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expressed therein.
Internationalization of Philippine Territory: The Question of Boundaries
Internationalization of Philippine Territory:
The Question of Boundaries*
Merlin M. Magallona**
Its territory, together with the population, was annexed by the Spanish Crown
under the 16th century international law of Christian nations. The elements
towards the formation of the Philippine statehood were spread through centuries,
the gestation process marked by the revolutionary war of the Filipino nation and
by the treaty of cession between two major powers, and finally arriving at the
grant of independence under general international law of the fourth decade of
the 20th century.
2. It is the cession of the Philippine Islands under the treaty of peace between
the United States and Spain, ending the Spanish-American War, that provides
some ground for evaluating the status of Philippine territory. With respect to the
Philippine Islands, the Treaty of Paris of 10 December 1898 reads in Article III:
which lines would represent the boundary lines of the Philippine Archipelago,
together with the boundaries set forth in the treaty between the United States and
Spain on 7 November 1900 and the treaty between the United States and Great
Britain on 2 January 1930.
* Published with the permission of Justice Adolfo Azcuna (Ret.) Chancellor, Philippine Judicial Academy and of
its Academic Council.
** Professorial Lecturer and former Dean and Professor of Law, U.P. College of Law; Professor, San Beda Gradu-
ate School of Law.
Within the same lines, the Treaty sets forth the technical definition of the
territorial boundaries of the Philippine Archipelago, as follows:
A line running from west to east along or near the twentieth parallel
of north latitude, and through the middle of the navigable channel
of Bachi, from the one hundred and eighteenth (118th) to the one
hundred and twenty seventh (127th) degree meridian of longitude
east of Greenwich, thence along the one hundred and twenty-
seventh (127th) degree meridian of longitude east of Greenwich
to the parallel of four degrees and forty five minutes (445) north
latitude, thence along the parallel of four degrees and forty five
minutes (445) north latitude to its intersection with the meridian
of longitude one hundred and nineteen degrees and thirty five
minutes (11935) east of Greenwich, thence along the meridian of
longitude one hundred and nineteen degrees and thirty five minutes
(11935) east of Greenwich to the parallel of latitude seven degrees
and forty (740) north, thence along the parallel of latitude seven
degrees and forty minutes (740) north to its intersection with the
one hundred and sixteenth (116th) degree meridian of longitude east
of Greenwich, thence by a direct line to the intersection of the tenth
(10th) degree parallel of north latitude with the one hundred and
eighteenth (118th) degree meridian of longitude east of Greenwich,
and thence along the one hundred and eighteenth (118th) degree
meridian east of Greenwich to the point of beginning.
3. The acquisition of Philippine Islands by the United States from Spain by cession
may be surveyed from the perspective of general international law, beginning with
the legality of war by which the Philippine Islands was ceded. At the time, a State
may resort to war against any other state without violating international law4;
rather, in the settlement of international disputes war was a normal expression of
state sovereignty. As in the case of the belligerent states in the Spanish-American
War, the state of war was terminated by the Treaty of Paris. It is a treaty of peace
that went beyond the termination of the state of war; it dealt with the acquisition
of territories the validity of which is in accord with general international law at
the time.
4. As in the case of the Philippine Islands, the sphere of sovereignty of the United
States to which the Archipelago was ceded is determined by the Treaty of Paris as
5. It is to be assumed that the territory ceded by Spain under the Treaty of Paris
was by the principle of effectiveness in general international law, subject to the
exercise of its sovereignty and jurisdiction within the delimitation of the boundaries of
the Philippine Archipelago, as established in Article III of the said treaty.
6. By the treaty of cession, the rights and obligations of the United States inherent
in the acquisition of territory of the Philippine Archipelago are directly derived
from the binding character of the said treaty under general international law and
not by succession from Spain.
The term boundary in international law has been defined as a line which
determines the limit of the territorial sphere of jurisdiction of States or other
entities having an international status.6 Boundaries are described as permanent
lines dividing sphere of de jure jurisdiction. They are imaginary lines on the
surface of the earth which separate the land or maritime territory of one State
from that of another.7
The Philippines, together with the boundaries forming part of its territory,
derives its international status from the fact and the law that it was the object
and purpose of the treaty as a source of law. The validity of the Treaty of Paris
is beyond question in establishing the rights and duties of the two great powers
at the time, gaining the general acquiescence of the international community
in the span of more than a century. Other than by treaty or other consensual
arrangement, there appears to be no general norm of international law governing
the determination of boundaries.
The cession of the Philippines by the Treaty of Paris with respect to the
determination of boundaries under its Article III was apparently left to the inter se
relations of the United States and Spain, as dictated by the results of the Spanish-
American War. While there appears to be no duty under international law of
the 19th century prescribing as to how boundaries were to be determined in the
relevant circumstances, reasonably, there arises the presumption that Spains
cession of the Philippine Islands was on the basis of the scope of its territorial
sovereignty at the time, as delimited in Article III of the Treaty of Paris and as
As the outer limit of territorial sovereignty, the boundaries serve to maintain the
consistency and stability of the States territory as an element of statehood. As
delimited by its boundaries the States jurisdiction is applied with effectiveness
and for the protection of all inhabitants, both nationals and aliens. And thus
the boundaries of the Philippines as defined by Article III of the Treaty of Paris
are interconnected with Article IX which allows Spanish subjects who retained
allegiance to the Crown of Spain to remain in the Philippine Islands with all
rights recognized under the Treaty subject to the jurisdiction in the change of
sovereignty; under Article XI of the Treaty they shall be subject in matters civil
as well as criminal to the jurisdiction of the new sovereign.
The territorial sovereignty of the United States under the Treaty of Paris was
internalized in the Jones Law, enacted by the U.S. Congress as the Philippine
Autonomy Act of 1916. The enabling clause of this Act reads:
Further, the United States Congress enacted into law the Tydings-Mc-Duffie Act
providing for complete independence of the Philippine Islands, the adoption
of its Constitution as well as the Government of the Commonwealth of the
Philippines Islands, which shall exercise jurisdiction over all territory ceded to the United
States by the treaty of peace concluded between the United States and Spain on the 10th day of
December 1898, the boundaries of which are set forth in article III of said treaty, together
with those islands embraced in the treaty between Spain and the United States
concluded at Washington on the 7th day of November 1900.8
All the property and rights which may have been acquired in the
Philippine Islands by the United States under the treaties mentioned
in the first section of this Act, are hereby granted to the government of
the Commonwealth of the Philippine Islands when constituted.9
The succession contemplates in the first place rights pertaining to the principle
of sovereignty, the application of which is circumscribed by the territorial
boundaries.
It may be recalled that prior to the Jones Law, Public Law No. 235 or the
Philippine Bill of 1902 was enacted by the U.S. Congress providing for the
creation of the Philippine Commission to exercise the powers of government, to
be administered for the benefit of the inhabitants thereof . The scope of those
powers comprehends those within Section 12: [A]ll the property and rights
which may have been acquired in the Philippine Islands by the United States
under the treaty of peace with Spain, signed December tenth, eighteen hundred
and ninety-eighteen hundred and ninety-eight. This Act declares that those
property and rights are hereby placed under the control of the government
of said islands. The totality of rights thus contemplates the determination by
boundaries of the sphere of jurisdiction.
In the Administrative Code of 1916 (Act No. 2657) and as revised by the
Administrative Code of 1917 (Act No. 2711), the provisions on sovereignty are
in terms of the distribution of powers of government within the territorial
boundaries as spelled out in the aforesaid treaties. Section 16 of the Revised
Administrative Code of 1917 states:
In 1932, the Philippine Commission enacted Act No. 4003 to amend and
compile the laws relating to fish and other aquatic resources of the Philippine
Islands. It occasioned the definition of Philippine waters or territorial waters
of the Philippines; section 6 of the Act construes this to mean
The foregoing considerations should dispel the objection of the United States
Government that the limits set by the Treaty of Paris are boundary lines.
It expressed the view that they constitute only a delimitation of geographical
area within which the land area belongs to the Philippines.12 In a protest to the
Declaration which the Philippine Delegation made when it signed and ratified
the UNCLOS, the United States stated that neither the treaties nor practice
has conferred upon the United States, nor upon the Republic of the Philippines
as successor to the United States, greater rights in the waters surrounding the
Philippine Islands than are otherwise recognized in customary international
law.13
The real function of the boundaries as drawn in Article III of the Treaty of
Paris, together with the supplementary agreements, has been historically
shown by application on the part of the United States and by the Philippine
Government as successor-in-interest. This continuity in succession assumed some
qualitative change when towards its independence the Philippines achieved the
The Philippines comprises all the territory ceded to the United States
by the Treaty of Paris concluded between the United States and
Spain on the tenth day of December, eighteen hundred and ninety-
eight, the limits of which are set forth in Article III of the said treaty, together
with all the island in the treaty concluded at Washington between the
United States and Spain on the seventh day of November, nineteen
hundred, and the treaty concluded between the United States and
Great Britain on the second day of January, nineteen hundred and
thirty, and all territory over which he present Government of the
Philippine Islands exercises jurisdiction.
States and Great Britain on January 2, 1930, and all the territory
over which the Government of the Philippine Islands exercised
jurisdiction at the time of the adoption of the Constitution;
Whereas, all the waters within the limits set forth in the above-mentioned treaties
have always been regarded as part of the territory of the Philippines Islands;17
Whereas, all the waters around, between and connecting the various islands of
the Philippine archipelago, irrespective of their width or dimension, have always
been considered as necessary appurtenances of the land territory, forming part of
the inland or internal waters of the Philippines;18
Whereas, all the waters beyond the outermost islands of the archipelago but
within the limits of the boundaries set forth in the abovementioned treaties comprise
the territorial sea of the Philippines;19
At the time the treaties concerning the Philippine Archipelago were concluded,
no objective standards existed under international law governing archipelagos,
particularly mid-ocean archipelagos in statehood. Indeed not until the First UN
Conference on the Law of the Sea in 1958 did the legal status of archipelagos
came into diplomatic deliberations. And not until the adoption of the UN
Convention on the Law of the Sea in 1982 (UNCLOS) was the international law
of the archipelagic states formally constituted. The International Treaty Limits
of the Philippine Archipelago was left to be determined, as it was, to the relations
of the State Parties primarily of the Treaty of Paris, with the recognition of the
international community; the unity of its land areas and their connecting waters
was integral to its internal sovereignty in statehood as thus established.
At the time of the three UN conferences on the law of the sea, the defined
territory of the Philippines as an independent state was already well-established.
On the day its independence was proclaimed on July 4, 1946, the United States
concluded the Treaty of General Relations with the new republic in which it is
provided in Article VII that
The Republic of the Philippines agrees to assume all continuing
obligations assumed by the United States of America under the
Treaty of Paris between the United States of America and Spain
concluded at Paris on the 10th day of December 1898, by which
the Philippine Islands were ceded to United States of America, and
under the Treaty between the United States of America concluded
at Washington on the 7th day of November 1900.
Inevitably, when the United States invited the Governments with which it had
diplomatic relations to recognize the Republic of the Philippines as a member
of the family of nations, it involved the recognition of its territorial boundaries
as set forth in treaties as a source of international law. This invitation is set forth in
Article II of the Provisional Agreement between the United States of America and
the Republic of the Philippines Concerning Friendly Relations and Diplomatic
and Consular Relations, signed at Manila, July 4, 1946. This provision reads:
[2] All other water areas embraced within the lines described in the
Treaty of Paris of 10 December 1898, the Treaty concluded at
Washington, D.C., between the United States and Spain on 7
November 1900, the Agreement between the United States and
the United Kingdom of 2 January 1930.[]
The proceedings on the breadth of the territorial sea in the 1960 UN Law of
the Sea Conference elicited questions as to the peculiarities of the legal regime
of the waters within the territorial boundaries of the Philippine Archipelago. In
response to these questions, the Philippine Delegation held on to the following
position:
* * *
The legal and historic title communicated and affirmed by the Philippine
Government in the foregoing statements primarily refer to the treaties as sources
of international law governing the Philippine Archipelago; they define the rights
and obligations of the States parties of those treaties, together with their binding
status on the international community at the time. The legal regime created by
this treaties has been internalized into the constitutional system of the Philippine
State through the 1935 Constitution and is perpetuated through changes in its
fundamental law. The survey presented above in Part I on the General View of
Philippine Territory in International Law substantiates the legal and historic
title creative of territorial sovereignty, the acquisition and possession of which not
contrary to general norms of international law have become an integral element
of Philippine statehood.
The sovereignty of a coastal State extends beyond its land territory and
internal waters and, and in case of archipelagic State, its archipelagic
waters, to an adjacent belt of sea, described as the territorial sea.20
This provision means that in general coastal States have sovereignty over their
land territory and internal waters, which sovereignty extends to other areas. This
general norm, however, cannot apply to the Philippines as an archipelagic state
because the category of internal waters mentioned in the aforesaid provision
refer to waters landward of the normal or straight baseline as established in Articles
7 or 8 of the UNCLOS. The Philippines does not possess internal waters of that
category; what it has landward of its archipelagic baseline under the UNCLOS are
archipelagic waters, which are subject to the right of innocent passage by ships of all
States. The so-called internal waters of the Philippines under the UNCLOS are
those referred to in Article 50, consisting of waters in mouth of rivers (in Article
9), in bays (in Article 10) and in harbor works in (Article 11).
Whereas, all the waters around, between and connecting the various
islands of the Philippine archipelago, irrespective of their width or
dimension, have always been considered as necessary appurtenances
of the land territory forming part of the inland or internal waters of
the Philippines; [.]
The UNCLOS does not recognize internal waters as known in the Constitution
in the case of the Philippines as an archipelagic state. Instead, it has replaced
internal waters of such category with archipelagic waters. Virtually of the same
After declaring that the archipelagic state has sovereignty over archipelagic waters
in Articles 2 and 49, UNCLOS stipulates the limitation to that sovereignty; it
provides in Article 49(3) that This sovereignty is exercised subject to this Part,
which pertains in particular to Article 52 in providing that ships of all States
enjoy the right of innocent passage through archipelagic waters. In the case
of the Philippines, this right of innocent passage is exercisable as a matter of
objective right in the waters around, between and connecting the islands of the
archipelago.
(1) the normal baseline and the straight baseline provided respectively in
Articles 7 and 8 of the UNCLOS, which apply to all coastal States; and
(2) the archipelagic baseline in Article 47 of the UNCLOS, which specially
applies only to archipelagic states, such as the Philippines.
The distinction between these two categories of baselines lies in the legal status
of waters enclosed by, or landward of, the baseline. As regards the normal or
straight baseline, these waters are characterized as internal waters. Thus, Article
8 provides:
[w]aters on the landward side of the baseline of the territorial sea form
part of the internal waters of the State.
But with respect to archipelagic baseline, the waters landward or within the
baseline are archipelagic waters. Article 49 of the UNCLOS provides:
On one hand, the status of internal waters in regard to coastal states in general is
unqualified as forming part of the sovereignty over land territory. Expressing the
general norm of international law, Article 2(1) of the UNCLOS reads:
On the other hand, with respect to archipelagic states, while the UNCLOS
describes archipelagic waters as area of sovereignty in Articles 2 and 49, this
sovereignty is subject to Article 52 which provides that
Coastal states under the general norm of international law have the benefit of
sovereignty over their internal waters landward of the baseline, by prohibiting
navigation by foreign ships of all states without express permission. But by special
rules governing archipelagic states, what is defined as internal waters in general
international law and under its own Constitution in the Philippine case
are subject to the right of innocent passage of ships of all States under the
UNCLOS. The only internal waters left to the Philippines under the UNCLOS
are waters in mouths of rivers, in bays and in permanent harbor works identified
in respectively Articles 9, 10 and 11, pursuant to Article 50.
But with respect to the Philippines, as subject to special rules governing archipelagic
states, the baseline ceases to be a demarcation line between territorial sea and
waters landward of the Philippine archipelagic baseline, because the right of
innocent passage may be exercised in continuity from the territorial sea into the
Beside this common character of innocent passage in both regimes, there are
differences between them which are of crucial disadvantage to the Philippines
as an archipelagic state. In Article 18(2)(a), UNCLOS defines passage to be
characterized as innocent as meaning navigation through the territorial sea for
the purpose of traversing that sea without entering internal waters or calling of a
roadstead or port facility outside the internal waters. With respect to the Philippines,
the right of innocent passage in the territorial sea has suffered a change adversed
to the Philippines in its exercise; for the reason that the qualification without
entering internal waters Article 18(2)(a) ceases to be prohibitive or becomes
inapplicable in the absence of internal waters landward of the archipelagic
baselines of the Philippines, internal waters having been replaced by archipelagic
waters. In effect, in place of this prohibitive qualification there is installed the
right of innocent passage in the archipelagic waters. Thus, that qualification has
become meaningless.
* * *
* * *
Archipelagic sea lane passage under the UNCLOS combines the right of
navigation of all foreign ships and the right of overflight of all foreign aircraft,
as provided in Article 53 (1) and (2). It is an independent legal regime from, and
is an addition to, the right of innocent passage in the territorial sea and in the
archipelagic waters. No less then 50 nautical miles wide, archipelagic sea lanes
and air routes, as Article 53(4) of the UNCLOS prescribes, shall traverse the
archipelagic waters and the adjacent territorial sea and shall include all normal
passage routes used as routes for international navigation or overflight through or
over archipelagic waters.
Customary international law does not allow overflight over the territorial sea
nor over archipelagic or internal waters. Codifying general international law,
Article 1 of the Chicago Convention on International Civil Aviation mandates
that every State has complete and exclusive sovereignty over the airspace above
its territory. In Article 3, the Convention prohibits every State aircraft to fly over
the territory of another State or land thereon without authorization by special
agreement or otherwise and in accordance with the terms thereon.
In instituting the archipelagic sea lane passage and overflight for archipelagic
states, including the Philippines, UNCLOS sets aside these norms of general
international law by providing the right of overflight across the territorial sea and
archipelagic waters.
Foremost in the function of the archipelagic sea lane passage is the military-
strategic interest. Judge Shigeru Oda of the International Court of Justice has
summarized this rationale as follows:
The requirement that air routes must be above archipelagic sea lanes
was dictated not by need of civil air navigation but by necessity to
provide maneuvering possibilities for military aircraft while the naval forces of
a particular fleet are passing through the sea lanes.26
The military-strategic motive power that propelled the archipelagic sea lanes
passage into the mainstream of international law of the sea carries serious
implications on the security and integrity of the national community. In context,
it is most pertinent to inquire why the Philippines must pay such a heavy price in
the interest of the major military powers, such as the United States and China,
which might be brought to a sharper military competition sooner than in the
coming decade. Recently, by the time that a bill establishing the archipelagic sea
lane was filed in Congress, China announced the launching of its first aircraft
carrier.
What may be the consequence if the Philippines decides not to designate the
archipelagic sea lanes? The result may be worse by virtue of the application of
paragraph 12 of Article 53 of the UNCLOS, as follows:
If an archipelagic State does not designate sea lanes or air routes, the
right of archipelagic sea lanes passage may be exercised through the
routes normally used for international navigation.
Yet the Delegation went on and signed the UNCLOS which contradicted and
in effect nullified that position by its provision on archipelago waters.
Later, in the face of that contradiction, the Delegation proceeded to have the
UNCLOS ratified, which was done to express the consent of the Philippines to
be bound by the UNCLOS.
Enigmatic is the fact that when it signed the UNCLOS on 10 December 1982,
the Delegation submitted a Declaration which manifests that in signing the
1982 United Nations Convention on the Law of the Sea it does so with the
understandings embodied in this declaration.
2. Such signing shall not in any manner affect the sovereign rights
of the Republic of the Philippines as successor of the United
States of America under and arising out of the Treaty of Paris
between Spain and the United States of America of December
10, 1898, and the Treaty of Washington between the United
States of America and Great Britain of January 2, 1930.
The Declaration in paragraph 5 prescribes that the UNCLOS shall not have
the effect of amending Philippine laws, apparently with respect to territory.
UNCLOS therefore is reduced to irrelevance as to the legal status of Philippine
territory, in particular as concerning the changes contemplated under Part IV of
the UNCLOS governing the Philippines as an archipelagic state. This paragraph
provides in part:
The Philippine Delegation justifies this Declaration under Article 310 of the
UNCLOS as a way of harmonization of its laws and regulations with the
provisions of this Convention. This justification fails because, contrary to Article
310, the Declaration purport[s] to exclude or to modify the legal effect of the
provisions of this Convention in their application to the Philippines.
2. Was the Declaration intended to prepare the way for the concurrence of the
UNCLOS by the Batasang Pambansa, in anticipation of constitutional objections
(a) it would not impair the sovereign rights of the Philippines under the
Constitution;
(b) it would not affect the territorial rights of the Philippines as derived from
the Treaty of Paris and related treaties; and
(c) it would not be amending laws apparently in regard to the defined
territory of the Philippines.
However, all these undertakings under the Declaration have no legal ground
under the UNCLOS and the entire Declaration stands as a violation of the
UNCLOS. In other words, the Philippine Declaration is not binding on any
State Party of the UNCLOS. With respect to the impact of the UNCLOS on
Philippine territory, these undertakings would prove to be false.
At any rate, by Resolution No. 121, the Batasan expressed its concurrence in the
UNCLOS on 22 February 1984. It reads:
While the Declaration has no legal standing in the international plane and is not
binding in the relation between the Philippines and the other States Parties, in
domestic law, having been made an integral part of Resolution No. 121, as its
Annex, it is an enactment of the Batasang Pambansa within its constitutional
authority. Its legal significance lies in its disclosure of the fuller legislative intent
as to the limitations that will control the implementation or operation of the
UNCLOS in Philippine jurisdiction.
In this sense, the undertakings set forth in the Declaration appear to be in the
nature of conditions to concurrence. Thus, the Batasan expressed its concurrence,
subject to the undertakings stipulated in the Declaration, as explained above. This
would include the necessity of a continuing surveillance as to the implementation
of the UNCLOS in keeping with the undertakings required by the Declaration.
This interpretation raises the more basic question as to whether the Constitution
would accommodate a conditional concurrence. This line of reasoning finds a
fundamental obstacle because the Declaration is based on the supremacy of the
Constitution and the laws over the UNCLOS and hence the UNCLOS shall not
effect any change in the pertinent domestic law.
Taken together, the undertakings under the Declaration necessarily imply that
it preclude the application of the UNCLOS in Philippine jurisdiction and
sovereignty as defined under the Constitution and the laws. Hence, conditional
concurrence may mean no concurrence at all.
The New Baseline Law in Republic Act No. 9522 may prove to be a turning
point in the territorial sovereignty of the Philippines.
How does RA 9522 affect the legal status of Philippine territory as defined in the
preambular paragraphs of RA 3046. In particular, how does Section 8 of the new
law amend or modify, if at all, the complex of territorial rights comprehended by
the preamble of RA 3046, as follows:
(a) those that are integral to the Treaty of Paris, together with the
two supplementary agreements, which at time of the enactment
of RA 3046 in 1961 were provided in the definition of National
Territory set forth in the 1935 Constitution;
(b) those pertaining to all the waters within the boundaries
established by these treaties; and
(c) those rights pertaining to all the waters around, between and
connecting the various islands of the Philippine archipelago.
The term archipelagic baseline may have been derived from Article 47 of the
UNCLOS. This provides in part that The archipelagic State may draw straight
archipelagic baselines joining the outermost points of the outermost islands and
drying reefs of the archipelago .
But it is the ponencia of the Supreme Court in Magallona vs. Ermita36 which clearly
indicates the decisive premise in our discussion that the New Baseline Law is
On the basis of the foregoing premise in regard to the status of the New Baseline
Law under the UNCLOS as applied to Philippine territory, the following
implications are submitted:
(a) the New Baseline Law represents the entry point of the
Philippines into the special rules of the UNCLOS governing
archipelagic states, signifying the status of the Philippines as an
archipelagic state;
(b) the application of the archipelagic baselines under Article 47
of the UNCLOS implies necessarily the application of the
other elements or features of the archipelagic state provided in
Part IV of the UNCLOS, namely, the archipelagic waters and
archipelagic sea lane passage;
(c) as a consequence of the totalizing coverage of the UNCLOS,
the entire Philippine territory is reorganized along the
characterization explained in our earlier discussion, including
the elimination of its boundaries established by the Treaty of
Paris and related international agreements.
END NOTES
1 Montevideo Convention on Rights and Duties of States (1933), Article I, 165 League
of Nations Treaty Series 19. See Hans Kelsen, Principles of International Law, 2nd
ed., revised and edited by Robert W. Tucker, 1967, p. 307: Traditional doctrine
distinguishes three elements of the state: its territory, its people, and its power
exercised by an independent and effective government.
2 James Crawford, The Creation of States in International Law, 1979, pp. 48-52;
Kelsen, op. cit., p. 307.
3 See Hiran W. Jayewardene, The Regime if Islands in International Law, 1989, pp.
104-105.
4 See Kelsen, op. cit., p. 29.
5 Kelsen, op.cit., p. 319.
6 Michael, Boundaries in Rudolf L. Bindschedler (ed.) Encyclopedia of Public
International Law, Vol. 10, 1987, p. 17.
7 Ibid., p. 18.
8 An Act to Declare the Purpose of the People of the United States as to the Future Political Status
of the People of the Philippine Islands and to Provide a More Autonomous Government for those
Islands. Emphasis added. The treaty referred to is meant to be the Treaty of Paris of
10 December 1898.
9 Article 1. Emphasis added.
10 Emphasis added.
11 Emphasis added.
12 Emphasis added.
13 4 Whiteman, Digest of International Law 283.
14 As quoted in Kwiatkowska, An Assessment of National Legislation on Archipelagic
Waters, 6 World Bulletin, 23,45.
15 See Island of Palmas Case, I RIAA 829, 839 (1928).
16 See North Sea Continental Shelf Cases, ICJ Reports, 1969, pp. 3, 32.
17 Constitution (1987), Article I.
18 Emphasis added.
19 Emphasis added.
20 Emphasis added.
21 Emphasis added.
22 See The Fisheries Case, ICJ Reports, 1951, pp. 46, 133.
23 See the North Atlantic Coast Fisheries ABritration Case, vol. 11, pp. 167, 196).
24 Ian Brownlie, Principles of Public International Law, 1998, pp. 116-117.
25 E.D. Brown, The International Law of the Sea, vol. I, 1994, pp. 38,40.
26 The Passage of Warships Through Straights and Archipelagic Waters, in J.U. van
Dyke, et als., (eds.), International Navigation: Rocks and Shoals, pp. 155-157, 260
(1988).
27 Barbara Kwiatkowska, Evaluation of State Legislation on Archipelagic Waters, 6
World Bulletin 22, 23 (1990). Emphasis added.
28 Ibid., pp. 22-23.
29 D.L. Larson, Security Issues and the Law of the Sea: A General Framework, 15
Ocean Dev. & Intl Law, 99, 118 (1985).
30 UN Dept. of Disarmament Affairs, The Naval Arms Race, 1986, p. 14.
31 See H.W. Jayewardene, The Regime of Islands in International Law, 1990, pp. 170-
171.
31a
Emphasis added.
32 China flexes muscle, shows submarine fleet, Philippine Star, October 30, 2013, p. 1.
33 R.R. Churchill and A.V. Lowe, The Law of the Sea, 1983, pp. 96-97.
34 Kwiatkowska, op.cit., supra, note 24, p. 37, citing UNCLOS official records in vol. II,
paras. 61.2, 65 and 66.
35 Emphasis added.
36 G.R. No. 187167, August 18, 2011.
I. OVERVIEW
The right against unreasonable search and seizure is no ordinary right which may
yield to the predilection of a police officer. It is a right guaranteed inviolable by the
Constitution.1 Thus, as early as 1904, at the outset of our recorded jurisprudential history,
the rule has been made that the poorest and the most humble citizen or subject may, in
his cottage, no matter how frail or humble it is, bid defiance to all powers of the State;
the wind, the storm and the sunshine alike may enter through its weather-beaten parts,
but the king may not enter against its owners will; none of his forces dare to cross the
threshold of even the humblest tenement without its owners consent.2 As it is to his
cottage, so it is to his person.3 This exemplified zone of privacy in the home is now
constitutionally4 strengthened and amplified in scope to cover not only the citizens right
to be let alone,5 but also the right to be secured in their persons, houses, papers and effects6
and communication and correspondence.7 The inviolability of these zones of privacy is
* This article is a chapter in the authors forthcoming book on Criminal Procedure tentatively titled Rights of the
Accused: A Treatise on Philippine Criminal Procedure.
** A.B., University of Sto. Tomas; Ll.B., University of the Philippines, Ll.M. (candidate), San Beda Graduate
School of Law; Editor-in-Chief, San Beda Graduate School of Law Journal (2006-200).
1 CONST., Article III, Section 2: The right of the people to be secure in THEIR PERSONS, house, papers,
and effects against unreasonable searches and seizures of whatever nature and for any purpose SHALL BE
INVIOLABLE xxx xxx.
2 U.S. v. Arceo, G.R. No. 1491. March 5, 1904, 3 Phil. 381 [1904]; Ali v. Gastro, G.R. No. L-69401. June 23,
1987; The quote is actually a rephrase of William Pitts speech on the Excise Bill in the House of Commons in
March 1763 or a little less than a century and a half before: The poorest man may in his cottage bid defiance
to all the force of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storms may
enter, the rain may enter, but the King of England cannot enter; all his forces dare not cross the threshold of
the ruined tenement. (Pritchett, Herman C., Constitutional Civil Liberties 177 (1984 ed.). See J. Puno, concurring
opinion in Republic v. Sandiganbayan, G.R. No. 104768, July 21, 2003 for an excellent historical perspective of
the guarantee against unreasonable search and seizure.
3 CONST., Article III, Section 2.
4 Per J. Puno in Ople v. Torres, G.R. No. 127685, July 23, 1998, the right to privacy was given constitutional
foundation in Griswold v. Connecticut, 381 U.S. 479, 14 L. Ed. 2d 510 [1965] adopted in Morfe v. Mutuc, 22
SCRA 424, 444-445.
5 Per J. Bersamin, concurring and dissenting in Pollo v. Constantino-David, G.R. No. 181881, October 18, 2011,
the right to be let alone phrase is taken by Samuel Warren and Louis Brandeis in their co-written article in
1890 The Right to Privacy (4 Harvard Law Review 193-220 [1890]), from Judge Thomas M. Cooleys 1888 treatise
The Law of Torts 29 (2d. 1888).
6 CONST., Article III, Section 2.
7 CONST., Article III, Section 3.
further fortified in our statutes8 and by the Universal Declaration of Human Rights which
mandates that no one shall be subjected to arbitrary interference with his privacy and
everyone has the right to the protection of the law against such interference or attacks.9
Any form of intrusion against these rights is impermissible unless excused by law and in
accordance with customary legal process.10
Thus, the general rule is that for a search or seizure to be valid, there must be a
search warrant validly issued by a judge,11 which seemingly suggests that the absence
of a warrant makes any arrest, search, and seizure unreasonable.12 Hence, exceptions
to this rule have always been allowed under the strictest of conditions, as it is settled
jurisprudence that the Bill of Rights has been intended to protect the individual against
the forces of the state.13
The constitutional provision on search and seizure,14 however, clearly contemplates
two independent situations when the right of the people to be secure in their persons,
houses, papers, and effects is deemed violated: (1) when the search and seizure without
warrant is unreasonable; and (2) when the search and seizure with a warrant was not founded on
judicially-determined probable cause. What would be unreasonable in cases of search
and seizure without warrant is not the fact of the absence of a warrant, but also the lack
of probable cause as deterrence against police arbitrariness. Thus, the Constitution does
not prohibit all searches and seizures but only those which are unreasonable searches
and seizures.15
The provision does not state that any search without warrant, by that omission alone,
is unreasonable. The unreasonableness must be determined by the facts surrounding each
case. Had the reading been faithful to the contextual dichotomy between the reasonableness
8 Ople v. Torres, G.R. No. 127685, July 23, 1998: Zones of privacy are likewise recognized and protected
in our laws. The Civil Code provides that [e]very person shall respect the dignity, personality, privacy and
peace of mind of his neighbors and other persons and punishes as actionable torts several acts by a person of
meddling and prying into the privacy of another (Article 26 of the Civil Code). It also holds a public officer or
employee or any private individual liable for damages for any violation of the rights and liberties of another
person (Article 32, Civil Code) and recognizes the privacy of letters and other private communications (Article
723, Civil Code). The Revised Penal Code makes a crime the violation of secrets by an officer (Article 229,
Revised Penal Code), the revelation of trade and industrial secrets (Articles 290-292, Revised Penal Code), and
trespass to dwelling (Article 280, Revised Penal Code). Invasion of privacy is an offense in special laws like the
Anti-Wiretapping Law (R.A. 4200), the Secrecy of Bank Deposits Act (R.A. 1405) and the Intellectual Property
Code (R.A. 8293). The Rules of Court on privileged communication likewise recognize the privacy of certain
information (Section 24, Rule 130 (c), Revised Rules on Evidence.
9 Miguel v. Gordon, G.R. Nos. 174340, 174318 & 174177, October 17, 2008 citing Article 12 of the Universal
Declaration of Human Rights. See also Article 17 (1) and (2) of the International Covenant on Civil and
Political Rights.
10 Miguel v. Gordon, G.R. Nos. 174340, 174318 & 174177, October 17, 2008.
11 People v. Rodrigueza, 205 SCRA 791 [1992]
12 People v. Chua Hua San, G.R. No. 128222, June 17, 1999 citing People v. Barros, 231 SCRA 557, 565 [1994].
13 Protection of the Accused: A Human Right, p. 95 [1997 ed.]
14 1987 Const., Article III, Sec.2: The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizure of whatever nature and for any purpose shall be inviolable,
and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the complainant and witnesses he may produce,
and particularly describing the place to be searched and the person or things to be seized.
15 Pollo v. Constantino-David, G.R. No. 181881, October 18. 2011.
command and the warrant requirement as independent of each other, the bewildering number
of exceptions would not be exceptions at all but simply reasonable searches and seizures,
which do not require a warrant.
The fact that no warrant is required at all in certain searches and seizures is self-
evident in routine inspection of moving vehicles,16 customs and airport searches, stop and
frisk, and police checkpoints. The nature and purpose of these reasonable searches are not
dependent upon lack of time to secure a warrant or to make immediate arrest for fear of
escape by the suspect or destruction of evidence in his possession. That said, to require a
prior warrant in this kind of searches is self-defeating, if not a bizarre imposition. These
searches have no definite suspect, no targeted things, items, or articles to be seized and no
described place and particular person to be searched
The meaning of a search warrant has not changed to any substantial degree from its
original formulation under Section 95 of General Orders No. 58, the forerunner of our
present laws of criminal procedure. As then and now, [a] search warrant is an order in
writing issued in the name of the People of the Philippines, signed by a judge and directed
to a peace officer, commanding him to search for personal property described therein and
bring it before the court.17
Its purpose is to search for and seize personal property which is alleged to have been
stolen or embezzled, and other proceeds or fruits of the offense and property used or
intended to be used for committing an offense.18 It cannot be used, however, as an excuse
for the sole purpose of obtaining evidence not particularly described therein, as it serves
a higher purpose of screening legitimate application from those which are not, mediated
by the magistrate, an authority clothed with power to issue or refuse to issue search
warrants or warrants of arrest.19
16 Extensive search under the moving vehicle exception, however, requires probable cause that the motorist is a
law-offender or that he carries evidence of a crime. (People v. Saycon, 110995, September 5, 1994 citing People
v. Bagista, 214 SCRA 63 (1992); Valmonte v. de Villa, 185 SCRA 665 [1990]).
17 Rules of Court, Rule 126, Section 1; Rodriguez v. Villamiel, G.R. No. 44328, December 23, 1937.
18 Amarga v. Abbas, G.R. No. 8666, March 28, 1956.
19 People v. Encinada, G.R. No. 116720, October 2, 1997.
20 Kho v. Lanzanas, G.R. No. 150877, May 4, 2006 citing People v. Chiu, G.R. Nos. 142915-16, February 27,
2004, 424 SCRA 72, 84 and Malaloan v. Court of Appeals, G.R. No. 104879, 6 May 1994, 232 SCRA 249,
257.
21 Worldwide Web Corporation v. People, G.R. No. 161106, January 13, 2014; Planet Internet Corporation v.
Philippine Long Distance Telephone Company, G.R. No. 161266, January 13, 2014.
standing alone, a criminal action.22 While it is a special and peculiar remedy, drastic in
its nature, and necessitated by public necessity23 or public welfare, it cannot be employed
to transgress the constitutional rights of citizens.24 Thus, both the law on search
warrant, in particular, and the law on search and seizure, in general, call for a dogged and
persistent effort at balancing the right of the individual and the interest of the State. In
the process though, the constitutional rights of the individual to personal security in his
person, papers, houses, and effects must be liberally construed while statutes or process
authorizing searches and seizures must be strictly construed.25 In short, in cases of doubt,
the tilt of the scale must always be in favor of the individual and against the State.
B. Where to Apply for Search Warrant
The application for search warrant shall be filed depending upon the place,
circumstances, and nature and stage of the offense. While there is no requirement in the
Rules that the application be accompanied by a certificate of non-forum shopping, the
applicant cannot shop for forum. Thus, the policy against multiple court proceedings
clearly applies to application for search warrants.26 It may be noted, however, that the
absence of the certification of non-forum shopping in the application for search warrant
and absent any actual conduct of shopping for forum as when the applicant after
being denied in one court shall apply in another will not result in the dismissal of the
application for search warrant, the application not being an initiatory pleading, but only
a process.27
The former holdings28 made before the effectivity of the 2000 Revised Rules of
Criminal Procedure that an application for search warrant may be filed in a territorial
jurisdiction other than where the illegal articles sought to be seized are located due to the
regional scope of the Regional Trial Courts jurisdiction29 has been clarified. The rule
now is as follows:
1. In cases when the criminal action has not been filed, the application for
search warrant, as a general rule, shall be filed with the court within
whose territorial jurisdiction a crime was committed.30 It is only for
compelling reasons, which must be stated in the application, that
22 Malaloan v. Court of Appeals, G.R. No. 104879, 6 May 1994, 232 SCRA 249.
23 Id.
24 Rodriguez v. Villamiel, G.R. No. 44328, December 23, 1937 citing People v. Elias, 147 N. E., 472; Alvarez v.
Court of First Instance of Tayabas and Anti-Usury Board, 35 Off. Gaz., 1183.
25 People v. Lambujon, G.R. No. 89543, November 13, 1992; J. Feliciano, concurring and dissenting in In Re:
Umil v. Ramos, G.R. Nos. 81567, 84581-84, 85727, & 86332, October 3, 1991; Rodriguez v. Villamiel, G.R.
No. 44328, December 23, 1937 citing State v. Custer County, 198 Pac., 362; State v. McDaniel, 231 Pac., 965;
237 Pac., 373; Rose v. St. Clair, 28 Fed. [2d], 189; Leonard v. U. S., 6 Fed. [2d], 353; Perry v. U. S., 14 Fed. [2d],
88; Cofer v. State, 118 So., 613; Alvarez v. Court of First Instance of Tayabas and Anti-Usury Board, 35 Off.
Gaz., 1183.
26 Washington Distillers, Inc. v. Court of Appeals, G.R. No. 118151, August 22, 1996; Malaloan v. Court of
Appeals, 232 SCRA 249 [1994].
27 Savage v. Taypin, G.R. No. 134217, May 11, 2000.
28 Malaloan v. Court of Appeals, 232 SCRA 249 [1994]; Ilano v. Court of Appeals, 244 SCRA 346 [1995].
29 See People v. Chiu, G.R. Nos. 142915-16, February 27, 2004.
30 Rules of Court, Rule126, Section 2 (a).
the application may be filed with any court within the judicial region
where the crime was committed if the place is known or within the
judicial region where the warrant shall be enforced.31 This will not
violate the rule that venue in criminal cases is jurisdictional since no
criminal action has been filed yet, a search warrant being merely a
process and not a criminal action by itself.
2. In cases when the criminal action has already been filed, the
application shall only be made in the court where the criminal action
is pending.32 This is, this time, in observance of the rule that venue
in criminal cases is jurisdictional, the criminal action having been
already filed. The wisdom of this rule has been illustrated in one
case when the Supreme Court sustained the acquittal of the accused
based on the nullification of a search warrant by the regional trial
court who heard the case despite a previous ruling by the another
branch of the same court who issued the warrant upholding its
validity.33
As an exception to this rule on venue of application, the executive judges and vice-
executive judges of the regional trial courts of Manila and Quezon City may issue search
warrants personally endorsed for filing by the heads of specified police enforcement
agencies and for equally specified crimes.35 Later, the Supreme Court allowed the heads
of these agencies to delegate to their duly authorized officials the endorsements for the
application of the search warrant.36
31 Rules of Court, Section 126, Section 2 (b).
32 Rules of Court, Section 126, Section 2 (last paragraph); See Nolasco v. Pao, 139 SCRA 152 [1985]
33 People v. Bans, G.R. No. 104147, December 8, 1994.
34 Sony Computer Entertainment, Inc. v. Supergreen, Inc., G.R. No. 161823, March 22, 2007 citing See also
A.M. No. 03-8-02-SC, which provides as follows:
Sec. 12. Issuance of search warrants in special criminal cases by the Regional Trial Courts of Manila
and Quezon City. The Executive Judges and, whenever they are on official leave of absence or are
not physically present in the station, the Vice-Executive Judges of the RTCs of Manila and Quezon
City shall have authority to act on applications filed by the National Bureau of Investigation (NBI),
the Philippine National Police (PNP) and the Anti-Crime Task Force (ACTAF), for search warrants
involving heinous crimes, illegal gambling, illegal possession of firearms and ammunitions as well
as violations of the Comprehensive Dangerous Drugs Act of 2002, the Intellectual Property Code,
the Anti-Money Laundering Act of 2001, the Tariff and Customs Code, as amended, and other
relevant laws that may hereafter be enacted by Congress, and included herein by the Supreme
Court.
35 Marimla v. People, G.R. No. 158467, October 16, 2009 citing A.M. No. 99-10-09-SC, Clarifying the Guidelines
on the Application for the Enforceability of Search Warrants
36 Re: Avenilino I. Razon, A.M. No. 08-4-4-SC, July 7, 2009 resulting in the amendment of A.M. No. 03-8-02-
SC, Sec. 12 to read: Sec. 12. Issuance of search warrants in special criminal cases by the Regional Trial Courts of Manila
and Quezon City. xxx xxx xxx
The applications shall be endorsed by the heads of such agencies or their respective duly authorized officials and shall particularly
describe therein the places to be searched and/or the property or things to be seized as prescribed in the Rules of Court. The Executive
Judges and Vice-Executive Judges concerned shall issue the warrants, if justified, which may be served outside the territorial
jurisdiction of the said courts.
For purposes of determining probable cause before issuing the warrant, the judge
must personally examine in the form of searching questions and answers and in writing
and under oath the complainant and the witnesses he may produce on facts personally
known to them.37 There are two requirements here: (1) the judge, and no other, must
personally conduct the examination in the form of searching questions and answers;38 and (2)
the examination must be reduced in writing and executed under oath.
Mere affidavits, without the deposition taken by the judge personally of the
complainant and his witnesses, are not sufficient.39 The search warrant must be struck
down40 and the judge must be declared guilty of grave abuse of discretion41 if he fails to
personally examine the applicant and his witnesses.
When the examination is conducted, it must not be merely routine or pro forma, or
simply a rehash of the contents of the affidavit submitted. The examination must be
probing and exhaustive on the intent and justification of the application,.42 Leading
questions or questions conducted in a general manner would not satisfy the requirements
for issuance of a valid search warrant.43 The judge must be convinced, not the individual
making the affidavit and seeking for the issuance of the warrant, that probable cause
exists. Therefore, it cannot be issued on loose, vague, or doubtful basis of fact, nor on
mere suspicion or belief.44
Finally, the submitted sworn statements and affidavits, 45 together with the examination
on oath,46 shall be attached to the record. There could be no way by which an aggrieved
party may determine whether searching questions are conducted unless such written
examination of the witnesses on oath is attached to the record. Thus, when there is no
evidence in writing of the examination made by the judge, the warrant is void.47
Probable cause for purposes of issuing the search warrant means such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an
offense has been committed and that the objects sought in connection with the offense are
in the place sought to be searched.48
As one of the elements for a criminal search warrant,49 the determination of probable
cause must be in relation to an offense. A judge is guilty of incompetence and gross ignorance
of the law when he issued a search warrant where his examination centered on non-
payment of the purchase price of imported vehicles in an application for criminal
violation involving tax exemptions on the said vehicles.50
The basis of probable cause shall not be less than personal knowledge by the
complainant or his witnesses of the facts upon which the issuance of the warrant may be
justified.51 Facts and circumstances are not mere conclusions of law, as when the affidavit
of the police officer during the application for search warrant for the crime of inciting
to sedition stated that said periodicals, contain articles tending to incite distrust and
hatred for the Government of the Philippines or any of its duly constituted authorities;52
or that the subject is in possession or has in his control printing equipment and other
paraphernalia, news publications and other documents which were used and are all
continuously being used as a means of committing the offense of subversion.53
The fact, however, that there is no probable cause for some items described in the
warrant, such as drug paraphernalia, as, in fact, none was found during the search,
does not invalidate the warrant as to the other items found where probable cause exists.54
The lack of probable cause on the drug paraphernalia would have been material only
if such were found during the search for if that be so, the warrant would have been
void, but only with respect to such items.55 In short, items described in the warrant are
48 Microsoft Corporation v. Maxicorp, Inc., G.R. No. 140946, 13 September 2004, 438 SCRA 224, 234-237;
Kho v. Lanzanas, G.R. No. 150877, May 4, 2006; Uy v. BIR, G.R. No. 129651, October 20, 2000 citing Pendon
v. Court of Appeals, 191 SCRA 429 (1990); Prudente v. Dayrit, 180 SCRA 69 (1989); Burgos v. Chief of Staff,
G.R. No. 64261, December 26, 1984; Del Castillo v. People, G.R. No. 185128, January 30, 2012 citing Santos
v. Pryce Gases, Inc., G.R. No. 165122, November 23, 2007, 538 SCRA 474, 484, citing Columbia Pictures, Inc.
v. Court of Appeals, 329 Phil. 875, 903 (1996).
49 As distinguished from a civil search warrant secured under A.M. No. 02-1-06-SC on 22 January 2002, Rule on
Search and Seizure in Civil Actions for Infringement of Intellectual Property Rights (effective on 15 February
2002).
50 Dizon v. Veneracion, A.M. No. RTJ-97-1379, July 20, 2000.
51 Burgos v. Chief of Staff, G.R. No. 64261, December 26, 1984 relying on Alvarez v. Court of First Instance, 64
Phil. 33.
52 Corro v. Lising, G.R. No. 69899, July 15, 1985.
53 Burgos v. Chief of Staff, G.R. No. 64261, December 26, 1984.
54 People v. Salanguit, G.R. No. 1332254-55, April 19, 2001.
55 Id. citing Aday v. Superior Court, 55 Cal. 2d 789, 13 Cal.Rptr. 415, 362 P.2d 47 (1961) cited in WAYNE R.
LAFAVE, SEARCH AND SEIZURE, A TREATISE ON THE FOURTH AMENDMENT 258 (2d ed. 1987)
(Although the warrant was defective in the respects noted, it does not follow that it was invalid as a whole. Such
a conclusion would mean that the seizure of certain articles, even though proper if viewed separately, must be
condemned merely because the warrant was defective with respect to other articles. The invalid portions of the
warrant are severable from the authorization relating to the named books, which formed the principal basis of
severable between those supported and those that are not supported, by probable cause
which partial coverage does not invalidate the entire warrant in toto.
A search warrant may only be issued for search and seizure of personal properties
which are either the subject or fruits of the offense, stolen or embezzled and other proceeds,
or used or intended to be used as the means of committing an offense.56 But aside from the
objects being limited to personal properties, such objects must be specifically described.57
Such requirement for specificity is designed to prevent abuses and to limit the things to
be seized to those, and only those, particularly described in the search warrant to leave
the officers of the law no discretion regarding what articles they shall seize.58 A search
warrant is not a sweeping authority empowering a raiding party to undertake a fishing
expedition to seize and confiscate any and all kinds of evidence or articles relating to a
crime as the search is limited in scope so as not to be general or exploratory.59
Thus, a warrant issued for books of accounts, financial records, vouchers, journals,
correspondence, receipts, ledgers, portfolios, credit journals, typewriters, and other
documents and/or paper showing all business transactions including disbursement
receipts, balance sheets and related profit and loss statements60 or certain accounting
books, documents and papers,61 was held to be a general warrant. Such all-encompassing
description even without the phrase all business transactions still amounts to a general
warrant.62
Likewise, an order directing the seizure of the documents and paraphernalia being
used or intended to be used as the means of committing illegal recruitment is also
general which renders such order null and void for being unconstitutional.63 Similarly,
a search warrant which has for its objects methamphetamine hydrochloride (shabu)
and paraphernalia, would not cover ladys wallet, cash, grinder, camera, component
speakers, electric planer, jigsaw, electric tester, saws, hammer, drill, and bolo as they
cannot be encompassed by the word paraphernalia as they bear no relation to the use or
manufacture of drugs. These objects should be restored to the accused.64
the charge of obscenity. The search for and seizure of these books, if otherwise valid, were not rendered illegal
by the defects concerning other articles . . . In so holding we do not mean to suggest that invalid portions of a
warrant will be treated as severable under all circumstances. We recognize the danger that warrants might be
obtained which are essentially general in character but as to minor items meet the requirement of particularity,
and that wholesale seizures might be made under them, in the expectation that the seizure would in any event be
upheld as to the property specified. Such an abuse of the warrant procedure, of course, could not be tolerated.
56 Rules of Court, rule 126, Section 3.
57 Rules of Court, Rule 126, Section 4.
58 Uy Kheytin v. Villareal, 42 Phil. 886, 896; Corro v. Lising, G.R. No. 69899, July 15, 1985; People v. Aruta, G.R.
No. 120915, April 13, 1998.
59 United Laboratories, Inc. v. Isip, G.R. No. 163858, June 28, 2005 citing People v. Go, G.R. No. 144639, 12
September 2003, 411 SCRA 81; People v. Nuez, G.R. No. 177148, June 30, 2009.
60 Stonehill v. Diokno, L-19550, June 19, 1967,
61 Alvarez v. Court of First Instance of Tayabas, G.R. No. 45358, January 29, 1937, J. Laurel concurring.
62 Bache & co. (Phil), Inc. v. Ruiz, G.R. No. 32409, February 27, 1971.
63 Salazar v. Achacoso, G.R. No. 81510, March 14, 1990, where, also, the power of the Minister of Labor to issue
search and seizure order under Presidential Decree No. 2018 was likewise nullified as unconstitutional.
64 People v. Nuez, G.R. No. 177148, June 30, 2009.
In one case, the Supreme Court stated that [t]he Constitution requires search
warrants to particularly describe not only the place to be searched but also the persons
to be arrested.66 However, one will note that there is nothing in the Rules67 requiring
the name or identity of the person to be stated in the search warrant; neither in the
definition,68 requisites for its issuance,69 nor in its form.70 The only mention of a person
subject of the search is when the things to be seized are on the person or place ordered
to be searched, to justify service of the warrant at any time of the day or night.71
But when a person is named, property belonging to another cannot be searched as, for
example, a cabinet which does not belong to the person subject of the search cannot be
searched, especially so that it belongs to a lawyer where he keeps his clients documents
which are confidential.72
That said, a mistake in the name of the person to be searched or seized does not
invalidate the warrant when the authorities had personal knowledge of his description
and criminal activities.73 Thus, as an exception, a person may be described as John Doe,
on the warrant if descriptio personae is known such as will enable the officer to identify the
accused.74 After all, a search warrant is not directed against any person, but is solely for
the discovery and to get possession of personal property.75 But, an error on the actual
resident in the house searched resulting in the arrest of a person who happened to be
present during the search, makes the search irregular, as it shows the authorities lack of
personal knowledge of the circumstances to justify the search.76
G. One-Specific-Offense Rule
A warrant shall be issued in connection with one specific offense.77 So, a warrant
issued for more than one offense, known as a scatter-shot warrant, is void.78 Thus,
a warrant is void when issued to cover estafa, falsification, tax evasion, and insurance
fraud;79 to cover falsification of land titles under Article 171 and 213 of the Revised Penal
Code and violation of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices
Act;80 and to cover two specific laws for violations of Presidential Decree No. 1866 on
illegal possession of firearms, ammunition and explosives and of Republic Act No.
1700, the Anti-Subversion Law.81 A generic description of an offense as illegal traffic of
narcotics and contraband which necessarily gives rise to more than one offense makes
the warrant illegal.82
But an offense described as violation of R.A. 6425,or the Dangerous Drugs Act
of 1972,83 without specifying the specific provisions violated in the law, is sustained
because while illegal possession of shabu, illegal possession of marijuana, and illegal
possession of paraphernalia are indeed covered by different articles and sections in the
law, it is a special law that deals specifically with dangerous drugs and defines and
penalizes categories of offenses which are closely related or which belong to the same
class or species.84 In the same vein, a warrant is valid even when it failed to mention
any offense, but the application for the warrant reflected the crimes of substituting
and altering trademarks, tradenames, or service marks and unfair competition and
fraudulent registration of trademark and tradename, which acts defining said offenses,
while punishable separately under Articles 188 and 189 of the Revised Penal Code, are
closely allied to each other that the punishable acts in one of them can be considered
as included in the other.85
Still, a warrant is invalid where neither in the application for it nor on its face was any
offense shown at all.86 Thus, a warrant is also irregular when the space intended for the
nature of the offense on the face of the warrant was left blank (indicating uncertainty as
to the crime committed) and where on the body of the warrant was merely stated that
transformers were stolen or embezzled and proceeds or fruits of the offense, used or
intended to be used as the means of committing the offense, (which could be anything
77 Rules of Court, Rule 126, Section 4. This one-offense rule does not exist before the effectivity of the Rules of
Court of January 1, 1964 in that in one case (Oca v. Maiquez, G.R. No. 20749, July 30, 1965), a search warrant
for the various offenses of misappropriation of union funds, falsification of public and/or private documents,
defined and penalized by the Revised Penal Code, and violation of labor laws, rules and regulations, was
sustained. .
78 People v. Simbahon, G.R. No. 132371, April 9, 2003 citing Tambasen v. People, 316 Phil. 237 [1995]; Stonehill
v. Diokno, L-19550, June 19, 1967.
79 Asian Surety & Insurance Company, Inc. v. Herrera, G.R. No. 25232, December 20, 1973.
80 Vallejo v. Court of Appeals, G.R. No. 156413, April 14, 2004;
81 Tambasen v. People, G.R. No. 89103, July 14, 1995.
82 Castro v. Pabalan, G.R. No. 28642, April 30, 1976.
83 This law was repealed by Republic Act No. 9165 otherwise known as the Comprehensive Dangerous Drugs Act
of 2002 dated June 7, 2002.
84 People v. Salanguit, G.R. No. 133254-55, April 19, 2001 relying on People v. Dichoso, 223 SCRA 174 [1993].
85 People v. Marcos, G.R. No. 31757, October 29, 1982.
86 Marcelo v. De Guzman, G.R. No. 29077, June 29, 1982.
This one-specific-offense rule should not be confused with the number of counts
of a single offense such as a warrant for several counts of the offense of copyright
infringement88 or with the number of goods as various electronic equipments like
cassette tape recorders, car stereos, phonograph needles (diamond), portable TV sets,
imported long playing records, spare parts of TVs and radios and other electrical
appliances for having been imported in violation of Section 2536 of the Tariff and
Customs Code, as amended.89 In both cases, the warrants were sustained as there was
only one offense shown.
The address indicated on the warrant governs. Thus the warrant is void when the
place was merely referred to as premises even when the exact address is indicated in
the application.95 So also is the warrant void when an exact address is indicated in the
warrant which differs from that intended and mentioned in the affidavit in support of
the application. The peace officers cannot search the one intended than that indicated
in the warrant as they have no authority to change, enlarge, or amplify the place to be
searched.96 Thus, a search outside of the address indicated, as the one made in a nipa hut
located twenty meters away from the place described, is irregular and the items found
therein are considered fruits of an invalid warrantless search which are inadmissible in
87 People v. Court of Appeals, G.R. No. 94396, November 27, 1992.
88 Columbia Pictures, Inc. v. Court of Appeals, G.R. No. 110318, August 28, 1996.
89 Chia v. Acting Collector of Customs, G.R. No. 43810, September 26, 1989, a decision rendered under the 1973
Constitution when the Commissioner of Custom may issue search and seizure order under the deleted phrase
in Article III, Sec. 3 thereof where warrant may be issued not only by a judge, but by such other responsible
officer as may be authorized by law.
90 People v. Simbahon, G.R. No. 132371, April 9, 2003.
91 Id. citing People v. Veloso, 48 Phil. 169, 180 [1927].
92 Yao, Sr. v. People, G.R. No. 168306, June 19, 2007 citing Uy v. Bureau of Internal Revenue, 397 Phil. 892, 907-
908 (2000).
93 Yao, Sr. v. People, G.R. No. 168306, June 19, 2007.
94 Prudente v. Dayrit, G.R. NO. 82870, December 14, 1999.
95 People v. Simbahon, G.R. No. 132371, April 9, 2003
96 People v. Francisco, G.R. No. 129035, August 22, 2002; Paper Industries Corporation of the Philippines v.
Asuncion, 307 SCRA 273 (1999) citing People v. Court of Appeals, 291 SCRA 400 [1998].
evidence.97
The search warrant, in summary, must strictly conform to the following requirements:
(1) the warrant must be issued upon probable cause;
(2) the probable cause must be determined by the judge himself and not
by the applicant or any other person;
(3) in the determination of probable cause, the judge must examine,
under oath or affirmation, the complainant and such witnesses as the
latter may produce; and
(4) the warrant issued must particularly describe the place to be searched
and persons or things to be seized.98
(5) the warrant must be issued in connection with one specific offense.99
As already shown in the preceding discussion, the absence of any of these requirements
makes the search warrant void.100 But once the judge is satisfied that the requirements are
met, foremost among which is the existence of facts sufficient to pass muster the mandate
of probable cause, he shall issue the warrant.101
The form prescribed by the Supreme Court in the Rules of Court as Form 26 is as
follows:
GREETINGS:
premises) in (name of street), district of _______, (name property subject of the offense; or
stolen or embezzled and other proceeds or fruits of the offense; or used or intended to be used
as the means of committing an offense) which should be seized and brought to the undersigned.
(Cancel description not applicable.).
Judge
This form, however, must further indicate until when the warrant shall be valid,102
which is ten days from its date.
Unlike a warrant of arrest,103 a search warrant shall be valid for a period of only ten
(10) days from its date and shall be void thereafter.104 The period cannot be extended.105
When its execution is commenced within the ten-day period and not completed or
interrupted on the day served, the search may be continued the following day provided it
is still within the ten-day period.106
The warrant must direct that it be served in the daytime, unless the affidavit of the
applicant asserts that the property subject of the search is on the person or in the place
to be searched, in which case a further directive may be inserted that it be served at any
time of the day or night.107 Daytime search is the rule, nighttime search, the exception.108
Nighttime search, in the absence of specific judicial authorization, is prohibited in order
to protect the public from the abrasiveness of official intrusion.109 But within the time
of day or night authorized in the search warrant, the exact time of its execution is left to
102 Adm. Circular No. 13 of the Supreme Court dated October 1, 1985.
103 Which does not expire until served.
104 Rules of Court, Rule 126, Section 10.
105 Lacadin v. Mangino, A.M. No. MTJ-01-1346, July 9 (where lacking ignominy or ill will, the judge who
extended the warrant, was exonerated).
106 Mustang Lumber, Inc. v. Court of Appeals, G.R. Nos. 104988, 106424, & 123784. June 18, 1996 citing Florenz
D. Regalado, Remedial Law Compendium, Vol. 2, Seventh Revised Ed. [1995], 526, citing Uy Kheytin v.
Villareal, 42 Phil. 886 [1920].
107 Rules of Court, Rule 126, Section 9.
108 People v. Court of Appeals, G.R. No. 117412, December 8, 2000.
109 Id. citing State v. Schmeets, 278 NW 2d 401.
the discretion of the law enforcement officer.110 Nighttime is from sunset to sunrise.111
There is an American authority to the effect that a search pursuant to a daytime warrant
is proper if it begins in the daytime even though it continues after dark.112
c. Knock-and-Announce Rule
Before entering the place to be searched, the officer should give notice of his purpose
and authority. Only when he is refused entry may he break open any outer or inner door
or window of the house to be searched or any of its part or anything therein to execute
the warrant.113 This required prior announcement of purpose and authority is known as
the knock-and-announce rule, its performance or non-performance being an important
consideration in assessing whether the subsequent entry by force is constitutionally
reasonable.114 In making the announcement, no precise form of words is required as it is
sufficient that the accused has notice of the officers, their authority, and the purpose of the
search and the object to be seized.115 Also, the rule is not absolute. Unannounced entry
is permissible when (a) a demand to open was made but the occupants refuse; (b) when
the occupants already knew of the identity of the officers and of their authority and
persons; (c) when the officers are justified in the honest belief that there is an imminent
peril to life or limb; and (d) when those in the premises, aware of the presence of someone
outside (because, for example, there has been a knock at the door), are then engaged in
activity which justifies the officers to believe that an escape or the destruction of evidence
is being attempted.116 Still, these exceptions are not exclusive. Any other unannounced
entry is not automatically impermissible. Other law enforcement interests may establish
the reasonableness of an unannounced entry. There is no formula for determining the
reasonableness for a no-knock entry as it may be judged by the facts and circumstances
obtaining in each case.117 Thus, when announcement of intent and authority would be
dangerous or futile, or that it would trigger destruction of the evidence by the occupants,
an unannounced entry is deemed reasonable. 118
When trapped or unlawfully detained inside, the officer may resort to the same mode
of breaking out any enclosure as when he is refused entry to liberate himself or any person
lawfully aiding him in the process.119 The required prior announcement of purpose is
110 Id. citing State v. Moreno, 222 Kan 149, 563 P2d 1056.
111 Civil Code, Article 13.
112 Torcia, Charles E., 1 Whartons Criminal Procedure 664-665 (13th ed.) citing United States v. Burgard (1977,
CA8 Mo) 551 F2d 190; United States v. Balsamo (1979, DC Me) 468 F Supp 1363 (search of residence and
dock area rented by suspected drug smugglers was not rendered invalid by the fact that an authorized daytime
search was not completed until after 10 p.m., absent showing of prejudice, where search properly began during
daytime).
113 Rules of Court, Rule 126, Section 7.
114 People v. Huang Zhen Hua, G.R. No. 139301, September 29, 2004.
115 Id.
116 People v. Huang Zhen Hua, G.R. No. 139301, September 29, 2004 citing People v. Maddox, 46 Cal. 2d 301,
294 P. 2d 6 [1956].
117 Id. citing U.S. v. Rabinowitz, 94 L Ed. 653 [1950].
118 Id. citing Richards v. Wisconsin, 137 L. Ed. 2d 615 [1997].
119 Rules of Court, Rule 126, Section 7.
No search may be conducted of a house, room, or any other premises except in the
presence of its lawful occupant or of any member of his family or in the absence of the
latter, of two witnesses of sufficient age and discretion residing in the same locality.121 The
order of preference cannot be disregarded, interchanged, or intercalated.
Thus, only in the absence of the lawful occupant and refusal of any member of his
family who were present to witness the search, may the police officers ask the bailiff of the
court and the barangay security officer to act as witnesses instead.122 In one case, however,
the Supreme Court upheld the validity of the search despite the unresolved factual issue
of whether the lawful occupant was outside or inside the house the house during the
search, reasoning that even if the occupant was outside the house, the search may be
conducted in his absence provided two witnesses are present.123 This ruling seems to be
a relaxation of the rule that search must be conducted in the presence of the occupant
of the house and only when absent may the substitute witnesses be allowed. In fact, the
search is void when an immediate member of the family of the occupant was prevented
from being a witness as he was handcuffed to a chair during the search,124 despite the
presence of two barangay kagawads as witnesses.
After seizure of properties under a warrant, the officer who made the seizure must
give a detailed receipt for the same to the lawful occupant of the premises when present
during the search. In his absence, but in the presence of two witnesses of sufficient age
and discretion, the receipt must be left in the premises where the properties were found.125
This duty of preparing and issuing a receipt is mandatory as it is required to preclude
substitution by interested parties of the items seized.126
There is definitely a constitutional issue involved here when the occupant is asked
to sign the receipt for the property seized in his place. For one, if said properties were
evidence of a crime, his signature on the receipt may be construed as an admission of
guilt or a confession made without the assistance of a counsel.
In one case, the receipt was ruled to be inadmissible when the officer failed to inform
the accused of his right to remain silent and to assistance of counsel and of his right not
120 People v. Huang Zhen Hua, G.R. No. 139301, September 29, 2004 citing Wison v. Arkansas, 131 L.Ed. 2d. 976
[1995]; People v. Go, G.R. No. 144639, September 12, 2003.
121 Rules of Court, Rule 126, Section 8.
122 People v. Court of Appeals, G.R. No. 117412, December 8, 2000.
123 Valleno v. People, G.R. No. 192050, January 9, 2013.
124 People v. Go, G.R. No. 144639, September 12, 2003.
125 Rules of Court, Rule 126, Section 11.
126 People v. Gesmundo, G.R. No. 89373, March 9, 1993.
to sign the receipt.127 In another, it was held that the signature on the receipt which was
prepared earlier than the actual date of seizure affects its integrity, especially so when it
was signed without the assistance of counsel, a violation of accuseds custodial rights.128
Thus, the practice of the police in inducing suspects to sign receipts for property allegedly
confiscated from their possession is unusual and unconstitutional.129
In drug cases, the manner of search and preservation of evidence seized is specially
prescribed under Section 21, of Republic Act No. 9165:
Article II, Section 21 (a) of the Implementing Rules and Regulations of R.A. 9165,
however, stated that non-compliance with these requirements under justifiable grounds,
as long as the integrity and the evidentiary value of the seized items are properly preserved by the
apprehending officer/team, shall not render void and invalid such seizure of and custody
over the said items.
Seemingly, compliance with Section 21 is still the rule in that [w]hile the court allows
for [its] relaxation in some cases, there must be compelling and justifiable grounds for the same
and it must be shown that the integrity and evidentiary value of the seized items have
been properly preserved.130
But in a number of cases, it was held that non-compliance with Section 21 on the duty
of the police officers to state and prove compelling and justifiable grounds, will not affect
the validity of the search if these could no longer be determined due to the defenses
failure to raise it as an issue during trial131 (therefore, it cannot be raised for the first time
on appeal132). Effectively by this pronouncement, the burden on the justifiable grounds
for non-observance of Section 21 is unfairly placed upon the accused. This should not be
the case since such grounds or reasons are for the police officers to explain and prove, the
accused not being privy to their motives, reasons, and circumstances for such disregard,
non-observance, or omission.
What remains, therefore, of the requirements under Section 21 and its implementing
rule is only the caveat that the prosecution must establish that the integrity and evidentiary
value of the seized items have been preserved,133 which, in the first place, is the long-
standing rule in the chain of custody of evidence in criminal cases, with or without
Section 21. But even this remaining requirement for the integrity of the evidences chain
of custody was further eroded in People v. Domado134 which held:
From the point of view of jurisprudence, we are not beating any new
path by holding that the failure to undertake the required photography
and immediate marking of seized items may be excused by the unique
circumstances of a case. In People v. Resurreccion,135 we already stated that
marking upon immediate confiscation does not exclude the possibility
that marking can be at the police station or office of the apprehending
team. In the cases of People v. Rusiana,136 People v. Hernandez,137 and People v.
Gum-Oyen,138 the apprehending team marked the confiscated items at the
police station and not at the place of seizure. Nevertheless, we sustained
the conviction because the evidence showed that the integrity and
evidentiary value of the items seized had been preserved. To reiterate
what we have held in past cases, we are not always looking for the strict
step-by-step adherence to the procedural requirements; what is important
is to ensure the preservation of the integrity and the evidentiary value of
the seized items, as these would determine the guilt or innocence of the
accused. We succinctly explained this in People v. Del Monte139 when we
held:
131 People v. Mariacos, G.R. No. 188611, June 21, 2010 citing See People v. Pringas, G.R. No. 175928, August 31,
2007, 531 SCRA 828; People v. Sta. Maria, G.R. No. 171019, February 23, 2007, 516 SCRA 621, 633.
132 People v. Castillo, G.R. No. 190180; November 27, 2013; People v. Santos, G.R. No. 193190, November 13,
2013; People v. Robelo, G.R. No. 184181, November 26, 2012, 686 SCRA 417, 427-428; People v. Mateo, G.R.
No. 179478, July 28, 2008 citing People v. Sta. Maria, G.R. No. 171019, 23 February 2007, 516 SCRA 621;
People v. Hernandez, G.R. No. 184804, June 18, 2009, 589 SCRA 625, 645; People v. Lazaro, Jr., G.R. No.
186418, October 16, 2009, 604 SCRA 250, 274.
133 People v. Langcua, G.R. No. 190343, February 6, 2013 citing People v. Lorena, G.R. No. 184954, January 10,
2011, 639 SCRA 139; People v. Berdadero, G.R. No. 179710, June 29, 2010.
134 G.R. No. 172971, June 16, 2010.
135 G.R. No. 186380, October 12, 2009.
136 G.R. No. 186139, October 5, 2009.
137 G.R. No. 184804, June 18, 2009.
138 G.R. No. 182231, April 16, 2009, 585 SCRA 668.
139 G.R. No. 179940, April 23, 2008, 552 SCRA 627.
For all practical purposes, the police officer can now cavalierly disregard Section 21
and does not even have to exert effort to prove unbroken chain of custody of the seized
items since the evidence is presumed to have been preserved unless there is a showing
of bad faith, ill will, or proof that the evidence has been tampered with.141 Again, with
this holding, the burden of proving corruption in the integrity of the evidence is unfairly
placed upon the accused and his constitutional right to presumption of innocence further
compromised. This should not be so.
Corpus delicti, a sine qua non for conviction in drug cases,142 consists of the seized
prohibited or regulated drug itself,143 presented in court with proof that its integrity has
not been corrupted.144 This preserved integrity of the drug is indispensable for its identity,
which identity must be established beyond reasonable doubt.145 The identity of the drug is,
therefore, a burden that the prosecution must discharge as the one who offers real evidence,
such as the narcotics in a trial of a drug case, who must account for the custody of the evidence
from the moment in which it reaches his custody until the moment in which it is offered
in evidence.146 The proof of the chain must be one with unwavering exactitude and
not merely presumed from another presumption on the regularity in the performance of
duty:
The current trend in jurisprudence at relaxation, if not total disregard of Section 21,
defeats the reason for the requirement of said provision in the handling and custody of
confiscated drugs. In People v. Nacua,150 the Supreme Court, sounded the caveat that: While
the Court allows for relaxation of the rules in some cases, there must be compelling and
justifiable grounds for the same and it must be shown that the integrity and evidentiary
value of the seized items have been properly preserved. In short, relaxation in the
observance of Section 21 must be for compelling and justifiable grounds beyond
preservation of the integrity of the corpus delicti. Thus, in Nacua the accused was acquitted
because the prosecution did not offer any explanation as to why the police officers
failed to strictly comply with the established procedure for the custody of the suspected
shabu, aside from its failure to also show that the integrity and evidentiary value of the
suspected drug has been properly preserved from the time said item was transmitted to
the crime laboratory up to its presentation in court. As Justice Perez puts it in one case:
Buy-bust operation being susceptible to police abuse and usually used as a means
145 People v. Suan, G.R. No. 184546, February 22, 2010 citing Catuiran v. People, G.R. No. 175647, May 8, 2009,
587 SCRA 567. People v. Quimanlon, G.R. No. 191198, January 26, 2011 where it was held: Indeed, in every
prosecution for illegal sale of prohibited drugs, the presentation in evidence of the seized drug, as an integral
part of the corpus delicti, is most material. Thus, it is vital that the identity of the prohibited drug be proved with
moral certainty. The fact that the substance bought or seized during the buy-bust operation is the same item
offered in court as exhibit must also be established with the same degree of certitude. It is in this respect
that the chain of custody requirement performs its function. It ensures that unnecessary doubts
concerning the identity of the evidence are removed (citations omitted).
146 People v. Pagaduan, G.R. No. 179029, August 9, 2010 citing Blacks Law Dictionary which cited Com. V.
White, 353 Mass. 409, 232 N.E.2d 335.
147 Citing Sales v. People, G.R. No. 182296, April 7, 2009, 584 SCRA 680 at 688-689.
148 People v. De la Cruz, G.R. No. 185717, June 8, 2011 citing Catuiran v. People, G.R. No. 175647, May 8, 2009,
587 SCRA 567, 580.
149 People v. Pagaduan, G.R. No. 179029, August 9, 2010 citing People v. Kamad, G.R. No. 174198, January 19,
2010.
150 G.R. No. 200165, January 30, 2013.
for extortion . . . the Court must ensure that the enactment of R.A. 9165 providing
specific procedures to counter these abuses151 is not put to naught.152 Justice Sereno, in People
v. Salonga,153 reiterated that Section 21 of R.A. 9165 delineates the mandatory procedural
safeguards in buy-bust operations . . . adding that the presumption of regularity in the
performance of official duty cannot be invoked by the prosecution where the procedure
was tainted with material lapses.
On the part of the seizing officer, he must forthwith deliver the seized property to the
judge who issued the warrant, together with a true inventory, duly verified under oath, of
the items seized.154 All these must be stated on the return on the warrant which shall be
filed and kept by the custodian of log book on search warrants, who shall enter therein the
date of the return, the result, and other actions of the judge.155 A violation of these duties
on the part of the concerned person shall constitute contempt of court.156
Delivery of the items seized to the court which issued the warrant is mandatory in
character.157 The danger sought to be avoided is to preclude substitution,158 tampering, or
loss of the items either by deliberate acts or by negligence.159 The officers who made the
search may, however, retain the items seized or deliver them to another agency, but only
with the approval of the court.160
On the part of the issuing judge, he should ascertain if the return has been made after
the lapse of ten days from issuance of the warrant, and if there is none, he should summon
the person to whom the warrant was issued and require him to explain why no return
was made.161 If the return has been made, the judge shall determine whether a detailed
receipt was issued for the properties seized to the lawful occupant if present during the
search, or if absent, was left in the place where the property was seized, witnessed by
at least two persons of sufficient age in discretion residing in the same locality.162 Also,
the judge shall require that the property seized be delivered to him together with a true
inventory of the property seized duly verified under oath,163 which, in the first place are
151 Citing Section 21, Article II of R.A. 9165.
152 People v. Secreto, G.R. No. 198115, February 27, 2013.
153 G.R. No. 194948, September 2, 2013.
154 Rules of Court, Rule 126, Section 12
155 Rules of Court, Rule 126, Section 12 (c).
156 Rules of Court, Rule 126, Section 12 (last paragraph).
157 Tenorio v. Court of Appeals, G.R. NO. 110604, October 10, 2003.
158 Santos v. Pryce Gases, Inc., G.R. No. 165122, November 23, 2007.
159 Tenorio v. Court of Appeals, G.R. NO. 110604, October 10, 2003 citing People v. Gesmundo, 219 SCRA 743
(1993).
160 Mallillin v. People, G.R. No. 172953, April 30, 2008; People v. Del Castillo, G.R. No. 153254, 20 September
2004, 439 SCRA 601, citing People v. Gesmundo, 219 SCRA 743 (1993); Yee Sue Koy, et al. v. Almeda, 70 Phil
141.
161 Rules of Court, Rule 126, Section 12 (b); Lacadin v. Mangino, A.M. No. MTJ-01-1346, July 9, 2003 citing
Guideline No. 5(g), Administrative Circular No. 13, issued on October 1, 1985
162 Rules of Court, Rule 126, Section 12 (b).
163 Rules of Court, Rule 126, Section 12 (b) last two sentences.
Seemingly, the general rationale for warrantless searches starts from a presumption
of guilt:
To hold that no criminal can, in any case, be arrested and searched for
the evidence and tokens of his crime without a warrant, would be to
leave society, to a large extent, at the mercy of the shrewdest, the most
expert, and the most depraved of criminals, facilitating their escape in
many instances.164
But the impression is misplaced. While the general rule is that no search and seizure
may be effected without a valid search warrant, exceptions or reasonable warrantless
searches are crafted through the years in response to fact-specific situations to address both
criminality and public interest.165 These exceptions, except in the case of consented
warrantless search, may be loosely divided into probable-cause and regulatory searches.
The law requires that the search must be incidental to a lawful arrest in order that the
search itself may likewise be considered legal. Therefore, a lawful arrest must precede the
search. Generally, the process cannot be reversed;172 that is, an illegal search cannot be
164 People v. Malasugui, 63 Phil. 221 at 228 as cited in People v. Gerente, G.R. Nos. 95847-48, March 10, 1993.
165 Ambait v. Court of Appeals, G.R. No. 164909, April 30, 2008 citing People v. Canton, G.R. No. 148825,
December 27, 2002, 394 SCRA 478, 485; People v. Aruta, G.R. No. 120915, April 13, 1998
166 Extensive search under the moving vehicle exception, requires probable cause that the motorist is a law-offender
or that he carries evidence of a crime. (People v. Saycon, 110995, September 5, 1994 citing People v. Bagista,
214 SCRA 63 (1992); Valmonte v. de Villa, 185 SCRA 665 [1990]).
167 People v. De Gracia, 233 SCRA 716 [1994].
168 People v. Solayao, 262 SCRA 255 [1996].
169 Padilla v. CA and People, G.R. No. 121917, March 12, 1997.
170 Valmonte v. De Villa, G.R. No. 83988, September 29, 1989; People v. Usana, 323 SCRA 754 (2000).
171 Valeroso v. Court of Appeals, G.R. No. 164815, September 3, 2009 citing Nachura, Antoio B. Outline Reviewer
in Political Law, 2009 pp. 139-142; People v. Abriol, G.R. No. 12337, October 17, 2001; People v. Compacion,
G.R. No. 124442, July 20, 2001; Camara v. Municipal Court, 387 U.S. 523 (1967). But see discussion in 2.3.9.
Inspections For Compliance with Building, Fire, Sanitary, and Environmental Laws and Regulations hereof.
172 People v. Molina, G.R. No. 133917, February 19, 2001; Sy. V. People, G.R. No. 182178, August 15, 2011;
People v. Chua Ho San, G.R. No. 128222, June 17, 1999; Malacat v. Court of Appeals, G.R. No. 123595,
undertaken and then an arrest effected on the strength of the evidence yielded by the
search.173 Where a search is first undertaken, and an arrest effected based on evidence
produced by such search, both the search and the arrest would be unlawful, for being
contrary to law.174
The lawful arrest contemplated here to justify warrantless search refers to (1) arrest in
flagrante delicto or where the person to be arrested has committed, is actually committing,
or is attempting to commit an offense (2) arrest effected in hot pursuit or when an
offense has just been committed and the arresting officer has probable cause to believe,
based on personal knowledge, that the person to be arrested has committed it; and (3)
arrest of escaped prisoners.175 Therefore, the warrantless and incidental search validated
by the lawful arrest must not be too remote in time or place176 from the actual arrest to
render the term incidental detached and meaningless.
Thus, a person cannot be arrested to justify the search when he does not manifest
any suspicious behavior despite a prior reliable information that he was in possession
of a prohibited substance,183 as when he was innocently disembarking from a vessel with
the other passengers even if he was indeed found to be in possession of a prohibited
December 12, 1997 cited in the concurring and dissenting opinion of J. Panganiban in People v. Montilla, G.R.
No. 123872, January 30, 1998.
173 People v. Encinada, G.R. No. 116720, October 2, 1997; People v. Sarap, G.R. No. 132165, March 26, 2003.
174 People v. Aruta, G.R. No. 120915, April 3, 1998 citing People v. Cuizon, 256 SCRA 325 [1996].
175 Rules of Court, Rule 113, Sec. 5; People v. Chua Ho San @ Tsay Ho San, 308 SCRA 432, 444 [1999].
176 People v. Court of First Instance of Rizal, G.R. No. 41686, November 17, 1980, dissenting and concurring
opinion of Justice Teehankee.
177 People v. Che Chun Ting, G.R. No. 130568-69, March 21, 2000; Nolasco v. Pao. G.R. No. 69803, October 8,
1985, concurring and dissenting opinion of Justice Cuevas.
178 People v. Che Chun Ting, G.R. No. 130568-69, March 21, 2000; Nolasco v. Pao. G.R. No. 69803, October 8,
1985, concurring and dissenting opinion of Justice Cuevas.
179 Valeroso v. Court of Appeals, G.R. NO. 164815, September 3, 2008 citing People v. Estella, 443 Phil. 669 at
685 (2003). .
180 People v. Che Chun Ting, G.R. No. 130568-69, March 21, 2000; Nolasco v. Pao. G.R. No. 69803, October 8,
1985, concurring and dissenting opinion of Justice Cuevas
181 People v. Jerry Ting Uy, G.R. No. 144506-07, April 11, 2002; People v. Cubcubin, G.R. No. 136267, July 10,
2001.
182 People v. Salanguit, G.R. No. 133254-25, April 19, 2001.
183 People v. Laguio, G.R. No. 128587, March 16, 2007 citing People v. Binad Sy Chua, 444 Phil. 757 (2003), citing
People v. Molina, G.R. No. 133917, February 19, 2001, 352 SCRA 174.
substance.184 However, in one case, the warrantless search was justified on the basis
of a tip-off when coupled with the fact of plain view since leaves of marijuana was
jutting off out of the package carried by the accused.185 Also, a search substantially
contemporaneous with an arrest can precede the arrest if the police have probable cause to
make the arrest at the outset of the search.186
The accused may waive the illegality of his arrest. Still, such waiver does not validate
the search conducted on his person thereafter, since the arrest was invalid at the time of the
occurrence of the warrantless search.187
For seizure of evidence to be valid under the plain view doctrine, the following
elements must concur: (a) a prior valid intrusion in which the police are legally present
in the pursuit of their official duties; (b) the evidence was inadvertently discovered by
the police who had the right to be where they are; (c) the evidence must be immediately
apparent to be evidence of a crime; and (d) the plain view justified mere seizure of
evidence without further search.188
By the phrase itself, a warrantless search to be justified under the plain view doctrine
requires that the object seized must be immediately visible or exposed to sight or readily
apparent on its face to be illegal without requiring any further confirmatory act.189 Thus,
as a rule, where the object seized is wrapped without indication of contents190 or inside
a closed package or container,191 it is not in plain view and may not be seized without a
warrant such as also when the disputed evidence was found wrapped in plastic bag under
a table,192 under the bed wrapped in newspaper,193 or at the back of the house.194
contents are in plain view and may be seized.195 Some illustrative examples would be
when edges of leaves of marijuana were jutting out of the package,196 when a revolver and
magazine were displayed tucked in accuseds waist when he raised his hand,197 and when
plastic sachets of shabu were seen while the accused was fumbling for the registration
papers of his car in his clutch bag.198
For warrantless seizure to be justified under the plain view doctrine, the discovery of
the item must be by inadvertence199 and therefore, the search conducted should not be
deliberate. The doctrine cannot be used to launch unbridled searches and indiscriminate
seizures nor to extend a general exploratory search made solely to find evidence of
defendants guilt.200
C. Automobile Search
The basis of warrantless search of vehicles originated during the Prohibition in the
U.S. when in 1921 police officers searched a vehicle which occupants were suspected
of bootlegging in an area near the U.S. and Canadian border. The area was known for
traffic in illegal liquor. The search yielded sixty-nine quarts of bonded whiskey and gin
found in the upholstery of the vehicle seats. When the issue of the constitutionality of the
search was decided in 1925 in Carroll v. United States,201 the U. S. Supreme Court held the
search valid because it is not practicable to secure a warrant because the vehicle can be
quickly moved out of the locality or jurisdiction in which the warrant must be sought.
For a while, this justification for automobile searches had been referred to as the Carroll
Doctrine.202
Thus, when the vehicle is stationary and parked inside a driveway and therefore,
no possible loss of jurisdiction is in the offing this automobile exception will not
be sustained. In Coolidge v. New Hampshire,203 it was held that since there was already an
ample advance opportunity for the police officers to secure a warrant and there was no
indication that the vehicle will be driven away, a warrantless search on the vehicle will not
fall under this exception.204 This is how it should be since the very basis of the moving
vehicle exception (possible loss of jurisdiction) no longer obtains.
Automobile searches evolved over time to branch out into two kinds of searches:
routine search and extensive search where probable cause or lack of it determines the
validity of the search conducted.
195 Caballes v. Court ofAppeals, G.R. No. 136292, January 15, 2002 citing People v. Doria, 301 SCRA 668 [1999].
196 People v. Peaflorida, G.R. No. 175604, April 10, 2008.
197 Padilla v. Court of Appeals, G.R. No. 121197, March 12, 1997.
198 People v. Macalaba, G.R. No. 146284-86, January 20, 2003
199 People v. Cubcubin, G.R. No. 136267, July 10, 2001 citing Coolidge v. New Hampshire, 403 U.S. 443, 29 L.Ed.
2d 564 (1971)] and Texas v. Brown, 460 U.S. 730, 75 L. Ed. 2d 502 (1983)].
200 People v. Musa, 217 SCRA 597 at 611 (1993) cited in Peole v. Cubcubin, G.R. No. 136267, July 10, 2001.
201 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925)
202 M. Dee, Getting Back to the Fourth Amendment: Warrantless Cell Phone Searches, 56 N.Y. L. Rev. 1143 (2011/12)
203 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 [1971]
204 United States v. Sheperd, 714 F.2d 316 [1983].
The first consists merely of routine inspection as when the peace officer merely draws
aside the curtain of a vacant vehicle which is parked on the public fair grounds205 or
simply looks into a vehicle,206 flashes a light therein without opening the car door,207
does not subject the occupants to a physical or body search,208 and merely subject the
vehicle to visual search or visual inspection,209 or where the routine check is conducted
in a fixed area.210 Routine inspections are not regarded as violative of the right against
unreasonable search.211 However, the mere mobility of vehicles does not give the police
officers unlimited discretion to conduct indiscriminate searches without warrants if made
within the interior of the vehicle and in the absence of probable cause.212
The second consists of extensive search where the police officer has to reach inside
the vehicle or the entire vehicle is searched.213 This kind of search without warrant is
unreasonable if the officers conducting the search do not have reasonable or probable
cause to believe, before the search, that either the motorist is a law-offender or the contents
or cargo of the vehicle are or have been instruments or the subject matter or the proceeds
of some criminal offense.214 Physical intrusion by the peace officer inside the vehicle
without a warrant is, as a general rule, illegal.215 But if reasonable or probable cause exists
as when the distinctive odor of marijuana emanated from a package inside the vehicle
and the police officers received confidential report beforehand that the accused was to
transport prohibited drugs and substances,216 or that an information was received in
advance that a particularly-described passenger jeepney is transporting illegal lumber217
the search on the vehicle is justified by the impossibility if not impracticability of securing
a warrant since the vehicle can be quickly moved out of the locality or jurisdiction in
which the warrant must be sought.218
205 Valmonte v. de Villa, 185 SCRA 665 [1990] citing People v. Case, 190 MW 289, 220 Mich. 379, 27 A.L.R. 686.
206 Valmonte v. de Villa, 185 SCRA 665 [1990] citing State v. Gaina, 97 SE 62, 111 S.C. 174, 3 A.L.R. 1500.
207 Id. citing Rowland v. Commonwealth, 259 SW 33, 202 Rg 92.
208 People v. Barros, G.R. No. 90640, March 29, 1994.
209 People v. Lacerna, 278 SCRA 561 (1997); People v. Libnao, G.R. No. 136860, January 20, 2003 citing People
v. Barros, supra.
210 People v. Escano, 323 SCRA 754 (2000).
211 Caballes v. Court of Appeals, G.R. No. 136292, January 15, 2002.
212 Id. citing People v. Malmstedt, 198 SCRA 401 [1991]; Obra v. Court of Appeals, G.R. No. 120852, October
28, 1999 citing People v. Bagista, 214 SCRA 63, 69 [1992].
213 People v. Barros, G.R. No. 90640, March 29, 1994; People v. Lapitaje, G.R. No. 132042, February 19, 2003.
214 People v. Saycon, 110995, September 5, 1994 citing People v. Bagista, 214 SCRA 63 (1992); Valmonte v. de
Villa, 185 SCRA 665 [1990].
215 Caballes v. Court of Appeals, G.R. No. 136292, January 15, 2002 citing United States v. Pierre 932 F. 2d 377
cited in Hermann, Search and Seizure Checklists, 1994 ed., p. 246.
216 People v. Barros, 231 SCRA 557 (1994); People v. Lacerna, 278 SCRA 561 (1997); Caballes v. Court of Appeals,
G.R. No. 136292, January 15, 2002; People v. Lo Ho Wing, 193 SCRA 122 (1991); People v. Balingan, G.R. No.
105834, February 13, 1995.
217 Epie, Jr. v. Ulat-Marredo, G.R. No. 148117, March 22, 2007.
218 People v. Lo Ho Wing, 193 SCRA 122 (1991) cited in People v. Bobbonan, G.R. No. 105834, February 13,
1995; Asuncion v. Court of Appeals, G.R. No. 125959, February 1, 1999.
D. Stop-and-Frisk
It may not be said that danger to the police officer or that of the others is the same
principle of limitation warranting stop-and-frisk in Philippine jurisprudence. The signals
in the application of this exception are mixed.
In the earlier applications by the Supreme Court of the principle of stop and frisk,
warrantless searches were validated without any mention as their basis any supposed
danger to the police or suspicion of dangerous weapons in the possession of the suspect.
Thus, searches by virtue of stop and frisk were sustained upon a suspect who was merely
acting suspiciously and who attempted to flee upon seeing the police officers as held in
Posadas v. Court of Appeals;224 on persons who appeared to be drunk, wearing a camouflage
uniform or a jungle suit and who also attempted to flee upon seeing the government
agents in People v. Solayao;225 on persons whose eyes are red and wobbling like a drunk,
characteristic of persons high on drugs in an area frequented by drug addicts, in Manalili
v. Court of Appeals. 226
These departures or excursions away from the essence of a Terry search was, however,
somehow corrected in Malacat v. Court of Appeals227 when the Supreme Court, invalidating
the search questioned in that case, restated the essence of Terry as follows:
219 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968)
220 Malacat v. Court of Appeals, G.R. No. 123596, December 12, 1997.
221 392 U.S. 40, 64-66 [1968]
222 68 Am Jur 2d, Searches and Seizures, 78 citing State v. Fox, 283 Minn 176, 168 NW2d 260.
223 Ybarra v. Illinois, 444 U.S. 85, 100 S. Ct. 338, 62 L.Ed.2d 238 [1979])
224 Posadas v. Court of Appeals, 188 SCRA 188 (1990), G.R. No. 89139. August 2, 1990.
225 People v. Solayao, G.R. No. 119220. September 20, 1996
226 Manalili v. Court of Appeals , G.R. No. 113447. October 9, 1997.
227 G.R. No. 123596, December 12, 1997.
Other notable points of Terry are that while probable cause is not
required to conduct a stop and frisk, it nevertheless holds that mere
suspicion or a hunch will not validate a stop and frisk. A genuine reason
must exist, in light of the police officers experience and surrounding
conditions, to warrant the belief that the person detained has weapons
concealed about him. Finally, a stop-and-frisk serves a two-fold interest: (1)
the general interest of effective crime prevention and detection, which
underlies the recognition that a police officer may, under appropriate
circumstances and in an appropriate manner, approach a person for
purposes of investigating possible criminal behavior even without probable
cause; and (2) the more pressing interest of safety and self-preservation which
permit the police officer to take steps to assure himself that the person with whom he
deals is not armed with a deadly weapon that could unexpectedly and fatally be used
against the police officer.
..........
In Esquillo v. People,230 the Supreme Court, citing Malacat v. Court of Appeals, supra, stated
the principle that
Esquillo, however, affirmed the conviction of the accused without any findings on the
danger to the police officer as basis but merely that the search was undertaken after the
[accused] was interrogated on what she placed inside a cigarette case, after the police
officer introduced himself as such to accused, and, at the time of her arrest, accused
was exhibiting suspicious behavior and in fact attempted to flee after the police officer
had identified himself. The dissenting opinion of Justice Bersamin in Esquillo reminded
the majority that: a Terry protective search is strictly limited to what is necessary for the
discovery of weapons that may be used to harm the officer of the law or others nearby.
There must then be a genuine reason to believe that the accused is armed and presently
dangerous. Being an exception to the rule requiring a search warrant, a Terry protective
search is strictly construed; hence, it cannot go beyond what is necessary to determine
if the suspect is armed. Anything beyond is no longer valid and the fruits of the search
will be suppressed. This is a faithful restatement of principle if a warrantless search will
continue to be justified under the guise or disguise of Terry.
What is exigent and emergency is, of course, fact-specific. In one case, warrantless
search was justified of a building where large quantities of explosives and ammunitions
were found during a coup detat after intelligence reports showed that said building was
being used as headquarter of the plotters, where a surveillance team dispatched thereat
was fired at from the said building,231 and where the [n]earby courts were closed and
general chaos and disorder prevailed.232
231 People v. De Gracia, 233 SCRA 716 [1994] citing People v. Malmstedt, 198 SCRA 401 (1991) and Umil, et al.
v. Ramos, et al., 187 SCRA 311 (1990).
232 People v. Aruta, G.R. No. 120915, 3 April 1998, 288 SCRA 637-638.
233 Roaden v. Kentucky, 413 U.S. 496, 505 [1973].
234 State v. Berry, 2008 La. App. LEXIS 979 (La. App. 5 Cir. June 19, 2008); Blake v. State, 2008 Del. LEXIS 288
(June 24, 2008):
235 Kentucky v. King, No. 09-1272, May 16, 2011, 563 U.S.___(2011).
As to airport searches, the justification, aside from Section 9239 of Republic Act No.
6235, is their minimal intrusiveness, the gravity of the safety interests involved, and the
reduced privacy expectations associated with airline travel.240 Also, the act of a suspect
of checking-in his personal luggage as a passenger amounts to consent to inspection
in accordance with customs rules and regulations and waiver of any objection to a
warrantless search of such luggage.241 The search was held to be regular when a passenger
was frisked after passing through the metal detector booth that emitted a beeping sound
and the frisker noticed something bulging in the passengers body;242 or even when the
metal detector failed to detect anything suspicious, but a frisk was nonetheless conducted
which yielded a prohibited or illegal substance from the person of the passenger.243
In one case, the subsequent warrantless arrest of the passenger was justified as in
flagrante delicto upon the discovery and recovery of contraband in his bag.244 This should
not be confused with a case of search incidental to a lawful arrest where the arrest must
precede the search, but a case where the search was reasonable in the first place which
justifies the arrest. It is nonsensical for peace officers to be helpless in the face of the
glaring evidence of a crime committed in their presence.
236 Kentucky v. King, No. 09-1272, May 16, 2011, 563 U.S.___(2011).
237 Rieta v. People, G.R. No. 147817, August 12, 2004.
238 Salvador v. People. G.R. No. 146706, July 15, 2005; Papa v. Mago, G.R. No. 27360, February 28, 1968, 22
SCRA 857.
239 SEC. 9. Every ticket issued to a passenger by the airline or air carrier concerned shall contain among others the
following condition printed thereon: Holder hereof and his hand-carried luggage(s) are subject to search for,
and seizure of, prohibited materials or substances. Holder refusing to be searched shall not be allowed to board
the aircraft, which shall constitute a part of the contract between the passenger and the air carrier. It may not
even be argued that under this provision, the action of the airport security personnel is limited to refusing the
passenger to board the aircraft as it would sanction impotence and ineffectivity in law enforcement, to the
detriment of society. (People v. Canton, G.R. No. 148825, December 27, 2002 citing People v. Malmstedt, 198
SCRA 401, 410 [1991]).
240 Sales v. People, G.R. No. 191023, February 6, 2013 citing People v. Johnson, 401 Phil. 734 [2000]
241 People v. Gatward, G.R. Nos. 119722-73, February 7, 1997.
242 People v. Canton, 442 Phil. 743 (2002).
243 Sales v. People, G.R. No. 191023, February 6, 2013.
244 People v. Gatward, G.R. Nos. 119722-73, February 7, 1997.
The reasonableness of checkpoints by the military and the police was sustained in
Valmonte v. de Villa245 as a security measure to enable the police to pursue its mission of
establishing effective territorial defense and maintaining peace and order for the benefit
of the public and as measures to thwart plots to destabilize the government, in the
interest of public security. In Valmonte, the Supreme Court took judicial notice of the
shift to urban centers and their suburbs of the insurgency movement, so clearly reflected
in the increased killings in cities of police and military men by NPA sparrow units, not
to mention the abundance of unlicensed firearms and the alarming rise in lawlessness
and violence in such urban centers which all sum up to what one can rightly consider,
at the very least, as abnormal times. The Supreme Court further stated that [b]etween
the inherent right of the state to protect its existence and promote public welfare and an
individuals right against a warrantless search which is however reasonably conducted,
the former should prevail. The reasonableness of checkpoints was also affirmed in People
v. Lisana,246 as dictated by exceptional circumstances, as where the survival of organized
government is on the balance, or where the lives and safety of the people are in grave
peril.
However, when there is probable cause which justifies a reasonable belief of the men
at the checkpoints that either the motorist is a law offender or the contents of the vehicle
are or have been instruments of some offense vehicles may be stopped and extensively
searched.250 This becomes a probable-cause search and no longer a routine regulatory
search.
245 G.R. No. 83988, September 29, 1989. This majority decision in this case, however, draws strong dissents
from Justice Isagani Cruz who strongly stated that [t]he bland declaration that individual rights must yield
to the demands of national security ignores the fact that the Bill of Rights was intended precisely to limit the
authority of the State even if asserted on the ground of national security and Justice Abraham Sarmiento, who
reminded the majority that military checkpoints are things of martial rule, and things of the past.
246 323 SCRA 754, 768 (2000)
247 People v. Escao, G.R. Nos. 129756-58. January 28, 2000.
248 Aniag v. Commission on Elections, G.R. No. 104961, October 7, 1994.
249 G.R. No. 76005, April 23, 1993.
250 People v. Exala, G.R. No. 76005, April 23, 1993; People v. Vinecario, G.R. No. 141137. January 20, 2004 citing
People v. Usana, supra; People v. Lapitaje, G.R. No. 132042. February 19, 2003
Searches and inspection for purposes of compliance with regulations are known as
administrative searches. The inspection and search here are not related to criminal law
enforcement in the sense that they are preceded by a probable cause determination that
a crime may have been committed in the premises. For example, for purposes of sanitary
compliance, the designated sanitary inspector is statutorily granted the power of entry
at all reasonable times to establishments and premises engaged in the manufacture,
preparation or packing of any article of food for sale for the purpose of inspection.251
It is surely anomalous to say that the individual and his private property
are fully protected by the Fourth Amendment only when the individual is
suspected of criminal behavior. For instance, even the most law-abiding
citizen has a very tangible interest in limiting the circumstances under
which the sanctity of his home may be broken by official authority, for
the possibility of criminal entry under the guise of official sanction is
a serious threat to personal and family security. And even accepting
Franks256 rather remarkable premise, inspections of the kind we are
here considering do in fact jeopardize self-protection interests of the
property owner. Like most regulatory laws, fire, health, and housing
codes are enforced by criminal processes. In some cities, discovery
251 Presidential Decree No. 856, December 23, 1975, Sec. 31, par. (f). Code on Sanitation of the Philippines.
252 Id., Chapter XXII, Sec. 103.
253 Frank v. Maryland, 359 U.S. 360 [1959] (This case had generally been interpreted to justify search not needing
a warrant because the inspections are merely to determine whether physical conditions exist which do not
comply with minimum standards prescribed in local regulatory ordinances. Since the inspector does not ask
that the property owner open his doors to a search for evidence of criminal action which may be used to secure
the owners criminal conviction, historic interests of self-protection jointly protected by the Fourth and Fifth
Amendments are said not to be involved, but only the less intense right to be secure from intrusion into personal
privacy.); Also Eaton v. Price, 364 U. S. 263.
254 387 U.S. 523 (1967).
255 Our counterpart provision on unreasonable search and seizure is contained in Sections 2 and 3, Article III of
the 1987 Constitution which provide:
Section 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon probable cause to be determined personally by a judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized.
.......
Section 3 (1). The privacy of communication and correspondence shall be inviolable except upon lawful order
of the court, or when public safety and order requires otherwise as prescribed by law.
(2) Any evidence obtained in violation of this or the preceding section shall be inadmissible for any purpose in
any proceeding.
256 Frank v. Maryland, 359 U.S. 360.
The right against unreasonable searches and seizures even when constitutional is still
a personal right. It may be waived expressly or impliedly,261 but not by presumption.
Failure to object to a search cannot be construed as a waiver of this right262 nor a
peaceful submission to a search or seizure, even when warrantless, may be considered
consent or invitation thereto.263 Thus, no consented search may be concluded when the
accused asked for a search warrant but was searched anyway without the police showing
any warrant.264 Neither may mere silence be construed as passive consent nor implied
acquiescence to the search, the presumption of regularity in the performance of duty
on the part of the police officers notwithstanding.265 Acquiescence or consent in the loss
of fundamental rights cannot be presumed.266 Also, failure to object before the search or
passive submission to it will not amount to waiver or consent since the constitutional
guaranty is not dependent upon any affirmative act of the citizen:267
Thus, the consent contemplated here to allow warrantless search must be unequivocal,
specific, and intelligently given, uncontaminated by any duress or coercion272 which
cannot be lightly inferred, but must be shown by clear and convincing evidence.273 In
determining the voluntariness of the consent given, the following circumstances may be
taken into account: (1) the age of the defendant; (2) whether he was in a public or secluded
location; (3) whether he objected to the search or passively looked on;274 (4) the education
and intelligence of the defendant; (5) the presence of coercive police procedures; (6) the
defendants belief that no incriminating evidence will be found;275 (7) the nature of the
police questioning; (8) the environment in which the questioning took place; and (9) the
possibly vulnerable subjective state of the person consenting.276 That said, a suspect who
voluntarily and without protest submitted some evidence of the crime and who allowed to
be searched, without protest or opposition, is deemed to have waived his right.277
269 People v. Donato, G.R. No. 79269, June 5, 1991 citing 67 C.J. 291.
270 People v. Nuevas, G.R. No. 170233. February 22, 2007; People v. Figueroa, G.R. No. 134056, July 6, 2000
citing People v. Chua Ho San @ Tsay Ho San, 308 SCRA 432, 444 [1999], which in turn cited People v. Burgos,
144 SCRA 1 [1986]; Pasion Vda. de Garcia v. Locsin, 65 Phil. 698.
271 People v. Cubcubin, G.R. No. 136267. July 10, 2001.
272 Caballes v. Court of Appeals, G.R. No. 136292, January 15, 2002 citing 68 Am Jur 2d Searches and Seizures,
135.
273 Id.
274 Id. citing United States v. Barahona, 990 F. 2d 412.
275 Id. citing United States v. Lopez, 911 F. 2d 1006.
276 Id. citing United States v. Nafzger, 965 F. 2d 213.
277 People v. Malasugui, G.R. No. 44335, July 30, 1936; People v. Agbot, G.R. No. 37641, July 31, 1981; People v.
Omaweng, G.R. No. 99050, September 2, 1992 citing People v. Malasugui, 63 Phil. 221, 226 [1936]. See also
Vda. de Garcia v. Locsin, 65 Phil. 689 [1938]; People v. Donato, 198 SCRA 130 [1991]; People v. Rodriguez,
205 SCRA 791 [1992]; People v. Correa, G.R. No. 119246, January 30, 1998 citing People v. Fernandez,
G.R. No. 113474, 13 December 1994, 239 SCRA 174, 184; People v. Ramos, et al., G.R. Nos. 101804-07, 25
May 1993, 222 SCRA 557, 575; People v. Tabar, G.R. No. 101124, 17 May 1993, 222 SCRA 144; People v.
Malasugui, G.R. No. 44335, 30 July 1936, 63 Phil. 221; Vda de Garcia v. Locsin, 65 Phil. 689 [1938]; People v.
Donato, 198 SCRA 130 [1991]; People v. Rodrigueza, 205 SCRA 791 [1992]; People v. Omaweng, G. R. No.
99050, 02 September 1992, 213 SCRA 462-463.
The evidence that may be used against the criminally-accused is not always tangible.
It may be as electronic or digital data or audio streaming or recording. In cases of audio
recording or wire tapping, the rule of inadmissibility is the same as in warrantless search
and seizure, in that any communication or spoken word, or the existence, contents,
substance, purport, or meaning of the same or any part thereof, or any information
therein contained or secured by any person by way of unauthorized wire tapping shall
not be admissible in evidence in any judicial, quasi-judicial, legislative, or administrative
hearing of investigation.278 The exception is when there is a written court order279
for any peace officer to wiretap. Such written court order, however, is limited to cases
involving the crimes of treason, espionage, provoking war and disloyalty in case of war,
piracy, mutiny in the high seas, rebellion, conspiracy and proposal to commit rebellion,
inciting rebellion, sedition, conspiracy to commit sedition, inciting to sedition, kidnapping
as defined by the Revised Penal Code, and violations of Commonwealth Act No. 616,
punishing espionage, and other offenses against national security.280
The prohibition on wiretapping concretized under the Anti-Wiretapping Act is
intended to fill the inadequacy of laws penalizing violation of the privacy of communication
and correspondence281 and to keep up with advances in technology.282 One may note,
however, that while violation of the constitutional provision on illegal search and seizure
may only give rise to a civil action for damages,283 violation of the Anti-Wiretapping Act
gives rise to criminal liability with a penalty of six (6) months nor more than six (6) years
with accessory penalty of perpetual absolute disqualification from public office.284 Illegal
search and seizure has graver consequences to the right of privacy since they involve
physical violence on ones person and abode, ones castle, if you may, not to mention
the trauma they create on the other members of the suspects family. The author could
not see why violation of ones telephone will give rise to criminal liability but not to
violation of ones home and person; rights which are equally inviolable by constitutional
command.
The Anti-Wiretapping law, however, does not cover accidental overhearing by a third
party of a telephone conversation through a crossed-line, and therefore, without any
intent or effort to tap the conversation.285 A third party line or extension line has been
ruled to be not a device commonly known as dictaphone or dictagraph or detectapohone
The search incidental to a valid arrest is not limited to the person of the suspect. It
extends to areas within his immediate control288 from where he can reach for a weapon or
for evidence that he can destroy.289
The immediate control test has been illustrated in the American case of Chimel v.
State of California290 where the accuseds entire three-bedroom house, including the attic,
the garage, a small workshop, and drawers were thoroughly searched and where evidence
of burglary were found. On the basis of such evidence the accused was convicted by the
trial court. The United States Supreme Court reversed the conviction on the ground
that the search of the accuseds home went far beyond his person and the area from
within which he might have obtained either a weapon or something that could have been
used as evidence against him.291 This same exacting principle of limitation obtains in
Philippine jurisdiction where immediate control has been construed as the permissible
area within the suspects reach.292
Thus, a warrantless search was held subversive to the basic constitutional right and
guarantee against unreasonable searches and seizures when conducted on accuseds
apartment which was located a few blocks away from his place of arrest,293 in a hotel room
other than the room of the accused,294 at the back of the house where the search was
initially conducted inside the house,295 in the house or room of the accuseds girlfriend
where he is merely a sojourner or visitor,296 or inside his house when the suspect was
arrested outside his house.297
286 Id., Sec. 1; Gaanan v. Intermediate Appellate Court, G.R. No. 69809, October 16, 1986.
287 Explanatory Note by Senator Lorenzo Taada for R.A. No. 4200 as quoted in Garcillano v. House of
Reprentatives Committees on Public Information, G.R. No. 170338 & 179275, December 23, 2008.
288 People v. Cubcubin, G.R. No. 136267. July 10, 2001.
289 People v. Estela, G.R. No. 138539-40, January 21, 2003; People v. Malmstedt, G.R. No. 91107, June 19, 1992.
290 Chimel v. State of California, 395 U.S. 752 (1969).
291 People v. Leangsiri, G.R. No. 112659. January 24, 1996.
292 People v. Santos, G.R. No. 106213, September 23, 1994 citing People v. Catan, 205 SCRA 235; People v.
Liquen, 212 SCRA 288.
293 People v. Leangsiri, G.R. No. 112659. January 24, 1996; People v. Omogbalahan, G.R. No. 112659, January
24, 1996.
294 Id.
295 People v. Cubcubin, G.R. No. 136267. July 10, 2001.
296 People v. Che Chun Ting, G.R. No. 130568-69, March 21, 2000.
297 People v. Lua, 256 SCRA 539 (1996); Espano v. Court of Appeals, G.R. No. 120431, April 1, 1998.
On the other hand, the warrantless search was held valid in a confined place within
appellants (and his wifes) immediate control, an area where he might gain possession of
a weapon or destroy evidence constituting proceeds or proof of his commission of related
offenses298 or of a bag carried by the suspect as it is within his custody and immediate
control.299
The right to privacy is not absolute.300 For example, intrusion to privacy may be
allowed to access information on matters of compelling public concern; to ensure
that banking regulatory agencies adequately protect the public who invest in foreign
securities when such information is required during congressional hearings301 or Senate
investigations;302 or to require public officers to make periodical submission of financial
statement as provided under an anti-graft law.303 All these exceptional cases, however,
involve the validity of a law and the extent of congressional power of inquiry in relation
to compelling state interest.
Beyond those compelled by public interest, the justification for a search must be
narrowly focused and accompanied by proper safeguards and well-defined standards to
prevent unconstitutional invasions.304
It may be advanced here as a proposition that in that pronounced need for a narrow
focus in ordinary searches in relation to a possible commission of a crime or transgression
of certain administrative rules, where compelling state interest is too pompous to invoke,
the test for the validity of a search should be on the individuals reasonable expectation
of privacy.
recognize as reasonable.306
a. Search of Computers
The test crafted in Katz has since been applied in warrantless search of computers
and its contents. For example, when computers are located in a common area accessible
to others, a person does not have an expectation of privacy in the physical components
of that computer.312 But a homeowner has a reasonable expectation of privacy in his
306 As we adopted in Ople v. Torres, G.R. No. 127685, July 23, 1998 citing Rakas v. Illinois, 439 U.S. 128, 143-
144 [1978]; see the decision and Justice Harlans concurring opinion in Katz v. United States, 389 U.S. 347,
353, 361, 19 L. ed. 2d 576, 583, 587-589 [1967]; see also Southard, Individual Privacy and Governmental
Efficiency: Technologys Effect on the Governments Ability to Gather, Store, and Distribute Information
(Computer/Law Journal, vol. IX, pp. 359, 367, note 63 [1989]; The test is reinstated per Justice Bersamins
concurring and dissenting opinion in Pollo v. Constantino-David as: first, that a person have exhibited an
actual (subjective) expectation of privacy and, second, that the expectation be one that society is prepared to
recognize as reasonable citing the concurring opinion of Justice Harlan in Katz v. United States, 389 U.S.
347, 350-351 [1967].
307 People v. Estrada, G.R. Nos. 164368-69, April 2, 2009.
308 Caballes v. Court of Appeals, G.R. No. 136292, January 15, 2002.
309 People v. Johnson, 401 Phil. 734 (2000).
310 Alejano v. Cabuay, G.R. No. 160792, August 25, 2005: American cases recognize that the unmonitored use
of pre-trial detainees non-privileged mail poses a genuine threat to jail security (Corpus Juris Secundum, supra
note 44) Hence, when a detainee places his letter in an envelope for non-privileged mail, the detainee knowingly
exposes his letter to possible inspection by jail officials. A pre-trial detainee has no reasonable expectation of
privacy for his incoming mail. However, incoming mail from lawyers of inmates enjoys limited protection such
that prison officials can open and inspect the mail for contraband but could not read the contents without
violating the inmates right to correspond with his lawyer (In re Jordan, Cr. 15734, 15755 [1972]. The inspection
of privileged mail is limited to physical contraband and not to verbal contraband.
311 Alejano v. Cabuay, G.R. No. 160792, August 25, 2005, citing In re Jordan, Cr. 15734, 15755 [1972]
312 Clancy, Thomas K., The Fourth Amendment Aspecs of Computer Searchers and Seizures: A Perspective and a Primer, 75
belongings, including computers, in his home313 or in his personal computer even if being
used in the workplace.314
(1) the employees relationship to the item seized; (2) whether the item
was in the immediate control of the employee when it was seized; and (3)
whether the employee took actions to maintain his privacy in the item.
These factors are relevant to both the subjective and objective prongs of
the reasonableness inquiry, and we consider the two questions together.319
Thus, where the employee used a password on his computer, did not
share his office with co-workers and kept the same locked, he had a
legitimate expectation of privacy and any search of that space and items
located therein must comply with the Fourth Amendment.320
In search and seizure of a computer, however, on the basis of a search warrant, the
printing from the diskettes of the computer seized was allowed when they were not shown
to have been tampered with.321
Mississipi Law Journal 227 [2005], citing United States v. Netties, 175 F. Supp. 2d 1089, 1093-94 (N.D. III,
2001).
313 Clancy, Thomas K., The Fourth Amendment Aspecs of Computer Searchers and Seizures: A Perspective and a Primer, 75
Mississipi Law Journal 227 [2005], citing Guest, 255 F. 3d at 333; See also People v. OBrien, 769 N.Y.S. 2d 654,
656 (N.Y. App. Div. 2003) where defendant was held to have reasonable expectation of privacy in computer in
his bedroom).
314 Anonymous Letter-Complaint against Atty. Miguel Morales, Clerk of Court, Metropolitan Trial Court of
Manila, A.M. Nos. P-08-2519 and P-08-2520, November 19, 2008, 571 SCRA 361.
315 Pollo v. Constantino-David, G.R. No. 181881, October 18, 2011.
316 Id.
317 Id. .
318 G.R. No. 181881, October 18, 2011.
319 Citing U.S. v. Barrows, 481 F.3d 1246, C.A.10 (Okla.), April 3, 2007, citing United States v. Anderson, 154 F.3d
1225, 1229 (10th Cir. 1998).
320 Citing U.S. v. Ziegler, 474 F.3d 1184 C.A.9 (Mont.), January 30, 2007.
321 People v. Burgos, G.R. No. 92739, August 2, 1991.
With respect to mobile phones, most district courts in the United States justify search
and seizure of their contents under established exceptions to warrantless search, i.e. search
incidental to a valid arrest, search under exigent circumstances, and search of moving
vehicles, among others.322 This trend is merely a stopgap measure which disregards the
fact that a cell phone contains vast amount of information where those related to the
offense may not be immediately discernible from those that are not, unlike traditional
seizure under the known exceptions when the items seized are immediately discernible as
connected to, if not the direct object of, the search. This stopgap measures, however, have
been effectively overruled by the U.S. Supreme Court in Riley v. California (2014)323 which
held that search of a mobile phone may no longer be justified as reasonable without
a warrant even when made under the search incident to a lawful arrest doctrine. As
emphatically rule in Riley, [o]ur answer to the question of what police must do before
searching a cell phone seized incident to an arrest is accordingly simple get a warrant.
Even the analogy often used to justify warrantless search of cell phone that it is
akin to a closed container like an address book or filing cabinets324 is too convenient for
comfort. It may be that there is no principled distinction under the doctrine of functional
equivalence325 that may be drawn for evidentiary purposes between digital documents and
their written or printed counterparts. But that non-discrimination to evidentiary weight
and probative value applies when the evidence, digital or otherwise, has already been
identified and segregated, not when the search for such evidence has yet to take place.
A cell phone today is not merely a repository of names and addresses but of, for
example, digital letters through e-mail, history and current records of bank accounts,
passwords, photographs, Internet browsing history, financial records, and other sensitive
information and privacy concerns. An all-encompassing approach to search this vast
amount of data is akin to a fishing expedition on top of the fact that it is subversive to the
settled principle that items to be searched, even in cases of warrant application, must be
particularized and only for a single-offense.326 As there is a void scatter-shot warrant327
prohibiting a search for multiple offenses, so must there be an equally void shot-gun
search, prohibiting the fishing for evidence.
322 Dee, Mireilee, Getting Back to the Fourth Amendment: Warrantless Cell Phone Searchers, 56 New York Law School Law
Review 1131 [211-2012] citing U.S. v. Murphy, 552 F. 3d 405 (upholding warrantless cell phone search as
lawful under the search incident to arrest); U.S. v. Salgado, 2010 U.S. Dis. LEXIS 77266 (under the exigent
circumstances exception); United States v. Suarez-Blanca, 2008 U.S. Dist. LEXIS 111623 (under the search
incident to a lawful arrest exception); U.S. v. Meador, 2008 US. Dis. LEXIS 92728 (under the automobile
exception); U.S. v. Zamora, 2005 U.S. Dist. LEXIS 40775 (under the exigent and incident to arrest exceptions);
U.S. v. Parada, 289 U.S. Dist. LEXIS 40775 (under the exigent circumstances exception).
323 No. 13-132 and its companion case of U.S. v. Wurie, No. 13-212, June 25, 2014, 573 U.S. ___ (2014).
324 Clancy, Thomas K., The Fourth Amendment Aspecs of Computer Searchers and Seizures: A Perspective and a Primer, 75
Mississipi Law Journal 200 [2005], citing People v. Gall, 30 P. 3d 145, 153 (Colo. 2001; See also United States
v. Al-Marri, 230 F. Supp. 2d 535, 541 (S.D.N.Y. 2003) (a computer is a form of container); People v. Loorie, 630
N.Y.S. 2d 483, 486 (County Ct. 1995); United States v. Barth, 26 F. Supp. 2d 929, 936 (W.D. Tex. 1998).
325 Republic Act No. 8792 (Electronic Commerce Act), Section 7: . . . . For evidentiary purposes, an electronic
document shall be the functional equivalent of a written document under existing laws.
326 See 4.2.5. Objects of the Warrant; 4.2.7. One-Specific-Offense Rule hereof.
327 See 4.2.7. One-Specific-Offense Rule hereof.
It may be noted, however, that current technology closes the gap between computers
and mobile phones, especially those called smart phones328 which are actually computers
with calling capability. Note, that except for the size, a desktop, a laptop, or a tablet
computer connected to a wi-fi or to the Internet also have communication capability. It
is not remote that the standards imposed for warrantless search on computer may likewise
be observed for cell phones search. The caveat is that cell phones are, more often than not,
personally-owned with more stringent and heightened degree of reasonable expectation of
privacy against warrantless search than computers being used in offices.
Beeper and Global Positioning System (GPS) are tracking devices that may be used to
monitor the movement and precise location of a vehicle, person, or other assets to which
they are attached. A beeper may only provide information on location, while a GPS, in
addition to providing location in real time, may store the location data in the unit itself or
they may be transmitted to a central data base.329
In 1983, in United States v. Knotts,330 the Supreme Court of the United States held
that the use of beeper in tracking a car on public highways does not amount to a search
because the vehicle may also be followed without the beeper. On the argument on
the possibility that the use of beepers without a warrant would permit 24-hour mass
surveillance of citizens, the Court refused to rule on the ground that the fear rests on
hypothetical grounds and deferred resolution until such time that the issue is presented
as actual controversy. Just a year after Knotts, or in 1984, in United States v. Karo,331 the
Court ruled that the use of a beeper to monitor the location of a property brought inside
a private home where the government could tell the exact location of the property
inside the home requires a warrant. The difference between Knotts and Karo is that the
beeper should not be allowed to do what a police officer could not do physically without
a warrant. The similarity in both cases is that the beeper was installed with the consent of
the initial party who was in possession of the container to where the beeper was installed
which thereafter was delivered to the suspects.
In 2012, it was held in United States v. Jones,332 that the governments installation of
a GPS device to a vehicle without the consent of the suspect, and its use to monitor
the vehicles movement later, constitute a search. The search was ruled to be illegal
as the government physically occupied private property (a Jeep Grand Cherokee) for the
purpose of obtaining information and that by attaching the GPS device to the Jeep, the
government encroached on a protected area.
In Jones, the U.S. Supreme Court further stated that while Katz, indeed ruled that the
Fourth Amendment protects people, not places, later jurisprudence sustain the view that
a violation occurs when government officers violate a persons reasonable expectation of
328 iPhone, Galaxy II, Blackberry brands and models, among others.
329 Wikipedia, GPS Tracking Unit at http://en.wikipedia.org/wiki/GPS_ tracking _ unit last visited 5 April 2012.
330 460 U.S. 276 [1983].
331 468 U.S. 705 [1984].
332 No. 10-1259, January 23, 2012; 565 U.S. __ (2012).
privacy.333 The Court distinguished Jones from Knotts and Karo, by the fact that in Knotts
and Karo, the beeper had been placed in a container with the consent of its original holder
before it came into the accuseds possession and therefore no infringement of defendants
reasonable expectation of privacy is involved. In Jones, the accused is already in possession
of the vehicle when the government installed the GPS device without his consent.
Thermal imaging cameras, also known as infrared cameras detect the heat given off
by an object or person. If a person has gun tucked under his shirt, the camera can see
through the outlines of a gun as the person himself emits heat and the portion blocked
by the gun will appear cooler. Inside a car, it can be used in detecting hidden vehicle
compartments which may be used for transporting illegal drugs, contraband, or even
people due to the detected change in thermal characteristics of a surface caused by an
adjoining wall or bulkhead, where the thermal images highlight structural details unseen
by the naked eye. When focused inside a house, heat being exhausted through vents and
other outlets or exterior walls can see through this abnormal excess heat and provide
an additional element of probable cause such as growing marijuana inside a house which
requires high intensity lamps or illegal drugs manufacturing.334 Clearly, thermal imaging
cameras or devices effectively see through objects what the human eyes cannot see. If the
use of such devices is allowed, physical intrusion may no longer be necessary before the
police may establish probable cause to conduct a warrantless search.
In Kyllo v. United States,335 an agent of the U.S. Department of the Interior suspected
that marijuana was being grown inside a suspects home. Indoor growing of marijuana
requires high-intensity lamps to duplicate the heat of the sun. To determine such amount
of heat emanating from the suspects home consistent with the use of such lamps, the
agent used a thermal-imaging device to scan the suspects home while in his passenger
seat parked across the street. The scan revealed that relatively hot areas existed in some
portions of the house. Based on such thermal imaging result, utility bills, and tips from
informants, a federal magistrate issued a warrant to search the suspects home which
unveiled the fact that marijuana was indeed being grown inside the house. The issue on
the intrusiveness of thermal imaging reached the U.S. Supreme Court when the trial
court ruled that it is non-intrusive.
The U.S. Supreme Court, however, reversed in a 5-4 opinion and held that [w]here,
as here, the Government uses a device that is not in general public use, to explore details
of the home that would previously have been unknowable without physical intrusion, the
surveillance is a search and is presumptively unreasonable without a warrant. In dissent, Justice
John Paul Stevens argued that the observations were made with a fairly primitive thermal
imager that gathered data exposed on the outside of [Kyllos] home but did not invade
any constitutionally protected interest in privacy, and were, thus, information in the
public domain.
333 Citing e.g. Bond v. United States, 529 U.S. 334 [2000]; California v. Ciraolo, 476 U.S. 207 [1986]; Smith v.
Maryland, 442 U.S. 735 [1979].
334 P&R Infrared site, Thermal Imaging: Facts v. Fiction at http://www.pr-infrared.com/about-thermal-imaging/
thermal -imaging-facts-vs-fiction/ last visited 18 May 2013.
335 533 U.S. 27 [2001].
A. Inadmissibility of Evidence
There was a time when evidence secured even by illegal search and seizure are admissible
in evidence against the accused as held in Moncado v. Peoples Court.336 Moncado, however,
was abandoned by the Supreme Court in Stonehill v. Diokno337 where evidence secured by
illegal search had been excluded, the volte-face dictated by the realization that exclusion is
the only practical means of enforcing the constitutional injunction against unreasonable
searches and seizure. The fruit of the poisonous tree doctrine, of American origin,338
which absolutely forbids use of evidence improperly obtained as adopted in Stonehill,
extends to pieces of evidence derivatively flowing from illegal searches and seizures or
from admissions made by accused under conditions constitutionally proscribed.339 More,
illegal searches and seizures are a menace against the constitutional guarantee of the
citizens to be inviolable in their homes.340 This has been known as the exclusionary rule.
In the event of illegal search and seizures, two alternative remedies are available to
the accused even before trial begins: 1) a motion to quash the search warrant341 before
the issuing court or when the information has already been filed, before the court where
the case is filed; or 2) a motion to suppress evidence before the court where the case is
pending.342
In both cases, one of the objectives is to exclude the evidence seized as fruit of
the poisonous tree as adopted in Stonehill. In a motion to quash a search warrant or to
suppress evidence, such motion shall be filed only in and acted upon by the court where
the action has been instituted.343 If no criminal action has been instituted, the motion
may be filed in and resolved by the court that issued the search warrant.344 If the motion
filed before the court which issued the search warrant was not resolved and the case
subsequently filed in another court, the latter court shall resolve the motion.345 Since
two separate courts with different participations are involved in this situation, a motion to
quash a search warrant and a motion to suppress evidence are alternative and not cumulative
remedies. In order to prevent forum shopping, a motion to quash shall consequently be
governed by the omnibus motion rule, provided, however, that objections not available,
336 G.R. No. L-824. January 14, 1948, 80 Phil. 1 [1948].
337 G.R. No. 19550, June 19, 1967.
338 The principle as an extension of the exclusionary rule was established in Silverthorne Lumber Co. v. United States,
251 U.S. 385 [1920]. The phrase fruit of the poisonous tree was coined in Nardone v. United States, 308 U.S. 338,
[1939[. The doctrine was first applied in the context of a Fourth Amendment violation earlier in Weeks v. United
States, 232 U.S. 383 (1914) and was made to apply to state courts as well in Mapp v. Ohio, 367 U.S. 643 (1961).
339 People v. Alicando, G.R. No. 117487, December 12, 1995; People v. Rondero, G.R. No. 125687, December 9,
1999.
340 People v. Aruta, G.R. No. 120915, April 13, 1998; People v. Burgos, G.R. No. 68955, September 4, 1986.
341 Rules of Court, Rule 126, Sec. 14.
342 Rules of Court, Rule 126, Sec. 14; Malaloan v. Court of Appeals, 232 SCRA 249 at 268 (1994)
343 Id.
344 Id.
345 Id.
existent or known during the proceedings for the quashal of the warrant may be raised
in the hearing of the motion to suppress. The resolution of the court on the motion to
suppress shall likewise be subject to any proper remedy in the appropriate higher court346
Even one who is not a party to the case may file a motion to suppress the use of the
seized items against him, the proceeding for its issuance not being a criminal action in
itself, but merely a legal process likened to a writ of discovery.347
The failure to file a motion to quash the search warrant or to suppress evidence
before plea does not amount to waiver of the inadmissibility of the evidence seized during
the illegal search. The waiver occasioned by the plea does not extend this far.348 The
accused may still object to the admissibility of the illegally-seized evidence during the
offer of evidence by the prosecution or to file a demurrer to evidence, moored, among
others, to the inadmissibility of the illegally secured evidence.349 After all, the well-known
practice is that the time to object to the admissibility of the evidence is when it is being
formally offered when the prosecution is at the stage of closing its case.350 It is even
premature to object to documentary evidence when documents are just being marked for
identification, but have yet to be formally offered.351
The liability of a police officer who illegally conducted a search without warrant or
an illegal warrantless search is only civil.352 Thus, violation of ones constitutional right
against illegal search and seizure can be the basis for the recovery of damages under
Article 32 in relation to Article 2219, pargraphs (6) and (10) of the New Civil Code.353 Per
se, illegal warrantless search by the police is not penalized under the Revised Penal Code
or any other special criminal law.354 What is criminally penalized is obtaining a search
warrant maliciously355 or conducting the search of domicile without warrant as violation
of domicile,356 or conducting a search otherwise proper, but done in the absence of the
suspect, of any member of his family, or when they are unavailable, of two witnesses
residing in the same locality.357
346 People v. Court of Appeals, G.R. No. 126379, 26 June 1998, 291 SCRA 400 as cited in Garaygay v. People,
G.R. No. 135503, July 6, 2000.
347 Securities and Exchange Commission v. Mendoza, G.R. No. 170425. April 23, 2012
348 People v. Aruta, G.R. No. 120915, April 13, 1998, 288 SCRA 626 [1998].
349 People v. Barros, 231 SCRA 557 [1994]
350 People v. Caguioa, G.R. No. 38975, January 17, 1980; Valencia v. Locquiao, G.R. No. 122134, October 3, 2003
citing Rules of Court, Rule 132, Section 36.
351 People v. Santito, 201 SCRA 87 (1991); People v. Sayat, G.R. Nos. 102773-77, 9 June 1993 as footnoted in
People v. Barros, G.R. No. 90640, March 29, 1994.
352 Illegal arrest, on the other hand, may be criminally pursued under Articles 269 or Article 124 on arbitrary
detention of the Revised Penal Code. (Morales v. Enrile, G.R. Nos. 61016 and 61107, April 26, 1983).
353 Silahis International Hotel, Inc. v. Soluta, G.R. No. 163087, February 20, 2006.
354 Galvante v. Casimiro, G.R. No. 162808, April 22, 2008.
355 Revised Penal Code, Art. 129: Search Warrants Maliciously Obtained and Abuse in the Service of Those
Legally Obtained.
356 Revised Penal Code, Article 128; Moncado v. El Tribunal Del Pueblo, G.R. No. 824, January 14, 1948.
357 Revised Penal Code, Art. 130: Searching Domicile Without Witnesses.
Thus, when the victim is illegally searched in his vehicle which does not fall under the
moving vehicle exception or any other exception358 nor does he waive his right against
unreasonable search and seizure beyond mere failure to object,359 the remedy against the
police officer is a civil action for damages under Article 32, in relation to Article 2219 (6)
and (10) of the Civil Code.
An action for damages may be filed, not only against a public officer or employee, but
also against any private individual who directly or indirectly obstructs, defeats, violates or
in any manner impedes or impairs another persons right to privacy of communication
and correspondence,360 which resulted in a particular wrong or injury.361
358 Silahis International Hotel, Inc. v. Soluta, G.R. No. 163087, February 20, 2006, 482 SCRA 660, 672.
359 Lui v. Matillano, G.R. No. 141176, May 27, 2004.
360 Civil Code, Article 32 (11).
361 Vinzons-Chato v. Fortune Tobacco Corporation, G.R. No. 141309, December 23, 2008; Vinzons-Chato v.
Fortune Tobacco Corporation, G.R. No. 141309, June 19, 2007, 525 SCRA 11.
I. INTRODUCTION
Prior to the FRIA, corporate rehabilitation was governed by the Presidential Decree
No. 902-A (SEC Reorganization Act) and was initially placed under the jurisdiction of the
Securities and Exchange Commission (SEC). When the SECs jurisdiction was transferred
to the Regional Trial Courts (under Republic Act No. 8799 or the Securities Regulation
Code), the Supreme Court promulgated the Interim Rules of Procedure on Corporate
Rehabilitation on 21 November 2000 (Interim Rules),3 and later, the Rules of Procedure on
Corporate Rehabilitation on 2 December 2008 (2008 Rules).4 The Interim Rules and the
2008 Rules shall be collectively referred to in this article as the old rehabilitation rules.
* Presiding Judge, Regional Trial Court (RTC) of Quezon City, Branch 90. 80 Advanced Management Course,
Yale University; 77 LL.B., University of the Philippines (Order of the Purple Feather); 72 B.S.C., major in account-
ing and auditing, San Beda College, magna cum laude, and certified public accountant. The article is primarily
based on the Executive Summary prepared by the Supreme Court Sub-Committee on Commercial Courts with
Supreme Court Associate Justice Arturo D. Brion as Chairperson, Supreme Court Associate Jus-
tice Estela M. Perlas-Bernabe as Vice-Chairperson, Court of Appeals Justices Japar B. Dimaam-
pao and Apolinario D. Bruselas, Jr., the author Judge Reynaldo B. Daway, Intellectual Property Office
Director General Ricardo R. Blancaflor, Atty. Francis Ed. Lim and Atty. Rena M. Rico-Pamfilo as
Members.
1 The FR Rules or the Financial Rehabilitation Rules of Procedure (2013) (A.M. No. 12-12-11-SC) was
approved by the Supreme Court on 27 August 2013.
2 FRIA, sec. 6.
3 The Interim Rules became effective on 15 December 2000.
4 The 2008 Rules became effective on 16 January 2009.
5 See, FR Rules or Financial Rehabilitation Rules of Procedure (2013), rules 2, 3, and 4.
6 2008 Rules, rules 4, 5 and 6.
The FRIA also expressly adopts the Model Law on Cross-Border Insolvency of the
United Nations Commission for International Trade Law and Development (UNCITRAL),
subject to the rules of procedure to be adopted by the Court.7 Although the 2008 Rules had already
incorporated some provisions of the UNCITRAL Model Law,8 the FR Rules further
modifies these provisions in light of relevant laws and rules.9
Upon effectivity, the FR Rules shall also apply to suspensions of payments and
rehabilitation proceedings already pending, except where its application would not be just
or feasible in the opinion of the rehabilitation court.12 In the latter case, the procedures
originally applicable shall continue to govern the pending proceedings.13
As in the old rehabilitation rules, rehabilitation proceedings under the FRIA are
non-adversarial, summary, and in rem.14 Jurisdiction over persons affected by the
proceedings is acquired upon publication, in one (1) newspaper of general circulation
in the Philippines for two (2) consecutive weeks, of the Notice of Commencement of
Proceedings and Commencement Order to be issued by the rehabilitation court.15
Initiation of Proceedings
Court-supervised rehabilitation proceedings17 may either be: (1) debtor-
initiated,18 or (2) creditor-initiated.19
A debtor is deemed insolvent if it (1) is generally unable to pay its liabilities when
they fall due in the ordinary course of business, or (2) has liabilities that are greater than
its assets.20
As in the old rehabilitation rules,21 a group of debtors may initiate a petition for
rehabilitation when: (1) one or more of its members foresee the impossibility of meeting
debts when they respectively fall due; and (2) the financial distress would likely adversely
affect the financial condition and/or operations of the other members of the group or
the participation of the other members of the group is essential under the terms and
conditions of the proposed Rehabilitation Plan.22
The Commencement Order under the FR Rules incorporates a Stay Order that
specifically pertains to claims that are stayed during the pendency of the rehabilitation
proceedings.25 Other aspects of the Stay Order provided in the old rehabilitation rules26
are included as part of the Commencement Order in the FR Rules.
If the court finds the petition for rehabilitation sufficient in form and substance, it shall
issue a Commencement Order within five working (5) days from the filing of the petition.27
17 See, FR Rules, supra note 5, rule 2.
18 See, FR Rules, supra note 5, rule 2, sec. 1.
19 See, FR Rules, supra note 5, rule 2, sec. 4.
20 See, FR Rules, supra note 5, rule 1, sec. 5(k).
21 2008 Rules, rule 4, sec. 1.
22 See, FR Rules, supra note 5, rule 2, sec. 1.
23 See, FR Rules, supra note 5, rule 2, sec. 4.
24 2008 Rules, rule 5, sec. 1.
25 See, FR Rules, supra note 5, rule 2, sec. 8.
26 2008 Rules, rule 3, sec. 7.
27 See, FR Rules, supra note 5, rule 2, secs. 7 and 8.
These directives are also part of the Stay Order under the old rehabilitation rules.29
In addition to the above listed directives, the Commencement Order likewise carries
the following effects:
1. vest the rehabilitation receiver all the powers and functions under
the FRIA;
2. serve as legal basis to render null and void any extrajudicial
activity or process to enforce a claim against the debtor after the
commencement date;
3. serve as legal basis to render null and void any set-off after the
commencement date of any debt owed to the debtor by any of the
debtors creditors;
4. serve as legal basis to render null and void the perfection of any lien
against the debtors property after the commencement date;
5. consolidate all legal proceedings by and against the debtor to the
court; and
6. exempt the debtor for all liability for taxes, fees, and penalties,
interests, charges thereon due to the national or local government.30
Under the FR Rules, the effects of the Commencement Order shall retroact to the
date of the filing of the petition.31 The old rehabilitation rules only made the Stay Order
effective from the date of its issuance.32
28 Ibid.
29 See, 2008 Rules, supra note 26.
30 See, FR Rules, supra note 5, rule 2, sec. 9.
31 Ibid.
32 2008 Rules, rule 3, sec. 9.
Under the FR Rules, the Commencement Order is effective for the duration of the
rehabilitation proceedings, unless:
1. earlier lifted by the court (as a result, for instance, of the dismissal of
the petition);
2. the Rehabilitation Plan is seasonably confirmed or approved by the
court; or
3. the rehabilitation proceedings are ordered terminated by the court33
(but the Commencement Order shall continue to be effective during
the interim period when the rehabilitation proceeding is converted to
liquidation. Since the old rehabilitation rules do not allow conversion
of rehabilitation proceedings to liquidation, the Stay Order was
effective only until the approval of the rehabilitation plan or the
dismissal of the petition.)34
The court may also relieve a claim from the coverage of the Stay Order when: (a)
a creditor does not have adequate protection over property securing its claim; or (b) the
value of a claim secured by a lien on property which is not necessary for rehabilitation
of the debtor exceeds the fair market value of the property.37 A similar provision is also
found in the 2008 Rules, which allows relief from, modification, or termination of the
Stay Order.38
As in the old rehabilitation rules,39 the FR Rules declares that the issuance of the stay
order does not affect the right to commence actions or proceedings insofar as it is necessary
to preserve ad cautelam a claim against the debtor, with the additional requirement for
36 See, FR Rules, supra note 5, rule 2, sec. 10.
37 See, FR Rules, supra note 5, rule 2, sec. 60.
38 2008 Rules, rule 3, sec. 10.
39 2008 Rules, rule 3, sec. 7.
the payment of the applicable filing fee. The FR Rules requires the ad cautelam filing of
the action or proceeding to preserve the claim, since the Stay Order does not toll the
running of the period of prescription. The plaintiff shall have to pay the amount of
Php100,000.00 or 1/10 of the prescribed filing fee, whichever is lower. The payment of
the balance of the filing fee shall be a jurisdictional requirement for the reinstatement or
revival of the case.40
Notice of Claim
If the credit is not included in the Schedule of Debts and Liabilities, the creditor must
file his verified notice of claim not later than five (5) days before the first initial hearing
date fixed in the Commencement Order.42 Under the old rehabilitation rules, any omitted
credit should be included in the comment or opposition to be filed by the creditor.43
If a creditor fails to file his notice of claim on time, he shall not be entitled to
participate in the proceedings, but shall be entitled to receive distributions arising from
the proceedings if recommended and approved by the rehabilitation receiver, and
approved by the court.44 There was no similar barring effect under the old rehabilitation
rules in case the holder of an omitted claim fails to file a notice of claim. However, the old
rehabilitation rules required all creditors and interested parties to file a verified comment
on or opposition to the petition prior to the initial hearing;45 otherwise, they were barred
from participating in the proceedings.46
The old rehabilitation rules required a proceeding akin to a pre-trial, where the parties
shall consider: amendments to the proposed rehabilitation plan; the simplification of the
issues; the possibility of obtaining stipulations and admissions of facts and documents;
the possibility of a new rehabilitation plan voluntarily agreed upon by the debtor and its
creditors; and any other matter that may aid in the speedy and summary disposition of
the case.47
This pre-trial proceeding had been removed in the FR Rules, since the FRIA itself
40 See, FR Rules, supra note 5, rule 2, sec. 8.
41 See, FR Rules, supra note 5, rule 2, sec. 2(B)(4).
42 See, FR Rules, supra note 5, rule 2, sec. 12.
43 2008 Rules, rule 4, sec. 4.
44 See, FR Rules, supra note 42.
45 2008 Rules, rule 4, sec. 4.
46 2008 Rules, rule 3, sec. 7.
47 2008 Rules, rule 4, sec. 5(b).
does not require it. Instead, the court shall conduct an initial hearing where it shall:
(A) determine the creditors who have made timely and proper filing of
their notice of claims and issue an order that the creditors not named
therein shall not be entitled to participate in the proceedings but shall
be entitled to receive distributions arising from the proceedings;
(C) direct the creditors to discuss their comments on the petition and the
Rehabilitation Plan that had been submitted;
The court may hold additional hearings to discuss the above matters, but these
hearings must be concluded not later than ninety (90) days from the first hearing date.49
After the conclusion of the initial hearing, the rehabilitation receiver is required to
submit a report to the court stating his preliminary findings and recommendations, among
others, on (1) whether the debtor is insolvent and the possible causes of such insolvency;
(2) the financial goals of the rehabilitation plan and the procedures to accomplish these
goals; and (3) the substantial likelihood that the debtor can be rehabilitated. In the
alternative, the rehabilitation receiver may recommend the dismissal of the petition, or
the dissolution and/or liquidation of the debtor.50
The court shall consider the rehabilitation receivers report and may:
(C) convert the proceedings into one for the liquidation of the debtor
upon a finding that:
If the petition is given due course, the court shall order the rehabilitation receiver
to meet with the debtor and its creditors to consider their views and proposals on the
Rehabilitation Plan. In case any dispute relating to the Rehabilitation Plan or the
proceedings remains unresolved, the court may refer the parties to arbitration or any
mode of dispute resolution under the ADR Law.52 However, a referral to arbitration or
other modes of dispute resolution shall not be made if it will prejudice the one-year
period for the confirmation of the Rehabilitation Plan.53
The old rehabilitation rules did not authorize any referral to arbitration.
Unlike in the old rehabilitation rules where only natural persons may serve as
rehabilitation receivers,54 the FRIA allows the appointment of juridical persons as
rehabilitation receivers. Thus, the FR Rules provides for the qualifications for juridical
persons who are to serve as rehabilitation receivers.55
who shall be authorized to act for it. The designated representative must be a director,
an officer, a stockholder, or a partner of the juridical receiver. The juridical receiver is
solidarily liable with its designated representative for any wrongful act committed in the
discharge of their functions and responsibilities.56
The FR Rules specifically requires the rehabilitation receiver (as well as the designated
representative, in case of juridical receivers) to disclose, upon appointment, if he has any
conflict of interest. He has the continuing obligation to make a disclosure of any fact
coming to his knowledge that may be deemed a conflict of interest.57 Under the old
rehabilitation rules, there was no requirement for the rehabilitation receiver to make a
disclosure of any conflict of interest he may have upon his appointment or at any time
thereafter.
Though granted vast powers, the rehabilitation receiver may not interfere with or
take over the management of the debtors affairs, but may only oversee and monitor the
operations of these affairs during the pendency of the proceedings.59
As in the old rehabilitation rules,60 the rehabilitation receiver and persons he may
employ are entitled to compensation. The compensation shall be for the account of the
debtor and are considered administrative expense.61 The amount of compensation shall
be based on terms approved by the court after notice and hearing.62
The old rehabilitation rules did not provide for the appointment of a management
committee with the authority to assume the powers of management of the debtors affairs.
The Interim Rules of Procedure Governing Intra-Corporate Controversies, however,
provided for the appointment of a management committee,63 and this was a provision
made applicable to corporate rehabilitation cases.
Under the FR Rules, the court - upon motion of any interested party - is now
empowered to appoint a management committee under the following circumstances:
56 Ibid.
57 See, FR Rules, supra note 5, rule 2, secs. 22, 23 and 24.
58 Ibid.
59 See, FR Rules, supra note 5, rule 2, secs. 26 and 28.
60 2008 Rules, rule 3, sec. 14.
61 FRIA, sec. 56.
62 See, FR Rules, supra note 5, rule 2, sec. 28.
63 Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. 8799 (A.M. No. 01-2-04-
SC), rule 9. This became effective on 01 April 2001.
In the exercise of this power, the court may either direct the rehabilitation receiver
to assume the management of the debtor or appoint a management committee for such
purpose.65
The management committee shall take custody and control of all the assets of the
debtor and shall take the place of the management and governing body of the debtor and
assume its powers, rights and responsibilities. It has the power to overrule or revoke the
actions of the previous management or governing body of the debtor.66
To facilitate dealing with the creditors, the FR Rules allows the creation and
organization of a creditors committee if the majority of the creditors vote for its creation.
The creditors belonging to a class may formally organize among themselves and each
class may elect a representative to the creditors committee.67
When created, the creditors committee shall be the primary liaison between the
rehabilitation receiver and the creditors. Notice shall be sent to the creditors committee
instead of the individual creditors. It may also perform such other tasks or functions
that the court may deem necessary to facilitate the rehabilitation process. However, the
creditors committee cannot exercise or waive any right or give any consent on behalf of
any creditor unless specifically authorized in writing by such creditor.68
Administrative Expenses
(4) salaries and claims of employees for work performed after the commencement date.69
The payment of administrative expenses is not covered by the Stay Order.70
In general, the funds and properties of the debtor shall not be used or disposed
except in the ordinary course of business or unless necessary to finance the administrative expenses of
the rehabilitation proceedings.71
In certain cases, the court, upon motion, may authorize the sale, encumbrance or
disposition of the debtors property if there is showing that it is necessary for the continued
operation of the debtors business. If the property is encumbered, the secured creditor
must consent to the sale, encumbrance or disposition, and must be given a substitute
lien.72
The Rehabilitation Plan must be approved by all classes of creditors whose rights are
affected or modified by the Plan. The Rehabilitation Plan is deemed approved by a class
of creditors if members of the class holding more than 50% of the total claims in the
class vote in favor of the Plan.77 The 2008 Rules required a vote of at least 2/3 of the total
liabilities of the debtor, including secured creditors holding more than 50% of the total
secured claims of the debtor, and unsecured creditors holding more than 50% of the total
unsecured claims of the debtor.78
Notwithstanding the rejection of the Plan by the creditors, the court may still confirm
the Plan under the following circumstances:
Except for paragraph (C), these are the same circumstances required in the 2008
Rules for the court to confirm the rehabilitation plan notwithstanding the creditors
rejection thereof.80
If the Rehabilitation Plan is approved by the creditors, any interested party may
still file an opposition to the Plan before it is confirmed by the court.81 The objections,
however, are limited to the following grounds:
If the court finds the objections sufficient in form and substance, it shall conduct a
hearing on the objections.82
77 See, FR Rules, supra note 5, rule 2, sec. 62.
78 2008 Rules, rule 4, sec. 7.
79 See, FR Rules, supra note 77.
80 2008 Rules, rule 4, sec. 11.
81 See, FR Rules, supra note 5, rule 2, secs. 63, 64 and 65.
82 Ibid.
Volume 38, Number 1 & 2 - ( January - June 2013 ) 81
Reynaldo Bautista Daway
The court shall issue an order confirming the Rehabilitation Plan in any of the
following instances:
(A) no objection is filed within the twenty (20)-day period from receipt of
notice from the Court that a rehabilitation plan has been submitted;
(B) the court finds the objections lacking in merit;
(C) the basis for the objection has been cured; or
(D) the debtor has complied with the order to cure the objection.83
The court may confirm the Rehabilitation Plan notwithstanding unresolved disputes
over claims if the Rehabilitation Plan has made adequate provisions for paying such
claims.84
The court is given a maximum period of one (1) year from the filing of the petition
to confirm the Rehabilitation Plan.85 Unlike in the 2008 Rules where the one-year period
may be extended by the Supreme Court upon a showing of good cause,86 no extension is
authorized by the FRIA. Instead, if no confirmation is made within the one-year period,
the proceedings may be converted into one for liquidation of the debtor.87
Once the Rehabilitation Plan is confirmed, the debtors and all persons affected are
bound by its terms, regardless of whether or not they have participated in the proceedings.88
Termination of proceedings
The court may order the proceedings terminated either by declaring a successful
implementation of the Rehabilitation Plan or a failure of rehabilitation.89
the objectives, targets or goals of the Plan, including the timelines and
conditions for the settlement of the obligations due to the creditors
and other claimants;
(F) Determination that the Rehabilitation Plan may no longer be
implemented in accordance with its terms, conditions, restrictions,
or assumptions;
(G) There is a finding that fraud was committed in securing the approval
of the Rehabilitation Plan or its amendment;
(H) After the court finds merit in the objection/s raised against the
confirmation of the Rehabilitation Plan, the defect is not cured
within the time ordered by the court, or if the court determines that
the debtor acted in bad faith, or that it is no longer feasible to cure
the defect; and
(I) Failure of the debtor to comply with the FR Rules, the Rules of
Court, or any order of the court.90
An insolvent debtor, by itself or jointly with any of its creditors, may file a verified
petition with the rehabilitation court for the approval of a Pre-Negotiated Rehabilitation
Plan. Similar to the 2008 Rules,92 the FR Rules requires that the Pre-Negotiated
Rehabilitation Plan be initially approved by creditors holding at least two-thirds (2/3) of
the debtors total liabilities, including secured creditors holding more than fifty percent
(50%) of the debtors total secured claims and unsecured creditors holding more than fifty
percent (50%) of the debtors total unsecured claims.93
The rehabilitation court shall have a maximum period of one hundred twenty (120)
days within which to act on the submitted Pre-Negotiated Rehabilitation Plan. The Pre-
Negotiated Rehabilitation Plan shall be deemed approved upon the courts failure to act
within the 120-day period. The approval of the Pre-Negotiated Rehabilitation Plan shall
have the same effects of a confirmation of a rehabilitation plan under Rule 2 of the FR
Rules.94
Approval issued by the rehabilitation court. Within this period, any creditor or other
interested party is given the opportunity to file an objection to the Pre-Negotiated
Rehabilitation Plan based on limited grounds. The court may conduct a hearing on the
objection/s filed, which would then extend the suspension of the Plans implementation.95
If the rehabilitation court determines that the debtor or creditors supporting the Pre-
Negotiated Rehabilitation Plan acted in bad faith, or that the objection filed to the Plan is
incurable, the court may convert the proceedings into liquidation.96
To be effective, the OCRA requires a higher number of votes than the Pre-Negotiated
Rehabilitation Plan. An OCRA must be approved by the debtor, creditors representing
at least sixty-seven percent (67%) of the debtors secured obligations, creditors
representing seventy-five percent (75%) of the debtors unsecured obligations, and
creditors holding at least eighty-five percent (85%) of the debtors total liabilities.99
The Notice of the OCRA, which will contain the salient provisions of the agreement,
must be published once a week for at least three (3) consecutive weeks in a newspaper of
general circulation in the Philippines.100
cent (50%) of the total liabilities of the debtor, whichever comes first.102 The parties,
however, are not precluded from extending the period or from executing a new Standstill
Agreement.
The OCRA shall take effect upon the lapse of fifteen (15) days from the date of
the last publication of its notice, and shall have the same effects of a confirmation of
rehabilitation plan under Rule 2 of the FR Rules. The parties may file a Petition for
Court Assistance with the Regional Trial Court (RTC) having jurisdiction over the
debtors residence or principal place of business for the execution or implementation of
the OCRA or even the Standstill Agreement.103
An OCRA or Standstill Agreement that does not comply with the requirements
under this Rule or obtained through fraud, intimidation, violence, or vitiated consent
may be cancelled by filing a Petition for Annulment with the RTC.104
Within five (5) days from receipt of the comment on or opposition to the Petition
for Court Assistance or Petition for Annulment filed under the FR Rules, the RTC shall
determine whether the petition be given due course and shall issue a Due Course Order, if
proper.105
The proceedings in the RTC shall be summary and conducted not later than twenty
(20) days from the filing of the petition.106 Judgment on the petition must be rendered,
not later than sixty (60) days from the filing of the petition, and shall be immediately
executory.107 A party aggrieved by the courts judgment may file for an injunctive writ
with the Court of Appeals (CA) through a Petition for Certiorari under Rule 65 of the Rules
of Court. The implementation of the OCRA shall not be stayed by any court action
or proceeding arising from or relating to the OCRA, unless the CA issues an injunctive
writ.108
The FR Rules now specifically provides that upon recognition of a foreign proceeding,
the foreign representative, through counsel, acquires the standing to initiate actions to avoid
or otherwise render ineffective acts detrimental to creditors that are available under the
FR Rules. The intervention of foreign representative in any action or proceeding in the
Philippines in which the debtor is a party must also be through counsel.114
The local court shall cooperate to the extent feasible in all court-to-court
communications for purposes of information or assistance.115 Under the 2008 Rules, the
courts may communicate directly with foreign representatives.116
As in the 2008 Rules, a party may file a motion for reconsideration of any order
issued by the court before the approval of the rehabilitation plan.117 No relief may be
extended to the aggrieved party by the courts order on the motion through a special civil
action for certiorari under Rule 65 of the Rules of Court.118
Unlike the 2008 Rules, no appeal may be taken from an order or resolution
of the court approving or dismissing the rehabilitation plan.119 The FR Rules
allows only a review of the order or resolution through a petition for certiorari under
Rule 65 of the Rules of Court filed with Court of Appeals, within fifteen (15) days from
notice of the decision or order.120
The FR Rules shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least two (2) newspapers of national circulation in the Philippines.121
VIII. CONCLUSION
I. INTRODUCTION
The Philippines is facing a rosy economic outlook. Amidst slowdowns and financial
crises abroad, it has recently been dubbed as an emerging Asian tiger,1 a star performer in
Asia,2 and a truly remarkable hot spot[] in Asia that can become one of the worlds top economies
by 2050.3 Indeed, with the increasing investor confidence and the proliferation of small
and medium-scale local enterprises, the Philippines is a viable competitor in the race to
becoming a lead economy in South East Asia.
However, to win this race, it is crucial for the country to lay down its economic
fundamentals properly. One of the structural frameworks that need to be put in place
is a sound insolvency system. It is said that the manner in which a country addresses
insolvency is tied to other decisions: about support for entrepreneurial behavior as an
engine of growth, about the promotion of education as a contributor to the well-educated
workforce needed for the future, and about the extent to which safety nets are provided by
governments to assist those who are less fortunate, among others.4
As the continuity of economic activity is vital to our developing country, the country
must prepare itself by paving the road to ensure the continuity of economic stability.
All businesses, regardless of size, may encounter financial difficulties at some point. The
fairly recent experiences of General Motors Corporation and Lehman Brothers two
pillars of the United States economy attest to this fact. As such, there must be a good
set of insolvency laws, rules and systems in place which businesses may turn to in times
*
This paper was delivered on the occasion of the endowment on the author of the Professorial Chair in Com-
mercial Law by the Philippine Supreme Court, Philippine Judicial Academy and the Metrobank Foundation,
Inc. The author profoundly thanks Attys. Jacqueline Ann C. Alegre, Catherine Anne L. Dio, Filemon Ray L.
Javier, Johanna Aleria P. Lorenzo and Lancaster L. Uy of ACCRA LAW Offices for their invaluable assistance
in preparing this paper.
**
Co-Managing Partner and Head, Corporate
and Special Projects Department, ANGARA ABELLO CON-
CEPCION REGALA & CRUZ (ACCRALAW)
1 Michael Lim Ubac, PH is rising Asian Tiger, Phil. Daily Inquirer, November 11, 2012, available at http://busi-
ness.inquirer.net/92374/ph-is-rising-asian-tiger (last accessed January 16, 2013); JC Bello Ruiz, Emerging Asian
Tiger, Manila Bulletin, November 10, 2012, available at http://www.mb.com.ph/articles/380883/emerging-
asian-tiger (last accessed January 16, 2013).
2 See Karen Ward, The World in 2050 (HSBC Global Research: Global Economics, January 2012), available at
http://www.hsbc.com.mx/1/PA_esf-ca-app-content/content/home/empresas/archivos/world_2050.pdf
(last accessed January 16, 2013).
3 See The Philippines rising economy to Star in 2050, Rebuilding for the Better Philippines, January 16, 2012, available
at http://betterphils.blogspot.com/2012/01/philippines-rising-economy-to-star-in.html (last accessed January
16, 2013).
4 Report of the Standing Senate Committee on Banking, Trade and Commerce (Canada), Debtors and Creditors
Sharing the Burden: A Review of the Bankruptcy and Insolvency Act and the Companies Creditors Arrangement Act (November
2003), available at http://www.cfs-fcee.ca/html/english/campaigns/Senate_Cmte_Report_2003_11-a.pdf (last
accessed January 16, 2013).
of financial distress.
It is imperative, therefore, that the law, rules and supporting systems put in place
by the government be able to keep viable businesses operating. This means avoiding
premature liquidation of sustainable businesses.6 As aptly described by author Paul L.C.
Torremans, the insolvency procedure must be a measure of last resort.7 Thus:
Let us examine some fairly recent experiences. First is the bankruptcy case faced
by United States automotive giant General Motors Corporation (now General Motors
Company) (GM). In 2009, the world watched as GM adamantly maintained its position
that [r]estructuring the business out of court remains the best solution for
GM and its constituents.9 GM had a firm view that in-court restructuring would
carry with it tremendous costs and risks. It insisted that a bankruptcy filing could force
liquidation considering the financing that GM would require as well as consumer
reluctance to buy vehicles from a bankrupt automaker. The automaker, which lost
5 Ibid.
6 Simeon Djankov, Bankruptcy Regimes during Financial Distress (Financial and Private Sector Development, The
World Bank Group, May 2009), available at http://www.doingbusiness.org/~/media/FPDKM/Doing%20
Business/Documents/Miscellaneous/tbd/bankruptcy-regimes-during-financial-distress.pdf (last accessed Jan-
uary 16, 2013).
7 Collier International Business Insolvency Guide 2, Insolvency Laws of Selected Nations, 15.01[3] (2005 ed.).
8 Ibid. (emphasis supplied).
9 Poornima Gupta, GM says still prefers out-of-court restructuring, Reuters, March 6, 2009, available at http://www.
reuters.com/article/2009/03/06/us-gm-sb-idUSTRE5254XU20090306 (last accessed January 16, 2013).
Volume 38, Number 1 & 2 - ( January - June 2013 ) 89
Francisco Ed. Lim
nearly $31 billion in 2008, was given a deadline to complete concession talks with the
United Auto Workers and bondholders. This was part of a bid to convince the task force
assembled by United States President Barack Obama that it could be made viable with a
new round of government help.
Despite its optimistic outlook, GM had no recourse but to file for bankruptcy in the
middle of 2009. The bankruptcy filing was the largest in the United States manufacturing
history. The decision to push GM into a fast-track bankruptcy and provide $30 billion
of additional taxpayer funds to restructure the automaker was definitely a huge gamble
for the Obama administration.10 Now, the re-organized General Motors Company is
sixty percent (60%) government-owned, i.e., by the United States Treasury, with a $50
billion equity investment and $10 billion in debt and perpetual preferred shares.11 Such
equity was in exchange for more than $50 billion in federal assistance extended to the
old GM and its successor.12 This was a big issue for many American taxpayers. However,
the fact of the matter is that the successful rehabilitation of GM saved one of the pillars
of the United States economy. Moreover, the United States Government is now slowly
recovering its investments by selling some of its shareholdings in GM.
In Canada, the successful rehabilitation of its domestic airline carrier, Air Canada,
was attributed to the evolving role of the so-called court-appointed Monitor in
restructurings under the Companies Creditors Arrangement Act (CCAA).13 Throughout the
process of restructuring, the Monitor enjoyed a wide flexibility under the CCAA, such
that he was able to adapt his role to facilitate the needs of a particular restructuring (taking
into account the size and complexity of the case).14 In addition, the Superior Court Judge
played a crucial role in holding the parties to imposed deadlines and mitigating the tense
battle between labor and management officials.15
10 Kevin Krolicki and John Crawley, GM Files for Bankruptcy, Chrysler Sale Cleared, Reuters, June 1, 2009, available
at http://www.reuters.com/article/2009/06/01/us-gm-idUSN3044658620090601 (last accessed January 16,
2013).
11 Kevin Krolicki and David Bailey, GM exits bankruptcy, Reuters, July 10, 2009, available at http://www.reuters.
com/article/2009/07/10/us-gm-idUSTRE5690JO20090710 (last accessed January 16, 2013).
12 Ibid.
13 Michael A. Fitch and Sheryl E. Seigel, Recent Trends in Canadian Restructuring Cases (Fasken Martineau), avail-
able at http://www.fasken.com/files/Publication/1d527800-25c7-4057-a817-c4bcb4cedf46/Presentation/
PublicationAttachment/5f3014c0-17ed-4d9b-8d21-a28df13e04ba/RECENT_CASES_IN_CDN_RE-
STRUCTURING_CASES.PDF (last accessed January 16, 2013).
14 Ibid.
15 Keith McArthur and Brent Jang, How Air Canada got back on a new flight path, The Globe and Mail, August 28,
2004, available at http://www.avcanada.ca/forums2/viewtopic.php?f=31&t=3147 (last accessed January 16,
2013).
straight days.16 The restructuring plan was actually the offshoot of the Daewoo Group
bail-out that was earlier orchestrated by a number of South Korean banks, including
the government-run Korea Development Bank.17 About a month after the declaration
of bankruptcy, a civil court in South Korea granted Daewoo Motors application for
receivership. As a result, the company avoided immediate liquidation. Its creditors
agreed to offer 728 billion won ($1.16 billion) of new loans to help restore operations and
implement a reform plan that would foster talks of merger/acquisition with GM.18
Daewoo Motors operations had since been gradually returning to normal. In April
2002, GM signed a final agreement with its business partners and Daewoo Motors
creditors to form a joint venture to purchase the major passenger car manufacturing
operations of the company. Then in September 2002, a new restructuring plan was made
and tentatively/conditionally approved by the court, such that Daewoo Motor [was
required to] repay 12% of debt owed to financial company creditors with cash over the
next nine years, and repay 80.1% of the debt owed to those creditors using securities in
trust, including preferred shares of GM-Daewoo. Daewoo Motor will also pay 16.3% of
debt owed to its affiliated suppliers, including Korea Delphi Automotive System Corp.,
with cash over the next nine years. It will convert 45% of the debt owed to these affiliated
suppliers into equity. GM-Daewoo will assume 21.4% of Daewoo Motors debt to the
affiliated suppliers.19
The approval of the new plan became final after majority of the companys creditors
agreed to swap seventy seven percent (77%) of Daewoo Motors debt amounting to 19
trillion won ($15.5 billion) for stock in the GM joint venture.20
About four (4) years after the restructuring, Daewoo Motor [has become] a bright
spot for GM. GM-Daewoos car sales steadily increased and the joint venture rehired
most of the 1,600 workers laid off by the old Daewoo Motor.21
It bears noting that the South Korean court played a key role in facilitating the
rehabilitation. It paved a way for the creditors to agree on a restructuring plan that made
16 See Daewoo Motor Declared Bankrupt, ABC News, November 8, 2000, available at http://abcnews.go.com/Busi-
ness/story?id=89083&page=1 (last accessed January 16, 2013). See also Jonathan Watts and Nicholas Bannister,
Daewoo Motor plunges into bankruptcy, The Guardian, November 9, 2000, available at www.guardian.co.uk/busi-
ness/2000/nov/09/2 (last accessed January 16, 2013).
17 Samuel Len, Daewoo Motor in Bankruptcy After Creditors Balk, The New York Times, November 9, 2000, available at
http://www.nytimes.com/2000/11/09/business/daewoo-motor-in-bankruptcy-after-creditors-balk.html (last
accessed January 16, 2013).
18 Bloomberg, Daewoo Motor goes into court receivership, December 1, 2000, available at http://news.drive.com.
au/drive/motor-news/daewoo-motor-goes-into-court-receivership-20100823-13h8e.html (last accessed Janu-
ary 16, 2013).
19 Jeongjin Lim, Daewoo Restructuring Plan Wins Backing From Court, The Wall Street Journal, September 15, 2002,
available at http://online.wsj.com/article/0,,SB1032113943767343075-search,00.html (last accessed January
16, 2013).
20 Daewoo restructuring plan cleared, CNN.com, September 30, 2002, available at http://archives.cnn.com/2002/
BUSINESS/asia/09/30/korea.daewoo/ (last accessed January 16, 2013).
21 Choe Sang-Hun, Daewoo Motor Becomes a Bright Spot for G.M., The New York Times, May 30, 2006, available at
http://www.nytimes.com/2006/05/30/business/30daewoo.html (last accessed January 16, 2013).
The cases of GM, Air Canada and Daewoo Motor impress upon us the importance
of an insolvency system which gives distressed corporations flexibility and sufficient room
to select a rehabilitation proceeding that best addresses their financial problems.
In contrast, the Philippine experience has not been encouraging, at least in the
1980s, when there were no detailed rules governing rehabilitation of debtor companies.
For example, we have the case of the Philippine Blooming Mills (PBM), a large steel
company founded in 1952 that filed for suspension of payments in the 1980s with the
Securities and Exchange Commission (SEC) to save its business. Then, there is the
case of the Stanford Microsystems, Inc. (Stanford), once the largest and oldest contract
semiconductor manufacturer in the Philippines. Like PBM, Stanford filed a petition for
suspension of payments in 1985 with the SEC, in an effort to rehabilitate its business.22
Sadly, neither PBM nor Stanford successfully emerged from rehabilitation. Their
liquidation ultimately resulted in dire consequences to their creditors, employees and
owners that could have been prevented had there been a sound insolvency system in
place at the time.
In these modern times, a countrys insolvency system is one of the indicators used by
international institutions in benchmarking economies to determine the competitiveness
of its investment climate.
22 Chua v. NLRC, G.R. Nos. 89971-75, 17 October 1990, 190 SCRA 558.
23 See Chung Ka Bio v. Intermediate Appellate Court, G.R. No. 71837, 26 July 1988, 163 SCRA 534.
While the Philippines improved by ten (10) notches overall in the 2012-2013 Global
Competitiveness Report of the WEF, relative to its rank for 2011-2012, it still fares quite
poorly with a score/value of 4 on a 0-10 (best) scale under the Legal Rights Index. The
Philippines score is the same as those of Lebanon, Iran and Sri Lanka. This score is
much lower than the scores of other Asian countries like Singapore, Hong Kong and
Malaysia, all of which obtained a perfect score of 10.
The latest report released in June 2012 ranks the Philippines 165 out of the 185
economies included in the index on the topic of insolvency. The Philippines then ranks
138 out of the 185 countries, as an economy recommended for ease in doing business
with.25
The score for business freedom is based on factors such as starting a business, obtaining
a license, and closing a business. Efficient and effective insolvency systems and respect
for creditors rights are, therefore, important to business freedom, to the extent that [r]igid
and onerous bankruptcy procedures [could be] distortionary, providing a disincentive for
24 Other factors include: (1) Starting a business; (2) Employing workers; (3) Registering property; (4) Getting credit;
(5) Protecting investors; (6) Paying taxes; (7) Trading across borders; and (8) Enforcing contracts.
25 International Financing Corporation, Doing Business, Economy Rankings as of June 2012 available at http://
doingbusiness.org/rankings (last accessed January 16, 2013).
Under the 2013 Index of Economic Freedom Report, the Philippines suffered a decline
in business freedom, which is primarily attributed to the fact that business start-up process
remains time-consuming. The report does not state whether changes were noted as
regardsthe other factors of business freedom.
It must be stressed that the ten-notch increase in the countrys ranking and the
increase in the economic freedom score are due to the notable improvements in investment
freedom and freedom from corruption.27
In fact, the Forum on Asian Insolvency Reform (FAIR)28 has been set up by the
Organization of Economic Co-operation and Development, the Asia-Pacific Economic
Co-operation Forum and the Asian Development Bank, with assistance from the
governments of Japan and Australia. FAIR regularly gathers key policy makers, members
of the judiciary, academics, insolvency practitioners and other private sector participants
to discuss insolvency-related matters, in recognition of the vital role that an insolvency
system plays in an economy.
Thus, an insolvency system is relevant, not only to cater to the needs of the stakeholders
of a company, but also to make an economy financially viable and globally competitive.
It is, thus, my humble submission that the time is ripe to pave the road to ensure that our
insolvency system is effective and responsive.
While there is no perfect model or framework that a country can simply adopt,
there are guidelines and principles that have emerged, primarily motivated by the recent
economic and financial crisis.
Among these guidelines are: (1) the United Nations Commission on International
Trade Law (UNCITRAL) Legislative Guide on Insolvency Law (UNCITRAL
Guide);29 (2) the Principles for Effective Creditor Rights and Insolvency Systems
26 Ambassador Terry Miller and Anthony B. Kim, Defining Economic Freedom, in Terry Miller, Kim R. Holmes,
and Edwin J. Feulner (eds.), Index of Economic Freedom: Promoting Economic Opportunity and Prosper-
ity (2013), available at http://www.heritage.org/index/book/chapter-7 (last accessed January 16, 2013).
27 See Ronnel W. Domingo, PH up 10 notches in economic freedom list, Philippine Daily Inquirer, January 14, 2013,
available at http://business.inquirer.net/102443/ph-up-10-notches-in-economic-freedom-list (last accessed Jan-
uary 16, 2013).
28 Organization of Economic Co-operation and Development (OECD) Website at http://www.oecd.org/cor-
porate/corporateaffairs/corporategovernanceprinciples/insolvencyinasia-forumonasianinsolvencyreformfair.
htm (last accessed January 16, 2013).
29 United Nations Commission on International Trade Law, Legislative Guide on Insolvency Law (2005) [UNCITRAL
Guide], available at http://www.uncitral.org/pdf/english/texts/insolven/05-80722_Ebook.pdf (last accessed
January 16, 2013).
formulated by the World Bank (World Bank Principles);30 and the principles and
guidelines submitted under a technical project of the Asian Development Bank under
RETA No. 5975: Promoting Regional Cooperation in the Development of Insolvency
(ADB Insolvency Reform Guide ).
These standards and/or practices are aimed at improving both the efficiency and
outcome of insolvency proceedings.
a. UNCITRAL Guide
The UNCITRAL Guide explains how designing an effective and efficient insolvency
law involves a consideration of a common set of issues relating to the substantive
and procedural legal framework and the institutional framework required for its
implementation. Thus, UNCITRAL recommends that an insolvency system must have
the following key objectives:
30 The World Bank, Principles for Effective Creditor Rights and Insolvency Systems (Revised Draft December 21, 2005)
[World Bank Principles], available at http://www.worldbank.org/ifa/FINAL-ICRPrinciples-March2009.pdf
(last accessed January 16, 2013).
31 UNCITRAL Guide, supra.
The foregoing guides, principles and assessments, however, do not provide concrete
rules or actions to be set in place. In order to determine other laws, rules or systems to
implement, we must look into, study and consider the experiences and trends implemented
by other countries, and determine if such laws, rules or systems, would work for our
country.
Since the ASIAN financial crisis in 1997, the Asian Development Bank (ADB) was
extensively involved in helping ASEAN countries reform their insolvency systems.
In its Final Report (ADB Insolvency Reform Guide),34 the ADB suggests several
principles that should be taken into account in improving insolvency systems.
On cross-border insolvency, for example, the ADB Insolvency Reform Guide suggests
the following factors to be considered:
A. HISTORICAL BACKGROUND
Our first insolvency law, Act No. 1956 (Insolvency Law), was enacted on 20 May
1909. As with most legislation of that time, the Insolvency Law traces origin to American
laws. Specifically, it was derived from the Insolvency Act of California (1895), with a few
provisions taken from the American Bankruptcy Law of 1898.37 Under the Insolvency
Law, jurisdiction over suspension of payments and insolvency was vested in the Courts of
First Instance (now the Regional Trial Courts).
This changed in 1981, when Presidential Decree No. 1799 amended Section 6 of
Presidential Decree No. 902-A (PD 902-A), otherwise known as the SEC Reorganization
Act which was promulgated by then President Ferdinand Marcos on 11 March 1976. PD
902-A, as amended, gave the SEC jurisdiction over suspension of payments cases filed by
corporations, partnerships or associations.
For the first time in our legal history, P.D. 902-A, as amended, introduced the
remedy of rehabilitation. The SEC was vested with the power to create and appoint a
management committee or rehabilitation receiver when there is imminent danger of
dissipation, loss, wastage or destruction of assets or other properties or
paralization of business operations of such corporations or entities which
may be prejudicial to the interest of minority stockholders, parties-litigants
or the general public.38
The Interim Rules laid down the guidelines for filing a petition for
rehabilitation, either by the debtor or the creditor(s), and outlined the
powers and functions of the rehabilitation receiver, among others.
On 16 January 2009, or more than eight (8) years after its promulgation,
the Supreme Court amended the Interim Rules.41
The FRIA adopts best practices for an effective insolvency law culled from the
UNCITRAL Guidelines and World Bank Principles, and the ADB Insolvency Reform
Guide, among others. It has the following basic principle:
37 See Sun Life Assurance Co. of Canada v. Ingersoll, G.R. No. 16475, 8 November 1921, 42 Phil. 331 and Mitsui
Bussan Kaisha (Ltd.) v. Hongkong & Shanghai Banking Corporation, G.R. No. 11079, 12 January 1917, 36
Phil. 27.
38 Pres. Decree No. 902-A, as amended by Pres. Decree No. 1799, Sec. 6.
39 Rep. Act No. 8799 (2000), Sec. 5.2.
40 A.M. No. 00-8-10-SC, 21 November 2000.
41 A.M. No. 00-8-10-SC, 2 December 2008.
Prior to the enactment of the FRIA, rules and procedures on suspension of payments,
corporate rehabilitation, insolvency and liquidation were scattered and embodied in
different laws and Supreme Court issuances.
The FRIA effectively repealed the provisions found in the Insolvency Law, PD 902-A,
as amended, the Interim Rules, and the Rules of Procedure on Corporate Rehabilitation.
In addition, the FRIA codified the procedures and requirements for court-supervised,
pre-negotiated and out-of-court rehabilitation and liquidation proceedings to enable
businesses to continue operating and creditors to recover their investments faster and
more efficiently.
B. SALIENT FEATURES
The FRIA is not merely a collaboration and codification of existing laws and issuances
on insolvency. It introduced several innovations and has a forward-looking structure to
put our countrys insolvency law at par with international standards. The following are
some of its salient features:
The Commencement Order serves as legal basis for: (a) exception or waiver of all
taxes and fees including penalties, interests and charges;47 (b) rendering null and void
the results of any extrajudicial activity or process to seize property, sell encumbered
property, or otherwise attempt to collection or enforce a claim against the debtor
after the Commencement Date;48 (c) rendering null and void any set-off after the
Commencement Date of any debt owed to the debtor by any of the debtors creditors;49
(d) rendering null and void the perfection of any lien against the debtors property after
the Commencement Date;50 (e) rendering null and void any sale, payment, transfer or
conveyance of the debtors unencumbered property or any encumbering thereof by the
debtor or its agents or representatives which are not in the ordinary course of the business
of the debtor;51 (f) declaring claims of separation pay for months worked prior to the
Commencement Date as pre-commencement claim;52 (g) reckoning the 90-day period to
confirm existing contracts;53 and, (h) declaring null and void transactions, occurring prior
to Commencement Date, entered into by the debtor or involving its funds or assets, which
were executed with intent to defraud the creditor/s or which constitute undue preference
of creditors.54
5. Exchange Debt for Equity The FRIA recognizes that banks are usually
the big creditors of businesses. To enable them to help rehabilitate their debtors, the
FRIA allows banks to acquire and hold an equity interest or investment in a debtor
or its subsidiaries when conveyed to such bank in satisfaction of debts pursuant to a
rehabilitation or liquidation plan, notwithstanding any provision of law to the contrary.55
The plan must be endorsed or approved by creditors holding at least two-thirds (2/3)
of the total liabilities of the debtors, including secured creditors holding more than fifty
percent (50%) of the total secured claims and unsecured creditors holding more than fifty
percent (50%) of the total unsecured claims of the debtor.56
The approval of a pre-negotiated rehabilitation plan will have the same legal effect as
the confirmation of a court-supervised rehabilitation plan.57
This remedy may be availed of where the debtor/s, and creditors representing at
least 85% of the debtors total liabilities (composed of at least 67% of the debtors secured
obligations and 75% of the debtors unsecured obligations), agree on a restructuring or
rehabilitation plan.58 This is essentially an out-of-court proceeding, but the FRIA expressly
allows the insolvent debtor and/or creditor to seek court assistance for the execution or
implementation of their rehabilitation plan.59
In addition, the FRIA provides that the amount of any indebtedness or obligation,
reduced or forgiven in connection with a rehabilitation plans approval, shall not be
subject to any tax.61
market, etc.).63
11. Personal Liability of Directors and Officers In line with trends on good
corporate governance, the FRIA imposes personal liability on directors and officers if
they are found to have willfully disposed or caused the disposal of any property in fraud
of creditors or in a manner grossly disadvantageous to the debtor, or have concealed or
approved the concealment from the creditors of, or embezzles or misappropriates, any
property of the debtor.66
13. Creditors Committee To facilitate the rehabilitation of the debtor, the FRIA
expressly authorizes the creditors belonging to a class to formally organize themselves into
a committee. The creditors may, as a group, form one committee composed of: (a) secured
creditors; (b) unsecured creditors; (c) trade creditors and suppliers; and, (d) employees of
the debtor.68
14. Confirmation of Contracts The FRIA requires the debtor, with the
consent of the rehabilitation receiver, to notify each contractual counter-party whether
it is confirming a particular contract. Contractual obligations of the debtor arising or
performed during this period, and afterwards (for confirmed contracts), shall be considered
as administrative expenses. Contracts not confirmed within the required deadline shall be
considered terminated.69
If the property secured is not necessary for the rehabilitation of the debtor, however,
the secured creditor is allowed to enforce his security or lien, or foreclose upon the property
of the debtor securing his/its claim under certain conditions.70
The Model Law reflects cross-border insolvency practices which are characteristic
of modern and efficient insolvency systems. The Model Law, however, respects different
national procedural laws and does not impose a substantive unification of insolvency laws.
Instead, the Model Law offers solutions which help in modest, but significant, ways.74
These include:
The Model Law expressly empowers courts to extend cooperation in the areas
covered by the Model Law.76 This includes authorizing cooperation between a court in
the enacting State and a foreign representative, and between a person administering the
insolvency proceeding in the enacting State and a foreign court or representative.77
The objective is to foster coordinated decisions that would best achieve the objectives
of both proceedings (e.g., maximizing the value of the debtors assets and determining
the most advantageous restructuring of the enterprise). In order to achieve satisfactory
coordination and adapt relief to changing circumstances, the Model Law directs the
court, in all situations covered by the Model Law (including those that limit the effects of
foreign proceedings in the face of local proceedings), to cooperate with foreign courts and
representatives to the maximum extent possible.80
Some of the key issues to be clarified under the IRR (for rehabilitation proceedings)
are the following:
Once the IRR for rehabilitation proceedings are approved, the IRR for liquidation
proceedings will be drafted and thereafter, promulgated in due course.
The passage of the FRIA is considered a major reform to our economys financial
system. Nevertheless, we still need to provide a complementary set of rules and support
systems to ensure its effectivity and efficiency.
As previously mentioned, the Supreme Court is in the process of drafting the IRR
of the FRIA. Aside from well-established rules, however, developed and/or developing
countries have put in place the following in their insolvency frameworks:
An efficient judicial system is founded on rules that confer jurisdiction upon courts and
vest them with authority to act on insolvency proceedings. Jurisdiction is the authority to
hear and determine a cause or the right to act in a case.84 Considering that rehabilitation
proceedings, insolvency issues and the task of implementing its governing law, such as the
FRIA, involve highly crucial and technical matters, most jurisdictions have assigned and
created specialized courts.
In Belgium, its legislature created a body called the judicial composition under
the Federal Act of 17 July 1997. The objective was to spot traders in difficulty at an
early stage and before their problems became so serious that the procedure would not
be able to save them from insolvency. Inside the commercial courts, there were special
chambers that were assigned to collect data on traders in difficulty. These chambers were
composed of three judges who determine whether a trader meets the criteria for a judicial
composition. The main source of information consisted of data that traders were obliged
to file with the registry of the commercial court on a regular basis. The special chambers
were also required to conduct its examinations in a discreet way so as not to disturb
normal commercial life. In fact, only the debtor and the public prosecutor were given the
right to consult the file.85
This specialized court in Belgium, however, was considered too evasive and created
a negative stigma in the names of the distressed traders. Thus, Belgium later (i.e., on 31
January 2009) passed the Law on the Continuity of Enterprises, which fundamentally
changed the rules on judicial composition. At present, the two main objectives which
govern Belgiums new Restructuring Law are: (i) promoting out-of-court or confidential
restructurings, so that the debtor can avoid the negative stigma attached to any public
insolvency proceeding; and, (ii) providing flexible solutions to allow companies in distress
to reorganize their activities.86
In the United States, Congress passed the Bankruptcy Code which, among others:
(1) created a bankruptcy court, the constituent members of which are bankruptcy judges
appointed by the judges of various courts of appeals for a term of fourteen (14) years; (2)
granted jurisdiction over bankruptcy cases and litigation, which arises in those cases to
the district courts in the first instance; and, (3) reallocated the insolvency responsibility by
enabling a district court handling bankruptcy litigation to refer them to the bankruptcy
court.87
Sufficient training programs and a medium must be in place to ensure the competency,
efficiency and independence of these specialized courts.
In the United States, bankruptcy judges as well as all federal judges and magistrates,
receive formal judicial training from the Federal Judicial Center in Washington D.C.
The Center provides research, training and continuing education programs necessary
to increase the skills of the judges. The Center runs orientation training for all new
federal judges, providing an in-depth introduction to the federal court system and to
substantive and procedural areas pertinent to the areas of law in which the judges deal.
The Center also provides continuing legal education programs, offering each judge an
update in relevant areas of statutory and case law, as well as case management. There is
also specialized training in specific subject areas, such as financial accounting, which is
very important to the development of bankruptcy judges skills.88
In the Philippines, the Philippine Judicial Academy (PHILJA), which was created
by the Supreme Court pursuant to Administrative Order No. 35-96 on 12 March 1996,
was institutionalized as the training school for justices, judges, court personnel, lawyers
and aspirants to judicial posts.89
PHILJA plays a vital role in ensuring judicial competence and efficiency through
continuing judicial education.
The training of our commercial law judges has been pursued earnestly by the Supreme
Court through PHILJA. PHILJA recently completed a training module on rehabilitation
and liquidation proceedings in insolvency. This module included the following: (1) recent
trends and developments in light of the enactment of the FRIA; (2) introduction of
significant changes and basic legal concepts and reasoning, including an introduction to
87 Collier International Business Insolvency Guide 2, Insolvency Laws of Selected Nations 2.02 [3], (Release No.
15, September 2012).
88 See Timothy B. De Sieno and Rupal Shah Palanki, The United States Specialized Bankruptcy Courts (Forum for Asian
Insolvency Reform, Insolvency Reform in Asia: An Assessment of the Recent Developments and the Role of
the Judiciary, Bali, Indonesia, February 7-8, 2001), available at http://siteresources.worldbank.org/GILD/Re-
sources/DiSieno.pdf (last accessed January 16, 2013).
89 Rep. Act No. 8557 (1998), Sec. 3.
primary and secondary source materials relating to the FRIA; (3) discussions on specific
roles and tasks; and, (4) accounting issues.
Capacity building for our insolvency courts may include tapping specialized personnel
to assist them.
Unlike a judge, a Rechtspfleger does not have to attend law school and obtain a Juris
Doctor degree. Instead, he has to go through a legal education program especially designed
for the Rechtspfleger profession. The German states run internal colleges for that program.
Generally, the colleges will only admit students who have the revocable status of a civil
servant of the state running the college. The program takes three (3) years to complete.
It is made up of both on and off the job training. In some German states, the program
includes twelve (12) months of studies at the college, followed by thirteen (13) months
practical training at an Amtsgericht (County Court) and in the office of a civil law notary,
followed by another nine (9) months of studies at the college and concluded by two (2)
months of practical training with the office of the public prosecutor. At the end of the
program, the students have to take the Rechtspfleger exam. Each student who passes the
exam is awarded the degree of Diplomrechtspfleger. The Rechtspfleger decides independently,
just like a judge. The Rechtspflegers responsibilities include, among others, the following:
(a) supervision of legal guardians; (b) rulings on applications for entry in the commercial
register; (c) registration of mortgages and similar rights in the registry of deeds; (d) judicial
sales of realty; and, (e) execution of civil and criminal judgments.
Bankruptcy law has developed into a very unique, sophisticated and technical area
of expertise, and there is an increasing demand for legal ability and proficiency especially
from those who practice in this field. For example, rehabilitation receivers and liquidators
may be required to periodically attend primer courses on good insolvency practices. The
topics offered may include, among others, current developments and trends on insolvency
proceedings, compliance mechanisms and relevant periods, and ethical and professional
responsibility, including duty of confidentiality.
The organization of associations for insolvency practitioners has been done in other
countries to help professionalize the ranks of insolvency practitioners. In fact, there
is a worldwide federation, known as the International Association of Restructuring,
Insolvency & Bankruptcy Professionals (INSOL), composed of national associations of
accountants and lawyers who specialize in turnaround and insolvency. Currently, there
are over forty-three (43) Member Associations with over 9,000 professionals participating
as members.
INSOL also has ancillary groups that represent the judiciary, regulators, lenders and
academics. These groups play an invaluable role within INSOL and provide valuable fora
for discussions of mutual problems.
liquidators conduct if he or she has not faithfully performed his or her duties.93
To solve this problem, the court may require the parties to file and serve their pleadings/
motions electronically. In fact, the United States has created a system where parties and
courts may electronically file and serve their pleadings/motions/order. This system is
called the Electronic Bankruptcy Noticing (EBN).94 Under the EBN, lawyers, parties
and the courts can upload their pleadings and filings, and once uploaded, the same would
be accessible by interested persons online. The use of the EBN is free and voluntary, in
that the parties must consent to be subject to the electronic filing and notification system.
There is also a need to establish a fast track appeal system made up of an insolvency
law panel of appellate court judges. This would bring expertise to the appellate level.
While appeals cause delay in the disposition of a case, there must still be a mechanism
that would allow a timely and proficient review of the orders, resolutions and decisions of
the lower courts. This may only be attained if the composition of the reviewing body is
properly trained, experienced and knowledgeable in insolvency proceedings.
93 Ibid. at 14.04[5][f][iv]. See also Report 287: ASIC regulation of registered liquidators: January to December 2011 (Aus-
tralian Securities & Investments Commission, May 2012), available at http://www.asic.gov.au/asic/pdflib.nsf/
LookupByFileName/rep287-published-22-May-2012.pdf/$file/rep287-published-22-May-2012.pdf (last ac-
cessed January 16, 2013).
94 See Electronic Bankruptcy Noticing at http://ebn.uscourts.gov/ (last accessed January 16, 2013).
IV. CONCLUSION
The legislative reform of the countrys insolvency system, through the enactment of
the FRIA, is a major step toward economic and financial reform. The FRIA has a forward-
looking structure by adopting international best practices on insolvency. Foremost is the
adoption of pre-negotiated rehabilitation, out-of-court rehabilitation or restructuring
agreements, and cross-border insolvency as component parts of the law.
With the enactment of the FRIA, we have paved the road to a more effective and
responsive insolvency system. Nevertheless, there are several support systems that still
need to be developed to realize this objective. As discussed above, these include capacity
building for our special commercial courts handling insolvency cases and insolvency
practitioners, providing for electronic filings and creating a fast track appeal system similar
to those existing in developed nations.
With the foregoing in mind, let us now move forward and take a step toward a
developed and stable financial economy.
Part I discusses how key concerns of conflicts of interest, neutrality and confidentiality
are tied to the legitimacy and integrity of the mediation process. Part II dissects the ethical
* This is an essay submitted to complete the requirements for the Dispute Resolution course of under the Master
of Dispute Resolution program of the University of New South Wales.
** Accredited as Associate Mediator of the Singapore Mediation Centre and an Associate Member of LEADR-
Association of Dispute Resolvers; accredited under Australias National Accreditation System for mediators;
LL.M, Columbia University; Master of Dispute Resolution, University of New South Wales; Awardee for
Excellence on Mediation, Managing Workplace Conflict and Change and Facilitation.
1 Naomi Cukier, Lawyers acting as mediators: Ethical dilemmas in the shift from advocacy to impartiality (2010)
21 Australasian Dispute Resolution Journal 59, 60.
2 See generally Mary Anne Noone, Lawyers as mediators: More responsibility? (2006) 17 Australasian Dispute
Resolution Journal 96; Judith L Maute, Public Values and Private Justice: A Case For Mediator Accountability
(1990-1991) 4 Georgetown Journal of Legal Ethics 503, 508; Alison Smiley, Professional Codes and Neutral
Lawyering: An Emerging Standard Governing Nonrepresentational Attorney Mediation (1993-1994) 7
Georgetown Journal of Legal Ethics 213. Maute maintains legal knowledge facilitates mediation while Noone
contends that the skills, training and experience of lawyers make them ideally placed to be mediators (citing
Tapoohi v Lewenberg (No 2) [2003] VSC 410 at [76] per Habersberger J.). Smiley asserts that lawyers, compared to
other neutrals, may be better in identifying issues, pressing parties for decisions, incorporating these decisions
into a final settlement agreement, and drafting the final agreement.
3 With the approval in 2012 of accreditation guidelines for ADR practitioners. See Adopting Accreditation Guidelines
for Alternative Dispute Resolution Provider Organizations and Training Standards for Alternative Dispute Resolution Practitioners
(Philippines) 17 August 2012, Department of Justice Circular No. 049.
Changing mediator and lawyer hats is a road laden with ethical dilemmas.4 Deemed
three of the most significant ethical dilemmas faced by practitioners of ADR5, neutrality,
confidentiality and conflicts of interest are among the fundamental considerations
requiring attention from a lawyer shifting practice from advocate to neutral before,
during and after mediation.6 And when she7 switches hats back from mediator to advocate,
neutrality, confidentiality and conflicts of interest concerns merit equal attention as post-
mediation professional relationships may affect the interests of ADR parties, the integrity
of the mediation, and the publics confidence in the process.
12 Michael King, Arie Freiberg, Becky Batagol, Ross Hyams, Non-Adversarial Justice (Federation Press, 2009) 105.
13 Astor, above n 10, 222. Astor adds that legitimacy of mediation also rests strongly on consensual decision-
making which is related to mediator neutrality.
14 Boulle, above n 11, 73 [3.28].
15 Ibid.
16 Ibid.
17 Moore, above n 9, 449.
18 Ibid 54
19 Robert A Baruch-Bush, The Dilemmas of Mediation Practice: A Study of Ethical Dilemmas and Policy
Implications (1994) 1994 Journal of Dispute Resolution 1, 12.
20 Ibid.
21 Rebecca Callahan, Mediation Confidentiality: For California Litigants, Why Should Mediation Confidentiality
be a Function of the Court in Which the Litigation is Pending? (2012) 12 Pepperdine Dispute Resolution Law Journal
63, 64. Boulle considers impartiality an intrinsic principle in and defining feature of mediation. (Boulle, above
n 11, 479).
22 Deason, above n 10, 80.
23 David Spencer and Michael Brogan, Mediation Law and Practice (Cambridge University Press, 2006) 85-86
(Confidentiality, in general terms, provides that parties may discuss the issues between them without fear of
disclosure to others in order to facilitate the resolution of the dispute.)
incentive for parties to withhold information from the mediator.24 The ability of a third
party neutral to maintain confidentiality is a prerequisite to the integrity of the mediation
process25 and how confidentiality is handled in mediation can define the success of
mediation as an alternative to litigation.26
Izumi contends that subsumed in the concept of neutrality is the avoidance of any
actual or apparent conflict of interest27 and that the value of confidentiality rests upon
the parties perception of the mediator as an unaligned participant.28 Menkel-Meadow
on the other hand sews conflicts of interest directly to confidentiality by underscoring
protection of confidentiality as an underlying value of conflicts protections29 and
further ties conflicts rules to the integrity and trust of the mediation process.30 She links
conflicts regulations to expectations of confidentiality by adding: If a party thought that
a mediator could use shared information against him he would likely never participate in
the mediation.31
Taking off from the importance neutrality and confidentiality play in casting
legitimacy and integrity in the mediation process and the intersection of both defining
features of mediation to conflicts of interest, this essay reviews the conflicts regulation for
a Philippine mediator/lawyer.
without the consent of all parties, and for a reasonable time under the
particular circumstance, a mediator who also practices another profession
shall not establish a professional relationship in that other profession with
one of the parties, or any person or entity, in a substantially and factually
related matter.35 [Regulation]
For clarity, the Regulation is dissected into the following guidelines on post-mediation
relationships of the mediator/lawyer:
Guideline A establishes the relatedness threshold when a conflict may arise; that is,
when the subject of the anticipated post-mediation relationship is a matter substantially
and factually related to the mediation handled by the mediator/lawyer. Guideline
B imposes the consent and time requirements to relieve the mediator/lawyer of the
disqualification in Guideline A. Absent substantial and factual relatedness in Guideline A,
the Regulation finds no conflict of interest and Guideline C allows the mediator/lawyer
to establish the post-mediation professional relationship.
Two years after the mediation, M/L can serve as P2s lawyer in
adopting a child (Guideline C).
A. Relatedness of matter
X may reckon however that the negotiations with SuperCo may involve use of
information disclosed at the estate settlement mediation. Even if M/L continues to
abide by the ethical rule on confidentiality39 and has no intention of violating any non-
disclosure clause, his mere knowledge of sensitive business information disclosed by X
during mediation (e.g., business plans) may serve useful to him (and incidentally to Q)
when moving forward with the negotiations. In reporting a Proposed New Model Rule
of Professional Conduct for the lawyer as third-party neutral40, Menkel-Meadow and
37 Ibid.
38 Ibid.
39 Rule on Ethical Conduct of a Mediator, art 3.8 (A mediator shall keep in utmost confidence all confidential
information obtained in the course of the mediation process.)
40 CPR-Georgetown Commission on Ethics and Standards in ADR, Proposed New Model Rule of Professional Conduct
Plapinger advocate that an ethical regulation on conflicts must aim to protect mediating
parties from actual harm suffered by conflicts of interest.41 In scenario 1, the potential
harm that may be suffered by X is far from illusory and the Regulation, without requiring
consent, may fall short in protecting X from such possible harm.
Wisdom may be drawn from how the conflicts guideline under the Model Standards
of Conduct for Mediators of the American Arbitration Association, American Bar
Association, and Association for Conflict Resolution (AAA/ABA/ACR Model
Standards)44 is drafted. Instead of banking on a single standard such as relatedness
of subject matter, the AAA/ABA/ACR Model Standards catalog important factors
a mediator/lawyer must consider (e.g., nature of relationships established; services
to be offered by the mediator/lawyer, time lapse after mediation45) when deciding if
conflicts may arise in post-mediation professional relationships. Using these factors in
addition to the relatedness-of-matter standard, uncertainties arising from the anticipated
representational work of M/L for Q may be better addressed.
Scenario 2: Two weeks after the mediation, Y engages the legal services of M/L
to handle the negotiations for a multi-million special project of MegaCo, a business
interest of Y not inherited from her grandmother. In this scenario, since the subject
of the subsequent professional relationship is not substantially and factually related to
the mediation, M/L need not grapple with consent or reasonable time requirements of
the Regulation. However the subsequent engagement by Y of M/L and the significant
business interest gained by M/L from Y may affect the other ADR parties perceptions of
M/Ls neutrality and of fairness of the mediation outcome.
- Rule 4.5: The Lawyer as Third-Party Neutral (Reported by Carrie Menkel-Meadow and Elizabeth Plapinger, 2000)
International Institute for Conflict Prevention & Resolution <www.cpradr.org/Resources/ ALLCPRArticles/
tabid/265/ID/622/Model-Rule-for-The-Lawyer-as-Third-Party-Neutral.aspx>.
41 Ibid. Comment [1] on Conflicts.
42 See above n 31 and accompanying text.
43 Moffitt, above n 24.
44
American Arbitration Association, American Bar Association and Association for Conflict Resolution, Model
Standards of Conduct for Mediators (at August 2005) STANDARD III. CONFLICTS OF INTEREST.
<http://www.americanbar.org/content/dam/aba/migrated/dispute/documents/model_standards_
conduct_april2007.authcheckdam.pdf> (AAA/ABA/ACR Model Standards).
45 Ibid. Standard III.F.
Neutrality also means that the mediator does not expect to obtain benefits or special
payments from one of the parties as compensation for favors in conducting the mediation46
and that the mediator has no possibility of personal gain from the mediation.47 The
expectation (apparent or real) to receive benefits from one ADR party through potential
future work may have had an impact on M/Ls neutrality or on X and Zs perceived
neutrality of M/L. Doubts on impartiality may be more nagging if M/L conducted an
evaluative mediation on the parties.
C. Matter of time?
Scenario 3: Impressed with M/L at the mediation, Z (after informing X and Y) invited
M/L three days after the mediation to be her legal consultant in managing the properties
46 Moore, above n 9, 53.
47 Izumi, above n 27, 79-80.
48 CPR-Georgetown Commission on Ethics and Standards in ADR, above n 40, Comment on Rule 4.5.4.
49 Cukier, above n 1, 62.
50 AAA/ABA/ACR Model Standards, Standard III.A.
51 Ibid, Standard III.F.
52 Standard III.F of the AAA/ABA/ACR Model Standards states: Subsequent to a mediation, a mediator shall not
establish another relationship with any of the participants in any matter that would raise questions about the integrity
of the mediation. When a mediator develops personal or professional relationships with parties, other individuals
or organizations following a mediation in which they were involved, the mediator should consider factors such
as time elapsed following the mediation, the nature of the relationships established, and services offered when
determining whether the relationships might create a perceived or actual conflict of interest. (emphasis added)
The Regulation uses both elements of time and consent to defuse the conflict resulting
from relatedness. In scenario 3, the reasonable time requirement has to be met to excuse
the mediator/lawyer from disqualification to represent a mediated party. Assuming
proper consents from X and Y were obtained, are three days reasonable time under the
particular circumstance?53 Giving the Regulation a plain interpretation, reasonable time
appears to refer to a lapse of a certain period from the time the mediation concluded. To
say that the three-day period in scenario 3 is reasonable time requires a certain stretch
of imagination. Should M/L wait then for several months to pass? Is reasonableness
determined by the mediated parties required to give consent? If yes, does the reasonable
time requirement remain relevant if consent of the other mediated parties has been
obtained?
Grey areas may be addressed by referring to the language of the Code of Professional
Conduct of the International Mediation Institute (IMI Code),54 which uses time or consent
for a mediator to be excused on post-mediation conflict. The conflicts rule under the IMI
Code provides that a mediator cannot represent any party to a mediation in the same or
a substantially related matter within 12 months following the end of a mediation unless
all parties to the mediation expressly consent to that representation after full disclosure.55
The IMI Code deals with the possible grey areas that reasonable time and relatedness-
of-matter standards56 bring by specifying a definite period to measure when conflict is
deemed to disappear.
unrelated to the mediation such as scenarios 1 and 2. Working on the premise that conflicts
rules ought to protect the process, the public, and the parties from the appearance
of improper influences or appearance of self-interest60 and viewing neutrality in the
sense of disinterestedness, Menkel-Meadow and Plapinger suggest a regulation that
disqualifies a mediator/lawyer from representing a mediated party in a substantially
unrelated matter such as Scenarios 1 and 2 for a period of one year or other reasonable
period of time under the circumstances, unless all parties consent to the subsequent
legal representation after full disclosure is done.61 This suggested cooling-off period62
addresses the so-called downstream conflicts or future relationships between M/L and
an ADR party in unrelated cases63 that might reasonably create the appearance that the
neutral had been influenced in the ADR process by the anticipation or expectation of a
subsequent relationship or interest.64
Beneficial mediation laws function to set out rights and obligations of mediation
parties and outside parties, thereby protecting the integrity of mediation processes and
benefitting its participants.66 As a beneficial mediation law, the Regulation articulates the
mediating parties continuing rights to preserved confidentiality and neutrality and informs
the public (future consumers) of such rights. It further sets rights of mediated parties to
be informed of and give consent to future professional relationships of the mediator/
lawyer that may result to conflicts and consequently affect these rights to confidentiality
and neutrality in the mediation. Consent under the Regulation is effectively a waiver of
conflicts of interest and consequently, of the mediated parties right to (or expectation of)
confidentiality and neutrality in the mediation.
60 CPR-Georgetown Commission on Ethics and Standards in ADR, above n 40, 17, Comment [1].
61 Ibid r 4.5.4.(a)(4).
62 In the United States, the absence or presence of a cooling-off period before other professional post-mediation
relationships can occur varies by state. (McCorkle, above n 11, 166)
63 CPR-Georgetown Commission on Ethics and Standards in ADR, above n 40, 19, Comment [5].
64 Ibid, r 4.5.4.(a)(4).
65 Ibid 20, Comment [5].
66 Nadja Alexander, Mediation and the Art of Regulation (2008) 8 Queensland University of Technology Law and Justice
Journal 1, 15. In her conceptual framework of Mediation Mix, Alexander suggests that one way to characterize
laws on mediation is the use of a functional approach where mediation laws may be characterized as triggering,
procedural, standard-setting or beneficial.
matters substantially and factually related to the mediation handled by M/L, what quality
of consent must M/L obtain from the mediated parties to avoid conflicts? What type of
information must be communicated, or extent of disclosure made, to mediated parties
before consent is obtained? How should consent be given?67 Should the consent obtained
be same as that required for parties to proceed with mediation despite possible conflicts
existing pre-mediation?
If M/L were to avoid conflicts of interest in the practice of law, he is bound by the Code
of Professional Responsibility68 that prohibits the lawyer from representing conflicting
interests except by written consent of all concerned after a full disclosure of the facts.69 How
similar or different is this disclosure and consent requirement for lawyer conflicts from
that required of mediator/lawyers under the Regulation? The essay is not prepared to
apply this lawyer ethical rule to M/Ls post-mediation professional relationship as there
is no authority confirming if mediation is practice of law in the Philippines70 and if a
lawyer-client relationship exists between M/L and the mediated parties.71 However, the
language of the Code of Professional Responsibility can give guidance when modifying
the Regulation.
Similarly, the Ethical Guidelines for Mediators developed by the Law Council of
Australia72 and the Revised Guidelines for Solicitors who act as Mediators of The Law
Society of New South Wales73 uniformly state that if a mediator is a partner or associate
of any representative of any party, fully informed consent of all the parties has to be
obtained before he can act as the mediator in order to avoid conflict of interest.74 While
67 Questions patterned from those posed by Love and Cooley when inquiring into the consent required of parties
before a mediator switches to an evaluative role. They asked: What should be said to the parties? When should
it be said? How can consent be given? [Lela P Love and John W Cooley, The Intersection of Evaluation by
Mediators and Informed Consent: Warning the Unwary (2005) 21(1) Ohio State Journal on Dispute Resolution 45,
48].
68 Adopted by the Integrated Bar of the Philippines and approved by the Supreme Court of the Philippines on 21
June 1988. <www.ibp.ph>
69 Code of Professional Responsibility (Philippines) Canon 15, Rule 15.03. (emphasis added)
70 See generally Menkel-Meadow, The Lawyer as Consensus Builder, above n 4 (Discussing how ethics rules for
lawyers fail to provide guidance and best practices for lawyers serving roles in ADR processes); Comment,
The Attorney as Mediator Inherent Conflict of Interest? (1984-1985) 32 UCLA Law Review 987 where it is
argued that the ethical guidelines for attorney conduct are designed primarily to regulate the adversarial system
of justice, but many of the adversarial systems assumptions are inappropriate in other legal contexts. The
Comment explores if mediation conducted by a lawyer is considered practice of law and if the lawyer, when
acting as a mediator, should be governed by the ethical rules for lawyers.
71 Unlike the Code of Professional Responsibility, the ABA Model Rules clarifies that no lawyer-client relationship
exists between a mediator/lawyer and the mediated parties: A lawyer serves as a third-party neutral when the
lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other
matter that has arisen between them. ABA Model Rules, r 2.4(a).
72 Law Council of Australia, Ethical Guidelines for Mediators (at August 2011) <http://www.lawcouncil.asn.au/shadomx/
apps/fms/fmsdownload.cfm?file_uuid=239F39DD-1E4F-17FA-D241-5CF41A0BA6DC&siteName=lca>
(Law Council Ethical Guidelines)
73 The Law Society of New South Wales, Revised Guidelines for Solicitors who act as Mediators (at 29 July 1993) < http://
www.lawsociety.com.au/cs/groups/public/documents/internetcontent/026506.pdf >. (NSW Guidelines for
Solicitors)
74 Law Council Ethical Guidelines, Comment (d) to Guideline 3; NSW Guidelines for Solicitors, Guideline 5.4.
this rule refers to conflicts existing prior to the mediation, the kind of consent required
should not be any different from the quality of consent solicited of mediated parties to
seek excuse from post-mediation conflicts.
What then must a mediator disclose, discuss and ascertain to ensure fully informed
consent is obtained? The ABA Model Rules, which require informed consent, confirmed
in writing75 before a mediator/lawyer can represent any party in connection with a matter
in which he participated personally and substantially as a mediator,76 define informed
consent as one that
While the definition appears to refer to informed consent on choice of ADR process
and apply tangentially to the conflicts rule, the language remains instructive. Provided
the mediator/lawyer communicates adequate information to the mediated parties and
explains material risks to them, consent can be deemed informed.
III. CONCLUSION
No code of ethical standards can cover all circumstances79 without doubt and no
rules will be totally clear when applied to real-life disputes.80 Nonetheless, it remains that
the efficacy of appropriate ethics in mediation is critical81 and any attempt to improve
ethical guidelines ought to be welcomed in order to better guide mediator/lawyers, inform
mediating parties, and promote public confidence in the process.82 Besides, clear ethical
rules will facilitate lawyers involvement in mediation and protect the public purpose
75 ABA Model Rules, r 1.12.
76 Ibid.
77 Ibid r 1.0(e).
78 Rachel Field, A mediation profession in Australia: An improved framework for mediation ethics (2007) 18
Australasian Dispute Resolution Journal 178.
79 Moore, above n 9, 449.
80 Ibid.
81 Field, above n 78.
82 Adopted from the purposes of ethical standards commonly found in the Law Council Ethical Guidelines,
Introductory Note and AAA/ABA/ACR Model Standards, Preamble.
served by mediation.83
The Integrated Bar of the Philippines (IBP)84 is likewise encouraged to explore the
possibility of expanding the Code of Professional Responsibility for Philippine lawyers85
to cover possible conflicts of lawyers who are also third-party neutrals. Other areas of
possible ethical dilemma (e.g., whether a lawyer-client relationship is present between a
mediator/lawyer and a mediated party) may be considered.86 The IBP may take a step
further by considering a separate ethical code or guidelines for mediators akin to those
issued by the Law Council of Australia,87 the Law Society of New South Wales,88 and the
American Bar Association (with the American Arbitration Association and Association
for Conflict Resolution).89
Boulle shares early Australian codes of ethics were generated in the absence of
widespread practical experience in mediation giving the earlier ethical standards an
abstract and tentative quality.90 The extensive practical experience of mediation rendered
these codes of conduct more sophisticated instruments.91 Absent a rich experience in
mediation, the Philippines can meanwhile learn from other countries in this regard as it
endeavors to enhance its ethical standards for mediator/lawyers.
Abstract
I. INTRODUCTION
landslides and pollution.3 Usually, these sectors rely on the environment and natural
resources for their subsistence and livelihood. Because of poverty and lack of access to
formal structures and decision-makers, they are at the losing end of any difference in
perspective or competition on the use of the environment. Hence, to enforce the peoples
right to environment in the Philippine context when conflict arises, particularly their
environmental procedural rights, there is a need for legal remedies which are effective but
are simple and inexpensive. To address such need, the Philippine Supreme Court recently
formulated in Rule 3, Section 3 of the Rules of Procedure of Environmental Cases4 the
procedural policy of environmental mediation. Under these rules, environmental civil
cases shall undergo mediation as an alternative to costly and protracted litigation. The
outcome of such environmental mediation can be approved by the court in a judicial
order known as a consent decree.
B. Introduction
C. Definition of Terms
For purposes of this study, these key terms shall be defined this way:
at a negotiated settlement.
2. Environmental disputes are conflicts involving the environment and
natural resources wherein there are opposing rights or interests in the
management, control or use of such resources.
3. Consent decrees are judicially approved settlement agreements of
the parties who have brought a civil case involving an environmental
dispute.
D. Objectives
Given the legal framework of environmental justice wherein the right to environment
is a fundamental right of each human being, this study seeks to study the possibilities and
limitations of environmental meditation which is a novel concept in the Philippines and
has not been extensively discussed. Thus, this research delves into the concept and practice
of environmental mediation in the Philippines. In exploring environmental mediation as
a dispute resolution process vis--vis the nature of environmental rights and disputes, this
study will look at whether public interest is or can be safeguarded when self-interested
parties reach an agreement. Thereafter, this paper will make recommendations to ensure
that the product of environmental mediation, i.e. consent decrees, does not undermine
the rights of both the parties and affected third parties.
Because people are different from each other, conflict is inevitably part of life. The
challenge is to find conflict resolution processes to get past the disagreement, enable life to
move forward and create conditions for human beings to thrive. While it is very difficult
to agree on common values, we can agree on processes which will make it possible for us
to discuss those things we disagree about.
Presently, the dominant dispute resolution process in the Philippine justice system is
adversarial. In this system, party-litigants bring their legal controversies to court. They
present their evidence and arguments to a judge. This judge is expected to be impartial
in applying the law to the facts established. However, this system of justice has been
imposed on the people by colonizers even if most of the countrys indigenous systems were
discursive7 instead of adversarial. Thus, peoples needs for dispute resolution and justice
are not fulfilled. People feel that the justice system only works for those immersed in or are
comfortable with Western adversarial rationality. Majority are marginalized because they
do not understand their own system which should serve them. The language used by the
system and its style alienate them such that they cannot freely and fairly participate in it.
But even before the ADR Act was formulated, Philippine laws already provided for
alternative modes of settling disputes. In fact, such modes, like mediation, have been seen
to be rooted in Filipinos historical experience before the entry of colonizers and can be
found in indigenous dispute resolution systems.11 Even before the Spaniards came, the
local rulers (datus) or respected village elders settled disputes in their communities.12
Thus when Philippine laws were formalized, ADR was incorporated. For example,
the Civil Code encourages parties to come to a compromise even if litigation has already
started.13 For suits between members of the same family, it mandates that earnest efforts
toward a compromise should have been made and failed before such can be filed.14 Since
the 1950s, the Arbitration Law15 had already been in place. International arbitration is
7 See Tanggol Kalikasan, A Sourcebook on Appropriate Dispute Resolution Processes 20-26 (n.d.).
8 An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to
Establish the Office for Alternative Dispute Resolution, and for Other Purposes [Alternative Dispute Resolution
Act of 2004] R.A. No. 9285 (2004). Practitioners prefer to use the term Appropriate Dispute Resolution to
communicate the idea that these ADR mechanisms are mainstream and not alternative.
9 Id., 2.
10 Id.
11 Philippine Mediation Center, JURIS Primer, available at http://pmc.judiciary.gov.ph/downloads/JURIS_
Primer.pdf (last accessed Sep. 30, 2012).
12 Marthe Lois V. Cordia, Alternative Dispute Resolution in the Philippines: Wave of the Future or the Road Less Traveled? 51
UST L. Rev. 185, 187 (2006-2007).
13 An Act to Ordain and Institute the Civil Code of the Philippines [Civil Code] R.A. No. 386 (1949), art. 2029.
14 Id. art. 222.
15 An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment of
Arbitrators and the Procedure for Arbitration in Civil Controversies, and for Other Purposes [The Arbitration
Law] R.A. No. 876 (1953).
1. Court-Annexed Mediation
The judiciary, realizing the potential of ADR in improving its systems and in carrying
out its constitutional mandate to promulgate rules that shall provide a simple and
inexpensive procedure for the speedy disposition of cases,21 has come up with its own
initiatives, specifically in the promotion of mediation as a way of settling cases already
filed in court. As early as 1999, the judiciary tested the efficacy of mandatory mediation.
Since this is mandatory, it being part of pre-trial, the trial court is empowered to impose
sanctions in case of abusive conduct during the proceedings or absence of a party.22 This
is referred to as court-annexed mediation (CAM).
In CAM, the court refers the mediatable cases to an accredited mediator. The mediator,
who is ideally a neutral third party chosen by the disputants from a list provided to them,
facilitates the discussion of the parties and assists them in negotiating and reaching a
voluntary agreement regarding their dispute. In 2001, the Supreme Court designated its
educational arm, the Philippine Judicial Academy (PHILJA) as the component unit of the
Court for CAM and other ADR mechanisms, likewise creating the Philippine Mediation
16 The Philippines Adhered to the United Nations Convention on the Recognition and the Enforcement of
Foreign Arbitral Awards of 1958 (adopted Jun. 7, 1959, 330 U.N.T.S. 3.) under the 10 May 1965 Resolution
No. 71 of the Philippine Senate, which gave reciprocal recognition and allowed enforcement of international
arbitration agreements between parties of different nationalities within a contracting state [Gonzales v. Climax
Mining Ltd., 512 SCRA 148, 166-167 (2007), citing National Union Fire Insurance Company of Pittsburgh v. Stolt-Nielsen
Philippines, Inc., 184 SCRA 682, 688-689 (1990)].
17 An Act Providing for a Local Government Code of 1991 [Local Government Code of 1991], R.A. No. 7160,
408 (1991).
18 1997 Rules of Civil Procedure, rule 18, 2 (a).
19 Phil. Const. art. XIII, 3; see also A Decree Instituting a Labor Code Thereby Revising and Consolidating Labor
and Social Laws to Afford Protection to Labor, Promote Employment and Human Resources Development and
Insure Industrial Peace Based on Social Justice [Labor Code], P.D. No. 442, art. 211 (a) (1975).
20 Office of the President, Revoking Executive Order No. 523 (s. 2006) and Conferring upon the Office for
Alternative Dispute Resolution the Management, Development, Coordination, and Oversight Of Alternative
Dispute Resolution Programs in the Executive Department, and for Other Purposes, Executive Order No. 97,
Series of 2012 [E.O. No. 97, s. 2012] (Oct. 18, 2012).
21 Phil. Const. art. VIII, 5, 5.
22 Custodio O. Parlade, Alternative Dispute Resolution of 2004 (Annotated) 15 (2004).
Center (PMC) to be the center of mediation initiatives.23 PMC units were then established
in the different courts nationwide. Mediation proceedings were expanded to the appellate
court in 2002.24
Amicable settlements and arbitral awards are favored by the courts because it unclogs
judicial dockets. Thus, the latter will only interfere with great reluctance to invalidate or
set aside such compromise agreements or action of the arbitrator.25
Very recently, the Supreme Court formulated the Rules of Procedure for Environmental
Cases (Rules). Under Rule 3, Section 3, the court is required to refer environmental civil
cases to CAM before trial starts:
The mediation should be terminated after 30 days from the referral.26 The mediation
report from the PMC must be submitted to the court within 10 days from the expiration
of the 30-day period. Even after mediation in the PMC unit fails, the court may refer the
case to the branch clerk of court to further assist the parties in reaching a settlement.27
Thereafter, the judge is likewise tasked to mediate and assist the parties in reaching
an amicable settlement.28 The parties are also allowed to compromise or settle in
accordance with law at any stage of the proceedings before rendition of judgment.29
The Rules, however, provide parameters as to what the court can approve by way of
compromise agreement, i.e. it must be in accordance with law, morals, public order and
public policy to protect the right of the people to a balanced and healthful ecology30
and shall be judicially approved in a consent decree.31 It is clear therefore that under the
23 Supreme Court, Re: Various Resolutions of the Board of Trustees of the PHILJA Approved During its
Meetings on 18 September 2001 and 1 October 2001, SC Administrative Matter No. 01-10-5-SC-PHILJA
(Oct. 16, 2001).
24 Supreme Court, Re: Pilot Testing of Mediation in the Court of Appeals, SC Administrative Matter No. 02-2-
17-SC [A.M. No. 02-2-17-SC] (Apr. 16, 2002).
25 Home Bankers Savings and Trust Company v. Court of Appeals, 318 SCRA 558, 568 (1999).
26 Rules of Procedure for Environmental Cases, part II, rule 3, 3.
27 Id. 4 (a).
28 Id. 5.
29 Id. 10.
30 Id. 5.
31 Id. 4.
Rules, environmental mediation is now a policy in the courts. The Rules are applicable
to environmental courts also known as green courts which were designated to handle
environmental cases.32
Under the Rules, even after CAM fails, the judge shall exert best efforts to persuade
the parties to arrive at a settlement of the dispute.33 This is referred to as Judicial Dispute
Resolution (JDR) wherein after CAM, the JDR judge will continue to assist the parties
in reaching an agreement regarding the dispute. This is done by another judge through
raffle and not the environmental court judge unless the parties agree that this court
shall conduct the JDR.34 The judge acts like a mediator and not adjudicator. Even after
termination of pre-trial and already in the trial stage, the case may be referred back to
JDR while trial is suspended should at least one of the parties desire to do so.35
In the Philippine context, litigation is an involuntary, formal and public process for
dispute resolution where a government-appointed judge determines facts and decrees an
outcome to legal causes of action based on adversarial presentations of arguments and
evidence by each party and after applying laws and rules.36 Litigation is seen as a rights-
based approach wherein a verdict is made in accordance with the rights protected under
laws and rules whereas mediation is an interests-based approach of dispute resolution
which seeks to unearth and deal with the interests of the parties.
Culling from experience of other countries and the Philippines own familiarity
with mediation in general, the following are the potential benefits of mediation in
environmental disputes over litigation in the country if it is practiced well and the parties
engage the process with good intentions:
to arrive at a mutually acceptable solution. Each party strives to consider what is good for
both parties and resolve the others problem. Such resonance necessarily can contribute
to the success of the process.
Comprehensive Process and Outcome. The parties explain the reasons behind
their positions. These strongly felt interests are presented to the other party. Thus, in
discussing what their real issues are, the parties are not limited by the legal definition of
their dispute, i.e. the cause of action or elements of the crime and legal defenses.37 The
process allows them to thresh out what truly matters to them, even related non-legal
concerns. Thus the resulting agreement is more comprehensive. Possibly, it addresses even
the underlying or root causes of the conflict. Furthermore, the mediated solution may
integrate not only the needs of the disputants but of the ecosystem as a whole.
Efficient and Economical. It is speedier and more efficient because it does away
with a protracted trial. Consequently, it is less costly and more convenient because the
parties need not spend much on paying lawyers and going to the court to attend trial.
Counsels participation is not indispensable in mediation because the parties themselves
can speak on their own behalf. This is significant because the filing of environmental
cases has increased tenfold from 1996 to 2008.38
Creative and Contextual Resolutions. The parties can explore creative options
and a greater variability of solutions that are not available or cannot be produced through
court remedy. The settlement reached by the parties can be tailored to their particular
situation. More inventive solutions that are responsive to specific interests of the parties
can emerge. This is because the group discussion enables participants to broaden the
range of possible alternatives. Freed from the narrowness and restrictions of a purely legal
37 Antonio M. Martinez, Mediation in the Courts and the Barangay Justice System, 4 The PHILJA Judicial J., 67, 71
(Jan. - Mar. 2002).
38 Francis N. Tolentino, An Environmental Writ: The Philippines Avatar, 35 (1) IBP J. 117, 131 (Aug. 2010).
Relationships are Preserved. The dialogue between the parties mends rifts,
preserves or even improves their relationship, or at the very least does not damage it
because trust and respect are developed. Eventually, it fosters harmony and cultivates
a culture of peace in the community. Some say that mediation sooner or later leads to
social transformation by peaceful relations. Maintenance of relationships of stakeholders
is valuable for the present and future protection of the environment.
Capacity to Resolve Future Disputes. Because the parties learn a new process of
dispute resolution, this skill is instilled and can be put to use in resolving future disputes.
In addition, since the parties have already talked and worked together to solve mutual
problems, they can avoid a repeat of past pitfalls and establish new ways of amicably
dealing with each other.
45 Stephen Higgs, The Potential for Mediation to Resolve Environmental and Natural Resources Disputes,
available at http://www.acctm.org/docs/The%20Potential%20For%20Mediation%20to%20Resolve%20
Environmental%20_CONNOR-Higgs_.pdf (last accessed Oct. 13, 2012).
46 Re: Consolidated and Revised Guidelines to Implement the Expanded Coverage of Court-Annexed
Mediation [CAM] and Judicial Dispute Resolution [JDR]), A.M. No. 11-1-6-SC-PHILJA, part Four.
47 Id.
Moving Forward. Although mediation may fail, the parties would not have
sacrificed their claims and can still pursue rights-based dispute resolution mechanisms.
But even proponents admit that environmental mediation has its difficulties:
Lack of Skills. The parties and their representatives may not have the necessary
skills in negotiating a fair and acceptable agreement.
Social Norms Not Protected. It can be said that such approach to conflict
resolution does not create, refine or enforce agreed upon societal norms for behavior50 in
relation to the environment. In contrast, the judge decides based on formal rules which
bind people and communities together in generally accepted understanding of what they
value.51
Third Party is Never Neutral. When parties are assisted by a mediator, the
process may be unwittingly skewed towards an outcome even if such third party is well-
intentioned. This is because no one, not even the mediator, is exempt from prejudices and
subconscious preconceived ideas of fairness or of how things should be.
Needs of the Public Overlooked. The disputing parties may be satisfied with the
solution but the broader community or general publics welfare may be disadvantaged if
the violator of environmental laws is also allowed to be a winner in a mediated settlement.54
54 See Peter H. Kahn, Jr., Resolving Environmental Disputes: Litigation, Mediation, and the Courting of Ethical
Community available at http://faculty.washington.edu/pkahn/articles/Resolving_ Environmental_ Disputes.
pdf (last accessed Oct. 13, 2012).
55 See Alexis Gensberg, Mediating Inequality: Mediators Perspectives on Power Imbalances in Public Disputes,
available at http://dspace.mit.edu/bitstream/handle/1721.1/66400/52971312.pdf ?sequence=1(last accessed
Oct. 13, 2012).
When an agreement is reached, whether through CAM or JDR, the judge where the
case was filed is tasked to approve the compromise agreement if it is not contrary to law,
morals, good customs, public order and public policy.56 This takes the form of a consent
decree. The Rules define a consent decree as a judicially-approved settlement between
concerned parties based on public interest and public policy to protect and preserve the
environment.57
The Philippines has not had much experience with consent decrees.58 But in the
United States, the very first consent decree appeared in the 1859 case of United States v.
Peralta.59 Consent decrees were first heavily utilized in anti-trust litigation.60 Thereafter, it
had been used for public interest disputes involving civil rights and environmental issues.61
Thus, the American doctrines on consent decrees will be used as a guide for this study.
Likewise, this study shall draw on existing Philippine jurisprudence on general principles
applicable to consent decrees, in particular case law on compromise agreements under
civil and labor laws.
A consent decree is both contract and judgment or court order.62 According to the
framers of the Rules:
The contract aspect pertains to the compromise agreement between the two parties
whereby the parties, by making reciprocal concessions, avoid a litigation or put an end
to one already commenced.64 Such reciprocal concessions where all parties benefit mean
that parties give up claims or defenses that they could have advanced if trial ensued. They
are bound by what they have agreed upon and not what they may be entitled to under the
law. The agreement is prepared by the parties and signed by them. Just like any contract,
to be valid, the following elements must concur pursuant to Article 1318 of the Civil
Code: (a) consent of the contracting parties; (b) object certain that is the subject matter of
the contract; and (c) cause of the obligation. Consent means that the parties voluntarily,
freely and intelligently executed the agreement with full knowledge. It is manifested
by the meeting of the offer and cause which are to constitute the agreement.65 The
object is what is specifically stated in the agreement, including other objects by necessary
implication.66 The cause or consideration consists of the reciprocal concessions.
The court which approves the compromise agreement renders a judgment based
on such agreement and orders the parties to faithfully comply with their agreement in
good faith. Once approved, it becomes more than a mere contract between the parties
and thereafter has the force and effect of a judgment.67 As in other decisions based on
compromise agreement, the judgment operates as disposing of the merits of the case.
It is already a determination of the controversy and has the effect of res judicata on the
parties.68 It should not be disturbed and is not appealable except for vices of consent
(e.g. mistake, fraud, misrepresentation, coercion or duress), forgery69 or if the terms of
settlement are so palpably unconscionable.70
Where the aggrieved party alleges mistake, fraud, violence, intimidation, undue influence,
or falsity in the execution of the compromise embodied in a judgment, an action to annul it
should be brought before the Court of Appeals, in accordance with Sec. 9 (2) of BP 129, which
gives that court exclusive original jurisdiction over inter alia actions for annulment of judgments
of regional trial courts.
The other available remedy is a motion for relief from judgment, which may be sought under
Rule 38, Secs. 2 to 3, of the Rules of Court, on the ground that the judgment was obtained
through fraud, mistake or excusable negligence. This must be filed with the court that rendered
the judgment, within 60 days after the petitioner is notified of the judgment and not more than
six months after its entry.
It follows that concessions made by the parties not contrary to law, morals, good
customs, public order and public policy are binding even though the agreement may
have gone beyond the issues of the case. As to the parties, it is still res judicata because the
compromise is not of the claim alone but even its incidents and ramifications.71
A judicial compromise has the force of law and is conclusive between the parties.72 A
party cannot discard it unilaterally because of a change of mind thus under Article 2041
of the Civil Code, if one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as rescinded without necessity
for a prior judicial declaration of rescission73 and insist upon his, her or its original
demand. The court has no power to relieve the parties of obligations they voluntarily
assumed simply because the compromise agreement turned out to be unwise, disastrous
or foolish. It [has] no authority to impose upon the parties a judgment different from or
against the terms and conditions of their compromise agreement.74
Because it is generally not appealable, it is immediately final and executory such that
execution is the ministerial duty of the court. Under Article 2037 of the Civil Code, a
compromise has the effect and authority of res judicata upon the parties even if not judicially
approved; but when judicially approved, it is already a judgment subject to execution. A
mere contract can be judicially executed through an action for specific performance but
a consent decree just like any judgment can be enforced in the same proceeding through
a writ of execution.75 In case of default, refusal or failure to abide with its terms, the
aggrieved party is entitled to a writ of execution.76 The obligations undertaken under
the decree for which a writ of execution has been issued must be obeyed under penalty
of contempt.77 Still, it has been held that the court may stay immediate execution of
a judgment where supervening events bring about a material change in the situation
of the parties which makes the execution inequitable, or where there is no compelling
urgency for the execution because it is not justified by the prevailing circumstances.78 As
a judgment, the court retains jurisdiction over the execution of the same.
71 Salazar, et al. v. Jarabe, 91 Phil. 596, 601 (1952), citing McCarthy v. Barber Steamship Lines, 45 Phil. 488.
72 Martir, 497 SCRA at 127.
73 Iloilo Traders Finance Inc. v. Heirs of Oscar Soriano Jr., 404 SCRA 67, 73 (2003), citing Diongzon v. Court of
Appeals, 321 SCRA 477 (1999).
74 Martir, 497 SCRA at 129, citing Choithram Jethmal Ramnani v. Court of Appeals, 413 Phil. 194, 209 (2001)
& Manila International Airport Authority (MIAA) v. ALA Industries Corporation 422 SCRA 603, 610-611
(2004).
75 Martir, 497 SCRA at 128, citing Dela Rama v. Mendiola, 401 SCRA 704, 713 (2003).
76 Id.
77 Under 1997 Rules of Civil Procedure, rule 71; Prudence Realty, 231 SCRA at 390.
78 Dalida v. Naguit, 526 SCRA 172, 175-176 (2007), citing Laurel v. Abalos, 140 Phil. 532 (1969) & Hualam
Construction and Devt Corp. v. Court of Appeals, 214 SCRA 612 (1992).
79 Phil. Const. art. III, 10.
impaired by subsequent legislation80 in line with the principle that laws generally have
prospective application. There is impairment if a subsequent law changes the terms of a
contract between the parties.81 Existing laws are deemed to be read into the compromise
agreement as a contract but the reinterpretation of laws in judicial decisions likewise
should be applied prospectively.82 However, the non-impairment clause must yield to the
police power of the state.83 Such police power may consist in the passage of subsequent
legislation for the purpose of advancing the right of the people to a balanced and healthful
ecology.
The consent decree is res judicata and binding only on the parties to the suit who are
signatories to it and their successors in interest.84 Accordingly, it is not binding on co-
litigants who did not sign the same (e.g. a defendant not mentioned in the agreement),85
more so third parties to the case. It follows that a non-party cannot be allowed to enforce,
modify or amend the agreement.86 Those harmed by it or who feel that the terms are
insufficient or inadequate are not prevented from filing their own suit later on, especially
those who are not organized, have no resources or have no access to information regarding
the proceedings.
Non-parties who want to contest an approved consent decree can do so in the higher
court on the ground of abuse of discretion.87
Judge Protects Public Interest. Even if public interest is not properly represented
and defended during mediation, the judge is responsible for ensuring that the consent
decree does not contravene public interest.
But there is American jurisprudence stating that the court can modify its terms, even
over the objection of a party when crucial to give effect to the decree.92 This is particularly
helpful when the implementation of the settlement will take some time to complete.93
obligations to the plaintiff without admitting to any wrongdoing94 hence avoiding the
concomitant negative perception arising from such admission or adverse decision. A
compromise likewise cannot be construed to be an admission of liability of the parties to
a third party.95
Partial Consent Decrees. In multi-party disputes, some of the parties can choose
to settle the case without affecting the non-consenting parties.96
It is also argued that the judge assumes an unfamiliar role in relation to the
consent decree98 because he or she becomes involved in the execution, implementation
or monitoring of his or her judicial decisions. This may already be in the sphere of
responsibility of the executive branch of government and going beyond the judges usual
judicial functions.
94 Chavez v. Court of Appeals, 453 SCRA 843, 852 (2005), citing Servicewide Specialists, Inc. v. Court of Appeals,
257 SCRA 643 (1996).
95 Servicewide, 257 SCRA at 656.
96 Webster, supra note 60, at 141.
97 Macchiarola, supra note 59, at 721.
98 Id. at 709.
Non-parties Affected. The case affects others and not just the parties who are
negotiating and proposing a consent decree to be approved. It cannot be expected that
the parties will draft an agreement that will be beneficial to third parties thus it may not
be possible that everyone will be satisfied with the solution. Parties may externalize the
costs and burdens of their settlement such that these costs do not affect them leaving it to
others (present or future) to bear them.99
Mindful of their benefits, compromises are allowed and accepted, even favored
and encouraged by the courts.100 The court can even approve compromise agreements
submitted to it for approval that were executed outside the court and without its
assistance.101 Just like ordinary contracts, in interpreting the agreement, the intention of
the parties is to be ascertained from the agreement itself, and effect should be given to that
intention. Thus, the compromise agreement must be read as a whole.102
However, the duty of the court is to ensure that the agreement is not contrary to law,
morals, good customs, public order and public policy to protect the right of the people
to a balanced and healthful ecology.103 It is not there merely to rubberstamp or to give
pro forma approval. The judge should actively and independently assess and thereafter
approve, deny or modify the agreement in accordance with these criteria. The parties
may not be expected to go beyond their narrow concerns thus it is the judge, with his
or her knowledge of the law, who can look out for this broader interest and scrutinize
the agreements conformity with the law. This duty inevitably falls on the judge because
the mediator is not required to be an expert of the law. This does not require the judge
to look into the merits of the case. The court decides independently of the adversarial
proceedings. Nonetheless, the agreement should be aligned with the objectives of the laws
invoked in the dispute.
However, the judge can impose additional terms104 without supplanting the will of the
99 Robert Zeinemann, The Characterization of Public Sector Mediation, 24 Environs Envtl. L. & Poly J. 49, 57 (2001).
100 Raola v. Raola, 594 SCRA 788, 794 (2009), citing DMG Industries, Inc. v. Philippine American Investments
Corporations, 526 SCRA 682, 687 (2007); Civil Code, art. 2029 states:
Art. 2029. The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise.
Rule 18, 2(a) of the 1997 Rules of Civil Procedure:
Sec. 2. Nature and purpose. xxx.
(a) The possibility of an amicable settlement or of a submission to alternative modes of dispute resolutions.
101 Algabre v. Court of Appeals, 28 SCRA 1130, 1138-1139 (1969).
102 Chu, 657 SCRA at 387-388, citing Adriatico Consortium, Inc. v. Land Bank, 609 SCRA 403 (2009).
103 Rules of Procedure for Environmental Cases, part II, rule 3, 5.
104 Webster, supra note 60, at 142.
general is already widely used in Philippine courts as an alternative to litigation. This came
about because of the problems encountered with traditional litigation which leave parties
feeling that justice was not achieved. Although environmental mediation has a longer
history in other countries, there is still skepticism as to how such confidential proceedings
where self-interested parties negotiate with each other and the resultant decree can take
into consideration the public interest.113
Any settlement should be in accordance with law, morals, public order and public
policy to protect the right of the people to a balanced and healthful ecology for the court
to approve it in a consent decree. It is expected that counsels for the parties, along with
the mediator, know how to steer the parties to an agreement that will be consistent with
this standard. But even if there is an error or lack of expertise on their part, in due course,
it is the judge who makes certain that the standard is followed. This can be a nebulous
standard when faced with the particular context of an environmental dispute before the
court. Given that there is no extensive experience yet with consent decrees, the court
can only be aided by the general guideline it uses when making a judgment approving a
compromise agreement: the agreement should comport with the objectives of the laws
giving framework to the dispute. Once it negates these objectives, the agreement must
be rejected. It is the authors submission that if this standard is ensured, public interest is
advanced in that the agreement does not contradict the policy formulated by the political
branches of government, the goal of which is the preservation of the environment.
Environmental mediation has limitations which can result in its failure such that the
parties will have to resort to litigation. Should it succeed and a consent decree is approved,
the same likewise has limits and poses dangers to non-parties. Another way to guarantee
that the agreement does not work against broader public interest is to address the needs
of affected non-parties. Even if procedural fairness and substantive justice are attained
between or among the parties, how can the judge ensure that public interest is served such
that the rights of third parties are not disregarded? It is proposed that as much as possible,
all affected groups should be represented and participate in the discussion of a particular
dispute, not just the impleaded parties of the case, so that the negotiated outcome will be
good for everyone and not just some.
Therefore, there is a need for a consistent procedure that will address the needs
of interested key stakeholders who are not parties to the case. At the same time, the
litigants will want assurance that their negotiated settlement will not be challenged by
non-parties in the future. Such threat gives a cloud of uncertainty that does not encourage
good faith settlement efforts. It is essential that parties are accorded due process: The
procedure should be fair in that all the affected stakeholders who may not be parties to
the litigation are given the opportunity to be heard and participate. Existing rules provide
remedies to involve all known stakeholders such as Joinder of Parties and Intervention.
However, the author likewise will recommend supplemental rules specifically applicable
to environmental cases.
113 Higgs, Mediating Sustainability: The Public Interest Mediator in the New Zealand Environment Court, 37 Envtl. L. 61, 81
(Winter 2007).
1. Joinder
When the third party is an indispensable party to the case, compulsory joinder of
parties is the proper remedy.114 Indispensable parties, i.e. parties without whom no final
determination can be had of an action, should be impleaded and the court can dismiss
the action if the party refuses to do so despite its order.115 If judgment is rendered despite
the non-joinder, the indispensable party who is not impleaded is not bound by the consent
decree116 and such partys remedy is to have the judgment annulled under Rule 47 of
the 1997 Rules of Civil Procedure. There is jurisprudence that states that joinder can be
allowed even after final judgment if such is necessary to afford full relief and the delay in
filing the joinder motion is excusable.117
Permissive joinder of parties is also allowed when there is a question of law or fact
common to all such plaintiffs or defendants in the action involving the same transaction
or series of transactions such that the same evidence will be presented to prove a cause of
action.118 In joining parties, the provisions on jurisdiction and venue should be respected.119
114 1997 Rules of Civil Procedure, rule 3, 7 states:
Section 7. Compulsory joinder of indispensable parties. Parties in interest without whom no final determination can
be had of an action shall be joined either as plaintiffs or defendants.
115 PepsiCo, Inc. v. Emerald Pizza, Inc., 530 SCRA 58, 67 (2007); 1997 Rules of Civil Procedure, rule 3, 11
provides:
Section 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for
dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its
own initiative at any stage the action and on such terms as are just. Any claim against a misjoined party may be
severed and proceeded with separately.
116 See Garcia v. Garcia, 660 SCRA 1, 13 (2011).
117 Republic v. Sandiganbayan, 406 SCRA 190, 272-273 (2003).
118 1997 Rules of Civil Procedure, rule 3, 6:
Section 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or
arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the
alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in
the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being
embarrassed or put to expense in connection with any proceedings in which he may have no interest.
119 Pantranco North Express, Inc. v. Standard Insurance Company, Inc., 453 SCRA 482, 488 (2005); 1997 Rules
of Civil Procedure, rule 2, 5 states:
Section 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or otherwise, as
many causes of action as he may have against an opposing party, subject to the following conditions:
(a) The party joining the causes of action shall comply with the rules on joinder of parties;
(b) The joinder shall not include special civil actions or actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to different venues
or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of
the causes of action falls within the jurisdiction of said court and the venue lies therein;
and
(d) Where the claims in all the causes action are principally for recovery of money, the
aggregate amount claimed shall be the test of jurisdiction.
Joinder is not necessary in class suits. In a class suit, the subject matter of the controversy
is one of common or general interest to many and the parties are so numerous that it is
impracticable to bring them all before the court.123
2. Intervention
The rule in the Philippines is that intervention is not mandatory, but only optional
and permissive under Section 1, Rule 19 of the 1997 Rules of Civil Procedure:
Section 1. Who may intervene. A person who has a legal interest in the
matter in litigation, or in the success of either of the parties, or an interest
against both, or is so situated as to be adversely affected by a distribution
or other disposition of property in the custody of the court or of an
officer thereof may, with leave of court, be allowed to intervene in the
action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenors rights may be fully protected
in a separate proceeding.
As for the appropriate timing of the intervention, the 1997 Rules of Civil Procedure
state:
120 La Farge Cement Philippines, Inc. v. Continental Cement Corporation, 443 SCRA 522, 543 (2004).
121 Webster, supra note 60, at 921
122 Integrated Bar of the Philippines v. Zamora, 338 SCRA 81, 101 (2005).
123 1997 Rules of Civil Procedure, rule 3, 12.
It has been held that intervention after the judgment of compromise was final and
executory and already substantially executed is improper.124 The remedy of the affected
third party is to institute a separate action. However, the Philippine Supreme Court has
also ruled that intervention may still be allowed even after the prescribed period in the
interest of substantial justice.125
A third party who is an indispensable party126 or who has a direct and material interest
in the approval or disapproval of the compromise agreement can be allowed to intervene
to challenge such agreement.127 Such third party is not bound and its rights should not be
infringed on by the compromise agreement of the parties.128
The Rules expressly allow for a motion for intervention.129 Moreover, it contains a
particular provision on intervention in a citizen suit:
Citizen suits filed under R.A. No. 8749 and R.A. No. 9003 shall be
governed by their respective provisions.130
Section 19. Transfer of interest. In case of any transfer of interest, the action may be continued by or against
the original party, unless the court upon motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party.
Likewise, under the principle of laches, third parties, although entitled to be involved
in the case, may be barred from later on questioning a judgment or the rules on joinder
and intervention when because of negligence, they failed to join or intervene in the action
and remained silent despite being given the opportunity to do so.133
132 See David v. Commission on Elections, 271 SCRA 90, 93 (1997) where it stated:
The Petition for Leave to Intervene filed on March 17, 1997 by Punong Barangay Rodson F. Mayor was denied
as it would just unduly delay the resolution of the case, his interest like those of all other barangay officials being
already adequately represented by Petitioner David who filed this petition as president of the Liga ng mga
Barangay sa Pilipinas.
133 Avisado v. Rumbaua, 354 SCRA 245, 258 (2001), citing Lim Tay v. Court of Appeals, 293 SCRA 634, 659
(1998), defines laches, to wit:
There is laches when there is failure or neglect, for an unreasonable length of time to do that which by
exercising due diligence could or should have been done earlier. When there is laches, the presumption arises
that the party entitled to assert aright has either abandoned it or has declined to assert it. Even a registered
owner may be barred from recovering possession of land by virtue of laches. Its elements are:
(1) conduct on the part of defendant, or one under whom he claims, giving rise to the
situation that led to the complaint and for which the complaint seeks a remedy;
(2) delay in asserting the complainants rights, having had knowledge or notice of the
defendants conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of defendant that the complainant would assert
the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or
the suit is not held barred.
134 Phil. Const. art VIII, 5 (5). Section 5. The Supreme Court shall have the following powers:
xxx xxx xxx
(5) Promulgate rules concerning the protection and enforcement of constitutional rights,
pleading, practice, and procedure in all courts, the admission to the practice of law, the
integrated bar, and legal assistance to the under-privileged. Such rules shall provide a
simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform
for all courts of the same grade, and shall not diminish, increase, or modify substantive
rights. Rules of procedure of special courts and quasi-judicial bodies shall remain
effective unless disapproved by the Supreme Court.
To make the public aware of the case and settlement proceedings, before approving
the compromise agreement reached by the parties, the court should cause a notice to
be posted for affected non-parties to have ample time and opportunity to intervene in
the case, i.e. time when they could have reasonably seen the effects of the settlement
on their interests,135 and file a third party comment. In the United States, this has been
called limited intervention wherein the intervenors are permitted to comment on
the reasonableness of the terms of the settlement and suggest alternatives or revisions
thereto.136 Patterning the proposed provision to that required for intervention in citizen
suits under the aforementioned Part II, Rule 2, Section 5 of the Rules, the same should
state:
This recommended rule should not apply in said citizen suits where interested parties
were already required to intervene upon filing of the suit. They have already been given
the opportunity to do so and are precluded at this stage to belatedly intervene. However,
according to the framers of the Rules, a suit by an individual who can show personal
and direct injury can be filed alongside a citizen suit.137 The framers likewise noted that
publication of the notice to the public is merely permissive and non-jurisdictional and is
meant only to encourage public participation.138
The notice should contain the proposed settlement giving the public an opportunity
to inspect it. This will not violate the requirement of confidentiality for CAM since only
the proceedings are expressly stated as confidential, not the outcome which is subject to
court approval. The requirement of giving notice will not entail added substantial costs.
Moreover, interested parties can look up these notices in their own environmental courts.
Consequently, taking into account the reach of possible effects of environmental cases
to other parties and to prevent approved decrees from being prone to attack, those third
parties who were identified as stakeholders and notified actually or constructively of their
entitlement to limited intervention but failed to intervene in the original suit should be
135 Schwarzschild, supra note 87, at 921.
136 Id. at 923.
137 Secretariat of the Sub-committee on the Rules of Procedure for Environmental Cases, supra note 63, at 110.
138 Id. at 112.
barred from later on challenging the decree.139 As a result, a non-party should prove that
it was denied due process by being prevented from intervening (as when such stakeholder
was not identified as an interested party and could not be reasonably deemed to have been
constructively notified as well as when there are difficulties of communication) before it
can be allowed to attack the decree after establishing its legal standing to do so.140
The intervention should not result in opening the case to litigation or a veto power
against an otherwise legitimate settlement141 thereby delaying the proceedings and
prolonging the uncertainty arising from litigation142 which ultimately defeats the purpose
of CAM and compromise agreements.
2. Fairness Hearings
In the United States, some courts hold fairness hearings wherein they give notice
to affected parties not involved in the case and allow them a limited amount of time to
comment on or object to the proposed agreement prior to approval and entry of a decree,
particularly its effects on them, without however arguing the merits of the case, i.e. the
alleged violation or liability.143 A similar rule can be adopted here:
Fairness Hearings. Upon receipt of the third party comment, the court
shall require the original parties to reply thereto within ten (10) days
from receipt of a copy thereof. After the replies are filed or the time
for the filing thereof has expired, the court may hear the comments-
in-intervention and replies thereto which shall be summary in nature
or require the parties to submit memoranda. The court shall consider
such pleadings and those taken up during the hearings in acting on the
compromise agreement.
This timeline does not unduly prolong the disposition of environmental cases
considering that at this point, trial had been dispensed with and what only needs to be
completed is action on the proposed agreement.
This enables the court to take into account the views of the public when approving
the agreement.144 In this way, the governments interest through its regulatory agency can
be presented and explained when necessary. This is important because by the nature of a
settlement agreement, the parties choose a solution that works for them which can just be
among several possible legal ways of resolving the conflict. In other words, there is no such
thing as one correct solution. The hearings give an opportunity for stakeholders to state
their views on the agreement and for them to be apprised of the benefits of the decree.
139 Webster, supra note 60, at 147 citing Martin v. Wilks, 109 S.Ct. at 2180.
140 Id. at 148.
141 Schwarzschild, supra note 87, at 921.
142 Clark, 517 SCRA at 219, citing Ramnani v. Court of Appeals, 360 SCRA 645, 654 (2001).
143 Schwarzschild, supra note 87, at 911.
144 Id.
These will also elicit relevant information from the expanded pool of stakeholders which
can help in the evaluation of the proposal. This can facilitate in sorting out conflicting
information.
During this time, the action is considered suspended since this stage is still part of
CAM.145
The following are proposed ways to make the process fair for both parties and non-
parties which are just additional safeguards and need not be mandatory:
Another measure is for the court, in its discretion, to appoint a guardian ad litem to protect
the interests of known but absent or unrepresented third parties148 and of the environment
which duty may be performed by the DENR as the regulator for environmental concerns.
The guardian can present information and arguments on behalf of the absent party.
Sec. 8. Suspension of Actions. The suspension of actions shall be governed by the provisions of the Civil Code.
CIVIL CODE, art. 2030:
With this recommended process, the consent decree can withstand attacks from non-
parties. While it may not be possible for the decree to be acceptable to everyone who
could be affected, this procedure enables non-parties to be informed and be included
in the dialogue so that the decision can be justified to a broader public. However, it is
important not to make the procedure so burdensome that it becomes more like litigation
than an alternative to it. It should maintain the advantage of cooperative atmosphere
that should pervade the proceedings leading to a consent decree. This is best done if the
process is responsive to all the parties who make themselves known although in the end,
the judge will make an independent review, assessment and analysis of everything he
or she has heard, in keeping with his or her judicial training. The court will rule on the
comments-in-intervention in the consent decree and set forth its reasons for its holdings.
Ultimately, it will be the task of the court to balance the rights and interests of parties
along with those of the public including future generations.
In view of the young environmental mediation practice in the Philippines and the
limitations facing it, the consequences of consent decrees have not been seen. Thus, there
are still a lot to be learned as to how to protect public interest in the process of approving
consent decrees. It is expected to evolve and improve as the country strives to resolve
environmental disputes peacefully.
Annex A
Section 1. There shall be inserted as Sections 5-A and 5-B of Part II, Rule 3 of A.M.
No. 09-6-8-SC the following subsections:
SEC. 5-A. Notice and third party comment. Before approval of the
compromise agreement reached by the parties, the court shall issue
an order which shall contain the text of such compromise agreement,
requiring all interested parties to manifest their interest to intervene in the
case and to file their third party comment on the proposed compromise
agreement within fifteen (15) days from notice thereof. The court shall
post the order in at least one (1) conspicuous place in the court premises
for at least ten (10) consecutive working days. The parties may be ordered
to publish the order once in a newspaper of a general circulation in the
Philippines or furnish all affected barangays copies of said order.
SEC. 5-B. Fairness Hearings. Upon receipt of the third party comment,
the court shall require the original parties to reply thereto within ten (10)
days from receipt of a copy thereof. After the replies are filed or the time
for the filing thereof has expired, the court may hear the comments-
in-intervention and replies thereto which shall be summary in nature
or require the parties to submit memoranda. The court shall consider
such pleadings and those taken up during the hearings in acting on the
compromise agreement.
SEC. 2. Effectivity. - These Supplemental Rules shall take effect within fifteen (15)
days following publication once in a newspaper of general circulation.
I. INTRODUCTION
The answer to that question can be the subject of an entire lecture itself, considering
the fact that the status of tort under Philippine Civil Law is unclear. The word tort itself
does not appear in the entire Civil Code because it was rejected by the Code Commission1
and yet jurisprudence treats tort as if it were a natural part of Civil Law. There is also the
question of whether a quasi-delict is a tort and vice versa. I have discussed this relationship
between torts and quasi-delicts elsewhere2 and there is no reason to repeat the discussion
in detail now.
But for the purpose of moving this discussion forward, let us sidestep the issue of the
definition of what Philippine tort law is and adopt Carpios model3 wherein Philippine
tort law consists of three parts: intentional torts, negligent torts or quasi-delicts, and strict
liability torts. These three types of torts are all found in the Civil Code.
But why is Philippine tort law difficult (if not impossible) to define?
* This was delivered as the Edgardo J. Angara Professorial Chair Lecture. Thus, it is written from the first person
point of view.
** Assistant Professor, College of Law, University of the Philippines Diliman; LL.M., Columbia Law School,
Columbia University; LL.B College of Law, University of the Philippines; B.A. Political Science, College of
Social Sciences and Philosophy, University of the Philippines.
1 Napoleon Malolos and Teodorico Martin, Report of the Code Commission: With Annotations 161-162
(1951).
2 Rommel Casis, Analysis of Law and Jurisprudence on Torts and Quasi-Delicts 42 (2012).
3 Antonio Carpio, Intentional Torts in Philippine Law, 47 Phil. L.J. 649 (1973).
The basic problem is that jurisprudence has been chronically inconsistent in dealing
with what it calls tort. If common law has a problem in defining tort,4 it is no surprise
that the Philippines will also have the same problem because jurisprudence has chosen to
adopt the common law concept despite the rejection of the term in the Civil Code.
The dilemma is further aggravated by the other reason for the use of the term
elementary in this lecture. Often, in determining whether a valid cause of action exists,
jurisprudence would identify elements that the claimant must comply with. The problem
is, in establishing these elements, issues have arisen which would not have arisen had the
Court stuck to the language of the Civil Code. This is particularly true in the case of
quasi-delicts and torts.
The purpose of this lecture is to bring to light these elementary dilemmas in the
hope that solutions can be identified. If these are the foundational issues in tort law,
then they have to be addressed and not sidestepped. However, it can be a daunting task
because it requires reconciling seemingly antagonistic rulings. But through what I like to
call jurisprudential apologetics, there may be a way to reconcile divergent decisions.
II. QUASI-DELICT
A. Defining a Quasi-Delict
This question should be easy to answer considering that the Civil Code appears to
provide for a definition. Article 2176 provides:
Based on the text of this article, what is a quasi-delict? Is it the act or omission or
the fault or negligence?
In the first sentence, the act or omission causes damage. It is this act or omission
causing damage which gives rise to the obligation to pay damages.5 It is reasonable to
suppose that this is the quasi-delict. However, in the second sentence, it is the fault
or negligence which is called a quasi-delict when there is no pre-existing contractual
relation.
Article 1902 of the old Civil Code, the precursor of Article 2176, is clearer. It says:
Assuming that the subtle change in language in the new code was not intended to
change the substance of the text, Article 2176 can be interpreted to mean that fault or
negligence is the manner by which the act or omission causing damage to another was
committed. It may be said that the quasi-delict is the negligent act or omission.
But what about the term fault? Is the concept of fault different from negligence?
B. Scope of Quasi-Delict
It is clear that acts committed with negligence can be a quasi-delict. But can an
intentional act be considered a quasi-delict? Does fault or negligence in Article 2176
justify the inclusion of intentional acts?
Article 1902 of the Civil Code declares that any person who by an act or
omission, characterized by fault or negligence, causes damage to another
shall be liable for the damage so done. Ignoring so much of this article
as relates to liability for negligence, we take the rule to be that a person is
liable for damage done to another by any culpable act and by culpable
act we mean any act which is blameworthy when judged by
accepted legal standards. The idea thus expressed is undoubtedly
broad enough to include any rational conception of liability for
the tortious acts likely to be developed in any society. (Emphasis
supplied.)
This early case suggests that any culpable act was covered by Article 1902 of the
old Civil Code. But what is a culpable act?
The obligation spoken of in this article are those which arise from an
injury caused by an act or omission without malicious intention.
The obligation so dealt with differ from those arising from crimes in
that the latter are the offspring of illicit acts which are purely voluntary,
while the former proceed from acts or omissions not punishable
and sometimes involuntary or even not personal to the person who
Therefore in Tolentinos view, Article 1902 covered acts without malicious intention.
In his view, it covered voluntary and involuntary acts provided that these acts were not
punishable or were not crimes. Thus, under this interpretation, the act or omission which
constitutes culpa aquiliana under the Article 1902 cannot be a crime. While this opinion
was supported by the text of the old Civil Code, after the ruling of the Court in Barredo v.
Garcia8 which re-interpreted the rule in Article 1902, the act or omission constituting a
culpa aquiliana could be a crime.
But the Barredo ruling does not necessarily answer the question of whether a culpa
aquiliana can be an intentional criminal act. The Court in that case, after a thorough
discussion of the authorities, said:
Thus, the rule stated in Barredo was: the same negligent act may produce either a civil
liability arising from a crime under the Penal Code, or a separate responsibility for fault
or negligence under articles 1902 to 1910 of the Civil Code. Under this case, the kind of
act that can be both a crime and a culpa aquiliana was a negligent act. Therefore, Barredo
cannot be the basis for a rule stating that the same intentional9 act can both be a crime
and a culpa aquiliana.
7 Arturo Tolentino, Commentaries and Jurisprudence on the Civil Code with Special laws Vol. II 1070
(1947).
8 Barredo v. Garcia, G.R. No. L-48006, July 8, 1942.
9 Intentional here does not mean voluntary. It means with intent to harm.
10 Eduardo Caguioa, Comments and Cases on Civil Law Vol. VI 392 (1970).
The statements of Caguioa and Jarencio underscore the clarification made earlier
regarding the ruling in Barredo. The fact that a quasi-delict may be a criminal act does
not necessarily mean that all criminal acts may be a quasi-delict. An act cannot be a
quasi-delict if there is a deliberate intent to harm. Therefore, only crimes committed with
criminal negligence can be a quasi-delict but not crimes committed with deliberate intent
to harm.
The problem, however, is that there are cases which seem to say otherwise.
In Elcano v. Hill,12 the Court held that Article 2176, [when] it refers to fault or
negligence, covers not only acts not punishable by law but also acts criminal in character,
whether intentional and voluntary or negligent. However, as it has been explained in
detail elsewhere,13 Elcano cannot be used as basis for saying that a quasi-delict can be a
criminal act with intent to harm.
Neither is the statement in Andamo v. IAC,14 which copies the same statement Elcano
without quoting it as a source, a proper legal basis because it is obiter dictum.15
Unfortunately, both Elcano and Andamo were relied upon by the Court in Dulay v. CA,16
where it said:
there is no justification for limiting the scope of Article 2176 of the Civil
Code to acts or omissions resulting from negligence. Well-entrenched
is the doctrine that Article 2176 covers not only acts committed with
negligence, but also acts which are voluntary and intentional.
The respondent in this case argued that the word intentional in the
Andamo case was an inaccurate obiter, and should be read as voluntary
because intent cannot be coupled with negligence as defined by Article
365 of the Revised Penal Code. The Court dismissed this argument,
stating that:
In the absence of more substantial reasons, this Court will not disturb the
above doctrine on the coverage of Article 2176.
Nevertheless, a compelling argument for the said rule can be made in cases involving
vicarious liability. Under Article 2180, a person may be held liable for a quasi-delict for
acts committed by a person for whom he is responsible for. The argument is that it should
not matter if the injury causing act or omission was committed with intent to harm. The
logic of the argument is that if under Article 2180 a person can be held liable by the
mere negligence of a person he is responsible for, should he not also be responsible for
the intentional17 acts of the same person? For instance, under Article 2180, an employer
is liable for the damage caused by an employee for acts or omission within the scope of
his assigned tasks. Jurisprudence explains that under this article, if an employee is found
negligent, the employer is presumed negligent in the selection and supervision of his
employee. The argument is that if an employer is liable for mere acts of negligence of an
employee, shouldnt he also be held responsible for acts with intent to harm?18
The obligation imposed by article 2176 is demandable not only for ones
own acts or omissions, but also for those of persons for whom one is
responsible.
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage.
The persons herein mentioned refers to the persons vicariously responsible and not
the actors. Therefore, the text of the article suggests that the quasi-delict is the negligent
act or omission of the person vicariously responsible. In other words, the person who is
guilty of the negligent act is the person vicariously responsible and not the actor.
This interpretation of Article 2180 would be supported by the cases wherein a person
was held vicariously liable for the intentional19 acts or omissions of a person for whom he
is responsible for.20
First, if the person vicariously responsible is liable for all acts or omissions of the
actor, whether negligent or with intent to harm, why does the Court require a finding of
negligence on the part of the actor in many cases?21
Second, under Article 2180, there may be two negligent acts, that of the actor and
that of the person vicariously responsible. If the negligence of the latter is the quasi-delict,
shouldnt it be required that such negligence be the proximate cause of the injury before
there can be a quasi-delict? Why is it that in many cases involving the vicarious liability
of employers, an employer can be held liable under Article 2180 upon his failure to rebut
the presumption of negligence on his part? If it is his negligence which is considered a
quasi-delict, then mere proof of his negligence should not be enough. The claimant must
prove that his negligence, presumed or otherwise, is the proximate cause of the injury. But
we do not see this in jurisprudence. The same complaint can be made against the view
that the act or omission of the actor is the quasi-delict. In many cases, after his negligence
is proven, there is at times no discussion as to why his negligence is the proximate cause.22
Despite these questions, the current status of jurisprudence seems to be that cases
based on Article 2180 can prosper even if the actor acted with intent to harm provided
the person vicariously responsible was negligent. This is a strange set-up, considering that
the actor is not necessarily committing a quasi-delict if he is not negligent and neither
is the person vicariously responsible because his negligence is not required to be the
proximate cause. But, the status quo may be acceptable to many because it allows for
recovery despite conceptual inconsistency.
Liability under Art. 2176 may arise either from fault or negligence.
In other words, liability may be incurred by an act or through an
omission. Fault requires the execution of a positive act
which causes damage to another, while negligence consists in the
omission to do acts which result also in damage to another. The act
or omission must be without intent to cause damage, because if there is
intent to cause damage, the act or omission becomes a crime and civil
liability for such act or omission will be governed by the Revised Penal
Code in accordance with the provisions of Art. 1161 of the Civil Code.23
The fault referred to in Art. 2176 of the New Civil Code is fault
substantive and independent which in itself is a source of obligations.
This kind of fault is also known as culpa extracontractual or culpa
aquiliana.
Caguioa adds:
Only juridical fault but not moral fault gives rise to liability for damages.
Lack of charity or altruism, constituting moral fault, does not constitute
a quasi-delict. Thus, a person who folds his arms while another is in
danger of death, is guilty only of moral negligence but not of juridical
negligence and cannot be held liable for damages.28
23 Jarencio, supra note 13, at 18.
24 Child Learning Center v. Tagario, G.R. No. 150920, November 25, 2005.
25 Id., citing Alicia Gonzales-Decano, Notes on Torts and Damages 18-19 (Central Law Book Publishing Co.
Inc., 2004).
26 Jarencio, supra note 13, at 17.
27 Id., at 17-18.
28 Caguioa, supra note 12, at 393, citing 5 Tolentino 506.
The term fault or negligence also appears in Article 1173, which states in part:
Therefore, it may be said that apart from the difference identified by Jarencio and
apparently adopted in the Child Learning Center case, there is no substantial distinction
between fault or negligence and the two terms can be subsumed under the concept of
negligence.
C. Elements of a Quasi-Delict
Tolentino writes:
In order to give rise to an action under this article, the following requisites
must concur: (1) That there exists a damage or injury, which must be
proved by the person claiming recovery; (2) That there exists a wrongful
act or omission imputable to the defendant by reason of his fault or
negligence; and (3) That there be a direct relation of cause and effect
between the damage or injury and the fault or negligence (12 Manresa
613-614).30
In Donaldson v. Smith,31 the Court explained that Article 1902 of the Civil Code
established the general principle of liability for damage caused by fault or negligence
and there can be no fault or negligence where... there was no obligation resting upon the
person causing the damage to exercise diligence as respects the injured person.
In Francisco v. Onrubia,32 the Court explained that it is necessary that the negligence
or fault in question be not punished by law. It explained:
In Dioquino v. Araneta,33 the Court discussed that Article 1902 was not applicable
against the defendant because the negligence was not the proximate cause of the injury.
In Receiver v. Ybanez,34 the Court explained that the word damage in Article
1902 includes any and all damages that a human being may suffer in any and all the
manifestations of his life: physical or material, moral or psychological, mental or spiritual,
financial, economic, social, political, and religious.
The Court has ruled in a number of cases35 that based on Article 2176, there are
three elements36 necessary to establish a quasi-delict case:
Damages as the first element is obviously inaccurate because the term refers to
the recompense or compensation awarded for the damage suffered.38 In Bulao v. CA39
and Dy Teban v. Jose Ching,40 the Court used damage but this is also not applicable in
all situations because there could be damage without injury (damnum absque injuria). Thus,
the fact that there is damage along with the two other elements may not be sufficient to
establish a quasi-delict if the case involves damnum absque injuria. As the Court explained
in Custodio v. CA:41
In order that a plaintiff may maintain an action for the injuries of which
he complains, he must establish that such injuries resulted from a breach
33 Dioquino v. Araneta, G.R. No. L-48176, July 21, 1944.
34 Receiver v. Ybanez, G.R. No. L-22183, August 30, 1968.
35 Dela Llana v. Biong, G.R. No. 182356, December 4, 2013; Huang v. Philippine Hoteliers, G.R. No. 180440,
December 5, 2012; Gregorio v. CA G.R. No. 179799, September 11, 2009; Corinthian Gardens v. Tanjangco,
G.R. No. 160795, June 27, 2008; BPI v. Lifetime, G.R. No. 176434, June 25, 2008; Dy Teban v. Jose Ching,
G.R. No. 161803, February 4, 2008; PNR v. Brunty, G.R. No. 169891, November 2, 2006; Child Learning
Center v. Tagario, G.R. No. 150920, November 25, 2005; PNCC v. CA, G.R. No. 159270, August 22, 2005;
Smith Bell v. Borja, G.R. No. 143008, June 10, 2002; PBC v. CA, G.R. No. 97626, March 14, 1997; MMTC v.
CA, G.R. No. 104408, June 21, 1993; Bulao v. CA, G.R. No. 101983, February 1, 1993; Andamo v. IAC, G.R.
No. 74761, November 6, 1990; Vergara v. CA, G.R. No. 77679, September 30, 1987.
36 Vergara v. CA, G.R. No. 77679, September 30, 1987; PNR v. Brunty, G.R. No. 169891, November 2, 2006. This
was referred to as requisites.
37 Some cases would add or by some person for whose acts the defendant must respond. This would be based,
however, on Article 2180 in connection with Article 2176. So, if this would be added, it would be more accurate
to say that these are the elements to establish a quasi-delict under Articles 2176 and 2180. This is what the Court
did in MMTC v. CA (G.R. No. 104408, June 21, 1993) and it even included Article 2177 for good measure.
38 Custodio v. CA, G.R. No. 116100, February 9, 1996.
39 Bulao v. CA, G.R. No. 101983, February 1, 1993.
40 Dy Teban v. Jose Ching, G.R. No. 161803, February 4, 2008.
41 Custodio v. CA, G.R. No. 116100, February 9, 1996
Many accidents occur and many injuries are inflicted by acts or omissions
which cause damage or loss to another but which violate no legal duty
to such other person, and consequently create no cause of action in
his favor. In such cases, the consequences must be borne by the injured
person alone. The law affords no remedy for damages resulting
from an act which does not amount to a legal injury or wrong.
(Emphasis supplied, citations omitted.)
In some cases, the Court would add an additional element to the three. In Gregorio v.
CA,42 the Court added a fourth element: that there must be no preexisting contractual
relation between the parties. As basis, the Court cited the case of Corinthian Gardens
v. Tanjangco43 which was written by the same ponente. Curiously, however, the Court in
Corinthian Gardens only indicated the three usual elements.
In a few cases,44 the Court listed the requisites of quasi-delict in this manner:
The text of the article suggests that a quasi-delict can only exist if there is no pre-
existing contract between the parties. But the use of the phrase is called creates
ambiguity.
The first sentence of Article 2176 creates an obligation on the part of a person who
by negligent act or omission causes damage to another. The second sentence says that
such negligent act or omission is called a quasi-delict if there is no pre-existing contract
between the parties.
How does the requirement in the second sentence, that there is no contract between
the parties, affect the obligation to pay for the damage caused by negligent acts or
omissions found in the first sentence?
Does the existence of a contract between the parties negate the existence of the
obligation created under the first sentence or does the obligation subsist but it simply
cannot be called a quasi-delict? What is the purpose of the second sentence in Article
2176?
a. Nomenclature
The fact that the no contractual relation requirement was separated from the
statement establishing the obligation, in addition to the use of the phrase is called
(as opposed to simply using is), suggests that such requirement does not affect the
obligation. If this were the case, the second sentence may be interpreted as simply a rule
on nomenclature. It gives a name to the negligent act or omission when there is no pre-
existing contract between the parties. This view also seems to be supported by the intent
of the Code Commission. In its Report, the Code Commission stated:
Thus, the second sentence may simply be a result of the question of nomenclature
which the Commission grappled with. Their intention may have been simply to establish
the name as to what was being described under Article 2176 and it was just unfortunate
that the text lent itself to an interpretation that the mere existence of a contract prevents
a quasi-delict from coming into existence.
Thus, under this interpretation, the obligation created under the first paragraph
of Article 2176 subsists even though a contract between the parties exists. The second
sentence only gives a name to that obligation where no contract at all exists. However, this
interpretation, while supported by textual considerations, creates a problem.
What is the name of the negligent act or omission causing damage to another when
there is a pre-existing contract? The obligation subsists but it cannot be called a quasi-
delict because that name only applies if there is no pre-existing contract. Thus, the
interpretation may be creating a nameless tort.
On the other hand, it may be argued that it is not a nameless tort because the first
sentence of Article 2176 is substantially the same as Article 1902 of the old Civil Code. If
the latter is referred to as culpa aquiliana then the first sentence of Article 2176 is also culpa
aquiliana. Thus, it is not a nameless tort. The effect of this, however, is that Article 2176
defines two concepts. The first sentence defines culpa aquiliana while the second sentence
defines a quasi-delict. This implies that quasi-delict and culpa aquiliana are two different
concepts.
b. Negation
On the other hand, it may be argued that the text suggests that the second sentence
adds a further requirement to establish a quasi-delict. The second sentence is referring to
the fault or negligence mentioned in the first, so it cannot possibly describe something
different from it. In other words, the second sentence is describing what is being referred
to in the first sentence. Thus, both sentences are defining the same thing and should be
considered one whole idea. Therefore, under this interpretation, a quasi-delict cannot
exist if there is a pre-existing contract between the parties. A pre-existing contract between
the parties negates the existence of a quasi-delict.
This interpretation may also be supported by the intent of the Code Commission.
As quoted earlier, the term culpa-extra-contractual or its translation extra-contractual
fault was considered but eliminated because it did not exclude quasi-contractual or
penal obligations. But it is important to note that it was considered because these terms
conformed to the idea that Article 2176 is supposed to cover non-contractual fault. The
Code Commission report also stated that the word tort was rejected because it was
much broader than the Spanish-Philippine concept of obligations arising from non-
contractual negligence. Hence, the intent of the framers was to limit Article 2176 to
non-contractual negligence.
3. Untangling Jurisprudence
Considering that the text of the article and intent of the framers can support two
contrasting interpretations, resort to jurisprudence becomes a necessity. Unfortunately,
instead of providing clarity, jurisprudence further clouds the issue.
In Fores v. Miranda,45 the Court ruled that an action for breach of contract cannot
simultaneously embody an action on tort.46 This statement is not the same as stating that
a quasi-delict cannot exist if there is a contract. However, it can be implied. Nevertheless,
the authoritativeness of this implied rule is doubtful, considering the reasoning behind
it.47
The first statement says that because there is a contract between the parties, the rules
on quasi-delict do not really govern. The rules on quasi-delict can refer to a number
of provisions.49 Is the Court saying that if there is a contractual relation, there can be no
quasi-delict or only that the rules of quasi-delict, whatever these may be, do not apply?
It is also not clear what the Court means by these rules not really governing. Do these
rules absolutely not apply or only generally not apply? If it were only stating general rule,
the Court did not specify any exceptions to this general rule.
In its second statement, the Court points out that based on Article 2176, obligations
arising from quasi-delict50 arise only between parties not otherwise bound by contract.
This statement is a categorical rejection of the possibility of a quasi-delict if there is
a contract between the parties. This may be taken as a clarification of what the first
statement meant. But unfortunately, the Court did not stop there.
In its third statement, the Court characterized the rule in the second statement as a
mere impression which has not prevented the Court from determining the existence
45 Fores v. Miranda, G.R. No. L-12163, March 4, 1959.
46 In this case, tort referred to Article 2176.
47 See Casis, supra note 4, at 78-80.
48 PSBA v. CA, G.R. No. 84698, February 4, 1992.
49 It may refer to Articles 2176 and 2180 which define types of quasi-delicts. It may also refer to the rules on
damages applicable to quasi-delicts as well as provisions referring to possible defenses to quasi-delictual actions
such as fortuitous event under Article 1174.
50 Here, the Court equates the concept of quasi-delict with tort.
of a tort even when there obtains a contract. It is not clear as to whether this observation
negates the rule mentioned in the second statement. On its face, the third statement casts
doubt on the authoritativeness of that rule by citing contrary rulings of the Court as basis.
But the problem is, can the Courts rulings overturn a rule stated in the Civil Code?51
Furthermore, this third statement refers to tort and not to quasi-delict. Then again, the
Court in the second statement equated tort with quasi-delict or at least used the terms
interchangeably.
Finally, after this statement, the Court explained the ruling in Air France v. Carrascoso52
and implied that this was the basis of the third statement. It said:
In Air France vs. Carroscoso, the private respondent was awarded damages
for his unwarranted expulsion from a first-class seat aboard the petitioner
airline. It is noted, however, that the Court referred to the petitioner-
airlines liability as one arising from tort, not one arising from a contract
of carriage. In effect, Air France is authority for the view that liability
from tort may exist even if there is a contract, for the act
that breaks the contract may be also a tort. (Citations omitted,
emphasis supplied.)
Unfortunately, despite its popularity, Air France does not solve the problem at all. As
we have explained in detail elsewhere,53 the factual and legal considerations in that case
disqualify it from serving as basis for a rule which states that a quasi-delict cannot exist if
there is a pre-existing contractual relationship.
Thus, based on this statement, the law on quasi-delict would apply as a general rule
in cases where there is no pre-existing contractual relationship between the parties. By
stating this rule as a general rule, the Court is implying that there are exceptions. However
the Court did not expound on this.
In this case, the Court appeared to have used this general rule as justification for its
application of the rules on culpa contractual and not culpa aquiliana. The Court agreed with
the trial court that what was involved in this case was a contract between a depositor and
its bank, thereby rejecting the application of the rules on culpa aquiliana relied upon by the
appellate court. Curiously however, the Court went on to discuss at length the proximate
cause of the injury. If this were a case for culpa contractual and not culpa aquliana, there was
no reason to determine the proximate cause, which is part of the law on quasi-delicts.
51 The answer to this question is no. But the Court has admitted making rulings which seem to conflict with
Civil Code provisions. See Republic v. Tuvera, G.R. No. 148246, February 16, 2007.
52 Air France v. Carrascoso, G.R. No. L-21438, September 28, 1966.
53 Casis, supra note 4, at 81-86.
54 Consolidated Bank v. CA, G.R. No. 138569, September 11, 2003.
In this sense, the Court may not have applied its own rule.55
So in this case, the Court considers the non-existence of a contract between the
parties to a case for a quasi-delict as the general rule. The exception, according to the
Court, is when it is where tort is that which breaches the contract. The rule can be
traced ultimately to Air France which does not provide adequate basis.
On the other hand, there are cases wherein the Court appears to rule that a pre-
existing contract and a quasi-delict are not mutually exclusive.
Hence, had there been actual negligence on the part of the Manila
Memorial Park Cemetery, Inc., it would be held liable not for a quasi-
delict or culpa aquiliana, but for culpa contractual as provided by Article 1170
of the Civil Code.
This statement seems to say that because there was a contract between the parties,
negligence, if proven, would be considered culpa contractual and not culpa aquiliana. The
Court did not state this in the context of explaining the second sentence of Article 2176.
But if it were, the Court would be explaining that such sentence is not stating that a pre-
existing contract precludes the existence of a quasi-delict but only creates a rule on priority.
Therefore, if there is a breach of contract committed via negligence, then Article 2176
would require that it be governed by the rules on culpa contractual and not culpa aquiliana.
55 This raises the question of whether the authoritativeness of a rule stated by the Court loses strength when the
Court itself decides in a manner contrary to it.
56 American Express v. Cordero, G.R. No. 138550, October 14, 2005.
57 Syquia v. CA, G.R. No. 98695. January 27, 1993.
In this case, the Court did not find any breach of contract. So it went on to determine
if there was negligence that could become the basis for an action on quasi-delict.
The said statement in Syquia is similar to what the Court also said in PSBA. It said:
The Courts statement that [t]he negligence of the school cannot exist independently
on the contract seems to imply that the negligence is only relevant if it exists independent
of a contract.
This is similar with what the Court said in Far East Bank v. CA:58
The Court has not in the process overlooked another rule that a quasi-
delict can be the cause for breaching a contract that might
thereby permit the application of applicable principles on
tort even where there is a pre-existing contract between the
plaintiff and the defendant. This doctrine, unfortunately, cannot
improve private respondents case for it can aptly govern only
where the act or omission complained of would constitute an
actionable tort independently of the contract. The test (whether
a quasi-delict can be deemed to underlie the breach of a contract) can
be stated thusly: Where, without a pre-existing contract between
two parties, an act or omission can nonetheless amount to an
actionable tort by itself, the fact that the parties are contractually
bound is no bar to the application of quasi-delict provisions to the case.
Here, private respondents damage claim is predicated solely on their
contractual relationship; without such agreement, the act or omission
complained of cannot by itself be held to stand as a separate cause of
action or as an independent actionable tort. (Citations omitted, emphasis
supplied.)
In this case, the Court says that a quasi-delict can be the fault or negligence that
breaches the contract. This means that a quasi-delict can exist despite the existence of a
pre-existing contractual relationship. Unfortunately, the cases cited by the Court to justify
58 Far East Bank v. CA, G.R. No. 108164, February 23, 1995
Assuming that the stated rule is correct, the Court nevertheless provides for a
requirement for this to happen. Essentially, what the Court is saying is this:
There have also been several other cases wherein the Court ruled that there was a
quasi-delict despite the existence of a contract between the parties.
In BLTB v. IAC,60 which involved a collision between two buses, the passengers of one
bus sued the owners of both buses they were riding on for damages they sustained. BLTB,
the owner of the bus the injured passengers were riding on, argued that the action should
have been based on culpa contractual. The Court responded by saying that a reading of the
appellate courts decision showed that it anchored the bus companys liability both in culpa
contractual and culpa aquiliana, implying that there is no problem for these two sources of
obligations to co-exist.
In BPI v. Lifetime,61 the depositor sued the bank for quasi-delict. Despite the existence
of a contract between the bank and its depositor, the Court found nothing wrong with the
action for damages based on quasi-delict.
In Makati Shangri-la v. Harper62 the hotel owner was held liable for damages under
Article 2176 when a stranger killed a guest inside a hotel room. The Court adopted
the ruling of the appellate court finding that the hotel owner was negligent in providing
security measures, implying the acceptance of a quasi-delict despite the existence of a
contract between the hotel and its guest.
Perhaps there is a way to reconcile the text of Article 2176 that preserves the vision of
the framers and is consistent with the intended interpretation of jurisprudence.
As discussed, the Code Commission deliberately chose to use the word quasi-delict
to convey the exact coverage of the source of obligation defined under Article 2176.
The second sentence may be seen as the Commissions attempt to explicitly express this
intention to limit the coverage of the action based on Article 2176 to exclude actions
similar to Anglo-American tort and/or intentional criminal acts.
But what of the phrase if there is no pre-existing contractual relation between the
parties? To preserve the vision of the framers, the word if should be understood as
59 See Casis, supra note 4, at 89-90.
60 BLTB v. IAC, G.R. Nos. 74387-90, November 14, 1988.
61 BPI v. Lifetime, G.R. No. 176434, June 25, 2008.
62 Makati Shangri-la v. Harper, G.R. No. 189998, August 29, 2012.
where such that the phrase is not interpreted as a condition but a description. In essence,
the second sentence merely reiterates that the action based on quasi-delict is not based on
contractual negligence. This view is similar to Carpios view when he says:
The second sentence of Article 2176 did not appear in Article 1902 of
the old Code, the provision governed quasi-delicts under the old law.
Under the old Code, it was repeatedly held that the existence of a
contract between the parties did not bar the commission of a tort by the
one against the other and the consequent recovery of damages therefor.
And notwithstanding the addition of the second sentence in
Article 2176 of the present Code, the Supreme Court has not
changed its view. It has been said that the second sentence
was added in the present Code for better clarity without
changing the essence of the precept contained in Article 1902
of the old law. If that was the purpose, then not only did the
second sentence fail miserably in its purpose, it also confused
the concept of quasi-delict.63 (Emphasis supplied.)
Thus, it may be said that the second sentence of Article 2176 may be taken as a case
where the literal meaning of the text does not reflect the intent of the framers and must
therefore be interpreted correctly by the courts. Carpio adds:
We are disposed to think that the second sentence did not add any
requirement to those already recognized under the old law for the
existence of a quasi-delict. The second sentence can best be explained
as an attempt to distinguish an action based on quasi-delict
from one founded on breach of contract, particularly in cases
where a quasi-delict is coincident with a breach of contract.
An action under Article 2176 may lie although the relation between the
parties which gives rise to the quasi-delict emanates from a contract, as
when the defendant through negligence violates a legal duty which arises
when the contract is made but which legal duty is not identical with the
contract obligation.64
Therefore, the mere existence of a contract does not preclude the existence of a quasi-
delict. If there was negligence in breaching the contract, it would be considered culpa
contractual. But such negligence may also be considered culpa aquiliana if the defendants
duty to be diligent subsists even without a contract.
Despite the clear intent of the Code Commission to reject tort at least as far as
Article 2176 is concerned, it has not stopped the Court from citing Article 2176 as basis
for actions which appear to be based on tort.
A. Medical Negligence
Putting all of these statements together, the implication is that the basis of the four
elements of medical negligence cases is Article 2176.
In Lucas v. Tuao,66 which was also characterized by the Court as a medical negligence
case, the Court was more explicit:
For lack of a specific law geared towards the type of negligence committed
by members of the medical profession, such claim for damages is almost
always anchored on the alleged violation of Article 2176 of the Civil
Code.
The Cayao-Lasam case cites as its basis Reyes v. Sisters of Mercy67 which in turn cites
Garcia-Rueda v. Pascasio68 as basis for the four elements. The Lucas case cites Garcia-Rueda
directly. Therefore, the root of both cases that identify Article 2176 as the basis of the four
elements, is Garcia-Rueda.
In its simplest terms, the type of lawsuit which has been called medical malpractice
or, more appropriately, medical negligence, is that type of claim which a victim has
available to him or her to redress a wrong committed by a medical professional which
has caused bodily harm.
In order to successfully pursue such a claim, a patient must prove that a health care
provider, in most cases a physician, either failed to do something which a reasonably
prudent health care provider would have done, or that he or she did something that a
reasonably prudent provider would not have done; and that failure or action caused
injury to the patient.
It must be noted that the Court did not provide basis when it listed the four elements.
It can only be surmised that it used the two quoted paragraphs as basis. It must be noted,
however, that the quoted paragraphs do not justify the four elements. It must also be
noted that the case itself was not decided on the basis of these elements. The case was a
civil action under Rule 65 of the Rules of Court against the Ombudsman for its failure
to uphold the public respondents for violation of Republic Act No. 3019. The original
complaint was one for Homicide for Reckless Imprudence. These facts, coupled with the
nature of the source of these two paragraphs,69 do not make the case a proper foundation
for what seems to be a new cause of a civil action for medical negligence cases.
But since Garcia-Rueda was decided in 1997, there have been a number of medical
negligence cases,70 apart from Cayao-Lasam and Lucas, which list these same four elements.
In most of these cases, the Court does not even identify any statutory basis for the action on
damages as if the mere listing of these four elements were enough. However, considering
that the law of damages applicable to quasi-delicts71 or the doctrine of proximate cause72
is applied in some of these cases, it can be seen that the Court considers these actions at
least analogous to quasi-delicts.
It seems that despite its weak73 foundation, these elements of medical negligence have
not just been accepted as part of Philippine tort law but have even entered the realm of
administrative and criminal law. In Solidum v. People,74 the Court said:
Noticeably, the elements have changed somewhat but are still the same in essence.
Instead of proximate causation, what is required is reasonably close and causal
connection. Instead of injury, the ponente used damages.75
What was the basis of the Court for this paragraph? Footnote 36 of the decision
states:
It is intriguing how the Court can consider this secondary source from a foreign
jurisdiction as basis for such an important rule which can affect litigation in civil, criminal
and administrative cases.
The Solidum case involved a criminal action for reckless imprudence resulting in serious
physical injuries. The physician was acquitted due to the absence of expert testimony but
the Court said:
We have to clarify that the acquittal of Dr. Solidum would not immediately
exempt him from civil liability. But we cannot now find and declare
him civilly liable because the circumstances that have been established
here do not present the factual and legal bases for validly doing so. His
acquittal did not derive only from reasonable doubt. There was really
no firm and competent showing how the injury to Gerard had been
caused. That meant that the manner of administration of the anesthesia
by Dr. Solidum was not necessarily the cause of the hypoxia that caused
the bradycardia experienced by Gerard. Consequently, to adjudge Dr.
Solidum civilly liable would be to speculate on the cause of the hypoxia.
We are not allowed to do so, for civil liability must not rest on speculation
73 Some may say that there is a non-existent foundation because there is no statutory basis at all.
74 Solidum v. People, G.R. No. 192123, March 10, 2014.
75 For reasons explained earlier, the former term is more accurate.
If the reason for the acquittal in this criminal case is the absence of expert testimony,
then does it not also result in absolution from civil liability? If the elements are the same as
the Court claims, the only difference is the quantum of proof required in criminal actions
versus civil actions. In this case, is a preponderance of evidence possible considering that
no expert testimony was given? Considering that what was involved in this case was a
complete absence of expert testimony then negligence could not be proven regardless of
the quantum of proof required.
B. Illegal Act
The four elements used in medical negligence cases have also been used in cases
which can be loosely characterized as torts for violation of law or torts for illegal acts.
This case involved a civil action for damages against the owner and employee of a
clinic for issuing an incorrect test result showing that she tested positive for Hepatitis.
The test results caused the plaintiff to lose her job and her father to have a heart attack.
Thus, this case is not a medical negligence case because the negligence claimed was in
the conduct of the business of the clinic. In fact, in ruling against the owner of the
clinic, the Court relied upon rules and regulations that governed the operations of clinical
laboratories. It said:
After quoting the relevant laws and regulations, the Court held that the owner did
not comply with the standards set and proceeded to explain how the four elements listed
76 Garcia v. Salvador, G.R. No. 168512, March 20, 2007.
earlier were established. The Court then quoted Article 20 of the Civil Code, which
states:
This article provides for an award of damages for illegal acts causing injury to a
person. Article 2176 is noticeably absent in the entire case. Thus, the only statutory basis
to which the four elements can be founded on would be Article 20.
At the onset, the Court notes that the present case is one for damages based
on torts, the employer-employee relationship being merely incidental. To
successfully prosecute an action anchored on torts, three elements must
be present, viz.: (1) duty (2) breach (3) injury and proximate causation.
The assailed decision of the appellate court held that it was the duty
of petitioners to provide adequate medical assistance to the employees
under Art. 161 of the Labor Code, failing which a breach is committed.
The Court identifies the four elements78 in connection with the violation of a statute.
This case therefore appears to be similar to Garcia except that Article 20 is not mentioned
at all. Article 161 itself does not provide for an award of damages for its violation so there
had to be another legal basis for an award of damages. Nevertheless, the Court in this
case ruled that the elements were not established.
Four essential elements must concur in a suit for damages, namely: (1)
duty; (2) breach; (3) injury; and (4) proximate causation. Even in medical
negligence cases, all elements must co-exist in order to find the physician
negligent and thus, liable for damages.
The language of the Court suggests that the four elements apply to any and all suits
for damages, citing Lucas v. Tuao as basis. The Garrido case was described by the Court
as one for torts and damages. It involved a case filed by the wife of man who allegedly
suffered failing health, comatose and eventual death as a result of the negligence of a
hospital and its doctor. However, the complaint was eventually dismissed on procedural
grounds. Hence, the subsequent discussion on the elements would be obiter dictum.
77 Ocean Builders v. Sps. Cubacub, G.R. No. 150898, April 13, 2011.
78 Which for some reason the Court counts as three.
79 G.R. No. 183967. December 11, 2013.
IV. CONCLUSION
Ironically, the simplest things baffle us the most. Definitions and elements of legal
concepts are the building blocks of the more complex legal doctrines. But sometimes
these building blocks are not clearly defined. Sometimes the courts assume too much, not
realizing that these assumptions have serious legal implications.
Perhaps in the haste to move on to complexity, little thought is given to the basic
issues. But when the foundation of a legal regime is uncertain or unsound, the whole
regime is at risk.
The uncertainty can be blamed on the language employed in the text of the Civil
Code and in the discussion of the Court. The solution therefore is greater care in the
words and phrases employed to define our legal rules whether in the form of a code or
jurisprudence. Those who construct our legal rules can ill afford to be negligent.
In this lecture, we tried to figure out a way to reconcile the conflicts in the law and
jurisprudence in torts. But there is a difference between conflicting decisions and simply
erroneous decisions. The discerning student of law should learn to tell the difference.
INTRODUCTION
The 1987 Constitution of the Philippines mandates the State to protect the health of
the people1 and to adopt a comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services available to all the
people at affordable cost.2 Furthermore, the Universal Declaration of Human Rights3
states, to wit:
Article 25.
* Managing Partner, JAMON TORREJA & ASSOC. LAW OFFICES; Assistant Dean, De La Salle University
(DLSU) College of Law; Coach for the Debating Team of the De La Salle College of Law, in the recent Moot
Court Competition on International Humanitarian Law held at the University of the Philippines, College of
Law, Diliman, Quezon City; Member, National Committee on Bio-Safety of the Philippines (NCBP), Depart-
ment of Science and Technology (DOST) representing the Consumer Sector; Assistant Vice-President, Office
of the Chairman of the Board, United Laboratories, Inc. (UNILAB) (April 1996 June 2001); Assistant Vice-
President, Legal and Corporate Affairs, Chemphil Group of Companies (October 1989 April 15, 1996); Di-
rector, Legal and Intelligence Services, Bureau of Customs (March to August 1987); Officer-in-Charge (OIC),
Office of the Executive Director (March 1987) and Chief Legal Officer, Legal and Policy Research Division
(LPRD) (January 1984), Environment Management Bureau, DENR; Corporate Secretary, Institute of Strategic
and Development Studies (ISDS), a private research and think-tank Institute, based in UP; He also served
as Corporate Legal Counsel, Office of the President and Chief Executive Officer (Pres/CEO) of the Philip-
pine Health Insurance Corp. (PhilHealth); Corporate Secretary, Board of Trustees of the Specialty Hospitals
(Philippine Heart Center, National Kidney & Transplant Institute, Lung Center of the Philippines, Philippine
Childrens and Medical Center and East Avenue Medical Center); Legal Consultant, Veterans Medical and
Memorial Center, and Legal Counsel of the Nutritionists Dietitians Association of the Philippines (NDAP),
and the Office of the Secretary of Health, Department of Health, for almost a decade.
1 Sec. 15, Art. I1 Declaration of Principles and State Policies, 1987 Constitution: The State shall protect and
promote the right to health of the people and instill health consciousness among them.
2 Sec. 1 Art. XI11 Social Justice and Human Rights, ibid: The State shall adopt an integrated and comprehensive
approach to health development which shall endeavor to make essential goods, health and other
social services available to all the people at affordable cost. There shall be priority for the needs of
the underprivileged sick, elderly, disabled, women and children. The state shall endeavor to provide free medical
care to paupers.
3 Adopted and proclaimed by General Assembly resolution 217 A (III) of 10 December 1948
Based on the above legal infrastructure, it is crystal clear that right to health is a
paramount right of a human being, of every Filipino, comparable if not more important
than the other human rights. The State is given the duty of assuring its people their right
to health. Our very own Constitution recognizes this duty and imposes upon the State
the duty of providing affordable essential goods for health and development. Hence, the
State cannot just abdicate on this right by leaving the market forces to prevail in the
MNC dominated pharmaceutical industry in the country. Pharmaceutical companies
are, by their very nature profit driven. The same is especially true for multi national
pharmaceutical companies. Said industry, is by nature already tilted in favor of the big
bad pharmaceutical MNCs that the poor Filipino masses need the intervention of the
State to protect their interest their basic right to health !
This Paper discusses and supports the Affordable Medicine Bill (AMB) as a timely
and urgent remedy to the high costs of medicines in the Philippines. If successful, this
Bill also has the added advantage of boosting local pharmaceutical industries, as well
as developing traditional Filipino alternative medicines. Ultimately, it is the common
Filipino who will benefit from the reduced prices of essential but quality medicines.
Grinding poverty has been one of the most serious problems confronting our society
today. A host of other problems flow from this. According to the World Bank, the countrys
poor, or those living with less than $2 a day, stands at 35.1 million in 2006 or 41.9%
of the total population. This percentage may have been lower than the previous years
percentage of 43.5%,6 but there is one inescapable truth in these numbers. Almost 50%
of Filipinos are poor. At the threshold level of P100 per day, a family of 4 would barely
have enough money for food, much less medicine during times of sickness. Coupled with
this situation is the fact that the countrys medicine costs are one of the highest in the
region, if not in the world. This stark reality makes the present study relevant, significant
and urgent.
4 Article 12
5 http://www.who.int/hhr/Right_to_health.pdf
6 http://www.manilastandardtoday.com/?page=felMaragay_april10_2006
Prices of basic drugs sold by these companies put a heavy burden on populations in the
developing world thus undermining their basic right to health. The enormous resources
of MNCs have influence not only doctors who continue to prescribe their products, but
also the host State itself which miserably fails to effectively regulate operation in the free
market system of the said MNCs. In the end, it is the ordinary people who almost always
bear the brunt of the astronomical cost of essential medicines.
It is argued in this Paper that the Affordable Medicines Bill (AMB) can substantially
provide a good alternative regulatory mechanism that can effectively check on the
excessive MNC predominance in the pharmaceutical industry in the Philippines. The Bill
if signed into law has the potential of delivering quality and cheap medicines to a greater
majority of the Filipino people.
In the Philippines, around fifty percent (50%) of the population lives below the
poverty line. As such they cannot afford basic necessities such as housing, food and health
care. Coupled with minimal government intervention, the problem is also exacerbated
by opportunistic companies which put profit at a pedestal. The cost of medicines in the
Philippines has become so prohibitive that every time a family member gets sick, the
whole family sinks in a quagmire of debts.
The Explanatory Note of House Bill 5718, one of the various bills addressing the
issue of affordability of medicines, states that in 2000, the Philippines ranked 126th out
of 191 countries in terms of health level. In fact, around forty percent (40%) of Filipinos
never get to be treated or been ever seen by a doctor in their entire lives. Indeed, with
the prohibitive cost of drugs in the country only thirty percent (30%) of the population
has the capacity to purchase essential medicines, essential medicines that could spell the
difference between life and death to Filipinos.
The Philippines is one of the few countries in the world where the cost of medicines
are really high. And this is true for all kinds of medicines, even those medicines for
common ailments. For example, the antibiotic Bactrim, generically named Cotrimoxazole
and produced by Roche, is priced locally at P 14.80 per 400/80 mg capsule. The same
drug, manufactured by the same manufacturer, is sold in India at only P 0.75. In Pakistan,
Roche sells the same medicine at P 1.09. This means that Bactrim is being sold in the
Philippines at 1,300% to 1,900% higher than the ones sold in India or Pakistan.8 What
could possibly be the cause of these astronomical prices? Surely taxes and other costs of
operation in the Philippines are not so high as to justify such differences in costs.
Perhaps the following statistics sum up the current state of the Philippine
pharmaceutical industry. Prices of medicines in the country are higher by forty to seventy
per cent (40 to 70 %) than in the neighboring countries. The Philippines ranks second to
Japan as the country with the highest prices of medicines in Asia. Our countrys medicines
are 18 times more expensive than Indias or Canadas.9 As of August 2006, the countrys
top 10 players in the local pharmaceutical industry posted a 12-month sales of P93
billion. This amounts to a 9.4% increase in value, despite the fact that the volume of sales
increased only by three per cent. This happens despite the fact that the patents of 80-90
percent of essential drugs in the Philippines have already expired.10 The latter statistic,
perhaps more than anything else, shows that the countrys pharmaceutical industry is
price driven, rather than volume driven.
The following factors are also cited for having contributed to the high costs of
medicines in the country:
B.)
Existing policy framework that has allowed for MNC
dominance of the Philippine pharmaceutical industry and the
alternative advocacy on affordable medicines
Indeed, one of reasons, if not the most important reason, pointed out for the high
costs of medicines in the country is the institutionalized protection given to giant
foreign pharmaceutical companies by the present Republic Act 8293, otherwise known
as Intellectual Property Code (IPC).
Under the present IPC, the protection given to patent holders is twenty (20) years.
This period is often extended by patent holders (usually foreign owned multinational
corporations), by filing new patents on the individual ingredients of the drug which might
not have therapeutic effects at all ever greening principle. An example of this is the
case of Pfizers Norvasc. The patent of Norvasc or Amlodipine Besylate, for its active
ingredient Amlodipine, has long been expired. Currently, Norvascs patent is based on
the besylate salt, an ingredient which has no therapeutic effect or curative capacities. 13
In addition to this scenario is the fact that the patent of the patented drug denies
any other manufacturer from testing and developing a new drug based on the patented
drug as long as the patent is in effect. It is only after the patent expires that another
manufacturer can study the patented drug and market any possible product he may have
developed. This period often takes 2 to 3 years after the patent expires. 14
SECTION 71. Rights Conferred by Patent. - 71.1. A patent shall confer on its owner
the following exclusive rights:
11 Sponsorship Speech of Sen. Loren Legarda for SB 1530, citing Lim 1997
12 Explanatory Note for House Bill No. 5718
13 3CPNet, Pfizer Denying Filipinos of Affordable Hypertensive Drug, dated August 17, 2007
14 Co-sponsorship speech of Sen. Cayetano on SB 2263
Under the above provision, parallel importation is prohibited because the patent
confers upon the holder the exclusive right to offer for sale, sell or import the product.
Under this provision, a patent holder can offer the same patented drug for sale at P100
in one country and sell the same drug at P1 in another country. The country where the
drug is being sold at 100% mark up has no remedy because the right to sell and import
the product is exclusively lodged in the patent holder. This is happening in our country.
The protection given under the law has prevented newcomers from penetrating the
pharmaceutical industry. The multi-national drug companies have firmly entrenched its
grip on the industry through patents of the essential drugs and the legal framework that
leans heavily on protecting the rights of the patent holder.
Perhaps realizing that the demand for affordable medicines has reached a critical
point, several bills in both houses of Congress were filed to address this need. Some of
these bills, the more important and significant ones, were HB 400 which promotes the
institution of a system that allows for parallel importation of medicines in the country;15
HB 5718 which sought to amend the Intellectual Property Code to allow importation
and early development of patented medicines and to lower prices and increase access
to and supply of quality drugs;16 HB 305 which sought to lower the prices of medicine
by establishing a drug regulatory system;17 and HB 498 which sought to lower the
prices of medicines by amending the IP Code, specifically by lowering the term of drug
and pharmaceutical products from 20 to 10 years and by providing for a more liberal
compulsory licensing system.18 These House Bills were consolidated into House Bill No.
6035 by the Committee on Trade and Industry.19
Similarly, in the Senate, several Senate Bills were passed addressing the issue of
astronomical drug prices in the country. Specifically, the following bills were filed: SB 1530
which sought to put a cap on the maximum retail price on certain medicines;20 SB 755
which sought to lower the prices of medicines by amending the existing laws pertaining
to medicines such as the Pharmacy law, Generics Act, among other things;21 SB 90,22
SB 10123 and SB 141424 all of which sought to bring down the prices of medicines by
amending the IP Code. These Senate Bills were consolidated to become SB 2139 and
finally SB 2263.25
The Affordable Medicine Bill is significant in that it aims to level the playing field
among all pharmaceutical companies either established players or newcomers. Ultimately,
it is hoped that the public will benefit in this new playing field. Specifically the AMB
addresses the following:
The AMB seeks to curtail the practice of unscrupulous drug patent holders of filing
new patents for each demonstrable new use of a previously patented product. It has
been observed that through this practice, patent holders get to prolong the protection of
their product, way beyond the 20 years allowed in the law. And while their patent subsists,
they get to monopolize the market and dictate the prices of their drugs.
The AMB is also a significant piece of legislation in that it seeks to balance the needs
of the Filipinos with the international duties of the country. Under the TRIPS Agreement,
to which the Philippines is a signatory, countries have an obligation to grant patents on
pharmaceutical products and processes. However, these same countries are not obliged
to grant patents on new uses of existing substances. In fact, no provision in the TRIPS
Agreement or in the Intellectual Property Code of the Philippines requires the grant of
patents for such. 26 Hence, there is no legal impediment for the country to take a firm step
in refusing to grant successive patents to what is essentially the same invention.
2) Parallel Importation
Also, under the AMB, the country will benefit enormously from the law of supply
and demand. Under the present IP Code, the patent holder has the exclusive right of
importing and introducing the patented product into the Philippine market. On the
proposed amendment to the IP Code under the AMB, manufacturers or even the common
Filipinos, will be able to shop at any international drug markets in the world, and secure
best prices for the same product and introduce it in the country, without violating the
rights of the patent holders, and even without the drug companies consent. Thus, it is
hoped that competition will bring down the market price of the medicines.
Early working refers to the process by which generic companies are allowed to
experiment and test for regulatory approval of generic versions of a drug or medicine
before its patent expires. This will allow generic producers to get ready, so that they can
start the production and sale of a generic drug as soon as its patent expires.28
Without this exception, drug manufacturers can only test and later on register the
product after the expiry of the patent. This registration process alone often takes three (3)
years, thus effectively extending, in effect, the patent 3 years after its expiration. With the
Bolar amendment/exception generic drugs are introduced into the market the following
day the patent expires. Notably, this amendment is similarly provided in many other
jurisdictions like Canada, Argentina, Thailand, Malaysia and Indonesia.29
Let me just mention the case filed by Pfizer against the Bureau of Food and Drugs
(BFAD) and the Philippine International Trading Corporation (PITC) which operates the
Botica ng Bayan. PITC got samples of Norvasc, the most popular hypertension drug in
the country and which is manufactured by Pfizer, from India, and applied for registration
with BFAD in anticipation of the expiration of the patent sometime in July of this year.
Pfizer immediately filed a case for TRO and Injunction/Damages against BFAD and
PITC to stop them from processing the registration of Norvasc on the ground that it is an
infringement of its patent. Our Office filed an Intervention on behalf of the Fair Trade
Alliance, a multi-sectoral group composed of, among others, heart patients who are using
Norvasc as maintenance drug. The case has become moot and academic as the patent
has expired during the pendency of the case.
4) Government Use
Under this proposed amendment, the government can determine the circumstances
under which it can exercise its right to make use of the invention. Significantly, the TRIPS
Agreement does not limit the right of member states to make the determination of the
reasons, including public health, which may justify the government use of a patented
27 Ibid.,
28 Ibid.,
29 Ibid.,
invention. This amendment is also an answer to the defects of the government compulsory
licensing, specifically the long delay before the government can make use of its compulsory
licensing power, mainly because of the numerous petitions filed by the patent owner.
The proposed amendment also grants to the President of the Republic of the
Philippines the power to make a determination on the immediate use or other
exploitation by the government or its authorized representatives of drugs or medicines,
still under patent, to protect public health. It also retained the proposals to provide legal
cover for the implementing agencies and its officers, which shall implement the said
action. This legal cover is the grant of an exemption from temporary restraining orders
and preliminary injunctions of such government actions, except if issued by the Supreme
Court. This amendment sought to create a situation where the government will be able to
act promptly and decisively on matters that involve public interest.30
Sometime in 2004, PITC launched the Botika ng Bayan, a project aimed at providing
quality but affordable medicines to the Filipinos. The Botika ng Bayan sells imported
medicines from India and Pakistan and also local generic drugs. Most of the medicines
imported are for common illnesses that usually requires maintenance drugs like asthma,
hypertension and diabetes.33
30 Ibid.,
31 Co-sponsorship speech of Sen. Cayetano on SB 2263
32 PITC Vision Statement
33 www.pitc.com
A Botika ng Bayan outlet is a privately owned and operated drugstore, which carries
over-the-counter (OTC) and prescription drugs, as well as imported branded medicines.
A Botika ng Barangay, on the other hand, is owned either by a local government unit,
peoples organization or community-based organization. It sells only OTC and selected
prescription drugs. The drug stores in the Botika ng Bayan are privately owned but are
under the supervision of Department of Health and the Bureau of Food and Drugs. The
prices in these stores are usually 40-50% cheaper than their counterpart in the market.
For example, Nifedipine, an hypertensive drug, retails for P44 a tablet but is being sold in
the Botika for only P25-26.34
The Botika ng Bayan Program aims to take a chunk out of the billion dollar
pharmaceutical industry in the Philippines dominated by the MNCs. It had a 2-3 percent
share in 2005, and a 4 percent share in 2006.35 The numbers themselves might seem
insignificant, but considering that we are talking about a billion-dollar industry, even a
single point increase in the market share of the Botika ng Bayan is a significant increase
already. PITC hopes that by the end of the present year, the share of generics would
increase to as much as 20 to 25 percent. The ultimate goal is to achieve a 50-percent
market share for generics by 2010.
34 Amy Remo, Botika ng Bayan sells cheaper drugs, Inquirer March 19, 2007
35 Ibid.,
36 http://www.unilab.com.ph/about/ul_organization.asp
37 http://www.pascuallab.com/aboutus/aboutus_profile.html
AGAP was created and formally launched on May 23, 2006 with the aim of making
quality medicines in the Philippines more affordable and to ensure that public health
comes first. It is composed of labor organizations, government agencies, civil society
groups, health professionals and consumer groups. It had made the Affordable Medicine
Bill the heart of its campaign.
AGAP had only been convened the previous year, but it had already made its presence
felt in the non government organization (NGO) community. It pushed for the passage of
SB 2263 and HB 6035, by lobbying in the two houses of Congress and giving the issue
the necessary media mileage. Through concerted efforts of its members, it had been able
to secure a certification from the Office of the President making the bills on affordable
medicines urgent and a priority. AGAP was also involved in the deliberations of the
bills in their respective committees. One of the convenors of AGAP was also given the
privilege of expressing their support through a privilege speech during the hearings of the
bills. AGAP also wrote letters to the House of Representatives Committee on Trade and
Commerce where the bill is pending and to different legislators to express their support
and stress the urgency of the measure. AGAP was also given the chance to take part in
the technical working groups which consolidated the various bills filed in the senate into
the cohesive affordable medicine bill.
More importantly, AGAP also raised the awareness of the public on the campaign
and advocacy for affordable but quality medicines, taking it to separate houses of
Congress through pickets, newspaper ads and collaboration with other with other NGO
groups. AGAP likewise heightened public awareness on the advantages of using generic
medicines as opposed to their high priced branded counterpart.
Senate Bill 2263 (The Manuel Roxas Bill), in substitution of Senate Bill 2139 seeks to
amend Sections 26, 72 and 147 of the IP Code. (Note: The House Version has yet to be
passed.) The amended version (i.e. highlighted) states thus:
SEC. 26. Inventive Step. - 26.1. An invention involves an inventive step if, having
regard to prior art, it is not obvious to a person skilled in the art at the time of the filing
date or priority date of the application claiming the invention.
SEC. 72. Limitations of Patent Rights. - The owner of a patent has no right to
prevent third parties from performing, without his authorization, the acts referred to in
Section 71 hereof in the following circumstances:
72.1. Using a patented product which has been put on the market in the Philippines by
the owner of the product, or with his express consent, insofar as such use is performed
after that product has been so put on the said market: PROVIDED THAT, WITH
REGARD TO DRUGS OR MEDICINES, THE LIMITATION
ON PATENT RIGHTS TO THE USE, SALE, OFFERING FOR
SALE OR IMPORTATION OF THE PRODUCT SHALL APPLY
AFTER A DRUG OR MEDICINE HAS BEEN INTRODUCED
ANYWHERE IN THE WORLD BY THE PATENT OWNER, OR
BY ANY PARTY AUTHORIZED TO USE THE INVENTION.
72.2. Where the act is done privately and on a non-commercial scale or for a non-
commercial purpose: Provided, That it does not significantly prejudice the economic
interests of the owner of the patent;
72.3. Where the act consists of making or using exclusively for [the purpose
of experiments that relate to the subject matter of the patented invention;]
EXPERIMENTAL USE OF THE INVENTION FOR SCIENTIFIC
PURPOSES OR EDUCATIONAL PURPOSES AND SUCH OTHER
72.5. Where the act consists of the preparation for individual cases, in a pharmacy or
by a medical professional, of a medicine in accordance with a medical prescription or
acts concerning the medicine so prepared;
72.6. Where the invention is used in any ship, vessel, aircraft, or land vehicle of
any other country entering the territory of the Philippines temporarily or accidentally:
provided, That such invention is used exclusively for the needs of the ship, vessel,
aircraft, or land vehicle and not used for the manufacturing of anything to be sold
within the Philippines. (Secs. 38 and 39, R.A. No. 165a)
AGAP recognized the fact that there is still a long way to go before these bills can
be enacted into law. The big pharmaceutical companies are trying their best to derail
the passage of this bill. News accounts tell of a One Billion Lobby Fund that the big
pharmaceutical companies have put up for the single purpose of preventing the passage
of these bills into law.
The Bills from the Senate and the House would also have to be harmonized in the 3rd
Chamber, the so-called Bicam Conference, for reconciliation of otherwise conflicting
provisions of the Senate and House Versions of the Bill. When the Bill is finally passed into
law, the long and tedious process of formulating the implementing rules and regulations
commences, which is equally important and must also be closely monitored, lest they fail
to give tooth and nail to the law.
The Affordable Medicine Bill is an answer, among others, to the dilemma faced by
millions of Filipinos today. It is timely and urgent, if the government is to fulfill its role
as protector of the health of the people. The writer of this Paper is of the position that
this Bill is a necessary step to correct the wrong perpetrated by the present IP code. In
the House deliberations of the bill that will later become the IP Code, then Congressman
Joker Arroyo is one of the very few congressmen who did not vote for the passing of
the IP Code. In his opinion then, the IP Code will hamper the development of home
grown products by Filipinos. It seems that his fears have proven true. The present IP Code
operates for the benefit of the multinational pharmaceutical companies which have an
entrenched hold on the pharmaceutical market. Thus, struggling Filipino inventors find
it difficult to break into the pharmaceutical industry.
The passage of the AMB will surely put in place in our country the objectives of
making affordable but quality medicine accessible to the Filipino masses. The Pharma
MNCs could then be effectively regulated to serve first and foremost the constitutional
right of the people to good health and enjoy a better quality of life.
Giant pharma companies should not look solely into their profits but should give
similar, if not more, importance to corporate social responsibility (CSR). The right to
health must prevail over the MNCs right to profits. Economics and property must always
yield to the paramount right to life!
BOARD OF GOVERNORS
(2011-2013)
NATIONAL OFFICERS
RODOLFO G. URBIZTONDO
Deputy General Counsel