30) calendar days is instructed to submit
a clearance as to money and property accountabilities.9

In this case, respondent knew that she had to secure the appropriate clearance
as to money and property accountability to support her application for travel
authority. She cannot feign ignorance of this requirement because she had her
application for clearance circulated through the various divisions. She, however,
failed to secure clearance from the Supreme Court Savings and Loan
Association (SCSLA) where she had an outstanding loan.

There is no dispute, therefore, that although respondent submitted her leave


application for foreign travel, she failed to comply with the clearance and
accountability requirements. As the OCA Circular specifically cautions that "no
action shall be taken on requests for travel authority with incomplete
requirements," it was expected that her leave application would, as a
consequence, be disapproved by the OCA.

Considering that respondent was aware that she was not able to complete the
requirements, her explanation that she honestly believed that her application
would be approved is unacceptable. Thus, her leaving the country, without first
awaiting the approval or non-approval of her application to travel abroad from
the OCA, was violative of the rules.
On the Constitutional Right to Travel

It has been argued that OCA Circular No. 49-2003 (B) on vacation leave to be
spent abroad unduly restricts a citizen’s right to travel guaranteed by Section 6,
Article III of the 1987 Constitution.10 Section 6 reads:

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

Let there be no doubt that the Court recognizes a citizen’s constitutional right to
travel. It is, however, not the issue in this case. The only issue in this case is the
non-compliance with the Court’s rules and regulations. It should be noted that
respondent, in her Comment, did not raise any constitutional concerns. In fact,
she was apologetic and openly admitted that she went abroad without the
required travel authority. Hence, this is not the proper vehicle to thresh out
issues on one’s constitutional right to travel.

Nonetheless, granting that it is an issue, the exercise of one’s right to travel or


the freedom to move from one place to another,11 as assured by the
Constitution, is not absolute. There are constitutional, statutory and inherent
limitations regulating the right to travel. Section 6 itself provides that "neither
shall the right to travel be impaired except in the interest of national security,
public safety or public health, as may be provided by law." Some of these
statutory limitations are the following:

1] The Human Security Act of 2010 or Republic Act (R.A.) No. 9372. The law
restricts the right to travel of an individual charged with the crime of terrorism
even though such person is out on bail.

2] The Philippine Passport Act of 1996 or R.A. No. 8239. Pursuant to said law,
the Secretary of Foreign Affairs or his authorized consular officer may refuse the
issuance of, restrict the use of, or withdraw, a passport of a Filipino citizen.

3] The "Anti- Trafficking in Persons Act of 2003" or R.A. No. 9208. Pursuant to
the provisions thereof, the Bureau of Immigration, in order to manage migration
and curb trafficking in persons, issued Memorandum Order Radjr No.
2011-011,12 allowing its Travel Control and Enforcement Unit to "offload
passengers with fraudulent travel documents, doubtful purpose of travel,
including possible victims of human trafficking" from our ports.
4] The Migrant Workers and Overseas Filipinos Act of 1995 or R. A. No. 8042,
as amended by R.A. No. 10022. In enforcement of said law, the Philippine
Overseas Employment Administration (POEA) may refuse to issue deployment
permit to a specific country that effectively prevents our migrant workers to enter
such country.

5] The Act on Violence against Women and Children or R.A. No. 9262. The law
restricts movement of an individual against whom the protection order is
intended.

6] Inter-Country Adoption Act of 1995 or R.A. No. 8043. Pursuant thereto, the
Inter-Country Adoption Board may issue rules restrictive of an adoptee’s right to
travel "to protect the Filipino child from abuse, exploitation, trafficking and/or
sale or any other practice in connection with adoption which is harmful,
detrimental, or prejudicial to the child."

Inherent limitations on the right to travel are those that naturally emanate from
the source. These are very basic and are built-in with the power. An example of
such inherent limitation is the power of the trial courts to prohibit persons
charged with a crime to leave the country.13 In such a case, permission of the
court is necessary. Another is the inherent power of the legislative department to
conduct a congressional inquiry in aid of legislation. In the exercise of legislative
inquiry, Congress has the power to issue a subpoena and subpoena duces
tecum to a witness in any part of the country, signed by the chairperson or acting
chairperson and the Speaker or acting Speaker of the House;14 or in the case of
the Senate, signed by its Chairman or in his absence by the Acting Chairman,
and approved by the Senate President.15

Supreme Court has administrative supervision over all courts and the personnel
thereof

With respect to the power of the Court, Section 5 (6), Article VIII of the 1987
Constitution provides that the "Supreme Court shall have administrative
supervision over all courts and the personnel thereof." This provision empowers
the Court to oversee all matters relating to the effective supervision and
management of all courts and personnel under it. Recognizing this mandate,
Memorandum Circular No. 26 of the Office of the President, dated July 31,
1986,16 considers the Supreme Court exempt and with authority to promulgate
its own rules and regulations on foreign travels. Thus, the Court came out with
OCA Circular No. 49-2003 (B).

Where a person joins the Judiciary or the government in general, he or she


swears to faithfully adhere to, and abide with, the law and the corresponding
office rules and regulations. These rules and regulations, to which one submits
himself or herself, have been issued to guide the government officers and
employees in the efficient performance of their obligations. When one becomes
a public servant, he or she assumes certain duties with their concomitant
responsibilities and gives up some rights like the absolute right to travel so that
public service would not be prejudiced.

As earlier stated, with respect to members and employees of the Judiciary, the
Court issued OCA Circular No. 49-2003 to regulate their foreign travel in an
unofficial capacity. Such regulation is necessary for the orderly administration of
justice. If judges and court personnel can go on leave and travel abroad at will
and without restrictions or regulations, there could be a disruption in the
administration of justice. A situation where the employees go on mass leave and
travel together, despite the fact that their invaluable services are urgently
needed, could possibly arise. For said reason, members and employees of the
Judiciary cannot just invoke and demand their right to travel.

To permit such unrestricted freedom can result in disorder, if not chaos, in the
Judiciary and the society as well. In a situation where there is a delay in the
dispensation of justice, litigants can get disappointed and disheartened. If their
expectations are frustrated, they may take the law into their own hands which
results in public disorder undermining public safety. In this limited sense, it can
even be considered that the restriction or regulation of a court personnel’s right
to travel is a concern for public safety, one of the exceptions to the non-
impairment of one’s constitutional right to travel.

Given the exacting standard expected from each individual called upon to serve
in the Judiciary, it is imperative that every court employee comply with the travel
notification and authority requirements as mandated by OCA Circular No.
49-2003. A court employee who plans to travel abroad must file his leave
application prior to his intended date of travel with sufficient time allotted for his
application to be processed and approved first by the Court. He cannot leave
the country without his application being approved, much less assume that his
leave application would be favorably acted upon. In the case at bench,
respondent should have exercised prudence and asked for the status of her
leave application before leaving for abroad.

Indeed, under the Omnibus Rules Implementing Book V of Executive Order


(EO) No. 292, a leave application should be acted upon within five (5) working
days after its receipt, otherwise the leave application shall be deemed approved.
Section 49, Rule XVI of the Omnibus Rules on Leave reads:
SEC. 49. Period within which to act on leave applications. – Whenever the
application for leave of absence, including terminal leave, is not acted upon by
the head of agency or his duly authorized representative within five (5) working
days after receipt thereof, the application for leave of absence shall be deemed
approved.

Applying this provision, the Court held in the case of Commission


on Appointments v. Paler17 that an employee could not be considered absent
without leave since his application was deemed approved. In said case, there
was no action on his application within five (5) working days from receipt
thereof.18

The ruling in Paler, however, is not squarely applicable in this case. First, the
employee in said case was governed by CSC Rules only. In the case of
respondent, like the others who are serving the Judiciary, she is governed not
only by CSC Rules but also by OCA Circular No. 49-2003 which imposes
guidelines on requests for travel abroad for judges and court personnel. Second,
in Paler, the employee submitted his leave application with complete
requirements before his intended travel date. No additional requirement was
asked to be filed. In the case of respondent, she submitted her leave application
but did not fully comply with the clearance and accountability requirements
enumerated in OCA Circular No. 49-2003. Third, in Paler, there was no approval
or disapproval of his application within 5 working days from the submission of
the requirements. In this case, there was no submission of the clearance
requirements and, hence, the leave application could not have been favorably
acted upon.

SCSLA membership is voluntary

Regarding the requirement of the OCA that an employee must also seek
clearance from the SCSLA, the Court finds nothing improper in it. OCA is not
enforcing the collection of a loan extended to such employee.19 Although SCSLA
is a private entity, it cannot be denied that its functions and operations are
inextricably connected with the Court. First, SCSLA was primarily established as
a savings vehicle for Supreme Court and lower court employees. The
membership, which is voluntary, is open only to Supreme Court justices,
officials, and employees with permanent, coterminous, or casual appointment,
as well as to first and second-level court judges and their personnel.20 An
eligible employee who applies for membership with SCSLA must submit,
together with his application, his latest appointment papers issued by the
Supreme Court.21 Second, when an employee-member applies for a SCSLA
loan, he or she is asked to authorize the Supreme Court payroll office to deduct
the amount due and remit it to SCSLA. Third, the employee-borrower likewise
undertakes to assign in favor of SCSLA, in case of non-payment, his capital
deposit, including earned dividends, all monies and monetary benefits due or
would be due from his office, Government Service Insurance System or from
any government office or other sources, to answer the remaining balance of his
loan.22 Fourth, every employee-borrower must procure SCSLA members to sign
as co-makers for the loan23 and in case of leave applications that would require
the processing of a Supreme Court clearance, another co-maker’s undertaking
would be needed.

The Court stresses that it is not sanctioning respondent for going abroad with an
unpaid debt but for failing to comply with the requirements laid down by the
office of which she is an employee. When respondent joined the Judiciary and
volunteered to join the SCSLA, she agreed to follow the requirements and
regulations set forth by both offices. When she applied for a loan, she was not
forced or coerced to accomplish the requirements. Everything was of her own
volition.

In this regard, having elected to become a member of the SCSLA, respondent


voluntarily and knowingly committed herself to honor these undertakings. By
accomplishing and submitting the said undertakings, respondent has clearly
agreed to the limitations that would probably affect her constitutional right to
travel. By her non-compliance with the requirement, it can be said that she has
waived, if not constricted, her right. An employee cannot be allowed to enjoy the
benefits and privileges of SCSLA membership and at the same time be
exempted from her voluntary obligations and undertakings.

A judiciary employee who leaves for abroad without authority must be prepared
to face the consequences

Lest it be misunderstood, a judge or a member of the Judiciary, who is not being


restricted by a criminal court or any other agency pursuant to any statutory
limitation, can leave for abroad without permission but he or she must be
prepared to face the consequences for his or her violation of the Court’s rules
and regulations. Stated otherwise, he or she should expect to be subjected to a
disciplinary action. In the past, the Court was not hesitant to impose the
appropriate sanctions and penalties.

In Office of the Administrative Services (OAS)-Office of the Court Administrator


(OCA) v. Calacal,24 a utility worker of the Metropolitan Trial Court was found
guilty of violating OCA Circular No. 49-2003 for going overseas without the
required travel authority and was reprimanded and warned that a repetition of
the same or similar offense would be penalized more severely. In that case, the
Court stressed that unawareness of the circular was not an excuse from non-
compliance therewith.25

In Reyes v. Bautista,26 a court stenographer was found guilty of violation of OCA


Circular No. 49-2003 for traveling abroad without securing the necessary
permission for foreign travel. She was also found guilty of dishonesty when she
indicated in her application that her leave would be spent in the Philippines,
when in truth it was spent abroad. Because of the employee’s numerous
infractions, she was dismissed from the service with forfeiture of all benefits and
privileges, except accrued leave credits, with prejudice to re-employment in any
branch or instrumentality of the government, including government owned or
controlled corporations.

In Concerned Employees of the Municipal Trial Court of Meycauayan, Bulacan v.


Paguio-Bacani,27 a branch clerk of court of the Municipal Trial Court of
Meycauayan, Bulacan, was found guilty of dishonesty for falsifying her Daily
Time Record and leaving the country without the requisite travel authority. She
was suspended from the service for one (1) year without pay, with a warning that
a repetition of the same or similar offense would be dealt with more
severely.lavvphi1

Following the Uniform Rules on Administrative Cases in the Civil Service, the
Court considers a violation of reasonable office rules and regulations as a light
offense and punishable with reprimand on the first offense; suspension for one
to thirty days on the second; and dismissal from the service on the third
infraction. Considering that this appears to be respondent’s first infraction, the
OCA recommended that she be penalized with a reprimand and warned that a
repetition of the same or similar offense would be dealt with more severely.

The Court, nonetheless, takes note of the belated action (4 months) of the
Leave Division on her application for leave which she submitted two months
before her intended departure date. The Leave Division should have acted on
the application, favorably or unfavorably, before the intended date with sufficient
time to communicate it to the applicant. If an applicant has not complied with the
requirements, the Leave Division should deny the same and inform him or her of
the adverse action. As respondent was not informed of the denial of her
application within a reasonable time, respondent should only be admonished.

WHEREFORE, respondent Wilma Salvacion P. Heusdens, Clerk IV Municipal


Trial Court in Cities, Tagum City, is hereby ADMONISHED for traveling abroad
without any travel authority in violation of OCA Circular No. 49-2003, with
a WARNING that a repetition of the same or similar offense would be dealt with
more severely.
The Leave Division, OAS-OCA, is hereby directed to act upon applications for
travel abroad at least five (5) working days before the intended date of
departure.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 88211 September 15, 1989

FERDINAND E. MARCOS, IMELDA R. MARCOS, FERDINAND R. MARCOS,


JR., IRENE M. ARANETA, IMEE MANOTOC, TOMAS MANOTOC,
GREGORIO ARANETA, PACIFICO E. MARCOS, NICANOR YÑIGUEZ and
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), represented by
its President, CONRADO F. ESTRELLA, petitioners, 

vs.

HONORABLE RAUL MANGLAPUS, CATALINO MACARAIG, SEDFREY
ORDOÑEZ, MIRIAM DEFENSOR SANTIAGO, FIDEL RAMOS, RENATO DE
VILLA, in their capacity as Secretary of Foreign Affairs, Executive
Secretary, Secretary of Justice, Immigration Commissioner, Secretary of
National Defense and Chief of Staff, respectively, respondents.

CORTES, J.:

Before the Court is a contreversy of grave national importance. While ostensibly


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

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

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

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

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

The Petition

This case is unique. It should not create a precedent, for the case of a dictator
forced out of office and into exile after causing twenty years of political,
economic and social havoc in the country and who within the short space of
three years seeks to return, is in a class by itself.

This petition for mandamus and prohibition asks the Courts to order the
respondents to issue travel documents to Mr. Marcos and the immediate
members of his family and to enjoin the implementation of the President's
decision to bar their return to the Philippines.

The Issue

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

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

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

a. Is this a political question?

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

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

b. Assuming that she has made that finding

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

(2) Has there been prior notice to petitioners?

(3) Has there been a hearing?

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

c. Is the President's determination that the return of former President Marcos


and his family to the Philippines is a clear and present danger to national
security, public safety, or public health a political question?
d. Assuming that the Court may inquire as to whether the return of former
President Marcos and his family is a clear and present danger to national
security, public safety, or public health, have respondents established such fact?

3. Have the respondents, therefore, in implementing the President's decision to


bar the return of former President Marcos and his family, acted and would be
acting without jurisdiction, or in excess of jurisdiction, or with grave abuse of
discretion, in performing any act which would effectively bar the return of former
President Marcos and his family to the Philippines? [Memorandum for
Petitioners, pp. 5-7; Rollo, pp. 234-236.1

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

Section 1. No person shall be deprived of life, liberty, or property without due


process of law, nor shall any person be denied the equal protection of the laws.

xxx xxx xxx

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

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

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

The Universal Declaration of Human Rights provides:

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

(2) Everyone has the right to leave any country, including his own, and to return
to his country.
Likewise, the International Covenant on Civil and Political Rights, which had
been ratified by the Philippines, provides:

Article 12

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

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

3) The above-mentioned rights shall not be subject to any restrictions except


those which are provided by law, are necessary to protect national security,
public order (order public), public health or morals or the rights and freedoms of
others, and are consistent with the other rights recognized in the present
Covenant.

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

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

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

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

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


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

There are thus gradations to the question, to wit:


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

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

Is there danger to national security and public safety if petitioners Ferdinand E.


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

Respondents argue for the primacy of the right of the State to national security
over individual rights. In support thereof, they cite Article II of the Constitution, to
wit:

Section 4. The prime duty of the Government is to serve and protect the people.
The Government may call upon the people to defend the State and, in the
fulfillment thereof, all citizens may be required, under conditions provided by
law, to render personal, military, or civil service.

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

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

The parties are in agreement that the underlying issue is one of the scope of
presidential power and its limits. We, however, view this issue in a different light.
Although we give due weight to the parties' formulation of the issues, we are not
bound by its narrow confines in arriving at a solution to the controversy.
At the outset, we must state that it would not do to view the case within the
confines of the right to travel and the import of the decisions of the U.S.
Supreme Court in the leading cases of Kent v. Dulles [357 U.S. 116, 78 SCt
1113, 2 L Ed. 2d 1204] and Haig v. Agee [453 U.S. 280, 101 SCt 2766, 69 L Ed.
2d 640) which affirmed the right to travel and recognized exceptions to the
exercise thereof, respectively.

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

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

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

Consequently, resolution by the Court of the well-debated issue of whether or


not there can be limitations on the right to travel in the absence of legislation to
that effect is rendered unnecessary. An appropriate case for its resolution will
have to be awaited.

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

Executive Power

The 1987 Constitution has fully restored the separation of powers of the three
great branches of government. To recall the words of Justice Laurel in Angara v.
Electoral Commission [63 Phil. 139 (1936)], "the Constitution has blocked but
with deft strokes and in bold lines, allotment of power to the executive, the
legislative and the judicial departments of the government." [At 157.1 Thus, the
1987 Constitution explicitly provides that "[the legislative power shall be vested
in the Congress of the Philippines" Art VI, Sec. 11, "[t]he executive power shall
bevested in the President of the Philippines" [Art. VII, Sec. 11, and "[te judicial
power shall be vested in one Supreme Court and in such lower courts as may
be established by law" [Art. VIII, Sec. 1.] These provisions not only establish a
separation of powers by actual division [Angara v. Electoral Commission, supra]
but also confer plenary legislative, executive and judicial powers subject only to
limitations provided in the Constitution. For as the Supreme Court in Ocampo v.
Cabangis [15 Phil. 626 (1910)] pointed out "a grant of the legislative power
means a grant of all legislative power; and a grant of the judicial power means a
grant of all the judicial power which may be exercised under the
government." [At 631-632.1 If this can be said of the legislative power which is
exercised by two chambers with a combined membership of more than two
hundred members and of the judicial power which is vested in a hierarchy of
courts, it can equally be said of the executive power which is vested in one
official the President.
As stated above, the Constitution provides that "[t]he executive power shall be
vested in the President of the Philippines." [Art. VII, Sec. 1]. However, it does not
define what is meant by executive power" although in the same article it touches
on the exercise of certain powers by the President, i.e., the power of control
over all executive departments, bureaus and offices, the power to execute the
laws, the appointing power, the powers under the commander-in-chief clause,
the power to grant reprieves, commutations and pardons, the power to grant
amnesty with the concurrence of Congress, the power to contract or guarantee
foreign loans, the power to enter into treaties or international agreements, the
power to submit the budget to Congress, and the power to address Congress
[Art. VII, Sec. 14-23].

The inevitable question then arises: by enumerating certain powers of the


President did the framers of the Constitution intend that the President shall
exercise those specific powers and no other? Are these se enumerated powers
the breadth and scope of "executive power"? Petitioners advance the view that
the President's powers are limited to those specifically enumerated in the 1987
Constitution. Thus, they assert: "The President has enumerated powers, and
what is not enumerated is impliedly denied to her. Inclusion unius est exclusio
alterius[Memorandum for Petitioners, p. 4- Rollo p. 233.1 This argument brings
to mind the institution of the U.S. Presidency after which ours is legally
patterned.**

Corwin, in his monumental volume on the President of the United States


grappled with the same problem. He said:

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

We encounter this characteristic of Article 11 in its opening words: "The


executive power shall be vested in a President of the United States of
America." . . .. [The President: Office and Powers, 17871957, pp. 3-4.]

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

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


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

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

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

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

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

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

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

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

xxx xxx xxx

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

The Power Involved


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

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

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

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

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

More particularly, this case calls for the exercise of the President's powers as
protector of the peace. Rossiter The American Presidency].The power of the
President to keep the peace is not limited merely to exercising the commander-
in-chief powers in times of emergency or to leading the State against external
and internal threats to its existence. The President is not only clothed with
extraordinary powers in times of emergency, but is also tasked with attending to
the day-to-day problems of maintaining peace and order and ensuring domestic
tranquility in times when no foreign foe appears on the horizon. Wide discretion,
within the bounds of law, in fulfilling presidential duties in times of peace is not in
any way diminished by the relative want of an emergency specified in the
commander-in-chief provision. For in making the President commander-in-chief
the enumeration of powers that follow cannot be said to exclude the President's
exercising as Commander-in- Chief powers short of the calling of the armed
forces, or suspending the privilege of the writ of habeas corpus or declaring
martial law, in order to keep the peace, and maintain public order and security.

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

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

The Extent of Review

Under the Constitution, judicial power includes the duty to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government." [Art.
VIII, Sec. 1] Given this wording, we cannot agree with the Solicitor General that
the issue constitutes a political question which is beyond the jurisdiction of the
Court to decide.

The present Constitution limits resort to the political question doctrine and
broadens the scope of judicial inquiry into areas which the Court, under previous
constitutions, would have normally left to the political departments to decide. But
nonetheless there remain issues beyond the Court's jurisdiction the
determination of which is exclusively for the President, for Congress or for the
people themselves through a plebiscite or referendum. We cannot, for example,
question the President's recognition of a foreign government, no matter how
premature or improvident such action may appear. We cannot set aside a
presidential pardon though it may appear to us that the beneficiary is totally
undeserving of the grant. Nor can we amend the Constitution under the guise of
resolving a dispute brought before us because the power is reserved to the
people.

There is nothing in the case before us that precludes our determination thereof
on the political question doctrine. The deliberations of the Constitutional
Commission cited by petitioners show that the framers intended to widen the
scope of judicial review but they did not intend courts of justice to settle all
actual controversies before them. When political questions are involved, the
Constitution limits the determination to whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the
official whose action is being questioned. If grave abuse is not established, the
Court will not substitute its judgment for that of the official concerned and decide
a matter which by its nature or by law is for the latter alone to decide. In this
light, it would appear clear that the second paragraph of Article VIII, Section 1 of
the Constitution, defining "judicial power," which specifically empowers the
courts to determine whether or not there has been a grave abuse of discretion
on the part of any branch or instrumentality of the government, incorporates in
the fundamental law the ruling in Lansang v. Garcia [G.R. No. L-33964,
December 11, 1971, 42 SCRA 4481 that:]

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

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

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

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

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

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

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

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

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

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner, 



vs.

HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and
TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas
Employment Administration, respondents.

Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for


short), a firm "engaged principally in the recruitment of Filipino workers, male
and female, for overseas placement," 1 challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
AND HOUSEHOLD WORKERS," in this petition for certiorari and prohibition.
Specifically, the measure is assailed for "discrimination against males or
females;" 2that it "does not apply to all Filipino workers but only to domestic
helpers and females with similar skills;" 3 and that it is violative of the right to
travel. It is held likewise to be an invalid exercise of the lawmaking power, police
power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the
Constitution, providing for worker participation "in policy and decision-making
processes affecting their rights and benefits as may be provided by
law." 4 Department Order No. 1, it is contended, was passed in the absence of
prior consultations. It is claimed, finally, to be in violation of the Charter's non-
impairment clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary
of Labor and Administrator of the Philippine Overseas Employment
Administration, filed a Comment informing the Court that on March 8, 1988, the
respondent Labor Secretary lifted the deployment ban in the states of Iraq,
Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and
Switzerland. * In submitting the validity of the challenged "guidelines," the
Solicitor General invokes the police power of the Philippine State.

It is admitted that Department Order No. 1 is in the nature of a police power


measure. The only question is whether or not it is valid under the Constitution.

The concept of police power is well-established in this jurisdiction. It has been


defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." 5 As
defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in
order to foster the common good. It is not capable of an exact definition but has
been, purposely, veiled in general terms to underscore its all-comprehensive
embrace.

"Its scope, ever-expanding to meet the exigencies of the times, even to


anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the
greatest benefits." 6

It finds no specific Constitutional grant for the plain reason that it does not owe
its origin to the Charter. Along with the taxing power and eminent domain, it is
inborn in the very fact of statehood and sovereignty. It is a fundamental attribute
of government that has enabled it to perform the most vital functions of
governance. Marshall, to whom the expression has been credited, 7 refers to it
succinctly as the plenary power of the State "to govern its citizens." 8

"The police power of the State ... is a power coextensive with self- protection,
and it is not inaptly termed the "law of overwhelming necessity." It may be said
to be that inherent and plenary power in the State which enables it to prohibit all
things hurtful to the comfort, safety, and welfare of society." 9

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it


is "rooted in the conception that men in organizing the state and imposing upon
its government limitations to safeguard constitutional rights did not intend
thereby to enable an individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." 10 Significantly, the Bill of
Rights itself does not purport to be an absolute guaranty of individual rights and
liberties "Even liberty itself, the greatest of all rights, is not unrestricted license to
act according to one's will." 11 It is subject to the far more overriding demands
and requirements of the greater number.

Notwithstanding its extensive sweep, police power is not without its own
limitations. For all its awesome consequences, it may not be exercised arbitrarily
or unreasonably. Otherwise, and in that event, it defeats the purpose for which it
is exercised, that is, to advance the public good. Thus, when the power is used
to further private interests at the expense of the citizenry, there is a clear misuse
of the power. 12

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of


clear and convincing evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure
should be nullified. There is no question that Department Order No. 1 applies
only to "female contract workers," 14 but it does not thereby make an undue
discrimination between the sexes. It is well-settled that "equality before the law"
under the Constitution 15 does not import a perfect Identity of rights among all
men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the
purposes of the law; (3) they are not confined to existing conditions; and (4) they
apply equally to all members of the same class. 16

The Court is satisfied that the classification made-the preference for female
workers — rests on substantial distinctions.

As a matter of judicial notice, the Court is well aware of the unhappy plight that
has befallen our female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by, in not a few cases, physical and
personal abuse. The sordid tales of maltreatment suffered by migrant Filipina
workers, even rape and various forms of torture, confirmed by testimonies of
returning workers, are compelling motives for urgent Government action. As
precisely the caretaker of Constitutional rights, the Court is called upon to
protect victims of exploitation. In fulfilling that duty, the Court sustains the
Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there
is no evidence that, except perhaps for isolated instances, our men abroad have
been afflicted with an Identical predicament. The petitioner has proffered no
argument that the Government should act similarly with respect to male workers.
The Court, of course, is not impressing some male chauvinistic notion that men
are superior to women. What the Court is saying is that it was largely a matter of
evidence (that women domestic workers are being ill-treated abroad in massive
instances) and not upon some fanciful or arbitrary yardstick that the Government
acted in this case. It is evidence capable indeed of unquestionable
demonstration and evidence this Court accepts. The Court cannot, however, say
the same thing as far as men are concerned. There is simply no evidence to
justify such an inference. Suffice it to state, then, that insofar as classifications
are concerned, this Court is content that distinctions are borne by the evidence.
Discrimination in this case is justified.

As we have furthermore indicated, executive determinations are generally final


on the Court. Under a republican regime, it is the executive branch that enforces
policy. For their part, the courts decide, in the proper cases, whether that policy,
or the manner by which it is implemented, agrees with the Constitution or the
laws, but it is not for them to question its wisdom. As a co-equal body, the
judiciary has great respect for determinations of the Chief Executive or his
subalterns, especially when the legislature itself has specifically given them
enough room on how the law should be effectively enforced. In the case at bar,
there is no gainsaying the fact, and the Court will deal with this at greater length
shortly, that Department Order No. 1 implements the rule-making powers
granted by the Labor Code. But what should be noted is the fact that in spite of
such a fiction of finality, the Court is on its own persuaded that prevailing
conditions indeed call for a deployment ban.

There is likewise no doubt that such a classification is germane to the purpose


behind the measure. Unquestionably, it is the avowed objective of Department
Order No. 1 to "enhance the protection for Filipino female overseas
workers" 17 this Court has no quarrel that in the midst of the terrible mistreatment
Filipina workers have suffered abroad, a ban on deployment will be for their own
good and welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended
to apply indefinitely so long as those conditions exist. This is clear from the
Order itself ("Pending review of the administrative and legal measures, in the
Philippines and in the host countries . . ."18), meaning to say that should the
authorities arrive at a means impressed with a greater degree of permanency,
the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case. Accordingly, it
provides:
9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment
(DOLE) may, upon recommendation of the Philippine Overseas Employment
Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare


and protection of Filipino workers. 19

The Court finds, finally, the impugned guidelines to be applicable to all female
domestic overseas workers. That it does not apply to "all Filipina workers" 20 is
not an argument for unconstitutionality. Had the ban been given universal
applicability, then it would have been unreasonable and arbitrary. For obvious
reasons, not all of them are similarly circumstanced. What the Constitution
prohibits is the singling out of a select person or group of persons within an
existing class, to the prejudice of such a person or group or resulting in an unfair
advantage to another person or group of persons. To apply the ban, say
exclusively to workers deployed by A, but not to those recruited by B, would
obviously clash with the equal protection clause of the Charter. It would be a
classic case of what Chase refers to as a law that "takes property from A and
gives it to B." 21 It would be an unlawful invasion of property rights and freedom
of contract and needless to state, an invalid act. 22 (Fernando says: "Where the
classification is based on such distinctions that make a real difference as
infancy, sex, and stage of civilization of minority groups, the better rule, it would
seem, is to recognize its validity only if the young, the women, and the cultural
minorities are singled out for favorable treatment. There would be an element of
unreasonableness if on the contrary their status that calls for the law ministering
to their needs is made the basis of discriminatory legislation against them. If
such be the case, it would be difficult to refute the assertion of denial of equal
protection." 23 In the case at bar, the assailed Order clearly accords protection to
certain women workers, and not the contrary.)

It is incorrect to say that Department Order No. 1 prescribes a total ban on


overseas deployment. From scattered provisions of the Order, it is evident that
such a total ban has hot been contemplated. We quote:

5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and


workers of similar skills defined herein to the following [sic] are authorized under
these guidelines and are exempted from the suspension.

5.1 Hirings by immediate members of the family of Heads of State and


Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government
officials; and

5.3 Hirings by senior officials of the diplomatic corps and duly accredited
international organizations.

5.4 Hirings by employers in countries with whom the Philippines have [sic]
bilateral labor agreements or understanding.

xxx xxx xxx

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR


SKILLS--Vacationing domestic helpers and/or workers of similar skills shall be
allowed to process with the POEA and leave for worksite only if they are
returning to the same employer to finish an existing or partially served
employment contract. Those workers returning to worksite to serve a new
employer shall be covered by the suspension and the provision of these
guidelines.

xxx xxx xxx

9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE)


may, upon recommendation of the Philippine Overseas Employment
Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare


and protection of Filipino workers. 24

xxx xxx xxx

The consequence the deployment ban has on the right to travel does not impair
the right. The right to travel is subject, among other things, to the requirements
of "public safety," "as may be provided by law." 25 Department Order No. 1 is a
valid implementation of the Labor Code, in particular, its basic policy to "afford
protection to labor," 26 pursuant to the respondent Department of Labor's rule-
making authority vested in it by the Labor Code. 27 The petitioner assumes that it
is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid
qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes
an invalid exercise of legislative power. It is true that police power is the domain
of the legislature, but it does not mean that such an authority may not be lawfully
delegated. As we have mentioned, the Labor Code itself vests the Department
of Labor and Employment with rulemaking powers in the enforcement
whereof. 28

The petitioners's reliance on the Constitutional guaranty of worker participation


"in policy and decision-making processes affecting their rights and benefits" 29 is
not well-taken. The right granted by this provision, again, must submit to the
demands and necessities of the State's power of regulation.

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. 30

"Protection to labor" does not signify the promotion of employment alone. What
concerns the Constitution more paramountly is that such an employment be
above all, decent, just, and humane. It is bad enough that the country has to
send its sons and daughters to strange lands because it cannot satisfy their
employment needs at home. Under these circumstances, the Government is
duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the
Government has evidence, an evidence the petitioner cannot seriously dispute,
of the lack or inadequacy of such protection, and as part of its duty, it has
precisely ordered an indefinite ban on deployment.

The Court finds furthermore that the Government has not indiscriminately made
use of its authority. It is not contested that it has in fact removed the prohibition
with respect to certain countries as manifested by the Solicitor General.

The non-impairment clause of the Constitution, invoked by the petitioner, must


yield to the loftier purposes targetted by the Government. 31 Freedom of contract
and enterprise, like all other freedoms, is not free from restrictions, more so in
this jurisdiction, where laissez faire has never been fully accepted as a
controlling economic way of life.

This Court understands the grave implications the questioned Order has on the
business of recruitment. The concern of the Government, however, is not
necessarily to maintain profits of business firms. In the ordinary sequence of
events, it is profits that suffer as a result of Government regulation. The interest
of the State is to provide a decent living to its citizens. The Government has
convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the
extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.
" 

THIRD DIVISION

G.R. No. 163155 July 21, 2006

ALFREDO HILADO, MANUEL LACSON, JOSE MA. TUVILLA, JOAQUIN


LIMJAP LOPEZ SUGAR CORPORATION, petitioners, 

vs.

JUDGE AMOR A. REYES, PRESIDING JUDGE, REGIONAL TRIAL COURT
OF MANILA, BRANCH 21 and ADMINISTRATRIX JULITA CAMPOS
BENEDICTO, respondents.

DECISION

CARPIO MORALES, J.:

The present petition is one for mandamus and prohibition.

Julita Campos Benedicto (private respondent), the surviving spouse of the


deceased Roberto S. Benedicto, filed on May 25, 2000 a petition for issuance of
letters of administration, docketed as Special Proceeding No.
00-97505, "Intestate Estate of Roberto S. Benedicto" (the case), before the
Regional Trial Court (RTC) of Manila. The case was raffled to Branch 21
presided by Judge Amor A. Reyes (public respondent).

Private respondent was, by Order1 of August 2, 2000, appointed Administratrix


of the estate of Benedicto (the estate), and letters of administration were
thereafter issued in her favor.

Herein petitioners, Alfredo Hilado, Manuel Lacson, Jose M. Tuvilla, Joaquin


Limjap, Lopez Sugar Corporation and First Farmers Holding Corporation had,
during the lifetime of Benedicto, filed before the Bacolod City RTC two
complaints for damages or collection of sums of money, docketed as Civil Case
No. 95-9137 and Civil Case No. 111718, against Roberto Benedicto et al.2
In the initial inventory of the estate which private respondent submitted on
January 18, 20013 in the case before the Manila RTC, she listed, among other
liabilities of the estate, the claims of petitioners subject of the above-said
Bacolod RTC cases as follows:

LIST OF LIABILITIES

DESCRIPTION

AMOUNT

xxxx

A claim of several sugar planters which is presently the subject of Civil Case
No. 95-9137 entitled Lacson et al. v. R.S. Benedicto et al., pending before
Branch 44 of the Regional Trial Court in Bacolod City

P136,045,772.50

[at P50.00 per US $1.00]

A claim filed by various sugar planters which is presently the subject of Civil
Case No. 11178 entitled Lopez Sugar Corporation et al. v. R.S. Benedicto, et al.,
pending before Branch 41 of the Regional Trial Court in Bacolod City.4

P35,198,697.40

[at P50.00 per US $1.00]

(Emphasis and underscoring supplied)

From January 2002 until November 2003, the Branch Clerk of Court of Branch
21 of the Manila RTC allowed petitioners through counsel Sedigo and
Associates to regularly and periodically examine the records of the case and to
secure certified true copies thereof.

By December 2003, however, Atty. Grace Carmel Paredes, an associate of


petitioners' counsel, was denied access to the last folder-record of the case
which, according to the court's clerical staff, could not be located and was
probably inside the chambers of public respondent for safekeeping.5

Petitioners' counsel thus requested public respondent, by letter6 of January 15,


2004, to allow Atty. Paredes to personally check the records of the case. Acting
on the letter, the Officer-In- Charge/Legal Researcher of Branch 21 advised
petitioners' counsel in writing that "per instruction of the Hon. Presiding Judge[,]
only parties or those with authority from the parties are allowed to inquire or
verify the status of the case pending in this Court," and that they may be
"allowed to go over the records of the above-entitled case upon presentation of
written authority from the [administratrix]."7

On February 2, 2004, petitioners' counsel was served with a notice of hearing of


the case on February 13, 2004.8Petitioners' counsel thus attended such
scheduled hearing during which he filed a Motion for Inhibition9 of public
respondent on the ground of gross ignorance, dereliction of duty, and manifest
partiality towards the administratrix. Public respondent, noting that an error was
committed in the service to petitioners of the notice of hearing, ignored the
motion of petitioners' counsel.10

Intending to compare the list of properties in the estate's inventory all of which
properties were appraised at a fair value of P100 million with the list of assets
valued at P1 Billion said to have been ceded in 1990 to the decedent under his
Compromise Agreement with the Presidential Commission on Good
Government,11 petitioners' counsel sent the Branch Clerk of Court of Branch 21
of the Manila RTC a letter12 requesting to be furnished with certified true copies
of the "updated inventory."

By still another letter,13 petitioners' counsel requested to be furnished


with certified true copies of the order issued by the court during the hearing of
February 13, 2004, as well as the transcript of stenographic notes taken
thereon.14

By Order15 of March 2, 2004, public respondent indicated why petitioners had no


standing to file the Motion for Inhibition as well as to request for certified true
copies of the above-indicated documents. Read the Order of March 2, 2004:

Perusal of the motion shows that the movant is asking this Court to act on their
motion despite the denial of their Omnibus Motion to Intervene which to date
remains pending resolution with the Court of Appeals.

As correctly pointed out by the Administratrix, said motion is filed by persons/


entities who have no legal standing in the above-entitled case, hence they
cannot ask anything from this Court, much more for this Court to act on
pleadings filed or soon to be filed.

For the record, the Court received two (2) letters dated February 17 and 27,
2004 addressed to Atty. Maria Luisa Lesle G. Gonzales, the Branch Clerk of
Court…asking that he be furnished with certified true copies of the updated
inventory and Order issued by this Court on February 13, 2004 hearing as well
as the corresponding transcript of stenographic notes within fifteen (15) days
from receipt of said letters.

Considering that the movants were not allowed to intervene in the proceedings
per order of this Court dated January 2, 2002, copies of all pleadings/orders
filed/issued relative to this case may only be secured from the [Administratrix]
and/or counsel.16 (Underscoring supplied)

Petitioners thus filed on April 30, 2004 before this Court the present petition for
mandamus and prohibition to compel public respondent to allow them to access,
examine, and obtain copies of any and all documents forming part of the records
of the case and disqualify public respondent from further presiding thereover.

In their petition, petitioners contend that the records of the case are public
records to which the public has the right to access, inspect and obtain official
copies thereof,17 recognition of which right is enjoined under Section 7, Article III
of the Constitution and Section 2, Rule 135 and Section 11, Rule 136 of the
Rules of Court.

Petitioners further contend that public respondent manifested her arbitrariness,


malice and partiality through her blatant disregard of basic rules in the
disposition and safekeeping of court records, and her denial of their right to
access the records suffices to bar her from presiding over the case;18 and public
respondent's incompetence, malice, bad faith and partiality are underscored by
her failure to enforce for more than three years the requirement of the Rules of
Court on the prompt submission by the administratrix of her final inventory and
the filing of a periodic accounting of her administration.19

By Comment20 filed on September 21, 2004, private respondent submits that the
petition is fatally defective since petitioners failed to disclose in their certification
of non-forum shopping that they had earlier instituted an administrative
complaint against public respondent which prayed for the same reliefs21 — for
the disqualification of public respondent from presiding over the case and for the
court docket to be opened for examination.

Private respondent further submits that the petition for prohibition should be
dismissed since petitioners are not parties to the case, hence, they have no
personality to file a motion for inhibition.22

As to the alleged denial of petitioners' right to examine court records and


participate in the proceedings, private respondent submits that this is not
unqualifiedly true for petitioners must have secured a copy of the inventory of
the assets and liabilities of the estate, they being aware of the declared fair
value of the estate and their counsel was present during the February 13, 2004
hearing.23

For consideration then are the following issues: (1) whether the present petition
is fatally defective for failure of petitioners to disclose in the certificate of non-
forum shopping that they had priorly instituted an administrative complaint
against public respondent which prays for the same reliefs; (2) whether a writ of
mandamus may issue to compel public respondent to allow petitioners to
examine and obtain copies of any or all documents forming part of the records
of the case; and (3) whether a writ of prohibition will issue in favor of petitioners,
who are not parties to the case, to inhibit public respondent from presiding over
the case.

As reflected above, petitioners had, before the filing of the present petition, filed
an administrative complaint before this Court against public respondent, "Alfredo
Hilado, Lopez Sugar Corporation and First Farmers Holding Corporation v.
Judge Amor A. Reyes, Regional Trial Court of Manila, Branch 21," docketed as
A.M. No. RTJ-05-1910.

Petitioners subsequently filed a supplemental24 and a second supplemental


administrative complaint25 praying for 1) the imposition of appropriate
disciplinary sanctions against public respondent for, among other things,
denying them their right to access the docket of the case, and 2) the
disqualification of public respondent from presiding over the case, which latter
prayer was, however, subsequently withdrawn in a motion26 filed on April 30,
2004, the same day that the present petition was filed.

Denying the existence of forum shopping, petitioners argue that it "exists only
where the elements of litis pendenciaare present, or where a final judgment in
one case will amount to res judicata in the other."27

It is well settled that the doctrine of res judicata applies only to judicial or quasi-
judicial proceedings, and not to the exercise of administrative powers.28

The non-existence of forum shopping notwithstanding, this Court proscribes the


filing of an administrative complaint before the exhaustion of judicial remedies
against questioned errors of a judge in the exercise of its jurisdiction.

Resort to and exhaustion of judicial remedies are prerequisites for the taking of,
among other measures, an administrative complaint against the person of the
judge concerned. So Atty. Flores v. Hon. Abesamis29 teaches:
x x x [T]he law provides ample judicial remedies against errors or irregularities
being committed by a Trial Court in the exercise of its jurisdiction. The ordinary
remedies against errors or irregularities which may be regarded as normal in
nature (i.e., error in appreciation or admission of evidence, or in construction or
application of procedural or substantive law or legal principle) include a motion
for reconsideration (or after rendition of a judgment or final order, a motion for
new trial), and appeal. The extraordinary remedies against error or irregularities
which may be deemed extraordinary in character (i.e., whimsical, capricious,
despotic exercise of power or neglect of duty, etc.) are inter alia the special civil
actions of certiorari, prohibition or mandamus, or a motion for inhibition, a
petition for change of venue, as the case may be.

x x x Resort to and exhaustion of these judicial remedies, as well as the entry of


judgment in the corresponding action or proceeding, are pre-requisites for the
taking of other measures against the persons of the judges concerned,
whether of civil, administrative, or criminal nature. It is only after the available
judicial remedies have been exhausted and the appellate tribunals have
spoken with finality, that the door to an inquiry into his criminal, civil or
administrative liability may be said to have opened, or closed.

x x x Law and logic decree that "administrative or criminal remedies are neither
alternative nor cumulative to judicial review where such review is available,
and must wait on the result thereof" Indeed, since judges must be free to judge,
without pressure or influence from external forces or factors, they should not be
subject to intimidation, the fear of civil, criminal or administrative sanctions for
acts they may do and dispositions they may make in the performance of their
duties and functions; x x x30 (Emphasis and underscoring supplied; citations
omitted)

It is thus only after a questioned action of a judge in a pending case has been
judicially resolved with finality that the door to an inquiry into his or her
administrative liability may be said to have opened.

Parenthetically, during the pendency of the present petition or on April 15, 2005,
the Second Division of this Court rendered a decision31 on the above-said
administrative complaint filed by petitioners against public respondent.

On the merits of the petition for mandamus, Section 7 of Article III of the
Constitution provides:

SECTION 7. The right of the people to information on matters of public


concern shall be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall
be afforded the citizen, subject to such limitations as may be provided by
law.(Emphasis and underscoring supplied)

The above-quoted constitutional provision guarantees a general right – the right


to information on matters of "public concern" and, as an accessory thereto,
the right of access to "official records" and the like. The right to information on
"matters of public concern or of public interest" is both the purpose and the limit
of the constitutional right of access to public documents.32

Insofar as the right to information relates to judicial records, an understanding of


the term "judicial record" or "court record" is in order.

The term "judicial record" or "court record" does not only refer to the orders,
judgment or verdict of the courts. It comprises the official collection of all papers,
exhibits and pleadings filed by the parties, all processes issued and returns
made thereon, appearances, and word-for-word testimony33 which took place
during the trial and which are in the possession, custody, or control of the
judiciary or of the courts for purposes of rendering court decisions. It has also
been described to include any paper, letter, map, book, other document, tape,
photograph, film, audio or video recording, court reporter's notes, transcript, data
compilation, or other materials, whether in physical or electronic form, made or
received pursuant to law or in connection with the transaction of any official
business by the court, and includes all evidence it has received in a case.34

In determining whether a particular information is of public concern, there is no


right test. In the final analysis, it is for the courts to determine on a case to case
basis whether the matter at issue is of interest or importance as it relates to or
affect the public.35

It bears emphasis that the interest of the public hinges on its right to
transparency in the administration of justice, to the end that it will serve to
enhance the basic fairness of the judicial proceedings, safeguard the integrity of
the fact-finding process, and foster an informed public discussion of
governmental affairs. Thus in Barretto v. Philippine Publishing Co.,36 this Court
held:

x x x The foundation of the right of the public to know what is going on in the
courts is not the fact that the public, or a portion of it, is curious, or that what is
going on in the court is news, or would be interesting, or would furnish topics of
conversation; but is simply that it has a right to know whether a public officer is
properly performing his duty. In other words, the right of the public to be
informed of the proceedings in court is not founded in the desire or necessity of
people to know about the doing of others, but in the necessity of knowing
whether its servant, the judge, is properly performing his duty. x x x

The case in Cowley vs. Pulsifer (137 Mass. 392) is so pertinent to the questions
presented for our decision in the case at bar that we cannot refrain from quoting
extensively therefrom. x x x

x x x "The general advantage to the country in having these proceedings made


public more than counterbalances the inconveniences to the private persons
whose conduct may be the subject of such proceedings." x x x

"The chief advantage to the country to which we can discern, and that which we
understand to be intended by the foregoing passage, is the security which
publicity gives for the proper administration of justice. x x x It is desirable that
the trial of causes should take place under the public eye, not because the
controversies of one citizen with another are of public concern, but because it is
of the highest moment that those who administer justice should act under
the sense of public responsibility, and that every citizen should be able to
satisfy himself with his own eyes as to the mode in which a public duty is
performed."

From this quotation it is obvious that it was not the idea of the supreme court of
Massachusetts to lay down the proposition that simply because a pleading
happened to be filed in a public office it becomes public property that any
individual, whether interested or not, had the right to publish its contents, or that
any newspaper was privileged to scatter the allegations contained therein to the
four corners of the country. The right of the public to know the contents of the
paper is the basis of the privilege, which is, as we have said, the right to
determine by its own senses that its servant, the judge, is performing his duties
according to law. x x x37 (Emphasis and underscoring supplied; citations
omitted)

Decisions and opinions of a court are of course matters of public concern or


interest for these are the authorized expositions and interpretations of the laws,
binding upon all citizens, of which every citizen is charged with knowledge.
38 Justice thus requires that all should have free access to the opinions of judges

and justices, and it would be against sound public policy to prevent, suppress or
keep the earliest knowledge of these from the public.39Thus, in Lantaco Sr. et al.
v. Judge Llamas,40 this Court found a judge to have committed grave abuse of
discretion in refusing to furnish Lantaco et al. a copy of his decision in a criminal
case of which they were even the therein private complainants, the decision
being "already part of the public record which the citizen has a right to
scrutinize."
Unlike court orders and decisions, however, pleadings and other documents
filed by parties to a case need not be matters of public concern or interest. For
they are filed for the purpose of establishing the basis upon which the court may
issue an order or a judgment affecting their rights and interests.

In thus determining which part or all of the records of a case may be accessed
to, the purpose for which the parties filed them is to be considered.

In intestate proceedings, the heirs file pleadings and documents for the purpose
of establishing their right to a share of the estate. As for the creditors, their
purpose is to establish their claim to the estate and be paid therefor before the
disposition of the estate.

Information regarding the financial standing of a person at the time of his death
and the manner by which his private estate may ultimately be settled is not a
matter of general, public concern or one in which a citizen or the public has an
interest by which its legal rights or liabilities maybe affected. Granting
unrestricted public access and publicity to personal financial information may
constitute an unwarranted invasion of privacy to which an individual may have
an interest in limiting its disclosure or dissemination.

If the information sought then is not a matter of public concern or interest, denial
of access thereto does not violate a citizen's constitutional right to information.

Once a particular information has been determined to be of public concern, the


accessory right of access to official records, including judicial records, are open
to the public.

The accessory right to access public records may, however, be restricted on a


showing of good cause. How "good cause" can be determined, the Supreme
Judicial Court of Massachusetts in Republican Company v. Appeals
Court teaches:41

The public's right of access to judicial records, including transcripts, evidence,


memoranda, and court orders, maybe restricted, but only on a showing of "good
cause." "To determine whether good cause is shown, a judge must balance the
rights of the parties based on the particular facts of each case." In so
doing, the judge "must take into account all relevant factors, 'including, but not
limited to, the nature of the parties and the controversy, the type of information
and the privacy interests involved, the extent of community interest,and
the reason for the request.'"42 (Emphasis and underscoring supplied; citations
omitted)
And even then, the right is subject to inherent supervisory and protective powers
of every court over its own records and files.43

The Supreme Court of Canada, expounding on the right of the court to exercise
supervisory powers over materials surrendered into its care, held:

It follows that the court, as the custodian of the exhibits, is bound to inquire into
the use that is to be made of them and, in my view, is fully entitled to regulate
that use by securing appropriate undertakings and assurances if those be
advisable to protect competing interests. x x x

In exercising its supervisory powers over materials surrendered into its care, the
court may regulate the use made of it. In an application of this nature, the court
must protect the respondent and accommodate public interest in access. x x x In
an application of this nature the court must protect the respondent and
accommodate the public interest in access. This can only be done in terms of
the actual purpose, and in the face of obvious prejudice and the absence of a
specific purpose, the order for unrestricted access and reproduction should not
have been made.44 (Underscoring supplied)

In fine, access to court records may be permitted at the discretion45 and subject
to the supervisory and protective powers of the court,46 after considering
the actual use or purpose for which the request for access is based and
the obvious prejudice to any of the parties. In the exercise of such discretion,
the following issues may be relevant: "whether parties have interest in
privacy, whether information is being sought for legitimate purpose or for
improper purpose, whether there is threat of particularly serious embarrassment
to party, whether information is important to public health and safety, whether
sharing of information among litigants would promote fairness and efficiency,
whether party benefiting from confidentiality order is public entity or official, and
whether case involves issues important to the public."47

By the administratrix-private respondent's own information, petitioners are the


plaintiffs in two complaints (against Roberto Benedicto et al.) for damages and/
or sums of money, Civil Case No. 95-9137 and Civil Case No. 11178, filed
before the Bacolod RTC. She contends, however, that "if the motion to dismiss
[these RTC Bacolod cases is] granted, . . . petitioners would have absolutely no
interest of any kind [over] the [e]state of the [d]eceased Roberto S. Benedicto."48

Petitioners' stated main purpose for accessing the records — to monitor prompt
compliance with the Rules governing the preservation and proper disposition of
the assets of the estate, e.g., the completion and appraisal of the Inventory and
the submission by the Administratrix of an annual accounting49 — appears
legitimate, for, as the plaintiffs in the complaints for sum of money against
Roberto Benedicto et al., they have an interest over the outcome of the
settlement of his estate. They are in fact "interested persons" under Rule 135,
Sec. 2 of the Rules of Court reading:

Rule 135, SEC. 2. Publicity of proceedings and records. – x x x x The records of


every court of justice shall be public records and shall be available for the
inspection of any interested person, at all proper business hours, under the
supervision of the clerk having custody of such records, unless the court shall, in
any special case, have forbidden their publicity, in the interest of morality or
decency. (Underscoring supplied),

entitled to be informed of the inventory as well as other records which are


relevant to their claims against Benedicto.

As long then as any party, counsel or person has a legitimate reason to have a
copy of court records and pays court fees,50 a court may not deny access to
such records. Of course as this Court held in Beegan v. Borja,51precautionary
measures to prevent tampering or alteration must be observed:

We are not unaware of the common practice in the courts with respect to the
photocopying or xeroxing of portions of case records as long as the same are
not confidential or disallowed by the rules to be reproduced. The judge need not
be bothered as long as the permission of the Clerk of Court has been sought
and as long as a duly authorized representative of the court takes charge of the
reproduction within the court premises if warranted or if not, the said court
representative must bring along the case records where reproduction takes
place and return the same intact to the Clerk of Court.52

In fine, this Court finds the petition for mandamus meritorious, petitioners being
"interested persons" who have a legitimate reason or purpose for accessing the
records of the case.

Respecting the prohibition aspect of the petition, the same fails.

Sections 1 and 2 of Rule 137 of the Rules of Court which govern disqualification
of judges provide:

SECTION 1. Disqualification of judges. — No judge or judicial officer shall sit in


any case in which he, or his wife or child, is pecuniarily interested as heir,
legatee, creditor or otherwise, or in which he is related to either party within the
sixth degree of consanguinity or affinity or to counsel within the fourth degree,
computed according to the rules of the civil law, or in which he was presided in
any inferior court when his ruling or decision is the subject of review, without the
written consent of all parties in interest, signed by them and entered upon the
record.

A judge may, in the exercise of his sound discretion, disqualify himself from
sitting in a case, for just and valid reasons other than those mentioned above.

SECTION 2. Objection that judge disqualified, how made and effect. - If it be


c l a i m e d t h a t a n o ff i c i a l i s d i s q u a l i f i e d f r o m s i t t i n g a s a b o v e
provided, the party objecting to his competency may, in writing, file with the
official his objection, stating the grounds therefor, and the official shall thereupon
proceed with the trial, or withdraw therefrom, in accordance with his
determination of the question of his disqualification. His decision shall be
forthwith made in writing and filed with the other papers in the case, but no
appeal or stay shall be allowed from, or by reason of, his decision in favor of his
own competency, until after final judgment in the case. (Emphasis and
underscoring supplied)

Since petitioners are not parties to the case, they may not seek public
respondent's inhibition, whether under the first paragraph of above-quoted
Section 1 which constitutes grounds for mandatory disqualification, or under the
second paragraph of the same section on voluntary disqualification.

WHEREFORE, the petition for mandamus is GRANTED. Public respondent


is ORDERED to allow petitioners to access, examine, and obtain copies of any
and all documents-part of the records of Special Proceeding No. 00-97505
bearing on

the inventory of assets and liabilities of the estate and the hearing conducted by
the trial court on February 13, 2004, subject to precautionary measures to
prevent tampering or alteration thereof.

The petition for prohibition is DISMISSED.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

A.M. No. 10-11-5-SC, June 14, 2011

RE: PETITION FOR RADIO AND TELEVISION COVERAGE OF THE


MULTIPLE MURDER CASES AGAINST MAGUINDANAO GOVERNOR
ZALDY AMPATUAN, ET AL.,

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

A.M. No. 10-11-6-SC

RE: PETITION FOR THE CONSTITUTION OF THE PRESENT COURT


HANDLING THE TRIAL OF THE MASSACRE OF 57 PERSONS, INCLUDING
32 JOURNALISTS, IN AMPATUAN, MAGUINDANAO INTO A SPECIAL
COURT HANDLING THIS CASE ALONE FOR THE PURPOSE OF
ACHIEVING GENUINE SPEEDY TRIAL and FOR THE SETTING UP OF
VIDEOCAM AND MONITOR JUST OUTSIDE THE COURT FOR
JOURNALISTS TO COVER AND FOR THE PEOPLE TO WITNESS THE
"TRIAL OF THE DECADE" TO MAKE IT TRULY PUBLIC AND IMPARTIAL AS
COMMANDED BY THE CONSTITUTION,

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

A.M. No. 10-11-7-SC

RE: LETTER OF PRESIDENT BENIGNO S. AQUINO III FOR THE LIVE


MEDIA COVERAGE OF THE MAGUINDANAO MASSACRE TRIAL.

RESOLUTION

CARPIO MORALES, J.:

On November 23, 2009, 57 people including 32 journalists and media


practitioners were killed while on their way to Shariff Aguak in Maguindanao.
Touted as the worst election-related violence and the most brutal killing of
journalists in recent history, the tragic incident which came to be known as the
"Maguindanao Massacre" spawned charges for 57 counts of murder and an
additional charge of rebellion against 197 accused, docketed as Criminal Case
Nos. Q-09-162148-72, Q-09-162216-31, Q-10-162652-66, and Q-10-163766,
commonly entitled People v. Datu Andal Ampatuan, Jr., et al. Following the
transfer of venue and the reraffling of the cases, the cases are being tried by
Presiding Judge Jocelyn Solis-Reyes of Branch 221 of the Regional Trial Court
(RTC) of Quezon City inside Camp Bagong Diwa in Taguig City.

Almost a year later or on November 19, 2010, the National Union of Journalists
of the Philippines (NUJP), ABS-CBN Broadcasting Corporation, GMA Network,
Inc., relatives of the victims,1 individual journalists2 from various media entities,
and members of the academe3 filed a petition before this Court praying that live
television and radio coverage of the trial in these criminal cases be allowed,
recording devices (e.g., still cameras, tape recorders) be permitted inside the
courtroom to assist the working journalists, and reasonable guidelines be
formulated to govern the broadcast coverage and the use of devices.4 The Court
docketed the petition as A.M. No. 10-11-5-SC.

In a related move, the National Press Club of the Philippines5 (NPC)


and Alyansa ng Filipinong Mamamahayag6(AFIMA) filed on November 22, 2010
a petition praying that the Court constitute Branch 221 of RTC-Quezon City as a
special court to focus only on the Maguindanao Massacre trial to relieve it of all
other pending cases and assigned duties, and allow the installation inside the
courtroom of a sufficient number of video cameras that shall beam the audio and
video signals to the television monitors outside the court.7 The Court docketed
the petition as A.M. No. 10-11-6-SC.

President Benigno S. Aquino III, by letter of November 22, 20108 addressed to


Chief Justice Renato Corona, came out "in support of those who have petitioned
[this Court] to permit television and radio broadcast of the trial." The President
expressed "earnest hope that [this Court] will, within the many considerations
that enter into such a historic deliberation, attend to this petition with the
dispatch, dispassion and humaneness, such a petition merits."9 The Court
docketed the matter as A.M. No. 10-11-7-SC.

By separate Resolutions of November 23, 2010,10 the Court consolidated A.M.


No. 10-11-7-SC with A.M. No. 10-11-5-SC. The Court shall treat in a separate
Resolution A.M. No. 10-11-6-SC.

Meanwhile, various groups11 also sent to the Chief Justice their respective
resolutions and statements bearing on these matters.

The principal accused in the cases, Andal Ampatuan, Jr. (Ampatuan), filed a
Consolidated Comment of December 6, 2010 in A.M. No. 10-11-5-SC and A.M.
No. 10-11-7-SC. The President, through the Office of the Solicitor General
(OSG), and NUJP, et al. filed their respective Reply of January 18, 2011 and
January 20, 2011. Ampatuan also filed a Rejoinder of March 9, 2011.

On Broadcasting the Trial of the Maguindanao Massacre Cases

Petitioners seek the lifting of the absolute ban on live television and radio
coverage of court proceedings. They principally urge the Court to revisit
the 1991 ruling in Re: Live TV and Radio Coverage of the Hearing of President
Corazon C. Aquino’s Libel Case12 and the 2001 ruling in Re: Request Radio-TV
Coverage of the Trial in the Sandiganbayan of the Plunder Cases Against the
Former President Joseph E. Estrada13 which rulings, they contend, violate the
doctrine that proposed restrictions on constitutional rights are to be narrowly
construed and outright prohibition cannot stand when regulation is a viable
alternative.

Petitioners state that the trial of the Maguindanao Massacre cases has attracted
intense media coverage due to the gruesomeness of the crime, prominence of
the accused, and the number of media personnel killed. They inform that
reporters are being frisked and searched for cameras, recorders, and cellular
devices upon entry, and that under strict orders of the trial court against live
broadcast coverage, the number of media practitioners allowed inside the
courtroom has been limited to one reporter for each media institution.

The record shows that NUJP Vice-Chairperson Jose Jaime Espina, by January
12, 2010 letter14 to Judge Solis-Reyes, requested a dialogue to discuss
concerns over media coverage of the proceedings of the Maguindanao
Massacre cases. Judge Solis-Reyes replied, however, that "matters concerning
media coverage should be brought to the Court’s attention through appropriate
motion."15 Hence, the present petitions which assert the exercise of the freedom
of the press, right to information, right to a fair and public trial, right to assembly
and to petition the government for redress of grievances, right of free access to
courts, and freedom of association, subject to regulations to be issued by the
Court.

The Court partially GRANTS pro hac vice petitioners’ prayer for a live
broadcast of the trial court proceedings, subject to the guidelines which
shall be enumerated shortly.

Putt’s Law16 states that "technology is dominated by two types of people: those
who understand what they do not manage, and those who manage what they do
not understand." Indeed, members of this Court cannot strip their judicial robe
and don the experts’ gown, so to speak, in a pretense to foresee and fathom all
serious prejudices or risks from the use of technology inside the courtroom.
A decade after Estrada and a score after Aquino, the Court is once again faced
with the same task of striking that delicate balance between seemingly
competing yet certainly complementary rights.

The indication of "serious risks" posed by live media coverage to the accused’s
right to due process, left unexplained and unexplored in the era obtaining
in Aquino and Estrada, has left a blow to the exercise of press freedom and the
right to public information.lawphil

The rationale for an outright total prohibition was shrouded, as it is now,


inside the comfortable cocoon of a feared speculation which no scientific
study in the Philippine setting confirms, and which fear, if any, may be
dealt with by safeguards and safety nets under existing rules and exacting
regulations.

In this day and age, it is about time to craft a win-win situation that
shall not compromise rights in the criminal administration of justice, sacrifice
press freedom and allied rights, and interfere with the integrity, dignity and
solemnity of judicial proceedings. Compliance with regulations, not curtailment
of a right, provides a workable solution to the concerns raised in these
administrative matters, while, at the same time, maintaining the same underlying
principles upheld in the two previous cases.

The basic principle upheld in Aquino is firm ─ "[a] trial of any kind or in any court
is a matter of serious importance to all concerned and should not be treated as
a means of entertainment[, and t]o so treat it deprives the court of the dignity
which pertains to it and departs from the orderly and serious quest for truth for
which our judicial proceedings are formulated." The observation that "[m]assive
intrusion of representatives of the news media into the trial itself can so alter and
destroy the constitutionally necessary atmosphere and decorum" stands.

The Court concluded in Aquino:

Considering the prejudice it poses to the defendant's right to due process as


well as to the fair and orderly administration of justice, and considering further
that the freedom of the press and the right of the people to information may be
served and satisfied by less distracting, degrading and prejudicial means, live
radio and television coverage of court proceedings shall not be allowed. Video
footages of court hearings for news purposes shall be restricted and limited to
shots of the courtroom, the judicial officers, the parties and their counsel taken
prior to the commencement of official proceedings. No video shots or
photographs shall be permitted during the trial proper.
Accordingly, in order to protect the parties' right to due process, to prevent the
distraction of the participants in the proceedings and in the last analysis, to
avoid miscarriage of justice, the Court resolved to PROHlBIT live radio and
television coverage of court proceedings. Video footage of court hearings for
news purposes shall be limited and restricted as above indicated.17

The Court had another unique opportunity in Estrada to revisit the question of
live radio and television coverage of court proceedings in a criminal case. It held
that "[t]he propriety of granting or denying the instant petition involve[s] the
weighing out of the constitutional guarantees of freedom of the press and the
right to public information, on the one hand, and the fundamental rights of the
accused, on the other hand, along with the constitutional power of a court to
control its proceedings in ensuring a fair and impartial trial." The Court disposed:

The Court is not all that unmindful of recent technological and scientific
advances but to chance forthwith the life or liberty of any person in a hasty bid to
use and apply them, even before ample safety nets are provided and the
concerns heretofore expressed are aptly addressed, is a price too high to pay.

WHEREFORE, the petition is DENIED.

SO ORDERED.18

In resolving the motion for reconsideration, the Court in Estrada, by Resolution


of September 13, 2001, provided a glimmer of hope when it ordered the audio-
visual recording of the trial for documentary purposes, under the following
conditions:

x x x (a) the trial shall be recorded in its entirety, excepting such portions thereof
as the Sandiganbayan may determine should not be held public under Rule 119,
§21 of the Rules of Criminal Procedure; (b) cameras shall be installed
inconspicuously inside the courtroom and the movement of TV crews shall be
regulated consistent with the dignity and solemnity of the proceedings; (c) the
audio-visual recordings shall be made for documentary purposes only and shall
be made without comment except such annotations of scenes depicted therein
as may be necessary to explain them; (d) the live broadcast of the recordings
before the Sandiganbayan shall have rendered its decision in all the cases
against the former President shall be prohibited under pain of contempt of court
and other sanctions in case of violations of the prohibition; (e) to ensure that the
conditions are observed, the audio-visual recording of the proceedings shall be
made under the supervision and control of the Sandiganbayan or its Division
concerned and shall be made pursuant to rules promulgated by it; and (f)
simultaneously with the release of the audio-visual recordings for public
broadcast, the original thereof shall be deposited in the National Museum and
the Records Management and Archives Office for preservation and exhibition in
accordance with law.19

P e t i t i o n e r s n o t e t h a t t h e 1 9 6 5 c a s e o f E s t e s v.
Texas20 which Aquino and Estrada heavily cited, was borne out of the dynamics
of a jury system, where the considerations for the possible infringement of the
impartiality of a jury, whose members are not necessarily schooled in the law,
are different from that of a judge who is versed with the rules of evidence. To
petitioners, Estes also does not represent the most contemporary position of the
United States in the wake of latest jurisprudence21 and statistical figures
revealing that as of 2007 all 50 states, except the District of Columbia, allow
television coverage with varying degrees of openness.

Other jurisdictions welcome the idea of media coverage. Almost all the
proceedings of United Kingdom’s Supreme Court are filmed, and sometimes
broadcast.22 The International Criminal Court broadcasts its proceedings via
video streaming in the internet.23

On the media coverage’s influence on judges, counsels and witnesses,


petitioners point out that Aquino and Estrada, like Estes, lack empirical evidence
to support the sustained conclusion. They point out errors of generalization
where the conclusion has been mostly supported by studies on American
attitudes, as there has been no authoritative study on the particular matter
dealing with Filipinos.

Respecting the possible influence of media coverage on the impartiality of trial


court judges, petitioners correctly explain that prejudicial publicity insofar as it
undermines the right to a fair trial must pass the "totality of circumstances" test,
applied in People v. Teehankee, Jr.24 and Estrada v. Desierto,25 that the right of
an accused to a fair trial is not incompatible to a free press, that pervasive
publicity is not per se prejudicial to the right of an accused to a fair trial, and that
there must be allegation and proof of the impaired capacity of a judge to render
a bias-free decision. Mere fear of possible undue influence is not tantamount to
actual prejudice resulting in the deprivation of the right to a fair trial.

Moreover, an aggrieved party has ample legal remedies. He may challenge the
validity of an adverse judgment arising from a proceeding that transgressed a
constitutional right. As pointed out by petitioners, an aggrieved party may early
on move for a change of venue, for continuance until the prejudice from publicity
is abated, for disqualification of the judge, and for closure of portions of the trial
when necessary. The trial court may likewise exercise its power of contempt and
issue gag orders.
One apparent circumstance that sets the Maguindanao Massacre cases apart
from the earlier cases is the impossibility of accommodating even the parties to
the cases – the private complainants/families of the victims and other witnesses
– inside the courtroom. On public trial, Estrada basically discusses:

An accused has a right to a public trial but it is a right that belongs to him, more
than anyone else, where his life or liberty can be held critically in balance. A
public trial aims to ensure that he is fairly dealt with and would not be unjustly
condemned and that his rights are not compromised in secrete conclaves of
long ago. A public trial is not synonymous with publicized trial; it only implies that
the court doors must be open to those who wish to come, sit in the available
seats, conduct themselves with decorum and observe the trial process. In the
constitutional sense, a courtroom should have enough facilities for a reasonable
number of the public to observe the proceedings, not too small as to render the
openness negligible and not too large as to distract the trial participants from
their proper functions, who shall then be totally free to report what they have
observed during the proceedings.26 (underscoring supplied)

Even before considering what is a "reasonable number of the public" who may
observe the proceedings, the peculiarity of the subject criminal cases is that the
proceedings already necessarily entail the presence of hundreds of families. It
cannot be gainsaid that the families of the 57 victims and of the 197 accused
have as much interest, beyond mere curiosity, to attend or monitor the
proceedings as those of the impleaded parties or trial participants. It bears
noting at this juncture that the prosecution and the defense have listed more
than 200 witnesses each.

The impossibility of holding such judicial proceedings in a courtroom that will


accommodate all the interested parties, whether private complainants or
accused, is unfortunate enough. What more if the right itself commands that a
reasonable number of the general public be allowed to witness the proceeding
as it takes place inside the courtroom. Technology tends to provide the only
solution to break the inherent limitations of the courtroom, to satisfy the
imperative of a transparent, open and public trial.

In so allowing pro hac vice the live broadcasting by radio and television of the
Maguindanao Massacre cases, the Court lays down the following guidelines
toward addressing the concerns mentioned in Aquino and Estrada:

(a) An audio-visual recording of the Maguindanao massacre cases may be


made both for documentary purposes and for transmittal to live radio and
television broadcasting.
(b) Media entities must file with the trial court a letter of application, manifesting
that they intend to broadcast the audio-visual recording of the proceedings and
that they have the necessary technological equipment and technical plan to
carry out the same, with an undertaking that they will faithfully comply with the
guidelines and regulations and cover the entire remaining proceedings until
promulgation of judgment.

No selective or partial coverage shall be allowed. No media entity shall be


allowed to broadcast the proceedings without an application duly approved by
the trial court.

(c) A single fixed compact camera shall be installed inconspicuously inside the
courtroom to provide a single wide-angle full-view of the sala of the trial court.
No panning and zooming shall be allowed to avoid unduly highlighting or
downplaying incidents in the proceedings. The camera and the necessary
equipment shall be operated and controlled only by a duly designated official or
employee of the Supreme Court. The camera equipment should not produce or
beam any distracting sound or light rays. Signal lights or signs showing the
equipment is operating should not be visible. A limited number of microphones
and the least installation of wiring, if not wireless technology, must be
unobtrusively located in places indicated by the trial court.

The Public Information Office and the Office of the Court Administrator shall
coordinate and assist the trial court on the physical set-up of the camera and
equipment.

(d) The transmittal of the audio-visual recording from inside the courtroom to the
media entities shall be conducted in such a way that the least physical
disturbance shall be ensured in keeping with the dignity and solemnity of the
proceedings and the exclusivity of the access to the media entities.

The hardware for establishing an interconnection or link with the camera


equipment monitoring the proceedings shall be for the account of the media
entities, which should employ technology that can (i) avoid the cumbersome
snaking cables inside the courtroom, (ii) minimize the unnecessary ingress or
egress of technicians, and (iii) preclude undue commotion in case of technical
glitches.

If the premises outside the courtroom lack space for the set-up of the media
entities’ facilities, the media entities shall access the audio-visual recording
either via wireless technology accessible even from outside the court premises
or from one common web broadcasting platform from which streaming can be
accessed or derived to feed the images and sounds.
At all times, exclusive access by the media entities to the real-time audio-visual
recording should be protected or encrypted.

(e) The broadcasting of the proceedings for a particular day must be continuous
and in its entirety, excepting such portions thereof where Sec. 21 of Rule 119 of
the Rules of Court27 applies, and where the trial court excludes, upon motion,
prospective witnesses from the courtroom, in instances where, inter alia, there
are unresolved identification issues or there are issues which involve the
security of the witnesses and the integrity of their testimony (e.g., the dovetailing
of corroborative testimonies is material, minority of the witness).

The trial court may, with the consent of the parties, order only the pixelization of
the image of the witness or mute the audio output, or both.

(f) To provide a faithful and complete broadcast of the proceedings, no


commercial break or any other gap shall be allowed until the day’s proceedings
are adjourned, except during the period of recess called by the trial court and
during portions of the proceedings wherein the public is ordered excluded.
1avvphi1

(g) To avoid overriding or superimposing the audio output from the on-going
proceedings, the proceedings shall be broadcast without any voice-overs,
except brief annotations of scenes depicted therein as may be necessary to
explain them at the start or at the end of the scene. Any commentary shall
observe the sub judice rule and be subject to the contempt power of the court;

(h) No repeat airing of the audio-visual recording shall be allowed until after the
finality of judgment, except brief footages and still images derived from or
cartographic sketches of scenes based on the recording, only for news
purposes, which shall likewise observe the sub judice rule and be subject to the
contempt power of the court;

(i) The original audio-recording shall be deposited in the National Museum and
the Records Management and Archives Office for preservation and exhibition in
accordance with law.

(j) The audio-visual recording of the proceedings shall be made under the
supervision and control of the trial court which may issue supplementary
directives, as the exigency requires, including the suspension or revocation of
the grant of application by the media entities.

(k) The Court shall create a special committee which shall forthwith study,
design and recommend appropriate arrangements, implementing regulations,
and administrative matters referred to it by the Court concerning the live
broadcast of the proceedings pro hac vice, in accordance with the above-
outlined guidelines. The Special Committee shall also report and recommend on
the feasibility, availability and affordability of the latest technology that would
meet the herein requirements. It may conduct consultations with resource
persons and experts in the field of information and communication technology.

(l) All other present directives in the conduct of the proceedings of the trial court
(i.e., prohibition on recording devices such as still cameras, tape recorders; and
allowable number of media practitioners inside the courtroom) shall be observed
in addition to these guidelines.

Indeed, the Court cannot gloss over what advances technology has to offer in
distilling the abstract discussion of key constitutional precepts into the workable
context. Technology per se has always been neutral. It is the use and regulation
thereof that need fine-tuning. Law and technology can work to the advantage
and furtherance of the various rights herein involved, within the contours of
defined guidelines.

WHEREFORE, in light of the foregoing disquisition, the Court PARTIALLY


GRANTS PRO HAC VICE the request for live broadcast by television and radio
of the trial court proceedings of the Maguindanao Massacre cases, subject to
the guidelines herein outlined.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 165036 July 5, 2010

HAZEL MA. C. ANTOLIN, Petitioner, 



vs.

ABELARDO T. DOMONDON, JOSE A. GANGAN, and VIOLETA J.
JOSEF, Respondents.

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

G.R. No. 175705

HAZEL MA. C. ANTOLIN Petitioner, 



vs.

ANTONIETA FORTUNA-IBE, Respondent.

DECISION

DEL CASTILLO, J.:

Examinations have a two-fold purpose. First, they are summative; examinations


are intended to assess and record what and how much the students have
learned. Second, and perhaps more importantly, they are formative;
examinations are intended to be part and parcel of the learning process. In a
perfect system, they are tools for learning. In view of the pedagogical aspect of
national examinations, the need for all parties to fully ventilate their respective
positions, and the view that government transactions can only be improved by
public scrutiny, we remand these cases to the trial court for further proceedings.

Factual Antecedents

Petitioner took the accountancy licensure examinations (the Certified Public


Accountant [CPA] Board Exams) conducted by the Board of Accountancy (the
Board) in October 1997.1 The examination results were released on October 29,
1997; out of 6,481 examinees, only 1,171 passed. Unfortunately, petitioner did
not make it. When the results were released, she received failing grades in four
out of the seven subjects.2
Subject
Petitioner’s Grade
Theory of Accounts
65 %
Business Law
66 %
Management Services
69 %
Auditing Theory
82 %
Auditing Problems
70 %
Practical Accounting I
68 %
Practical Accounting II
77 %
Convinced that she deserved to pass the examinations, she wrote to respondent
Abelardo T. Domondon (Domondon), Acting Chairman of the Board of
Accountancy, and requested that her answer sheets be re-corrected.3 On
November 3, 1997, petitioner was shown her answer sheets, but these
consisted merely of shaded marks, so she was unable to determine why she
failed the exam.4 Thus, on November 10, 1997, she again wrote to the Board to
request for copies of (a) the questionnaire in each of the seven subjects (b) her
answer sheets; (c) the answer keys to the questionnaires, and (d) an
explanation of the grading system used in each subject (collectively, the
Examination Papers).5

Acting Chairman Domondon denied petitioner’s request on two grounds: first,


that Section 36, Article III of the Rules and Regulations Governing the
Regulation and Practice of Professionals, as amended by Professional
Regulation Commission (PRC) Resolution No. 332, series of 1994, only
permitted access to the petitioner’s answer sheet (which she had been shown
previously), and that reconsideration of her examination result was only proper
under the grounds stated therein:

Sec. 36 An examinee shall be allowed to have access or to go over his/her test


papers or answer sheets on a date not later than thirty (30) days from the official
release of the results of the examination. Within ten (10) days from such date,
he/she may file his/her request for reconsideration of ratings. Reconsideration of
rating shall be effected only on grounds of mechanical error in the grading of his/
her testpapers or answer sheets, or malfeasance.6lawph!l
Second, Acting Chairman Domondon clarified that the Board was precluded
from releasing the Examination Papers (other than petitioner’s answer sheet) by
Section 20, Article IV of PRC Resolution No. 338, series of 1994, which
provides:

Sec. 20. Illegal, Immoral, Dishonorable, Unprofessional Acts – The hereunder


acts shall constitute prejudicial, illegal, grossly immoral, dishonorable, or
unprofessional conduct:

A. Providing, getting, receiving, holding, using or reproducing questions

xxxx

3. that have been given in the examination except if the test bank for the subject
has on deposit at least two thousand (2,000) questions.7

After a further exchange of correspondence,8 the Board informed petitioner that


an investigation was conducted into her exam and there was no mechanical
error found in the grading of her test papers.9

Proceedings before the Regional Trial Court

Undeterred, on January 12, 1998, petitioner filed a Petition for Mandamus with
Damages against the Board of Accountancy and its members10 before the
Regional Trial Court (RTC) of Manila. The case was raffled to Branch 33, and
docketed as Civil Case No. 98-86881. The Petition included a prayer for the
issuance of a preliminary mandatory injunction ordering the Board of
Accountancy and its members (the respondents) to furnish petitioner with copies
of the Examination Papers. Petitioner also prayed that final judgment be issued
ordering respondents to furnish petitioner with all documents and other materials
as would enable her to determine whether respondents fairly administered the
examinations and correctly graded petitioner’s performance therein, and, if
warranted, to issue to her a certificate of registration as a CPA.11

On February 5, 1998, respondents filed their Opposition to the Application for a


Writ of Preliminary Mandatory Injunction, and argued, inter alia, that petitioner
was not entitled to the relief sought, that the respondents did not have the duty
to furnish petitioner with copies of the Examination Papers, and that petitioner
had other plain, speedy, adequate remedy in the ordinary course of law, namely,
recourse to the PRC.12 Respondents also filed their Answer with Compulsory
Counterclaim in the main case, which asked that the Petition for Mandamus with
Damages be dismissed for lack of merit on the following grounds: (1) petitioner
failed to exhaust administrative remedies; (2) the petition stated no cause of
action because there was no ministerial duty to release the information
demanded; and (3) the constitutional right to information on matters of public
concern is subject to limitations provided by law, including Section 20, Article IV,
of PRC Resolution No. 338, series of 1994.13

On March 3, 1998, petitioner filed an Amended Petition (which was admitted by


the RTC), where she included the following allegation in the body of her petition:

The allegations in this amended petition are meant only to plead a cause of
action for access to the documents requested, not for re-correction which
petitioner shall assert in the proper forum depending on, among others, whether
she finds sufficient error in the documents to warrant such or any other relief.
None of the allegations in this amended petition, including those in the following
paragraphs, is made to assert a cause of action for re-correction.14

If only to underscore the fact that she was not asking for a re-checking of her
exam, the following prayer for relief was deleted from the Amended Petition:
"and, if warranted, to issue to her a certificate of registration as a CPA."

On June 23, 1998, respondents filed a Manifestation and Motion to Dismiss


Application for Writ of Preliminary Mandatory Injunction, on the ground that
petitioner had taken and passed the May 1998 CPA Licensure Examination and
had taken her oath as a CPA.15 Petitioner filed her Opposition on July 8,
1998.16 Subsequently, on October 29, 1998, respondents filed their Answer with
Counterclaim to the amended petition. They reiterated their original allegations
and further alleged that there was no cause of action because at the time the
Amended Petition was admitted, they had ceased to be members of the Board
of Accountancy and they were not in possession of the documents sought by the
petitioner.17

Ruling of the Regional Trial Court

In an Order dated October 16, 1998, the trial court granted respondent’s Motion
to Dismiss Petitioner’s Application for a Writ of Preliminary Mandatory Injunction
(not the main case), ruling that the matter had become moot since petitioner
passed the May CPA Licensure 1998 Examination and had already taken her
oath as a CPA.18

Undaunted, petitioner sought and obtained leave to file a Second Amended


Petition for Mandamus with Damages19 where she finally impleaded the PRC as
respondent and included the following plea in her prayer:

WHEREFORE, petitioner respectfully prays that:


xxxx

2. Judgment be issued –

(a) commanding respondents to give petitioner all documents and other


materials as would enable her to determine whether respondents fairly
administered the same examinations and correctly graded petitioner’s
performance therein and, if warranted, to make the appropriate revisions on the
results of her examination.(Emphasis ours)

On June 21, 2002, the trial court dismissed the petition on the ground that the
petition had already become moot, since petitioner managed to pass the 1998
CPA Board examinations.20 Petitioner sought reconsideration21which was
granted by the trial court in its Omnibus Order22 dated November 11, 2002. The
Omnibus Order provides in part:

On the motion for reconsideration filed by the petitioner, the Court is inclined to
reconsider its Order dismissing the petition. The Court agrees with the petitioner
that the passing of the petitioner in the subsequent CPA examination did not
render the petition moot and academic because the relief "and if warranted, to
issue to her a certificate of registration as Certified Public Accountant" was
deleted from the original petition. As regard the issue of whether the petitioner
has the constitutional right to have access to the questioned documents, the
Court would want first the parties to adduce evidence before it can resolve the
issue so that it can make a complete determination of the rights of the parties.

The Court would also want the Professional Regulation Commission to give its
side of the case the moment it is impleaded as a respondent in the Second
Amended Petition for Mandamus filed by the petitioner which this Court is
inclined to grant.

As to the Motion for Conservatory Measures filed by the petitioner, the Court
denies the same. It is clear that the PRC has in custody the documents being
requested by the petitioner. It has also an adequate facility to preserve and
safeguard the documents. To be sure that the questioned documents are
preserved and safeguarded, the Court will order the PRC to preserve and
safeguard the documents and make them available anytime the Court or
petitioner needs them.

WHEREFORE, the Order of this Court dated June 20, 2002 is reconsidered and
set aside. The Professional Regulation Commission is ordered to preserve and
safeguard the following documents:
a) Questionnaire in each of the seven subjects comprising the Accountancy
Examination of October, 1997;

b) Petitioner’s Answer Sheets; and

c) Answer keys to the questionnaires.

SO ORDERED.23

Respondents filed a motion for reconsideration which was denied.24

Proceedings before the Court of Appeals

The RTC Decisions led to the filing of three separate petitions


for certiorari before the Court of Appeals (CA):

(a) CA-GR SP No. 76498, a petition filed by respondents Domondon, Gangan,


and Josef on April 11, 2003;

(b) CA-GR SP No. 76546, a petition filed by respondent Ibe on April 30, 2003;
and

(c) CA-GR SP No. 76545, a petition filed by the Board of Accountancy and PRC.

It is the first two proceedings that are pending before us. In both cases, the CA
set aside the RTC Decisions and ordered the dismissal of Civil Case No.
98-8681.

Ruling of the Court of Appeals

In its December 11, 2006 Decision25 in CA-GR SP No. 76546, the CA ruled that
the petition has become moot in view of petitioner’s eventual passing of the
1998 CPA Board Exam. In CA-GR SP No. 76498, the CA found, in a Decision
dated February 16, 2004,26 that (i) Section 20, Article IV of PRC Resolution No.
338 constituted a valid limitation on petitioner’s right to information and access
to government documents; (ii) the Examination Documents were not of public
concern, because petitioner merely sought review of her failing marks; (iii) it was
not the ministerial or mandatory function of the respondents to review and
reassess the answers to examination questions of a failing examinee; (iv) the
case has become moot, since petitioner already passed the May 1998 CPA
Board Examinations and took her oath as a CPA; and (v) petitioner failed to
exhaust administrative remedies, because, having failed to secure the desired
outcome from the respondents, she did not elevate the matter to the PRC before
seeking judicial intervention.27

CA-GR SP No. 76498 and CA-GR SP No. 76546 were brought before us by the
petitioner and docketed as G.R. Nos. 165036 and 175705, respectively. The
cases were then consolidated, in view of the similarity of the factual antecedents
and issues, and to avoid the possibility of conflicting decisions by different
divisions of this Court.28

Issues

Before us, petitioner argues that she has a right to obtain copies of the
examination papers so she can determine for herself why and how she failed
and to ensure that the Board properly performed its duties. She argues that the
Constitution29 as well as the Code of Conduct and Ethical Standards for Public
Officials and Employees30support her right to demand access to the
Examination Papers. Furthermore, she claims that there was no need to
exhaust administrative remedies, since no recourse to the PRC was available,
and only a pure question of law is involved in this case. Finally, she claims that
her demand for access to documents was not rendered moot by her passing of
the 1998 CPA Board Exams.

Our Ruling

Propriety of Writ of Mandamus

At the very outset let us be clear of our ruling. Any claim for re-correction or
revision of her 1997 examination cannot be compelled by mandamus. This
much was made evident by our ruling in Agustin-Ramos v. Sandoval,31where we
stated:

After deliberating on the petition in relation to the other pleadings filed in the
proceedings at bar, the Court resolved to DENY said petition for lack of merit.
The petition at bar prays for the setting aside of the Order of respondent Judge
dismissing petitioners’ mandamus action to compel the other respondents
(Medical Board of Examiners and the Professional Regulation Commission) "to
reconsider, recorrect and/or rectify the board ratings of the petitioners from their
present failing grades to higher or passing marks." The function of reviewing and
re-assessing the petitioners’ answers to the examination questions, in the light
of the facts and arguments presented by them x x x is a discretionary function of
the Medical Board, not a ministerial and mandatory one, hence, not within the
scope of the writ of mandamus. The obvious remedy of the petitioners from the
adverse judgment by the Medical Board of Examiners was an appeal to the
Professional Regulation Commission itself, and thence to the Court of Appeals;
and since they did not apply for relief to the Commission prior to their institution
of the special civil action of mandamus in the Regional Trial Court, the omission
was fatal to the action under the familiar doctrine requiring exhaustion of
administrative remedies. Apart from the obvious undesirability of a procedure
which would allow Courts to substitute their judgment for that of Government
boards in the determination of successful examinees in any administered
examination – an area in which courts have no expertise – and the circumstance
that the law declares the Court of Appeals to be the appropriate review Court,
the Regional Trial Court was quite correct in refusing to take cognizance of an
action seeking reversal of the quasi-judicial action taken by the Medical Board of
Examiners.32 (Emphasis ours)

For a writ of mandamus to issue, the applicant must have a well-defined, clear,
and certain legal right to the thing demanded. The corresponding duty of the
respondent to perform the required act must be equally clear.33 No such clarity
exists here; neither does petitioner’s right to demand a revision of her
examination results. And despite petitioner’s assertions that she has not made
any demand for re-correction, the most cursory perusal of her Second Amended
Petition and her prayer that the respondents "make the appropriate revisions on
the results of her examination" belies this claim.

Like the claimants in Agustin, the remedy of petitioner from the refusal of the
Board to release the Examination Papers should have been through an appeal
to the PRC. Undoubtedly, petitioner had an adequate remedy from the Board’s
refusal to provide her with copies of the Examination Papers. Under Section 5(a)
of Presidential Decree No. 223,34 the PRC has the power to promulgate rules
and regulations to implement policies for the regulation of the accounting
profession.35 In fact, it is one such regulation (PRC Resolution No. 338) that is at
issue in this case. In addition, under Section 5(c), the PRC has the power to

review, coordinate, integrate and approve the policies, resolutions, rules and
regulations, orders or decisions promulgated by the various Boards with respect
to the profession or occupation under their jurisdictions including the results of
their licensure examinations but their decisions on administrative cases shall be
final and executory unless appealed to the Commission within thirty (30) days
from the date of promulgation thereof.

Petitioner posits that no remedy was available because the PRC’s power to
"review" and "approve" in Section 5(c) only refers to appeals in decisions
concerning administrative investigations36 and not to instances where
documents are being requested. Not only is this position myopic and self-
serving, it is bereft of either statutory or jurisprudential basis. The PRC’s quasi-
legislative and enforcement powers, encompassing its authority to review and
approve "policies, resolutions, rules and regulations, orders, or decisions" cover
more than administrative investigations conducted pursuant to its quasi-judicial
powers.37 More significantly, since the PRC itself issued the resolution
questioned by the petitioner here, it was in the best position to resolve questions
addressed to its area of expertise. Indeed, petitioner could have saved herself a
great deal of time and effort had she given the PRC the opportunity to rectify any
purported errors committed by the Board.

One of the reasons for exhaustion of administrative remedies is our well-


entrenched doctrine on separation of powers, which enjoins upon the Judiciary a
becoming policy of non-interference with matters falling primarily (albeit not
exclusively) within the competence of other departments.38 Courts, for reasons
of law, comity and convenience, should not entertain suits unless the available
administrative remedies have first been resorted to and the proper authorities
have been given an appropriate opportunity to act and correct their alleged
errors, if any, committed in the administrative forum. 39

However, the principle of exhaustion of administrative remedies is subject to


exceptions, among which is when only a question of law is involved.40 This is
because issues of law – such as whether petitioner has a constitutional right to
demand access to the Examination Papers - cannot be resolved with finality by
the administrative officer.41

Issues of Mootness

We now turn to the question of whether the petition has become moot in view of
petitioner’s having passed the 1998 CPA examination. An issue becomes moot
and academic when it ceases to present a justiciable controversy, so that a
declaration on the issue would be of no practical use or value.42

In this jurisdiction, any citizen may challenge any attempt to obstruct the
exercise of his or her right to information and may seek its enforcement by
mandamus.43 And since every citizen possesses the inherent right to be
informed by the mere fact of citizenship,44 we find that petitioner’s belated
passing of the CPA Board Exams does not automatically mean that her interest
in the Examination Papers has become mere superfluity. Undoubtedly, the
constitutional question presented, in view of the likelihood that the issues in this
case will be repeated, warrants review.45
The crux of this case is whether petitioner may compel access to the
Examination Documents through mandamus. As always, our inquiry must begin
with the Constitution. Section 7, Article III provides:

Sec.7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.

Together with the guarantee of the right to information, Section 28, Article II
promotes full disclosure and transparency in government, viz:

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions involving
public interest.

Like all the constitutional guarantees, the right to information is not absolute.
The people's right to information is limited to "matters of public concern," and is
further "subject to such limitations as may be provided by law." Similarly, the
State's policy of full disclosure is limited to "transactions involving public
interest," and is "subject to reasonable conditions prescribed by law". The Court
has always grappled with the meanings of the terms "public interest" and "public
concern." As observed in Legaspi v. Civil Service Commission:46

In determining whether x x x a particular information is of public concern there is


no rigid test which can be applied. "Public concern" like "public interest" is a
term that eludes exact definition. Both terms embrace a broad spectrum of
subjects which the public may want to know, either because these directly affect
their lives, or simply because such matters naturally arouse the interest of an
ordinary citizen. In the final analysis, it is for the courts to determine on a case
by case basis whether the matter at issue is of interest or importance, as it
relates to or affects the public.

We have also recognized the need to preserve a measure of confidentiality on


some matters, such as national security, trade secrets and banking transactions,
criminal matters, and other confidential matters.47

We are prepared to concede that national board examinations such as the CPA
Board Exams are matters of public concern. The populace in general, and the
examinees in particular, would understandably be interested in the fair and
competent administration of these exams in order to ensure that only those
qualified are admitted into the accounting profession. And as with all matters
pedagogical, these examinations could be not merely quantitative means of
assessment, but also means to further improve the teaching and learning of the
art and science of accounting.

On the other hand, we do realize that there may be valid reasons to limit access
to the Examination Papers in order to properly administer the exam. More than
the mere convenience of the examiner, it may well be that there exist inherent
difficulties in the preparation, generation, encoding, administration, and checking
of these multiple choice exams that require that the questions and answers
remain confidential for a limited duration. However, the PRC is not a party to
these proceedings. They have not been given an opportunity to explain the
reasons behind their regulations or articulate the justification for keeping the
Examination Documents confidential. In view of the far-reaching implications of
this case, which may impact on every board examination administered by the
PRC, and in order that all relevant issues may be ventilated, we deem it best to
remand these cases to the RTC for further proceedings.

IN VIEW OF THE FOREGOING, the petitions are GRANTED. The December


11, 2006 and February 16, 2004 Decisions of the Court of Appeals in CA-GR SP
No. 76546 and CA-GR SP No. 76498, respectively, are hereby SET ASIDE. The
November 11, 2002 and January 30, 2003 Orders of the Regional Trial Court of
Manila, Branch 33, in Civil Case No. 98-86881 are AFFIRMED. The case is
remanded to the Regional Trial Court for further proceedings.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

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

LEOVILLO C. AGUSTIN, petitioner, 



vs.

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

Leovillo C. Agustin Law Office for petitioner.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Ruben E.


Agpalo and Solicitor Amado D. Aquino for respondents.

FERNANDO, J.:

The validity of a letter of Instruction 1 providing for an early seaming device for
motor vehicles is assailed in this prohibition proceeding as being violative of the
constitutional guarantee of due process and, insofar as the rules and regulations
for its implementation are concerned, for transgressing the fundamental
principle of non- delegation of legislative power. The Letter of Instruction is
stigmatized by petitioner who is possessed of the requisite standing, as being
arbitrary and oppressive. A temporary restraining order as issued and
respondents Romeo F. Edu, Land Transportation Commissioner Juan Ponce
Enrile, Minister of National Defense; Alfredo L. Juinio, Minister of Public Works,
Transportation and Communications; and Baltazar Aquino, Minister of Public
Highways; were to answer. That they did in a pleading submitted by Solicitor
General Estelito P. Mendoza. 2Impressed with a highly persuasive quality, it
makes devoid clear that the imputation of a constitutional infirmity is devoid of
justification The Letter of Instruction on is a valid police power measure. Nor
could the implementing rules and regulations issued by respondent Edu be
considered as amounting to an exercise of legislative power. Accordingly, the
petition must be dismissed.
The facts are undisputed. The assailed Letter of Instruction No. 229 of President
Marcos, issued on December 2, 1974, reads in full: "[Whereas], statistics show
that one of the major causes of fatal or serious accidents in land transportation
is the presence of disabled, stalled or parked motor vehicles along streets or
highways without any appropriate early warning device to signal approaching
motorists of their presence; [Whereas], the hazards posed by such obstructions
to traffic have been recognized by international bodies concerned with traffic
safety, the 1968 Vienna Convention on Road Signs and Signals and the United
Nations Organization (U.N.); [Whereas], the said Vienna Convention which was
ratified by the Philippine Government under P.D. No. 207, recommended the
enactment of local legislation for the installation of road safety signs and
devices; [Now, therefore, I, Ferdinand E. Marcos], President of the Philippines,
in the interest of safety on all streets and highways, including expressways or
limited access roads, do hereby direct: 1. That all owners, users or drivers of
motor vehicles shall have at all times in their motor vehicles at least one (1) pair
of early warning device consisting of triangular, collapsible reflectorized plates in
red and yellow colors at least 15 cms. at the base and 40 cms. at the sides. 2.
Whenever any motor vehicle is stalled or disabled or is parked for thirty (30)
minutes or more on any street or highway, including expressways or limited
access roads, the owner, user or driver thereof shall cause the warning device
mentioned herein to be installed at least four meters away to the front and rear
of the motor vehicle staged, disabled or parked. 3. The Land Transportation
Commissioner shall cause Reflectorized Triangular Early Warning Devices, as
herein described, to be prepared and issued to registered owners of motor
vehicles, except motorcycles and trailers, charging for each piece not more than
15 % of the acquisition cost. He shall also promulgate such rules and
regulations as are appropriate to effectively implement this order. 4. All hereby
concerned shall closely coordinate and take such measures as are necessary or
appropriate to carry into effect then instruction. 3 Thereafter, on November 15,
1976, it was amended by Letter of Instruction No. 479 in this wise. "Paragraph 3
of Letter of Instruction No. 229 is hereby amended to read as follows: 3. The
Land transportation Commissioner shall require every motor vehicle owner to
procure from any and present at the registration of his vehicle, one pair of a
reflectorized early warning device, as d bed of any brand or make chosen by
mid motor vehicle . The Land Transportation Commissioner shall also
promulgate such rule and regulations as are appropriate to effectively implement
this order.'" 4 There was issued accordingly, by respondent Edu, the
implementing rules and regulations on December 10, 1976. 5 They were not
enforced as President Marcos on January 25, 1977, ordered a six-month period
of suspension insofar as the installation of early warning device as a pre-
registration requirement for motor vehicle was concerned. 6 Then on June 30,
1978, another Letter of Instruction 7 the lifting of such suspension and directed
the immediate implementation of Letter of Instruction No. 229 as amended. 8 It
was not until August 29, 1978 that respondent Edu issued Memorandum
Circular No. 32, worded thus: "In pursuance of Letter of Instruction No. 716,
dated June 30, 1978, the implementation of Letter of Instruction No. 229, as
amended by Letter of Instructions No. 479, requiring the use of Early Warning
Devices (EWD) on motor vehicle, the following rules and regulations are hereby
issued: 1. LTC Administrative Order No. 1, dated December 10, 1976; shall now
be implemented provided that the device may come from whatever source and
that it shall have substantially complied with the EWD specifications contained in
Section 2 of said administrative order; 2. In order to insure that every motor
vehicle , except motorcycles, is equipped with the device, a pair of serially
numbered stickers, to be issued free of charge by this Commission, shall be
attached to each EWD. The EWD. serial number shall be indicated on the
registration certificate and official receipt of payment of current registration fees
of the motor vehicle concerned. All Orders, Circulars, and Memoranda in conflict
herewith are hereby superseded, This Order shall take effect immediately. 9 It
was for immediate implementation by respondent Alfredo L. Juinio, as Minister
of Public Works, transportation, and Communications. 10

Petitioner, after setting forth that he "is the owner of a Volkswagen Beetle Car,
Model 13035, already properly equipped when it came out from the assembly
lines with blinking lights fore and aft, which could very well serve as an early
warning device in case of the emergencies mentioned in Letter of Instructions
No. 229, as amended, as well as the implementing rules and regulations in
Administrative Order No. 1 issued by the land transportation
Commission," 11 alleged that said Letter of Instruction No. 229, as amended,
"clearly violates the provisions and delegation of police power, [sic] * * *: " For
him they are "oppressive, unreasonable, arbitrary, confiscatory, nay
unconstitutional and contrary to the precepts of our compassionate New
Society." 12 He contended that they are "infected with arbitrariness because it is
harsh, cruel and unconscionable to the motoring public;" 13 are "one-sided,
onerous and patently illegal and immoral because [they] will make
manufacturers and dealers instant millionaires at the expense of car owners
who are compelled to buy a set of the so-called early warning device at the rate
of P 56.00 to P72.00 per set." 14 are unlawful and unconstitutional and contrary
to the precepts of a compassionate New Society [as being] compulsory and
confiscatory on the part of the motorists who could very well provide a practical
alternative road safety device, or a better substitute to the specified set of
EWD's." 15 He therefore prayed for a judgment both the assailed Letters of
Instructions and Memorandum Circular void and unconstitutional and for a
restraining order in the meanwhile.
A resolution to this effect was handed down by this Court on October 19, 1978:
"L-49112 (Leovillo C. Agustin v. Hon. Romeo F. Edu, etc., et al.) — Considering
the allegations contained, the issues raised and the arguments adduced in the
petition for prohibition with writ of p prohibitory and/or mandatory injunction, the
Court Resolved to (require) the respondents to file an answer thereto within ton
(10) days from notice and not to move to dismiss the petition. The Court further
Resolved to [issue] a [temporary restraining order] effective as of this date and
continuing until otherwise ordered by this Court.16

Two motions for extension were filed by the Office of the Solicitor General and
granted. Then on November 15, 1978, he Answer for respondents was
submitted. After admitting the factual allegations and stating that they lacked
knowledge or information sufficient to form a belief as to petitioner owning a
Volkswagen Beetle car," they "specifically deny the allegations and stating they
lacked knowledge or information sufficient to form a belief as to petitioner
owning a Volkswagen Beetle Car, 17 they specifically deny the allegations in
paragraphs X and XI (including its subparagraphs 1, 2, 3, 4) of Petition to the
effect that Letter of Instruction No. 229 as amended by Letters of Instructions
Nos. 479 and 716 as well as Land transportation Commission Administrative
Order No. 1 and its Memorandum Circular No. 32 violates the constitutional
provisions on due process of law, equal protection of law and undue delegation
of police power, and that the same are likewise oppressive, arbitrary,
confiscatory, one-sided, onerous, immoral unreasonable and illegal the truth
being that said allegations are without legal and factual basis and for the
reasons alleged in the Special and Affirmative Defenses of this Answer."18 Unlike
petitioner who contented himself with a rhetorical recital of his litany of
grievances and merely invoked the sacramental phrases of constitutional
litigation, the Answer, in demonstrating that the assailed Letter of Instruction was
a valid exercise of the police power and implementing rules and regulations of
respondent Edu not susceptible to the charge that there was unlawful delegation
of legislative power, there was in the portion captioned Special and Affirmative
Defenses, a citation of what respondents believed to be the authoritative
decisions of this Tribunal calling for application. They are Calalang v.
Williams, 19 Morfe v. Mutuc, 20 and Edu v. Ericta. 21 Reference was likewise
made to the 1968 Vienna Conventions of the United Nations on road traffic, road
signs, and signals, of which the Philippines was a signatory and which was duly
ratified. 22 Solicitor General Mendoza took pains to refute in detail, in language
calm and dispassionate, the vigorous, at times intemperate, accusation of
petitioner that the assailed Letter of Instruction and the implementing rules and
regulations cannot survive the test of rigorous scrutiny. To repeat, its highly-
persuasive quality cannot be denied.
This Court thus considered the petition submitted for decision, the issues being
clearly joined. As noted at the outset, it is far from meritorious and must be
dismissed.

1. The Letter of Instruction in question was issued in the exercise of the police
power. That is conceded by petitioner and is the main reliance of respondents. It
is the submission of the former, however, that while embraced in such a
category, it has offended against the due process and equal protection
safeguards of the Constitution, although the latter point was mentioned only in
passing. The broad and expansive scope of the police power which was
originally Identified by Chief Justice Taney of the American Supreme Court in an
1847 decision as "nothing more or less than the powers of government inherent
in every sovereignty" 23 was stressed in the aforementioned case of Edu v.
Ericta thus: "Justice Laurel, in the first leading decision after the Constitution
came into force, Calalang v. Williams, Identified police power with state authority
to enact legislation that may interfere with personal liberty or property in order to
promote the general welfare. Persons and property could thus 'be subjected to
all kinds of restraints and burdens in order to we the general comfort, health and
prosperity of the state.' Shortly after independence in 1948, Primicias v.
Fugoso reiterated the doctrine, such a competence being referred to as 'the
power to prescribe regulations to promote the health, morals, peace, education,
good order or safety, and general welfare of the people. The concept was set
forth in negative terms by Justice Malcolm in a pre-Commonwealth decision as
'that inherent and plenary power in the State which enables it to prohibit all
things hurtful to the comfort, safety and welfare of society. In that sense it could
be hardly distinguishable as noted by this Court in Morfe v. Mutuc with the
totality of legislative power. It is in the above sense the greatest and most
powerful at. tribute of government. It is, to quote Justice Malcolm anew, 'the
most essential, insistent, and at least table powers, I extending as Justice
Holmes aptly pointed out 'to all the great public needs.' Its scope, ever-
expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible
response to conditions and circumstances thus assuring the greatest benefits. In
the language of Justice Cardozo: 'Needs that were narrow or parochial in the
past may be interwoven in the present with the well-being of the nation. What is
critical or urgent changes with the time.' The police power is thus a dynamic
agency, suitably vague and far from precisely defined, rooted in the conception
that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual
citizen or a group of citizens to obstruct unreasonably the enactment of such
salutary measures calculated to communal peace, safety, good order, and
welfare." 24
2. It was thus a heavy burden to be shouldered by petitioner, compounded by
the fact that the particular police power measure challenged was clearly
intended to promote public safety. It would be a rare occurrence indeed for this
Court to invalidate a legislative or executive act of that character. None has
been called to our attention, an indication of its being non-existent. The latest
decision in point, Edu v. Ericta, sustained the validity of the Reflector Law, 25 an
enactment conceived with the same end in view. Calalang v. Williams found
nothing objectionable in a statute, the purpose of which was: "To promote safe
transit upon, and. avoid obstruction on roads and streets designated as national
roads * * *. 26 As a matter of fact, the first law sought to be nullified after the
effectivity of the 1935 Constitution, the National Defense Act, 27 with petitioner
failing in his quest, was likewise prompted by the imperative demands of public
safety.

3. The futility of petitioner's effort to nullify both the Letter of Instruction and the
implementing rules and regulations becomes even more apparent considering
his failure to lay the necessary factual foundation to rebut the presumption of
validity. So it was held in Ermita-Malate Hotel and Motel Operators Association,
Inc. v. City Mayor of Manila. 28 The rationale was clearly set forth in an excerpt
from a decision of Justice Branders of the American Supreme Court, quoted in
the opinion: "The statute here questioned deals with a subject clearly within the
scope of the police power. We are asked to declare it void on the ground that the
specific method of regulation prescribed is unreasonable and hence deprives
the plaintiff of due process of law. As underlying questions of fact may condition
the constitutionality of legislation of this character, the presumption of
constitutionality must prevail in the absence of some factual foundation of record
in overthrowing the statute. 29

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

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

6. Nor did the other extravagant assertions of constitutional deficiency go


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

7 It does appear clearly that petitioner's objection to this Letter of Instruction is


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

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


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

9. The conclusion reached by this Court that this petition must be dismissed is
reinforced by this consideration. The petition itself quoted these two whereas
clauses of the assailed Letter of Instruction: "[Whereas], the hazards posed by
such obstructions to traffic have been recognized by international bodies
concerned with traffic safety, the 1968 Vienna Convention on Road Signs and
Signals and the United Nations Organization (U.N.); [Whereas], the said Vionna
Convention, which was ratified by the Philippine Government under P.D. No.
207, recommended the enactment of local legislation for the installation of road
safety signs and devices; * * * " 35 It cannot be disputed then that this
Declaration of Principle found in the Constitution possesses relevance: "The
Philippines * * * adopts the generally accepted principles of international law as
part of the law of the land * * *." 36 The 1968 Vienna Convention on Road Signs
and Signals is impressed with such a character. It is not for this country to
repudiate a commitment to which it had pledged its word. The concept of Pacta
sunt servanda stands in the way of such an attitude, which is, moreover, at war
with the principle of international morality.

10. That is about all that needs be said. The rather court reference to equal
protection did not even elicit any attempt on the Part of Petitioner to substantiate
in a manner clear, positive, and categorical why such a casual observation
should be taken seriously. In no case is there a more appropriate occasion for
insistence on what was referred to as "the general rule" in Santiago v. Far
Eastern Broadcasting Co., 37 namely, "that the constitutionality of a law wig not
be considered unless the point is specially pleaded, insisted upon, and
adequately argued." 38 "Equal protection" is not a talismanic formula at the mere
invocation of which a party to a lawsuit can rightfully expect that success will
crown his efforts. The law is anything but that.

WHEREFORE, this petition is dismissed. The restraining order is lifted. This


decision is immediately executory. No costs.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 161107 March 12, 2013

HON. MA. LOURDES C. FERNANDO, in her capacity as City Mayor of


Marikina City, JOSEPHINE C. EVANGELIST A, in her capacity as Chief,
Permit Division, Office of the City Engineer, and ALFONSO ESPIRITU, in
his capacity as City Engineer of Marikina City, Petitioners, 

vs.

ST. SCHOLASTICA'S COLLEGE and ST. SCHOLASTICA'S ACADEMY-
MARIKINA, INC., Respondents.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, which seeks to set aside the December 1, 2003 Decision1 of the Court
of Appeals (CA) in CA-G.R. SP No. 75691.

The Facts

Respondents St. Scholastica’s College (SSC) and St. Scholastica’s Academy-


Marikina, Inc. (SSA-Marikina) are educational institutions organized under the
laws of the Republic of the Philippines, with principal offices and business
addresses at Leon Guinto Street, Malate, Manila, and at West Drive, Marikina
Heights, Marikina City, respectively.2

Respondent SSC is the owner of four (4) parcels of land measuring a total of
56,306.80 square meters, located in Marikina Heights and covered by Transfer
Certificate Title (TCT) No. 91537. Located within the property are SSA-Marikina,
the residence of the sisters of the Benedictine Order, the formation house of the
novices, and the retirement house for the elderly sisters. The property is
enclosed by a tall concrete perimeter fence built some thirty (30) years ago.
Abutting the fence along the West Drive are buildings, facilities, and other
improvements.3

The petitioners are the officials of the City Government of Marikina. On


September 30, 1994, the Sangguniang Panlungsod of Marikina City enacted
Ordinance No. 192,4 entitled "Regulating the Construction of Fences and Walls
in the Municipality of Marikina." In 1995 and 1998, Ordinance Nos. 2175 and
2006 were enacted to amend Sections 7 and 5, respectively. Ordinance No. 192,
as amended, is reproduced hereunder, as follows:

ORDINANCE No. 192



Series of 1994

ORDINANCE REGULATING THE CONSTRUCTION OF FENCES AND WALLS


IN THE MUNICIPALITY OF MARIKINA

WHEREAS, under Section 447.2 of Republic Act No. 7160 otherwise known as
the Local Government Code of 1991 empowers the Sangguniang Bayan as the
local legislative body of the municipality to "x x x Prescribe reasonable limits and
restraints on the use of property within the jurisdiction of the municipality, x x x";

WHEREAS the effort of the municipality to accelerate its economic and physical
development, coupled with urbanization and modernization, makes imperative
the adoption of an ordinance which shall embody up-to-date and modern
technical design in the construction of fences of residential, commercial and
industrial buildings;

WHEREAS, Presidential Decree No. 1096, otherwise known as the National


Building Code of the Philippines, does not adequately provide technical
guidelines for the construction of fences, in terms of design, construction, and
criteria;

WHEREAS, the adoption of such technical standards shall provide more


efficient and effective enforcement of laws on public safety and security;

WHEREAS, it has occurred in not just a few occasions that high fences or walls
did not actually discourage but, in fact, even protected burglars, robbers, and
other lawless elements from the view of outsiders once they have gained
ingress into these walls, hence, fences not necessarily providing security, but
becomes itself a "security problem";

WHEREAS, to discourage, suppress or prevent the concealment of prohibited or


unlawful acts earlier enumerated, and as guardian of the people of Marikina, the
municipal government seeks to enact and implement rules and ordinances to
protect and promote the health, safety and morals of its constituents;

WHEREAS, consistent too, with the "Clean and Green Program" of the
government, lowering of fences and walls shall encourage people to plant more
trees and ornamental plants in their yards, and when visible, such trees and
ornamental plants are expected to create an aura of a clean, green and beautiful
environment for Marikeños;

WHEREAS, high fences are unsightly that, in the past, people planted on
sidewalks to "beautify" the façade of their residences but, however, become
hazards and obstructions to pedestrians;

WHEREAS, high and solid walls as fences are considered "un-neighborly"


preventing community members to easily communicate and socialize and
deemed to create "boxed-in" mentality among the populace;

WHEREAS, to gather as wide-range of opinions and comments on this


proposal, and as a requirement of the Local Government Code of 1991 (R.A.
7160), the Sangguniang Bayan of Marikina invited presidents or officers of
homeowners associations, and commercial and industrial establishments in
Marikina to two public hearings held on July 28, 1994 and August 25, 1994;

WHEREAS, the rationale and mechanics of the proposed ordinance were fully
presented to the attendees and no vehement objection was presented to the
municipal government;

NOW, THEREFORE, BE IT ORDAINED BY THE SANGGUINANG BAYAN OF


MARIKINA IN SESSION DULY ASSEMBLED:

Section 1. Coverage: This Ordinance regulates the construction of all fences,


walls and gates on lots classified or used for residential, commercial, industrial,
or special purposes.

Section 2. Definition of Terms:

a. Front Yard – refers to the area of the lot fronting a street, alley or public
thoroughfare.

b. Back Yard – the part of the lot at the rear of the structure constructed therein.

c. Open fence – type of fence which allows a view of "thru-see" of the inner yard
and the improvements therein. (Examples: wrought iron, wooden lattice, cyclone
wire)

d. Front gate – refers to the gate which serves as a passage of persons or


vehicles fronting a street, alley, or public thoroughfare.
Section 3. The standard height of fences or walls allowed under this ordinance
are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height.
Fences in excess of one (1) meter shall be of an open fence type, at least eighty
percent (80%) see-thru; and

(2) Fences on the side and back yard – shall be in accordance with the
provisions of P.D. 1096 otherwise known as the National Building Code.

Section 4. No fence of any kind shall be allowed in areas specifically reserved or


classified as parks.

Section 5. In no case shall walls and fences be built within the five (5) meter
parking area allowance located between the front monument line and the
building line of commercial and industrial establishments and educational and
religious institutions.7

Section 6. Exemption.

(1) The Ordinance does not cover perimeter walls of residential subdivisions.

(2) When public safety or public welfare requires, the Sangguniang Bayan may
allow the construction and/or maintenance of walls higher than as prescribed
herein and shall issue a special permit or exemption.

Section 7. Transitory Provision. Real property owners whose existing fences and
walls do not conform to the specifications herein are allowed adequate period of
time from the passage of this Ordinance within which to conform, as follows:

(1) Residential houses – eight (8) years

(2) Commercial establishments – five (5) years

(3) Industrial establishments – three (3) years

(4) Educational institutions – five (5) years8 (public and privately owned)

Section 8. Penalty. Walls found not conforming to the provisions of this


Ordinance shall be demolished by the municipal government at the expense of
the owner of the lot or structure.

Section 9. The Municipal Engineering Office is tasked to strictly implement this


ordinance, including the issuance of the necessary implementing guidelines,
issuance of building and fencing permits, and demolition of non-conforming
walls at the lapse of the grace period herein provided.

Section 10. Repealing Clause. All existing Ordinances and Resolutions, Rules
and Regulations inconsistent with the foregoing provisions are hereby repealed,
amended or modified.

Section 11. Separability Clause. If for any reason or reasons, local executive
orders, rules and regulations or parts thereof in conflict with this Ordinance are
hereby repealed and/or modified accordingly.

Section 12. Effectivity. This ordinance takes effect after publication.

APPROVED: September 30, 1994

(Emphases supplied)

On April 2, 2000, the City Government of Marikina sent a letter to the


respondents ordering them to demolish and replace the fence of their Marikina
property to make it 80% see-thru, and, at the same time, to move it back about
six (6) meters to provide parking space for vehicles to park.9 On April 26, 2000,
the respondents requested for an extension of time to comply with the directive.
10 In response, the petitioners, through then City Mayor Bayani F. Fernando,

insisted on the enforcement of the subject ordinance.

Not in conformity, the respondents filed a petition for prohibition with an


application for a writ of preliminary injunction and temporary restraining order
before the Regional Trial Court, Marikina, Branch 273 (RTC), docketed as SCA
Case No. 2000-381-MK.11

The respondents argued that the petitioners were acting in excess of jurisdiction
in enforcing Ordinance No. 192, asserting that such contravenes Section 1,
Article III of the 1987 Constitution. That demolishing their fence and constructing
it six (6) meters back would result in the loss of at least 1,808.34 square meters,
worth about ₱9,041,700.00, along West Drive, and at least 1,954.02 square
meters, worth roughly ₱9,770,100.00, along East Drive. It would also result in
the destruction of the garbage house, covered walk, electric house, storage
house, comfort rooms, guards’ room, guards’ post, waiting area for visitors,
waiting area for students, Blessed Virgin Shrine, P.E. area, and the multi-
purpose hall, resulting in the permanent loss of their beneficial use. The
respondents, thus, asserted that the implementation of the ordinance on their
property would be tantamount to an appropriation of property without due
process of law; and that the petitioners could only appropriate a portion of their
property through eminent domain. They also pointed out that the goal of the
provisions to deter lawless elements and criminality did not exist as the solid
concrete walls of the school had served as sufficient protection for many years.
12

The petitioners, on the other hand, countered that the ordinance was a valid
exercise of police power, by virtue of which, they could restrain property rights
for the protection of public safety, health, morals, or the promotion of public
convenience and general prosperity.13

On June 30, 2000, the RTC issued a writ of preliminary injunction, enjoining the
petitioners from implementing the demolition of the fence at SSC’s Marikina
property.14

Ruling of the RTC

On the merits, the RTC rendered a Decision,15 dated October 2, 2002, granting
the petition and ordering the issuance of a writ of prohibition commanding the
petitioners to permanently desist from enforcing or implementing Ordinance No.
192 on the respondents’ property.

The RTC agreed with the respondents that the order of the petitioners to
demolish the fence at the SSC property in Marikina and to move it back six (6)
meters would amount to an appropriation of property which could only be done
through the exercise of eminent domain. It held that the petitioners could not
take the respondents’ property under the guise of police power to evade the
payment of just compensation.

It did not give weight to the petitioners’ contention that the parking space was for
the benefit of the students and patrons of SSA-Marikina, considering that the
respondents were already providing for sufficient parking in compliance with the
standards under Rule XIX of the National Building Code.

It further found that the 80% see-thru fence requirement could run counter to the
respondents’ right to privacy, considering that the property also served as a
residence of the Benedictine sisters, who were entitled to some sense of privacy
in their affairs. It also found that the respondents were able to prove that the
danger to security had no basis in their case. Moreover, it held that the purpose
of beautification could not be used to justify the exercise of police power.

It also observed that Section 7 of Ordinance No. 192, as amended, provided for
retroactive application. It held, however, that such retroactive effect should not
impair the respondents’ vested substantive rights over the perimeter walls, the
six-meter strips of land along the walls, and the building, structures, facilities,
and improvements, which would be destroyed by the demolition of the walls and
the seizure of the strips of land.

The RTC also found untenable the petitioners’ argument that Ordinance No. 192
was a remedial or curative statute intended to correct the defects of buildings
and structures, which were brought about by the absence or insufficiency of
laws. It ruled that the assailed ordinance was neither remedial nor curative in
nature, considering that at the time the respondents’ perimeter wall was built,
the same was valid and legal, and the ordinance did not refer to any previous
legislation that it sought to correct.

The RTC noted that the petitioners could still take action to expropriate the
subject property through eminent domain.

The RTC, thus, disposed:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby


issued commanding the respondents to permanently desist from enforcing or
implementing Ordinance No. 192, Series of 1994, as amended, on petitioners’
property in question located at Marikina Heights, Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.16

Ruling of the CA

In its December 1, 2003 Decision, the CA dismissed the petitioners’ appeal and
affirmed the RTC decision.

The CA reasoned out that the objectives stated in Ordinance No. 192 did not
justify the exercise of police power, as it did not only seek to regulate, but also
involved the taking of the respondents’ property without due process of law. The
respondents were bound to lose an unquantifiable sense of security, the
beneficial use of their structures, and a total of 3,762.36 square meters of
property. It, thus, ruled that the assailed ordinance could not be upheld as valid
as it clearly invaded the personal and property rights of the respondents and
"[f]or being unreasonable, and undue restraint of trade."17

It noted that although the petitioners complied with procedural due process in
enacting Ordinance No. 192, they failed to comply with substantive due process.
Hence, the failure of the respondents to attend the public hearings in order to
raise objections did not amount to a waiver of their right to question the validity
of the ordinance.

The CA also shot down the argument that the five-meter setback provision for
parking was a legal easement, the use and ownership of which would remain
with, and inure to, the benefit of the respondents for whom the easement was
primarily intended. It found that the real intent of the setback provision was to
make the parking space free for use by the public, considering that such would
cease to be for the exclusive use of the school and its students as it would be
situated outside school premises and beyond the school administration’s control.

In affirming the RTC ruling that the ordinance was not a curative statute, the CA
found that the petitioner failed to point out any irregularity or invalidity in the
provisions of the National Building Code that required correction or cure. It noted
that any correction in the Code should be properly undertaken by the Congress
and not by the City Council of Marikina through an ordinance.

The CA, thus, disposed:

WHEREFORE, all foregoing premises considered, the instant appeal is


DENIED.1âwphi1 The October 2, 2002 Decision and the January 13, 2003
Order of the Regional Trial Court (RTC) of Marikina City, Branch 273, granting
petitioners-appellees’ petition for Prohibition in SCA Case No. 2000-381-MK are
hereby AFFIRMED.

SO ORDERED.18

Aggrieved by the decision of the CA, the petitioners are now before this Court
presenting the following

ASSIGNMENT OF ERRORS

1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN


DECLARING THAT CITY ORDINANCE NO. 192, SERIES OF 1994 IS NOT A
VALID EXERCISE OF POLICE POWER;

2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN


RULING THAT THE AFOREMENTIONED ORDINANCE IS AN EXERCISE OF
THE CITY OF THE POWER OF EMINENT DOMAIN;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN


DECLARING THAT THE CITY VIOLATED THE DUE PROCESS CLAUSE IN
IMPLEMENTING ORDINANCE NO. 192, SERIES OF 1994; AND
4. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE ABOVE-MENTIONED ORDINANCE CANNOT BE GIVEN
RETROACTIVE APPLICATION.19

In this case, the petitioners admit that Section 5 of the assailed ordinance,
pertaining to the five-meter setback requirement is, as held by the lower courts,
invalid.20 Nonetheless, the petitioners argue that such invalidity was
subsequently cured by Zoning Ordinance No. 303, series of 2000. They also
contend that Section 3, relating to the 80% see-thru fence requirement, must be
complied with, as it remains to be valid.

Ruling of the Court

The ultimate question before the Court is whether Sections 3.1 and 5 of
Ordinance No. 192 are valid exercises of police power by the City Government
of Marikina.

"Police power is the plenary power vested in the legislature to make statutes
and ordinances to promote the health, morals, peace, education, good order or
safety and general welfare of the people."21 The State, through the legislature,
has delegated the exercise of police power to local government units, as
agencies of the State. This delegation of police power is embodied in Section
1622 of the Local Government Code of 1991 (R.A. No. 7160), known as the
General Welfare Clause,23 which has two branches. "The first, known as the
general legislative power, authorizes the municipal council to enact ordinances
and make regulations not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon the municipal council
by law. The second, known as the police power proper, authorizes the
municipality to enact ordinances as may be necessary and proper for the health
and safety, prosperity, morals, peace, good order, comfort, and convenience of
the municipality and its inhabitants, and for the protection of their property."24

White Light Corporation v. City of Manila,25 discusses the test of a valid


ordinance:

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.
26

Ordinance No. 192 was passed by the City Council of Marikina in the apparent
exercise of its police power. To successfully invoke the exercise of police power
as the rationale for the enactment of an ordinance and to free it from the
imputation of constitutional infirmity, two tests have been used by the Court – the
rational relationship test and the strict scrutiny test:

We ourselves have often applied the rational basis test mainly in analysis of
equal protection challenges. Using the rational basis examination, laws or
ordinances are upheld if they rationally further a legitimate governmental
interest. Under intermediate review, governmental interest is extensively
examined and the availability of less restrictive measures is considered.
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.27

Even without going to a discussion of the strict scrutiny test, Ordinance No. 192,
series of 1994 must be struck down for not being reasonably necessary to
accomplish the City’s purpose. More importantly, it is oppressive of private
rights.

Under the rational relationship test, an ordinance must pass the following
requisites as discussed in Social Justice Society (SJS) v. Atienza, Jr.:28

As with the State, local governments may be considered as having properly


exercised their police power only if the following requisites are met: (1) the
interests of the public generally, as distinguished from those of a particular class,
require its exercise and (2) the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppressive upon individuals.
In short, there must be a concurrence of a lawful subject and lawful method.29

Lacking a concurrence of these two requisites, the police power measure shall
be struck down as an arbitrary intrusion into private rights and a violation of the
due process clause.30

Section 3.1 and 5 of the assailed ordinance are pertinent to the issue at hand, to
wit:

Section 3. The standard height of fences of walls allowed under this ordinance
are as follows:
(1) Fences on the front yard – shall be no more than one (1) meter in height.
Fences in excess of one (1) meter shall be an open fence type, at least eighty
percent (80%) see-thru;

xxx xxx xxx

Section 5. In no case shall walls and fences be built within the five (5) meter
parking area allowance located between the front monument line and the
building line of commercial and industrial establishments and educational and
religious institutions.

The respondents, thus, sought to prohibit the petitioners from requiring them to
(1) demolish their existing concrete wall, (2) build a fence (in excess of one
meter) which must be 80% see-thru, and (3) build the said fence six meters
back in order to provide a parking area.

Setback Requirement

The Court first turns its attention to Section 5 which requires the five-meter
setback of the fence to provide for a parking area. The petitioners initially argued
that the ownership of the parking area to be created would remain with the
respondents as it would primarily be for the use of its students and faculty, and
that its use by the public on non-school days would only be incidental. In their
Reply, however, the petitioners admitted that Section 5 was, in fact, invalid for
being repugnant to the Constitution.31

The Court agrees with the latter position.

The Court joins the CA in finding that the real intent of the setback requirement
was to make the parking space free for use by the public, considering that it
would no longer be for the exclusive use of the respondents as it would also be
available for use by the general public. Section 9 of Article III of the 1987
Constitution, a provision on eminent domain, provides that private property shall
not be taken for public use without just compensation.

The petitioners cannot justify the setback by arguing that the ownership of the
property will continue to remain with the respondents. It is a settled rule that
neither the acquisition of title nor the total destruction of value is essential to
taking. In fact, it is usually in cases where the 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.32 The Court is
of the view that the implementation of the setback requirement would be
tantamount to a taking of a total of 3,762.36 square meters of the respondents’
private property for public use without just compensation, in contravention to the
Constitution.

Anent the objectives of prevention of concealment of unlawful acts and "un-


neighborliness," it is obvious that providing for a parking area has no logical
connection to, and is not reasonably necessary for, the accomplishment of these
goals.

Regarding the beautification purpose of the setback requirement, it has long


been settled that the State may not, under the guise of police power,
permanently divest owners of the beneficial use of their property solely to
preserve or enhance the aesthetic appearance of the community.33 The Court,
thus, finds Section 5 to be unreasonable and oppressive as it will substantially
divest the respondents of the beneficial use of their property solely for aesthetic
purposes. Accordingly, Section 5 of Ordinance No. 192 is invalid.

The petitioners, however, argue that the invalidity of Section 5 was properly
cured by Zoning Ordinance No. 303,34 Series of 2000, which classified the
respondents’ property to be within an institutional zone, under which a five-meter
setback has been required.

The petitioners are mistaken. Ordinance No. 303, Series of 2000, has no
bearing to the case at hand.

The Court notes with displeasure that this argument was only raised for the first
time on appeal in this Court in the petitioners’ Reply. Considering that Ordinance
No. 303 was enacted on December 20, 2000, the petitioners could very well
have raised it in their defense before the RTC in 2002. The settled rule in this
jurisdiction is that a party cannot change the legal theory of this case under
which the controversy was heard and decided in the trial court. It should be the
same theory under which the review on appeal is conducted. Points of law,
theories, issues, and arguments not adequately brought to the attention of the
lower court will not be ordinarily considered by a reviewing court, inasmuch as
they cannot be raised for the first time on appeal. This will be offensive to the
basic rules of fair play, justice, and due process.35

Furthermore, the two ordinances have completely different purposes and


subjects. Ordinance No. 192 aims to regulate the construction of fences, while
Ordinance No. 303 is a zoning ordinance which classifies the city into specific
land uses. In fact, the five-meter setback required by Ordinance No. 303 does
not even appear to be for the purpose of providing a parking area.
By no stretch of the imagination, therefore, can Ordinance No. 303, "cure"
Section 5 of Ordinance No. 192.

In any case, the clear subject of the petition for prohibition filed by the
respondents is Ordinance No. 192 and, as such, the precise issue to be
determined is whether the petitioners can be prohibited from enforcing the said
ordinance, and no other, against the respondents.

80% See-Thru Fence Requirement

The petitioners argue that while Section 5 of Ordinance No. 192 may be invalid,
Section 3.1 limiting the height of fences to one meter and requiring fences in
excess of one meter to be at least 80% see-thru, should remain valid and
enforceable against the respondents.

The Court cannot accommodate the petitioner.

For Section 3.1 to pass the rational relationship test, the petitioners must show
the reasonable relation between the purpose of the police power 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.36

The principal purpose of Section 3.1 is "to discourage, suppress or prevent the
concealment of prohibited or unlawful acts." The ultimate goal of this objective is
clearly the prevention of crime to ensure public safety and security. The means
employed by the petitioners, however, is not reasonably necessary for the
accomplishment of this purpose and is unduly oppressive to private rights. The
petitioners have not adequately shown, and it does not appear obvious to this
Court, that an 80% see-thru fence would provide better protection and a higher
level of security, or serve as a more satisfactory criminal deterrent, than a tall
solid concrete wall. It may even be argued that such exposed premises could
entice and tempt would-be criminals to the property, and that a see-thru fence
would be easier to bypass and breach. It also appears that the respondents’
concrete wall has served as more than sufficient protection over the last 40
years. `

As to the beautification purpose of the assailed ordinance, as previously


discussed, the State may not, under the guise of police power, infringe on
private rights solely for the sake of the aesthetic appearance of the community.
Similarly, the Court cannot perceive how a see-thru fence will foster
"neighborliness" between members of a community.
Compelling the respondents to construct their fence in accordance with the
assailed ordinance is, thus, a clear encroachment on their right to property,
which necessarily includes their right to decide how best to protect their
property.

It also appears that requiring the exposure of their property via a see-thru fence
is violative of their right to privacy, considering that the residence of the
Benedictine nuns is also located within the property. The right to privacy has
long been considered a fundamental right guaranteed by the Constitution that
must be protected from intrusion or constraint. The right to privacy is essentially
the right to be let alone,37 as governmental powers should stop short of certain
intrusions into the personal life of its citizens.38 It is inherent in the concept of
liberty, enshrined in the Bill of Rights (Article III) in Sections 1, 2, 3(1), 6, 8, and
17, Article III of the 1987 Constitution.39

The enforcement of Section 3.1 would, therefore, result in an undue interference


with the respondents’ rights to property and privacy. Section 3.1 of Ordinance
No. 192 is, thus, also invalid and cannot be enforced against the respondents.

No Retroactivity

Ordinance No. 217 amended Section 7 of Ordinance No. 192 by including the
regulation of educational institutions which was unintentionally omitted, and
giving said educational institutions five (5) years from the passage of Ordinance
No. 192 (and not Ordinance No. 217) to conform to its provisions.40 The
petitioners argued that the amendment could be retroactively applied because
the assailed ordinance is a curative statute which is retroactive in nature.

Considering that Sections 3.1 and 5 of Ordinance No. 192 cannot be enforced
against the respondents, it is no longer necessary to rule on the issue of
retroactivity. The Court shall, nevertheless, pass upon the issue for the sake of
clarity.

"Curative statutes are enacted to cure defects in a prior law or to validate legal
proceedings which would otherwise be void for want of conformity with certain
legal requirements. They are intended to supply defects, abridge superfluities
and curb certain evils. They are intended to enable persons to carry into effect
that which they have designed or intended, but has failed of expected legal
consequence by reason of some statutory disability or irregularity in their own
action. They make valid that which, before the enactment of the statute was
invalid. Their purpose is to give validity to acts done that would have been
invalid under existing laws, as if existing laws have been complied with. Curative
statutes, therefore, by their very essence, are retroactive."41
The petitioners argue that Ordinance No. 192 is a curative statute as it aims to
correct or cure a defect in the National Building Code, namely, its failure to
provide for adequate guidelines for the construction of fences. They ultimately
seek to remedy an insufficiency in the law. In aiming to cure this insufficiency,
the petitioners attempt to add lacking provisions to the National Building Code.
This is not what is contemplated by curative statutes, which intend to correct
irregularities or invalidity in the law. The petitioners fail to point out any irregular
or invalid provision. As such, the assailed ordinance cannot qualify as curative
and retroactive in nature.

At any rate, there appears to be no insufficiency in the National Building Code


with respect to parking provisions in relation to the issue of the respondents.
Paragraph 1.16.1, Rule XIX of the Rules and Regulations of the said code
requires an educational institution to provide one parking slot for every ten
classrooms. As found by the lower courts, the respondents provide a total of 76
parking slots for their 80 classrooms and, thus, had more than sufficiently
complied with the law.

Ordinance No. 192, as amended, is, therefore, not a curative statute which may
be applied retroactively.

Separability

Sections 3.1 and 5 of Ordinance No. 192, as amended, are, thus, invalid and
cannot be enforced against the respondents. Nonetheless, "the general rule is
that where part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if susceptible to being separated from the
invalid, may stand and be enforced."42 Thus, the other sections of the assailed
ordinance remain valid and enforceable.

Conclusion

Considering the invalidity of Sections 3.1 and 5, it is clear that the petitioners
were acting in excess of their jurisdiction in enforcing Ordinance No. 192 against
the respondents. The CA was correct in affirming the decision of the RTC in
issuing the writ of prohibition. The petitioners must permanently desist from
enforcing Sections 3.1 and 5 of the assailed ordinance on the respondents'
property in Marikina City.

WHEREFORE, the petition is DENIED. The October 2, 2002 Decision of the


Regional Trial Court in SCA Case No. 2000-381-MK is AFFIRMED but
MODIFIED to read as follows:
WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby
issued commanding the respondents to permanently desist from enforcing or
implementing Sections 3.1 and 5 of Ordinance No. 192, Series of 1994, as
amended, on the petitioners' property in question located in Marikina Heights,
Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.
" 

EN BANC

G.R. No. 118127 April 12, 2005

CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of


Manila, HON. JOSELITO L. ATIENZA, in his capacity as Vice-Mayor of the
City of Manila and Presiding Officer of the City Council of Manila, HON.
ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S.
CAILIAN, HON. ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON.
HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR., HON.
ROMUALDO S. MARANAN, HON. NESTOR C. PONCE, JR., HON.
HUMBERTO B. BASCO, HON. FLAVIANO F. CONCEPCION, JR., HON.
ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE
JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON.
JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON. VICTORIANO A. MELENDEZ,
HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. NIETO, HON.
DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E.
HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON.
KARLO Q. BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO D.
RAGAZA, HON. MA. CORAZON R. CABALLES, HON. CASIMIRO C. SISON,
HON. BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M. ISIP, HON.
ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON. LEONARDO
L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of
the City of Manila, Petitioner, 

vs.

HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and
MALATE TOURIST DEVELOPMENT CORPORATION, Respondents.

DECISION

TINGA, J.:

I know only that what is moral is what you feel good after and what is immoral is
what you feel bad after.
Ernest Hermingway

Death in the Afternoon, Ch. 1

It is a moral and political axiom that any dishonorable act, if performed by


oneself, is less immoral than if performed by someone else, who would be well-
intentioned in his dishonesty.

J. Christopher Gerald

Bonaparte in Egypt, Ch. I

The Court's commitment to the protection of morals is secondary to its fealty to


the fundamental law of the land. It is foremost a guardian of the Constitution but
not the conscience of individuals. And if it need be, the Court will not hesitate to
"make the hammer fall, and heavily" in the words of Justice Laurel, and uphold
the constitutional guarantees when faced with laws that, though not lacking in
zeal to promote morality, nevertheless fail to pass the test of constitutionality.

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised
Rules on Civil Procedure seeking the reversal of the Decision2 in Civil Case No.
93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court),
3 is the validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.4

The antecedents are as follows:

Private respondent Malate Tourist Development Corporation (MTDC) is a


corporation engaged in the business of operating hotels, motels, hostels and
lodging houses.5 It built and opened Victoria Court in Malate which was licensed
as a motel although duly accredited with the Department of Tourism as a hotel.
6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a

Writ of Preliminary Injunction and/or Temporary Restraining Order7 (RTC


Petition) with the lower court impleading as defendants, herein petitioners City of
Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of
the City Council of Manila (City Council). MTDC prayed that the Ordinance,
insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional.8

Enacted by the City Council9 on 9 March 1993 and approved by petitioner City
Mayor on 30 March 1993, the said Ordinance is entitled–

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF


BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES.10

The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the contrary


notwithstanding, no person, partnership, corporation or entity shall, in the
Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft
Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the
West, pursuant to P.D. 499 be allowed or authorized to contract and engage
in, any business providing certain forms of amusement, entertainment,
services and facilities where women are used as tools in entertainment
and which tend to disturb the community, annoy the inhabitants, and
adversely affect the social and moral welfare of the community, such as but
not limited to:

1. Sauna Parlors

2. Massage Parlors

3. Karaoke Bars

4. Beerhouses

5. Night Clubs

6. Day Clubs

7. Super Clubs

8. Discotheques

9. Cabarets

10. Dance Halls

11. Motels

12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of
the said officials are prohibited from issuing permits, temporary or
otherwise, or from granting licenses and accepting payments for the
operation of business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or devoted
to, the businesses enumerated in Section 1 hereof are hereby given three (3)
months from the date of approval of this ordinance within which to wind
up business operations or to transfer to any place outside of the Ermita-
Malate area or convert said businesses to other kinds of business
allowable within the area,such as but not limited to:

1. Curio or antique shop

2. Souvenir Shops

3. Handicrafts display centers

4. Art galleries

5. Records and music shops

6. Restaurants

7. Coffee shops

8. Flower shops

9. Music lounge and sing-along restaurants, with well-defined activities for


wholesome family entertainment that cater to both local and foreign clientele.

10. Theaters engaged in the exhibition, not only of motion pictures but also of
cultural shows, stage and theatrical plays, art exhibitions, concerts and the like.

11. Businesses allowable within the law and medium intensity districts as
provided for in the zoning ordinances for Metropolitan Manila, except new
warehouse or open-storage depot, dock or yard, motor repair shop, gasoline
service station, light industry with any machinery, or funeral establishments.

SEC. 4. Any person violating any provisions of this ordinance, shall upon
conviction, be punished by imprisonment of one (1) year or fine of FIVE
THOUSAND (P5,000.00) PESOS, or both, at the discretion of the Court,
PROVIDED, that in case of juridical person, the President, the General
Manager, or person-in-charge of operation shall be liable thereof; PROVIDED
FURTHER, that in case of subsequent violation and conviction, the
premises of the erring establishment shall be closed and padlocked
permanently.

SEC. 5. This ordinance shall take effect upon approval.


Enacted by the City Council of Manila at its regular session today, March 9,
1993.

Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously and
improperly included in its enumeration of prohibited establishments, motels and
inns such as MTDC's Victoria Court considering that these were not
establishments for "amusement" or "entertainment" and they were not "services
or facilities for entertainment," nor did they use women as "tools for
entertainment," and neither did they "disturb the community," "annoy the
inhabitants" or "adversely affect the social and moral welfare of the
community."11

MTDC further advanced that the Ordinance was invalid and unconstitutional for
the following reasons: (1) The City Council has no power to prohibit the
operation of motels as Section 458 (a) 4 (iv)12 of the Local Government Code of
1991 (the Code) grants to the City Council only the power to regulate the
establishment, operation and maintenance of hotels, motels, inns, pension
houses, lodging houses and other similar establishments; (2) The Ordinance is
void as it is violative of Presidential Decree (P.D.) No. 49913 which specifically
declared portions of the Ermita-Malate area as a commercial zone with certain
restrictions; (3) The Ordinance does not constitute a proper exercise of police
power as the compulsory closure of the motel business has no reasonable
relation to the legitimate municipal interests sought to be protected; (4)
The Ordinance constitutes an ex post facto law by punishing the operation of
Victoria Court which was a legitimate business prior to its enactment; (5)
The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory
and constitutes an invasion of plaintiff's property rights; (b) the City Council has
no power to find as a fact that a particular thing is a nuisance per se nor does it
have the power to extrajudicially destroy it; and (6) The Ordinance constitutes a
denial of equal protection under the law as no reasonable basis exists for
prohibiting the operation of motels and inns, but not pension houses, hotels,
lodging houses or other similar establishments, and for prohibiting said business
in the Ermita-Malate area but not outside of this area.14

In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim
maintained that the City Council had the power to "prohibit certain forms of
entertainment in order to protect the social and moral welfare of the community"
as provided for in Section 458 (a) 4 (vii) of the Local Government Code,16 which
reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of
the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of
this Code, and shall:

....

(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:

....

(vii) Regulate the establishment, operation, and maintenance of any


entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna baths,
massage parlors, and other places for entertainment or amusement; regulate
such other events or activities for amusement or entertainment, particularly
those which tend to disturb the community or annoy the inhabitants, or require
the suspension or suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and moral welfare of
the community.

Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of
regulation spoken of in the above-quoted provision included the power to
control, to govern and to restrain places of exhibition and amusement.18

Petitioners likewise asserted that the Ordinance was enacted by the City
Council of Manila to protect the social and moral welfare of the community in
conjunction with its police power as found in Article III, Section 18(kk) of
Republic Act No. 409,19 otherwise known as the Revised Charter of the City of
Manila (Revised Charter of Manila)20 which reads, thus:

ARTICLE III

THE MUNICIPAL BOARD

. . .

Section 18. Legislative powers. – The Municipal Board shall have the following
legislative powers:
. . .

(kk) To enact all ordinances it may deem necessary and proper for the sanitation
and safety, the furtherance of the prosperity, and the promotion of the morality,
peace, good order, comfort, convenience, and general welfare of the city and its
inhabitants, and such others as may be 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.

Further, the petitioners noted, the Ordinance had the presumption of validity;
hence, private respondent had the burden to prove its illegality or
unconstitutionality.21

Petitioners also maintained that there was no inconsistency between P.D. 499
and the Ordinance as the latter simply disauthorized certain forms of businesses
and allowed the Ermita-Malate area to remain a commercial zone.
22 The Ordinance, the petitioners likewise claimed, cannot be assailed as ex post

facto as it was prospective in operation.23 The Ordinance also did not infringe
the equal protection clause and cannot be denounced as class legislation as
there existed substantial and real differences between the Ermita-Malate area
and other places in the City of Manila.24

On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio)
issued an ex-parte temporary restraining order against the enforcement of
the Ordinance.25 And on 16 July 1993, again in an intrepid gesture, he granted
the writ of preliminary injunction prayed for by MTDC.26

After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision,
enjoining the petitioners from implementing the Ordinance. The dispositive
portion of said Decision reads:27

WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3],


Series of 1993, of the City of Manila null and void, and making permanent the
writ of preliminary injunction that had been issued by this Court against the
defendant. No costs.

SO ORDERED.28

Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994,
manifesting that they are elevating the case to this Court under then Rule 42 on
pure questions of law.30
On 11 January 1995, petitioners filed the present Petition, alleging that the
following errors were committed by the lower court in its ruling: (1) It erred in
concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power; (2) It erred in holding
that the questioned Ordinancecontravenes P.D. 49931 which allows operators of
all kinds of commercial establishments, except those specified therein; and (3) It
erred in declaring the Ordinance void and unconstitutional.32

In the Petition and in its Memorandum,33 petitioners in essence repeat the


assertions they made before the lower court. They contend that the
assailed Ordinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of
Manila and conjunctively, Section 458 (a) 4 (vii) of the Code.34 They allege that
the Ordinance is a valid exercise of police power; it does not contravene P.D.
499; and that it enjoys the presumption of validity.35

In its Memorandum36 dated 27 May 1996, private respondent maintains that


the Ordinance is ultra vires and that it is void for being repugnant to the general
law. It reiterates that the questioned Ordinance is not a valid exercise of police
power; that it is violative of due process, confiscatory and amounts to an
arbitrary interference with its lawful business; that it is violative of the equal
protection clause; and that it confers on petitioner City Mayor or any officer
unregulated discretion in the execution of the Ordinance absent rules to guide
and control his actions.

This is an opportune time to express the Court's deep sentiment and tenderness
for the Ermita-Malate area being its home for several decades. A long-time
resident, the Court witnessed the area's many turn of events. It relished its glory
days and endured its days of infamy. Much as the Court harks back to the
resplendent era of the Old Manila and yearns to restore its lost grandeur, it
believes that the Ordinance is not the fitting means to that end. The Court is of
the opinion, and so holds, that the lower court did not err in declaring
the Ordinance, as it did, ultra vires and therefore null and void.

The Ordinance is so replete with constitutional infirmities that almost every


sentence thereof violates a constitutional provision. The prohibitions and
sanctions therein transgress the cardinal rights of persons enshrined by the
Constitution. The Court is called upon to shelter these rights from attempts at
rendering them worthless.

The tests of a valid ordinance are well established. A long line of decisions has
held that for an ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and must be passed according to
the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any
statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
and consistent with public policy; and (6) must not be unreasonable.37

Anent the first criterion, ordinances shall only be valid when they are not
contrary to the Constitution and to the laws.38 The Ordinance must satisfy two
requirements: it must pass muster under the test of constitutionality and the test
of consistency with the prevailing laws. That ordinances should be constitutional
uphold the principle of the supremacy of the Constitution. The requirement that
the enactment must not violate existing law gives stress to the precept that local
government units are able to legislate only by virtue of their derivative legislative
power, a delegation of legislative power from the national legislature. The
delegate cannot be superior to the principal or exercise powers higher than
those of the latter.39

This relationship between the national legislature and the local government units
has not been enfeebled by the new provisions in the Constitution strengthening
the policy of local autonomy. The national legislature is still the principal of the
local government units, which cannot defy its will or modify or violate it.40

The Ordinance was passed by the City Council in the exercise of its police
power, an enactment of the City Council acting as agent of Congress. Local
government units, as agencies of the State, are endowed with police power in
order to effectively accomplish and carry out the declared objects of their
creation.41 This delegated police power is found in Section 16 of the Code,
known as the general welfare clause, viz:

SECTION 16. General Welfare.!Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and enrichment
of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
Local government units exercise police power through their respective
legislative bodies; in this case, the sangguniang panlungsod or the city council.
The Code empowers the legislative bodies to "enact ordinances, approve
resolutions and appropriate funds for the general welfare of the province/city/
municipality and its inhabitants pursuant to Section 16 of the Code and in the
proper exercise of the corporate powers of the province/city/ municipality
provided under the Code.42 The inquiry in this Petition is concerned with the
validity of the exercise of such delegated power.

The Ordinance contravenes 



the Constitution

The police power of the City Council, however broad and far-reaching, is
subordinate to the constitutional limitations thereon; and is subject to the
limitation that its exercise must be reasonable and for the public good.43 In the
case at bar, the enactment of the Ordinance was an invalid exercise of
delegated power as it is unconstitutional and repugnant to general laws.

The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life, liberty, and
property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.44

SEC. 14. The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and men.45

SEC. 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 laws.46

Sec. 9. Private property shall not be taken for public use without just
compensation.47

A. The Ordinance infringes



the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat "(N)o person
shall be deprived of life, liberty or property without due process of law. . . ."48

There is no controlling and precise definition of due process. It furnishes though


a standard to which governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. This
standard is aptly described as a responsiveness to the supremacy of reason,
obedience to the dictates of justice,49 and as such it is a limitation upon the
exercise of the police power.50

The purpose of the guaranty is to prevent governmental encroachment against


the life, liberty and property of individuals; to secure the individual from the
arbitrary exercise of the powers of the government, unrestrained by the
established principles of private rights and distributive justice; to protect property
from confiscation by legislative enactments, from seizure, forfeiture, and
destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the
benefit of the general law.51

The guaranty serves as a protection against arbitrary regulation, and private


corporations and partnerships are "persons" within the scope of the guaranty
insofar as their property is concerned.52

This clause has been interpreted as imposing two separate limits on


government, usually called "procedural due process" and "substantive due
process."

Procedural due process, as the phrase implies, refers to the procedures that the
government must follow before it deprives a person of life, liberty, or property.
Classic procedural due process issues are concerned with what kind of notice
and what form of hearing the government must provide when it takes a
particular action.53

Substantive due process, as that phrase connotes, asks whether the


government has an adequate reason for taking away a person's life, liberty, or
property. In other words, substantive due process looks to whether there is a
sufficient justification for the government's action.54 Case law in the United
States (U.S.) tells us that whether there is such a justification depends very
much on the level of scrutiny used.55 For example, if a law is in an area where
only rational basis review is applied, substantive due process is met so long as
the law is rationally related to a legitimate government purpose. But if it is an
area where strict scrutiny is used, such as for protecting fundamental rights,
then the government will meet substantive due process only if it can prove that
the law is necessary to achieve a compelling government purpose.56

The police power granted to local government units must always be exercised
with utmost observance of the rights of the people to due process and equal
protection of the law. Such power cannot be exercised whimsically, arbitrarily or
despotically57 as its exercise is subject to a qualification, limitation or restriction
demanded by the respect and regard due to the prescription of the fundamental
law, particularly those forming part of the Bill of Rights. Individual rights, it bears
emphasis, may be adversely affected only to the extent that may fairly be
required by the legitimate demands of public interest or public welfare.58 Due
process requires the intrinsic validity of the law in interfering with the rights of
the person to his life, liberty and property.59

Requisites for the valid exercise



of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60 It
must be evident that no other alternative for the accomplishment of the purpose
less intrusive of private rights can work. A reasonable relation must exist
between the purposes of the police measure and the means employed for its
accomplishment, for even under the guise of protecting the public interest,
personal rights and those pertaining to private property will not be permitted to
be arbitrarily invaded.61

Lacking a concurrence of these two requisites, the police measure shall be


struck down as an arbitrary intrusion into private rights62 !a violation of the due
process clause.

The Ordinance was enacted to address and arrest the social ills purportedly
spawned by the establishments in the Ermita-Malate area which are allegedly
operated under the deceptive veneer of legitimate, licensed and tax-paying
nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and
motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel
and Motel Operators Association, Inc. v. City Mayor of Manila63 had already
taken judicial notice of the "alarming increase in the rate of prostitution, adultery
and fornication in Manila traceable in great part to existence of motels, which
provide a necessary atmosphere for clandestine entry, presence and exit and
thus become the ideal haven for prostitutes and thrill-seekers."64

The object of the Ordinance was, accordingly, the promotion and protection of
the social and moral values of the community. Granting for the sake of argument
that the objectives of the Ordinance are within the scope of the City Council's
police powers, the means employed for the accomplishment thereof were
unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all
reasonable regulations looking to the promotion of the moral and social values
of the community. However, the worthy aim of fostering public morals and the
eradication of the community's social ills can be achieved through means less
restrictive of private rights; it can be attained by reasonable restrictions rather
than by an absolute prohibition. The closing down and transfer of businesses or
their conversion into businesses "allowed" under the Ordinance have no
reasonable relation to the accomplishment of its purposes. Otherwise stated, the
prohibition of the enumerated establishments will not per se protect and promote
the social and moral welfare of the community; it will not in itself eradicate the
alluded social ills of prostitution, adultery, fornication nor will it arrest the spread
of sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-
repute and establishments of the like which the City Council may lawfully
prohibit,65 it is baseless and insupportable to bring within that classification
sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated
establishments are lawful pursuits which are not per se offensive to the moral
welfare of the community.

That these are used as arenas to consummate illicit sexual affairs and as
venues to further the illegal prostitution is of no moment. We lay stress on the
acrid truth that sexual immorality, being a human frailty, may take place in the
most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance. If the flawed
logic of the Ordinance were to be followed, in the remote instance that an
immoral sexual act transpires in a church cloister or a court chamber, we would
behold the spectacle of the City of Manila ordering the closure of the church or
court concerned. Every house, building, park, curb, street or even vehicles for
that matter will not be exempt from the prohibition. Simply because there are no
"pure" places where there are impure men. Indeed, even the Scripture and the
Tradition of Christians churches continually recall the presence and universality
of sin in man's history.66

The problem, it needs to be pointed out, is not the establishment, which by its
nature cannot be said to be injurious to the health or comfort of the community
and which in itself is amoral, but the deplorable human activity that may occur
within its premises. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as a
house of ill-repute or as a nuisance per se on a mere likelihood or a naked
assumption. If that were so and if that were allowed, then the Ermita-Malate
area would not only be purged of its supposed social ills, it would be
extinguished of its soul as well as every human activity, reprehensible or not, in
its every nook and cranny would be laid bare to the estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of
morality. Try as the Ordinancemay to shape morality, it should not foster the
illusion that it can make a moral man out of it because immorality is not a thing,
a building or establishment; it is in the hearts of men. The City Council instead
should regulate human conduct that occurs inside the establishments, but not to
the detriment of liberty and privacy which are covenants, premiums and
blessings of democracy.

While petitioners' earnestness at curbing clearly objectionable social ills is


commendable, they unwittingly punish even the proprietors and operators of
"wholesome," "innocent" establishments. In the instant case, there is a clear
invasion of personal or property rights, personal in the case of those individuals
desirous of owning, operating and patronizing those motels and property in
terms of the investments made and the salaries to be paid to those therein
employed. If the City of Manila so desires to put an end to prostitution,
fornication and other social ills, it can instead impose reasonable regulations
such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend or
revoke their licenses for these violations;67 and it may even impose increased
license fees. In other words, there are other means to reasonably accomplish
the desired end.

Means employed are



constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage parlors,


karaoke bars, beerhouses, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3
thereof, owners and/or operators of the enumerated establishments are given
three (3) months from the date of approval of the Ordinance within which "to
wind up business operations or to transfer to any place outside the Ermita-
Malate area or convert said businesses to other kinds of business allowable
within the area." Further, it states in Section 4 that in cases of subsequent
violations of the provisions of the Ordinance, the "premises of the erring
establishment shall be closed and padlocked permanently."

It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes on
the constitutional guarantees of a person's fundamental right to liberty and
property.

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."68 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.69

The U.S. Supreme Court in the case of Roth v. Board of Regents,70 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.

In another case, it also confirmed that liberty protected by the due process
clause includes personal decisions relating to marriage, procreation,
contraception, family relationships, child rearing, and education. In explaining
the respect the Constitution demands for the autonomy of the person in making
these choices, the U.S. Supreme Court explained:

These matters, involving the most intimate and personal choices a person may
make in a lifetime, choices central to personal dignity and autonomy, are central
to the liberty protected by the Fourteenth Amendment. At the heart of liberty is
the right to define one's own concept of existence, of meaning, of universe, and
of the mystery of human life. Beliefs about these matters could not define the
attributes of personhood where they formed under compulsion of the State.71

Persons desirous to own, operate and patronize the enumerated establishments


under Section 1 of the Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy
to consummate their bonds in intimate sexual conduct within the motel's
premises!be it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the Constitution.72
Adults have a right to choose to forge such relationships with others in the
confines of their own private lives and still retain their dignity as free persons.
The liberty protected by the Constitution allows persons the right to make this
choice.73 Their right to liberty under the due process clause gives them the full
right to engage in their conduct without intervention of the government, as long
as they do not run afoul of the law. Liberty should be the rule and restraint the
exception.

Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a repository of
freedom. The right to be let alone is the beginning of all freedom!it is the most
comprehensive of rights and the right most valued by civilized men.74

The concept of liberty compels respect for the individual whose claim to privacy
and interference demands respect. As the case of Morfe v. Mutuc,75 borrowing
the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His


separateness, his isolation, are indefeasible; indeed, they are so fundamental
that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to
himself. If he surrenders his will to others, he surrenders himself. If his will is set
by the will of others, he ceases to be a master of himself. I cannot believe that a
man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the
invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal
life of the citizen.76

There is a great temptation to have an extended discussion on these civil


liberties but the Court chooses to exercise restraint and restrict itself to the
issues presented when it should. The previous pronouncements of the Court are
not to be interpreted as a license for adults to engage in criminal conduct. The
reprehensibility of such conduct is not diminished. The Court only reaffirms and
guarantees their right to make this choice. Should they be prosecuted for their
illegal conduct, they should suffer the consequences of the choice they have
made. That, ultimately, is their choice.

Modality employed is



unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it substantially


divests the respondent of the beneficial use of its property.77 The Ordinance in
Section 1 thereof forbids the running of the enumerated businesses in the
Ermita-Malate area and in Section 3 instructs its owners/operators to wind up
business operations or to transfer outside the area or convert said businesses
into allowed businesses. An ordinance which permanently restricts the use of
property that it can not be used for any reasonable purpose goes beyond
regulation and must be recognized as a taking of the property without just
compensation.78 It is intrusive and violative of the private property rights of
individuals.

The Constitution expressly provides in Article III, Section 9, that "private property
shall not be taken for public use without just compensation." The provision is the
most important protection of property rights in the Constitution. This is a
restriction on the general power of the government to take property. The
constitutional provision is about ensuring that the government does not
confiscate the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a person's property to benefit society,
then society should pay. The principal purpose of the guarantee is "to bar the
Government from forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.79

There are two different types of taking that can be identified. A "possessory"
taking occurs when the government confiscates or physically occupies property.
A "regulatory" taking occurs when the government's regulation leaves no
reasonable economically viable use of the property.80

In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking
also could be found if government regulation of the use of property went "too
far." When regulation reaches a certain magnitude, in most if not in all cases
there must be an exercise of eminent domain and compensation to support the
act. While property may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking.82

No formula or rule can be devised to answer the questions of what is too far and
when regulation becomes a taking. In Mahon, Justice Holmes recognized that it
was "a question of degree and therefore cannot be disposed of by general
propositions." On many other occasions as well, the U.S. Supreme Court has
said that the issue of when regulation constitutes a taking is a matter of
considering the facts in each case. The Court asks whether justice and fairness
require that the economic loss caused by public action must be compensated by
the government and thus borne by the public as a whole, or whether the loss
should remain concentrated on those few persons subject to the public action.83

What is crucial in judicial consideration of regulatory takings is that government


regulation is a taking if it leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.84 A
regulation that permanently denies all economically beneficial or productive use
of land is, from the owner's point of view, equivalent to a "taking" unless
principles of nuisance or property law that existed when the owner acquired the
land make the use prohibitable.85 When the owner of real property has been
called upon to sacrifice all economically beneficial uses in the name of the
common good, that is, to leave his property economically idle, he has suffered a
taking.86

A regulation which denies all economically beneficial or productive use of land


will require compensation under the takings clause. Where a regulation places
limitations on land that fall short of eliminating all economically beneficial use, a
taking nonetheless may have occurred, depending on a complex of factors
including the regulation's economic effect on the landowner, the extent to which
the regulation interferes with reasonable investment-backed expectations and
the character of government action. These inquiries are informed by the purpose
of the takings clause which is to prevent the government from forcing some
people alone to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole.87

A restriction on use of property may also constitute a "taking" if not reasonably


necessary to the effectuation of a substantial public purpose or if it has an
unduly harsh impact on the distinct investment-backed expectations of the
owner.88

The Ordinance gives the owners and operators of the "prohibited"


establishments three (3) months from its approval within which to "wind up
business operations or to transfer to any place outside of the Ermita-Malate area
or convert said businesses to other kinds of business allowable within the area."
The directive to "wind up business operations" amounts to a closure of the
establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate an
"allowed" business, the structure which housed the previous business will be left
empty and gathering dust. Suppose he transfers it to another area, he will
likewise leave the entire establishment idle. Consideration must be given to the
substantial amount of money invested to build the edifices which the owner
reasonably expects to be returned within a period of time. It is apparent that
the Ordinance leaves no reasonable economically viable use of property in a
manner that interferes with reasonable expectations for use.

The second and third options! to transfer to any place outside of the Ermita-
Malate area or to convert into allowed businesses!are confiscatory as well.
The penalty of permanent closure in cases of subsequent violations found in
Section 4 of the Ordinance is also equivalent to a "taking" of private property.

The second option instructs the owners to abandon their property and build
another one outside the Ermita-Malate area. In every sense, it qualifies as a
taking without just compensation with an additional burden imposed on the
owner to build another establishment solely from his coffers. The proffered
solution does not put an end to the "problem," it merely relocates it. Not only is
this impractical, it is unreasonable, onerous and oppressive. The conversion into
allowed enterprises is just as ridiculous. How may the respondent convert a
motel into a restaurant or a coffee shop, art gallery or music lounge without
essentially destroying its property? This is a taking of private property without
due process of law, nay, even without compensation.

The penalty of closure likewise constitutes unlawful taking that should be


compensated by the government. The burden on the owner to convert or
transfer his business, otherwise it will be closed permanently after a subsequent
violation should be borne by the public as this end benefits them as a whole.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance.


A zoning ordinance, although a valid exercise of police power, which limits a
"wholesome" property to a use which can not reasonably be made of it
constitutes the taking of such property without just compensation. Private
property which is not noxious nor intended for noxious purposes may not, by
zoning, be destroyed without compensation. Such principle finds no support in
the principles of justice as we know them. The police powers of local
government units which have always received broad and liberal interpretation
cannot be stretched to cover this particular taking.

Distinction should be made between destruction from necessity and eminent


domain. It needs restating that the property taken in the exercise of police
power is destroyed because it is noxious or intended for a noxious purpose
while the property taken under the power of eminent domain is intended for a
public use or purpose and is therefore "wholesome."89 If it be of public benefit
that a "wholesome" property remain unused or relegated to a particular purpose,
then certainly the public should bear the cost of reasonable compensation for
the condemnation of private property for public use.90

Further, the Ordinance fails to set up any standard to guide or limit the
petitioners' actions. It in no way controls or guides the discretion vested in them.
It provides no definition of the establishments covered by it and it fails to set
forth the conditions when the establishments come within its ambit of prohibition.
The Ordinance confers upon the mayor arbitrary and unrestricted power to close
down establishments. Ordinances such as this, which make possible abuses in
its execution, depending upon no conditions or qualifications whatsoever other
than the unregulated arbitrary will of the city authorities as the touchstone by
which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial
enforcement could be secured.91

Ordinances placing restrictions upon the lawful use of property must, in order to
be valid and constitutional, specify the rules and conditions to be observed and
conduct to avoid; and must not admit of the exercise, or of an opportunity for the
exercise, of unbridled discretion by the law enforcers in carrying out its
provisions.92

Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the


U.S. Supreme Court struck down an ordinance that had made it illegal for "three
or more persons to assemble on any sidewalk and there conduct themselves in
a manner annoying to persons passing by." The ordinance was nullified as it
imposed no standard at all "because one may never know in advance what
'annoys some people but does not annoy others.' "

Similarly, the Ordinance does not specify the standards to ascertain which
establishments "tend to disturb the community," "annoy the inhabitants," and
"adversely affect the social and moral welfare of the community." The cited case
supports the nullification of the Ordinance for lack of comprehensible standards
to guide the law enforcers in carrying out its provisions.

Petitioners cannot therefore order the closure of the enumerated establishments


without infringing the due process clause. These lawful establishments may be
regulated, but not prevented from carrying on their business. This is a sweeping
exercise of police power that is a result of a lack of imagination on the part of the
City Council and which amounts to an interference into personal and private
rights which the Court will not countenance. In this regard, we take a resolute
stand to uphold the constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation
which is a far cry from the ill-considered Ordinance enacted by the City Council.

In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive


ordinance regulating "sexually oriented businesses," which are defined to
include adult arcades, bookstores, video stores, cabarets, motels, and theaters
as well as escort agencies, nude model studio and sexual encounter centers.
Among other things, the ordinance required that such businesses be licensed. A
group of motel owners were among the three groups of businesses that filed
separate suits challenging the ordinance. The motel owners asserted that the
city violated the due process clause by failing to produce adequate support for
its supposition that renting room for fewer than ten (10) hours resulted in
increased crime and other secondary effects. They likewise argued than the ten
(10)-hour limitation on the rental of motel rooms placed an unconstitutional
burden on the right to freedom of association. Anent the first contention, the U.S.
Supreme Court held that the reasonableness of the legislative judgment
combined with a study which the city considered, was adequate to support the
city's determination that motels permitting room rentals for fewer than ten (10 )
hours should be included within the licensing scheme. As regards the second
point, the Court held that limiting motel room rentals to ten (10) hours will have
no discernible effect on personal bonds as those bonds that are formed from the
use of a motel room for fewer than ten (10) hours are not those that have played
a critical role in the culture and traditions of the nation by cultivating and
transmitting shared ideals and beliefs.

The ordinance challenged in the above-cited case merely regulated the targeted
businesses. It imposed reasonable restrictions; hence, its validity was upheld.

The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City
Mayor of Manila,96 it needs pointing out, is also different from this case in that
what was involved therein was a measure which regulated the mode in which
motels may conduct business in order to put an end to practices which could
encourage vice and immorality. Necessarily, there was no valid objection on due
process or equal protection grounds as the ordinance did not prohibit motels.
The Ordinance in this case however is not a regulatory measure but is an
exercise of an assumed power to prohibit.97

The foregoing premises show that the Ordinance is an unwarranted and


unlawful curtailment of property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, even under the guise of
exercising police power, be upheld as valid.
B. The Ordinance violates Equal

Protection Clause

Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. Similar
subjects, in other words, should not be treated differently, so as to give undue
favor to some and unjustly discriminate against others.98 The guarantee means
that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances.99 The
"equal protection of the laws is a pledge of the protection of equal laws."100 It
limits governmental discrimination. The equal protection clause extends to
artificial persons but only insofar as their property is concerned.101

The Court has explained the scope of the equal protection clause in this wise:

… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: "The ideal situation is for the law's benefits to be available to all,
that none be placed outside the sphere of its coverage. Only thus could chance
and favor be excluded and the affairs of men governed by that serene and
impartial uniformity, which is of the very essence of the idea of law." There is
recognition, however, in the opinion that what in fact exists "cannot approximate
the ideal. Nor is the law susceptible to the reproach that it does not take into
account the realities of the situation. The constitutional guarantee then is not to
be given a meaning that disregards what is, what does in fact exist. To assure
that the general welfare be promoted, which is the end of law, a regulatory
measure may cut into the rights to liberty and property. Those adversely affected
may under such circumstances invoke the equal protection clause only if they
can show that the governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of hostility, or at the
very least, discrimination that finds no support in reason." Classification is thus
not ruled out, it being sufficient to quote from the Tuason decision anew "that the
laws operate equally and uniformly on all persons under similar circumstances
or that all persons must be treated in the same manner, the conditions not being
different, both in the privileges conferred and the liabilities imposed. Favoritism
and undue preference cannot be allowed. For the principle is that equal
protection and security shall be given to every person under circumstances
which, if not identical, are analogous. If law be looked upon in terms of burden
or charges, those that fall within a class should be treated in the same fashion,
whatever restrictions cast on some in the group equally binding on the rest.102

Legislative bodies are allowed to classify the subjects of legislation. If the


classification is reasonable, the law may operate only on some and not all of the
people without violating the equal protection clause.103 The classification must,
as an indispensable requisite, not be arbitrary. To be valid, it must conform to the
following requirements:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law.

3) It must not be limited to existing conditions only.

4) It must apply equally to all members of the class.104

In the Court's view, there are no substantial distinctions between motels, inns,
pension houses, hotels, lodging houses or other similar establishments. By
definition, all are commercial establishments providing lodging and usually
meals and other services for the public. No reason exists for prohibiting motels
and inns but not pension houses, hotels, lodging houses or other similar
establishments. The classification in the instant case is invalid as similar
subjects are not similarly treated, both as to rights conferred and obligations
imposed. It is arbitrary as it does not rest on substantial distinctions bearing a
just and fair relation to the purpose of the Ordinance.

The Court likewise cannot see the logic for prohibiting the business and
operation of motels in the Ermita-Malate area but not outside of this area. A
noxious establishment does not become any less noxious if located outside the
area.

The standard "where women are used as tools for entertainment" is also
discriminatory as prostitution!one of the hinted ills the Ordinance aims to
banish!is not a profession exclusive to women. Both men and women have an
equal propensity to engage in prostitution. It is not any less grave a sin when
men engage in it. And why would the assumption that there is an ongoing
immoral activity apply only when women are employed and be inapposite when
men are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government objectives.
105 Thus, the discrimination is invalid.

Failing the test of constitutionality, the Ordinance likewise failed to pass the test
of consistency with prevailing laws.

C. The Ordinance is repugnant



to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers
local government units to regulate, and not prohibit, the establishments
enumerated in Section 1 thereof.

The power of the City Council to regulate by ordinances the establishment,


operation, and maintenance of motels, hotels and other similar establishments is
found in Section 458 (a) 4 (iv), which provides that:

Section 458. Powers, Duties, Functions and Compensation. (a) The


sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of
the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of
this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:

. . .

(iv) 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 . . . .

While its power to regulate the establishment, operation and maintenance of any
entertainment or amusement facilities, and to prohibit certain forms of
amusement or entertainment is provided under Section 458 (a) 4 (vii) of the
Code, which reads as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The


sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of
the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of
this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:
. . .

(vii) Regulate the establishment, operation, and maintenance of any


entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna baths,
massage parlors, and other places for entertainment or amusement; regulate
such other events or activities for amusement or entertainment, particularly
those which tend to disturb the community or annoy the inhabitants, or require
the suspension or suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and moral welfare of
the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns,


pension houses, lodging houses, and other similar establishments, the only
power of the City Council to legislate relative thereto is to regulate them to
promote the general welfare. The Code still withholds from cities the power to
suppress and prohibit altogether the establishment, operation and maintenance
of such establishments. It is well to recall the rulings of the Court in Kwong Sing
v. City of Manila106 that:

The word "regulate," as used in subsection (l), section 2444 of the


Administrative Code, means and includes the power to control, to govern, and to
restrain; but "regulate" should not be construed as synonymous with "suppress"
or "prohibit." Consequently, under the power to regulate laundries, the municipal
authorities could make proper police regulations as to the mode in which the
employment or business shall be exercised.107

And in People v. Esguerra,108 wherein the Court nullified an ordinance of the


Municipality of Tacloban which prohibited the selling, giving and dispensing of
liquor ratiocinating that the municipality is empowered only to regulate the same
and not prohibit. The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given authority or


power to regulate or to license and regulate the liquor traffic, power to prohibit is
impliedly withheld.109

These doctrines still hold contrary to petitioners' assertion110 that they were
modified by the Code vesting upon City Councils prohibitory powers.

Similarly, the City Council exercises regulatory powers over public dancing
schools, public dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement as found in the first clause of Section 458 (a) 4
(vii). Its powers to regulate, suppress and suspend "such other events or
activities for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants" and to "prohibit certain forms of
amusement or entertainment in order to protect the social and moral welfare of
the community" are stated in the second and third clauses, respectively of the
same Section. The several powers of the City Council as provided in Section
458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-
colons (;), the use of which indicates that the clauses in which these powers are
set forth are independent of each other albeit closely related to justify being put
together in a single enumeration or paragraph.111 These powers, therefore,
should not be confused, commingled or consolidated as to create a
conglomerated and unified power of regulation, suppression and prohibition.112

The Congress unequivocably specified the establishments and forms of


amusement or entertainment subject to regulation among which are
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other
similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment
or amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be
included as among "other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the inhabitants"
or "certain forms of amusement or entertainment" which the City Council may
suspend, suppress or prohibit.

The rule is that the City Council has only such powers as are expressly granted
to it and those which are necessarily implied or incidental to the exercise
thereof. By reason of its limited powers and the nature thereof, said powers are
to be construed strictissimi juris and any doubt or ambiguity arising out of the
terms used in granting said powers must be construed against the City Council.
113 Moreover, it is a general rule in statutory construction that the express

mention of one person, thing, or consequence is tantamount to an express


exclusion of all others. Expressio unius est exclusio alterium. This maxim is
based upon the rules of logic and the natural workings of human mind. It is
particularly applicable in the construction of such statutes as create new rights
or remedies, impose penalties or punishments, or otherwise come under the
rule of strict construction.114

The argument that the City Council is empowered to enact the Ordinance by
virtue of the general welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the
Revised Charter of Manila is likewise without merit. On the first point, the ruling
of the Court in People v. Esguerra,115 is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause, or
section 2238 of the Revised Administrative Code, refers to matters not covered
by the other provisions of the same Code, and therefore it can not be applied to
intoxicating liquors, for the power to regulate the selling, giving away and
dispensing thereof is granted specifically by section 2242 (g) to municipal
councils. To hold that, under the general power granted by section 2238, a
municipal council may enact the ordinance in question, notwithstanding the
provision of section 2242 (g), would be to make the latter superfluous and
nugatory, because the power to prohibit, includes the power to regulate, the
selling, giving away and dispensing of intoxicating liquors.

On the second point, it suffices to say that the Code being a later expression of
the legislative will must necessarily prevail and override the earlier law, the
Revised Charter of Manila. Legis posteriores priores contrarias abrogant, or
later statute repeals prior ones which are repugnant thereto. As between two
laws on the same subject matter, which are irreconcilably inconsistent, that
which is passed later prevails, since it is the latest expression of legislative will.
116 If there is an inconsistency or repugnance between two statutes, both relating

to the same subject matter, which cannot be removed by any fair and
reasonable method of interpretation, it is the latest expression of the legislative
will which must prevail and override the earlier.117

Implied repeals are those which take place when a subsequently enacted law
contains provisions contrary to those of an existing law but no provisions
expressly repealing them. Such repeals have been divided into two general
classes: those which occur where an act is so inconsistent or irreconcilable with
an existing prior act that only one of the two can remain in force and those which
occur when an act covers the whole subject of an earlier act and is intended to
be a substitute therefor. The validity of such a repeal is sustained on the ground
that the latest expression of the legislative will should prevail.118

In addition, Section 534(f) of the Code states that "All general and special laws,
acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly." Thus,
submitting to petitioners' interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the Charter stating
such must be considered repealed by the Code as it is at variance with the
latter's provisions granting the City Council mere regulatory powers.

It is well to point out that petitioners also cannot seek cover under the general
welfare clause authorizing the abatement of nuisances without judicial
proceedings. That tenet applies to a nuisance per se, or one which affects the
immediate safety of persons and property and may be summarily abated under
the undefined law of necessity. It can not be said that motels are injurious to the
rights of property, health or comfort of the community. It is a legitimate business.
If it be a nuisance per accidens it may be so proven in a hearing conducted for
that purpose. A motel is not per se a nuisance warranting its summary
abatement without judicial intervention.119

Notably, the City Council was conferred powers to prevent and prohibit certain
activities and establishments in another section of the Code which is reproduced
as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The


sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of
the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of
this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:

. . .

(v) Enact ordinances intended to prevent, suppress and impose appropriate


penalties for habitual drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of houses of ill repute, gambling
and other prohibited games of chance, fraudulent devices and ways to obtain
money or property, drug addiction, maintenance of drug dens, drug pushing,
juvenile delinquency, the printing, distribution or exhibition of obscene or
pornographic materials or publications, and such other activities inimical to the
welfare and morals of the inhabitants of the city;

. . .

If it were the intention of Congress to confer upon the City Council the power to
prohibit the establishments enumerated in Section 1 of the Ordinance, it would
have so declared in uncertain terms by adding them to the list of the matters it
may prohibit under the above-quoted Section. The Ordinance now vainly
attempts to lump these establishments with houses of ill-repute and expand the
City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of
the Code in an effort to overreach its prohibitory powers. It is evident that these
establishments may only be regulated in their establishment, operation and
maintenance.

It is important to distinguish the punishable activities from the establishments


themselves. That these establishments are recognized legitimate enterprises
can be gleaned from another Section of the Code. Section 131 under the Title
on Local Government Taxation expressly mentioned proprietors or operators of
massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging
houses as among the "contractors" defined in paragraph (h) thereof. The same
Section also defined "amusement" as a "pleasurable diversion and
entertainment," "synonymous to relaxation, avocation, pastime or fun;" and
"amusement places" to include "theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain oneself by
seeing or viewing the show or performances." Thus, it can be inferred that the
Code considers these establishments as legitimate enterprises and activities. It
is well to recall the maxim reddendo singula singulis which means that words in
different parts of a statute must be referred to their appropriate connection,
giving to each in its place, its proper force and effect, and, if possible, rendering
none of them useless or superfluous, even if strict grammatical construction
demands otherwise. Likewise, where words under consideration appear in
different sections or are widely dispersed throughout an act the same principle
applies.120

Not only does the Ordinance contravene the Code, it likewise runs counter to
the provisions of P.D. 499. As correctly argued by MTDC, the statute had
already converted the residential Ermita-Malate area into a commercial area.
The decree allowed the establishment and operation of all kinds of commercial
establishments except warehouse or open storage depot, dump or yard, motor
repair shop, gasoline service station, light industry with any machinery or funeral
establishment. The rule is that for an ordinance to be valid and to have force and
effect, it must not only be within the powers of the council to enact but the same
must not be in conflict with or repugnant to the general law.121 As succinctly
illustrated in Solicitor General v. Metropolitan Manila Authority:122

The requirement that the enactment must not violate existing law explains itself.
Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature (except only that the
power to create their own sources of revenue and to levy taxes is conferred by
the Constitution itself). They are mere agents vested with what is called the
power of subordinate legislation. As delegates of the Congress, the local
government units cannot contravene but must obey at all times the will of their
principal. In the case before us, the enactment in question, which are merely
local in origin cannot prevail against the decree, which has the force and effect
of a statute.123

Petitioners contend that the Ordinance enjoys the presumption of validity. While
this may be the rule, it has already been held that although the presumption is
always in favor of the validity or reasonableness of the ordinance, such
presumption must nevertheless be set aside when the invalidity or
unreasonableness appears on the face of the ordinance itself or is established
by proper evidence. The exercise of police power by the local government is
valid unless it contravenes the fundamental law of the land, or an act of the
legislature, or unless it is against public policy or is unreasonable, oppressive,
partial, discriminating or in derogation of a common right.124

Conclusion

All considered, the Ordinance invades fundamental personal and property rights
and impairs personal privileges. It is constitutionally infirm.
The Ordinance contravenes statutes; it is discriminatory and unreasonable in its
operation; it is not sufficiently detailed and explicit that abuses may attend the
enforcement of its sanctions. And not to be forgotten, the City Council under the
Code had no power to enact the Ordinance and is therefore ultra vires, null and
void.

Concededly, the challenged Ordinance was enacted with the best of motives
and shares the concern of the public for the cleansing of the Ermita-Malate area
of its social sins. Police power legislation of such character deserves the full
endorsement of the judiciary !we reiterate our support for it. But inspite of its
virtuous aims, the enactment of the Ordinance has no statutory or constitutional
authority to stand on. Local legislative bodies, in this case, the City Council,
cannot prohibit the operation of the enumerated establishments under Section 1
thereof or order their transfer or conversion without infringing the constitutional
guarantees of due process and equal protection of laws !not even under the
guise of police power.

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional
Trial Court declaring the Ordinance void is AFFIRMED. Costs against
petitioners.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-22008 November 3, 1924

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, 



vs.

JULIO POMAR, defendant-appellant.

Araneta and Zaragoza for appellant. 



Attorney-General Villa-Real for appellee.

JOHNSON, J.:

The only question presented by this appeal is whether or not the provisions of
sections 13 and 15 of Act No. 3071 are a reasonable and lawful exercise of the
police power of the state.

It appears from the record that on the 26th day of October, 1923, the
prosecuting attorney of the City of Manila presented a complaint in the Court of
First Instance, accusing the defendant of a violation of section 13 in connection
with section 15 of Act No. 3071 of the Philippine Legislature. The complaint
alleged:

That on or about the 27th day of August, 1923, and sometime prior thereto, in
the City of Manila, Philippine Islands, the said accused, being the manager and
person in charge of La Flor de la Isabela, a tobacco factory pertaining to La
Campania General de Tabacos de Filipinas, a corporation duly authorized to
transact business in said city, and having, during the year 1923, in his employ
and service as cigar-maker in said factory, a woman by the name of Macaria
Fajardo, whom he granted vacation leave which began on the 16th day of July,
1923, by reason of her pregnancy, did then and there willfully, unlawfully, and
feloniously fail and refuse to pay to said woman the sum of eighty pesos (P80),
Philippine currency, to which she was entitled as her regular wages
corresponding to thirty days before and thirty days after her delivery and
confinement which took place on the 12th day of August, 1923, despite and over
the demands made by her, the said Macaria Fajardo, upon said accused, to do
so.

To said complaint, the defendant demurred, alleging that the facts therein
contained did not constitute an offense. The demurrer was overruled,
whereupon the defendant answered and admitted at the trial all of the
allegations contained in the complaint, and contended that the provisions of said
Act No. 3071, upon which the complaint was based were illegal, unconstitutional
and void.

Upon a consideration of the facts charged in the complaint and admitted by the
defendant, the Honorable C. A. Imperial, judge, found the defendant guilty of the
alleged offense described in the complaint, and sentenced him to pay a fine of
P50, in accordance with the provisions of section 15 of said Act, to suffer
subsidiary imprisonment in case of insolvency, and to pay the costs.

From that sentence the defendant appealed, and now makes the following
assignments of error: That the court erred in overruling the demurrer; in
convicting him of the crime charged in the information; and in not declaring
section 13 of Act No. 3071, unconstitutional:

Section 13 of Act No. 3071 is as follows:

Every person, firm or corporation owning or managing a factory, shop or place of


labor of any description shall be obliged to grant to any woman employed by it
as laborer who may be pregnant, thirty days vacation with pay before and
another thirty days after confinement: Provided, That the employer shall not
discharge such laborer without just cause, under the penalty of being required to
pay to her wages equivalent to the total of two months counted from the day of
her discharge.

Section 15 of the same Act is as follows:

Any person, firm or corporation violating any of the provisions of this Act shall be
punished by a fine of not less than fifty pesos nor more than two hundred and
fifty, or by imprisonment for not less than ten days nor more than six months, or
both, in the discretion of the court.

In the case of firms or corporations, the presidents, directors or managers


thereof or, in their default, the persons acting in their stead, shall be criminally
responsible for each violation of the provisions of this Act.
Said section 13 was enacted by the Legislature of the Philippine Islands in the
exercise of its supposed police power, with the praiseworthy purpose of
safeguarding the health of pregnant women laborers in "factory, shop or place of
labor of any description," and of insuring to them, to a certain extent, reasonable
support for one month before and one month after their delivery. The question
presented for decision by the appeal is whether said Act has been adopted in
the reasonable and lawful exercise of the police power of the state.

In determining whether a particular law promulgated under the police power of


the state is, in fact, within said power, it becomes necessary first, to determine
what that power is, its limits and scope. Literally hundreds of decisions have
been promulgated in which definitions of the police power have been attempted.
An examination of all of said decisions will show that the definitions are
generally limited to particular cases and examples, which are as varied as they
are numerous.

By reason of the constant growth of public opinion in a developing civilization,


the term "police power" has never been, and we do not believe can be, clearly
and definitely defined and circumscribed. One hundred years ago, for example,
it is doubtful whether the most eminent jurist, or court, or legislature would have
for a moment thought that, by any possibility, a law providing for the destruction
of a building in which alcoholic liquors were sold, was within a reasonable and
lawful exercise of the police power. (Mugler vs. Kansas, 123 U. S., 623.) The
development of civilization, the rapidly increasing population, the growth of
public opinion, with a desire on the part of the masses and of the government to
look after and care for the interests of the individuals of the state, have brought
within the police power of the state many questions for regulation which formerly
were not so considered. In a republican form of government public sentiment
wields a tremendous influence upon what the state may or may not do, for the
protection of the health and public morals of the people. Yet, neither public
sentiment, nor a desire to ameliorate the public morals of the people of the state
will justify the promulgation of a law which contravenes the express provisions of
the fundamental law of the people — the constitutional of the state.

A definition of the police power of the state must depend upon the particular law
and the particular facts to which it is to be applied. The many definitions which
have been given by the highest courts may be examined, however, for the
purpose of giving us a compass or guide to assist us in arriving at a correct
conclusion in the particular case before us. Sir William Blackstone, one of the
greatest expounders of the common law, defines the police power as "the due
regulation and domestic order of the kingdom, whereby the inhabitants of a
state, like members of a well-governed family, are bound to conform their
general behavior to the rules of propriety, good neighborhood, and good
manners, and to be decent, industrious, and inoffensive in their respective
stations." (4 Blackstone's Commentaries, 162.)

Mr. Jeremy Bentham, in his General View of Public Offenses, gives us the
following definition: "Police is in general a system of precaution, either for the
prevention of crimes or of calamities. Its business may be distributed into eight
distinct branches: (1) Police for the prevention of offenses; (2) police for the
prevention of calamities; (3) police for the prevention of endemic diseased; (4)
police of charity; (5) police of interior communications; (6) police of public
amusements; (7) police for recent intelligence; (8) police for registration."

Mr. Justice Cooley, perhaps the greatest expounder of the American


Constitution, says: "The police power is the power vested in the legislature by
the constitution to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare
of the commonwealth, and of the subject of the same. . . ." (Cooley's
Constitutional Limitations, p. 830.)

In the case of Commonwealth of Massachusetts vs. Alger (7 Cushing, 53), we


find a very comprehensive definition of the police power of the state. In that case
it appears that the colony of Massachusetts in 1647 adopted an Act to preserve
the harbor of Boston and to prevent encroachments therein. The defendant
unlawfully erected, built, and established in said harbor, and extended beyond
said lines and into and over the tide water of the Commonwealth a certain
superstructure, obstruction and encumbrance. Said Act provided a penalty for its
violation of a fine of not less than $1,000 nor more than $5,000 for every
offense, and for the destruction of said buildings, or structures, or obstructions
as a public nuisance. Alger was arrested and placed on trial for violation of said
Act. His defense was that the Act of 1647 was illegal and void, because if
permitted the destruction of private property without compensation. Mr. Justice
Shaw, speaking for the court in that said, said: "We think it is a settled principle,
growing out of the nature of well-ordered civil society, that every holder of
property, however absolute and unqualified may be his title, holds it under the
implied liability that his use of it may be so regulated, that it shall not be injurious
to the equal environment of others having an equal right to the enjoyment of
their property nor injurious to the rights of the community. All property in this
commonwealth, as well that in the interior as that bordering on tide waters, is
derived directly or indirectly from the government and held subject to those
general regulations, which are necessary to the common good and general
welfare. Rights of property, like all other social and conventional rights, are
subject to such reasonable limitations in their enjoyment, as shall prevent them
from being injurious, and to such reasonable restraints and regulations
established by law, as the legislature, under the governing and controlling power
vested in them by the constitution, may think necessary and expedient." Mr.
Justice Shaw further adds: ". . . The power we allude to is rather the police
power, the power vested in the legislature by the constitution, to make, ordain
and establish all manner of wholesome and reasonable laws, statutes and
ordinances, either with penalties or without, not repugnant to the constitution, as
they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same."

This court has, in the case of Case vs. Board of Health and Heiser (24 Phil.,
250), in discussing the police power of the state, had occasion to say: ". . . It is a
well settled principle, growing out of the nature of well-ordered and civilized
society, that every holder of property, however absolute and unqualified may be
his title, holds it under the implied liability that his use of it shall not be injurious
to the equal enjoyment of others having an equal right to the enjoyment of their
property, nor injurious to the rights of the community. All property in the state is
held subject to its general regulations, which are necessary to the common good
and general welfare. Rights of property, like all other social and conventional
rights, are subject to such reasonable limitations in their enjoyment as shall
prevent them from being injurious, and to such reasonable restraints and
regulations, established by law, as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary and
expedient. The state, under the police power is possessed with plenary power to
deal with all matters relating to the general health, morals, and safety of the
people, so long as it does not contravene any positive inhibition of the organic
law and providing that such power is not exercised in such a manner as to justify
the interference of the courts to prevent positive wrong and oppression."

Many other definitions have been given not only by the Supreme Court of the
United States but by the Supreme Court of every state of the Union. The
foregoing definitions, however, cover the general field of all of the definitions,
found in jurisprudence. From all of the definitions we conclude that it is much
easier to perceive and realize the existence and sources of the police power
than to exactly mark its boundaries, or prescribe limits to its exercise by the
legislative department of the government.

The most recent definition which has been called to our attention is that found in
the case of Adkins vs.Children's Hospital of the District of Columbia (261 U. S.,
525). In that case the controversy arose in this way: A children's hospital
employed a number of women at various rates of wages, which were entirely
satisfactory to both the hospital and the employees. A hotel company employed
a woman as elevator operator at P35 per month and two meals a day under
healthy and satisfactory conditions, and she did not risk to lose her position as
she could not earn so much anywhere else. Her wages were less than the
minimum fixed by a board created under a law for the purpose of fixing a
minimum wage for women and children, with a penalty providing a punishment
for a failure or refusal to pay the minimum wage fixed. The wage paid by the
hotel company of P35 per month and two meals a day was less than the
minimum wage fixed by said board. By reason of the order of said board, the
hotel company, was about to discharge her, as it was unwilling to pay her more
and could not give her employment at that salary without risking the penalty of a
fine and imprisonment under the law. She brought action to enjoin the hotel
company from discharging her upon the ground that the enforcement of the
"Minimum Wage Act" would deprive her of her employment and wages without
due process of law, and that she could not get as good a position anywhere
else. The constitutionality of the Act was squarely presented to the Supreme
Court of the United States for decision.

The Supreme Court of the United States held that said Act was void on the
ground that the right to contract about one's own affairs was a part of the liberty
of the individual under the constitution, and that while there was no such thing
as absolute freedom of contract, and it was necessary subject to a great variety
of restraints, yet none of the exceptional circumstances, which at times justify a
limitation upon one's right to contract for his own services, applied in the
particular case.

In the course of the decision in that case (Adkins vs. Children's Hospital of the
District of Columbia, 261 U. S., 525), Mr. Justice Sutherland, after a statement of
the fact and making reference to the particular law, said:

The statute now under consideration is attacked upon the ground that it
authorizes an unconstitutional interference with the freedom
of contract including within the guarantees of the due process clause of the 5th
Amendment. That the right to contract about one's affairs is a part of the liberty
of the individual protected by this clause is settled by the decision of this court,
and is no longer open to question. Within this liberty are contracts of
employment of labor. In making such contracts, generally speaking, the parties
have an equal right to obtain from each other the best terms they can as the
result of private bargaining. (Allgeyer vs. Louisiana, 165 U. S., 578; 591;
Adair vs. United States, 208 U. S., 161; Muller vs. Oregon, 208 U. S., 412,
421.)
xxx xxx xxx

The law takes account of the necessities of only one party to the contract. It
ignores the necessities of the employer by compelling him to pay not less than a
certain sum, not only whether the employee is capable of earning it, but
irrespective of the ability of his business to sustain the burden, generously
leaving him, of course, the privilege of abandoning his business as an
alternative for going on at a loss. Within the limits of the minimum sum, he is
precluded, under penalty of fine and imprisonment, from adjusting compensation
to the differing merits of his employees. It compels him to pay at least the sum
fixed in any event, because the employee needs it, but requires no service of
equivalent value from the employee. It (the law) therefore undertakes to solve
but one-half of the problem. The other half is the establishment of a
corresponding standard of efficiency; and this forms no part of the policy of the
legislation, although in practice the former half without the latter must lead to
ultimate failure, in accordance with the inexorable law that no one can continue
indefinitely to take out more than he puts in without ultimately exhausting the
supply. The law . . . takes no account of periods of distress and business
depression, or crippling losses, which may leave the employer himself without
adequate means of livelihood. To the extent that the sum fixed exceeds the fair
value of the services rendered, it amounts to a compulsory exaction from the
employer for the support of a partially indigent person, for whose condition there
rests upon him no peculiar responsibility, and therefore, in effect, arbitrarily shifts
to his shoulders a burden which, if it belongs to anybody, belongs to society as a
whole.

The failure of this state which, perhaps more than any other, puts upon it the
stamp of invalidity is that it exacts from the employer an arbitrary payment for a
purpose and upon a basis having no casual connection with his business, or the
contract, or the work the employee engages to do. The declared basis, as
already pointed out, is not the value of the service rendered, but the extraneous
circumstances that the employee needs to get a prescribed sum of money to
insure her subsistence, health and morals. . . . The necessities of the employee
are alone considered, and these arise outside of the employment, are the same
when there is no employment, and as great in one occupation as in another. . . .
In principle, there can be no difference between the case of selling labor and the
case of selling goods. If one goes to the butcher, the baker, or grocer to buy
food, he is morally entitled to obtain the worth of his money, but he is not entitle
to more. If what he gets is worth what he pays, he is not justified in demanding
more simply because he needs more; and the shopkeeper, having dealt fairly
and honestly in that transaction, is not concerned in any peculiar sense with the
question of his customer's necessities. Should a statute undertake to vest in a
commission power to determine the quantity of food necessary for individual
support, and require the shopkeeper, if he sell to the individual at all, to furnish
that quantity at not more than a fixed maximum, it would undoubtedly fall before
the constitutional test. The fallacy of any argument in support of the validity of
such a statute would be quickly exposed. The argument in support of that now
being considered is equally fallacious, though the weakness of it may not be so
plain. . . .

It has been said that the particular statute before us is required in the interest of
social justice for whose end freedom of contract may lawfully be subjected to
restraint. The liberty of the individual to do as he pleases, even in innocent
matters, is not absolute. That liberty must frequently yield to the common good,
and the line beyond which the power of interference may not be pressed is
neither definite nor unalterable, may be made to move, within limits not well
defined, with changing needs and circumstances.

The late Mr. Justice Harlan, in the case of Adair vs. United States (208 U. S.,
161, 174), said that the right of a person to sell his labor upon such terms as he
deems proper is, in its essence, the same as the right of the purchaser of labor
to prescribe the conditions upon which he will accept such labor from the person
offering to sell. In all such particulars the employer and the employee have
equality of right, and any legislation that disturbs that equality is an arbitrary
interference with the liberty of contract, which no government can legally justify
in a free land, under a constitution which provides that no person shall be
deprived of his liberty without due process of law.

Mr. Justice Pitney, in the case of Coppage vs. Kansas (235 U. S., 1, 14),
speaking for the Supreme Court of the United States, said: ". . . Included in the
right of personal liberty and the right of private property — partaking of the
nature of each — is the right to make contracts for the acquisition of property.
Chief among such contracts is that of personal employment, by which labor and
other services are exchange for money or other forms of property. If this right be
struck down or arbitrarily interfered with, there is a substantial impairment of
liberty in the long established constitutional sense. The right is as essential to
the laborer as to the capitalist, to the poor as to the rich; for the vast majority of
persons have no other honest way to begin to acquire property, save by working
for money."

The right to liberty includes the right to enter into contracts and to terminate
contracts. In the case of Gillespie vs.People (118 Ill., 176, 183-185) it was held
that a statute making it unlawful to discharge an employee because of his
connection with any lawful labor organization, and providing a penalty therefor,
is void, since the right to terminate a contract, subject to liability to respond in a
civil action for an unwarranted termination, is within the protection of the state
and Federal constitutions which guarantee that no person shall be deprived of
life, liberty or property without due process of law. The court said in part: ". . .
One citizen cannot be compelled to give employment to another citizen, nor can
anyone be compelled to be employed against his will. The Act of 1893, now
under consideration, deprives the employer of the right to terminate his contract
with his employee. The right to terminate such a contract is guaranteed by the
organic law of the state. The legislature is forbidden to deprive the employer or
employee of the exercise of that right. The legislature has no authority to
pronounce the performance of an innocent act criminal when the public health,
safety, comfort or welfare is not interfered with. The statute in question says that,
if a man exercises his constitutional right to terminate a contract with his
employee, he shall, without a hearing, be punished as for the commission of a
crime.

xxx xxx xxx

Liberty includes not only the right to labor, but to refuse to labor, and,
consequently, the right to contract to labor or for labor, and to terminate such
contracts, and to refuse to make such contracts. The legislature cannot prevent
persons, who are sui juris, from laboring, or from making such contracts as they
may see fit to make relative to their own lawful labor; nor has it any power by
penal laws to prevent any person, with or without cause, from refusing to employ
another or to terminate a contract with him, subject only to the liability to
respond in a civil action for an unwarranted refusal to do that which has been
agreed upon. Hence, we are of the opinion that this Act contravenes those
provisions of the state and Federal constitutions, which guarantee that no
person shall be deprived of life, liberty or property without due process of law.

The statute in question is exactly analogous to the "Minimum Wage Act" referred
to above. In section 13 it will be seen that no person, firm, or corporation owning
or managing a factory shop, or place of labor of any description, can make a
contract with a woman without incurring the obligation, whatever the contract of
employment might be, unless he also promise to pay to such woman employed
as a laborer, who may become pregnant, her wages for thirty days before and
thirty days after confinement. In other words, said section creates a term or
condition in every contract made by every person, firm, or corporation with any
woman who may, during the course of her employment, become pregnant, and
a failure to include in said contract the terms fixed to a fine and imprisonment.
Clearly, therefore, the law has deprived, every person, firm, or corporation
owning or managing a factory, shop or place of labor of any description within
the Philippine Islands, of his right to enter into contracts of employment upon
such terms as he and the employee may agree upon. The law creates a term in
every such contract, without the consent of the parties. Such persons are,
therefore, deprived of their liberty to contract. The constitution of the Philippine
Islands guarantees to every citizen his liberty and one of his liberties is the
liberty to contract.

It is believed and confidently asserted that no case can be found, in civilized


society and well-organized governments, where individuals have been deprived
of their property, under the police power of the state, without
compensation, except in cases where the property in question was used for the
purpose of violating some legally adopted, or constitutes a nuisance. Among
such cases may be mentioned: Apparatus used in counterfeiting the money of
the state; firearms illegally possessed; opium possessed in violation of law;
apparatus used for gambling in violation of law; buildings and property used for
the purpose of violating laws prohibiting the manufacture and sale of intoxicating
liquors; and all cases in which the property itself has become a nuisance and
dangerous and detrimental to the public health, morals and general welfare of
the state. In all of such cases, and in many more which might be cited, the
destruction of the property is permitted in the exercise of the police power of the
state. But it must first be established that such property was used as the
instrument for the violation of a valid existing law. (Mugler vs. Kansas, 123 U. S.,
623; Slaughter-House Cases, 16 Wall., [U. S.], 36; Butchers' Union, etc.,
Co. vs. Crescent City, etc., Co., 111 U. S., 746 John Stuart Mill — "On Liberty,"
28, 29.)

Without further attempting to define what are the peculiar subjects or limits of
the police power, it may safely be affirmed, that every law for the restraint and
punishment of crimes, for the preservation of the public peace, health, and
morals, must come within this category. But the state, when providing by
legislation for the protection of the public health, the public morals, or the public
safety, is subject to and is controlled by the paramount authority of the
constitution of the state, and will not be permitted to violate rights secured or
guaranteed by that instrument or interfere with the execution of the powers and
rights guaranteed to the people under their law — the constitution.
(Mugler vs. Kansas, 123 U. S., 623.)

The police power of the state is a growing and expanding power. As civilization
develops and public conscience becomes awakened, the police power may be
extended, as has been demonstrated in the growth of public sentiment with
reference to the manufacture and sale of intoxicating liquors. But that power
cannot grow faster than the fundamental law of the state, nor transcend or
violate the express inhibition of the people's law — the constitution. If the people
desire to have the police power extended and applied to conditions and things
prohibited by the organic law, they must first amend that law.1awphil.net

It will also be noted from an examination of said section 13, that it takes no
account of contracts for the employment of women by the day nor by the piece.
The law is equally applicable to each case. It will hardly be contended that the
person, firm or corporation owning or managing a factory, shop or place of labor,
who employs women by the day or by the piece, could be compelled under the
law to pay for sixty days during which no services were rendered.

It has been decided in a long line of decisions of the Supreme Court of the
United States, that the right to contract about one's affairs is a part of the liberty
of the individual, protected by the "due process of law" clause of the constitution.
(Allgeyer vs. Louisiana, 165 U. S., 578, 591; New York Life Ins. Co. vs. Dodge,
246 U. S., 357, 373, 374; Coppage vs. Kansas, 236 U. S., 1, 10, 14;
Adair vs. United States, 208 U. S., 161; Lochner vs.New York, 198 U. S.; 45, 49;
Muller vs. Oregon, 208 U. S., 412, 421.)

The rule in this jurisdiction is, that the contracting parties may establish any
agreements, terms, and conditions they may deem advisable, provided they are
not contrary to law, morals or public policy. (Art. 1255, Civil Code.)

For all of the foregoing reasons, we are fully persuaded, under the facts and the
law, that the provisions of section 13, of Act No. 3071 of the Philippine
Legislature, are unconstitutional and void, in that they violate and are contrary to
the provisions of the first paragraph of section 3 of the Act of Congress of the
United States of August 29, 1916. (Vol. 12, Public Laws, p. 238.)

Therefore, the sentence of the lower court is hereby revoked, the complaint is
hereby dismissed, and the defendant is hereby discharged from the custody of
the law, with costs de oficio. So ordered.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA


TOURIST & DEVELOPMENT CORPORATION, Petitioners, 

vs.

CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S.
LIM, Respondent.

DECISION

Tinga, J.:

With another city ordinance of Manila also principally involving the tourist district
as subject, the Court is confronted anew with the incessant clash between
government power and individual liberty in tandem with the archetypal tension
between law and morality.

In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city
ordinance barring the operation of motels and inns, among other
establishments, within the Ermita-Malate area. The petition at bar assails a
similarly-motivated city ordinance that prohibits those same establishments from
offering short-time admission, as well as pro-rated or "wash up" rates for such
abbreviated stays. Our earlier decision tested the city ordinance against our
sacred constitutional rights to liberty, due process and equal protection of law.
The same parameters apply to the present petition.

This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which
seeks the reversal of the Decision3in C.A.-G.R. S.P. No. 33316 of the Court of
Appeals, challenges the validity of Manila City Ordinance No. 7774 entitled, "An
Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and
Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension
Houses, and Similar Establishments in the City of Manila" (the Ordinance).

I.

The facts are as follows:


On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law
the Ordinance.4 The Ordinance is reproduced in full, hereunder:

SECTION 1. Declaration of Policy. It is hereby the declared policy of the City


Government to protect the best interest, health and welfare, and the morality of
its constituents in general and the youth in particular.

SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short
time admission in hotels, motels, lodging houses, pension houses and similar
establishments in the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-
up rate or other similarly concocted terms, are hereby prohibited in hotels,
motels, inns, lodging houses, pension houses and similar establishments in the
City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and


charging of room rate for less than twelve (12) hours at any given time or the
renting out of rooms more than twice a day or any other term that may be
concocted by owners or managers of said establishments but would mean the
same or would bear the same meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate any
provision of this ordinance shall upon conviction thereof be punished by a fine of
Five Thousand (₱5,000.00) Pesos or imprisonment for a period of not exceeding
one (1) year or both such fine and imprisonment at the discretion of the court;
Provided, That in case of [a] juridical person, the president, the manager, or the
persons in charge of the operation thereof shall be liable: Provided, further, That
in case of subsequent conviction for the same offense, the business license of
the guilty party shall automatically be cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances not


consistent with or contrary to this measure or any portion hereof are hereby
deemed repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.

Enacted by the city Council of Manila at its regular session today, November 10,
1992.

Approved by His Honor, the Mayor on December 3, 1992.


On December 15, 1992, the Malate Tourist and Development Corporation
(MTDC) filed a complaint for declaratory relief with prayer for a writ of
preliminary injunction and/or temporary restraining order ( TRO)5 with the
Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein
respondent City of Manila (the City) represented by Mayor Lim.6 MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional. MTDC
claimed that as owner and operator of the Victoria Court in Malate, Manila it was
authorized by Presidential Decree (P.D.) No. 259 to admit customers on a short
time basis as well as to charge customers wash up rates for stays of only three
hours.

On December 21, 1992, petitioners White Light Corporation (WLC), Titanium


Corporation (TC) and Sta. Mesa Tourist and Development Corporation (STDC)
filed a motion to intervene and to admit attached complaint-in-intervention7 on
the ground that the Ordinance directly affects their business interests as
operators of drive-in-hotels and motels in Manila.8 The three companies are
components of the Anito Group of Companies which owns and operates several
hotels and motels in Metro Manila.9

On December 23, 1992, the RTC granted the motion to intervene.10 The RTC
also notified the Solicitor General of the proceedings pursuant to then Rule 64,
Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw as
plaintiff.11

On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The
RTC issued a TRO on January 14, 1993, directing the City to cease and desist
from enforcing the Ordinance.13 The City filed an Answer dated January 22,
1993 alleging that the Ordinance is a legitimate exercise of police power.14

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering


the city to desist from the enforcement of the Ordinance.15 A month later, on
March 8, 1993, the Solicitor General filed his Comment arguing that the
Ordinance is constitutional.

During the pre-trial conference, the WLC, TC and STDC agreed to submit the
case for decision without trial as the case involved a purely legal question.16 On
October 20, 1993, the RTC rendered a decision declaring the Ordinance null
and void. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of
Manila is hereby declared null and void.
Accordingly, the preliminary injunction heretofor issued is hereby made
permanent.

SO ORDERED.17

The RTC noted that the ordinance "strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution."18 Reference
was made to the provisions of the Constitution encouraging private enterprises
and the incentive to needed investment, as well as the right to operate economic
enterprises. Finally, from the observation that the illicit relationships the
Ordinance sought to dissuade could nonetheless be consummated by simply
paying for a 12-hour stay, the RTC likened the law to the ordinance annulled
in Ynot v. Intermediate Appellate Court,19 where the legitimate purpose of
preventing indiscriminate slaughter of carabaos was sought to be effected
through an inter-province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on 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 for certiorari 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:

"to enact all ordinances it may deem necessary and proper for the sanitation
and safety, the furtherance of the prosperity and the promotion of the morality,
peace, good order, comfort, convenience and general welfare of the city and its
inhabitants, and such others as be necessary to carry into effect and discharge
the powers and duties conferred by this Chapter; and to fix penalties for the
violation of ordinances which shall not exceed two hundred pesos fine or six
months imprisonment, or both such fine and imprisonment for a single offense.23

Petitioners argued that the Ordinance is unconstitutional and void since it


violates the right to privacy and the freedom of movement; it is an invalid
exercise of police power; and it is an unreasonable and oppressive interference
in their business.

The Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.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.

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 action are in effect
permitted to raise the rights of third parties. Generally applied to statutes
infringing on the freedom of speech, the overbreadth doctrine applies when a
statute needlessly restrains even constitutionally guaranteed rights.39 In this
case, the petitioners claim that the Ordinance makes a sweeping intrusion into
the right to liberty of their clients. We can see that based on the allegations in
the petition, the Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional
rights of their clients to patronize their establishments for a "wash-rate" time
frame.

III.

To students of jurisprudence, the facts of this case will recall to mind not only the
recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and
Motel Operations Association, Inc., v. Hon. City Mayor of Manila.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 nation’s legal system, its use
has rarely been denied.

The apparent goal of the Ordinance is to minimize if not eliminate the use of the
covered establishments for illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and certainly fall within the ambit of
the police power of the State. Yet the desirability of these ends do not sanctify
any and all means for their achievement. Those means must align with the
Constitution, and our emerging sophisticated analysis of its guarantees to the
people. The Bill of Rights stands as a rebuke to the seductive theory of
Macchiavelli, and, sometimes even, the political majorities animated by his
cynicism.

Even as we design the precedents that establish the framework for analysis of
due process or equal protection questions, the courts are naturally inhibited by a
due deference to the co-equal branches of government as they exercise their
political functions. But when we are compelled to nullify executive or legislative
actions, yet another form of caution emerges. If the Court were animated by the
same passing fancies or turbulent emotions that motivate many political
decisions, judicial integrity is compromised by any perception that the judiciary is
merely the third political branch of government. We derive our respect and good
standing in the annals of history by acting as judicious and neutral arbiters of the
rule of law, and there is no surer way to that end than through the development
of rigorous and sophisticated legal standards through which the courts analyze
the most fundamental and far-reaching constitutional questions of the day.

B.

The primary constitutional question that confronts us is one of due process, as


guaranteed under Section 1, Article III of the Constitution. Due process evades a
precise definition.48 The purpose of the guaranty is to prevent arbitrary
governmental encroachment against the life, liberty and property of individuals.
The due process guaranty serves as a protection against arbitrary regulation or
seizure. Even corporations and partnerships are protected by the guaranty
insofar as their property is concerned.

The due process guaranty has traditionally been interpreted as imposing two
related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures that
the government must follow before it deprives a person of life, liberty, or
property.49 Procedural due process concerns itself with government action
adhering to the established process when it makes an intrusion into the private
sphere. Examples range from the form of notice given to the level of formality of
a hearing.

If due process were confined solely to its procedural aspects, there would arise
absurd situation of arbitrary government action, provided the proper formalities
are followed. Substantive due process completes the protection envisioned by
the due process clause. It inquires whether the government has sufficient
justification for depriving a person of life, liberty, or property.50

The question of substantive due process, moreso than most other fields of law,
has reflected dynamism in progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power, traditionally awesome as it
may be, is now confronted with a more rigorous level of analysis before it can be
upheld. The vitality though of constitutional due process has not been
predicated on the frequency with which it has been utilized to achieve a liberal
result for, after all, the libertarian ends should sometimes yield to the
prerogatives of the State. Instead, the due process clause has acquired potency
because of the sophisticated methodology that has emerged to determine the
proper metes and bounds for its application.

C.

The general test of the validity of an ordinance on substantive due process


grounds is best tested when assessed with the evolved footnote 4 test laid down
by the U.S. Supreme Court in U.S. v. Carolene Products.51Footnote 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."52Consequently, 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.60Strict scrutiny is used
today to test the validity of laws dealing with the regulation of speech, gender, or
race as well as other fundamental rights as expansion from its earlier
applications to equal protection.61 The United States Supreme Court has
expanded the scope of strict scrutiny to protect fundamental rights such as
suffrage,62 judicial access63 and interstate travel.64

If we were to take the myopic view that an Ordinance should be analyzed strictly
as to its effect only on the petitioners at bar, then it would seem that the only
restraint imposed by the law which we are capacitated to act upon is the injury
to property sustained by the petitioners, an injury that would warrant the
application of the most deferential standard – the rational basis test. Yet as
earlier stated, we recognize the capacity of the petitioners to invoke as well the
constitutional rights of their patrons – those persons who would be deprived of
availing short time access or wash-up rates to the lodging establishments in
question.

Viewed cynically, one might say that the infringed rights of these customers
were are trivial since they seem shorn of political consequence. Concededly,
these are not the sort of cherished rights that, when proscribed, would impel the
people to tear up their cedulas. Still, the Bill of Rights does not shelter gravitas
alone. Indeed, it is those "trivial" yet fundamental freedoms – which the people
reflexively exercise any day without the impairing awareness of their
constitutional consequence – that accurately reflect the degree of liberty enjoyed
by the people. Liberty, as integrally incorporated as a fundamental right in the
Constitution, is not a Ten Commandments-style enumeration of what may or
what may not be done; but rather an atmosphere of freedom where the people
do not feel labored under a Big Brother presence as they interact with each
other, their society and nature, in a manner innately understood by them as
inherent, without doing harm or injury to others.

D.

The rights at stake herein fall within the same fundamental rights to liberty which
we upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most
primordial of rights, thus:

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to


include "the right to exist and the right to be free from arbitrary restraint or
servitude. The term cannot be dwarfed into mere freedom from physical restraint
of the person of the citizen, but is deemed to embrace the right of man to enjoy
the facilities with which he has been endowed by his Creator, subject only to
such restraint as are necessary for the common welfare."[65] In accordance with
this case, the rights of the citizen to be free to use his faculties in all lawful ways;
to live and work where he will; to earn his livelihood by any lawful calling; and to
pursue any avocation are all deemed embraced in the concept of liberty.[66]

The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to
clarify the meaning of "liberty." It said:

While the Court has not attempted to define with exactness the liberty . . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire useful
knowledge, to marry, establish a home and bring up children, to worship God
according to the dictates of his own conscience, and generally to enjoy those
privileges long recognized . . . as essential to the orderly pursuit of happiness by
free men. In a Constitution for a free people, there can be no doubt that the
meaning of "liberty" must be broad indeed.67 [Citations omitted]

It cannot be denied that the primary animus behind the ordinance is the
curtailment of sexual behavior. The City asserts before this Court that the
subject establishments "have gained notoriety as venue of ‘prostitution, adultery
and fornications’ in Manila since they ‘provide the necessary atmosphere for
clandestine entry, presence and exit and thus became the ‘ideal haven for
prostitutes and thrill-seekers.’"68 Whether or not this depiction of a mise-en-
scene of vice is accurate, it cannot be denied that legitimate sexual behavior
among willing married or consenting single adults which is constitutionally
protected69 will be curtailed as well, as it was in the City of Manila case. Our
holding therein retains significance for our purposes:

The concept of liberty compels respect for the individual whose claim to privacy
and interference demands respect. As the case of Morfe v. Mutuc, borrowing the
words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His


separateness, his isolation, are indefeasible; indeed, they are so fundamental
that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to
himself. If he surrenders his will to others, he surrenders himself. If his will is set
by the will of others, he ceases to be a master of himself. I cannot believe that a
man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the
invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal
life of the citizen.70

We cannot discount other legitimate activities which the Ordinance would


proscribe or impair. There are very legitimate uses for a wash rate or renting the
room out for more than twice a day. Entire families are known to choose pass
the time in a motel or hotel whilst the power is momentarily out in their homes. In
transit passengers who wish to wash up and rest between trips have a
legitimate purpose for abbreviated stays in motels or hotels. Indeed any person
or groups of persons in need of comfortable private spaces for a span of a few
hours with purposes other than having sex or using illegal drugs can legitimately
look to staying in a motel or hotel as a convenient alternative.
E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons of
a product and the petitioners of lucrative business ties in with another
constitutional requisite for the legitimacy of the Ordinance as a police power
measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of private rights.71 It
must also be evident that no other alternative for the accomplishment of the
purpose less intrusive of private rights can work. More importantly, a reasonable
relation must exist between the purposes of the measure and the means
employed for its accomplishment, for even under the guise of protecting the
public interest, personal rights and those pertaining to private property will not
be permitted to be arbitrarily invaded.72

Lacking a concurrence of these requisites, the police measure shall be struck


down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review when life, liberty or property
is affected.73 However, this is not in any way meant to take it away from the
vastness of State police power whose exercise enjoys the presumption of
validity.74

Similar to the Comelec resolution requiring newspapers to donate advertising


space to candidates, this Ordinance is a blunt and heavy instrument.75 The
Ordinance makes no distinction between places frequented by patrons engaged
in illicit activities and patrons engaged in legitimate actions. Thus it prevents
legitimate use of places where illicit activities are rare or even unheard of. A
plain reading of section 3 of the Ordinance shows it makes no classification of
places of lodging, thus deems them all susceptible to illicit patronage and
subject them without exception to the unjustified prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-
Malate area, its longtime home,76 and it is skeptical of those who wish to depict
our capital city – the Pearl of the Orient – as a modern-day Sodom or Gomorrah
for the Third World set. Those still steeped in Nick Joaquin-dreams of the
grandeur of Old Manila will have to accept that Manila like all evolving big cities,
will have its problems. Urban decay is a fact of mega cities such as Manila, and
vice is a common problem confronted by the modern metropolis wherever in the
world. The solution to such perceived decay is not to prevent legitimate
businesses from offering a legitimate product. Rather, cities revive themselves
by offering incentives for new businesses to sprout up thus attracting the
dynamism of individuals that would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already prohibited
and could in fact be diminished simply by applying existing laws. Less intrusive
measures such as curbing the proliferation of prostitutes and drug dealers
through active police work would be more effective in easing the situation. So
would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on the
businesses of the petitioners and other legitimate merchants. Further, it is
apparent that the Ordinance can easily be circumvented by merely paying the
whole day rate without any hindrance to those engaged in illicit activities.
Moreover, drug dealers and prostitutes can in fact collect "wash rates" from their
clientele by charging their customers a portion of the rent for motel rooms and
even apartments.

IV.

We reiterate that individual rights may be adversely affected only to the extent
that may fairly be required by the legitimate demands of public interest or public
welfare. The State is a leviathan that must be restrained from needlessly
intruding into the lives of its citizens. However well-intentioned the Ordinance
may be, it is in effect an arbitrary and whimsical intrusion into the rights of the
establishments as well as their patrons. The Ordinance needlessly restrains the
operation of the businesses of the petitioners as well as restricting the rights of
their patrons without sufficient justification. The 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

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

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

Even as the implementation of moral norms remains an indispensable


complement to governance, that prerogative is hardly absolute, especially in the
face of the norms of due process of liberty. And while the tension may often be
left to the courts to relieve, it is possible for the government to avoid the
constitutional conflict by employing more judicious, less drastic means to
promote morality.

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,
i s R E I N S TAT E D . O r d i n a n c e N o . 7 7 7 4 i s h e r e b y d e c l a r e d
UNCONSTITUTIONAL. No pronouncement as to costs.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Baguio City

THIRD DIVISION

G.R. No. 156684 April 6, 2011

SPOUSES ANTONIO and FE YUSAY, Petitioners, 



vs.

COURT OF APPEALS, CITY MAYOR and CITY COUNCIL OF
MANDALUYONG CITY, Respondents.

RESOLUTION

BERSAMIN, J.:

The petitioners appeal the adverse decision promulgated on October 18,


20021 and resolution promulgated on January 17, 2003,2 whereby the Court of
Appeals (CA) reversed and set aside the order issued in their favor on February
19, 2002 by the Regional Trial Court, Branch 214, in Mandaluyong City (RTC).
3 Thereby, the CA upheld Resolution No. 552, Series of 1997, adopted by the

City of Mandaluyong (City) authorizing its then City Mayor to take the necessary
legal steps for the expropriation of the parcel of land registered in the names of
the petitioners.

We affirm the CA.

Antecedents

The petitioners owned a parcel of land with an area of 1,044 square meters
situated between Nueve de Febrero Street and Fernandez Street in Barangay
Mauway, Mandaluyong City. Half of their land they used as their residence, and
the rest they rented out to nine other families. Allegedly, the land was their only
property and only source of income.

On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City


adopted Resolution No. 552, Series of 1997, to authorize then City Mayor
Benjamin S. Abalos, Sr. to take the necessary legal steps for the expropriation of
the land of the petitioners for the purpose of developing it for low cost housing
for the less privileged but deserving city inhabitants. The resolution reads as
follows:
RESOLUTION NO. 552, S-19974

RESOLUTION AUTHORIZING HON. BENJAMIN S. ABALOS TO TAKE THE


NECESSARY LEGAL STEPS FOR THE EXPROPRIATION OF A PARCEL OF
LAND SITUATED ALONG DR. JOSE FERNANDEZ STREET, BARANGAY
MAUWAY, CITY OF MANDALUYONG, OWNED BY MR. ANTONIO YUSAY

WHEREAS, there is a parcel of land situated along Dr. Jose Fernandez Street,
Barangay Mauway, City of Mandaluyong, owned and registered in the name of
MR. ANTONIO YUSAY;

WHEREAS, this piece of land have been occupied for about ten (10) years by
many financially hard-up families which the City Government of Mandaluyong
desires, among other things, to provide modest and decent dwelling;

WHEREAS, the said families have already negotiated to acquire this land but
was refused by the above-named owner in total disregard to the City
Government’s effort of providing land for the landless;

WHEREAS, the expropriation of said land would certainly benefit public interest,
let alone, a step towards the implementation of social justice and urban land
reform in this City;

WHEREAS, under the present situation, the City Council deems it necessary to
authorize Hon. Mayor BENJAMIN S. ABALOS to institute expropriation
proceedings to achieve the noble purpose of the City Government of
Mandaluyong.

NOW, THEREFORE, upon motion duly seconded, the City Council of


Mandaluyong, in session assembled, RESOLVED, as it hereby RESOLVES, to
authorize, as it is hereby authorizing, Hon. Mayor BENJAMIN S. ABALOS, to
institute expropriation proceedings against the above-named registered owner
of that parcel of land situated along Dr. Jose Fernandez Street, Barangay
Mauway, City of Mandaluyong, (f)or the purpose of developing it to a low-cost
housing project for the less privileged but deserving constituents of this City.

ADOPTED on this 2nd day of October 1997 at the City of Mandaluyong.

Sgd. Adventor R. Delos Santos



Acting Sanggunian Secretary

Attested:
Approved:
Sgd. Roberto J. Francisco
City Councilor & Acting City Mayor
Sgd. Benjamin S. Abalos
Presiding Officer
Notwithstanding that the enactment of Resolution No. 552 was but the initial
step in the City’s exercise of its power of eminent domain granted under Section
19 of the Local Government Code of 1991, the petitioners became alarmed, and
filed a petition for certiorari and prohibition in the RTC, praying for the annulment
of Resolution No. 552 due to its being unconstitutional, confiscatory, improper,
and without force and effect.

The City countered that Resolution No. 552 was a mere authorization given to
the City Mayor to initiate the legal steps towards expropriation, which included
making a definite offer to purchase the property of the petitioners; hence, the
suit of the petitioners was premature.

On January 31, 2001, the RTC ruled in favor of the City and dismissed the
petition for lack of merit, opining that certiorari did not lie against a legislative act
of the City Government, because the special civil action of certiorari was only
available to assail judicial or quasi-judicial acts done without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; that the special civil action of prohibition did not also lie under the
circumstances considering that the act of passing the resolution was not a
judicial, or quasi-judicial, or ministerial act; and that notwithstanding the
issuance of Resolution No. 552, the City had yet to commit acts of
encroachment, excess, or usurpation, or had yet to act without or in excess of
jurisdiction or with grave abuse of discretion amounting lack or in excess of
jurisdiction.

However, on February 19, 2002, the RTC, acting upon the petitioners’ motion for
reconsideration, set aside its decision and declared that Resolution No. 552 was
null and void. The RTC held that the petition was not premature because the
passage of Resolution No. 552 would already pave the way for the City to
deprive the petitioners and their heirs of their only property; that there was no
due process in the passage of Resolution No. 552 because the petitioners had
not been invited to the subsequent hearings on the resolution to enable them to
ventilate their opposition; and that the purpose for the expropriation was not for
public use and the expropriation would not benefit the greater number of
inhabitants.

Aggrieved, the City appealed to the CA.


In its decision promulgated on October 18, 2002, the CA concluded that the
reversal of the January 31, 2001 decision by the RTC was not justified because
Resolution No. 552 deserved to be accorded the benefit of the presumption of
regularity and validity absent any sufficient showing to the contrary; that notice
to the petitioners (Spouses Yusay) of the succeeding hearings conducted by the
City was not a part of due process, for it was enough that their views had been
consulted and that they had been given the full opportunity to voice their protest;
that to rule otherwise would be to give every affected resident effective veto
powers in law-making by a local government unit; and that a public hearing,
although necessary at times, was not indispensable and merely aided in law-
making.

The CA disposed as follows:

WHEREFORE, premises considered, the questioned order of the Regional Trial


Court, Branch 214, Mandaluyong City dated February 19, 2002 in SCA Case
No. 15-MD, which declared Resolution No. 552, Series of 1997 of the City of
Mandaluyong null and void, is hereby REVERSED and SET ASIDE. No costs.

SO ORDERED.5

The petitioners moved for reconsideration, but the CA denied their motion. Thus,
they appeal to the Court, posing the following issues, namely:

1. Can the validity of Resolution No. 552 be assailed even before its
implementation?

2. Must a citizen await the takeover and possession of his property by the local
government before he can go to court to nullify an unjust expropriation?

Before resolving these issues, however, the Court considers it necessary to first
determine whether or not the action for certiorari and prohibition commenced by
the petitioners in the RTC was a proper recourse of the petitioners.

Ruling

We deny the petition for review, and find that certiorari and prohibition were not
available to the petitioners under the circumstances. Thus, we sustain, albeit
upon different grounds, the result announced by the CA, and declare that the
RTC gravely erred in giving due course to the petition for certiorari and
prohibition.

1.
Certiorari does not lie to assail the issuance of 

a resolution by the Sanggunian Panglungsod

The special civil action for certiorari is governed by Rule 65 of the 1997 Rules of
Civil Procedure, whose Section 1 provides:

Section 1. Petition for certiorari. – When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal,
board or officer, and granting such incidental reliefs as law and justice may
require.

xxx

For certiorari to prosper, therefore, the petitioner must allege and establish the
concurrence of the following requisites, namely:

(a) The writ is directed against a tribunal, board, or officer exercising judicial or
quasi-judicial functions;

(b) Such tribunal, board, or officer has acted without or in excess of jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction; and

(c) There is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.6

It is further emphasized that a petition for certiorari seeks solely to correct


defects in jurisdiction,7 and does not correct just any error or mistake committed
by a court, board, or officer exercising judicial or quasi-judicial functions unless
such court, board, or officer thereby acts without jurisdiction or in excess of
jurisdiction or with such grave abuse of discretion amounting to lack of
jurisdiction.8

The first requisite is that the respondent tribunal, board, or officer must be
exercising judicial or quasi-judicial functions. Judicial function, according to
Bouvier,9 is the exercise of the judicial faculty or office; it also means the
capacity to act in a specific way which appertains to the judicial power, as one of
the powers of government. "The term," Bouvier continues,10 "is used to describe
generally those modes of action which appertain to the judiciary as a
department of organized government, and through and by means of which it
accomplishes its purpose and exercises its peculiar powers."

Based on the foregoing, certiorari did not lie against the Sangguniang
Panglungsod, which was not a part of the Judiciary settling an actual
controversy involving legally demandable and enforceable rights when it
adopted Resolution No. 552, but a legislative and policy-making body declaring
its sentiment or opinion.

Nor did the Sangguniang Panglungsod abuse its discretion in adopting


Resolution No. 552. To demonstrate the absence of abuse of discretion, it is well
to differentiate between a resolution and an ordinance. The first is upon a
specific matter of a temporary nature while the latter is a law that is permanent
in character.11 No rights can be conferred by and be inferred from a resolution,
which is nothing but an embodiment of what the lawmaking body has to say in
the light of attendant circumstances. In simply expressing its sentiment or
opinion through the resolution, therefore, the Sangguniang Panglungsod in no
way abused its discretion, least of all gravely, for its expression of sentiment or
opinion was a constitutionally protected right.

Moreover, Republic Act No. 7160 (The Local Government Code) required the
City to pass an ordinance, not adopt a resolution, for the purpose of initiating an
expropriation proceeding. In this regard, Section 19 of The Local Government
Code clearly provides, viz:

Section 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
at the time of the taking of the property.

A resolution like Resolution No. 552 that merely expresses the sentiment of the
Sangguniang Panglungsod is not sufficient for the purpose of initiating an
expropriation proceeding. Indeed, in Municipality of Parañaque v. V.M. Realty
Corporation,12 a case in which the Municipality of Parañaque based its
complaint for expropriation on a resolution, not an ordinance, the Court ruled so:

The power of eminent domain is lodged in the legislative branch of government,


which may delegate the exercise thereof to LGUs, other public entities and
public utilities. An LGU may therefore exercise the power to expropriate private
property only when authorized by Congress and subject to the latter’s control
and restraints, imposed "through the law conferring the power or in other
legislations." In this case, Section 19 of RA 7160, which delegates to LGUs the
power of eminent domain, also lays down the parameters for its exercise. It
provides as follows:

"Section 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
at the time of the taking of the property." (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU can exercise
the power of eminent domain:

1. An ordinance is enacted by the local legislative council authorizing the local


chief executive, in behalf of the LGU, to exercise the power of eminent domain
or pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare,
or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9 Article III


of the Constitution and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the
property sought to be expropriated, but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of
eminent domain pursuant to a resolution of the municipal council. Thus, there
was no compliance with the first requisite that the mayor be authorized through
an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals to show that a
resolution may suffice to support the exercise of eminent domain by an LGU.
This case, however, is not in point because the applicable law at that time was
BP 337, the previous Local Government Code, which had provided that a mere
resolution would enable an LGU to exercise eminent domain. In contrast, RA
7160, the present Local Government Code which was already in force when the
Complaint for expropriation was filed, explicitly required an ordinance for this
purpose.

We are not convinced by petitioner’s insistence that the terms "resolution" and
"ordinance" are synonymous. A municipal ordinance is different from a
resolution. An ordinance is a law, but a resolution is merely a declaration of the
sentiment or opinion of a lawmaking body on a specific matter. An ordinance
possesses a general and permanent character, but a resolution is temporary in
nature. Additionally, the two are enacted differently -- a third reading is
necessary for an ordinance, but not for a resolution, unless decided otherwise
by a majority of all the Sanggunian members.

If Congress intended to allow LGUs to exercise eminent domain through a mere


resolution, it would have simply adopted the language of the previous Local
Government Code. But Congress did not. In a clear divergence from the
previous Local Government Code, Section 19 of RA 7160 categorically requires
that the local chief executive act pursuant to an ordinance. Indeed, "[l]egislative
intent is determined principally from the language of a statute. Where the
language of a statute is clear and unambiguous, the law is applied according to
its express terms, and interpretation would be resorted to only where a literal
interpretation would be either impossible or absurd or would lead to an
injustice." In the instant case, there is no reason to depart from this rule, since
the law requiring an ordinance is not at all impossible, absurd, or unjust.

Moreover, the power of eminent domain necessarily involves a derogation of a


fundamental or private right of the people. Accordingly, the manifest change in
the legislative language – from "resolution" under BP 337 to "ordinance" under
RA 7160 – demands a strict construction. "No species of property is held by
individuals with greater tenacity, and is guarded by the Constitution and laws
more sedulously, than the right to the freehold of inhabitants. When the
legislature interferes with that right and, for greater public purposes,
appropriates the land of an individual without his consent, the plain meaning of
the law should not be enlarged by doubtful interpretation."
xxx

In its Brief filed before Respondent Court, petitioner argues that its Sangguniang
Bayan passed an ordinance on October 11, 1994 which reiterated its Resolution
No. 93-35, Series of 1993, and ratified all the acts of its mayor regarding the
subject expropriation.

This argument is bereft of merit. In the first place, petitioner merely alleged the
existence of such an ordinance, but it did not present any certified true copy
thereof. In the second place, petitioner did not raise this point before this Court.
In fact, it was mentioned by private respondent, and only in passing. In any
event, this allegation does not cure the inherent defect of petitioner’s Complaint
for expropriation filed on September 23, 1993. It is hornbook doctrine that:

" x x x in a motion to dismiss based on the ground that the complaint fails to
state a cause of action, the question submitted before the court for
determination is the sufficiency of the allegations in the complaint itself. Whether
those allegations are true or not is beside the point, for their truth is
hypothetically admitted by the motion. The issue rather is: admitting them to be
true, may the court render a valid judgment in accordance with the prayer of the
complaint?"

The fact that there is no cause of action is evident from the face of the
Complaint for expropriation which was based on a mere resolution. The absence
of an ordinance authorizing the same is equivalent to lack of cause of action.
Consequently, the Court of Appeals committed no reversible error in affirming
the trial court’s Decision which dismissed the expropriation suit.13 (Emphasis
supplied)

In view of the absence of the proper expropriation ordinance authorizing and


providing for the expropriation, the petition for certiorari filed in the RTC was
dismissible for lack of cause of action.

2.

Prohibition does not lie against expropriation

The special civil action for prohibition is governed also by Section 2 of Rule 65
of the 1997 Rules of Civil Procedure, which states:

Section 2. Petition for prohibition. — When the proceedings of any tribunal,


corporation, board, officer or person, whether exercising judicial, quasi-judicial or
ministerial functions, are without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there
is no appeal or any other plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further proceedings in the
action or matter specified therein, or otherwise granting such incidental reliefs as
law and justice may require.

xxx

The function of prohibition is to prevent the unlawful and oppressive exercise of


legal authority and to provide for a fair and orderly administration of justice.
14 The writ of prohibition is directed against proceedings that are done without or

in excess of jurisdiction, or with grave abuse of discretion, there being no appeal


or other plain, speedy and adequate remedy in the ordinary course of law.15 For
grave abuse of discretion to be a ground for prohibition, the petitioner must first
demonstrate that the tribunal, corporation, board, officer, or person, whether
exercising judicial, quasi-judicial or ministerial functions, has exercised its or his
power in an arbitrary or despotic manner, by reason of passion or personal
hostility, which must be so patent and gross as would amount to an evasion, or
to a virtual refusal to perform the duty enjoined or to act in contemplation of law.
16 On the other hand, the term excess of jurisdiction signifies that the court,

board, or officer has jurisdiction over a case but has transcended such
jurisdiction or acted without any authority.17

The petitioner must further allege in the petition and establish facts to show that
any other existing remedy is not speedy or adequate.18 A remedy is plain,
speedy and adequate if it will promptly relieve the petitioner from the injurious
effects of that judgment and the acts of the tribunal or inferior court.191avvphi1

The rule and relevant jurisprudence indicate that prohibition was not available to
the petitioners as a remedy against the adoption of Resolution No. 552, for the
Sangguniang Panglungsod, by such adoption, was not exercising judicial, quasi-
judicial or ministerial functions, but only expressing its collective sentiment or
opinion.

Verily, there can be no prohibition against a procedure whereby the immediate


possession of the land under expropriation proceedings may be taken, provided
always that due provision is made to secure the prompt adjudication and
payment of just compensation to the owner. 20 This bar against prohibition
comes from the nature of the power of eminent domain as necessitating the
taking of private land intended for public use,21 and the interest of the affected
landowner is thus made subordinate to the power of the State. Once the State
decides to exercise its power of eminent domain, the power of judicial review
becomes limited in scope, and the courts will be left to determine the
appropriate amount of just compensation to be paid to the affected landowners.
Only when the landowners are not given their just compensation for the taking of
their property or when there has been no agreement on the amount of just
compensation may the remedy of prohibition become available.

Here, however, the remedy of prohibition was not called for, considering that
only a resolution expressing the desire of the Sangguniang Panglungsod to
expropriate the petitioners’ property was issued. As of then, it was premature for
the petitioners to mount any judicial challenge, for the

power of eminent domain could be exercised by the City only through the filing
of a verified complaint in the proper court.22 Before the City as the expropriating
authority filed such verified complaint, no expropriation proceeding could be said
to exist. Until then, the petitioners as the owners could not also be deprived of
their property under the power of eminent domain.23

WHEREFORE, we affirm the decision promulgated on October 18, 2002 in CA-


G.R. SP No. 70618.

Costs to be paid by the petitioners.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 192088 October 9, 2012

INITIATIVES FOR DIALOGUE AND EMPOWERMENT THROUGH


ALTERNATIVE LEGAL SERVICES, INC. (IDEALS, INC.), represented by its
Executive Director, Mr. Edgardo Ligon, and FREEDOM FROM DEBT
COALITION (FDC), represented by its Vice President Rebecca L. Malay,
AKBAYAN CITIZEN'S ACTION PARTY, represented by its Chair Emeritus
Loretta Anne P. Rosales, ALLIANCE OF PROGRESSIVE LABOR,
represented by its Chairperson, Daniel L. Edralin, REP. WALDEN BELLO,
in his capacity as duly-elected Member of the House of
Representatives, Petitioners, 

vs.

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
CORPORATION (PSALM), represented by its Acting President and Chief
Executive Officer Atty. Ma. Luz L. Caminero, METROPOLITAN
WATERWORKS AND SEWERAGE SYSTEM (MWSS), represented by its
Administrator Atty. Diosdado M. Allado, NATIONAL IRRIGATION
ADMINISTRATION (NIA), represented by its Administrator Carlos S.
Salazar, KOREA WATER RESOURCES CORPORATION, represented by its
Chief Executive Officer, Kim Kuen-Ho and/or Attorneys-in-fact, Atty. Anna
Bianca L. Torres and Atty. Luther D. Ramos, FIRST GEN NORTHERN
ENERGY CORP., represented by its President, Mr. Federico R. Lopez, SAN
MIGUEL CORP., represented by its President, Mr. Ramon S. Ang,
SNABOITIZ POWER-PANGASINAN INC., represented by its President, Mr.
Antonio R. Moraza, TRANS-ASIA OIL AND ENERGY DEVELOPMENT
CORPORATION, represented by its President and CEO, Mr. Francisco L.
Viray, and DMCI POWER CORP., represented by its President, Mr. Nestor
Dadivas, Respondents.

DECISION

VILLARAMA, J.:

Before us is a petition for certiorari and prohibition seeking to permanently


enjoin the sale of the Angat Hydro-Electric Power Plant (AHEPP) to Korea Water
Resources Corporation (K-Water) which won the public bidding conducted by
the Power Sector Assets and Liabilities Management Corporation (PSALM).
The Facts

Respondent PSALM is a government-owned and controlled corporation created


by virtue of Republic Act No. 9136,1 otherwise known as the "Electric Power
Industry Reform Act of 2001" (EPIRA). The EPIRAprovided a framework for the
restructuring of the electric power industry, including the privatization of the
assets of the National Power Corporation (NPC), the transition to the desired
competitive structure, and the definition of the responsibilities of the various
government agencies and private entities. Said law mandated PSALM to
manage the orderly sale, disposition, and privatization of NPC generation
assets, real estate and other disposable assets, and Independent Power
Producer (IPP) contracts with the objective of liquidating all NPC financial
obligations and stranded contract costs in an optimal manner, which liquidation
is to be completed within PSALM’s 25-year term of existence.2

Sometime in August 2005, PSALM commenced the privatization of the 246-


megawatt (MW) AHEPP located in San Lorenzo, Norzagaray, Bulacan. AHEPP’s
main units built in 1967 and 1968, and 5 auxiliary units, form part of the Angat
Complex which includes the Angat Dam, Angat Reservoir and the outlying
watershed area. A portion of the AHEPP - the 10 MW Auxiliary Unit No. 4
completed on June 16, 1986 and the 18 MW Auxiliary Unit No. 5 completed on
January 14, 1993 - is owned by respondent Metropolitan Waterworks and
Sewerage System (MWSS).3 The main units produce a total of 200 MW of
power while the auxiliary units yield the remaining 46 MW of power. The Angat
Dam and AHEPP are utilized for power generation, irrigation, water supply and
flood control purposes. Because of its multi-functional design, the operation of
the Angat Complex involves various government agencies, namely: (1) NPC; (2)
National Water Resources Board (NWRB); (3) MWSS; (4) respondent National
Irrigation Administration (NIA); and (5) Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAG-ASA).

On December 15, 2009, PSALM’s Board of Directors approved the Bidding


Procedures for the privatization of the AHEPP. An Invitation to Bid was published
on January 11, 12 and 13, 2010 in three major national newspapers. Subject of
the bid was the AHEPP consisting of 4 main units and 3 auxiliary units with an
aggregate installed capacity of 218 MW. The two auxiliary units owned by
MWSS were excluded from the bid.

The following terms and conditions for the purchase of AHEPP were set forth in
the Bidding Package:

IB-05 CONDITION OF THE SALE


The Asset shall be sold on an "AS IS, WHERE IS" basis.

The Angat Dam (which is part of the Non-Power Components) is a multi-


purpose hydro facility which currently supplies water for domestic use, irrigation
and power generation. The four main units of the Angat Plant release water to
an underground trailrace that flows towards the Bustos Dam which is owned and
operated by the National Irrigation Administration ("NIA") and provides irrigation
requirements to certain areas in Bulacan. The water from the auxiliary units 1, 2
and 3 flows to the Ipo Dam which is owned and operated by MWSS and
supplies domestic water to Metro Manila and other surrounding cities.

The priority of water usage under Philippine Law would have to be observed by
the Buyer/Operator.

The Winning Bidder/Buyer shall be requested to enter into an operations and


maintenance agreement with PSALM for the Non-Power Components in
accordance with the terms and conditions of the O & M Agreement to be issued
as part of the Final Transaction Documents. The Buyer, as Operator, shall be
required to operate and maintain the Non-Power Components at its own cost
and expense. PSALM is currently negotiating a water protocol agreement with
various parties which are currently the MWSS, NIA, the National Water
Resources Board and NPC. If required by PSALM, the Buyer will be required to
enter into the said water protocol agreement as a condition to the award of the
Asset.

The Buyer shall be responsible for securing the necessary rights to occupy the
land underlying the Asset.4 (Emphasis supplied.)

All participating bidders were required to comply with the following:

(a) submission of a Letter of Interest; (b) execution of Confidentiality Agreement


and Undertaking; and (c) payment of a non-refundable fee of US$ 2,500 as
Participation Fee.5 After holding pre-bid conferences and forum discussions with
various stakeholders, PSALM received the following bids from six competing
firms:

K-Water
US$ 440,880,000.00
First Gen Northern Energy
365,000,678.00
Corporation

San Miguel Corporation


312,500,000.00
SNAboitiz Power-Pangasinan, Inc.
256,000,000.00
Trans-Asia Oil & Energy
237,000,000.00
Development Corporation

DMCI Power Corporation


188,890,000.00
On May 5, 2010, and after a post-bid evaluation, PSALM’s Board of Directors
approved and confirmed the issuance of a Notice of Award to the highest bidder,
K-Water.6

On May 19, 2010, the present petition with prayer for a temporary restraining
order (TRO) and/or writ of preliminary injunction was filed by the Initiatives for
Dialogue and Empowerment Through Alternative Legal Services, Inc. (IDEALS),
Freedom from Debt Coalition (FDC), AKBAYAN Citizen’s Action Party
(AKBAYAN) and Alliance of Progressive Labor.

On May 24, 2010, this Court issued a Status QuoAnte Order directing the
respondents to maintain the status quo prevailing before the filing of the petition
and to file their respective Comments on the petition.7

Arguments of the Parties

Petitioners contend that PSALM gravely abused its discretion when, in the
conduct of the bidding it disregarded and violated the people’s right to
information guaranteed under the Constitution, as follows: (1) the bidding
process was commenced by PSALM without having previously released to the
public critical information such as the terms and conditions of the sale, the
parties qualified to bid and the minimum bid price, as laid down in the case of
Chavez v. Public Estates Authority8 ; (2) PSALM refused to divulge significant
information requested by petitioners, matters which are of public concern; and
(3) the bidding was not conducted in an open and transparent manner,
participation was indiscriminately restricted to the private sectors in violation of
the EPIRA which provides that its provisions shall be "construed in favor of the
establishment, promotion, preservation of competition and people empowerment
so that the widest participation of the people, whether directly or indirectly, is
ensured."9

Petitioners also assail the PSALM in not offering the sale of the AHEPP to
MWSS which co-owned the Angat Complex together with NPC and NIA. Being a
mere co-owner, PSALM cannot sell the AHEPP without the consent of co-
owners MWSS and NIA, and being an indivisible thing, PSALM has a positive
obligation to offer its undivided interest to the other co-owners before selling the
same to an outsider. Hence, PSALM’s unilateral disposition of the said hydro
complex facility violates the Civil Code rules on co-ownership (Art. 498) and
Sec. 47 (e) of the EPIRA which granted PSALM the legal option of transferring
possession, control and operation of NPC generating assets like the AHEPP to
another entity in order "to protect potable water, irrigation and all other
requirements imbued with public interest."

As to the participation in the bidding of and award of contract to K-Water which


is a foreign corporation, petitioners contend that PSALM clearly violated the
constitutional provisions on the appropriation and utilization of water as a natural
resource, as implemented by the Water Code of the Philippines limiting water
rights to Filipino citizens and corporations which are at least 60% Filipino-
owned. Further considering the importance of the Angat Dam which is the
source of 97% of Metro Manila’s water supply, as well as irrigation for farmlands
in 20 municipalities and towns in Pampanga and Bulacan, petitioners assert that
PSALM should prioritize such domestic and community use of water over that of
power generation.

They maintain that the Philippine Government, along with its agencies and
subdivisions, have an obligation under international law, to recognize and
protect the legally enforceable human right to water of petitioners and the public
in general.

Petitioners cite the Advisory on the "Right to Water in Light of the Privatization of
the Angat Hydro-Electric Power Plant"10 dated November 9, 2009 issued by the
Commission on Human Rights (CHR) urging the Government to revisit and
reassess its policy on water resources vis-à-vis its concurrent obligations under
international law to provide, and ensure and sustain, among others, "safe,
sufficient, affordable and convenient access to drinking water." Since investment
in hydropower business is primarily driven by generation of revenues both for
the government and private sector, the CHR warns that once the AHEPP is
privatized, there will be less accessible water supply, particularly for those living
in Metro Manila and the Province of Bulacan and nearby areas which are
currently benefited by the AHEPP. The CHR believes that the management of
AHEPP is better left to MWSS being a government body and considering the
public interest involved. However, should the decision to privatize the AHEPP
become inevitable, the CHR strongly calls for specific and concrete safeguards
to ensure the right to water of all, as the domestic use of water is more
fundamental than the need for electric power.
Petitioners thus argue that the protection of their right to water and of public
interest requires that the bidding process initiated by PSALM be declared null
and void for violating such right, as defined by international law and by domestic
law establishing the State’s obligation to ensure water security for its people.

In its Comment With Urgent Motion to Lift Status Quo Ante Order, respondent
PSALM prayed for the dismissal of the petition on the following procedural
grounds: (a) a petition for certiorari is not the proper remedy because PSALM
was not acting as a tribunal or board exercising judicial or quasi-judicial
functions when it commenced the privatization of AHEPP; (b) the present
petition is rendered moot by the issuance of a Notice of Award in favor of K-
Water; (c) assuming the petition is not mooted by such contract award, this
Court has no jurisdiction over the subject matter of the controversy involving a
political question, and also because if it were the intent of Congress to exclude
the AHEPP in the privatization of NPC assets, it should have clearly expressed
such intent as it did with the Agus and Pulangui power plants under Sec. 47 of
the EPIRA; (d) petitioners’ lack of standing to question the bidding process for
failure to show any injury as a result thereof, while Rep. Walden Bello likewise
does not have such legal standing in his capacity as a duly elected member of
the House of Representatives as can be gleaned from the rulings in David v.
Arroyo11 and Philippine Constitutional Association v. Enriquez.12

On the alleged violation of petitioners’ right to information, PSALM avers that it


conducted the bidding in an open and transparent manner, through a series of
events in accordance with the governing rules on public bidding. The non-
disclosure of certain information in the invitation to bid was understandable,
such as the minimum or reserve price which are still subject to negotiation and
approval of PSALM’s Board of Directors. The ruling in Chavez v. Public Estates
Authority13 is inapplicable since it involved government property which has
become unserviceable or was no longer needed and thus fell under Sec. 79 of
the Government Auditing Code whereas the instant case concerns a
hydroelectric power plant adjacent to a dam which still provides water supply to
Metro Manila. In the bidding for the AHEPP, PSALM claims that it relied on the
Rules and Regulations Implementing the EPIRA, as well as COA Circular No.
89-296 on the general procedures for bidding by government agencies and
instrumentalities of assets that will be divested or government property that will
be disposed of. PSALM likewise avers that it was constrained to deny petitioner
IDEALS’ letter dated April 20, 2010 requesting documents relative to the
privatization of Angat Dam due to non-submission of a Letter of Interest,
Confidentiality and Undertaking and non-payment of the Participation Fee. With
regard to IDEALS’ request for information about the winning bidder, as
contained in its letter dated May 14, 2010, the same was already referred to
respondent K-Water’s counsel for appropriate action.

In any case, PSALM maintains that not all details relative to the privatization of
the AHEPP can be readily disclosed; the confidentiality of certain matters was
necessary to ensure the optimum bid price for the property.

PSALM further refutes the assertion of petitioners that the Angat Complex is an
indivisible system and co-owned with MWSS and NIA. It contends that MWSS’s
contribution in the funds used for the construction of the AHEPP did not give rise
to a regime of co-ownership as the said funds were merely in exchange for the
supply of water that MWSS would get from the Angat Dam, while the Umiray-
AngatTransbasin Rehabilitation Project the improvement and repair of which
were funded by MWSS, did not imply a co-ownership as these facilities are
located in remote places. Moreover, PSALM points out that PSALM, MWSS and
NIA each was issued a water permit, and are thus holders of separate water
rights.

On the alleged violation of petitioners’ and the people’s right to water, PSALM
contends that such is baseless and proceeds from the mistaken assumption that
the Angat Dam was sold and as a result thereof, the continuity and availability of
domestic water supply will be interrupted. PSALM stresses that only the
hydroelectric facility is being sold and not the Angat Dam which remains to be
owned by PSALM, and that the NWRB still governs the water allocation therein
while the NPC-FFWSDO still retains exclusive control over the opening of
spillway gates during rainy season. The foregoing evinces the continued
collective control by government agencies over the Angat Dam, which in the
meantime, is in dire need of repairs, the cost of which cannot be borne by the
Government.

PSALM further debunks the nationality issue raised by petitioners, citing


previous opinions rendered by the Department of Justice (DOJ) consistently
holding that the utilization of water by a hydroelectric power plant does not
constitute appropriation of water from its natural source considering that the
source of water (dam) that enters the intake gate of the power plant is an
artificial structure. Moreover, PSALM is mindful of the State’s duty to protect the
public’s right to water when it sold the AHEPP. In fact, such concern as taken
into consideration by PSALM in devising a privatization scheme for the AHEPP
whereby the water allocation is continuously regulated by the NWRB and the
dam and its spillway gates remain under the ownership and control of NPC.

In its Comment,14 respondent MWSS asserts that by virtue of its various


statutory powers since its creation in 1971, which includes the construction,
maintenance and operation of dams, reservoir and other waterworks within its
territorial jurisdiction, it has supervision and control over the Angat Dam given
that the Angat Reservoir supplies approximately 97% of the water requirements
of Metro Manila. Over the course of its authority over the Angat Dam, Dykes and
Reservoir, MWSS has incurred expenses to maintain their upkeep, improve and
upgrade their facilities. Thus, in 1962, MWSS contributed about 20% for the
construction cost of the Angat Dam and Dykes (then equivalent to about ₱ 21
million); in 1992, MWSS contributed about ₱ 218 million for the construction of
Auxiliary Unit No. 5; in 1998, MWSS contributed ₱ 73.5 million for the
construction cost of the low level outlet; and subsequently, MWSS invested ₱
3.3 billion to build the Umiray-AngatTransbasin Tunnel to supplement the water
supply available from the Angat Dam, which tunnel contributes a minimum of
about 9 cubic meters per second to the Angat Reservoir, thus increasing power
generation. MWSS argues that its powers over waterworks are vested upon it by
a special law (MWSS Charter) which prevails over the EPIRA which is a general
law, as well as other special laws, issuances and presidential edicts. And as
contained in Sec. 1 of the MWSS Charter, which remains valid and effective, it is
expressly provided that the establishment, operation and maintenance of
waterworks systems must always be supervised by the State.

MWSS further alleges that after the enactment of EPIRA, it had expressed the
desire to acquire ownership and control of the AHEPP so as not to leave the
operation of the Angat Reservoir to private discretion that may prejudice the
water allocation to MWSS as dictated by NWRB rules.

Representations were thereafter made with the Office of the President (OP) for
the turn over of the management of these facilities to MWSS, and joint
consultation was also held with PSALM officials for the possibility of a
Management Committee to manage and control the Angat Dam Complex under
the chairmanship of the water sector, which position was supported by former
Secretary HermogenesEbdane of the Department of Public Works and
Highways (DPWH). In March 2008, PSALM proposed the creation of an inter-
agency technical working group (TWG) to draft the Operations and Maintenance
(O & M) Agreement for the AHEPP that will be in effect after its privatization.
PSALM likewise sought the view of the Office of the Government Corporate
Counsel (OGCC) which opined that PSALM may turn over the facility to a
qualified entity such as MWSS without need of public bidding. In 2009, various
local governments supported the transfer of the control and management of the
AHEPP to MWSS, while the League of Cities and Municipalities interposed its
opposition to the privatization of the AHEPP fearing that it might increase the
cost of water in Metro Manila, and also because it will be disadvantageous to
the national government since the AHEPP only contributes 246 MW of electricity
to the Luzon Grid. Even the CHR has advised the Government to reassess its
privatization policy and to always consider paramount the most basic resources
necessary and indispensable for human survival, which includes water.

MWSS further avers that upon the facilitation of the OGCC and participated in
by various stakeholders, including its two concessionaires, Manila Water
Company, Inc. and Maynilad Water Services, Inc., various meetings and
conferences were held relative to the drafting of the

Memorandum of Agreement on the Angat Water Protocol. On April 20, 2010, the
final draft of the Angat Water Protocol was finally complete. However, as of June
18, 2010, only MWSS and NIA signed the said final draft. MWSS thus contends
that PSALM failed to institute any safeguards as prescribed in Sec. 47 of the
EPIRA when it proceeded with the privatization of the AHEPP.

As to the issue of nationality requirement in the appropriation of water resources


under the Constitution, MWSS cites the case of Manila Prince Hotel v.
Government Service Insurance System15 which interpreted paragraph 2, Sec.
10, Art. XII of the 1987 Constitution providing that "in the grant of rights,
privileges, and concessions covering the national economy and patrimony, the
State shall give preference to qualified Filipinos" to imply "a mandatory, positive
command which is complete in itself and which needs no further guidelines or
implementing laws or rules for its enforcement x xx and is per se judicially
enforceable." In this case, the AHEPP is in dire danger of being wholly-owned
by a Korean corporation which probably merely considers it as just another
business opportunity, and as such cannot be expected to observe and ensure
the smooth facilitation of the more critical purposes of water supply and
irrigation.

Respondent First Gen Northern Energy Corporation (FGNEC) also filed a


Comment16 disagreeing with the contentions of petitioners and respondent
MWSS on account of the following: (1) the NPC charter vested upon it complete
jurisdiction and control over watersheds like the Angat Watershed surrounding
the reservoir of the power plants, and hence Art. 498 of the Civil Code is
inapplicable; (2) NPC, MWSS and NIA are not co-owners of the various rights
over the Angat Dam as in fact each of them holds its own water rights; (3) the
State through the EPIRA expressly mandates PSALM to privatize all NPC
assets, which necessarily includes the AHEPP; (4) the privatization of the
AHEPP will not affect the priority of water for domestic and municipal uses as
there are sufficient safeguards to ensure the same, and also because the Water
Code specifically mandates that such use shall take precedence over other
uses, and even the EPIRA itself gives priority to use of water for domestic and
municipal purposes over power generation; (5) the Water Protocol also
safeguards priority of use of water for domestic purposes; (6) the bidding
procedure for the AHEPP was valid, and the bidding was conducted by PSALM
in an open and transparent manner; and (7) the right to information of petitioners
and the public in general was fully satisfied, and PSALM adopted reasonable
rules and regulations for the orderly conduct of its functions pursuant to its
mandate under the EPIRA.

FGNEC nevertheless prays of this Court to declare the nationality requirements


for the ownership, operation and maintenance of the AHEPP as prescribed by
the Constitution and pertinent laws. Considering the allegation of petitioners that
K-Water is owned by the Republic of South Korea, FGNEC asserts that PSALM
should not have allowed said entity to participate in the bidding because under
our Constitution, the exploration, development and utilization of natural
resources are reserved to Filipino citizens or to corporations with 60% of their
capital being owned by Filipinos.

Respondent NIA filed its Comment17 stating that its interest in this case is limited
only to the protection of its water allocation drawn from the Angat Dam as
determined by the NWRB. Acknowledging that it has to share the meager water
resources with other government agencies in fulfilment of their respective
mandate, NIA submits that it is willing to sit down and discuss issues relating to
water allocation, as evidenced by the draft Memorandum of Agreement on the
Angat Water Protocol. Since the reliefs prayed for in the instant petition will not
be applicable to NIA which was not involved in the bidding conducted by
PSALM, it will thus not be affected by the outcome of the case.

Respondents San Miguel Corporation (SMC), DMCI Power Corporation, Trans-


Asia Oil and Energy Development Corporation and SNAboitiz Power-
Pangasinan, Inc. filed their respective Comments18 with common submission
that they are not real parties-in-interest and should be excluded from the case.
They assert that PSALM acted pursuant to its mandate to privatize the AHEPP
when it conducted the bidding, and there exists no reason for them to take any
action to invalidate the said bidding wherein they lost to the highest bidder K-
Water.

On its part, respondent K-Water filed a Manifestation In Lieu of


Comment19 stating that it is not in a position to respond to petitioners’
allegations, having justifiably relied on the mandate and expertise of PSALM in
the conduct of public bidding for the privatization of the AHEPP and had no
reason to question the legality or constitutionality of the privatization process,
including the bidding. K-Water submits that its participation in the bidding for the
AHEPP was guided at all times by an abiding respect for the Constitution and
the laws of the Philippines, and hopes for a prompt resolution of the present
petition to further strengthen and enhance the investment environment –
considering the level of investment entailed, not only in financial terms – by
providing a definitive resolution and reliable guidance for investors, whether
Filipino or foreign, as basis for effective investment and business decisions.

In their Consolidated Reply,20 petitioners contend that the instant petition is not
mooted with the issuance of a Notice of Award to K-Water because the
privatization of AHEPP is not finished until and unless the deed of absolute sale
has been executed. They cite the ruling in David v. Arroyo,21 that courts will
decide cases, otherwise moot and academic, if:

first, there is a grave violation of the Constitution; second, the exceptional


character of the situation and the paramount public interest is involved; third,
when constitutional issue raised requires formulation of controlling principles to
guide the bench, the bar and the public; and fourth, the case is capable of
repetition yet evading review.

Petitioners reiterate their legal standing to file the present suit in their capacity
as taxpayers, or as Filipino citizens asserting the promotion and protection of a
public right, aside from being directly injured by the proceedings of PSALM. As
to the absence of Certification and Verification of Non-Forum Shopping from
petitioner Bello in the file copy of PSALM, the same was a mere inadvertence in
photocopying the same.

On the matter of compliance with an open and transparent bidding, petitioners


also reiterate as held in Chavez v. Public Estates Authority,22 that the Court’s
interpretation of public bidding applies to any law which requires public bidding,
especially since Sec. 79 of the Government Auditing Code does not enumerate
the data that must be disclosed to the public. PSALM should have followed the
minimum requirements laid down in said case instead of adopting the "format
generally used by government entities in their procurement of goods,
infrastructure and consultancy services," considering that what was involved in
Chavez is an amended Joint Venture Agreement which seeks to transfer title
and ownership over government property. Petitioners point out that the
requirement under COA Circular 89-296 as regards confidentiality covers only
sealed proposals and not all information relating to the AHEPP privatization.
PSALM’s simple referral of IDEALS’ request letter to the counsel of K-Water is
very telling, indicating PSALM’s limited knowledge about a company it allowed
to participate in the bidding and which even won the bidding.
On the transfer of water rights to K-Water, petitioners reiterate that this violates
the Water Code, and contrary to PSALM’s statements, once NPC transfers its
water permit to K-Water, in accordance with the terms of the Asset Purchase
Agreement, NPC gives up its authority to extract or utilize water from the Angat
River. Petitioners further assert that the terms of the sale of AHEPP allowing the
buyer the operation and management of the Non-Power Components,
constitutes a relinquishment of government control over the Angat Dam, in
violation of Art. XII, Sec. 2 of the Constitution. PSALM likewise has not stated
that all stakeholders have signed the Water Protocol. Such absence of a signed
Water Protocol is alarming in the light of PSALM’s pronouncement that the
terms of the sale to K-Water would still subject to negotiation. Is PSALM’s
refusal to sign the Water Protocol part of its strategy to negotiate the terms of
the sale with the bidders? If so, then PSALM is blithely and cavalierly bargaining
away the Filipinos’ right to water.

Responding to the claims of MWSS in its Comment, PSALM contends that


MWSS’s allegations regarding the bidding process is belied by MWSS’s own
admission that it held discussions with PSALM to highlight the important points
and issues surrounding the AHEPP privatization that needed to be threshed out.
Moreover, MWSS also admits having participated, along with other agencies
and stakeholders, various meetings and conferences relative to the drafting of a
Memorandum of Agreement on the Angat Water Protocol.

As regards the Angat Dam, PSALM emphasizes that MWSS never exercised
jurisdiction and control over the said facility. PSALM points out that the Angat
Dam was constructed in 1967, or four years before the enactment of Republic
Act No. 6234, upon the commissioning thereof by the NPC and the consequent
construction by Grogun, Inc., a private corporation. MWSS’ attempt to base its
claim of jurisdiction over the Angat Dam upon its characterization of EPIRA as a
general law must likewise fail. PSALM explains that EPIRA cannot be classified
as a general law as it applies to a particular portion of the State, i.e., the energy
sector. The EPIRA must be deemed an exception to the provision in the Revised
MWSS Charter on MWSS’s general jurisdiction over waterworks systems.

PSALM stresses that pursuant to the EPIRA, PSALM took ownership of all
existing NPC generation assets, liabilities, IPP contracts, real estate and other
disposable assets, which necessarily includes the AHEPP Complex, of which
the Angat Dam is part. As to the OGCC opinion cited by MWSS to support its
position that control and management of the Angat Dam Complex should be
turned over to MWSS, the OGCC had already issued a second opinion dated
August 20, 2008 which clarified the tenor of its earlier Opinion No. 107, s. 2008,
stating that "the disposal of the Angat HEPP by sale through public bidding – the
principal mode of disposition under EPIRA – remains PSALM’s primary option."
Moreover, as pointed out by the National Economic Development Authority
(NEDA) in its letter dated September 16, 2009, the ownership and operation of a
hydropower plant goes beyond the mandate of MWSS. This view is consistent
with the provisions of EPIRA mandating the transfer of ownership and control of
NPC generation assets, IPP Contracts, real estate and other disposable assets
to a private person or entity. Consequently, a transfer to another government
entity of the said NPC assets would be a clear violation of the EPIRA. Even
assuming such is allowed by EPIRA, it would not serve the objective of the
EPIRA, i.e., that of liquidating all NPC’s financial obligations and would merely
transfer NPC’s debts from the hands of one government entity to another, the
funds that would be utilized by MWSS in the acquisition of the AHEPP would
doubtless come from the pockets of the Filipino people.

As regards the opposition of various local government units to the sale of the
AHEPP, PSALM said that a forum was held specifically to address their
concerns. After the said forum, these LGUs did not anymore raise the same
concerns; such inaction on their part could be taken as an acquiescence to, and
acceptance of, the explanations made by PSALM during the forum.

PSALM had made it clear that it is only the AHEPP and not the Angat Dam
which was being privatized. The same wrong premise underpinned the position
of the CHR with its erroneous allegation that MWSS is allowed, under its
Revised Charter, to operate and maintain a power plant.

PSALM further contends that the sale of AHEPP to K-Water did not violate the
Constitution’s provision on the State’s natural resources and neither is the ruling
in Manila Prince Hotel applicable as said case was decided under different
factual circumstances. It reiterates that the AHEPP, being a generation asset,
can be sold to a foreign entity, under the EPIRA, in accordance with the policy
reforms said law introduced in the power sector; the EPIRA aims to enable open
access in the electricity market and then enable the government to concentrate
more fully on the supply of basic needs to the Filipino people. Owing to the
competitive and open nature of the generation sector, foreign corporation may
own generation assets.

Issues

The present controversy raised the following issues:

1) Legal standing of petitioners;

2) Mootness of the petition;


3) Violation of the right to information;

4) Ownership of the AHEPP;

5) Violation of Sec. 2, Art. XII of the Constitution;

6) Violation of the Water Code provisions on the grant of water rights; and

7) Failure of PSALM to comply with Sec. 47 (e) of EPIRA.

Mootness and Locus Standi

PSALM’s contention that the present petition had already been mooted by the
issuance of the Notice of Award to K-Water is misplaced. Though petitioners had
sought the immediate issuance of injunction against the bidding commenced by
PSALM -- specifically enjoining it from proceeding to the next step of issuing a
notice of award to any of the bidders -- they further prayed that PSALM be
permanently enjoined from disposing of the AHEPP through privatization. The
petition was thus filed not only as a means of enforcing the State’s obligation to
protect the citizens’ "right to water" that is recognized under international law
and legally enforceable under our Constitution, but also to bar a foreign
corporation from exploiting our water resources in violation of Sec. 2, Art. XII of
the 1987 Constitution. If the impending sale of the AHEPP to K-Water indeed
violates the Constitution, it is the duty of the Court to annul the contract award
as well as its implementation. As this Court held in Chavez v. Philippine Estates
Authority,23 "supervening events, whether intended or accidental, cannot prevent
the Court from rendering a decision if there is a grave violation of the
Constitution."

We also rule that petitioners possess the requisite legal standing in filing this suit
as citizens and taxpayers.

"Legal standing" or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury
as a result of the governmental act that is being challenged, alleging more than
a generalized grievance. The gist of the question of standing is whether a party
alleges "such personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which
the court depends for illumination of difficult constitutional questions."24 This
Court, however, has adopted a liberal attitude on the locus standi of a petitioner
where the petitioner is able to craft an issue of transcendental significance to the
people, as when the issues raised are of paramount importance to the public.
25 Thus, when the proceeding involves the assertion of a public right, the mere
fact that the petitioner is a citizen satisfies the requirement of personal interest.
26

There can be no doubt that the matter of ensuring adequate water supply for
domestic use is one of paramount importance to the public. That the continued
availability of potable water in Metro Manila might be compromised if PSALM
proceeds with the privatization of the hydroelectric power plant in the Angat Dam
Complex confers upon petitioners such personal stake in the resolution of legal
issues in a petition to stop its implementation.

Moreover, we have held that if the petition is anchored on the people’s right to
information on matters of public concern, any citizen can be the real party in
interest. The requirement of personal interest is satisfied by the mere fact that
the petitioner is a citizen, and therefore, part of the general public which
possesses the right. There is no need to show any special interest in the result.
It is sufficient that petitioners are citizens and, as such, are interested in the
faithful execution of the laws.27

Violation of Right to Information

The people’s right to information is provided in Section 7, Article III of the


Constitution, which reads:

Sec. 7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law. (Emphasis
supplied.)

The people’s constitutional right to information is intertwined with the


government’s constitutional duty of full public disclosure of all transactions
involving public interest.28 Section 28, Article II of the Constitution declares the
State policy of full transparency in all transactions involving public interest, to
wit:

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions involving
public interest. (Italics supplied.)

The foregoing constitutional provisions seek to promote transparency in policy-


making and in the operations of the government, as well as provide the people
sufficient information to exercise effectively other constitutional rights. They are
also essential to hold public officials "at all times x xx accountable to the
people," for unless citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right information, citizens can
participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential to
the existence and proper functioning of any democracy.29

Consistent with this policy, the EPIRA was enacted to provide for "an orderly and
transparent privatization" of NPC’s assets and liabilities.30 Specifically, said law
mandated that "all assets of NPC shall be sold in an open and transparent
manner through public bidding."31

In Chavez v. Public Estates Authority32 involving the execution of an Amended


Joint Venture Agreement on the disposition of reclaimed lands without public
bidding, the Court held:

x x xBefore the consummation of the contract, PEA must, on its own and without
demand from anyone, disclose to the public matters relating to the disposition of
its property. These include the size, location, technical description and nature of
the property being disposed of, the terms and conditions of the disposition, the
parties qualified to bid, the minimum price and similar information. PEA must
prepare all these data and disclose them to the public at the start of the
disposition process, long before the consummation of the contract, because the
Government

Auditing Code requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during the bidding
process.

Information, however, on on-going evaluation or review of bids or proposals


being undertaken by the bidding or review committee is not immediately
accessible under the right to information. While the evaluation or review is still
on-going, there are no "official acts, transactions, or decisions" on the bids or
proposals. However, once the committee makes its official recommendation,
there arises a "definite proposition" on the part of the government. From this
moment, the public’s right to information attaches, and any citizen can access all
the non-proprietary information leading to such definite proposition. In Chavez v.
PCGG, the Court ruled as follows:

"Considering the intent of the framers of the Constitution, we believe that it is


incumbent upon the PCGG and its officers, as well as other government
representatives, to disclose sufficient public information on any proposed
settlement they have decided to take up with the ostensible owners and holders
of ill-gotten wealth. Such information, though, must pertain to definite
propositions of the government not necessarily to intra-agency or inter-agency
recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the "exploratory"
stage. There is need, of course, to observe the same restrictions on disclosure
of information in general, as discussed earlier – such as on matters involving
national security, diplomatic or foreign relations, intelligence and other classified
information." (Emphasis supplied.)

Chavez v. Public Estates Authority thus laid down the rule that the constitutional
right to information includes official information on on-going negotiations before
a final contract. The information, however, must constitute definite propositions
by the government and should not cover recognized exceptions like privileged
information, military and diplomatic secrets and similar matters affecting national
security and public order. In addition, Congress has prescribed other limitations
on the right to information in several legislations.33

In this case, petitioners’ first letter dated April 20, 2010 requested for documents
such as Terms of Reference and proposed bids submitted by the bidders. At that
time, the bids were yet to be submitted at the bidding scheduled on April 28,
2010. It is also to be noted that PSALM’s website carried news and updates on
the sale of AHEPP, providing important information on bidding activities and
clarifications regarding the terms and conditions of the Asset Purchase
Agreement (APA) to be signed by PSALM and the winning bidder (Buyer).34

In Chavez v. National Housing Authority,35 the Court held that pending the
enactment of an enabling law, the release of information through postings in
public bulletin boards and government websites satisfies the constitutional
requirement, thus:

It is unfortunate, however, that after almost twenty (20) years from birth of the
1987 Constitution, there is still no enabling law that provides the mechanics for
the compulsory duty of government agencies to disclose information on
government transactions. Hopefully, the desired enabling law will finally see the
light of day if and when Congress decides to approve the proposed "Freedom of
Access to Information Act." In the meantime, it would suffice that government
agencies post on their bulletin boards the documents incorporating the
information on the steps and negotiations that produced the agreements and the
agreements themselves, and if finances permit, to upload said information on
their respective websites for easy access by interested parties. Without any law
or regulation governing the right to disclose information, the NHA or any of the
respondents cannot be faulted if they were not able to disclose information
relative to the SMDRP to the public in general.36 (Emphasis supplied.)

The Court, however, distinguished the duty to disclose information from the duty
to permit access to information on matters of public concern under Sec. 7, Art. III
of the Constitution. Unlike the disclosure of information which is mandatory
under the Constitution, the other aspect of the people’s right to know requires a
demand or request for one to gain access to documents and paper of the
particular agency. Moreover, the duty to disclose covers only transactions
involving public interest, while the duty to allow access has a broader scope of
information which embraces not only transactions involving public interest, but
any matter contained in official communications and public documents of the
government agency.37 Such relief must be granted to the party requesting
access to official records, documents and papers relating to official acts,
transactions, and decisions that are relevant to a government contract.

Here, petitioners’ second letter dated May 14, 2010 specifically requested for
detailed information regarding the winning bidder, such as company profile,
contact person or responsible officer, office address and Philippine registration.
But before PSALM could respond to the said letter, petitioners filed the present
suit on May 19, 2010. PSALM’s letter-reply dated May 21, 2010 advised
petitioners that their letter-re quest was referred to the counsel of K-Water. We
find such action insufficient compliance with the constitutional requirement and
inconsistent with the policy under EPIRA to implement the privatization of NPC
assets in an "open and transparent" manner. PSALM’s evasive response to the
request for information was unjustified because all bidders were required to
deliver documents such as company profile, names of authorized officers/
representatives, financial and technical experience.

Consequently, this relief must be granted to petitioners by directing PSALM to


allow petitioners access to the papers and documents relating to the company
profile and legal capacity of the winning bidder. Based on PSALM’s own press
releases, K-Water is described as a Korean firm with extensive experience in
implementing and managing water resources development projects in South
Korea, and also contributed significantly to the development of that country’s
heavy and chemical industries and the modernization of its national industrial
structure.

AngatHEPP is Under the Jurisdiction of



the Department of Energy Through NPC

It must be clarified that though petitioners had alleged a co-ownership by virtue


of the joint supervision in the operation of the Angat Complex by MWSS, NPC
and NIA, MWSS actually recognized the ownership and jurisdiction of NPC over
the hydroelectric power plant itself. While MWSS had initially sought to acquire
ownership of the AHEPP without public bidding, it now prays that PSALM be
ordered to turn over the possession and control of the said facility to MWSS.
MWSS invokes its own authority or "special powers" by virtue of its general
jurisdiction over waterworks systems, and in consideration of its substantial
investments in the construction of two auxiliary units in the AHEPP, as well as
the construction of the Umiray-AngatTransbasin Tunnel to supplement the water
intake at the Angat Reservoir which resulted in increased power generation.

Records disclosed that as early as December 2005, following the decision of


PSALM’s Board of Directors to commence the sale process of the AHEPP along
with Magat and AmlanHEPPs in August 2005, MWSS was actively cooperating
and working with PSALM regarding the proposed Protocol for the Privatization
of the AHEPP, specifically on the terms and conditions for the management,
control and operation of the Angat Dam Complex taking into consideration the
concerns of its concessionaires. A Technical Working Group (TWG) similar to
that formed for the Operation and Management Agreement of Pantabangan and
Magat dams was created, consisting of representatives from PSALM, MWSS
and other concerned agencies, to formulate strategies for the effective
implementation of the privatization of AHEPP and appropriate structure for the
operation and management of the Angat Dam Complex.38

In March 2008, PSALM sought legal advice from the OGCC on available
alternatives to a sale structure for the AHEPP. On May 27, 2008, then
Government Corporate Counsel Alberto C. Agra issued Opinion No. 107, s.
200839 stating that PSALM is not limited to "selling" as a means of fulfilling its
mandate under the EPIRA, and that in dealing with the AHEPP, PSALM has the
following options:

1. Transfer the ownership, possession, control, and operation of the Angat


Facility to another entity, which may or may not be a private enterprise, as
specifically provided under Section 47 (e) of RA 9136;

2. Transfer the Angat Facility, through whatever form, to another entity for the
purpose of protecting the public interest.40

The OGCC cited COA Circular No. 89-296 which provides that government
property or assets that are no longer serviceable or needed "may be transferred
to other government entities/agencies without cost or at an appraised value
upon authority of the head or governing body of the agency or corporation, and
upon due accomplishment of an Invoice and Receipt of Property." Pointing out
the absence of any prohibition under R.A. No. 9136 and its IRR for PSALM to
transfer the AHEPP to another government instrumentality, and considering that
MWSS is allowed under its charter to acquire the said facility, the OGCC
expressed the view that PSALM may, "in the interest of stemming a potential
water crisis, turn over the ownership, operations and management of the Angat
Facility to a qualified entity, such as the MWSS, without need of public bidding
as the latter is also a government entity."41

Consequently, MWSS requested the Office of the President (OP) to exclude the
AHEPP from the list of NPC assets to be privatized under the EPIRA. Said
request was endorsed to the Department of Finance (DOF) which requested the
National Economic Development Authority (NEDA) to give its comments.
Meanwhile, on August 20, 2008, the OGCC issued a Clarification42 on its
Opinion No. 107, s. 2008 stating that the tenor of the latter issuance was
"permissive" and "necessarily, the disposal of the AHEPP by sale through public
bidding – the principal mode of disposition under x xx R.A. 9136 – remains
PSALM’s primary option." The OGCC further explained its position, thus:

If, in the exercise of PSALM’s discretion, it determines that privatization by sale


through public bidding is the best mode to fulfill its mandate under R.A. 9136,
and that this mode will not contravene the State’s declared policy on water
resources, then the same is legally permissible.

Finally, in OGCC Opinion No. 107 s. 2008, this Office underscored "the
overriding policy of the State x xx recognizing that ‘water is vital to national
development x xx’ and the crucial role which the Angat Facility plays in the
uninterrupted and adequate supply and distribution of potable water to residents
of Metro Manila." This Office reiterates "the primacy of the State’s interest in
mitigating the possible deleterious effects of an impending "water crisis"
encompassing areas even beyond Metro Manila." Any transfer of the AHEPP to
be undertaken by PSALM – whether to a private or public entity – must not
contravene the State’s declared policy of ensuring the flow of clean, potable
water under RA 6395 and 9136, and Presidential Decree 1067. Hence, said
transfer and/or privatization scheme must ensure the preservation of the AHEPP
as a vital source of water for Metro Manila and the surrounding provinces.
43 (Emphasis supplied.)

On September 16, 2009, NEDA Deputy Director General Rolando G. Tungpalan,


by way of comment to MWSS’s position, wrote the DOF stating that MWSS’s
concern on ensuring an uninterrupted and adequate supply of water for
domestic use is amply protected and consistently addressed in the EPIRA.
Hence, NEDA concluded that there appears to be no basis to exclude AHEPP
from the list of NPC generation assets to be privatized and no compelling
reason to transfer its management, operations and control to MWSS.44 NEDA
further pointed out that:

Ownership and operation of a hydropower plant, however, goes beyond


the mandate of MWSS. To operate a power generation plant, given the sector’s
legislative setup would require certification and permits that has to be secured
by the operator. MWSS does not have the technical capability to undertake the
operation and maintenance of the AHEPP nor manage the contract of a
contracted private party to undertake the task for MWSS. While MWSS may tap
NPC to operate and maintain the AHEPP, this, similar to contracting out a
private party, may entail additional transaction costs, and ultimately result to
higher generation rates.45 (Emphasis supplied.)

Thereafter, MWSS sought the support of the DPWH in a letter dated September
24, 2009 addressed to then Secretary Hermogenes E. Ebdane, Jr., for the
exclusion of the AHEPP from the list of NPC assets to be privatized and instead
transfer the ownership, possession and control thereof to MWSS with
reasonable compensation. Acting on the said request, Secretary Ebdane, Jr.
wrote a memorandum for the President recommending that "the Angat Dam be
excluded from the list of NPC assets to be privatized, and that the ownership,
management and control of the Dam be transferred from NPC to MWSS, with
reasonable compensation."46

Based on the foregoing factual backdrop, there seems to be no dispute as to the


complete jurisdiction of NPC over the government-owned Angat Dam and
AHEPP.

The Angat Reservoir and Dam were constructed from 1964 to 1967 and have
become operational since 1968. They have multiple functions:

1) To provide irrigation to about 31,000 hectares of land in 20 municipalities and


towns in Pampanga and Bulacan;

2) To supply the domestic and industrial water requirements of residents in


Metro Manila;

3) To generate hydroelectric power to feed the Luzon Grid; and

4) To reduce flooding to downstream towns and villages.47

The Angat Dam is a rockfill dam with a spillway equipped with three gates at a
spilling level of 219 meters and has storage capacity of about 850 million cubic
meters. Water supply to the MWSS is released through five auxiliary turbines
where it is diverted to the two tunnels going to the Ipo Dam.48 The Angat Dam is
one of the dams under the management of NPC while the La Mesa and Ipo
dams are being managed by MWSS. MWSS is a government corporation
existing by virtue of R.A. No. 6234.49 NAPOCOR or NPC is also a government-
owned corporation created under Commonwealth Act (C.A.) No. 120,50 which,
among others, was vested with the following powers under Sec. 2, paragraph
(g):

(g) To construct, operate and maintain power plants, auxiliary plants, dams,
reservoirs, pipes, mains, transmission lines, power stations and substations, and
other works for the purpose of developing hydraulic power from any river, creek,
lake, spring and waterfall in the Philippines and supplying such power to the
inhabitants thereof; to acquire, construct, install, maintain, operate and improve
gas, oil, or steam engines, and/or other prime movers, generators and other
machinery in plants and/or auxiliary plants for the production of electric power;
to establish, develop, operate, maintain and administer power and lighting
system for the use of the Government and the general public; to sell electric
power and to fix the rates and provide for the collection of the charges for any
service rendered: Provided, That the rates of charges shall not be subject to
revision by the Public Service Commission;

x x x x (Emphasis supplied.)

On September 10, 1971, R.A. No. 6395 was enacted which revised the charter
of NPC, extending its corporate life to the year 2036. NPC thereafter continued
to exercise complete jurisdiction over dams and power plants including the
Angat Dam, Angat Reservoir and AHEPP. While the NPC was expressly granted
authority to construct, operate and maintain power plants, MWSS was not
vested with similar function. Section 3 (f), (o) and (p) of R.A. No. 6234 provides
that MWSS’s powers and attributes include the following –

(f) To construct, maintain, and operate dams, reservoirs, conduits, aqueducts,


tunnels, purification plants, water mains, pipes, fire hydrants, pumping stations,
machineries and other waterworks for the purpose of supplying water to the
inhabitants of its territory, for domestic and other purposes; and to purify,
regulate and control the use, as well as prevent the wastage of water;

xxxx

(o) To assist in the establishment, operation and maintenance of waterworks and


sewerage systems within its jurisdiction under cooperative basis;
(p) To approve and regulate the establishment and construction of waterworks
and sewerage systems in privately owned subdivisions within its jurisdiction; x
xx. (Emphasis supplied.)

On December 9, 1992, by virtue of R.A. No. 7638,51 NPC was placed under the
Department of Energy (DOE) as one of its attached agencies.

Aside from its ownership and control of the Angat Dam and AHEPP, NPC was
likewise mandated to exercise complete jurisdiction and control over its
watershed, pursuant to Sec. 2 (n) and (o) of R.A. No. 6395 for development and
conservation purposes:

(n) To exercise complete jurisdiction and control over watersheds surrounding


the reservoirs of plants and/or projects constructed or proposed to be
constructed by the Corporation. Upon determination by the Corporation of the
areas required for watersheds for a specific project, the Bureau of Forestry, the
Reforestation Administration and the Bureau of Lands shall, upon written advice
by the Corporation, forthwith surrender jurisdiction to the Corporation of all areas
embraced within the watersheds, subject to existing private rights, the needs of
waterworks systems, and the requirements of domestic water supply;

(o) In the prosecution and maintenance of its projects, the Corporation shall
adopt measures to prevent environmental pollution and promote the
conservation, development and maximum utilization of natural resources; and

x x x x (Emphasis supplied.)

On December 4, 1965, Presidential Proclamation No. 505 was issued amending


Proclamation No. 71 by transferring the administration of the watersheds
established in Montalban, San Juan del Monte, Norzagaray, Angat, San Rafael,
Peñaranda and Infanta, Provinces of Rizal, Bulacan, Nueva Ecija and Quezon,
to NPC. Subsequent executive issuances Presidential Decree (P.D.) No. 1515
which was signed in June 1978 and amended by P.D. No. 1749 in December
1980 led to the creation of the NPC Watershed Management Division which
presently has 11 watershed areas under its management.52

Privatization of AHEPP Mandatory Under EPIRA

With the advent of EPIRA in 2001, PSALM came into existence for the principal
purpose of managing the orderly sale, privatization and disposition of generation
assets, real estate and other disposable assets of the NPC including IPP
Contracts. Accordingly, PSALM was authorized to take title to and possession
of, those assets transferred to it. EPIRA mandated that all such assets shall be
sold through public bidding with the exception of Agus and Pulangui complexes
in Mindanao, the privatization of which was left to the discretion of PSALM in
consultation with Congress,53 thus:

Sec. 47. NPC Privatization. – Except for the assets of SPUG, the generation
assets, real estate, and other disposable assets as well as IPP contracts of NPC
shall be privatized in accordance with this Act. Within six (6) months from the
effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement
by the Joint Congressional Power Commission and the approval of the
President of the Philippines, on the total privatization of the generation assets, x
xx of NPC and thereafter, implement the same, in accordance with the following
guidelines, except as provided for in paragraph (f) herein:

x xxx

(d) All assets of NPC shall be sold in an open and transparent manner
through public bidding, x xx;

x xxx

(f) The Agus and the Pulangui complexes in Mindanao shall be excluded from
among the generation companies that will be initially privatized. Their ownership
shall be transferred to the PSALM Corp. and both shall continue to be operated
by the NPC. Said complexes may be privatized not earlier than ten (10) years
from the effectivity of this Act, x xx.The privatization of Agus and Pulangui
complexes shall be left to the discretion of PSALM Corp. in consultation with
Congress;

x xxx (Emphasis supplied.)

The intent of Congress not to exclude the AHEPP from the privatization of NPC
generation assets is evident from the express provision exempting only the
aforesaid two power plants in Mindanao. Had the legislature intended that
PSALM should likewise be allowed discretion in case of NPC generation assets
other than those mentioned in Sec. 47, it could have explicitly provided for the
same. But the EPIRA exempted from privatization only those two plants in
Mindanao and the Small Power Utilities Group (SPUG).
54 Expressiouniusestexclusioalterius, the express inclusion of one implies the

exclusion of all others.55

It is a settled rule of statutory construction that the express mention of one


person, thing, or consequence implies the exclusion of all others. The rule is
expressed in the familiar maxim, expressiouniusestexclusioalterius.
The rule of expressiouniusestexclusioalterius is formulated in a number of ways.
One variation of the rule is principle that what is expressed puts an end to that
which is implied. Expressiumfacitcessaretacitum. Thus, where a statute, by its
terms, is expressly limited to certain matters, it may not, by interpretation or
construction, be extended to other matters.

x xxx

The rule of expressiouniusestexclusioalterius and its variations are canons of


restrictive interpretation. They are based on the rules of logic and the natural
workings of the human mind. They are predicated upon one’s own voluntary act
and not upon that of others. They proceed from the premise that the legislature
would not have made specified enumeration in a statute had the intention been
not to restrict its meaning and confine its terms to those expressly mentioned.56

The Court therefore cannot sustain the position of petitioners, adopted by


respondent MWSS, that PSALM should have exercised the discretion not to
proceed with the privatization of AHEPP, or at least the availability of the option
to transfer the said facility to another government entity such as MWSS. Having
no such discretion in the first place, PSALM committed no grave abuse of
discretion when it commenced the sale process of AHEPP pursuant to the
EPIRA.

In any case, the Court finds that the operation and maintenance of a
hydroelectric power plant is not among the statutorily granted powers of MWSS.
Although MWSS was granted authority to construct and operate dams and
reservoirs, such was for the specific purpose of supplying water for domestic
and other uses, and the treatment, regulation and control of water usage, and
not power generation.57 Moreover, since the sale of AHEPP by PSALM merely
implements the legislated reforms for the electric power industry through
schemes that aim "to enhance the inflow of private capital and broaden the
ownership base of the power generation, transmission and distribution
sectors,"58 the proposed transfer to MWSS which is another government entity
contravenes that State policy. COA Circular No. 89-296 likewise has no
application to NPC generating assets which are still serviceable and definitely
needed by the Government for the purpose of liquidating NPC’s accumulated
debts amounting to billions in US Dollars. Said administrative circular cannot
prevail over the EPIRA, a special law governing the disposition of government
properties under the jurisdiction of the DOE through NPC.

Sale of Government-Owned AHEPP



to a Foreign Corporation Not Prohibited

But Only Filipino Citizens and Corporations

60% of whose capital is owned by Filipinos

May be Granted Water Rights

The core issue concerns the legal implications of the acquisition by K-Water of
the AHEPP in relation to the constitutional policy on our natural resources.

Sec. 2, Art. XII of the 1987 Constitution provides in part:

SEC.2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State may
directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In case of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.

x xxx (Emphasis supplied.)

The State’s policy on the management of water resources is implemented


through the regulation of water rights. Presidential Decree No. 1067, otherwise
known as "The Water Code of the Philippines" is the basic law governing the
ownership, appropriation utilization, exploitation, development, conservation and
protection of water resources and rights to land related thereto. The National
Water Resources Council (NWRC) was created in 1974 under P.D. No. 424 and
was subsequently renamed as National Water Resources Board (NWRB)
pursuant to Executive Order No. 124-A.59 The NWRB is the chief coordinating
and regulating agency for all water resources management development
activities which is tasked with the formulation and development of policies on
water utilization and appropriation, the control and supervision of water utilities
and franchises, and the regulation and rationalization of water rates.60

The pertinent provisions of Art. 3, P.D. No. 1067 provide:

Art. 3. The underlying principles of this code are:

a. All waters belong to the State.


b. All waters that belong to the State can not be the subject to acquisitive
prescription.

c. The State may allow the use or development of waters by administrative


concession.

d. The utilization, exploitation, development, conservation and protection of


water resources shall be subject to the control and regulation of the government
through the National Water Resources Council x xx

e. Preference in the use and development of waters shall consider current


usages and be responsive to the changing needs of the country.

x xxx

Art. 9. Waters may be appropriated and used in accordance with the provisions
of this Code.

Appropriation of water, as used in this Code, is the acquisition of rights over the
use of waters or the taking or diverting of waters from a natural source in the
manner and for any purpose allowed by law.

Art. 10. Water may be appropriated for the following purposes:

x xxx

(d) Power generation

x xxx

Art. 13. Except as otherwise herein provided, no person including government


instrumentalities or government-owned or controlled corporations, shall
appropriate water without a water right, which shall be evidenced by a document
known as a water permit.

Water right is the privilege granted by the government to appropriate and use
water.

x xxx

Art. 15. Only citizens of the Philippines, of legal age, as well as juridical persons,
who are duly qualified by law to exploit and develop water resources, may apply
for water permits. (Emphasis supplied.)
It is clear that the law limits the grant of water rights only to Filipino citizens and
juridical entities duly qualified by law to exploit and develop water resources,
including private corporations with sixty percent of their capital owned by
Filipinos. In the case of Angat River, the NWRB has issued separate water
permits to MWSS, NPC and NIA.61

Under the EPIRA, the generation of electric power, a business affected with
public interest, was opened to private sector and any new generation company
is required to secure a certificate of compliance from the Energy Regulatory
Commission (ERC), as well as health, safety and environmental clearances
from the concerned government agencies. Power generation shall not be
considered a public utility operation,62 and hence no franchise is necessary.
Foreign investors are likewise allowed entry into the electric power industry.
However, there is no mention of water rights in the privatization of multi-purpose
hydropower facilities. Section 47 (e) addressed the issue of water security, as
follows:

(e) In cases of transfer of possession, control, operation or privatization of multi-


purpose hydro facilities, safeguards shall be prescribed to ensure that the
national government may direct water usage in cases of shortage to protect
potable water, irrigation, and all other requirements imbued with public interest;

x xxx (Emphasis supplied.)

This provision is consistent with the priority accorded to domestic and municipal
uses of water63 under the Water Code, thus:

Art. 22. Between two or more appropriators of water from the same sources of
supply, priority in time of appropriation shall give the better right, except that in
times of emergency the use of water for domestic and municipal purposes shall
have a better right over all other uses; Provided, That, where water shortage is
recurrent and the appropriator for municipal use has a lower priority in time of
appropriation, then it shall be his duty to find an alternative source of supply in
accordance with conditions prescribed by the Board. (Emphasis supplied.)

Rule 23, Section 6 of the Implementing Rules and Regulations (IRR) of the
EPIRA provided for the structure of appropriation of water resources in multi-
purpose hydropower plants which will undergo privatization, as follows:

Section 6. Privatization of Hydroelectric Generation Plants.

(a) Consistent with Section 47(e) of the Act and Section 4(f) of this Rule, the
Privatization of hydro facilities of NPC shall cover the power component
including assignable long-term water rights agreements for the use of water,
which shall be passed onto and respected by the buyers of the hydroelectric
power plants.

(b) The National Water Resources Board (NWRB) shall ensure that the
allocation for irrigation, as indicated by the NIA and requirements for domestic
water supply as provided for by the appropriate Local Water District(s) are
recognized and provided for in the water rights agreements. NPC or PSALM
may also impose additional conditions in the shareholding agreement with the
winning bidders to ensure national security, including, but not limited to, the use
of water during drought or calamity.

(c) Consistent with Section 34(d) of the Act, the NPC shall continue to be
responsible for watershed rehabilitation and management and shall be entitled
to the environmental charge equivalent to one-fourth of one centavo per
kilowatt-hour sales (P0.0025/kWh), which shall form part of the Universal
Charge. This environmental fund shall be used solely for watershed
rehabilitation and management and shall bemanaged by NPC under existing
arrangements. NPC shall submit an annual report to the DOE detailing the
progress of the water shed rehabilitation program.

(d) The NPC and PSALM or NIA, as the case may be, shall continue to be
responsible for the dam structure and all other appurtenant structures necessary
for the safe and reliable operation of the hydropower plants. The NPC and
PSALM or NIA, as the case may be, shall enter into an operations and
maintenance agreement with the private operator of the power plant to cover the
dam structure and all other appurtenant facilities. (Emphasis supplied.)

In accordance with the foregoing implementing regulations, and in furtherance of


the Asset Purchase Agreement64 (APA), PSALM, NPC and K-Water executed on
April 28, 2010 an Operations and Maintenance Agreement65 (O & M Agreement)
for the administration, rehabilitation, operation, preservation and maintenance,
by K-Water as the eventual owner of the AHEPP, of the Non-Power Components
meaning the Angat Dam, non-power equipment, facilities, installations, and
appurtenant devices and structures, including the water sourced from the Angat
Reservoir.

It is the position of PSALM that as the new owner only of the hydroelectric
power plant, K-Water will be a mere operator of the Angat Dam. In the power
generation activity, K-Water will have to utilize the waters already extracted from
the river and impounded on the dam. This process of generating electric power
from the dam water entering the power plant thus does not constitute
appropriation within the meaning of natural resource utilization in the
Constitution and the Water Code.

The operation of a typical hydroelectric power plant has been described as


follows:

Hydroelectric energy is produced by the force of falling water. The capacity to


produce this energy is dependent on both the available flow and the height from
which it falls. Building up behind a high dam, water accumulates potential
energy. This is transformed into mechanical energy when the water rushes down
the sluice and strikes the rotary blades of turbine. The turbine's rotation spins
electromagnets which generate current in stationary coils of wire. Finally, the
current is put through a transformer where the voltage is increased for long
distance transmission over power lines.66

Foreign ownership of a hydropower facility is not prohibited under existing laws.


The construction, rehabilitation and development of hydropower plants are
among those infrastructure projects which even wholly-owned foreign
corporations are allowed to undertake under the Amended Build-Operate-
Transfer (Amended BOT) Law (R.A. No. 7718).67

Beginning 1987, the policy has been openness to foreign investments as


evident in the fiscal incentives provided for the restructuring and privatization of
the power industry in the Philippines, under the Power Sector Restructuring
Program (PSRP) of the Asian Development Bank.

The establishment of institutional and legal framework for the entry of private
sector in the power industry began with the issuance by President Corazon C.
Aquino of Executive Order No. 215 in 1987. Said order allowed the entry of
private sector – the IPPs –to participate in the power generation activities in the
country. The entry of IPPs was facilitated and made attractive through the first
BOT Law in 1990 (R.A. No. 6957) which aimed to "minimize the burden of
infrastructure projects on the national government budget, minimize external
borrowing for infrastructure projects, and use the efficiency of the private sector
in delivering a public good." In 1993, the Electric Power Crisis Act was passed
giving the President emergency powers to urgently address the power crisis in
the country.68 The full implementation of the restructuring and privatization of the
power industry was achieved when Congress passed the EPIRA in 2001.

With respect to foreign investors, the nationality issue had been framed in terms
of the character or nature of the power generation process itself, i.e., whether
the activity amounts to utilization of natural resources within the meaning of Sec.
2, Art. XII of the Constitution. If so, then foreign companies cannot engage in
hydropower generation business; but if not, then government may legally allow
even foreign-owned companies to operate hydropower facilities.

The DOJ has consistently regarded hydropower generation by foreign entities


as not constitutionally proscribed based on the definition of water appropriation
under the Water Code, thus:

Opinion No. 173, 1984

This refers to your request for opinion on the possibility of granting water permits
to foreign corporations authorized to do business in the Philippines x xx

x xxx

x xx while the Water Code imposes a nationality requirement for the grant of
water permits, the same refers to the privilege "to appropriate and use water."
This should be interpreted to mean the extraction of water from its natural
source (Art. 9, P.D. No. 1067). Once removed therefrom, they cease to be a part
of the natural resources of the country and are the subject of ordinary commerce
and may be acquired by foreigners (Op. No. 55, series of 1939). x xx in case of
a contract of lease, the water permit shall be secured by the lessor and included
in the lease as an improvement. The water so removed from the natural source
may be appropriated/used by the foreign corporation leasing the property.

Opinion No. 14, S. 1995

The nationality requirement imposed by the Water Code refers to the privilege
"to appropriate and use water." This, we have consistently interpreted to mean
the extraction of water directly from its natural source. Once removed from its
natural source the water ceases to be a part of the natural resources of the
country and may be subject of ordinary commerce and may even be acquired by
foreigners. (Secretary of Justice Op. No. 173, s. 1984; No. 24, s. 1989; No. 100
s. 1994)

In fine, we reiterate our earlier view that a foreign entity may legally process or
treat water after its removal from a natural source by a qualified person, natural
or juridical.

Opinion No. 122, s. 1998

The crucial issue at hand is the determination of whether the utilization of water
by the power plant to be owned and operated by a foreign-owned corporation
(SRPC) will violate the provisions of the Water Code.
As proposed, the participation of SRPC to the arrangement commences upon
construction of the power station, consisting of a dam and a power plant. After
the completion of the said station, its ownership and control shall be turned over
to NPC. However, SRPC shall remain the owner of the power plant and shall
operate it for a period of twenty-five (25) years.

It appears that the dam, which will be owned and controlled by NPC, will block
the natural flow of the river. The power plant, which is situated next to it, will
entirely depend upon the dam for its water supply which will pass through an
intake gate situated one hundred (100) meters above the riverbed. Due to the
distance from the riverbed, water could not enter the power plant absent the
dam that traps the flow of the river. It appears further that no water shall enter
the power tunnel without specific dispatch instructions from NPC, and such
supplied water shall be used only by SRPC for power generation and not for any
other purpose. When electricity is generated therein, the same shall be supplied
to NPC for distribution to the public. These facts x xx viewed in relation to the
Water Code, specifically Article 9 thereof, x xx clearly show that there is no
circumvention of the law.

This Department has declared that the nationality requirement imposed by the
Water Code refers to the privilege "to appropriate and use water" and has
interpreted this phrase to mean the extraction of water directly from its natural
source (Secretary of Justice Opinion No. 14, s. 1995). "Natural" is defined as
that which is produced without aid of stop, valves, slides, or other
supplementary means (see Webster’s New International Dictionary, Second
Edition, p. 1630). The water that is used by the power plant could not enter the
intake gate without the dam, which is a man-made structure. Such being the
case, the source of the water that enters the power plant is of artificial character
rather than natural. This Department is consistent in ruling, that once water is
removed from its natural source, it ceases to be a part of the natural resources
of the country and may be the subject of ordinary commerce and may even be
acquired by foreigners. (Ibid., No. 173, s. 1984; No. 24, s. 1989; No. 100, s.
1994).

It is also significant to note that NPC, a government-owned and controlled


corporation, has the effective control over all elements of the extraction process,
including the amount and timing thereof considering that x xx the water will flow
out of the power tunnel and through the power plant, to be used for the
generation of electricity, only when the Downstream Gates are opened, which
occur only upon the specific water release instructions given by NPC to SRPC.
This specific feature of the agreement, taken together with the above-stated
analysis of the source of water that enters the plant, support the view that the
nationality requirement embodied in Article XII, Section 2 of the present
Constitution and in Article 15 of the Water Code, is not violated.69

(Emphasis supplied.)

The latest executive interpretation is stated in DOJ Opinion No. 52, s. 2005
which was rendered upon the request of PSALM in connection with the
proposed sale structure for the privatization of hydroelectric and geothermal
generation assets (Gencos) of NPC. PSALM sought a ruling on the legality of its
proposed privatization scheme whereby the non-power components (dam,
reservoir and appurtenant structures and watershed area) shall be owned by the
State through government entities like NPC or NIA which shall exercise control
over the release of water, while the ownership of the power components (power
plant and related facilities) is open to both Filipino citizens/corporations and
100% foreign-owned corporations.

Sustaining the position of PSALM, then Secretary Raul M. Gonzalez opined:

Premised on the condition that only the power components shall be transferred
to the foreign bidders while the non-power components/structures shall be
retained by state agencies concerned, we find that both PSALM’s proposal and
position are tenable.

x xxx

x xx as ruled in one case by a U.S. court:

Where the State of New York took its natural resources consisting of Saratoga
Spring and, through a bottling process, put those resources into preserved
condition where they could be sold to the public in competition with private
waters, the state agencies were not immune from federal taxes imposed upon
bottled waters on the theory that state was engaged in the sale of "natural
resources."

Applied to the instant case, and construed in relation to the earlier-mentioned


constitutional inhibition, it would appear clear that while both waters and
geothermal steam are, undoubtedly "natural resources", within the meaning of
Section 2 Article XII of the present Constitution, hence, their exploitation,
development and utilization should be limited to Filipino citizens or corporations
or associations at least sixty per centum of the capital of which is owned by
Filipino citizens, the utilization thereof can be opened even to foreign nationals,
after the same have been extracted from the source by qualified persons or
entities. The rationale is because, since they no longer form part of the natural
resources of the country, they become subject to ordinary commerce.

A contrary interpretation, i.e., that the removed or extracted natural resources


would remain inalienable especially to foreign nationals, can lead to absurd
consequences, e.g. that said waters and geothermal steam, and any other
extracted natural resources, cannot be acquired by foreign nationals for sale
within or outside the country, which could not have been intended by the framers
of the Constitution.

The fact that under the proposal, the non-power components and structures
shall be retained and maintained by the government entities concerned is, to us,
not only a sufficient compliance of constitutional requirement of "full control and
supervision of the State" in the exploitation, development and utilization of
natural resources. It is also an enough safeguard against the evil sought to be
avoided by the constitutional reservation x xx.70 (Italics in the original, emphasis
supplied.)

Appropriation of water, as used in the Water Code refers to the "acquisition of


rights over the use of waters or the taking or diverting of waters from a natural
source in the manner and for any purpose allowed by law."71 This definition is
not as broad as the concept of appropriation of water in American jurisprudence:

An appropriation of water flowing on the public domain consists in the capture,


impounding, or diversion of it from its natural course or channel and its actual
application to some beneficial use private or personal to the appropriator, to the
entire exclusion (or exclusion to the extent of the water appropriated) of all other
persons. x xx72

On the other hand, "water right" is defined in the Water Code as the privilege
granted by the government to appropriate and use water.73 Black’s Law
Dictionary defined "water rights" as "a legal right, in the nature of a corporeal
hereditament, to use the water of a natural stream or water furnished through a
ditch or canal, for general or specific purposes, such as irrigation, mining, power,
or domestic use, either to its full capacity or to a measured extent or during a
defined portion of the time," or "the right to have the water flow so that some
portion of it may be reduced to possession and be made private property of
individual, and it is therefore the right to divert water from natural stream by
artificial means and apply the same to beneficial use."74

Under the Water Code concept of appropriation, a foreign company may not be
said to be "appropriating" our natural resources if it utilizes the waters collected
in the dam and converts the same into electricity through artificial devices. Since
the NPC remains in control of the operation of the dam by virtue of water rights
granted to it, as determined under DOJ Opinion No. 122, s. 1998, there is no
legal impediment to foreign-owned companies undertaking the generation of
electric power using waters already appropriated by NPC, the holder of water
permit. Such was the situation of hydropower projects under the BOT
contractual arrangements whereby foreign investors are allowed to finance or
undertake construction and rehabilitation of infrastructure projects and/or own
and operate the facility constructed. However, in case the facility requires a
public utility franchise, the facility operator must be a Filipino corporation or at
least 60% owned by Filipino.75

With the advent of privatization of the electric power industry which resulted in
its segregation into four sectors -- generation, transmission, distribution and
supply – NPC’s generation and transmission functions were unbundled. Power
generation and transmission were treated as separate sectors governed by
distinct rules under the new regulatory framework introduced by EPIRA. The
National Transmission Corporation (TRANSCO) was created to own and
operate the transmission assets and perform the transmission functions
previously under NPC. While the NPC continues to undertake missionary
electrification programs through the SPUG, PSALM was also created to
liquidate the assets and liabilities of NPC.

Under the EPIRA, NPC’s generation function was restricted as it was allowed to
"generate and sell electricity only from the undisposed generating assets and
IPP contracts of PSALM" and was prohibited from incurring "any new obligations
to purchase power through bilateral contracts with generation companies or
other suppliers."76 PSALM, on the other hand, was tasked "to structure the sale,
privatization or disposition of NPC assets and IPP contracts and/or their energy
output based on such terms and conditions which shall optimize the value and
sale prices of said assets."77 In the case of multi-purpose hydropower plants, the
IRR of R.A. No. 9136 provided that their privatization would extend to water
rights which shall be transferred or assigned to the buyers thereof, subject to
safeguards mandated by Sec. 47(e) to enable the national government to direct
water usage in cases of shortage to protect water requirements imbued with
public interest.

Accordingly, the Asset Purchase Agreement executed between PSALM and K-


Water stipulated:

2.04 Matters Relating to the Non-Power Component

x xxx
Matters relating to Water Rights

NPC has issued a certification (the "Water Certification") wherein NPC consents,
subject to Philippine Law, to the (i) transfer of the Water Permit to the BUYER or
its Affiliate, and (ii) use by the BUYER or its Affiliate of the water covered by the
Water Permit from Closing Date up to a maximum period of one (1) year
thereafter to enable the BUYER to appropriate and use water sourced from
Angat reservoir for purposes of power generation; provided, that should the
consent or approval of any Governmental Body be required for either (i) or (ii),
the BUYER must secure such consent or approval. The BUYER agrees and
shall fully comply with the Water Permit and the Water Certification. x xx

x xxx

Multi-Purpose Facility

The BUYER is fully aware that the Non-Power Components is a multi-purpose


hydro-facility and the water is currently being appropriated for domestic use,
municipal use, irrigation and power generation. Anything in this Agreement
notwithstanding, the BUYER shall, at all times even after the Payment Date,
fully and faithfully comply with Philippine Law, including the Instructions, the
Rule Curve and Operating Guidelines and the Water Protocol.78 (Emphasis
supplied.)

Lease or transfer of water rights is allowed under the Water Code, subject to the
approval of NWRB after due notice and hearing.79 However, lessees or
transferees of such water rights must comply with the citizenship requirement
imposed by the Water Code and its IRR. But regardless of such qualification of
water permit holders/transferees, it is to be noted that there is no provision in the
EPIRA itself authorizing the NPC to assign or transfer its water rights in case of
transfer of operation and possession of multi-purpose hydropower facilities.
Since only the power plant is to be sold and privatized, the operation of the non-
power components such as the dam and reservoir, including the maintenance of
the surrounding watershed, should remain under the jurisdiction and control of
NPC which continue to be a government corporation. There is therefore no
necessity for NPC to transfer its permit over the water rights to K-Water.
Pursuant to its purchase and operation/management contracts with K-Water,
NPC may authorize the latter to use water in the dam to generate electricity.

NPC’s water rights remain an integral aspect of its jurisdiction and control over
the dam and reservoir. That the EPIRAitselfdid not ordain any transfer of water
rights leads us to infer that Congress intended NPC to continue exercising full
supervision over the dam, reservoir and, more importantly, to remain in complete
control of the extraction or diversion of water from the Angat River. Indeed, there
can be no debate that the best means of ensuring that PSALM/NPC can fulfill
the duty to prescribe "safeguards to enable the national government to direct
water usage to protect potable water, irrigation, and all other requirements
imbued with public interest" is for it to retain the water rights over those water
resources from where the dam waters are extracted. In this way, the State’s full
supervision and control over the country’s water resources is also assured
notwithstanding the privatized power generation business.

Section 6 (a) of the IRR of R.A. No. 9136 insofar as it directs the transfer of
water rights in the privatization of multi-purpose hydropower facilities, is thus
merely directory.

It is worth mentioning that the Water Code explicitly provides that Filipino
citizens and juridical persons who may apply for water permits should be "duly
qualified by law to exploit and develop water resources."

Thus, aside from the grant of authority to construct and operate dams and
power plants, NPC’s Revised Charter specifically authorized it –

(f) To take water from any public stream, river, creek, lake, spring or waterfall in
the Philippines, for the purposes specified in this Act; to intercept and divert the
flow of waters from lands of riparian owners and from persons owning or
interested in waters which are or may be necessary for said purposes, upon
payment of just compensation therefor; to alter, straighten, obstruct or increase
the flow of water in streams or water channels intersecting or connecting
therewith or contiguous to its works or any part thereof: Provided, That just
compensation shall be paid to any person or persons whose property is, directly
or indirectly, adversely affected or damaged thereby.80

The MWSS is likewise vested with the power to construct, maintain and operate
dams and reservoirs for the purpose of supplying water for domestic and other
purposes, as well to construct, develop, maintain and operate such artesian
wells and springs as may be needed in its operation within its territory.81 On the
other hand, NIA, also a water permit holder in Angat River, is vested with similar
authority to utilize water resources, as follows:

(b) To investigate all available and possible water resources in the country for
the purpose of utilizing the same for irrigation, and to plan, design and construct
the necessary projects to make the ten to twenty-year period following the
approval of this Act as the Irrigation Age of the Republic of the Philippines;82
(c) To construct multiple-purpose water resources projects designed primarily for
irrigation, and secondarily for hydraulic power development and/or other uses
such as flood control, drainage, land reclamation, domestic water supply, roads
and highway construction and reforestation, among others, provided, that the
plans, designs and the construction thereof, shall be undertaken in coordination
with the agencies concerned;83

To reiterate, there is nothing in the EPIRAwhich declares that it is mandatory for


PSALM or NPC to transfer or assign NPC’s water rights to buyers of its multi-
purpose hydropower facilities as part of the privatization process. While PSALM
was mandated to transfer the ownership of all hydropower plants except those
mentioned in Sec. 47 (f), any transfer of possession, operation and control of the
multi-purpose hydropower facilities, the intent to preserve water resources under
the full supervision and control of the State is evident when PSALM was
obligated to prescribe safeguards to enable the national government to direct
water usage to domestic and other requirements "imbued with public interest."
There is no express requirement for the transfer of water rights in all cases
where the operation of hydropower facilities in a multi-purpose dam complex is
turned over to the private sector.

As the new owner of the AHEPP, K-Water will have to utilize the waters in the
Angat Dam for hydropower generation. Consistent with the goals of the EPIRA,
private entities are allowed to undertake power generation activities and acquire
NPC’s generation assets. But since only the hydroelectric power plants and
appurtenances are being sold, the privatization scheme should enable the buyer
of a hydroelectric power plant in NPC’s multi-purpose dam complex to have
beneficialuse of the waters diverted or collected in the Angat Dam for its
hydropower generation activities, and at the same time ensure that the NPC
retains full supervision and control over the extraction and diversion of waters
from the Angat River.

In fine, the Court rules that while the sale of AHEPP to a foreign corporation
pursuant to the privatization mandated by the EPIRA did not violate Sec. 2, Art.
XII of the 1987 Constitution which limits the exploration, development and
utilization of natural resources under the full supervision and control of the State
or the State’s undertaking the same through joint venture, co-production or
production sharing agreements with Filipino corporations 60% of the capital of
which is owned by Filipino citizens, the stipulation in the Asset Purchase
Agreement and Operations and Maintenance Agreement whereby NPC
consents to the transfer of water rights to the foreign buyer, K-Water,
contravenes the aforesaid constitutional provision and the Water Code.1âwphi1
Section 6, Rule 23 of the IRR of EPIRA, insofar as it ordered NPC’s water rights
in multi-purpose hydropower facilities to be included in the sale thereof, is
declared as merely directoryand not an absolute condition in the privatization
scheme. In this case, we hold that NPC shall continue to be the holder of the
water permit even as the operational control and day-to-day management of the
AHEPP is turned over to K-Water under the terms and conditions of their APA
and O & M Agreement, whereby NPC grants authority to K-Water to utilize the
waters diverted or collected in the Angat Dam for hydropower generation.
Further, NPC and K-Water shall faithfully comply with the terms and conditions
of the Memorandum of Agreement on Water Protocol, as well as with such other
regulations and issuances of the NWRB governing water rights and water
usage.

WHEREFORE, the present petition for certiorari and prohibition with prayer for
injunctive relief/s is PARTLY GRANTED.

The following DISPOSITIONS are in ORDER:

1) The bidding conducted and the Notice of Award issued by PSALM in favor of
the winning bidder, KOREA WATER RESOURCES CORPORATION (K-
WATER), are declared VALID and LEGAL;

2) PSALM is directed to FURNISH the petitioners with copies of all documents


and records in its files pertaining to K-Water;

3) Section 6 (a), Rule 23, IRR of the EPIRA, is hereby declared as


merely DIRECTORY, and not an absolute condition in all cases where NPC-
owned hydropower generation facilities are privatized;

4) NPC shall CONTINUE to be the HOLDER of Water Permit No. 6512 issued
by the National Water Resources Board. NPC shall authorize K-Water to utilize
the waters in the Angat Dam for hydropower generation, subject to the NWRB’s
rules and regulations governing water right and usage. The Asset Purchase
Agreement and Operation & Management Agreement between NPC/PSALM
and K- Water are thus amended accordingly.

Except for the requirement of securing a water permit, K-Water remains BOUND
by its undertakings and warranties under the APA and O & M Agreement;

5) NPC shall be a CO-PARTY with K-Water in the Water Protocol Agreement


with MWSS and NIA, and not merely as a conforming authority or agency; and
6) The Status Quo Ante Order issued by this Court on May 24, 2010 is
hereby LIFTED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 191846 May 6, 2010

TEOFISTO GUINGONA, JR., BISHOP LEO A. SORIANO, FE MARIA


ARRIOLA, ISAGANI R. SERRANO, and ENGR. RODOLFO
LOZADA, Petitioners, 

vs.

COMMISSION ON ELECTIONS, Respondent.

RESOLUTION

CARPIO, J.:

The Case

In this special civil action for mandamus filed on 23 April 2010, petitioners invoke
their constitutional rights to suffrage and to information in compelling respondent
Commission on Elections (Comelec) to explain fully the complete details of its
preparations for the 10 May 2010 elections, in view of the unraveling of alarming
events of late.

The Antecedents

Petitioners cite various recent media reports, as follows:

1. Smartmatic-Total Information Management Corporation supplied the wrong


ultraviolet ink used in the printing of the ballots for the May 2010 elections. The
security marks were unreadable by the Precinct Count Optical Scan (PCOS)
machines. This prompted Comelec to disable the ultraviolet light detector in the
PCOS machines, and to buy ultraviolet lamps for ₱30 million. Director Ferdinand
Rafanan of the Comelec’s legal department, who challenged Comelec’s decision
to buy ultraviolet lamps, was quoted as saying, "Why is Comelec shouldering
this expense when it was not its fault that this deficiency came about."

2. Senate Minority Leader Aquilino Pimentel, Jr. then disclosed that election
officials bought nearly two million ballot secrecy folders for the May 2010
elections at an overpriced rate of ₱380 each without any public bidding.
Comelec promptly canceled the awarding of the ₱690 million contract for the
supply and delivery of the ballot secrecy folders, which the Bids and Awards
Committee of Comelec had recommended to be awarded to OTC Paper Supply
for 1,815,000 ballot secrecy folders.

3. Another whistle blower, Dr. Arwin Serrano, the citizen’s arm representative to
the Comelec’s Bids and Awards Committee, asked that the bidding for indelible
ink be probed as well. According to Serrano, there were two bidders initially.
After screening, Texas Resources Corporation was left as the sole bidder. Upon
testing of a sample of its indelible ink, the product failed. The ink easily washed
off and the mark left by it only appeared after the lapse of a few hours.
Undeterred by the failed test, Comelec still used the ink supplied by Texas
Resources Corporation.

4. Comelec tried to re-bid the contract for the indelible ink. However, it
backtracked on its plan saying that the lone bidder did not fail the test after all.
Comelec spokesperson James Jimenez was quoted as saying, "It looks like
there is no need to actually re-bid it, not to mention the fact that there is really
not enough time left for that."

5. On the second day of the overseas absentee voting in Hong Kong, the PCOS
machines at precincts 15 and 16 at the Bayanihan Kennedytown Center failed to
accept promptly the ballots shortly after the precincts reopened at 8 a.m.
Inspection of the ballots showed no stray or ambiguous marks that could result
in their rejection by the PCOS machines. Smartmatic officials blamed the
combination of cold and humidity in Hong Kong for the malfunctioning machines.

6. In an interview, Cesar Flores, president of Smartmatic, admitted that


"Machines will break on election day, and machines will have to go to
contingency procedures and there will be replacements, and there will be cases
where no replacements will be available and the Board of Election Inspectors
(BEIs) will have to resort to the next-door machines." Flores explained that
hiccups could either be due to hardware failure or operational failure if the paper
was inserted incorrectly or some connections were not plugged in. Flores
continued, "It’s very important that we say these things to the public and we
manage the expectations of people. If you’re planning on getting your headlines
from machines broken, you’re going to run out of space on your front page on
election day."

7. This series of unfortunate events and worrisome admissions notwithstanding,


the Comelec subsequently approved a resolution awarding Smartmatic a
contract amounting to ₱500 million for the tracking and delivery services of
official ballots. No bidding was held for the contract, which Comelec claimed to
be an emergency procurement.
8. In an en banc resolution detailing the general instructions on the actual
conduct of elections, Comelec specifically instructed BEIs not to key in their
digital signatures before the PCOS machines transmit election results. Thus,
any PCOS machine, including the reserves totaling 10,000 machines, can
transmit election results to Comelec’s central server even without digital
authentication. The results can still be tallied as official results. In other words,
even ballots that are not officially printed can be used in any PCOS machine.
Official ballots are no longer precinct-specific. The volume of ballots can no
longer be monitored. Petitioners call this Court’s attention to the fact that reserve
PCOS machines can be used to transmit pre-loaded results.

The Court further takes judicial notice of the fact, as widely reported in print and
broadcast media, that with just six days to go before the 10 May 2010 elections,
Comelec recalled 76,000 compact flash cards following widespread failure of the
PCOS machines to read and tally the votes during the machine test conducted
by Comelec and Smartmatic. Comelec spokesman James Jimenez was quoted
as saying, "Right now we are assuming that all of the machines were affected.
We have stopped the testing and are pulling out all memory cards for
reconfiguration."

Prior to this, Comelec unanimously discarded the proposal of information


technology experts for a parallel manual count to safeguard the integrity and
credibility of the election results.

In light of the foregoing alarming developments, petitioners pray that the Court
order respondent Comelec to explain the complete details of its preparations for
the impending 10 May 2010 elections, specifically:

1. The status of its negotiations for election supplies and paraphernalia,


including contracts that did not undergo the bidding process;

2. Nature and security of the machines, memory card, and other software and
facilities to be used for the elections, including its current anti-hacking/tampering
strategy of the votes and the electoral results;

3. Content of the source code review mandated by RA 9369, and modes of


access by the public to the source code;

4. Schedule, venue, and specifications of the random manual audit mandated by


RA 9369;

5. Terms and protocols under which manual voting would be implemented in


case failure of elections is to be declared;
6. Its readiness to shift to manual voting and the details adopted to ensure that
the results cannot be manipulated;

7. Certification from the Technical Evaluation Committee that the entire AES is
100% fully functional and that a continuity plan is already in place pursuant to
Section 111 of RA 9369;

8. Certification protocol and the actual certification issued by DOST certifying


that the 240,000 BEI’s all over the country are trained to use the AES as
required by Section 32 of RA 9369.

9. Status of investigations and prosecutions of the offenders behind the


procurement scandals besetting the commission of late, including those
mentioned in the petition.

In its Comment filed on 4 May 2010, respondent Comelec contends petitioners


have no legal standing to file the present special civil action for mandamus.
Respondent insists petitioners have no valid cause of action against it.
Respondent argues there is no proof petitioners had requested the release of
the public documents mentioned in the petition; hence, the extraordinary writ of
mandamus is legally unavailing. Respondent Comelec maintains that the issues
raised by petitioners have already been decided in Roque v. Comelec, where
this Court held that "failure of elections consequent to voting machines failure
would, in fine, be a very remote possibility" and that although the "AES has its
flaws, Comelec and Smartmatic have seen to it that the system is well-protected
with sufficient security measures." Respondent thus prays that the petition be
dismissed for lack of merit.

The Court’s Ruling

The Court, after a careful study of the case and mindful of the transcendental
importance of the matters raised, grants the petition in part.

In order that a petition for mandamus may be given due course, it must be
instituted by a party aggrieved by the alleged inaction of any tribunal,
corporation, board, or person, which unlawfully excludes said party from the
enjoyment of a legal right.3 However, if the petition is anchored on the people’s
right to information on matters of public concern, any citizen can be the real
party in interest. The requirement of personal interest is satisfied by the mere
fact that the petitioner is a citizen, and therefore, part of the general public which
possesses the right.4There is no need to show any special interest in the result.
It is sufficient that petitioners are citizens and, as such, are interested in the
faithful execution of the laws.5
The petitioners in this case are Teofisto Guingona, Jr., Bishop Leo A. Soriano,
Jr., Quintin S. Doromal, Fe Maria Arriola, Isagani R. Serrano, and Engr. Rodolfo
Lozada. All are Filipino citizens. They are thus clothed with personality to
institute this special civil action for mandamus.

Coming now to the substantive issues, Section 7, Article III of the Constitution
enshrines the people’s fundamental right to information, thus:

Sec. 7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by law.
(Emphasis supplied)

In Valmonte v. Belmonte, Jr.,6 the Court explained the rationale of the right to
information in this wise:

The cornerstone of this republican system of government is delegation of power


by the people to the State. In this system, governmental agencies and
institutions operate within the limits of the authority conferred by the
people. Denied access to information on the inner workings of
government, the citizenry can become prey to the whims and caprices of
those to whom the power had been delegated. The postulate of public office
is a public trust, institutionalized in the Constitution to protect the people from
abuse of governmental power, would certainly be mere empty words if access to
such information of public concern is denied x x x.

x x x The right to information goes hand-in-hand with the constitutional


policies of full public disclosure and honesty in the public service. It is meant
to enhance the widening role of the citizenry in governmental decision-making
as well as in checking abuse in government. (Emphasis supplied)

The people’s constitutional right to information is intertwined with the


government’s constitutional duty of full public disclosure of all transactions
involving public interest. For every right of the people, there is a corresponding
duty on the part of those who govern to protect and respect that right. Section
28, Article II of the Constitution succinctly expresses this state policy:

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions
involving public interest. (Emphasis supplied)
In Legaspi v. Civil Service Commission,7 the Court explained that the people’s
right to information is limited to matters of public concern. The Court then
formulated a broad definition of what constitutes matters of public concern, to
wit:

In determining whether or not a particular information is of public concern, there


is no rigid test which can be applied. "Public concern" like "public interest" is a
term that eludes exact definition. Both terms embrace a broad spectrum of
subjects which the public may want to know, either because such matters
directly affect their lives, or simply because such matters naturally arouse
the interest of an ordinary citizen. In the final analysis, it is for the courts to
determine in a case by case basis whether the matter at issue is of interest or
importance, as it relates to or affects the public. (Emphasis supplied)

There can be no doubt that the coming 10 May 2010 elections is a matter of
great public concern. On election day, the country’s registered voters will come
out to exercise the sacred right of suffrage. Not only is it an exercise that
ensures the preservation of our democracy, the coming elections also embodies
our people’s last ounce of hope for a better future. It is the final opportunity,
patiently awaited by our people, for the peaceful transition of power to the next
chosen leaders of our country. If there is anything capable of directly affecting
the lives of ordinary Filipinos so as to come within the ambit of a public concern,
it is the coming elections, more so with the alarming turn of events that continue
to unfold. The wanton wastage of public funds brought about by one bungled
contract after another, in staggering amounts, is in itself a matter of grave public
concern.

It is not enough, however, that the information petitioners seek in a writ of


mandamus is a matter of public concern. For mandamus to lie in a given case,
the information must not be among the species exempted by law from the
operation of the constitutional guarantee.8 In this case, respondent Comelec
failed to cite any provision of law exempting the information sought by
petitioners from the coverage of the government’s constitutional duty to disclose
fully information of public concern.

Respondent’s claim that there is no proof a request has been made for the
release of the public records mentioned in the petition is belied by its allegation
in its own Comment that this matter has already been addressed in the recent
case of Roque v. Comelec.9 Quoting the Court’s ruling in that case on the issue
of disclosure of the source code, respondent unwittingly admits a prior request
for disclosure:
The fact that a source code review is not expressly included in the Comelec
schedule of activities is not an indication, as petitioners suggest, that Comelec
will not implement such review. Comelec, in its Comment on the Motion for
Reconsideration, manifests its intention to make available and open the source
code to all political and interested parties, but under a controlled environment to
obviate replication and tampering of the source code.10

Petitioners in Roque v. Comelec11 in fact pressed Comelec for a source code


review. To this day, however, Comelec has yet to disclose the source code as
mandated by law. In any case, considering the lack of material time, the Court in
the exercise of its equity jurisdiction may even dispense with the requirement of
proof of a prior demand in this case.

The Court may, and given the alarming developments of late in the run-up to the
10 May 2010 elections, should compel Comelec to disclose fully the complete
details of its preparations. In Legaspi v. Civil Service Commission,12 the Court
stressed that the constitutional duty to disclose information of public concern
may be compelled by mandamus, to wit:

Thus, while the manner of examining public records may be subject to


reasonable regulation by the government agency in custody thereof, the duty to
disclose the information of public concern, and to afford access to public
records cannot be discretionary on the part of said agencies. Certainly, its
performance cannot be made contingent upon the discretion of such agencies.
Otherwise, the enjoyment of the constitutional right may be rendered nugatory
by any whimsical exercise of agency discretion. The constitutional duty, not
being discretionary, its performance may be compelled by a writ of
mandamus in a proper case. (Emphasis supplied)

Section 52(j) of Batas Pambansa Blg. 881, otherwise known as the Omnibus
Election Code, mandates that Comelec shall carry out a continuing and
systematic campaign to educate the public and fully inform the electorate about
election laws, procedures, decisions, and other matters relative to the work and
duties of the Comelec and the necessity of clean, free, orderly, and honest
electoral processes. It provides:

Section 52. Powers and functions of the Commission on Elections. - In addition


to the powers and functions conferred upon it by the Constitution, the
Commission shall have exclusive charge of the enforcement and administration
of all laws relative to the conduct of elections for the purpose of ensuring free,
orderly and honest elections, and shall:
(j) Carry out a continuing and systematic campaign through newspapers
of general circulation, radios and other media forms to educate the public
and fully inform the electorate about election laws, procedures, decisions,
and other matters relative to the work and duties of the Commission and
the necessity of clean, free, orderly, and honest electoral processes. (Emphasis
supplied)

Section 5(e) of Republic Act No. 6713, otherwise known as the Code of Conduct
and Ethical Standards for Public Officials and Employees, requires that all public
documents must be made accessible to, and readily available for inspection by,
the public within reasonable working hours. It states:

Section 5. Duties of Public Officials and Employees. - In the performance of their


duties, all public officials and employees are under obligation to:

e) Make documents accessible to the public. - All public documents must


be made accessible to, and readily available for inspection by, the public
within reasonable working hours. (Emphasis supplied)

Section 3 of Republic Act No. 9184, otherwise known as the Government


Procurement Reform Act, lays down the following categorical and definitive
principles governing government procurement:

Section 3. Governing Principles on Government Procurement.

All procurement of the national government, its departments, bureaus,


offices and agencies, including state universities and colleges, government -
owned and/or-controlled corporations, government financial institutions and local
government units, shall, in all cases, be governed by these principles:

(a) Transparency in the procurement process and in the implementation of


procurement contracts.

(b) Competitiveness by extending equal opportunity to enable private


contracting parties who are eligible and qualified to participate in public bidding.

(c) Streamlined procurement process that will uniformly apply to all government
procurement. The procurement process shall be simple and made adaptable to
advances in modern technology in order to ensure an effective and efficient
method.

(d) System of accountability where both the public officials directly or


indirectly involved in the procurement process as well as in the
implementation of procurement contracts and the private parties that deal
with government are, when warranted by circumstances, investigated and
held liable for their actions relative thereto.

(e) Public monitoring of the procurement process and the implementation


of awarded contracts with the end in view of guaranteeing that these contracts
are awarded pursuant to the provisions of this Act and its implementing rules
and regulations, and that all these contracts are performed strictly according to
specifications. (Emphasis supplied)

Section 1 of Republic Act No. 9369, otherwise known as An Act Amending


Republic Act No. 8436, declares as a state policy a transparent and credible
election process, thus:

SECTION 1. Declaration of Policy. - It is the policy of the State to ensure free,


orderly, honest, peaceful, credible, and informed elections, plebiscites,
referenda, recall, and other similar electoral exercises by improving on the
election process and adopting systems, which shall involve the use of an
automated election system that will ensure the secrecy and sanctity of the ballot
and all election, consolidation, and transmission documents in order that the
process shall be transparent and credible and that the results shall be fast,
accurate, and reflective of the genuine will of the people. (Emphasis supplied)

Section 2 of Republic Act No. 9525, otherwise known as An Act Appropriating


₱11 Billion as Supplemental Appropriations for an Automated Election System,
conditions the disbursement of the funds on the adoption of measures that will
guarantee transparency and accuracy in the selection of the relevant technology
of the machines to be used in the elections. It provides:

Section 2. Use of Funds. - The amounts herein appropriated shall be used for
the purposes indicated and subject to: (i) the relevant special and general
provisions of Republic Act No. 9498, or the FY 2008 General Appropriations Act,
as reenacted, and subsequent General Appropriations Acts, and (ii) the
applicable provisions of 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, Providing Funds Therefor and for Other Purposes", as amended by
Republic Act No. 9369: Provided, however, That disbursement of the
amounts herein appropriated or any part thereof shall be authorized only
in strict compliance with the Constitution, the provisions of Republic Act
No. 9369 and other election laws incorporated in said Act so as to ensure
the conduct of a free, orderly, clean, honest and credible election and shall
adopt such measures that will guarantee transparency and accuracy in the
selection of the relevant technology of the machines to be used on May 10,
2010 automated national and local election. (Emphasis supplied)

Section 11 of Republic Act No. 9369 requires a continuity plan in case of a


systems breakdown resulting in delay, obstruction, or nonperformance of the
automated election system, thus:

SEC. 11. Section 9 of Republic Act No. 8436 is hereby amended to read as
follows:

"SEC.13. Continuity Plan. - The AES shall be so designed to include a


continuity plan in case of a systems breakdown or any such eventuality
which shall result in the delay, obstruction, or nonperformance of the
electoral process. Activation of such continuity and contingency measures
shall be undertaken in the presence of representatives of political parties and
citizen’s arm of the Commission who shall be notified by the election officer of
such activation.

"All political parties and party-lists shall be furnished copies of said


continuity plan at their official addresses as submitted to the Commission. The
list shall be published in at least two newspapers of national circulation
and shall be posted at the website of the Commission at least fifteen (15)
days prior to the electoral activity concerned." (Emphasis supplied)

Section 12 of Republic Act No. 9369 also mandates that the equipment or
device for the automated election system shall be open for examination and
testing by political parties, candidates, or their representatives. More importantly,
the law provides that once a technology is selected for implementation, the
Comelec shall promptly make the source code of that technology available and
open to any interested political party or groups which may conduct their own
review, thus:

SEC. 12. Section 10 of Republic Act No. 8436 is hereby amended to read as
follows:

"SEC.14. Examination and Testing of Equipment or Device of the AES and


Opening of the Source Code for Review. - The Commission shall allow the
political parties and candidates or their representatives, citizens’ arm or their
representatives to examine and test:

"The equipment or device to be used in the voting and counting on the day of
the electoral exercise, before voting starts. Test ballots and test forms shall be
provided by the Commission.
"Immediately after the examination and testing of the equipment or device,
parties and candidates or their representatives, citizen’s arms or their
representatives, may submit a written comment to the election officer who shall
immediately transmit it to the Commission for appropriate action.

"The election officer shall keep minutes of the testing, a copy of which shall be
submitted to the Commission together with the minute of voting."

"Once an AES technology is selected for implementation, the Commission


shall promptly make the source code of that technology available and
open to any interested political party or groups which may conduct their
own review thereof." (Emphasis supplied)

In sum, petitioners’ prayer to compel Comelec to explain fully its preparations for
the coming 10 May 2010 elections finds overwhelming support in the
Constitution, specifically under Section 7 of Article III and Section 28 of Article II
on the people’s right to information and the State’s corresponding duty of full
public disclosure of all transactions involving public interest; the jurisprudential
doctrines laid down in Valmonte v. Belmonte, Jr., Legaspi v. Civil Service
Commission, and Akbayan Citizens Action Party v. Aquino; as well as Section
52(j) of Batas Pambansa Blg. 881 otherwise known as the Omnibus Election
Code; Section 5(e) of Republic Act No. 6713 otherwise known as the Code of
Conduct and Ethical Standards for Public Officials and Employees; Section 3 of
Republic Act No. 9184 otherwise known as the Government Procurement
Reform Act; Sections 1, 11, and 12 of Republic Act No. 9369 otherwise known
as An Act Amending Republic Act No. 8436; and Section 2 of Republic Act No.
9525 otherwise known as An Act Appropriating ₱11 Billion as Supplemental
Appropriations for an Automated Election System.

Respondent Comelec cannot shirk its constitutional duty to disclose fully to the
public complete details of all information relating to its preparations for the 10
May 2010 elections without violating the Constitution and relevant laws. No less
than the Constitution13 mandates it to enforce and administer election laws. The
Comelec chairman and the six commissioners are beholden and accountable to
the people they have sworn to serve. This Court, as the last bulwark of
democracy in this country, will spare nothing in its constitutionally granted
powers to ensure that the fundamental right of the people to information on
matters of public concern, especially on matters that directly affect our
democratic processes, is fully guaranteed, protected, and implemented.1awwph!
1

However, due to the proximity of the 10 May 2010 elections which is less than
five days away, we shall grant only the specific reliefs prayed for by petitioners
which by necessity must be disclosed before the 10 May 2010 elections or are
expressly mandated by law to be disclosed or performed in connection with the
holding of the 10 May 2010 elections. Petitioners can press Comelec for the
other reliefs after the 10 May 2010 elections, and if they still fail to secure such
reliefs, they may take such actions as may be allowed under the law.

WHEREFORE, we GRANT the petition in part. Respondent Commission on


Elections is ORDERED, within two (2) days from receipt of this Resolution, to
disclose to petitioners and the public the following:

1. The nature and security of all equipment and devices, including their
hardware and software components, to be used in the 10 May 2010 automated
elections, as provided for in Section 714 of Republic Act No. 9369;

2. The source code for review by interested parties as mandated by Section


1215 of Republic Act No. 9369;

3. The terms and protocols of the random manual audit, as mandated by Section
2416 of Republic Act No. 9369;

4. A certification from the Technical Evaluation Committee that the entire


Automated Election System is fully functional and that a continuity plan is
already in place, as mandated by Sections 917 and 1118 of Republic Act No.
9369; and

5. The certification protocol and the actual certification issued by the Department
of Science and Technology that the 240,000 Board of Election Inspectors all
over the country are trained to use the Automated Election System, as required
by Section 319 of Republic Act No. 9369.

This Resolution is immediately executory.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 166494 June 29, 2007

CARLOS SUPERDRUG CORP., doing business under the name and style
"Carlos Superdrug," ELSIE M. CANO, doing business under the name and
style "Advance Drug," Dr. SIMPLICIO L. YAP, JR., doing business under
the name and style "City Pharmacy," MELVIN S. DELA SERNA, doing
business under the name and style "Botica dela Serna," and LEYTE SERV-
WELL CORP., doing business under the name and style "Leyte Serv-Well
Drugstore," petitioners, 

vs.

DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD),
DEPARTMENT OF HEALTH (DOH), DEPARTMENT OF FINANCE (DOF),
DEPARTMENT OF JUSTICE (DOJ), and DEPARTMENT OF INTERIOR and
LOCAL GOVERNMENT (DILG), respondents.

DECISION

AZCUNA, J.:

This is a petition1 for Prohibition with Prayer for Preliminary Injunction assailing
the constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257,2 otherwise
known as the "Expanded Senior Citizens Act of 2003."

Petitioners are domestic corporations and proprietors operating drugstores in


the Philippines.

Public respondents, on the other hand, include the Department of Social Welfare
and Development (DSWD), the Department of Health (DOH), the Department of
Finance (DOF), the Department of Justice (DOJ), and the Department of Interior
and Local Government (DILG) which have been specifically tasked to monitor
the drugstores’ compliance with the law; promulgate the implementing rules and
regulations for the effective implementation of the law; and prosecute and
revoke the licenses of erring drugstore establishments.

The antecedents are as follows:


On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432,3 was signed
into law by President Gloria Macapagal-Arroyo and it became effective on March
21, 2004. Section 4(a) of the Act states:

SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled
to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to
the utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior citizens, including
funeral and burial services for the death of senior citizens;

...

The establishment may claim the discounts granted under (a), (f), (g) and (h)
as tax deduction based on the net cost of the goods sold or services
rendered: Provided, That the cost of the discount shall be allowed as deduction
from gross income for the same taxable year that the discount is
granted. Provided, further, That the total amount of the claimed tax deduction
net of value added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code, as amended.4

On May 28, 2004, the DSWD approved and adopted the Implementing Rules
and Regulations of R.A. No. 9257, Rule VI, Article 8 of which states:

Article 8. Tax Deduction of Establishments. – The establishment may claim the


discounts granted under Rule V, Section 4 – Discounts for Establishments;
5 Section 9, Medical and Dental Services in Private Facilities[,]6 and Sections

107 and 118 – Air, Sea and Land Transportation as tax deduction based on the
net cost of the goods sold or services rendered. Provided, That the cost of the
discount shall be allowed as deduction from gross income for the same taxable
year that the discount is granted; Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable, shall be included in
their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as
amended; Provided, finally, that the implementation of the tax deduction shall be
subject to the Revenue Regulations to be issued by the Bureau of Internal
Revenue (BIR) and approved by the Department of Finance (DOF).9

On July 10, 2004, in reference to the query of the Drug Stores Association of the
Philippines (DSAP) concerning the meaning of a tax deduction under the
Expanded Senior Citizens Act, the DOF, through Director IV Ma. Lourdes B.
Recente, clarified as follows:

1) The difference between the Tax Credit (under the Old Senior Citizens Act)
and Tax Deduction (under the Expanded Senior Citizens Act).

1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act)
grants twenty percent (20%) discount from all establishments relative to the
utilization of transportation services, hotels and similar lodging establishment,
restaurants and recreation centers and purchase of medicines anywhere in the
country, the costs of which may be claimed by the private establishments
concerned as tax credit.

Effectively, a tax credit is a peso-for-peso deduction from a taxpayer’s tax


liability due to the government of the amount of discounts such establishment
has granted to a senior citizen. The establishment recovers the full amount of
discount given to a senior citizen and hence, the government shoulders 100% of
the discounts granted.

It must be noted, however, that conceptually, a tax credit scheme under the
Philippine tax system, necessitates that prior payments of taxes have been
made and the taxpayer is attempting to recover this tax payment from his/her
income tax due. The tax credit scheme under R.A. No. 7432 is, therefore,
inapplicable since no tax payments have previously occurred.

1.2. The provision under R.A. No. 9257, on the other hand, provides that the
establishment concerned may claim the discounts under Section 4(a), (f), (g)
and (h) as tax deduction from gross income, based on the net cost of goods
sold or services rendered.

Under this scheme, the establishment concerned is allowed to deduct from


gross income, in computing for its tax liability, the amount of discounts granted
to senior citizens. Effectively, the government loses in terms of foregone
revenues an amount equivalent to the marginal tax rate the said establishment
is liable to pay the government. This will be an amount equivalent to 32% of the
twenty percent (20%) discounts so granted. The establishment shoulders the
remaining portion of the granted discounts.

It may be necessary to note that while the burden on [the] government is slightly
diminished in terms of its percentage share on the discounts granted to senior
citizens, the number of potential establishments that may claim tax deductions,
have however, been broadened. Aside from the establishments that may claim
tax credits under the old law, more establishments were added under the new
law such as: establishments providing medical and dental services, diagnostic
and laboratory services, including professional fees of attending doctors in all
private hospitals and medical facilities, operators of domestic air and sea
transport services, public railways and skyways and bus transport services.

A simple illustration might help amplify the points discussed above, as follows:

Tax Deduction Tax Credit

Gross Sales x x x x x x x x x x x x

Less : Cost of goods sold x x x x x x x x x x

Net Sales x x x x x x x x x x x x

Less: Operating Expenses:

Tax Deduction on Discounts x x x x --

Other deductions: x x x x x x x x

Net Taxable Income x x x x x x x x x x

Tax Due x x x x x x

Less: Tax Credit -- ______x x

Net Tax Due -- x x

As shown above, under a tax deduction scheme, the tax deduction on


discounts was subtracted from Net Sales together with other deductions which
are considered as operating expenses before the Tax Due was computed based
on the Net Taxable Income. On the other hand, under a tax credit scheme, the
amount of discounts which is the tax credit item, was deducted directly from the
tax due amount.10

Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or


the Policies and Guidelines to Implement the Relevant Provisions of Republic
Act 9257, otherwise known as the "Expanded Senior Citizens Act of 2003"11was
issued by the DOH, providing the grant of twenty percent (20%) discount in the
purchase of unbranded generic medicines from all establishments dispensing
medicines for the exclusive use of the senior citizens.
On November 12, 2004, the DOH issued Administrative Order No
17712 amending A.O. No. 171. Under A.O. No. 177, the twenty percent discount
shall not be limited to the purchase of unbranded generic medicines only, but
shall extend to both prescription and non-prescription medicines whether
branded or generic. Thus, it stated that "[t]he grant of twenty percent (20%)
discount shall be provided in the purchase of medicines from all establishments
dispensing medicines for the exclusive use of the senior citizens."

Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior


Citizens Act based on the following grounds:13

1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution
which provides that private property shall not be taken for public use without just
compensation;

2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our
Constitution which states that "no person shall be deprived of life, liberty or
property without due process of law, nor shall any person be denied of the equal
protection of the laws;" and

3) The 20% discount on medicines violates the constitutional guarantee in Article


XIII, Section 11 that makes "essential goods, health and other social services
available to all people at affordable cost."14

Petitioners assert that Section 4(a) of the law is unconstitutional because it


constitutes deprivation of private property. Compelling drugstore owners and
establishments to grant the discount will result in a loss of profit

and capital because 1) drugstores impose a mark-up of only 5% to 10% on


branded medicines; and 2) the law failed to provide a scheme whereby
drugstores will be justly compensated for the discount.

Examining petitioners’ arguments, it is apparent that what petitioners are


ultimately questioning is the validity of the tax deduction scheme as a
reimbursement mechanism for the twenty percent (20%) discount that they
extend to senior citizens.

Based on the afore-stated DOF Opinion, the tax deduction scheme does not
fully reimburse petitioners for the discount privilege accorded to senior citizens.
This is because the discount is treated as a deduction, a tax-deductible expense
that is subtracted from the gross income and results in a lower taxable income.
Stated otherwise, it is an amount that is allowed by law15 to reduce the income
prior to the application of the tax rate to compute the amount of tax which is due.
16Being a tax deduction, the discount does not reduce taxes owed on a peso for
peso basis but merely offers a fractional reduction in taxes owed.

Theoretically, the treatment of the discount as a deduction reduces the net


income of the private establishments concerned. The discounts given would
have entered the coffers and formed part of the gross sales of the private
establishments, were it not for R.A. No. 9257.

The permanent reduction in their total revenues is a forced subsidy


corresponding to the taking of private property for public use or benefit.17 This
constitutes compensable taking for which petitioners would ordinarily become
entitled to a just compensation.

Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the taker’s gain but the
owner’s loss. The word just is used to intensify the meaning of the
word compensation, and to convey the idea that the equivalent to be rendered
for the property to be taken shall be real, substantial, full and ample.18

A tax deduction does not offer full reimbursement of the senior citizen discount.
As such, it would not meet the definition of just compensation.19

Having said that, this raises the question of whether the State, in promoting the
health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program.

The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution of
senior citizens to nation-building, and to grant benefits and privileges to them for
their improvement and well-being as the State considers them an integral part of
our society.20

The priority given to senior citizens finds its basis in the Constitution as set forth
in the law itself. Thus, the Act provides:

SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. – Pursuant to Article XV,


Section 4 of the Constitution, it is the duty of the family to take care of its elderly
members while the State may design programs of social security for them. In
addition to this, Section 10 in the Declaration of Principles and State Policies
provides: "The State shall provide social justice in all phases of national
development." Further, Article XIII, Section 11, provides: "The State shall adopt
an integrated and comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services available to
all the people at affordable cost. There shall be priority for the needs of the
underprivileged sick, elderly, disabled, women and children." Consonant with
these constitutional principles the following are the declared policies of this Act:

...

(f) To recognize the important role of the private sector in the improvement
of the welfare of senior citizens and to actively seek their partnership.21

To implement the above policy, the law grants a twenty percent discount to
senior citizens for medical and dental services, and diagnostic and laboratory
fees; admission fees charged by theaters, concert halls, circuses, carnivals, and
other similar places of culture, leisure and amusement; fares for domestic land,
air and sea travel; utilization of services in hotels and similar lodging
establishments, restaurants and recreation centers; and purchases of medicines
for the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments extending the
twenty percent discount to senior citizens may claim the discount as a tax
deduction.

The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not capable
of an exact definition, but has been purposely veiled in general terms to
underscore its comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response to conditions and circumstances, thus
assuring the greatest benefits. 22 Accordingly, it has been described as "the most
essential, insistent and the least limitable of powers, extending as it does to all
the great public needs."23 It is "[t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare
of the commonwealth, and of the subjects of the same."24

For this reason, when the conditions so demand as determined by the


legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general welfare.
25

Police power as an attribute to promote the common good would be diluted


considerably if on the mere plea of petitioners that they will suffer loss of
earnings and capital, the questioned provision is invalidated. Moreover, in the
absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor.26

Given these, it is incorrect for petitioners to insist that the grant of the senior
citizen discount is unduly oppressive to their business, because petitioners have
not taken time to calculate correctly and come up with a financial report, so that
they have not been able to show properly whether or not the tax deduction
scheme really works greatly to their disadvantage.27

In treating the discount as a tax deduction, petitioners insist that they will incur
losses because, referring to the DOF Opinion, for every ₱1.00 senior citizen
discount that petitioners would give, ₱0.68 will be shouldered by them as only
₱0.32 will be refunded by the government by way of a tax deduction.

To illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive
maintenance drug Norvasc as an example. According to the latter, it
acquires Norvasc from the distributors at ₱37.57 per tablet, and retails it at
₱39.60 (or at a margin of 5%). If it grants a 20% discount to senior citizens or an
amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which
translates to a loss from capital of ₱5.89 per tablet. Even if the government will
allow a tax deduction, only ₱2.53 per tablet will be refunded and not the full
amount of the discount which is ₱7.92. In short, only 32% of the 20% discount
will be reimbursed to the drugstores.28

Petitioners’ computation is flawed. For purposes of reimbursement, the law


states that the cost of the discount shall be deducted from gross income,29 the
amount of income derived from all sources before deducting allowable
expenses, which will result in net income. Here, petitioners tried to show a loss
on a per transaction basis, which should not be the case. An income statement,
showing an accounting of petitioners’ sales, expenses, and net profit (or loss) for
a given period could have accurately reflected the effect of the discount on their
income. Absent any financial statement, petitioners cannot substantiate their
claim that they will be operating at a loss should they give the discount. In
addition, the computation was erroneously based on the assumption that their
customers consisted wholly of senior citizens. Lastly, the 32% tax rate is to be
imposed on income, not on the amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot
raise the prices of their medicines given the cutthroat nature of the players in the
industry. It is a business decision on the part of petitioners to peg the mark-up at
5%. Selling the medicines below acquisition cost, as alleged by petitioners, is
merely a result of this decision. Inasmuch as pricing is a property right,
petitioners cannot reproach the law for being oppressive, simply because they
cannot afford to raise their prices for fear of losing their customers to
competition.

The Court is not oblivious of the retail side of the pharmaceutical industry and
the competitive pricing component of the business. While the Constitution
protects property rights, petitioners must accept the realities of business and the
State, in the exercise of police power, can intervene in the operations of a
business which may result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and
public utilities, continuously serve as a reminder that the right to property can be
relinquished upon the command of the State for the promotion of public good.30

Undeniably, the success of the senior citizens program rests largely on the
support imparted by petitioners and the other private establishments concerned.
This being the case, the means employed in invoking the active participation of
the private sector, in order to achieve the purpose or objective of the law, is
reasonably and directly related. Without sufficient proof that Section 4(a) of R.A.
No. 9257 is arbitrary, and that the continued implementation of the same would
be unconscionably detrimental to petitioners, the Court will refrain from quashing
a legislative act.31

WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.