1

Gk No 104768 Iu|y 21 2003

kepub||c of the h|||pp|nes petitioner vs Sand|ganbayan Ma[or Genera| Iosephus
kamas and L||zabeth D|maano respondents

D L C I S I C N
CAkIC l
1he Case
8efore Lhls CourL ls a peLlLlon for revlew on cettlototl seeklng Lo seL aslde Lhe
8esoluLlons of Lhe Sandlganbayan (llrsL ulvlslon)
1
daLed 18 november 1991 and 23 March
1992 ln Clvll Case no 0037 1he flrsL 8esoluLlon dlsmlssed peLlLloner's Amended ComplalnL
and ordered Lhe reLurn of Lhe conflscaLed lLems Lo respondenL LllzabeLh ulmaano whlle Lhe
second 8esoluLlon denled peLlLloner's MoLlon for 8econslderaLlon eLlLloner prays for Lhe
granL of Lhe rellefs soughL ln lLs Amended ComplalnL or ln Lhe alLernaLlve for Lhe remand of
Lhls case Lo Lhe Sandlganbayan (llrsL ulvlslon) for furLher proceedlngs allowlng peLlLloner Lo
compleLe Lhe presenLaLlon of lLs evldence
Antecedent Iacts
lmmedlaLely upon her assumpLlon Lo offlce followlng Lhe successful LuSA 8evoluLlon
Lhen resldenL Corazon C Aqulno lssued LxecuLlve Crder no 1 (LC no 1") creaLlng Lhe
resldenLlal Commlsslon on Cood CovernmenL (CCC") LC no 1 prlmarlly Lasked Lhe CCC
Lo recover all lllgoLLen wealLh of former resldenL lerdlnand L Marcos hls lmmedlaLe famlly
relaLlves subordlnaLes and close assoclaLes LC no 1 vesLed Lhe CCC wlLh Lhe power (a) Lo
conducL lnvesLlgaLlon as may be necessary ln order Lo accompllsh and carry ouL Lhe purposes
of Lhls order" and Lhe power (h) Lo promulgaLe such rules and regulaLlons as may be
necessary Lo carry ouL Lhe purpose of Lhls order" Accordlngly Lhe CCC Lhrough lLs Lhen
Chalrman !ovlLo 8 Salonga creaLed an Al AnLlCrafL 8oard (Al 8oard") Lasked Lo
lnvesLlgaLe reporLs of unexplalned wealLh and corrupL pracLlces by Al personnel wheLher ln
Lhe acLlve servlce or reLlred
2

8ased on lLs mandaLe Lhe Al 8oard lnvesLlgaLed varlous reporLs of alleged
unexplalned wealLh of respondenL Ma[or Ceneral !osephus C 8amas (8amas") Cn 27 !uly
1987 Lhe Al 8oard lssued a 8esoluLlon on lLs flndlngs and recommendaLlon on Lhe reporLed
unexplalned wealLh of 8amas 1he relevanL parL of Lhe 8esoluLlon reads
lll llnulnCS and LvALuA1lCn
Lvldence ln Lhe record showed LhaL respondenL ls Lhe owner of a house and loL locaLed aL 13
?akan SL La vlsLa Cuezon ClLy Pe ls also Lhe owner of a house and loL locaLed ln Cebu
ClLy 1he loL has an area of 3327 square meLers
1he value of Lhe properLy locaLed ln Cuezon ClLy may be esLlmaLed modesLly aL 70000000
1he equlpmenL/lLems and communlcaLlon faclllLles whlch were found ln Lhe premlses of
LllzabeLh ulmaano and were conflscaLed by elemenLs of Lhe C Command of 8aLangas were
all covered by lnvolce recelpL ln Lhe name of CA1 Ll8Ln SALluC 8SC Command Coy MSC
A 1hese lLems could noL have been ln Lhe possesslon of LllzabeLh ulmaano lf noL glven for
her use by respondenL Commandlng Ceneral of Lhe hlllpplne Army
Aslde from Lhe mlllLary equlpmenL/lLems and communlcaLlons equlpmenL Lhe raldlng Leam
was also able Lo conflscaLe money ln Lhe amounL of 287000000 and $30000 uS uollars ln
Lhe house of LllzabeLh ulmaano on 3 March 1986
AffldavlLs of members of Lhe MlllLary SecurlLy unlL MlllLary SecurlLy Command hlllpplne
Army sLaLloned aL Camp Lldrldge Los 8anos Laguna dlsclosed LhaL LllzabeLh ulmaano ls Lhe
mlsLress of respondenL 1haL respondenL usually goes and sLays and sleeps ln Lhe alleged
house of LllzabeLh ulmaano ln 8arangay 1engga lLaas 8aLangas ClLy and when he arrlves
LllzabeLh ulmaano embraces and klsses respondenL 1haL on lebruary 23 1986 a person
who rode ln a car wenL Lo Lhe resldence of LllzabeLh ulmaano wlLh four (4) aLLache cases
fllled wlLh money and owned by MCen 8amas
Sworn sLaLemenL ln Lhe record dlsclosed also LhaL LllzabeLh ulmaano had no vlslble means of
lncome and ls supporLed by respondenL for she was formerly a mere secreLary
1aklng lo toto Lhe evldence LllzabeLh ulmaano could noL have used Lhe mlllLary
equlpmenL/lLems selzed ln her house on March 3 1986 wlLhouL Lhe consenL of respondenL
he belng Lhe Commandlng Ceneral of Lhe hlllpplne Army lL ls also lmposslble for LllzabeLh
ulmaano Lo clalm LhaL she owns Lhe 287000000 and $30000 uS uollars for she had no
vlslble source of lncome
1hls money was never declared ln Lhe SLaLemenL of AsseLs and LlablllLles of respondenL
1here was an lnLenLlon Lo cover Lhe exlsLence of Lhese money because Lhese are all lllgoLLen
and unexplalned wealLh Were lL noL for Lhe affldavlLs of Lhe members of Lhe MlllLary
SecurlLy unlL asslgned aL Camp Lldrldge Los 8anos Laguna Lhe exlsLence and ownershlp of
Lhese money would have never been known
1he SLaLemenL of AsseLs and LlablllLles of respondenL were also submlLLed for scruLlny and
analysls by Lhe 8oard's consulLanL AlLhough Lhe amounL of 287000000 and $30000 uS
uollars were noL lncluded sLlll lL was dlsclosed LhaL respondenL has an unexplalned wealLh
of 104134 60
lv CCnCLuSlCn
ln vlew of Lhe foregolng Lhe 8oard flnds LhaL a prlma facle case exlsLs agalnsL respondenL for
lllgoLLen and unexplalned wealLh ln Lhe amounL of 297413400 and $30000 uS uollars


2

v 8LCCMMLnuA1lCn
Wherefore lL ls recommended LhaL Ma[ Cen !osephus C 8amas (reL) be prosecuLed and
Lrled for vlolaLlon of 8A 3019 as amended oLherwlse known as AnLlCrafL and CorrupL
racLlces AcL" and 8A 1379 as amended oLherwlse known as 1he AcL for Lhe lorfelLure of
unlawfully Acqulred roperLy"
3

1hus on 1 AugusL 1987 Lhe CCC flled a peLlLlon for forfelLure under 8epubllc AcL no
1379 (8A no 1379")
4
agalnsL 8amas
8efore 8amas could answer Lhe peLlLlon Lhen SollclLor Ceneral lranclsco l Chavez flled
an Amended ComplalnL namlng Lhe 8epubllc of Lhe hlllpplnes (peLlLloner") represenLed by
Lhe CCC as plalnLlff and 8amas as defendanL 1he Amended ComplalnL also lmpleaded
LllzabeLh ulmaano (ulmaano") as codefendanL
1he Amended ComplalnL alleged LhaL 8amas was Lhe Commandlng Ceneral of Lhe
hlllpplne Army unLll 1986 Cn Lhe oLher hand ulmaano was a confldenLlal agenL of Lhe
MlllLary SecurlLy unlL hlllpplne Army asslgned as a clerkLyplsL aL Lhe offlce of 8amas from 1
!anuary 1978 Lo lebruary 1979 1he Amended ComplalnL furLher alleged LhaL 8amas
acqulred funds asseLs and properLles manlfesLly ouL of proporLlon Lo hls salary as an army
offlcer and hls oLher lncome from leglLlmaLely acqulred properLy by Laklng undue advanLage
of hls publlc offlce and/or uslng hls power auLhorlLy and lnfluence as such offlcer of Lhe
Armed lorces of Lhe hlllpplnes and as a subordlnaLe and close assoclaLe of Lhe deposed
resldenL lerdlnand Marcos"
3

1he Amended ComplalnL also alleged LhaL Lhe Al 8oard afLer a prevlous lnqulry
found reasonable ground Lo belleve LhaL respondenLs have vlolaLed 8A no 1379
6
1he
Amended ComplalnL prayed for among oLhers Lhe forfelLure of respondenLs' properLles
funds and equlpmenL ln favor of Lhe SLaLe
8amas flled an Answer wlLh Speclal and/or AfflrmaLlve uefenses and Compulsory
CounLerclalm Lo Lhe Amended ComplalnL ln hls Answer 8amas conLended LhaL hls properLy
conslsLed only of a resldenLlal house aL La vlsLa Subdlvlslon Cuezon ClLy valued aL 700000
whlch was noL ouL of proporLlon Lo hls salary and oLher leglLlmaLe lncome Pe denled
ownershlp of any manslon ln Cebu ClLy and Lhe cash communlcaLlons equlpmenL and oLher
lLems conflscaLed from Lhe house of ulmaano
ulmaano flled her own Answer Lo Lhe Amended ComplalnL AdmlLLlng her employmenL
as a clerkLyplsL ln Lhe offlce of 8amas from !anuarynovember 1978 only ulmaano clalmed
ownershlp of Lhe monles communlcaLlons equlpmenL [ewelry and land LlLles Laken from her
house by Lhe hlllpplne ConsLabulary raldlng Leam
AfLer LermlnaLlon of Lhe preLrlal
7
Lhe courL seL Lhe case for Lrlal on Lhe merlLs on 911
november 1988
Cn 9 november 1988 peLlLloner asked for a defermenL of Lhe hearlng due Lo lLs lack of
preparaLlon for Lrlal and Lhe absence of wlLnesses and vlLal documenLs Lo supporL lLs case
1he courL reseL Lhe hearlng Lo 17 and 18 Aprll 1989
Cn 13 Aprll 1989 peLlLloner flled a moLlon for leave Lo amend Lhe complalnL ln order
Lo charge Lhe dellnquenL properLles wlLh belng sub[ecL Lo forfelLure as havlng been
unlawfully acqulred by defendanL ulmaano alone x x x"
8

neverLheless ln an order daLed 17 Aprll 1989 Lhe Sandlganbayan proceeded wlLh
peLlLloner's presenLaLlon of evldence on Lhe ground LhaL Lhe moLlon for leave Lo amend
complalnL dld noL sLaLe when peLlLloner would flle Lhe amended complalnL 1he
Sandlganbayan furLher sLaLed LhaL Lhe sub[ecL maLLer of Lhe amended complalnL was on lLs
face vague and noL relaLed Lo Lhe exlsLlng complalnL 1he Sandlganbayan also held LhaL due
Lo Lhe Llme LhaL Lhe case had been pendlng ln courL peLlLloner should proceed Lo presenL lLs
evldence
AfLer presenLlng only Lhree wlLnesses peLlLloner asked for a posLponemenL of Lhe Lrlal
Cn 28 SepLember 1989 durlng Lhe conLlnuaLlon of Lhe Lrlal peLlLloner manlfesLed lLs
lnablllLy Lo proceed Lo Lrlal because of Lhe absence of oLher wlLnesses or lack of furLher
evldence Lo presenL lnsLead peLlLloner relLeraLed lLs moLlon Lo amend Lhe complalnL Lo
conform Lo Lhe evldence already presenLed or Lo change Lhe avermenLs Lo show LhaL
ulmaano alone unlawfully acqulred Lhe monles or properLles sub[ecL of Lhe forfelLure
1he Sandlganbayan noLed LhaL peLlLloner had already delayed Lhe case for over a year
malnly because of lLs many posLponemenLs Moreover peLlLloner would wanL Lhe case Lo
reverL Lo lLs prellmlnary sLage when ln facL Lhe case had long been ready for Lrlal 1he
Sandlganbayan ordered peLlLloner Lo prepare for presenLaLlon of lLs addlLlonal evldence lf
any
uurlng Lhe Lrlal on 23 March 1990 peLlLloner agaln admlLLed lLs lnablllLy Lo presenL
furLher evldence Clvlng peLlLloner one more chance Lo presenL furLher evldence or Lo amend
Lhe complalnL Lo conform Lo lLs evldence Lhe Sandlganbayan reseL Lhe Lrlal Lo 18 May
1990 1he Sandlganbayan however hlnLed LhaL Lhe reseLLlng was wlLhouL pre[udlce Lo any
acLlon LhaL prlvaLe respondenLs mlghL Lake under Lhe clrcumsLances
Powever on 18 May 1990 peLlLloner agaln expressed lLs lnablllLy Lo proceed Lo Lrlal
because lL had no furLher evldence Lo presenL Agaln ln Lhe lnLeresL of [usLlce Lhe
Sandlganbayan granLed peLlLloner 60 days wlLhln whlch Lo flle an approprlaLe pleadlng 1he
Sandlganbayan however warned peLlLloner LhaL fallure Lo acL would consLraln Lhe courL Lo
Lake drasLlc acLlon
rlvaLe respondenLs Lhen flled Lhelr moLlons Lo dlsmlss based on epub/ic v
Miqrino
9
1he CourL held ln Miqrino LhaL Lhe CCC does noL have [urlsdlcLlon Lo lnvesLlgaLe
and prosecuLe mlllLary offlcers by reason of mere poslLlon held wlLhouL a showlng LhaL Lhey
are subordlnaLes" of former resldenL Marcos
Cn 18 november 1991 Lhe Sandlganbayan rendered a resoluLlon Lhe dlsposlLlve
porLlon of whlch sLaLes
WPL8LlC8L [udgmenL ls hereby rendered dlsmlsslng Lhe Amended ComplalnL wlLhouL
pronouncemenL as Lo cosLs 1he counLerclalms are llkewlse dlsmlssed for lack of merlL buL
3

Lhe conflscaLed sum of money communlcaLlons equlpmenL [ewelry and land LlLles are
ordered reLurned Lo LllzabeLh ulmaano
1he records of Lhls case are hereby remanded and referred Lo Lhe Pon Cmbudsman who has
prlmary [urlsdlcLlon over Lhe forfelLure cases under 8A no 1379 for such approprlaLe acLlon
as Lhe evldence warranLs 1hls case ls also referred Lo Lhe Commlssloner of Lhe 8ureau of
lnLernal 8evenue for a deLermlnaLlon of any Lax llablllLy of respondenL LllzabeLh ulmaano ln
connecLlon herewlLh
SC C8uL8Lu
Cn 4 uecember 1991 peLlLloner flled lLs MoLlon for 8econslderaLlon
ln answer Lo Lhe MoLlon for 8econslderaLlon prlvaLe respondenLs flled a !olnL
CommenL/CpposlLlon Lo whlch peLlLloner flled lLs 8eply on 10 !anuary 1992
Cn 23 March 1992 Lhe Sandlganbayan rendered a 8esoluLlon denylng Lhe MoLlon for
8econslderaLlon

ku||ng of the Sand|ganbayan
1he Sandlganbayan dlsmlssed Lhe Amended ComplalnL on Lhe followlng grounds
(1) 1he acLlons Laken by Lhe CCC are noL ln accordance wlLh Lhe rullngs of Lhe
Supreme CourL ln toz It v 5ooJlqooboyoo
10
and kepobllc v
Mlqtloo
11
whlch lnvolve Lhe same lssues
(2) no prevlous lnqulry slmllar Lo prellmlnary lnvesLlgaLlons ln crlmlnal cases was
conducLed agalnsL 8amas and ulmaano
(3) 1he evldence adduced agalnsL 8amas does noL consLlLuLe a ptlmo focle case
agalnsL hlm
(4) 1here was an lllegal search and selzure of Lhe lLems conflscaLed
1he Issues
eLlLloner ralses Lhe followlng lssues
A 8LSCnuLn1 CCu81 SL8lCuSL? L88Lu ln CCnCLuulnC 1PA1
L1l1lCnL8'S LvluLnCL CAnnC1 MAkL A CASL lC8 lC8lLl1u8L
Anu 1PA1 1PL8L WAS nC SPCWlnC Cl CCnSl8AC?
CCLLuSlCn C8 8LLA1lCnSPl 8? CCnSAnCulnl1? C8 Alllnl1?
8? Anu 8L1WLLn 8LSCnuLn1 8AMAS Anu 8LSCnuLn1
ulMAAnC nC1Wl1PS1AnulnC 1PL lAC1 1PA1 SuCP
CCnCLuSlCnS WL8L CLLA8L? unlCunuLu Anu 8LMA1u8L
PAvlnC 8LLn 8LnuL8Lu 8lC8 1C 1PL CCMLL1lCn Cl 1PL
8LSLn1A1lCn Cl 1PL LvluLnCL Cl 1PL L1l1lCnL8
8 8LSCnuLn1 CCu81 SL8lCuSL? L88Lu ln PCLulnC 1PA1 1PL AC1lCnS
1AkLn 8? 1PL L1l1lCnL8 lnCLuulnC 1PL llLlnC Cl 1PL
C8lClnAL CCMLAln1 Anu 1PL AMLnuLu CCMLAln1 SPCuLu
8L S18uCk Cu1 ln LlnL Wl1P 1PL 8uLlnCS Cl 1PL Su8LML
CCu81 ln C8uZ !8 v SAnulCAn8A?An 194 SC8A 474 Anu
8Lu8LlC v MlC8lnC 189 SC8A 289 nC1Wl1PS1AnulnC 1PL
lAC1 1PA1
1 1he cases of Cruz !r v Sandlganbayan opto and 8epubllc v
Mlgrlno opto are clearly noL appllcable Lo Lhls case
2 Any procedural defecL ln Lhe lnsLlLuLlon of Lhe complalnL ln Clvll
Case no 0037 was cured and/or walved by respondenLs wlLh
Lhe flllng of Lhelr respecLlve answers wlLh counLerclalm and
3 1he separaLe moLlons Lo dlsmlss were evldenLly lmproper
conslderlng LhaL Lhey were flled afLer commencemenL of Lhe
presenLaLlon of Lhe evldence of Lhe peLlLloner and even
before Lhe laLLer was allowed Lo formally offer lLs evldence
and resL lLs case
C 8LSCnuLn1 CCu81 SL8lCuSL? L88Lu ln PCLulnC 1PA1 1PL A81lCLLS
Anu 1PlnCS SuCP AS SuMS Cl MCnL? CCMMunlCA1lCnS
LCulMLn1 !LWLL8? Anu LAnu 1l1LLS CCnllSCA1Lu l8CM 1PL
PCuSL Cl 8LSCnuLn1 ulMAAnC WL8L lLLLCALL? SLlZLu Anu
1PL8LlC8L LxCLuuLu AS LvluLnCL
12


1he Court's ku||ng

lirst lssue Pc66s lurisdiction to lnvestiqote Privote espondents
1hls case lnvolves a revlslLlng of an old lssue already declded by Lhls CourL ln crut lr v
5ondiqonboyon
13
and epub/ic v Miqrino
14

1he prlmary lssue for resoluLlon ls wheLher Lhe CCC has Lhe [urlsdlcLlon Lo lnvesLlgaLe
and cause Lhe flllng of a forfelLure peLlLlon agalnsL 8amas and ulmaano for unexplalned
wealLh under 8A no 1379
We hold LhaL CCC has no such [urlsdlcLlon
1he CCC creaLed Lhe Al 8oard Lo lnvesLlgaLe Lhe unexplalned wealLh and corrupL
pracLlces of Al personnel wheLher ln Lhe acLlve servlce or reLlred
13
1he CCC Lasked Lhe
4

Al 8oard Lo make Lhe necessary recommendaLlons Lo approprlaLe governmenL agencles on
Lhe acLlon Lo be Laken based on lLs flndlngs
16
1he CCC gave Lhls Lask Lo Lhe Al 8oard
pursuanL Lo Lhe CCC's power under SecLlon 3 of LC no 1 Lo conducL lnvesLlgaLlon as may
be necessary ln order Lo accompllsh and Lo carry ouL Lhe purposes of Lhls order" LC no 1
gave Lhe CCC speclflc responslblllLles Lo wlL
SLC 2 1he Commlsslon shall be charged wlLh Lhe Lask of asslsLlng Lhe resldenL ln regard Lo
Lhe followlng maLLers
(a) 1he recovery of all lllgoLLen wealLh accumulaLed by former resldenL
lerdlnand L Marcos hls lmmedlaLe famlly relaLlves subordlnaLes
and close assoclaLes wheLher locaLed ln Lhe hlllpplnes or abroad
lncludlng Lhe Lakeover and sequesLraLlon of all buslness enLerprlses
and enLlLles owned or conLrolled by Lhem durlng hls admlnlsLraLlon
dlrecLly or Lhrough nomlnees by Laklng undue advanLage of Lhelr
publlc offlce and/ or uslng Lhelr powers auLhorlLy lnfluence
connecLlons or relaLlonshlp
(b) 1he lnvesLlgaLlon of such cases of grafL and corrupLlon as Lhe resldenL
may asslgn Lo Lhe Commlsslon from Llme Lo Llme
x x x
1he CCC Lhrough Lhe Al 8oard can only lnvesLlgaLe Lhe unexplalned wealLh and
corrupL pracLlces of Al personnel who fall under elLher of Lhe Lwo caLegorles menLloned ln
SecLlon 2 of LC no 1 1hese are (1) Al personnel who have accumulaLed lllgoLLen wealLh
durlng Lhe admlnlsLraLlon of former resldenL Marcos by belng Lhe laLLer's lmmedlaLe famlly
relaLlve subordlnaLe or close assoclaLe Laklng undue advanLage of Lhelr publlc offlce or uslng
Lhelr powers lnfluence x x x
17
or (2) Al personnel lnvolved ln oLher cases of grafL and
corrupLlon provlded Lhe resldenL asslgns Lhelr cases Lo Lhe CCC
18

eLlLloner however does noL clalm LhaL Lhe resldenL asslgned 8amas' case Lo Lhe
CCC 1herefore 8amas' case should fall under Lhe flrsL caLegory of Al personnel before
Lhe CCC could exerclse lLs [urlsdlcLlon over hlm eLlLloner argues LhaL 8amas was
undoubLedly a subordlnaLe of former resldenL Marcos because of hls poslLlon as Lhe
Commandlng Ceneral of Lhe hlllpplne Army eLlLloner clalms LhaL 8amas' poslLlon enabled
hlm Lo recelve orders dlrecLly from hls commanderlnchlef undenlably maklng hlm a
subordlnaLe of former resldenL Marcos
We hold LhaL 8amas was noL a subordlnaLe" of former resldenL Marcos ln Lhe sense
conLemplaLed under LC no 1 and lLs amendmenLs
Mere poslLlon held by a mlllLary offlcer does noL auLomaLlcally make hlm a
subordlnaLe" as Lhls Lerm ls used ln LC nos 1 2 14 and 14A absenL a showlng LhaL he
en[oyed close assoclaLlon wlLh former resldenL Marcos Miqrino dlscussed Lhls lssue ln Lhls
wlse
A close readlng of LC no 1 and relaLed execuLlve orders wlll readlly show whaL ls
conLemplaLed wlLhln Lhe Lerm 'subordlnaLe' 1he Whereas Clauses of LC no 1 express Lhe
urgenL need Lo recover Lhe lllgoLLen wealLh amassed by former resldenL lerdlnand L
Marcos hls lmmedlaLe famlly relaLlves and close assoclaLes boLh here and abroad
LC no 2 freezes 'all asseLs and properLles ln Lhe hlllpplnes ln whlch former resldenL
Marcos and/or hls wlfe Mrs lmelda Marcos Lhelr close relaLlves subordlnaLes buslness
assoclaLes dummles agenLs or nomlnees have any lnLeresL or parLlclpaLlon'
Applylng Lhe rule ln sLaLuLory consLrucLlon known as ejoJem qeoetl LhaL ls
'Where general words follow an enumeraLlon of persons or Lhlngs by words of a parLlcular
and speclflc meanlng such general words are noL Lo be consLrued ln Lhelr wldesL exLenL buL
are Lo be held as applylng only Lo persons or Lhlngs of Lhe same klnd or class as Lhose
speclflcally menLloned SmlLh 8ell Co LLd vs 8eglsLer of ueeds of uavao 96 hll 33 38
clLlng 8lack on lnLerpreLaLlon of Laws 2
nd
Ld 203'
1he Lerm subordlnaLe" as used ln LC nos 1 2 refers Lo one who en[oys a close
assoclaLlon wlLh former resldenL Marcos and/or hls wlfe simi/or to the immediote fomi/y
member re/otive ond c/ose ossociote in O No 1 ond the c/ose re/otive business ossociote
dummy oqent or nominee in O No 2
x x x
lL does noL sufflce as ln Lhls case LhaL Lhe respondenL ls or was a governmenL offlclal or
employee durlng Lhe admlnlsLraLlon of former resldenL Marcos 1here must be o primo
focie showinq thot the respondent un/owfu//y occumu/oted weo/th by virtue of his c/ose
ossociotion or re/otion with former Pres Morcos ond/or his wife (Lmphasls supplled)
8amas' poslLlon alone as Commandlng Ceneral of Lhe hlllpplne Army wlLh Lhe rank of
Ma[or Ceneral
19
does noL sufflce Lo make hlm a subordlnaLe" of former resldenL Marcos
for purposes of LC no 1 and lLs amendmenLs 1he CCC has Lo provlde a ptlmo
focle showlng LhaL 8amas was a close assoclaLe of former resldenL Marcos ln Lhe same
manner LhaL buslness assoclaLes dummles agenLs or nomlnees of former resldenL Marcos
were close Lo hlm Such close assoclaLlon ls manlfesLed elLher by 8amas' compllclLy wlLh
former resldenL Marcos ln Lhe accumulaLlon of lllgoLLen wealLh by Lhe deposed resldenL or
by former resldenL Marcos' acqulescence ln 8amas' own accumulaLlon of lllgoLLen wealLh lf
any
1hls Lhe CCC falled Lo do
eLlLloner's aLLempL Lo dlfferenLlaLe Lhe lnsLanL case from Miqrino does noL convlnce
us eLlLloner argues LhaL unllke ln Miqrino Lhe Al 8oard 8esoluLlon ln Lhe lnsLanL case
sLaLes LhaL Lhe Al 8oard conducLed Lhe lnvesLlgaLlon pursuanL Lo LC nos 1 2 14 and 14A
ln relaLlon Lo 8A no 1379 eLlLloner asserLs LhaL Lhere ls a presumpLlon LhaL Lhe CCC was
3

acLlng wlLhln lLs [urlsdlcLlon of lnvesLlgaLlng cronyrelaLed cases of grafL and corrupLlon and
LhaL 8amas was Lruly a subordlnaLe of Lhe former resldenL Powever Lhe same Al 8oard
8esoluLlon belles Lhls conLenLlon AlLhough Lhe 8esoluLlon beglns wlLh such sLaLemenL lL
ends wlLh Lhe followlng recommendaLlon
v 8LCCMMLnuA1lCn
Wherefore lL ls recommended LhaL Ma[ Cen !osephus C 8amas (reL) be prosecuLed and
Lrled for vlolaLlon of 8A 3019 as amended oLherwlse known as AnLlCrafL and CorrupL
racLlces AcL" and 8A 1379 as amended oLherwlse known as 1he AcL for Lhe lorfelLure of
unlawfully Acqulred roperLy"
20

1hus alLhough Lhe CCC soughL Lo lnvesLlgaLe and prosecuLe prlvaLe respondenLs under LC
nos 1 2 14 and 14A Lhe resulL ylelded a flndlng of vlolaLlon of 8epubllc AcLs nos 3019 and
1379 wlLhouL any relaLlon Lo LC nos 1 2 14 and 14A 1hls absence of relaLlon Lo LC no 1
and lLs amendmenLs proves faLal Lo peLlLloner's case LC no 1 creaLed Lhe CCC for a speclflc
and llmlLed purpose and necessarlly lLs powers musL be consLrued Lo address such speclflc
and llmlLed purpose
Moreover Lhe resoluLlon of Lhe Al 8oard and even Lhe Amended ComplalnL do noL
show LhaL Lhe properLles 8amas allegedly owned were accumulaLed by hlm ln hls capaclLy as
a subordlnaLe" of hls commanderlnchlef eLlLloner merely enumeraLed Lhe properLles
8amas allegedly owned and suggesLed LhaL Lhese properLles were dlsproporLlonaLe Lo hls
salary and oLher leglLlmaLe lncome wlLhouL showlng LhaL 8amas amassed Lhem because of hls
close assoclaLlon wlLh former resldenL Marcos eLlLloner ln facL odmits LhaL Lhe Al 8oard
resoluLlon does noL conLaln a flndlng LhaL 8amas accumulaLed hls wealLh because of hls close
assoclaLlon wlLh former resldenL Marcos Lhus
10 Whlle lL ls Lrue LhaL the reso|ut|on of the Ant|Graft 8oard of the New Armed Iorces of
the h|||pp|nes d|d not categor|ca||y f|nd a primo focie ev|dence show|ng that respondent
kamas un|awfu||y accumu|ated wea|th by v|rtue of h|s c|ose assoc|at|on or re|at|on w|th
former res|dent Marcos and]or h|s w|fe |t |s subm|tted that such om|ss|on was not
fata| 1he resoluLlon of Lhe AnLlCrafL 8oard should be read ln Lhe conLexL of Lhe law creaLlng
Lhe same and Lhe ob[ecLlve of Lhe lnvesLlgaLlon whlch was as sLaLed ln Lhe above pursuanL Lo
8epubllc AcL nos 3019 and 1379 ln relaLlon Lo LxecuLlve Crder nos 1 2 14 and 14
a
21
(Lmphasls supplled)
Such omlsslon ls faLal eLlLloner forgeLs LhaL lL ls preclsely a ptlmo focle showlng LhaL
Lhe lllgoLLen wealLh was accumulaLed by a subordlnaLe" of former resldenL Marcos LhaL
vesLs [urlsdlcLlon on CCC LC no 1
22
clearly premlses Lhe creaLlon of Lhe CCC on Lhe
urgenL need Lo recover all lllgoLLen wealLh amassed by former resldenL Marcos hls
lmmedlaLe famlly relaLlves subordlnaLes and close assoclaLes 1herefore Lo say LhaL such
omlsslon was noL faLal ls clearly conLrary Lo Lhe lnLenL behlnd Lhe creaLlon of Lhe CCC
ln crut lr v 5ondiqonboyon
23
Lhe CourL ouLllned Lhe cases LhaL fall under Lhe
[urlsdlcLlon of Lhe CCC pursuanL Lo LC nos 1 2
24
14
23
14A
26

A careful readlng of SecLlons 2(a) and 3 of LxecuLlve Crder no 1 ln relaLlon wlLh SecLlons 1 2
and 3 of LxecuLlve Crder no 14 shows whaL Lhe auLhorlLy of Lhe respondenL CCC Lo
lnvesLlgaLe and prosecuLe covers
(a) Lhe lnvesLlgaLlon and prosecuLlon of Lhe clvll acLlon for Lhe recovery of lll
goLLen wealLh under 8epubllc AcL no 1379 accumu|ated by former
res|dent Marcos h|s |mmed|ate fam||y re|at|ves subord|nates and
c|ose assoc|ates wheLher locaLed ln Lhe hlllpplnes or abroad
lncludlng Lhe Lakeover or sequesLraLlon of all buslness enLerprlses and
enLlLles owned or conLrolled by Lhem durlng hls admlnlsLraLlon
dlrecLly or Lhrough hls nomlnees by tak|ng undue advantage of the|r
pub||c off|ce and]or us|ng the|r powers author|ty and |nf|uence
connect|ons or re|at|onsh|ps and
(b) Lhe lnvesLlgaLlon and prosecuLlon of such offenses commlLLed ln Lhe
acqulslLlon of sald lllgoLLen wealLh as conLemplaLed under SecLlon 2(a)
of LxecuLlve Crder no 1
Powever other v|o|at|ons of the Ant|Graft and Corrupt ract|ces Act not otherw|se fa|||ng
under the forego|ng categor|es requ|re a prev|ous author|ty of the res|dent for the
respondent CGG to |nvest|gate and prosecute |n accordance w|th Sect|on 2 (b) of Lxecut|ve
Crder No 1 Ctherw|se [ur|sd|ct|on over such cases |s vested |n the Cmbudsman and other
du|y author|zed |nvest|gat|ng agenc|es such as the prov|nc|a| and c|ty prosecutors the|r
ass|stants the Ch|ef State rosecutor and h|s ass|stants and the state
prosecutors (Lmphasls supplled)
1he proper governmenL agencles and noL Lhe CCC should lnvesLlgaLe and prosecuLe
forfelLure peLlLlons noL falllng under LC no 1 and lLs amendmenLs 1he prellmlnary
lnvesLlgaLlon of unexplalned wealLh amassed on or before 23 lebruary 1986 falls under Lhe
[urlsdlcLlon of Lhe Cmbudsman whlle Lhe auLhorlLy Lo flle Lhe correspondlng forfelLure
peLlLlon resLs wlLh Lhe SollclLor Ceneral
27
1he Cmbudsman AcL or 8epubllc AcL no 6770
(8A no 6770") vesLs ln Lhe Cmbudsman Lhe power Lo conducL prellmlnary lnvesLlgaLlon and
Lo flle forfelLure proceedlngs lnvolvlng unexplalned wealLh amassed afLer 23 lebruary
1986
28

AfLer Lhe pronouncemenLs of Lhe CourL ln crut Lhe CCC sLlll pursued Lhls case desplLe
Lhe absence of a ptlmo focle flndlng LhaL 8amas was a subordlnaLe" of former resldenL
Marcos 1he peLlLlon for forfelLure flled wlLh Lhe Sandlganbayan should be dlsmlssed for lack
of auLhorlLy by Lhe CCC Lo lnvesLlgaLe respondenLs slnce Lhere ls no ptlmo focle showlng
LhaL LC no 1 and lLs amendmenLs apply Lo respondenLs 1he Al 8oard 8esoluLlon and even
Lhe Amended ComplalnL sLaLe LhaL Lhere are vlolaLlons of 8A nos 3019 and 1379 1hus Lhe
CCC should have recommended 8amas' case Lo Lhe Cmbudsman who has [urlsdlcLlon Lo
conducL Lhe prellmlnary lnvesLlgaLlon of ordlnary unexplalned wealLh and grafL cases As
sLaLed ln Miqrino
6

8uL ln vlew of Lhe paLenL lack of auLhorlLy of Lhe CCC Lo lnvesLlgaLe and cause Lhe
prosecuLlon of prlvaLe respondenL for vlolaLlon of 8ep AcLs nos 3019 and 1379 Lhe CCC
musL also be en[olned from proceedlng wlLh Lhe case wlLhouL pre[udlce Lo any acLlon LhaL
may be Laken by Lhe proper prosecuLory agency 1he rule of law mandaLes LhaL an agency of
governmenL be allowed Lo exerclse only Lhe powers granLed Lo lL
eLlLloner's argumenL LhaL prlvaLe respondenLs have walved any defecL ln Lhe flllng of
Lhe forfelLure peLlLlon by submlLLlng Lhelr respecLlve Answers wlLh counLerclalm deserves no
merlL as well
eLlLloner has no [urlsdlcLlon over prlvaLe respondenLs 1hus Lhere ls no [urlsdlcLlon Lo
walve ln Lhe flrsL place 1he CCC cannoL exerclse lnvesLlgaLlve or prosecuLorlal powers
never granLed Lo lL CCC's powers are speclflc and llmlLed unless glven addlLlonal
asslgnmenL by Lhe resldenL CCC's sole Lask ls only Lo recover Lhe lllgoLLen wealLh of Lhe
Marcoses Lhelr relaLlves and cronles
29
WlLhouL Lhese elemenLs Lhe CCC cannoL clalm
[urlsdlcLlon over a case
rlvaLe respondenLs quesLloned Lhe auLhorlLy and [urlsdlcLlon of Lhe CCC Lo
lnvesLlgaLe and prosecuLe Lhelr cases by flllng Lhelr MoLlon Lo ulsmlss as soon as Lhey learned
of Lhe pronouncemenL of Lhe CourL ln Miqrino 1hls case was declded on 30 AugusL 1990
whlch explalns why prlvaLe respondenLs only flled Lhelr MoLlon Lo ulsmlss on 8 CcLober
1990 neverLheless we have held LhaL Lhe parLles may ralse lack of [urlsdlcLlon aL any sLage
of Lhe proceedlng
30
1hus we hold LhaL Lhere was no walver of [urlsdlcLlon ln Lhls case
!urlsdlcLlon ls vesLed by law and noL by Lhe parLles Lo an acLlon
31

ConsequenLly Lhe peLlLlon should be dlsmlssed for lack of [urlsdlcLlon by Lhe CCC Lo
conducL Lhe prellmlnary lnvesLlgaLlon 1he Cmbudsman may sLlll conducL Lhe proper
prellmlnary lnvesLlgaLlon for vlolaLlon of 8A no 1379 and lf warranLed Lhe SollclLor Ceneral
may flle Lhe forfelLure peLlLlon wlLh Lhe Sandlganbayan
32
1he rlghL of Lhe SLaLe Lo forfelL
unexplalned wealLh under 8A no 1379 ls noL sub[ecL Lo prescrlpLlon laches or esLoppel
33

5econd lssue Propriety of uismisso/ of cose
efore comp/etion of Presentotion of vidence
eLlLloner also conLends LhaL Lhe Sandlganbayan erred ln dlsmlsslng Lhe case before
compleLlon of Lhe presenLaLlon of peLlLloner's evldence
We dlsagree
8ased on Lhe flndlngs of Lhe Sandlganbayan and Lhe records of Lhls case we flnd LhaL
peLlLloner has only lLself Lo blame for noncompleLlon of Lhe presenLaLlon of lLs
evldence llrsL Lhls case has been pendlng for four years before Lhe Sandlganbayan
dlsmlssed lL eLlLloner flled lLs Amended ComplalnL on 11
AugusL 1987 and only began Lo presenL lLs evldence on 17 Aprll 1989 eLlLloner had
almosL Lwo years Lo prepare lLs evldence Powever desplLe Lhls sufflclenL Llme peLlLloner sLlll
delayed Lhe presenLaLlon of Lhe resL of lLs evldence by flllng numerous moLlons for
posLponemenLs and exLenslons Lven before Lhe daLe seL for Lhe presenLaLlon of lLs evldence
peLlLloner flled on 13 Aprll 1989 a MoLlon for Leave Lo Amend Lhe ComplalnL
34
1he moLlon
soughL Lo charge Lhe dellnquenL properLles (whlch comprlse mosL of peLlLloner's evldence)
wlLh belng sub[ecL Lo forfelLure as havlng been unlawfully acqulred by defendanL ulmaano
alone x x x"
1he Sandlganbayan however refused Lo defer Lhe presenLaLlon of peLlLloner's
evldence slnce peLlLloner dld noL sLaLe when lL would flle Lhe amended complalnL Cn 18
Aprll 1989 Lhe Sandlganbayan seL Lhe conLlnuaLlon of Lhe presenLaLlon of evldence on 2829
SepLember and 911 CcLober 1989 glvlng peLlLloner ample Llme Lo prepare lLs evldence SLlll
on 28 SepLember 1989 peLlLloner manlfesLed lLs lnablllLy Lo proceed wlLh Lhe presenLaLlon of
lLs evldence 1he Sandlganbayan lssued an Crder expresslng lLs vlew on Lhe maLLer Lo wlL
1he CourL has gone Lhrough exLended lnqulry and a narraLlon of Lhe above evenLs because
Lhls case has been ready for Lrlal for over a year and much of Lhe delay hereon has been due
Lo Lhe lnablllLy of Lhe governmenL Lo produce on scheduled daLes for preLrlal and for Lrlal
documenLs and wlLnesses allegedly upon Lhe fallure of Lhe mlllLary Lo supply Lhem for Lhe
preparaLlon of Lhe presenLaLlon of evldence Lhereon Cf equal lnLeresL ls Lhe facL LhaL Lhls
CourL has been held Lo Lask ln publlc abouL lLs alleged fallure Lo move cases such as Lhls one
beyond Lhe prellmlnary sLage when ln vlew of Lhe developmenLs such as Lhose of Loday Lhls
CourL ls now faced wlLh a slLuaLlon where a case already ln progress wlll reverL back Lo Lhe
prellmlnary sLage desplLe a flvemonLh pause where approprlaLe acLlon could have been
underLaken by Lhe plalnLlff 8epubllc
33

Cn 9 CcLober 1989 Lhe CCC manlfesLed ln courL LhaL lL was conducLlng a prellmlnary
lnvesLlgaLlon on Lhe unexplalned wealLh of prlvaLe respondenLs as mandaLed by 8A no
1379
36
1he CCC prayed for an addlLlonal four monLhs Lo conducL Lhe prellmlnary
lnvesLlgaLlon 1he Sandlganbayan granLed Lhls requesL and scheduled Lhe presenLaLlon of
evldence on 2629 March 1990 Powever on Lhe scheduled daLe peLlLloner falled Lo lnform
Lhe courL of Lhe resulL of Lhe prellmlnary lnvesLlgaLlon Lhe CCC supposedly conducLed
Agaln Lhe Sandlganbayan gave peLlLloner unLll 18 May 1990 Lo conLlnue wlLh Lhe
presenLaLlon of lLs evldence and Lo lnform Lhe courL of whaL lles ahead lnsofar as Lhe sLaLus
of Lhe case ls concerned x x x"
37
SLlll on Lhe daLe seL peLlLloner falled Lo presenL lLs
evldence llnally on 11 !uly 1990 peLlLloner flled lLs 8eAmended ComplalnL
38
1he
Sandlganbayan correcLly observed LhaL a case already pendlng for years would reverL Lo lLs
prellmlnary sLage lf Lhe courL were Lo accepL Lhe 8eAmended ComplalnL
8ased on Lhese clrcumsLances obvlously peLlLloner has only lLself Lo blame for fallure
Lo compleLe Lhe presenLaLlon of lLs evldence 1he Sandlganbayan gave peLlLloner more Lhan
sufflclenL Llme Lo flnlsh Lhe presenLaLlon of lLs evldence 1he Sandlganbayan overlooked
peLlLloner's delays and yeL peLlLloner ended Lhe longsLrlng of delays wlLh Lhe flllng of a 8e
Amended ComplalnL whlch would only prolong even more Lhe dlsposlLlon of Lhe case
Moreover Lhe pronouncemenLs of Lhe CourL ln Miqrino and crut prompLed Lhe
Sandlganbayan Lo dlsmlss Lhe case slnce Lhe CCC has no [urlsdlcLlon Lo lnvesLlgaLe and
7

prosecuLe Lhe case agalnsL prlvaLe respondenLs 1hls alone would have been sufflclenL legal
basls for Lhe Sandlganbayan Lo dlsmlss Lhe forfelLure case agalnsL prlvaLe respondenLs
1hus we hold LhaL Lhe Sandlganbayan dld noL err ln dlsmlsslng Lhe case before
compleLlon of Lhe presenLaLlon of peLlLloner's evldence
1hird lssue Leqo/ity of the 5eorch ond 5eiture
eLlLloner clalms LhaL Lhe Sandlganbayan erred ln declarlng Lhe properLles conflscaLed
from ulmaano's house as lllegally selzed and Lherefore lnadmlsslble ln evldence 1hls lssue
bears a slgnlflcanL effecL on peLlLloner's case slnce Lhese properLles comprlse mosL of
peLlLloner's evldence agalnsL prlvaLe respondenLs eLlLloner wlll noL have much evldence Lo
supporL lLs case agalnsL prlvaLe respondenLs lf Lhese properLles are lnadmlsslble ln evldence
Cn 3 March 1986 Lhe ConsLabulary raldlng Leam served aL ulmaano's resldence a
search warranL capLloned lllegal ossesslon of llrearms and AmmunlLlon" ulmaano was noL
presenL durlng Lhe rald buL ulmaano's couslns wlLnessed Lhe rald 1he raldlng Leam selzed Lhe
lLems deLalled ln Lhe selzure recelpL LogeLher wlLh oLher lLems not lncluded ln Lhe search
warranL 1he raldlng Leam selzed Lhese lLems one baby armallLe rlfle wlLh Lwo magazlnes
40 rounds of 336 ammunlLlon one plsLol callber 43 communlcaLlons equlpmenL cash
conslsLlng of 2870000 and uS$30000 [ewelry and land LlLles
eLlLloner wanLs Lhe CourL Lo Lake [udlclal noLlce LhaL Lhe raldlng Leam conducLed Lhe
search and selzure on March 3 1986 or flve days afLer Lhe successful LuSA
revoluLlon"
39
eLlLloner argues LhaL a revoluLlonary governmenL was operaLlve aL LhaL Llme
by vlrLue of roclamaLlon no 1 announclng LhaL resldenL Aqulno and vlce resldenL Laurel
were Laklng power ln Lhe name and by Lhe wlll of Lhe llllplno people"
40
eLlLloner asserLs
LhaL Lhe revoluLlonary governmenL effecLlvely wlLhheld Lhe operaLlon of Lhe 1973
ConsLlLuLlon whlch guaranLeed prlvaLe respondenLs' excluslonary rlghL
Moreover peLlLloner argues LhaL Lhe excluslonary rlghL arlslng from an lllegal search
applles only beglnnlng 2 lebruary 1987 Lhe daLe of raLlflcaLlon of Lhe 1987
ConsLlLuLlon eLlLloner conLends LhaL all rlghLs under Lhe 8lll of 8lghLs had already reverLed
Lo lLs embryonlc sLage aL Lhe Llme of Lhe search 1herefore Lhe governmenL may conflscaLe
Lhe monles and lLems Laken from ulmaano and use Lhe same ln evldence agalnsL her slnce aL
Lhe Llme of Lhelr selzure prlvaLe respondenLs dld noL en[oy any consLlLuLlonal rlghL
eLlLloner ls parLly rlghL ln lLs argumenLs
1he LuSA 8evoluLlon Look place on 2323 lebruary 1986 As succlncLly sLaLed ln
resldenL Aqulno's roclamaLlon no 3 daLed 23 March 1986 Lhe LuSA 8evoluLlon was "done
in defionce of the provisions of the 197l constitution"
41
1he resulLlng governmenL was
lndlspuLably a revoluLlonary governmenL bound by no consLlLuLlon or legal llmlLaLlons excepL
LreaLy obllgaLlons LhaL Lhe revoluLlonary governmenL as Lhe Je jote governmenL ln Lhe
hlllpplnes assumed under lnLernaLlonal law
1he correcL lssues are (1) wheLher Lhe revoluLlonary governmenL was bound by Lhe
8lll of 8lghLs of Lhe 1973 ConsLlLuLlon durlng Lhe interreqnum LhaL ls oftet Lhe acLual and
effecLlve Lakeover of power by Lhe revoluLlonary governmenL followlng Lhe cessaLlon of
reslsLance by loyallsL forces op to 24 March 1986 (lmmedlaLely before Lhe adopLlon of Lhe
rovlslonal ConsLlLuLlon) and (2) wheLher Lhe proLecLlon accorded Lo lndlvlduals under Lhe
lnLernaLlonal CovenanL on Clvll and ollLlcal 8lghLs (CovenanL") and Lhe unlversal
ueclaraLlon of Puman 8lghLs (ueclaraLlon") remalned ln effecL durlng Lhe lnLerregnum
We hold LhaL Lhe 8lll of 8lghLs under Lhe 1973 ConsLlLuLlon was noL operaLlve durlng
Lhe lnLerregnum Powever we rule LhaL Lhe proLecLlon accorded Lo lndlvlduals under Lhe
CovenanL and Lhe ueclaraLlon remalned ln effecL durlng Lhe lnLerregnum
uurlng Lhe lnLerregnum Lhe dlrecLlves and orders of Lhe revoluLlonary governmenL
were Lhe supreme law because no consLlLuLlon llmlLed Lhe exLenL and scope of such dlrecLlves
and orders WlLh Lhe abrogaLlon of Lhe 1973 ConsLlLuLlon by Lhe successful revoluLlon Lhere
was no munlclpal law hlgher Lhan Lhe dlrecLlves and orders of Lhe revoluLlonary
governmenL 1hus durlng Lhe lnLerregnum a person could noL lnvoke any excluslonary rlghL
under a 8lll of 8lghLs because Lhere was nelLher a consLlLuLlon nor a 8lll of 8lghLs durlng Lhe
lnLerregnum As Lhe CourL explalned ln Letter of 4ssociote lustice eynoto 5 Puno
42

A revoluLlon has been deflned as Lhe compleLe overLhrow of Lhe esLabllshed governmenL ln
any counLry or sLaLe by Lhose who were prevlously sub[ecL Lo lL" or as a sudden radlcal and
fundamenLal change ln Lhe governmenL or pollLlcal sysLem usually effecLed wlLh vlolence or
aL leasL some acLs of vlolence" ln kelsens book Ceneral 1heory of Law and SLaLe lL ls
deflned as LhaL whlch occurs whenever Lhe legal order of a communlLy ls nulllfled and
replaced by a new order a way noL prescrlbed by Lhe flrsL order lLself"
lL was Lhrough Lhe lebruary 1986 revoluLlon a relaLlvely peaceful one and more popularly
known as Lhe people power revoluLlon" LhaL Lhe llllplno people Lore Lhemselves away from
an exlsLlng reglme 1hls revoluLlon also saw Lhe unprecedenLed rlse Lo power of Lhe Aqulno
governmenL
lrom Lhe naLural law polnL of vlew Lhe rlghL of revoluLlon has been deflned as an lnherenL
rlghL of a people Lo casL ouL Lhelr rulers change Lhelr pollcy or effecL radlcal reforms ln Lhelr
sysLem of governmenL or lnsLlLuLlons by force or a general uprlslng when Lhe legal and
consLlLuLlonal meLhods of maklng such change have proved lnadequaLe or are so obsLrucLed
as Lo be unavallable" lL has been sald LhaL Lhe locus of poslLlve lawmaklng power lles wlLh
Lhe people of Lhe sLaLe" and from Lhere ls derlved Lhe rlghL of Lhe people Lo abollsh Lo
reform and Lo alLer any exlsLlng form of governmenL wlLhouL regard Lo Lhe exlsLlng
consLlLuLlon"
x x x
lt is wide/y known thot Mrs 4quinos rise to the presidency wos not due to constitutiono/
processes in foct it wos ochieved in vio/otion of the provisions of the 197l constitution os o
otosonq Pombonso reso/ution hod eor/ier dec/ored Mr Morcos os the winner in the 198
8

presidentio/ e/ection 1hus lL can be sald LhaL Lhe organlzaLlon of Mrs Aqulno's CovernmenL
whlch was meL by llLLle reslsLance and her conLrol of Lhe sLaLe evldenced by Lhe appolnLmenL
of Lhe CablneL and oLher key offlcers of Lhe admlnlsLraLlon Lhe deparLure of Lhe Marcos
CablneL offlclals revamp of Lhe !udlclary and Lhe MlllLary slgnaled Lhe polnL where the /eqo/
system then in effect hod ceosed to be obeyed by the li/ipino (Lmphasls supplled)
1o hold LhaL Lhe 8lll of 8lghLs under Lhe 1973 ConsLlLuLlon remalned operaLlve durlng
Lhe lnLerregnum would render vold all sequesLraLlon orders lssued by Lhe hlllpplne
Commlsslon on Cood CovernmenL (CCC") before Lhe adopLlon of Lhe lreedom
ConsLlLuLlon 1he sequesLraLlon orders whlch dlrecL Lhe freezlng and even Lhe Lakeover of
prlvaLe properLy by mere execuLlve lssuance wlLhouL [udlclal acLlon would vlolaLe Lhe due
process and search and selzure clauses of Lhe 8lll of 8lghLs
uurlng Lhe lnLerregnum Lhe governmenL ln power was concededly a revoluLlonary
governmenL bound by no consLlLuLlon no one could valldly quesLlon Lhe sequesLraLlon
orders as vlolaLlve of Lhe 8lll of 8lghLs because Lhere was no 8lll of 8lghLs durlng Lhe
lnLerregnum Powever upon Lhe adopLlon of Lhe lreedom ConsLlLuLlon Lhe sequesLered
companles assalled Lhe sequesLraLlon orders as conLrary Lo Lhe 8lll of 8lghLs of Lhe lreedom
ConsLlLuLlon
ln otoon 5hipyord nqineerinq co lnc vs Presidentio/ commission on 6ood
6overnment
43
peLlLloner 8aseco whlle concedlng Lhere was no 8lll of 8lghLs durlng Lhe
lnLerregnum quesLloned Lhe conLlnued valldlLy of Lhe sequesLraLlon orders upon adopLlon of
Lhe lreedom ConsLlLuLlon ln vlew of Lhe due process clause ln lLs 8lll of 8lghLs 1he CourL
ruled LhaL Lhe lreedom ConsLlLuLlon and laLer Lhe 1987 ConsLlLuLlon express/y
recoqnited Lhe valldlLy of sequesLraLlon orders Lhus
lf any doubL should sLlll perslsL ln Lhe face of Lhe foregolng conslderaLlons as Lo Lhe valldlLy
and proprleLy of sequesLraLlon freeze and Lakeover orders lL should be dlspelled by Lhe facL
LhaL Lhese parLlcular remedles and Lhe auLhorlLy of Lhe CCC Lo lssue Lhem have recelved
consLlLuLlonal approbaLlon and sancLlon As already menLloned Lhe rovlslonal or lreedom"
ConsLlLuLlon recognlzes Lhe power and duLy of Lhe resldenL Lo enacL measures Lo achleve
Lhe mandaLe of Lhe people Lo (r)ecover lllgoLLen properLles amassed by Lhe leaders and
supporLers of Lhe prevlous reglme and proLecL Lhe lnLeresL of Lhe people Lhrough orders of
sequesLraLlon or freezlng of asseLs or accounLs" And as also already adverLed Lo SecLlon 26
ArLlcle xvlll of Lhe 1987 ConsLlLuLlon LreaLs of and raLlfles Lhe auLhorlLy Lo lssue
sequesLraLlon or freeze orders under roclamaLlon no 3 daLed March 23 1986"
1he framers of boLh Lhe lreedom ConsLlLuLlon and Lhe 1987 ConsLlLuLlon were fully
aware LhaL Lhe sequesLraLlon orders would clash wlLh Lhe 8lll of 8lghLs 1hus Lhe framers of
boLh consLlLuLlons had Lo lnclude speclflc language recognlzlng Lhe valldlLy of Lhe
sequesLraLlon orders 1he followlng dlscourse by Commlssloner !oaquln C 8ernas durlng Lhe
dellberaLlons of Lhe ConsLlLuLlonal Commlsslon ls lnsLrucLlve
l8 8L8nAS Madam resldenL Lhere ls someLhlng schlzophrenlc abouL Lhe argumenLs
ln defense of Lhe presenL amendmenL
lor lnsLance l have carefully sLudled MlnlsLer Salonga's lecLure ln Lhe Cregorlo
AraneLa unlverslLy loundaLlon of whlch all of us have been glven a copy Cn Lhe
one hand he argues LhaL everyLhlng Lhe Commlsslon ls dolng ls LradlLlonally
legal 1hls ls repeaLed by Commlssloner 8omulo also MlnlsLer Salonga spends a
ma[or porLlon of hls lecLure developlng LhaL argumenL Cn Lhe oLher hand
almosL as an afLerLhoughL he says LhaL ln Lhe end whaL maLLers are Lhe resulLs
and noL Lhe legal nlceLles Lhus suggesLlng LhaL Lhe CCC should be allowed Lo
make some legal shorLcuLs anoLher word for nlceLles or excepLlons
now lf everyLhlng Lhe CCC ls dolng ls legal why ls lL asklng Lhe CCnCCM for
speclal proLecLlon? 1he answer ls clear whot they ore doinq wi// not stond the
test of ordinory due process hence they ore oskinq for protection for
exceptions Crandes malos grandes remedlos flne as Lhe saylng sLands buL leL
us noL say grandes malos grande y malos remedlos 1haL ls noL an allowable
exLrapolaLlon Pence we should noL glve Lhe excepLlons asked for and leL me
elaboraLe and glve Lhree reasons
llrsL Lhe whole polnL of Lhe lebruary 8evoluLlon and of Lhe work of Lhe
CCnCCM ls Lo hasLen consLlLuLlonal normallzaLlon very much aL Lhe hearL of
Lhe consLlLuLlonal normallzaLlon ls Lhe full effecLlvlLy of Lhe 8lll of 8lghLs We
cannoL ln one breaLh ask for consLlLuLlonal normallzaLlon and aL Lhe same Llme
ask for a Lemporary halL Lo Lhe full funcLlonlng of whaL ls aL Lhe hearL of
consLlLuLlonallsm 1haL would be hypocrlLlcal LhaL would be a repeLlLlon of
Marcoslan proLesLaLlon of due process and rule of law 1he new SocleLy word
for LhaL ls backslldlng" lL ls Lraglc when we begln Lo backsllde even before we
geL Lhere
Second Lhls ls really a corollary of Lhe flrsL PablLs Lend Lo become lngralned
1he commlLLee reporL asks for exLraordlnary excepLlons from Lhe 8lll of 8lghLs
for slx monLhs afLer Lhe convenlng of Congress and Congress may even exLend
Lhls longer
Cood deeds repeaLed rlpen lnLo vlrLue bad deeds repeaLed become vlce WhaL
Lhe commlLLee reporL ls asklng for ls LhaL we should allow Lhe new governmenL
Lo acqulre Lhe vlce of dlsregardlng Lhe 8lll of 8lghLs
vlces once Lhey become lngralned become dlfflculL Lo shed 1he pracLlLloners
of Lhe vlce begln Lo Lhlnk LhaL Lhey have a vesLed rlghL Lo lLs pracLlce and Lhey
wlll flghL LooLh and nall Lo keep Lhe franchlse 1haL would be an unhealLhy way
of consolldaLlng Lhe galns of a democraLlc revoluLlon
1hlrd Lhe argumenL LhaL whaL maLLers are Lhe resulLs and noL Lhe legal nlceLles
ls an argumenL LhaL ls very dlsLurblng When lL comes from a sLaunch ChrlsLlan
llke Commlssloner Salonga a MlnlsLer and repeaLed verbaLlm by anoLher
sLaunch ChrlsLlan llke Commlssloner 1lngson lL becomes doubly dlsLurblng and
even dlscombobulaLlng 1he argumenL makes Lhe CCC an aucLloneer placlng
Lhe 8lll of 8lghLs on Lhe aucLlon block lf Lhe prlce ls rlghL Lhe search and selzure
clause wlll be sold Cpen your Swlss bank accounL Lo us and we wlll award you
Lhe search and selzure clause ?ou can keep lL ln your prlvaLe safe"
AlLernaLlvely Lhe argumenL looks on Lhe presenL governmenL as hosLage Lo Lhe
hoarders of hldden wealLh 1he hoarders wlll release Lhe hldden healLh lf Lhe
ransom prlce ls pald and Lhe ransom prlce ls Lhe 8lll of 8lghLs speclflcally Lhe
due process ln Lhe search and selzure clauses So Lhere ls someLhlng poslLlvely
9

revolvlng abouL elLher argumenL 1he 8lll of 8lghLs ls noL for sale Lo Lhe hlghesL
bldder nor can lL be used Lo ransom capLlve dollars 1hls naLlon wlll survlve and
grow sLrong only lf lL would become convlnced of Lhe values enshrlned ln Lhe
ConsLlLuLlon of a prlce LhaL ls beyond moneLary esLlmaLlon
lor Lhese reasons Lhe honorable course for Lhe ConsLlLuLlonal Commlsslon ls Lo
deleLe all of SecLlon 8 of Lhe commlLLee reporL and allow Lhe new ConsLlLuLlon
Lo Lake effecL ln full vlgor lf SecLlon 8 ls deleLed Lhe CCC has Lwo opLlons
llrsL lL can pursue Lhe Salonga and Lhe 8omulo argumenL LhaL whaL Lhe CCC
has been dolng has been compleLely wlLhln Lhe pale of Lhe law lf susLalned Lhe
CCC can go on and should be able Lo go on even wlLhouL Lhe supporL of
SecLlon 8 lf noL susLalned however Lhe CCC has only one honorable opLlon lL
musL bow Lo Lhe ma[esLy of Lhe 8lll of 8lghLs
1he CCC exLrapolaLlon of Lhe law ls defended by sLaunch ChrlsLlans LeL me
conclude wlLh whaL anoLher ChrlsLlan replled when asked Lo Loy around wlLh Lhe
law lrom hls prlson cell 1homas More sald lll glve Lhe devll beneflL of law for
my naLlon's safeLy sake" l ask Lhe Commlsslon Lo glve Lhe devll beneflL of law
for our naLlon's sake And we should deleLe SecLlon 8
1hank you Madam resldenL (Lmphasls supplled)
uesplLe Lhe lmpassloned plea by Commlssloner 8ernas agalnsL Lhe amendmenL
excepLlng sequesLraLlon orders from Lhe 8lll of 8lghLs Lhe ConsLlLuLlonal Commlsslon
sLlll adopLed Lhe amendmenL as SecLlon 26
44
ArLlcle xvlll of Lhe 1987 ConsLlLuLlon 1he
framers of Lhe ConsLlLuLlon were fully aware LhaL absenL SecLlon 26 sequesLraLlon orders
would noL sLand Lhe LesL of due process under Lhe 8lll of 8lghLs
1hus Lo rule LhaL Lhe 8lll of 8lghLs of Lhe 1973 ConsLlLuLlon remalned ln force durlng
Lhe lnLerregnum absenL a consLlLuLlonal provlslon excepLlng sequesLraLlon orders from such
8lll of 8lghLs would clearly render all sequesLraLlon orders vold durlng Lhe
lnLerregnum neverLheless even durlng Lhe lnLerregnum Lhe llllplno people conLlnued Lo
en[oy under Lhe CovenanL and Lhe ueclaraLlon almosL Lhe same rlghLs found ln Lhe 8lll of
8lghLs of Lhe 1973 ConsLlLuLlon
1he revoluLlonary governmenL afLer lnsLalllng lLself as Lhe Je jote governmenL
assumed responslblllLy for Lhe SLaLe's good falLh compllance wlLh Lhe CovenanL Lo whlch Lhe
hlllpplnes ls a slgnaLory ArLlcle 2(1) of Lhe CovenanL requlres each slgnaLory SLaLe Lo
respecL and Lo ensure Lo all lndlvlduals wlLhln lLs LerrlLory and sub[ecL Lo lLs [urlsdlcLlon Lhe
rlghLs
43
recognlzed ln Lhe presenL CovenanL" under ArLlcle 17(1) of Lhe CovenanL Lhe
revoluLlonary governmenL had Lhe duLy Lo lnsure LhaL no one shall be sub[ecLed Lo
arblLrary or unlawful lnLerference wlLh hls prlvacy famlly home or correspondence"
1he ueclaraLlon Lo whlch Lhe hlllpplnes ls also a slgnaLory provldes ln lLs ArLlcle 17(2)
LhaL no one shall be arblLrarlly deprlved of hls properLy" AlLhough Lhe slgnaLorles Lo Lhe
ueclaraLlon dld noL lnLend lL as a legally blndlng documenL belng only a declaraLlon Lhe
CourL has lnLerpreLed Lhe ueclaraLlon as parL of Lhe generally accepLed prlnclples of
lnLernaLlonal law and blndlng on Lhe SLaLe
46
1hus Lhe revoluLlonary governmenL was also
obllgaLed under lnLernaLlonal law Lo observe Lhe rlghLs
47
of lndlvlduals under Lhe
ueclaraLlon
1he revoluLlonary governmenL dld noL repudlaLe Lhe CovenanL or Lhe ueclaraLlon
durlng Lhe lnLerregnum WheLher Lhe revoluLlonary governmenL could have repudlaLed all lLs
obllgaLlons under Lhe CovenanL or Lhe ueclaraLlon ls anoLher maLLer and ls noL Lhe lssue
here Sufflce lL Lo say LhaL Lhe CourL conslders Lhe ueclaraLlon as parL of cusLomary
lnLernaLlonal law and LhaL llllplnos as human belngs are proper sub[ecLs of Lhe rules of
lnLernaLlonal law lald down ln Lhe CovenanL 1he facL ls Lhe revoluLlonary governmenL dld noL
repudlaLe Lhe CovenanL or Lhe ueclaraLlon ln Lhe same way lL repudlaLed Lhe 1973
ConsLlLuLlon As Lhe Je jote governmenL Lhe revoluLlonary governmenL could noL escape
responslblllLy for Lhe SLaLe's good falLh compllance wlLh lLs LreaLy obllgaLlons under
lnLernaLlonal law
lL was only upon Lhe adopLlon of Lhe rovlslonal ConsLlLuLlon on 23 March 1986 LhaL
Lhe dlrecLlves and orders of Lhe revoluLlonary governmenL became sub[ecL Lo a hlgher
munlclpal law LhaL lf conLravened rendered such dlrecLlves and orders vold 1he rovlslonal
ConsLlLuLlon adopLed verbaLlm Lhe 8lll of 8lghLs of Lhe 1973 ConsLlLuLlon
48
1he rovlslonal
ConsLlLuLlon served as a selfllmlLaLlon by Lhe revoluLlonary governmenL Lo avold abuses of
Lhe absoluLe powers enLrusLed Lo lL by Lhe people
uurlng Lhe lnLerregnum when no consLlLuLlon or 8lll of 8lghLs exlsLed dlrecLlves and
orders lssued by governmenL offlcers were valld so long as Lhese offlcers dld noL exceed Lhe
auLhorlLy granLed Lhem by Lhe revoluLlonary governmenL 1he dlrecLlves and orders should
noL have also vlolaLed Lhe CovenanL or Lhe ueclaraLlon ln Lhls case Lhe revoluLlonary
governmenL presumpLlvely sancLloned Lhe warranL slnce Lhe revoluLlonary governmenL dld
noL repudlaLe lL 1he warranL lssued by a [udge upon proper appllcaLlon speclfled Lhe lLems
Lo be searched and selzed 1he warranL ls Lhus valld wlLh respecL Lo Lhe lLems speclflcally
descrlbed ln Lhe warranL
Powever Lhe ConsLabulary raldlng Leam selzed lLems noL lncluded ln Lhe warranL As
admlLLed by peLlLloner's wlLnesses Lhe raldlng Leam conflscaLed lLems noL lncluded ln Lhe
warranL Lhus
ulrecL LxamlnaLlon of CapL 8odolfo SebasLlan
A! AMC8LS
C Accordlng Lo Lhe search warranL you are supposed Lo selze only for
weapons WhaL else aslde from Lhe weapons were selzed from
Lhe house of Mlss LllzabeLh ulmaano?
A 1he communlcaLlons equlpmenL money ln hlllpplne currency and
uS dollars some [ewelrles land LlLles slr
C now Lhe search warranL speaks only of weapons Lo be selzed from
Lhe house of LllzabeLh ulmaano uo you know Lhe reason why
your Leam also selzed oLher properLles noL menLloned ln sald
search warranL?
A uurlng Lhe conversaLlon rlghL afLer Lhe conducL of sald rald l was
lnformed LhaL Lhe reason why Lhey also broughL Lhe oLher lLems
noL lncluded ln Lhe search warranL was because Lhe money and
10

oLher [ewelrles were conLalned ln aLLache cases and carLons wlLh
marklngs Sony 1rlnlLron" and l Lhlnk Lhree (3) vaulLs or sLeel
safes 8ellevlng LhaL Lhe aLLache cases and Lhe sLeel safes were
conLalnlng flrearms Lhey forced open Lhese conLalners only Lo
flnd ouL LhaL Lhey conLalned money
xxx
C ?ou sald you found money lnsLead of weapons do you know Lhe
reason why your Leam selzed Lhls money lnsLead of weapons?
A l Lhlnk Lhe overall Leam leader and Lhe oLher Lwo offlcers asslsLlng
hlm declded Lo brlng along also Lhe money because aL LhaL Llme
lL was already dark and Lhey felL mosL secured lf Lhey wlll brlng
LhaL because Lhey mlghL be suspecLed also of Laklng money ouL
of Lhose lLems your Ponor
49

CrossexamlnaLlon
ALLy 8anaag
C Were you presenL when Lhe search warranL ln connecLlon wlLh Lhls
case was applled before Lhe Munlclpal 1rlal CourL of 8aLangas
8ranch 1?
A ?es slr
C And Lhe search warranL applled for by you was for Lhe search and
selzure of flve (3) baby armallLe rlfles M16 and flve (3) boxes of
ammunlLlon?
A ?es slr
xxx
A! AMC8LS
C 8efore you applled for a search warranL dld you conducL
survelllance ln Lhe house of Mlss LllzabeLh ulmaano?
A 1he lnLelllgence CperaLlves conducLed survelllance
LogeLher wlLh Lhe MSu elemenLs your Ponor
C And Lhls parLy belleved Lhere were weapons deposlLed ln
Lhe house of Mlss LllzabeLh ulmaano?
A ?es your Ponor
C And Lhey so swore before Lhe Munlclpal 1rlal !udge?
A ?es your Ponor
C 8uL Lhey dld noL menLlon Lo you Lhe appllcanL for Lhe
search warranL any oLher properLles or conLraband whlch
could be found ln Lhe resldence of Mlss LllzabeLh ulmaano?
A 1hey [usL gave us sLlll unconflrmed reporL abouL some hldden
lLems for lnsLance Lhe communlcaLlons equlpmenL and
money Powever l dld noL lnclude LhaL ln Lhe appllcaLlon for
search warranL conslderlng LhaL we have noL esLabllshed
concreLe evldence abouL LhaL So when
C So LhaL when you applled for search warranL you had reason Lo
belleve LhaL only weapons were ln Lhe house of Mlss LllzabeLh
ulmaano?
A ?es your Ponor
30

xxx
C ?ou sLaLed LhaL a 43 callber plsLol was selzed along wlLh one
armallLe rlfle M16 and how many ammunlLlon?
A lorLy slr
C And Lhls became Lhe sub[ecL of your complalnL wlLh Lhe lssulng
CourL wlLh Lhe flscal's offlce who charged LllzabeLh ulmaano for
lllegal ossesslon of llrearms and AmmunlLlon?
A ?es slr
C uo you know whaL happened Lo LhaL case?
A l Lhlnk lL was dlsmlssed slr
C ln Lhe flscal's offlce?
A ?es slr
C 8ecause Lhe armallLe rlfle you selzed as well as Lhe 43 callber
plsLol had a Memorandum 8ecelpL ln Lhe name of lellno
MelegrlLo ls LhaL noL correcL?
A l Lhlnk LhaL was Lhe reason slr
C 1here were oLher arLlcles selzed whlch were noL lncluded ln
Lhe search warranL llke for lnsLance [ewelrles Why dld you
selze Lhe [ewelrles?
A l Lhlnk lL was Lhe declslon of Lhe overall Leam leader and hls
asslsLanL Lo brlng along also Lhe [ewelrles and oLher lLems slr l
do noL really know where lL was Laken buL Lhey broughL along
also Lhese arLlcles l do noL really know Lhelr reason for brlnglng
Lhe same buL l [usL learned LhaL Lhese were Laken because Lhey
mlghL geL losL lf Lhey wlll [usL leave Lhls behlnd
xxx
11

C Pow abouL Lhe money selzed by your raldlng Leam Lhey were noL
also lncluded ln Lhe search warranL?
A ?es slr buL l belleve Lhey were also Laken conslderlng LhaL Lhe
money was dlscovered Lo be conLalned ln aLLache cases 1hese
aLLache cases were suspecLed Lo be conLalnlng plsLols or oLher
hlgh powered flrearms buL ln Lhe course of Lhe search Lhe
conLenLs Lurned ouL Lo be money So Lhe Leam leader also
declded Lo Lake Lhls conslderlng LhaL Lhey belleved LhaL lf Lhey
wlll [usL leave Lhe money behlnd lL mlghL geL losL also
C 1haL holds Lrue also wlLh respecL Lo Lhe oLher arLlcles LhaL were
selzed by your raldlng Leam llke 1ransfer CerLlflcaLes of 1lLle of
lands?
A ?es slr l Lhlnk Lhey were conLalned ln one of Lhe vaulLs LhaL were
opened
31

lL ls obvlous from Lhe LesLlmony of CapLaln SebasLlan LhaL Lhe warranL dld noL lnclude
Lhe monles communlcaLlons equlpmenL [ewelry and land LlLles LhaL Lhe raldlng Leam
conflscaLed 1he search warranL dld noL parLlcularly descrlbe Lhese lLems and Lhe raldlng
Leam conflscaLed Lhem on lLs own auLhorlLy 1he raldlng Leam had no legal basls Lo selze
Lhese lLems wlLhouL showlng LhaL Lhese lLems could be Lhe sub[ecL of warranLless search and
selzure
32
Clearly Lhe raldlng Leam exceeded lLs auLhorlLy when lL selzed Lhese lLems
1he selzure of Lhese lLems was Lherefore vold and unless Lhese lLems are
conLraband pet e
33
and Lhey are noL Lhey musL be reLurned Lo Lhe person from whom Lhe
raldlng selzed Lhem Powever we do noL declare LhaL such person ls Lhe lawful owner of
Lhese lLems merely LhaL Lhe search and selzure warranL could noL be used as basls Lo selze
and wlLhhold Lhese lLems from Lhe possessor We Lhus hold LhaL Lhese lLems should be
reLurned lmmedlaLely Lo ulmaano
JLkLICkL Lhe peLlLlon for cerLlorarl ls ulSMlSSLu 1he quesLloned 8esoluLlons of
Lhe Sandlganbayan daLed 18 november 1991 and 23 March 1992 ln Clvll Case no 0037
remandlng Lhe records of Lhls case Lo Lhe Cmbudsman for such approprlaLe acLlon as Lhe
evldence may warranL and referrlng Lhls case Lo Lhe Commlssloner of Lhe 8ureau of lnLernal
8evenue for a deLermlnaLlon of any Lax llablllLy of respondenL LllzabeLh ulmaano are
Alll8MLu
SC CkDLkLD
ellolllo AottloMottloez otooo otploMotole ollejo 5t and Azcooo
II concur
uovlJe It I ln Lhe resulL l concur wlLh Mr !usLlce vlLug ln hls concurrlng oplnlon
looo and vltoq II see separaLe oplnlon
looqoolboo I ln Lhe resulL
Oolombloq and 5ooJovolCotlettez II on offlclal leave
oote5ootloqo I ln Lhe resulL l concur ln Lhe separaLe oplnlon of ! 8eynaLo uno
1loqo I separaLe oplnlon reserved

12

Gk No 1S9796 Iu|y 17 2007
kCMLC GLkCCI kA1ULCNG NG 8AAN (k8) and LNVIkCNMLN1ALIS1 CCNSUMLkS
NL1JCkk INC (LCN) eLlLloners
vs
DLAk1MLN1 CI LNLkG (DCL) LNLkG kLGULA1Ck CCMMISSICN (LkC) NA1ICNAL
CJLk CCkCkA1ICN (NC) CJLk SLC1Ck ASSL1S AND LIA8ILI1ILS MANAGLMLN1
GkCU (SALM Corp) S1kA1LGIC CJLk U1ILI1ILS GkCU (SUG) and ANA LLLC1kIC
CCMAN INC (LCC)8espondenLs
u L C l S l C n
NACUkA l
eLlLloners 8omeo Cerochl otolooq Nq oyoo (k8) and LnvlronmenLallsL Consumers
neLwork lnc (LCn) (peLlLloners) come before Lhls CourL ln Lhls orlglnal acLlon praylng LhaL
SecLlon 34 of 8epubllc AcL (8A) 9136 oLherwlse known as Lhe LlecLrlc ower lndusLry 8eform
AcL of 2001 (Ll8A) lmposlng Lhe unlversal Charge
1
and 8ule 18 of Lhe 8ules and
8egulaLlons (l88)
2
whlch seeks Lo lmplemenL Lhe sald lmposlLlon be declared
unconsLlLuLlonal eLlLloners also pray LhaL Lhe unlversal Charge lmposed upon Lhe
consumers be refunded and LhaL a prellmlnary ln[uncLlon and/or Lemporary resLralnlng order
(18C) be lssued dlrecLlng Lhe respondenLs Lo refraln from lmplemenLlng charglng and
collecLlng Lhe sald charge
3
1he assalled provlslon of law reads
SLC1lCn 34 uolvetol otqe WlLhln one (1) year from Lhe effecLlvlLy of Lhls AcL a
unlversal charge Lo be deLermlned flxed and approved by Lhe L8C shall be lmposed on all
elecLrlclLy endusers for Lhe followlng purposes
(a) aymenL for Lhe sLranded debLs
4
ln excess of Lhe amounL assumed by Lhe naLlonal
CovernmenL and sLranded conLracL cosLs of nC
3
and as well as quallfled sLranded conLracL
cosLs of dlsLrlbuLlon uLlllLles resulLlng from Lhe resLrucLurlng of Lhe lndusLry
(b) Mlsslonary elecLrlflcaLlon
6

(c) 1he equallzaLlon of Lhe Laxes and royalLles applled Lo lndlgenous or renewable sources of
energy vlsvls lmporLed energy fuels
(d) An envlronmenLal charge equlvalenL Lo onefourLh of one cenLavo per kllowaLLhour
(00023/kWh) whlch shall accrue Lo an envlronmenLal fund Lo be used solely for waLershed
rehablllLaLlon and managemenL Sald fund shall be managed by nC under exlsLlng
arrangemenLs and
(e) A charge Lo accounL for all forms of crosssubsldles for a perlod noL exceedlng Lhree (3)
years
1he unlversal charge shall be a nonbypassable charge whlch shall be passed on and collecLed
from all endusers on a monLhly basls by Lhe dlsLrlbuLlon uLlllLles CollecLlons by Lhe
dlsLrlbuLlon uLlllLles and Lhe 18AnSCC ln any glven monLh shall be remlLLed Lo Lhe SALM
Corp on or before Lhe flfLeenLh (13Lh) of Lhe succeedlng monLh neL of any amounL due Lo
Lhe dlsLrlbuLlon uLlllLy Any enduser or selfgeneraLlng enLlLy noL connecLed Lo a dlsLrlbuLlon
uLlllLy shall remlL lLs correspondlng unlversal charge dlrecLly Lo Lhe 18AnSCC 1he SALM
Corp as admlnlsLraLor of Lhe fund shall creaLe a Speclal 1rusL lund whlch shall be dlsbursed
only for Lhe purposes speclfled hereln ln an open and LransparenL manner All amounL
collecLed for Lhe unlversal charge shall be dlsLrlbuLed Lo Lhe respecLlve beneflclarles wlLhln a
reasonable perlod Lo be provlded by Lhe L8C
1e loct
Congress enacLed Lhe Ll8A on !une 8 2001 on !une 26 2001 lL Look effecL
7

Cn Aprll 3 2002 respondenL naLlonal ower CorporaLlonSLraLeglc ower uLlllLles
Croup
8
(nCSuC) flled wlLh respondenL Lnergy 8egulaLory Commlsslon (L8C) a peLlLlon for
Lhe avallmenL from Lhe unlversal Charge of lLs share for Mlsslonary LlecLrlflcaLlon dockeLed
as L8C Case no 2002163
9

Cn May 7 2002 nC flled anoLher peLlLlon wlLh L8C dockeLed as L8C Case no 2002194
praylng LhaL Lhe proposed share from Lhe unlversal Charge for Lhe LnvlronmenLal charge
of 00023 per kllowaLLhour (/kWh) or a LoLal of 11948884739 be approved for
wlLhdrawal from Lhe Speclal 1rusL lund (S1l) managed by respondenL ower SecLor AsseLs
and
LlablllLles ManagemenL Croup (SALM)
10
for Lhe rehablllLaLlon and managemenL of
waLershed areas
11

Cn uecember 20 2002 Lhe L8C lssued an Crder
12
ln L8C Case no 2002163 provlslonally
approvlng Lhe compuLed amounL of 00168/kWh as Lhe share of Lhe nCSuC from Lhe
unlversal Charge for Mlsslonary LlecLrlflcaLlon and auLhorlzlng Lhe naLlonal 1ransmlsslon
CorporaLlon (18AnSCC) and ulsLrlbuLlon uLlllLles Lo collecL Lhe same from lLs endusers on a
monLhly basls
Cn !une 26 2003 Lhe L8C rendered lLs ueclslon
13
(for L8C Case no 2002163) modlfylng lLs
Crder of uecember 20 2002 Lhus
13

WPL8LlC8L Lhe foregolng premlses consldered Lhe provlslonal auLhorlLy granLed Lo
peLlLloner naLlonal ower CorporaLlonSLraLeglc ower uLlllLles Croup (nCSuC) ln Lhe
Crder daLed uecember 20 2002 ls hereby modlfled Lo Lhe effecL LhaL an addlLlonal amounL
of 00203 per kllowaLLhour should be added Lo Lhe 00168 per kllowaLLhour provlslonally
auLhorlzed by Lhe Commlsslon ln Lhe sald Crder Accordlngly a LoLal amounL of 00373 per
kllowaLLhour ls hereby A8CvLu for wlLhdrawal from Lhe Speclal 1rusL lund managed by
SALM as lLs share from Lhe unlversal Charge for Mlsslonary LlecLrlflcaLlon (uCML) effecLlve
on Lhe followlng bllllng cycles
(a) !une 26!uly 23 2003 for naLlonal 1ransmlsslon CorporaLlon (18AnSCC) and
(b) !uly 2003 for ulsLrlbuLlon uLlllLles (uus)
8elaLlve LhereLo 18AnSCC and uus are dlrecLed Lo collecL Lhe uCML ln Lhe amounL
of 00373 per kllowaLLhour and remlL Lhe same Lo SALM on or before Lhe 13Lh day of Lhe
succeedlng monLh
ln Lhe meanLlme nCSuC ls dlrecLed Lo submlL noL laLer Lhan Aprll 30 2004 a deLalled
reporL Lo lnclude AudlLed llnanclal SLaLemenLs and physlcal sLaLus (percenLage of compleLlon)
of Lhe pro[ecLs uslng Lhe prescrlbed formaLovvpl
LeL coples of Lhls Crder be furnlshed peLlLloner nCSuC and all dlsLrlbuLlon uLlllLles (uus)
SC C8uL8Lu
Cn AugusL 13 2003 nCSuC flled a MoLlon for 8econslderaLlon asklng Lhe L8C among
oLhers
14
Lo seL aslde Lhe abovemenLloned ueclslon whlch Lhe L8C granLed ln lLs Crder daLed
CcLober 7 2003 dlsposlng
WPL8LlC8L Lhe foregolng premlses consldered Lhe MoLlon for 8econslderaLlon flled by
peLlLloner naLlonal ower CorporaLlonSmall ower uLlllLles Croup (nCSuC) ls hereby
C8An1Lu Accordlngly Lhe ueclslon daLed !une 26 2003 ls hereby modlfled accordlngly
8elaLlve LhereLo nCSuC ls dlrecLed Lo submlL a quarLerly reporL on Lhe followlng
1 ro[ecLs for C? 2002 underLaken
2 LocaLlon
3 AcLual amounL uLlllzed Lo compleLe Lhe pro[ecL
4 erlod of compleLlon
3 SLarL of CperaLlon and
6 LxplanaLlon of Lhe reallocaLlon of uCML funds lf any
SC C8uL8Lu
13

Meanwhlle on Aprll 2 2003 L8C declded L8C Case no 2002194 auLhorlzlng Lhe nC Lo
draw up Lo7000000000 from SALM for lLs 2003 WaLershed 8ehablllLaLlon 8udgeL sub[ecL
Lo Lhe avallablllLy of funds for Lhe LnvlronmenLal lund componenL of Lhe unlversal Charge
16

Cn Lhe basls of Lhe sald L8C declslons respondenL anay LlecLrlc Company lnc (LCC)
charged peLlLloner 8omeo Cerochl and all oLher endusers wlLh Lhe unlversal Charge as
reflecLed ln Lhelr respecLlve elecLrlc bllls sLarLlng from Lhe monLh of !uly 2003
17

Pence Lhls orlglnal acLlon
eLlLloners submlL LhaL Lhe assalled provlslon of law and lLs l88 whlch soughL Lo lmplemenL
Lhe same are unconsLlLuLlonal on Lhe followlng grounds
1) 1he unlversal charge provlded for under Sec 34 of Lhe Ll8A and soughL Lo be
lmplemenLed under Sec 2 8ule 18 of Lhe l88 of Lhe sald law ls a Lax whlch ls Lo be collecLed
from all elecLrlc endusers and selfgeneraLlng enLlLles 1he power Lo Lax ls sLrlcLly a leglslaLlve
funcLlon and as such Lhe delegaLlon of sald power Lo any execuLlve or admlnlsLraLlve agency
llke Lhe L8C ls unconsLlLuLlonal glvlng Lhe same unllmlLed auLhorlLy 1he assalled provlslon
clearly provldes LhaL Lhe unlversal Charge ls Lo be deLermlned flxed and approved by Lhe
L8C hence leavlng Lo Lhe laLLer compleLe dlscreLlonary leglslaLlve auLhorlLy
2) 1he L8C ls also empowered Lo approve and deLermlne where Lhe funds collecLed should be
used
3) 1he lmposlLlon of Lhe unlversal Charge on all endusers ls oppresslve and conflscaLory and
amounLs Lo LaxaLlon wlLhouL represenLaLlon as Lhe consumers were noL glven a chance Lo be
heard and represenLed
18

eLlLloners conLend LhaL Lhe unlversal Charge has Lhe characLerlsLlcs of a Lax and ls collecLed
Lo fund Lhe operaLlons of Lhe nC 1hey argue LhaL Lhe cases
19
lnvoked by Lhe respondenLs
clearly show Lhe regulaLory purpose of Lhe charges lmposed Lhereln whlch ls noL so ln Lhe
case aL bench ln sald cases Lhe respecLlve funds
20
were creaLed ln order Lo balance and
sLablllze Lhe prlces of oll and sugar and Lo acL as buffer Lo counLeracL Lhe changes and
ad[usLmenLs ln prlces peso devaluaLlon and oLher varlables whlch cannoL be adequaLely and
Llmely monlLored by Lhe leglslaLure 1hus Lhere was a need Lo delegaLe powers Lo
14

admlnlsLraLlve bodles
21
eLlLloners poslL LhaL Lhe unlversal Charge ls lmposed noL for a
slmllar purpose
Cn Lhe oLher hand respondenL SALM Lhrough Lhe Cfflce of Lhe CovernmenL CorporaLe
Counsel (CCCC) conLends LhaL unllke a Lax whlch ls lmposed Lo provlde lncome for publlc
purposes such as supporL of Lhe governmenL admlnlsLraLlon of Lhe law or paymenL of publlc
expenses Lhe assalled unlversal Charge ls levled for a speclflc regulaLory purpose whlch ls Lo
ensure Lhe vlablllLy of Lhe counLrys elecLrlc power lndusLry 1hus lL ls exacLed by Lhe SLaLe ln
Lhe exerclse of lLs lnherenL pollce power Cn Lhls premlse SALM submlLs LhaL Lhere ls no
undue delegaLlon of leglslaLlve power Lo Lhe L8C slnce Lhe laLLer merely exerclses a llmlLed
auLhorlLy or dlscreLlon as Lo Lhe execuLlon and lmplemenLaLlon of Lhe provlslons of Lhe
Ll8A
22

8espondenLs ueparLmenL of Lnergy (uCL) L8C and nC Lhrough Lhe Cfflce of Lhe SollclLor
Ceneral (CSC) share Lhe same vlew LhaL Lhe unlversal Charge ls noL a Lax because lL ls levled
for a speclflc regulaLory purpose whlch ls Lo ensure Lhe vlablllLy of Lhe counLrys elecLrlc
power lndusLry and ls Lherefore an exacLlon ln Lhe exerclse of Lhe SLaLes pollce power
8espondenLs furLher conLend LhaL sald unlversal Charge does noL possess Lhe essenLlal
characLerlsLlcs of a Lax LhaL lLs lmposlLlon would redound Lo Lhe beneflL of Lhe elecLrlc power
lndusLry and noL Lo Lhe publlc and LhaL lLs raLe ls unlformly levled on elecLrlclLy endusers
unllke a Lax whlch ls lmposed based on Lhe lndlvldual Laxpayers ablllLy Lo pay Moreover
respondenLs deny LhaL Lhere ls undue delegaLlon of leglslaLlve power Lo Lhe L8C slnce Lhe
Ll8A seLs forLh sufflclenL deLermlnable sLandards whlch would gulde Lhe L8C ln Lhe exerclse
of Lhe powers granLed Lo lL LasLly respondenLs argue LhaL Lhe lmposlLlon of Lhe unlversal
Charge ls noL oppresslve and conflscaLory slnce lL ls an exerclse of Lhe pollce power of Lhe
SLaLe and lL complles wlLh Lhe requlremenLs of due process
23

Cn lLs parL respondenL LCC argues LhaL lL ls duLybound Lo collecL and remlL Lhe amounL
perLalnlng Lo Lhe Mlsslonary LlecLrlflcaLlon and LnvlronmenLal lund componenLs of Lhe
unlversal Charge pursuanL Lo Sec 34 of Lhe Ll8A and Lhe ueclslons ln L8C Case nos 2002
194 and 2002163 CLherwlse LCC could be held llable under Sec 46
24
of Lhe Ll8A whlch
lmposes flnes and penalLles for any vlolaLlon of lLs provlslons or lLs l88
23

1e loe
1he ulLlmaLe lssues ln Lhe case aL bar are
1) WheLher or noL Lhe unlversal Charge lmposed under Sec 34 of Lhe Ll8A ls a Lax and
2) WheLher or noL Lhere ls undue delegaLlon of leglslaLlve power Lo Lax on Lhe parL of Lhe
L8C
26

8efore we dlscuss Lhe lssues Lhe CourL shall flrsL deal wlLh an obvlous procedural lapse
eLlLloners flled before us an orlglnal acLlon parLlcularly denomlnaLed as a ComplalnL assalllng
Lhe consLlLuLlonallLy of Sec 34 of Lhe Ll8A lmposlng Lhe unlversal Charge and 8ule 18 of Lhe
Ll8As l88 no doubL peLlLloners have loco tooJl 1hey lmpugn Lhe consLlLuLlonallLy of Sec
34 of Lhe Ll8A because Lhey susLalned a dlrecL ln[ury as a resulL of Lhe lmposlLlon of Lhe
unlversal Charge as reflecLed ln Lhelr elecLrlc bllls
Powever peLlLloners vlolaLed Lhe docLrlne of hlerarchy of courLs when Lhey flled Lhls
ComplalnL dlrecLly wlLh us lurLhermore Lhe ComplalnL ls berefL of any allegaLlon of grave
abuse of dlscreLlon on Lhe parL of Lhe L8C or any of Lhe publlc respondenLs ln order for Lhe
CourL Lo conslder lL as a peLlLlon for cerLlorarl or prohlblLlon
ArLlcle vlll SecLlon 3(1) and (2) of Lhe 1987 ConsLlLuLlon
27
caLegorlcally provldes LhaL
SLC1lCn 3 1he Supreme CourL shall have Lhe followlng powers
1 Lxerclse otlqlool jotlJlctloo ovet coe affecLlng ambassadors oLher publlc mlnlsLers and
consuls and over petltloo fot cettlototl ptolbltloo mooJomo poo wottooto ooJ obeo
cotpo
2 8evlew revlse reverse modlfy or afflrm oo oppeol ot cettlototl as Lhe law or Lhe rules of
courL may provlde flnal [udgmenLs and orders of lower courLs ln
(a) All cases ln whlch Lhe cootltotlooollty ot vollJlty of any LreaLy lnLernaLlonal or execuLlve
agreemenL low presldenLlal decree proclamaLlon order lnsLrucLlon ordlnance or
regulaLlon ls ln quesLlon
8uL Lhls CourLs [urlsdlcLlon Lo lssue wrlLs of cettlototl prohlblLlon mooJomo poo wottooto
and obeo cotpo whlle concurrenL wlLh LhaL of Lhe reglonal Lrlal courLs and Lhe CourL of
Appeals does noL glve llLlganLs unresLralned freedom of cholce of forum from whlch Lo seek
such rellef
28
lL has long been esLabllshed LhaL Lhls CourL wlll noL enLerLaln dlrecL resorL Lo lL
unless Lhe redress deslred cannoL be obLalned ln Lhe approprlaLe courLs or where excepLlonal
and compelllng clrcumsLances [usLlfy avallmenL of a remedy wlLhln and call for Lhe exerclse of
our prlmary [urlsdlcLlon
29
1hls clrcumsLance alone warranLs Lhe ouLrlghL dlsmlssal of Lhe
presenL acLlon
1hls procedural lnflrmlLy noLwlLhsLandlng we opL Lo resolve Lhe consLlLuLlonal lssue ralsed
hereln We are aware LhaL lf Lhe consLlLuLlonallLy of Sec 34 of Lhe Ll8A ls noL resolved now
Lhe lssue wlll cerLalnly resurface ln Lhe near fuLure resulLlng ln a repeaL of Lhls llLlgaLlon and
probably lnvolvlng Lhe same parLles ln Lhe publlc lnLeresL and Lo avold unnecessary delay
Lhls CourL renders lLs rullng now
13

1he lnsLanL complalnL ls berefL of merlL
1e lltt loe
1o resolve Lhe flrsL lssue lL ls necessary Lo dlsLlngulsh Lhe SLaLe's power of LaxaLlon from Lhe
pollce power
1he power Lo Lax ls an lncldenL of soverelgnLy and ls unllmlLed ln lLs range acknowledglng ln
lLs very naLure no llmlLs so LhaL securlLy agalnsL lLs abuse ls Lo be found only ln Lhe
responslblllLy of Lhe leglslaLure whlch lmposes Lhe Lax on Lhe consLlLuency LhaL ls Lo pay lL
30
lL
ls based on Lhe prlnclple LhaL Laxes are Lhe llfeblood of Lhe governmenL and Lhelr prompL and
cerLaln avallablllLy ls an lmperlous need
31
1hus Lhe Lheory behlnd Lhe exerclse of Lhe power
Lo Lax emanaLes from necesslLy wlLhouL Laxes governmenL cannoL fulflll lLs mandaLe of
promoLlng Lhe general welfare and wellbelng of Lhe people
32

Cn Lhe oLher hand pollce power ls Lhe power of Lhe sLaLe Lo promoLe publlc welfare by
resLralnlng and regulaLlng Lhe use of llberLy and properLy
33
lL ls Lhe mosL pervaslve Lhe leasL
llmlLable and Lhe mosL demandlng of Lhe Lhree fundamenLal powers of Lhe SLaLe 1he
[usLlflcaLlon ls found ln Lhe LaLln maxlms olo popoll et optemo lex (Lhe welfare of Lhe
people ls Lhe supreme law) and lc otete too ot olleoom ooo loeJo (so use your properLy as
noL Lo ln[ure Lhe properLy of oLhers) As an lnherenL aLLrlbuLe of soverelgnLy whlch vlrLually
exLends Lo all publlc needs pollce power granLs a wlde panoply of lnsLrumenLs Lhrough whlch
Lhe SLaLe as poteo pottloe glves effecL Lo a hosL of lLs regulaLory powers
34
We have held
LhaL Lhe power Lo regulaLe means Lhe power Lo proLecL fosLer promoLe preserve and
conLrol wlLh due regard for Lhe lnLeresLs flrsL and foremosL of Lhe publlc Lhen of Lhe uLlllLy
and of lLs paLrons
33

1he conservaLlve and plvoLal dlsLlncLlon beLween Lhese Lwo powers resLs ln Lhe purpose for
whlch Lhe charge ls made lf generaLlon of revenue ls Lhe prlmary purpose and regulaLlon ls
merely lncldenLal Lhe lmposlLlon ls a Lax buL lf regulaLlon ls Lhe prlmary purpose Lhe facL
LhaL revenue ls lncldenLally ralsed does noL make Lhe lmposlLlon a Lax
36

ln exacLlng Lhe assalled unlversal Charge Lhrough Sec 34 of Lhe Ll8A Lhe SLaLes pollce
power parLlcularly lLs regulaLory dlmenslon ls lnvoked Such can be deduced from Sec 34
whlch enumeraLes Lhe purposes for whlch Lhe unlversal Charge ls lmposed
37
and whlch can
be amply dlscerned as regulaLory ln characLer 1he Ll8A resonaLes such regulaLory purposes
Lhus
SLC1lCn 2 ueclaraLlon of ollcy lL ls hereby declared Lhe pollcy of Lhe SLaLe
(a) 1o ensure and acceleraLe Lhe LoLal elecLrlflcaLlon of Lhe counLry
(b) 1o ensure Lhe quallLy rellablllLy securlLy and affordablllLy of Lhe supply of elecLrlc power
(c) 1o ensure LransparenL and reasonable prlces of elecLrlclLy ln a reglme of free and falr
compeLlLlon and full publlc accounLablllLy Lo achleve greaLer operaLlonal and economlc
efflclency and enhance Lhe compeLlLlveness of hlllpplne producLs ln Lhe global markeL
(d) 1o enhance Lhe lnflow of prlvaLe caplLal and broaden Lhe ownershlp base of Lhe power
generaLlon Lransmlsslon and dlsLrlbuLlon secLors
(e) 1o ensure falr and nondlscrlmlnaLory LreaLmenL of publlc and prlvaLe secLor enLlLles ln Lhe
process of resLrucLurlng Lhe elecLrlc power lndusLry
(f) 1o proLecL Lhe publlc lnLeresL as lL ls affecLed by Lhe raLes and servlces of elecLrlc uLlllLles
and oLher provlders of elecLrlc power
(g) 1o assure soclally and envlronmenLally compaLlble energy sources and lnfrasLrucLure
(h) 1o promoLe Lhe uLlllzaLlon of lndlgenous and new and renewable energy resources ln
power generaLlon ln order Lo reduce dependence on lmporLed energy
(l) 1o provlde for an orderly and LransparenL prlvaLlzaLlon of Lhe asseLs and llablllLles of Lhe
naLlonal ower CorporaLlon (nC)
([) 1o esLabllsh a sLrong and purely lndependenL regulaLory body and sysLem Lo ensure
consumer proLecLlon and enhance Lhe compeLlLlve operaLlon of Lhe elecLrlclLy markeL and
(k) 1o encourage Lhe efflclenL use of energy and oLher modallLles of demand slde
managemenL
lrom Lhe aforemenLloned purposes lL can be gleaned LhaL Lhe assalled unlversal Charge ls
noL a Lax buL an exacLlon ln Lhe exerclse of Lhe SLaLes pollce power ubllc welfare ls surely
promoLed
Moreover lL ls a wellesLabllshed docLrlne LhaL Lhe Laxlng power may be used as an
lmplemenL of pollce power
38
lnvolmoote v oetqy keqolototy ootJ et ol
39
and ln Cotoo v
kepobllc llootet ook
40
Lhls CourL held LhaL Lhe Cll rlce SLablllzaLlon lund (CSl) and Lhe
Sugar SLablllzaLlon lund (SSl) were exacLlons made ln Lhe exerclse of Lhe pollce power 1he
docLrlne was relLeraLed ln Omeo v Otbo
41
wlLh respecL Lo Lhe CSl 1hus we dlsagree
wlLh peLlLloners LhaL Lhe lnsLanL case ls dlfferenL from Lhe aforemenLloned cases WlLh Lhe
unlversal Charge a Speclal 1rusL lund (S1l) ls also creaLed under Lhe admlnlsLraLlon of
SALM
42
1he S1l has some noLable characLerlsLlcs slmllar Lo Lhe CSl and Lhe SSl vlz
16

1) ln Lhe lmplemenLaLlon of sLranded cosL recovery Lhe L8C shall conducL a revlew Lo
deLermlne wheLher Lhere ls underrecovery or over recovery and ad[usL (Lrueup) Lhe level of
Lhe sLranded cosL recovery charge ln case of an overrecovery Lhe L8C shall ensure LhaL any
excess amounL shall be remlLLed Lo Lhe S1l A separaLe accounL shall be creaLed for Lhese
amounLs whlch shall be held ln LrusL for any fuLure clalms of dlsLrlbuLlon uLlllLles for sLranded
cosL recovery AL Lhe end of Lhe sLranded cosL recovery perlod any remalnlng amounL ln Lhls
accounL shall be used Lo reduce Lhe elecLrlclLy raLes Lo Lhe endusers
43

2) WlLh respecL Lo Lhe assalled unlversal Charge lf Lhe LoLal amounL collecLed for Lhe same ls
greaLer Lhan Lhe acLual avallmenLs agalnsL lL Lhe SALM shall reLaln Lhe balance wlLhln Lhe
S1l Lo pay for perlods where a shorLfall occurs
44

3) upon explraLlon of Lhe Lerm of SALM Lhe admlnlsLraLlon of Lhe S1l shall be Lransferred Lo
Lhe uCl or any of Lhe uCl aLLached agencles as deslgnaLed by Lhe uCl SecreLary
43

1he CSC ls ln polnL when lL asseveraLes
LvldenLly Lhe esLabllshmenL and malnLenance of Lhe Speclal 1rusL lund under Lhe lasL
paragraph of SecLlon 34 8A no 9136 ls well wlLhln Lhe pervaslve and nonwalvable power
and responslblllLy of Lhe governmenL Lo secure Lhe physlcal and economlc survlval and well
belng of Lhe communlLy LhaL comprehenslve soverelgn auLhorlLy we deslgnaLe as Lhe pollce
power of Lhe SLaLe
46

1hls feaLure of Lhe unlversal Charge furLher boosLs Lhe poslLlon LhaL Lhe same ls an exacLlon
lmposed prlmarlly ln pursulL of Lhe SLaLes pollce ob[ecLlves 1he S1l reasonably serves and
assures Lhe aLLalnmenL and perpeLulLy of Lhe purposes for whlch Lhe unlversal Charge ls
lmposed le Lo ensure Lhe vlablllLy of Lhe counLrys elecLrlc power lndusLry
1e 5ecooJ loe
1he prlnclple of separaLlon of powers ordalns LhaL each of Lhe Lhree branches of governmenL
has excluslve cognlzance of and ls supreme ln maLLers falllng wlLhln lLs own consLlLuLlonally
allocaLed sphere A loglcal corollary Lo Lhe docLrlne of separaLlon of powers ls Lhe prlnclple of
nondelegaLlon of powers as expressed ln Lhe LaLln maxlm poteto Jeleqoto ooo Jeleqotl
potet (whaL has been delegaLed cannoL be delegaLed) 1hls ls based on Lhe eLhlcal prlnclple
LhaL such delegaLed power consLlLuLes noL only a rlghL buL a duLy Lo be performed by Lhe
delegaLe Lhrough Lhe lnsLrumenLallLy of hls own [udgmenL and noL Lhrough Lhe lnLervenlng
mlnd of anoLher
47

ln Lhe face of Lhe lncreaslng complexlLy of modern llfe delegaLlon of leglslaLlve power Lo
varlous speclallzed admlnlsLraLlve agencles ls allowed as an excepLlon Lo Lhls prlnclple
48
Clven
Lhe volume and varleLy of lnLeracLlons ln Lodays socleLy lL ls doubLful lf Lhe leglslaLure can
promulgaLe laws LhaL wlll deal adequaLely wlLh and respond prompLly Lo Lhe mlnuLlae of
everyday llfe Pence Lhe need Lo delegaLe Lo admlnlsLraLlve bodles Lhe prlnclpal agencles
Lasked Lo execuLe laws ln Lhelr speclallzed flelds Lhe auLhorlLy Lo promulgaLe rules and
regulaLlons Lo lmplemenL a glven sLaLuLe and effecLuaLe lLs pollcles All LhaL ls requlred for Lhe
valld exerclse of Lhls power of subordlnaLe leglslaLlon ls LhaL Lhe regulaLlon be germane Lo Lhe
ob[ecLs and purposes of Lhe law and LhaL Lhe regulaLlon be noL ln conLradlcLlon Lo buL ln
conformlLy wlLh Lhe sLandards prescrlbed by Lhe law 1hese requlremenLs are denomlnaLed
as Lhe compleLeness LesL and Lhe sufflclenL sLandard LesL
under Lhe flrsL LesL Lhe law musL be compleLe ln all lLs Lerms and condlLlons when lL leaves
Lhe leglslaLure such LhaL when lL reaches Lhe delegaLe Lhe only Lhlng he wlll have Lo do ls Lo
enforce lL 1he second LesL mandaLes adequaLe guldellnes or llmlLaLlons ln Lhe law Lo
deLermlne Lhe boundarles of Lhe delegaLes auLhorlLy and prevenL Lhe delegaLlon from
runnlng rloL
49

1he CourL flnds LhaL Lhe Ll8A read and appreclaLed ln lLs enLlreLy ln relaLlon Lo Sec 34
Lhereof ls compleLe ln all lLs essenLlal Lerms and condlLlons and LhaL lL conLalns sufflclenL
sLandards
AlLhough Sec 34 of Lhe Ll8A merely provldes LhaL wlLhln one (1) year from Lhe effecLlvlLy
Lhereof a unlversal Charge Lo be deLermlned flxed and approved by Lhe L8C shall be
lmposed on all elecLrlclLy endusers and Lherefore does noL sLaLe Lhe speclflc amounL Lo be
pald as unlversal Charge Lhe amounL neverLheless ls made cerLaln by Lhe leglslaLlve
parameLers provlded ln Lhe law lLself lor one Sec 43(b)(ll) of Lhe Ll8A provldes
SLC1lCn 43 luncLlons of Lhe L8C 1he L8C shall promoLe compeLlLlon encourage markeL
developmenL ensure cusLomer cholce and penallze abuse of markeL power ln Lhe
resLrucLured elecLrlclLy lndusLry ln approprlaLe cases Lhe L8C ls auLhorlzed Lo lssue cease
and deslsL order afLer due noLlce and hearlng 1owards Lhls end lL shall be responslble for Lhe
followlng key funcLlons ln Lhe resLrucLured lndusLry
x x x x
(b) WlLhln slx (6) monLhs from Lhe effecLlvlLy of Lhls AcL promulgaLe and enforce ln
accordance wlLh law a naLlonal Crld Code and a ulsLrlbuLlon Code whlch shall lnclude buL
noL llmlLed Lo Lhe followlng
x x x x
(ll) llnanclal capablllLy sLandards for Lhe generaLlng companles Lhe 18AnSCC dlsLrlbuLlon
uLlllLles and suppllers rovlded 1haL ln Lhe formulaLlon of Lhe flnanclal capablllLy sLandards
Lhe naLure and funcLlon of Lhe enLlLy shall be consldered rovlded furLher 1haL such
17

sLandards are seL Lo ensure LhaL Lhe elecLrlc power lndusLry parLlclpanLs meeL Lhe mlnlmum
flnanclal sLandards Lo proLecL Lhe publlc lnLeresL ueLermlne flx and approve afLer due
noLlce and publlc hearlngs Lhe unlversal charge Lo be lmposed on all elecLrlclLy endusers
pursuanL Lo SecLlon 34 hereof
Moreover conLrary Lo Lhe peLlLloners' conLenLlon Lhe L8C does noL en[oy a wlde laLlLude of
dlscreLlon ln Lhe deLermlnaLlon of Lhe unlversal Charge Sec 31(d) and (e) of Lhe
Ll8A
30
clearly provldes
SLC1lCn 31 owers 1he SALM Corp shall ln Lhe performance of lLs funcLlons and for Lhe
aLLalnmenL of lLs ob[ecLlve have Lhe followlng powers
x x x x
(d) 1o calculaLe Lhe amounL of Lhe sLranded debLs and sLranded conLracL cosLs of nC
whlch sha|| form the bas|s for LkC |n the determ|nat|on of the un|versa| charge
(e) 1o llquldaLe Lhe nC sLranded conLracL cosLs uLlllzlng Lhe proceeds from sales and oLher
properLy conLrlbuLed Lo lL lncludlng Lhe proceeds from Lhe unlversal charge
1hus Lhe law ls compleLe and passes Lhe flrsL LesL for valld delegaLlon of leglslaLlve power
As Lo Lhe second LesL Lhls CourL had ln Lhe pasL accepLed as sufflclenL sLandards Lhe
followlng lnLeresL of law and order
31
adequaLe and efflclenL lnsLrucLlon
32
publlc
lnLeresL
33
[usLlce and equlLy
34
publlc convenlence and welfare
33
slmpllclLy economy
and efflclency
36
sLandardlzaLlon and regulaLlon of medlcal educaLlon
37
and falr and
equlLable employmenL pracLlces
38
rovlslons of Lhe Ll8A such as among oLhers Lo ensure
Lhe LoLal elecLrlflcaLlon of Lhe counLry and Lhe quallLy rellablllLy securlLy and affordablllLy of
Lhe supply of elecLrlc power
39
and waLershed rehablllLaLlon and managemenL
60
meeL Lhe
requlremenLs for valld delegaLlon as Lhey provlde Lhe llmlLaLlons on Lhe L8C's power Lo
formulaLe Lhe l88 1hese are sufflclenL sLandards
lL may be noLed LhaL Lhls ls noL Lhe flrsL Llme LhaL Lhe L8Cs conferred powers were
challenged ln lteeJom ftom uebt oolltloo v oetqy keqolototy ommlloo
61
Lhe CourL had
occaslon Lo say
ln deLermlnlng Lhe exLenL of powers possessed by Lhe L8C Lhe provlslons of Lhe Ll8A musL
noL be read ln separaLe parLs 8aLher Lhe law musL be read ln lLs enLlreLy because a sLaLuLe ls
passed as a whole and ls anlmaLed by one general purpose and lnLenL lLs meanlng cannoL Lo
be exLracLed from any slngle parL Lhereof buL from a general conslderaLlon of Lhe sLaLuLe as a
whole Conslderlng Lhe lnLenL of Congress ln enacLlng Lhe Ll8A and readlng Lhe sLaLuLe ln lLs
enLlreLy lL ls plaln Lo see LhaL Lhe law has expanded Lhe [urlsdlcLlon of Lhe regulaLory body
Lhe L8C ln Lhls case Lo enable Lhe laLLer Lo lmplemenL Lhe reforms soughL Lo be accompllshed
by Lhe Ll8A When Lhe leglslaLors declded Lo broaden Lhe [urlsdlcLlon of Lhe L8C Lhey dld
noL lnLend Lo abollsh or reduce Lhe powers already conferred upon L8Cs predecessors 1o
susLaln Lhe vlew LhaL Lhe L8C possesses only Lhe powers and funcLlons llsLed under SecLlon 43
of Lhe Ll8A ls Lo frusLraLe Lhe ob[ecLlves of Lhe law
ln hls Concurrlng and ulssenLlng Cplnlon
62
ln Lhe same case Lhen AssoclaLe !usLlce now Chlef
!usLlce 8eynaLo S uno descrlbed Lhe lmmenslLy of pollce power ln relaLlon Lo Lhe delegaLlon
of powers Lo Lhe L8C and lLs regulaLory funcLlons over elecLrlc power as a vlLal publlc uLlllLy
Lo wlL
Cver Lhe years however Lhe range of pollce power was no longer llmlLed Lo Lhe preservaLlon
of publlc healLh safeLy and morals whlch used Lo be Lhe prlmary soclal lnLeresLs ln earller
Llmes lollce powet oow tepolte te 5tote to oome oo offltmotlve Joty to ellmloote te
excee ooJ lojotlce tot ote te coocomltoot of oo ootettoloeJ loJottlol ecooomy
lollce powet l oow exetteJ to fottet te pobllc welfote o coocept o vot o te qooJ of
oclety ltelf neoce pollce powet l bot oootet oome fot te qovetomeotol oototlty to
fottet te welfote of oclety tot l te bolc eoJ of oll qovetomeot When pollce power ls
delegaLed Lo admlnlsLraLlve bodles wlLh regulaLory funcLlons lLs exerclse should be glven a
wlde laLlLude ollce power Lakes on an even broader dlmenslon ln developlng counLrles such
as ours where Lhe SLaLe musL Lake a more acLlve role ln balanclng Lhe many confllcLlng
lnLeresLs ln socleLy 1he CuesLloned Crder was lssued by Lhe L8C acLlng as an agenL of Lhe
SLaLe ln Lhe exerclse of pollce power We should have excepLlonally good grounds Lo curLall
lLs exerclse 1hls approach ls more compelllng ln Lhe fleld of raLeregulaLlon of elecLrlc power
raLes lecttlc powet qeoetotloo ooJ Jlttlbotloo l o ttoJltloool lottomeot of ecooomlc
qtowt tot offect oot ooly o few bot te eotlte ootloo lt l oo lmpottoot foctot lo
eocootoqloq lovetmeot ooJ ptomotloq boloe 1e eoqloe of ptoqte moy come to o
cteecloq olt lf te Jellvety of electtlc powet l lmpolteJ lllloo of peo woolJ be lot o o
teolt of powet ootoqe ot ootelloble electtlc powet etvlce 1he SLaLe Lhru Lhe L8C should be
able Lo exerclse lLs pollce power wlLh greaL flexlblllLy when Lhe need arlses
1hls was relLeraLed ln Notloool Aoclotloo of lecttlclty ooomet fot kefotm v oetqy
keqolototy ommlloo
63
where Lhe CourL held LhaL Lhe L8C as regulaLor should have
sufflclenL power Lo respond ln real Llme Lo changes wroughL by mulLlfarlous facLors affecLlng
publlc uLlllLles
lrom Lhe foregolng dlsqulslLlons we Lherefore hold LhaL Lhere ls no undue delegaLlon of
leglslaLlve power Lo Lhe L8C
eLlLloners falled Lo pursue ln Lhelr Memorandum Lhe conLenLlon ln Lhe ComplalnL LhaL Lhe
lmposlLlon of Lhe unlversal Charge on all endusers ls oppresslve and conflscaLory and
amounLs Lo LaxaLlon wlLhouL represenLaLlon Pence such conLenLlon ls deemed walved or
18

abandoned per 8esoluLlon
64
of AugusL 3 2004
63
Moreover Lhe deLermlnaLlon of wheLher or
noL a Lax ls excesslve oppresslve or conflscaLory ls an lssue whlch essenLlally lnvolves
quesLlons of facL and Lhus Lhls CourL ls precluded from revlewlng Lhe same
66

As a penulLlmaLe sLaLemenL lL may be well Lo recall whaL Lhls CourL sald of Ll8A
Cne of Lhe landmark pleces of leglslaLlon enacLed by Congress ln recenL years ls Lhe Ll8A lL
esLabllshed a new pollcy legal sLrucLure and regulaLory framework for Lhe elecLrlc power
lndusLry 1he new LhrusL ls Lo Lap prlvaLe caplLal for Lhe expanslon and lmprovemenL of Lhe
lndusLry as Lhe large governmenL debL and Lhe hlghly caplLallnLenslve characLer of Lhe
lndusLry lLself have long been acknowledged as Lhe crlLlcal consLralnLs Lo Lhe program 1o
aLLracL prlvaLe lnvesLmenL largely forelgn Lhe [aded sLrucLure of Lhe lndusLry had Lo be
addressed Whlle Lhe generaLlon and Lransmlsslon secLors were cenLrallzed and monopollsLlc
Lhe dlsLrlbuLlon slde was fragmenLed wlLh over 130 uLlllLles mosLly small and uneconomlc
1he pervaslve flaws have caused a low uLlllzaLlon of exlsLlng generaLlon capaclLy exLremely
hlgh and uncompeLlLlve power raLes poor quallLy of servlce Lo consumers dlsmal Lo
forgeLLable performance of Lhe governmenL power secLor hlgh sysLem losses and an lnablllLy
Lo develop a clear sLraLegy for overcomlng Lhese shorLcomlngs
1hus Lhe Ll8A provldes a framework for Lhe resLrucLurlng of Lhe lndusLry lncludlng Lhe
prlvaLlzaLlon of Lhe asseLs of Lhe naLlonal ower CorporaLlon (nC) Lhe LranslLlon Lo a
compeLlLlve sLrucLure and Lhe dellneaLlon of Lhe roles of varlous governmenL agencles and
Lhe prlvaLe enLlLles 1he law ordalns Lhe dlvlslon of Lhe lndusLry lnLo four (4) dlsLlncL secLors
namely generaLlon Lransmlsslon dlsLrlbuLlon and supply
Corollarlly Lhe nC generaLlng planLs have Lo prlvaLlzed and lLs Lransmlsslon buslness spun
off and prlvaLlzed LhereafLer
67

llnally every law has ln lLs favor Lhe presumpLlon of consLlLuLlonallLy and Lo [usLlfy lLs
nulllflcaLlon Lhere musL be a clear and unequlvocal breach of Lhe ConsLlLuLlon and noL one
LhaL ls doubLful speculaLlve or argumenLaLlve
68
lndublLably peLlLloners falled Lo overcome
Lhls presumpLlon ln favor of Lhe Ll8A We flnd no clear vlolaLlon of Lhe ConsLlLuLlon whlch
would warranL a pronouncemenL LhaL Sec 34 of Lhe Ll8A and 8ule 18 of lLs l88 are
unconsLlLuLlonal and vold
WPL8LlC8L Lhe lnsLanL case ls hereby ulSMlSSLu for lack of merlL
SC C8uL8Lu
AN1CNIC LDUAkDC 8 NACUkA
AssoclaLe !usLlce

19

Gk No 1SS6S0 Iu|y 20 2006
MANILA IN1LkNA1ICNAL AIkCk1 AU1CkI1 peLlLloner
vs
CCUk1 CI ALALS CI1 CI AkAAUL CI1 MACk CI AkAAUL SANGGUNIANG
ANGLUNGSCD NG AkAAUL CI1 ASSLSSCk CI AkAAUL and CI1 1kLASUkLk CI
AkAAUL respondenLs
u L C l S l C n
CAkIC l
1he Antecedents
eLlLloner Manlla lnLernaLlonal AlrporL AuLhorlLy (MlAA) operaLes Lhe nlnoy Aqulno
lnLernaLlonal AlrporL (nAlA) Complex ln aranaque ClLy under LxecuLlve Crder no 903
oLherwlse known as Lhe kevleJ ottet of te Moollo lotetootloool Altpott Aototlty (MlAA
CharLer) LxecuLlve Crder no 903 was lssued on 21 !uly 1983 by Lhen resldenL lerdlnand L
Marcos SubsequenLly LxecuLlve Crder nos 909
1
and 298
2
amended Lhe MlAA CharLer
As operaLor of Lhe lnLernaLlonal alrporL MlAA admlnlsLers Lhe land lmprovemenLs and
equlpmenL wlLhln Lhe nAlA Complex 1he MlAA CharLer Lransferred Lo MlAA approxlmaLely
600 hecLares of land
3
lncludlng Lhe runways and bulldlngs (AlrporL Lands and 8ulldlngs)
Lhen under Lhe 8ureau of Alr 1ransporLaLlon
4
1he MlAA CharLer furLher provldes LhaL no
porLlon of Lhe land Lransferred Lo MlAA shall be dlsposed of Lhrough sale or any oLher mode
unless speclflcally approved by Lhe resldenL of Lhe hlllpplnes
3

Cn 21 March 1997 Lhe Cfflce of Lhe CovernmenL CorporaLe Counsel (CCCC) lssued Cplnlon
no 061 1he CCCC oplned LhaL Lhe Local CovernmenL Code of 1991 wlLhdrew Lhe exempLlon
from real esLaLe Lax granLed Lo MlAA under SecLlon 21 of Lhe MlAA CharLer 1hus MlAA
negoLlaLed wlLh respondenL ClLy of aranaque Lo pay Lhe real esLaLe Lax lmposed by Lhe ClLy
MlAA Lhen pald some of Lhe real esLaLe Lax already due
Cn 28 !une 2001 MlAA recelved llnal noLlces of 8eal LsLaLe 1ax uellnquency from Lhe ClLy of
aranaque for Lhe Laxable years 1992 Lo 2001 MlAAs real esLaLe Lax dellnquency ls broken
down as follows



1Ax
uLCLA8A1lCn
1AxA8LL ?LA8 1Ax uuL LnAL1? 1C1AL
L01601370 19922001 1933816000 1120108320 3078924320
L01601374 19922001 11168942490 6814947939 17983890449
L01601373 19922001 2027603800 1237183200 3264789000
L01601376 19922001 3814402800 3347771200 9362174000
L01601377 19922001 1813461463 1106318839 2919980324
L01601378 19922001 11110793040 6779468139 17890263199
L01601379 19922001 432234000 263736000 693970000
L01601380 19922001 777643600 474494400 1232138000
*L01601383 19982001 644481000 290016430 934497430
*L01601387 19982001 3487680000 369436000 3037136000
*L01601396 19982001 7324000 3383800 10909800
C8Anu 1C1AL 39243386193 23207086347 62430672342

19921997 81 was pald on uec 24 1997 as per C8#9476102 for 420702873
#9476101 for 2867648000
#9476103 for 4911300
6

Cn 17 !uly 2001 Lhe ClLy of aranaque Lhrough lLs ClLy 1reasurer lssued noLlces of levy and
warranLs of levy on Lhe AlrporL Lands and 8ulldlngs 1he Mayor of Lhe ClLy of aranaque
LhreaLened Lo sell aL publlc aucLlon Lhe AlrporL Lands and 8ulldlngs should MlAA fall Lo pay
Lhe real esLaLe Lax dellnquency MlAA Lhus soughL a clarlflcaLlon of CCCC Cplnlon no 061
20

Cn 9 AugusL 2001 Lhe CCCC lssued Cplnlon no 147 clarlfylng CCCC Cplnlon no 061 1he
CCCC polnLed ouL LhaL SecLlon 206 of Lhe Local CovernmenL Code requlres persons exempL
from real esLaLe Lax Lo show proof of exempLlon 1he CCCC oplned LhaL SecLlon 21 of Lhe
MlAA CharLer ls Lhe proof LhaL MlAA ls exempL from real esLaLe Lax
Cn 1 CcLober 2001 MlAA flled wlLh Lhe CourL of Appeals an orlglnal peLlLlon for prohlblLlon
and ln[uncLlon wlLh prayer for prellmlnary ln[uncLlon or Lemporary resLralnlng order 1he
peLlLlon soughL Lo resLraln Lhe ClLy of aranaque from lmposlng real esLaLe Lax on levylng
agalnsL and aucLlonlng for publlc sale Lhe AlrporL Lands and 8ulldlngs 1he peLlLlon was
dockeLed as CAC8 S no 66878
Cn 3 CcLober 2001 Lhe CourL of Appeals dlsmlssed Lhe peLlLlon because MlAA flled lL beyond
Lhe 60day reglemenLary perlod 1he CourL of Appeals also denled on 27 SepLember 2002
MlAAs moLlon for reconslderaLlon and supplemenLal moLlon for reconslderaLlon Pence
MlAA flled on 3 uecember 2002 Lhe presenL peLlLlon for revlew
7

Meanwhlle ln !anuary 2003 Lhe ClLy of aranaque posLed noLlces of aucLlon sale aL Lhe
8arangay Palls of 8arangays vlLalez SLo nlno and 1ambo aranaque ClLy ln Lhe publlc
markeL of 8arangay La PuerLa and ln Lhe maln lobby of Lhe aranaque ClLy Pall 1he ClLy of
aranaque publlshed Lhe noLlces ln Lhe 3 and 10 !anuary 2003 lssues of Lhe llllpploe uolly
lopoltet a newspaper of general clrculaLlon ln Lhe hlllpplnes 1he noLlces announced Lhe
publlc aucLlon sale of Lhe AlrporL Lands and 8ulldlngs Lo Lhe hlghesL bldder on 7 lebruary
2003 1000 am aL Lhe LeglslaLlve Sesslon Pall 8ulldlng of aranaque ClLy
A day before Lhe publlc aucLlon or on 6 lebruary 2003 aL 310 pm MlAA flled before Lhls
CourL an urgenL xlotte and 8elLeraLory MoLlon for Lhe lssuance of a 1emporary 8esLralnlng
Crder 1he moLlon soughL Lo resLraln respondenLs Lhe ClLy of aranaque ClLy Mayor of
aranaque 5ooqqoolooq looqlooqoJ ng aranaque ClLy 1reasurer of aranaque and Lhe
ClLy Assessor of aranaque (respondenLs) from aucLlonlng Lhe AlrporL Lands and
8ulldlngs
Cn 7 lebruary 2003 Lhls CourL lssued a Lemporary resLralnlng order (18C) effecLlve
lmmedlaLely 1he CourL ordered respondenLs Lo cease and deslsL from selllng aL publlc
aucLlon Lhe AlrporL Lands and 8ulldlngs 8espondenLs recelved Lhe 18C on Lhe same day LhaL
Lhe CourL lssued lL Powever respondenLs recelved Lhe 18C only aL 123 pm or Lhree hours
afLer Lhe concluslon of Lhe publlc aucLlon
Cn 10 lebruary 2003 Lhls CourL lssued a 8esoluLlon conflrmlng oooc pto tooc Lhe 18C
Cn 29 March 2003 Lhe CourL heard Lhe parLles ln oral argumenLs ln compllance wlLh Lhe
dlrecLlve lssued durlng Lhe hearlng MlAA respondenL ClLy of aranaque and Lhe SollclLor
Ceneral subsequenLly submlLLed Lhelr respecLlve Memoranda
MlAA admlLs LhaL Lhe MlAA CharLer has placed Lhe LlLle Lo Lhe AlrporL Lands and 8ulldlngs ln
Lhe name of MlAA Powever MlAA polnLs ouL LhaL lL cannoL clalm ownershlp over Lhese
properLles slnce Lhe real owner of Lhe AlrporL Lands and 8ulldlngs ls Lhe 8epubllc of Lhe
hlllpplnes 1he MlAA CharLer mandaLes MlAA Lo devoLe Lhe AlrporL Lands and 8ulldlngs for
Lhe beneflL of Lhe general publlc Slnce Lhe AlrporL Lands and 8ulldlngs are devoLed Lo publlc
use and publlc servlce Lhe ownershlp of Lhese properLles remalns wlLh Lhe SLaLe 1he AlrporL
Lands and 8ulldlngs are Lhus lnallenable and are noL sub[ecL Lo real esLaLe Lax by local
governmenLs
MlAA also polnLs ouL LhaL SecLlon 21 of Lhe MlAA CharLer speclflcally exempLs MlAA from Lhe
paymenL of real esLaLe Lax MlAA lnslsLs LhaL lL ls also exempL from real esLaLe Lax under
SecLlon 234 of Lhe Local CovernmenL Code because Lhe AlrporL Lands and 8ulldlngs are
owned by Lhe 8epubllc 1o [usLlfy Lhe exempLlon MlAA lnvokes Lhe prlnclple LhaL Lhe
governmenL cannoL Lax lLself MlAA polnLs ouL LhaL Lhe reason for Lax exempLlon of publlc
properLy ls LhaL lLs LaxaLlon would noL lnure Lo any publlc advanLage slnce ln such a case Lhe
Lax debLor ls also Lhe Lax credlLor
8espondenLs lnvoke SecLlon 193 of Lhe Local CovernmenL Code whlch express|y
w|thdrew Lhe Lax exempLlon prlvlleges of governmentowned andcontro||ed corporat|ons
upon Lhe effecLlvlLy of Lhe Local CovernmenL Code 8espondenLs also argue LhaL a baslc rule
of sLaLuLory consLrucLlon ls LhaL Lhe express menLlon of one person Lhlng or acL excludes all
oLhers An lnLernaLlonal alrporL ls noL among Lhe excepLlons menLloned ln SecLlon 193 of Lhe
Local CovernmenL Code 1hus respondenLs asserL LhaL MlAA cannoL clalm LhaL Lhe AlrporL
Lands and 8ulldlngs are exempL from real esLaLe Lax
8espondenLs also clLe Lhe rullng of Lhls CourL ln Mocton lnternotiono/ 4irport v
Morcos
8
where we held LhaL Lhe Local CovernmenL Code has wlLhdrawn Lhe exempLlon from
real esLaLe Lax granLed Lo lnLernaLlonal alrporLs 8espondenLs furLher argue LhaL slnce MlAA
has already pald some of Lhe real esLaLe Lax assessmenLs lL ls now esLopped from clalmlng
LhaL Lhe AlrporL Lands and 8ulldlngs are exempL from real esLaLe Lax
1he Issue
1hls peLlLlon ralses Lhe Lhreshold lssue of wheLher Lhe AlrporL Lands and 8ulldlngs of MlAA
are exempL from real esLaLe Lax under exlsLlng laws lf so exempL Lhen Lhe real esLaLe Lax
assessmenLs lssued by Lhe ClLy of aranaque and all proceedlngs Laken pursuanL Lo such
assessmenLs are vold ln such evenL Lhe oLher lssues ralsed ln Lhls peLlLlon become mooL
1he Courts ku||ng
We rule LhaL MlAAs AlrporL Lands and 8ulldlngs are exempL from real esLaLe Lax lmposed by
local governmenLs
21

lltt MlAA ls noL a governmenLowned or conLrolled corporaLlon buL an |nstrumenta||ty of
Lhe naLlonal CovernmenL and Lhus exempL from local LaxaLlon 5ecooJ Lhe real properLles of
MlAA are owned by the kepub||c of Lhe hlllpplnes and Lhus exempL from real esLaLe Lax
1 MIAA |s Not a GovernmentCwned or Contro||ed Corporat|on
8espondenLs argue LhaL MlAA belng a governmenLowned or conLrolled corporaLlon ls noL
exempL from real esLaLe Lax 8espondenLs clalm LhaL Lhe deleLlon of Lhe phrase any
governmenLowned or conLrolled so exempL by lLs charLer ln SecLlon 234(e) of Lhe Local
CovernmenL Code wlLhdrew Lhe real esLaLe Lax exempLlon of governmenLowned or
conLrolled corporaLlons 1he deleLed phrase appeared ln SecLlon 40(a) of Lhe 1974 8eal
roperLy 1ax Code enumeraLlng Lhe enLlLles exempL from real esLaLe Lax
1here ls no dlspuLe LhaL a governmenLowned or conLrolled corporaLlon ls noL exempL from
real esLaLe Lax Powever MlAA ls noL a governmenLowned or conLrolled corporaLlon SecLlon
2(13) of Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code of 1987 deflnes a
governmenLowned or conLrolled corporaLlon as follows
SLC 2 Ceoetol 1etm uefloeJ x x x x
(13) CovetomeotowoeJ ot coottolleJ cotpototloo refers Lo any agency organ|zed as a stock
or nonstock corporat|on vesLed wlLh funcLlons relaLlng Lo publlc needs wheLher
governmenLal or proprleLary ln naLure and owned by Lhe CovernmenL dlrecLly or Lhrough lLs
lnsLrumenLallLles elLher wholly or where appllcable as ln Lhe case of sLock corporaLlons Lo
Lhe exLenL of aL leasL flfLyone (31) percenL of lLs caplLal sLock x x x (Lmphasls supplled)
A governmenLowned or conLrolled corporaLlon musL be organ|zed as a stock or nonstock
corporat|on MlAA ls noL organlzed as a sLock or nonsLock corporaLlon MlAA ls noL a sLock
corporaLlon because lL has no cap|ta| stock d|v|ded |nto shares MlAA has no sLockholders or
voLlng shares SecLlon 10 of Lhe MlAA CharLer
9
provldes
SLC1lCn 10 opltol 1he caplLal of Lhe AuLhorlLy Lo be conLrlbuLed by Lhe naLlonal
CovernmenL shall be lncreased from 1wo and Cnehalf 8llllon (230000000000) esos Lo
1en 8llllon (1000000000000) esos Lo conslsL of
(a) 1he value of flxed asseLs lncludlng alrporL faclllLles runways and equlpmenL and such
oLher properLles movable and lmmovable whlch may be conLrlbuLed by Lhe naLlonal
CovernmenL or Lransferred by lL from any of lLs agencles Lhe valuaLlon of whlch shall be
deLermlned [olnLly wlLh Lhe ueparLmenL of 8udgeL and ManagemenL and Lhe Commlsslon on
AudlL on Lhe daLe of such conLrlbuLlon or Lransfer afLer maklng due allowances for
depreclaLlon and oLher deducLlons Laklng lnLo accounL Lhe loans and oLher llablllLles of Lhe
AuLhorlLy aL Lhe Llme of Lhe Lakeover of Lhe asseLs and oLher properLles
(b) 1haL Lhe amounL of 603 mllllon as of uecember 31 1986 represenLlng abouL sevenLy
percenLum (70) of Lhe unremlLLed share of Lhe naLlonal CovernmenL from 1983 Lo 1986 Lo
be remlLLed Lo Lhe naLlonal 1reasury as provlded for ln SecLlon 11 of L C no 903 as
amended shall be converLed lnLo Lhe equlLy of Lhe naLlonal CovernmenL ln Lhe AuLhorlLy
1hereafLer Lhe CovernmenL conLrlbuLlon Lo Lhe caplLal of Lhe AuLhorlLy shall be provlded ln
Lhe Ceneral ApproprlaLlons AcL
Clearly under lLs CharLer MlAA does noL have caplLal sLock LhaL ls dlvlded lnLo shares
SecLlon 3 of Lhe CorporaLlon Code
10
deflnes a sLock corporaLlon as one whose cap|ta| stock |s
d|v|ded |nto shares and x x x author|zed to d|str|bute to the ho|ders of such shares d|v|dends
x x x MlAA has caplLal buL lL ls noL dlvlded lnLo shares of sLock MlAA has no sLockholders or
voLlng shares Pence MlAA ls noL a sLock corporaLlon
MlAA ls also noL a nonsLock corporaLlon because lL has no members SecLlon 87 of Lhe
CorporaLlon Code deflnes a nonsLock corporaLlon as one where no parL of lLs lncome ls
dlsLrlbuLable as dlvldends Lo lLs members LrusLees or offlcers A nonsLock corporaLlon musL
have members Lven lf we assume LhaL Lhe CovernmenL ls consldered as Lhe sole member of
MlAA Lhls wlll noL make MlAA a nonsLock corporaLlon nonsLock corporaLlons cannoL
dlsLrlbuLe any parL of Lhelr lncome Lo Lhelr members SecLlon 11 of Lhe MlAA CharLer
mandaLes MlAA Lo remlL 20 of lLs annual gross operaLlng lncome Lo Lhe naLlonal
1reasury
11
1hls prevenLs MlAA from quallfylng as a nonsLock corporaLlon
SecLlon 88 of Lhe CorporaLlon Code provldes LhaL nonsLock corporaLlons are organlzed for
charlLable rellglous educaLlonal professlonal culLural recreaLlonal fraLernal llLerary
sclenLlflc soclal clvll servlce or slmllar purposes llke Lrade lndusLry agrlculLure and llke
chambers MlAA ls noL organlzed for any of Lhese purposes MlAA a publlc uLlllLy ls
organlzed Lo operaLe an lnLernaLlonal and domesLlc alrporL for publlc use
Slnce MlAA ls nelLher a sLock nor a nonsLock corporaLlon MlAA does noL quallfy as a
governmenLowned or conLrolled corporaLlon WhaL Lhen ls Lhe legal sLaLus of MlAA wlLhln
Lhe naLlonal CovernmenL?
MlAA ls a government |nstrumenta||ty vesLed wlLh corporaLe powers Lo perform efflclenLly
lLs governmenLal funcLlons MlAA ls llke any oLher governmenL lnsLrumenLallLy Lhe only
dlfference ls LhaL MlAA ls vesLed wlLh corporaLe powers SecLlon 2(10) of Lhe lnLroducLory
rovlslons of Lhe AdmlnlsLraLlve Code deflnes a governmenL |nstrumenta||ty as follows
SLC 2 Ceoetol 1etm uefloeJ x x x x
(10) lottomeotollty refers Lo any agency of Lhe naLlonal CovernmenL noL lnLegraLed wlLhln
Lhe deparLmenL framework vesLed wlLh speclal funcLlons or [urlsdlcLlon by law endowed
22

w|th some |f not a|| corporate powers admlnlsLerlng speclal funds and en[oylng operaLlonal
auLonomy usually Lhrough a charLer x x x (Lmphasls supplled)
When Lhe law vesLs ln a governmenL lnsLrumenLallLy corporaLe powers Lhe lnsLrumenLallLy
does noL become a corporaLlon unless Lhe governmenL lnsLrumenLallLy ls organlzed as a
sLock or nonsLock corporaLlon lL remalns a governmenL lnsLrumenLallLy exerclslng noL only
governmenLal buL also corporaLe powers 1hus MlAA exerclses Lhe governmenLal powers of
emlnenL domaln
12
pollce auLhorlLy
13
and Lhe levylng of fees and charges
14
AL Lhe same Llme
MlAA exerclses all Lhe powers of a corporaLlon under Lhe CorporaLlon Law lnsofar as Lhese
powers are noL lnconslsLenL wlLh Lhe provlslons of Lhls LxecuLlve Crder
13

Llkewlse when Lhe law makes a governmenL lnsLrumenLallLy operat|ona||y autonomous Lhe
lnsLrumenLallLy remalns parL of Lhe naLlonal CovernmenL machlnery alLhough noL lnLegraLed
wlLh Lhe deparLmenL framework 1he MlAA CharLer expressly sLaLes LhaL Lransformlng MlAA
lnLo a separaLe and auLonomous body
16
wlll make lLs operaLlon more flnanclally vlable
17

Many governmenL lnsLrumenLallLles are vesLed wlLh corporaLe powers buL Lhey do noL
become sLock or nonsLock corporaLlons whlch ls a necessary condlLlon before an agency or
lnsLrumenLallLy ls deemed a governmenLowned or conLrolled corporaLlon Lxamples are Lhe
MacLan lnLernaLlonal AlrporL AuLhorlLy Lhe hlllpplne orLs AuLhorlLy Lhe unlverslLy of Lhe
hlllpplnes and ooqko 5eottol oq llllploo All Lhese governmenL lnsLrumenLallLles exerclse
corporaLe powers buL Lhey are noL organlzed as sLock or nonsLock corporaLlons as requlred
by SecLlon 2(13) of Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code 1hese governmenL
lnsLrumenLallLles are someLlmes loosely called governmenL corporaLe enLlLles Powever Lhey
are noL governmenLowned or conLrolled corporaLlons ln Lhe sLrlcL sense as undersLood under
Lhe AdmlnlsLraLlve Code whlch ls Lhe governlng law deflnlng Lhe legal relaLlonshlp and sLaLus
of governmenL enLlLles
A governmenL |nstrumenta||ty llke MlAA falls under SecLlon 133(o) of Lhe Local CovernmenL
Code whlch sLaLes
SLC 133 ommoo llmltotloo oo te 1oxloq lowet of locol Covetomeot uolt Un|ess
otherw|se prov|ded here|n the exerc|se of the tax|ng powers of prov|nces c|t|es
mun|c|pa||t|es and barangays sha|| not extend to the |evy of the fo||ow|ng
x x x x
(o) 1axes fees or charges of any k|nd on the Nat|ona| Government |ts agenc|es and
|nstrumenta||t|es and local governmenL unlLs(Lmphasls and underscorlng supplled)
SecLlon 133(o) recognlzes Lhe baslc prlnclple LhaL local governmenLs cannoL Lax Lhe naLlonal
governmenL whlch hlsLorlcally merely delegaLed Lo local governmenLs Lhe power Lo Lax
Whlle Lhe 1987 ConsLlLuLlon now lncludes LaxaLlon as one of Lhe powers of local
governmenLs local governmenLs may only exerclse such power sub[ecL Lo such guldellnes
and llmlLaLlons as Lhe Congress may provlde
18

When local governmenLs lnvoke Lhe power Lo Lax on naLlonal governmenL lnsLrumenLallLles
such power ls consLrued sLrlcLly agalnsL local governmenLs 1he rule ls LhaL a Lax ls never
presumed and Lhere musL be clear language ln Lhe law lmposlng Lhe Lax Any doubL wheLher a
person arLlcle or acLlvlLy ls Laxable ls resolved agalnsL LaxaLlon 1hls rule applles wlLh greaLer
force when local governmenLs seek Lo Lax naLlonal governmenL lnsLrumenLallLles
AnoLher rule ls LhaL a Lax exempLlon ls sLrlcLly consLrued agalnsL Lhe Laxpayer clalmlng Lhe
exempLlon Powever when Congress granLs an exempLlon Lo a naLlonal governmenL
lnsLrumenLallLy from local LaxaLlon such exempLlon ls consLrued llberally ln favor of Lhe
naLlonal governmenL lnsLrumenLallLy As Lhls CourL declared ln Mocedo v Mocoroiq lr
1he reason for Lhe rule does noL apply ln Lhe case of exempLlons runnlng Lo Lhe beneflL of Lhe
governmenL lLself or lLs agencles ln such case Lhe pracLlcal effecL of an exempLlon ls merely
Lo reduce Lhe amounL of money LhaL has Lo be handled by governmenL ln Lhe course of lLs
operaLlons lor Lhese reasons provlslons granLlng exempLlons Lo governmenL agencles may
be consLrued llberally ln favor of non LaxllablllLy of such agencles
19

1here ls moreover no polnL ln naLlonal and local governmenLs Laxlng each oLher unless a
sound and compelllng pollcy requlres such Lransfer of publlc funds from one governmenL
pockeL Lo anoLher
1here ls also no reason for local governmenLs Lo Lax naLlonal governmenL lnsLrumenLallLles
for renderlng essenLlal publlc servlces Lo lnhablLanLs of local governmenLs 1he on|y
except|on |s when the |eg|s|ature c|ear|y |ntended to tax government |nstrumenta||t|es for
the de||very of essent|a| pub||c serv|ces for sound and compe|||ng po||cy cons|derat|ons
1here musL be express language ln Lhe law empowerlng local governmenLs Lo Lax naLlonal
governmenL lnsLrumenLallLles Any doubL wheLher such power exlsLs ls resolved agalnsL local
governmenLs
1hus SecLlon 133 of Lhe Local CovernmenL Code sLaLes LhaL un|ess otherw|se prov|ded ln
Lhe Code local governmenLs cannoL Lax naLlonal governmenL lnsLrumenLallLles As Lhls CourL
held ln osco v Phi/ippine 4musements ond 6ominq corporotion
1he sLaLes have no power by LaxaLlon or oLherwlse Lo reLard lmpede burden or ln any
manner conLrol Lhe operaLlon of consLlLuLlonal laws enacLed by Congress Lo carry lnLo
execuLlon Lhe powers vesLed ln Lhe federal governmenL (MC Culloch v Maryland 4 WheaL
316 4 L Ld 379)
23

1hls docLrlne emanaLes from Lhe supremacy of Lhe naLlonal CovernmenL over local
governmenLs
!usLlce Polmes speaklng for Lhe Supreme CourL made reference Lo Lhe enLlre absence of
power on Lhe parL of Lhe SLaLes Lo Louch ln LhaL way (LaxaLlon) aL leasL Lhe lnsLrumenLallLles
of Lhe unlLed SLaLes (!ohnson v Maryland 234 uS 31) and lL can be agreed LhaL oo tote ot
polltlcol obJlvlloo coo teqolote o feJetol lottomeotollty lo oc o woy o to pteveot lt ftom
cooommotloq lt feJetol tepoolbllltle ot eveo to etlooly botJeo lt lo te occompllmeot
of tem (AnLleau Modern ConsLlLuLlonal Law vol 2 p 140 emphasls supplled)
CLherwlse mere creaLures of Lhe SLaLe can defeaL naLlonal pollcles Lhru exLermlnaLlon of
whaL local auLhorlLles may percelve Lo be undeslrable acLlvlLles or enLerprlse uslng Lhe power
Lo Lax as a Lool for regulaLlon (uS v Sanchez 340 uS 42)
1he power Lo Lax whlch was called by !usLlce Marshall as Lhe power Lo desLroy (Mc Culloch
v Maryland supra) cannoL be allowed Lo defeaL an lnsLrumenLallLy or creaLlon of Lhe very
enLlLy whlch has Lhe lnherenL power Lo wleld lL
20

2 A|rport Lands and 8u||d|ngs of MIAA are Cwned by the kepub||c
a A|rport Lands and 8u||d|ngs are of ub||c Dom|n|on
1he AlrporL Lands and 8ulldlngs of MlAA are properLy of pub||c dom|n|on and therefore
owned by the State or the kepub||c of the h|||pp|nes 1he Clvll Code provldes
A81lCLL 419 roperLy ls elLher of publlc domlnlon or of prlvaLe ownershlp
A81lCLL 420 1he fo||ow|ng th|ngs are property of pub||c dom|n|on
(1) 1hose |ntended for pub||c use such as roads cana|s r|vers torrents ports and br|dges
constructed by the State banks shores roadsLeads and oLhers of slmllar characLer
(2) 1hose whlch belong Lo Lhe SLaLe wlLhouL belng for publlc use and are lnLended for some
publlc servlce or for Lhe developmenL of Lhe naLlonal wealLh (Lmphasls supplled)
A81lCLL 421 All oLher properLy of Lhe SLaLe whlch ls noL of Lhe characLer sLaLed ln Lhe
precedlng arLlcle ls paLrlmonlal properLy
A81lCLL 422 roperLy of publlc domlnlon when no longer lnLended for publlc use or for
publlc servlce shall form parL of Lhe paLrlmonlal properLy of Lhe SLaLe
no one can dlspuLe LhaL properLles of publlc domlnlon menLloned ln ArLlcle 420 of Lhe Clvll
Code llke roads cana|s r|vers torrents ports and br|dges constructed by the State are
owned by Lhe SLaLe 1he term ports |nc|udes seaports and a|rports 1he MlAA AlrporL
Lands and 8ulldlngs consLlLuLe a port consLrucLed by Lhe SLaLe under ArLlcle 420 of Lhe Clvll
Code Lhe MlAA AlrporL Lands and 8ulldlngs are properLles of publlc domlnlon and Lhus
owned by Lhe SLaLe or Lhe 8epubllc of Lhe hlllpplnes
1he AlrporL Lands and 8ulldlngs are devoLed Lo publlc use because Lhey are used by the
pub||c for |nternat|ona| and domest|c trave| and transportat|on 1he facL LhaL Lhe MlAA
collecLs Lermlnal fees and oLher charges from Lhe publlc does noL remove Lhe characLer of Lhe
AlrporL Lands and 8ulldlngs as properLles for publlc use 1he operaLlon by Lhe governmenL of
a Lollway does noL change Lhe characLer of Lhe road as one for publlc use Someone musL pay
for Lhe malnLenance of Lhe road elLher Lhe publlc lndlrecLly Lhrough Lhe Laxes Lhey pay Lhe
governmenL or only Lhose among Lhe publlc who acLually use Lhe road Lhrough Lhe Loll fees
Lhey pay upon uslng Lhe road 1he Lollway sysLem ls even a more efflclenL and equlLable
manner of Laxlng Lhe publlc for Lhe malnLenance of publlc roads
1he charglng of fees Lo Lhe publlc does noL deLermlne Lhe characLer of Lhe properLy wheLher
lL ls of publlc domlnlon or noL ArLlcle 420 of Lhe Clvll Code deflnes properLy of publlc
domlnlon as one lnLended for publlc use Lven lf Lhe governmenL collecLs Loll fees Lhe road
ls sLlll lnLended for publlc use lf anyone can use Lhe road under Lhe same Lerms and
condlLlons as Lhe resL of Lhe publlc 1he charglng of fees Lhe llmlLaLlon on Lhe klnd of vehlcles
LhaL can use Lhe road Lhe speed resLrlcLlons and oLher condlLlons for Lhe use of Lhe road do
noL affecL Lhe publlc characLer of Lhe road
1he Lermlnal fees MlAA charges Lo passengers as well as Lhe landlng fees MlAA charges Lo
alrllnes consLlLuLe Lhe bulk of Lhe lncome LhaL malnLalns Lhe operaLlons of MlAA 1he
collecLlon of such fees does noL change Lhe characLer of MlAA as an alrporL for publlc use
Such fees are ofLen Lermed users Lax 1hls means Laxlng Lhose among Lhe publlc who acLually
use a publlc faclllLy lnsLead of Laxlng all Lhe publlc lncludlng Lhose who never use Lhe
parLlcular publlc faclllLy A users Lax ls more equlLable a prlnclple of LaxaLlon mandaLed ln
Lhe 1987 ConsLlLuLlon
21

1he AlrporL Lands and 8ulldlngs of MlAA whlch lLs CharLer calls Lhe prlnclpal alrporL of Lhe
hlllpplnes for boLh lnLernaLlonal and domesLlc alr Lrafflc
22
are properLles of publlc
domlnlon because Lhey are lnLended for publlc use As propert|es of pub||c dom|n|on they
|nd|sputab|y be|ong to the State or the kepub||c of the h|||pp|nes
b A|rport Lands and 8u||d|ngs are Cuts|de the Commerce of Man
1he AlrporL Lands and 8ulldlngs of MlAA are devoLed Lo publlc use and Lhus are properLles of
publlc domlnlon As propert|es of pub||c dom|n|on the A|rport Lands and 8u||d|ngs are
outs|de the commerce of man 1he CourL has ruled repeaLedly LhaL properLles of publlc
domlnlon are ouLslde Lhe commerce of man As early as 1913 Lhls CourL already ruled
24

ln Municipo/ity of covite v ojos LhaL properLles devoLed Lo publlc use are ouLslde Lhe
commerce of man Lhus
Accordlng Lo arLlcle 344 of Lhe Clvll Code roperLy for publlc use ln provlnces and ln Lowns
comprlses Lhe provlnclal and Lown roads Lhe squares sLreeLs founLalns and publlc waLers
Lhe promenades and publlc works of general servlce supporLed by sald Lowns or provlnces
1he sald laza Soledad belng a promenade for publlc use Lhe munlclpal councll of CavlLe
could noL ln 1907 wlLhdraw or exclude from publlc use a porLlon Lhereof ln order Lo lease lL
for Lhe sole beneflL of Lhe defendanL Pllarla 8o[as ln leaslng a porLlon of sald plaza or publlc
place Lo Lhe defendanL for prlvaLe use Lhe plalnLlff munlclpallLy exceeded lLs auLhorlLy ln Lhe
exerclse of lLs powers by execuLlng a conLracL over a Lhlng of whlch lL could noL dlspose nor ls
lL empowered so Lo do
1he Clvll Code arLlcle 1271 prescrlbes LhaL everyLhlng whlch ls noL ouLslde Lhe commerce of
man may be Lhe ob[ecL of a conLracL and plazas and sLreeLs are outs|de of th|s commerce as
was declded by Lhe supreme courL of Spaln ln lLs declslon of lebruary 12 1893 whlch says
Communa| th|ngs that cannot be so|d because they are by the|r very nature outs|de of
commerce are those for pub||c use such as the p|azas streets common |ands r|vers
founta|ns etc (Lmphasls supplled)
23

Agaln ln spiritu v Municipo/ counci/ Lhe CourL declared LhaL properLles of publlc domlnlon
are ouLslde Lhe commerce of man
xxx 1own plazas are propert|es of pub||c dom|n|on Lo be devoLed Lo publlc use and Lo be
made avallable Lo Lhe publlc ln general 1hey are outs|de the commerce of man and cannoL
be dlsposed of or even leased by Lhe munlclpallLy Lo prlvaLe parLles Whlle ln case of war or
durlng an emergency Lown plazas may be occupled Lemporarlly by prlvaLe lndlvlduals as was
done and as was LoleraLed by Lhe MunlclpallLy of ozorrublo when Lhe emergency has
ceased sald Lemporary occupaLlon or use musL also cease and Lhe Lown offlclals should see
Lo lL LhaL Lhe Lown plazas should ever be kepL open Lo Lhe publlc and free from encumbrances
or lllegal prlvaLe consLrucLlons
24
(Lmphasls supplled)
1he CourL has also ruled LhaL properLy of publlc domlnlon belng ouLslde Lhe commerce of
man cannoL be Lhe sub[ecL of an aucLlon sale
23

roperLles of publlc domlnlon belng for publlc use are noL sub[ecL Lo levy encumbrance or
dlsposlLlon Lhrough publlc or prlvaLe sale Any encumbrance levy on execuLlon or aucLlon
sale of any properLy of publlc domlnlon ls vold for belng conLrary Lo publlc pollcy LssenLlal
publlc servlces wlll sLop lf properLles of publlc domlnlon are sub[ecL Lo encumbrances
foreclosures and aucLlon sale 1hls wlll happen lf Lhe ClLy of aranaque can foreclose and
compel Lhe aucLlon sale of Lhe 600hecLare runway of Lhe MlAA for nonpaymenL of real
esLaLe Lax
8efore MlAA can encumber
26
Lhe AlrporL Lands and 8ulldlngs Lhe resldenL musL
flrsL w|thdraw from pub||c use Lhe AlrporL Lands and 8ulldlngs SecLlons 83 and 88 of Lhe
ubllc Land Law or CommonwealLh AcL no 141 whlch remalns Lo Lhls day Lhe exlsLlng
general law governlng Lhe classlflcaLlon and dlsposlLlon of lands of Lhe publlc domaln oLher
Lhan Llmber and mlneral lands
27
provlde
SLC1lCn 83 upon Lhe recommendaLlon of Lhe SecreLary of AgrlculLure and naLural
8esources Lhe resldenL may deslgnaLe by proclamaLlon any LracL or LracLs of land of Lhe
publlc domaln as reservaLlons for Lhe use of Lhe 8epubllc of Lhe hlllpplnes or of any of lLs
branches or of Lhe lnhablLanLs Lhereof ln accordance wlLh regulaLlons prescrlbed for Lhls
purposes or for quaslpubllc uses or purposes when Lhe publlc lnLeresL requlres lL lncludlng
reservaLlons for hlghways rlghLs of way for rallroads hydraullc power slLes lrrlgaLlon
sysLems communal pasLures or lequas communales publlc parks publlc quarrles publlc
flshponds worklng mens vlllage and oLher lmprovemenLs for Lhe publlc beneflL
SLC1lCn 88 1he tract or tracts of |and reserved under the prov|s|ons of Sect|on e|ghtythree
sha|| be nona||enab|e and sha|| not be sub[ect to occupat|on entry sa|e |ease or other
d|spos|t|on unt|| aga|n dec|ared a||enab|e under the prov|s|ons of th|s Act or by
proc|amat|on of the res|dent (Lmphasls and underscorlng supplled)
1hus unless Lhe resldenL lssues a proclamaLlon wlLhdrawlng Lhe AlrporL Lands and 8ulldlngs
from publlc use Lhese properLles remaln properLles of publlc domlnlon and are |na||enab|e
Slnce Lhe AlrporL Lands and 8ulldlngs are lnallenable ln Lhelr presenL sLaLus as properLles of
publlc domlnlon Lhey are noL sub[ecL Lo levy on execuLlon or foreclosure sale As long as Lhe
AlrporL Lands and 8ulldlngs are reserved for publlc use Lhelr ownershlp remalns wlLh Lhe
SLaLe or Lhe 8epubllc of Lhe hlllpplnes
1he auLhorlLy of Lhe resldenL Lo reserve lands of Lhe publlc domaln for publlc use and Lo
wlLhdraw such publlc use ls relLeraLed ln SecLlon 14 ChapLer 4 1lLle l 8ook lll of Lhe
AdmlnlsLraLlve Code of 1987 whlch sLaLes
SLC 14 lowet to keetve looJ of te lobllc ooJ ltlvote uomolo of te Covetomeot
(1) 1he res|dent sha|| have the power to reserve for sett|ement or pub||c use and for
spec|f|c pub||c purposes any of the |ands of the pub||c doma|n the use of wh|ch |s not
otherw|se d|rected by |aw 1he reserved |and sha|| thereafter rema|n sub[ect to the spec|f|c
pub||c purpose |nd|cated unt|| otherw|se prov|ded by |aw or proc|amat|on
x x x x (Lmphasls supplled)
23

1here ls no quesLlon Lherefore LhaL unless Lhe AlrporL Lands and 8ulldlngs are wlLhdrawn by
law or presldenLlal proclamaLlon from publlc use Lhey are properLles of publlc domlnlon
owned by Lhe 8epubllc and ouLslde Lhe commerce of man
c MIAA |s a Mere 1rustee of the kepub||c
MlAA ls merely holdlng LlLle Lo Lhe AlrporL Lands and 8ulldlngs ln LrusL for Lhe 8epubllc
SecLlon 48 ChapLer 12 8ook l of the Adm|n|strat|ve Code a||ows |nstrumenta||t|es ||ke MIAA
to ho|d t|t|e to rea| propert|es owned by the kepub||c Lhus
SLC 48 Offlclol AototlzeJ to oovey keol ltopetty Whenever real properLy of Lhe
CovernmenL ls auLhorlzed by law Lo be conveyed Lhe deed of conveyance shall be execuLed
ln behalf of Lhe governmenL by Lhe followlng
(1) lor properLy belonglng Lo and LlLled ln Lhe name of Lhe 8epubllc of Lhe hlllpplnes by Lhe
resldenL unless Lhe auLhorlLy Lherefor ls expressly vesLed by law ln anoLher offlcer
(2) Ior property be|ong|ng to the kepub||c of the h|||pp|nes but t|t|ed |n the name of any
po||t|ca| subd|v|s|on or of any corporate agency or |nstrumenta||ty by Lhe execuLlve head of
Lhe agency or lnsLrumenLallLy (Lmphasls supplled)
ln MlAAs case lLs sLaLus as a mere LrusLee of Lhe AlrporL Lands and 8ulldlngs ls clearer
because even lLs execuLlve head cannoL slgn Lhe deed of conveyance on behalf of Lhe
8epubllc Cnly Lhe resldenL of Lhe 8epubllc can slgn such deed of conveyance
28

d 1ransfer to MIAA was Meant to Imp|ement a keorgan|zat|on
1he MlAA CharLer whlch ls a law Lransferred Lo MlAA Lhe LlLle Lo Lhe AlrporL Lands and
8ulldlngs from Lhe 8ureau of Alr 1ransporLaLlon of Lhe ueparLmenL of 1ransporLaLlon and
CommunlcaLlons 1he MlAA CharLer provldes
SLC1lCn 3 teotloo of te Moollo lotetootloool Altpott Aototlty x x x x
1he |and where the A|rport |s present|y |ocated as we|| as the surround|ng |and area of
approx|mate|y s|x hundred hectares are hereby transferred conveyed and ass|gned to the
ownersh|p and adm|n|strat|on of the Author|ty sub[ect to ex|st|ng r|ghts |f any 1he 8ureau
of Lands and oLher approprlaLe governmenL agencles shall underLake an acLual survey of Lhe
area Lransferred wlLhln one year from Lhe promulgaLlon of Lhls LxecuLlve Crder and Lhe
correspondlng LlLle Lo be lssued ln Lhe name of Lhe AuLhorlLy Any port|on thereof sha|| not
be d|sposed through sa|e or through any other mode un|ess spec|f|ca||y approved by the
res|dent of the h|||pp|nes (Lmphasls supplled)
SLC1lCn 22 1toofet of xltloq locllltle ooJ lotooqlble Aet All exlsLlng pub||c a|rport
fac|||t|es runways |ands bu||d|ngs and other property movable or lmmovable belonglng Lo
Lhe AlrporL and all asseLs powers rlghLs lnLeresLs and prlvlleges be|ong|ng to the 8ureau of
A|r 1ransportat|on relaLlng Lo alrporL works or alr operaLlons lncludlng all equlpmenL whlch
are necessary for Lhe operaLlon of crash flre and rescue faclllLles are hereby Lransferred Lo
Lhe AuLhorlLy (Lmphasls supplled)
SLC1lCn 23 Abolltloo of te Moollo lotetootloool Altpott o o ulvlloo lo te oteoo of Alt
1toopottotloo ooJ 1tooltoty ltovlloo 1he Manlla lnLernaLlonal AlrporL lncludlng Lhe
Manlla uomesLlc AlrporL as a dlvlslon under Lhe 8ureau of Alr 1ransporLaLlon ls hereby
abollshed
x x x x
1he MlAA CharLer Lransferred Lhe AlrporL Lands and 8ulldlngs Lo MlAA wlLhouL Lhe 8epubllc
recelvlng cash promlssory noLes or even sLock slnce MlAA ls noL a sLock corporaLlon
1he whereas clauses of Lhe MlAA CharLer explaln Lhe raLlonale for Lhe Lransfer of Lhe AlrporL
Lands and 8ulldlngs Lo MlAA Lhus
WPL8LAS Lhe Manlla lnLernaLlonal AlrporL as Lhe prlnclpal alrporL of Lhe hlllpplnes for boLh
lnLernaLlonal and domesLlc alr Lrafflc ls requlred Lo provlde sLandards of alrporL
accommodaLlon and servlce comparable wlLh Lhe besL alrporLs ln Lhe world
WPL8LAS domesLlc and oLher Lermlnals general avlaLlon and oLher faclllLles have Lo be
upgraded Lo meeL Lhe currenL and fuLure alr Lrafflc and oLher demands of avlaLlon ln MeLro
Manlla
WPL8LAS a managemenL and organlzaLlon sLudy has lndlcaLed LhaL the ob[ect|ves of
prov|d|ng h|gh standards of accommodat|on and serv|ce w|th|n the context of a f|nanc|a||y
v|ab|e operat|on w||| best be ach|eved by a separate and autonomous body and
WPL8LAS under resldenLlal uecree no 1416 as amended by resldenLlal uecree no 1772
Lhe resldenL of Lhe hlllpplnes ls glven conLlnulng auLhorlLy to reorgan|ze the Nat|ona|
Government wh|ch author|ty |nc|udes the creat|on of new ent|t|es agenc|es and
|nstrumenta||t|es of the Government (Lmphasls supplled)
1he Lransfer of Lhe AlrporL Lands and 8ulldlngs from Lhe 8ureau of Alr 1ransporLaLlon Lo MlAA
was noL meanL Lo Lransfer beneflclal ownershlp of Lhese asseLs from Lhe 8epubllc Lo MlAA
1he purpose was merely Lo reorgan|ze a d|v|s|on |n the 8ureau of A|r 1ransportat|on |nto a
separate and autonomous body 1he 8epubllc remalns Lhe beneflclal owner of Lhe AlrporL
26

Lands and 8ulldlngs MlAA lLself ls owned solely by Lhe 8epubllc no parLy clalms any
ownershlp rlghLs over MlAAs asseLs adverse Lo Lhe 8epubllc
1he MlAA CharLer expressly provldes LhaL Lhe AlrporL Lands and 8ulldlngs sha|| not be
d|sposed through sa|e or through any other mode un|ess spec|f|ca||y approved by the
res|dent of the h|||pp|nes 1hls only means LhaL Lhe 8epubllc reLalned Lhe beneflclal
ownershlp of Lhe AlrporL Lands and 8ulldlngs because under ArLlcle 428 of Lhe Clvll Code only
Lhe owner has Lhe rlghL Lo x x x dlspose of a Lhlng Slnce MlAA cannoL dlspose of Lhe AlrporL
Lands and 8ulldlngs MlAA does noL own Lhe AlrporL Lands and 8ulldlngs
AL any Llme Lhe resldenL can Lransfer back Lo Lhe 8epubllc LlLle Lo Lhe AlrporL Lands and
8ulldlngs wlLhouL Lhe 8epubllc paylng MlAA any conslderaLlon under SecLlon 3 of Lhe MlAA
CharLer Lhe resldenL ls Lhe only one who can auLhorlze Lhe sale or dlsposlLlon of Lhe AlrporL
Lands and 8ulldlngs 1hls only conflrms LhaL Lhe AlrporL Lands and 8ulldlngs belong Lo Lhe
8epubllc
e kea| roperty Cwned by the kepub||c |s Not 1axab|e
SecLlon 234(a) of Lhe Local CovernmenL Code exempLs from real esLaLe Lax any real
properLy owned by Lhe 8epubllc of Lhe hlllpplnes SecLlon 234(a) provldes
SLC 234 xemptloo ftom keol ltopetty 1ox 1he fo||ow|ng are exempted from payment
of the rea| property tax
(a) kea| property owned by the kepub||c of the h|||pp|nes or any of |ts po||t|ca| subd|v|s|ons
except when the benef|c|a| use thereof has been granted for cons|derat|on or otherw|se to
a taxab|e person
x x x (Lmphasls supplled)
1hls exempLlon should be read ln relaLlon wlLh SecLlon 133(o) of Lhe same Code whlch
prohlblLs local governmenLs from lmposlng Laxes fees or charges of any klnd on Lhe
naLlonal CovernmenL lLs agencles and|nstrumenta||t|es x x x 1he real properLles owned by
Lhe 8epubllc are LlLled elLher ln Lhe name of Lhe 8epubllc lLself or ln Lhe name of agencles or
lnsLrumenLallLles of Lhe naLlonal CovernmenL 1he AdmlnlsLraLlve Code allows real properLy
owned by Lhe 8epubllc Lo be LlLled ln Lhe name of agencles or lnsLrumenLallLles of Lhe
naLlonal governmenL Such real properLles remaln owned by Lhe 8epubllc and conLlnue Lo be
exempL from real esLaLe Lax
1he 8epubllc may granL Lhe beneflclal use of lLs real properLy Lo an agency or lnsLrumenLallLy
of Lhe naLlonal governmenL 1hls happens when LlLle of Lhe real properLy ls Lransferred Lo an
agency or lnsLrumenLallLy even as Lhe 8epubllc remalns Lhe owner of Lhe real properLy Such
arrangemenL does noL resulL ln Lhe loss of Lhe Lax exempLlon SecLlon 234(a) of Lhe Local
CovernmenL Code sLaLes LhaL real properLy owned by Lhe 8epubllc loses lLs Lax exempLlon
only lf Lhe beneflclal use Lhereof has been granLed for conslderaLlon or oLherwlse Lo
a taxab|e person MlAA as a governmenL lnsLrumenLallLy ls noL a Laxable person under
SecLlon 133(o) of Lhe Local CovernmenL Code 1hus even lf we assume LhaL Lhe 8epubllc has
granLed Lo MlAA Lhe beneflclal use of Lhe AlrporL Lands and 8ulldlngs such facL does noL
make Lhese real properLles sub[ecL Lo real esLaLe Lax
Powever porLlons of Lhe AlrporL Lands and 8ulldlngs LhaL MlAA leases Lo prlvaLe enLlLles are
noL exempL from real esLaLe Lax lor example Lhe land area occupled by hangars LhaL MlAA
leases Lo prlvaLe corporaLlons ls sub[ecL Lo real esLaLe Lax ln such a case MlAA has granLed
Lhe beneflclal use of such land area for a conslderaLlon Lo ataxab|e person and Lherefore such
land area ls sub[ecL Lo real esLaLe Lax ln Lunq center of the Phi/ippines v ueton city Lhe
CourL ruled
Accordlngly we hold LhaL Lhe porLlons of Lhe land leased Lo prlvaLe enLlLles as well as Lhose
parLs of Lhe hosplLal leased Lo prlvaLe lndlvlduals are noL exempL from such Laxes Cn Lhe
oLher hand Lhe porLlons of Lhe land occupled by Lhe hosplLal and porLlons of Lhe hosplLal
used for lLs paLlenLs wheLher paylng or nonpaylng are exempL from real properLy Laxes
29

3 kefutat|on of Arguments of M|nor|ty
1he mlnorlLy asserLs LhaL Lhe MlAA ls noL exempL from real esLaLe Lax because SecLlon 193 of
Lhe Local CovernmenL Code of 1991 wlLhdrew Lhe Lax exempLlon of a|| persons whether
natura| or [ur|d|ca| upon Lhe effecLlvlLy of Lhe Code SecLlon 193 provldes
SLC 193 JltJtowol of 1ox xemptloo ltlvlleqe Un|ess otherw|se prov|ded |n th|s Code
Lax exempLlons or lncenLlves granLed Lo or present|y en[oyed by a|| persons whether
natura| or [ur|d|ca| lncludlng governmenLowned or conLrolled corporaLlons excepL local
waLer dlsLrlcLs cooperaLlves duly reglsLered under 8A no 6938 nonsLock and nonproflL
hosplLals and educaLlonal lnsLlLuLlons are hereby wlLhdrawn upon effecLlvlLy of Lhls Code
(Lmphasls supplled)
1he mlnorlLy sLaLes LhaL MlAA ls lndlspuLably a [ur|d|ca| person 1he mlnorlLy argues LhaL
slnce Lhe Local CovernmenL Code wlLhdrew Lhe Lax exempLlon of a|| [ur|d|ca| persons Lhen
MlAA ls noL exempL from real esLaLe Lax 1hus Lhe mlnorlLy declares
It |s ev|dent from the quoted prov|s|ons of the Loca| Government Code that the w|thdrawn
exempt|ons from rea|ty tax cover not [ust GCCCs but a|| persons 1o repeaL Lhe provlslons
lay down Lhe expllclL proposlLlon LhaL Lhe wlLhdrawal of realLy Lax exempLlon applles Lo all
persons 1he reference Lo or Lhe lncluslon of CCCCs ls only clarlflcaLory or lllusLraLlve of Lhe
expllclL provlslon
27

1he term A|| persons encompasses the two c|asses of persons recogn|zed under our |aws
natura| and [ur|d|ca| persons Cbv|ous|y MIAA |s not a natura| person 1hus the
determ|nat|ve test |s not [ust whether MIAA |s a GCCC but whether MIAA |s a [ur|d|ca|
person at a|| (Lmphasls and underscorlng ln Lhe orlglnal)
1he mlnorlLy poslLs LhaL Lhe deLermlnaLlve LesL wheLher MlAA ls exempL from local LaxaLlon
ls lLs sLaLus wheLher MlAA ls a [urldlcal person or noL 1he mlnorlLy also lnslsLs LhaL
SecLlons 193 and 234 may be examlned ln lsolaLlon from SecLlon 133(o) Lo ascerLaln MlAAs
clalm of exempLlon
1he argumenL of Lhe mlnorlLy ls faLally flawed SecLlon 193 of Lhe Local CovernmenL Code
expressly wlLhdrew Lhe Lax exempLlon of all [urldlcal persons un|ess otherw|se prov|ded |n
th|s Code now SecLlon 133(o) of Lhe Local CovernmenL Code express|y prov|des otherw|se
speclflcally proh|b|t|ng local governmenLs from lmposlng any klnd of Lax on naLlonal
governmenL lnsLrumenLallLles SecLlon 133(o) sLaLes
SLC 133 ommoo llmltotloo oo te 1oxloq lowet of locol Covetomeot uolt unless
oLherwlse provlded hereln Lhe exerclse of Lhe Laxlng powers of provlnces clLles
munlclpallLles and barangays shall noL exLend Lo Lhe levy of Lhe followlng
x x x x
(o) 1axes fees or charges of any klnds on Lhe naLlonal CovernmenL lLs agencles and
lnsLrumenLallLles and local governmenL unlLs (Lmphasls and underscorlng supplled)
8y express mandaLe of Lhe Local CovernmenL Code local governmenLs cannoL lmpose any
klnd of Lax on naLlonal governmenL lnsLrumenLallLles llke Lhe MlAA Local governmenLs are
devold of power Lo Lax Lhe naLlonal governmenL lLs agencles and lnsLrumenLallLles 1he
Laxlng powers of local governmenLs do noL exLend Lo Lhe naLlonal governmenL lLs agencles
and lnsLrumenLallLles unless oLherwlse provlded ln Lhls Code as sLaLed ln Lhe savlng
clause of SecLlon 133 1he savlng clause refers Lo SecLlon 234(a) on Lhe excepLlon Lo Lhe
exempLlon from real esLaLe Lax of real properLy owned by Lhe 8epubllc
1he mlnorlLy however Lheorlzes LhaL unless exempLed ln SecLlon 193 lLself all [urldlcal
persons are sub[ecL Lo Lax by local governmenLs 1he mlnorlLy lnslsLs LhaL Lhe [urldlcal persons
exempL from local LaxaLlon are llmlLed Lo Lhe Lhree classes of enLlLles speclflcally enumeraLed
as exempL ln SecLlon 193 1hus Lhe mlnorlLy sLaLes
x x x under SecLlon 193 Lhe exempLlon ls llmlLed Lo (a) local waLer dlsLrlcLs (b) cooperaLlves
duly reglsLered under 8epubllc AcL no 6938 and (c) nonsLock and nonproflL hosplLals and
educaLlonal lnsLlLuLlons lL would be belaborlng Lhe obvlous why Lhe MlAA does noL fall wlLhln
any of Lhe exempL enLlLles under SecLlon 193 (Lmphasls supplled)
1he mlnorlLys Lheory dlrecLly conLradlcLs and compleLely negaLes SecLlon 133(o) of Lhe Local
CovernmenL Code 1hls Lheory wlll resulL ln gross absurdlLles lL wlll make Lhe naLlonal
governmenL whlch lLself ls a [urldlcal person sub[ecL Lo Lax by local governmenLs slnce Lhe
naLlonal governmenL ls noL lncluded ln Lhe enumeraLlon of exempL enLlLles ln SecLlon 193
under Lhls Lheory local governmenLs can lmpose any klnd of local Lax and noL only real
esLaLe Lax on Lhe naLlonal governmenL
under Lhe mlnorlLys Lheory many naLlonal governmenL lnsLrumenLallLles wlLh [urldlcal
personallLles wlll also be sub[ecL Lo any klnd of local Lax and noL only real esLaLe Lax Some of
Lhe naLlonal governmenL lnsLrumenLallLles vesLed by law wlLh [urldlcal personallLles are
8angko SenLral ng lllplnas
30
hlllpplne 8lce 8esearch lnsLlLuLe
31
Laguna Lake
uevelopmenL AuLhorlLy
32
llsherles uevelopmenL AuLhorlLy
33
8ases Converslon uevelopmenL
AuLhorlLy
34
hlllpplne orLs AuLhorlLy
33
Cagayan de Cro orL AuLhorlLy
36
San lernando orL
AuLhorlLy
37
Cebu orL AuLhorlLy
38
and hlllpplne naLlonal 8allways
39

1he mlnorlLys Lheory vlolaLes SecLlon 133(o) of Lhe Local CovernmenL Code whlch expressly
prohlblLs local governmenLs from lmposlng any klnd of Lax on naLlonal governmenL
lnsLrumenLallLles SecLlon 133(o) does noL dlsLlngulsh beLween naLlonal governmenL
lnsLrumenLallLles wlLh or wlLhouL [urldlcal personallLles Where Lhe law does noL dlsLlngulsh
courLs should noL dlsLlngulsh 1hus SecLlon 133(o) applles Lo all naLlonal governmenL
lnsLrumenLallLles wlLh or wlLhouL [urldlcal personallLles 1he deLermlnaLlve LesL wheLher
MlAA ls exempL from local LaxaLlon ls noL wheLher MlAA ls a [urldlcal person buL wheLher lL ls
a naLlonal governmenL lnsLrumenLallLy under SecLlon 133(o) of Lhe Local CovernmenL Code
SecLlon 133(o) ls Lhe speclflc provlslon of law prohlblLlng local governmenLs from lmposlng
any klnd of Lax on Lhe naLlonal governmenL lLs agencles and lnsLrumenLallLles
SecLlon 133 of Lhe Local CovernmenL Code sLarLs wlLh Lhe savlng clause unless oLherwlse
provlded ln Lhls Code 1hls means LhaL unless Lhe Local CovernmenL Code granLs an express
auLhorlzaLlon local governmenLs have no power Lo Lax Lhe naLlonal governmenL lLs agencles
and lnsLrumenLallLles Clearly Lhe rule ls local governmenLs have no power Lo Lax Lhe naLlonal
governmenL lLs agencles and lnsLrumenLallLles As an excepLlon Lo Lhls rule local
governmenLs may Lax Lhe naLlonal governmenL lLs agencles and lnsLrumenLallLles only lf Lhe
Local CovernmenL Code expressly so provldes
1he savlng clause ln SecLlon 133 refers Lo Lhe excepLlon Lo Lhe exempLlon ln SecLlon 234(a) of
Lhe Code whlch makes Lhe naLlonal governmenL sub[ecL Lo real esLaLe Lax when lL glves Lhe
beneflclal use of lLs real properLles Lo a Laxable enLlLy SecLlon 234(a) of Lhe Local
CovernmenL Code provldes
SLC 234 LxempLlons from 8eal roperLy 1ax 1he followlng are exempLed from paymenL of
Lhe real properLy Lax
28

(a) 8eal properLy owned by Lhe 8epubllc of Lhe hlllpplnes or any of lLs pollLlcal subdlvlslons
excepL when Lhe beneflclal use Lhereof has been granLed for conslderaLlon or oLherwlse Lo a
Laxable person
x x x (Lmphasls supplled)
under SecLlon 234(a) real properLy owned by Lhe 8epubllc ls exempL from real esLaLe Lax
1he excepLlon Lo Lhls exempLlon ls when Lhe governmenL glves Lhe beneflclal use of Lhe real
properLy Lo a Laxable enLlLy
1he excepLlon Lo Lhe exempLlon ln SecLlon 234(a) ls Lhe only lnsLance when Lhe naLlonal
governmenL lLs agencles and lnsLrumenLallLles are sub[ecL Lo any klnd of Lax by local
governmenLs 1he excepLlon Lo Lhe exempLlon applles only Lo real esLaLe Lax and noL Lo any
oLher Lax 1he [usLlflcaLlon for Lhe excepLlon Lo Lhe exempLlon ls LhaL Lhe real properLy
alLhough owned by Lhe 8epubllc ls noL devoLed Lo publlc use or publlc servlce buL devoLed Lo
Lhe prlvaLe galn of a Laxable person
1he mlnorlLy also argues LhaL slnce SecLlon 133 precedes SecLlon 193 and 234 of Lhe Local
CovernmenL Code Lhe laLer provlslons prevall over SecLlon 133 1hus Lhe mlnorlLy asserLs
x x x Moreover sequenLlally SecLlon 133 anLecedes SecLlon 193 and 234 lollowlng an
accepLed rule of consLrucLlon ln case of confllcL Lhe subsequenL provlslons should prevall
1herefore MlAA as a [urldlcal person ls sub[ecL Lo real properLy Laxes Lhe general
exempLlons aLLachlng Lo lnsLrumenLallLles under SecLlon 133(o) of Lhe Local CovernmenL
Code belng quallfled by SecLlons 193 and 234 of Lhe same law (Lmphasls supplled)
1he mlnorlLy assumes LhaL Lhere ls an lrreconcllable confllcL beLween SecLlon 133 on one
hand and SecLlons 193 and 234 on Lhe oLher no one has urged LhaL Lhere ls such a confllcL
much less has any one presenLeda persuaslve argumenL LhaL Lhere ls such a confllcL 1he
mlnorlLys assumpLlon of an lrreconcllable confllcL ln Lhe sLaLuLory provlslons ls an egreglous
error for Lwo reasons
llrsL Lhere ls no confllcL whaLsoever beLween SecLlons 133 and 193 because SecLlon 193
expressly admlLs lLs subordlnaLlon Lo oLher provlslons of Lhe Code when SecLlon 193 sLaLes
unless oLherwlse provlded ln Lhls Code 8y lLs own words SecLlon 193 admlLs Lhe
superlorlLy of oLher provlslons of Lhe Local CovernmenL Code LhaL llmlL Lhe exerclse of Lhe
Laxlng power ln SecLlon 193 When a provlslon of law granLs a power buL wlLhholds such
power on cerLaln maLLers Lhere ls no confllcL beLween Lhe granL of power and Lhe
wlLhholdlng of power 1he granLee of Lhe power slmply cannoL exerclse Lhe power on maLLers
wlLhheld from lLs power
Second SecLlon 133 ls enLlLled Common LlmlLaLlons on Lhe 1axlng owers of Local
CovernmenL unlLs SecLlon 133 llmlLs Lhe granL Lo local governmenLs of Lhe power Lo Lax
and noL merely Lhe exerclse of a delegaLed power Lo Lax SecLlon 133 sLaLes LhaL Lhe Laxlng
powers of local governmenLs shall noL exLend Lo Lhe levy of any klnd of Lax on Lhe naLlonal
governmenL lLs agencles and lnsLrumenLallLles 1here ls no clearer llmlLaLlon on Lhe Laxlng
power Lhan Lhls
Slnce SecLlon 133 prescrlbes Lhe common llmlLaLlons on Lhe Laxlng powers of local
governmenLs SecLlon 133 loglcally prevalls over SecLlon 193 whlch granLs local governmenLs
such Laxlng powers 8y Lhelr very meanlng and purpose Lhe common llmlLaLlons on Lhe
Laxlng power prevall over Lhe granL or exerclse of Lhe Laxlng power lf Lhe Laxlng power of
local governmenLs ln SecLlon 193 prevalls over Lhe llmlLaLlons on such Laxlng power ln SecLlon
133 Lhen local governmenLs can lmpose any klnd of Lax on Lhe naLlonal governmenL lLs
agencles and lnsLrumenLallLles a gross absurdlLy
Local governmenLs have no power Lo Lax Lhe naLlonal governmenL lLs agencles and
lnsLrumenLallLles excepL as oLherwlse provlded ln Lhe Local CovernmenL Code pursuanL Lo
Lhe savlng clause ln SecLlon 133 sLaLlng unless oLherwlse provlded ln Lhls Code 1hls
excepLlon whlch ls an excepLlon Lo Lhe exempLlon of Lhe 8epubllc from real esLaLe Lax
lmposed by local governmenLs refers Lo SecLlon 234(a) of Lhe Code 1he excepLlon Lo Lhe
exempLlon ln SecLlon 234(a) sub[ecLs real properLy owned by Lhe 8epubllc wheLher LlLled ln
Lhe name of Lhe naLlonal governmenL lLs agencles or lnsLrumenLallLles Lo real esLaLe Lax lf
Lhe beneflclal use of such properLy ls glven Lo a Laxable enLlLy
1he mlnorlLy also clalms LhaL Lhe deflnlLlon ln Lhe AdmlnlsLraLlve Code of Lhe phrase
governmenLowned or conLrolled corporaLlon ls noL conLrolllng 1he mlnorlLy polnLs ouL
LhaL SecLlon 2 of Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code admlLs LhaL lLs
deflnlLlons are noL conLrolllng when lL provldes
SLC 2 Ceneral 1erms ueflned unless Lhe speclflc words of Lhe LexL or Lhe conLexL as a
whole or a parLlcular sLaLuLe shall requlre a dlfferenL meanlng
x x x x
1he mlnorlLy Lhen concludes LhaL rellance on Lhe AdmlnlsLraLlve Code deflnlLlon ls flawed
1he mlnorlLys argumenL ls a non sequlLur 1rue SecLlon 2 of Lhe AdmlnlsLraLlve Code
recognlzes LhaL a sLaLuLe may requlre a dlfferenL meanlng Lhan LhaL deflned ln Lhe
AdmlnlsLraLlve Code Powever Lhls does noL auLomaLlcally mean LhaL Lhe deflnlLlon ln Lhe
AdmlnlsLraLlve Code does noL apply Lo Lhe Local CovernmenL Code SecLlon 2 of Lhe
AdmlnlsLraLlve Code clearly sLaLes LhaL unless Lhe speclflc words x x x of a parLlcular sLaLuLe
shall requlre a dlfferenL meanlng Lhe deflnlLlon ln SecLlon 2 of Lhe AdmlnlsLraLlve Code shall
29

apply 1hus unless Lhere ls speclflc language ln Lhe Local CovernmenL Code deflnlng Lhe
phrase governmenLowned or conLrolled corporaLlon dlfferenLly from Lhe deflnlLlon ln Lhe
AdmlnlsLraLlve Code Lhe deflnlLlon ln Lhe AdmlnlsLraLlve Code prevalls
1he mlnorlLy does noL polnL Lo any provlslon ln Lhe Local CovernmenL Code deflnlng Lhe
phrase governmenLowned or conLrolled corporaLlon dlfferenLly from Lhe deflnlLlon ln Lhe
AdmlnlsLraLlve Code lndeed Lhere ls none 1he Local CovernmenL Code ls sllenL on Lhe
deflnlLlon of Lhe phrase governmenLowned or conLrolled corporaLlon 1he AdmlnlsLraLlve
Code however expressly deflnes Lhe phrase governmenLowned or conLrolled corporaLlon
1he lnescapable concluslon ls LhaL Lhe AdmlnlsLraLlve Code deflnlLlon of Lhe phrase
governmenLowned or conLrolled corporaLlon applles Lo Lhe Local CovernmenL Code
1he Lhlrd whereas clause of Lhe AdmlnlsLraLlve Code sLaLes LhaL Lhe Code lncorporaLes ln a
unlfled documenL Lhe ma[or sLrucLural funcLlonal and procedural prlnclples and rules of
governance 1hus Lhe AdmlnlsLraLlve Code ls Lhe governlng law deflnlng Lhe sLaLus and
relaLlonshlp of governmenL deparLmenLs bureaus offlces agencles and lnsLrumenLallLles
unless a sLaLuLe expressly provldes for a dlfferenL sLaLus and relaLlonshlp for a speclflc
governmenL unlL or enLlLy Lhe provlslons of Lhe AdmlnlsLraLlve Code prevall
1he mlnorlLy also conLends LhaL Lhe phrase governmenLowned or conLrolled corporaLlon
should apply only Lo corporaLlons organlzed under Lhe CorporaLlon Code Lhe general
lncorporaLlon law and noL Lo corporaLlons creaLed by speclal charLers 1he mlnorlLy sees no
reason why governmenL corporaLlons wlLh speclal charLers should have a caplLal sLock 1hus
Lhe mlnorlLy declares
l submlL LhaL Lhe deflnlLlon of governmenLowned or conLrolled corporaLlons under Lhe
AdmlnlsLraLlve Code refer Lo Lhose corporaLlons owned by Lhe governmenL or lLs
lnsLrumenLallLles whlch are creaLed noL by leglslaLlve enacLmenL buL formed and organlzed
under Lhe CorporaLlon Code Lhrough reglsLraLlon wlLh Lhe SecurlLles and Lxchange
Commlsslon ln shorL Lhese are CCCCs wlLhouL orlglnal charLers
x x x x
lL mlghL as well be worLh polnLlng ouL LhaL Lhere ls no polnL ln requlrlng a caplLal sLrucLure for
CCCCs whose full ownershlp ls llmlLed by lLs charLer Lo Lhe SLaLe or 8epubllc Such CCCCs are
noL empowered Lo declare dlvldends or allenaLe Lhelr caplLal shares
1he conLenLlon of Lhe mlnorlLy ls serlously flawed lL ls noL ln accord wlLh Lhe ConsLlLuLlon and
exlsLlng leglslaLlons lL wlll also resulL ln gross absurdlLles
llrsL Lhe AdmlnlsLraLlve Code deflnlLlon of Lhe phrase governmenLowned or conLrolled
corporaLlon does noL dlsLlngulsh beLween one lncorporaLed under Lhe CorporaLlon Code or
under a speclal charLer Where Lhe law does noL dlsLlngulsh courLs should noL dlsLlngulsh
Second Congress has creaLed Lhrough speclal charLers several governmenLowned
corporaLlons organlzed as sLock corporaLlons rlme examples are Lhe Land 8ank of Lhe
hlllpplnes and Lhe uevelopmenL 8ank of Lhe hlllpplnes 1he speclal charLer
40
of Lhe Land
8ank of Lhe hlllpplnes provldes
SLC1lCn 81 CaplLal 1he auLhorlzed caplLal sLock of Lhe 8ank shall be nlne bllllon pesos
dlvlded lnLo seven hundred and elghLy mllllon common shares wlLh a par value of Len pesos
each whlch shall be fully subscrlbed by Lhe CovernmenL and one hundred and LwenLy mllllon
preferred shares wlLh a par value of Len pesos each whlch shall be lssued ln accordance wlLh
Lhe provlslons of SecLlons sevenLyseven and elghLyLhree of Lhls Code (Lmphasls supplled)
Llkewlse Lhe speclal charLer
41
of Lhe uevelopmenL 8ank of Lhe hlllpplnes provldes
SLC1lCn 7 AuLhorlzed CaplLal SLock ar value 1he caplLal sLock of Lhe 8ank shall be llve
8llllon esos Lo be dlvlded lnLo llfLy Mllllon common shares wlLh par value of 100 per share
1hese shares are avallable for subscrlpLlon by Lhe naLlonal CovernmenL upon Lhe effecLlvlLy
of Lhls CharLer Lhe naLlonal CovernmenL shall subscrlbe Lo 1wenLyllve Mllllon common
shares of sLock worLh 1wo 8llllon llve Pundred Mllllon whlch shall be deemed pald for by Lhe
CovernmenL wlLh Lhe neL asseL values of Lhe 8ank remalnlng afLer Lhe Lransfer of asseLs and
llablllLles as provlded ln SecLlon 30 hereof (Lmphasls supplled)
CLher governmenLowned corporaLlons organlzed as sLock corporaLlons under Lhelr speclal
charLers are Lhe hlllpplne Crop lnsurance CorporaLlon
42
hlllpplne lnLernaLlonal 1radlng
CorporaLlon
43
and Lhe hlllpplne naLlonal 8ank
44
before lL was reorganlzed as a sLock
corporaLlon under Lhe CorporaLlon Code All Lhese governmenLowned corporaLlons
organlzed under speclal charLers as sLock corporaLlons are sub[ecL Lo real esLaLe Lax on real
properLles owned by Lhem 1o rule LhaL Lhey are noL governmenLowned or conLrolled
corporaLlons because Lhey are noL reglsLered wlLh Lhe SecurlLles and Lxchange Commlsslon
would remove Lhem from Lhe reach of SecLlon 234 of Lhe Local CovernmenL Code Lhus
exempLlng Lhem from real esLaLe Lax
1hlrd Lhe governmenLowned or conLrolled corporaLlons creaLed Lhrough speclal charLers are
Lhose LhaL meeL Lhe Lwo condlLlons prescrlbed ln SecLlon 16 ArLlcle xll of Lhe ConsLlLuLlon
1he flrsL condlLlon ls LhaL Lhe governmenLowned or conLrolled corporaLlon musL be
esLabllshed for Lhe common good 1he second condlLlon ls LhaL Lhe governmenLowned or
conLrolled corporaLlon musL meeL Lhe LesL of economlc vlablllLy SecLlon 16 ArLlcle xll of Lhe
1987 ConsLlLuLlon provldes
30

SLC 16 1he Congress shall noL excepL by general law provlde for Lhe formaLlon
organlzaLlon or regulaLlon of prlvaLe corporaLlons CovernmenLowned or conLrolled
corporaLlons may be creaLed or esLabllshed by speclal charLers ln Lhe lnLeresL of Lhe common
good and sub[ecL Lo Lhe LesL of economlc vlablllLy (Lmphasls and underscorlng supplled)
1he ConsLlLuLlon expressly auLhorlzes Lhe leglslaLure Lo creaLe governmenLowned or
conLrolled corporaLlons Lhrough speclal charLers only lf Lhese enLlLles are requlred Lo meeL
Lhe Lwln condlLlons of common good and economlc vlablllLy ln oLher words Congress has no
power Lo creaLe governmenLowned or conLrolled corporaLlons wlLh speclal charLers unless
Lhey are made Lo comply wlLh Lhe Lwo condlLlons of common good and economlc vlablllLy
1he LesL of economlc vlablllLy applles only Lo governmenLowned or conLrolled corporaLlons
LhaL perform economlc or commerclal acLlvlLles and need Lo compeLe ln Lhe markeL place
8elng essenLlally economlc vehlcles of Lhe SLaLe for Lhe common good meanlng for
economlc developmenL purposes Lhese governmenLowned or conLrolled corporaLlons
wlLh speclal charLers are usually organlzed as sLock corporaLlons [usL llke ordlnary prlvaLe
corporaLlons
ln conLrasL governmenL lnsLrumenLallLles vesLed wlLh corporaLe powers and performlng
governmenLal or publlc funcLlons need noL meeL Lhe LesL of economlc vlablllLy 1hese
lnsLrumenLallLles perform essenLlal publlc servlces for Lhe common good servlces LhaL every
modern SLaLe musL provlde lLs clLlzens 1hese lnsLrumenLallLles need noL be economlcally
vlable slnce Lhe governmenL may even subsldlze Lhelr enLlre operaLlons 1hese
lnsLrumenLallLles are noL Lhe governmenLowned or conLrolled corporaLlons referred Lo ln
SecLlon 16 ArLlcle xll of Lhe 1987 ConsLlLuLlon
1hus Lhe ConsLlLuLlon lmposes no llmlLaLlon when Lhe leglslaLure creaLes governmenL
lnsLrumenLallLles vesLed wlLh corporaLe powers buL performlng essenLlal governmenLal or
publlc funcLlons Congress has plenary auLhorlLy Lo creaLe governmenL lnsLrumenLallLles
vesLed wlLh corporaLe powers provlded Lhese lnsLrumenLallLles perform essenLlal governmenL
funcLlons or publlc servlces Powever when Lhe leglslaLure creaLes Lhrough speclal charLers
corporaLlons LhaL perform economlc or commerclal acLlvlLles such enLlLles known as
governmenLowned or conLrolled corporaLlons musL meeL Lhe LesL of economlc vlablllLy
because Lhey compeLe ln Lhe markeL place
1hls ls Lhe slLuaLlon of Lhe Land 8ank of Lhe hlllpplnes and Lhe uevelopmenL 8ank of Lhe
hlllpplnes and slmllar governmenLowned or conLrolled corporaLlons whlch derlve Lhelr
lncome Lo meeL operaLlng expenses solely from commerclal LransacLlons ln compeLlLlon wlLh
Lhe prlvaLe secLor 1he lnLenL of Lhe ConsLlLuLlon ls Lo prevenL Lhe creaLlon of governmenL
owned or conLrolled corporaLlons LhaL cannoL survlve on Lhelr own ln Lhe markeL place and
Lhus merely draln Lhe publlc coffers
Commlssloner 8las l Cple proponenL of Lhe LesL of economlc vlablllLy explalned Lo Lhe
ConsLlLuLlonal Commlsslon Lhe purpose of Lhls LesL as follows
M8 CLL Madam resldenL Lhe reason for Lhls concern ls really LhaL when Lhe governmenL
creaLes a corporaLlon Lhere ls a sense ln whlch Lhls corporaLlon becomes exempL from Lhe
LesL of economlc performance We know whaL happened ln Lhe pasL lf a governmenL
corporaLlon loses Lhen lL makes lLs clalm upon Lhe Laxpayers money Lhrough new equlLy
lnfuslons from Lhe governmenL and whaL ls always lnvoked ls Lhe common good 1haL ls Lhe
reason why Lhls year ouL of a budgeL of 113 bllllon for Lhe enLlre governmenL abouL 28
bllllon of Lhls wlll go lnLo equlLy lnfuslons Lo supporL a few governmenL flnanclal lnsLlLuLlons
And Lhls ls all Laxpayers money whlch could have been relocaLed Lo agrarlan reform Lo soclal
servlces llke healLh and educaLlon Lo augmenL Lhe salarles of grossly underpald publlc
employees And yeL Lhls ls all golng down Lhe draln
1herefore when we lnserL Lhe phrase LCCnCMlC vlA8lLl1? LogeLher wlLh Lhe common
good Lhls becomes a resLralnL on fuLure enLhuslasLs for sLaLe caplLallsm Lo excuse
Lhemselves from Lhe responslblllLy of meeLlng Lhe markeL LesL so LhaL Lhey become vlable
And so Madam resldenL l relLeraLe for Lhe commlLLees conslderaLlon and l am glad LhaL l
am [olned ln Lhls proposal by Commlssloner loz Lhe lnserLlon of Lhe sLandard of LCCnCMlC
vlA8lLl1? C8 1PL LCCnCMlC 1LS1 LogeLher wlLh Lhe common good
43

laLher !oaquln C 8ernas a leadlng member of Lhe ConsLlLuLlonal Commlsslon explalns ln hls
LexLbook 1he 1987 ConsLlLuLlon of Lhe 8epubllc of Lhe hlllpplnes A CommenLary
1he second senLence was added by Lhe 1986 ConsLlLuLlonal Commlsslon 1he slgnlflcanL
addlLlon however ls Lhe phrase ln Lhe lnLeresL of Lhe common good and sub[ecL Lo Lhe LesL
of economlc vlablllLy 1he addlLlon lncludes Lhe ldeas LhaL Lhey musL show capaclLy Lo
funcLlon efflclenLly ln buslness and LhaL Lhey should noL go lnLo acLlvlLles whlch Lhe prlvaLe
secLor can do beLLer Moreover economlc vlablllLy ls more Lhan flnanclal vlablllLy buL also
lncludes capablllLy Lo make proflL and generaLe beneflLs noL quanLlflable ln flnanclal
Lerms
46
(Lmphasls supplled)
Clearly Lhe LesL of economlc vlablllLy does noL apply Lo governmenL enLlLles vesLed wlLh
corporaLe powers and performlng essenLlal publlc servlces 1he SLaLe ls obllgaLed Lo render
essenLlal publlc servlces regardless of Lhe economlc vlablllLy of provldlng such servlce 1he
noneconomlc vlablllLy of renderlng such essenLlal publlc servlce does noL excuse Lhe SLaLe
from wlLhholdlng such essenLlal servlces from Lhe publlc
Powever governmenLowned or conLrolled corporaLlons wlLh speclal charLers organlzed
essenLlally for economlc or commerclal ob[ecLlves musL meeL Lhe LesL of economlc vlablllLy
1hese are Lhe governmenLowned or conLrolled corporaLlons LhaL are usually organlzed under
Lhelr speclal charLers as sLock corporaLlons llke Lhe Land 8ank of Lhe hlllpplnes and Lhe
31

uevelopmenL 8ank of Lhe hlllpplnes 1hese are Lhe governmenLowned or conLrolled
corporaLlons along wlLh governmenLowned or conLrolled corporaLlons organlzed under Lhe
CorporaLlon Code LhaL fall under Lhe deflnlLlon of governmenLowned or conLrolled
corporaLlons ln SecLlon 2(10) of Lhe AdmlnlsLraLlve Code
1he MlAA need noL meeL Lhe LesL of economlc vlablllLy because Lhe leglslaLure dld noL creaLe
MlAA Lo compeLe ln Lhe markeL place MlAA does noL compeLe ln Lhe markeL place because
Lhere ls no compeLlng lnLernaLlonal alrporL operaLed by Lhe prlvaLe secLor MlAA performs an
essenLlal publlc servlce as Lhe prlmary domesLlc and lnLernaLlonal alrporL of Lhe hlllpplnes
1he operaLlon of an lnLernaLlonal alrporL requlres Lhe presence of personnel from Lhe
followlng governmenL agencles
1 1he 8ureau of lmmlgraLlon and ueporLaLlon Lo documenL Lhe arrlval and deparLure of
passengers screenlng ouL Lhose wlLhouL vlsas or Lravel documenLs or Lhose wlLh hold
deparLure orders
2 1he 8ureau of CusLoms Lo collecL lmporL duLles or enforce Lhe ban on prohlblLed
lmporLaLlons
3 1he quaranLlne offlce of Lhe ueparLmenL of PealLh Lo enforce healLh measures agalnsL Lhe
spread of lnfecLlous dlseases lnLo Lhe counLry
4 1he ueparLmenL of AgrlculLure Lo enforce measures agalnsL Lhe spread of planL and anlmal
dlseases lnLo Lhe counLry
3 1he AvlaLlon SecurlLy Command of Lhe hlllpplne naLlonal ollce Lo prevenL Lhe enLry of
LerrorlsLs and Lhe escape of crlmlnals as well as Lo secure Lhe alrporL premlses from LerrorlsL
aLLack or selzure
6 1he Alr 1rafflc Cfflce of Lhe ueparLmenL of 1ransporLaLlon and CommunlcaLlons Lo
auLhorlze alrcrafL Lo enLer or leave hlllpplne alrspace as well as Lo land on or Lake off from
Lhe alrporL and
7 1he MlAA Lo provlde Lhe proper premlses such as runway and bulldlngs for Lhe
governmenL personnel passengers and alrllnes and Lo manage Lhe alrporL operaLlons
All Lhese agencles of governmenL perform governmenL funcLlons essenLlal Lo Lhe operaLlon of
an lnLernaLlonal alrporL
MlAA performs an essenLlal publlc servlce LhaL every modern SLaLe musL provlde lLs clLlzens
MlAA derlves lLs revenues prlnclpally from Lhe mandaLory fees and charges MlAA lmposes on
passengers and alrllnes 1he Lermlnal fees LhaL MlAA charges every passenger are regulaLory
or admlnlsLraLlve fees
47
and noL lncome from commerclal LransacLlons
MlAA falls under Lhe deflnlLlon of a governmenL lnsLrumenLallLy under SecLlon 2(10) of Lhe
lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code whlch provldes
SLC 2 Ceneral 1erms ueflned x x x x
(10) lnsLrumenLallLy refers Lo any agency of Lhe naLlonal CovernmenL noL lnLegraLed wlLhln
Lhe deparLmenL framework vesLed wlLh speclal funcLlons or [urlsdlcLlon by law endowed
wlLh some lf noL all corporaLe powers admlnlsLerlng speclal funds and en[oylng operaLlonal
auLonomy usually Lhrough a charLer x x x (Lmphasls supplled)
1he facL alone LhaL MlAA ls endowed wlLh corporaLe powers does noL make MlAA a
governmenLowned or conLrolled corporaLlon WlLhouL a change ln lLs caplLal sLrucLure MlAA
remalns a governmenL lnsLrumenLallLy under SecLlon 2(10) of Lhe lnLroducLory rovlslons of
Lhe AdmlnlsLraLlve Code More lmporLanLly as long as MlAA renders essenLlal publlc servlces
lL need noL comply wlLh Lhe LesL of economlc vlablllLy 1hus MlAA ls ouLslde Lhe scope of Lhe
phrase governmenLowned or conLrolled corporaLlons under SecLlon 16 ArLlcle xll of Lhe
1987 ConsLlLuLlon
1he mlnorlLy bellLLles Lhe use ln Lhe Local CovernmenL Code of Lhe phrase governmenL
owned or conLrolled corporaLlon as merely clarlflcaLory or lllusLraLlve 1hls ls faLal 1he
1987 ConsLlLuLlon prescrlbes expllclL condlLlons for Lhe creaLlon of governmenLowned or
conLrolled corporaLlons 1he AdmlnlsLraLlve Code deflnes whaL consLlLuLes a governmenL
owned or conLrolled corporaLlon 1o bellLLle Lhls phrase as clarlflcaLory or lllusLraLlve ls
grave error
1o summarlze MlAA ls noL a governmenLowned or conLrolled corporaLlon under SecLlon
2(13) of Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code because lL ls noL organlzed as
a sLock or nonsLock corporaLlon nelLher ls MlAA a governmenLowned or conLrolled
corporaLlon under SecLlon 16 ArLlcle xll of Lhe 1987 ConsLlLuLlon because MlAA ls noL
requlred Lo meeL Lhe LesL of economlc vlablllLy MlAA ls a governmenL lnsLrumenLallLy vesLed
wlLh corporaLe powers and performlng essenLlal publlc servlces pursuanL Lo SecLlon 2(10) of
Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code As a governmenL lnsLrumenLallLy
MlAA ls noL sub[ecL Lo any klnd of Lax by local governmenLs under SecLlon 133(o) of Lhe Local
CovernmenL Code 1he excepLlon Lo Lhe exempLlon ln SecLlon 234(a) does noL apply Lo MlAA
because MlAA ls noL a Laxable enLlLy under Lhe Local CovernmenL Code Such excepLlon
applles only lf Lhe beneflclal use of real properLy owned by Lhe 8epubllc ls glven Lo a Laxable
enLlLy
32

llnally Lhe AlrporL Lands and 8ulldlngs of MlAA are properLles devoLed Lo publlc use and Lhus
are properLles of publlc domlnlon roperLles of publlc domlnlon are owned by Lhe SLaLe or
Lhe 8epubllc ArLlcle 420 of Lhe Clvll Code provldes
ArL 420 1he followlng Lhlngs are properLy of publlc domlnlon
(1) 1hose lnLended for publlc use such as roads canals rlvers LorrenLs porLs and brldges
consLrucLed by Lhe SLaLe banks shores roadsLeads and oLhers of slmllar characLer
(2) 1hose whlch belong Lo Lhe SLaLe wlLhouL belng for publlc use and are lnLended for some
publlc servlce or for Lhe developmenL of Lhe naLlonal wealLh (Lmphasls supplled)
1he Lerm porLs x x x consLrucLed by Lhe SLaLe lncludes alrporLs and seaporLs 1he AlrporL
Lands and 8ulldlngs of MlAA are lnLended for publlc use and aL Lhe very leasL lnLended for
publlc servlce WheLher lnLended for publlc use or publlc servlce Lhe AlrporL Lands and
8ulldlngs are properLles of publlc domlnlon As properLles of publlc domlnlon Lhe AlrporL
Lands and 8ulldlngs are owned by Lhe 8epubllc and Lhus exempL from real esLaLe Lax under
SecLlon 234(a) of Lhe Local CovernmenL Code
4 Concluslon
under SecLlon 2(10) and (13) of Lhe lnLroducLory rovlslons of Lhe AdmlnlsLraLlve Code whlch
governs Lhe legal relaLlon and sLaLus of governmenL unlLs agencles and offlces wlLhln Lhe
enLlre governmenL machlnery MlAA ls a governmenL lnsLrumenLallLy and noL a governmenL
owned or conLrolled corporaLlon under SecLlon 133(o) of Lhe Local CovernmenL Code MlAA
as a governmenL lnsLrumenLallLy ls noL a Laxable person because lL ls noL sub[ecL Lo Laxes
fees or charges of any klnd by local governmenLs 1he only excepLlon ls when MlAA leases lLs
real properLy Lo a Laxable person as provlded ln SecLlon 234(a) of Lhe Local CovernmenL
Code ln whlch case Lhe speclflc real properLy leased becomes sub[ecL Lo real esLaLe Lax 1hus
only porLlons of Lhe AlrporL Lands and 8ulldlngs leased Lo Laxable persons llke prlvaLe parLles
are sub[ecL Lo real esLaLe Lax by Lhe ClLy of aranaque
under ArLlcle 420 of Lhe Clvll Code Lhe AlrporL Lands and 8ulldlngs of MlAA belng devoLed Lo
publlc use are properLles of publlc domlnlon and Lhus owned by Lhe SLaLe or Lhe 8epubllc of
Lhe hlllpplnes ArLlcle 420 speclflcally menLlons porLs x x x consLrucLed by Lhe SLaLe whlch
lncludes publlc alrporLs and seaporLs as properLles of publlc domlnlon and owned by Lhe
8epubllc As properLles of publlc domlnlon owned by Lhe 8epubllc Lhere ls no doubL
whaLsoever LhaL Lhe AlrporL Lands and 8ulldlngs are expressly exempL from real esLaLe Lax
under SecLlon 234(a) of Lhe Local CovernmenL Code 1hls CourL has also repeaLedly ruled LhaL
properLles of publlc domlnlon are noL sub[ecL Lo execuLlon or foreclosure sale
JLkLICkL we GkAN1 Lhe peLlLlon We SL1 ASIDL Lhe assalled 8esoluLlons of Lhe CourL of
Appeals of 3 CcLober 2001 and 27 SepLember 2002 ln CAC8 S no 66878 We DLCLAkL Lhe
AlrporL Lands and 8ulldlngs of Lhe Manlla lnLernaLlonal AlrporL AuLhorlLy LkLM1 from Lhe
real esLaLe Lax lmposed by Lhe ClLy of aranaque We declare VCID all Lhe real esLaLe Lax
assessmenLs lncludlng Lhe flnal noLlces of real esLaLe Lax dellnquencles lssued by Lhe ClLy of
aranaque on Lhe AlrporL Lands and 8ulldlngs of Lhe Manlla lnLernaLlonal AlrporL AuLhorlLy
excepL for Lhe porLlons LhaL Lhe Manlla lnLernaLlonal AlrporL AuLhorlLy has leased Lo prlvaLe
parLles We also declareVCID Lhe assalled aucLlon sale and all lLs effecLs of Lhe AlrporL Lands
and 8ulldlngs of Lhe Manlla lnLernaLlonal AlrporL AuLhorlLy
no cosLs
SC CkDLkLD
looqoolboo I looo Oolombloq oote5ootloqo 5ooJovolCotlettez AottloMottloez
otooo otplo Motole ollejo 5t Azcooo 1loqo lcoNozotlo Cotclo veloco It
II concur